A.

Definition, Article 1732, Civil Code of the Philippines

HOME INSURANCE CO. V AMERICAN STEAMSHIP AGENCIES

23 SCRA 24 April 4, 1968

Facts:
Consorcio Pasquero Del Perse of South America shipped a freight of 21,740 jute
bags of Peruvian fish meal through the SS Crowborough consigned to the Sam Miguel
Brewery and insured by Home Insurance Company for $202,505.00. It arrived in Manila
on March 7, 1963 and was loaded into the lighters of Luzon Stevedoring Company.
However, it arrived with shortages. Thus SMB demanded that Home Insurance pay the
claim of P14,000.00. Home Insurance on the other hand filed for the recovery of the
P14,000.00 from Luzon Stevedoring. The Court of First Instance absolved Luzon
Stevedoring, but ordered the American Steamship Agencies to reimburse the amount
to Home Insurance, basing the ruling on Art. 587 of the Code of Commerce which
makes the ship agent civilly liable for damages in favor of third persons due to conduct
of carrier’s captain and that the stipulation in the charter party exempting the owner
from liability is against public policy under Article 1744 of the New Civil Code.

Issue:
Between the provisions of the New Civil Code and the Code of Commerce, which
should apply.

Held:
The court rules the affirmative as to the non-applicability of the prohibition of
the exemption of the carrier from liability. The provisions of our Civil Code on
common carriers were taken from Anglo-American Law. Under American
Jurisprudence, a common carrier undertakes to carry a special cargo or chartered to a
special person only, becomes a private carrier. And thus, as a private carrier, a
stipulation exempting the owner from liability for the negligence of its agent is not
against public policy. The reason is that there is no strict public policy applied.
 DE GUZMAN VS. COURT OF APPEALS
168 SCRA 612

Facts:
Cendena was a junk dealer and was engaged in buying used bottles and scrap materials
in Pangasinan and brought these to Manila for resale. He used two 6-wheeler trucks.
On the return trip to Pangasinan, he would load his vehicles with cargo which various
merchants wanted delivered to Pangasinan. For that service, he charged freight lower
than regular rates. General Milk Co. contacted with him for the hauling of 750 cartons
of milk. On the way to Pangasinan, one of the trucks was hijacked by armed men who
took with them the truck and its cargo and kidnapped the driver and his helper. Only
150 cartons of milk were delivered. The Milk Co. sued to claim the value of the lost
merchandise based on an alleged contract of carriage. Cendena denied that he was a
common carrier and contended that he could not be liable for the loss it was due to
force majeure. The trial court ruled that he was a common carrier. The CA reversed.

Issue:
Whether or not Cendena is a common carrier?

Held: Yes, Cendena is properly characterized as a common carrier even though he

merely backhauled goods for other merchants, and even if it was done on a periodic
basis rather than on a regular basis, and even if his principal occupation was not the
carriage of goods.

Article 1732 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. It also avoids making a distinction between a person or enterprise
offering transportation services on a regular or scheduled basis and one offering service
on an occasional, episodic or unscheduled basis. Neither does it make a distinction
between a carrier offering its services to the general public and one who offers services
or solicits business only from a narrow segment of population.
 PLANTERS PRODUCTS, INC. VS. COURT OF APPEALS, 226 SCRA 476 ,
SEPTEMBER 15, 1993
Facts:
Planters Products (Planters) purchased from Mitsubishi International Corporation of
USA of 9,000 metric tons of urea fertilizer which the latter shipped abroad the cargo
vessel owned by private respondent Kyosei Kisin Kabushiki Kaisha (KKKK) from
America to La Union. Prior to its voyage, a time charter party was entered into between
Mitusbishi as shipper/charterer and KKKK as ship-owner. After the Urea fertilizer was
loaded in bulk by stevedored hired by the shipper, the steel hatches were closed with
heavy iron lids which remained closed during the entire journey.
Upon arrival of the vessel, the hatches were opened with the use of the vessel boom.
Planters unloaded the cargo from the holders into the steel bodied dump trucks. Each
time the dump trucks were filled up, its load of urea was covered with tarpaulin before
it was transported to the consignee’s warehouse located some (50) fifty meteres from
the wharf. It took (11) eleven days from planters to unload the cargo. The report
submitted by private marine and cargo surveyors revealed a shortage in the cargo, and
some portion in the cargo was contaminated with dirt, rendering the same unfit for
commerce. Planters filed an action for damages bu the appellate court absolved the
carrier from liability.
Issues:
1. Whether or not the respondent is a common carrier.
2. Whether or not the respondent is liable for damages.
Held:
1. The court rules the affirmative as to the respondent being a common carrier.
The term common carrier is defined in Article 1732 of the Civil Code. The definition
refers to carriers either by land, water, or air which holds themselves out as ready to
engage in carrying goods on transporting passengers or both for compensation as a
public employment and not as a casual occupation; if the undertaking is a single
transaction, not a part of the general business or corporation, although involving the
carriage of goods for a fee, then the person or corporation offering such services is a
private carrier. In the case at bar respondent carrier transports goods indiscriminately
for all persons. Being such, he is a common carrier.
2. The court rules the negative. True, being a common carrier, respondent must
have observed extraordinary diligence over the goods it carries. In the case at bar it has
been proven that the respondent has sufficiently overcome this, by clear and
convincing proof, the prima facie presumption of negligence, due to the manner of
storage of the goals during the vogyage. In fact, it was pointed out that there was a risk
in shipping the urea due to its character.
 COASTWISE LIGHTERAGE CORPORATION V. CA

Facts:
Pag-asa Sales Inc. entered into a contract to transport molasses from the province of
Negros to Manila with Coastwise Lighterage Corporation (Coastwise for brevity), using
the latter's dumb barges. The barges were towed in tandem by the tugboat MT Marica,
which is likewise owned by Coastwise. Upon reaching Manila Bay, one of the barges,
"Coastwise 9", struck an unknown sunken object. The forward buoyancy compartment
was damaged, and water gushed in through a hole "two inches wide and twenty-two
inches long". As a consequence, the molasses at the cargo tanks were contaminated.
Pag-asa filed a claim against Philippine General Insurance Company, the insurer of its
cargo. Philgen paid P700,000 for the value of the molasses lost.

Philgen then filed an action against Coastwise to recover the money it paid, claiming to
be subrogated to the claims which the consignee may have against the carrier. Both the
trial court and the Court of Appeals ruled against Coastwise.

Issues:

(1) Whether Coastwise was transformed into a private carrier by virtue of the contract
it entered into with Pag-asa, and whether it exercised the required degree of diligence
(2) Whether Philgen was subrogated into the rights of the consignee against the carrier

Held:

(1) Pag-asa Sales, Inc. only leased three of petitioner's vessels, in order to carry cargo
from one point to another, but the possession, command mid navigation of the vessels
remained with petitioner Coastwise Lighterage. Coastwise Lighterage, by the contract
of affreightment, was not converted into a private carrier, but remained a common
carrier and was still liable as such. The law and jurisprudence on common carriers both
hold that the mere proof of delivery of goods in good order to a carrier and the
subsequent arrival of the same goods at the place of destination in bad order makes for
a prima facie case against the carrier. It follows then that the presumption of
negligence that attaches to common carriers, once the goods it is sports are lost,
destroyed or deteriorated, applies to the petitioner. This presumption, which is
overcome only by proof of the exercise of extraordinary diligence, remained
unrebutted in this case. Jesus R. Constantino, the patron of the vessel "Coastwise 9"
admitted that he was not licensed. Coastwise Lighterage cannot safely claim to have
exercised extraordinary diligence, by placing a person whose navigational skills are
questionable, at the helm of the vessel which eventually met the fateful accident. It
may also logically, follow that a person without license to navigate, lacks not just the
skill to do so, but also the utmost familiarity with the usual and safe routes taken by
seasoned and legally authorized ones. Had the patron been licensed he could be
presumed to have both the skill and the knowledge that would have prevented the
vessel's hitting the sunken derelict ship that lay on their way to Pier 18. As a common
carrier, petitioner is liable for breach of the contract of carriage, having failed to
overcome the presumption of negligence with the loss and destruction of goods it
transported, by proof of its exercise of extraordinary diligence.
(2) Article 2207 of the Civil Code is founded on the well-settled principle of
subrogation. If the insured property is destroyed or damaged through the fault or
negligence of a party other than the assured, then the insurer, upon payment to the
assured will be subrogated to the rights of the assured to recover from the wrongdoer
to the extent that the insurer has been obligated to pay. Payment by the insurer to the
assured operated as an equitable assignment to the former of all remedies which the
latter may have against the third party whose negligence or wrongful act caused the
loss. The right of subrogation is not dependent upon, nor does it grow out of, any
private of contract or upon written assignment of, claim. It accrues simply upon
payment of the insurance claim by the insurer.

NATIONAL STEEL CORPORATION V. COURT OF APPEALS

Facts:
Herein petitioner of G.R. No. 112350, Vlasons Shipping entered into a contract of
afreightment on contract of vogage4 charter line with the petitioner of the other
consolidated case, National Steel Corporation (NSC), whereby the latter hired Vlason’s
vessel, the M/V Vlasons I to make a voyage to load steel products from Ilagan City to
Manila. Under the agreement, the loading and unloading of the cargoes are the
responsibility of the charter and the owner shall no be liable of the loss or damage of
the cargo arising from the unseaworthiness unless counsel by want of diligence on the
part of the owners to make the vessel seaworthy and to secure that it is properly
manned, equipped and supplied.
Upon arrival on August 12, 1974, it was found that nearly all the tin plates and
hot rolled sheets were wet and rusty. The cargo was unloaded by the charterer Hence
the petitioner filed for a claim of damages amounting to P941,145.58, alleging the
negligence of the master and crew of the ship.

Issue:
Whether or not Vlasons Shipping is made liable notwithstanding the Charter Party
stipulations.

Held:
The courts rule the negative. At bottom, this appeal really hinges on a factual
issue as to then, how, and who caused the damages to the cargo. Ranged against NSC
are two formidable truhs. First, it was found that such damage was brought about
during the unloading process when the rain seeped into the cargo due to the
negligence of the stevedores employed by it.
Second and more importantly, the agreement between the parties “The Contact
of Voyage Charter Party for Hire” placed the burden of proof of such loss or damage
upon the shipper, not upon the ship owner. Such stipulation, while disadvantageous to
the NSC, is valid because the parties entered into a contract of private charter, not one
of common carriage.
Basic too is the doctrine that courts cannot relieve a party from the effects of a
private contract fully entered into, on the ground that it is allegedly one-sided or unfair
to the plaintiff. It has been held that the true test of a common carrier of
passengers/goods is the carriage of the same, provided it has space, for all who opt to
avail for its transportation service for a fee.
ASIA LIGHTERAGE AND SHIPPING, INC. V. CA

Petitioner was contracted as a carrier by a corporation from Portland, Oregon to

deliver a cargo to the consignee’s warehouse at Pasig City. The cargo, however, never
reached the consignee as the barge that carried the cargo sank completely, resulting in
damage to the cargo. Private respondent, as insurer, indemnified the consignee for the
lost cargo and thus, as subrogee, sought recovery from petitioner. Both the trial court
and the appellate court ruled in favor of private respondent.

Issue:
Whether the petitioner is a common carrier.

Ruling:
Petitioner is a common carrier. Article 1732 of the Civil Code defines common carriers
as persons, corporations, firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or air, for compensation,
offering their services to the public. Petitioner contends that it is not a common carrier
but a private carrier. Allegedly, it has no fixed and publicly known route, maintains no
terminals, and issues no tickets. It points out that it is not obliged to carry
indiscriminately for any person. It is not bound to carry goods unless it consents. In
short, it does not hold out its services to the general public. We disagree. In De
Guzman vs. Court of Appeals, we held that the definition of common carriers in Article
1732 of the Civil Code 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. We also did not distinguish 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. Further, we ruled that Article
1732 does not 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. In the case at bar, the principal business of the petitioner is that of
lighterage and drayage and it offers its barges to the public for carrying or transporting
goods by water for compensation. Petitioner is clearly a common carrier. In De
Guzman, we considered private respondent to be a common carrier even if his
principal occupation was not the carriage of goods for others, but that of buying used
bottles and scrap metal in Pangasinan and selling these items in Manila. We therefore
hold that petitioner is a common carrier whether its carrying of goods is done on an
irregular rather than scheduled manner, and with an only limited clientele. A common
carrier need not have fixed and publicly known routes. Neither does it have to
maintain terminals or issue tickets. To be sure, petitioner fits the test of a common
carrier as laid down in Bascos vs. Court of Appeals. The test to determine a common
carrier is “whether the given undertaking is a part of the business engaged in by the
carrier which he has held out to the general public as his occupation rather than the
quantity or extent of the business transacted.” In the case at bar, the petitioner
admitted that it is engaged in the business of shipping and lighterage, offering its
barges to the public, despite its limited clientele for carrying or transporting goods by
water for compensation.
B. EXTRAORDINARY DILIGENCE

PANTRANCO vs. Public Service Commission (PSC)

FACTS: 
PANTRANCO, a holder of an existing Certificate of Public Convenience is applying to
operate additional buses with the Public Service Commission (PSC) has been engaged
in transporting passengers in certain provinces by means of public transportation
utility. Patranc applied for authorization to operate 10 additional trucks. The PSC
granted the application but added several conditions for PANTRANCO’s compliance.
One is that the service can be acquired by government upon payment of the cost price
less depreciation, and that the certificate shall be valid only for a definite period of
time.
ISSUE: 
Whether or not PSC can impose said conditions. If so, wouldn’t this power of the PSC
constitute undue delegation of powers?
RULING:  
The Supreme Court held that there was valid delegation of powers.
The theory of the separation of powers is designed by its originators to secure action at
the same time forestall overaction which necessarily results from undue concentration
of powers and thereby obtain efficiency and prevent deposition. But due to the growing
complexity of modern life, the multiplication of subjects of governmental regulation
and the increased difficulty of administering laws, there is a constantly growing
tendency toward the delegation of greater powers by the legislature, giving rise to the
adoption, within certain limits, of the principle of “subordinate legislation.”
All that has been delegated to the Commission is the administrative function, involving
the use of discretion to carry out the will of the National Assembly having in view, in
addition, the promotion of public interests in a proper and suitable manner.
 Cangco V. MRR

FACTS:
January 20, 1915 around 7 to 8 p.m.: Jose Cangco arose from his seat in the 2nd class-car
where he was riding and, making, his exit through the door, took his position upon the
steps of the coach, seizing the upright guardrail with his right hand for support
As the train slowed down another passenger and also an employee of the railroad
company Emilio Zuñiga got off the same car alighting safely at the point where the
platform begins to rise from the level of the ground.
When the train had proceeded a little farther Cangco stepped off but 1 or both of his
feet came in contact with a sack of watermelons so his feet slipped from under him and
he fell violently on the platform. 
His body rolled from the platform and was drawn under the moving car, where his
right arm was badly crushed and lacerated. 
The car moved forward possibly 6 meters before it came to a full stop.
He was bought to the hospital in the city of Manila where an examination was made
and his arm was amputated
operation was unsatisfactory so he had second operation at another hospital was
performed and the member was again amputated higher up near the
shoulder expending a total of P790.25 
It is customary season for harvesting these melons and a large lot had been brought to
the station for the shipment to the market
CFI: favored Manila Railroad Co. (MRR)- Cangco had failed to use due caution in
alighting from the coach and was therefore precluded form recovering
ISSUE: W/N MRR should be held liable.

HELD:
YES. lower court is reversed, and judgment is hereby rendered plaintiff for the sum of
P3,290.25
It can not be doubted that the employees of the railroad company were guilty of
negligence. It necessarily follows that the defendant company is liable for the damage
thereby occasioned unless recovery is barred by the plaintiff's own contributory
negligence. 
In resolving this problem it is necessary that each of these conceptions of liability, to-
wit, the primary responsibility of the defendant company and the contributory
negligence of the plaintiff should be separately examined
Article 1903 of the Civil Code is not applicable to obligations arising ex contractu, but
only to extra-contractual obligations — or to use the technical form of expression, that
article relates only to culpa aquiliana and not to culpa contractual
Article 1903 of the Civil Code is not applicable to acts of negligence which constitute
the breach of a contract
two things are apparent: (1) That when an injury is caused by the negligence of a
servant or employee there instantly arises a presumption of law that there was
negligence on the part of the master or employer either in selection of the servant or
employee, or in supervision over him after the selection, or both; and (2) that that
presumption is juris tantum and not juris et de jure, and consequently, may be
rebutted. It follows necessarily that if the employer shows to the satisfaction of the
court that in selection and supervision he has exercised the care and diligence of a
good father of a family, the presumption is overcome and he is relieved from liability.
As a general rule . . . it is logical that in case of extra-contractual culpa, a suing creditor
should assume the burden of proof of its existence, as the only fact upon which his
action is based; while on the contrary, in a case of negligence which presupposes the
existence of a contractual obligation, if the creditor shows that it exists and that it has
been broken, it is not necessary for him to prove negligence.
The test by which to determine whether the passenger has been guilty of negligence in
attempting to alight from a moving railway train, is that of ordinary or reasonable care.
It is to be considered whether an ordinarily prudent person, of the age, sex and
condition of the passenger, would have acted as the passenger acted under the
circumstances disclosed by the evidence. This care has been defined to be, not the care
which may or should be used by the prudent man generally, but the care which a man
of ordinary prudence would use under similar circumstances, to avoid injury.
Women, it has been observed, as a general rule are less capable than men of alighting
with safety under such conditions, as the nature of their wearing apparel obstructs the
free movement of the limbs. Again, it may be noted that the place was perfectly
familiar to the plaintiff as it was his daily custom to get on and of the train at this
station. There could, therefore, be no uncertainty in his mind with regard either to the
length of the step which he was required to take or the character of the platform where
he was alighting. Our conclusion is that the conduct of the plaintiff in undertaking to
alight while the train was yet slightly under way was not characterized by imprudence
and that therefore he was not guilty of contributory negligence.
at the time of the accident, was earning P25 a month as a copyist clerk, and that the
injuries he has suffered have permanently disabled him from continuing that
employment. Defendant has not shown that any other gainful occupation is open to
plaintiff. His expectancy of life, according to the standard mortality tables, is
approximately thirty-three years. We are of the opinion that a fair compensation for
the damage suffered by him for his permanent disability is the sum of P2,500, and that
he is also entitled to recover of defendant the additional sum of P790.25 for medical
attention, hospital services, and other incidental expenditures connected with the
treatment of his injuries.
 Medina vs. Cresencia
Facts:
A passenger jeepney driven by Brigido Avorque smashed into a Meralco post resulting
in the death of Vicente Medina, one of its passengers. Guillermo Cresencia is the
registered owner of the jeepney as well as the registered operator. On the other hand,
Rosario Avorque, after the jeepney having been repeatedly sold from one buyer after
another, is its current absolute owner as well as the employer of driver Brigido.

Issue:
(1) Who should be held liable for the death of Medina – the registered owner or the
absolute owner?
(2) WON Rosario Avorque has a subsidiary liability under the RPC for damages arising
from her driver’s criminal act.

Held:
(1) The registered owner.
The requires the approval of the Public Service Commission in order that a franchise,
or any privilege pertaining thereto, may be sold or leased without infringing the
certificate issued to the grantee x x x As the sale of the jeepney was admittedly without
the approval of the Public Service Commission, Guillermo Cresencia, who is the
registered owner and operator thereof, continued to be liable to the Commission and
the public for the consequences incident to its operation.
(2) No, she has no subsidiary liability.

Medina’s action for damages is independent of the criminal case filed against Brigido
Avorque, and based, not on the employer’s subsidiary liability under the Revised Penal
Code, but on a breach of the carrier’s contractual obligation to carry his passengers
safely to their destination (culpa contractual). And it is also for this reason that there is
no need of first proving the insolvency of the driver Brigido Avorque before damages
can be recovered from the carrier, for in culpa contractual, the liability of the carrier is
not merely subsidiary or secondary, but direct and immediate (Articles 1755, 1756, and
1759, New Civil Code).
 Isaac v. A.L. Ammen Transport Co., Inc.
FACTS:
Cesar Isaac boarded Bus No. 31 from Ligao, Albay bound for Pili, Camarines Sur and
seated himself on the left side resting his left arm on the window and with his left
elbow outside the window.Before reaching his destination, a pick-up car at full speed
and was running outside of its proper lane came from the opposite direction.
The driver of the bus swerved the bus to the very extreme right of the road until its
front and rear wheels have gone over the pile of stones or gravel situated on the
rampart of the road. He was rushed to a hospital in Iriga, Camarines Sur where he was
given blood transfusion to save his life.After four (4) days, he was transferred to
another hospital in Tabaco, Albay. Where he underwent treatment for 3 months. He
incurred expenses of Php623.40, excluding medical fees which were paid by A.L.
Ammen Trans. Co.
ISSUE:
Whether or not there is no negligence on the part of the common carrier since the
accident resulting in injuries is due to causes which are inevitable and which could not
have been avoided or anticipated notwithstanding the exercise of that high degree of
care and skill which the carrier is bound to exercise for for the safety of its passengers
neither the common carrier nor the driver is liable therefore.
HELD:
Yes. Considering all the circumstances, we are persuaded to conclude that the driver of
the bus has done what a prudent man could have done to avoid the collision. It is true
that Isaac’s contributory negligence cannot relieve A.L. Ammen of its liability but will
only entitle it to a reduction of the amount of damage caused (Article 1762, new Civil
Code), but this is a circumstance which further militates against the position taken by
Isaac.
Where a carrier’s employee is confronted with a sudden emergency, the fact that he is
obliged to act quickly and without a chance for deliberation must be taken into
account, and he is held to the some degree of care that he would otherwise be required
to exercise in the absence of such emergency but must exercise only such care as an
ordinary prudent person would exercise under like circumstances and conditions, and
the failure on his part to exercise the best judgment the case renders possible does not
establish lack of care and skill on his part.
Principles governing the liability of a common carrier:
1. the liability of a carrier is contractual and arises upon breach of its obligation. There
is breach if it fails to exert extraordinary diligence according to all circumstances of
each case.
2. a carrier is obliged to carry its passenger with the utmost diligence of a very cautious
person, having due regard for all the circumstances.
3. a carrier is presumed to be at fault or to have acted negligently in case of death of, or
injury, to passengers, it being its duty to prove that it exercised extraordinary diligence.
4. the carrier is not an insurer against all risks of travel.
 FORES VS. MIRANDA
Facts:
Defendant-petitioner Paz Fores brings this petition for review of the decision of the
Court of Appeals (C. A. Case No. 1437-R) awarding to the plaintiff-respondent Ireneo
Miranda the sums of P5,000 by way of actual damages and counsel fees, and P10,000 as
moral damages, with costs.

Respondent was one of the passengers on a jeepney driven by Eugenio Luga. While the
vehicle was descending the Sta. Mesa bridge at an excessive rate of speed, the driver
lost control thereof, causing it to swerve and to hit the bridge wall. The accident
occurred on the morning of March 22, 1953. Five of the passengers were injured,
including the respondent who suffered a fracture of the upper right humerus. He was
taken to the National Orthopedic Hospital for treatment, and later was subjected to a
series of operations; the first on May 23, 1953, when wire loops were wound around the
broken bones and screwed into place; a second, effected to insert a metal splint, and a
third one to remove such splint. At the time of the trial, it appears that respondent had
not yet recovered the use of his right arm.

The driver was charged with serious physical injuries through reckless imprudence,
and upon interposing a plea of guilty was sentenced accordingly.

The contention that the evidence did not sufficiently establish the identity of the
vehicle as that belonging to the petitioner was rejected by the appellate court which
found, among other things, that it carried plate No. TPU-1163, series of 1952, Quezon
City, registered in the name of Paz Fores, (appellant herein) and that the vehicle even
had the name of "Dona Paz" painted below its windshield. No evidence to the contrary
was introduced by the petitioner, who relied on an attack upon the credibility of the
two policemen who went to the scene of the incident.

A point to be further remarked is petitioner's contention that on March 21, 1953, or one
day before the accident happened, she allegedly sold the passenger jeep that was
involved therein to a certain Carmen Sackerman.

The initial problem raised by the petitioner in this appeal may be formulated thus"Is
the approval of the Public Service Commission necessary for the sale of a public service
vehicle even without conveying therewith the authority to operate the same?"
Assuming the dubious sale to be a fact, the Court of Appeals answered the query in the
affirmative. The ruling should be upheld. Section 20 of the Public Service Act
(Commonwealth Act No. 146) provides:

"SEC. 20. Subject to established limitations and exceptions and saving provisions to the
contrary, it shall be unlawful for any public service or for the owner, lessee or operator
thereof, without the previous approval and authority of the Commission previously
had

(g) To sell, alienate, mortgage, encumber or lease its property, franchises, certificates,
privileges, or rights, or any part thereof; or merge or consolidate its property,
franchises, privileges or rights, or any part thereof, with those of any other public
service. The approval herein required shall be given, after notice to the public and after
hearing the persons interested at a public hearing, if it be shown that there are just and
reasonable grounds for making the mortgage or encumbrance, for liabilities of more
than one year maturity, or the sale, alienation, lease, merger, or consolidation to be
approved and that the same are not detrimental to the public interest, and in case of. a
sale, the date on which the same is to be consummated shall be fixed in the order of
approval: Provided, however, That nothing herein contained shall be construed to
prevent the transaction from being negotiated or completed before its approval or to
prevent the sale, alienation, or lease by any public service of any of its property in the
ordinary course of its business."
Interpreting the effects of this particular provision of law, we have held in the recent
cases of Montoya vs. Ignacio,[* ]50 Off. Gaz. No. 1, p. 108; Timbol vs. Osias, et al., G. R.
No. L-7547, April 30, 1955, and Medina vs. Cresencia, 99 Phil, 506; 52 Off. Gaz. No. 10,
p. 4606, that a transfer contemplated by the law, if made without the requisite
approval of the Public Service Commission, is not effective and binding in so far as the
responsibility of the grantee under the franchise in relation to the public is concerned.
Petitioner assails, however, the applicability of these rulings to the instant case,
contending that m those cases, the operator did not convey, by lease or by sale, the
vehicle independently of his rights under the franchise. This line of reasoning does not
find support in the law. The provisions of the statute are clear and prohibit the sale,
alienation, lease, or encumbrance of the property, franchise, certificate, privileges or
rights, or any part thereof of the owner or operator of the public service without
approval or authorization of the Public Service Commission. The law was designed
primarily for the protection of the public interest; and until the approval of the Public
Service Commission is obtained the vehicle is, in contemplation of law, still under the
service of the owner or operator standing in the records of the Commission which the
public has a right to rely upon.

The proviso contained in the aforequoted law, to the effect that nothing therein shall
be construed "to prevent the transaction from being negotiated or completed before its
approval", means only that the sale without the required approval is still valid and
binding between the parties (Montoya vs. Ignacio, supra). The phrase "in the ordinary
course of its business" found in the other proviso "or to prevent the sale, alienation, or
lease by any public service of any of its property", as correctly observed by the lower
court, could not have been intended to include the sale of the vehicle itself, but at most
may refer only to such property that may be conceivably disposed or by the carrier in
the ordinary course of its business, like junked equipment or spare parts.

The case of Indalecio de Torres vs. Vicente Ona (63 Phil., 594, 597) is enlightening; and
there, it was held:

"Under the law, the Public Service Commission has not only general supervision and
regulation of, but also full jurisdiction and control over all public utilities including the
property, equipment and facilities used, and the property rights and franchises enjoyed
by every individual and company engaged in the performance of a public service in the
sense this phrase is used in the Public Service Act or Act No. 3108 (sec. 1308). By virtue
of the provisions of said Act, motor vehicles used in the performance of a service, as
the transportation of freight from one point to another, have to this date been
considered and they cannot but be so considered public service property; and, by
reason of its own nature, a TH truck, which means that the operator thereof places it at
the disposal of anybody who is willing to pay a rental for its use, when he desires to
transfer or carry his effects, merchandise or any other cargo from one place to another,
is necessarily a public service property." (Emphasis supplied)
Of course, this Court has held in the case of Bachrach Motor Co. vs. Zamboanga
Transportation Co., 52 Phil., 244, that there may be a mine pro tune authorization
which has the effect of having the approval retroact to the date of the transfer; but
such outcome cannot prejudice rights intervening in the meantime. It appears that no
such approval was given by the Commission before the accident occurred.
The P10,000 actual damages awarded by the Court of First Instance of Manila were
reduced by the Court of Appeals to only P2,000, on the ground that a review of the
records failed to disclose a sufficient basis for the trial court's appraisal, since the only
evidence presented on this point consisted of respondent's bare statement that his
expenses and loss of income amounted to P20,000. On the other hand, "it cannot be
denied," the lower court said, "that appellee (respondent) did incur expenses." It is well
to note further that respondent was a painter by profession and a professor of Fine
Arts, so that the amount of P2,000 awarded cannot be said to be excessive (see Arts.
2224 and 2225, Civil Code of the Philippines). The attorney's fees in the sum of P3,000
also awarded to the respondent are assailed on the ground that the Court of First
Instance did not provide for the same, and since no appeal was interposed by said
respondent, it was allegedly error for the Court of Appeals to award them motu
proprio. Petitioner fails to note that attorney's fees are included in the concept of
actual damages under the Civil Code and may be awarded whenever the court deems it
just and equitable (Art. 2208, Civil Code of the Philippines). We see no reason to alter
these awards.

Anent the moral damages ordered to be paid to the respondent, the same must be
discarded. We have repeatedly ruled (Cachero vs. Manila Yellow Taxicab Co. Inc., 101
Phil., 523; 54 Off. Gaz., [26], 6599; Necesito, et al vs. Paras, 104 Phil., 75; 56 Off. Gaz.,
[23] 4023, that moral damages are not recoverable in damage actions predicated on a
breach of the contract of transportation, in view of Articles 2219 and 2220 of the new
Civil Code, which provide as follows:

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

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;

By contrasting the provisions of these two articles it immediately becomes apparent

that:

(a) In case of breach of contract (including one of transportation) proof of bad faith or
fraud (dolus), i.e., wanton or deliberately injurious conduct, is essential to justify an
award of moral damages; and

(b) That a breach of contract can not be considered included in the descriptive term
"analogous cases" used in Art. 2219; not only because Art. 2220 specifically provides for
the damages that are caused by contractual breach, but because the definition of quasi-
delict in Art. 2176 of the Code expressly excludes the cases where there is a "preexisting
contractual relation between the parties."

The exception to the basic rule of damages now under consideration is a mishap
resulting in the death of a passenger, in which case Article 1764 makes the common
carrier expressly subject to the rule of Art. 2206, that entitles the spouse, descendants
and ascendants of the deceased passenger to "demand moral damages for mental
anguish by reason of the death of the deceased" (Necesito vs. Paras, 104 Phil., 84,
Resolution on motion to reconsider, September 11, 1958). But the exceptional rule of
Art. 1764 makes it all the more evident that where the injured passenger does not die,
moral damages are not recoverable unless it is proved that the carrier was guilty of
malice or bad faith. We think it is clear that the mere carelessness of the carrier's driver
does not per se constitute or justify an inference of malice or bad faith on the part of
the carrier; and in the case at bar there is no other evidence of such malice to support
the award of moral damages by the Court of Appeals. To award moral damages for
breach of contract, therefore, without proof of bad faith or malice on the part of the
defendant, as required by Art. 2220", would be to violate the clear provisions of the law,
and constitute unwarranted judicial legislation.

The Court of Appeals has invoked our rulings in Castro vs. Aero Taxicab Co-, R. G. No.
49155, December 14, 1948 and Layda vs. Court of Appeals, 90 Phil., 724; but these
doctrines were predicated upon our former law of damages, before judicial discretion
in fixing them became limited by the express provisions of the new Civil Code
(previously quoted). Hence, the aforesaid rulings are now inapplicable.

Upon the other hand, the advantageous position of a party suing a carrier for breach of
the contract of transportation explains, to some extent, the limitations imposed by the
new Code on the amount of the recovery. The action for breach of contract imposes on
the defendant carrier a presumption of liability upon mere proof of injury to the
passenger; that latter is relieved from the duty to establish the fault of the carrier, or of
his employees, and the burden is placed on the carrier to prove that it was due to an
unforseen event or to force majeure (Cangco vs. Manila Railroad Co., 38 Phil, 768, 777).
Moreover, the carrier, unlike in suits for quasi-delict, may not escape liability by
proving that it has exercised due diligence in the selection and supervision of its
employees (Art. 1759, new Civil Code; Cangco vs. Manila Railroad Co., supra;
Prado vs. Manila Electric Co., 51 Phil., 900).

The difference in conditions, defenses and proof, as well as the codal concept of quasi-
delict as essentially extra contractual negligence, compel us to differentiate between
action ex contractu, and actions quasi ex delicto, and prevent us from viewing the
action for breach of contract as simultaneously embodying an action on tort. Neither
can this action be taken as one to enforce on employee's liability under Art. 103 of the
Revised Penal Code, since the responsibility is not alleged to be subsidiary, nor is there
on record any averment or proof that the driver of appellant was insolvent. In fact, he
is not even made a party to the suit.

It is also suggested that a carrier's violation of its engagement to safely transport the
passenger involves a breach of the passenger's confidence, and therefore should be
regarded as a breach of contract in bad faith, justifying recovery of moral damages
under Art. 2220. This theory is untenable, for under it the carrier would always be
deemed in bad faith, in every case its obligation to the passenger is infringed, and it
would be never accountable for simple negligence; while under the law (Art. 1756). the
presumption is that common carriers acted negligently (and not maliciously), and Art.
1762 speaks of negligence of the common carrier.

"Art. 1756. In case of death of or injuries to passengers, common carriers are presumed
to have been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed in articles 1733 and 1755."

"Art. 1762. The contributory negligence of the passenger does not bar recovery of
damages for his death or injuries, if the proximate cause thereof is the negligence of
the common carrier, but the amount of damages shall be equitably reduced."
The distinction between fraud, bad faith or malice in the sense of deliberate or wanton
wrong doing and negligence (as mere carelessness) is too fundamental in our law to be
ignored (Arts. 1170-1172); their consequences being clearly differentiated by the Code.

"Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who
acted in good faith is liable shall be those that are the natural and probable
consequences of the breach of the obligation, and which the parties have foreseen or
could have reasonably foreseen at the time the obligation was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible
for all damages which may be reasonably attributed to the non-performance of the
obligation."
It is to be presumed, in the absence of statutory provision to the contrary, that this
difference was in the mind of the lawmakers when in Art. 2220 they limited recovery of
moral damages to breaches of contract in bad faith. It is true that negligence may be
occasionally so gross as to amount to malice; but that fact must be shown in evidence,
and a carrier's bad faith is not to be lightly inferred from a mere finding that the
contract was breached through negligence of the carrier's employees.

In view of the foregoing considerations, the decision of the Court of Appeals is

modified by eliminating the award of P5.000.00 by way of moral damages (Court of
Appeals Resolution of May 5, 1957). In all other respects, the judgment is affirmed. No
costs in this instance. So ordered.

Phil. Rabbit Bus Lines v. Intermediate Appellate Court

FACTS:
On December 24, 1966, passengers boarded the jeepney owned by spouses Isidro
Mangune and Guillerma Carreon and driven by Tranquilino Manalo at Pampanga
bound for Pangasinan for P24.00. Upon reaching Tarlac, the right rear wheel of the
jeepney detached causing it to run in an unbalanced position. Driver Manalo stepped
on the brake, causing the jeepney to make a U-turn, invading and eventually stopping
on the opposite lane of the road (the jeepney’sfront faced the south (from where it
came) and its rear faced the north (towards where it was going).The jeepney occupied
and blocked the greater portion of the western lane, which is the right of way of
vehicles coming from the north.
Petitioner Phil. Rabbit Bus Lines claims that almost immediately after the sudden U-
turn the busbumped the right rear portion of the jeep. Defendants, on the other hand,
claim that the bus stoppeda few minutes before hitting the jeepney. Either way, as a
result of the collision, three passengers of the jeepney (Catalina Pascua, Erlinda
Meriales and Adelaida Estomo) died while the other jeepneypassengers sustained
physical injuries.A criminal complaint was filed against the two drivers for Multiple
Homicide. The case against delosReyes (driver of Phil. Rabbit) was dismissed for
insufficieny of evidence. Manalo (jeepney driver) was convicted and sentenced to suffer
imprisonment.
Three complaints for recovery of damages were then filed before the CFI of
Pangasinan: (1) SpousesCasiano Pascua and Juana Valdez sued as heirs of Catalina
Pascua while Caridad Pascua sued in her behalf; (2) Spouses Manuel Millares and
Fidencia Arcica sued as heirs of Erlinda Meriales; and (3) spouses Mariano Estomo and
Dionisia Sarmiento sued as heirs of Adelaida Estomo. All three cases impleaded
spouses Mangune and Carreon, Manalo (jeepney owners), Rabbit and delos Reyes as
defendants. Plaintiffs anchored their suits against spouses Mangune andCarreon and
Manalo on their contractual liability. As against Rabbit and delos Reyes, plaintiffs
basedtheir suits on their culpability for a quasi-delict.
The respondent court applied primarily (1) the doctrine of last clear chance, (2) the
presumption that drivers who bump the rear of another vehicle guilty and the cause of
the accident unless contradicted by other evidence, and (3) the substantial factor test
concluded that delos Reyes was negligent.
ISSUE:
Whether or not the doctrine of last clear chance is applicable in this case.
RULING:
No. The doctrine is not applicable.

The principle about “the last clear” chance, would call for application in a suit between
the owners and drivers of the two colliding vehicles. It does not arise where a
passenger demands responsibility from the carrier to enforce its contractual
obligations. For it would be inequitable to exempt the negligent driver of the jeepney
and its owners on the ground that the other driver was likewise guilty of negligence.”
This was the ruling in Anuran, et al. v. Buño et al., G.R. Nos. L-21353 and L-21354, May
20, 1966, 17 SCRA 224. Thus, the respondent court erred in applying said doctrine.
On the presumption that drivers who bump the rear of another vehicle guilty and the
cause of the accident, unless contradicted by other evidence, the respondent court
said:
. . . the jeepney had already executed a complete turnabout and at the time of impact
was already facing the western side of the road. Thus the jeepney assumed a new
frontal position vis a vis, the bus, and the bus assumed a new role of defensive driving.
The spirit behind the presumption of guilt on one who bumps the rear end of another
vehicle is for the driver following a vehicle to be at all times prepared of a pending
accident should the driver in front suddenly come to a full stop, or change its course
either through change of mind of the front driver, mechanical trouble, or to avoid an
accident. The rear vehicle is given the responsibility of avoiding a collision with the
front vehicle for it is the rear vehicle who has full control of the situation as it is in a
position to observe the vehicle in front of it.
The above discussion would have been correct were it not for the undisputed fact that
the U-turn made by the jeepney was abrupt. The jeepney, which was then traveling on
the eastern shoulder, making a straight, skid mark of approximately 35 meters, crossed
the eastern lane at a sharp angle, making a skid mark of approximately 15 meters from
the eastern shoulder to the point of impact (Exhibit “K” Pascua). Hence, delos Reyes
could not have anticipated the sudden U-turn executed by Manalo. The respondent
court did not realize that the presumption was rebutted by this piece of evidence.

STREET, J.:
This is a petition for a writ of mandamus filed in this court by the Ynchausti Steamship
Company to compel the Purchasing Agent of the Philippine Islands and the Insular
Auditor to sign, countersign, and deliver to the petitioner a warrant upon the
Treasurer of the Philippine Islands for the sum of P82.79 in satisfaction of a claim for
that amount, which is alleged to be due the petitioner as a common carrier for freight
earned in transporting for the Government two distinct consignments of mineral oil
from Manila to two other ports in the Philippine Islands.  After the defendants had
duly answered, denying all the allegations of the petition except such as relate to the
character and places of residence of the parties to the petition (which are admitted)
the controversy was submitted for determination by this court upon an agreed
statement of facts as follows:

"On July 23, 1918, the Government of the Philippine Islands, acting by and through the
respondent Insular  Purchasing Agent, employed the services of the petitioner,
Ynchausti Steamship Co., a common carrier, for the transportation, on board the
steamship Venus, from the port of Manila to the port of Aparri, Cagayan, of a
consignment of merchandise, consisting of thirty (30) cases of 'White Rose' mineral oil
of two five-gallon cans to the case; and on September 18, 1918, the said Government
likewise employed the services of petitioner for the transportation on board the
steamship Venus, from Manila to Aparri, Cagayan, of ninety-six cases of 'Cock' brand
mineral oil, ten gallons to the case.  The goods were delivered by the shipper to the
carrier, which accordingly received them, and to evidence the contract of
transportation, the parties duly executed and delivered what is popularly called the
Government bill of lading (General Form 9-A), hereto attached, marked Exhibit A and
made a part hereof, wherein and whereby it was stipulated that the carrier, the
petitioner Ynchausti & Co., received the above-mentioned supplies in apparent good
condition, obligating itself to carry said supplies to the place agreed upon, in
accordance with the authorized and prescribed rates and classifications, and subject to
the law of common carriers in force on the date of the shipment, and to the conditions
prescribed by the Insular Collector of Customs in Philippine Marine Regulations at
page 16 under the heading of 'Bill of Lading Conditions,' hereto attached, marked
Exhibit B and made a part hereof.

"Upon the delivery of the said shipment of 'Cock' brand oil the consignee claimed
that one case was delivered empty, and noted such claim upon the bill of lading; and
upon the delivery of the said shipment of 'White Rose,' brand oil the consignee claimed
that one case was delivered empty, and noted said claim upon the bill of lading.

"Thereafter, notwithstanding the protestations of the petitioner, Ynchausti Steamship

Co., that said shortages were due to causes entirely unknown to it, and were not due to
any fault or negligence on its part, or on the part of its agents or servants, the Acting
Insular Purchasing Agent of the Philippine Islands notified the  petitioners herein that
after due investigation the Insular Auditor found and decided that the leakages of the
two whole cases were due to its negligence and that the deduction of the sum of
P22.53, the invoice  value of the goods lost, and held by the Auditor to be the true value
thereof had been authorized by the said Insular Auditor.

"Petitioner thereupon protested against the threatened deduction, and demanded that
it be paid the full amount due for the transportation of the two said shipments of
merchandise, to wit, the sum of P82.79, as shown by its transportation voucher
presented in this cause, hereto attached, marked Exhibit C and made a part hereof.

"Thereafter, notwithstanding the protest and demand of the petitioner as aforesaid, the
Insular Auditor, in conformity with his ruling, declined and still declines to issue to the
petitioner a warrant for the full sum of P82.79,and has tendered to it a warrant for the
sum of P60.26, which the petitioner has refused to accept.

"The sum of P22.53 authorized to be deducted by the Insular Auditor, as appears

herein, has not at any time been liquidated by consent, agreement, or by the judgment
of any court of competent jurisdiction."
Upon a perusal of the foregoing agreed statement it will be seen that  the present
litigation had its origin in a situation practically identical with that considered by this
court in Compaiiia General de Tabacos vs. French and Unson (39 Phil., 34).  It will be
noted, however, that the case mentioned was decided upon demurrer, while the one
now before us is to be heard and determined upon the petition, answer, and the
admitted facts.

We note that in this case, as in the case of Compania General de Tabacos  vs. French
and Unson (supra), the petition alleges that the leakage of the lost gasoline was due to
causes unknown to the petitioner and was not due to any fault or negligence of
petitioner, its agents, or servants.  The respondents, by demurring to the petition in
the earlier case, admitted that allegation.  In the case now before us that allegation is
put in issue, and we find nothing in the admitted statement of facts to support it.  It
results that if that allegation is material to the relief here sought, the petition must fail.
We are of the opinion that the allegation in question is material and  that the relief
sought in this case cannot be granted.

In section 646 of the Administrative Code it is provided that when Government

property is transmitted from one place to another by carrier, it shall be upon proper
bill of lading, or receipt, from  such carrier; and it shall be the duty of the consignee, or
his representative, to make full notation of any evidence of loss, shortage, or damage,
upon the bill of lading, or receipt, before accomplishing it.  It is admitted by the
petitioner in the agreed statement of facts that the consignee, at the, time the oil was
delivered, noted the loss in the present case upon the two respective bills of lading. 
The notation of these losses by the consignee, in obedience to the precept of section
646 of the Administrative Code, is competent evidence to show that the shortage in
fact existed.  As the petitioner admits that the oil was  received by it for carriage and
inasmuch as the fact of loss is proved in the  manner just  stated, it results that there is
a presumption that the petitioner was to blame for the loss; and it was incumbent
upon the petitioner in order to entitle it to relief in this case to rebut that presumption
by proving, as is alleged in the petition, that the loss was not due to any fault or
negligence of the petitioner.

The mere proof of delivery of goods in good order to a carrier, and of their arrival at
the place of destination in bad order, makes out a prima facie case against the carrier,
so that if no explanation is given as to how the injury occurred, the carrier must be
held responsible.  (4 R. C. L.,  p. 917.)  It is incumbent upon the carrier to prove that
the  loss was due to accident or some other circumstance inconsistent with its"
liability.  (Articles 361-363, Code of Commerce.)  Indeed, if the Government of the
Philippine Islands had instituted an action in a court of law against the petitioner to
recover the value of the oil lost while these consignments, were in the course of
transportation, it would, upon the facts appearing before us, have been entitled to
judgment.

From this it is apparent that the mandamus prayed for cannot be granted.  It is a rule
of universal application that a petition for extraordinary relief of the character here
sought must show merit.  That is, the petitioner's right to relief must be clear.  Such
cannot be said to be the case where, as here, a presumption of responsibility on the
part of the petitioner stands unrefuted upon the record.

We are of the opinion that, in the absence of proof showing that the carrier was not at
fault in respect to the matter under discussion, the Insular Auditor was entitled to
withhold, from the amount admittedly due to the petitioner for the freight charges, a
sum sufficient to cover the value of the oil lost in transit.

The petition will be dismissed, with costs against the petitioner.

Mirasol v The Robert Dollar Co. (G.R. No. L-29721)

Facts:
Shippers who are forced to ship goods on an ocean liner or any other ship have some
legal rights, and when goods are delivered on board ship in good order and condition,
and the shipowner delivers them to the shipper in bad order and condition, it then
devolves upon the shipowner to both allege and prove that the goods were damaged by
the reason of some fact which legally exempts him from liability; otherwise, the
shipper would be left without any redress, no matter what may have caused the
damage.

As a third special defense, defendant quoted clause 13 of the bill of lading, in which it is
stated that in no case shall it be held liable “for or in respect to said merchandise or
property beyond the sum of S250 for any piece, package or any article not enclosed in a
package, unless a higher value is stated herein and ad valorem freight paid or assessed
thereon,” and that there was no other agreement.

The plaintiff wrote the defendant a letter as follows: "I wish to file claim of damage."
Plaintiff contends that he is entitled to P700 for his Encyclopedia Britannica which was
damaged during shipment.

Defendant alleges that the damage, if any, was caused by “sea water,” and that the bill
of lading exempts defendant from liability for that cause. That damage by “sea water” is
a shipper’s risk, and that defendant is not liable.

Issue: Whether or not damage by sea water is a shipper's risk.

Held:

In the case of The Kengsington decided by the Supreme Court of the U.S.:
The stipulation in a steamship passenger's ticket, which compels him to value his
baggage, at a certain sum, far less than it is worth, or, in order to have a higher value
put upon it, to subject it to the provisions of the Harter Act, by which the carrier would
be exempted from all the liability therefore from
errors in navigation or management of the vessel of other negligence is unreasonable
and in conflict with public policy.

In the case, defendant having received the two boxes in good condition, its legal duty
was to deliver them to the plaintiff in the same condition in which it received them.
From the time of their delivery to the defendant in New York until they are delivered
to the plaintiff in Manila, the boxes were under the control and supervision of the
defendant and beyond the control of the plaintiff. The defendant having admitted that
the boxes were damaged while in transit and in its possession, the burden of proof
then shifted, and it devolved upon the defendant to both allege and prove that the
damage was caused by reason of some fact which exempted it from liability. As to how
the boxes were damaged, when or where, was a matter peculiarly and exclusively
within the knowledge of the defendant and in the very nature of things could not be in
the knowledge of the plaintiff. To require the plaintiff to prove as to when and how the
damage was caused would force him to call and rely upon the employees of the
defendant’s ship, which in legal effect would be to say that he could not recover any
damage for any reason. That is not the law.

Shippers who are forced to ship goods on an ocean liner or any other ship have some
legal rights, and when goods are delivered on board ship in good order and condition,
and the shipowner delivers them to the shipper in bad order and condition, it then
devolves upon the shipowner to both allege and prove that the goods were damaged by
the reason of some fact which legally exempts him from liability; otherwise, the
shipper would be left without any redress, no matter what may have caused the
damage.

The defendant has not even attempted to prove that the two cases were wet with sea
water by fictitious event, force majeure or nature and defect of the things themselves.
Consequently, it must be presumed that it was by causes entirely distinct and in no
manner imputable to the plaintiff, and of which the steamer President Garfield or any
of its crew could not have been entirely unaware.

The fact that the cases were damaged by “sea water,” standing alone and within itself,
is not evidence that they were damaged by force majeure or for a cause beyond the
defendant’s control. The words “perils of the sea,” as stated in defendant’s brief apply
to “all kinds of marine casualties, such as shipwreck, foundering, stranding,” and
among other things, it is said: “Tempest, rocks, shoals, icebergs and other obstacles are
within the expression,” and “where the peril is the proximate cause of the loss, the
shipowner is excused.” “Something fortuitous and out of the ordinary course is
involved in both words ‘peril’ or ‘accident’.”

EREZO VS. JEPTE

Appeal from a judgment of the Court of First Instance of Manila ordering defendant to
pay plaintiff Gaudioso Erezo P3,000 on the death of Ernesto Erezo, son of plaintiff
Gaudioso Erezo.

Defendant-appellant is the registered owner of a six by six truck bearing plate No. TC-
1253. On August 9, 1949, while the same was being driven by Rodolfo Espino y Garcia, it
collided with a taxicab at the intersection of San Andres and Dakota Streets, Manila. As
the truck went off the street, it hit Ernesto Erezo and another, and the former suffered
injuries, as a result of which he died. The driver was prosecuted for homicide through
reckless negligence in criminal case No. 10663 of the Court of First Instance of Manila.
The accused pleaded guilty and was sentenced to suffer imprisonment and to pay the
heirs of Ernesto Erezo the sum of P3,000. As the amount of the judgment could not be
enforced against him, plaintiff brought this action against the registered owner of the
truck, the defendant-appellant. The circumstances material to the case are stated by
the court in its decision:

"The defendant does not deny that at the time of the fatal accident the cargo truck
driven by Rodolfo Espino y Garcia was registered in his name. He, however, claims that
the vehicle belonged to the Port Brokerage, of which he was the broker at the time of
the accident. He explained, and his explanation was corroborated by Policarpio Franco,
the manager of the corporation, that the trucks of the corporation were registered in
his name is a convenient arrangement so as to enable the corporation to pay the
registration fee with his backpay as a pre-war government employee. Franco, however,
admitted that the arrangement was not known to the Motor Vehicles Office."
The trial court held that as the defendant-appellant represented himself to be the
owner of the truck and the Motor Vehicles Office, relying on his representation,
registered the vehicle in his name, the Government and all persons affected by the
representation had the right to rely on his declaration of ownership and registration. It,
therefore, held that defendant-appellant is liable because he cannot be permitted to
repudiate his own declaration. (Sec. 68 [a], Rule 123, and Art. 1431, New Civil Code.)

Against the judgment, the defendant has prosecuted at this appeal claiming that the
time of the accident the relation of employer and employee between the driver and
defendant-appellant was not established, it having been proved at the trial that the real
owner of the truck the Port Brokerage, of which defendant-appellant was merely a
broker. We find no merit or justice in the above contention. In previous decisions, We
already have held that the registered owner of a certificate of public convenience is
liable to the public for the injuries or damages suffered by passengers or third per- sons
caused by the operation of said vehicle, even though the same had been transferred to
a third person. (Montoya vs. Ignacio, G. R. No. L-5S68, Dec. 29, 1953; Eoque vs. Malibay
Transit, Inc., 1 G. R. No. L-8561, Nov. 18, 1955; Vda. de Medina vs. Cresencia, G. R. No.
L-8194, 52 off. Gaz.. [10] 4606.) The principle upon which this doctrine is based is that
in dealing with vehicles registered under the Public Servive Law, the public has the
right to assume or presume that the registered owner is the actual owner thereof, for it
would be difficult for the public to enforce the actions that they may have for injuries
caused to them by the vehicles being negligently operated if the public should be
required to prove who the actual owner is. How would the public or third persons
know against whom to enforce their rights in case of subsequent transfers of the
vehicles? We do not imply by this doctrine, however, that the registered owner may
not recover whatever amount he had paid by virtue of his liability to third persons
from the person to whom he had actually sold, assigned or conveyed the vehicle.

Under the same principle the registered owner of any vehicle, even if not used for a
public service, should primarily be responsible to the public or to third persons for
injuries caused the latter while the vehicle is being driven on the highways or streets.
The members of the court are in agreement that the defendant- appellant should be
held liable to plaintiff-appellee for the injuries occasioned to the latter because of the
negligence of the driver, even if the defendant-appellant was no longer the owner of
the vehicle at the time of the damage because he had previously sold it to another, that
is the legal basis for his (defendant-appellant's) liability?

There is a presumption that the owner of the guilty vehicle is the defendant-appellant
as he is the registered owner in the Motor Vehicles Office. Should he not be allowed to
prove the truth, that he had sold it to another and thus shift the responsibility for the
injury to the real and actual owner? The defendant should the affirmative of this
proposition; the trial court held the negative.

The Revised Motor Vehicles Law (Act No. 3992, as amended) provides that no vehicle
may be used or operated upon any public highway unless the same is properly
registered. It has been stated that the system of licensing and the requirement that
each machine must carry a registration number, conspicuously displayed, is one of the
precautions taken to reduce the danger of injury to pedestrians and other travellers
from the careless management of automobiles, and to furnish a means, of ascertaining
the identity of persons violating the laws and ordinances, regulating the speed and
operation of machines upon the highways (2 R. C. L. 1176). Not only are vehicles to be
registered and that no motor vehicles are to be used or operated without being
properly registered for the current year, but that dealers in motor vehicles shall furnish
the Motor Vehicles Office a report showing the name and address of each purchaser of
motor vehicle during the previous month and the manufacturers serial number and
motor number. (Sec, 5 [c], Act No. 3992, as amended.)

Registration is required not to make said registration the operative act by which
ownership in vehicles is transferred, as in land registration cases, because the
administrative proceeding of registration does not bear any essential relation to the
contract of sale between the parties (Chinchilla vs. Rafel and Verdaguer, 39 Phil. 888),
but to permit the use and operation of the vehicle upon any public highway (Sec. 5 [a],
Act No. 3992, as amended). The main aim of motor vehicle registration is to identify
the owner so that if any accident happens, or that any damage or injury is caused by
the vehicle on the public highways, responsibility therefor can be fixed on a definite
individual, the registered owner. Instances are numerous where vehicles running on
public highways caused accidents or injuries to pedestrians or other vehicles without
positive identification of the owner or drivers, or with very scant means of
identification. It is to forestall these circumstances, so inconvenient or prejudicial to
the public, that the motor vehicle registration is primarily ordained, in the interest of
the determination of persons responsible for damages or injuries caused on public
highways.

"One of the principal purposes of motor vehicle legislation is identification of the

vehicle and of the operator, in case of accident; and another is that the knowledge that
means of detection are always available may act as a deterrent from lax observance of
the law and of the rules of conservative and safe operation. Whatever purpose there
may be in these statutes, it is subordinate at the last to the primary purpose of
rendering it certain that the violator of the law or of the rules of safety shall not escape
because of lack of means to discover him. The purpose of the statute is thwarted, and
the displayed number becomes a 'snare and delusion; if courts would entertain such
defenses as that put forward by appellee in this case. No responsible person or
corporation could be held liable for the most outrageous acts of negligence, if they
should be allowed to place a middleman between them and the public, and escape
liability by the manner in which they recompense their servants." (King vs. Brenham
Automobile Co., 145 S. W 278, 279)
With the above policy in mind, the question that defendant-appellant poses is: Should
not the registered owner be allowed at the trial to prove who the actual and real owner
is, and in accordance with such proof escape or evade responsibility and lay the same
on the person actually owning the vehicle? We hold with the trial court that the law
does not allow him to do so; the law, with its aim and policy in mind, does not relieve
him directly of the responsibility that the law fixes and places upon him as an incident
or consequence of registration. Were a registered owner allowed to evade
responsibility by proving who the supposed transferee or owner is, it would be easy for
him, by collusion with others or otherwise, to escape said responsibility and transfer
the same to an indefinite person, or to one who possesses no property with which to
respond financially for the damage or injury done. A victim of recklessness on the
public highways is usually without means to discover or identify the person actually
causing the injury or damage. He has no means other than by a recourse to the
registration in the Motor Vehicles Office to determine who the owner is. The
protection that the law aims to extend to him would become illusory were the
registered owner given the opportunity to escape liability by disproving his ownership.
If the policy of the law is to be enforced and carried out, the registered owner should
not be allowed to prove the contrary to the prejudice of the person injured, that is, to
prove that a third person or another has become the owner, so that he may thereby be
relieved of the responsibility to the injured person.

The above policy and application of the law may appear quite harsh and would seem to
conflict with truth and justice. We do not think it is so. A registered owner who has
already sold or transferred a vehicle has the recourse to a third-party complaint, in the
same action brought against him to recover for the damage or injury done, against the
vendee or transferee of the vehicle. The inconvenience of the suit is no justification for
relieving him of liability; said inconvenience is the price he pays for failure to comply
with the registration that the law demands and requires.

In synthesis, we hold that the registered owner, the defendant-appellant herein, is

primarily responsible for the damage caused to the vehicle of the plaintiff-appellee, but
he (defendant-appellant) has a right to be indemnified by the real or actual owner of
the amount that he may be required to pay as damage for the injury caused to the
plaintiff-appellant.

The judgment appealed from is hereby affirmed, with costs against defendant-
appellant.
ABELARDO LIM v. CA, GR No. 125817, 2002-01-16
Facts:
Sometime in 1982 private respondent Donato Gonzales purchased an Isuzu passenger
jeepney from Gomercino Vallarta,  holder of a certificate of public convenience for the
operation of public utility vehicles plying the Monumento-Bulacan route.  While
private respondent
Gonzales continued offering the jeepney for public transport services he did not have
the registration of the vehicle transferred in his name nor did he secure for himself a
certificate of public convenience for its operation.   Thus Vallarta remained on record
as its... registered owner and operator.
The jeepney collided with a ten-wheeler-truck owned by petitioner and driven by his
co-petitioner Esmadito Gunnaban.  Gunnaban owned responsibility for the accident.
Petitioner Lim negotiated with private respondent and offered to have the passenger
jeepney repaired at his shop. Respondent however did not accept the offer... instead,
private respondent demanded a brand-new jeep or the amount of P236,000.00. The
filing of the complaint for damages by private respondent against petitioners.
Issues:
When a passenger jeepney covered by a certificate of public convenience is sold to
another who continues to operate it under the same certificate of public convenience
under the so-called kabit system, and in the course thereof the vehicle meets an
accident through the fault of another vehicle, may the new owner sue for damages
against the erring vehicle?
Ruling:
The kabit system is an arrangement whereby a person who has been granted a
certificate of public convenience allows other persons who own motor vehicles to
operate them under his license, sometimes for a fee or percentage of the earnings.
Although the parties to such an agreement are not outrightly penalized by law, the
kabit system is invariably recognized as being contrary to public policy and therefore
void and inexistent under Art. 1409 of the Civil Code.
In the early case of Dizon v. Octavio[10] the Court explained that one of the primary
factors considered in the granting of a certificate of public convenience for the
business of public transportation is the financial capacity of the holder of the... license,
so that liabilities arising from accidents may be duly compensated.   The  kabit  system
renders illusory such purpose and, worse, may  still be availed of by the grantee to
escape civil liability caused by a negligent use of a vehicle... owned by another and
operated under his license.
For the safety of passengers and the public who may have been wronged and deceived
through the baneful kabit system, the registered owner of the vehicle is not allowed to
prove that... another person has become the owner so that he may be thereby relieved
of responsibility.  Subsequent cases affirm such basic doctrine.
In the present case it is at 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.Private respondent has the right
to proceed against petitioners for the damage caused on his passenger jeepney as well
as on his business.

HERMINIO MARIANO v. ILDEFONSO C. CALLEJAS

Facts:
Petitioner Herminio Mariano, Jr. is the surviving spouse of Dr. Frelinda Mariano who
was a passenger of a Celyrosa Express bus bound for Tagaytay when she met her death.
Respondent Ildefonso C. Callejas is the registered owner of Celyrosa Express, while
respondent Edgar de Borja was the driver of the bus on which the deceased was a
passenger.
At around 6:30 p.m. on November 12, 1991, along Aguinaldo Highway, San Agustin,
Dasmariñas, Cavite, the Celyrosa Express bus, carrying Dr. Mariano as its passenger,
collided with an Isuzu truck with trailer bearing plate numbers PJH 906 and TRH 531.
The passenger bus was bound... for Tagaytay while the trailer truck came from the
opposite direction, bound for Manila. The trailer truck bumped the passenger bus on
its left middle portion. Due to the impact, the passenger bus fell on its right side on the
right shoulder of the highway and caused the death... of Dr. Mariano and physical
injuries to four other passengers. Dr. Mariano was 36 years old at the time of her death.
She left behind three minor children, aged four, three and two years.
Petitioner filed a complaint for breach of contract of carriage and damages against
respondents for their failure to transport his wife and mother of his three minor
children safely to her destination. Respondents denied liability for the death of Dr.
Mariano. They claimed that... the proximate cause of the accident was the recklessness
of the driver of the trailer truck which bumped their bus while allegedly at a halt on
the shoulder of the road in its rightful lane. Thus, respondent Callejas filed a third-
party complaint against Liong Chio Chang, doing... business under the name and style
of La Perla Sugar Supply, the owner of the trailer truck, for indemnity in the event that
he would be held liable for damages to petitioner.
In the case at bar, the trial court, in its Decision dated September 13, 1999, found
respondents Ildefonso Callejas and Edgar de Borja, together with Liong Chio Chang,
jointly and severally liable to pay petitioner damages and costs of suit.
Respondents Callejas and De Borja appealed to the Court of Appeals, contending that
the trial court erred in holding them guilty of breach of contract of carriage.

Issues:
The decision of the Honorable court of appeals, special fourteenth division is not in
accord with the factual basis of the case.
Ruling:
In accord with the above provisions, Celyrosa Express, a common carrier, through its
driver, respondent De Borja, and its registered owner, respondent Callejas, has the
express obligation "to carry the passengers safely as far as human care and foresight
can provide, using the... utmost diligence of very cautious persons, with a due regard
for all the circumstances,"[11] and to observe extraordinary diligence in the discharge of
its duty. The death of the wife of the petitioner in the course of transporting her to her
destination... gave rise to the presumption of negligence of the carrier. To overcome
the presumption, respondents have to show that they observed extraordinary diligence
in the discharge of their duty, or that the accident was caused by a fortuitous event.
While the law requires the highest degree of diligence from common carriers in the
safe transport of their passengers and creates a presumption of negligence against
them, it does not, however, make the carrier an insurer of the absolute safety of its...
passengers.
Article 1756 of the Civil Code, in creating a presumption of fault or negligence on the
part of the common carrier when its passenger is injured, merely relieves the latter, for
the time being, from introducing evidence to fasten the negligence on the former,
because the... presumption stands in the place of evidence. Being a mere presumption,
however, the same is rebuttable by proof that the common carrier had exercised
extraordinary diligence as required by law in the performance of its contractual
obligation, or that the injury suffered by... the passenger was solely due to a fortuitous
event.
Thus, it is clear that neither the law nor the nature of the business of a transportation
company makes it an insurer of the passenger's safety, but that its liability for personal
injuries sustained by its passenger rests upon its negligence, its failure to exercise the...
degree of diligence that the law requires.
In the case at bar, petitioner cannot succeed in his contention that respondents failed
to overcome the presumption of negligence against them. The totality of evidence
shows that the death of petitioner's spouse was caused by the reckless negligence of
the driver of the Isuzu... trailer truck which lost its brakes and bumped the Celyrosa
Express bus, owned and operated by respondents.

HERNANDEZ v. DOLOR
Facts:
Boyet Dolor and Oscar Valmocina died as a result of a collision between an owner and
the driver.
During the trial, the following were established:

 The owner type jeep was travelling at a moderate speed

 The passenger jeepney was travelling fast when it bumped into the owner
 Petitioner Juan Gonzales obtained his professional driver’s license only 3
months before the accident occurred.
 Hernandez spouses leases the jeep to the driver on a daily basis.

Hernandez spouses are contending that they should not be impleaded in the case since
they were not in the jeep during the accident. They also claimed that there is no
employer-employee relationship that exists between them and the driver since they
only lease the jeep to the latter.

Trial Court held rendered the decision in favor of the victims and held Hernandez
spouses solidarily liable. CA affirmed the decision but with a few modifications on the
amount of the damages.

Issue:
WON Hernandez spouses are solidarily liable with Juan Gonzales
Held:
Hernandez spouses are solidarily liable.

Even though they were not in the jeep during the accident, they are still answerable
under several provisions of the Civil Code Article 2180 employers shall be liable for the
damages caused by their employees and household helpers acting within the scope of
their assigned tasks, even though eh former are not engaged in any business or activity
Article 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if there
is no pre- existing contractual relation between the parties, is called a quasi-delict and
is governed by the provisions of this Chapter
While the above provisions do not expressly provide for the solidary liability, they
should be read in consonance with Article 2180 – one can be liable for the acts or
omission of another whom he is responsible for, meaning that an employer is
accountable for the actions of his employees. Article 2194 categorically states that
responsibility of two or more persons who are liable for quasi-delict is solidary.
The Hernandez spouses maintained that Julian Gonzales is not their employee because
the latter pays them daily for the use of the jeepney. They argued that they are
practicing a lease agreement using the “boundary system”. SC held that there exists an
employer-employee relationship because by agreeing to the Hernandez, there would
be a villation of the Public Service Law and we are going to place the riding public at
the mercy of reckless and irresponsible drivers because most drivers are in no position
to pay for damages when accidents occur.
C. DURATION OF RESPONSIBILITY

CIA MARITIMA V. INSURANCE CO. OF NORTH AMERICA

FACTS:
October, 1952: Macleod and Company of the Philippines (Macleod) contracted by
telephone the services of the Compañia Maritima (CM), a shipping corporation, for:
shipment of 2,645 bales of hemp from the Macleod's Sasa private pier at Davao City to
Manila subsequent transhipment to Boston, Massachusetts, U.S.A. on board the S.S. Steel
Navigator.
This oral contract was later on confirmed by a formal and written booking issued by
Macleod's branch office in Sasa and handcarried to CM's branch office in Davao in
compliance with which the CM sent to Macleod's private wharf LCT Nos. 1023 and 1025 on
which the loading of the hemp was completed on October 29, 1952. The 2 lighters were
manned each by a patron and an assistant patron.
The patrons of both barges issued the corresponding carrier's receipts and that issued by
the patron of Barge No. 1025 reads in part:
Received in behalf of S.S. Bowline Knot in good order and condition from MACLEOD
AND COMPANY OF PHILIPPINES, Sasa Davao, for transhipment at Manila onto S.S.
Steel Navigator.
Early hours of October 30: LCT No. 1025 sank, resulting in the damage or loss of 1,162
bales of hemp loaded therein. Macleod promptly notified the carrier's main office in
Manila and its branch in Davao advising it of its liability. The damaged hemp was brought
to Odell Plantation in Madaum, Davao, for cleaning, washing, reconditioning, and
redrying.
All abaca shipments of Macleod were insured with the Insurance Company of North
America against all losses and damages
Macleod filed a claim for the loss it suffered with the insurance company and was paid
P64,018.55
subrogation agreement between Macleod and the insurance company wherein the
Macleod assigned its rights over the insured and damaged cargo. October 28, 1953.: failing
to recover from the carrier P60,421.02 (amount supported by receipts), the insurance
company instituted the present action
CA affirmed RTC: ordering CM to pay the insurance co.
ISSUE: W/N there was a contract of carriage bet. CM (carrier) and Macleod (shipper)

HELD: YES. Affirmed

receipt of goods by the carrier has been said to lie at the foundation of the contract to
carry and deliver, and if actually no goods are received there can be no such contract
The liability and responsibility of the carrier under a contract for the carriage of goods
commence on their actual delivery to, or receipt by, the carrier or an authorized agent. ...
and delivery to a lighter in charge of a vessel for shipment on the vessel, where it is the
custom to deliver in that way
Whenever the control and possession of goods passes to the carrier and nothing remains
to be done by the shipper, then it can be said with certainty that the relation of shipper
and carrier has been established
As regards the form of the contract of carriage it can be said that provided that there is a
meeting of the minds and from such meeting arise rights and obligations, there should be
no limitations as to form.The bill of lading is not essential.
Even where it is provided by statute that liability commences with the issuance of the bill
of lading, actual delivery and acceptance are sufficient to bind the carrier marine
surveyors, attributes the sinking of LCT No. 1025 to the 'non-water-tight conditions of
various buoyancy compartments.
 LU DO & LU YM CORPORATION VS. BINAMIRA

FACTS:
On August 10, 1951, the Delta Photo Supply Company of New York shipped on board the
M/S "FERNSIDE" at New York, U.S.A., six cases of films and/or photographic supplies
consigned to the order of respondent I. V. Binamira. For this shipment, Bill of Lading No.
29 was issued. The ship arrived at the port of Cebu on September 23, 1951 and discharged
her cargo on September 23, and 24, 1951, including the shipment in question, placing it in
the possession and custody of the arrastre operator of said port, the Visayan Cebu
Terminal Company, Inc.
Petitioner, as agent of the carrier, hired the Cebu Stevedoring Company, Inc. to unload its
cargo. During the discharge, good order cargo was separated from the bad order cargo on
board the ship, and a separate list of bad order cargo was prepared by Pascual Villamor,
checker of the stevedoring company. All the cargo unloaded was received at the pier by
the Visayan Cebu Terminal Company Inc, arrastre operator of the port. This terminal
company had also its own checker, Romeo Quijano, who also recorded and noted down
the good cargo from the bad one. The shipment in question, was not included in the
report of bad order cargo of both checkers, indicating that it was discharged from the,
ship in good order and condition.
On September 26, 1951, three days after the goods were unloaded from the ship,
respondent took delivery of his six cases of photographic supplies from the arrastre
operator. He discovered that the cases showed signs of pilferage and, consequently, he
hired marine surveyors, R. J. del Pan & Company, Inc., to examine them. The surveyors
examined the cases and made a physical count of their contents in the presence of
representatives of petitioner, respondent and the stevedoring company. The surveyors
examined the cases and made a physical count of their contents in the presence of
representatives of petitioner, respondent and the stevedoring company. The finding of
the surveyors showed that some films and photographic supplies were missing valued at
P324.63.
It appears from the evidence that the six cases of films and photographic supplies were
discharged from the ship at the port of Cebu by the stevedoring company hired by
petitioner as agent of the carrier. All the unloaded cargo, including the shipment in
question, was received by the Visayan Cebu Terminal Company Inc., the arrastre operator
appointed by the Bureau of Customs. It also appears that during the discharge, the cargo
was checked both by the stevedoring company hired by petitioner as well as by the
arrastre operator of the port, and the shipment in question, when discharged from the
ship, was found to be in good order and condition. But after it was delivered to
respondent three days later, the same was examined by a marine surveyor who found that
some films and supplies were missing valued at P324.63.
Plaintiff filed an action in the Court of First Instance of Cebu against defendant to recover
the sum of P324.63 as value of certain missing shipment
TC: ordering defendant to pay plaintiff the sum of P216.84. CA Affirmed.
ISSUE:
WON carrier is responsible for the loss considering that the same occurred after the
shipment was discharged from the ship and placed in the possession and custody of the
customs authorities?
RULING:
No, Carrier is not responsible after the shipment was discharged and was place in the
custody of custom authorities. The Carrier shall not be liable in any capacity whatsoever
for any delay, nondelivery or misdelivery, or loss of or damage to the goods occurring
while the goods are not in the actual custody of the Carrier.
Responsibility of the Carrier in any capacity shall altogether cease and the goods shall be
considered to be delivered and at their own risk and expense in every respect when taken
into the custody of customs or other authorities.
It therefore appears clear that the carrier does not assume liability for any loss or damage
to the goods once they have been "taken into the custody of customs or other
authorities", or when they have been delivered at ship's tackle.
It is true that, as a rule, a common carrier is responsible for the loss, destruction or
deterioration of the goods it assumes to carry from one place to another unless the same
is due to any to any of the causes mentioned in Article 1734 on the new Civil Code, and
that, if the goods are lost, destroyed or deteriorated, for causes other that those
mentioned, the common carrier is presumed to have been at fault or to have acted
negligently, unless it proves that it has observed extraordinary diligence in their care
(Article 1735, Idem.), and that this extraordinary liability lasts from the time the goods are
placed in the possession of the carrier until they are delivered to the consignee, or "to the
person who has the right to receive them" (Article 1736, Idem.), but these provisions only
apply when the loss, destruction or deterioration takes place while the goods are in the
possession of the carrier, and not after it has lost control of them. The reason is obvious.
While the goods are in its possession, it is but fair that it exercise extraordinary diligence
in protecting them from damage, and if loss occurs, the law presumes that it was due to
its fault or negligence. This is necessary to protect the interest the interest of the owner
who is at its mercy. The situation changes after the goods are delivered to the consignee.
Wherefore, the decision appealed from is reversed, without pronouncement as to costs.
 DANGWA TRANSPORTATION CO., INC. VS. COURT OF APPEALS

FACTS:
Theodore Lardizabal was driving a passenger bus belonging to Dangwa
Transportation Co., Inc. The bus was at full stop between Bunkhouses 53 and 54 when
Pedro Cudiamat alighted. However, the bus suddenly accelerated forward and ran over
Pedro. Theodore first brought his other passengers and cargo to their respective
destinations before bring Pedro to Lepanto Hospital where he expired.

ISSUE:
Whether or not Dangwa Transportation Co., Inc. should be held liable for the negligence
of its driver Theodore.

HELD:
Yes. A public utility once it stops, is in effect making a continuous offer to bus
riders. The duty of the driver is not to make acts that would have the effect of increasing
peril to a passenger while he is attempting to board the same. Stepping and standing on
the platform of the bus is already considered a passenger and is entitled to all the rights
and protection pertaining to such a contractual relation. Thus, the duty extends to
boarding and alighting. The general rule is by contract of carriage, the carrier assumes the
express obligation to transport the passenger to his destination safely and observe
extraordinary diligence with due regard to all circumstance.
 CALALAS V. COURT OF APPEALS

Facts:
Private respondent Eliza Sunga, then freshman at Siliman University , took a passenger
jeepney owned and operated by petitioner Vicente Calalas. As the jeepney was filled to
capacity, 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 a let passenger off
and Sunga was about to give way to the outgoing passenger, an Izuzu truck driven by
Verena and owned by Salva bumped the left rear portion of the jeepney. Sunga sustained
multiple injuries and remained on a cast for three months.
Sunga filed a complaint for damages against Calalas, for breach of contract of carriage.
Calalas, on the other hand,filed a third party complaint against Francisco Salva, the owner
of the truck. The lower court rendered judgment against Salva and absolved Calalas of
liability.
It took cognizance of other case (Civil Case No. 3490), filed by Calalas against Salva and
Verena ,for quasi-delict, in which branch 37 of the same court held Salva and his driver
Verena jointly liable to Calalas for the damage to his jeepney
The CA reversed the lower courts ruling on the ground the ground that Sunga’s cause of
action was based on a contract of carriage, not quasi-deplict, and that the common carrier
failed to exercise the diligence required under the Civil Code. The appellate court
dismissed the third-party complaint against Salva and adjudged Calalas liable for
damages to Sunga.

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

Held:
Iin 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, Article 1756 of the Civil Code provides that common
carriers are presumed to have been at fault or have acted negligently unless they proved
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.
It is immaterial that the proximate cause of the collision between the jeepney and the
truck was the negligence of the truck driver. The doctrine of proximate cause is applicable
only in action 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 parties, it is the parties themselves who create
the obligation, and the function of the law is merely to regulate the relation thus created.

KAPALARAN BUS LINE VS. CORONADO

Facts:

The jeepney driven by Lope Grajera was then coming from Pila, Laguna and traversing
the an old highway towards Sta. Cruz collided with a KBL bus driven by its regular driver
Virgilio Llamoso. 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. The
sketch marked very clearly that the jeepney had already traversed the intersection when it
met the KBL bus head-on. It is also obvious that the point of impact was on the right lane
of the highway which is the lane properly belonging to the jeepney. Judging from the
testimony of Atty. Conrado L. Manicad and the sketch (Exhibit 'E'), the sequence of
events shows that the first vehicle to arrive at the intersection was the jeepney. Seeing
that 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. The KBL bus had no more room within which to stop without slamming into
the rear of the vehicle behind the car of Atty. Manicad. 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 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.
Issue:
Whether or not KAPALARAN BUS LINE (KBL) is liable for damages from the collision.

Ruling of the Court:

YES. KBL is liable for the damages in the collision.
The patent and gross negligence on the part of the petitioner Kapalaran's driver raised the
legal presumption that Kapalaran as employer was guilty of negligence either in the
selection or in the supervision of its bus driver, where the employer is held liable for
damages; it has of course a right of recourse against its own negligent employee. The
liability of the employer under Article 2180 of the Civil Code is direct and immediate; it is
not conditioned upon prior recourse against the negligent employee and a prior showing
of the insolvency of such employee. So far as the record shows, petitioner Kapalaran was
unable to rebut the presumption of negligence on its own part. The award of moral
damages against petitioner Kapalaran is not only entirely in order; it is also quite modest
consideirng Dionisio Shinyo's death during the pendency of this petition, a death
hastened by, if not directly due to, the grievous injuries sustained by him in the violent
collision.
 REGIONAL CONTAINER LINES OF SINGAPORE VS. THE NETHERLANDS
INSURANCE

Facts:

On October 20, 1995, 405 cartons of Epoxy Molding Compound were consigned to be
shipped from Singapore to Manila for Temic Telefunken Microelectronics Philippines. U-
Freight Singapore, a forwarding agent based in Singapore, contracted the services of
Pacific Eagle to transport the subject cargo. The cargo was packed, stored, and sealed by
Pacific Eagle in its Refrigerated Container. As the cargo was highly perishable, the inside
of the container had to be kept at a temperature of 0º Celsius. Pacific Eagle then loaded
the refrigerated container on board the M/V Piya Bhum, a vessel owned by RCL. To
insure the cargo against loss and damage, Netherlands Insurance issued a Marine Open
Policy in favor of Temic to cover all losses and damages to the shipment.

On October 25, 1995, the M/V Piya Bhum docked in Manila. After unloading the
refrigerated container, it was plugged to the power terminal of the pier to keep its
temperature constant. Fidel Rocha, Vice-President for Operations of Marines Adjustment
Corporation, conducted a protective survey of the cargo. They found that based on the
temperature chart, the temperature reading was constant from October 18, 1995 to
October 25, 1995 at 0º Celsius. However, at midnight of October 25, 1995, when the cargo
had already been unloaded from the ship, the temperature fluctuated with a reading of
33º Celsius. Rocha believed the fluctuation was caused by the burnt condenser fan motor
of the refrigerated container.

On November 9, 1995, Temic received the shipment. It found the cargo completely
damaged. Temic filed a claim for cargo loss against Netherlands Insurance, with
supporting claims documents. The Netherlands Insurance paid Temic the sum of
P1,036,497.00 under the terms of the Marine Open Policy. Temic then executed a loss and
subrogation receipt in favor of Netherlands Insurance. Netherlands Insurance filed a
complaint for subrogation of insurance settlement against RCL and its agent, EDSA
Shipping.
RCL and EDSA Shipping disclaim any responsibility for the loss or damage to the goods in
question. They contend that the cause of the damage to the cargo was the “fluctuation of
the temperature in the reefer van,” which fluctuation occurred after the cargo had already
been discharged from the vessel; no fluctuation, they point out, arose when the cargo was
still on board M/V Piya Bhum. As the cause of the damage to the cargo occurred after the
same was already discharged from the vessel and was under the custody of the arrastre
operator (International Container Terminal Services, Inc. or ICTSI), RCL and EDSA
Shipping posit that the presumption of negligence provided in Article 1735 of the Civil
Code should not apply.

ISSUE:

Whether or not RCL and EDSA Shipping are liable as common carriers under the theory
of presumption of negligence.

RULING:

Yes. A common carrier is presumed to have been negligent if it fails to prove that it
exercised extraordinary vigilance over the goods it transported. When the goods shipped
are either lost or arrived in damaged condition, a presumption arises against the carrier of
its failure to observe that diligence, and there need not be an express finding of
negligence to hold it liable.

To overcome the presumption of negligence, the common carrier must establish by

adequate proof that it exercised extraordinary diligence over the goods. It must do more
than merely show that some other party could be responsible for the damage.

In the present case, RCL and EDSA Shipping failed to prove that they did exercise that
degree of diligence required by law over the goods they transported. Indeed, there is
sufficient evidence showing that the fluctuation of the temperature in the refrigerated
container van, as recorded in the temperature chart, occurred after the cargo had been
discharged from the vessel and was already under the custody of the arrastre operator,
ICTSI. This evidence, however, does not disprove that the condenser fan, which caused
the fluctuation of the temperature in the refrigerated container, was not damaged while
the cargo was being unloaded from the ship. It is settled in maritime law jurisprudence
that cargoes while being unloaded generally remain under the custody of the carrier. RCL
and EDSA Shipping failed to dispute this.

RCL and EDSA Shipping could have offered evidence before the trial court to show that
the damage to the condenser fan did not occur: (1) while the cargo was in transit; (2)
while they were in the act of discharging it from the vessel; or (3) while they were
delivering it actually or constructively to the consignee. They could have presented proof
to show that they exercised extraordinary care and diligence in the handling of the goods,
but they opted to file a demurrer to evidence. As the order granting their demurrer was
reversed on appeal, the CA correctly ruled that they are deemed to have waived their
right to present evidence, and the presumption of negligence must stand.