G.R. No.

80447 January 31, 1989

BALIWAG TRANSIT, INC., Sta. Maria & Associates for petitioner.

Punzalan and Associates Law Office for respondents.

MELENCIO-HERRERA, J.:

On 10 April 1985 a Complaint for damages arising from breach of contract of carriage was filed by private
respondents, the Spouses Sotero Cailipan, Jr. and Zenaida Lopez, and their son George, of legal age, against
petitioner Baliwag Transit (Baliwag, for brevity). The Complaint alleged that George, who was a paying passenger
on a Baliwag bus on 17 December 1984, suffered multiple serious physical injuries when he was thrown off said
bus driven in a careless and negligent manner by Leonardo Cruz, the authorized bus driver, along Barangay
Patubig, Marilao, Bulacan. As a result, he was confined in the hospital for treatment, incurring medical expenses,
which were borne by his parents, the respondent Spouses, in the sum of about P200,000.00 plus other incidental
expenses of about P10,000.00.

On 26 April 1985 an Answer was filed by petitioner alleging that the cause of the injuries sustained by George was
solely attributable to his own voluntary act in that, without warning and provocation, he suddenly stood up from
his seat and headed for the door of the bus as if in a daze, opened it and jumped off while said bus was in motion, in
spite of the protestations by the driver and without the knowledge of the conductor.

Baliwag then filed a Third-Party Complaint against Fortune Insurance & Surety Company, Inc., on its third-party
liability insurance in the amount of P50,000.00. In its Answer, Fortune Insurance claimed limited liability, the
coverage being subject to a Schedule of Indemnities forming part of the insurance policy.

On 14 November 1985 and 18 November 1985, respectively, Fortune Insurance and Baliwag each filed Motions to
Dismiss on the ground that George, in consideration of the sum of P8,020.50 had executed a "Release of Claims"
dated 16 May 1985. These Motions were denied by the Trial Court in an Order dated 13 January 1986 as they were
filed beyond the time for pleading and after the Answer were already filed.

On 5 February 1986 Baliwag filed a Motion to Admit Amended Answer, which was granted by the Trial Court. The
Amended Answer incorporated the affirmative defense in the Motion to Dismiss to the effect that on 16 May 1985,
George bad been paid all his claims for damages arising from the incident subject matter of the complaint when he
executed the following "Release of Claims":

For and in consideration of the payment to me/us of the sum of EIGHT THOUSAND TWENTY and 50/100 PESOS
ONLY (P8,020.50), the receipt of which is hereby acknowledged, I/we, being of lawful age, do hereby release,
acquit and forever discharge Fortune Insurance and/or Baliwag transit, Inc. his/her heirs, executors and assigns,
from any and all liability now accrued or hereafter to accrue on account of any and all claims or causes of action
which I/we now or may here after have for personal injuries, damage to property, loss of services, medical
expenses, losses or damages of any and every kind or nature whatsoever, now known or what may hereafter
develop by me/us sustained or received on or about 17th day of December, 1984 through Reckless Imprudence
Resulting to Physical Injuries, and I/we hereby declare that I/we fully understand the terms of this settlement and
voluntarily accept said sum for the purpose of making a full and final compromise adjustment and settlement of
the injuries and damages, expenses and inconvenience above mentioned. (Rollo, p. 11)

During the preliminary hearing on the aforementioned affirmative defense, Baliwag waived the presentation of
testimonial evidence and instead offered as its Exhibit "1" the "Release of Claims" signed by George and witnessed
by his brother Benjamin L. Cailipan, a licensed engineer.
By way of opposition to petitioner's affirmative defense, respondent Sotero Cailipan, Jr. testified that be is the
father of George, who at the time of the incident was a student, living with his parents and totally dependent on
them for their support; that the expenses for his hospitalization were shouldered by his parents; and that they had
not signed the "Release of Claims."

In an Order dated 29 August 1986, the Regional Trial Court of Bulacan, Branch 20, 1 dismissed the Complaint and
Third-party Complaint, ruling that since the contract of carriage is between Baliwag and George L. Cailipan, the
latter, who is of legal age, had the exclusive right to execute the Release of Claims despite the fact that he is still a
student and dependent on his parents for support. Consequently, the execution by George of the Release of Claims
discharges Baliwag and Fortune Insurance.

Aggrieved, the Spouses appealed to respondent Court of Appeals.

On 22 October 1987, the Appellate Court rendered a Decision 2 setting aside the appealed Order and holding that
the "Release of Claims" cannot operate as a valid ground for the dismissal of the case because it does not have the
conformity of all the parties, particularly George's parents, who have a substantial interest in the case as they stand
to be prejudiced by the judgment because they spent a sizeable amount for the medical bills of their son; that the
Release of Claims was secured by Fortune Insurance for the consideration of P8,020.50 as the full and final
settlement of its liability under the insurance policy and not for the purpose of releasing Baliwag from its liability
as a carrier in this suit for breach of contract. The Appellate Court also ordered the remand of the case to the lower
Court for trial on the merits and for George to return the amount of P8,020.50 to Fortune Insurance.

Hence, this Petition for Review on certiorari by Baliwag assailing the Appellate Court judgment.

The issue brought to the fore is the legal effect of the Release of Claims executed by George during the pendency of
this case.

We hold that since the suit is one for breach of contract of carriage, the Release of Claims executed by him, as the
injured party, discharging Fortune Insurance and Baliwag from any and all liability is valid. He was then of legal
age, a graduating student of Agricultural Engineering, and had the capacity to do acts with legal effect (Article 37 in
relation to Article 402, Civil Code). Thus, he could sue and be sued even without the assistance of his parents.

Significantly, the contract of carriage was actually between George, as the paying passenger, and Baliwag, as the
common carrier. As such carrier, Baliwag was bound to carry its passengers safely as far as human care and
foresight could provide, and is liable for injuries to them through the negligence or wilful acts of its employees
(Articles 1755 and 1759, Civil Code). Thus, George had the right to be safely brought to his destination and Baliwag
had the correlative obligation to do so. Since a contract may be violated only by the parties thereto, as against each
other, in an action upon that contract, the real parties in interest, either as plaintiff or as defendant, must be parties
to said contract (Marimperio Compania Naviera, S.A. vs. Court of Appeals, No. L-40234, December 14, 1987, 156
SCRA 368). A real party-in-interest -plaintiff is one who has a legal right while a real party-in-interest-defendant is
one who has a correlative legal obligation whose act or omission violates the legal right of the former (Lee vs.
Romillo, Jr., G.R. No. 60973, May 28, 1988). In the absence of any contract of carriage between Baliwag and
George's parents, the latter are not real parties-in-interest in an action for breach of that contract.

The general rule of the common law is that every action must be brought in the name of the party whose legal right
has been invaded or infringed. 15 Enc. P1. & Pr. p. 484. "For the immediate wrong and damage the person injured
is the only one who can maintain the action." Id. p. 578. The person who sustains an injury is the person to bring an
action for the injury against the wrongdoer." Dicey parties to Actions, 347. (Cited in Green v. Shoemaker, 73 A 688,
23 L.R.A., N.S. 667).
There is no question regarding the genuineness and due execution of the Release of Claims. It is a duly notarized
public document. It clearly stipulates that the consideration of P8,020.50 received by George was "to release and
forever discharge Fortune Insurance and/or Baliwag from any and all liabilities now accrued or to accrue on
account of any and all claims or causes of action ... for personal injuries, damage to property, loss of services,
medical expenses, losses or damages of any and every kind or nature whatsoever, sustained by him on 17
December 1984 thru Reckless Imprudence Resulting to Physical Injuries." Consequently, the ruling of respondent
Appellate Court that the "Release of Claims" was intended only as the full and final settlement of a third-party
liability for bodily injury claim and not for the purpose of releasing Baliwag from its liability, if any, in a breach of a
contract of carriage, has to be rejected for being contrary to the very terms thereof. If the terms of a contract are
clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall
control (Article 1370, Civil Code). The phraseology "any and all claims or causes of action" is broad enough to
include all damages that may accrue to the injured party arising from the unfortunate accident.

The Release of Claims had the effect of a compromise agreement since it was entered into for the purpose of
making a full and final compromise adjustment and settlement of the cause of action involved. A compromise is a
contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already
commenced (Article 2028, Civil Code). The Release of Claims executed by the injured party himself wrote finish to
this litigation.

WHEREFORE, the Decision dated 22 October 1987 of respondent Court of Appeals is SET ASIDE, the Decision of the
Regional Trial Court of Bulacan, Branch 20, is REINSTATED, and the Complaint and Third-Party Complaint are
hereby ordered DISMISSED. No costs.

SO ORDERED.
G.R. No. 101089. April 7, 1993.

ESTRELLITA M. BASCOS, petitioners, vs. COURT OF APPEALS and RODOLFO A. CIPRIANO, respondents.

Modesto S. Bascos for petitioner. Pelaez, Adriano & Gregorio for private respondent.

SYLLABUS

1. CIVIL LAW; COMMON CARRIERS; DEFINED; TEST TO DETERMINE COMMON CARRIER. — Article 1732 of the
Civil Code defines a common carrier as "(a) person, corporation or firm, or association engaged in the business of
carrying or transporting passengers or goods or both, by land, water or air, for compensation, offering their
services to the public." The test to determine a common carrier is "whether the given undertaking is a part of the
business engaged in by the carrier which he has held out to the general public as his occupation rather than the
quantity or extent of the business transacted." . . . The holding of the Court in De Guzman vs. Court of Appeals is
instructive. In referring to Article 1732 of the Civil Code, it held thus: "The above article makes no distinction
between one whose principal business activity is the carrying of persons or goods or both, and one who does such
carrying only as an ancillary activity (in local idiom, as a "sideline"). Article 1732 also carefully avoids making any
distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one
offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguished
between a carrier offering its services to the "general public," i.e., the general community or population, and one
who offers services or solicits business only from a narrow segment of the general population. We think that
Article 1732 deliberately refrained from making such distinctions."

2. ID.; ID.; DILIGENCE REQUIRED IN VIGILANCE OVER GOODS TRANSPORTED; WHEN PRESUMPTION OF
NEGLIGENCE ARISES; HOW PRESUMPTION OVERCAME; WHEN PRESUMPTION MADE ABSOLUTE. — Common
carriers are obliged to observe extraordinary diligence in the vigilance over the goods transported by them.
Accordingly, they are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or
deteriorated. There are very few instances when the presumption of negligence does not attach and these
instances are enumerated in Article 1734. In those cases where the presumption is applied, the common carrier
must prove that it exercised extraordinary diligence in order to overcome the presumption . . . The presumption of
negligence was raised against petitioner. It was petitioner's burden to overcome it. Thus, contrary to her assertion,
private respondent need not introduce any evidence to prove her negligence. Her own failure to adduce sufficient
proof of extraordinary diligence made the presumption conclusive against her.

3. ID.; ID.; HIJACKING OF GOODS; CARRIER PRESUMED NEGLIGENT; HOW CARRIER ABSOLVED FROM LIABILITY.
— In De Guzman vs. Court of Appeals, the Court held that hijacking, not being included in the provisions of Article
1734, must be dealt with under the provisions of Article 1735 and thus, the common carrier is presumed to have
been at fault or negligent. To exculpate the carrier from liability arising from hijacking, he must prove that the
robbers or the hijackers acted with grave or irresistible threat, violence, or force. This is in accordance with Article
1745 of the Civil Code which provides: "Art. 1745. Any of the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy . . . (6) That the common carrier's liability for acts committed by
thieves, or of robbers who do not act with grave or irresistible threat, violences or force, is dispensed with or
diminished"; In the same case, the Supreme Court also held that: "Under Article 1745 (6) above, a common carrier
is held responsible — and will not be allowed to divest or to diminish such responsibility — even for acts of
strangers like thieves or robbers, except where such thieves or robbers in fact acted "with grave of irresistible
threat, violence of force," We believe and so hold that the limits of the duty of extraordinary diligence in the
vigilance over the goods carried are reached where the goods are lost as a result of a robbery which is attended by
"grave or irresistible threat, violence or force."
4. REMEDIAL LAW; EVIDENCE; JUDICIAL ADMISSIONS CONCLUSIVE. — In this case, petitioner herself has made
the admission that she was in the trucking business, offering her trucks to those with cargo to move. Judicial
admissions are conclusive and no evidence is required to prove the same.

5. ID.; ID.; BURDEN OF PROOF RESTS WITH PARTY WHO ALLEGES A FACT. — Petitioner presented no other proof
of the existence of the contract of lease. He who alleges a fact has the burden of proving it.

6. ID.; ID.; AFFIDAVITS NOT CONSIDERED BEST EVIDENCE IF AFFIANTS AVAILABLE AS WITNESSES. — While the
affidavit of Juanito Morden, the truck helper in the hijacked truck, was presented as evidence in court, he himself
was a witness as could be gleaned from the contents of the petition. Affidavits are not considered the best evidence
if the affiants are available as witnesses.

7. CIVIL LAW; OBLIGATIONS AND CONTRACTS; CONTRACT IS WHAT LAW DEFINES IT TO BE. — Granting that the
said evidence were not self-serving, the same were not sufficient to prove that the contract was one of lease. It
must be understood that a contract is what the law defines it to be and not what it is called by the contracting
parties.

DECISION

CAMPOS, JR., J p:

This is a petition for review on certiorari of the decision ** of the Court of Appeals in "RODOLFO A. CIPRIANO,
doing business under the name CIPRIANO TRADING ENTERPRISES plaintiff-appellee, vs. ESTRELLITA M. BASCOS,
doing business under the name of BASCOS TRUCKING, defendant-appellant," C.A.-G.R. CV No. 25216, the
dispositive portion of which is quoted hereunder:

"PREMISES considered, We find no reversible error in the decision appealed from, which is hereby affirmed in toto.
Costs against appellant." 1

The facts, as gathered by this Court, are as follows:

Rodolfo A. Cipriano representing Cipriano Trading Enterprise (CIPTRADE for short) entered into a hauling contract
2 with Jibfair Shipping Agency Corporation whereby the former bound itself to haul the latter's 2,000 m/tons of
soya bean meal from Magallanes Drive, Del Pan, Manila to the warehouse of Purefoods Corporation in Calamba,
Laguna. To carry out its obligation, CIPTRADE, through Rodolfo Cipriano, subcontracted with Estrellita Bascos
(petitioner) to transport and to deliver 400 sacks of soya bean meal worth P156,404.00 from the Manila Port Area
to Calamba, Laguna at the rate of P50.00 per metric ton. Petitioner failed to deliver the said cargo. As a
consequence of that failure, Cipriano paid Jibfair Shipping Agency the amount of the lost goods in accordance with
the contract which stated that:

"1. CIPTRADE shall be held liable and answerable for any loss in bags due to theft, hijacking and non-delivery or
damages to the cargo during transport at market value, . . ." 3

Cipriano demanded reimbursement from petitioner but the latter refused to pay. Eventually, Cipriano filed a
complaint for a sum of money and damages with writ of preliminary attachment 4 for breach of a contract of
carriage. The prayer for a Writ of Preliminary Attachment was supported by an affidavit 5 which contained the
following allegations:

"4. That this action is one of those specifically mentioned in Sec. 1, Rule 57 the Rules of Court, whereby a writ of
preliminary attachment may lawfully issue, namely:
"(e) in an action against a party who has removed or disposed of his property, or is about to do so, with intent to
defraud his creditors;"

5. That there is no sufficient security for the claim sought to be enforced by the present action;

6. That the amount due to the plaintiff in the above-entitled case is above all legal counterclaims;"

The trial court granted the writ of preliminary attachment on February 17, 1987.

In her answer, petitioner interposed the following defenses: that there was no contract of carriage since CIPTRADE
leased her cargo truck to load the cargo from Manila Port Area to Laguna; that CIPTRADE was liable to petitioner in
the amount of P11,000.00 for loading the cargo; that the truck carrying the cargo was hijacked along Canonigo St.,
Paco, Manila on the night of October 21, 1988; that the hijacking was immediately reported to CIPTRADE and that
petitioner and the police exerted all efforts to locate the hijacked properties; that after preliminary investigation,
an information for robbery and carnapping were filed against Jose Opriano, et al.; and that hijacking, being a force
majeure, exculpated petitioner from any liability to CIPTRADE.

After trial, the trial court rendered a decision *** the dispositive portion of which reads as follows:

"WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant ordering the latter to pay
the former:

1. The amount of ONE HUNDRED FIFTY-SIX THOUSAND FOUR HUNDRED FOUR PESOS (P156,404.00) as an (sic)
for actual damages with legal interest of 12% per cent per annum to be counted from December 4, 1986 until fully
paid;

2. The amount of FIVE THOUSAND PESOS (P5,000.00) as and for attorney's fees; and

3. The costs of the suit.

The "Urgent Motion To Dissolve/Lift preliminary Attachment" dated March 10, 1987 filed by defendant is DENIED
for being moot and academic.

SO ORDERED." 6

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

Consequently, petitioner filed this petition where she makes the following assignment of errors; to wit:

"I. THE RESPONDENT COURT ERRED IN HOLDING THAT THE CONTRACTUAL RELATIONSHIP BETWEEN
PETITIONER AND PRIVATE RESPONDENT WAS CARRIAGE OF GOODS AND NOT LEASE OF CARGO TRUCK.

II. GRANTING, EX GRATIA ARGUMENTI, THAT THE FINDING OF THE RESPONDENT COURT THAT THE
CONTRACTUAL RELATIONSHIP BETWEEN PETITIONER AND PRIVATE RESPONDENT WAS CARRIAGE OF GOODS
IS CORRECT, NEVERTHELESS, IT ERRED IN FINDING PETITIONER LIABLE THEREUNDER BECAUSE THE LOSS OF
THE CARGO WAS DUE TO FORCE MAJEURE, NAMELY, HIJACKING.

III. THE RESPONDENT COURT ERRED IN AFFIRMING THE FINDING OF THE TRIAL COURT THAT PETITIONER'S
MOTION TO DISSOLVE/LIFT THE WRIT OF PRELIMINARY ATTACHMENT HAS BEEN RENDERED MOOT AND
ACADEMIC BY THE DECISION OF THE MERITS OF THE CASE." 7

The petition presents the following issues for resolution: (1) was petitioner a common carrier?; and (2) was the
hijacking referred to a force majeure?
The Court of Appeals, in holding that petitioner was a common carrier, found that she admitted in her answer that
she did business under the name A.M. Bascos Trucking and that said admission dispensed with the presentation by
private respondent, Rodolfo Cipriano, of proofs that petitioner was a common carrier. The respondent Court also
adopted in toto the trial court's decision that petitioner was a common carrier, Moreover, both courts appreciated
the following pieces of evidence as indicators that petitioner was a common carrier: the fact that the truck driver of
petitioner, Maximo Sanglay, received the cargo consisting of 400 bags of soya bean meal as evidenced by a cargo
receipt signed by Maximo Sanglay; the fact that the truck helper, Juanito Morden, was also an employee of
petitioner; and the fact that control of the cargo was placed in petitioner's care.

In disputing the conclusion of the trial and appellate courts that petitioner was a common carrier, she alleged in
this petition that the contract between her and Rodolfo A. Cipriano, representing CIPTRADE, was lease of the truck.
She cited as evidence certain affidavits which referred to the contract as "lease". These affidavits were made by
Jesus Bascos 8 and by petitioner herself. 9 She further averred that Jesus Bascos confirmed in his testimony his
statement that the contract was a lease contract. 10 She also stated that: she was not catering to the general public.
Thus, in her answer to the amended complaint, she said that she does business under the same style of A.M. Bascos
Trucking, offering her trucks for lease to those who have cargo to move, not to the general public but to a few
customers only in view of the fact that it is only a small business. 11

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

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

But petitioner argues that there was only a contract of lease because they offer their services only to a select group
of people and because the private respondents, plaintiffs in the lower court, did not object to the presentation of
affidavits by petitioner where the transaction was referred to as a lease contract.

Regarding the first contention, the holding of the Court in De Guzman vs. Court of Appeals 14 is instructive. In
referring to Article 1732 of the Civil Code, it held thus:

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

Regarding the affidavits presented by petitioner to the court, both the trial and appellate courts have dismissed
them as self-serving and petitioner contests the conclusion. We are bound by the appellate court's factual
conclusions. Yet, granting that the said evidence were not self-serving, the same were not sufficient to prove that
the contract was one of lease. It must be understood that a contract is what the law defines it to be and not what it
is called by the contracting parties. 15 Furthermore, petitioner presented no other proof of the existence of the
contract of lease. He who alleges a fact has the burden of proving it. 16

Likewise, We affirm the holding of the respondent court that the loss of the goods was not due to force majeure.
Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods transported by
them. 17 Accordingly, they are presumed to have been at fault or to have acted negligently if the goods are lost,
destroyed or deteriorated. 18 There are very few instances when the presumption of negligence does not attach
and these instances are enumerated in Article 1734. 19 In those cases where the presumption is applied, the
common carrier must prove that it exercised extraordinary diligence in order to overcome the presumption.

In this case, petitioner alleged that hijacking constituted force majeure which exculpated her from liability for the
loss of the cargo. In De Guzman vs. Court of Appeals, 20 the Court held that hijacking, not being included in the
provisions of Article 1734, must be dealt with under the provisions of Article 1735 and thus, the common carrier is
presumed to have been at fault or negligent. To exculpate the carrier from liability arising from hijacking, he must
prove that the robbers or the hijackers acted with grave or irresistible threat, violence, or force. This is in
accordance with Article 1745 of the Civil Code which provides:

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

xxx xxx xxx

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

In the same case, 21 the Supreme Court also held that:

"Under Article 1745 (6) above, a common carrier is held responsible — and will not be allowed to divest or to
diminish such responsibility — even for acts of strangers like thieves or robbers except where such thieves or
robbers in fact acted with grave or irresistible threat, violence or force. We believe and so hold that the limits of the
duty of extraordinary diligence in the vigilance over the goods carried are reached where the goods are lost as a
result of a robbery which is attended by "grave or irresistible threat, violence or force."

To establish grave and irresistible force, petitioner presented her accusatory affidavit, 22 Jesus Bascos' affidavit, 23
and Juanito Morden's 24 "Salaysay". However, both the trial court and the Court of Appeals have concluded that
these affidavits were not enough to overcome the presumption. Petitioner's affidavit about the hijacking was based
on what had been told her by Juanito Morden. It was not a first-hand account. While it had been admitted in court
for lack of objection on the part of private respondent, the respondent Court had discretion in assigning weight to
such evidence. We are bound by the conclusion of the appellate court. In a petition for review on certiorari, We are
not to determine the probative value of evidence but to resolve questions of law. Secondly, the affidavit of Jesus
Bascos did not dwell on how the hijacking took place. Thirdly, while the affidavit of Juanito Morden, the truck
helper in the hijacked truck, was presented as evidence in court, he himself was a witness as could be gleaned from
the contents of the petition. Affidavits are not considered the best evidence if the affiants are available as
witnesses. 25 The subsequent filing of the information for carnapping and robbery against the accused named in
said affidavits did not necessarily mean that the contents of the affidavits were true because they were yet to be
determined in the trial of the criminal cases.

The presumption of negligence was raised against petitioner. It was petitioner's burden to overcome it. Thus,
contrary to her assertion, private respondent need not introduce any evidence to prove her negligence. Her own
failure to adduce sufficient proof of extraordinary diligence made the presumption conclusive against her.

Having affirmed the findings of the respondent Court on the substantial issues involved, We find no reason to
disturb the conclusion that the motion to lift/dissolve the writ of preliminary attachment has been rendered moot
and academic by the decision on the merits.
In the light of the foregoing analysis, it is Our opinion that the petitioner's claim cannot be sustained. The petition
is DISMISSED and the decision of the Court of Appeals is hereby AFFIRMED.

SO ORDERED.
G.R. No. 111127 July 26, 1996

MR. & MRS. ENGRACIO FABRE, JR. and PORFIRIO CABIL,

This is a petition for review on certiorari of the decision of the Court of Appeals1 in CA-GR No. 28245, dated
September 30, 1992, which affirmed with modification the decision of the Regional Trial Court of Makati, Branch
58, ordering petitioners jointly and severally to pay damages to private respondent Amyline Antonio, and its
resolution which denied petitioners' motion for reconsideration for lack of merit.

Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model Mazda minibus. They used the bus
principally in connection with a bus service for school children which they operated in Manila. The couple had a
driver, Porfirio J. Cabil, whom they hired in 1981, after trying him out for two weeks, His job was to take school
children to and from the St. Scholastica's College in Malate, Manila.

On November 2, 1984 private respondent Word for the World Christian Fellowship Inc. (WWCF) arranged with
petitioners for the transportation of 33 members of its Young Adults Ministry from Manila to La Union and back in
consideration of which private respondent paid petitioners the amount of P3,000.00.

The group was scheduled to leave on November 2, 1984, at 5:00 o'clock in the afternoon. However, as several
members of the party were late, the bus did not leave the Tropical Hut at the corner of Ortigas Avenue and EDSA
until 8:00 o'clock in the evening. Petitioner Porfirio Cabil drove the minibus.

The usual route to Caba, La Union was through Carmen, Pangasinan. However, the bridge at Carmen was under
repair, sot hat petitioner Cabil, who was unfamiliar with the area (it being his first trip to La Union), was forced to
take a detour through the town of Baay in Lingayen, Pangasinan. At 11:30 that night, petitioner Cabil came upon a
sharp curve on the highway, running on a south to east direction, which he described as "siete." The road was
slippery because it was raining, causing the bus, which was running at the speed of 50 kilometers per hour, to skid
to the left road shoulder. The bus hit the left traffic steel brace and sign along the road and rammed the fence of
one Jesus Escano, then turned over and landed on its left side, coming to a full stop only after a series of impacts.
The bus came to rest off the road. A coconut tree which it had hit fell on it and smashed its front portion.

Several passengers were injured. Private respondent Amyline Antonio was thrown on the floor of the bus and
pinned down by a wooden seat which came down by a wooden seat which came off after being unscrewed. It took
three persons to safely remove her from this portion. She was in great pain and could not move.

The driver, petitioner Cabil, claimed he did not see the curve until it was too late. He said he was not familiar with
the area and he could not have seen the curve despite the care he took in driving the bus, because it was dark and
there was no sign on the road. He said that he saw the curve when he was already within 15 to 30 meters of it. He
allegedly slowed down to 30 kilometers per hour, but it was too late.

The Lingayen police investigated the incident the next day, November 3, 1984. On the basis of their finding they
filed a criminal complaint against the driver, Porfirio Cabil. The case was later filed with the Lingayen Regional
Trial Court. Petitioners Fabre paid Jesus Escano P1,500.00 for the damage to the latter's fence. On the basis of
Escano's affidavit of desistance the case against petitioners Fabre was dismissed.

Amyline Antonio, who was seriously injured, brought this case in the RTC of Makati, Metro Manila. As a result of
the accident, she is now suffering from paraplegia and is permanently paralyzed from the waist down. During the
trial she described the operations she underwent and adduced evidence regarding the cost of her treatment and
therapy. Immediately after the accident, she was taken to the Nazareth Hospital in Baay, Lingayen. As this hospital
was not adequately equipped, she was transferred to the Sto. Niñ o Hospital, also in the town of Ba-ay, where she
was given sedatives. An x-ray was taken and the damage to her spine was determined to be too severe to be
treated there. She was therefore brought to Manila, first to the Philippine General Hospital and later to the Makati
Medical Center where she underwent an operation to correct the dislocation of her spine.

In its decision dated April 17, 1989, the trial court found that:

No convincing evidence was shown that the minibus was properly checked for travel to a long distance trip and
that the driver was properly screened and tested before being admitted for employment. Indeed, all the evidence
presented have shown the negligent act of the defendants which ultimately resulted to the accident subject of this
case.

Accordingly, it gave judgment for private respondents holding:

Considering that plaintiffs Word for the World Christian Fellowship, Inc. and Ms. Amyline Antonio were the only
ones who adduced evidence in support of their claim for damages, the Court is therefore not in a position to award
damages to the other plaintiffs.

WHEREFORE, premises considered, the Court hereby renders judgment against defendants Mr. & Mrs. Engracio
Fabre, Jr. and Porfirio Cabil y Jamil pursuant to articles 2176 and 2180 of the Civil Code of the Philippines and said
defendants are ordered to pay jointly and severally to the plaintiffs the following amount:

1) P93,657.11 as compensatory and actual damages;

2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff Amyline Antonio;
3) P20,000.00 as moral damages;
4) P20,000.00 as exemplary damages; and
5) 25% of the recoverable amount as attorney's fees;
6) Costs of suit.
SO ORDERED.

The Court of Appeals affirmed the decision of the trial court with respect to Amyline Antonio but dismissed it with
respect to the other plaintiffs on the ground that they failed to prove their respective claims. The Court of Appeals
modified the award of damages as follows:

1) P93,657.11 as actual damages;

2) P600,000.00 as compensatory damages;
3) P50,000.00 as moral damages;
4) P20,000.00 as exemplary damages;
5) P10,000.00 as attorney's fees; and
6) Costs of suit.
The Court of Appeals sustained the trial court's finding that petitioner Cabil failed to exercise due care and
precaution in the operation of his vehicle considering the time and the place of the accident. The Court of Appeals
held that the Fabres were themselves presumptively negligent. Hence, this petition. Petitioners raise the following
issues:

I. WHETHER OR NOT PETITIONERS WERE NEGLIGENT.

II. WHETHER OF NOT PETITIONERS WERE LIABLE FOR THE INJURIES SUFFERED BY PRIVATE RESPONDENTS.

III WHETHER OR NOT DAMAGES CAN BE AWARDED AND IN THE POSITIVE, UP TO WHAT EXTENT.

Petitioners challenge the propriety of the award of compensatory damages in the amount of P600,000.00. It is
insisted that, on the assumption that petitioners are liable an award of P600,000.00 is unconscionable and highly
speculative. Amyline Antonio testified that she was a casual employee of a company called "Suaco," earning
P1,650.00 a month, and a dealer of Avon products, earning an average of P1,000.00 monthly. Petitioners contend
that as casual employees do not have security of tenure, the award of P600,000.00, considering Amyline Antonio's
earnings, is without factual basis as there is no assurance that she would be regularly earning these amounts.

With the exception of the award of damages, the petition is devoid of merit.

First, it is unnecessary for our purpose to determine whether to decide this case on the theory that petitioners are
liable for breach of contract of carriage or culpa contractual or on the theory of quasi delict or culpa aquiliana as
both the Regional Trial Court and the Court of Appeals held, for although the relation of passenger and carrier is
"contractual both in origin and nature," nevertheless "the act that breaks the contract may be also a tort." 2

The finding that Cabil drove his bus negligently, while his employer, the Fabres, who owned the bus, failed to
exercise the diligence of a good father of the family in the selection and supervision of their employee is fully
supported by the evidence on record. These factual findings of the two courts we regard as final and conclusive,
supported as they are by the evidence. Indeed, it was admitted by Cabil that on the night in question, it was raining,
and as a consequence, the road was slippery, and it was dark. He averred these facts to justify his failure to see that
there lay a sharp curve ahead. However, it is undisputed that Cabil drove his bus at the speed of 50 kilometers per
hour and only slowed down when he noticed the curve some 15 to 30 meters ahead. 3

Considering the foregoing — the fact that it was raining and the road was slippery, that it was dark, that he drove
his bus at 50 kilometers an hour when even on a good day the normal speed was only 20 kilometers an hour, and
that he was unfamiliar with the terrain, Cabil was grossly negligent and should be held liable for the injuries
suffered by private respondent Amyline Antonio.

Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to the presumption that his employers,
the Fabres, were themselves negligent in the selection and supervisions of their employee.

Due diligence in selection of employees is not satisfied by finding that the applicant possessed a professional
driver's license. The employer should also examine the applicant for his qualifications, experience and record of
service. 5 Due diligence in supervision, on the other hand, requires the formulation of rules and regulations for the
guidance of employees and issuance of proper instructions as well as actual implementation and monitoring of
consistent compliance with the rules.6

In the case at bar, the Fabres, in allowing Cabil to drive the bus to La Union, apparently did not consider the fact
that Cabil had been driving for school children only, from their homes to the St. Scholastica's College in Metro
Manila. 7 They had hired him only after a two-week apprenticeship. They had hired him only after a two-week
apprenticeship. They had tested him for certain matters, such as whether he could remember the names of the
children he would be taking to school, which were irrelevant to his qualification to drive on a long distance travel,
especially considering that the trip to La Union was his first. The existence of hiring procedures and supervisory
policies cannot be casually invoked to overturn the presumption of negligence on the part of an employer. 8

Petitioners argue that they are not liable because (1) an earlier departure (made impossible by the congregation's
delayed meeting) could have a averted the mishap and (2) under the contract, the WWCF was directly responsible
for the conduct of the trip. Neither of these contentions hold water. The hour of departure had not been fixed. Even
if it had been, the delay did not bear directly on the cause of the accident. With respect to the second contention, it
was held in an early case that:

[A] person who hires a public automobile and gives the driver directions as to the place to which he wishes to be
conveyed, but exercises no other control over the conduct of the driver, is not responsible for acts of negligence of
the latter or prevented from recovering for injuries suffered from a collision between the automobile and a train,
caused by the negligence or the automobile driver. 9
As already stated, this case actually involves a contract of carriage. Petitioners, the Fabres, did not have to be
engaged in the business of public transportation for the provisions of the Civil Code on common carriers to apply
to them. As this Court has held: 10

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

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

As common carriers, the Fabres were found to exercise "extraordinary diligence" for the safe transportation of the
passengers to their destination. This duty of care is not excused by proof that they exercise the diligence of a good
father of the family in the selection and supervision of their employee. As Art. 1759 of the Code provides:

Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the
former's employees although such employees may have acted beyond the scope of their authority or in violation of
the orders of the common carriers.

This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father
of a family in the selection and supervision of their employees.

The same circumstances detailed above, supporting the finding of the trial court and of the appellate court that
petitioners are liable under Arts. 2176 and 2180 for quasi delict, fully justify findings them guilty of breach of
contract of carriage under Arts. 1733, 1755 and 1759 of the Civil Code.

Secondly, we sustain the award of damages in favor of Amyline Antonio. However, we think the Court of Appeals
erred in increasing the amount of compensatory damages because private respondents did not question this award
as inadequate. 11 To the contrary, the award of P500,000.00 for compensatory damages which the Regional Trial
Court made is reasonable considering the contingent nature of her income as a casual employee of a company and
as distributor of beauty products and the fact that the possibility that she might be able to work again has not been
foreclosed. In fact she testified that one of her previous employers had expressed willingness to employ her again.

With respect to the other awards, while the decisions of the trial court and the Court of Appeals do not sufficiently
indicate the factual and legal basis for them, we find that they are nevertheless supported by evidence in the
records of this case. Viewed as an action for quasi delict, this case falls squarely within the purview of Art. 2219(2)
providing for the payment of moral damages in cases of quasi delict. On the theory that petitioners are liable for
breach of contract of carriage, the award of moral damages is authorized by Art. 1764, in relation to Art. 2220,
since Cabil's gross negligence amounted to bad faith.12

The award of exemplary damages and attorney's fees was also properly made. However, for the same reason that it
was error for the appellate court to increase the award of compensatory damages, we hold that it was also error
for it to increase the award of moral damages and reduce the award of attorney's fees, inasmuch as private
respondents, in whose favor the awards were made, have not appealed. 13

As above stated, the decision of the Court of Appeals can be sustained either on the theory of quasi delict or on that
of breach of contract. The question is whether, as the two courts below held, petitioners, who are the owners and
driver of the bus, may be made to respond jointly and severally to private respondent. We hold that they may be. In
Dangwa Trans. Co. Inc. v. Court of Appeals, 14 on facts similar to those in this case, this Court held the bus company
and the driver jointly and severally liable for damages for injuries suffered by a passenger. Again, in Bachelor
Express, Inc. v. Court of Appeals 15

The same rule of liability was applied in situations where the negligence of the driver of the bus on which plaintiff
was riding concurred with the negligence of a third party who was the driver of another vehicle, thus causing an
accident. In Anuran v. Buñ o, 16 Batangas Laguna Tayabas Bus Co. v. Intermediate Appellate Court, 17

Nor should it make any difference that the liability of petitioner [bus owner] springs from contract while that of
respondents [owner and driver of other vehicle] arises from quasi-delict. As early as 1913, we already ruled in
Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of injury to a passenger due to the negligence of the driver of the
bus on which he was riding and of the driver of another vehicle, the drivers as well as the owners of the two
vehicles are jointly and severally liable for damages. Some members of the Court, though, are of the view that
under the circumstances they are liable on quasi-delict. 20

It is true that in Philippine Rabbit Bus Lines, Inc. v. Court of Appeals 21 this Court exonerated the jeepney driver
from liability to the injured passengers and their families while holding the owners of the jeepney jointly and
severally liable, but that is because that case was expressly tried and decided exclusively on the theory of culpa
contractual. As this Court there explained:

The trial court was therefore right in finding that Manalo (the driver) and spouses Mangune and Carreon (the
jeepney owners) were negligent. However, its ruling that spouses Mangune and Carreon are jointly and severally
liable with Manalo is erroneous. The driver cannot be held jointly and severally liable with carrier in case of breach
of the contract of carriage. The rationale behind this is readily discernible. Firstly, the contract of carriage is
between the carrier is exclusively responsible therefore to the passenger, even if such breach be due to the
negligence of his driver (see Viluan v. The Court of Appeals, et al., G.R. Nos. L-21477-81, April 29, 1966, 16 SCRA
742). 22

As in the case of BLTB, private respondents in this case and her coplaintiffs did not stake out their claim against the
carrier and the driver exclusively on one theory, much less on that of breach of contract alone. After all, it was
permitted for them to allege alternative causes of action and join as many parties as may be liable on such causes of
action 23 so long as private respondent and her coplaintiffs do not recover twice for the same injury. What is clear
from the cases is the intent of the plaintiff there to recover from both the carrier and the driver, thus, justifying the
holding that the carrier and the driver were jointly and severally liable because their separate and distinct acts
concurred to produce the same injury.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED with MODIFICATION as to award of damages.
Petitioners are ORDERED to PAY jointly and severally the private respondent Amyline Antonio the following
amounts:

1) P93,657.11 as actual damages;

2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff Amyline Antonio;
3) P20,000.00 as moral damages;
4) P20,000.00 as exemplary damages;
5) 25% of the recoverable amount as attorney's fees; and
6) costs of suit.
SO ORDERED.
G.R. No. 125524 August 25, 1999

BENITO MACAM doing business under the name and style BEN-MAC ENTERPRISES,

BELLOSILLO, J.:

On 4 April 1989 petitioner Benito Macam, doing business under the name and style Ben-Mac Enterprises, shipped
on board the vessel Nen Jiang, owned and operated by respondent China Ocean Shipping Co., through local agent
respondent Wallem Philippines Shipping, Inc. (hereinafter WALLEM), 3,500 boxes of watermelons valued at
US$5,950.00 covered by Bill of Lading No. HKG 99012 and exported through Letter of Credit No. HK 1031/30
issued by National Bank of Pakistan, Hongkong (hereinafter PAKISTAN BANK) and 1,611 boxes of fresh mangoes
with a value of US$14,273.46 covered by Bill of Lading No. HKG 99013 and exported through Letter of Credit No.
HK 1032/30 also issued by PAKISTAN BANK. The Bills of Lading contained the following pertinent provision: "One
of the Bills of Lading must be surrendered duly endorsed in exchange for the goods or delivery order.1 The
shipment was bound for Hongkong with PAKISTAN BANK as consignee and Great Prospect Company of Kowloon,
Hongkong (hereinafter GPC) as notify party.

On 6 April 1989, per letter of credit requirement, copies of the bills of lading and commercial invoices were
submitted to petitioner's depository bank, Consolidated Banking Corporation (hereinafter SOLIDBANK), which
paid petitioner in advance the total value of the shipment of US$20,223.46.1â wphi1.nêt

Upon arrival in Hongkong, the shipment was delivered by respondent WALLEM directly to GPC, not to PAKISTAN
BANK, and without the required bill of lading having been surrendered. Subsequently, GPC failed to pay PAKISTAN
BANK such that the latter, still in possession of the original bills of lading, refused to pay petitioner through
SOLIDBANK. Since SOLIDBANK already pre-paid petitioner the value of the shipment, it demanded payment from
respondent WALLEM through five (5) letters but was refused. Petitioner was thus allegedly constrained to return
the amount involved to SOLIDBANK, then demanded payment from respondent WALLEM in writing but to no avail.

On 25 September 1991 petitioner sought collection of the value of the shipment of US$20,223.46 or its equivalent
of P546,033.42 from respondents before the Regional Trial Court of Manila, based on delivery of the shipment to
GPC without presentation of the bills of lading and bank guarantee.

Respondents contended that the shipment was delivered to GPC without presentation of the bills of lading and
bank guarantee per request of petitioner himself because the shipment consisted of perishable goods. The telex
dated 5 April 1989 conveying such request read —

AS PER SHPR'S REQUEST KINDLY ARRANGE DELIVERY OF A/M SHIPT TO RESPECTIVE CNEES WITHOUT
PRESENTATION OF OB/L2 and bank guarantee since for prepaid shipt ofrt charges already fully paid our end . . . .3

Respondents explained that it is a standard maritime practice, when immediate delivery is of the essence, for the
shipper to request or instruct the carrier to deliver the goods to the buyer upon arrival at the port of destination
without requiring presentation of the bill of lading as that usually takes time. As proof thereof, respondents
apprised the trial court that for the duration of their two-year business relationship with petitioner concerning
similar shipments to GPC deliveries were effected without presentation of the bills of lading.4 Respondents
advanced next that the refusal of PAKISTAN BANK to pay the letters of credit to SOLIDBANK was due to the latter's
failure to submit a Certificate of Quantity and Quality. Respondents counterclaimed for attorney's fees and costs of
suit.

On 14 May 1993 the trial court ordered respondents to pay, jointly and severally, the following amounts: (1)
P546,033.42 plus legal interest from 6 April 1989 until full payment; (2) P10,000.00 as attorney's fees; and, (3) the
costs. The counterclaims were dismissed for lack of merit.5 The trial court opined that respondents breached the
provision in the bill of lading requiring that "one of the Bills of Lading must be surrendered duly endorsed in
exchange for the goods or delivery order," when they released the shipment to GPC without presentation of the
bills of lading and the bank guarantee that should have been issued by PAKISTAN BANK in lieu of the bills of lading.
The trial court added that the shipment should not have been released to GPC at all since the instruction contained
in the telex was to arrange delivery to the respective consignees and not to any party. The trial court observed that
the only role of GPC in the transaction as notify party was precisely to be notified of the arrival of the cargoes in
Hongkong so it could in turn duly advise the consignee.

Respondent Court of Appeals appreciated the evidence in a different manner. According to it, as established by
previous similar transactions between the parties, shipped cargoes were sometimes actually delivered not to the
consignee but to notify party GPC without need of the bills of lading or bank guarantee.6 Moreover, the bills of
lading were viewed by respondent court to have been properly superseded by the telex instruction and to
implement the instruction, the delivery of the shipment must be to GPC, the real importer/buyer of the goods as
shown by the export invoices,7 and not to PAKISTAN BANK since the latter could very well present the bills of
lading in its possession; likewise, if it were the PAKISTAN BANK to which the cargoes were to be strictly delivered
it would no longer be proper to require a bank guarantee. Respondent court noted that besides, GPC was listed as a
consignee in the telex. It observed further that the demand letter of petitioner to respondents never complained of
misdelivery of goods. Lastly, respondent court found that petitioner's claim of having reimbursed the amount
involved to SOLIDBANK was unsubstantiated. Thus, on 13 March 1996 respondent court set aside the decision of
the trial court and dismissed the complaint together with the counterclaims.8 On 5 July 1996 reconsideration was
denied.9

Petitioner submits that the fact that the shipment was not delivered to the consignee as stated in the bill of lading
or to a party designated or named by the consignee constitutes a misdelivery thereof. Moreover, petitioner argues
that from the text of the telex, assuming there was such an instruction, the delivery of the shipment without the
required bill of lading or bank guarantee should be made only to the designated consignee, referring to PAKISTAN
BANK.

We are not persuaded. The submission of petitioner that "the fact that the shipment was not delivered to the
consignee as stated in the Bill of Lading or to a party designated or named by the consignee constitutes a
misdelivery thereof" is a deviation from his cause of action before the trial court. It is clear from the allegation in
his complaint that it does not deal with misdelivery of the cargoes but of delivery to GPC without the required bills
of lading and bank guarantee —

6. The goods arrived in Hongkong and were released by the defendant Wallem directly to the buyer/notify party,
Great Prospect Company and not to the consignee, the National Bank of Pakistan, Hongkong, without the required
bills of lading and bank guarantee for the release of the shipment issued by the consignee of the goods . . . .10

Even going back to an event that transpired prior to the filing of the present case or when petitioner wrote
respondent WALLEM demanding payment of the value of the cargoes, misdelivery of the cargoes did not come into
the picture —

We are writing you on behalf of our client, Ben-Mac Enterprises who informed us that Bills of Lading No. 99012
and 99013 with a total value of US$20,223.46 were released to Great Prospect, Hongkong without the necessary
bank guarantee. We were further informed that the consignee of the goods, National Bank of Pakistan, Hongkong,
did not release or endorse the original bills of lading. As a result thereof, neither the consignee, National Bank of
Pakistan, Hongkong, nor the importer, Great Prospect Company, Hongkong, paid our client for the goods . . . .11

At any rate, we shall dwell on petitioner's submission only as a prelude to our discussion on the imputed liability of
respondents concerning the shipped goods. Article 1736 of the Civil Code provides —
Art. 1736. The extraordinary responsibility of the common carriers lasts from the time the goods are
unconditionally placed in the possession of, and received by the carrier for transportation until the same are
delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive
them, without prejudice to the provisions of article 1738.12

We emphasize that the extraordinary responsibility of the common carriers lasts until actual or constructive
delivery of the cargoes to the consignee or to the person who has a right to receive them. PAKISTAN BANK was
indicated in the bills of lading as consignee whereas GPC was the notify party. However, in the export invoices GPC
was clearly named as buyer/importer. Petitioner also referred to GPC as such in his demand letter to respondent
WALLEM and in his complaint before the trial court. This premise draws us to conclude that the delivery of the
cargoes to GPC as buyer/importer which, conformably with Art. 1736 had, other than the consignee, the right to
receive them14 was proper.

The real issue is whether respondents are liable to petitioner for releasing the goods to GPC without the bills of
lading or bank guarantee.

Respondents submitted in evidence a telex dated 5 April 1989 as basis for delivering the cargoes to GPC without
the bills of lading and bank guarantee. The telex instructed delivery of various shipments to the respective
consignees without need of presenting the bill of lading and bank guarantee per the respective shipper's request
since "for prepaid shipt ofrt charges already fully paid." Petitioner was named therein as shipper and GPC as
consignee with respect to Bill of Lading Nos. HKG 99012 and HKG 99013. Petitioner disputes the existence of such
instruction and claims that this evidence is self-serving.

From the testimony of petitioner, we gather that he has been transacting with GPC as buyer/importer for around
two (2) or three (3) years already. When mangoes and watermelons are in season, his shipment to GPC using the
facilities of respondents is twice or thrice a week. The goods are released to GPC. It has been the practice of
petitioner to request the shipping lines to immediately release perishable cargoes such as watermelons and fresh
mangoes through telephone calls by himself or his "people." In transactions covered by a letter of credit, bank
guarantee is normally required by the shipping lines prior to releasing the goods. But for buyers using telegraphic
transfers, petitioner dispenses with the bank guarantee because the goods are already fully paid. In his several
years of business relationship with GPC and respondents, there was not a single instance when the bill of lading
was first presented before the release of the cargoes. He admitted the existence of the telex of 3 July 1989
containing his request to deliver the shipment to the consignee without presentation of the bill of lading15 but not
the telex of 5 April 1989 because he could not remember having made such request.

Consider pertinent portions of petitioner's testimony —

Q: Are you aware of any document which would indicate or show that your request to the defendant Wallem for
the immediate release of your fresh fruits, perishable goods, to Great Prospect without the presentation of the
original Bill of Lading?
A: Yes, by telegraphic transfer, which means that it is fully paid. And I requested immediate release of the cargo
because there was immediate payment.
Q: And you are referring, therefore, to this copy Telex release that you mentioned where your Company's name
appears Ben-Mac?
Atty. Hernandez: Just for the record, Your Honor, the witness is showing a Bill of Lading referring to SKG (sic)
93023 and 93026 with Great Prospect Company.
Atty. Ventura:
Q: Is that the telegraphic transfer?
A: Yes, actually, all the shippers partially request for the immediate release of the goods when they are perishable. I
thought Wallem Shipping Lines is not neophyte in the business. As far as LC is concerned, Bank guarantee is
needed for the immediate release of the goods . . . .15
Q: Mr. Witness, you testified that if is the practice of the shipper of the perishable goods to ask the shipping lines to
release immediately the shipment. Is that correct?
A: Yes, sir.
Q: Now, it is also the practice of the shipper to allow the shipping lines to release the perishable goods to the
importer of goods without a Bill of Lading or Bank guarantee?
A: No, it cannot be without the Bank Guarantee.
Atty. Hernandez:
Q: Can you tell us an instance when you will allow the release of the perishable goods by the shipping lines to the
importer without the Bank guarantee and without the Bill of Lading?
A: As far as telegraphic transfer is concerned.
Q: Can you explain (to) this Honorable Court what telegraphic transfer is?
A: Telegraphic transfer, it means advance payment that I am already fully paid . . . .
Q: Mr. Macam, with regard to Wallem and to Great Prospect, would you know and can you recall that any of your
shipment was released to Great Prospect by Wallem through telegraphic transfer?
A: I could not recall but there were so many instances sir.
Q: Mr. Witness, do you confirm before this Court that in previous shipments of your goods through Wallem, you
requested Wallem to release immediately your perishable goods to the buyer?
A: Yes, that is the request of the shippers of the perishable goods . . . .16
Q: Now, Mr. Macam, if you request the Shipping Lines for the release of your goods immediately even without the
presentation of OBL, how do you course it?
A: Usually, I call up the Shipping Lines, sir . . . .17
Q: You also testified you made this request through phone calls. Who of you talked whenever you made such phone
call?
A: Mostly I let my people to call, sir. (sic)
Q: So everytime you made a shipment on perishable goods you let your people to call? (sic)
A: Not everytime, sir.
Q: You did not make this request in writing?
A: No, sir. I think I have no written request with Wallem . . . .18
Against petitioner's claim of "not remembering" having made a request for delivery of subject cargoes to GPC
without presentation of the bills of lading and bank guarantee as reflected in the telex of 5 April 1989 are damaging
disclosures in his testimony. He declared that it was his practice to ask the shipping lines to immediately release
shipment of perishable goods through telephone calls by himself or his "people." He no longer required
presentation of a bill of lading nor of a bank guarantee as a condition to releasing the goods in case he was already
fully paid. Thus, taking into account that subject shipment consisted of perishable goods and SOLIDBANK pre-paid
the full amount of the value thereof, it is not hard to believe the claim of respondent WALLEM that petitioner
indeed requested the release of the goods to GPC without presentation of the bills of lading and bank guarantee.
The instruction in the telex of 5 April 1989 was "to deliver the shipment to respective consignees." And so
petitioner argues that, assuming there was such an instruction, the consignee referred to was PAKISTAN BANK. We
find the argument too simplistic. Respondent court analyzed the telex in its entirety and correctly arrived at the
conclusion that the consignee referred to was not PAKISTAN BANK but GPC —

There is no mistake that the originals of the two (2) subject Bills of Lading are still in the possession of the
Pakistani Bank. The appealed decision affirms this fact. Conformably, to implement the said telex instruction, the
delivery of the shipment must be to GPC, the notify party or real importer/buyer of the goods and not the Pakistani
Bank since the latter can very well present the original Bills of Lading in its possession. Likewise, if it were the
Pakistani Bank to whom the cargoes were to be strictly delivered, it will no longer be proper to require a bank
guarantee as a substitute for the Bill of Lading. To construe otherwise will render meaningless the telex
instruction. After all, the cargoes consist of perishable fresh fruits and immediate delivery thereof to the
buyer/importer is essentially a factor to reckon with. Besides, GPC is listed as one among the several consignees in
the telex (Exhibit 5-B) and the instruction in the telex was to arrange delivery of A/M shipment (not any party) to
respective consignees without presentation of OB/L and bank guarantee . . . .20

Apart from the foregoing obstacles to the success of petitioner's cause, petitioner failed to substantiate his claim
that he returned to SOLIDBANK the full amount of the value of the cargoes. It is not far-fetched to entertain the
notion, as did respondent court, that he merely accommodated SOLIDBANK in order to recover the cost of the
shipped cargoes from respondents. We note that it was SOLIDBANK which initially demanded payment from
respondents through five (5) letters. SOLIDBANK must have realized the absence of privity of contract between
itself and respondents. That is why petitioner conveniently took the cudgels for the bank.

In view of petitioner's utter failure to establish the liability of respondents over the cargoes, no reversible error
was committed by respondent court in ruling against him.

WHEREFORE, the petition is DENIED. The decision of respondent Court of Appeals of 13 March 1996 dismissing
the complaint of petitioner Benito Macam and the counterclaims of respondents China Ocean Shipping Co. and/or
Wallem Philippines Shipping, Inc., as well as its resolution of 5 July 1996 denying reconsideration, is AFFIRMED.

SO ORDERED.
G.R. No. 138334 August 25, 2003

ESTELA L. CRISOSTOMO,

DECISION

YNARES-SANTIAGO, J.:

In May 1991, petitioner Estela L. Crisostomo contracted the services of respondent Caravan Travel and Tours
International, Inc. to arrange and facilitate her booking, ticketing and accommodation in a tour dubbed "Jewels of
Europe". The package tour included the countries of England, Holland, Germany, Austria, Liechstenstein,
Switzerland and France at a total cost of P74,322.70. Petitioner was given a 5% discount on the amount, which
included airfare, and the booking fee was also waived because petitioner’s niece, Meriam Menor, was respondent
company’s ticketing manager.

Pursuant to said contract, Menor went to her aunt’s residence on June 12, 1991 – a Wednesday – to deliver
petitioner’s travel documents and plane tickets. Petitioner, in turn, gave Menor the full payment for the package
tour. Menor then told her to be at the Ninoy Aquino International Airport (NAIA) on Saturday, two hours before
her flight on board British Airways.

Without checking her travel documents, petitioner went to NAIA on Saturday, June 15, 1991, to take the flight for
the first leg of her journey from Manila to Hongkong. To petitioner’s dismay, she discovered that the flight she was
supposed to take had already departed the previous day. She learned that her plane ticket was for the flight
scheduled on June 14, 1991. She thus called up Menor to complain.

Subsequently, Menor prevailed upon petitioner to take another tour – the "British Pageant" – which included
England, Scotland and Wales in its itinerary. For this tour package, petitioner was asked anew to pay US$785.00 or
P20,881.00 (at the then prevailing exchange rate of P26.60). She gave respondent US$300 or P7,980.00 as partial
payment and commenced the trip in July 1991.

Upon petitioner’s return from Europe, she demanded from respondent the reimbursement of P61,421.70,
representing the difference between the sum she paid for "Jewels of Europe" and the amount she owed respondent
for the "British Pageant" tour. Despite several demands, respondent company refused to reimburse the amount,
contending that the same was non-refundable.1 Petitioner was thus constrained to file a complaint against
respondent for breach of contract of carriage and damages, which was docketed as Civil Case No. 92-133 and
raffled to Branch 59 of the Regional Trial Court of Makati City.

In her complaint,2 petitioner alleged that her failure to join "Jewels of Europe" was due to respondent’s fault since
it did not clearly indicate the departure date on the plane ticket. Respondent was also negligent in informing her of
the wrong flight schedule through its employee Menor. She insisted that the "British Pageant" was merely a
substitute for the "Jewels of Europe" tour, such that the cost of the former should be properly set-off against the
sum paid for the latter.

For its part, respondent company, through its Operations Manager, Concepcion Chipeco, denied responsibility for
petitioner’s failure to join the first tour. Chipeco insisted that petitioner was informed of the correct departure
date, which was clearly and legibly printed on the plane ticket. The travel documents were given to petitioner two
days ahead of the scheduled trip. Petitioner had only herself to blame for missing the flight, as she did not bother to
read or confirm her flight schedule as printed on the ticket.

Respondent explained that it can no longer reimburse the amount paid for "Jewels of Europe", considering that the
same had already been remitted to its principal in Singapore, Lotus Travel Ltd., which had already billed the same
even if petitioner did not join the tour. Lotus’ European tour organizer, Insight International Tours Ltd., determines
the cost of a package tour based on a minimum number of projected participants. For this reason, it is accepted
industry practice to disallow refund for individuals who failed to take a booked tour.3

Lastly, respondent maintained that the "British Pageant" was not a substitute for the package tour that petitioner
missed. This tour was independently procured by petitioner after realizing that she made a mistake in missing her
flight for "Jewels of Europe". Petitioner was allowed to make a partial payment of only US$300.00 for the second
tour because her niece was then an employee of the travel agency. Consequently, respondent prayed that
petitioner be ordered to pay the balance of P12,901.00 for the "British Pageant" package tour.

After due proceedings, the trial court rendered a decision,4 the dispositive part of which reads:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

1. Ordering the defendant to return and/or refund to the plaintiff the amount of Fifty Three Thousand Nine
Hundred Eighty Nine Pesos and Forty Three Centavos (P53,989.43) with legal interest thereon at the rate of twelve
percent (12%) per annum starting January 16, 1992, the date when the complaint was filed;

2. Ordering the defendant to pay the plaintiff the amount of Five Thousand (P5,000.00) Pesos as and for reasonable
attorney’s fees;

3. Dismissing the defendant’s counterclaim, for lack of merit; and

4. With costs against the defendant.

SO ORDERED.5

The trial court held that respondent was negligent in erroneously advising petitioner of her departure date
through its employee, Menor, who was not presented as witness to rebut petitioner’s testimony. However,
petitioner should have verified the exact date and time of departure by looking at her ticket and should have
simply not relied on Menor’s verbal representation. The trial court thus declared that petitioner was guilty of
contributory negligence and accordingly, deducted 10% from the amount being claimed as refund.

Respondent appealed to the Court of Appeals, which likewise found both parties to be at fault. However, the
appellate court held that petitioner is more negligent than respondent because as a lawyer and well-traveled
person, she should have known better than to simply rely on what was told to her. This being so, she is not entitled
to any form of damages. Petitioner also forfeited her right to the "Jewels of Europe" tour and must therefore pay
respondent the balance of the price for the "British Pageant" tour. The dispositive portion of the judgment
appealed from reads as follows:

WHEREFORE, premises considered, the decision of the Regional Trial Court dated October 26, 1995 is hereby
REVERSED and SET ASIDE. A new judgment is hereby ENTERED requiring the plaintiff-appellee to pay to the
defendant-appellant the amount of P12,901.00, representing the balance of the price of the British Pageant
Package Tour, the same to earn legal interest at the rate of SIX PERCENT (6%) per annum, to be computed from the
time the counterclaim was filed until the finality of this decision. After this decision becomes final and executory,
the rate of TWELVE PERCENT (12%) interest per annum shall be additionally imposed on the total obligation until
payment thereof is satisfied. The award of attorney’s fees is DELETED. Costs against the plaintiff-appellee.

SO ORDERED.6

Upon denial of her motion for reconsideration,7 petitioner filed the instant petition under Rule 45 on the following
grounds:

I
It is respectfully submitted that the Honorable Court of Appeals committed a reversible error in reversing and
setting aside the decision of the trial court by ruling that the petitioner is not entitled to a refund of the cost of
unavailed "Jewels of Europe" tour she being equally, if not more, negligent than the private respondent, for in the
contract of carriage the common carrier is obliged to observe utmost care and extra-ordinary diligence which is
higher in degree than the ordinary diligence required of the passenger. Thus, even if the petitioner and private
respondent were both negligent, the petitioner cannot be considered to be equally, or worse, more guilty than the
private respondent. At best, petitioner’s negligence is only contributory while the private respondent [is guilty] of
gross negligence making the principle of pari delicto inapplicable in the case;

II

The Honorable Court of Appeals also erred in not ruling that the "Jewels of Europe" tour was not indivisible and
the amount paid therefor refundable;

III

The Honorable Court erred in not granting to the petitioner the consequential damages due her as a result of
breach of contract of carriage.8

Petitioner contends that respondent did not observe the standard of care required of a common carrier when it
informed her wrongly of the flight schedule. She could not be deemed more negligent than respondent since the
latter is required by law to exercise extraordinary diligence in the fulfillment of its obligation. If she were negligent
at all, the same is merely contributory and not the proximate cause of the damage she suffered. Her loss could only
be attributed to respondent as it was the direct consequence of its employee’s gross negligence.

Petitioner’s contention has no merit.

By definition, a contract of carriage or transportation is one whereby a certain person or association of persons
obligate themselves to transport persons, things, or news from one place to another for a fixed price.9 Such person
or association of persons are regarded as carriers and are classified as private or special carriers and common or
public carriers.10 A common carrier is defined under Article 1732 of the Civil Code as persons, corporations, firms
or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water or
air, for compensation, offering their services to the public.

It is obvious from the above definition that respondent is not an entity engaged in the business of transporting
either passengers or goods and is therefore, neither a private nor a common carrier. Respondent did not undertake
to transport petitioner from one place to another since its covenant with its customers is simply to make travel
arrangements in their behalf. Respondent’s services as a travel agency include procuring tickets and facilitating
travel permits or visas as well as booking customers for tours.

While petitioner concededly bought her plane ticket through the efforts of respondent company, this does not
mean that the latter ipso facto is a common carrier. At most, respondent acted merely as an agent of the airline,
with whom petitioner ultimately contracted for her carriage to Europe. Respondent’s obligation to petitioner in
this regard was simply to see to it that petitioner was properly booked with the airline for the appointed date and
time. Her transport to the place of destination, meanwhile, pertained directly to the airline.

The object of petitioner’s contractual relation with respondent is the latter’s service of arranging and facilitating
petitioner’s booking, ticketing and accommodation in the package tour. In contrast, the object of a contract of
carriage is the transportation of passengers or goods. It is in this sense that the contract between the parties in this
case was an ordinary one for services and not one of carriage. Petitioner’s submission is premised on a wrong
assumption.
The nature of the contractual relation between petitioner and respondent is determinative of the degree of care
required in the performance of the latter’s obligation under the contract. For reasons of public policy, a common
carrier in a contract of carriage is bound by law to carry passengers as far as human care and foresight can provide
using the utmost diligence of very cautious persons and with due regard for all the circumstances.11 As earlier
stated, however, respondent is not a common carrier but a travel agency. It is thus not bound under the law to
observe extraordinary diligence in the performance of its obligation, as petitioner claims.

Since the contract between the parties is an ordinary one for services, the standard of care required of respondent
is that of a good father of a family under Article 1173 of the Civil Code.12 This connotes reasonable care consistent
with that which an ordinarily prudent person would have observed when confronted with a similar situation. The
test to determine whether negligence attended the performance of an obligation is: did the defendant in doing the
alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in
the same situation? If not, then he is guilty of negligence.13

In the case at bar, the lower court found Menor negligent when she allegedly informed petitioner of the wrong day
of departure. Petitioner’s testimony was accepted as indubitable evidence of Menor’s alleged negligent act since
respondent did not call Menor to the witness stand to refute the allegation. The lower court applied the
presumption under Rule 131, Section 3 (e)14 of the Rules of Court that evidence willfully suppressed would be
adverse if produced and thus considered petitioner’s uncontradicted testimony to be sufficient proof of her claim.

On the other hand, respondent has consistently denied that Menor was negligent and maintains that petitioner’s
assertion is belied by the evidence on record. The date and time of departure was legibly written on the plane
ticket and the travel papers were delivered two days in advance precisely so that petitioner could prepare for the
trip. It performed all its obligations to enable petitioner to join the tour and exercised due diligence in its dealings
with the latter.

We agree with respondent.

Respondent’s failure to present Menor as witness to rebut petitioner’s testimony could not give rise to an inference
unfavorable to the former. Menor was already working in France at the time of the filing of the complaint,15
thereby making it physically impossible for respondent to present her as a witness. Then too, even if it were
possible for respondent to secure Menor’s testimony, the presumption under Rule 131, Section 3(e) would still not
apply. The opportunity and possibility for obtaining Menor’s testimony belonged to both parties, considering that
Menor was not just respondent’s employee, but also petitioner’s niece. It was thus error for the lower court to
invoke the presumption that respondent willfully suppressed evidence under Rule 131, Section 3(e). Said
presumption would logically be inoperative if the evidence is not intentionally omitted but is simply unavailable, or
when the same could have been obtained by both parties.16

In sum, we do not agree with the finding of the lower court that Menor’s negligence concurred with the negligence
of petitioner and resultantly caused damage to the latter. Menor’s negligence was not sufficiently proved,
considering that the only evidence presented on this score was petitioner’s uncorroborated narration of the
events. It is well-settled that the party alleging a fact has the burden of proving it and a mere allegation cannot take
the place of evidence.17 If the plaintiff, upon whom rests the burden of proving his cause of action, fails to show in
a satisfactory manner facts upon which he bases his claim, the defendant is under no obligation to prove his
exception or defense.18

Contrary to petitioner’s claim, the evidence on record shows that respondent exercised due diligence in
performing its obligations under the contract and followed standard procedure in rendering its services to
petitioner. As correctly observed by the lower court, the plane ticket19 issued to petitioner clearly reflected the
departure date and time, contrary to petitioner’s contention. The travel documents, consisting of the tour itinerary,
vouchers and instructions, were likewise delivered to petitioner two days prior to the trip. Respondent also
properly booked petitioner for the tour, prepared the necessary documents and procured the plane tickets. It
arranged petitioner’s hotel accommodation as well as food, land transfers and sightseeing excursions, in
accordance with its avowed undertaking.

Therefore, it is clear that respondent performed its prestation under the contract as well as everything else that
was essential to book petitioner for the tour. Had petitioner exercised due diligence in the conduct of her affairs,
there would have been no reason for her to miss the flight. Needless to say, after the travel papers were delivered
to petitioner, it became incumbent upon her to take ordinary care of her concerns. This undoubtedly would require
that she at least read the documents in order to assure herself of the important details regarding the trip.

The negligence of the obligor in the performance of the obligation renders him liable for damages for the resulting
loss suffered by the obligee. Fault or negligence of the obligor consists in his failure to exercise due care and
prudence in the performance of the obligation as the nature of the obligation so demands.20 There is no fixed
standard of diligence applicable to each and every contractual obligation and each case must be determined upon
its particular facts. The degree of diligence required depends on the circumstances of the specific obligation and
whether one has been negligent is a question of fact that is to be determined after taking into account the
particulars of each case.21 1â wphi1

The lower court declared that respondent’s employee was negligent. This factual finding, however, is not
supported by the evidence on record. While factual findings below are generally conclusive upon this court, the
rule is subject to certain exceptions, as when the trial court overlooked, misunderstood, or misapplied some facts
or circumstances of weight and substance which will affect the result of the case.22

In the case at bar, the evidence on record shows that respondent company performed its duty diligently and did
not commit any contractual breach. Hence, petitioner cannot recover and must bear her own damage.

WHEREFORE, the instant petition is DENIED for lack of merit. The decision of the Court of Appeals in CA-G.R. CV
No. 51932 is AFFIRMED. Accordingly, petitioner is ordered to pay respondent the amount of P12,901.00
representing the balance of the price of the British Pageant Package Tour, with legal interest thereon at the rate of
6% per annum, to be computed from the time the counterclaim was filed until the finality of this Decision. After
this Decision becomes final and executory, the rate of 12% per annum shall be imposed until the obligation is fully
settled, this interim period being deemed to be by then an equivalent to a forbearance of credit.23

SO ORDERED.
FIRST DIVISION

G.R. No. 141910 August 6, 2002

FGU INSURANCE CORPORATION,

VITUG, J.:

G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver on 18 June 1994 thirty (30) units of Condura S.D.
white refrigerators aboard one of its Isuzu truck, driven by Lambert Eroles, from the plant site of Concepcion
Industries, Inc., along South Superhighway in Alabang, Metro Manila, to the Central Luzon Appliances in Dagupan
City. While the truck was traversing the north diversion road along McArthur highway in Barangay Anupol,
Bamban, Tarlac, it collided with an unidentified truck, causing it to fall into a deep canal, resulting in damage to the
cargoes.

FGU Insurance Corporation (FGU), an insurer of the shipment, paid to Concepcion Industries, Inc., the value of the
covered cargoes in the sum of P204,450.00. FGU, in turn, being the subrogee of the rights and interests of
Concepcion Industries, Inc., sought reimbursement of the amount it had paid to the latter from GPS. Since the
trucking company failed to heed the claim, FGU filed a complaint for damages and breach of contract of carriage
against GPS and its driver Lambert Eroles with the Regional Trial Court, Branch 66, of Makati City. In its answer,
respondents asserted that GPS was the exclusive hauler only of Concepcion Industries, Inc., since 1988, and it was
not so engaged in business as a common carrier. Respondents further claimed that the cause of damage was purely
accidental.1â wphi1.nêt

The issues having thus been joined, FGU presented its evidence, establishing the extent of damage to the cargoes
and the amount it had paid to the assured. GPS, instead of submitting its evidence, filed with leave of court a
motion to dismiss the complaint by way of demurrer to evidence on the ground that petitioner had failed to prove
that it was a common carrier.

The trial court, in its order of 30 April 1996,1 granted the motion to dismiss, explaining thusly:

"Under Section 1 of Rule 131 of the Rules of Court, it is provided that ‘Each party must prove his own affirmative
allegation, xxx.’

"In the instant case, plaintiff did not present any single evidence that would prove that defendant is a common
carrier.

"x x x xxx xxx

"Accordingly, the application of the law on common carriers is not warranted and the presumption of fault or
negligence on the part of a common carrier in case of loss, damage or deterioration of goods during transport
under 1735 of the Civil Code is not availing.

"Thus, the laws governing the contract between the owner of the cargo to whom the plaintiff was subrogated and
the owner of the vehicle which transports the cargo are the laws on obligation and contract of the Civil Code as
well as the law on quasi delicts.

"Under the law on obligation and contract, negligence or fault is not presumed. The law on quasi delict provides for
some presumption of negligence but only upon the attendance of some circumstances. Thus, Article 2185 provides:

‘Art. 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been
negligent if at the time of the mishap, he was violating any traffic regulation.’
"Evidence for the plaintiff shows no proof that defendant was violating any traffic regulation. Hence, the
presumption of negligence is not obtaining.

"Considering that plaintiff failed to adduce evidence that defendant is a common carrier and defendant’s driver
was the one negligent, defendant cannot be made liable for the damages of the subject cargoes."2

The subsequent motion for reconsideration having been denied,3 plaintiff interposed an appeal to the Court of
Appeals, contending that the trial court had erred (a) in holding that the appellee corporation was not a common
carrier defined under the law and existing jurisprudence; and (b) in dismissing the complaint on a demurrer to
evidence.

The Court of Appeals rejected the appeal of petitioner and ruled in favor of GPS. The appellate court, in its decision
of 10 June 1999,4 discoursed, among other things, that -

"x x x in order for the presumption of negligence provided for under the law governing common carrier (Article
1735, Civil Code) to arise, the appellant must first prove that the appellee is a common carrier. Should the
appellant fail to prove that the appellee is a common carrier, the presumption would not arise; consequently, the
appellant would have to prove that the carrier was negligent.

"x x x xxx xxx

"Because it is the appellant who insists that the appellees can still be considered as a common carrier, despite its
`limited clientele,’ (assuming it was really a common carrier), it follows that it (appellant) has the burden of
proving the same. It (plaintiff-appellant) `must establish his case by a preponderance of evidence, which means
that the evidence as a whole adduced by one side is superior to that of the other.’ (Summa Insurance Corporation
vs. Court of Appeals, 243 SCRA 175). This, unfortunately, the appellant failed to do -- hence, the dismissal of the
plaintiff’s complaint by the trial court is justified.

"x x x xxx xxx

"Based on the foregoing disquisitions and considering the circumstances that the appellee trucking corporation has
been `its exclusive contractor, hauler since 1970, defendant has no choice but to comply with the directive of its
principal,’ the inevitable conclusion is that the appellee is a private carrier.

"x x x xxx xxx

"x x x the lower court correctly ruled that 'the application of the law on common carriers is not warranted and the
presumption of fault or negligence on the part of a common carrier in case of loss, damage or deterioration of
good[s] during transport under [article] 1735 of the Civil Code is not availing.' x x x.

"Finally, We advert to the long established rule that conclusions and findings of fact of a trial court are entitled to
great weight on appeal and should not be disturbed unless for strong and valid reasons."5

Petitioner's motion for reconsideration was likewise denied;6 hence, the instant petition,7 raising the following
issues:

WHETHER RESPONDENT GPS MAY BE CONSIDERED AS A COMMON CARRIER AS DEFINED UNDER THE LAW AND
EXISTING JURISPRUDENCE.

II
WHETHER RESPONDENT GPS, EITHER AS A COMMON CARRIER OR A PRIVATE CARRIER, MAY BE PRESUMED TO
HAVE BEEN NEGLIGENT WHEN THE GOODS IT UNDERTOOK TO TRANSPORT SAFELY WERE SUBSEQUENTLY
DAMAGED WHILE IN ITS PROTECTIVE CUSTODY AND POSSESSION.

III

WHETHER THE DOCTRINE OF RES IPSA LOQUITUR IS APPLICABLE IN THE INSTANT CASE.

On the first issue, the Court finds the conclusion of the trial court and the Court of Appeals to be amply justified.
GPS, being an exclusive contractor and hauler of Concepcion Industries, Inc., rendering or offering its services to no
other individual or entity, cannot be considered a common carrier. Common carriers are persons, corporations,
firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land,
water, or air, for hire or compensation, offering their services to the public,8 whether to the public in general or to
a limited clientele in particular, but never on an exclusive basis.9 The true test of a common carrier is the carriage
of passengers or goods, providing space for those who opt to avail themselves of its transportation service for a
fee.10 Given accepted standards, GPS scarcely falls within the term "common carrier."

The above conclusion nothwithstanding, GPS cannot escape from liability.

In culpa contractual, upon which the action of petitioner rests as being the subrogee of Concepcion Industries, Inc.,
the mere proof of the existence of the contract and the failure of its compliance justify, prima facie, a corresponding
right of relief.11 The law, recognizing the obligatory force of contracts,12 will not permit a party to be set free from
liability for any kind of misperformance of the contractual undertaking or a contravention of the tenor thereof.13 A
breach upon the contract confers upon the injured party a valid cause for recovering that which may have been lost
or suffered. The remedy serves to preserve the interests of the promisee that may include his "expectation
interest," which is his interest in having the benefit of his bargain by being put in as good a position as he would
have been in had the contract been performed, or his "reliance interest," which is his interest in being reimbursed
for loss caused by reliance on the contract by being put in as good a position as he would have been in had the
contract not been made; or his "restitution interest," which is his interest in having restored to him any benefit that
he has conferred on the other party.14 Indeed, agreements can accomplish little, either for their makers or for
society, unless they are made the basis for action.15 The effect of every infraction is to create a new duty, that is, to
make recompense to the one who has been injured by the failure of another to observe his contractual
obligation16 unless he can show extenuating circumstances, like proof of his exercise of due diligence (normally
that of the diligence of a good father of a family or, exceptionally by stipulation or by law such as in the case of
common carriers, that of extraordinary diligence) or of the attendance of fortuitous event, to excuse him from his
ensuing liability.

Respondent trucking corporation recognizes the existence of a contract of carriage between it and petitioner’s
assured, and admits that the cargoes it has assumed to deliver have been lost or damaged while in its custody. In
such a situation, a default on, or failure of compliance with, the obligation – in this case, the delivery of the goods in
its custody to the place of destination - gives rise to a presumption of lack of care and corresponding liability on the
part of the contractual obligor the burden being on him to establish otherwise. GPS has failed to do so.

Respondent driver, on the other hand, without concrete proof of his negligence or fault, may not himself be
ordered to pay petitioner. The driver, not being a party to the contract of carriage between petitioner’s principal
and defendant, may not be held liable under the agreement. A contract can only bind the parties who have entered
into it or their successors who have assumed their personality or their juridical position.17 Consonantly with the
axiom res inter alios acta aliis neque nocet prodest, such contract can neither favor nor prejudice a third person.
Petitioner’s civil action against the driver can only be based on culpa aquiliana, which, unlike culpa contractual,
would require the claimant for damages to prove negligence or fault on the part of the defendant.18
A word in passing. Res ipsa loquitur, a doctrine being invoked by petitioner, holds a defendant liable where the
thing which caused the injury complained of is shown to be under the latter’s management and the accident is such
that, in the ordinary course of things, cannot be expected to happen if those who have its management or control
use proper care. It affords reasonable evidence, in the absence of explanation by the defendant, that the accident
arose from want of care.19 It is not a rule of substantive law and, as such, it does not create an independent ground
of liability. Instead, it is regarded as a mode of proof, or a mere procedural convenience since it furnishes a
substitute for, and relieves the plaintiff of, the burden of producing specific proof of negligence. The maxim simply
places on the defendant the burden of going forward with the proof.20 Resort to the doctrine, however, may be
allowed only when (a) the event is of a kind which does not ordinarily occur in the absence of negligence; (b) other
responsible causes, including the conduct of the plaintiff and third persons, are sufficiently eliminated by the
evidence; and (c) the indicated negligence is within the scope of the defendant's duty to the plaintiff.21 Thus, it is
not applicable when an unexplained accident may be attributable to one of several causes, for some of which the
defendant could not be responsible.22

Res ipsa loquitur generally finds relevance whether or not a contractual relationship exists between the plaintiff
and the defendant, for the inference of negligence arises from the circumstances and nature of the occurrence and
not from the nature of the relation of the parties.23 Nevertheless, the requirement that responsible causes other
than those due to defendant’s conduct must first be eliminated, for the doctrine to apply, should be understood as
being confined only to cases of pure (non-contractual) tort since obviously the presumption of negligence in culpa
contractual, as previously so pointed out, immediately attaches by a failure of the covenant or its tenor. In the case
of the truck driver, whose liability in a civil action is predicated on culpa acquiliana, while he admittedly can be
said to have been in control and management of the vehicle which figured in the accident, it is not equally shown,
however, that the accident could have been exclusively due to his negligence, a matter that can allow, forthwith, res
ipsa loquitur to work against him.

If a demurrer to evidence is granted but on appeal the order of dismissal is reversed, the movant shall be deemed
to have waived the right to present evidence.24 Thus, respondent corporation may no longer offer proof to
establish that it has exercised due care in transporting the cargoes of the assured so as to still warrant a remand of
the case to the trial court.1â wphi1.nêt

WHEREFORE, the order, dated 30 April 1996, of the Regional Trial Court, Branch 66, of Makati City, and the
decision, dated 10 June 1999, of the Court of Appeals, are AFFIRMED only insofar as respondent Lambert M. Eroles
is concerned, but said assailed order of the trial court and decision of the appellate court are REVERSED as regards
G.P. Sarmiento Trucking Corporation which, instead, is hereby ordered to pay FGU Insurance Corporation the value
of the damaged and lost cargoes in the amount of P204,450.00. No costs.

SO ORDERED.
G.R. No. 157917 August 29, 2012

SPOUSES TEODORO1 and NANETTE PERENA,

DECISION

BERSAMIN, J.:

The operator of a. school bus service is a common carrier in the eyes of the law. He is bound to observe
extraordinary diligence in the conduct of his business. He is presumed to be negligent when death occurs to a
passenger. His liability may include indemnity for loss of earning capacity even if the deceased passenger may only
be an unemployed high school student at the time of the accident.

The Case

By petition for review on certiorari, Spouses Teodoro and Nanette Perefia (Perefias) appeal the adverse decision
promulgated on November 13, 2002, by which the Court of Appeals (CA) affirmed with modification the decision
rendered on December 3, 1999 by the Regional Trial Court (RTC), Branch 260, in Parañ aque City that had decreed
them jointly and severally liable with Philippine National Railways (PNR), their co-defendant, to Spouses Nicolas
and Teresita Zarate (Zarates) for the death of their 15-year old son, Aaron John L. Zarate (Aaron), then a high
school student of Don Bosco Technical Institute (Don Bosco).

Antecedents

The Pereñ as were engaged in the business of transporting students from their respective residences in Parañ aque
City to Don Bosco in Pasong Tamo, Makati City, and back. In their business, the Pereñ as used a KIA Ceres Van (van)
with Plate No. PYA 896, which had the capacity to transport 14 students at a time, two of whom would be seated in
the front beside the driver, and the others in the rear, with six students on either side. They employed Clemente
Alfaro (Alfaro) as driver of the van.

In June 1996, the Zarates contracted the Pereñ as to transport Aaron to and from Don Bosco. On August 22, 1996, as
on previous school days, the van picked Aaron up around 6:00 a.m. from the Zarates’ residence. Aaron took his
place on the left side of the van near the rear door. The van, with its air-conditioning unit turned on and the stereo
playing loudly, ultimately carried all the 14 student riders on their way to Don Bosco. Considering that the students
were due at Don Bosco by 7:15 a.m., and that they were already running late because of the heavy vehicular traffic
on the South Superhighway, Alfaro took the van to an alternate route at about 6:45 a.m. by traversing the narrow
path underneath the Magallanes Interchange that was then commonly used by Makati-bound vehicles as a short
cut into Makati. At the time, the narrow path was marked by piles of construction materials and parked passenger
jeepneys, and the railroad crossing in the narrow path had no railroad warning signs, or watchmen, or other
responsible persons manning the crossing. In fact, the bamboo barandilla was up, leaving the railroad crossing
open to traversing motorists.

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

Devastated by the early and unexpected death of Aaron, the Zarates commenced this action for damages against
Alfaro, the Pereñ as, PNR and Alano. The Pereñ as and PNR filed their respective answers, with cross-claims against
each other, but Alfaro could not be served with summons.

At the pre-trial, the parties stipulated on the facts and issues, viz:

A. FACTS:

(1) That spouses Zarate were the legitimate parents of Aaron John L. Zarate;

(2) Spouses Zarate engaged the services of spouses Pereñ a for the adequate and safe transportation carriage of
the former spouses' son from their residence in Parañ aque to his school at the Don Bosco Technical Institute in
Makati City;

(3) During the effectivity of the contract of carriage and in the implementation thereof, Aaron, the minor son of
spouses Zarate died in connection with a vehicular/train collision which occurred while Aaron was riding the
contracted carrier Kia Ceres van of spouses Pereñ a, then driven and operated by the latter's employee/authorized
driver Clemente Alfaro, which van collided with the train of PNR, at around 6:45 A.M. of August 22, 1996, within
the vicinity of the Magallanes Interchange in Makati City, Metro Manila, Philippines;

(4) At the time of the vehicular/train collision, the subject site of the vehicular/train collision was a railroad
crossing used by motorists for crossing the railroad tracks;

(5) During the said time of the vehicular/train collision, there were no appropriate and safety warning signs and
railings at the site commonly used for railroad crossing;

(6) At the material time, countless number of Makati bound public utility and private vehicles used on a daily
basis the site of the collision as an alternative route and short-cut to Makati;

(7) The train driver or operator left the scene of the incident on board the commuter train involved without
waiting for the police investigator;

(8) The site commonly used for railroad crossing by motorists was not in fact intended by the railroad operator
for railroad crossing at the time of the vehicular collision;

(9) PNR received the demand letter of the spouses Zarate;

(10) PNR refused to acknowledge any liability for the vehicular/train collision;

(11) The eventual closure of the railroad crossing alleged by PNR was an internal arrangement between the
former and its project contractor; and

(12) The site of the vehicular/train collision was within the vicinity or less than 100 meters from the Magallanes
station of PNR.

B. ISSUES

(1) Whether or not defendant-driver of the van is, in the performance of his functions, liable for negligence
constituting the proximate cause of the vehicular collision, which resulted in the death of plaintiff spouses' son;
(2) Whether or not the defendant spouses Pereñ a being the employer of defendant Alfaro are liable for any
negligence which may be attributed to defendant Alfaro;

(3) Whether or not defendant Philippine National Railways being the operator of the railroad system is liable for
negligence in failing to provide adequate safety warning signs and railings in the area commonly used by motorists
for railroad crossings, constituting the proximate cause of the vehicular collision which resulted in the death of the
plaintiff spouses' son;

(4) Whether or not defendant spouses Pereñ a are liable for breach of the contract of carriage with plaintiff-spouses
in failing to provide adequate and safe transportation for the latter's son;

(5) Whether or not defendants spouses are liable for actual, moral damages, exemplary damages, and attorney's
fees;

(6) Whether or not defendants spouses Teodorico and Nanette Pereñ a observed the diligence of employers and
school bus operators;

(7) Whether or not defendant-spouses are civilly liable for the accidental death of Aaron John Zarate;

(8) Whether or not defendant PNR was grossly negligent in operating the commuter train involved in the accident,
in allowing or tolerating the motoring public to cross, and its failure to install safety devices or equipment at the
site of the accident for the protection of the public;

(9) Whether or not defendant PNR should be made to reimburse defendant spouses for any and whatever amount
the latter may be held answerable or which they may be ordered to pay in favor of plaintiffs by reason of the
action;

(10) Whether or not defendant PNR should pay plaintiffs directly and fully on the amounts claimed by the latter in
their Complaint by reason of its gross negligence;

(11) Whether or not defendant PNR is liable to defendants spouses for actual, moral and exemplary damages and
attorney's fees.2

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

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

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

Ruling of the RTC

On December 3, 1999, the RTC rendered its decision,3 disposing:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the
defendants ordering them to jointly and severally pay the plaintiffs as follows:

(1) (for) the death of Aaron- Php50,000.00;

(2) Actual damages in the amount of Php100,000.00;
(3) For the loss of earning capacity- Php2,109,071.00;
(4) Moral damages in the amount of Php4,000,000.00;
(5) Exemplary damages in the amount of Php1,000,000.00;
(6) Attorney’s fees in the amount of Php200,000.00; and
(7) Cost of suit.
SO ORDERED.

On June 29, 2000, the RTC denied the Pereñ as’ motion for reconsideration,4 reiterating that the cooperative gross
negligence of the Pereñ as and PNR had caused the collision that led to the death of Aaron; and that the damages
awarded to the Zarates were not excessive, but based on the established circumstances.

The CA’s Ruling

Both the Pereñ as and PNR appealed (C.A.-G.R. CV No. 68916).

PNR assigned the following errors, to wit:5

The Court a quo erred in:

1. In finding the defendant-appellant Philippine National Railways jointly and severally liable together with
defendant-appellants spouses Teodorico and Nanette Pereñ a and defendant-appellant Clemente Alfaro to pay
plaintiffs-appellees for the death of Aaron Zarate and damages.

2. In giving full faith and merit to the oral testimonies of plaintiffs-appellees witnesses despite overwhelming
documentary evidence on record, supporting the case of defendants-appellants Philippine National Railways.

The Pereñ as ascribed the following errors to the RTC, namely:

The trial court erred in finding defendants-appellants jointly and severally liable for actual, moral and exemplary
damages and attorney’s fees with the other defendants.

The trial court erred in dismissing the cross-claim of the appellants Pereñ as against the Philippine National
Railways and in not holding the latter and its train driver primarily responsible for the incident.

The trial court erred in awarding excessive damages and attorney’s fees.

The trial court erred in awarding damages in the form of deceased’s loss of earning capacity in the absence of
sufficient basis for such an award.

On November 13, 2002, the CA promulgated its decision, affirming the findings of the RTC, but limited the moral
damages to ₱ 2,500,000.00; and deleted the attorney’s fees because the RTC did not state the factual and legal
bases, to wit:6

WHEREFORE, premises considered, the assailed Decision of the Regional Trial Court, Branch 260 of Parañ aque City
is AFFIRMED with the modification that the award of Actual Damages is reduced to ₱ 59,502.76; Moral Damages is
reduced to ₱ 2,500,000.00; and the award for Attorney’s Fees is Deleted.

SO ORDERED.

The CA upheld the award for the loss of Aaron’s earning capacity, taking cognizance of the ruling in Cariaga v.
Laguna Tayabas Bus Company and Manila Railroad Company,7 wherein the Court gave the heirs of Cariaga a sum
representing the loss of the deceased’s earning capacity despite Cariaga being only a medical student at the time of
the fatal incident. Applying the formula adopted in the American Expectancy Table of Mortality:–

2/3 x (80 - age at the time of death) = life expectancy

the CA determined the life expectancy of Aaron to be 39.3 years upon reckoning his life expectancy from age of 21
(the age when he would have graduated from college and started working for his own livelihood) instead of 15
years (his age when he died). Considering that the nature of his work and his salary at the time of Aaron’s death
were unknown, it used the prevailing minimum wage of ₱ 280.00/day to compute Aaron’s gross annual salary to
be ₱ 110,716.65, inclusive of the thirteenth month pay. Multiplying this annual salary by Aaron’s life expectancy of
39.3 years, his gross income would aggregate to ₱ 4,351,164.30, from which his estimated expenses in the sum of ₱
2,189,664.30 was deducted to finally arrive at P 2,161,500.00 as net income. Due to Aaron’s computed net income
turning out to be higher than the amount claimed by the Zarates, only ₱ 2,109,071.00, the amount expressly prayed
for by them, was granted.

On April 4, 2003, the CA denied the Pereñ as’ motion for reconsideration.8

Issues

In this appeal, the Pereñ as list the following as the errors committed by the CA, to wit:

I. The lower court erred when it upheld the trial court’s decision holding the petitioners jointly and severally liable
to pay damages with Philippine National Railways and dismissing their cross-claim against the latter.

II. The lower court erred in affirming the trial court’s decision awarding damages for loss of earning capacity of a
minor who was only a high school student at the time of his death in the absence of sufficient basis for such an
award.

III. The lower court erred in not reducing further the amount of damages awarded, assuming petitioners are liable
at all.

Ruling

The petition has no merit.

1.Were the Pereñ as and PNR jointly and severally liable for damages?

The Zarates brought this action for recovery of damages against both the Pereñ as and the PNR, basing their claim
against the Pereñ as on breach of contract of carriage and against the PNR on quasi-delict.

The RTC found the Pereñ as and the PNR negligent. The CA affirmed the findings.

We concur with the CA.

To start with, the Pereñ as’ defense was that they exercised the diligence of a good father of the family in the
selection and supervision of Alfaro, the van driver, by seeing to it that Alfaro had a driver’s license and that he had
not been involved in any vehicular accident prior to the fatal collision with the train; that they even had their own
son travel to and from school on a daily basis; and that Teodoro Pereñ a himself sometimes accompanied Alfaro in
transporting the passengers to and from school. The RTC gave scant consideration to such defense by regarding
such defense as inappropriate in an action for breach of contract of carriage.
We find no adequate cause to differ from the conclusions of the lower courts that the Pereñ as operated as a
common carrier; and that their standard of care was extraordinary diligence, not the ordinary diligence of a good
father of a family.

Although in this jurisdiction the operator of a school bus service has been usually regarded as a private carrier,9
primarily because he only caters to some specific or privileged individuals, and his operation is neither open to the
indefinite public nor for public use, the exact nature of the operation of a school bus service has not been finally
settled. This is the occasion to lay the matter to rest.

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

In relation to common carriers, the Court defined public use in the following terms in United States v. Tan Piaco,15
viz:

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

In De Guzman v. Court of Appeals,16 the Court noted that Article 1732 of the Civil Code avoided any distinction
between a person or an enterprise offering transportation on a regular or an isolated basis; and has not
distinguished a carrier offering his services to the general public, that is, the general community or population,
from one offering his services only to a narrow segment of the general population.

Nonetheless, the concept of a common carrier embodied in Article 1732 of the Civil Code coincides neatly with the
notion of public service under the Public Service Act, which supplements the law on common carriers found in the
Civil Code. Public service, according to Section 13, paragraph (b) of the Public Service Act, includes:

x x x every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or
compensation, with general or limited clientèle, whether permanent or occasional, and done for the general
business purposes, any common carrier, railroad, street railway, traction railway, subway motor vehicle, either for
freight or passenger, or both, with or without fixed route and whatever may be its classification, freight or carrier
service of any class, express service, steamboat, or steamship line, pontines, ferries and water craft, engaged in the
transportation of passengers or freight or both, shipyard, marine repair shop, ice-refrigeration plant, canal,
irrigation system, gas, electric light, heat and power, water supply and power petroleum, sewerage system, wire or
wireless communications systems, wire or wireless broadcasting stations and other similar public services. x x x.17

Given the breadth of the aforequoted characterization of a common carrier, the Court has considered as common
carriers pipeline operators,18 custom brokers and warehousemen,19 and barge operators20 even if they had
limited clientèle.

As all the foregoing indicate, the true test for a common carrier is not the quantity or extent of the business actually
transacted, or the number and character of the conveyances used in the activity, but whether the undertaking is a
part of the activity engaged in by the carrier that he has held out to the general public as his business or
occupation. If the undertaking is a single transaction, not a part of the general business or occupation engaged in,
as advertised and held out to the general public, the individual or the entity rendering such service is a private, not
a common, carrier. The question must be determined by the character of the business actually carried on by the
carrier, not by any secret intention or mental reservation it may entertain or assert when charged with the duties
and obligations that the law imposes.21

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

The common carrier’s standard of care and vigilance as to the safety of the passengers is defined by law. Given the
nature of the business and for reasons of public policy, the common carrier is bound "to observe extraordinary
diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all
the circumstances of each case."22 Article 1755 of the Civil Code specifies that the common carrier should "carry
the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious
persons, with a due regard for all the circumstances." To successfully fend off liability in an action upon the death
or injury to a passenger, the common carrier must prove his or its observance of that extraordinary diligence;
otherwise, the legal presumption that he or it was at fault or acted negligently would stand.23 No device, whether
by stipulation, posting of notices, statements on tickets, or otherwise, may dispense with or lessen the
responsibility of the common carrier as defined under Article 1755 of the Civil Code. 24

And, secondly, the Pereñ as have not presented any compelling defense or reason by which the Court might now
reverse the CA’s findings on their liability. On the contrary, an examination of the records shows that the evidence
fully supported the findings of the CA.

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

There is no question that the Pereñ as did not overturn the presumption of their negligence by credible evidence.
Their defense of having observed the diligence of a good father of a family in the selection and supervision of their
driver was not legally sufficient. According to Article 1759 of the Civil Code, their liability as a common carrier did
not cease upon proof that they exercised all the diligence of a good father of a family in the selection and
supervision of their employee. This was the reason why the RTC treated this defense of the Pereñ as as
inappropriate in this action for breach of contract of carriage.
The Pereñ as were liable for the death of Aaron despite the fact that their driver might have acted beyond the scope
of his authority or even in violation of the orders of the common carrier.27 In this connection, the records showed
their driver’s actual negligence. There was a showing, to begin with, that their driver traversed the railroad tracks
at a point at which the PNR did not permit motorists going into the Makati area to cross the railroad tracks.
Although that point had been used by motorists as a shortcut into the Makati area, that fact alone did not excuse
their driver into taking that route. On the other hand, with his familiarity with that shortcut, their driver was fully
aware of the risks to his passengers but he still disregarded the risks. Compounding his lack of care was that loud
music was playing inside the air-conditioned van at the time of the accident. The loudness most probably reduced
his ability to hear the warning horns of the oncoming train to allow him to correctly appreciate the lurking dangers
on the railroad tracks. Also, he sought to overtake a passenger bus on the left side as both vehicles traversed the
railroad tracks. In so doing, he lost his view of the train that was then coming from the opposite side of the
passenger bus, leading him to miscalculate his chances of beating the bus in their race, and of getting clear of the
train. As a result, the bus avoided a collision with the train but the van got slammed at its rear, causing the fatality.
Lastly, he did not slow down or go to a full stop before traversing the railroad tracks despite knowing that his
slackening of speed and going to a full stop were in observance of the right of way at railroad tracks as defined by
the traffic laws and regulations.28 He thereby violated a specific traffic regulation on right of way, by virtue of
which he was immediately presumed to be negligent.29

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

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

The test by which to determine the existence of negligence in a particular case may be stated as follows: Did the
defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent
person would have used in the same situation? If not, then he is guilty of negligence. The law here in effect adopts
the standard supposed to be supplied by the imaginary conduct of the discreet paterfamilias of the Roman law. The
existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the
situation before him. The law considers what would be reckless, blameworthy, or negligent in the man of ordinary
intelligence and prudence and determines liability by that.

The question as to what would constitute the conduct of a prudent man in a given situation must of course be
always determined in the light of human experience and in view of the facts involved in the particular case.
Abstract speculation cannot here be of much value but this much can be profitably said: Reasonable men govern
their conduct by the circumstances which are before them or known to them. They are not, and are not supposed
to be, omniscient of the future. Hence they can be expected to take care only when there is something before them
to suggest or warn of danger. Could a prudent man, in the case under consideration, foresee harm as a result of the
course actually pursued? If so, it was the duty of the actor to take precautions to guard against that harm.
Reasonable foresight of harm, followed by the ignoring of the suggestion born of this prevision, is always necessary
before negligence can be held to exist. Stated in these terms, the proper criterion for determining the existence of
negligence in a given case is this: Conduct is said to be negligent when a prudent man in the position of the
tortfeasor would have foreseen that an effect harmful to another was sufficiently probable to warrant his foregoing
the conduct or guarding against its consequences. (Emphasis supplied)
Pursuant to the Picart v. Smith test of negligence, the Pereñ as’ driver was entirely negligent when he traversed the
railroad tracks at a point not allowed for a motorist’s crossing despite being fully aware of the grave harm to be
thereby caused to his passengers; and when he disregarded the foresight of harm to his passengers by overtaking
the bus on the left side as to leave himself blind to the approach of the oncoming train that he knew was on the
opposite side of the bus.

Unrelenting, the Pereñ as cite Phil. National Railways v. Intermediate Appellate Court,35 where the Court held the
PNR solely liable for the damages caused to a passenger bus and its passengers when its train hit the rear end of
the bus that was then traversing the railroad crossing. But the circumstances of that case and this one share no
similarities. In Philippine National Railways v. Intermediate Appellate Court, no evidence of contributory
negligence was adduced against the owner of the bus. Instead, it was the owner of the bus who proved the exercise
of extraordinary diligence by preponderant evidence. Also, the records are replete with the showing of negligence
on the part of both the Pereñ as and the PNR. Another distinction is that the passenger bus in Philippine National
Railways v. Intermediate Appellate Court was traversing the dedicated railroad crossing when it was hit by the
train, but the Pereñ as’ school van traversed the railroad tracks at a point not intended for that purpose.

At any rate, the lower courts correctly held both the Pereñ as and the PNR "jointly and severally" liable for damages
arising from the death of Aaron. They had been impleaded in the same complaint as defendants against whom the
Zarates had the right to relief, whether jointly, severally, or in the alternative, in respect to or arising out of the
accident, and questions of fact and of law were common as to the Zarates.36 Although the basis of the right to relief
of the Zarates (i.e., breach of contract of carriage) against the Pereñ as was distinct from the basis of the Zarates’
right to relief against the PNR (i.e., quasi-delict under Article 2176, Civil Code), they nonetheless could be held
jointly and severally liable by virtue of their respective negligence combining to cause the death of Aaron. As to the
PNR, the RTC rightly found the PNR also guilty of negligence despite the school van of the Pereñ as traversing the
railroad tracks at a point not dedicated by the PNR as a railroad crossing for pedestrians and motorists, because
the PNR did not ensure the safety of others through the placing of crossbars, signal lights, warning signs, and other
permanent safety barriers to prevent vehicles or pedestrians from crossing there. The RTC observed that the fact
that a crossing guard had been assigned to man that point from 7 a.m. to 5 p.m. was a good indicium that the PNR
was aware of the risks to others as well as the need to control the vehicular and other traffic there. Verily, the
Pereñ as and the PNR were joint tortfeasors.

2. Was the indemnity for loss of Aaron’s earning capacity proper?

The RTC awarded indemnity for loss of Aaron’s earning capacity. Although agreeing with the RTC on the liability,
the CA modified the amount. Both lower courts took into consideration that Aaron, while only a high school
student, had been enrolled in one of the reputable schools in the Philippines and that he had been a normal and
able-bodied child prior to his death. The basis for the computation of Aaron’s earning capacity was not what he
would have become or what he would have wanted to be if not for his untimely death, but the minimum wage in
effect at the time of his death. Moreover, the RTC’s computation of Aaron’s life expectancy rate was not reckoned
from his age of 15 years at the time of his death, but on 21 years, his age when he would have graduated from
college.

We find the considerations taken into account by the lower courts to be reasonable and fully warranted.

Yet, the Pereñ as submit that the indemnity for loss of earning capacity was speculative and unfounded.1â wphi1
They cited People v. Teehankee, Jr.,37 where the Court deleted the indemnity for victim Jussi Leino’s loss of
earning capacity as a pilot for being speculative due to his having graduated from high school at the International
School in Manila only two years before the shooting, and was at the time of the shooting only enrolled in the first
semester at the Manila Aero Club to pursue his ambition to become a professional pilot. That meant, according to
the Court, that he was for all intents and purposes only a high school graduate.
We reject the Pereñ as’ submission.

First of all, a careful perusal of the Teehankee, Jr. case shows that the situation there of Jussi Leino was not akin to
that of Aaron here. The CA and the RTC were not speculating that Aaron would be some highly-paid professional,
like a pilot (or, for that matter, an engineer, a physician, or a lawyer). Instead, the computation of Aaron’s earning
capacity was premised on him being a lowly minimum wage earner despite his being then enrolled at a prestigious
high school like Don Bosco in Makati, a fact that would have likely ensured his success in his later years in life and
at work.

And, secondly, the fact that Aaron was then without a history of earnings should not be taken against his parents
and in favor of the defendants whose negligence not only cost Aaron his life and his right to work and earn money,
but also deprived his parents of their right to his presence and his services as well. Our law itself states that the
loss of the earning capacity of the deceased shall be the liability of the guilty party in favor of the heirs of the
deceased, and shall in every case be assessed and awarded by the court "unless the deceased on account of
permanent physical disability not caused by the defendant, had no earning capacity at the time of his death."38
Accordingly, we emphatically hold in favor of the indemnification for Aaron’s loss of earning capacity despite him
having been unemployed, because compensation of this nature is awarded not for loss of time or earnings but for
loss of the deceased’s power or ability to earn money.39

This favorable treatment of the Zarates’ claim is not unprecedented. In Cariaga v. Laguna Tayabas Bus Company
and Manila Railroad Company,40 fourth-year medical student Edgardo Carriaga’s earning capacity, although he
survived the accident but his injuries rendered him permanently incapacitated, was computed to be that of the
physician that he dreamed to become. The Court considered his scholastic record sufficient to justify the
assumption that he could have finished the medical course and would have passed the medical board examinations
in due time, and that he could have possibly earned a modest income as a medical practitioner. Also, in People v.
Sanchez,41 the Court opined that murder and rape victim Eileen Sarmienta and murder victim Allan Gomez could
have easily landed good-paying jobs had they graduated in due time, and that their jobs would probably pay them
high monthly salaries from ₱ 10,000.00 to ₱ 15,000.00 upon their graduation. Their earning capacities were
computed at rates higher than the minimum wage at the time of their deaths due to their being already senior
agriculture students of the University of the Philippines in Los Bañ os, the country’s leading educational institution
in agriculture.

3.Were the amounts of damages excessive?

The Pereñ as plead for the reduction of the moral and exemplary damages awarded to the Zarates in the respective
amounts of ₱ 2,500,000.00 and ₱ 1,000,000.00 on the ground that such amounts were excessive.

The plea is unwarranted.

The moral damages of ₱ 2,500,000.00 were really just and reasonable under the established circumstances of this
case because they were intended by the law to assuage the Zarates’ deep mental anguish over their son’s
unexpected and violent death, and their moral shock over the senseless accident. That amount would not be too
much, considering that it would help the Zarates obtain the means, diversions or amusements that would alleviate
their suffering for the loss of their child. At any rate, reducing the amount as excessive might prove to be an
injustice, given the passage of a long time from when their mental anguish was inflicted on them on August 22,
1996.

Anent the ₱ 1,000,000.00 allowed as exemplary damages, we should not reduce the amount if only to render
effective the desired example for the public good. As a common carrier, the Pereñ as needed to be vigorously
reminded to observe their duty to exercise extraordinary diligence to prevent a similarly senseless accident from
happening again. Only by an award of exemplary damages in that amount would suffice to instill in them and
others similarly situated like them the ever-present need for greater and constant vigilance in the conduct of a
business imbued with public interest.

WHEREFORE, we DENY the petition for review on certiorari; AFFIRM the decision promulgated on November 13,
2002; and ORDER the petitioners to pay the costs of suit.

SO ORDERED.
G.R. No. L-47822 December 22, 1988
PEDRO DE GUZMAN, Vicente D. Millora for petitioner.
Jacinto Callanta for private respondent.
FELICIANO, J.:
Respondent Ernesto Cendana, a junk dealer, was engaged in buying up used bottles and scrap metal in Pangasinan.
Upon gathering sufficient quantities of such scrap material, respondent would bring such material to Manila for
resale. He utilized two (2) six-wheeler trucks which he owned for hauling the material to Manila. On the return trip
to Pangasinan, respondent would load his vehicles with cargo which various merchants wanted delivered to
differing establishments in Pangasinan. For that service, respondent charged freight rates which were commonly
lower than regular commercial rates.
Sometime in November 1970, petitioner Pedro de Guzman a merchant and authorized dealer of General Milk
Company (Philippines), Inc. in Urdaneta, Pangasinan, contracted with respondent for the hauling of 750 cartons of
Liberty filled milk from a warehouse of General Milk in Makati, Rizal, to petitioner's establishment in Urdaneta on
or before 4 December 1970. Accordingly, on 1 December 1970, respondent loaded in Makati the merchandise on to
his trucks: 150 cartons were loaded on a truck driven by respondent himself, while 600 cartons were placed on
board the other truck which was driven by Manuel Estrada, respondent's driver and employee.
Only 150 boxes of Liberty filled milk were delivered to petitioner. The other 600 boxes never reached petitioner,
since the truck which carried these boxes was hijacked somewhere along the MacArthur Highway in Paniqui,
Tarlac, by armed men who took with them the truck, its driver, his helper and the cargo.
On 6 January 1971, petitioner commenced action against private respondent in the Court of First Instance of
Pangasinan, demanding payment of P 22,150.00, the claimed value of the lost merchandise, plus damages and
attorney's fees. Petitioner argued that private respondent, being a common carrier, and having failed to exercise
the extraordinary diligence required of him by the law, should be held liable for the value of the undelivered goods.
In his Answer, private respondent denied that he was a common carrier and argued that he could not be held
responsible for the value of the lost goods, such loss having been due to force majeure.
On 10 December 1975, the trial court rendered a Decision 1 finding private respondent to be a common carrier and
holding him liable for the value of the undelivered goods (P 22,150.00) as well as for P 4,000.00 as damages and P
2,000.00 as attorney's fees.
On appeal before the Court of Appeals, respondent urged that the trial court had erred in considering him a
common carrier; in finding that he had habitually offered trucking services to the public; in not exempting him
from liability on the ground of force majeure; and in ordering him to pay damages and attorney's fees.
The Court of Appeals reversed the judgment of the trial court and held that respondent had been engaged in
transporting return loads of freight "as a casual
occupation — a sideline to his scrap iron business" and not as a common carrier. Petitioner came to this Court by
way of a Petition for Review assigning as errors the following conclusions of the Court of Appeals:
1. that private respondent was not a common carrier;
2. that the hijacking of respondent's truck was force majeure; and
3. that respondent was not liable for the value of the undelivered cargo. (Rollo, p. 111)
We consider first the issue of whether or not private respondent Ernesto Cendana may, under the facts earlier set
forth, be properly characterized as a common carrier.
The Civil Code defines "common carriers" in the following terms:
Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying
or transporting passengers or goods or both, by land, water, or air for compensation, offering their services to the
public.
The above article makes no distinction between one whose principal business activity is the carrying of persons or
goods or both, and one who does such carrying only as an ancillary activity (in local Idiom as "a sideline"). Article
1732 also carefully avoids making any distinction between a person or enterprise offering transportation service
on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis.
Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the general
community or population, and one who offers services or solicits business only from a narrow segment of the
general population. We think that Article 1733 deliberaom making such distinctions.
So understood, the concept of "common carrier" under Article 1732 may be seen to coincide neatly with the notion
of "public service," under the Public Service Act (Commonwealth Act No. 1416, as amended) which at least partially
supplements the law on common carriers set forth in the Civil Code. Under Section 13, paragraph (b) of the Public
Service Act, "public service" includes:
... every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general
business purposes, any common carrier, railroad, street railway, traction railway, subway motor vehicle, either for
freight or passenger, or both, with or without fixed route and whatever may be its classification, freight or carrier
service of any class, express service, steamboat, or steamship line, pontines, ferries and water craft, engaged in the
transportation of passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant,
ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and power
petroleum, sewerage system, wire or wireless communications systems, wire or wireless broadcasting stations and
other similar public services. ... (Emphasis supplied)
It appears to the Court that private respondent is properly characterized as a common carrier even though he
merely "back-hauled" goods for other merchants from Manila to Pangasinan, although such back-hauling was done
on a periodic or occasional rather than regular or scheduled manner, and even though private respondent's
principal occupation was not the carriage of goods for others. There is no dispute that private respondent charged
his customers a fee for hauling their goods; that fee frequently fell below commercial freight rates is not relevant
here.
The Court of Appeals referred to the fact that private respondent held no certificate of public convenience, and
concluded he was not a common carrier. This is palpable error. A certificate of public convenience is not a requisite
for the incurring of liability under the Civil Code provisions governing common carriers. That liability arises the
moment a person or firm acts as a common carrier, without regard to whether or not such carrier has also
complied with the requirements of the applicable regulatory statute and implementing regulations and has been
granted a certificate of public convenience or other franchise. To exempt private respondent from the liabilities of
a common carrier because he has not secured the necessary certificate of public convenience, would be offensive to
sound public policy; that would be to reward private respondent precisely for failing to comply with applicable
statutory requirements. The business of a common carrier impinges directly and intimately upon the safety and
well being and property of those members of the general community who happen to deal with such carrier. The
law imposes duties and liabilities upon common carriers for the safety and protection of those who utilize their
services and the law cannot allow a common carrier to render such duties and liabilities merely facultative by
simply failing to obtain the necessary permits and authorizations.
We turn then to the liability of private respondent as a common carrier.
Common carriers, "by the nature of their business and for reasons of public policy" 2 are held to a very high degree
of care and diligence ("extraordinary diligence") in the carriage of goods as well as of passengers. The specific
import of extraordinary diligence in the care of goods transported by a common carrier is, according to Article
1733, "further expressed in Articles 1734,1735 and 1745, numbers 5, 6 and 7" of the Civil Code.
Article 1734 establishes the general rule that common carriers are responsible for the loss, destruction or
deterioration of the goods which they carry, "unless the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character-of the goods or defects in the packing or-in the containers; and
(5) Order or act of competent public authority.
It is important to point out that the above list of causes of loss, destruction or deterioration which exempt the
common carrier for responsibility therefor, is a closed list. Causes falling outside the foregoing list, even if they
appear to constitute a species of force majeure fall within the scope of Article 1735, which provides as follows:
In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of the preceding article, if the goods are lost,
destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless
they prove that they observed extraordinary diligence as required in Article 1733. (Emphasis supplied)
Applying the above-quoted Articles 1734 and 1735, we note firstly that the specific cause alleged in the instant
case — the hijacking of the carrier's truck — does not fall within any of the five (5) categories of exempting causes
listed in Article 1734. It would follow, therefore, that the hijacking of the carrier's vehicle must be dealt with under
the provisions of Article 1735, in other words, that the private respondent as common carrier is presumed to have
been at fault or to have acted negligently. This presumption, however, may be overthrown by proof of
extraordinary diligence on the part of private respondent.
Petitioner insists that private respondent had not observed extraordinary diligence in the care of petitioner's
goods. Petitioner argues that in the circumstances of this case, private respondent should have hired a security
guard presumably to ride with the truck carrying the 600 cartons of Liberty filled milk. We do not believe,
however, that in the instant case, the standard of extraordinary diligence required private respondent to retain a
security guard to ride with the truck and to engage brigands in a firelight at the risk of his own life and the lives of
the driver and his helper.
The precise issue that we address here relates to the specific requirements of the duty of extraordinary diligence in
the vigilance over the goods carried in the specific context of hijacking or armed robbery.
As noted earlier, the duty of extraordinary diligence in the vigilance over goods is, under Article 1733, given
additional specification not only by Articles 1734 and 1735 but also by Article 1745, numbers 4, 5 and 6, Article
1745 provides in relevant part:
Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy:
xxx xxx xxx
(5) that the common carrier shall not be responsible for the acts or omissions of his or its employees;
(6) that the common carrier's liability for acts committed by thieves, or of robbers who do not act with grave or
irresistible threat, violence or force, is dispensed with or diminished; and
(7) that the common carrier shall not responsible for the loss, destruction or deterioration of goods on account of
the defective condition of the car vehicle, ship, airplane or other equipment used in the contract of carriage.
(Emphasis supplied)
Under Article 1745 (6) above, a common carrier is held responsible — and will not be allowed to divest or to
diminish such responsibility — even for acts of strangers like thieves or robbers, except where such thieves or
robbers in fact acted "with grave or irresistible threat, violence or force." We believe and so hold that the limits of
the duty of extraordinary diligence in the vigilance over the goods carried are reached where the goods are lost as
a result of a robbery which is attended by "grave or irresistible threat, violence or force."
In the instant case, armed men held up the second truck owned by private respondent which carried petitioner's
cargo. The record shows that an information for robbery in band was filed in the Court of First Instance of Tarlac,
Branch 2, in Criminal Case No. 198 entitled "People of the Philippines v. Felipe Boncorno, Napoleon Presno,
Armando Mesina, Oscar Oria and one John Doe." There, the accused were charged with willfully and unlawfully
taking and carrying away with them the second truck, driven by Manuel Estrada and loaded with the 600 cartons
of Liberty filled milk destined for delivery at petitioner's store in Urdaneta, Pangasinan. The decision of the trial
court shows that the accused acted with grave, if not irresistible, threat, violence or force.3
In these circumstances, we hold that the occurrence of the loss must reasonably be regarded as quite beyond the
control of the common carrier and properly regarded as a fortuitous event. It is necessary to recall that even
common carriers are not made absolute insurers against all risks of travel and of transport of goods, and are not
held liable for acts or events which cannot be foreseen or are inevitable, provided that they shall have complied
with the rigorous standard of extraordinary diligence.
We, therefore, agree with the result reached by the Court of Appeals that private respondent Cendana is not liable
for the value of the undelivered merchandise which was lost because of an event entirely beyond private
respondent's control.
ACCORDINGLY, the Petition for Review on certiorari is hereby DENIED and the Decision of the Court of Appeals
dated 3 August 1977 is AFFIRMED. No pronouncement as to costs.
SO ORDERED.
G.R. No. 147246 August 19, 2003
ASIA LIGHTERAGE AND SHIPPING, INC.,
PUNO, J.:
On appeal is the Court of Appeals' May 11, 2000 Decision1 in CA-G.R. CV No. 49195 and February 21, 2001
Resolution2 affirming with modification the April 6, 1994 Decision3 of the Regional Trial Court of Manila which
found petitioner liable to pay private respondent the amount of indemnity and attorney's fees.
First, the facts.
On June 13, 1990, 3,150 metric tons of Better Western White Wheat in bulk, valued at US$423,192.354 was
shipped by Marubeni American Corporation of Portland, Oregon on board the vessel M/V NEO CYMBIDIUM V-26
for delivery to the consignee, General Milling Corporation in Manila, evidenced by Bill of Lading No. PTD/Man-4.5
The shipment was insured by the private respondent Prudential Guarantee and Assurance, Inc. against loss or
damage for P14,621,771.75 under Marine Cargo Risk Note RN 11859/90.6
On July 25, 1990, the carrying vessel arrived in Manila and the cargo was transferred to the custody of the
petitioner Asia Lighterage and Shipping, Inc. The petitioner was contracted by the consignee as carrier to deliver
the cargo to consignee's warehouse at Bo. Ugong, Pasig City.
On August 15, 1990, 900 metric tons of the shipment was loaded on barge PSTSI III, evidenced by Lighterage
Receipt No. 03647 for delivery to consignee. The cargo did not reach its destination.
It appears that on August 17, 1990, the transport of said cargo was suspended due to a warning of an incoming
typhoon. On August 22, 1990, the petitioner proceeded to pull the barge to Engineering Island off Baseco to seek
shelter from the approaching typhoon. PSTSI III was tied down to other barges which arrived ahead of it while
weathering out the storm that night. A few days after, the barge developed a list because of a hole it sustained after
hitting an unseen protuberance underneath the water. The petitioner filed a Marine Protest on August 28, 1990.8 It
likewise secured the services of Gaspar Salvaging Corporation which refloated the barge.9 The hole was then
patched with clay and cement.
The barge was then towed to ISLOFF terminal before it finally headed towards the consignee's wharf on September
5, 1990. Upon reaching the Sta. Mesa spillways, the barge again ran aground due to strong current. To avoid the
complete sinking of the barge, a portion of the goods was transferred to three other barges.10
The next day, September 6, 1990, the towing bits of the barge broke. It sank completely, resulting in the total loss
of the remaining cargo.11 A second Marine Protest was filed on September 7, 1990.12
On September 14, 1990, a bidding was conducted to dispose of the damaged wheat retrieved and loaded on the
three other barges.13 The total proceeds from the sale of the salvaged cargo was P201,379.75.14
On the same date, September 14, 1990, consignee sent a claim letter to the petitioner, and another letter dated
September 18, 1990 to the private respondent for the value of the lost cargo.
On January 30, 1991, the private respondent indemnified the consignee in the amount of P 4,104,654.22.15
Thereafter, as subrogee, it sought recovery of said amount from the petitioner, but to no avail.
On July 3, 1991, the private respondent filed a complaint against the petitioner for recovery of the amount of
indemnity, attorney's fees and cost of suit.16 Petitioner filed its answer with counterclaim.17
The Regional Trial Court ruled in favor of the private respondent. The dispositive portion of its Decision states:
WHEREFORE, premises considered, judgment is hereby rendered ordering defendant Asia Lighterage & Shipping,
Inc. liable to pay plaintiff Prudential Guarantee & Assurance Co., Inc. the sum of P 4,104,654.22 with interest from
the date complaint was filed on July 3, 1991 until fully satisfied plus 10% of the amount awarded as and for
attorney's fees. Defendant's counterclaim is hereby DISMISSED. With costs against defendant.18
Petitioner appealed to the Court of Appeals insisting that it is not a common carrier. The appellate court affirmed
the decision of the trial court with modification. The dispositive portion of its decision reads:
WHEREFORE, the decision appealed from is hereby AFFIRMED with modification in the sense that the salvage
value of P 201,379.75 shall be deducted from the amount of P 4,104,654.22. Costs against appellant.
SO ORDERED.
Petitioner's Motion for Reconsideration dated June 3, 2000 was likewise denied by the appellate court in a
Resolution promulgated on February 21, 2001.
Hence, this petition. Petitioner submits the following errors allegedly committed by the appellate court, viz:19
(1) THE COURT OF APPEALS DECIDED THE CASE A QUO IN A WAY NOT IN ACCORD WITH LAW AND/OR WITH
THE APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT HELD THAT PETITIONER IS A COMMON
CARRIER.
(2) THE COURT OF APPEALS DECIDED THE CASE A QUO IN A WAY NOT IN ACCORD WITH LAW AND/OR WITH
THE APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT AFFIRMED THE FINDING OF THE LOWER
COURT A QUO THAT ON THE BASIS OF THE PROVISIONS OF THE CIVIL CODE APPLICABLE TO COMMON
CARRIERS, "THE LOSS OF THE CARGO IS, THEREFORE, BORNE BY THE CARRIER IN ALL CASES EXCEPT IN THE
FIVE (5) CASES ENUMERATED."
(3) THE COURT OF APPEALS DECIDED THE CASE A QUO IN A WAY NOT IN ACCORD WITH LAW AND/OR WITH
THE APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT EFFECTIVELY CONCLUDED THAT PETITIONER
FAILED TO EXERCISE DUE DILIGENCE AND/OR WAS NEGLIGENT IN ITS CARE AND CUSTODY OF THE
CONSIGNEE'S CARGO.
The issues to be resolved are:
(1) Whether the petitioner is a common carrier; and,
(2) Assuming the petitioner is a common carrier, whether it exercised extraordinary diligence in its care and
custody of the consignee's cargo.
On the first issue, we rule that 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.20
We disagree.
In De Guzman vs. Court of Appeals,21 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 drayage22 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, supra,23 we considered private respondent Ernesto Cendañ a 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.24 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."25 In the case at bar, the petitioner admitted that it is engaged in the business of shipping and
lighterage,26 offering its barges to the public, despite its limited clientele for carrying or transporting goods by
water for compensation.27
On the second issue, we uphold the findings of the lower courts that petitioner failed to exercise extraordinary
diligence in its care and custody of the consignee's goods.
Common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by
them.28 They are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or
deteriorated.29 To overcome the presumption of negligence in the case of loss, destruction or deterioration of the
goods, the common carrier must prove that it exercised extraordinary diligence. There are, however, exceptions to
this rule. Article 1734 of the Civil Code enumerates the instances when the presumption of negligence does not
attach:
Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same
is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.
In the case at bar, the barge completely sank after its towing bits broke, resulting in the total loss of its cargo.
Petitioner claims that this was caused by a typhoon, hence, it should not be held liable for the loss of the cargo.
However, petitioner failed to prove that the typhoon is the proximate and only cause of the loss of the goods, and
that it has exercised due diligence before, during and after the occurrence of the typhoon to prevent or minimize
the loss.30 The evidence show that, even before the towing bits of the barge broke, it had already previously
sustained damage when it hit a sunken object while docked at the Engineering Island. It even suffered a hole.
Clearly, this could not be solely attributed to the typhoon. The partly-submerged vessel was refloated but its hole
was patched with only clay and cement. The patch work was merely a provisional remedy, not enough for the
barge to sail safely. Thus, when petitioner persisted to proceed with the voyage, it recklessly exposed the cargo to
further damage. A portion of the cross-examination of Alfredo Cunanan, cargo-surveyor of Tan-Gatue Adjustment
Co., Inc., states:
CROSS-EXAMINATION BY ATTY. DONN LEE:31
xxx xxx xxx
q - Can you tell us what else transpired after that incident?
a - After the first accident, through the initiative of the barge owners, they tried to pull out the barge from the
place of the accident, and bring it to the anchor terminal for safety, then after deciding if the vessel is stabilized,
they tried to pull it to the consignee's warehouse, now while on route another accident occurred, now this time the
barge totally hitting something in the course.
q - You said there was another accident, can you tell the court the nature of the second accident?
a - The sinking, sir.
q - Can you tell the nature . . . can you tell the court, if you know what caused the sinking?
a - Mostly it was related to the first accident because there was already a whole (sic) on the bottom part of the
barge.
xxx xxx xxx
This is not all. Petitioner still headed to the consignee's wharf despite knowledge of an incoming typhoon. During
the time that the barge was heading towards the consignee's wharf on September 5, 1990, typhoon "Loleng" has
already entered the Philippine area of responsibility.32 A part of the testimony of Robert Boyd, Cargo Operations
Supervisor of the petitioner, reveals:
DIRECT-EXAMINATION BY ATTY. LEE:33
xxx xxx xxx
q - Now, Mr. Witness, did it not occur to you it might be safer to just allow the Barge to lie where she was
instead of towing it?
a - Since that time that the Barge was refloated, GMC (General Milling Corporation, the consignee) as I have
said was in a hurry for their goods to be delivered at their Wharf since they needed badly the wheat that was
loaded in PSTSI-3. It was needed badly by the consignee.
q - And this is the reason why you towed the Barge as you did?
a - Yes, sir.
xxx xxx xxx
CROSS-EXAMINATION BY ATTY. IGNACIO:34
xxx xxx xxx
q - And then from ISLOFF Terminal you proceeded to the premises of the GMC? Am I correct?
a - The next day, in the morning, we hired for additional two (2) tugboats as I have stated.
q - Despite of the threats of an incoming typhoon as you testified a while ago?
a - It is already in an inner portion of Pasig River. The typhoon would be coming and it would be dangerous if
we are in the vicinity of Manila Bay.
q - But the fact is, the typhoon was incoming? Yes or no?
a - Yes.
q - And yet as a standard operating procedure of your Company, you have to secure a sort of Certification to
determine the weather condition, am I correct?
a - Yes, sir.
q - So, more or less, you had the knowledge of the incoming typhoon, right?
a - Yes, sir.
q - And yet you proceeded to the premises of the GMC?
a - ISLOFF Terminal is far from Manila Bay and anytime even with the typhoon if you are already inside the
vicinity or inside Pasig entrance, it is a safe place to tow upstream.
Accordingly, the petitioner cannot invoke the occurrence of the typhoon as force majeure to escape liability for the
loss sustained by the private respondent. Surely, meeting a typhoon head-on falls short of due diligence required
from a common carrier. More importantly, the officers/employees themselves of petitioner admitted that when the
towing bits of the vessel broke that caused its sinking and the total loss of the cargo upon reaching the Pasig River,
it was no longer affected by the typhoon. The typhoon then is not the proximate cause of the loss of the cargo; a
human factor, i.e., negligence had intervened.
IN VIEW THEREOF, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 49195 dated
May 11, 2000 and its Resolution dated February 21, 2001 are hereby AFFIRMED. Costs against petitioner.
SO ORDERED.