1. G.R. No.

L-47822 December 22, 1988

PEDRO DE GUZMAN, vs. COURT OF APPEALS and ERNESTO CENDANA

FACTS: Petitioner de Guzman, merchant and manufacturer, hired private respondent Cendana to transport
milk products from Manila to Pangasinan. Not all of the cartons of milk were delivered, since one of the trucks
which carried the cargo was hijacked in Tarlac by armed men who took with them the truck, its driver, his
helper and the cargo.

Petitioner commenced action against the private respondent for the claimed value of the lost merchandise,
arguing that the latter being a common carrier, failed to exercise the extraordinary diligence required under
the law. The private respondent denied that he was a common carrier, having engaged in transporting return
loads of freight as a “casual occupation” or “sideline” to his main business of scrap iron. He also argued that
he is exempt from liability on the ground of force majeure.

The CA reversed the judgment of the trial court which had considered the private respondent a common
carrier. The CA held that the respondent, having engaged in transportation as a casual occupation, and
having no Certificate of Public Convenience could not be considered as a common carrier, and thus not liable
for the loss of the undelivered goods due to force majeure.

ISSUES:
a. Whether or not the respondent is a common carrier
b. Whether or not the loss was due to force majeure

RULING:
a. Yes, the respondent is a common carrier, notwithstanding the fact that he is engaged in such
business as an ancillary activity nor the fact that he did not possess a Certificate of Public
Convenience. The Civil Code defines a “common carrier” 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"). 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. 

b. No, the respondent is not liable for the loss due to force majeure. 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.

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 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.

For cases not falling within the exclusive enumeration under Art. 1734, Article 1735 applies:

Art. 1735. 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. 

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:

(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.

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. Three (3) of the five (5) hold-uppers were armed with firearms. The robbers not only took
away the truck and its cargo but also kidnapped the driver and his helper, detaining them for several days
and later releasing them in another province.

In these circumstances, the Court held 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.

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 2. G.R. No. 125948 December 29, 1998

FIRST PHILIPPINE INDUSTRIAL CORPORATION , vs.

COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN, BATANGAS CITY and ADORACION C.
ARELLANO, in her official capacity as City Treasurer of Batangas

FACTS: Petitioner is a grantee of a pipeline concession under Republic Act No. 387, as amended, to
contract, install and operate oil pipelines. It applied for mayor’s permit in Batangas. However, the Treasurer
required petitioner to pay a local tax based on gross receipts amounting to P956,076.04. In order not to
hamper its operations, petitioner paid the taxes under protest. Petitioner claimed that its company is exempt
from local tax since it is a common carrier engaged in the business of transporting petroleum products from
the Batangas refineries, via pipeline, to the Sucat and JTF Pandacan terminals. Petitioner asserted that its
company is exempt from paying tax on gross receipts under Sec. 133 of the Local Government Code of
1991. The respondents argued that petitioner cannot be exempt from taxes under Section 133 (j) of the Local
Government Code as said exemption applies only to "transportation contractors and persons engaged in the
transportation by hire and common carriers by air, land and water." Respondents assert that pipelines are not
included in the term "common carrier" which refers solely to ordinary carriers such as trucks, trains, ships and
the like. Respondents further posit that the term "common carrier" under the said code pertains to the mode
or manner by which a product is delivered to its destination.
Both the RTC and the CA denied the petitioner’s prayer for tax refund, citing that the
the petitioner is not a common carrier or a transportation contractor. It also ruled that the exemption sought
for by petitioner is not clear under the law; as such, tax exemptions are to be strictly construed against the
taxpayer and exemptions granted only by clear and unequivocal provisions of law.

ISSUE: Whether or not the petitioner is a common carrier

RULING: Yes. A "common carrier" may be defined, broadly, as one who holds himself out to the public as
engaged in the business of transporting persons or property from place to place, for compensation, offering
his services to the public generally.

Art. 1732 of the Civil Code defines a "common carrier" as "any 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 their services to the public."

The test for determining whether a party is a common carrier of goods is:

1. He must be engaged in the business of carrying goods for others as a public employment, and must hold
himself out as ready to engage in the transportation of goods for person generally as a business and not as a
casual occupation;

2. He must undertake to carry goods of the kind to which his business is confined;

3. He must undertake to carry by the method by which his business is conducted and over his established
roads; and

4. The transportation must be for hire. 

Based on the above definitions and requirements, there is no doubt that petitioner is a common carrier. It is
engaged in the business of transporting or carrying goods, i.e. petroleum products, for hire as a public
employment. It undertakes to carry for all persons indifferently, that is, to all persons who choose to employ
its services, and transports the goods by land and for compensation. The fact that petitioner has a limited
clientele does not exclude it from the definition of a common carrier.

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Respondent's argument that the term "common carrier" as used in Section 133 (j) of the Local Government
Code refers only to common carriers transporting goods and passengers through moving vehicles or vessels
either by land, sea or water, is erroneous.

As correctly pointed out by petitioner, the definition of "common carriers" in the Civil Code makes no
distinction as to the means of transporting, as long as it is by land, water or air. It does not provide that the
transportation of the passengers or goods should be by motor vehicle.

Furthermore, Art. 86 of the Petroleum Act of the Philippines (Republic Act 387) and the Bureau of Internal
Revenue in its BIR Ruling No. 069-83, both declare that pipe line concessionaires are common carriers.

3. G.R. No. 157917               August 29, 2012

SPOUSES TEODORO and NANETTE PERENA vs.

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

FACTS: Perenas were engaged in the school bus business, transporting students from Paranaque to Don
Bosco school in Makati. The Zarates engaged Perenas’ services to transport their son, Aaron, to school.

On the way to school, the van’s air-conditioned unit was turned on and the stereo played loudly. Alfaro, the
driver took a detour because they were running late due to the traffic in SLEX. The detour was through a
narrow path underneath the Magallanes Interchange commonly used as shortcut into Makati. When the van
was about to traverse the PNR railroad crossing, the van was tailed a large passenger bus and the driver’s
view of the oncoming train was blocked. The bus was able to cross the tracks in time, but the train hit the van
at the rear end, and the impact threw 9 students including Aaron out of the van. Aaron landed in the path of
the train which dragged his body and severed his head, instantaneously killing him.

The Zarates filed for damages against the driver Alfaro, the spouses Perenas, PNR, and the train driver. The
cause of action against Perena was for breach of contract of carriage while for PNR, quasi delict. Perena
posited the defense of diligence of a good father in the selection and supervision of their driver, as well as
denied that they are common carriers.

ISSUE: Whether or not a school bus service is common carrier.

RULING: Yes. Perena’s defense of diligence of a good father in the selection and supervision of their driver
is unavailable for breach of contract of carriage. Perenas operated as a common carrier; and their standard
of care was extraordinary diligence, not only diligence of a good father.

A carrier is a person or corporation who undertakes to transport or convey goods from one place to another,
gratuitously or for hire. They may be private or common.

A Private carrier is one who, without holding himself or itself out to the public as ready to act for all who may
desire his or its services, undertakes, by special agreement in a particular instance only, to transport goods
or persons from one place to another either gratuitously or for hire. The diligence required of a private carrier
is only ordinary care.

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. Diligence required is to observe extraordinary diligence, and is presumed to be at fault or to have
acted negligently in case of the loss of effects of passengers, or death or injuries to passengers

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The true test for a common carrier is not the quantity or extent of business actually transacted, or the number
of conveyances, but whether the undertaking is a part of the activity that he has held out to the general public
as his business or occupation.

The Perenas held themselves out as a ready transportation indiscriminately to the students of a particular
school living within or near where they operated the service and for a fee. 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.

4. G.R. No. 92288 February 9, 1993

BRITISH AIRWAYS, INC., vs.

THE HON. COURT OF APPEALS, Twelfth Division, and FIRST INTERNATIONAL TRADING AND
GENERAL SERVICES

FACTS: Private respondent First International Trading and General Services Co., a duly licensed domestic
recruitment and placement agency, received a telex message from its principal ROLACO Engineering and
Contracting Services in Jeddah, Saudi Arabia to recruit Filipino contract workers. During the early part of
March, said principal paid the Jeddah branch of petitioner British Airways airfare tickets for the 93 contract
workers with a specific instruction to transport them to Jeddah on or before March 30, 1981. However, the
not all of the contract workers were flown to Jeddah before the agreed-upon date due to numerous delays
and flight cancellations of British Airways without prior notice. Because of this, the principal cancelled the
hiring of the remaining recruited workers bound for Jeddah. Private respondent initiated a suit against
petitioner for damages and unrealized profits.

It is the contention of petitioner that private respondent has no cause of action against it there being no
perfected contract of carriage existing between them as no ticket was ever issued to private respondent's
contract workers and, therefore, the obligation of the petitioner to transport said contract workers did not
arise. Furthermore, private respondent's failure to attach any ticket in the complaint further proved that it was
never a party to the alleged transaction.

ISSUE: Whether or not there respondent had no cause of action against British Airways because there is no
perfected contract of carriage.

RULING: There is a perfected contract of carriage, thereby making British Airways liable for breach.
"In dealing with the contract of common carriage of passengers, for purpose of accuracy, there are two (2)
aspects of the same, namely:

(a) the contract 'to carry (at some future time)/ which contract is consensual and is necessarily perfected
by mere consent (See Article 1356, Civil Code of the Philippines); and

(b) the contract 'of carriage' or 'of common carriage' itself which should be considered as a real contract
for not until the carrier is actually used can the carrier be said to have already assumed the obligation
of a carrier. (Paras, Civil Code Annotated, Vol. V, p. 429, Eleventh Ed.)

In the instant case, the contract 'to carry' is the one involved which is consensual and is perfected by the
mere consent of the parties.

The appellant's consent thereto, was manifested by its acceptance of the PTA or prepaid ticket advice that
ROLACO Engineering has prepaid the airfares of the appellee's contract workers advising the appellant that
it must transport the contract workers on or before the end of March, 1981.

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"Even if a PTA is merely an advice from the sponsors that an airline is authorized to issue a ticket and thus
no ticket was yet issued, the fact remains that the passage had already been paid for by the principal of the
appellee, and the appellant had accepted such payment. The existence of this payment was never objected
to nor questioned by the appellant in the lower court. Thus, the cause or consideration which is the fare paid
for the passengers exists in this case.

The third essential requisite of a contract is an object certain. In this contract 'to carry', such an object is the
transport of the passengers from the place of departure to the place of destination as stated in the telex.

Private respondent had a valid cause of action for damages against petitioner. A cause of action is an act or
omission of one party in violation of the legal right or rights of the other. Petitioner's repeated failures to
transport private respondent's workers in its flight despite confirmed booking of said workers clearly
constitutes breach of contract and bad faith on its part.