- Attorney-General, he cites the case of Terminal Taxicab Co. vs. Kutz (241 U. S..

252). Section 14 of Act No. 2307, as amended by section 9 of Act No. 2694, provides
that: "The Public Utility Commission or Commissioners shall have general
supervision and regulation of, jurisdiction and control over, all public utilities. . . . The
term 'public utility' is hereby defined to include every individual, copartnership,
association, corporation or joint stock company,

etc., etc., that now or hereafter may own, operate, managed, or control any common
carrier, railroad, street railway, etc., etc., engaged in the transportation of
passengers, cargo, etc., etc., for public use."
- Under the provisions of said section, two things are necessary: (a) The individual,
copartnership, etc., etc., must be a public utility; and (b) the business in which such
individual, copartnership, etc. etc., is engaged must be for public use. So long as the
individual or copartnership, etc., etc., is engaged in a purely private enterprise,
without attempting to render service to all who may apply, he can in no sense be
considered a public utility, for public use. "Public use" means the same as "use by the
public." The essential feature of the public use is that it is not confined to privilege
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 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 power 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 of the
character of the use is whether the public may enjoy it by right or only by permission.
For all of the foregoing reasons, the appellant was not operating a public utility, for
public use, and was not, therefore, subject to the jurisdiction of the Public Utility
Commission.
 Unitrans International vs Insurance Company of North America
- Article 1735 of the Civil Code states that 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
- Article 1733 states that common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary diligence in the vigilance
over the goods and for the safety of the passengers transported by them, according
to all the circumstances of each case.
 Unsworth Transport International vs CA and Pioneer Insurance
- A freight forwarder's liability is limited to damages arising from its own negligence,
including negligence in choosing the carrier; however, where the forwarder contracts
to deliver goods to their destination instead of merely arranging for their
transportation, it becomes... liable as a common carrier for loss or damage to goods.
A freight forwarder assumes the responsibility of a carrier, which actually executes
the transport, even though the forwarder does not carry the merchandise itself.
 - A bill of lading is a written acknowledgement of the receipt of goods and an
agreement to transport and to deliver them at a specified place to a person named or
on his or her order.[25] It operates both as a receipt and as a contract.  It is a
receipt... for the goods shipped and a contract to transport and... deliver the same as
therein stipulated. As a receipt, it recites the date and place of shipment, describes
the goods as to quantity, weight, dimensions, identification marks, condition, quality,
and value. As a contract, it names the contracting parties, which include the...
consignee; fixes the route, destination, and freight rate or charges; and stipulates the
rights and obligations assumed by the parties.

- the Civil Code does not limit the liability of the common carrier to a fixed amount per
package. In all matters not regulated by the Civil Code, the rights and obligations of
common carriers are governed by the Code of Commerce and special laws. Thus,
the
- COGSA supplements the Civil Code by establishing a provision limiting the carrier's
liability in the absence of a shipper's declaration of a higher value in the bill of lading.

 The Netherlands Insurance Co. vs Regional Container Lines and Edsa

Shipping Agency
- are bound to observe extraordinary diligence in the vigilance over the goods an
- 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:
- ART. 1735. In... 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 by article 1733.
- extraordinary liability of the common carrier continues to be operative even during the
time the goods are stored in a warehouse of the carrier at the place of destination,
until the consignee has been advised of the arrival of the goods and has had
reasonable... opportunity thereafter to remove them or otherwise dispose of them.
- To overcome the presumption of negligence, the common carrier must establish by
adequate proof that it exercised extraordinary diligence over the goods. It must do
more than merely show that some other party could be responsible for the damage

 Planters Products vs CA
 carrier has sufficiently overcome, by clear and convincing proof, the prima
facie presumption of negligence. The hatches remained close and tightly sealed while
the ship was in transit as the weight of the steel covers made it impossible for a
person to open without the use of the ship's boom.

 A charter-party contract by which an entire ship, or some principal part thereof, is let by the owner to another
person for a specified time or use; contract of affreightment by which the owner of a ship or other vessel lets
the whole or a part of her to a merchant or other person for the conveyance of goods, on a particular
voyage, in consideration of the payment of freight

 2 types of charter-party:
 a. contract of affreightment – involves the use of shipping space on vessels leased by the
owner in part or as a whole, to carry goods for others; may either be: i) time charter vessel is
leased to the charterer for a fixed period of time; or ii) voyage charter ship is leased for a single
voyage
 b. charter by demise or bareboat charter
 – whole vessel is let to the charterer with a transfer to him of its entire command and possession
and consequent control over its navigation, including the master and the crew, who are his
servants

 In both types, the charter-party provides for the hire of vessel only, either for a determinate period
of time or for a single or consecutive voyage, the ship owner to supply the ship’s stores, pay for
the wages of the master and the crew, and defray the expenses for the maintenance of the ship.

Common or public carrier

– see Art. 1732; extends to carriers either by land, air or water which hold themselves out as
ready to engage in carrying goods or transporting passengers or both for compensation as a
public employment and not as a casual occupation
- Distinction between a “common or public carrier” and a “private or special carrier”
lies in the character of the business.

- Private carrier- is that which holding himself out to the public as ready to act for all
who desire his services, by a special agreement in a particular instance only, to
transport property from one place to another either gratuitously or for hire.

- A common carrier holds himself out as engaged in public service

to all persons indifferently while a private courier carries only for
persons with whom he has an initial contract and assumes no
obligation to carry for others.

 Phil. First Insurance vs Wallem Phils Shipping

-It is established that damage or losses were incurred by the shipment during the unloading. As
common carrier, they are bound to observe extraordinary diligence in the vigilance over the
goods transported by them. Subject to certain exceptions enumerated under Article 1734 of the
Civil Code, common carriers are responsible for the loss, destruction, or deterioration of the
goods. The extraordinary responsibility of the common carrier 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.
-For marine vessels, Article 619 of the Code of Commerce provides that the ship captain is liable
for the cargo from the time it is turned over to him at the dock or afloat alongside the vessel at
the port of loading, until he delivers it on the shore or on the discharging wharf at the port of
unloading, unless agreed otherwise.
- COGSA provides that under every contract of carriage of goods by sea, the carrier in relation to
the loading, handling, stowage, carriage, custody, care, and discharge of such goods, shall be
subject to the responsibilities and liabilities and entitled to the rights and immunities set forth in
 the Act. Section 3 (2) thereof then states that among the carriers responsibilities are to properly
and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.
- On the other hand, the functions of an arrastre operator involve the handling of cargo
deposited on the wharf or between the establishment of the consignee or shipper and the ship's
tackle. Being the custodian of the goods discharged from a vessel, an arrastre operator's duty is
to take good care of the goods and to turn them over to the party entitled to their possession.
- Handling cargo is mainly the arrastre operator's principal work so its drivers/operators or
employees should observe the standards and measures necessary to prevent losses and damage
to shipments under its custody
- It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain
under the custody of the carrier.
 Sps. Perena vs Sps Zarate, National Railways vs CA
- 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.
- Contracts of common carriage are governed by the provisions on common
carriers of the Civil Code, the Public Service Act, 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. 
- 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.
-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.

- 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.

- Applying these considerations to the case before us, there is no question that the Peres 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 clientele, the Peres 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.
 -
 Manila Port Services vs American Home Assurance
- Article 1981 of the Civil Code also mandates a presumption of fault on the part of
the arrastre operator
- an unverified and unidentified private document cannot be accorded probative
value. It is precluded because the party against whom it is presented is deprived of
the right and opportunity to cross-examine the person to whom the statements or
writings are attributed. Its executor or author should be presented as a witness to
provide the other party to the litigation the opportunity to question its contents.
Being mere hearsay evidence, failure to present the author of the letter renders its
contents suspect and of no probative value.”
- There being no other competent evidence that the container vans were reopened
or that their locks and seals were broken for the second time, MPSI cannot be held
liable for damages due to the alleged loss of the bags of flour pursuant to Article
1981 of the Civil Code.
 Cangco vs MRC
- Proof of the contract and of its nonperformance is sufficient prima facie to warrant
a recovery.
- The test by which to determine whether the passenger has been guilty of
negligence in attempting to alight from a moving railway train, is that of ordinary
or reasonable care. It is to be considered whether an ordinarily prudent person, of
the age, sex and condition of the passenger, would have acted as the passenger
acted under the circumstances disclosed by the evidence. This care has been
defined to be, not the care which may or should be used by the prudent man
generally, but the care which a man of ordinary prudence would use under similar
circumstances, to avoid injury.”
- whether the passenger acted prudently or recklessly — the age, sex, and physical
condition of the passenger are circumstances necessarily affecting the safety of the
passenger, and should be considered.
- Whether Manila Railroad should be held liable for Cangco’s injuries? – YES. 
-
- What is the basis of Manila Railroad’s liability? -- BREACH OF CONTRACT OF
CARRIAGE, NOT VICARIOUS LIABILITY DUE TO THE NEGLIGENCE OF ITS EMPLOYEES.
-
- The foundation of the legal liability of Manila Railroad is the contract of carriage.
The obligation to respond for the damage which Cangco had suffered arises from
the breach of that contract by reason of Manila Railroad’s failure to exercise due
care in its performance. Vicarious liability of employers arising from the negligence
of their employees vs. liability arising from breach of contract

 Designer basket vs Air sea transport Inc and Asia Cargo Containers
- Whether or not the common carrier is liable on the release of the goods to a
consignee even without the surrender of the bill of lading. HELD: No. A
 common carrier may release the goods to the consignee even without the
surrender of the bill of lading. Although the general rule is that upon receipt of
the goods, the consignee surrenders the bill of lading, Article 353 of the Code
of Commerce provides two exceptions: When the bill of lading gets lost or for
other cause. In either case, the consignee must provide a receipt to the
carrier for the goods delivered.
- The Supreme Court further held that Art. 1733, 1734 & 1735 of the NCC,
which speaks of the carrier’s liability for the loss, destruction, or deterioration
of the goods and the presumption of negligence do not apply. The
responsibility of the carrier under these provisions lasts from the time the
goods are unconditionally placed in possession of, and received by the
carrier for transportation, until the goods are delivered by the carrier to the
consignee.
- Article 353 of the Code of Commerce “After the contract has been complied
with, the bill of lading which the carrier has issued shall be returned to him,
and by virtue of the exchange of this title with the thing transported, the
respective obligations shall be considered cancelled 
- In case the consignee, upon receiving the goods, cannot return the bill of
lading subscribed by the carrier because of its loss or of any other cause, he
must give the latter a receipt for the goods delivered, this receipt producing
the same effects as the return of the bill of lading. Simply put, the surrender
of the bill of lading is not an absolute and mandatory requirement for the
release of the goods to the consignee.
- Definition of Bill of Lading: A written acknowledgment of the receipt of goods
and an agreement to transport and to deliver them at a specified place to a
person named or on his order.

SUBSECTION 2
 Cokaliong Shipping Lines Inc. vs. UCPB General Insurance

- Article 1749. A stipulation that the common carrier’s liability is limited to the value of the
goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is
binding.

- Article 1750. A contract fixing the sum that may be recovered. by the owner or shipper for the
loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the
circumstances, and has been fairly and freely agreed upon.

 Nedlloyd Lljnen BV & Rotterdam vs. Glow Laks Entrerprises

- Doctrine of Processual Presumption = PHL law governs. Since Phl law governs,
observe the rule on period of responsibility of cc lasts.
 Transimex Co., vs. MAFRE Insurance
 - Article 1753. The law of the country to which the goods are to be transported shall govern the
liability of the common carrier for their loss, destruction or deterioration.
- It must be emphasized that not all instances of bad weather may be categorized as storms or
perils of the sea within the meaning of the provisions of the CC and COGSA on common
carriers. To be considered absolutory causes under either statute, bad weather conditions
must reach a certain threshold severity.
- There must be a proof that the damage to the shipment was solely and approximately caused
by bad weather
 Martini Ltd. v. Macondray & Co.
- It is not permissible for the court, in the absence of any allegation of proof of negligence, to
attribute negligence to the ship’s employees in the matter of protecting the goods from rains
and storms
 Phil. Charter Insurance vs. Unknown Owner of the Vessel “M/V Nat’l Honor
`- common carriers, from the nature of their business and for reasons of public policy, are mandated 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. he Court has defined extraordinary
diligence in the vigilance over the goods as follows:

The extraordinary diligence in the vigilance over the goods tendered for shipment requires the common
carrier to know and to follow the required precaution for avoiding damage to, or destruction of the goods
entrusted to it for sale, carriage and delivery. It requires common carriers to render service with the greatest
skill and foresight and “to use all reasonable means to ascertain the nature and characteristic of goods
tendered for shipment, and to exercise due care in the handling and stowage, including such methods as
their nature requires.”
The common carrier’s duty to observe the requisite diligence in the shipment of goods lasts from the time
the articles are surrendered to or unconditionally placed in the possession of, and received by, the carrier for
transportation until delivered to, or until the lapse of a reasonable time for their acceptance, by the person
entitled to receive them.] >When the goods shipped are either lost or arrive in damaged condition, a
presumption arises against the carrier of its failure to observe that diligence, and there need not be an
express finding of negligence to hold it liable. To overcome the presumption of negligence in the case of
loss, destruction or deterioration of the goods, the common carrier must prove that it exercised extraordinary
diligence.
- However, under Article 1734 of the New Civil Code, the presumption of negligence does not apply to
any of the following causes:

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.

It bears stressing that the enumeration in Article 1734 of the New Civil Code which exempts the
common carrier for the loss or damage to the cargo is a closed list. To exculpate itself from liability for
the loss/damage to the cargo under any of the causes, the common carrier is burdened to prove any of
the aforecited causes claimed by it by a preponderance of evidence. If the carrier succeeds, the burden
of evidence is shifted to the shipper to prove that the carrier is negligent.
- Defect” is the want or absence of something necessary for completeness or perfection; a lack or
absence of something essential to completeness; a deficiency in something essential to the proper use
for the purpose for which a thing is to be used. On the other hand, inferior means of poor quality,
mediocre, or second rate. A thing may be of inferior quality but not necessarily defective. In other words,
“defectiveness” is not synonymous with “inferiority.”
 Schmitz Transport & Brokerage Corp., vs. Transport Venture Inc.
-
 Federal Express Corp vs. Antonino
- Article 1733. Common carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in the vigilance over the goods and for
the safety of the passengers transported by them, according to all the circumstances of
each case.

- "Extraordinary diligence is that extreme measure of care and caution which persons of unusual
prudence and circumspection use for securing and preserving their own property or rights."
Consistent with the mandate of extraordinary diligence, the Civil Code stipulates that in case of loss
or damage to goods, common carriers are presumed to be negligent or at fault, except in the
following instances:
- 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 or competent public authority
-
 Asia Lighterage & Shipping vs. CA & Prudential
- 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 .

- Article 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.

 Lea Mer Industries vs.Malayan Insurance

- 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.

- Article 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.

- Article 1174 of the Civil Code provides that no person shall be responsible for those events
which could not be foreseen, or which though foreseen, were inevitable.
- A caso fortuito is an event which could not be foreseen, or which, though foreseen, was
inevitable. This requires that the following requirements be present: (a) the cause of the
breach is independent of the debtor’s will; (b) the event is unforeseeable or unavoidable; (c)
the event is such as to render it impossible for the debtor to fulfill his obligation in a normal
manner; ; and (d) the debtor did not take part in causing the injury to the creditor
- To excuse the common carrier of any liability, the fortuitous event must have
been the proximate and only cause of the loss. Moreover it should have
exercised due diligence to prevent or minimize the loss before, during and after
the occurrence of the fortuitous event.

SUBSECTION 3 (Saftey of Passengers)

 Mariano vs. Calleja & De Borja

- The death of the wife of the petitioner in the course of transporting her to her
destination gave rise to the presumption of negligence of the carrier; To overcome
the presumption, respondents have to show that they observed extraordinary
diligence in the discharge of their duty or that the accident was caused by a
fortuitous event.

 Tiu vs. Arriesgado

 A man must use common sense, and exercise due reflection in all his acts; it is his duty to be
cautious, careful and prudent, if not from instinct, then through fear of recurring punishment. He
is responsible for such results as anyone might foresee and for acts which no one would have
performed except through culpable abandon. Otherwise, his own person, rights and property,
and those of his fellow beings, would ever be exposed to all manner of danger and injury.
- Upon the happening of the accident, the presumption of negligence at once arises,
and it becomes the duty of a common carrier to prove that he observed
extraordinary diligence in the care of his pasengers.
- The carrier must show the utmost diligence of very cautious persons as far as human
care and foresight can provide, or that the accident was caused by fortuitous event
- the principle of last clear chance is inapplicable in the instant case, as it only applies
in a suit between the owners and drivers of colliding vehicles.
- It does not arise where a passenger demands responsibility from the carrier to
enforce its contractual obligations, for it would be inequitable to exempt the
 negligent driver and its owner on the ground that the other driver was likewise guilty
of negligence. The common law notion of last clear chance permitted courts to grant
recovery to a plaintiff who has also been negligent provided that the defendant had
the last clear chance to avoid the casualty and failed to do so. Accordingly, it is
difficult to see what role, if any, the common law of last clear chance doctrine has to
play in a jurisdiction where the common law concept of contributory negligence as an
absolute bar to recovery by the plaintiff, has itself been rejected, as it has been in
Article 2179 of the Civil Code.

- ; Article 2231 of the Civil Code explicitly authorizes the imposition of exemplary
damages in quasi-delicts “if the defendant acted with gross negligence.”— While the
immediate beneficiaries of the standard of extraordinary diligence are, of course, the
passengers and owners of cargo carried by a common carrier, they are not the only
persons that the law seeks to benefit. For if common carriers carefully observed the
statutory standard of extraordinary diligence in respect of their own passengers, they
cannot help but simultaneously benefit pedestrians and the passengers of other
vehicles who are equally entitled to the safe and convenient use of our roads and
highways. The law seeks to stop and prevent the slaughter and maiming of people
(whether passengers or not) on our highways and buses, the very size and power of
which seem to inflame the minds of their drivers.

- 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.— 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.

 LRTA vs. Navidad,

 The law requires common carriers to carry passengers safely using the utmost diligence of very
cautious persons with due regard for all circumstances. Such duty of a common carrier to provide
safety to its passengers so obligates it not only during the course of the trip but for so long as
the passengers are within its premises and where they ought to be in pursuance to the contract
of carriage.
 Instances when a common carrier becomes liable for death of or injury to passengers.—The
statutory provisions render a common carrier liable for death of or injury to passengers (a)
through the negligence or willful acts of its employees or b) on account of willful acts or
negligence of other passengers or of strangers if the common carrier’s employees through the
exercise of due diligence could have prevented or stopped the act or omission.
 In case of such death or injury, a carrier is presumed to have been at fault or been negligent,
andby simple proof of injury, the passenger is relieved of the duty to still establish the fault or
negligence of the carrier or of its employees and the burden shifts upon the carrier to prove that
the injury is due to an unforeseen event or to force majeure.
 a liability for tort may arise even under a contract, where tort is that which breaches the
contract. Stated differently, when an act which constitutes a breach of contract would have itself
constituted the source of a quasi-delictual liability had no contract existed between the parties,
the contract can be said to have been breached by tort, thereby allowing the rules on tort to
apply.
 - ; It is an established rule that nominal damages cannot co-exist with compensatory
damages.—The award of nominal damages in addition to actual damages is
untenable. Nominal damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered
by him. It is an established rule that nominal damages cannot co-exist with
compensatory damages.

 Calalas vs. CA
- The principle of res judicata does not apply where a party in a pending case was
never a party in a previous one.
- The first, quasi-delict, also known as culpa aquiliana or culpa extra contractual, has
as its source the negligence of the tortfeasor. The second, breach of contract or
culpa contractual, is premised upon the negligence in the performance of a
contractual obligation.
- . In case of death or injuries to passengers, Art. 1756 of the Civil Code provides that
common carriers are presumed to have been at fault or to have acted negligently
unless they prove that they observed extraordinary diligence as defined in Arts. 1733
and 1755 of the Code. This provision necessarily shifts to the common carrier the
burden of proof.
- The doctrine of proximate cause is applicable only in actions for quasi-delicts, not in
actions involving breach of contract.
- It is immaterial that the proximate cause of the collision between the jeepney and
the truck was the negligence of the truck driver. The doctrine of proximate cause is
applicable only in actions for quasi-delict, not in actions involving breach of contract
- Upon the happening of the accident, the presumption of negligence at once arises,
and it becomes the duty of a common carrier to prove that he observed
extraordinary diligence in the care of his passengers
- A caso fortuito is an event which could not be foreseen, or which, though foreseen,
was inevitable. This requires that the following requirements be present: (a) the
cause of the breach is independent of the debtor’s will; (b) the event is
unforeseeable or unavoidable; (c) the event is such as to render it impossible for the
debtor to fulfill his obligation in a normal manner; ; and (d) the debtor did not take
part in causing the injury to the creditor
- As a general rule, moral damages are not recoverable in actions for damages
predicated on a breach of contract for it is not one of the items enumerated under
Art. 2219 of the Civil Code. As an exception, such damages are recoverable: (1) in
cases in which the mishap results in the death of a passenger, as provided in Art.
1764, in relation to Art. 2206(3) of the Civil Code; and (2) in the cases in which the
carrier is guilty of fraud or bad faith, as provided in Art. 2220

 Batangas Transport Co. vs. Caguimbal

 Finding of negligence on the part of carrier not necessary to hold it responsible for damages
sought by passenger.—In an action based on a contract of carriage, the court need not make an
express f inding of fault or negligence on the part of the carrier in order to hold it responsible to
pay the damages sought for by the passenger. By the contract of carriage, the carrier assumes
the express obligation to transport the passenger to his destination safely and to observe
extraordinary diligence with a due regard for all the circumstances, and any injury that might be
suffered by the passenger is right away attributable to the fault or negligence of the carrier (Art.
1756, new Civil Code). This is an exception to the general rule that negligence must be proved.
- Where carrier is answerable for damages to its passengers; Award of attorney's fees
may be authorized.—In the case at bar, attorney's fees may be awarded in favor of
the heirs of the deceased passengers, on the following just and equitable grounds:
(1) the accident in question took place on April 25, 1954, and the Caguimbals have
been constrained to litigate for over thirteen (13) years to vindicate their rights; and
(2) it is high time to impress effectively upon publi c utili operators the nature and
extent of their responsibility in respect of the safety of their passengers and their
duty to exercise greater care in the selection of drivers and conductors and in
supervising the performance of their duties.

 Brinas vs. People of the Philippines

 It is a matter of common knowledge and experience about common carriers like trains and buses
that before reaching a station or flagstop they slow down and the conductor announces the
name of the place. It is also a matter of common experience that as the train or bus slackens its
speed, some passengers usually stand and proceed to the nearest exit, ready to disembark as
the train or bus comes to a full stop. This is especially true of a train because passengers feel
that if the train resumes its run before they are able to disembark, there is no way to stop it as a
bus may be stopped.
 Conductor’s negligent in prematurely announcing train’s next flag stop.—It was negligence on the
conductor’s part to announce the next flag stop when said stop was still a full three minutes
ahead. As the respondent Court of Appeals correctly observed, “the appellant’s announcement
was premature and erroneous.”
 The connection between the premature and erroneous announcement of petitioner-appellant and
the deaths of the victims is direct and natural, unbroken by any intervening efficient causes.
 ; Items of damages to be awarded in case of death arising from crime.—It is well-settled that
when death occurs as a result of the commission of a crime, the following items of damages may
be recovered: (1) an indemnity for the death of the victim; (2) an indemnity for loss of earning
capacity of the deceased; (3) moral damages; (4) exemplary damages; (5) attorney’s fees and
expenses of litigation, and (6) interest in proper cases.
 The indemnity for loss of earning capacity, moral damages, exemplary damages, attorney’s fees,
and interests are recoverable separately from and in addition to the fixed sum of P12,000.00
corresponding to the indemnity for the sole fact of death. This indemnity arising from the fact of
death due to a crime is fixed whereas the others are still subject to the determination of the
court based on the evidence presented. The fact that the witnesses were not interrogated on the
issue of damages is of no moment because the death indemnity fixed for death is separate and
distinct from the other forms of indemnity for damages.

 Sulpicio Lines vs. Sesante,

 Substitution by the heirs is not a matter of jurisdiction, but a requirement of due process. It
protects the right of due process belonging to any party, that in the event of death the deceased
litigant continues to be protected and properly represented in the suit through the duly appointed
 legal representative of his estate. The application of the rule on substitution depends on whether
or not the action survives the death of the litigant. Section 1, Rule 87 of the Rules of Court
enumerates the following actions that survive the death of a party, namely: (1) recovery of real
or personal property, or an interest from the estate; (2) enforcement of liens on the estate; and
(3) recovery of damages for an injury to person or property. On the one hand, Section 5, Rule 86
of the Rules of Court lists the actions abated by death as including: (1) claims for funeral
expenses and those for the last sickness of the decedent; (2) judgments for money; and (3) all
claims for money against the deceased, arising from contract, express or implied.
 A contract of carriage generates a relation attended with public duty, neglect or malfeasance of
the carrier’s employees and gives ground for an action for damages. Sesante’s claim against the
petitioner involved his personal injury caused by the breach of the contract of carriage. Pursuant
to the aforecited rules, the complaint survived his death, and could be continued by his heirs
following the rule on substitution.
 Article 1759 of the Civil Code does not establish a presumption of negligence because it explicitly
makes the common carrier liable in the event of death or injury to passengers due to the
negligence or fault of the common carrier’s employees. It reads: Article 1759. Common carriers
are liable for the death 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 liability of common carriers under
Article 1759 is demanded by the duty of extraordinary diligence required of common carriers in
safely carrying their passengers. On the other hand, Article 1756 of the Civil Code lays down the
presumption of negligence against the common carrier in the event of death or injury of its
passenger, viz.: Article 1756. In case of death of or injuries to passengers, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove that they
observed extraordinary diligence as prescribed in Articles 1733 and 1755.
 The presumption of negligence applies so long as there is evidence showing that: (a) a contract
exists between the passenger and the common carrier; and (b) the injury or death took place
during the existence of such contract.—Clearly, the trial court is not required to make an express
finding of the common carrier’s fault or negligence. Even the mere proof of injury relieves the
passengers from establishing the fault or negligence of the carrier or its employees. The
presumption of negligence applies so long as there is evidence showing that: (a) a contract exists
between the passenger and the common carrier; and (b) the injury or death took place during
the existence of such contract. In such event, the burden shifts to the common carrier to prove
its observance of extraordinary diligence, and that an unforeseen event or force majeure had
caused the injury.
 For a common carrier to be absolved from liability in case of force majeure, it is not enough that
the accident was caused by a fortuitous event. The common carrier must still prove that it did not
contribute to the occurrence of the incident due to its own or its employees’ negligence.—A
common carrier may be relieved of any liability arising from a fortuitous event pursuant to Article
1174 of the Civil Code. But while it may free a common carrier from liability, the provision still
requires exclusion of human agency from the cause of injury or loss. Else stated, for a common
carrier to be absolved from liability in case of force majeure, it is not enough that the accident
was caused by a fortuitous event. The common carrier must still prove that it did not contribute
to the occurrence of the incident due to its own or its employees’ negligence.
 moral damages may be recovered in an action upon breach of contract of carriage only when: (a)
death of a passenger results, or (b) it is proved that the carrier was guilty of fraud and bad faith,
even if death does not result. However, moral damages may be awarded if the contractual
 breach is found to be wanton and deliberately injurious, or if the one responsible acted
fraudulently or with malice or bad faith.
 The law requires the common carrier to observe the same diligence as the hotel keepers in case
the baggage remains with the passenger; otherwise, extraordinary diligence must be exercised.—
The rule that the common carrier is always responsible for the passenger’s baggage during the
voyage needs to be emphasized. Article 1754 of the Civil Code does not exempt the common
carrier from liability in case of loss, but only highlights the degree of care required of it
depending on who has the custody of the belongings. Hence, the law requires the common
carrier to observe the same diligence as the hotel keepers in case the baggage remains with the
passenger; otherwise, extraordinary diligence must be exercised. Furthermore, the liability of the
common carrier attaches even if the loss or damage to the belongings resulted from the acts of
the common carrier’s employees, the only exception being where such loss or damages is due to
force majeure.
 . So long as the belongings were brought inside the premises of the vessel, the petitioner was
thereby effectively notified and consequently duty-bound to observe the required diligence in
ensuring the safety of the belongings during the voyage. Applying Article 2000 of the Civil Code,
the petitioner assumed the liability for loss of the belongings caused by the negligence of its
officers or crew. In view of our finding that the negligence of the officers and crew of the
petitioner was the immediate and proximate cause of the sinking of the M/V Princess of the
Orient, its liability for Sesante’s lost personal belongings was beyond question.
- Temperate damages may be recovered when some pecuniary loss has been suffered
but the amount cannot, from the nature of the case, be proven with certainty. Article
2224 of the Civil Code expressly authorizes the courts to award temperate damages
despite the lack of certain proof of actual damages
- The petitioner, as a common carrier, was required to observe extraordinary diligence
in ensuring the safety of its passengers and their personal belongings.
- .—In contracts and quasi-contracts, the Court has the discretion to award exemplary
damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or
malevolent manner. Indeed, exemplary damages cannot be recovered as a matter of
right, and it is left to the court to decide whether or not to award them. In
consideration of these legal premises for the exercise of the judicial discretion to
grant or deny exemplary damages in contracts and quasi-contracts against a
defendant who acted in a wanton, fraudulent, reckless, oppressive, or malevolent
manner, the Court hereby awards exemplary damages to Sesante.

 GV Florida Transport vs. Heirs of Battung,

 The law exacts from common carriers (i.e., those 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 highest degree of diligence
(i.e., extraordinary diligence) in ensuring the safety of its passengers. Articles 1733 and 1755 of
the Civil Code state: Art. 1733. Common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the
goods and for the safety of the passengers transported by them, according to all the
circumstances of each case. Art. 1755. A common carrier is bound to carry the passengers safely
as far as human care and foresight can provide, using the utmost diligence of very cautious
persons, with a due regard for all the circumstances.
 ; Article 1756 of the Civil Code provides that “[i]n case of death of or injuries to passengers,
common carriers are presumed to have been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence as prescribed in Articles 1733 and 1755.”—In
this relation, Article 1756 of the Civil Code provides that “[i]n case of death of or injuries to
passengers, common carriers are presumed to have been at fault or to have acted negligently,
unless they prove that they observed extraordinary diligence as prescribed in Articles 1733 and
1755.” This disputable presumption may also be overcome by a showing that the accident was
caused by a fortuitous event.
 . In Pilapil v. CA, 180 SCRA 546 (1989), the Court clarified that where the injury sustained by the
passenger was in no way due (1) to any defect in the means of transport or in the method of
transporting, or (2) to the negligent or willful acts of the common carrier’s employees with
respect to the foregoing — such as when the injury arises wholly from causes created by
strangers which the carrier had no control of or prior knowledge to prevent — there would be no
issue regarding the common carrier’s negligence in its duty to provide safe and suitable care, as
well as competent employees in relation to its transport business; as such, the presumption of
fault/negligence foisted under Article 1756 of the Civil Code should not apply.
 the applicable provision is Article 1763 of the Civil Code, which states that “a common carrier is
responsible for injuries suffered by a passenger on account of the willful acts or negligence of
other passengers or of strangers, if the common carrier’s employees through the exercise of the
diligence of a good father of a family could have prevented or stopped the act or omission.”
Notably, for this obligation, the law provides a lesser degree of diligence, i.e., diligence of a good
father of a family, in assessing the existence of any culpability on the common carrier’s part.
 Case law states that the concept of diligence of a good father of a family “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.”

SUBSECTION 4
 Japan Air Lines vs Simangan
- Breach of contract of carriage In an action for breach of contract of carriage, all that is
required of plaintiff is to prove the existence of such contract and its non-performance
by the award of moral damages in breach of contract of carriage. 
- As a general rule, moral damages are not recoverable in actions for damages
predicated on a breach of contract for it is not enumerated under Art 2219 NCC. As
an exception, such damages are recoverable in: 1. Mishaps resulting to a death of a
passenger (Art. 1764 NCC) 2. When carrier is guilty of fraud or bad faith 
- Exemplary damages maybe recovered in contractual obligations as a way of example
or correction for the public good
 - Passengers have the right to be treated by the carrier’s employees with kindness,
respect, courtesy and due consideration and are entitled to be protected against
personal misconduct, injurious language, indignities and abuses from such
employees.
 Cathay Pacific vs. Vasquez, GR No. 150843
- Moral damages predicated upon a breach of contract of carriage may only be
recoverable in instances where the carrier is guilty of fraud or bad faith or where
the mishap resulted in the death of a passenger. It is a requisite in the grant of
exemplary damages that the act of the offender must be accompanied by bad
faith or done in wanton, fraudulent or malevolent manner. To be entitled thereto
the claimant must first establish his right to moral, temperate, or compensatory
damages. And where the awards for moral and exemplary damages are
eliminated, so must the award for attorney’s fees.
 Cariaga vs. LTB and MRC
- altho (a) owners and Managers of an establishment or enterprise are responsible for
damages caused by their employees in the service of the branches which the latter are
employed or on the occasion of their functions; (b) employers are likewise liable for
damages caused by their employees and household helpers acting within the scope of
their assigned task (Article 218 of the Civil Code); and (c) employers and corporations
engaged in any kind of industry are subsidiary civilly liable for felonies committed by
their employees in the discharge of their duties
 Northwest vs. Spouses Heshan
-
 Sulpicio Lines vs. Curso
`- As a general rule, moral damages are not recoverable in actions for damages predicated on a
breach of contract, unless there is fraud or bad faith. As an exception, moral damages may be
awarded in case of breach of contract of carriage that results in the death of a passenger,
- in accordance with Article 1764, in relation to Article 2206 (3), of the Civil Code,
which provide: “The spouse, legitimate and illegitimate descendants and ascendants
of the deceased may demand moral damages for mental anguish by reason of the
death of the deceased.”  The foregoing legal provisions set forth the persons entitled
to moral damages. The omission from Article 2206 (3) of the brothers and sisters of
the deceased passenger reveals the legislative intent to exclude them from the
recovery of moral damages for mental anguish by reason of the death of the
deceased
-
Philtranco Services vs. Paras & Inland Trailways,
- Paras can recover moral damages based on a quasi-delict. As a general rule, moral
damages are not recoverable in an action predicated on a breach of contract. This is
because such action is not included in Article 2219 of the Civil Code as one of the
actions in which moral damages may be recovered. By way of exception, moral
damages are recoverable in an action predicated on a breach of contract: (a) where
the mishap results in the death of a passenger, as provided in Article 1764 in relation
to Article 2206, (3) of the Civil Code; and (b) where the common carrier has been
guilty of fraud or bad faith, as provided in Article 2220 of the Civil Code.
 - Article 2224 of the Civil Code expressly authorizes the courts to award temperate
damages despite the lack of certain proof of actual damages. When the court finds
that some pecuniary loss has been suffered but the amount cannot, from the nature
of the case, be proved with certainty, temperate damages may be recovered.
Temperate damages may be allowed in cases where from the nature of the case,
definite proof of pecuniary loss cannot be adduced, although the court is convinced
that the aggrieved party suffered some pecuniary loss.
 Darines and Darines vs. Quinones
- The principle that, in an action for breach of contract of carriage, moral damages may be
awarded only in case (1) an accident results in the death of a passenger; or (2) the carrier is
guilty of fraud or bad faith,
- Article 2220. Willful injury to property may be a legal ground for awarding moral
damages if the court should find that, under the circumstances, such damages are
justly due. The same rule applies to breaches of contract where the defendant acted
fraudulently or in badfaith. (Emphasis supplied) The aforesaid concepts of fraud or
bad faith and negligence are basic as they are distinctly differentiated by law.
Specifically, fraud or bad faith connotes "deliberate or wanton wrong doing"19 or
such deliberate disregard of contractual obligations20 while negligence amount to
sheer carelessness.21
- fraud includes "inducement through insidious machination."22 In turn, insidious
machination refers to such deceitful strategy or such plan with an evil purpose. On
the other hand, bad faith does not merely pertain to bad judgment or negligence
but relates to a dishonest purpose, and a deliberate doing of a wrongful act. Bad
faith involves "breach of a known duty through some motive or interest or ill will
that partakes of the nature of fraud.
- In Viluan v. Court of Appeals, 24 and Bulante v. Chu Liante, 25 the Court disallowed
the recovery of moral damages in actions for breach of contract for lack of showing
that the common carrier committed fraud or bad faith in performing its obligation.
 Estrada v. Philippine Rabbit,
- While the net income had not been sufficiently established, the Court recognizes the
fact that the Mangalinao heirs had suffered loss deserving of compensation.1âwphi1
What the CA awarded is in actuality a form of temperate damages. Such form of
damages under Article 2224 of the Civil Code is given in the absence of competent
proof on the actual damages suffered. In the past, we awarded temperate damages
in lieu of actual damages for loss of earning capacity where earning capacity is
plainly established but no evidence was presented to support the allegation of the
injured party's actual income.
- In Pleno v. Court of Appeals, we sustained the award of temperate damages in the
amount of ₱200,000.00 instead of actual damages for loss of earning capacity
because the plaintiffs income was not sufficiently proven.
- We did the same in People v. Singh, and People v. Almedilla, granting temperate
damages in place of actual damages for the failure of the prosecution to present
sufficient evidence of the deceased's income.