1

National Development Company v. The Court of Appeals and Development Insurance and Surety Corporation, No. L-49409, August 19,
1998;
FACTS: E. Philipp Corporation of New York loaded on board the vessel "Dona Nati" at San Francisco, California, a total of 1,200 bales of
American raw cotton consigned to the order of Manila Banking Corporation, Manila and the People's Bank and Trust Company acting for
and in behalf of the Pan Asiatic Commercial Company, Inc., who represents Riverside Mills Corporation . Also loaded on the same vessel
at Tokyo, Japan, were the cargo of Kyokuto Boekui, Kaisa, Ltd., consigned to the order of Manila Banking Corporation consisting of 200
cartons of sodium lauryl sulfate and 10 cases of aluminum foil. En route to Manila the vessel Dofia Nati figured in a collision at 6:04 a.m.
on April 15, 1964 at Ise Bay, Japan with a Japanese vessel 'SS Yasushima Maru' as a result of which 550 bales of aforesaid cargo of American
raw cotton were lost and/or destroyed, of which 535 bales as damaged were landed and sold on the authority of the General Average Surveyor for
Yen 6,045,-500 and 15 bales were not landed and deemed lost. The damaged and lost cargoes was worth P344,977.86 which amount, the plaintiff
as insurer, paid to the Riverside Mills Corporation as holder of the negotiable bills of lading duly endorsed. Thus, the plaintiff had paid as insurer
the total amount of P364,915.86 to the consignees or their successors-in-interest, for the said lost or damaged cargoes. Hence, plaintiff filed this
complaint to recover said amount from the defendants-NDC and MCP as owner and ship agent respectively, of the said 'Dofia Nati' vessel. T he
pivotal issue in these consolidated cases is the determination of which laws govern loss or destruction of goods due to collision of
vessels outside Philippine water. NDC's argument is to the effect that the Carriage of Goods by Sea Act should apply to the case at bar
and not the Civil Code or the Code of Commerce. Under Section 4 (2) of said Act, the carrier is not responsible for the loss or damage
resulting from the "act, neglect or default of the master, mariner, pilot or the servants of the carrier in the navigation or in the
management of the ship."
ISSUE: What law applies to the case at bar

RULING: This issue has already been laid to rest by this Court of Eastern Shipping Lines Inc. v. IAC. here it was held under similar
circumstance "that the law of the country to which the goods are to be transported governs the liability of the common carrier in case of
their loss, destruction or deterioration" Thus, the rule was specifically laid down that for cargoes transported from Japan to the
Philippines, the liability of the carrier is governed primarily by the Civil Code and in all matters not regulated by said Code, the rights
and obligations of common carrier shall be governed by the Code of commerce and by laws (Article 1766, Civil Code). Hence, the
Carriage of Goods by Sea Act, a special law, is merely suppletory to the provision of the Civil Code.  It appears, however, that collision
falls among matters not specifically regulated by the Civil Code, so that no reversible error can be found in respondent courses
application to the case at bar of Articles 826 to 839, Book Three of the Code of Commerce, which deal exclusively with collision of
vessels.

More specifically, Article 826 of the Code of Commerce provides that where collision is imputable to the personnel of a vessel, the owner
of the vessel at fault, shall indemnify the losses and damages incurred after an expert appraisal. But more in point to the instant case is
Article 827 of the same Code, which provides that if the collision is imputable to both vessels, each one shall suffer its own damages
and both shall be solidarily responsible for the losses and damages suffered by their cargoes. Significantly, under the provisions of the
Code of Commerce, particularly Articles 826 to 839, the ship owner or carrier, is not exempt from liability for damages arising from
collision due to the fault or negligence of the captain.

2. Chua
TATAD VS SEC GARCIA (1995)

FACTS: DOTC planned to construct a light railway transit line along EDSA. In accordance with the provisions of R.A. No. 6957 and to set
the EDSA LRT III project underway, DOTC issued Department Orders creating the Prequalification Bids and Awards Committee (PBAC)
and the Technical Committee. Private respondent EDSA LRT Corporation, Ltd. to whom the contract to construct the EDSA LRT III was
awarded by public respondent, is admittedly a foreign corporation "duly incorporated and existing under the laws of Hongkong". There
is also no dispute that once the EDSA LRT III is constructed, private respondent, as lessor, will turn it over to DOTC, as lessee, for the
latter to operate the system and pay rentals for said use.

ISSUE: Whether respondent EDSA LRT Corporation, Ltd., a foreign corporation own EDSA LRT III; a public utility

RULING: Yes, What private respondent owns are the rail tracks, rolling stocks like the coaches, rail stations, terminals and the power
plant, not a public utility. While a franchise is needed to operate these facilities to serve the public, they do not by themselves constitute
a public utility. What constitutes a public utility is not their ownership but their use to serve the public.
The Constitution, in no uncertain terms, requires a franchise for the operation of a public utility. However, it does not require a franchise
before one can own the facilities needed to operate a public utility so long as it does not operate them to serve the public.

3
RCPI vs. NTC
150 SCRA 450
DOCTRINE OF THE LAW: A franchise, being merely a privilege emanating from the sovereign power of the state and owing its existence
to a grant, is subject to regulation by the state itself by virtue of its police power through its administrative agencies.
FACTS: RCPI has been operating a radio communications system since 1957 under its legislative franchise granted by RA No. 2036.
RCPI established a radio telegraph service in Catarman, Northern Samar; San Jose, Occidental Mindoro; and Sorsogon, Sorsogon.In a
decision of NTC, private respondent Kayumanggi Radio Network Incorporated was authorized by the public respondent to operate radio
communications systems in Catarman, Samar and in San Jose, Mindoro.
The private respondent filed a complaint with the NTC alleging that the RCPI was operating in Catarman, Samar and in San Jose,
Mindoro without a certificate of public convenience and necessity. RCPI counter-alleged that its telephone services in the areas are
covered by the legislative franchise recognized by NTC and its predecessor Public Service Commission. RCPI further stated that it has
been in operation in the questioned places long before private respondent Kayumanggi filed its application to operate in the same places. NTC
ordered RCPI to immediately cease from operating in these areas. Stating that EO 546 a certificate of public convenience and necessity is
mandatory for the operation of communication utilities and services including radio communications. RCPI’s MR was denied. Hence, this
petition.
ISSUE: WON RCPI is required to secure a certificate of public convenience.
RULING: YES. The petitioner's main argument states that the abolition of the Public Service Commission under Presidential Decree No. 1 and the
creation of the National Telecommunications Commission under Executive Order No. 546 to replace the defunct Public Service Commission did
not affect sections 14 and 15 of the Public Service Law (Commonwealth Act. No. 146, as amended) has no merit.
It is clear that Executive Order No. 546, Section 15 that the exemption enjoyed by radio companies from the jurisdiction of the Public
Service Commission and the Board of Communications no longer exists because of the changes effected by the Reorganization Law
and implementing executive orders. The petitioner's claim that its franchise cannot be affected by Executive Order No. 546 on the
ground that it has long been in operation since 1957 cannot be sustained.

4. HALID
FIRST PHILIPPINE INDUSTRIAL CORPORATION VS COURT OF APPEALS
G.R. NO. 125948 DECEMBER 29, 1998

FACTS: FPIC is a grantee of a pipeline concession under Republic Act No. 387, as amended, to contract, install and operate oil pipelines.
The original pipeline concession was granted in 1967 and renewed by the Energy Regulatory Board in 1992.

FPIC applied for a mayor's permit but before it could be issued, the respondent City Treasurer required FPIC to pay a local tax based on
its gross receipts for the fiscal year 1993 pursuant to the LGC. The City Treasurer assessed a business tax on the FPIC amounting to
P956,076.04 payable in four installments based on the gross receipts for products pumped at GPS-1 for the fiscal year 1993 which amounted to
P181,681,151.00. In order not to hamper its operations, FPIC filed a letter-protest alleging exemption under Section 133 of the LGC but
denied the protest contending that FPIC cannot be considered engaged in transportation business, thus it cannot claim . FPIC filed with
the RTC of Batangas City a complaint for tax refund with prayer for a writ of preliminary injunction against Respondents. 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.

ISSUES:1. WN FPIC, an oil pipeline operator, a common carrier?

2. WN common carriers exempt from local business tax?

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. there is no doubt
that FPIC 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 FPIC has a limited clientele does not exclude it from the definition of a
common carrier.

2..YES.The legislative intent is to exclude from the taxing power of the local government unit the imposition of business tax against
common carriers is to prevent a duplication of the so-called "common carrier's tax."
FPIC is already paying three (3%) percent common carrier's tax on its gross sales/earnings under the National Internal Revenue Code.
[19] To tax FPIC again on its gross receipts in its transportation of petroleum business would defeat the purpose of the LGC.

5
Philippine American General Insurance Company (Philamgen) v PKS Shipping
401 SCRA 222, G.R. No. 149038, April 9, 2003
Common carrier distinguished from private carrier

FACTS: Davao Union Marketing Corporation (DUMC) contracted the services of respondent PKS Shipping Company for the shipment of
75 bags of cement worth. DUMC insured the goods with Philamgen. The goods were loaded aboard the dumb barge Limar-I belonging to
PKS Shipping. One evening, while Limar-I was being towed by respondent’s tugboat, the barge sank bringing down the entire cargo of
cement. DUMC filed a formal claim with Philamgen for the full amount of the insurance. Philamgen promptly made payment; it then
sought reimbursement from PKS Shipping of the sum paid to DUMC but the shipping company refused to pay, prompting Philamgen to
file suit against PKS Shipping with the Makati RTC.
The RTC dismissed the complaint after finding that the total loss of the cargo could have been caused either by a fortuitous event, in
which case the ship owner was not liable, or through the negligence of the captain and crew of the vessel and that, under Article 587 of
the Code of Commerce adopting the "Limited Liability Rule," the ship owner could free itself of liability by abandoning, as it apparently
so did, the vessel with all her equipment and earned freightage.
Philamgen interposed an appeal to CA which affirmed in toto the decision of the trial court. The appellate court ruled that evidence to establish that
PKS Shipping was a common carrier at the time it undertook to transport the bags of cement was wanting because the peculiar method of the
shipping company’s carrying goods for others was not generally held out as a business but as a casual occupation. It then concluded that PKS
Shipping, not being a common carrier, was not expected to observe the stringent extraordinary diligence required of common carriers in
the care of goods. The appellate court, moreover, found that the loss of the goods was sufficiently established as having been due to
fortuitous event, negating any liability on the part of PKS Shipping to the shipper.
ISSUE: 1. Whether PKS Shipping is a common carrier.
2. Whether PKS Shipping is liable.

RULING: 1. Yes. Much of the distinction between a “common or public carrier” and a “private or special carrier” lies in the character of
the business, such that if the undertaking is an isolated transaction, not a part of the business or occupation, and the carrier does not
hold itself out to carry the goods for the general public or to a limited clientele, although involving the carriage of goods for a fee, the
person or corporation providing such service could very well be just a private carrier. A typical case is that of a charter party which
includes both the vessel and its crew, such as in a bareboat or demise, where the charterer obtains the use and service of all or some
part of a ship for a period of time or a voyage or voyages and gets the control of the vessel and its crew.

Contrary to the conclusion made by the appellate court, its factual findings indicate that PKS Shipping has engaged itself in the business of
carrying goods for others, although for a limited clientele, undertaking to carry such goods for a fee. The regularity of its activities in
this area indicates more than just a casual activity on its part. Neither can the concept of a common carrier change merely because
individual contracts are executed or entered into with patrons of the carrier. Such restrictive interpretation would make it easy for a
common carrier to escape liability by the simple expedient of entering into those distinct agreements with clients.

2. The appellate court ruled, gathered from the testimonies and sworn marine protests of the respective vessel masters of Limar I and MT Iron
Eagle, that there was no way by which the barge’s or the tugboat’s crew could have prevented the sinking of Limar I. The vessel was
suddenly tossed by waves of extraordinary height of 6 to 8 feet and buffeted by strong winds of 1.5 knots resulting in the entry of water
into the barge’s hatches. The official Certificate of Inspection of the barge issued by the Philippine Coastguard and the Coastwise Load Line
Certificate would attest to the seaworthiness of Limar-I and should strengthen the factual findings of the appellate court. All given then, the
appellate court did not err in its judgment absolving PKS Shipping from liability for the loss of the DUMC cargo.
 6. LAKBAO
Spouses Dante Cruz and Leonora Cruz vs. Sun Holidays, Inc.
G.R. No. 186312, June 29, 2010

MP: Article 1732 of the Civil Code defining “common carriers” has deliberately refrained from making distinctions on whether the
carrying of persons or goods is the carrier’s principal business, whether it is offered on a regular basis, or whether it is offered to the
general public.

FACTS: Petitioner lodged a Complaint against Sun Holidays, Inc. for damages arising from the death of their son Ruelito who perished
with his wife on board the boat M/B Coco Beach III that capsized en route to Batangas from Puerto Galera, Oriental Mindoro where the
couple had stayed at Coco Beach Island Resort owned and operated by respondent.
Petitioners alleged that respondent, as a common carrier, was guilty of negligence in allowing M/B Coco Beach III to sail
notwithstanding storm warning bulletins issued by PAGASA.

ISSUE: W/N Sun Holidays, Inc, is common carrier since by its tour package, the transporting of its guests is an integral part of its resort business.

RULING: Yes. 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.
Respondent does not charge a separate fee or fare for its ferry services is of no moment. It would be imprudent to suppose that it
provides said services at a loss. The Court is aware of the practice of beach resort operators offering tour packages to factor the
transportation fee in arriving at the tour package price. That guest who opts not to avail of respondent’s ferry services pay the same
amount is likewise inconsequential. These guests may only be deemed to have overpaid.
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 deliberately refrained from making such distinctions.

ereña v. Zarate
G.R. No. 157917. (August 29, 2012)
Topic: distinguished common carrier from private carrier
FACTS: Pereñas were engaged in the business of transporting students from their respective residences in Parañaque City to Don
Bosco, and back. They employed Alfaro as driver of the van. The Zarates contracted the Pereñas to transport Aaron to and from Don
Bosco. Because they were running late, Alfaro took an alternate route by traversing the narrow path underneath the Magallanes
Interchange. 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 hit the rear
end of the van, and the impact threw 9 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. Thus, the Zarates brought this action for recovery of damages against
both the Pereñas and the PNR, basing their claim against the Pereñas on breach of contract of carriage and against the PNR on quasi-delict.
Pereñas’ 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 latter had a driver’s license and that he had not been involved in any vehicular accident prior to the fatal
collision with the train; and that Pereña 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; finding Parenas liable.
ISSUE: W/N the Pereñas operated a common carrier; thus liable for damages.
RULING: YES. 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.
Common carrier Private carrier
Definition is a person, corporation, firm or is one who, without making the
association engaged in the activity a vocation, or without
business of carrying or holding himself or itself out to the
transporting passengers or goods public as ready to act for all who
or both, by land, water, or air, for may desire his or its services,
compensation, offering such undertakes, by special
services to the public agreement in a particular
instance only, to transport goods
or persons from one place to
another either gratuitously or for
hire.

Governing provisions on common carriers of provisions on ordinary contracts

law the Civil Code, the Public of the Civil Code 
Service Act, and other special
laws relating to transportation.

Diligence extraordinary diligence ordinary (diligence of a good

required father of the family)

Presumption Presumption of faut/negligence No presumption of fault/

of (in case of the loss of the effects negligence
negligence of passengers, or the death or
injuries to passengers)
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.
Pereñas as 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, they 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.
Article 1755 of the 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.” No device, whether by stipulation,
posting of notices, statements on tickets, or otherwise, may dispense with or lessen the responsibility of the common carrier. 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. 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. Without proof of his or its observance of that extraordinary diligence, the legal presumption that he or it was at fault or
acted negligently would stand.
8 – LIM
A.F. Sanchez Brokerage Inc. vs. CA
G.R. No. 147079 December 21, 2004

FACTS: Wyeth-Pharma shipped on board an aircraft oral contraceptives for delivery to Manila in favor of the consignee, Wyeth-Suaco
Laboratories, Inc, which in turn insured the shipment against all risks with FGU Insurance which issued Marine Risk Note No. 4995.
Wyeth-Suaco engaged the services of Sanchez Brokerage as its customs broker, which calculates and pays the customs duties, taxes
and storage fees for the cargo and thereafter delivers it to Wyeth-Suaco. The cargo was stated to be received in good condition. The
Inspector of Wyeth-Suaco, placed a note above his signature on the delivery receipt stating that 44 cartons of oral contraceptives were in bad
order.

Wyeth-Suaco later demanded from Sanchez Brokerage the payment of P190k representing the value of its loss arising from the damaged
tablets. As the Sanchez Brokerage refused to heed the demand, Wyeth-Suaco filed an insurance claim against FGU Insurance which
paid Wyeth-Suaco the amount of P180k in settlement of its claim under Marine Risk Note Number 4995. Sanchez Brokerage disclaimed
liability for the damaged goods, positing that the damage was due to improper and insufficient export packaging; that when the sealed
containers were opened outside the PSI warehouse.
sISSUE: (1) W/N Petitioner is a common carrier – YES
(2) W/N Petitioner is liable to pay FGU insurance in this case – YES

RULING: (1) YES. The CA did not err in finding petitioner, a customs broker, to be also a common carrier, as defined under Article 1732 of
the Civil Code. The Manager and Principal Broker of Sanchez Brokerage, himself testified that the services the firm offers include the
delivery of goods to the warehouse of the consignee or importer. Article 1732 does not distinguish between one whose principal
business activity is the carrying of goods and one who does such carrying only as an ancillary activity. The contention, therefore, of
petitioner that it is not a common carrier but a customs broker whose principal function is to prepare the correct customs declaration
and proper shipping documents as required by law is bereft of merit. It suffices that petitioner undertakes to deliver the goods for
pecuniary consideration.
(2) YES. If the claim of petitioner that some of the cartons were already damaged upon delivery to it were true, then it should naturally
have received the cargo under protest or with reservations duly noted on the receipt issued by PSI. But it made no such protest or
reservation. Since petitioner received all the cargoes in good order and condition at the time they were turned over by the PSI
warehouseman, and upon their delivery to Hizon Laboratories, Inc. a portion thereof was found to be in bad order, it was incumbent on
petitioner to prove that it exercised extraordinary diligence in the carriage of the goods.(MP) It did not, however. Hence, its presumed
negligence under Article 1735 of the Civil Code remains unrebutted.
9
Loadmasters Customs Services, Inc. vs. Glodel Brokerage Corp.
GR No. 179446, January 10, 2011
Common carriers distiguished from towage, arrastre, stevedoring and others

MP: Under Article 1732 of the Civil Code, common carriers are persons, corporations, firms, or associations engaged in the business of carrying or
transporting passenger or goods, or both by land, water or air for compensation, offering their services to the public. It is distinguished from a
private carrier wherein the carriage is generally undertaken by special agreement and it does not hold itself out to carry goods for the general
public.

FACTS: Columbia Wire and Cable Corporation (Columbia) insured a cargo of copper cathodes through R&B Insurance Corporation (R&B).
Columbia also engaged the services of Glodel Brokerage Corporation (Glodel) for the transport of the cargo to Columbia facilities. Glodel then
engaged the services of Loadmasters Customs Services (Loadmasters) for the delivery of said cargo to Columbia. Out of 12 trucks, owned by
Loadmasters, used to deliver the cargo of Columbia, only 11 made it to their respective destinations. Columbia claimed the amount of loss from
R&B, which sued both Glodel and Loadmasters. The RTC ruled in favor of R&B, but did not hold Loadmasters liable. Both R&B and
Glodelappealed the judgement. The Court of Appeals modified the decision of the RTC and ruled that Loadmasters, being the agent of Glodel, is
liable to Glodel for all the damages it might be required to pay.

ISSUE: W/N Loadmasters and Glodel are common carriers to determine their liability for the loss of the subject cargo.

RULING: YES. Loadmasters is a common carrier because it is engaged in the business of transporting goods by land, through its
trucking service. It is a common carrier as distinguished from a private carrier wherein the carriage is generally undertaken by special
agreement and it does not hold itself out to carry goods for the general public. Glodel is also considered a common carrier within the
context of Article 1732. For as stated and well provided in the case of Schmitz Transport & Brokerage Corporation v. Transport Venture,
Inc., a customs broker is also regarded as a common carrier, the transportation of goods being an integral part of its business. Glodel
and Loadmasters are both common carriers, as they hold out their carriage services to the public. As such, under the Civil Code, they
are mandated to show extraordinary diligence in the conduct of transport. In the case at bar, both Glodel and Loadmasters were
negligent as the cargo failed to reach its destination. Loadmasters failed to ensure that its employees would not tamper with the cargo.
Glodel failed to ensure that Loadmasters is sufficiently capable of completing the delivery. Glodel and Loadmasters are therefore joint
tortfeasors and are solidarily liable to R&B Insurance. Loadmasters cannot be considered an agent of Glodel. Loadmasters in no way
represented itself as such, and in the transfer of cargo, did not represent itself as doing such in behalf of Glodel. In fact, Loadmasters is
not privy to the agreement between Glodel and Columbia. It cannot be considered an agent of Glodel, and cannot be held liable to
Glodel.
 10
Crisostomo vs. CA
GR. No. 138334, August 25, 2003

FACTS: Petitioner Crisostomo contracted the services of respondent Caravan Travel and Tours to facilitate her booking and accommodation in a
tour (Jewels of Europe.) Petitioner was given a discount because petitioner’s niece, Meriam Menor, was respondent company’s ticketing manager.
Menor went to her aunt’s residence on June 12, 1991 (Wednesday) to deliver petitioner’s travel documents and plane tickets. Petitioner, in turn,
gave the full payment for the package tour. Menor then told her to be at the NAIA on Saturday, two hours before her flight. Without checking her
travel documents, petitioner went to NAIA on Saturday. To petitioner’s dismay, she discovered that the flight she was supposed to take had already
departed the previous day. She thus called up Menor to complain. Menor prevailed upon petitioner to take another tour (British Pageant.) Upon
petitioner’s return from Europe, she demanded from respondent a reimbursement, representing the difference between the sum she paid for
"Jewels of Europe Tour" and the amount she owed respondent for the "British Pageant Tour.” Respondent company refused to reimburse
contending that the same was non-refundable. Petitioner filed a complaint alleging that her failure to join "Jewels of Europe" was due to
respondent’s fault and that the "British Pageant" was merely a substitute of the first tour, such that the cost of the former should be properly set-off
against the sum paid for the latter. Respondent denied liability and insisted that petitioner was informed of the correct departure date, which was
clearly and legibly printed on the plane ticket and petitioner had only herself to blame as she did not bother to read her flight schedule as printed on
the ticket.

ISSUE: W/N respondent is a common carrier and is therefore required to exercise extra-ordinary diligence

RULING: NO. 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. A common carrier is defined 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 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. 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 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. Respondent,
not being a common carrier but a travel agency, is not bound under the law to observe extraordinary diligence in the performance of its
obligation.

11
Crisostomo vs. CA
G.R. No. 138334, August 25, 2003
Common carrier distinguished from towage, arrastre, stevedoring and others

DOCTRINE OF LAW: There is no contract of carriage where a travel agency offers services such as procuring tickets and facilitating travel permits
or visas as well as booking customers for tours. The object of a contract of carriage is the transportation of passengers or goods.

FACTS: Estela Crisostomo contracted the services of Caravan Travel and Tours International to arrange and facilitate her booking, ticketing and
accommodation in atour dubbed “Jewels of Europe.” She was given a 5% discount on the amount, which included airfare, and the booking fee was
also waived because Crisostomo’s niece, Meriam Menor, was the ticketing manager. Pursuant to said contract, Menor went to Crisostomo’s
residence on Wednesday to deliver her travel documents and plane tickets. Crisostomo gave full payment for the package tour. Menor told her to
be at NAIA on Saturday, two hours before her flight. Without checking her travel documents, Crisostomo went to NAIA on Saturday to take the
flight but she discovered that the flight she was supposed to take had already departed the previous day. When she learned that her plane ticket
was for Friday, she called up Menor to complain. Menor told her to take another tour – “British Pageant” – instead. Crisostomo made a partial
payment. When she returned, she demanded from Caravan Travel the reimbursement of the difference between the sum she paid for the first tour
and the amount she owed for the second tour. Despite several demands, Caravan Travel refused to reimburse because it was non-refundable.

Crisostomo filed a complaint for breach of contract of carriage and damages. Caravan Travel contended that the correct departure date was clearly
and legibly printed on the plane ticket, and that she had her travel documents with her two days before the scheduled trip. Moreover, it can no
longer reimburse said amount as it had already been remitted to its principal, Lotus Travel.

RTC – Caravan Travel is negligent in erroneously advising Crisostomo of her departure date through its employee, Menor. However, Crisostomo is
guilty of contributory negligence. CA – Both parties were at fault, but Crisostomo was more negligent as she was actually a lawyer and well-
traveled person. She should have known better than to simply rely on what was told to her. Thus, she is not entitled to any form of damages.

Crisostomo contends that Caravan Travel 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 Caravan Travel since the latter is required by law to exercise extraordinary diligence
in the fulfillment of its obligation.

ISSUE: W/N Caravan Travel is a common carrier required by law to exercise extraordinary diligence.

RULING: NO. 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 lane, water or air, for compensation, offering their services to the public.

In this case, Caravan Travel is not an entity engaged in the business of transporting either passengers or goods and is therefore, neither,
a private nor a common carrier. It did not undertake to transport Crisostomo from one place to another since its covenant with its customers is
simply to make travel arrangements in their behalf. Their services as a travel agency include procuring tickets and facilitating travel permits
or visas as well as booking customers for tours. While Crisostomo bought her plane ticket through the efforts of Caravan Travel, this does not
mean that the latter ipso facto is a common carrier. At most, it acted merely as an agent of the airline, with whom Crisostomo ultimately contracted
for her carriage to Europe. Caravan Travel’s obligation to Crisostomo was simply to see to it that she was properly booked with the airline for the
appointed date and time.

The object of Crisostomo’s contractual relation with Caravan Travel is the latter’s service of arranging and facilitating her 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.

The nature of the contractual relation between Crisostomo and Caravan Travel 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. As earlier stated, however, Caravan Travel 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 Crisostomo claims. Since the contract between the parties is an
ordinary one for services, the standard of care required of is that of a good father of a family under Article 1173 of the Civil Code.

Note: Menor was not negligent as she performed its prestation under the contract as well as everything else that was essential to book
Crisostomo’s tour. Had Crisostomo exercised due diligence in the conduct of her affairs, there would have been no reason for her to miss the flight.
11
De Guzman vs. CA
Dec. 12, 1988
Tests to determine common carrier

MP: 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.

FACTS: Respondent Ernesto Cendana, a junk dealer, owned two trucks for hauling scrap materials to Manila. The trucks, on their return trip, were
loaded with cargoes contracted with various merchants to be delivered to different establishments in Pangasinan. Cendana charged freight rates
which were commonly lower than regular commercial rates. He was contracted by petitioner, an authorized dealer of General Milk Company to
haul 750 cartons of milk from its warehouse in Makati. 150 cartons were loaded on a truck driven by respondent himself, while 600 cartons were
placed on the other truck respondent’s driver and employee. However, 600 boxes of milk were not delivered because the truck, while on its way to
Pangasinan, was held up by armed men and the driver and his helper were kidnapped. RTC’s finding: Respondent a common carrier. CA’s
decision: Respondent was not liable for the value of the undelivered cargo. The transport of return loads of freight is “a casual occupation — a
sideline to his scrap iron business” and was not engaged as a common carrier. The hijacking of respondent’s truck was force majeure.

ISSUES: 1. W/N the owner of the truck is a common carrier.

2. W/N Cendana is liable for the undelivered goods.

RULING: 1. YES. Article 1732 makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and
one who does such carrying only as an ancillary activity. 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. 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 backhauling 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. A certificate of public convenience is not a requisite for the
incurring of liability under the Civil Code provisions governing common carriers.

2. 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:
a. Flood, storm, earthquake, lightning, or other natural disaster or calamity;
b. Act of the public enemy in war, whether international or civil;
c. Act or omission of the shipper or owner of the goods;
d. The character of the goods or defects in the packing or in the containers; and
e. Order or act of competent public authority."

The hijacking of the carrier's truck - does not fall within any of the five (5) categories of exempting causes listed in Article 1734. 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. 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." 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.

12- EREZO vs. JEPTE – R. Rizon

FACTS: A truck hit Ernesto Erezo (son of petitioner) which resulted to his death. The court sentenced him to imprisonment and ordered
him to pay the heirs of Ernesto Erezo the sum of P3,000. As the amount could not be enforced against the driver, an action was brought
against the registered owner of the truck – JEPTE. Jepte however claims that he is not liable to pay on the ground that the vehicle
belonged to the Port Brokerage, of which he was the broker at the time of the accident. That the trucks of the corporation were
registered in his name as a convenient arrangement so as to enable the corporation to pay the registration fee with his backpay as a pre-
war government employee. That at the time of the accident the relation of employer and employee between the driver and defendant-
appellant was not established. TC ruled that Jepte is liable to pay.
ISSUE: W/N Ereso (the father) can recover the P3,000 from JEPTE considering that he is not the real owner of the truck. – YES, as registered
owner but he may recover the amount from the real owner. W/N the registered owner be allowed at the trial to prove who the actual and real
owner is, and in accordance with such proof escape or evade responsibility and lay the same on the person actually owning the vehicle. – NO.
RULING:
 The main aim of motor vehicle registration is to identify the owner so that if any accident happens, or that any damage or injury is
caused by the vehicles on the public highways, responsibility therefore can be fixed on a definite individual, the registered owner.
Instances are numerous where vehicles running on public highways caused accidents or injuries to pedestrians or other vehicles
without positive identification of the owner or drivers, or with very scant means of identification. It is to forestall those
circumstances, so inconvenient or prejudicial to the public, that the motor vehicle registration is primarily ordained, in the interest
of the determination of persons responsible for damages or injuries caused on public highways. The primary purpose of
rendering it certain that the violator of the law or of the rules of safety shall not escape because of lack of means to discover him
 The public has the right to assume or presume that the registered owner is the actual owner thereof, for it would be difficult for the public to
enforce the actions that they may have for injuries caused to them by the vehicles being negligently operated if the public should be required
to prove who the actual owner is.
 Were a registered owner allowed to evade responsibility by proving who the supposed transferee or owner is, it would be easy for him, by
collusion with others or otherwise, to escape said responsibility and transfer the same to an indefinite person, or to one who possesses no
property with which to respond financially for the damage or injury done. A victim of recklessness on the public highways is usually without
means to discover or identify the person actually causing the injury or damage. He has no means other than by a recourse to the registration
in the Motor Vehicles Office to determine who is the owner. The protection that the law aims to extend to him would become illusory were
the registered owner given the opportunity to escape liability by disproving his ownership.
 13 – SABTALUH
LIM v CA
G.R. No. 125817. January 16, 2002

FACTS: Private respondent purchased an Isuzu passenger jeepney from Vallarta, holder of a certificate of public convenience for the operation of
public utility vehicles. Private respondent did not have the registration of the vehicle transferred in his name nor did he secure for himself a
certificate of public convenience for its operation. Thus Vallarta remained on record as its registered owner and operator. The jeepney collided with
a ten-wheeler-truck owned by petitioner and driven by his co-petitioner. The truck driver was found responsible for the accident. Petitioner offered
to have the passenger jeepney repaired at his shop. Respondent refused and instead, demanded a brand-new jeep or the amount of P236,000.00.
Petitioner argued that private respondent has no legal personality to sue, considering that he does not have a certificate of public convenience for
the operation of public utility vehicles.

ISSUE: W/N private respondent may sue for damages against the petitioner despite the fact that he is not the registered owner under the
certificate of public convenience.

RULING: Yes. The kabit system is an arrangement whereby a person who has been granted a certificate of public convenience allows
other persons who own motor vehicles to operate them under his license, sometimes for a fee or percentage of the earnings. Although
the parties to such an agreement are not out rightly penalized by law, the kabit system is invariably recognized as being contrary to public policy
and therefore void and inexistent under Art. 1409 of the Civil Code.

However, In the present case it is apparent that the evil sought to be prevented in enjoining the kabit  system does not exist.  First, neither of the
parties to the pernicious kabit system is being held liable for damages.  Second, the case arose from the negligence of another vehicle in using the
public road to whom no representation, or misrepresentation, as regards the ownership and operation of the passenger jeepney was made and to
whom no such representation, or misrepresentation, was necessary. Third, the riding public was not bothered nor inconvenienced at the very least
by the illegal arrangement.  On the contrary, it was private respondent himself who had been wronged and was seeking compensation for the
damage done to him.  Certainly, it would be the height of inequity to deny him his right. Hence, private respondent has the right to proceed against
petitioners for the damage caused on his passenger jeepney as well as on his business.

14.
Lita Enterprises vs. IAC
April 27, 1984 129 SCRA 79

DOCTRINE: “Kabit system” is found to be contrary to public policy and void and inexistent; Court cannot allow either of the parties to enforce an
illegal contract but leaves them both where it finds them.

FACTS: Petition to review the decision of CA. The spouses Nicasio M. Ocampo purchased in installment from the Delta Motor Sales Corporation
five (5) Toyota Corona Standard cars to be used as taxicabs. Since they had no franchise to operate taxicabs, they contracted with petitioner Lita
Enterprises, Inc., through its representative, Manuel Concordia, for the use of the latter’s certificate of public convenience in consideration of an
initial payment of P1,000.00 and a monthly rental of P200.00 per taxicab unit. About a year later one of their employee collided with a motorcycle
who died from the head injuries sustained therefrom. Thereafter, a civil case was filed against Lita Ent. as the registered owner of the taxicab.
Afterthat Nicasio Ocampo decided to register his taxicabs in his name. He requested the manager of petitioner Lita Enterprises, Inc. to turn over
the registration papers to him, but the latter allegedly refused; which opted them to file for a complaint. The CFI(RTC) and IAC(CA) ruled in favor of
Ocampo; hence this petition, on the ground that Ocampo must be held liable for the amount Lita Ent has paid resulting from the death of the victim.

ISSUE: WN Spouses Ocampo (respondents) has the right to assert a claim against Lita Enterprises; and vice versa.

RULING: NO. The SC held that parties who entered into an illegal contract cannot seek relief from the courts and each must bear the
consequences of his acts. In the case at bar, it is unquestionable that the parties herein operated under an arrangement, commonly known as the
“kabit system”, whereby a person who has been granted a certificate of convenience allows another person who owns motor vehicles to operate
under such franchise for a fee. A certificate of public convenience is a special privilege conferred by the government. Abuse of this privilege by the
grantees thereof cannot be countenanced. Although not outrightly penalized as a criminal offense, the “kabit system” is invariably recognized as
being contrary to public policy and, therefore, void and inexistent under Article 1409 of the Civil Code. Thus, having entered into an illegal contract,
neither can seek relief from the courts, and each must bear the consequences of his acts.
15
Teja Marketing vs. IAC
G.R. No. L-65510, March 9, 1987
FACTS: Pedro Nale bought from Teja Marketing a motorcycle with a sidecar (trimobile). A chattel mortgage was constituted as a security for the
payment of the balance of the purchase price. The trimobile sold was first mortgaged to Teja Marketing by Angel Jaucian, though they are one and
the same, to make it appear that Nale had no franchise of his own. The agreement also stipulated that the seller would undertake the yearly
registration with the Land Transportation Commission. It failed to comply because it alleged that Nale hid the trimobile from it. Nale also failed to
comply with the payments, despite several demands. He contends that because of the seller’s failure to register the trimobile, he suffered damages
when he failed to claim any insurance indemnity (2 accidents occurred) and when the LTC impounded the vehicle because it was not registered.
The CFI ruled in favor of Teja Marketing, while the IAC dismissed both the claim and counterclaim due to the in pari delicto rule.
ISSUE: W/N the doctrine of in pari delicto is applicable.
RULING: YES. The parties operated under an arrangement, commonly known as the "kabit system" whereby a person who has been granted a
certificate of public convenience allows another person who owns motor vehicles to operate under such franchise for a fee. A certificate of public
convenience is a special privilege conferred by the government. Abuse of this privilege by the grantees thereof cannot be countenanced. The
"kabit system" has been Identified as one of the root causes of the prevalence of graft and corruption in the government transportation offices.
Although not outrightly penalized as a criminal offense, the kabit system is invariably recognized as being contrary to public policy and, therefore,
void and in existent under Art. 1409 of the NCC. It is a fundamental principle that the court will not aid either party to enforce an illegal contract, but
will leave both where it finds then. Upon this premise it would be error to accord the parties relief from their predicament. Article 1412 of the Civil
Code denies them such aid.
The defect of in existence of a contract is permanent and cannot be cured by ratification or by prescription. The mere lapse of time cannot give
efficacy to contracts that are null and void.

16
Nostradamus Villanueva vs. Priscilla R. Domingo, et al.
GR No. 144274
Corona, J.

FACTS: A car driven by Renato Ocfemia hit a car driven by Leandro Domingo. The registered owner of Ocfemia’s vehicle was Nostradamus
Villanueva, although Villanueva has traded/swapped the vehicle for a Pajero owned by Albert Jaucian/Auto Palace Car Exchange.
 The Assistant City Prosecutor of Manila recommended the filing of an Information for reckless imprudence resulting to damage to property
and physical injuries.

The trial court found Villanueva liable and ordered him to pay damages. The Court of Appeals affirmed the trial court but deleted the award
for attorney’s and appearance fees. Villanueva files a petition for review with the Supreme Court.

ISSUE: Whether or not a registered owner of a vehicle may be held liable for damages arising from an accident involving the said vehicle while it
was being operated by the employee of the vehicle’s buyer without the latter’s consent and knowledge

RULING: YES. A registered owner of any vehicle is directly and primarily liable to the public and third persons while it is being operated. The
petition for review is denied and the Court of Appeals decision is affirmed.

The public has a right to assume that the registered owner is the actual owner, to make it easier for them to enforce actions for injuries
caused to them by vehicles negligently operated. However, the registered owner may recover from the person to whom he had sold, assigned, or
conveyed the vehicle via a third-party complaint.

The registered owner of any vehicle, even if not used for a public service, should be primarily responsible to the public or third persons while
the vehicle is being driven on the streets. The main aim of registration is to identify the owner so that if any accident happens, responsibility can be
fixed on a definite individual–the registered owner. The primary purpose is to make certain that the violator shall not escape because of lack of
means to discover him.

The law, with its aim in mind, does not relieve him directly of the responsibility that the law places upon him as an incident or consequence
of registration. If a registered owner is allowed to prove who the supposed transferee is, it would be easy for him to escape responsibility and
transfer it to an indefinite person or to one who possesses no property with which to respond financially for the injury or damage.
Whether the driver is authorized by the actual owner is irrelevant in determining the liability of the registered owner. To require so would defeat the
purpose of the enactment of motor vehicle registration.

17
FEB LEASING AND FINANCE CORPORATION VS SPOUSES SERGIO P. BAYLON

FACTS; On 2 September 2000, an Isuzu oil tanker running along Del Monte Avenue in Quezon City and bearing plate number TDY 712 hit Loretta
V. Baylon daughter of respondent spouses Baylon. The oil tanker was leased to BG Hauler, Inc. and was being driven by the latter’s driver, Manuel
Y. Estilloso. The oil tanker was insured by FGU Insurance Corp. The accident took place at around 2:00 p.m. While the driver of the oil tanker was
executing a left turn side by side with another vehicle towards Del Monte Avenue, the oil tanker hit Loretta who was then crossing Del Monte
Avenue coming from Mayon Street. She was brought for treatmentwhere she remained in a coma until her death two days after. The spouses
Baylon filed with the RTC (Branch 35) of Gapan City a Complaint 10 for damages against petitioner, BG Hauler, the driver, and FGU Insurance.
Petitioner claimed that the spouses Baylon had no cause of action against it because under its lease contract with BG Hauler, petitioner was not
liable for any loss, damage, or injury that the leased oil tanker might cause. Petitioner claimed that no employer-employee relationship existed
between petitioner and the driver. For its part, FGU Insurance averred that the victim was guilty of contributory negligence. FGU Insurance
concluded that the spouses Baylon could not expect to be paid the full amount of their claims. During trial, FGU Insurance moved that (1) it be
allowed to deposit in court the amount of ₱450,000.00 in the joint names of the spouses Baylon, petitioner, and BG Hauler and (2) it be released
from further participating in the proceedings which the RTC granted.

ISSUE: Whether the registered owner of a financially leased vehicle remains liable for loss, damage, or injury caused by the vehicle
notwithstanding an exemption provision in the financial lease contract.
RULING: Yes. Under Section 5 of Republic Act No. 4136, as amended, all motor vehicles used or operated on or upon any highway of the
Philippines must be registered with the LTO. The registered owner of a motor vehicle is directly and primarily responsible for the consequences of
its operation regardless of who the actual vehicle owner might be.Well-settled is the rule that the registered owner of the vehicle is liable for quasi-
delicts resulting from its use. Thus, even if the vehicle has already been sold, leased, or transferred to another person at the time the vehicle
figured in an accident, the registered vehicle owner would still be liable for damages caused by the accident. The policy behind the rule is to enable
the victim to find redress by the expedient recourse of identifying the registered vehicle owner in the records of the Land Transportation Office. The
registered owner can be reimbursed by the actual owner, lessee or transferee who is known to him. Unlike the registered owner, the innocent
victim is not privy to the lease, sale, transfer or encumbrance of the vehicle. Hence, the victim should not be prejudiced by the failure to register
such transaction or encumbrance.
In this case, petitioner admits that it is the registered owner of the oil tanker that figured in an accident causing the death of Loretta. As the
registered owner, it cannot escape liability for the loss arising out of negligence in the operation of the oil tanker. Its liability remains even if at the
time of the accident, the oil tanker was leased to BG Hauler and was being driven by the latter’s driver, and despite a provision in the lease
contract exonerating the registered owner from liability.

18 Chua
SPS HERNANDEZ VS SPS DOLOR (gr no 160286)

FACTS: Lorenzo Menard "Boyet" Dolor, Jr. was driving an owner-type jeepney owned by her mother, Margarita. As he was traversing the road his
vehicle collided with a passenger jeepney, driven by petitioner Juan Gonzales and owned by his co-petitioner Francisco Hernandez. Boyet Dolor
and his passenger, Oscar Valmocina, died as a result of the collision. 3 were also on board the owner-type jeep, which was totally wrecked,
suffered physical injuries. The collision also damaged the passenger jeepney of Francisco Hernandez and caused physical injuries to its 3
passengers.
Respondents commenced an action for damages against petitioners before the RTC, alleging that driver Juan Gonzales was guilty of
negligence and lack of care and that the Hernandez spouses were guilty of negligence in the selection and supervision of their employees.
Petitioners countered that the proximate cause of the death and injuries sustained by the passengers of both vehicles was the recklessness
of Boyet Dolor, the driver of the owner-type jeepney, who was driving in a zigzagging manner under the influence of alcohol. Petitioners also
alleged that Gonzales was not the driver-employee of the Hernandez spouses as the former only leased the passenger jeepney on a daily basis.
The Hernandez spouses further claimed that even if an employer-employee relationship is found to exist between them, they cannot be held liable
because as employers they exercised due care in the selection and supervision of their employee.
It was established that the drivers of the two vehicles were duly licensed to drive and that the road where the collision occurred was
asphalted and in fairly good condition.
The owner-type jeep was travelling uphill while the passenger jeepney was going downhill. It was further established that the owner-type jeep was
moderately moving and had just passed a road bend when its passengers, private respondents Joseph Sandoval and Rene Castillo, saw the
passenger jeepney at a distance of three meters away. The passenger jeepney was traveling fast when it bumped the owner type jeep. Moreover,
the evidence presented by respondents before the trial court showed that petitioner Juan Gonzales obtained his professional driver's license only
on September 24, 1986, or three months before the accident. Prior to this, he was holder of a student driver's permit.
ISSUE: (1) Whether the Hernandez spouses as solidarily liable with Juan Gonzales, although it is of record that they were not in the passenger
jeepney driven by latter when the accident occurred;
(2) whether Julian Gonzales is an employee of the Hernandez spouses.
RULING: (1) YES, While article 2176 do not expressly provide for solidary liability, the same can be inferred from the wordings of the first
paragraph of Article 2180 which states that the obligation imposed by article 2176 is demandable not only for one's own acts or omissions, but also
for those of persons for whom one is responsible.
Moreover, Article 2180 should be read with Article 2194 of the same Code, which categorically states that the responsibility of two or more
persons who are liable for quasi-delict is solidary. In other words, the liability of joint tortfeasors is solidary. Verily, under Article 2180 of the Civil
Code, an employer may be held solidarily liable for the negligent act of his employee.
(2) YES, Indeed to exempt from liability the owner of a public vehicle who operates it under the "boundary system" on the ground that he is a
mere lessor would be not only to abet flagrant violations of the Public Service Law, but also to place the riding public at the mercy of reckless and
irresponsible drivers — reckless because the measure of their earnings depends largely upon the number of trips they make and, hence, the speed
at which they drive; and irresponsible because most if not all of them are in no position to pay the damages they might cause.