TRANSPORTATION LAW

Atty. Ralph James G. Laman

I. Common Carriers

a. Codal Provisions = New Civil Code – Art. 1732 to Art. 1766

b. Case List - Introduction/Basic Concepts

1. Aleson Shipping Lines vs. CGU International Insurance and Candano Shipping Lines, G.R. NO. 217311,
July 15, 2020.

2. Unitrans International Forwarders, Inc. vs. Insurance Company of North America, G.R. No. 203865, March
13, 2019.
Common Carriers; Extraordinary Diligence; 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 in Article 1733.—Emphasis must be placed on the
fact that Unitrans itself admitted, through its own witness and general manager, Del Rosario, that in handling the
subject shipment and making sure that it was delivered to the consignee’s premises in good condition as the
delivery/forwarding agent, Unitrans was acting as a freight forwarding entity and an accredited non-vessel operating
common carrier. 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 in Article 1733. In turn, 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.

Same; Same; Same; Presumption of Negligence; Jurisprudence holds that a common carrier is presumed to have
been negligent if it fails to prove that it exercised extraordinary vigilance over the goods it transported.—
Jurisprudence holds that a common carrier is presumed to have been negligent if it fails to prove that it exercised
extraordinary vigilance over the goods it transported. When the goods shipped are either lost or arrived in damaged
condition, a presumption arises against the carrier of its failure to observe that diligence, and there need not be an
express finding of negligence to hold it liable. To overcome the presumption of negligence, the common carrier
must establish by adequate proof that it exercised extraordinary diligence over the goods. It must do more than
merely show that some other party could be responsible for the damage. In the instant case, considering that it is
undisputed that the subject goods were severely damaged, the presumption of negligence on the part of the common
carrier, i.e., Unitrans, arose. Hence, it had to discharge the burden, by way of adequate proof, that it exercised
extraordinary diligence over the goods; it is not enough to show that some other party might have been responsible
for the damage. Unitrans failed to discharge this burden. Hence, it cannot escape liability.

3. FedEx vs. Antonino, G.R. No. 199455, June 27, 2018

Common Carriers; Contract of Carriage; A provision in a contract of carriage requiring the filing of a formal claim
within a specified period is a valid stipulation.—Petitioner disclaims liability because of respondents’ failure to
comply with a condition precedent, that is, the filing of a written notice of a claim for nondelivery or misdelivery
within 45 days from acceptance of the shipment. The Regional Trial Court found the condition precedent to have
been substantially complied with and attributed respondents’ noncompliance to FedEx for giving them a runaround.
This Court affirms this finding. A provision in a contract of carriage requiring the filing of a formal claim within a
specified period is a valid stipulation. Jurisprudence maintains that compliance with this provision is a legitimate
condition precedent to an action for damages arising from loss of the shipment.

Same; Same; Diligence Required of Common Carriers; Extraordinary Diligence; The Civil Code mandates common
carriers to observe extraordinary diligence in caring for the goods they are transporting.—The Civil Code mandates
common carriers to observe extraordinary diligence in caring for the goods they are transporting: 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. In all other cases,
common carriers must prove that they exercised extraordinary diligence in the performance of their duties, if they
are to be absolved of liability.
Same; Same; Same; Same; The responsibility of common carriers to exercise extraordinary diligence lasts from the
time the goods are unconditionally placed in their possession until they are delivered “to the consignee, or to the
person who has a right to receive them.”—The responsibility of common carriers to exercise extraordinary diligence
lasts from the time the goods are unconditionally placed in their possession until they are delivered “to the
consignee, or to the person who has a right to receive them.” Thus, part of the extraordinary responsibility of
common carriers is the duty to ensure that shipments are received by none but “the person who has a right to receive
them.” Common carriers must ascertain the identity of the recipient. Failing to deliver shipment to the designated
recipient amounts to a failure to deliver. The shipment shall then be considered lost, and liability for this loss ensues.

Contract of Adhesion; Although not automatically void, any ambiguity in a contract of adhesion is construed strictly
against the party that prepared it.—The contract between petitioner and respondents is a contract of adhesion; it was
prepared solely by petitioner for respondents to conform to. Although not automatically void, any ambiguity in a
contract of adhesion is construed strictly against the party that prepared it. Accordingly, the prohibition against
transporting money must be restrictively construed against petitioner and liberally for respondents. Viewed through
this lens, with greater reason should respondents be exculpated from liability for shipping documents or instruments,
which are reasonably understood as not being money, and for being unable to declare them as such.

4. LTFRB, DoTR vs. ANGKAS, DBDOYC, INC., G.R. No. 242860, March 11, 2019
Constitutional Law; Police Power; Right to Liberty; Property Right; The State “may interfere with personal liberty,
property, lawful businesses and occupations to promote the general welfare [as long as] the interference [is]
reasonable and not arbitrary.”—As in all fundamental rights, the State has a legitimate interest in regulating these
rights when their exercise clearly affects the public. To recount, “[p]olice power is the inherent power of the State to
regulate or to restrain the use of liberty and property for public welfare.” Accordingly, the State “may interfere with
personal liberty, property, lawful businesses and occupations to promote the general welfare [as long as] the
interference [is] reasonable and not arbitrary.” Here, it is petitioners’ position that DBDOYC is a transportation
provider and its accredited drivers are common carriers engaged in rendering public service which is subject to their
regulation. The regulatory measures against DBDOYC, as mentioned above, pertain to DOs 2015-11 and 2017-11,
which have created new classifications of transportation services, namely TNC and TNVS, in light of modern
innovations. These issuances may be traced to Commonwealth Act No. 146, otherwise known as the “Public Service
Act,” as amended.

Transportation Law; Public Service Act; Common Carriers; Certificate of Public Convenience; Section 15 of the
Public Service Act requires that, except for certain exemptions, no public service shall operate in the Philippines
without possessing a Certificate of Public Convenience (CPC).—Section 15 of the Public Service Act requires that,
except for certain exemptions, no public service shall operate in the Philippines without possessing a CPC. In turn,
the then DOTC (which had supervision and control over the LTFRB that had assumed certain powers of the old
Public Service Commission) issued DO 97-1097 providing for the standard classifications of all PUVs before they
can be issued a CPC. This department order was later amended by the above stated DOs 2015-11 and 2017-11 and
thereafter, the LTFRB issued various memorandum circulars governing the rules for TNC and TNVS accreditation,
which rules DBDOYC purportedly failed to comply.

Same; Same; Same; Public Service; Words and Phrases; As stated in the Public Service Act, the term “public
service” covers any person who owns, operates, manages, or controls in the Philippines, for hire or compensation,
with general or limited clientele, whether permanent, occasional or accidental, and done for general business
purposes, any common carrier.—As stated in the Public Service Act, the term “public service” covers any person
who owns, operates, manages, or controls in the Philippines, for hire or compensation, with general or limited
clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier.
The Civil Code defines “common earners” 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.

Same; Same; Same; Angkas; The fact that its drivers are not physically hailed on the street does not automatically
render Angkas-accredited drivers as private carriers.—In this relation, DBDOYC posits that its accredited bikers are
private carriers as they do not hold out their services generally to the public because they cannot just be hailed on the
street as they only contract via the Angkas online front. However, the Court is hard-pressed to rule — at least at this
point, and for the purpose of determining the validity of the writ of preliminary injunction — that these bikers are
only private carriers who may publicly ply their trade without any regulation. As the Court observes, the genius
behind the Angkas app is that it removes the inconvenience of having to physically hail for public transportation by
creating a virtual system wherein practically the same activity may now be done at the tip of one’s fingers. As it is
the trend of modern technology, previously cumbersome mundane activities, such as paying bills, ordering food, or
reserving accommodations, can now be accomplished through a variety of online platforms. By DBDOYC’s own
description, it seems to be that Angkas app is one of such platforms. As such, the fact that its drivers are not
physically hailed on the street does not automatically render Angkas-accredited drivers as private carriers.

Same; Same; Same; Same; Even if it is assumed that Angkas-accredited bikers are not treated as common carriers
and hence, would not make DBDOYC fall under the “public service” definition, it does not necessarily mean that
the business of holding out private motorcycles for hire is a legitimate commercial venture.—Even if it is assumed
that Angkas-accredited bikers are not treated as common carriers and hence, would not make DBDOYC fall under
the “public service” definition, it does not necessarily mean that the business of holding out private motorcycles for
hire is a legitimate commercial venture. Section 7 of RA 4136 states that: Section 7. Registration Classification.—
Every motor vehicle shall be registered under one of the following described classifications: (a) private passenger
automobiles; (b) private trucks; and (c) private motorcycles, scooters, or motor wheel attachments. Motor vehicles
registered under these classifications shall not be used for hire under any circumstances and shall not be used to
solicit, accept, or be used to transport passengers or freight for pay.

Same; Same; Same; Same; The business of holding one’s self out as a transportation service provider, whether done
through online platforms or not, appears to be one which is imbued with public interest and thus, deserves
appropriate regulations.—The Court therefore concludes that no clear and unmistakable right exists in DBDOYC’s
favor; hence, the RTC gravely abused its discretion in issuing the assailed injunctive writ. In the final analysis, the
business of holding one’s self out as a transportation service provider, whether done through online platforms or not,
appears to be one which is imbued with public interest and thus, deserves appropriate regulations. With the safety of
the public further in mind, and given that, at any rate, the above said administrative issuances are presumed to be
valid until and unless they are set aside, the nullification of the assailed injunctive writ on the ground of grave abuse
of discretion is in order.

5. PAL vs CA, G.R. No. 92501 , March 6, 1992

Transportation; Common Carriers; Damages; Limits of liability under the Warsaw Convention not applicable.—
Petitioner contends that under the Warsaw Convention, its liability, if any, cannot exceed US $20.00 based on
weight as private respondent Co did not declare the contents of his baggage nor pay additional charges before the
flight (p. 3, tsn, July 18, 1985). We find no merit in that contention. In Samar Mining Company, Inc. vs.
Nordeutscher Lloyd (132 SCRA 529), this Court ruled: “The liability of the common carrier for the loss, destruction
or deterioration of goods transported from a foreign country to the Philippines is governed primarily by the New
Civil Code. In all matters not regulated by said Code, the rights and obligations of common carriers shall be
governed by the Code of Commerce and by Special Laws.” x x x. Since the passenger’s destination in this case was
the Philippines, Philippine law governs the liability of the carrier for the loss of the passenger’s luggage.

6. Alitalia vs. CA, G.R. No. 71929 : December 4, 1990

Transportation; Common Carriers; The Warsaw Convention does not operate as an absolute limit of the extent of an
airline's liability; it does not regulate or exclude liability for other breaches of contract by the carrier, or misconduct
of its employees, or for some particular or exceptional type of damage.—The Convention does not thus operate as
an exclusive enumeration of the instances of an airline's liability, or as an absolute limit of the extent of that liability.
Such a proposition is not borne out by the language of the Convention, as this Court has now, and at an earlier time,
pointed out. Moreover, slight reflection readily leads to the conclusion that it should be deemed a limit of liability
only in those cases where the cause of the death or injury to person, or destruction, loss or damage to property or
delay in its transport is not attributable to or attended by any wilful misconduct, bad faith, recklessness, or otherwise
improper conduct on the part of any official or employee for which the carrier is responsible, and there is otherwise
no special or extraordinary form of resulting injury. The Convention's provisions, in short, do not "regulate or
exclude liability for other breaches of contract by the carrier" or misconduct of its officers and employees, or for
some particular or exceptional type of damage. Otherwise, "an air carrier would be exempt from any liability for
damages in the event of its absolute refusal, in bad faith, to comply with a contract of carriage, which is absurd."
Nor may it for a moment be supposed that if a member of the aircraft complement should inflict.

some physical injury on a passenger, or maliciously destroy or damage the latter's property, the Convention might
successfully be pleaded as the sole gauge to determine the carrier's liability to the passenger. Neither may the
Convention be invoked to justify the disregard of some extraordinary sort of damage resulting to a passenger and
preclude recovery therefor beyond the limits set by said Convention. It is in this sense that the Convention has been
applied, or ignored, depending on the peculiar facts presented by each case.

Same; Same; Same; Damages; Nominal Damages; Private respondent is entitled to an award of nominal damages
for the injury she suffered as a result of the carrier's failure to deliver her luggage on time.—In the case at bar, no
bad faith or otherwise improper conduct may be ascribed to the employees of petitioner airline; and Dr. Pablo's
luggage was eventually returned to her, belatedly, it is true, but without appreciable damage. The fact is,
nevertheless, that some special species of injury was caused to Dr. Pablo because petitioner ALITALIA misplaced
her baggage and failed to deliver it to her at the time appointed—a breach of its contract of carriage, to be sure—
with the result that she was unable to read the paper and make the scientific presentation (consisting of slides,
autoradiograms or films, tables and tabulations) that she had painstakingly labored over, at the prestigious
international conference, to attend which she had traveled hundreds of miles, to her chagrin and embarrassment and
the disappointment and annoyance of the organizers. She felt, not unreasonably, that the invitation for her to
participate at the conference, extended by the Joint FAO/IAEA Division of Atomic Energy in Food and Agriculture
of the United Nations, was a singular honor not only to herself, but to the University of the Philippines and the
country as well, an opportunity to make some sort of impression among her colleagues in that field of scientific
activity. The opportunity to claim this honor or distinction was irretrievably lost to her because of Alitalia's breach
of its contract. Apart from this, there can be no doubt that Dr. Pablo underwent profound distress and anxiety, which
gradually turned to panic and finally despair, from the time she learned that her suitcases were missing up to the
time when, having gone to Rome, she finally realized that she would no longer be able to take part in the conference.
As she herself put it, she "was really shocked and distraught and confused." Certainly, the compensation for the
injury suffered by Dr. Pablo cannot under the circumstances be restricted to that prescribed by the Warsaw
Convention for delay in the transport of baggage. She is not, of course, entitled to be compensated for loss or
damage to her luggage. As already mentioned, her baggage was ultimately delivered to her in Manila, tardily but
safely.

She is however entitled to nominal damages—which, as the law says, is adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant, may be vindicated and recognized, and not for the
purpose of indemnifying the plaintiff for any loss suffered—and this Court agrees that the respondent Court of
Appeals correctly set the amount thereof at P40,000.00.

Same; Same; Same; Same; Same; A prayer "for such other and further just and equitable relief in the premises" is
broad enough to comprehend an application as well for nominal damages.—As to the purely technical argument that
the award to her of such nominal damages is precluded by her omission to include a specific claim therefor in her
complaint, it suffices to draw attention to her general prayer, following her plea for moral and exemplary damages
and attorney's fees, "for such other and further just and equitable relief in the premises," which certainly is broad
enough to comprehend an application as well for nominal damages. Besides, petitioner should have realized that the
explicit assertion, and proof, that Dr. Pablo's right had been violated or invaded by it—absent any claim for actual or
compensatory damages, the prayer thereof having been voluntarily deleted by Dr. Pablo upon the return to her of her
baggage—necessarily raised the issue of nominal damages.

Attorney's Fees; Attorney's fees may be awarded when defendant's acts or omission has compelled plaintiff to
litigate or incur expenses to protect her interests.—This Court also agrees that respondent Court of Appeals correctly
awarded attorney's fees to Dr. Pablo, and the amount "of P5,000.00 set by it is reasonable in the premises. The law
authorizes recovery of attorney's fees inter alia where, as here, "the defendant's act or omission has compelled the
plaintiff to litigate with third persons or to incur expenses to protect his interest," or "where the court deems it just
and equitable."

7. American Home vs CA, G.R. No. 94149 , May 5, 1992

Common Carriers; 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.—This issue has been resolved by this Court in
National Development Co. v. C.A. (164 SCRA 593 [1988]; citing Eastern Shipping Lines, Inc. v. I.A.C., 150 SCRA
469, 470 [1987] where it was held 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.” (Article 1753, Civil Code). Thus,
for cargoes transported to the Philippines as in the case at bar, 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 special laws.

Same; Same; Same; Common carriers bound to observe extraordinary diligence in the vigilance over the goods and
for the safety of passengers transported by them according to all circumstances of each case.—Corollary thereto, the
Court held further that under Article 1733 of the Civil Code, 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 passengers transported by them according to all circumstances of each case. Thus, under Article 1735 of
the same Code, in all cases other than those mentioned in Article 1734 thereof, the common carrier shall be
presumed to have been at fault or to have acted negligently, unless it proves that it has observed the extraordinary
diligence required by law.

Same; Same; Same; Common Carriers cannot limit their liability for injury or loss of goods where such injury or
loss was caused by its own negligence.—But more importantly, the Court ruled that common carriers cannot limit
their liability for injury or loss of goods where such injury or loss was caused by its own negligence. Otherwise
stated, the law on averages under the Code of Commerce cannot be applied in determining liability where there is
negligence.

8. Unsworth Transport Intl, G.R. No. 166250, July 26, 2010

Carriage of Goods by Sea Act; Words and Phrases; Meaning of “Freight Forwarder.”—Petitioner is a freight
forwarder. The term “freight forwarder” refers to a firm holding itself out to the general public (other than as a
pipeline, rail, motor, or water carrier) to provide transportation of property for compensation and, in the ordinary
course of its business, (1) to assemble and consolidate, or to provide for assembling and consolidating, shipments,
and to perform or provide for break-bulk and distribution operations of the shipments; (2) to assume responsibility
for the transportation of goods from the place of receipt to the place of destination; and (3) to use for any part of the
transportation a carrier subject to the federal law pertaining to common carriers.
Same; Same; Limitation of a Freight Forwarder’s Liability.—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.

Same; Same; Bill of Lading; Meaning of a Bill of Lading; A bill of lading operates both as receipts and as a
contract.—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. 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.

Same; Same; Common Carriers; Negligence; Common carriers, as a general rule, are presumed to have been at fault
or negligent if the goods they transported deteriorated or got lost or destroyed; Mere proof of delivery of the goods
in good order to a common carrier and of their arrival in bad order at their destination constitutes a prima facie case
of fault or negligence against the carrier.—UTI is liable as a common carrier. Common carriers, as a general rule,
are presumed to have been at fault or negligent if the goods they transported deteriorated or got lost or destroyed.
That is, unless they prove that they exercised extraordinary diligence in transporting the goods. In order to avoid
responsibility for any loss or damage, therefore, they have the burden of proving that they observed such diligence.
Mere proof of delivery of the goods in good order to a common carrier and of their arrival in bad order at their
destination constitutes a prima facie case of fault or negligence against the carrier. If no adequate explanation is
given as to how the deterioration, loss, or destruction of the goods happened, the transporter shall be held
responsible.

Same; Same; Same; The Civil Code does not limit the liability of the common carrier to a fixed amount per package;
The Carriage of Goods by Sea Act (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.—It is to be noted
that 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.

Same; Same; Same; Insertion of an invoice number does not in itself sufficiently and convincingly show that
petitioner had knowledge of the value of the cargo.—In the present case, the shipper did not declare a higher
valuation of the goods to be shipped. Contrary to the CA’s conclusion, the insertion of the words “L/C No. LC No.
1-187-008394/NY 69867 covering shipment of raw materials for pharmaceutical Mfg. x x x” cannot be the basis of
petitioner’s liability. Furthermore, the insertion of an invoice number does not in itself sufficiently and convincingly
show that petitioner had knowledge of the value of the cargo.

9. Malayan vs. PFIC, GR No. 184300, July 11, 2012

Common Carriers; 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; A common carrier becomes a private carrier when it undertakes
to carry a special cargo or chartered to a special person only.—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. On the other
hand, a private carrier is one wherein the carriage is generally undertaken by special agreement and it does not hold
itself out to carry goods for the general public. A common carrier becomes a private carrier when it undertakes to
carry a special cargo or chartered to a special person only. For all intents and purposes, therefore, Reputable
operated as a private/special carrier with regard to its contract of carriage with Wyeth.

Same; Same; The Civil Code provisions on common carriers should not be applied where the carrier is not acting as
such but as a private carrier.—The extent of a private carrier’s obligation is dictated by the stipulations of a contract
it entered into, provided its stipulations, clauses, terms and conditions are not contrary to law, morals, good customs,
public order, or public policy. “The Civil Code provisions on common carriers should not be applied where the
carrier is not acting as such but as a private carrier. Public policy governing common carriers has no force where the
public at large is not involved.”

Double Insurance; Double insurance exists where the same person is insured by several insurers separately in
respect to the same subject and interest.—By the express provision of Section 93 of the Insurance Code, double
insurance exists where the same person is insured by several insurers separately in respect to the same subject and
interest and risk. The requisites in order for double insurance to arise are as follows: 1. The person insured is the
same; 2. Two or more insurers insuring separately; 3. There is identity of subject matter; 4. There is identity of
interest insured; and 5. There is identity of the risk or peril insured against.

Same; Third Party Liability; Where the insurance contract provides for indemnity against liability to third persons,
the liability of the insurer is direct and such third persons can directly sue the insurer.—There is solidary liability
only when the obligation expressly so states, when the law so provides or when the nature of the obligation so
requires. In Heirs of George Y. Poe v. Malayan Insurance Company, Inc., 584 SCRA 152 (2009), the Court ruled
that: [Where the insurance contract provides for indemnity against liability to third persons, the liability of the
insurer is direct and such third persons can directly sue the insurer. The direct liability of the insurer under
indemnity contracts against third party[-]liability does not mean, however, that the insurer can be held solidarily
liable with the insured and/or the other parties found at fault, since they are being held liable under different
obligations. The liability of the insured carrier or vehicle owner is based on tort, in accordance with the provisions of
the Civil Code; while that of the insurer arises from contract, particularly, the insurance policy.

10. British Airways vs. CA, G.R. No. 121824. January 29, 1998
Common Carriers; Air Transportation; The nature of an airline’s contract of carriage partakes of two types, namely:
a contract to deliver a cargo or mechandise to its destination and a contract to transport passengers to their
destination.—Before we resolve the issues raised by BA, it is needful to state that the nature of an airline’s contract
of carriage partakes of two types, namely: a contract to deliver a cargo or merchandise to its destination and a
contract to transport passengers to their destination. A business intended to serve the travelling public primarily, it is
imbued with public interest, hence, the law governing common carriers imposes an exacting standard. Neglect or
malfeasance by the carrier’s employees could predictably furnish bases for an action for damages.

Same; Same; In determining the amount of compensatory damages in breach of contract involving misplaced
luggage, it is vital that the claimant satisfactorily prove during the trial the existence of the factual basis of the
damages and its causal connection to defendant’s acts.—In the instant case, it is apparent that the contract of
carriage was between Mahtani and BA. Moreover, it is indubitable that his luggage never arrived in Bombay on
time. Therefore, as in a number of cases we have assessed the airlines’ culpability in the form of damages for breach
of contract involving misplaced luggage. In determining the amount of compensatory damages in this kind of cases,
it is vital that the claimant satisfactorily prove during the trial the existence of the factual basis of the damages and
its causal connection to defendant’s acts.

Same; Same; Warsaw Convention; In a contract of air carriage, a declaration by the passenger of a higher value is
needed to recover a greater amount.—Admittedly, in a contract of air carriage a declaration by the passenger of a
higher value is needed to recover a greater amount. Article 22(1) of the Warsaw Convention, provides as follows: “x
x x x x x x x x (2) In the transportation of checked baggage and goods, the liability of the carrier shall be limited to a
sum of 250 francs per kilogram, unless the consignor has made, at the time the packages was handed over to the
carrier, a special declaration of the value at delivery and has paid a supplementary sum if the case so requires. In that
case the carrier will be liable to pay a sum not exceeding the declared sum, unless he proves that the sum is greater
than the actual value to the consignor at delivery.”

Same; Same; Tariffs; An air carrier is not liable for the loss of baggage in an amount in excess of the limits specified
in the tariff which was filed with the proper authorities, such tariff being binding on the passenger regardless of the
passenger’s lack of knowledge thereof or assent thereto.—American jurisprudence provides that an air carrier is not
liable for the loss of baggage in an amount in excess of the limits specified in the tariff which was filed with the
proper authorities, such tariff being binding on the passenger regardless of the passenger’s lack of knowledge
thereof or assent thereto. This doctrine is recognized in this jurisdiction.

Air Transportation; Agency; Damages; An agent is also responsible for any negligence in the performance of its
function and is liable for damages which the principal may suffer by reason of its negligent act.—Parenthetically,
the Court of Appeals should have been cognizant of the well-settled rule that an agent is also responsible for any
negligence in the performance of its function and is liable for damages which the principal may suffer by reason of
its negligent act. Hence, the Court of Appeals erred when it opined that BA, being the principal, had no cause of
action against PAL, its agent or subcontractor.

Same; Same; Same; International Air Transport Association (IATA); Member airlines of the IATA are regarded as
agents of each other in the issuance of the tickets and other matters pertaining to their relationship.—Also, it is
worth mentioning that both BA and PAL are members of the International Air Transport Association (IATA),
wherein member airlines are regarded as agents of each other in the issuance of the tickets and other matters
pertaining to their relationship. Therefore, in the instant case, the contractual relationship between BA and PAL is
one of agency, the former being the principal, since it was the one which issued the confirmed ticket, and the latter
the agent.

11. De Guzman vs. CA - G.R. No. L-47822 , December 22, 1988

Common Carriers; Definition of; Art. 1732 of the Civil Code makes no distinctions between a person or enterprise
offering transportation service on a regular or scheduled basis and such service on an occasional, episodic or
unscheduled basis.—The Civil Code defines “common carriers” in the following terms: “Article 1732. Common
carriers are persons, corporations, firms, or associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air for compensation, offering their services to the public.” The
above article makes no distinction between one whose principal business activity is the carrying of persons or goods
or both, and one who does such carrying only as an ancillary activity (in local idiom, as “a sideline”). Article 1732
also carefully avoids making any distinction between a person or enterprise offering transportation service on a
regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. Neither
does Article 1732 distinguish between a carrier offering its services to the “general public,” i.e., the general
community or population, and one who offers services or solicits business only from a narrow segment of the
general population. We think that Article 1733 deliberately refrained from making such distinctions.

Same; Same; Same; The concept of “common carrier” under Art. 1732 coincides with the notion of “Public Service”
under the Public Service Act (CA No. 1416).—So understood, the concept of “common carrier” under Article 1732
may be seen to coincide neatly with the notion of “public service,” under the Public Service Act (Commonwealth
Act No. 1416, as amended) which at least partially supplements the law on common carriers set forth in the Civil
Code. Under Section 13, paragraph (b) of the Public Service Act, “public service” includes: “x x x every person that
now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general or
limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common
carrier, railroad, street railway, traction railway, subway motor vehicle, either for freight or passenger, or both, with
or without fixed route and whatever may be its classification, freight or carrier service of any class, express service,
steamboat, or steamship line, pontines, ferries and water craft, engaged in the transportation of passengers or freight
or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system, gas,
electric light, heat and power, water supply and power petroleum, sewerage system, wire or wireless
communications systems, wire or wireless broadcasting stations and other similar public services. x x x.”

Same; Same; Same; Same; A certificate of public convenience is not a requisite for the incurring of liability under
the Civil Code provisions governing common carriers.—The Court of Appeals referred to the fact that private
respondent held no certificate of public convenience, and concluded he was not a common carrier. This is palpable
error. A certificate of public convenience is not a requisite for the incurring of liability under the Civil Code
provisions governing common carriers. That liability arises the moment a person or firm acts as a common carrier,
without regard to whether or not such carrier has also complied with the requirements of the applicable regulatory
statute and implementing regulations and has been granted a certificate of public convenience or other franchise. To
exempt private respondent from the liabilities of a common carrier because he has not secured the necessary
certificate of public convenience, would be offensive to sound public policy; that would be to reward private
respondent precisely for failing to comply with applicable statutory requirements. The business of a common carrier
impinges directly and intimately upon the safety and well being and property of those members of the general
community who happen to deal with such carrier. The law imposes duties and liabilities upon common carriers for
the safety and protection of those who utilize their services and the law cannot allow a common carrier to render
such duties and liabilities merely facultative by simply failing to obtain the necessary permits and authorizations.

Same; Same; Same; Liability of common carriers in case of loss, destruction or deterioration or destruction of goods
they carry; Extraordinary diligence, required; Exceptions.—Common carriers, “by the nature of their business and
for reasons of public policy,” are held to a very high degree of care and diligence (“extraordinary diligence”) in the
carriage of goods as well as of passengers. The specific import of extraordinary diligence in the care of goods
transported by a common carrier is, according to Article 1733, “further expressed in Articles 1734, 1735 and 1745,
numbers 5, 6 and 7” of the Civil Code. Article 1734 establishes the general rule that common carriers are
responsible for the loss, destruction or deterioration of the goods which they carry, “unless the same is due to any of
the following causes only: (1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) Act of
the public enemy in war, whether international or civil; (3) Act or omission of the shipper or owner of the goods; (4)
The character of the goods or defects in the packing or in the containers; and (5) Order or act of competent public
authority.” It is important to point out that the above list of causes of loss, destruction or deterioration which exempt
the common carrier for responsibility therefor, is a closed list. Causes falling outside the foregoing list, even if they
appear to constitute a species of force majeure, fall within the scope of Article 1735.

Same; Same; Same; Same; Same; The hijacking of the carriers truck does not fall within any of the five (5)
categories of exempting causes in Art. 1734.—Applying the above-quoted Articles 1734 and 1735, we note firstly
that the specific cause alleged in the instant case—the hijacking of the carrier’s truck—does not fall within any of
the five (5) categories of exempting causes listed in Article 1734. It would follow, therefore, that the hijacking of the
carrier’s vehicle must be dealt with under the provisions of Article 1735, in other words, that the private respondent
as common carrier is presumed to have been at fault or to have acted negligently. This presumption, however, may
be overthrown by proof of extraordinary diligence on the part of private respondent.

Same; Same; Same; Same; Same; Under Art. 1745(6), a common carrier is held responsible even for acts of
strangers like thieves or robbers except where such thieves or robbers acted “with grave or irresistible threat,
violence or force.”—As noted earlier, the duty of extraordinary diligence in the vigilance over goods is, under
Article 1733, given additional specification not only by Articles 1734 and 1735 but also by Article 1745, numbers 4,
5 and 6. Article 1745 provides in relevant part: “Any of the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy: xxx xxx xxx (5) that the common carrier shall not be responsible
for the acts or omissions of his or its employees; (6) that the common carrier’s liability for acts committed by
thieves, or of robbers who do not act with grave or irresistible threat, violence or force, is dispensed with or
diminished; and (7) that the common carrier shall not responsible for the loss, destruction or deterioration of goods
on account of the defective condition of the car, vehicle, ship, airplane or other equipment used in the contract of
carriage.” Under Article 1745 (6) above, a common carrier is held responsible and will not be allowed to divest or to
diminish such responsibility—even for acts of strangers like thieves or robbers, except where such thieves or robbers
in fact acted “with grave or irresistible threat, violence or force.” We believe and so hold that the limits of the duty
of extraordinary diligence in the vigilance over the goods carried are reached where the goods are lost as a result of a
robbery which is attended by “grave or irresistible threat, violence or force.”

Same; Same; Same; Same; Same; Common carriers are not made absolute insurers against all risks of travel and of
transport of goods and are not liable for fortuitous events; Case at bar.—In these circumstances, we hold that the
occurrence of the loss must reasonably be regarded as quite beyond the control of the common carrier and properly
regarded as a fortuitous event. It is necessary to recall that even common carriers are not made absolute insurers
against all risks of travel and of transport of goods, and are not held liable for acts or events which cannot be
foreseen or are inevitable, provided that they shall have complied with the rigorous standard of extraordinary
diligence. We, therefore, agree with the result reached by the Court of Appeals that private respondent Cendaña is
not liable for the value of the undelivered merchandise which was lost because of an event entirely beyond private
respondent’s control.

12. FPIC vs. CA, G.R. No. 125948. December 29, 1998
Common Carriers; A “common carrier” is 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 merit in the petition. 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. Article 1732 of the Civil Code defines a “common carrier” as “any person,
corporation, firm or association engaged in the business of carrying or transporting passengers or goods or both, by
land, water, or air, for compensation, offering their services to the public.”

Same; Same; Test for determining whether a party is a common carrier of goods.—The test for determining whether
a party is a common carrier of goods is: 1. He must be engaged in the business of carrying goods for others as a
public employment, and must hold himself out as ready to engage in the transportation of goods for person generally
as a business and not as a casual occupation; 2. He must undertake to carry goods of the kind to which his business
is confined; 3. He must undertake to carry by the method by which his business is conducted and over his
established roads; and 4. The transportation must be for hire.

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

Same; Same; Words and Phrases; The definition of “common carriers” in the Civil Code makes no distinction as to
the means of transporting, as long as it is by land, water or air.—As correctly pointed out by petitioner, the
definition of “common carriers” in the Civil Code makes no distinction as to the means of transporting, as long as it
is by land, water or air. It does not provide that the transportation of the passengers or goods should be by motor
vehicle. In fact, in the United States, oil pipe line operators are considered common carriers.

13. Asia Lighterage vs. CA, G.R. No. 147246. August 19, 2003
Common Carriers; Definition.—The definition of common carriers in Article 1732 of the Civil Code makes no
distinction between one whose principal business activity is the carrying of persons or goods or both, and one who
does such carrying only as an ancillary activity. We also did not distinguish between a person or enterprise offering
transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or
unscheduled basis. Further, we ruled that Article 1732 does not distinguish between a carrier offering its services to
the general public, and one who offers services or solicits business only from a narrow segment of the general
population.

Same; Same; Same; Determination of a common carrier.—The test to determine a common carrier is “whether the
given undertaking is a part of the business engaged in by the carrier which he has held out to the general public as
his occupation rather than the quantity or extent of the business transacted.”

Same; Same; Same; Presumption of Negligence; Common carriers are presumed to have been at fault or to have
acted negligently if the goods are lost, destroyed or deteriorated.—Common carriers are bound to observe
extraordinary diligence in the vigilance over the goods transported by them. They are presumed to have been at fault
or to have acted negligently if the goods are lost, destroyed or deteriorated. To overcome the presumption of
negligence in the case of loss, destruction or deterioration of the goods, the common carrier must prove that it
exercised extraordinary diligence. There are, however, exceptions to this rule. Article 1734 of the Civil Code
enumerates the instances when the presumption of negligence does not attach.

14. Bascos vs. CA, G.R. No. 101089. April 7, 1993

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

Same; Same; No distinction between person offering service on regular basis and one offering service on occasional
basis.—But petitioner argues that there was only a contract of lease because they offer their services only to a select
group of people and because the private respondents, plaintiffs in the lower court, did not object to the presentation
of affidavits by petitioner where the transaction was referred to as a lease contract. Regarding the first contention,
the holding of the Court in De Guzman vs. Court of Appeals is instructive. In referring to Article 1732 of the Civil
Code, it held thus: “The above article makes no distinction between one whose principal business activity is the
carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (in local idiom, as
a “sideline”). Article 1732 also carefully avoids making any distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the “general
public,” i.e., the general community or population, and one who offers services or solicits business only from a
narrow segment of the general population. We think that Article 1732 deliberately refrained from making such
distinctions.”

Same; Same; Obligation of carrier to observe extraordinary diligence; Presumption of negligence.—Common

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

Same; Same; Same; Liability arising from hijacking.—To exculpate the carrier from liability arising from hijacking,
he must prove that the robbers or the hijackers acted with grave or irresistible threat, violence, or force. This is in
accordance with Article 1745 of the Civil Code which provides: “Art. 1745. Any of the following or similar
stipulations shall be considered unreasonable, unjust and contrary to public policy: x x x x x x (6) That the common
carrier’s liability for acts committed by thieves, or of robbers who do not act with grave or irresistible threat,
violence or force, is dispensed with or diminished.”

15. Calvo vs. UCPB, G.R. No. 148496. March 19, 2002
Common Carriers; Customs Brokers; A customs broker is a common carrier—the concept of “common carrier”
under Article 1732 of the Civil Code may be seen to coincide nearly with the notion of “public service,” under the
Public Service Act (Commonwealth Act No. 1416) which at least partially supplements the law on common carriers
set forth in the Civil Code.—Petitioner contends that contrary to the findings of the trial court and the Court of
Appeals, she is not a common carrier but a private carrier because, as a customs broker and warehouseman, she does
not indiscriminately hold her services out to the public but only offers the same to select parties with whom she may
contract in the conduct of her business. The contention has no merit. In De Guzman v. Court of Appeals, the Court
dismissed a similar contention and held the party to be a common carrier, thus—The Civil Code defines “common
carriers” in the following terms: “Article 1732. Common carriers are persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air for
compensation, offering their services to the public.” The above article makes no distinction between one whose
principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an
ancillary activity . . . Article 1732 also carefully avoids making any distinction between a person or enterprise
offering transportation service on a regular or scheduled basis and one offering such service on an occasional,
episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the
“general public,” i.e., the general community or population, and one who offers services or solicits business only
from a narrow segment of the general population. We think that Article 1732 deliberately refrained from making
such distinctions. So understood, the concept of “common carrier” under Article 1732 may be seen to coincide
neatly with the notion of “public service,” under the Public Service Act (Commonwealth Act No. 1416, as amended)
which at least partially supplements the law on common carriers set forth in the Civil Code.

Same; Same; There is greater reason for holding a person who is a customs broker to be a common carrier because
the transportation of goods is an integral part of her business.—There is greater reason for holding petitioner to be a
common carrier because the transportation of goods is an integral part of her business. To uphold petitioner’s
contention would be to deprive those with whom she contracts the protection which the law affords them
notwithstanding the fact that the obligation to carry goods for her customers, as already noted, is part and parcel of
petitioner’s business.

Same; Same; Words and Phrases; “Extraordinary Diligence,” Explained; 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 such case.—As
to petitioner’s liability, Art. 1733 of the Civil Code provides: 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. . . . In Compania
Maritima v. Court of Appeals, the meaning of “extraordinary diligence in the vigilance over goods” was explained
thus: 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.”

16. Schmitz vs. TVI, G.R. No. 150255. April 22, 2005
Negligence; Fortuitous Events; The principle embodied in the act of God doctrine strictly requires that the act must
be occasioned solely by the violence of nature—human intervention is to be excluded from creating or entering into
the cause of the mischief.—In order, to be considered a fortuitous event, however, (1) the cause of the unforeseen
and unexpected occurrence, or the failure of the debtor to comply with his obligation, must be independent of human
will; (2) it must be impossible to foresee the event which constitute the caso fortuito, or if it can be foreseen it must
be impossible to avoid; (3) the occurrence must be such as to render it impossible for the debtor to fulfill his
obligation in any manner; and (4) the obligor must be free from any participation in the aggravation of the injury
resulting to the creditor. [T]he principle embodied in the act of God doctrine strictly requires that the act must be
occasioned solely by the violence of nature. Human intervention is to be excluded from creating or entering into the
cause of the mischief. When the effect is found to be in part the result of the participation of man, whether due to his
active intervention or neglect or failure to act, the whole occurrence is then humanized and removed from the rules
applicable to the acts of God.

Common Carriers; Customs Brokers; It is settled that under a given set of facts, a customs broker may be regarded
as a common carrier.—It is settled that under a given set of facts, a customs broker may be regarded as a common
carrier. Thus, this Court, in A.F. Sanchez Brokerage, Inc. v. The Honorable Court of Appeals, held: The appellate
court did not err in finding petitioner, a customs broker, to be also a common carrier, as defined under Article 1732
of the Civil Code, to wit, Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering
their services to the public. x x x 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. And in Calvo v. UCPB General Insurance Co., Inc., this
Court held that as the transportation of goods is an integral part of a customs broker, the customs broker is also a
common carrier. For to declare otherwise “would be to deprive those with whom [it] contracts the protection which
the law affords them notwithstanding the fact that the obligation to carry goods for [its] customers, is part and parcel
of petitioner’s business.”

Same; Private Carriers; While a private carrier is under no duty to observe extraordinary diligence, it is still required
to observe ordinary diligence.—In the case of TVI, while it acted as a private carrier for which it was under no duty
to observe extraordinary diligence, it was still required to observe ordinary diligence to ensure the proper and careful
handling, care and discharge of the carried goods.

Same; Same; A man of ordinary prudence would not leave a heavily loaded barge floating for a considerable
number of hours, at a precarious time, and in the open sea, knowing that the barge does not have any power of its
own and is totally defenseless from the ravages of the sea.—TVI’s failure to promptly provide a tugboat did not only
increase the risk that might have been reasonably anticipated during the shipside operation, but was the proximate
cause of the loss. A man of ordinary prudence would not leave a heavily loaded barge floating for a considerable
number of hours, at such a precarious time, and in the open sea, knowing that the barge does not have any power of
its own and is totally defenseless from the ravages of the sea. That it was nighttime and, therefore, the members of
the crew of a tugboat would be charging overtime pay did not excuse TVI from calling for one such tugboat.

Torts; Quasi-Delicts; 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.—This Court holds then that petitioner and TVI are solidarily
liable for the loss of the cargoes. The following pronouncement of the Supreme Court is instructive: The foundation
of LRTA’s liability is the contract of carriage and its obligation to indemnify the victim arises from the breach of
that contract by reason of its failure to exercise the high diligence required of the common carrier. In the discharge
of its commitment to ensure the safety of passengers, a carrier may choose to hire its own employees or avail itself
of the services of an outsider or an independent firm to undertake the task. In either case, the common carrier is not
relieved of its responsibilities under the contract of carriage. Should Prudent be made likewise liable? If at all, that
liability could only be for tort under the provisions of Article 2176 and related provisions, in conjunction with
Article 2180 of the Civil Code. x x x [O]ne might ask further, how then must the liability of the common carrier, on
one hand, and an independent contractor, on the other hand, be described? It would be solidary. A contractual
obligation can be breached by tort and when the same act or omission causes the injury, one resulting in culpa
contractual and the other in culpa aquiliana, Article 2194 of the Civil Code can well apply. In fine, 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.

Same; Same; Words and Phrases; Parties to a contract of carriage may agree upon a definition of delivery that
extends the services rendered by the carrier.—Parties to a contract of carriage may, however, agree upon a definition
of delivery that extends the services rendered by the carrier. In the case at bar, Bill of Lading No. 2 covering the
shipment provides that delivery be made “to the port of discharge or so near thereto as she may safely get, always
afloat.” The delivery of the goods to the consignee was not from “pier to pier” but from the shipside of “M/V
Alexander Saveliev” and into barges, for which reason the consignee contracted the services of petitioner.

Insurance; Adjustment fees do not constitute actual damages.—On the award of adjustment fees: The adjustment
fees and expense of divers were incurred by Industrial Insurance in its voluntary but unsuccessful efforts to locate
and retrieve the lost cargo. They do not constitute actual damages.

Same; Interests; When the demand cannot be reasonably established at the time the demand is made, the interest
shall begin to run not from the time the claim is made judicially or extrajudicially but from the date the judgment of
the lower court is made.—As for the court a quo’s award of interest on the amount claimed, the same calls for
modification following the ruling in Eastern Shipping Lines, Inc. v. Court of Appeals that when the demand cannot
be reasonably established at the time the demand is made, the interest shall begin to run not from the time the claim
is made judicially or extrajudicially but from the date the judgment of the court is made (at which the time the
quantification of damages may be deemed to have been reasonably ascertained).

17. A.F. Sanchez Brokerage vs. CA, G.R. No. 147079. December 21, 2004
Common Carriers; Appellate court 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 appellate court did not err in finding petitioner, a customs
broker, to be also a common carrier, as defined under Article 1732 of the Civil Code, to wit: Art. 1732. Common
carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air, for compensation, offering their services to the public.

Same; Same; 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.—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.

Same; Same; Petitioner as a common carrier is mandated to observe, under Article 1733 of the Civil Code,
extraordinary diligence in the vigilance over the goods it transports according to all the circumstances of each case.
—Petitioner as a common carrier is mandated to observe, under Article 1733 of the Civil Code, extraordinary
diligence in the vigilance over the goods it transports according to all the circumstances of each case. In the event
that the goods are lost, destroyed or deteriorated, it is presumed to have been at fault or to have acted negligently,
unless it proves that it observed extraordinary diligence.

Same; Same; The rule is that if the improper packing is known to the carrier or his employees or is apparent upon
ordinary observation, but he nevertheless accepts the same without protest or exception notwithstanding such
condition, he is not relieved of liability for the resulting damage.—While paragraph No. 4 of Article 1734 of the
Civil Code exempts a common carrier from liability if the loss or damage is due to the character of the goods or
defects in the packing or in the containers, the rule is that if the improper packing is known to the carrier or his
employees or is apparent upon ordinary observation, but he nevertheless accepts the same without protest or
exception notwithstanding such condition, he is not relieved of liability for the resulting damage.

18. FGU Insurance Corp. vs. G.P. Sarmiento Trucking Corp. G.R. No. 141910. August 6, 2002
Transportation; Common Carriers; A trucking company which is an exclusive contractor and hauler of another
company, rendering or offering its services to no other individual or entity, cannot be considered a common carrier.
—On the first issue, the Court finds the conclusion of the trial court and the Court of Appeals to be amply justified.
GPS, being an exclusive contractor and hauler of Concepcion Industries, Inc., rendering or offering its services to no
other individual or entity, cannot be considered a common carrier. Common carriers are persons, corporations, firms
or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or
air, for hire or compensation, offering their services to the public, whether to the public in general or to a limited
clientele in particular, but never on an exclusive basis. The true test of a common carrier is the carriage of
passengers or goods, providing space for those who opt to avail themselves of its transportation service for a fee.
Given accepted standards, GPS scarcely falls within the term “common carrier.”

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

Quasi-Delicts; Torts; The driver, not being a party to the contract of carriage, may not be held liable under the
agreement—action against him can only be based on culpa aquiliana, which, unlike culpa contractual, would require
the claimant for damages to prove negligence or fault on his part.—Respondent driver, on the other hand, without
concrete proof of his negligence or fault, may not himself be ordered to pay petitioner. The driver, not being a party
to the contract of carriage between petitioner’s principal and defendant, may not be held liable under the agreement.
A contract can only bind the parties who have entered into it or their successors who have assumed their personality
or their juridical position. Consonantly with the axiom res inter alios acta aliis neque nocet prodest, such contract
can neither favor nor prejudice a third person. Petitioner’s civil action against the driver can only be based on culpa
aquiliana, which, unlike culpa contractual, would require the claimant for damages to prove negligence or fault on
the part of the defendant.

Same; Same; Same; Same; Same; Res Ipsa Loquitur; Requisites; Words and Phrases; Res ipsa loquitur is not a rule
of substantive law and, as such, it does not create an independent ground of liability—instead, it is regarded as a
mode of proof, and relieves the plaintiff of the burden of producing specific proof of negligence.—A word in
passing. Res ipsa loquitur, a doctrine being invoked by petitioner, holds a defendant liable where the thing which
caused the injury complained of is shown to be under the latter’s management and the accident is such that, in the
ordinary course of things, cannot be expected to happen if those who have its management or control use proper
care. It affords reasonable evidence, in the absence of explanation by the defendant, that the accident arose from
want of care. It is not a rule of substantive law and, as such, it does not create an independent ground of liability.
Instead, it is regarded as a mode of proof, or a mere procedural convenience since it furnishes a substitute for, and
relieves the plaintiff of, the burden of producing specific proof of negligence. The maxim simply places on the
defendant the burden of going forward with the proof.Resort to the doctrine, however, may be allowed only when
(a) the event is of a kind which does not ordinarily occur in the absence of negligence; (b) other responsible causes,
including the conduct of the plaintiff and third persons, are sufficiently eliminated by the evidence; and (c) the
indicated negligence is within the scope of the defendant’s duty to the plaintiff. Thus, it is not applicable when an
unexplained accident may be attributable to one of several causes, for some of which the defendant could not be
responsible.

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

19. Crisostomo vs. CA, G.R. No. 138334. August 25, 2003
Common Carriers; Damages; Definition of common carrier.—By definition, a contract of carriage or transportation
is one whereby a certain person or association of persons obligate themselves to transport persons, things, or news
from one place to another for a fixed price. Such person or association of persons are regarded as carriers and are
classified as private or special carriers and common or public carriers. 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.

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

Same; Same; Same; 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.—The nature of the contractual relation between
petitioner and respondent is determinative of the degree of care required in the performance of the latter’s obligation
under the contract. For reasons of public policy, a common carrier in a contract of carriage is bound by law to carry
passengers as far as human care and foresight can provide using the utmost diligence of very cautious persons and
with due regard for all the circumstances. As earlier stated, however, respondent is not a common carrier but a travel
agency. It is thus not bound under the law to observe extraordinary diligence in the performance of its obligation, as
petitioner claims.

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

20. Sps. Perena vs. Sps. Zarate, G.R. No. 157917, August 29, 2012
Common Carriers; Words and Phrases; 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.―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. A private carrier is one who, without
making the activity a vocation, or without holding himself or itself out to the public as ready to act for all who may
desire his or its services, undertakes, by special agreement in a particular instance only, to transport goods or persons
from one place to another either gratuitously or for hire. The provisions on ordinary contracts of the Civil Code
govern the contract of private carriage. The diligence required of a private carrier is only ordinary, that is, the
diligence of a good father of the family. In contrast, a common carrier is a person, corporation, firm or association
engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for
compensation, offering such services to the public. 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.

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

Same; Same; School Buses; Despite catering to a limited clientèle, the Pereñas 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.―Applying these considerations to the case
before us, there is no question that the Pereñas as the operators of a school bus service were: (a) engaged in
transporting passengers generally as a business, not just as a casual occupation; (b) undertaking to carry passengers
over established roads by the method by which the business was conducted; and (c) transporting students for a fee.
Despite catering to a limited clientèle, the Pereñas 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.

Same; Same; Extraordinary Diligence; The common carrier is bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances
of each case.―The common carrier’s standard of care and vigilance as to the safety of the passengers is defined by
law. Given the nature of the business and for reasons of public policy, the common carrier is bound “to observe
extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them,
according to all the circumstances of each case.” 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. No device,
whether by stipulation, posting of notices, statements on tickets, or otherwise, may dispense with or lessen the
responsibility of the common carrier as defined under Article 1755 of the Civil Code.

Same; Same; Negligence; Words and Phrases; Negligence is the omission to do something which a reasonable man,
guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of
something which a prudent and reasonable man would not do.―The omissions of care on the part of the van driver
constituted negligence, which, according to Layugan v. Intermediate Appellate Court, 167 SCRA 363 (1988), is “the
omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the
conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would not do,
or as Judge Cooley defines it, ‘(t)he failure to observe for the protection of the interests of another person, that
degree of care, precaution, and vigilance which the circumstances justly demand, whereby such other person suffers
injury.’ ”

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

Same; Same; Loss of Earning Capacity; The basis for the computation of Aaron’s earning capacity was not what he
would have become or what he would have wanted to be if not for his untimely death, but the minimum wage in
effect at the time of his death.―The RTC awarded indemnity for loss of Aaron’s earning capacity. Although
agreeing with the RTC on the liability, the CA modified the amount. Both lower courts took into consideration that
Aaron, while only a high school student, had been enrolled in one of the reputable schools in the Philippines and that
he had been a normal and able-bodied child prior to his death. The basis for the computation of Aaron’s earning
capacity was not what he would have become or what he would have wanted to be if not for his untimely death, but
the minimum wage in effect at the time of his death. Moreover, the RTC’s computation of Aaron’s life expectancy
rate was not reckoned from his age of 15 years at the time of his death, but on 21 years, his age when he would have
graduated from college. We find the considerations taken into account by the lower courts to be reasonable and fully
warranted.
Same; Same; Same; Our law itself states that the loss of the earning capacity of the deceased shall be the liability of
the guilty party in favor of the heirs of the deceased, and shall in every case be assessed and awarded by the court
“unless the deceased on account of permanent physical disability not caused by the defendant, had no earning
capacity at the time of his death.―The fact that Aaron was then without a history of earnings should not be taken
against his parents and in favor of the defendants whose negligence not only cost Aaron his life and his right to work
and earn money, but also deprived his parents of their right to his presence and his services as well. Our law itself
states that the loss of the earning capacity of the deceased shall be the liability of the guilty party in favor of the heirs
of the deceased, and shall in every case be assessed and awarded by the court “unless the deceased on account of
permanent physical disability not caused by the defendant, had no earning capacity at the time of his death.”
Accordingly, we emphatically hold in favor of the indemnification for Aaron’s loss of earning capacity despite him
having been unemployed, because compensation of this nature is awarded not for loss of time or earnings but for
loss of the deceased’s power or ability to earn money.

21. Valenzuela Hardwood and Industrial Supply vs. CA and Seven Brothers Shipping Corp. G.R. No. 102316.
June 30, 1997

Commercial Law; Charter Law; As a private carrier, Article 1745 and other Civil Code provisions on common
carriers may not be applied unless expressly stipulated by the parties in their charter party.—The Court is not
persuaded. As adverted to earlier, it is undisputed that private respondent had acted as a private carrier in
transporting petitioner’s lauan logs. Thus, Article 1745 and other Civil Code provisions on common carriers which
were cited by petitioner may not be applied unless expressly stipulated by the parties in their charter party.

Commercial Law; Charter Law; In a contract of private carriage, the parties may freely stipulate their duties and
obligations which perforce would be binding on them. Unlike in a contract involving common carrier, private
carriage does not involve the general public.—In a contract of private carriage, the parties may validly stipulate that
responsibility for the cargo rests solely on the charterer, exempting the shipowner from liability for loss of or
damage to the cargo caused even by the negligence of the ship captain. Pursuant to Article 1306 of the Civil Code,
such stipulation is valid because it is freely entered into by the parties and the same is not contrary to law, morals,
good customs, public order, or public policy. Indeed, their contract of private carriage is not even a contract of
adhesion. We stress that in a contract of private carriage, the parties may freely stipulate their duties and obligations
which perforce would be binding on them. Unlike in a contract involving a common carrier, private carriage does
not involve the general public. Hence, the stringent provisions of the Civil Code on common carriers protecting the
general public cannot justifiably be applied to a ship transporting commercial goods as a private carrier.
Consequently, the public policy embodied therein is not contravened by stipulations in a charter party that lessen or
remove the protection given by law in contracts involving common carriers.

Same; Same; As a private carrier, a stipulation exempting the owner from liability for the negligence of its agent is
not against public policy, and is deemed valid.—The issue posed in this case and the arguments raised by petitioner
are not novel; they were resolved long ago by this Court in Home Insurance Co. vs. American Steamship Agencies,
Inc. In that case, the trial court similarly nullified a stipulation identical to that involved in the present case for being
contrary to public policy based on Article 1744 of the Civil Code and Article 587 of the Code of Commerce.
Consequently, the trial court held the shipowner liable for damages resulting from the partial loss of the cargo. This
Court reversed the trial court and laid down, through Mr. Justice Jose P. Bengzon, the following well-settled
observation and doctrine: “The provisions of our Civil Code on common carriers were taken from Anglo-American
law. Under American jurisprudence, a common carrier undertaking to carry a special cargo or chartered to a special
person only, becomes a private carrier. As a private carrier, a stipulation exempting the owner from liability for the
negligence of its agent is not against public policy, and is deemed valid. Such doctrine We find reasonable. The
Civil Code provisions on common carriers should not be applied where the carrier is not acting as such but as a
private carrier. The stipulation in the charter party absolving the owner from liability for loss due to the negligence
of its agent would be void only if the strict public policy governing common carriers is applied. Such policy has no
force where the public at large is not involved, as in this case of a ship totally chartered for the use of a single party.”
(Italics supplied.)

Same; Same; A charterer, in exchange for convenience and economy, may opt to set aside the protection of the law
on common carriers. When the charterer decides to exercise this option, he takes a normal business risk.—Indeed,
where the reason for the rule ceases, the rule itself does not apply. The general public enters into a contract of
transportation with common carriers without a hand or a voice in the preparation thereof. The riding public merely
adheres to the contract; even if the public wants to, it cannot submit its own stipulations for the approval of the
common carrier. Thus, the law on common carriers extends its protective mantle against one-sided stipulations
inserted in tickets, invoices or other documents over which the riding public has no understanding or, worse, no
choice. Compared to the general public, a charterer in a contract of private carriage is not similarly situated. It can—
and in fact it usually does—enter into a free and voluntary agreement. In practice, the parties in a contract of private
carriage can stipulate the carrier’s obligations and liabilities over the shipment which, in turn, determine the price or
consideration of the charter. Thus, a charterer, in exchange for convenience and economy, may opt to set aside the
protection of the law on common carriers. When the charterer decides to exercise this option, he takes a normal
business risk.
Same; Same; In the case of a private carrier, a stipulation exempting the owner from liability even for the negligence
of its agent is valid.—The naked assertion of petitioner that the American rule enunciated in Home Insurance is not
the rule in the Philippines deserves scant consideration. The Court there categorically held that said rule was
“reasonable” and proceeded to apply it in the resolution of that case. Petitioner miserably failed to show such
circumstances or arguments which would necessitate a departure from a well-settled rule. Consequently, our ruling
in said case remains a binding judicial precedent based on the doctrine of stare decisis and Article 8 of the Civil
Code which provides that “(j)udicial decisions applying or interpreting the laws or the Constitution shall form part
of the legal system of the Philippines.” In fine, the respondent appellate court aptly stated that “[in the case of] a
private carrier, a stipulation exempting the owner from liability even for the negligence of its agent is valid.”

Same; Same; As a general rule, patrimonial rights may be waived as opposed to rights to personality and family
rights which may not be made the subject of waiver.—Article 6 of the Civil Code provides that “(r)ights may be
waived, unless the waiver is contrary to law, public order, public policy, morals, or good customs, or prejudicial to a
person with a right recognized by law.” As a general rule, patrimonial rights may be waived as opposed to rights to
personality and family rights which may not be made the subject of waiver. Being patently and undoubtedly
patrimonial, petitioner’s right conferred under said articles may be waived. This, the petitioner did by acceding to
the contractual stipulation that it is solely responsible for any damage to the cargo, thereby exempting the private
carrier from any responsibility for loss or damage thereto. Furthermore, as discussed above, the contract of private
carriage binds petitioner and private respondent alone; it is not imbued with public policy considerations for the
general public or third persons are not affected thereby.

Other concepts involving common carriers.

Common Carrier not an Insurer against all risk of travel
1. Isaac vs A.L. Ammen Transportation Co.,
G.R. No. L-9671, August 23, 1957

1.PUBLIC UTILITIES; PRINCIPLES GOVERNING LIABILITY OF COMMON CARRIER.—The following are

the principles governing the liability of a common carrier: (1) the liability of a carrier is contractual and arises upon
breach of its obligation. There is a breach if it f ails to exert extraordinary diligence according to all the
circumstances of each case; (2) a carrier is obliged to carry its passenger with the utmost diligence of a very cautious
person, having due regard for all circumstances; (3) a carrier is presumed to be at f ault or to have acted negligently
in case of death of, or injury to, passengers, it being its duty to prove that it exercised extraordinary diligence; and
(4) the carrier is not an insurer against all risks of travel.

2.ID. ; ID. ; CONTRIBUTORY NEGLIGENCE OF PASSENGER MILITATES AGAINST His CLAIM; CASE AT
BAR.—A circumstance which militates against the stand of appellant is the fact borne out by the evidence that when
he boarded the bus in question, he seated himself on the left side thereof resting his left arm on the window sill but
with his left elbow outside the window, this being his position in the bus when the collision took place. It is for this
reason that the collision resulted in the severance of said left arm from the body of appellant thus doing him a great
damage. It is therefore apparent that appellant is guilty of contributory negligence. Isaac vs. A. L. Ammen Trans.
Co., Inc., 101 Phil. 1046, No. L-9671 August 23, 1957

2. Mariano Jr. vs. Callejas, G.R. No. 166640,

July 31, 2009

Common Carriers; Negligence; 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.—In accord with the above provisions, Celyrosa Express, a common carrier, through its
driver, respondent De Borja, and its registered owner, respondent Callejas, has the express obligation “to carry the
passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious
persons, with a due regard for all the circumstances,” and to observe extraordinary diligence in the discharge of its
duty. The death of the wife of the petitioner in the course of transporting her to her destination gave rise to the
presumption of negligence of the carrier. To overcome the presumption, respondents have to show that they
observed extraordinary diligence in the discharge of their duty, or that the accident was caused by

3. Pilapil vs. CA, G.R. No. 52159, December 22, 1989

Transportation; Common carriers; A common carrier does not give its consent to become an insurer of any and all
risks to passengers and goods.—In consideration of the right granted to it by the public to engage in the business of
transporting passengers and goods, a common carrier does not give its consent to become an insurer of any and all
risks to passengers and goods. It merely undertakes to perform certain duties to the public as the law imposes, and
holds itself liable for any breach thereof. Pilapil vs. Court of Appeals, 180 SCRA 546, G.R. No. 52159 December
22, 1989
Same; Same; Same; Same; While the law requires the highest degree of diligence from common carriers, it does not
make the carrier an insurer of the absolute safety of its passengers.—While the law requires the highest degree of
diligence from common carriers in the safe transport of their passengers and creates a presumption of negligence
against them, it does not, however, make the carrier an insurer of the absolute safety of its passengers.

Same; Same; Same; Same; Art. 1755 of the Civil Code qualifies the duty of extraordinary care, vigilance and
precaution in the carriage of passengers by common carriers to only such as human care and foresight can provide.
—Article 1755 of the Civil Code qualifies the duty of extraordinary care, vigilance and precaution in the carriage of
passengers by common carriers to only such as human care and foresight can provide. What constitutes compliance
with said duty is adjudged with due regard to all the circumstances.

Same; Same; Same; Presumption of negligence; Art. 1756 of the Civil Code in creating a presumption of fault or
negligence of the common carrier when its passenger is injured, merely relieves the carrier from introducing
evidence to fasten the negligence on the carrier; The presumption of negligence is rebuttable by proof that the carrier
had exercised extraordinary diligence.—Article 1756 of the Civil Code, in creating a presumption of fault or
negligence on the part of the common carrier when its passenger is injured, merely relieves the latter, for the time
being, from introducing evidence to fasten the negligence on the former, because the presumption stands in the place
of evidence. Being a mere presumption, however, the same is rebuttable by proof that the common carrier had
exercised extraordinary diligence as required by law in the performance of its contractual obligation, or that the
injury suffered by the passenger was solely due to a fortuitous event.

Same; Same; Same; Same; Liability of common carriers for personal injuries sustained by a passenger rests upon its
negligence.—Thus, it is clear that neither the law nor the nature of the business of a transportation company makes it
an insurer of the passenger’s safety, but that its liability for personal injuries sustained by its passenger rests upon its
negligence, its failure to exercise the degree of diligence that the law requires.

Same; Same; Same; Same; Where the injuries sustained by the petitioner was not due to any defect in the means of
transport or in the method of transporting or to the negligent or willful acts of respondent’s employees, the
presumption is rebutted.—First, as stated earlier, the presumption of fault or negligence against the carrier is only a
disputable presumption. It gives in where contrary facts are established proving either that the carrier had exercised
the degree of diligence required by law or the injury suffered by the passenger was due to a fortuitous event. Where,
as in the instant case, the injury sustained by the petitioner was in no way due to any defect in the means of transport
or in the method of transporting or to the negligent or wilful acts of private respondent’s employees, and therefore
involving no issue of negligence in its duty to provide safe and suitable cars as well as competent employees, with
the injury arising wholly from causes created by strangers over which the carrier had no control or even knowledge
or could not have prevented, the presumption is rebutted and the carrier is not and ought not to be held liable. To
rule otherwise would make the common carrier the insurer of the absolute safety of its passengers which is not the
intention of the lawmakers.

Same; Same; Same; Same; While as a general rule common carriers are bound to exercise extraordinary diligence in
the safe transport of its passengers, it is not the standard by which its liability is to be determined when intervening
acts of strangers directly cause the injury while the contract of carriage exists.—Second, while as a general rule,
common carriers are bound to exercise extraordinary diligence in the safe transport of their passengers, it would
seem that this is not the standard by which its liability is to be determined when intervening acts of strangers directly
cause the injury, while the contract of carriage exists.

Same; Same; Same; Same; A tort committed by a stranger which causes injury to a passenger does not accord the
passenger a cause of action against the carrier.—Clearly under the above provision, a tort committed by a stranger
which causes injury to a passenger does not accord the latter a cause of action against the carrier. The negligence for
which a common carrier is held responsible is the negligent omission by the carrier’s employees to prevent the tort
from being committed when the same could have been foreseen and prevented by them. Further, under the same
provision, it is to be noted that when the violation of the contract is due to the wilful acts of strangers, as in the
instant case, the degree of care essential to be exercised by the common carrier for the protection of its passenger is
only that of a good father of a family.

Same; Same; Same; The rule of ordinary care and prudence is not so exacting as to require one charged with its
exercise to take doubtful or unreasonable precautions to guard against unlawful acts of strangers.—Although the
suggested precaution could have prevented the injury complained of, the rule of ordinary care and prudence is not so
exacting as to require one charged with its exercise to take doubtful or unreasonable precautions to guard against
unlawful acts of strangers. The carrier is not charged with the duty of providing or maintaining vehicles as to
absolutely prevent any and all injuries to passengers. Where the carrier uses cars of the most approved type, in
general use by others engaged in the same occupation, and exercises a high degree of care in maintaining them in
suitable condition, the carrier cannot be charged with negligence in this respect.

Same; Same; Same; Making the carrier liable for stone throwing incidents is better left to the consideration of
Congress.—Finally, petitioner contends that it is to the greater interest of the State if a carrier were made liable for
such stone-throwing incidents rather than have the bus riding public lose confidence in the transportation system.
Sad to say, we are not in a position to so hold; such a policy would be better left to the consideration of Congress
which is empowered to enact laws to protect the public from the increasing risks and dangers of lawlessness in
society. Pilapil vs. Court of Appeals, 180 SCRA 546, G.R. No. 52159 December 22, 1989

The duty to exercise the utmost diligence on the part of common carriers for the safety of passengers extends
as well as for the members of the crew or the complement operating the carrier.

1. PAL vs. CA and Jesus V. Samson G.R. No. L-46558 : July 31, 1981
Common Carrier, Damages; Labor Law; A common carrier is required to exercise the highest degree of care in the
discharge of its business.—Petitioner is a common carrier 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, as defined
in Art. 1732, New Civil Code. The law is clear in requiring a common carrier to exercise the highest degree of care
in the discharge of its duty and business of carriage and transportation under Arts. 1733, 1755 and 1756 of the NOT
Civil Code.

Same; Same; Same; The duty of a common carrier, like PAL, to exercise the highest degree of diligence extends to
passengers and crew members.—The duty to exercise the utmost diligence on the part of common carriers is for the
safety of passengers as well as for the members of the crew or the complement operating the carrier, the airplane in
the case at bar. And this must be so for any omission, lapse or neglect thereof will certainly result to the damage,
prejudice, nay injuries and even death to all aboard the plane, passengers and crew members alike.

Same; Same; Same; Co-pilot who sustained brain injury due to the crashlanding of a PAL plane which was
negligently handled by the pilot is entitled compensatory and moral damages. Such negligence is a case of quasi-
delict and even if construed as a matter of employer-employee relationship, the resulting injury to claimant can be
traced to the bad faith of the employer justifying an award of moral damages under Art. 2220 and Art. 19 of the New
Civil Code.—The grant of compensatory damages to the private respondent made by the trial court and affirmed by
the appellate court by computing his basic salary per annum at P750.00 a month as basic salary and P300.00 a
month for extra pay for extra flying time including bonus given in December every year is justified. The correct
computation however should be P750 plus P300 x 12 months = P12,600 per annum x 10 years = P126,000.00 (not
P120,000.00 as computed by the court a quo). The further grant of increase in the basic pay of the pilots to P1 2,000
annually for 1964 to 1968 totalling P60,000.00 and another P1 8,000.00 as bonuses and extra pay for extra flying
time at the same rate of P300.00 a month totals P78,000.00. Adding P126,000.00 (1964 to 1968 compensation)
makes a grand total of P204,000.00 (not P198,000.00 as originally computed).

Same; Same; Same.—We reject the theory of petitioner that private respondent is not entitled to moral damages.
Under the facts found by the trial court and affirmed by the appellate court and under the law and jurisprudence
cited and applied, the grant of moral damages in the amount of P50,000.00 is proper and justified. The fact that
private respondent suffered physical injuries in the head when the plane crash-landed due to the negligence of the
latter is clearly a quasi-delict and therefore Article 2219, (2) New Civil Code is applicable, justifying the recovery of
moral damages.

Same; Same; Same; Same.—Even from the standpoint of the petitioner that there is an employer-employee
relationship between it and private respondent arising from the contract of employment, private respondent is still
entitled to moral damages in view of the finding of bad faith or malice by the appellate court, which finding We
hereby affirm, applying the provisions of Art. 2220, New Civil Code which provides that wilfull 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
bad f aith.

Same; Same; Same; Same.—The justification in the award of moral damages under Art. 19 of the New Civil Code
on Human Relations which requires that every person must, in the exercise of his rights and in the performance of
his duties, act with justice, give everyone his due, and observe honesty and good faith, as applied by respondent
court is also well-taken and We hereby give Our affirmance thereto.

Damages; Interest; Interest on damages accrues from the date of judicial or extrajudicial demand.—Articles 1169,
2209 and 2212 of the Civil Code govern when interest shall be computed. Thereunder interest begins to accrue upon
demand, extrajudicial or judicial. A complaint is a judicial demand (Cabarroguis vs. Vicente, 107 Phil. 340). Under
Article 2212 of the Civil Code, interest due shall earn legal interest from the time it is judicially demanded, although
the obligation may be silent upon this point." (CA Resolution, pp. 153-154, Records). Philippine Air Lines, Inc. vs.
Court of Appeals, 106 SCRA 391, No. L-46558 July 31, 1981

Registered owner liable for consequences flowing from the operations of the carrier (Registered Owner Rule)
1. Benedicto vs. IAC, G.R. No. 70876,July 19, 1990
Common Carriers; Petitioner Benedicto holding herself out to the public as engaged in the business of hauling or
transporting goods for hire or compensation is a common carrier.—There is no dispute that petitioner Benedicto has
been holding herself out to the public as engaged in the business of hauling or transporting goods for hire or
compensation. Petitioner Benedicto is, in brief, a common carrier.

Same; Same; The prevailing doctrine on common carriers makes the registered owner liable for consequences
flowing from the operations of the carrier even though the specific vehicle involved may lready have been
transferred to another person; Reason.—The prevailing doctrine on common carriers makes the registered owner
liable for consequences flowing from the operations of the carrier, even though the specific vehicle involved may
already have been transferred to another person. This doctrine rests upon the principle that in dealing with vehicles
registered under the Public Service Law, the public has the right to assume that the registered owner is the actual or
lawful owner thereof.

Same; Same; Same; Registered owner not allowed to deny liability by proving the identity of the alleged transferee.
—The registered owner is not allowed to deny liability by proving the identity of the alleged transferee. Thus,
contrary to petitioner’s claim, private respondent is not required to go beyond the vehicle’s certificate of registration
to ascertain the owner of the carrier.

Same; Same; Same; Same; Considerations both of public policy and of equity require that she bear the consequences
flowing from registered ownership of the subject vehicle.—Moreover, assuming the truth of her story, petitioner
Benedicto retained registered ownership of the freight truck for her own benefit and convenience, that is, to secure
the payment of the balance of the selling price of the truck. She may have been unaware of the legal security device
of chattel mortgage; or she, or her buyer, may have been unwilling to absorb the expenses of registering a chattel
mortgage over the truck. In either case, considerations both of public policy and of equity require that she bear the
consequences flowing from registered ownership of the subject vehicle.

Same; Same; Amount of diligence required; A common carrier is burdened by law with the duty of exercising
extraordinary diligence not only in ensuring the safety of passengers but also in caring for goods transported by it.
Loss or destruction or deterioration of goods turned over to the common carrier for conveyance raises instantly a
presumption of fault or negligence on the part of the carrier.—A common carrier, both from the nature of its
business and for insistent reasons of public policy, is burdened by the law with the duty of exercising extraordinary
diligence not only in ensuring the safety of passengers but also in caring for goods transported by it. The loss or
destruction or deterioration of goods turned over to the common carrier for conveyance to a designated destination,
raises instantly a presumption of fault or negligence on the part of the carrier, save only where such loss, destruction
or damage arises from extreme circumstances such as a natural disaster or calamity or act of the public enemy in
time of war, or from an act or omission of the shipper himself or from the character of the goods or their packaging
or container.

Same; Same; Same; Same; Presumption may be overcome only by proof of extraordinary diligence on the part of
the carrier.—This presumption may be overcome only by proof of extraordinary diligence on the part of the carrier.
Clearly, to permit a common carrier to escape its responsibility for the passengers or goods transported by it by
proving a prior sale of the vehicle or means of transportation to an alleged vendee would be to attenuate drastically
the carrier’s duty of extraordinary diligence. It would also open wide the door to collusion between the carrier and
the supposed vendee and to shifting liability from the carrier to one without financial capability to respond for the
resulting damages. In other words, the thrust of the public policy here involved is as sharp and real in the case of
carriage of goods as it is in the transporting of human beings. Thus, to sustain petitioner Benedicto’s contention, that
is, to require the shipper to go behind a certificate of registration of a public utility vehicle, would be utterly
subversive of the purpose of the law and doctrine.

Same; Same; Driver Licuden is in law regarded as the employee and agent of the petitioner for whose acts petitioner
must respond.—Once more, we are not persuaded by petitioner’s arguments which appear to be a transparent
attempt to evade statutory responsibilities. Driver Licuden was entrusted with possession and control of the freight
truck by the registered owner (and by the alleged secret owner, for that matter). Driver Licuden, under the
circumstances, was clothed with at least implied authority to contract to carry goods and to accept delivery of such
goods for carriage to a specified destination. That the freight to be paid may not have been fixed before loading and
carriage, did not prevent the contract of carriage from arising, since the freight was at least determinable if not fixed
by the tariff schedules in petitioner’s main business office. Put in somewhat different terms, driver Licuden is in law
regarded as the employee and agent of the petitioner, for whose acts petitioner must respond. A contract of carriage
of goods was shown: the sawn lumber was loaded on board the freight truck; loss or non-delivery of the lumber at
Blue Star’s premises in Valenzuela, Bulacan was also proven; and petitioner has not proven either that she had
exercised extraordinary diligence to prevent such loss or non-delivery or that the loss or non-delivery was due to
some casualty or force majeure inconsistent with her liability. Benedicto vs. Intermediate Appellate Court, 187
SCRA 547, G.R. No. 70876 July 19, 1990

Vigilance over the Goods – Article 1734-Article 1754

Law Applicable
1. Article 1753

a. Saudi Arabian Airlines vs. CA rules G.R. No. 122191. October 8, 1998
Same; Same; Same; Torts; Where the action is one involving torts, the “connecting factor” or “point of contact”
could be the place or places where the tortious conduct or lex loci actus occurred; The Philippines is the situs of the
tort where it is in the Philippines where the defendant allegedly deceived the plaintiff, a citizen residing and working
here, and the fact that certain acts or parts of the injury occurred in another country is of no moment, for what is
important is the place where the over-all harm or the totality of the injury to the person, reputation, social standing
and human rights of the plaintiff had lodged.—Considering that the complaint in the court a quo is one involving
torts, the “connecting factor” or “point of contact” could be the place or places where the tortious conduct or lex loci
actus occurred. And applying the torts principle in a conflicts case, we find that the Philippines could be said as a
situs of the tort (the place where the alleged tortious conduct took place). This is because it is in the Philippines
where petitioner allegedly deceived private respondent, a Filipina residing and working here. According to her, she
had honestly believed that petitioner would, in the exercise of its rights and in the performance of its duties, “act
with justice, give her her due and observe honesty and good faith.” Instead, petitioner failed to protect her, she
claimed. That certain acts or parts of the injury allegedly occurred in another country is of no moment. For in our
view what is important here is the place where the over-all harm or the totality of the alleged injury to the person,
reputation, social standing and human rights of complainant, had lodged, according to the plaintiff below (herein
private respondent). All told, it is not without basis to identify the Philippines as the situs of the alleged tort.

Same; Same; Same; Same; “State of the Most Significant Relationship” Rule; The “State of the most significant
relationship” rule is the appropriate modern theory on tort liability to apply in the instant case.—With the
widespread criticism of the traditional rule of lex loci delicti commissi, modern theories and rules on tort liability
have been advanced to offer fresh judicial approaches to arrive at just results. In keeping abreast with the modern
theories on tort liability, we find here an occasion to apply the “State of the most significant relationship” rule,
which in our view should be appropriate to apply now, given the factual context of this case. In applying said
principle to determine the State which has the most significant relationship, the following contacts are to be taken
into account and evaluated according to their relative importance with respect to the particular issue: (a) the place
where the injury occurred; (b) the place where the conduct causing the injury occurred; (c) the domicile, residence,
nationality, place of incorporation and place of business of the parties; and (d) the place where the relationship, if
any, between the parties is centered.

Same; Same; Same; Same; Same; Where the Philippines is the situs of the tort complained of and the place “having
the most interest in the problem,” the Philippine law on tort liability should have paramount application to and
control in the resolution of the legal issues arising therein.—As already discussed, there is basis for the claim that
over-all injury occurred and lodged in the Philippines. There is likewise no question that private respondent is a
resident Filipina national, working with petitioner, a resident foreign corporation engaged here in the business of
international air carriage. Thus, the “relationship” between the parties was centered here, although it should be
stressed that this suit is not based on mere labor law violations. From the record, the claim that the Philippines has
the most significant contact with the matter in this dispute, raised by private respondent as plaintiff below against
defendant (herein petitioner), in our view, has been properly established. Prescinding from this premise that the
Philippines is the situs of the tort complained of and the place “having the most interest in the problem,” we find, by
way of recapitulation, that the Philippine law on tort liability should have paramount application to and control in
the resolution of the legal issues arising out of this case. Further, we hold that the respondent Regional Trial Court
has jurisdiction over the parties and the subject matter of the complaint; the appropriate venue is in Quezon City,
which could properly apply Philippine law. Saudi Arabian Airlines vs. Court of Appeals, 297 SCRA 469, G.R. No.
122191, G.R. No. 122494 October 8, 1998

Test for determining common carrier of goods

1. PFIC vs. Wallem Shipping, G.R. No. 165647, March 26, 2009
Nature and Basis of Liability

1. Article 1733
a. Aboitiz Shipping vs. Insurance Company of North America, G.R. No. 168402, August 6, 2008
Corporation Law; A foreign corporation not licensed to do business in the Philippines is not absolutely incapacitated
from filing a suit in local courts.—A foreign corporation not licensed to do business in the Philippines is not
absolutely incapacitated from filing a suit in local courts. Only when that foreign corporation is “transacting” or
“doing business” in the country will a license be necessary before it can institute suits. It may, however, bring suits
on isolated business transactions, which is not prohibited under Philippine law. Thus, this Court has held that a
foreign insurance company may sue in Philippine courts upon the marine insurance policies issued by it abroad to
cover international-bound cargoes shipped by a Philippine carrier, even if it has no license to do business in this
country. It is the act of engaging in business without the prescribed license, and not the lack of license per se, which
bars a foreign corporation from access to our courts.
Civil Law; Subrogation; Respondent’s cause of action is founded on it being subrogated to the rights of the
consignee of the damaged shipment.—Respondent’s cause of action is founded on it being subrogated to the rights
of the consignee of the damaged shipment. The right of subrogation springs from Article 2207 of the Civil Code,
which states: Article 2207. If the plaintiff’s property has been insured, and he has received indemnity from the
insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance
company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the
contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party
shall be entitled to recover the deficiency from the person causing the loss or injury.

Same; Same; Subrogation is not dependent upon, nor does it grow out of, any privity of contract or upon written
assignment of claim.—As this Court held in the case of Pan Malayan Insurance Corporation v. Court of Appeals,
184 SCRA 54 (1990), payment by the insurer to the assured operates as an equitable assignment of all remedies the
assured may have against the third party who caused the damage. Subrogation is not dependent upon, nor does it
grow out of, any privity of contract or upon written assignment of claim. It accrues simply upon payment of the
insurance claim by the insurer.

Same; Insurance Law; The giving of notice of loss or injury is a condition precedent to the action for loss or injury
or the right to enforce the carrier’s liability.—The giving of notice of loss or injury is a condition precedent to the
action for loss or injury or the right to enforce the carrier’s liability. Circumstances peculiar to this case lead Us to
conclude that the notice requirement was complied with. As held in the case of Philippine American General
Insurance Co., Inc. v. Sweet Lines, Inc., 212 SCRA 194 (1992), this notice requirement protects the carrier by
affording it an opportunity to make an investigation of the claim while the matter is still fresh and easily
investigated. It is meant to safeguard the carrier from false and fraudulent claims.

Mercantile Law; The notice of claim must be made within 24 hours from receipt of the cargo if the damage is not
apparent from the outside of the package. For damages that are visible from the outside of the package, the claim
must be made immediately.—Under the Code of Commerce, the notice of claim must be made within twenty-four
(24) hours from receipt of the cargo if the damage is not apparent from the outside of the package. For damages that
are visible from the outside of the package, the claim must be made immediately. The law provides: Article 366.
Within twenty-four hours following the receipt of the merchandise, the claim against the carrier for damages or
average which may be found therein upon opening the packages, may be made, provided that the indications of the
damage or average which give rise to the claim cannot be ascertained from the outside part of such packages, in
which case the claim shall be admitted only at the time of receipt. After the periods mentioned have elapsed, or the
transportation charges have been paid, no claim shall be admitted against the carrier with regard to the condition in
which the goods transported were delivered. Same; Stipulations requiring notice of loss or claim for damage as a
condition precedent to the right of recovery from a carrier must be given a reasonable and practical construction,
adapted to the circumstances of the case under adjudication, and their application is limited to cases falling fairly
within their object and purpose.—Stipulations requiring notice of loss or claim for damage as a condition precedent
to the right of recovery from a carrier must be given a reasonable and practical construction, adapted to the
circumstances of the case under adjudication, and their application is limited to cases falling fairly within their
object and purpose.

Same; Provisions specifying a time to give notice of damage to common carriers are ordinarily to be given a
reasonable and practical, rather than a strict construction.—Provisions specifying a time to give notice of damage to
common carriers are ordinarily to be given a reasonable and practical, rather than a strict construction. We give due
consideration to the fact that the final destination of the damaged cargo was a school institution where authorities are
bound by rules and regulations governing their actions. Understandably, when the goods were delivered, the
necessary clearance had to be made before the package was opened. Upon opening and discovery of the damaged
condition of the goods, a report to this effect had to pass through the proper channels before it could be finalized and
endorsed by the institution to the claims department of the shipping company.

Subrogation; Parties; We have found that respondent, as subrogee of the consignee, is the real party in interest to
institute the claim for damages against petitioner.—To recapitulate, We have found that respondent, as subrogee of
the consignee, is the real party in interest to institute the claim for damages against petitioner; and pro hac vice, that
a valid notice of claim was made by respondent.

Civil Law; The rule as stated in Article 1735 of the Civil Code is that in cases where 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 required by law.—We now discuss petitioner’s liability for the damages
sustained by the shipment. The rule as stated in Article 1735 of the Civil Code is that in cases where 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 required by law. 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 rights. This standard is intended to grant favor to the shipper who is at the mercy of the common
carrier once the goods have been entrusted to the latter for shipment. Aboitiz Shipping Corporation vs. Insurance
Company of North America, 561 SCRA 262, G.R. No. 168402 August 6, 2008
2. Article 1734
3. Article 1735

a. Lea Mer Industries vs. Malayan Insurance, G.R. No. 161745, September 30, 2005
Common Carriers; Words and Phrases; 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—when this service is
offered to the public for compensa-tion.—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—when this service is
offered to the public for compensation. Petitioner is clearly a common carrier, because it offers to the public its
business of transporting goods through its vessels.

Same; Same; A demise or bareboat charter indicates a business undertaking that is private in character, and
therefore, the rights and obligations of the parties are governed principally by their stipulations, not by the law on
common carriers; In a contract of affreightment (time or voyage charter party), the rules for common carriers
govern.—The Court corrects the trial court’s finding that petitioner became a private carrier when Vulcan chartered
it. are classified as contracts of demise (or bareboat) and affreightment, which are distinguished as follows: “Under
the demise or bareboat charter of the vessel, the charterer will generally be considered as owner for the voyage or
service stipulated. The charterer mans the vessel with his own people and becomes, in effect, the owner pro hac vice,
subject to liability to others for damages caused by negligence. To create a demise, the owner of a vessel must
completely and exclusively relinquish possession, command and navigation thereof to the charterer; anything short
of such a complete transfer is a contract of affreightment (time or voyage charter party) or not a charter party at all.”
The distinction is significant, because a demise or bareboat charter indicates a business undertaking that is private in
character. Consequently, the rights and obligations of the parties to a contract of private carriage are governed
principally by their stipulations, not by the law on common carriers. The Contract in the present case was one of
affreightment, as shown by the fact that it was petitioner’s crew that manned the tugboat M/V Ayalit and controlled
the barge Judy VII. Necessarily, petitioner was a common carrier, and the pertinent law governs the present factual
circumstances.

Same; Same; Extraordinary Diligence; Negligence; Extraordinary diligence requires rendering service with the
greatest skill and foresight to avoid damage and destruction to the goods entrusted for carriage and delivery;
Common carriers are presumed to have been at fault or to have acted negligently for loss or damage to the goods
that they have transported; Exceptions.—Common carriers are bound to observe extraordinary diligence in their
vigilance over the goods and the safety of the passengers they transport, as required by the nature of their business
and for reasons of public policy. Extraordinary diligence requires rendering service with the greatest skill and
foresight to avoid damage and destruction to the goods entrusted for carriage and delivery. Common carriers are
presumed to have been at fault or to have acted negligently for loss or damage to the goods that they have
transported. This presumption can be rebutted only by proof that they observed extraordinary diligence, or that the
loss or damage was occasioned by 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.”

Same; Same; Same; Same; To excuse the common carrier fully of any liability, the fortuitous event must have been
the proximate and only cause of the loss.—Article 1174 of the Civil Code provides that “no person shall be
responsible for a fortuitous event which could not be foreseen, or which, though foreseen, was inevitable.” Thus, if
the loss or damage was due to such an event, a common carrier is exempted from liability. Jurisprudence defines the
elements of a “fortuitous event” as follows: (a) the cause of the unforeseen and unexpected occurrence, or the failure
of the debtors to comply with their obligations, must have been independent of human will; (b) the event that
constituted the caso fortuito must have been impossible to foresee or, if foreseeable, impossible to avoid; (c) the
occurrence must have been such as to render it impossible for the debtors to fulfill their obligation in a normal
manner; and (d) the obligor must have been free from any participation in the aggravation of the resulting injury to
the creditor. To excuse the common carrier fully 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. Lea Mer Industries, Inc. vs. Malayan Insurance Co., Inc., 471
SCRA 698, G.R. No. 161745 September 30, 2005

Duration of Liability
1. Article 1736 – Article 1738

Validity of Stipulations
1. Article 1744- Article 1750
2. Samar Mining Vs. Nordeutscher Lloyd, G.R. No. L-28673 October 23, 1984
CANNOT CLICK ON ESCRA
Duration of Liability (cf presumption of loss)
1. Eastern Shipping Lines vs. CA, G.R. No. 97412, July 12, 1994. (also:What is the legal relationship
between a consignee and the arrastre operator?)
Common Carriers; Obligations; Presumption of Fault; When the goods shipped either are lost or arrive in damaged
condition, a presumption arises against the carrier of its failure to observe that requisite diligence, and there need not
be an express finding of negligence to hold it liable.—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 (Arts. 1736-1738, Civil Code; Ganzon vs. Court of
Appeals, 161 SCRA 646; Kui Bai vs. Dollar Steamship Lines, 52 Phil. 863). When the goods shipped either are 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 (Art. 1735, Civil Code; of Appeals, 139 SCRA
87; Metro Port Service vs. Court of Appeals, 131 SCRA 365). There are, of course, exceptional cases when such
presumption of fault is not observed but these cases, enumerated in Article 1734 of the Civil Code, are exclusive,
not one of which can be applied to this case.

Same; Same; Arrastre Operator; Carrier and arrastre operator liable in solidum for the proper delivery of the goods
to the consignee.—The question of charging both the carrier and the arrastre operator with the obligation of properly
delivering the goods to the consignee has, too, been passed upon by the Court. In Fireman’s Fund Insurance Co. vs.
Metro Port Service, Inc. (182 SCRA 455), we have explained, in holding the carrier and the arrastre operator liable
in solidum, thus: “The legal relationship between the consignee and the arrastre operator is akin to that of a
depositor and warehouseman (Lua Kian v. Manila Railroad Co., et al., 19 SCRA 5 [1967]. The relationship between
the consignee and the common carrier is similar to that of the consignee and the arrastre operator (Northern Motors,
Inc. v. Prince Line, et al., 107 Phil. 253 [1960]). Since it is the duty of the ARRASTRE to take good care of the
goods that are in its custody and to deliver them in good condition to the consignee, such responsibility also
devolves upon the CARRIER. Both the ARRASTRE and the CARRIER are therefore charged with the obligation to
deliver the goods in good condition to the consignee.”

Same; Same; Same; The Supreme Court is not implying, however, that the arrastre operator and the customs broker
are themselves always and necessarily liable solidarily with the carrier, or vice-versa, nor that attendant facts in a
given case may not vary the rule.—We do not, of course, imply by the above pronouncement that the arrastre
operator and the customs broker are themselves always and necessarily liable solidarily with the carrier, or vice-
versa, nor that attendant facts in a given case may not vary the rule. The instant petition has been brought solely by
Eastern Shipping Lines which, being the carrier and not having been able to rebut the presumption of fault, is, in any
event, to be held liable in this particular case. A factual finding of both the court a quo and the appellate court, we
take note, is that “there is sufficient evidence that the shipment sustained damage while in the successive possession
of appellants” (the herein petitioner among them). Accordingly, the liability imposed on Eastern Shipping Lines,
Inc., the sole petitioner in this case, is inevitable regardless of whether there are others solidarily liable with it.
Eastern Shipping Lines, Inc. vs. Court of Appeals, 234 SCRA 78, G.R. No. 97412 July 12, 1994

2. Ynchausti vs. Dexter, G.R. No. L-15652 , December 14, 1920

1.COMMON CARRIER; TRANSPORTATION OF GOVERNMENT PROPERTY; NoTATION OF SHORTAGE

BY CONSIGNEE.—When Government property is transported by common carrier, it is the duty of the consignee,
under section 646 of the Administrative Code, to make notation of any loss, shortage, or damage upon the bill of
lading, or receipt, before accomplishing it; and where in obedience to this precept a shortage is noted by the
consignee upon the bill of lading at the time of delivery, such notation is competent evidence to show that the
shortage in fact existed.

2ID.; LOSS OR DAMAGE TO GOODS IN TRANSIT; LIABILITY OF CARRIER.—Proof of the delivery of

goods in good order to a carrier, and of their arrival at the place of destination short or in bad order, makes out a
prima facie case; and it is incumbent on the carrier, in order to exonerate itself, to prove that the loss or injury was
due to some circumstance inconsistent with its liability

3ID.; FREIGHT DUE TO CARRIER; SET-OFF FOR LOSS OR DAMAGE IN TRANSIT—The Purchasing Agent,
under the direction of the Insular Auditor, may properly deduct from the freight due to a common carrier for the
transportation of Government property any sum for which the carrier is liable to the Government for loss, shortage,
or damage occurring in course of the transportation of the same property.

4MANDAMUS; COMMON CARRIER; CLAIM AGAINST .GOVERNMENT; BUR4. DEN OF PROOF.—A

common carrier cannot maintain an action for the writ of mandamus to compel .the Purchasing Agent to pay a bill
for freight due to the carrier, under the doctrine enunciated in Compañía General de Tabacos vs. French and Unson
(39 Phil, 34), without showing that the loss, shortage, or damage suffered by the property while in the hands of the
carrier for transportation resulted from some other cause than its own fault or negligence.
3. Delsan Transport Lines Inc. vs. American Home Assurance Corporation, G.R. No. 149019, August 15,
2006 (also: How to overcome the presumption of negligence in case of loss, destruction, or deterioration of the
goods?)

Common Carriers; Presumption of Negligence; Common carriers are presumed to have been at fault or to have acted
negligently if the goods are lost, destroyed or deteriorated; Exceptions.—Common carriers are bound to observe
extraordinary diligence in the vigilance over the goods transported by them. They are presumed to have been at fault
or to have acted negligently if the goods are lost, destroyed or deteriorated. To overcome the presumption of
negligence in case of loss, destruction or deterioration of the goods, the common carrier must prove that it exercised
extraordinary diligence. There are, however, exceptions to this rule. Article 1734 of the Civil Code enumerates the
instances when the presumption of negligence does not attach: Art. 1734. Common carriers are responsible for the
loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only: 1) Flood
storm, earthquake, lightning, or other natural disaster or calamity; 2) Act of the public enemy in war, whether
international or civil; 3) Act or omission of the shipper or owner of the goods; 4) The character of the goods or
defects in the packing or in the containers; 5) Order or act of competent public authority.

Same; Same; The extraordinary responsibility of 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 a person who has the right to receive them.—Delsan’s argument
that it should not be held liable for the loss of diesel oil due to backflow because the same had already been actually
and legally delivered to Caltex at the time it entered the shore tank holds no water. It had been settled that the
subject cargo was still in the custody of Delsan because the discharging thereof has not yet been finished when the
backflow occurred. Since the discharging of the cargo into the depot has not yet been completed at the time of the
spillage when the backflow occurred, there is no reason to imply that there was actual delivery of the cargo to the
consignee. Delsan is straining the issue by insisting that when the diesel oil entered into the tank of Caltex on shore,
there was legally, at that moment, a complete delivery thereof to Caltex. To be sure, the extraordinary responsibility
of 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
a person who has the right to receive them. The discharging of oil products to Caltex Bulk Depot has not yet been
finished, Delsan still has the duty to guard and to preserve the cargo. The carrier still has in it the responsibility to
guard and preserve the goods, a duty incident to its having the goods transported. Delsan Transport Lines, Inc. vs.
American Home Assurance Corporation, 498 SCRA 603, G.R. No. 149019 August 15, 2006

4. Samar Mining Vs. Nordeutscher Lloyd, G.R. No. L-28673 October 23, 1984
CANNOT CLICK ON ESCRA

5. Macam vs. CA, G.R. No. 125524. August 25, 1999

Test of a Common Carrier
Common Carriers; The extraordinary responsibility of the common carriers lasts until actual or constructive delivery
of the cargoes to the consignee or to the person who has a right to receive them.—We emphasize that the
extraordinary responsibility of the common carriers lasts until actual or constructive delivery of the cargoes to the
consignee or to the person who has a right to receive them. PAKISTAN BANK was indicated in the bills of lading
as consignee whereas GPC was the notify party. However, in the export invoices GPC was clearly named as
buyer/importer. Petitioner also referred to GPC as such in his demand letter to respondent WALLEM and in his
complaint before the trial court. This premise draws us to conclude that the delivery of the cargoes to GPC as
buyer/importer which, conformably with Art. 1736 had, other than the consignee, the right to receive them was
proper. Macam vs. Court of Appeals, 313 SCRA 77, G.R. No. 125524 August 25, 1999

1. Asia Lighterage and Shipping vs. CA, G.R. No. 147246. August 19, 2003
Common Carriers; Definition.—The definition of common carriers in Article 1732 of the Civil Code makes no
distinction between one whose principal business activity is the carrying of persons or goods or both, and one who
does such carrying only as an ancillary activity. We also did not distinguish between a person or enterprise offering
transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or
unscheduled basis. Further, we ruled that Article 1732 does not distinguish between a carrier offering its services to
the general public, and one who offers services or solicits business only from a narrow segment of the general
population.

Same; Same; Same; Determination of a common carrier.—The test to determine a common carrier is “whether the
given undertaking is a part of the business engaged in by the carrier which he has held out to the general public as
his occupation rather than the quantity or extent of the business transacted.”
Same; Same; Same; Presumption of Negligence; Common carriers are presumed to have been at fault or to have
acted negligently if the goods are lost, destroyed or deteriorated.—Common carriers are bound to observe
extraordinary diligence in the vigilance over the goods transported by them. They are presumed to have been at fault
or to have acted negligently if the goods are lost, destroyed or deteriorated. To overcome the presumption of
negligence in the case of loss, destruction or deterioration of the goods, the common carrier must prove that it
exercised extraordinary diligence. There are, however, exceptions to this rule. Article 1734 of the Civil Code
enumerates the instances when the presumption of negligence does not attach. Asia Lighterage and Shipping, Inc.
vs. Court of Appeals, 409 SCRA 340, G.R. No. 147246 August 19, 2003

Fortuitous event (sole and proximate cause); Duty to minimize loss;

1. Central Shipping vs. Insurance Company of North America, G.R. No. 150751. September 20, 2004
Common Carriers; Negligence; Damages; Common carriers are bound to observe extraordinary diligence over the
goods they transport, according to all the circumstances of each case; In all other cases not specified under Article
1734 of the Civil Code, common carriers are presumed to have been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence.—From the nature of their business and for reasons of public
policy, common carriers are bound to observe extraordinary diligence over the goods they transport, according to all
the circumstances of each case. In the event of loss, destruction or deterioration of the insured goods, common
carriers are responsible; that is, unless they can prove that such loss, destruction or deterioration was brought about
—among others—by “flood, storm, earthquake, lightning or other natural disaster or calamity.” In all other cases not
specified under Article 1734 of the Civil Code, common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary diligence.

Same; Same; Same; Same; The defense of fortuitous event or natural disaster cannot be successfully made when the
injury could have been avoided by human precaution.—Even if the weather encountered by the ship is to be deemed
a natural disaster under Article 1739 of the Civil Code, petitioner failed to show that such natural disaster or
calamity was the proximate and only cause of the loss. Human agency must be entirely excluded from the cause of
injury or loss. In other words, the damaging effects blamed on the event or phenomenon must not have been caused,
contributed to, or worsened by the presence of human participation. The defense of fortuitous event or natural
disaster cannot be successfully made when the injury could have been avoided by human precaution.

Same; Same; Same; Same; Doctrine of Limited Liability; Doctrine does not apply to situations in which the loss or
the injury is due to the concurrent negligence of the shipowner and the captain.—The doctrine of limited liability
under Article 587 of the Code of Commerce is not applicable to the present case. This rule does not apply to
situations in which the loss or the injury is due to the concurrent negligence of the ship-owner and the captain. It has
already been established that the sinking of M/V Central Bohol had been caused by the fault or negligence of the
ship captain and the crew, as shown by the improper stowage of the cargo of logs. “Closer supervision on the part of
the shipowner could have prevented this fatal miscalculation.” As such, the shipowner was equally negligent. It
cannot escape liability by virtue of the limited liability rule. Central Shipping Company, Inc. vs. Insurance Company
of North America, 438 SCRA 511, G.R. No. 150751 September 20, 2004

2. Schmitz Transport vs. TVI, G.R. No. 150255. April 22, 2005
Fortuitous Events; The principle embodied in the act of God doctrine strictly requires that the act must be
occasioned solely by the violence of nature—human intervention is to be excluded from creating or entering into the
cause of the mischief.—In order, to be considered a fortuitous event, however, (1) the cause of the unforeseen and
unexpected occurrence, or the failure of the debtor to comply with his obligation, must be independent of human
will; (2) it must be impossible to foresee the event which constitute the caso fortuito, or if it can be foreseen it must
be impossible to avoid; (3) the occurrence must be such as to render it impossible for the debtor to fulfill his
obligation in any manner; and (4) the obligor must be free from any participation in the aggravation of the injury
resulting to the creditor. [T]he principle embodied in the act of God doctrine strictly requires that the act must be
occasioned solely by the violence of nature. Human intervention is to be excluded from creating or entering into the
cause of the mischief. When the effect is found to be in part the result of the participation of man, whether due to his
active intervention or neglect or failure to act, the whole occurrence is then humanized and removed from the rules
applicable to the acts of God.

Common Carriers; Customs Brokers; It is settled that under a given set of facts, a customs broker may be regarded
as a common carrier.—It is settled that under a given set of facts, a customs broker may be regarded as a common
carrier. Thus, this Court, in A.F. Sanchez Brokerage, Inc. v. The Honorable Court of Appeals, held: The appellate
court did not err in finding petitioner, a customs broker, to be also a common carrier, as defined under Article 1732
of the Civil Code, to wit, Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering
their services to the public. x x x 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. And in Calvo v. UCPB General Insurance Co., Inc., this
Court held that as the transportation of goods is an integral part of a customs broker, the customs broker is also a
common carrier. For to declare otherwise “would be to deprive those with whom [it] contracts the protection which
the law affords them notwithstanding the fact that the obligation to carry goods for [its] customers, is part and parcel
of petitioner’s business.”

Same; Private Carriers; While a private carrier is under no duty to observe extraordinary diligence, it is still required
to observe ordinary diligence.—In the case of TVI, while it acted as a private carrier for which it was under no duty
to observe extraordinary diligence, it was still required to observe ordinary diligence to ensure the proper and careful
handling, care and discharge of the carried goods.

Same; Same; A man of ordinary prudence would not leave a heavily loaded barge floating for a considerable
number of hours, at a precarious time, and in the open sea, knowing that the barge does not have any power of its
own and is totally defenseless from the ravages of the sea.—TVI’s failure to promptly provide a tugboat did not only
increase the risk that might have been reasonably anticipated during the shipside operation, but was the proximate
cause of the loss. A man of ordinary prudence would not leave a heavily loaded barge floating for a considerable
number of hours, at such a precarious time, and in the open sea, knowing that the barge does not have any power of
its own and is totally defenseless from the ravages of the sea. That it was nighttime and, therefore, the members of
the crew of a tugboat would be charging overtime pay did not excuse TVI from calling for one such tugboat.

Same; Obligations and Contracts; Torts; Quasi-Delicts; 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.—This Court holds
then that petitioner and TVI are solidarily liable for the loss of the cargoes. The following pronouncement of the
Supreme Court is instructive: The foundation of LRTA’s liability is the contract of carriage and its obligation to
indemnify the victim arises from the breach of that contract by reason of its failure to exercise the high diligence
required of the common carrier. In the discharge of its commitment to ensure the safety of passengers, a carrier may
choose to hire its own employees or avail itself of the services of an outsider or an independent firm to undertake the
task. In either case, the common carrier is not relieved of its responsibilities under the contract of carriage. Should
Prudent be made likewise liable? If at all, that liability could only be for tort under the provisions of Article 2176
and related provisions, in conjunction with Article 2180 of the Civil Code. x x x [O]ne might ask further, how then
must the liability of the common carrier, on one hand, and an independent contractor, on the other hand, be
described? It would be solidary. A contractual obligation can be breached by tort and when the same act or omission
causes the injury, one resulting in culpa contractual and the other in culpa aquiliana, Article 2194 of the Civil Code
can well apply. In fine, 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.

Same; Same; Words and Phrases; Parties to a contract of carriage may agree upon a definition of delivery that
extends the services rendered by the carrier.—Parties to a contract of carriage may, however, agree upon a definition
of delivery that extends the services rendered by the carrier. In the case at bar, Bill of Lading No. 2 covering the
shipment provides that delivery be made “to the port of discharge or so near thereto as she may safely get, always
afloat.” The delivery of the goods to the consignee was not from “pier to pier” but from the shipside of “M/V
Alexander Saveliev” and into barges, for which reason the consignee contracted the services of petitioner. Schmitz
Transport & Brokerage Corporation vs. Transport Venture, Inc., 456 SCRA 557, G.R. No. 150255 April 22, 2005

3. Servando vs. Philippine Steam Navigation Co. GR No. L-36481-2, October 23, 1982 (also, adhesion
contract see Ong You/Shewaram)
Common Carriers; Limitation of carrier's liability for loss or damage to goods, valid: Reason.—It should be pointed
out, however, that in the bills of lading issued for the cargoes in question, the parties agreed to limit the
responsibility of the carrier for the loss or damage that may be caused to the shipment. x x x We sustain the validity
of the above stipulation; there is nothing therein that is contrary to law, morals or public policy.

Same; Same; Same; Agreement on limitation of liability of carrier, binding upon the parties; Reason; Contracts of
adhesion not entirely prohibited.—Appellees would contend that the above stipulation does not bind them because it
was printed in fine letters on the back of the bills of lading; and that they did not sign the same. This argument
overlooks the pronouncement of this Court in Ong Yiu vs. Court of Appeals, promulgated June 29, 1979, where the
same issue was resolved in this wise: "While it may be true that petitioner had not signed the plane ticket (Exh. '12'),
he is nevertheless bound by the provisions thereof. 'Such provisions have been held to be a part of the contract of
carriage, and valid and binding upon the passenger regardless of the latter's lack of knowledge or assent to the
regulation.' It is what is known as a contract of 'adhesion', in regards which it has been said that contracts of
adhesion wherein one party imposes a ready made form of contract on the other, as the plane ticket in the case at
bar, are contracts not entirely prohibited. The one who adheres to the contract is in reality free to reject it entirely; if
he adheres, he gives his consent." (Tolentino, Civil Code, Vol. IV, 1962 Ed., p. 462, citing Mr. Justice J.B.L. Reyes,
Lawyer's Journal, Jan. 31, 1951, p. 49).
Same; Same; Exemption from liability; Fortuitous event or force majeure, concept and nature of; Obligor exempt
from liability for non-performance of obligation due to a fortuitous event; Burning of customs warehouse, a
fortuitous event; Case at bar.—Thus, where fortuitous event or force majeure is the immediate and proximate cause
of the loss, the obligor is exempt from liability for non performance. The Partidas, the antecedent of Article 1174 of
the Civil Code, defines 'caso fortuito' as 'an event that takes place by accident and could not have been foreseen.
Examples of this are destruction of houses, unexpected fire, shipwreck, violence of robbers.' In its dissertation of the
phrase 'caso fortuito' the Enciclopedia Juridicada Española says: "In a legal sense and, consequently, also in relation
to contracts, a 'caso fortuito' presents the following essential characteristics: (1) the cause of the unforeseen and
unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the
human will; (2) it may be impossible to foresee the event which constitutes the 'caso fortuito', or if it can be
foreseen, it must be impossible to avoid; (3) the occurrence must be such as to render it impossible for the debtor to
fulfill his obligation in a normal manner; and (4) the obligor must be free from any participation in the aggravation
of the injury resulting to the creditor." In the case at bar, the burning of the customs warehouse was an extraordinary
event which happened independently of the will of the appellant. The latter could not have foreseen the event.

Same; Same; Same; Absence of delay of carrier in the performance of its obligation and negligence of its employees
exempt carrier from liability for loss of goods due to fire.—There is nothing in the record to show that appellant
carrier incurred in delay in the performance of its obligation. It appears that appellant had not only notified appellees
of the arrival of their shipment, but had demanded that the same be withdrawn. In fact, pursuant to such demand,
appellee Uy Bico had taken delivery of 907 cavans of rice before the burning of the warehouse. Nor can the
appellant or its employees be charged with negligence. The storage of the goods in the Customs warehouse pending
withdrawal thereof by the appellees was undoubtedly made with their knowledge and consent. Since the warehouse
belonged to and was maintained by the government, it would be unfair to impute negligence to the appellant, the
latter having no control whatsoever over the same. Servando vs. Philippine Steam Navigation Co., 117 SCRA 832,
Nos. L-36481-2 October 23, 1982

4. De Guzman vs. CA, supra

Is fire considered a fortuitous event?
REPEATED

5. DSR-Senator Lines vs. Federal Phoenix, G.R. No. 135377. October 7, 2003
Negligence; Damages; If the peril of fire is not comprehended within the exceptions in Article 1734, the common
carrier shall be presumed to have been at fault or to have acted negligently unless it proves that it has observed the
extraordinary diligence required by law.—In Eastern Shipping Lines, Inc. vs. Intermediate Appellate Court, we
ruled that since the peril of fire is not comprehended within the exceptions in Article 1734, then the common carrier
shall be presumed to have been at fault or to have acted negligently, unless it proves that it has observed the
extraordinary diligence required :by law.

Same; Same; Same; The natural disaster must have been the proximate and only cause of the loss and that the carrier
has exercised due diligence to prevent or minimize the loss before, during or after the occurrence of the disaster.—
Even if fire were to be considered a natural disaster within the purview of Article 1734, it is required under Article
1739 of the same Code that the natural disaster must have been the proximate and DSR-Senator only cause of the
loss, and that the carrier has exercised due diligence to prevent or minimize the loss before, during or after the
occurrence of the disaster.

Same; Same; Same; When the goods shipped either are 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.—We have held that a 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 either are 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.

Same; Same; Same; In those cases where the presumption is applied the common carrier must prove that it exercised
extraordinary diligence in order to overcome the presumption.—Common carriers are obliged to observe
extraordinary diligence in the vigilance over the goods transported by them. Accordingly, they are presumed to have
been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. There are very few
instances when the presumption of negligence does not attach and these instances are enumerated in Article 1734. In
those cases where the presumption is applied, the common carrier must prove that it exercised extraordinary
diligence in order to overcome the presumption. DSR-Senator Lines vs. Federal Phoenix Assurance Co., Inc., 413
SCRA 14, G.R. No. 135377 October 7, 2003

6. Eastern Shipping vs. IAC, G.R. No. L-69044 , May 29, 1987
NO ESCRA
Due care to prevent further deterioration.
1. Iron Bulk Shipping vs. Remington Industrial, G.R. No. 136960. December 8, 2003
Contacts; Contract of Carriage; Bill of Lading; Two-fold Character; A bill of lading operates both as a receipt and as
a contract.—It is settled that a bill of lading has a two-fold character. In Phoenix Assurance Co., Ltd. vs. United
States Lines, we held that: [A] bill of lading 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 and 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.

Same; Same; Same; Extraordinary Diligence; Extraordinary diligence in the carriage of goods required of a common
carrier.—It is settled that 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 safe 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.
Under Article 1742 of the Civil Code, even if the loss, destruction, or deterioration of the goods should be caused,
among others, by the character of the goods, the common carrier must exercise due diligence to forestall or lessen
the loss. This extraordinary responsibility 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. Iron Bulk Shipping Philippines, Co., Ltd.
vs. Remington Industrial Sales Corporation, 417 SCRA 229, G.R. No. 136960 December 8, 2003

2. Compaña Maritima vs. Insurance Company of North America, G.R. No. L-18965, October 30, 1964
Contract of carriage; When contract completed; Loading of cargo on carrier’s barge preparatory to loading on ship.
—Where the shipper delivered the cargo to the carrier and the latter took possession thereof by placing it on a lighter
or barge manned by its authorized employees, it is held that there existed a complete contract of carriage the
consummation of which had already begun.

Same; Same; Bill of lading not indispensable to contract.—A bill of lading is not indispensable for the creation of a
contract of carriage.

Same; Same; Carrier’s liability for damage to cargo; When storm deemed to exist.—Winds of 11 miles per hour,
although stronger than the average 4–6 miles per hour then prevailing in the port where the lighter sank on the night
in question, cannot be classified as a storm. For according to Beaufort’s wind scale, a storm has wind velocities of
from 64 to 75 miles per hour; and by Philippine Weather Bureau standards winds should have a velocity of from 55
to 74 miles per hour to be classified as a storm.

Same; Same; Implied admission by carrier of charges in waiving its right to have books of accounts of shipper
produced in court.—The act of the carrier in waiving its right to have the books of account of the shipper presented
in Court is tantamount to an admission that the statements contained therein concerning the charges the latter made
for the loss of the damaged cargo are correct and their verification is not necessary, because its main defense was
that it was not liable for the damage since there was no contract of carriage between it and the shipper and the loss
caused, if any, was due to a fortuitous event.

Insurance; Right of insurer to sue carrier as assignee of shipper; Defect in insurance policy no defense.—An
insurance company can sue the carrier under its insurance contract as assignee of the shipper, and the carrier cannot
set up as a defense any defect in the insurance policy.

Same; Same; When proof of personality of foreign insurance company not important.—The question of the
personality of a foreign insurance company to sue in this jurisdiction becomes of no importance where the carrier’s
attorney admitted in open court that it is a foreign insurance company doing business in the Philippines with a
personality to file the present action. Compañia Maritima vs. Insurance Company of North America, 12 SCRA 213,
No. L-18965 October 30, 1964

Character of the goods or defects in the packing or in the containers; protest

1. AF Sanchez Brokerage vs. CA, G.R. No. 147079. December 21, 2004.

Common Carriers; Appellate court 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 appellate court did not err in finding petitioner, a customs
broker, to be also a common carrier, as defined under Article 1732 of the Civil Code, to wit: Art. 1732. Common
carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air, for compensation, offering their services to the public.
Same; Same; 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.—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.

Same; Same; Petitioner as a common carrier is mandated to observe, under Article 1733 of the Civil Code,
extraordinary diligence in the vigilance over the goods it transports according to all the circumstances of each case.
—Petitioner as a common carrier is mandated to observe, under Article 1733 of the Civil Code, extraordinary
diligence in the vigilance over the goods it transports according to all the circumstances of each case. In the event
that the goods are lost, destroyed or deteriorated, it is presumed to have been at fault or to have acted negligently,
unless it proves that it observed extraordinary diligence.

Same; Same; The rule is that if the improper packing is known to the carrier or his employees or is apparent upon
ordinary observation, but he nevertheless accepts the same without protest or exception notwithstanding such
condition, he is not relieved of liability for the resulting damage.—While paragraph No. 4 of Article 1734 of the
Civil Code exempts a common carrier from liability if the loss or damage is due to the character of the goods or
defects in the packing or in the containers, the rule is that if the improper packing is known to the carrier or his
employees or is apparent upon ordinary observation, but he nevertheless accepts the same without protest or
exception notwithstanding such condition, he is not relieved of liability for the resulting damage. A.F. Sanchez
Brokerage, Inc. vs. Court of Appeals, 447 SCRA 427, G.R. No. 147079 December 21, 2004

Order or act of competent public authority

1. Ganzon vs. CA, G.R. No. L-48757 May 30, 1988
Common Carriers; Perfection of contract of carriage; Extraordinary responsibility of carrier for loss, destruction or
deterioration of the goods, when it commences and ceases.—By the said act of delivery, the scraps were
unconditionally placed in the possession and control of the common carrier, and upon their receipt by the carrier for
transportation, the contract of carriage was deemed perfected. Consequently, the petitioner-carrier’s extraordinary
responsibility for the loss, destruction, or deterioration of the goods commenced, Pursuant to Art. 1736, such
extraordinary responsibility would cease only upon the delivery, actual or constructive, by the carrier to the
consignee, or to the person who has a right to receive them. The fact that part of the shipment had not been loaded
on board the lighter did not impair the said contract of transportation as the goods remained in the custody and
control of the carrier, albeit still unloaded.

Same; Same; Same; Failure of petitioner to show that the loss of the goods was due to causes under Art. 1734 of the
Civil Code.—The petitioner has failed to show that the loss of the scraps was due to any of the following causes
enumerated in Article 1734 of the Civil Code.

Same; Same; Same; Same; Presumption that petitioner acted negligently for his failure to show that the loss of the
goods was due to causes under Art. 1734 of the Civil Code; Effect of the presumption; Failure of petitioner to prove
the exercise of extraordinary diligence.—Hence, the petitioner is presumed to have been at fault or to have acted
negligently. By reason of this presumption, the court is not even required to make an express finding of fault or
negligence before it could hold the petitioner answerable for the breach. of the contract of carriage, Still, the
petitioner could have been exempted from any liability had he been able to prove that he observed extraordinary
diligence in the vigilance over the goods in his custody, according to all the circumstances of the case, or that the
loss was due to an unforeseen event or to force majeure. As it was, there was hardly any attempt on the part of the
petitioner to prove that he exercised such extraordinary diligence.

Same; Same; Same; Same; Loss of the scraps not due to caso fortuito.—We cannot sustain the theory of caso
fortuito. In the courts below, the petitioner’s defense was that the loss of the scraps was due to an “order or act of
competent public authority,” and this contention was correctly passed upon by the Court of Appeals.

Same; Same; Same; Same; Change of theory on appeal, not allowed; Intervention of municipal officials, not of a
character that would render impossible the fulfillment by the carrier of its obligations.—Now the petitioner is
changing his theory to caso fortuito. Such a change of theory on appeal we cannot, however, allow. In any case, the
intervention of the municipal officials was not of a character that would render impossible the fulfillment by the
carrier of its obligation. The petitioner was not duty bound to obey the illegal order to dump into the sea the scrap
iron. Moreover, there is absence of sufficient proof that the issuance of the same order was attended with such force
or intimidation as to completely overpower the will of the petitioner’s employees. The mere difficulty in the
fulfillment of the obligation is not considered force majeure. We agree with the private respondent that the scraps
could have been properly unloaded at the shore or at the NASSCO compound, so that after the dispute with the local
officials concerned was settled, the scraps could then be delivered in accordance with the contract of carriage.

Same; Same; Same; Absence of incompatibility between the provisions on common carriers and of the Code of
Commerce; Articles 1734 and 1735 of the Civil Code, interpreted; Requirement for the exercise of carrier of
ordinary diligence, deemed modified by Art. 1733 of the Civil Code.—There is no incompatibility between the Civil
Code provisions on common carriers and Articles 361 and 362 of the Code of Commerce which were the basis for
this Court’s ruling in Government of the Philippine Islands vs. Ynchausti & Co. and which the petitioner invokes in
this petition. For Art. 1735 of the Civil Code, conversely stated, means that the shipper will suffer the losses and
deterioration arising from the causes enumerated in Art. 1734; and in these instances, the burden of proving that
damages were caused by the fault or negligence of the carrier rests upon him. However, the carrier must first
establish that the loss or deterioration was occasioned by one of the excepted causes or was due to an unforeseen
event or to force majeure. Be that as it may, insofar as Art. 362 appears to require of the carrier only ordinary
diligence, the same is deemed to have been modified by Art. 1733 of the Civil Code. Ganzon vs. Court of Appeals,
161 SCRA 646, No. L-48757 May 30, 1988

Liability of carriers while the goods are in the custody of customs authorities.
1. Lu Do vs. Binamira, G.R. No. L-9840, April 22, 1957

CONTRACT OF CARRIAGE; LlABILITY OF CARRIERS WHILE THE GOODS ARE IN THE CUSTODY OF
CUSTOMS AUTHORITIES.—While delivery of the cargo to the customs authorities is not delivery to the
consignee, or "to the person who has a right to receive them", contemplated in Article 1736 of the New Civil Code,
because in such case the goods are still in the hands of the Government and the owner cannot exercise dominion
over them, however the parties may agree to limit the liability of the carrier considering that the goods have still to
go through the inspection of the customs authorities before they are actually turned over to the consignee. This is a
situation where the carrier loses control of the goods because of a custom regulation and it is unfair that it be made
responsible for any loss or damage that may be caused to the goods during the interregnum. Lu Do & Lu Ym Corp.
vs. Binamira, 101 Phil. 120, No. L-9840 April 22, 1957

Contract of Adhesion
1. Shewaram vs. PAL, Inc. G.R. No. L-20099, July 7, 1966
Common carriers; When limitation of carrier’s liability clause printed at the back of the ticket stub is not binding.—
Under Article 1760 of the New Civil Code, the pecuniary liability of a common carrier may by contract be limited to
a f ixed amount provided that the contract is reasonable and just under the circumstances and has been fairly and
freely agreed upon. Where the conditions printed at the back of a ticket stub are in letters so small that they are hard
to read, this would not warrant the presumption that the passenger was aware of those conditions such that he had
“fairly and freely agreed” to them. He is not and cannot, therefore, be bound, by the conditions of carriage found at
the back of the ticket stub.

Same; Carrier cannot limit its liability for loss due to its negligence.—Where the transistor radio and the camera of
the passenger was lost as a result of the negligence of the common carrier, its liability is clear—it must pay the
passenger the value of those two articles. The carrier cannot limit its liability for injury to or loss of goods shipped
where such injury or loss was caused by its own negligence. (Ysmael and Co. vs. Barretto, 51 Phil. 90.) Shewaram
vs. Philippine Air Lines, Inc., 17 SCRA 606, No. L-20099 July 7, 1966

2. Ong Yiu vs. CA, G.R. No. L-40597 , June 29, 1979
Transportation; Breach of contract of transportation; Bad faith, Concept of; No bad faith committed when airline
company exerted due diligence with its duty in locating a passenger’s lost luggage; Case at bar.—From the facts of
the case, we agree with respondent Court that PAL had not acted in bad faith. Bad faith means a breach of a known
duty through some motive of interest or ill will. It was the duty of PAL to look for petitioner’s luggage which had
been miscarried. PAL exerted due diligence in complying with such duty.

Same; Same; Same; Same; Moral Damages; No award of moral damages when bad faith is absent.—In the absence
of a wrongful act or omission or of fraud or bad faith, petitioner is not entitled to moral damages.

Same; Same; Same; Same; Exemplary Damages; Exemplary damages not awarded when defendant had not acted
fraudulently or oppressively.—Petitioner is neither entitled to exemplary damages. In contracts, as provided for in
Article 2232 of the Civil Code, exemplary damages can be granted if the defendant acted in a wanton, fraudulent,
reckless, oppressive, or malevolent manner, which has not been proven in this case.

Same; Same; Same; Contracts of adhesion; Philippine Air Lines’ limited carriage liability of P100.00 for loss or
delay of its passengers’ baggage held valid and binding absent higher value declared for luggage and actual value of
goods lost.—While it may be true that petitioner had not signed the plane ticket (Exh. “12”), he is nevertheless
bound by the provisions thereof. “Such provisions have been held to be a part of the contract of carriage, and valid
and binding upon the passenger regardless of the latter’s lack of knowledge or assent to the regulation”. It is what is
known as a contract of “adhesion”, in regards which it has been said that contracts of adhesion wherein one party
imposes a ready made form of contract on the other, as the plane ticket in the case at bar, are contracts not entirely
prohibited. The one who adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his
consent. And as held in Randolph v. American Airlines, 103 Ohio App. 172, 144 N.E. 2d 878; Rosenchein vs. Trans
World Airlines, Inc., 349 S.W. 2d 483, “a contract limiting liability upon an agreed valuation does not offend
against the policy of the law forbidding one from contracting against his own negligence.” Considering, therefore,
that petitioner had failed to declare a higher value for his baggage, he cannot be permitted a recovery in excess of
P100.00. Besides, passengers are advised not to place valuable items inside their baggage but “to avail of our V-
cargo service” (Exh. “1”). It is likewise to be noted that there is nothing in the evidence to show the actual value of
the goods allegedly lost by petitioner. Ong Yiu vs. Court of Appeals, 91 SCRA 223, No. L-40597 June 29, 1979

3. Pan American vs. IAC, G.R. No. 70462 August 11, 1988
Common Carrier; Liability for lost of baggage; Ruling in Ong Yiu vs. Court of Appeals sustaining the validity of a
printed stipulation at the back of an airline ticket limiting liability of the carrier for lost baggage to a specified
amount and that the liability limited to said amount since the passenger did not declare a higher value much less pay
additional charges squarely applicable to the instant case.—We find the ruling in Ong Yiu squarely applicable to the
instant case. In said case the Court, through Justice Melencio-Herrera, stated: Petitioner further contends that
respondent Court committed grave error when it limited PAL’s carriage liability to the amount of P100.00 as
stipulated at the back of the ticket. . . . We agree with the foregoing finding. The pertinent Condition of Carnage
printed at the back of the plane ticket reads: 8 BAGGAGE LIABILITY. . . The total liability of the Carrier for lost
or damaged baggage of the passenger is LIMITED TO P100.00 for each ticket unless a passenger declares a higher
valuation in excess of P100.00, but not in excess, however of a total valuation of P1,000.00 and additional charges
are paid pursuant to Carrier’s tariffs. There is no dispute that petitioner did not declare any higher value for his
luggage, much less did he pay any additional transportation charge.

Same; Same; Same; Same; Fact that petitioner had not signed the plane ticket he is nevertheless bound by the
provisions thereof.—While, it may be true that petitioner had not signed the plane ticket (Exh. “12”), he is
nevertheless bound by the provisions thereof. “Such provisions have been held to be a part of the contract of
carriage, and valid and binding upon the passenger regardless of the latter’s lack of knowledge or assent to the
regulation.” [Tannebaum v. National Airline, Inc., 13 Misc. 2d 450, 176 N.Y.S. 2d 400; Lichten v. Eastern Airlines,
87 Fed. Supp. 691; Migoski v. Eastern Air Lines, Inc., Fla., 63 So. 2d 634.] It is what is known as a contract of
“adhesion,” in regards which it has been said that contracts of adhesion wherein one party imposes a ready made
form of contract on the other, as the plane ticket in the case at bar, are contracts not entirely prohibited, the one who
adheres to the contract is in reality free to reject it entirely; if he adheres, he gives his consent [Tolentino, Civil
Code, Vol IV, 1962 ed., p. 462, citing Mr. Justice J.B.L. Reyes, Lawyer’s Journal, Jan. 31, 1951, p. 49]. And as held
in Randolph v. American Airlines, 103 Ohio App. 172, 144 N.E. 2d 878; Rosenchein v. Trans World Airlines, Inc.,
349 S.W. 2d 483, “a contract limiting liability upon an agreed valuation does not offend against the policy of the law
forbidding one from contracting against his own negligence.”

Same; Same; Same; Ruling in Shewaram vs. PAL Inc. that the stipulation limiting the carrier’s liability to a
specified amount was invalid finds no application in the instant case.—On the other hand, the ruling in Shewaram v.
Philippine Air Lines, Inc. [G.R. No. L-20099, July 2, 1966, 17 SCRA 606], where the court held that the stipulation
limiting the carrier’s liability to a specified amount was invalid, finds no application in the instant case, as the ruling
in said case was premised on the finding that the conditions printed at the back of the ticket were so small and hard
to read that they would not warrant the presumption that the passenger was aware of the conditions and that he had
freely and fairly agreed thereto. In the instant case, similar facts that would make the case fall under the exception
have not been alleged, much less shown to exist. Pan American World Airways, Inc. vs. IAC, 164 SCRA 268, No.
L-70462 August 11, 1988

Validity of Stipulations
1. Edgar Cokaliong Shipping Lines vs. UCPB General Insurance, G.R. No. 146018. June 25, 2003
Force Majeure; Broadly speaking, force majeure generally applies to a natural accident, such as that caused by a
lightning, an earthquake, a tempest or a public enemy.—Having originated from an unchecked crack in the fuel oil
service tank, the fire could not have been caused by force majeure. Broadly speaking, force majeure generally
applies to a natural accident, such as that caused by a lightning, an earthquake, a tempest or a public enemy. Hence,
fire is not considered a natural disaster or calamity.

Same; Same; Negligence; Common Carriers; A common carrier is presumed to have been negligent if it fails to
prove that it exercised extraordinary vigilance over the goods if transported.—The law provides that a common
carrier is presumed to have been negligent if it fails to prove that it exercised extraordinary vigilance over the goods
it transported. Ensuring the seaworthiness of the vessel is the first step in exercising the required vigilance.
Petitioner did not present sufficient evidence showing what measures or acts it had undertaken to ensure the
seaworthiness of the vessel.

Same; Same; Same; Same; A stipulation that limits liability is valid as long as it is not against public policy.—A
stipulation that limits liability is valid as long as it is not against public policy. In Everett Steamship Corporation v.
Court of Appeals the Court stated: “A stipulation in the bill of lading limiting the common carrier’s liability for loss
or destruction of a cargo to a certain sum, unless the shipper or owner declares a greater value, is sanctioned by law,
particularly Articles 1749 and 1750 of the Civil Code.

Same; Same; Same; Same; Petitioner should not be held liable for more than what was declared by the
shippers/consignees as the value of the goods in the bills of lading.—In Aboitiz Shipping Corporation v. Court of
Appeals, the description of the nature and the value of the goods shipped were declared and reflected in the bill of
lading, like in the present case. The Court therein considered this declaration as the basis of the carrier’s liability and
ordered payment based on such amount. Following this ruling, petitioner should not be held liable for more than
what was declared by the shippers/consignees as the value of the goods in the bills of lading. Edgar Cokaliong
Shipping Lines, Inc. vs. UCPB General Insurance Company, Inc., 404 SCRA 706, G.R. No. 146018 June 25, 2003

2. H. E. Heacock Company vs. Macondray, G.R. No. L-16598, October 3, 1921

NO ESCRA

3. Sea-Land Service Inc. Vs CA, G.R. No. 75118 August 31, 1987
Transportation; Contract of Carriage; Damages; Liability of a common carrier under a contract of carriage is
governed by the laws of the country of destination.—Since the liability of a common carrier for loss of or damage to
goods transported by it under a contract of carriage is governed by the laws of the country of destination and the
goods in question were shipped from the United States to the Philippines, the liability of petitioner Sea-Land to the
respondent consignee is governed primarily by the Civil Code, and as ordained by the said Code, suppletorily, in all
matters not determined thereby, by the Code of Commerce and special laws. One of these suppletory special laws is
the Carriage of Goods by Sea Act, U.S. Public Act No. 521 which was made applicable to all contracts for the
carriage of goods by sea to and from Philippine ports in foreign trade by Commonwealth Act No. 65, approved on
October 22, 1936.

Same; Same; Liability; A stipulation that the common carrier's liability is limited to the value of goods appearing in
the bill of lading, unless the shipper or owner declares a greater value in binding. Art 1759-c.c. 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.—Nothing contained in
section 4(5) of the Carriage of Goods by Sea Act already quoted is repugnant to or inconsistent with any of the just-
cited provisions of the Civil Code. Said section merely gives more flesh and greater specificity to the rather general
terms of Article 1749 (without doing any violence to the plain intent thereof) and of Article 1750, to give effect to
just agreements limiting carriers' liability for loss or damages which are freely and fairly entered into.

Same; Same; Consignee by making claim for loss on the basis of the bill of lading, to all intents and purposes
accepted said bill.—Private respondent, by making claim for loss on the basis of the bill of lading, to all intents and
purposes accepted said bill. Having done so, he—"x x x becomes bound by all stipulations contained therein
whether on the front or the back thereof. Respondent cannot elude its provisions simply because they prejudice him
and take advantage of those that are beneficial. Secondly, the fact that respondent shipped his goods on board the
ship of petitioner and paid the corresponding freight thereon shows that he impliedly accepted the bill of lading
which was issued in connection with the shipment in question, and so it may be said that the same is binding upon
him as if it had been actually signed by him or by any other person in his behalf. x x x" Sea-Land Service, Inc. vs.
Intermediate Appellate Court, 153 SCRA 552, No. L-75118 August 31, 1987

Transportation Law – Common Carriage of Passengers

Codal Provisions – Article 1755 to Article 1763

Case List:

1.) Singapore Airlines vs. Fernandez, G.R. No. 142305. December 10, 2003
Common Carriers; Air Transportation; When an airline issues a ticket to a passenger, confirmed for a particular
flight on a certain date, a contract of carriage arises; In an action for breach of contract of carriage, the aggrieved
party does not have to prove that the common carrier was at fault or was negligent—all that is necessary to prove is
the existence of the contract and the fact of its non-performance by the carrier.—When an airline issues a ticket to a
passenger, confirmed for a particular flight on a certain date, a contract of carriage arises. The passenger then has
every right to expect that he be transported on that flight and on that date. If he does not, then the carrier opens itself
to a suit for a breach of contract of carriage. The contract of air carriage is a peculiar one. Imbued with public
interest, the law requires common carriers to carry the passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons with due regard for all the circumstances. In an action
for breach of contract of carriage, the aggrieved party does not have to prove that the common carrier was at fault or
was negligent. All that is necessary to prove is the existence of the contract and the fact of its non-performance by
the carrier. Singapore Airlines Limited vs. Fernandez, 417 SCRA 474, G.R. No. 142305 December 10, 2003
Same; Same; When a passenger contracts for a specific flight, he has a purpose in making that choice which must be
respected.—When a passenger contracts for a specific flight, he has a purpose in making that choice which must be
respected. This choice, once exercised, must not be impaired by a breach on the part of the airline without the latter
incurring any liability. For petitioner’s failure to bring the respondent to her destination, as scheduled, we find the
petitioner clearly liable for the breach of its contract of carriage with the respondent.

Same; Same; Bad Faith; Words and Phrases; Bad faith means a breach of known duty through some motive of
interest or ill will; Self-enrichment or fraternal interest, and not personal ill will, may well have been the motive, but
it is malice nevertheless; Inattentiveness and rudeness of an airline’s personnel to a passenger’s plight may amount
to bad faith.—We are convinced that the petitioner acted in bad faith. Bad faith means a breach of known duty
through some motive of interest or ill will. Self-enrichment or fraternal interest, and not personal ill will, may well
have been the motive; but it is malice nevertheless. Bad faith was imputed by the trial court when it found that the
petitioner’s employees at the Singapore airport did not accord the respondent the attention and treatment allegedly
warranted under the circumstances. The lady employee at the counter was unkind and of no help to her. The
respondent further alleged that without her threats of suing the company, she was not allowed to use the company’s
phone to make long distance calls to her mother in Manila. The male employee at the counter where it says:
“Immediate Attention to Passengers with Immediate Booking” was rude to her when he curtly retorted that he was
busy attending to other passengers in line. The trial court concluded that this inattentiveness and rudeness of
petitioner’s personnel to respondent’s plight was gross enough amounting to bad faith. This is a finding that is
generally binding upon the Court which we find no reason to disturb.

Same; Same; Where the airline’s employees acted in a wanton, oppressive or malevolent manner, the award of
exemplary damages is warranted.—Article 2232 of the Civil Code provides that in a contractual or quasi-contractual
relationship, exemplary damages may be awarded only if the defendant had acted in a “wanton, fraudulent, reckless,
oppressive or malevolent manner.” In this case, petitioner’s employees acted in a wanton, oppressive or malevolent
manner. The award of exemplary damages is, therefore, warranted in this case. Singapore Airlines Limited vs.
Fernandez, 417 SCRA 474, G.R. No. 142305 December 10, 2003

2.) Northwest Airlines vs. Chiong, G.R. No. 155550, January 31, 2008

Air Transportation; Contracts of Carriage; Although initially, the burden of proof was with the passenger to prove
that there was a breach of contract of carriage, the burden of evidence shifted to the airline when the former adduced
sufficient evidence to prove the facts he had alleged—at that point, the airline had the burden of going forward to
controvert Chiong’s prima facie case, the burden of evidence to establish its claim.—It is true that Chiong’s passport
and seaman service record book indicate that he had left the country on April 17, 1989 and come back on October 5
of the same year. However, this evidence fails to debunk the facts established to have transpired on April 1, 1989,
more particularly, Chiong’s presence at the airport and his subsequent bumping-off by Northwest despite a
confirmed ticket. Although initially, the burden of proof was with Chiong to prove that there was a breach of
contract of carriage, the burden of evidence shifted to Northwest when Chiong adduced sufficient evidence to prove
the facts he had alleged. At that point, Northwest had the burden of going forward to controvert Chiong’s prima
facie case. As the party asserting that Chiong was a “no-show” passenger, Northwest then had the burden of
evidence to establish its claim. Regrettably, Northwest failed to do so. Northwest Airlines, Inc. vs. Chiong, 543
SCRA 308, G.R. No. 155550 January 31, 2008

Air Transportation; Contracts of Carriage; A contract of carriage, in this case, air transport, is primarily intended to
serve the traveling public and thus, imbued with public interest—the law governing common carriers consequently
imposes an exacting standard of conduct.—Time and again, we have declared that a contract of carriage, in this
case, air transport, is primarily intended to serve the traveling public and thus, imbued with public interest. The law
governing common carriers consequently imposes an exacting standard of conduct. As the aggrieved party, Chiong
only had to prove the existence of the contract and the fact of its non-performance by Northwest, as carrier, in order
to be awarded compensatory and actual damages.

Damages; An award of moral damages, in breaches of contract, is in order upon a showing that the defendant acted
fraudulently or in bad faith.—Under Article 2220 of the Civil Code of the Philippines, an award of moral damages,
in breaches of contract, is in order upon a showing that the defendant acted fraudulently or in bad faith. Bad faith
does not simply connote bad judgment or negligence. It imports a dishonest purpose or some moral obliquity and
conscious doing of a wrong. It means breach of a known duty through some motive, interest or ill will that partakes
of the nature of fraud. Northwest Airlines, Inc. vs. Chiong, 543 SCRA 308, G.R. No. 155550 January 31, 2008

Bad faith is in essence a question of intention. In the case at bench, the courts carefully examined the evidence as to
the conduct and outward acts of Northwest indicative of its inward motive. It is borne out by the records that Chiong
was given the run-around at the Northwest check-in counter, instructed to deal with a “man in barong” to obtain a
boarding pass, and eventually barred from boarding Northwest Flight No. 24 to accommodate an American, W.
Costine, whose name was merely inserted in the Flight Manifest, and did not even personally check-in at the
counter. Under the foregoing circumstances, the award of exemplary damages is also correct given the evidence that
Northwest acted in an oppressive manner towards Chiong. Northwest Airlines, Inc. vs. Chiong, 543 SCRA 308,
G.R. No. 155550 January 31, 2008

3.) Air France vs. Carrascoso, G.R. No. L-21438, September 28, 1966
Common carriers; Contracts; First class tickets.—A written document speaks a uniform language; the spoken word
could be notoriously unreliable. If only to achieve stability in the relations between passenger and air carrier,
adherence to the terms of a ticket is desirable. Air France vs. Carrascoso, 18 SCRA 155, No. L-21438 September 28,
1966

Same; Damages; Moral damages; Trial; Bad faith in breach of contract of carriage.—Where at the start of the trial,
respondent's counsel placed petitioner on guard that he intended to prove that, while sitting in the plane in Bangkok,
the respondent was ousted .by petitioner's manager, who gave his seat to a white man, and evidence of bad faith in
the fulfillment of the contract was presented without objection on the part of the petitioner, it is therefore
unnecessary to inquire as to whether or not there is sufficient averment in the complaint to justify an award for
moral damages. Deficiency in the complaint, if any, was cured by the evidence.

Same; Exemplary damages.—The New Civil Code gives the court ample power to grant exemplary damages in
contracts and quasi-contracts. The only condition is that defendant should have acted in a wanton, fraudulent,
reckless, oppressive, or malevolent manner. The manner of ejectment of respondent Carrascoso from his first class
seat fits into this legal precept.

Same; Attorney's fees.—The right to attorney's fees is fully established. The grant of exemplary damages justifies a
similar judgment for attorney's fees. The least that can be said is that the courts below felt that it is but just and
equitable that attorneys’ fees be given. We do not intend to break tradition that discretion well exercised—as it was
here—should not be disturbed. Air France vs. Carrascoso, 18 SCRA 155, No. L-21438 September 28, 1966

4.) Lopez vs. Pan American World Airways, G.R. No. L-22415, March 30, 1966

Carriers; Breach of contract to provide first class accommodations; Case at bar.—Plaintiffs made first class
reservations with defendant in its Tokyo-San Francisco flight. The reservations having been confirmed, first class
tickets were subsequently issued in favor of plaintiffs. Through mistake, however, defendant’s agents cancelled the
said reservations. Expecting that some cancellations of bookings would be made before the flight time, the
reservations supervisor decided to withhold from plaintiffs the information that their reservations had been
cancelled. Upon arrival in Tokyo, defendant informed plaintiffs that there was no accommodation for them in the
first class stating that they could not go unless they take the tourist class. Due to pressing engagements in the United
States, plaintiffs were constrained to take the flight as tourist passengers, but they did so under protest. Query:
Whether defendant acted in bad faith in the breach of its contract with plaintiffs. Held: In so misleading plaintiffs
into purchasing first class tickets in the conviction that they had confirmed reservations for the same, when in fact
they had none, defendant wilfully and knowingly placed itself into the position of having to breach its aforesaid
contracts with plaintiffs should there be no last-minute cancellation by other passengers before flight time, as it
turned out in this case. Such actuation of defendant may indeed have been promoted by nothing more than the
promotion of its self-interest in holding on to plaintiffs as passengers in its flight and foreclosing their chances to
seek the services of other airlines that may have been able to afford them first class accommodations. All the same,
in legal contemplation, such conduct already amounts to action in bad faith.

Same; Meaning of bad faith.—Bad faith means a breach of a known duty through some motive of interest or illwill.
Selfenrichment or fraternal interest, and not personal illwill, may have been the motive, but it is malice nevertheless.
Lopez, et al. vs. Pan American World Airways, 16 SCRA 431, No. L-22415 March 30, 1966

ame; Moral damages and exemplary are recoverable for breach of contract of carriage in bad faith.—As a proximate
result of defendant’s breach in bad faith of its contracts with plaintiffs, the latter suffered social humiliation,
wounded feelings, serious anxiety and mental anguish. For plaintiffs were travelling with first class tickets issued by
defendant and yet they were given only the tourist class. At stopovers, they were expected to be among the first-
class passengers by those awaiting to welcome them, only to be found among the tourist passengers. It may not be
humiliating to travel as tourist passengers; it is humiliating to be compelled to travel as such, contrary to what is
rightfully to be expected from the contractual undertaking.

The rationale behind exemplary or corrective damages is, as the name implies, to provide an example or correction
for public good. Defendant having breached its contracts in bad faith, the court may award exemplary damages in
addition to moral damages (Articles 2229, 2232, New Civil Code). In view of its nature, it should be imposed in
such amount as to sufficiently and effectively deter similar breach of contracts in the future by defendant or other
airlines. Lopez, et al. vs. Pan American World Airways, 16 SCRA 431, No. L-22415 March 30, 1966

Same; Factors considered in fixing damages.—In the case at bar the damages were determined by considering the
official, political, social and financial standing of the offended parties on one hand and the business and financial
position of the offender on the other (Dominding vs. Ng, 55 O.G. 10). Lopez, et al. vs. Pan American World
Airways, 16 SCRA 431, No. L-22415 March 30, 1966
5.) Philippine Airlines Inc. vs. CA, G.R. No. 123238, September 22, 2008
Common Carriers; Air Transportation; Contract of Carriage; When an airline issues a ticket to a passenger,
confirmed for a particular flight on a certain date, a contract of carriage arises—the passenger has every right to
expect that he be transported on that flight and on that date, and it becomes the airline’s obligation to carry him and
his luggage safely to the agreed destination without delay.—When an airline issues a ticket to a passenger,
confirmed for a particular flight on a certain date, a contract of carriage arises.

The passenger has every right to expect that he be transported on that flight and on that date, and it becomes the
airline’s obligation to carry him and his luggage safely to the agreed destination without delay. If the passenger is
not so transported or if in the process of transporting, he dies or is injured, the carrier may be held liable for a breach
of contract of carriage.

Same; Same; Same; Damages; Words and Phrases; “Gross Negligence,” Explained; In breach of contract of air
carriage, moral damages may be recovered where the negligence of the carrier is so gross and reckless as to virtually
amount to bad faith.—In breach of contract of air carriage, moral damages may be recovered where (1) the mishap
results in the death of a passenger; or (2) where the carrier is guilty of fraud or bad faith; or (3) where the negligence
of the carrier is so gross and reckless as to virtually amount to bad faith. Gross negligence implies a want or absence
of or failure to exercise even slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard
of consequences without exerting any effort to avoid them.

Same; Same; Same; A common carrier is bound by law to exercise extraordinary diligence and utmost care in
ensuring for the safety and welfare of its passengers with due regard for all the circumstances.—It is worth
emphasizing that petitioner, as a common carrier, is bound by law to exercise extraordinary diligence and utmost
care in ensuring for the safety and welfare of its passengers with due regard for all the circumstances. The negligent
acts of petitioner signified more than inadvertence or inattention and thus constituted a radical departure from the
extraordinary standard of care required of common carriers. Philippine Airlines, Incorporated vs. Court of Appeals,
566 SCRA 124, G.R. No. 123238 September 22, 2008

6.) Cathay Pacific Airways vs. Sps. Vasquez, G.R. No. 150843. March 14, 2003

Common Carriers; Air Transportation; Contracts; Requisites; Words and Phrases; A contract is a meeting of minds
between two persons whereby one agrees to give something or render some service to another for a consideration.—
A contract is a meeting of minds between two persons whereby one agrees to give something or render some service
to another for a consideration. There is no contract unless the following requisites concur: (1) consent of the
contracting parties; (2) an object certain which is the subject of the contract; and (3) the cause of the obligation
which is established. Undoubtedly, a contract of carriage existed between Cathay and the Vazquezes. They
voluntarily and freely gave their consent to an agreement whose object was the transportation of the Vazquezes from
Manila to HongKong and back to Manila, with seat: in the Business Class Section of the aircraft, and whose cause
or consideration was the fare paid by the Vazquezes to Cathay.

Same; Same; Same; Words and Phrases; “Breach of Contract” is defined as the “failure without legal reason to
comply with the terms of a contract,” or the failure, without legal excuse, to perform any promise which forms the
whole or part of the contract.”—The only problem is the legal effect of the upgrading of the seat accommodation of
the Vazquezes. Did it constitute a breach of contract? Breach of contract is defined as the “failure without legal
reason to comply with the terms of a contract.” It is also defined as the “[f]ailure, without legal excuse, to perform
any promise which forms the whole or part of the contract.” In previous cases, the breach of contract of carriage
consisted in either the bumping off of a passenger with confirmed reservation or the downgrading of a passenger’s
seat accommodation from one class to a lower class. In this case, what happened was the reverse. The contract
between the parties was for Cathay to transport the Vazquezes to Manila on a Business Class accommodation in
Flight CX-905. After checking-in their luggage at the Kai Tak Airport in Hong Kong, the Vazquezes were given
boarding cards indicating their seat assignments in the Business Class Section. However, during the boarding time,
when the Vazquezes presented their boarding passes, they were informed that they had a seat change from Business
Class to First Class. It turned out that the Business Class was overbooked in that there were more passengers than
the number of seats. Thus, the seat assignments of the Vazquezes were given to waitlisted passengers, and the
Vazquezes, being members of the Marco Polo Club, were upgraded from Business Class to First Class.

Same; Same; Same; Upgrading; Airline passengers have every right to decline an upgrade and insist on the
accommodation they had booked, and if an airline insists on the upgrade, it breaches its contract of carriage with the
passengers.—We note that in all their pleadings, the Vazquezes never denied that they were members of Cathay’s
Marco Polo Club. They knew that as members of the Club, they had priority for upgrading of their seat
accommodation at no extra cost when an opportunity arises. But, just like other privileges, such priority could be
waived. The Vazquezes should have been consulted first whether they wanted to avail themselves of the privilege or
would consent to a change of seat accommodation before their seat assignments were given to other passengers.
Normally, one would appreciate and accept an upgrading, for it would mean a better accommodation. But, whatever
their reason was and however odd it might be, the Vazquezes had every right to decline the upgrade and insist on the
Business Class accommodation they had booked for and which was designated in their boarding passes. They
clearly waived their priority or preference when they asked that other passengers be given the upgrade. It should not
have been imposed on them over their vehement objection. By insisting on the upgrade, Cathay breached its contract
of carriage with the Vazquezes.

An upgrading is for the better condition and, definitely for the benefit of the passenger.—Neither was the transfer of
the Vazquezes effected for some evil or devious purpose. As testified to by Mr. Robson, the First Class Section is
better than the Business Class Section in terms of comfort, quality of food, and service from the cabin crew; thus,
the difference in fare between the First Class and Business Class at that time was $250. Needless to state, an
upgrading is for the better condition and, definitely, for the benefit of the passenger.

Same; Same; Same; Overbooking; It is clear from Sec. 3 of Economic Regulation No. 7 of the Civil Aeronautics
Board, as amended, that an overbooking that does not exceed ten percent is not considered deliberate and therefore
does not amount to bad faith.—We are not persuaded by the Vazquezes’ argument that the overbooking of the
Business Class Section constituted bad faith on the part of Cathay. Section 3 of the Economic Regulation No. 7 of
the Civil Aeronautics Board, as amended, provides: Sec. 3. Scope.—This regulation shall apply to every Philippine
and foreign air carrier with respect to its operation of flights or portions of flights originating from or terminating at,
or serving a point within the territory of the Republic of the Philippines insofar as it denies boarding to a passenger
on a flight, or portion of a flight inside or outside the Philippines, for which he holds confirmed reserved space.
Furthermore, this Regulation is designed to cover only honest mistakes on the part of the carriers and excludes
deliberate and willful acts of non-accommodation. Provided, however, that overbooking not exceeding 10% of the
seating capacity of the aircraft shall not be considered as a deliberate and willful act of non-accommodation. It is
clear from this section that an overbooking that does not exceed ten percent is not considered deliberate and
therefore does not amount to bad faith. Here, while there was admittedly an overbooking of the Business Class, there
was no evidence of overbooking of the plane beyond ten percent, and no passenger was ever bumped off or was
refused to board the aircraft. Cathay Pacific Airways, Ltd. vs. Vasquez, 399 SCRA 207, G.R. No. 150843 March 14,
2003

7.) Bataclan vs. Medina, G.R. No. L-10126, October 22, 1957
1.DAMAGES; CARRIER'S LIABILITY; WORDS AND PHRASES; PROXIMATE CAUSE DEFINED.—"The
proximate legal cause is that acting first and producing the injury, either immediately or by setting other events in
motion, all constituting a natural and continuous chain of events, each having a close causal connection with its
immediate predecessor, the final event in the chain immediately effecting the injury as a natural and probable result
of the cause which first acted, under such circumstances that the person responsible for the first event should, as an
ordinarily prudent and intelligent person, have reasonable ground to expect at the moment of his act or default that
an injury to some person might probably result therefrom." (38 Am. Jur. pp. 695-696.)
2.ID.; ID.; OVERTURNING OF Bus; PROXIMATE CAUSE OF DEATH.— When a vehicle turned not only on its
side but completely on its back, the leaking of the gasoline from the tank was not unnatural or unexpected; that the
coming of the men with lighted torch was in response to the call for help, made not only by the passenger, but most
probably by the driver and the conductor themselves, and that because it was very dark (about 2:30 in the morning),
the rescuers had to carry a light with them; and coming as they did from a rural area where lanterns and flashlights
were not available, they had to use a torch the most handy and available; and what was more natural, than that said
rescuers should innocently approach the overturned vehicle to extend the aid and effect the rescue requested from
them, Held: That the proximate cause of the death of B was the overturning of the vehicle thru the negligence of
defendant and his agent.
3.ID.; ID.; CARRIER'S NEGLIGENCE; BURNING OF THE BUS.—The burning of the bus wherein some of the
passengers were trapped can also be attributed to the negligence of the carrier, through the driver and conductor who
were on the road walking back and forth. They should and must have known that in the position in which the
overturned bus was, gasoline could and must have leaked from the gasoline tank and soaked the area in and around
the bus, this aside from the fact that gasoline when spilled, specially over a large area, can be smelt and detected
even from a distance, Held: That the failure of the driver and the conductor to have cautioned or taken steps to warn
the rescuers not to bring the lighted torch too near the bus, constitutes negligence on the part of the agents of the
carrier under the provisions of the Civil Code, particularly, Article 1733, 1759 and 1763 thereof. Vda. de Bataclán,
et al. vs. Medina,, 102 Phil. 181, No. L-10126 October 22, 1957

8.) La Mallorca vs. CA, G.R. No. L-20761, July 27, 1966
Common carriers; When relationship of carrier and passenger is terminated; Reasonable time to leave carrier’s
premises construed.—Plaintiffs, husband and wife together with their minor daughters, namely, Milagros, 13 years
old, Raquel, about 4½ years old, and Fe, over 2 years old, boarded a Pambusco Bus, Upon reaching their destination,
plaintiffs and all their daughters alighted from the bus and the father led his compa-nions to a shaded spot about four
or f ive meters away f rom the vehicle. Father returned to the bus to get a piece of baggage which was not unloaded
when they alighted from the bus. Raquel, the child that she was, must have followed the father. However although
the father was still on the running board of the bus awaiting for the conductor to give him the bag or bayong, the bus
started to run, so that the father had to jump down from the moving vehicle. It was at this instance that the child,
who must be near the bus, was run over and killed. Held: In the circumstances, it cannot be said that the carrier’s
agent had exercised to utmost diligence of a very cautions person required by Article 1755 of the Civil Code to be
observed by a common carrier in the discharge of its obligation to transport safely its passengers. In the first place,
the driver, although stopping the bus, nevertheless did not put off the engine. Secondly, he started to run the bus
even before the bus conductor gave him the signal to go and while the latter was still unloading part of the baggage
of the passengers Mariano Beltran and family. The presence of said passengers near the bus was not unreasonable
and they are, therefore, to be considered still passengers of the carrier, entitled to protection under their contract of
carriage.

Actions; Quasi-delicts; Pleadings; Averment thereof is permissible under Rules of Court although incompatible with
claim of contract of carriage.—The complaint contained an allegation for quasi-delict. The inclusion of this
averment for quasi-delict, while incompatible with the other claim under the contract of carriage, is permissible
under Section 2 of Rule 8 of the New Rules of Court, which allows a plaintiff f to allege causes of action in the
alternative, be they compatible with each other or not, to the end that the real matter in controversy may be resolved
and determined. Thus, even assuming arguendo that the contract of carriage had terminated, herein petitioner can be
held liable for the negligence of its driver. The presentation of proof of the negligence of its driver gave rise to the
presumption that the defendant employer did not exercise the diligence of a good father of the family in the selection
and supervision of its employees. The petitioner had failed to overcome such presumption. Consequently, the
petitioner must be adjudged pecuniarily liable for the death of the child. La Mallorca vs. Court of Appeals, et al., 17
SCRA 739, No. L-20761 July 27, 1966

9.) Philippine Airlines, Inc. vs. CA, G.R. No. L-82619 , September 15, 1993
NO ESCRA

10.) Tiu vs Arriesgado, G.R. No. 138060. September 1, 2004

Contracts of Carriage; Common Carriers; Extraordinary Diligence; 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.—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.

Same; Same; Same; Same; Same; Negligence; 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.—Under the said contract of carriage, the petitioners assumed the express obligation to
transport the respondent and his wife to their destination safely and to observe extraordinary diligence with due
regard for all circumstances. Any injury suffered by the passengers in the course thereof is immediately attributable
to the negligence of the carrier. 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. It must be stressed that in requiring the highest possible degree of diligence from common carriers and
in creating a presumption of negligence against them, the law compels them to curb the recklessness of their drivers.

Same; Same; Same; Same; Same; Same; 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.— While evidence may
be submitted to overcome such presumption of negligence, it must be shown that the carrier observed the required
extraordinary diligence, which means that 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.

Same; Same; Same; Same; Same; Same; Principle of Last Clear Chance; Contrary to the petitioner’s contention, 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.—Contrary to the petitioner’s contention, 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 two colliding vehicles.
It does not arise where a passenger demands responsibility from the carrier to enforce its contractual obligations, for
it would be inequitable to exempt the negligent driver 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.

Same; Same; Same; Same; Same; Same; Presumed Negligence; It is such a firmly established principle, as to have
virtually formed part of the law itself, that the negligence of the employee gives rise to the presumption of
negligence on the part of the employer.—It is such a firmly established principle, as to have virtually formed part of
the law itself, that the negligence of the employee gives rise to the presumption of negligence on the part of the
employer. This is the presumed negligence in the selection and supervision of employee. The theory of presumed
negligence, in contrast with the American doctrine of respondeat superior, where the negligence of the employee is
conclusively presumed to be the negligence of the employer, is clearly deducible from the last paragraph of Article
2180 of the Civil Code which provides that the responsibility therein mentioned shall cease if the employers prove
that they observed all the diligence of a good father of a family to prevent damages. . . .

Same; Same; Same; Same; Same; Same; Indemnity; Compulsory Vehicle Liability Insurance; The nature of
Compulsory Motor Vehicle Liability Insurance is such that it is primarily intended to provide compensation for the
death or bodily injuries suffered by innocent third parties or pasengers as a result of the negligent operation and use
of motor vehicles.—The nature of Compulsory Motor Vehicle Liability Insurance is such that it is primarily
intended to provide compensation for the death or bodily injuries suffered by innocent third parties or passengers as
a result of the negligent operation and use of motor vehicles. The victims and/or their dependents are assured of
immediate financial assistance, regardless of the financial capacity of motor vehicle owners.

Same; Same; Same; Same; Same; Same; Same; Same; Extent; Although the victim may proceed directly against the
insurer for indemnity, the third party liability is only up to the extent of the insurance policy and those required by
law.—Although the victim may proceed directly against the insurer for indemnity, the third party liability is only up
to the extent of the insurance policy and those required by law. While it is true that where the insurance contract
provides for indemnity against liability to third persons, and such persons can directly sue the insurer, the direct
liability of the insurer under indemnity contracts against third party liability does not mean that the insurer can be
held liable in solidum with the insured and/or the other parties found at fault. For the liability of the insurer is based
on contract; that of the insured carrier or vehicle owner is based on tort. . . .

Solidary Liability; 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. In Anuran v. Buño, Batangas Laguna Tayabas Bus Co. v. Intermediate
Appellate Court, and Metro Manila Transit Corporation v. Court of Appeals, the bus company, its driver, the
operator of the other vehicle and the driver of the vehicle were jointly and severally held liable to the injured
passenger or the latter’s heirs. The basis of this allocation of liability was explained in Viluan v. Court of Appeals,
thus: “Nor should it make difference that the liability of petitioner [bus owner] springs from contract while that of
respondents [owner and driver of other vehicle] arises from quasi-delict. As early as 1913, we already ruled in
Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of injury to a passenger due to the negligence of the driver of the
bus on which he was riding and of the driver of another vehicle, the drivers as well as the owners of the two vehicles
are jointly and severally liable for damages. Some members of the Court, though, are of the view that under the
circumstances they are liable on quasi-delict.” Tiu vs. Arriesgado, 437 SCRA 426, G.R. No. 138060 September 1,
2004

11.) Estacion vs. Bernardo, G.R. No. 144723, February 27, 2006
Contracts of Carriage; Whether a person is negligent or not is a question of fact which this Court cannot pass upon
in a petition for review on certiorari, as the Supreme Court’s jurisdiction is limited to reviewing errors of law. As a
rule, factual findings of the trial court, affirmed by the CA, are final and conclusive and may not be reviewed on
appeal.—Whether a person is negligent or not is a question of fact which we cannot pass upon in a petition for
review on certiorari, as our jurisdiction is limited to reviewing errors of law. As a rule, factual findings of the trial
court, affirmed by the CA, are final and conclusive and may not be reviewed on appeal. The established exceptions
are: (1) when the inference made is manifestly mistaken, absurd or impossible; (2) when there is grave abuse of
discretion; (3) when the findings are grounded entirely on speculations, surmises or conjectures; (4) when the
judgment of the CA is based on misapprehension of facts; (5) when the findings of fact are conflicting; (6) when the
CA, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both
appellant and appellee; (7) when the findings of fact are conclusions without citation of specific evidence on which
they are based; (8) when the CA manifestly overlooked certain relevant facts not disputed by the parties and which,
if properly considered, would justify a different conclusion; and (9) when the findings of fact of the CA are
premised on the absence of evidence and are contradicted by the evidence on record.

Same; Same; Same; Contributory negligence is conduct on the part of the injured party, contributing as a legal cause
to the harm he has suffered, which falls below the standard to which he is required to conform for his own
protection.—We agree with petitioner that respondent Noe’s act of standing on the rear carrier of the Fiera exposing
himself to bodily injury is in itself negligence on his part. We find that the trial court and the CA erred when they
failed to consider that respondent Noe was also guilty of contributory negligence. Contributory negligence is
conduct on the part of the injured party, contributing as a legal cause to the harm he has suffered, which falls below
the standard to which he is required to conform for his own protection.

Same; Same; Same; It has been held that “to hold a person as having contributed to his injuries, it must be shown
that he performed an act that brought about his injuries in disregard of warnings or signs of an impending danger to
health and body. Respondent’s act of hanging on the Fiera is definitely dangerous to his life and limb.—It has been
established by the testimony of respondent Noe that he was with four or five other persons standing on the rear
carrier of the Fiera since it was already full. Respondent Noe’s act of standing on the left rear carrier portion of the
Fiera showed his lack of ordinary care and foresight that such act could cause him harm or put his life in danger. It
has been held that “to hold a person as having contributed to his injuries, it must be shown that he performed an act
that brought about his injuries in disregard of warning or signs of an impending danger to health and body.
Respondent Noe’s act of hanging on the Fiera is definitely dangerous to his life and limb.

Petitioner is presumed to be negligent in the selection and supervision of his employee by operation of law and may
be relieved of responsibility for the negligent acts of his driver, who at the time was acting within the scope of his
assigned task, only if he can show that he observed all the diligence of a good father of a family to prevent damage.
—As the employer of Gerosano, petitioner is primarily and solidarily liable for the quasi-delict committed by the
former. Petitioner is presumed to be negligent in the selection and supervision of his employee by operation of law
and may be relieved of responsibility for the negligent acts of his driver, who at the time was acting within the scope
of his assigned task, only if he can show that he observed all the diligence of a good father of a family to prevent
damage.

Same; Same; Same; The “diligence of a good father” referred to in the last paragraph of the statute means diligence
in the selection and supervision of employees. Thus, when an employee, while performing his duties, causes damage
to persons or property due to his own negligence, there arises the juris tantum presumption that the employer is
negligent, either in the selection of the employee or in the supervision over him after the selection.—In Yambao v.
Zuniga, 418 SCRA 266 (2003), we have clarified the meaning of the diligence of a good father of a family, thus:
The “diligence of a good father” referred to in the last paragraph of the aforecited statute means diligence in the
selection and supervision of employees. Thus, when an employee, while performing his duties, causes damage to
persons or property due to his own negligence, there arises the juris tantum presumption that the employer is
negligent, either in the selection of the employee or in the supervision over him after the selection. For the employer
to avoid the solidary liability for a tort committed by his employee, an employer must rebut the presumption by
presenting adequate and convincing proof that in the selection and supervision of his employee, he or she exercises
the care and diligence of a good father of a family. x x x

Same; Same; Same; Petitioner failed to show that he examined driver Gerosano as to his qualifications, experience
and service records.—Petitioner failed to show that he examined driver Gerosano as to his qualifications, experience
and service records. In fact, the testimony of driver Gerosano in his cross-examination showed the non-observance
of these requirements. Gerosano testified that petitioner was his first employer in Dumaguete and that he was
accepted by petitioner on the very day he applied for the job; that his driver’s license was issued in Mindanao where
he came from and that while petitioner asked him about his driving record in Mindanao, he did not present any
document of his driving record. Such admission clearly established that petitioner did not exercise due diligence in
the selection of his driver Gerosano.

Same; Same; Same; The underlying precept of the article on contributory negligence is that a plaintiff who is partly
responsible for his own injury should not be entitled to recover damages in full but must bear the consequences of
his own negligence.—Turning now to the award of damages, since there was contributory negligence on the part of
respondent Noe, petitioner’s liability should be mitigated in accordance with Article 2179 of the Civil Code which
provides: When the plaintiff’s own negligence was the immediate and proximate cause of his injury, he cannot
recover damages. But if his negligence was only contributory, the immediate and proximate cause of the injury
being the defendant’s lack of due care, the plaintiff may recover damages, but the courts shall mitigate the damages
to be awarded. The underlying precept of the above article on contributory negligence is that a plaintiff who is partly
responsible for his own injury should not be entitled to recover damages in full but must bear the consequences of
his own negligence. The defendant must thus be held liable only for the damages actually caused by his negligence.
Estacion vs. Bernardo, 483 SCRA 222, G.R. No. 144723 February 27, 2006

12.) Canco vs. Manila Railroad Company, G.R. No. L-12191 October 14, 1918
1.MASTER AND SERVANT; CONTRACT; NEGLIGENCE..—Failure to perform a contract cannot be excused
upon the ground that the breach was due to the negligence of a servant of the obligor, and that the latter exercised
due diligence in the selection and control of the servant.
2.CONTRACTS; NEGLIGENCE; CULPA AQUILIANA; CULPA CONTRACTUAL.—The distinction between
negligence as the source of an obligation (culpa aquiliana) and negligence in the performance of a contract (culpa
contractual) pointed out.
3.CARRIERS; PASSENGERS; NEGLIGENCE; ALIGHTING FROM MOVING TRAIN.—It is not negligence per
se for a traveler to alight from a slowly moving train. Cangco vs. Manila Railroad Co., 38 Phil. 768, No. 12191
October 14, 1918

13.) Del Prado vs. Manila Electric Co., G.R. No. L-29462, March 7, 1929
1.CARRIERS; STREET RAILWAY; PASSENGER BOARDING MOVING CAR; DUTY OF MOTORMAN NOT
TO INCREASE RISK.—Though there is no obligation on the part of a street railway company to stop its cars to
take on intending passengers at other points than those appointed for stoppage, nevertheless when the motorman
sees a person attempting to board the car while in motion, and at a place not appointed for stopping, he should not
do any act to increase the peril of such person; and if, in violation of this duty, the motorman in charge of a car
prematurely accelerates speed while the intending passenger is in the act of boarding the car, with the result that he
slips and gets his foot crushed under the wheel of the moving car, the company is civilly liable in damages.
2.ID.; ID.; ID.; OBLIGATION OF COMPANY TO PASSENGER.—The relation between a carrier of passengers
for hire and its patrons is of a contractual nature; and the failure upon part of the carrier to use due care in conveying
its passengers safely is a breach of obligation under article 1101, and related provisions, of the Civil Code.
Furthermore, the duty that the carrier of passengers owes to its patrons extends to persons boarding the. cars as well
as to those alighting theref rom.
3.MASTER AND SERVANT; NEGLIGENCE OF SERVANT; BREACH OF CONTRACTUAL DUTY.—The
defense indicated in the last paragraph of article 1903 of the Civil Code is not available to the master when his
servant is guilty of a breach of duty under article 1101 and related provisions of said Code.
4.NEGLIGENCE; CONTRIBUTORY NEGLIGENCE; MITIGATION OF DAMAGES.—Contributory negligence
upon part of a plaintiff, not amounting to the proximate cause of his injury, is not completely destructive of his right
of action in cases where liability arises from breach of a contractual duty; but such contributory negligence goes in
mitigation of damages, under article 1103 of the Civil Code. Del Prado vs. Manila Electric Co., 52 Phil. 900, No.
29462 March 7, 1929

14.) Briñas vs. People, G.R. No. L-30309 , November 25, 1983
Common Carriers; Torts; Evidence; It is common knowledge that as trains and buses slacken their speed and the
conductor announces the place of disembarkation, some passengers usually proceed to the nearest exit, especially of
trains.—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.

Same; Same; 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.”

Same; Same; Same.—That the announcement was premature and erroneous is shown by the fact that immediately
after the train slowed down, it unexpectedly accelerated to full speed. Petitioner-appellant failed to show any reason
why the train suddenly resumed its regular speed. The announcement was made while the train was still in Barrio
Lagalag.

Same; Same; Same.—The proximate cause of the death of the victims was the premature and erroneous
announcement of petitioner-appellant Briñas. This announcement prompted the two victims to stand and proceed to
the nearest exit. Without said announcement, the victims would have been safely seated in their respective seats
when the train jerked as it picked up speed. 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.

Same; Same; Action of passengers of going near train’s exit door on announcement of flagstop while train still
moving is at most merely contributory.—We have carefully examined the records and we agree with the respondent
court that the negligence of petitioner-appellant in prematurely and erroneously announcing the next flag stop was
the proximate cause of the deaths of Martina Bool and Emelita Gesmundo. Any negligence of the victims was at
most contributory and does not exculpate the accused from criminal liability.

Same; Same; Actions; Criminal Procedure; No error in awarding civil damages against driver in the criminal case
where separate civil action filed against employer only by heirs of train passengers.—The source of the obligation
sought to be enforced in Civil Case No. 5978 is culpa contractual, not an act or omission punishable by law. We also
note from the appellant’s arguments and from the title of the civil case that the party defendant is the Manila
Railroad Company and not petitioner-appellant Briñas. Culpa contractual and an act or omission punishable by law
are two distinct sources of obligation.

Same; Same; Same; Same; Same.—The trial court acted within its jurisdiction when, despite the filing with it of the
separate civil action against the Manila Railroad Company, it still awarded death indemnity in the judgment of
conviction against the petitioner-appellant.

Same; Same; Damages; 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.

Same; Same; Same; Where death results from crime there need not be witnesses to testify on the aspect of civil
damages as amount thereof is already a fixed and separate sum.—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.
Briñas vs. People, 125 SCRA 687, No. L-30309 November 25, 1983

15.) DANGWA Transportation vs. CA, G.R. No. 95582, October 7, 1991
Contract of carriage; Case at bar; The victim in the case at bar, by stepping and standing on the platform of the bus,
is already considered a passenger and is entitled to all the rights and protection pertaining to such a contractual
relation.—The victim herein, by stepping and standing on the platform of the bus, is already considered a passenger
and is entitled to all the rights and protection pertaining to such a contractual relation. Hence, it has been held that
the duty which the carrier of passengers owes to its patrons extends to persons boarding the cars as well as to those
alighting therefrom. Common carriers, from the nature of their business and for reasons of public policy, are bound
to observe extraordinary diligence for the safety of the passengers transported by them, according to all the
circumstances of each case. 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.

Same; Same; Extraordinary diligence; By the contract of carriage, the carrier assumes that 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.—It has also been repeatedly held that in an action based on a contract of carriage, the court
need not make an express finding of fault or negligence on the part of the carrier in order to hold it responsible to
pay the damages sought 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. This is an exception to the general rule that negligence must be proved, and it is therefore
incumbent upon the carrier to prove that it has exercised extraordinary diligence as prescribed in Articles 1733 and
1755 of the Civil Code.

Same; Same; Same; Negligence; The failure of the driver and the conductor to immediately bring the gravely injured
victim to the hospital for medical treatment is a patent and incontrovertible proof of their negligence.—Moreover,
the circumstances under which the driver and the conductor failed to bring the gravely injured victim immediately to
the hospital for medical treatment is a patent and incontrovertible proof of their negligence. It defies understanding
and can even be stigmatized as callous indifference. The evidence shows that after the accident the bus could have
forthwith turned at Bunk 56 and thence to the hospital, but its driver instead opted to first proceed to Bunk 70 to
allow a passenger to alight and to deliver a refrigerator, despite the serious condition of the victim. The vacuous
reason given by petitioners that it was the wife of the deceased who caused the delay was tersely and correctly
confuted by respondent court: "x x x The pretension of the appellees that the delay was due to the fact that they had
to wait for about twenty minutes for Inocencia Cudiamat to get dressed deserves scant consideration. It is rather
scandalous and deplorable for a wife whose husband is at the verge of dying to have the luxury of dressing herself
up for about twenty minutes before attending to help her distressed and helpless husband."

Same; Same; Damages; The amount recoverable by the heirs of a victim of a tort is not the loss of the entire
earnings, but the loss of that portion of the earnings which the beneficiary would have received.—With respect to
the award of damages, an oversight was, however, committed by respondent Court of Appeals in computing the
actual damages based on the gross income of the victim. The rule is that the amount recoverable by the heirs of a
victim of a tort is not the loss of the entire earnings, but rather the loss of that portion of the earnings which the
beneficiary would have received. In other words, only net earnings, not gross earnings, are to be considered, that is,
the total of the earnings less expenses necessary in the creation of such earnings or income and minus living and
other incidental expenses. Dangwa Transportation Co., Inc. vs. Court of Appeals, 202 SCRA 574, G.R. No. 95582
October 7, 1991

16.) Isaac v. A.L. Ammen Transportation Co. Inc., G.R. No. L-9671, August 23, 1957
1.PUBLIC UTILITIES; PRINCIPLES GOVERNING LIABILITY OF COMMON CARRIER.—The following are
the principles governing the liability of a common carrier: (1) the liability of a carrier is contractual and arises upon
breach of its obligation. There is a breach if it f ails to exert extraordinary diligence according to all the
circumstances of each case; (2) a carrier is obliged to carry its passenger with the utmost diligence of a very cautious
person, having due regard for all circumstances; (3) a carrier is presumed to be at f ault or to have acted negligently
in case of death of, or injury to, passengers, it being its duty to prove that it exercised extraordinary diligence; and
(4) the carrier is not an insurer against all risks of travel.
2.ID. ; ID. ; CONTRIBUTORY NEGLIGENCE OF PASSENGER MILITATES AGAINST His CLAIM; CASE AT
BAR.—A circumstance which militates against the stand of appellant is the fact borne out by the evidence that when
he boarded the bus in question, he seated himself on the left side thereof resting his left arm on the window sill but
with his left elbow outside the window, this being his position in the bus when the collision took place. It is for this
reason that the collision resulted in the severance of said left arm from the body of appellant thus doing him a great
damage. It is therefore apparent that appellant is guilty of contributory negligence. Isaac vs. A. L. Ammen Trans.
Co., Inc., 101 Phil. 1046, No. L-9671 August 23, 1957

17.) Manila Railroad vs. Ballesteros, G.R. No. L-19161, April 29, 1966
Common carriers; Liability for injuries suffered by passengers on account of willful acts or negligence of strangers.
— A common carrier is liable for injuries suffered by its passengers due to the wilful 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 (Art. 1763, New Civil Code).

Motor Vehicle Law.—A common carrier is liable for damages arising from the negligence of its driver in allowing
another person to drive his vehicle (Sec. 48[b], Motor Vehicle Law).

Compromise; Effect of negotiations for compromise.—Negotiations between the common carrier and the injured
passengers for the settlement of the latter’s claims may indicate that the carrier is really liable for damages,
especially considering that its counsel advised that a reasonable settlement be made. , 16 SCRA 641, No. L-19161
April 29, 1966

18.) Fortune Express vs. CA and Caorong, G.R. No. 119756. March 18, 1999
Common Carriers; A common carrier can be held liable for failing to prevent a hijacking by frisking passengers and
inspecting their baggages.—Had petitioner and its employees been vigilant they would not have failed to see that the
malefactors had a large quantity of gasoline with them. Under the circumstances, simple precautionary measures to
protect the safety of passengers, such as frisking passengers and inspecting their baggages, preferably with non-
intrusive gadgets such as metal detectors, before allowing them on board could have been employed without
violating the passenger’s constitutional rights. As this Court intimated in Gacal v. Philippine Air Lines, Inc., a
common carrier can be held liable for failing to prevent a hijacking by frisking passengers and inspecting their
baggages.

Same; Same; Definition of Fortuitous Event; Requisites in order that an event may be considered as force majeure.
—Art. 1174 of the Civil Code defines a fortuitous event as an occurrence which could not be foreseen or which
though foreseen, is inevitable. In Yobido v. Court of Appeals, we held that to be considered as force majeure, it is
necessary that: (1) the cause of the breach of the obligation must be independent of the human will; (2) the event
must be either unforeseeable or unavoidable; (3) the occurrence must be such as to render it impossible for the
debtor to fulfill the obligation in a normal manner; and (4) the obligor must be free of participation in, or
aggravation of, the injury to the creditor. The absence of any of the requisites mentioned above would prevent the
obligor from being excused from liability.

Same; Same; Damages; Indemnity for death fixed at P50,000.00.—Indemnity for Death. Art. 1764 of the Civil
Code, in relation to Art. 2206 thereof, provides for the payment of indemnity for the death of passengers caused by
the breach of contract of carriage by a common carrier. Initially fixed in Art. 2206 at P3,000.00, the amount of the
said indemnity for death has through the years been gradually increased in view of the declining value of the peso. It
is presently fixed at P50,000.00. Private respondents are entitled to this amount. Fortune Express, Inc. vs. Court of
Appeals, 305 SCRA 14, G.R. No. 119756 March 18, 1999

19.) PAL vs. BUNCIO Philippine Airlines Inc. vs. CA, G.R. No. 123238, September 22, 2008
Common Carriers; Air Transportation; Contract of Carriage; When an airline issues a ticket to a passenger,
confirmed for a particular flight on a certain date, a contract of carriage arises—the passenger has every right to
expect that he be transported on that flight and on that date, and it becomes the airline’s obligation to carry him and
his luggage safely to the agreed destination without delay.—When an airline issues a ticket to a passenger,
confirmed for a particular flight on a certain date, a contract of carriage arises.

The passenger has every right to expect that he be transported on that flight and on that date, and it becomes the
airline’s obligation to carry him and his luggage safely to the agreed destination without delay. If the passenger is
not so transported or if in the process of transporting, he dies or is injured, the carrier may be held liable for a breach
of contract of carriage.

Same; Same; Same; Damages; Words and Phrases; “Gross Negligence,” Explained; In breach of contract of air
carriage, moral damages may be recovered where the negligence of the carrier is so gross and reckless as to virtually
amount to bad faith.—In breach of contract of air carriage, moral damages may be recovered where (1) the mishap
results in the death of a passenger; or (2) where the carrier is guilty of fraud or bad faith; or (3) where the negligence
of the carrier is so gross and reckless as to virtually amount to bad faith. Gross negligence implies a want or absence
of or failure to exercise even slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard
of consequences without exerting any effort to avoid them.

Same; Same; Same; A common carrier is bound by law to exercise extraordinary diligence and utmost care in
ensuring for the safety and welfare of its passengers with due regard for all the circumstances.—It is worth
emphasizing that petitioner, as a common carrier, is bound by law to exercise extraordinary diligence and utmost
care in ensuring for the safety and welfare of its passengers with due regard for all the circumstances. The negligent
acts of petitioner signified more than inadvertence or inattention and thus constituted a radical departure from the
extraordinary standard of care required of common carriers.

Same; Same; Same; Damages; The award of exemplary damages is warranted where the air carrier acted recklessly
and malevolently in transporting the passengers, and its gross negligence amounting to bad faith entitled the latter to
moral damages.—Article 2232 of the Civil Code provides that exemplary damages may be awarded in a breach of
contract if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. In addition,
Article 2234 thereof states that the plaintiff must show that he is entitled to moral damages before he can be awarded
exemplary damages. As we have earlier found, petitioner breached its contract of carriage with private respondents,
and it acted recklessly and malevolently in transporting Deanna and Nikolai as unaccompanied minors and in
handling their indemnity bond. We have also ascertained that private respondents are entitled to moral damages
because they have sufficiently established petitioner’s gross negligence which amounted to bad faith. This being the
case, the award of exemplary damages is warranted.

Judgments; Attorney’s Fees; The matter of attorney’s fees cannot be dealt with only in the dispositive portion of the
decision—the text of the decision must state the reason behind the award of attorney’s fees.—Current jurisprudence
instructs that in awarding attorney’s fees, the trial court must state the factual, legal, or equitable justification for
awarding the same, bearing in mind that the award of attorney’s fees is the exception, not the general rule, and it is
not sound public policy to place a penalty on the right to litigate; nor should attorney’s fees be awarded every time a
party wins a lawsuit. The matter of attorney’s fees cannot be dealt with only in the dispositive portion of the
decision. The text of the decision must state the reason behind the award of attorney’s fees. Otherwise, its award is
totally unjustified. In the instant case, the award of attorney’s fees was merely cited in the dispositive portion of the
RTC decision without the RTC stating any legal or factual basis for said award. Hence, the Court of Appeals erred
in sustaining the RTC’s award of attorney’s fees. Philippine Airlines, Incorporated vs. Court of Appeals, 566 SCRA
124, G.R. No. 123238 September 22, 2008

20.) Vasquez vs CA, G.R. No. 144882. February 04, 2005

Same; Same; Same; A nunc pro tunc judgment cannot correct judicial error nor supply nonaction by the court.—
From the above characterization of a nunc pro tunc judgment it is clear that the judgment petitioner sought through
the motion for clarificatory judgment is outside its scope. Petitioners did not allege that the Court of Appeals
actually took judicial action and that such action was not included in the Court of Appeals’ Decision by
inadvertence. A nunc pro tunc judgment cannot correct judicial error nor supply nonaction by the court.

Civil Law; Property; Mortgages; The consolidation of ownership in the person of the mortgagee in equity, merely
upon failure of the mortgagor in equity to pay the obligation, would amount to a pactum commissorium; An action
for consolidation of ownership is an inappropriate remedy on the part of the mortgagee in equity; The only proper
remedy is to cause the foreclosure of the mortgage in equity.— Applying the principle of pactum commissorium
specifically to equitable mortgages, in Montevirgen v. CA, the Court enunciated that the consolidation of ownership
in the person of the mortgagee in equity, merely upon failure of the mortgagor in equity to pay the obligation, would
amount to a pactum commissorium. The Court further articulated that an action for consolidation of ownership is an
inappropriate remedy on the part of the mortgagee in equity. The only proper remedy is to cause the foreclosure of
the mortgage in equity. And if the mortgagee in equity desires to obtain title to the mortgaged property, the
mortgagee in equity may buy it at the foreclosure sale. Briones-Vasquez vs. Court of Appeals, 450 SCRA 482, G.R.
No. 144882 February 4, 2005

21.) Aboitiz Shipping vs. CA, G.R. No. 84458 November 6, 1989
Torts and Damages; Common Carriers; Carrier-passenger relationship continues until the passenger has been landed
at the port of destination and has left the vessel-owner’s premises.—The rule is that the relation of carrier and
passenger continues until the passenger has been landed at the port of destination and has left the vessel owner’s
dock or premises. Once created, the relationship will not ordinarily terminate until the passenger has, after reaching
his destination, safely alighted from the carrier’s conveyance or had a reasonable opportunity to leave the carrier’s
premises. All persons who remain on the premises a reasonable time after leaving the conveyance are to be deemed
passengers, and what is a reasonable time or a reasonable delay within this rule is to be determined from all the
circumstances, and includes a reasonable time to see after his baggage and prepare for his departure. The carrier-
passenger relationship is not terminated merely by the fact that the person transported has been carried to his
destination if, for example, such person remains in the carrier’s premises to claim his baggage.

Same; Same; Same; Reasonableness of time should be made to depend on the attending circumstances, such as the
kind of common carrier; the victim’s presence in the petitioner’s premises after the lapse of one hour from the time
he disembarked from the vessel is justified, hence he is deemed still a passenger when the accident occurred.—It is
apparent from the foregoing that what prompted the Court to rule as it did in said case is the fact of the passenger’s
reasonable presence within the carrier’s premises. That reasonableness of time should be made to depend on the
attending circumstances of the case, such as the kind of common carrier, the nature of its business, the customs of
the place, and so forth, and therefore precludes a consideration of the time element per se without taking into
account such other factors. It is thus of no moment whether in the cited case of La Mallorca there was no
appreciable interregnum for the passenger therein to leave the carrier’s premises whereas in the case at bar, an
interval of one (1) hour had elapsed before the victim met the accident. The primary factor to be considered is the
existence of a reasonable cause as will justify the presence of the victim on or near the petitioner’s vessel. We
believe there exists such a justifiable cause. It is of common knowledge that, by the very nature of petitioner’s
business as a shipper, the passengers of vessels are allotted a longer period of time to disembark from the ship than
other common carriers such as a passenger bus. x x x It is not definitely shown that one (1) hour prior to the
incident, the victim had already disembarked from the vessel. Petitioner failed to prove this. What is clear to us is
that at the time the victim was taking his cargoes, the vessel had already docked an hour earlier. In consonance with
common shipping procedure as to the minimum time of one (1) hour allowed for the passengers to disembark, it
may be presumed that the victim had just gotten off the vessel when he went to retrieve his baggage. Yet, even if he
had already disembarked an hour earlier, his presence in petitioner’s premises was not without cause. The victim had
to claim his baggage which was possible only one (1) hour after the vessel arrived since it was admittedly standard
procedure in the case of petitioner’s vessels that the unloading operations shall start only after that time.
Consequently, under the foregoing circumstances, the victim Anacleto Viana is still deemed a passenger of said
carrier at the time of his tragic death.

Same; Same; Same; 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 carrier by the latter’s failure to carry the passenger safely
to his destination.—Under the law, common carriers are, from the nature of their business and for reasons of public
policy, 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. More particularly, 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. Thus, where a passenger dies or is injured, the
common carrier is presumed to have been at fault or to have acted negligently. This gives rise to an action for breach
of contract of carriage where all that is required of plaintiff is to prove the existence of the contract of carriage and
its non-performance by the carrier, that is, the failure of the carrier to carry the passenger safely to his destination,
which, in the instant case, necessarily includes its failure to safeguard its passenger with extraordinary diligence
while such relation subsists.

Same; Same; Contributory Negligence; Proximate Cause; Petitioner’s failure to exercise extra-ordinary diligence
was the proximate and direct cause of the victim’s death, thereby making them liable, notwithstanding the victim’s
contributory negligence.—While the victim was admittedly contributorily negligent, still petitioner’s aforesaid
failure to exercise extraordinary diligence was the proximate and direct cause of, because it could definitely have
prevented, the former’s death. Moreover, in paragraph 5.6 of its petition, at bar, petitioner has expressly conceded
the factual finding of respondent Court of Appeals that petitioner did not present sufficient evidence in support of its
submission that the deceased Anacleto Viana was guilty of gross negligence. Petitioner cannot now be heard to
claim otherwise. Aboitiz Shipping Corporation vs. Court of Appeals, 179 SCRA 95, G.R. No. 84458 November 6,
1989

22.) Sps. Zalamea vs. CA G.R. No. 104235 November 18, 1993
Contract of Carriage; Damages; Overbooking amounts to bad faith, entitling the passengers to award of moral
damages.—Existing jurisprudence explicitly states that overbooking amounts to bad faith, entitling the passengers
concerned to an award of moral damages. In Alitalia Airways v. Court of Appeals, where passengers with confirmed
bookings were refused carriage on the last minute, this Court held that when an airline issues a ticket to a passenger
confirmed on a particular flight, on a certain date, a contract of carriage arises, and the passenger has every right to
expect that he would fly on that flight and on that date. If he does not, then the carrier opens itself to a suit for breach
of contract of carriage. Where an airline had deliberately overbooked, it took the risk of having to deprive some
passengers of their seats in case all of them would show up for check in. For the indignity and inconvenience of
being refused a confirmed seat on the last minute, said passenger is entitled to an award of moral damages.

Same; Same; Where an airline acted in bad faith in violating the passenger’s rights under their contract of carriage, it
is liable for injuries that the passenger sustained as a result.—Similarly, in Korean Airlines Co., Ltd. v. Court of
Appeals, where private respondent was not allowed to board the plane because her seat had already been given to
another passenger even before the allowable period for passengers to check in had lapsed despite the fact that she
had a confirmed ticket and she had arrived on time, this Court held that petitioner airline acted in bad faith in
violating private respondent’s rights under their contract of carriage and is therefore liable for the injuries she has
sustained as a result.

Same; Same; Award of damages is proper where a confirmed passenger included in the manifest was denied
accommodation in such flight.—In fact, existing jurisprudence abounds with rulings where the breach of contract of
carriage amounts to bad faith. In Pan American World Airways, Inc. v. Intermediate Appellate Court, where a
would-be passenger had the necessary ticket, baggage claim and clearance from immigration all clearly and
unmistakably showing that she was indeed a confirmed passenger and that she was, in fact, included in the
passenger manifest for said flight, and yet was denied accommodation in said flight, this Court did not hesitate to
affirm the lower court’s finding awarding her damages.

Same; Same; Inattention and lack of care for the interest of its passengers who are entitled to its utmost
consideration entitles the passenger to an award of moral damages.—A contract to transport passengers is quite
different in kind and degree from any other contractual relation. So ruled this Court in Zulueta v. Pan American
World Airways, Inc. This is so, for a contract of carriage generates a relation attended with public duty—a duty to
provide public service and convenience to its passengers which must be paramount to self-interest or enrichment.
Thus, it was also held that the switch of planes from Lockheed 1011 to a smaller Boeing 707 because there were
only 138 confirmed economy class passengers who could very well be accommodated in the smaller planes, thereby
sacrificing the comfort of its first class passengers for the sake of economy, amounts to bad faith. Such inattention
and lack of care for the interest of its passengers who are entitled to its utmost consideration entitles the passenger to
an award of moral damages.

Same; Same; Respondent TWA airline is still guilty of bad faith even if overbooking is allowed if it did not properly
inform passengers that it could breach the contract of carriage even if they were confirmed passengers.—Even on
the assumption that overbooking is allowed, respondent TWA is still guilty of bad faith in not informing its
passengers beforehand that it could breach the contract of carriage even if they have confirmed tickets if there was
overbooking. Respondent TWA should have incorporated stipulations on overbooking on the tickets issued or to
properly inform its passengers about these policies so that the latter would be prepared for such eventuality or would
have the choice to ride with another airline.

Same; Same; Respondent TWA was also guilty of not informing its passengers of its policy of giving less priority to
discounted tickets.—Moreover, respondent TWA was also guilty of not informing its passengers of its alleged
policy of giving less priority to discounted tickets. While the petitioners had checked in at the same time, and held
confirmed tickets, yet, only one of them was allowed to board the plane ten minutes before departure time because
the full-fare ticket he was holding was given priority over discounted tickets. The other two petitioners were left
behind.

Same; Same; In placing self-interest over the rights of its passengers and such conscious disregard of its passengers’
rights, respondent airline is liable for moral damages.—It is respondent TWA’s position that the practice of
overbooking and the airline system of boarding priorities are reasonable policies, which when implemented do not
amount to bad faith. But the issue raised in this case is not the reasonableness of said policies but whether or not said
policies were incorporated or deemed written on petitioner’s contracts of carriage. Respondent TWA failed to show
that there are provisions to that effect. Neither did it present any argument of substance to show that petitioners were
duly apprised of the overbooked condition of the flight or that there is a hierarchy of boarding priorities in booking
passengers. It is evident that petitioners had the right to rely upon the assurance of respondent TWA, thru its agent in
Manila, then in New York, that their tickets represented confirmed seats without any qualification. The failure of
respondent TWA to so inform them when it could easily have done so thereby enabling respondent to hold on to
them as passengers up to the last minute amounts to bad faith. Evidently respondent TWA placed its self-interest
over the rights of petitioners under their contracts of carriage. Such conscious disregard of petitioners’ rights makes
respondent TWA liable for moral damages.

Civil Law; Contract; Respondent airline is responsible for all damages which may be reasonably attributed to the
non-performance of its obligations.—The respondent court erred, however, in not ordering the refund of the cost of
the American Airlines tickets purchased and used by petitioners Suthira and Liana. The evidence shows that
petitioners Suthira and Liana were constrained to take the American Airlines flight to Los Angeles not because they
“opted not to use their TWA tickets on another TWA flight” but because respondent TWA could not accommodate
them either on the next TWA flight which was also fully booked. The purchase of the American Airlines tickets by
petitioners Suthira and Liana was the consequence of respondent TWA’s unjustifiable breach of its contracts of
carriage with petitioners. In accordance with Article 2201, New Civil Code, respondent TWA should, therefore, be
responsible for all damages which may be reasonably attributed to the non-performance of its obligation. In the
previously cited case of Alitalia Airways v. Court of Appeals, this Court explicitly held that a passenger is entitled to
be reimbursed for the cost of the tickets he had to buy for a flight on another airline. Thus, instead of simply being
refunded for the cost of the unused TWA tickets, petitioners should be awarded the actual cost of their flight from
New-York to Los Angeles. On this score, we differ from the trial court’s ruling which ordered not only the
reimbursement of the American Airlines tickets but also the refund of the unused TWA tickets. To require both
prestations would have enabled petitioners to fly from New York to Los Angeles without any fare being paid.
Zalamea vs. Court of Appeals, 228 SCRA 23, G.R. No. 104235 November 18, 1993
23.) Zulueta vs. Pan Am G.R. No. L-28589 January 8, 1973
Civil law; Damages; Case at bar, no contributory negligence on part of plaintiff.—The argument that plaintiff was
guilty of contributory negligence for failure to reboard the plane within the 30 minutes announced before the
passengers debarked therefrom, might have justified a reduction of damages, had plaintiff been unwittingly left by
the plane, owing to the negligence of airline personnel, or even, perhaps, wittingly, if he could not be found before
the plane’s departure. It does not and can not have such justification in the case at bar, plaintiff having shown up
before the plane had taken off, and he having been off-loaded intentionally and with malice aforethought.

Same; Same; Incidents justifying award of moral damages.—Indeed, the rude and rough reception plaintiff received
at the hands of Sitton or Captain Zentner when the latter met him at the ramp; the menacing attitude of Zentner or
Sitton and the supercilious manner in which he had asked plaintiff to open his bags and when told that a fourth bag
was missing; the abusive language and highly scornful reference to plaintiffs as monkey s by one of the airline’s
employees; the unfriendly attitude, the ugly stares and the unkind remarks to which plaintiffs were subjected, and
their being cordoned by men in uniform as if they were criminals, while plaintiff was arguing with Sitton; the airline
officials’ refusal to allow plaintiff to board the plane on the pretext that he was hiding a bomb in his luggage and
their arbitrary and high-handed decision to leave him in Wake; Mrs. Zulueta’s having suffered a nervous breakdown
for which she was hospitalized as a result of the embarassment, insults and humiliations to which plaintiffs were
exposed by the conduct of the airline’s employees; Miss Zulueta’s having suffered shame, humiliation and
embarrassment for the treatment received by her parents at the airport—all these justify an award for moral
damages.

Commercial law; Common carriers; Duties of carriers to their passengers.—A contract to transport passengers is
quite different in kind and degree from any other contractual relation. And this, because of the relation which an air-
carrier sustains with the public. Its business is mainly with the travelling public. It invites people to avail of the
comforts and advantages it offers. The contract of air carriage, therefore, generates a relation attended with a public
duty. Neglect or malfeasance of the carrier’s employees, naturally, could give ground for an action for damages.

Same; Same; Rights of passengers aboard a carrier.—Passengers do not contract merely for transportation. They
have a right to be treated by the carrier’s employees with kindness, respect, courtesy and due consideration. They are
entitled to be protected against personal misconduct, injurious language, indignities and abuses from such
employees. So it is, that any rude or discourteous conduct on the part of employees towards a passenger give the
latter an action for damages against the carrier.

Civil law; Damages; Factors to consider in assessing moral damages.—Among the factors courts take into account
in assessing moral damages are the professional, social, political and financial standing of the offended parties on
one hand, and the business and financial position of the offender on the other.

Same; Same; Awards for moral damages reduced where plaintiff contributed to gravity of defendant’s reaction.—To
some extent, however, plaintiff had contributed to the gravity of the situation because of the extreme belligerence
with which he had reacted on the occasion. We do not overlook the fact that he justly believed he should uphold and
defend his dignity and that of the people of this country; that the discomfort, the difficulties, and, perhaps, the ordeal
through which he had gone to relieve himself—which were unknown to the airline’s agents Zulueta vs. Pan
American World Airways, Inc., 43 SCRA 397, No. L-28589 February 29, 1972

24.) Cangco vs. Manila Railroad, G.R. No. L-12191 October 14, 1918
1.MASTER AND SERVANT; CONTRACT; NEGLIGENCE..—Failure to perform a contract cannot be excused
upon the ground that the breach was due to the negligence of a servant of the obligor, and that the latter exercised
due diligence in the selection and control of the servant.

2.CONTRACTS; NEGLIGENCE; CULPA AQUILIANA; CULPA CONTRACTUAL.—The distinction between

negligence as the source of an obligation (culpa aquiliana) and negligence in the performance of a contract (culpa
contractual) pointed out.

3.CARRIERS; PASSENGERS; NEGLIGENCE; ALIGHTING FROM MOVING TRAIN.—It is not negligence per
se for a traveler to alight from a slowly moving train. Cangco vs. Manila Railroad Co., 38 Phil. 768, No. 12191
October 14, 1918