JG SUMMIT HOLDINGS VS COURT OF APPEALS

G.R. No. 124293 January 31, 2005

FACTS: National Investment and Development Corporation (NIDC) and Kawasaki Heavy Industries entered
into a Joint Venture Agreement in a shipyard business named PHILSECO, with a shareholding of 60-40
respectively. NIDCs interest was later transferred to the National Government.
Pursuant to President Aquinos Proclamation No.5, which established the Committee on Privatization (COP)
and Asset Privatization Trust (APT), and allowed for the disposition of the governments non-performing assets,
the latter allowed Kawasaki Heavy Industries to choose a company to which it has stockholdings, to top the
winning bid of JG Summit Holdings over PHILSECO. JG Summit protested alleging that such act would
effectively increase Kawasakis interest in PHILSECOa shipyard is a public utility--and thus violative of the
Constitution.
ISSUE: Whether or not respondents act is valid.
HELD: No. In arguing that PHILSECO, as a shipyard, was a public utility, JG Summit relied on sec. 13, CA
No. 146. On the other hand, Kawasaki/PHI argued that PD No. 666 explicitly stated that a shipyard was not a
public utility. But the SC stated that sec. 1 of PD No. 666 was expressly repealed by sec. 20, BP Blg. 391 and
when BP Blg. 391 was subsequently repealed by EO 226, the latter law did not revive sec. 1 of PD No. 666.
Therefore, the law that states that a shipyard is a public utility still stands.
A shipyard such as PHILSECO being a public utility as provided by law is therefore required to comply with
the 60%-40% capitalization under the Constitution. Likewise, the JVA between NIDC and Kawasaki manifests
an intention of the parties to abide by this constitutional mandate. Thus, under the JVA, should the NIDC opt to
sell its shares of stock to a third party, Kawasaki could only exercise its right of first refusal to the extent that its
total shares of stock would not exceed 40% of the entire shares of stock. The NIDC, on the other hand,
may purchase even beyond 60% of the total shares. As a government corporation and necessarily a 100%
Filipino-owned corporation, there is nothing to prevent its purchase of stocks even beyond 60% of the
capitalization as the Constitution clearly limits only foreign capitalization.
TATAD VS GARCIA, JR.
243 SCRA 593
DOCTRINE: In law, there is a clear distinction between the "operation" of a public utility and the ownership of
the facilities and equipment used to serve the public. The right to operate a public utility may exist
independently and separately from the ownership of the facilities thereof. One can own said facilities without
operating them as a public utility, or conversely, one may operate a public utility without owning the facilities
used to serve the public. The devotion of property to serve the public may be done by the owner or by the
person in control thereof who may not necessarily be the owner thereof.

FACTS: In 1989, the government planned to build a railway transit line along EDSA. No bidding was made but
certain corporations were invited to prequalify. The only corporation to qualify was the EDSA LRT Consortium
which was obviously formed for this particular undertaking. An agreement was then made between the
government, through the Department of Transportation and Communication (DOTC), and EDSA LRT
Consortium. The agreement was based on the Build-Operate-Transfer scheme provided for by law (RA 6957,
Page 1

amended by RA 7718). Under the agreement, EDSA LRT Consortium shall build the facilities, i.e., railways,
and shall supply the train cabs. Every phase that is completed shall be turned over to the DOTC and the latter
shall pay rent for the same for 25 years. By the end of 25 years, it was projected that the government shall have
fully paid EDSA LRT Consortium. Thereafter, EDSA LRT Consortium shall sell the facilities to the government
for $1.00.
However, Senators Francisco Tatad, John Osmea, and Rodolfo Biazon opposed the implementation of said
agreement as they averred that EDSA LRT Consortium is a foreign corporation as it was organized under
Hongkong laws; that as such, it cannot own a public utility such as the EDSA railway transit because this falls
under the nationalized areas of activities. The petition was filed against Jesus Garcia, Jr. in his capacity as
DOTC Secretary.
ISSUE: Whether or not the petition shall prosper.
HELD: No. The Supreme Court made a clarification. The SC ruled that EDSA LRT Consortium, under the
agreement, does not and will not become the owner of a public utility hence, the question of its nationality is
misplaced. It is true that a foreign corporation cannot own a public utility but in this case what EDSA LRT
Consortium will be owning are the facilities that it will be building for the EDSA railway project. There is no
prohibition against a foreign corporation to own facilities used for a public utility. Further, it cannot be said that
EDSA LRT Consortium will be the one operating the public utility for it will be DOTC that will operate the
railway transit. DOTC will be the one exacting fees from the people for the use of the railway and from the
proceeds, it shall be paying the rent due to EDSA LRT Consortium. All that EDSA LRT Consortium has to do is
to build the facilities and receive rent from the use thereof by the government for 25 years it will not operate
the railway transit. Although EDSA LRT Consortium is a corporation formed for the purpose of building a
public utility it does not automatically mean that it is operating a public utility. The moment for determining the
requisite Filipino nationality is when the entity applies for a franchise, certificate or any other form of
authorization for that purpose.

BRITISH AIRWAYS VS COURT OF APPEALS

218 SCRA 699
DOCTRINE: A cause of action is an act or omission of one party in violation of the legal right or rights of the
other. Petitioner's repeated failures to transport private respondent's workers in its flight despite confirmed
booking of said workers clearly constitutes breach of contract and bad faith on its part.

FACTS: On April 6, 1989, Mahtani decided to visit his relative in Bombay, India. In anticipation of his visit,
he obtained the services of a certain Mr. Gemar to prepare his travel plan. Since british Airways had no ticket
flights from Manila to Bombay, Maktani had to take a connecting flight to Bombay on board British Airways.
Prior to his departure, Maktani checked in the PAL counter in Manila his two pieces of luggage containing his
clothing and personal effects, confident that upon reaching Hong Kong, the same would be transferred to the
Page 2

BA flight bound for Bombay, Unfortunately, when Maktani arrived in Bombay, he discovered that his luggage
was missing and that upon inquiry from the BA representatives, he was told that the same might have been
diverted to London. After plaintiff waiting for his luggage for one week, BA finally advised him to file a claim
accomplishing the property.

ISSUE: Whether or not defendant BA is liable for compulsory damages and attorneys fee, as well as the
dismissal of its third party complaint against PAL

HELD: The contract of transportation was exclusively between Maktani and BA. The latter merely endorsing
the Manila to Hong Kong log of the formers journey to PAL, as its subcontractor or agent. Conditions of
contacts was one of continuous air transportation from Manila to Bombay. 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. Since the
instant petition was based on breach of contract of carriage, Maktani can only sue BA and not PAL, since the
latter was not a party in the contract.

DE GUZMAN VS. COURT OF APPEALS

168 SCRA 612
DOCTRINE: Article 1732 makes no distinction between one whose principal business activity is the carrying
of persons or goods or both, and one who does such carrying only as an ancillary activity (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.
FACTS: Respondent Ernesto Cendana was a junk dealer. He buys scrap materials and brings those that he
gathered to Manila for resale using 2 six-wheeler trucks. On the return trip to Pangasinan, respondent would
load his vehicle with cargo which various merchants wanted delivered, charging fee lower than the commercial
rates. Sometime in November 1970, petitioner Pedro de Guzman contracted with respondent for the delivery of
750 cartons of Liberty Milk. On December 1, 1970, respondent loaded the cargo. Only 150 boxes were
delivered to petitioner because the truck carrying the boxes was hijacked along the way. Petitioner commenced
an action claiming the value of the lost merchandise. Petitioner argues that respondent, being a common carrier,
is bound to exercise extraordinary diligence, which it failed to do. Private respondent denied that he was a
common carrier, and so he could not be held liable for force majeure. The trial court ruled against the
respondent, but such was reversed by the Court of Appeals.
ISSUE: Whether or not private respondent is a common carrier
Page 3

HELD: Article 1732 makes no distinction between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only as an ancillary activity. Article 1732 also
carefully avoids making any distinction between a person or enterprise offering transportation service on a
regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis.
Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the
general community or population, and one who offers services or solicits business only from a narrow segment
of the general population. It appears to the Court that private respondent is properly characterized as a common
carrier even though he merely "back-hauled" goods for other merchants from Manila to Pangasinan, although
such backhauling was done on a periodic or occasional rather than regular or scheduled manner, and even
though private respondent's principal occupation was not the carriage of goods for others. There is no dispute
that private respondent charged his customers a fee for hauling their goods; that fee frequently fell below
commercial freight rates is not relevant here. A certificate of public convenience is not a requisite for the
incurring of liability under the Civil Code provisions governing common carriers.

FIRST PHILIPPINE INDUSTRIAL CORP. VS. CA

300 SCRA 661
DOCTRINE: Oil pipeline operators are common carriers. 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.
FACTS: Petitioner is a grantee of a pipeline concession under Republic Act No. 387. Sometime in January
1995, petitioner applied for mayors permit in Batangas. However, the Treasurer required petitioner to pay a
local tax based on gross receipts amounting to P956,076.04. In order not to hamper its operations, petitioner
paid the taxes for the first quarter of 1993 amounting to P239,019.01 under protest. On January 20, 1994,
petitioner filed a letter-protest to the City Treasurer, claiming that it is exempt from local tax since it is engaged
in transportation business. The respondent City Treasurer denied the protest, thus, petitioner filed a complaint
before the Regional Trial Court of Batangas for tax refund. Respondents assert that pipelines are not included in
the term common carrier which refers solely to ordinary carriers or motor vehicles. The trial court dismissed
the complaint, and such was affirmed by the Court of Appeals.
ISSUE: Whether a pipeline business is included in the term common carrier so as to entitle the petitioner to
the exemption
HELD: 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."
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;
Page 4

(2) He must undertake to carry goods of the kind to which his business is confined;
(3) He must undertake to carry by the method by which his business is conducted and over his established
roads; and
(4) The transportation must be for hire.
Based on the above definitions and requirements, there is no doubt that petitioner is a common carrier. It is
engaged in the business of transporting or carrying goods, i.e. petroleum products, for hire as a public
employment. It undertakes to carry for all persons indifferently, that is, to all persons who choose to employ its
services, and transports the goods by land and for compensation. The fact that petitioner has a limited clientele
does not exclude it from the definition of a common carrier.

FGU INSURANCE CORP. VS. G.P. SARMIENTO TRUCKING CORP.

G.R. No. 141910, August 6, 2002
DOCTRINE: 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.
FACTS: G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver on 18 June 1994 thirty (30) units of
Condura S.D. white refrigerators aboard one of its Isuzu truck, driven by Lambert Eroles, from the plant site of
Concepcion Industries, Inc., along South Superhighway in Alabang, Metro Manila, to the Central Luzon
Appliances in Dagupan City. While the truck was traversing the north diversion road along McArthur highway
in Barangay Anupol, Bamban, Tarlac, it collided with an unidentified truck, causing it to fall into a deep canal,
resulting in damage to the cargoes.
FGU Insurance Corporation (FGU), an insurer of the shipment, paid to Concepcion Industries, Inc., the value of
the covered cargoes in the sum of P204,450.00. FGU, in turn, being the subrogee of the rights and interests of
Concepcion Industries, Inc., sought reimbursement of the amount it had paid to the latter from GPS. Since the
trucking company failed to heed the claim, FGU filed a complaint for damages and breach of contract of
carriage against GPS and its driver Lambert Eroles with the Regional Trial Court, Branch 66, of Makati City. In
its answer, respondents asserted that GPS was the exclusive hauler only of Concepcion Industries, Inc., since
1988, and it was not so engaged in business as a common carrier. Respondents further claimed that the cause of
damage was purely accidental.
The issues having thus been joined, FGU presented its evidence, establishing the extent of damage to the
cargoes and the amount it had paid to the assured. GPS, instead of submitting its evidence, filed with leave of
court a motion to dismiss the complaint by way of demurrer to evidence on the ground that petitioner had failed
to prove that it was a common carrier.

ISSUE: Whether or not GPS falls under the category of a common carrier.
Page 5

HELD: Note that GPS is an exclusive contractor and hauler of Concepcion Industries, Inc. offering its service
to no other individual or entity. A common carrier is one which offers its services whether to the public in
general or to a limited clientele in particular but never on an exclusive basis. Therefore, GPS does not fit the
category of a common carrier although it is not freedfrom its liability based on culpa contractual.
EVERETT STEAMSHIP CORPORATION V. COURT OF APPEALS
297 SCRA 496

DOCTRINE: There can be no doubt or equivocation about the validity and enforceability of freely-agreedupon stipulations in a contract of carriage or bill of lading limiting the liability of the carrier to an agreed
valuation unless the shipper declares a higher value and inserts it into said contract or bill.

FACTS: Hernandez Trading Co., respondent herein, imported 3 crates of bus spare parts from its supplier,
Maruman Trading Company, Ltd., a foreign corporation based in Japan. The crates were shipped from Japan to
Manila on board "ADELFA EVERETTE," a vessel owned by the principal of the petitioner herein, Everett
Orient Lines. The said crates were covered by Bill of Lading No. NGO53MN. The vessel arrived in Manila and
it was discovered that the one crate was missing. This was confirmed and admitted by petitioner in its letter of
January 13, 1992 addressed to private respondent, which thereafter made a formal claim upon petitioner for the
value of the lost cargo in the amount shown in the invoice. However, petitioner offered to pay only the
maximum amount stipulated under Clause 18 of the covering bill of lading which limits the liability of
petitioner. Respondent rejected the offer and filed a case to collect payment for the loss against the petitioner.

ISSUE: Whether or not the petitioner is liable for the actual value and not the maximum value recoverable
under the bill of lading.

Held:
No. A stipulation in the bill of lading limiting the liability of the common carrier for the loss, damages of cargo
to a certain sum, unless the shipper declares or a higher value is sanctioned by law, particularly Articles 1749
and 1750 of the Civil Code. Pursuant to the afore-quoted provisions of law, it is required that the stipulation
limiting the common carrier's liability for loss must be "reasonable and just under the circumstances, and has
been freely and fairly agreed upon."

Page 6

SPOUSES CRUZ vs. SUN HOLIDAYS, INC.

G.R. No. 186312, June 29, 2010

DOCTRINE: Article 1732 makes no distinction between one whose principal business activity is the carrying
of persons or goods or both, and one who does such carrying only as an ancillary activity (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.

FACTS: Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on January 25, 2001 against Sun
Holidays, Inc. (respondent) with the Regional Trial Court (RTC) of Pasig City for damages arising from the
death of their son Ruelito C. Cruz (Ruelito) who perished with his wife on September 11, 2000 on board the
boat M/B Coco Beach III that capsized en route to Batangas from Puerto Galera, Oriental Mindoro where the
couple had stayed at Coco Beach Island Resort (Resort) owned and operated by respondent.

On September 11, 2000, as it was still windy, Matute and 25 other Resort guests including petitioners son and
his wife trekked to the other side of the Coco Beach mountain that was sheltered from the wind where they
boarded M/B Coco Beach III, which was to ferry them to Batangas.

Shortly after the boat sailed, it started to rain. As it moved farther away from Puerto Galera and into the open
seas, the rain and wind got stronger, causing the boat to tilt from side to side and the captain to step forward to
the front, leaving the wheel to one of the crew members.

The waves got more unwieldy. After getting hit by two big waves which came one after the other, M/B Coco
Beach III capsized putting all passengers underwater. The passengers, who had put on their life jackets,
struggled to get out of the boat. Upon seeing the captain, Matute and the other passengers who reached the
surface asked him what they could do to save the people who were still trapped under the boat. The captain
replied "Iligtas niyo na lang ang sarili niyo" (Just save yourselves).

Page 7

Help came after about 45 minutes when two boats owned by Asia Divers in Sabang, Puerto Galera passed by
the capsized M/B Coco Beach III. Boarded on those two boats were 22 persons, consisting of 18 passengers and
four crew members, who were brought to Pisa Island. Eight passengers, including petitioners son and his wife,
died during the incident.

ISSUE: Whether or not respondent is a common carrier.

HELD: Article 1732 of the New 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. Indeed, respondent is a common carrier. Its ferry services are so intertwined with its main
business as to be properly considered ancillary thereto. The constancy of respondents ferry services in its resort
operations is underscored by its having its own Coco Beach boats. And the tour packages it offers, which
include the ferry services, may be availed of by anyone who can afford to pay the same. These services are thus
available to the public.

That respondent does not charge a separate fee or fare for its ferry services is of no moment. It would be
imprudent to suppose that it provides said services at a loss. The Court is aware of the practice of beach resort
operators offering tour packages to factor the transportation fee in arriving at the tour package price. That guests
who opt not to avail of respondents ferry services pay the same amount is likewise inconsequential. These
guests may only be deemed to have overpaid.

EREZO V. JEPTE
102 PHIL 103
DOCTRINE: One of the principal purposes of motor vehicles legislation is identification of the vehicle and of
the operator, in case of accident; and another is that the knowledge that means of detection are always available
may act as a deterrent from lax observance of the law and of the rules of conservative and safe operation.
Whatever purpose there may be in these statutes, it is subordinate at the last to the primary purpose of rendering
it certain that the violator of the law or of the rules of safety shall not escape because of lack of means to
discover him.
FACTS: Defendant-appellant is the registered owner of a six by six truck bearing. On August, 9, 1949, while
the same was being driven by Rodolfo Espino y Garcia, it collided with a taxicab at the intersection of San
Andres and Dakota Streets, Manila. As the truck went off the street, it hit Ernesto Erezo and another, and the
former suffered injuries, as a result of which he died.
The driver was prosecuted for homicide through reckless negligence. The accused pleaded guilty and was
sentenced to suffer imprisonment and to pay the heirs of Ernesto Erezo the sum of P3,000. As the amount of the
judgment could not be enforced against him, plaintiff brought this action against the registered owner of the
truck, the defendant-appellant.
Page 8

The defendant does not deny at the time of the fatal accident the cargo truck driven by Rodolfo Espino y Garcia
was registered in his name. He, however, claims that the vehicle belonged to the Port Brokerage, of which he
was the broker at the time of the accident. He explained, and his explanation was corroborated by Policarpio
Franco, the manager of the corporation, that the trucks of the corporation were registered in his name as a
convenient arrangement so as to enable the corporation to pay the registration fee with his backpay as a pre-war
government employee. Franco, however, admitted that the arrangement was not known to the Motor Vehicle
Office.
ISSUE: Whether or not Jepte should be liable to Erezo for the injuries occasioned to the latter because ofthe
negligence of the driver even if he was no longer the owner of the vehicle at the timeof the damage (because he
had previously sold it to another)
HELD: YES. The registered owner, the defendant-appellant herein, is primarily responsible forthe damage
caused to the vehicle of the plaintiff-appellee, but he has a right to be indemnified by the real or actual owner of
the amount that he may be required to pay as damage for the injury caused to the plaintiff-appellant.
The Revised Motor Vehicle Law provides that no vehicle may be used or operated upon any public highway
unless the same is properly registered. Not only are vehicles to be registered and that no motor vehicles are to
be used or operated without being properly registered for the current year, but that dealers in motor vehicles
shall furnish the Motor Vehicles Office a report showing the name and address of each purchaser of motor
vehicle during the previous month and the manufacturer's serial number and motor number.
Registration is required not to make said registration the operative act by which ownership in vehicles is
transferred, as in land registration cases, because the administrative proceeding of registration does not bear any
essential relation to the contract of sale between the parties, but to permit the use and operation of the vehicle
upon any public.
The main aim of motor vehicle registration is to identify the owner so that if any accident happens, or that any
damage or injury is caused by the vehicles on the public highways, responsibility therefore can be fixed on a
definite individual, the registered owner.
LIM V. COURT OF APPEALS
373 SCRA 394
DOCTRINE: The thrust of the law in enjoining the kabit system is not so much as to penalize the parties but to
identify the person upon whom responsibility may be fixed in case of an accident with the end view of
protecting the riding public. The policy therefore loses its force if the public at large is not deceived, much less
involved.
FACTS: Private respondent herein purchased an Isuzu passenger jeepney from Gomercino Vallarta, a holder of
a certificate of public convenience for the operation of a public utility vehicle. He continued to operate the
public transport business without transferring the registration of the vehicle to his name. Thus, the original
owner remained to be the registered owner and operator of the vehicle. Unfortunately, the vehicle got involved
in a road mishap which caused it severe damage. The ten-wheeler-truck which caused the accident was owned
by petitioner Lim and was driven by co-petitioner Gunnaban. Gunnaban admitted responsibility for the
accident, so that petitioner Lim shouldered the costs of hospitalization of those wounded, compensation for the
heirs of the deceased passenger and the restoration of the other vehicle involved. He also negotiated for the
repair of the private respondent's jeepney but the latter refused and demanded for its replacement. Hence,
Page 9

private respondent filed a complaint for damages against petitioners. Meanwhile, the jeepney was left by the
roadside to corrode and decay. The trial court decided in favor of private respondent and awarded him his claim.
On appeal, the Court of Appeals affirmed the decision of the trial court. Hence, petitioner filed this petition.
ISSUE: Whether or not the new owner of a passenger jeepney who continued to operate the same under the socalled kabit system and in the course thereof met an accident has the legal personality to bring the action for
damages against the erring vehicle.
HELD: Yes. According to the Court, the thrust of the law in enjoining the kabit system is not much as to
penalize the parties but to identify the person upon whom responsibility maybe fixed in case of an accident with
the end view of protecting the riding public. In the present case, it is once apparent that the evil sought to be
prevented in enjoining the kabit system does not exist.
First , neither of the parties to the pernicious kabit system is being held liable for damages. Second, the case
arose from the negligence of another vehicle in using the public road to whom no representation, or
misrepresentation, as regards the ownership and operation of the passenger jeepney was made and to whom no
such representation, or misrepresentation, was necessary. Thus it cannot be said that private respondent
Gonzales and the registered owner of the jeepney were in estoppel for leading the public to believe that the
jeepney belonged to the registered owner.
Third ,the riding public was not bothered nor inconvenienced at the very least by the illegal arrangement. On
the contrary, it was private respondent himself who had been wronged and was seeking compensation for the
damage done to him. Certainly, it would be the height of inequity to deny him his right. Hence, the private
respondent has the right to proceed against petitioners for the damage caused on his passenger jeepney as well
as on his business
LITA ENTERPRISES, INC. V. INTERMEDIATE APPELATE COURT
129 SCRA 79
DOCTRINE: "Ex pacto illicito non oritur actio" (No action arises out of an illicit bargain) is the tune-honored
maxim that must be applied to the parties in the case at bar. Having entered into an illegal contract, neither can
seek relief from the courts, and each must bear the consequences of his acts.
FACTS: Spouse Ocampo purchased 5 Toyota standard cars from delta motors in installments to be used as taxi
cabs. However, since they do not have any franchise to operate a taxicabs, they entered in an agreement with lita
enterprises for the use of the latters certificate of public convenience, commonly known as Kabit system. Later
on, the taxi collided into a motorcycle resulting to the death of the driver of the motorcycle Emeterio Martin.
Lita enterprises were adjudged liable and two of the taxicabs were levied upon and sold at a public auction.
Thereafter the spouses ocampo decided to register the taxicabs in their own name and ask Lita enterprise to
return the papers but the latter refused. Hence this petition.
ISSUE: Whether or not the agreement between the parties is valid.
HELD: The Court held that the agreement between the parties is not valid.Under the arrangement of kabit
system, whereby a person who has been granted a certificate of convenience allows another person who owns
motor vehicles to operate under such for a fee. The Kabit System has been identifies as one of the root causes of
prevalence of graft and corruption in the government transportation offices. It is void being contrary to public

Page 10

policy. And the parties have no right of action against each other because they are in pari delicto, the court will
leave them both where it finds them.

TEJA MARKETING VS. IAC

148 SCRA 347

DOCTRINE: Although not outrightly penalized as a criminal offense, the kabit system is invariably recognized
as being contrary to public policy and, therefore, void and in existent under Article 1409 of the Civil Code. It is
a fundamental principle that the court will not aid either party to enforce an illegal contract, but will leave both
where
it
finds
them.

FACTS: Respondent purchased from petitioner a tiyajle. Such tiyalje amounted to a total value of P800.
Respondent was able to pay the purchase price but however left a balance of P1, 700. Subsequently, a chattel
mortgage was executed over the said balance. It was found by the court that the defendant purchased the
motorcycle for the purpose of engaging and using the same for transportation business. To be able to use the
vehicle, the tricycle was attached to the plaintiffs transportation line, which had the franchise. In effect, the
registration certificate is under petitioners name. It appeared that they agreed that the petitioner would
undertake the yearly registration of the unit in the Land Transportation Commission.

ISSUE: Whether or not relief may be granted to any of the parties.

HELD: The Supreme Court held that neither of the two parties are entitled for relief. Both parties have entered
into an illegal contract, thus no action arises out from any illicit transaction. The parties operated under an
agreement known as the Kabit System. Such system operates when a person who has been granted a
certificate of public convenience allows another person who owns a motor vehicle to operate under such
franchise for a fee. A certificate of public convenience is a special privilege which cannot be countenanced.
This illegitimate arrangement has been recognized as one of the root causes of the frequency of graft and
corruption in the government transportation affairs. It is declared void it being against public policy. It is a
fundamental principle that the court will not aid either party to enforce an illegal contract and will leave both
where it finds them. The defects of the contract are permanent and cannot be ratified. Thus, both parties are
culpable of their illicit indenture.

Page 11

SANTOS V. SIBUG
104 SCRA 520
DOCTRINE: The registered owner or operator and grantee of the franchise, is directly and primarily
responsible and liable for the damages caused to the injured party as a consequence of the negligent or careless
operation of the vehicle. This is based on the principle that the operator of record is considered the operator of
the vehicle in contemplation of law as regards the public and third persons even if the vehicle involved in the
accident had been sold to another where such sale had not been approved by the then Public Service
Commission.
FACTS: Santos, who owns a jeep, entered into an arrangement with Vivad that the latter will fictitiously
purchase the jeep so that Santos may use the Certificate of Public Convenience (CPC) of Vivad. Subsequently,
the Sibug was bumped by the said jeep. Damages was then awarded to Sibug against Vivad and his driver. The
Sheriff of Manila then levied the jeep and sold it in a public auction. Santos then files of the third-party claim
with the Sheriff stating that he owns the jeep and such sale is null and void because the property levied is not
owned by Vivad.
ISSUE: Whether or not the levy and auction sale made on the jeep is null and void.
HELD: The Court held that the agreement entered into by Santos and Vivad is a Kabit System, which is
prohibited by law. Such system was not approved by the Public Service Commission (PSC) therefore Vivad is
the owner of the jeep in legal contemplation. Since Vivad is the owner of the jeep according to law, then it
cannot be said that the Sheriff seized the property belonging to a stranger. The auction sale is still valid
according to the Court.

SARKIES TOURS PHILS. V. IAC

280 SCRA 58
DOCTRINE: Where the common carrier accepted its passenger's baggage for transportation and even had it
placed in the vehicle by its own employee, its failure to collect the freight charge is the common carrier's own
lookout. It is responsible for the consequent loss of the baggage.
FACTS: On August 31, 1984, Fatima boarded petitioners bus from Manila to Legazpi. Her belongings
consisting of 3 bags were kept at the baggage compartment of the bus, but during the stopover in Daet, it was
discovered that only one remained. The others might have dropped along the way. Other passengers suggested
having the route traced, but the driver ignored it. Fatima immediately told the incident to her mother, who went
to petitioners office in Legazpi and later in Manila. Petitioner offered P1,000 for each bag, but she turned it
down. Disapointed, she sought help from Philtranco bus drivers and radio stations. One of the bags was
recovered. She was told by petitioner that a team is looking for the lost luggage. After nine months of fruitless
waiting, respondents filed a case to recover the lost items, as well as moral and exemplary damages, attorneys
fees and expenses of litigation. The trial court ruled in favor of respondents, which decision was affirmed with
modification by the Court of Appeals, deleting moral and exemplary damages.
ISSUE: Whether petitioner is liable for the loss of the luggage.

Page 12

HELD: The cause of the loss in the case at bar was petitioner's negligence in not ensuring that the doors of the
baggage compartment of its bus were securely fastened. As a result of this lack of care, almost all of the luggage
was lost, to the prejudice of the paying passengers.
WESTWIND SHIPPING CORPORATION VS UCPB GENERAL INSURANCE
710 SCRA 514
DOCTRINE: A customs broker has been regarded as a common carrier because transportation of goods is an
integral part of its business. As long as a person or corporation holds itself to the public for the purpose of
transporting goods as a business, it is already considered a common carrier regardless of whether it owns the
vehicle to be used or has to actually hire one.
FACTS: Kinsho-Mataichi Corporation shipped from the port of Kobe, Japan, 197 metal containers/skids of tinfree steel for delivery to the consignee, San Miguel Corporation (SMC). The shipment was loaded and received
clean on board M/V Golden Harvest Voyage No. 66, a vessel owned and operated by Westwind. SMC insured
the cargoes against all risks with UCPB for US$184,798.97. The shipment arrived in Manila, Philippines and
was discharged in the custody of the arrastre operator, Asian Terminals, Inc. (ATI). During the unloading
operation, six containers sustained dents and punctures from the forklift used by the stevedores of Ocean
Terminal Services, Inc. (OTSI) in centering and shuttling the containers/skids. As a consequence, the local ship
agent of the vessel, Baliwag Shipping Agency, Inc., issued two Bad Order Cargo Receipt. Orient Freight
International, Inc. (OFII), the customs broker of SMC, withdrew from ATI the 197 containers/skids, including
the six in damaged condition, and delivered the same at SMCs warehouse in Calamba, Laguna through J.B.
Limcaoco Trucking (JBL). It was discovered upon discharge that additional nine containers were also damaged
due to the forklift operations; thus, making the total number of 15 containers/skids in bad order.
Almost a year after, SMC filed a claim against UCPB, Westwind, ATI, and OFII to recover the amount
corresponding to the damaged 15 containers/skids. As for OFII, it maintains that it is not a common carrier, but
only a customs broker whose participation is limited to facilitating withdrawal of the shipment in the custody of
ATI by overseeing and documenting the turnover and counterchecking if the quantity of the shipments were in
tally with the shipping documents at hand, but without participating in the physical withdrawal and loading of
the shipments into the delivery trucks of JBL.
ISSUE: Whether or not the OFII is a common carrier.
HELD: Yes. A customs broker has been regarded as a common carrier because transportation of goods is an
integral part of its business. 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. That OFII is a common carrier is buttressed
by the testimony of its own witness, Mr. Loveric Panganiban Cueto, that part of the services it offers to clients is
cargo forwarding, which includes the delivery of the shipment to the consignee. Thus, for undertaking the
transport of cargoes from ATI to SMCs warehouse in Calamba, Laguna, OFII is considered a common carrier.
BASCOS V. COURT OF APPEALS
221 SCRA 318
DOCTRINE: 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.
Page 13

FACTS: Rodolfo Cipriano, representing CIPTRADE, entered into a hauling contract with Jibfair Shipping
Agency Corporation whereby the former bound itself to haul the latters 2000m/tons of soya bean meal from
Manila to Calamba. CIPTRADE subcontracted with petitioner Estrellita Bascos to transport and deliver the 400
sacks of soya beans. Petitioner failed to deliver the cargo, and as a consequence, Cipriano paid Jibfair the
amount of goods lost in accordance with their contract. Cipriano demanded reimbursement from petitioner but
the latter refused to pay. Cipriano filed a complaint for breach of contract of carriage. Petitioner denied that
there was no contract of carriage since CIPTRADE leased her cargo truck, and that the hijacking was a force
majeure. The trial court ruled against petitioner.
ISSUES: Whether or not the petitioner is a common carrier.
HELD: Yes. 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.

SERVANDO V. PHILIPPINE STEAM NAVIGATION CO.

117 SCRA 382

DOCTRINE: While it may be true that petitioner had not signed the plane ticket, 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."

FACTS: Clara Uy Bico and Amparo Servando loaded on board the appellant's vessel, FS-176, for carriage from
Manila to Pulupandan, Negros Occidental cargoes of cavans of rice and cartons of colored paper which were
evidenced by bills of lading.

Upon arrival of the vessel at Pulupandan the cargoes were discharged, complete and in good order, unto the
warehouse of the Bureau of Customs. At about 2:00 in the afternoon of the same day, said warehouse was razed
by a fire of unknown origin, destroying appellees' cargoes. Before the fire, however, appellee Uy Bico was able
Page 14

to take delivery of 907 cavans of rice Appellees' claims for the value of said goods were rejected by the
appellant.

ISSUE: Whether or not carrier is liable for the loss of the cargo.
HELD: The court a quo held that the delivery of the shipment in question to the warehouse of the Bureau of
Customs is not the delivery contemplated by Article 1736; and since the burning of the warehouse occurred
before actual or constructive delivery of the goods to the appellees, the loss is chargeable against the appellant.
Article 1736 of the Civil Code imposes upon common carriers the duty to observe extraordinary diligence from
the moment the goods are unconditionally placed in their possession "until the same are delivered, actually or
constructively, by the carrier to the consignee or to the person who has a right to receive them, without
prejudice to the provisions of Article 1738. "
I
t 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 by inserting
therein the following stipulation:

Clause 14. Carrier shall not be responsible for loss or damage to shipments billed 'owner's risk' unless
such loss or damage is due to negligence of carrier. Nor shall carrier be responsible for loss or damage
caused by force majeure, dangers or accidents of the sea or other waters; war; public enemies; . . .
fire . ...

The Court sustains the validity of the above stipulation. There is nothing therein that is contrary to law,
morals or public policy. Therefore, the carrier is no longer liable for the loss of the goods.

EDGAR COKALIONG SHIPPING LINES VS UCPB

404 SCRA 706

DOCTRINE: The liability of a common carrier for the loss of goods may, by stipulation in the bill of lading,
be limited to the value declared by the shipper. On the other hand, the liability of the insurer is determined by
the actual value covered by the insurance policy and the insurance premiums paid therefor, and not necessarily
by the value declared in the bill of lading.
Page 15

FACTS: Nestor Angelia delivered to the Edgar Cokaliong Shipping Lines, Inc cargo consisting of one carton of
Christmas dcor and two sacks of plastic toys, to be transported on board the M/V Tandag on its Voyage No. T189 scheduled to depart from Cebu City, on December 12, 1991, for Tandag, Surigao del Sur and was issued
Bill of Lading No. 58. Zosimo Mercado likewise delivered cargo to petitioner, consisting of two cartons of
plastic toys and Christmas decor, covered by bill of lading No. 59, one roll of floor mat and one bundle of
various or assorted goods for transportation thereof from Cebu City to Tandag, Surigao del Sur, on board the
said vessel, and said voyage.
When the vessel left port, it had thirty-four passengers and assorted cargo on board, including the goods of
Legaspi. After the vessel had passed by the Mandaue-Mactan Bridge, fire ensued in the engine room, and,
despite earnest efforts of the officers and crew of the vessel, the fire engulfed and destroyed the entire vessel
resulting in the loss of the vessel and the cargoes therein. The Captain filed the required Marine Protest.
Shortly thereafter, Feliciana Legaspi filed a claim, with respondent, for the value of the cargo insured
under Marine Risk Note No. 18409 and covered by Bill of Lading No. 59.
ISSUE: Whether or not the petitioner is liable for the loss of the goods and if yes, up to what extent.
HELD: Yes. Where loss of cargo results from the failure of the officers of a vessel to inspect their ship
frequently so as to discover the existence of cracked parts, that loss cannot be attributed to force majeure, but to
the negligence of those officials. 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. Petitioner did not present
sufficient evidence showing what measures or acts it had undertaken to ensure the seaworthiness of the vessel.
Necessarily, in accordance with the Civil Code, the court holds petitioner responsible for the loss of the goods
covered by Bills of Lading Nos. 58 and 59.
In the present case, the stipulation limiting petitioners liability is not contrary to public policy. In fact, it is just
and reasonable character is evident. The shippers/consignees may recover the full value of the goods by the
simple expedient of declaring the true value of the shipment in the Bill of Lading. Other than the payment of a
higher freight, there was nothing to stop them from placing the actual value of the goods therein. In fact, they
committed fraud against the common carrier by deliberately undervaluing the goods in their Bill of Lading, thus
depriving the carrier of its proper and just transport fare.

GANZON V. COURT OF APPEALS

161 SCRA 646
DOCTRINE: Petitioner Ganzon failed to show that the loss of the scrap iron due to any cause enumerated in
Art. 1734. The order of the acting Mayor did not constitute valid authority for petitioner to carry out. 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 duly bound to obey the illegal order to dump
into the sea the scrap of 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 petitioners employees.

Page 16

FACTS: Ganzon, petitioner herein, was hired by Tumambing to haul 305 tons of scrap iron. The contract was
for the petitioner to transport the scrap iron to Manila from Bataan. Tumambing delivered the scrap iron to Niza,
captain of the lighter LCT Batman, to board it on the same. The crew of the Batman started to load the iron,
and when they were about halfway through, Mayor Advincula arrived and demanded P5,000 from Tumambing.
The latter resisted and a heated argument started. Mayor Advincula drew his gun and fired at Tumambing. He
was brought to the hospital for treatment, lucky for him the wound was not fatal.
A few days after this incident, the loading of the scrap metal was resumed. However, the acting Mayor this time
went to the port where the Batman was docked. He was accompanied by 3 policemen and he ordered Captain
Niza to dump the scrap iron where the lighter was docked. What was left or the iron was confiscated by the
Acting Mayor and brought to NASSCO. A receipt was issued showing that the municipality had taken custody
of the scraps or iron.
Tumambing filed a case in order to recover damages for the loss that he sustained. The lower court rendered a
decision in favor of Ganzon. However, on appeal the Court of Appeals reversed the decision ordering Ganzon to
pay Tumambing P5,895 as actual damages, P5,000 for exemplary damages and attorneys fees as well. Hence
this petition by Ganzon.
ISSUE: Whether or not Ganzon is liable for the loss that Tumambing sustained.
HELD: The Court held that Ganzon is liable for the loss of Tumambing. The defense that the scraps of iron
were not unconditionally placed in his custody and control is untenable. Petitioner herein admits that the scraps
of iron were delivered to Captain Niza by Tumambing in order to load the same on the lighter Batman. The
employees of Ganzon received the scraps of iron on his behalf, therefore the scraps of metal were placed in his
custody and control. Upon the receipt of the scraps by the carrier in order transport the same, the contract of
carriage was perfected. Upon perfection of the contract, the exercise of extraordinary diligence in caring for the
goods shall also commence to begin.
Article 1738 of the NCC provides that the exercise of extraordinary diligence shall cease only upon delivery to
the consignee or to the person who has the right to receive the same. In this case, there was no delivery made to
the consignee, therefore the carrier should have exercised extraordinary diligence in taking care of the scraps of
iron. It is irrelevant that the scraps of iron were only partially loaded on the lighter. The scraps of iron were
already under the custody and control of the carrier, therefore he shall be liable for its loss.
EASTERN SHIPPING LINES VS. IAC
150 SCRA 463
DOCTRINE: The heavy seas and rains referred to in the masters report were not caso fortuito but normal
occurrences that an ocean-going vessel, particularly in the month of September which, in our area, is a month of
rains and heavy seas would encounter as a matter of routine. They are not unforeseen nor unforeseeable. These
are conditions that ocean-going vessels would encounter and provide for, in the ordinary course of a voyage.
That rain water (not sea water) found its way into the holds of the Jupri Venture is a clear indication that care
and foresight did not attend the closing of the ship's hatches so that rain water would not find its way into the
cargo holds of the ship.
Facts: Sometime in or prior to June, 1977, the M/S ASIATICA, a vessel operated by petitioner loaded at Kobe,
Japan for transportation to Manila, 5,000 pieces of calorized lance pipes consigned to Philippine Blooming
Mills Co., Inc., and 7 cases of spare parts valued consigned to Central Textile Mills, Inc. Both sets of goods
Page 17

were insured against marine risk for with respondent. During the same period, the same vessel took on board
128 cartons of garment fabrics and accessories consigned to Mariveles Apparel Corporation, and two cases of
surveying instruments consigned to Aman Enterprises and General Merchandise. The 128 cartons were insured
for their stated value by respondent Nisshin and the 2 cases by respondent Dowa.
Enroute for Kobe, Japan, to Manila, the vessel caught fire and sank, resulting in the total loss of ship and cargo.
The respective respondent Insurers paid the corresponding marine insurance values to the consignees concerned
and were thus subrogated unto the rights of the latter as the insured.
Respondents filed a claim for reimbursement from petitioner. The RTC ruled in their favor to which the
petitioner appealed.
Issues:
Who has the burden of proof to show negligence of the carrier?
Held: Petitioner Carrier claims that the loss of the vessel by fire exempts it from liability under the phrase
"natural disaster or calamity. However, the Court said that fire may not be considered a natural disaster or
calamity. This must be so as it arises almost invariably from some act of man or by human means. It does not
fall within the category of an act of God unless caused by lightning or by other natural disaster or calamity. It
may even be caused by the actual fault or privity of the carrier. As the peril of the fire is not comprehended
within the exception in Article 1734, supra, Article 1735 of the Civil Code provides that all cases than those
mentioned 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 this case, the respective Insurers. as subrogees of the cargo shippers, have proven that the transported goods
have been lost. Petitioner Carrier has also proved that the loss was caused by fire. The burden then is upon
Petitioner Carrier to proved that it has exercised the extraordinary diligence required by law, which it failed to
do.
CALVO VS UCPB GENERAL INSURANCE CO.
379 SCRA 510
DOCTRINE: 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 petitioners 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 petitioners business.
FACTS: A contract was entered into between Calvo and San Miguel Corporation (SMC) for the transfer of
certain cargoes from the port area in Manila to the warehouse of SMC. The cargo was insured by UCPB
General Insurance Co., Inc. When the shipment arrived and unloaded from the vessel, Calvo withdrew the cargo
from the arrastre operator and delivered the same to SMCs warehouse. When it was inspected, it was found out
that some of the goods were torn. UCPB, being the insurer, paid for the amount of the damages and as subrogee
thereafter, filed a suit against Calvo. Petitioner, on the other hand, contends that it is a private carrier not
required to observe such extraordinary diligence in the vigilance over the goods. As customs broker, she does
not indiscriminately hold her services out to the public but only to selected parties.
ISSUE: Whether or not she is a common carrier.

Page 18

HELD: Yes. Article 1732 makes no distinction between one whose principal business activity is the carrying
of persons or goods or both, and one who does such carrying only as an ancillary.
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 petitioners 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 petitioners business. When Calvo's employees
withdrew the cargo from the arrastre operator, they did so without exception or protest either with regard to the
condition of container vans or their contents. Calvo must do more than merely show the possibility that some
other party could be responsible for the damage. It must prove that it used "all reasonable means to ascertain the
nature and characteristic ofgoods tendered for transport and that it exercised due care in the handling. For
1734(4) to apply, the rule is that if the improper packaging or, in this case, the defects in the container, is/are
known to the carrier or his employees or apparent upon ordinary observation he nevertheless accepts the same
without protest or exception notwithstanding such condition, he is not relieved of liability for damage resulting
therefrom.

BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE DAVIES TRANSPORT
SERVICES, INC vs. PHILIPPINE FIRST INSURANCE CO., INC
383 SCRA 23
DOCTRINE: 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, the loss or the destruction of the goods happened, the
transporter shall be held responsible.

FACTS: CMC Trading A.G. shipped on board the MN Anangel Sky at Hamburg, Germany 242 coils of
various Prime Cold Rolled Steel sheets for transportation to Manila consigned to the Philippine Steel Trading
Corporation. On July 28, 1990, MN Anangel Sky arrived at the port of Manila and, within the subsequent days,
discharged the subject cargo. Four (4) coils were found to be in bad order B.O. Tally sheet No. 154974. Finding
the four (4) coils in their damaged state to be unfit for the intended purpose, the consignee Philippine Steel
Trading Corporation declared the same as total loss.

Despite receipt of a formal demand, Phil. First insurance refused to submit to the consignees claim.
Consequently, Belgian Overseas paid the consignee P506,086.50, and was subrogated to the latters rights and
causes of action against defendants-appellees. Subsequently, plaintiff-appellant instituted this complaint for
recovery of the amount paid by them, to the consignee as insured.

Impugning the propriety of the suit against them, defendants-appellees imputed that the damage and/or loss was
due to pre-shipment damage, to the inherent nature, vice or defect of the goods, or to perils, danger and
Page 19

accidents of the sea, or to insufficiency of packing thereof, or to the act or omission of the shipper of the goods
or their representatives.

ISSUE: Whether or not petitioners have overcome the presumption of negligence of a common carrier.

HELD: No. Petitioners contend that the presumption of fault imposed on common carriers should not be
applied on the basis of the lone testimony offered by private respondent. The contention is untenable.

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, the loss or the destruction of the goods happened, the transporter shall be held
responsible.

That petitioners failed to rebut the prima facie presumption of negligence is revealed in the case at bar by a
review of the records and more so by the evidence adduced by respondent

FISHER VS. YANGCO STEAMSHIP CO.

31 PHIL 1
DOCTRINE: In construing Act 98 for the alleged violation, the test is whether the refusal of YSC to carry the
explosives without qualification or conditions may have the effect of subjecting any person or locality or the
traffic is such explosives to an unduly unreasonable or unnecessary prejudice or discrimination. Common
carriers in this jurisdiction cannot lawfully decline to accept a particular class of goods unless it appears that for
some sufficient reason the discrimination for such is reasonable and necessary. YSC has not met those
conditions.
FACTS: The board of Yangco Steamship Co. adopted a resolution which was ratified by the stockholders
declaring classes of merchandise which are not to be carried by the vessels of the company and prohibiting the
employees to carry dynamite, powder or other explosives. The Collector of Customs suspended the issuance of
clearances for the vessels unless they carry the explosives. Fisher, a stockholder of YSC, filed a petition for
prohibition.
ISSUE: Whether or not the refusal of the board of YFC to accept for carriage "dynamite, powder or other
explosives" from any and all shippers who may offer such explosives for carriage can be held to be a lawful act.

Page 20

HELD: No. In construing Act 98 for the alleged violation, the test is whether the refusal of YSC to carry the
explosives without qualification or conditions may have the effect of subjecting any person or locality or the
traffic is such explosives to an unduly unreasonable or unnecessary prejudice or discrimination. Common
carriers in this jurisdiction cannot lawfully decline to accept a particular class of goods unless it appears that for
some sufficient reason the discrimination for such is reasonable and necessary. YSC has not met those
conditions.
The nature of the business of a common carrier as a public employment is such that it is within the power of the
State to impose such just regulations in the interest of the public as the legislator may deem proper.
MACAM vs. COURT OF APPEALS
313 SCRA 77
DOCTRINE: 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. In transactions covered
by a letter of credit, bank guarantee is normally required by the shipping lines prior to releasing the goods.

FACTS: Petitioner Benito Macam shipped on board the vessel Nen Jiang, through local agent respondent
Wallem Philippines Shipping, Inc. watermelons and fresh mangoes. The shipment was bound for Hongkong
with Pakistan Bank as consignee and Great Prospect Company of Kowloon, Hongkong as notify party.
Petitioners depository bank, Consolidated Banking Corporation(SOLIDBANK) paid petitioner in advance the
total value of the shipment. Upon arrival in Hongkong, the shipment was delivered by respondent WALLEM
directly to GPC, not to Pakistan Bank, and without the required bill of lading having been surrendered.
Subsequently, GPC failed to pay Pakistan Bank such that the latter, still in possession of the original bills of
lading, refused to pay petitioner through SOLIDBANK. Since SOLIDBANK already pre-paid petitioner the
value of the shipment, it demanded payment from respondent WALLEM but was refused. Petitioner returned
the amount involved to SOLIDBANK, and then demanded payment from respondent WALLEM in writing but
to no avail. Hence petitioner sought collection of the value of the shipment from respondents before the RTC of
Manila, based on delivery of the shipment to GPC without presentation of the bills of lading and bank
guarantee.

ISSUE: Whether or not respondents are liable to petitioner for releasing the goods to GPC without the bills of
lading or bank guarantee.

HELD: Under Art. 1736 of the Civil Code, the extraordinary responsibility of the common carrier 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 notifying 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
Page 21

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. It has been the practice of petitioner to
request the shipping lines to immediately release perishable cargoes such as watermelons and fresh mangoes
through telephone calls by himself or his people.

SAMAR MINING COMPANY, INC. vs. NORDEUTSCHER LLOYD

132 SCRA 529

DOCTRINE: The validity of stipulations in bills of lading exempting the carrier from liability for loss or
damage to the goods when the same are not in its actual custody has been upheld. There is no doubt that Art.
1738 finds no applicability to the instant case. The said article contemplates a situation where the goods had
already reached their place of destination and are stored in the warehouse of the carrier. The subject goods were
still awaiting transshipment to their port of destination, and were stored in the warehouse of a third party when
last seen and/or heard of.

FACTS: The case arose from an importation made by Samar Mining Co. Inc. of 1 crate Optima welded wedge
wire sieves through the M/S Schwabenstein, a vessel owned by Nordeutscher Lloyd, (represented in the
Philippines by its agent, C.F. Sharp & Co., Inc.), which shipment is covered by Bill of Lading No. 18 duly
issued to consignee Samar Mining. Upon arrival of the vessel at the port of Manila, the importation was
unloaded and delivered in good order and condition to the bonded warehouse of AMCYL. The goods were
however never delivered to, nor received by, the consignee at the port of destination Davao. When the letters
of complaint sent to Nordeutscher Lloyd failed to elicit the desired response, Samar Mining filed a formal claim
for P1,691.93, the equivalent of $424.00 at the prevailing rate of exchange at that time, against the former, but
neither
paid.
ISSUE: Whether or not a stipulation in the bill of lading exempting the carrier from liability for loss of goods
not in its actual custody is valid.

HELD: Yes. Two undertakings are embodied in the bill of lading: the transport of goods from Germany to
Manila, and the transshipment of the same goods from Manila to Davao, with Samar Mining acting as the agent
of the consignee. The moment the subject goods are discharged in Manila, Samar Minings personality changes
from that of carrier to that of agent of the consignee. Such being the case, there was, in effect, actual delivery of
the goods from appellant as carrier to the same appellant as agent of the consignee. Upon such delivery, the
Page 22

appellant, as erstwhile carrier, ceases to be responsible for any loss or damage that may befall the goods from
that
point
onwards.
This
is
the
full
import
of
Article
1736.
But even as agent of the consignee, the appellant cannot be made answerable for the value of the missing goods.
It is true that the transshipment of the goods, which was the object of the agency, was not fully performed.
However, appellant had commenced said performance, the completion of which was aborted by circumstances
beyond its control. An agent who carries out the orders and instructions of the principal without being guilty of
negligence, deceit or fraud, cannot be held responsible for the failure of the principal to accomplish the object of
the agency.

SALUDO, JR. VS. COURT OF APPEALS

207 SCRA 498
DOCTRINE: Except as may be prohibited by law, there is nothing to prevent an inverse order of events, that is,
the execution of the bill of lading even prior to actual possession and control by the carrier of the cargo to be
transported. There is no law which requires that the delivery of the goods for carriage and the issuance of the
covering bill of lading must coincide in point of time or, for that matter, that the former should precede the
latter.
FACTS: After the death of plaintiffs mother, Crispina Saludo, Pomierski and Son Funeral Home of Chicago
brought the remains to Continental Mortuary Air Services which booked the shipment of the remains from
Chicago to San Francisco by TWA and from San Francisco to Manila with PAL. The remains were taken to the
Chicago Airport, but it turned out that there were two bodies in the said airport. Somehow the two bodies were
switched; the casket bearing the remains of plaintiffs mother was mistakenly sent to Mexico and was opened
there. The shipment was immediately loaded on PAL flight and arrived on Manila a day after it expected arrival
on October 29, 1976.
Plaintiff filed a damage suit with CFI of Leyte, contending that Trans World Airlines and PAL were liable for
misshipment, the eventual delay on the delivery of the cargo containing the remains, and of the discourtesy of
its employees to them.
ISSUE: Whether or not the carrier is liable for damages.
HELD: The records reveal that petitioners agonised for nearly five hours, over the possibility of losing their
mothers mortal remains, unattended to and without any assurance from the employees of TWA that they were
doing anything about the situation. They were entitled to the understanding and humane consideration called by
and commensurate with the extraordinary diligence required for common carriers, and not the cold insensitivity
to their predicament. TWAs personnel were remiss in the observance of that genuine human concern and
professional attentiveness required and expected of them. The foregoing observations, however, do not appear
to be applicable to respondent PAL. No attribution of discourtesy or indifference has been made against PAL by
petitioners and, in fact, petitioner Maria Saludo testified that it was to PAL they repaired after failing to receive
proper attention from TWA. It was from PAL that they received confirmation that their mothers remains would
be on the same flight with them.
Page 23

MAGELLAN
MANUFACTURING
MARKETING
CORPORATION
vs. CA, ORIENT OVERSEAS CONTAINER LINES and F.E. ZUELLIG, INC.
G.R. No. 95529, August 22, 1991
DOCTRINE: The holding in most jurisdictions has been that a shipper who receives a bill of lading without
objection after an opportunity to inspect it, and permits the carrier to act on it by proceeding with the shipment
is presumed to have accepted it as correctly stating the contract and to have assented to its terms.
FACTS: Plaintiff-appellant Magellan Manufacturers Marketing Corp. (MMMC) entered into a contract with
Choju Co. of Yokohama, Japan, on May 20, 1980, to export 136,000 anahaw fans for and in consideration of
$23,220.00. A letter of credit was issued to plaintiff MMMC by the buyer as payment. James Cu, the president
of MMMC then contracted F.E. Zuellig, a shipping agent, through its solicitor, one Mr. King, to ship the anahaw
fans through the other appellee, Orient Overseas Container Lines, Inc., (OOCL) specifying that he needed an
on-board bill of lading and that transhipment is not allowed under the letter of credit. Appellant MMMC paid
F.E. Zuellig the freight charges and secured a copy of the bill of lading which was presented to Allied Bank on
June 30, 1980. The bank then credited the amount of US$23,220.00 covered by the letter of credit to appellant's
account.
When appellant's president James Cu, went back to the bank later, he was informed that the payment was
refused by the buyer because there was no on-board bill of lading, and there was a transhipment of goods.
ISSUE: Whether or not there was transshipment .
HELD: Yes. Transhipment, in maritime law, is defined as "the act of taking cargo out of one ship and loading it
in another," or "the transfer of goods from the vessel stipulated in the contract of affreightment to another vessel
before the place of destination named in the contract has been reached," or "the transfer for further
transportation from one ship or conveyance to another." Clearly, either in its ordinary or its strictly legal
acceptation, there is transhipment whether or not the same person, firm or entity owns the vessels. In other
words, the fact of transhipment is not dependent upon the ownership of the transporting ships or conveyances or
in the change of carriers, as the petitioner seems to suggest, but rather on the fact of actual physical transfer of
cargo from one vessel to another.

ABOITIZ SHIPPING CORPORATION vs. CA

179 SCRA 95
DOCTRINE: 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.
FACTS: Anacleto Viana boarded the vessel owned by defendant ABOITIZ, at the port at San Jose, Occidental
Mindoro, bound for Manila. Said vessel arrived at Pier 4, North Harbor, Manila, and the passengers therein
disembarked, a gangplank having been provided connecting the side of the vessel to the pier. Instead of using
said gangplank Anacleto Viana disembarked on the third deck which was on the level with the pier. After said
vessel had landed, the Pioneer Stevedoring Corporation took over the exclusive control of the cargoes loaded on
said vessel pursuant to the Memorandum of Agreement between the third party defendant Pioneer Stevedoring
Page 24

Corporation and defendant Aboitiz. The crane owned by the third party defendant and operated by its crane
operator Alejo Figueroa was placed alongside the vessel and one hour after the passengers of said vessel had
disembarked, it started operation by unloading the cargoes from said vessel. While the crane was being
operated, Anacleto Viana who had already disembarked from said vessel obviously remembering that some of
his cargoes were still loaded in the vessel, went back to the vessel, and it was while he was pointing to the crew
of the said vessel to the place where his cargoes were loaded that the crane hit him, pinning him between the
side of the vessel and the crane. He was thereafter brought to the hospital where he later died. Private
respondents Vianas filed a complaint for damages against Aboitiz for breach of contract of carriage. Aboitiz
denied responsibility contending that at the time of the accident, the vessel was completely under the control of
Pioneer as the which handled the unloading of cargoes from the vessel of Aboitiz.
ISSUE: Whether or not the responsibility of Aboitiz to the victim ceased when it disembarked from the vessel.
HELD: No. 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.
When the accident occurred, the victim was in the act of unloading his cargoes, which he had every right to do,
from petitioner's vessel. 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 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.
LA MALLORCA vs. DE JESUS
17 SCRA 739
DOCTRINE: It has been recognized as a rule that the relation of carrier and passenger does not cease at the
moment the passenger alights from the carrier's vehicle at a place selected by the carrier at the point of
destination, but continues until the passenger has had a reasonable time or a reasonable opportunity to leave the
carrier's premises. And, what is a reasonable time or a reasonable delay within this rule is to be determined from
all the circumstances.
FACTS: Plaintiffs husband and wife, together with their minor children, boarded a La Mallorca bus. Upon
arrival at their destination, plaintiffs and their children alighted from the bus and the father led them to a shaded
spot about 5 meters away from the vehicle. The father returned to the bus to get a piece of baggage which was
not unloaded. He was followed by her daughter Raquel. While the father was still on the running board awaiting
for the conductor to give his baggage, the bus started to run so that the father had to jump. Raquel, who was
near the bus, was run over and killed.
The Lower Court rendered judgment for the plaintiff which was affirmed by CA, holding La Mallorca liable for
quasi-delict. La Mallorca contended that when the child was killed, she was no longer a passenger and therefore
the contract of carriage had terminated.
ISSUE: Whether or not the deceased is considered to be still a passenger of the bus to which the petitioner
could be held liable.
HELD: Yes. It is a recognized rule that the relation between carrier and passengers does not cease at the
moment the passenger alights from the carriers premises, to be determined from the circumstances. In this
Page 25

case, there was no utmost diligence. Firstly, the driver, although stopping the bus, did not put off the engine.
Secondly, he started to run the bus even before the bus conductor gave him the signal and while the latter was
unloading cargo. Here the presence of said passengers near the bus was not unreasonable and the duration of
responsibility still exists.
DANGWA TRANSPORTATION VS COURT OF APPEALS
202 SCRA 574
DOCTRINE: It is the duty of common carriers of passengers to stop their conveyances a reasonable length of
time in order to afford passengers an opportunity to board and enter, and they are liable for injuries suffered by
boarding passengers resulting from the sudden starting up or jerking of their conveyances while they are doing
so.

FACTS: Private respondents filed a complaint for damages against petitioners for the death of Pedrito
Cudiamat as a result of a vehicular accident which occurred on March 25, 1985 at Marivic, Sapid, Mankayan,
Benguet. Petitioner Theodore M. Lardizabal was driving a passenger bus belonging to petitioner corporation in
a reckless and imprudent manner and without due regard to traffic rules and regulations and safety to persons
and property, it ran over its passenger, Pedrito Cudiamat. Petitioners alleged that they had observed and
continued to observe the extraordinary diligence and that it was the victims own carelessness and negligence
which gave rise to the subject incident.
RTC pronounced that Pedrito Cudiamat was negligent, which negligence was the proximate cause of his death.
However, Court of Appeals set aside the decision of the lower court, and ordered petitioners to pay private
respondents damages due to negligence.
ISSUE: Whether or not the CA erred in reversing the decision of the trial court and in finding petitioners
negligent and liable for the damages claimed.
HELD: CA Decision is affirmed. The testimonies of the witnesses show that that the bus was at full stop when
the victim boarded the same. They further confirm the conclusion that the victim fell from the platform of the
bus when it suddenly accelerated forward and was run over by the rear right tires of the vehicle. Under such
circumstances, it cannot be said that the deceased was guilty of negligence. It is not negligence per se, or as a
matter of law, for one attempt to board a train or streetcar which is moving slowly. An ordinarily prudent person
would have made the attempt board the moving conveyance under the same or similar circumstances. The fact
that passengers board and alight from slowly moving vehicle is a matter of common experience both the driver
and conductor in this case could not have been unaware of such an ordinary practice.
VDA. DE NUECA v. MANILA RAILROAD CO.
CA GR No. 31731, January 30, 1968
DOCTRINE: A passenger is one who travels in a public conveyance by virtue of a contract, express or
implied, with the carrier as to the payment of the fare, or that which is accepted as an equivalent. The relation
of passenger and carrier commences when one puts himself in the care of the carrier, or directly under its
control, with the bona fide intention of becoming a passenger, and is accepted as such by the carrier as where
he makes a contract for transportation and presents himself at the proper place and in a proper manner to be
transported.
Page 26

FACTS: Fermin Nueca brought 7 sacks of palay to Manila Railroad Co. (MRC) at its station in Barrio del
Rosario, Camarines Sur, to be shipped to the municipality of Libmanan of the same province. He paid P 0.70 as
freight charge and was issued Way Bill No. 56515. The cargo was loaded on the freight wagon of Train 537.
Passengers boarded the train and shunting operations started to hook a wagon thereto. Before the train reached
the turnoff switch, its passenger coach fell on its side some 40 m from the station. The wagon pinned Nueca,
killing him instantly. Nuecas widow and children bring this claim for damages, alleging that the Nueca was a
passenger and his death was caused by MRCs negligence. MRC disclaimed liability stating it exercised due
care in safeguarding the passengers during the shunting operation, Nueca was not a passenger but a trespasser,
even if Nueca were a passenger, he illegally boarded the train without permission by not paying the fare, the
mishap was not attributable to any defect in MRC equipment, and that the accident happened due to force
majeure.
ISSUE: Whether or not Nueca was a passenger and MRC is liable.
HELD: No, Nueca was not a passenger thus, MRC did not owe him extraordinary diligence. A passenger is one
who travels in a public conveyance by virtue of a contract, express or implied, with the carrier as to the payment
of the fare, or that which is accepted as an equivalent. The relation of passenger and carrier commences when
one puts himself in the care of the carrier, or directly under its control, with the bona fide intention of becoming
a passenger, and is accepted as such by the carrier as where he makes a contract for trasportation and presents
himself at the proper place and in a proper manner to be transported. Even disregarding the matter of tickets,
and assuming Nueca intended to be a passenger, he was never accepted as such by MRC as he did not present
himself at the proper place and in a proper manner to be transported.
MRC is liable.The liability of railroad companies to persons upon the premises is determined by the general
rules of negligence relating to duties of owners/occupiers of property.
While railroad companies are not bound to the same degree of care in regard to strangers who are unlawfully
upon the premises of its passengers, it may still be liable to such strangers for negligent or tortious acts.

JAPAN AIRLINES vs. CA

294 SCRA 19
DOCTRINE: There is no question that when a party is unable to fulfill his obligation because of "force
majeure," the general rule is that he cannot be held liable for damages for non-performance. It has been held
that airline passengers must take such risks incident to the mode of travel. In this regard, adverse weather
conditions or extreme climatic changes are some of the perils involved in air travel, the consequences of which
the passenger must assume or expect.
FACTS: Private respondents boarded the JAL flights to Manila with a stop over at Narita Japan at the airlines'
expense. Upon arrival at Narita private respondents were billeted at Hotel Nikko Narita for the night. The next
day, private respondents went to the airport to take their flight to Manila. However, due to the Mt. Pinatubo
eruption rendered NAIA inaccessible to airline traffic. Hence, private respondents' trip to Manila was cancelled
indefinitely. JAL then booked another flight fort the passengers and again answered for the hotel
accommodations but still the succeeding flights were cancelled.
ISSUE: Whether or not JAL was obligated to answer for the accommodation expenses due to the force majeure.

Page 27

HELD: No, there is no question that when a party is unable to fulfill his obligation because of "force majeure,"
the general rule is that he cannot be held liable for damages for non performance. Corollarily, when JAL was
prevented from resuming its flight to Manila due to the effects of Mt. Pinatubo eruption, whatever losses or
damages in the form of hotel and meal expenses the stranded passengers incurred, cannot be charged to JAL.
Yet it is undeniable that JAL assumed the hotel expenses of respondents for their unexpected overnight stay on
June 15, 1991.
It has been held that airline passengers must take such risks incident to the mode of travel. In this regard,
adverse weather conditions or extreme climatic changes are some of the perils involved in air travel, the
consequences of which the passenger must assume or expect.

PHILIPPINE AIRLINES, INC. vs. COURT OF APPEALS and PEDRO ZAPATOS

G.R. No. L-82619 September 15, 1993
DOCTRINE: The relation of carrier and passenger continues until the latter has been landed at the port of
destination and has left the carriers premises. Hence, the common carrier necessarily would still have to
exercise extraordinary diligence in safeguarding the comfort, convenience and safety of its stranded passengers
until they have reached their final destination.
FACTS: Private respondent was among the 21 passengers of Flight 477 that took off from Cebu bound for
Ozamiz City. The routing of this flight was Cebu-Ozamiz-Cotabato. The pilot received a radio message that
Ozamiz airport was closed due to heavy rains and inclement weather and that he should proceed to Cotabato
City instead. Upon arrival at Cotabato City, the PAL Station Agent informed the passengers of their options to
return to Cebu on the same day and then to Ozamiz, or take the next flight to Cebu the following day, or remain
at Cotabato and take the next available flight to Ozamiz City. Flight 560 bound for Manila would make a stopover at Cebu to bring some of the diverted passengers; that there were only 6 seats available. Private respondent
chose to return to Cebu but was not accommodated because he checked-in as passenger No. 9 on Flight 477. He
was forced to stay at Cotabato City despite the local war between the military and the muslim rebels. He tried to
ferry the Ford Fiera loaded with PAL personnel but said pick-up vehicle did not accommodate him. The
personnel of PAL did not secure his accommodation in Cotabato City. He received a free ticket on a flight to
Iligan, but chose to buy his own. He lost his personal belongings, including a camera.
ISSUE: Whether or not PAL can properly invoke the defense of fortuitous event of bad weather in Ozamiz to
exempt itself from paying damages to the private respondent?
HELD:
No. PAL remissed in its duty of extending utmost care to private respondent while being stranded in Cotabato
City. PALs diversion of its flight due to inclement weather was a fortuitous event. Nonetheless, such occurrence
did not terminate PALs contract with its passengers. Being in the business of air carriage and the sole one to
operate in the country, PAL is deemed equipped to deal with situations as in the case at bar. The relation of
carrier and passenger continues until the latter has been landed at the port of destination and has left the carriers
premises. Hence, PAL necessarily would still have to exercise extraordinary diligence in safeguarding the
comfort, convenience and safety of its stranded passengers until they have reached their final destination. PAL
grossly failed considering the then ongoing battle between government forces and Muslim rebels in Cotabato
City and the fact that the private respondent was a stranger to the place.

Page 28

Since part of the failure to comply with the obligation of common carrier to deliver its passengers safely to their
destination lay in the defendants failure to provide comfort and convenience to its stranded passengers using
extra-ordinary diligence, the cause of non-fulfillment is not solely and exclusively due to fortuitous event, but
due to something which defendant airline could have prevented, PAL becomes liable to plaintiff.
TIU VS. ARRIESGADO
437

SCRA

426

DOCTRINE: The principle of last clear chance only applies in a suit between the owners and drivers of two
colliding vehicles. It does not arise where the 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 negligence.
FACTS: At about 10:00 pm of March 15, 1987, the cargo truck marked "Condor Hollow Blocks and General
Merchandise" was loaded with firewood in Bogo, Cebu and left for Cebu City. Upon reaching Sitio Aggies,
Poblacion Compostela, Cebu, just as the truck passed over the bridge, one of its rear tires exploded. The driver,
Sergio Pedrano, then parked along the right side of the bridge and removed the damaged tire to have it
vulcanized at a nearby shop. Pedrano left his helper, Jose Militante Jr. to keep watch over the stalled vehicle,
and instructed the latter to place a spare tire 6 fathoms behind the stalled truck to serve as a warning for
oncoming vehicles. The truck's tail lights were also left on. At abount 4:45 am., D rough Riders Passenger bus
driven by Virgilio te Las Pinas was crushing along the national highway of Sitio Aggies also bound for Cebu
City. Among its passengers were the Spouses Pedro A. Arriesgado and Felisa Pepito Arriesgado, who were
seated at the right side of the bus.
As the bus was approaching the bridge, Las Pinas saw the stalled truck. He applied the brakes and tried to
swerve to the left to avoid hitting the truck. But it was too late; the bus rammed into the truck's left rear. Pedro
Arriesgado lost consciousness and suffered a fracture in his colles. His wife Felisa died after being transferred
to Island Medical Center. Arriesgado then filed a complaint against Wiliam Tiu, operator of D Rough and his
driver Las Pinas for breach of contract of carriage.
ISSUE: Whether the doctrine of last clear chance is applicable as the petitioner asserts.
HELD: 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 the 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 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.
NECESSITO VS. PARAS
104 PHIL. 75
DOCTRINE: While the carrier is not an insurer of the safety of the passengers, it should nevertheless be held
to answer for the laws its equipment if such flaws were at all discoverable. In this connection, the manufacturer
of the defective appliance is considered in law the agent of the carrier, and the good repute of the manufacturer
will not relieve the carrier from liability. The rationale of the carrier's liability is the fact that the passenger has
Page 29

no privity with the manufacturer of the defective equipment; hence, he has no remedy against him, while the
carrier usually has.
FACTS: Severina Garces and her one-year old son boarded passenger auto truck of the Philippine Rabbit Bus
Lines. The truck entered a wooden bridge, but the front wheels swerved to the right; the driver lost control, and
after wrecking the bridge's wooden rails, the truck fell on its right side into a creek where water was breast deep.
The mother, Severina Garces, was drowned; the son,the truck fell on its right side into a creek where water was
breast deep. The mother, Severina Garces, was drowned; the son sustained injuries.
ISSUE: Whether or not the carrier is liable.
HELD: While the carrier is not an insurer of the safety of the passengers, it should nevertheless be held to
answer for the laws its equipment if such flaws were at all discoverable. In this connection, the manufacturer of
the defective appliance is considered in law the agent of the carrier, and the good repute of the manufacturer
will not relieve the carrier from liability. The rationale of the carrier's liability is the fact that the passenger has
no privity with the manufacturer of the defective equipment; hence, he has no remedy against him, while the
carrier usually has.
JUNTILLA VS FONTANAR
136 SCRA 624
DOCTRINE: Tire blowout of a jeep is not a fortuitous event where there exists a specific act of negligence by
the carrier consisting of the fact that the jeepney was overloaded and speeding at the time of the incident.
FACTS: Herein plaintiff was a passenger of the public utility jeepney on course from Danao City to Cebu City.
The jeepney was driven by driven by defendant Berfol Camoro and registered under the franchise of Clemente
Fontanar. When the jeepney reached Mandaue City, the right rear tire exploded causing the vehicle to turn
turtle. In the process, the plaintiff who was sitting at the front seat was thrown out of the vehicle. Plaintiff
suffered a lacerated wound on his right palm aside from the injuries he suffered on his left arm, right thigh, and
on his back.
Plaintiff filed a case for breach of contract with damages before the City Court of Cebu City. Defendants, in
their answer, alleged that the tire blow out was beyond their control, taking into account that the tire that
exploded was newly bought and was only slightly used at the time it blew up.
ISSUE: Whether or not the tire blow-out is a fortuitous event.
HELD: No. In the case at bar, the cause of the unforeseen and unexpected occurrence was not independent of
the human will. The accident was caused either through the negligence of the driver or because of mechanical
defects in the tire. Common carriers should teach drivers not to overload their vehicles, not to exceed safe and
legal speed limits, and to know the correct measures to take when a tire blows up thus insuring the safety of
passengers at all tines.
MARANAN VS. PEREZ
20 SCRA 412

Page 30

DOCTRINE: The basis of the common carrier's liability under NCC for assaults on passengers committed by
its drivers rests either on (1) the doctrine of respondeat superior or (2) the principle that it is the carrier's implied
duty to transport the passenger safely.
FACTS: Rogelio Corachea, on October 18, 1960, was a passenger in a taxicab owned and operated by Pascual
Perez when he was stabbed and killed by the driver, Simeon Valenzuela. Valenzuela was prosecuted for
homicide in the Court of First Instance of Batangas and was found guilty. While appeal was pending in the
Court of Appeals, Antonia Maranan, Rogelio's mother, filed an action to recover damages.
ISSUE: Whether or not defendant- operators could be held liable for damages
HELD: Yes. Defendant-appellant relies solely on the ruling enunciated in Gillaco v. Manila Railroad Co., 97
Phil. 884, that the carrier is under no absolute liability for assaults of its employees upon the passengers. The
attendant facts and controlling law of that case and the one at bar are very different however. In the Gillaco
case, the passenger was killed outside the scope and the course of duty of the guilty employee. Now here, the
killing was perpetrated by the driver of the very cab transporting the passenger, in whose hands the carrier had
entrusted the duty of executing the contract of carriage. In other words, unlike the Gillaco case, the killing of the
passenger here took place in the course of duty of the guilty employee and when the employee was acting
within the scope of his duties.
It is the carrier's strict obligation to select its drivers and similar employees with due regard not only to their
technical competence and physical ability, but also, no less important, to their total personality, including their
patterns of behavior, moral fibers, and social attitude.
GILLACO VS. MANILA RAILROAD CO.
97 PHIL. 884
DOCTRINE: While a passenger is entitled to protection from personal violence by the carrier or its agents or
employees, since the contract of transportation obligates the carrier to transport a passenger safely to his
destination, the responsibility of the carrier extends only to those acts that the carrier could foresee or avoid
through the exercise of the degree of care and diligence required of it.
FACTS: Lieut. Tomas Gillaco, husband of the plaintiff, was a passenger in the early morning train of the
Manila Railroad Company from Calamba, Laguna to Manila. When the train reached the Paco Railroad station,
Emilio Devesa, a train guard of the Manila Railroad Company happened to be in said station waiting for the
same train which would take him to Tutuban Station, where he was going to report for duty. Emilio Devesa had
a long standing personal grudge against Tomas Gillaco, because of this, Devesa shot Gillaco with the carbine
furnished to him by the Manila Railroad Company for his use as such train guard, upon seeing him inside the
train coach. Tomas died. Devesa was convicted of homicide. A complaint for damages was filed by the victims
widow. Damages were awarded to the plaintiff, hence the instant petition. Appellant's contention is that, no
liability attaches to it as employer of the Emilio Devesa because the crime was not committed while the slayer
was in the actual performance of his ordinary duties and service and that no negligence on appellant's part was
shown.
ISSUE: Whether or not appellant could be held liable for the acts of its employee.
HELD: No. While a passenger is entitled to protection from personal violence by the carrier or its agents or
employees, since the contract of transportation obligates the carrier to transport a passenger safely to his
destination, the responsibility of the carrier extends only to those acts that the carrier could foresee or avoid
Page 31

through the exercise of the degree of care and diligence required of it. In the present case, the act of the train
guard of the Manila Railroad Company in shooting the passenger (because of a personal grudge nurtured
against the latter since the Japanese occupation) was entirely unforseeable by the Manila Railroad Co. The latter
had no means to ascertain or anticipate that the two would meet, nor could it reasonably forsee every personal
rancor that might exist between each one of its many employees and any one of the thousands of eventual
passengers riding in its trains. The shooting in question was therefore "caso fortuito" within the definition of
Art. 1105 of the old Civil Code (which is the law applicable), being both unforeseeable and inevitable under the
given circumstances; and pursuant to established doctrine, the resulting breach of the company's contract of safe
carriage with the deceased was excused thereby.

LRTA VS NAVIDAD
G.R. No. 145804. February 6, 2003
DOCTRINE: The foundation of the common carriers 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.
FACTS: Navidad was drunk when he entered the boarding platform of the LRT. He got into an altercation with
the SG Escartin. They had a fistfight and Navidad fell onto the tracks and was killed when a train came and ran
over him.
The Heirs of Navidad filed a complaint for damages against Escartin, the train driver, (Roman) the LRTA, the
Metro Transit Organization and Prudent Security Agency (Prudent). The trial court found Prudent and Escartin
jointly and severally liable for damages to the heirs. The CA exonerated Prudent and instead held the LRTA and
the train driver Romero jointly and severally liable as well as removing the award for compensatory damages
and replacing it with nominal damages.
The reasoning of the CA was that a contract of carriage already existed between Navidad and LRTA (by virtue
of his havA ing purchased train tickets and the liability was caused by the mere fact of Navidad's death after
being hit by the train being managed by the LRTA and operated by Roman. The CA also blamed LRTA for not
having presented expert evidence showing that the emergency brakes could not have stopped the train on time.
ISSUES: Whether or not LRTA and/or Roman is liable for the death.
HELD: Yes. The foundation of LRTA's liability is the contract of carriage and its obligation to indemnify the
victim arising from the breach of that contract by reason of its failure to exercise the high diligence required of a
common carrier. A common carrier is required to use utmost diligence in carrying passengers with due regard
for all circumstances. This obligation exists not only during the course of the trip but for so long as the
passengers are within its premises where they ought to be in pursuance to then contract of carriage.
MARCHAN vs. MENDOZA
24 SCRA 888
Page 32

DOCTRINE: Exemplary damages may be imposed by way of example or correction only in addition, among
others, to compensatory damages, but that they cannot be recovered as a matter of right, their determination
depending upon the discretion of the court. If the amount of exemplary damages need not be proved, it need not
also be alleged, and the reason is obvious because it is merely incidental or dependent upon what the court may
award as compensatory damages.
FACTS: A passenger bus of the Philippine Rabbit Bus Lines which was then driven by Silverio Marchan fell
into a ditch somewhere in Barrio Malanday, Polo, Bulacan, while travelling on its way to Manila. As a result of
which Arsenio Mendoza, his wife and child, who were then inside the bus as passengers were thrown out to the
ground resulting in their multiple injuries. Arsenio Mendoza suffered the most serious injuries which damaged
his vertebrae causing the paralysis of his lower extremities. An action was brought to recover damages against
petitioners predicated not only on a breach of contract of carriage for failure to safely convey the plaintiffs to
their destination, but also on account of a criminal negligence on the part of defendant driver. The lower court
ruled in favor of plaintiffs. The award of P40,000.00 as compensatory damages was affirmed by CA. It however
added the amount of P30,000.00 as exemplary damages and sustained the award of attorney's fees in the amount
of P5,000.00.
ISSUE: Whether or not the award of moral damages was proper.
HELD: Yes. The amount of P40,000.00 awarded by the court as compensatory damages is quite reasonable and
fair, considering that plaintiff Arsenio Mendoza had suffered paralysis on the lower extremities, which will
incapacitate him to engage in his customary occupation throughout the remaining years of his life, especially so
if we take into account that plaintiff was only 26 years old when he met an accident and taking the average span
of life of a Filipino, he may be expected to live for 30 years more and bearing in mind the earning capacity of
Arsenio Mendoza who before the happening of this accident derived an income of almost P100.00 a month
from the business of his father-in-law as Assistant Supervisor of the small fairs and his income of P100.00 a
month which he derived as a professional boxer.
BACHELOR EXPRESS, INC VS. COURT OF APPEALS
188 SCRA 216
DOCTRINE: The sudden act of the passenger who stabbed another passenger in the bus is within the context
of force majeure. However, in order that a common carrier may be absolved from liability in case of force
majeure, it is not enough that the accident was caused by force majeure. The common carrier must still prove
that it was not negligent in causing the injuries resulting from such accident. In this case, Bachelor was
negligent.
FACTS: The bus owned by Petitioners came from Davao City on its way to Cagayan de Oro City passing
Butuan City. While at Tabon-Tabon, Butuan City, the bus picked up a passenger, that about fifteen minutes later,
a passenger at the rear portion suddenly stabbed a PC soldier which caused commotion and panic among the
passengers. When the bus stopped, passengers Ornominio Beter and Narcisa Rautraut were found lying down
the road, the former already dead as a result of head injuries and the latter also suffering from severe injuries
which caused her death later. The passenger assailant alighted from the bus and ran toward the bushes but was
killed by the police. Thereafter, the heirs of Ornominio Beter and Narcisa Rautraut, private respondents herein
filed a complaint for "sum of money" against Bachelor Express, Inc., its alleged owner and the driver Rivera.
The lower court dismissed the complaint. CA reversed the decision, hence the instant petition.
ISSUE: Whether or not petitioner is negligent.
Page 33

HELD: Yes. The liability, if any, of the petitioners is anchored on culpa contractual or breach of contract of
carriage. Art. 1732, 1733, 1755 and 1756 are applicable. There is no question that Bachelor is a common carrier.
Hence, Bachelor is bound to carry its 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. In the case at bar,
Ornominio Beter and Narcisa Rautraut were passengers of a bus belonging to Bachelor and, while passengers of
the bus, suffered injuries which caused their death. Consequently, pursuant to Article 1756 of the Civil Code,
Bachelor is presumed to have acted negligently unless it can prove that it had observed extraordinary diligence
in accordance with Articles 1733 and 1755 of the New Civil Code.

FORTUNE EXPRESS, INC. VS. COURT OF APPEALS

305 SCRA 14
DOCTRINE: Art. 1763 of the Civil Code provides that a common carrier is responsible for injuries suffered by
a passenger on account of wilfull acts of other passengers, if the employees of the common carrier could have
prevented the act through the exercise of the diligence of a good father of a family. In the present case, it is clear
that because of the negligence of petitioner's employees, the seizure of the bus by Mananggolo and his men was
made possible.
FACTS: Petitioner is a bus company in northern Mindanao. A bus of petitioner figured in an accident with a
jeepney in Kauswagan, Lanao del Norte, resulting in the death of several passengers of the jeepney, including
two Maranaos. The Constabulary officer found out that certain Maranaos were planning to take revenge on the
petitioner by burning some of its buses.
On November 22, 1989, three armed Maranaos who pretended to be passengers, seized a bus of petitioner at
Linamon, Lanao del Norte while on its way to Iligan City. They started pouring gasoline inside the bus, as the
other held the passenger at bay with a handgun then ordered the passenger to get off the bus. A passenger Atty.
Caorong pleaded with the Maranaos to spare the bus driver but the Maranaos shot him.
ISSUE: Whether or not the petitioners were guilty of a breach of the contract of carriage?
HELD: Yes, Art. 1763 of the Civil Code provides that a common carrier is responsible for injuries suffered by a
passenger on account of wilfull acts of other passengers, if the employees of the common carrier could have
prevented the act through the exercise of the diligence of a good father of a family. In the present case, it is clear
that because of the negligence of petitioner's employees, the seizure of the bus by Mananggolo and his men was
made possible.
Despite warning by the Philippine Constabulary at Cagayan de Oro that the Maranaos were planning to take
revenge on the petitioner by burning some of its buses and the assurance of petitioner's operation manager,
Diosdado Bravo, that the necessary precautions would be taken, petitioner did nothing to protect the safety of its
passengers. 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.

Page 34

The acts of Maranaos could not be considered as caso fortuito because there was already a warning by the PC.
No contributory negligence could be attributed to the deceased. The assailant's motive was to retaliate for the
loss of life of two Maranaos as a result of the collision between petitioner's bus and the jeepney in which the
two Maranaos were riding. The armed men actually allowed deceased to retrieve something from the bus. What
apparently angered them was his attempt to help the driver of the bus by pleading for his life.
GACAL v. PAL
183 SCRA 189
DOCTRINE: The source of a common carrier's legal liability is the contract of carriage, and by entering into
said contract, it binds itself to carry the passengers safely as far as human care and foresight can provide. There
is breach of this obligation if it fails to exert extraordinary diligence according to all the circumstances of the
case in exercise of the utmost diligence of a very cautious person.

FACTS: P laintiffs Franklin G. Gacal and his wife, Corazon M. Gacal along with three others were then
passengers boarding defendants plain for a flight to Manila, not knowing that on the same flight were members
of the MNLF armed with grenades and pistols. After takeoff, the MNLF announced the hijacking of the aircraft.
They landed in Zamboanga Airport to refuel. At the Zamboanga Airport, there ensued hostilities between the
military and the hijackers. As a result, the wives of Gacal and Anislag suffered injuries. Several Plaintiffs are
claiming for damages averring that PAL exercised negligence, finding basis on its breach of contract of carriage.
There was a failure to frisk the passengers adequately in order to discover hidden weapons in the bodies of the
hijackers. Despite the prevalence of skyjacking, PAL did not use a metal detector which is the most effective
means of discovering potential skyjackers among the passengers. PAL invokes the defense of force majeure or
caso fortuito.
ISSUE: Whether or not PAL is liable for damages.
HELD: NO. Under Art 1733 of the Civil Code, common carriers are required to exercise extraordinary
diligence in their vigilance over the goods and for the safety of passengers transported by them, according so all
the circumstances of each case. They are presumed at fault or to have acted negligently whenever a passenger
dies or is injured or for the loss, destruction or deterioration of goods in cases other than those enumerated in
Article 1734 of the Civil Code.
The source of a common carrier's legal liability is the contract of carriage, and by entering into said contract, it
binds itself to carry the passengers safely as far as human care and foresight can provide. There is breach of this
obligation if it fails to exert extraordinary diligence according to all the circumstances of the case in exercise of
the utmost diligence of a very cautious person.
It is the duty of a common carrier to overcome the presumption of negligence and it must be shown that the
carrier had observed the required extraordinary diligence of a very cautious person as far as human care and
foresight can provide or that the accident was caused by a fortuitous event. Thus, as ruled by this Court, no
person shall be responsible for those "events which could not be foreseen or which though foreseen were
inevitable." (Article 1174, Civil Code). The term is synonymous with caso fortuito which is of the same sense as
"force majeure".
Page 35

Pilapil v. Court of Appeals

G.R. No. 52159, Dec. 22, 1989
DOCTRINE: A common carrier is not liable for injuries suffered from stown-throwing if there is no showing
that any such incident previously happened so as to impose an obligation on the part of the personnel of the bus
company to warn the passengers and to take the necessary precaution. Such hurling of a stone constitutes
fortuitous event in this case. The bus company is not an insurer of the absolute safety of its passengers.

FACTS: Petitioner Pilapil, on board respondents bus was hit above his eye by a stone hurled by an unidentified
bystander. Respondents personnel lost no time in bringing him to a hospital, but eventually petitioner partially
lost
his
left
eyes
vision
and
sustained
a
permanent
scar.
Thus, Petitioner lodged an action for recovery of damages before the Court of First Instance of Camarines Sur
which the latter granted. On appeal, the Court of Appeals reversed said decision.
ISSUE: Whether or not common carriers assume risks to passengers such as the stoning in this case.
HELD: 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.
CERVANTES VS. COURT OF APPEALS
304 SCRA 27
DOCTRINE: When the third person knows that the agent was acting beyond his power or authority, the
principal cannot be held liable for the acts of the agent. If the said third person is aware of such limits of
authority, he is to blame, and is not entitled to recover damages from the agent, unless the latter undertook to
secure the principal's ratification.
FACTS: PAL issued to the petitioner a round trip plane ticket for Manila-Honolulu-Los Angeles-HonoluluManila, which ticket expressly provided an expiry of date of one year from issuance, i.e., until March 27, 1990.
On March 23, 1990, four days before the expiry date of subject ticket, the petitioner used it. Upon his arrival in
Los Angeles on the same day, he immediately booked his Los Angeles-Manila return ticket with the PAL office,
and it was confirmed for the April 2, 1990 flight. Upon learning that the same PAL plane would make a stopover in San Francisco, and considering that he would be there on April 2, 1990, petitioner made arrangements
with PAL for him to board the flight In San Francisco instead of boarding in Los Angeles. On April 2, 1990,
when the petitioner checked in at the PAL counter in San Francisco, he was not allowed to board. The PAL
personnel concerned marked the following notation on his ticket: "TICKET NOT ACCEPTED DUE
EXPIRATION OF VALIDITY." Petitioner Cervantes filed a Complaint for Damages, for breach of contract of
carriage. But the said complaint was dismissed for lack of merit. On appeal, the lower courts decision was
upheld, hence the instant petition.
ISSUE: Whether or not the act of the PAL agents in confirming subject ticket extended the period of validity of
petitioner's ticket.

Page 36

HELD: No. Since the PAL agents are not privy to the said Agreement and petitioner knew that a written request
to the legal counsel of PAL was necessary, he cannot use what the PAL agents did to his advantage. The said
agents, according to the Court of Appeals, acted without authority when they confirmed the flights of the
petitioner. Under Article 1989 of the New Civil Code, the acts an agent beyond the scope of his authority do not
bind the principal, unless the latter ratifies the same expressly or impliedly. Furthermore, when the third person
(herein petitioner) knows that the agent was acting beyond his power or authority, the principal cannot be held
liable for the acts of the agent. If the said third person is aware of such limits of authority, he is to blame, and is
not entitled to recover damages from the agent, unless the latter undertook to secure the principal's ratification.
PNR VS. COURT OF APPEALS
139 SCRA 87
DOCTRINE: When a train boarded by the deceased passenger was so over-crowded that he and many other
passengers had no choice but to sit on the open platforms between the coaches of the train, the common carrier
is negligent. The petitioner has the obligation to transport its passengers to their destinations and to observe
extraordinary diligence in doing so. Death or any injury suffered by any of its passengers gives rise to the
presumption that it was negligent in the performance of its obligation under the contract of carriage.
FACTS: Winifredo Tupang, husband of plaintiff, boarded a train of appellant at Libmanan, Camarines Sur, as a
paying passenger bound for Manila. Due to some mechanical defect, the train stopped at Sipocot, Camarines
Sur, for repairs. Unfortunately, upon passing Iyam Bridge at Lucena, Quezon, Winifredo Tupang fell off the
train resulting in his death.The train did not stop despite the alarm raised by the other passengers that somebody
fell from the train. Upon complaint filed by Rosario the lower court after trial, held PNR liable for damages for
breach of contract of carriage. The decision was sustained by the appellate court hence the present petition,
wherein PNR raised for the first time, as a defense, the doctrine of state immunity from suit. It alleged that it is
a mere agency of the Philippine government without distinct or separate personality of its own, and that its
funds are governmental in character and, therefore, not subject to garnishment or execution.
ISSUE: Whether or not PNR can raise the defense of doctrine of state immunity from suit and whether or not it
is negligent.
HELD: No. PNR was created under Rep. Act 4156, as amended. Section 4 of the said Act gives PNR all the
powers, the characteristics and attributes of a corporation under the Corporation Law. There can be no question
then that the PNR may sue and be sued and may be subjected to court processes just like any other corporation.
PNR is negligent. The appellate court found, the petitioner does not deny, that the train boarded by the
deceased Winifredo Tupang was so over-crowded that he and many other passengers had no choice but to sit on
the open platforms between the coaches of the train. It is likewise undisputed that the train did not even slow
down when it approached the Iyam Bridge which was under repair at the time, Neither did the train stop, despite
the alarm raised by other passengers that a person had fallen off the train at lyam Bridge.
But while petitioner failed to exercise extraordinary diligence as required by law, it appears that the deceased
was chargeable with contributory negligence. Since he opted to sit on the open platform between the coaches of
the train, he should have held tightly and tenaciously on the upright metal bar found at the side of said platform
to avoid falling off from the speeding train. Such contributory negligence, while not exempting the PNR from
liability, nevertheless justified the deletion of the amount adjudicated as moral damages and exemplary
damages. Exemplary damages may be allowed only in cases where the defendant acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner.

Page 37

MECENAS VS. COURT OF APPEALS

180 SCRA 83
DOCTRINE: The behaviour of the captain of the "Don Juan" in tills instance-playing mahjong "before and up
to the time of collision constitutes behaviour that is simply unacceptable on the part of the master of a vessel to
whose hands the lives and welfare of at least seven hundred fifty (750) passengers had been entrusted. Whether
or not Capt. Santisteban was "off-duty" or "on-duty" at or around the time of actual collision is quite
immaterial; there is, both realistically speaking and in contemplation of law, no such thing as "off-duty" hours
for the master of a vessel at sea that is a common carrier upon whom the law imposes the duty of extraordinary
diligence.
FACTS: M/T "Tacloban City," a barge-type oil tanker owned by the Philippine National Oil Company (PNOC)
and operated by the PNOC Shipping and Transport Corporation (PNOC Shipping), having unloaded its cargo,
left for Negros Occidental when it collided with a carrier ship named Don Juan. When the collision occurred,
the sea was calm, the weather fair and visibility good. As a result of this collision, the M/V "Don Juan" sank and
hundreds of its passengers perished. Among the ill-fated passengers were the parents of petitioners, the spouses
Perfecto Mecenas and Sofia Mecenas, whose bodies were never found despite intensive search by petitioners.
ISSUE: Whether or not the respondents were negligent?
HELD: Yes, the behaviour of the captain of the "Don Juan" in tills instance-playing mahjong "before and up to
the time of collision constitutes behaviour that is simply unacceptable on the part of the master of a vessel to
whose hands the lives and welfare of at least seven hundred fifty (750) passengers had been entrusted. Whether
or not Capt. Santisteban was "off-duty" or "on-duty" at or around the time of actual collision is quite
immaterial; there is, both realistically speaking and in contemplation of law, no such thing as "off-duty" hours
for the master of a vessel at sea that is a common carrier upon whom the law imposes the duty of extraordinary
diligence.
The record shows that the "Don Juan" sank within ten (10) to fifteen (15) minutes after initial contact with the
"Tacloban City. While the failure of Capt. Santisteban to supervise his officers and crew in the process of
abandoning the ship and his failure to avail of measures to prevent the too rapid sinking of his vessel after
collision, did not cause the collision by themselves, such failures doubtless contributed materially to the
consequent loss of life and, moreover, were indicative of the kind and level of diligence exercised by Capt.
Santisteban in respect of his vessel and his officers and men prior to actual contact between the two (2) vessels.
The officer-on-watch in the "Don Juan" admitted that he had failed to inform Capt. Santisteban not only of the
"imminent danger of collision" but even of "the actual collision itself " There is also evidence that the "Don
Juan" was carrying more passengers than she had been certified as allowed to carry.
VDA DE ABETO VS PHILIPPINE AIR LINES
G.R. No. L-28692 July 30, 1982
DOCTRINE: 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 for by the
passenger. By the contract of carriage, the carrier assumes the express obligation to transport the passenger to
his destination safely and to observe extraordinary diligence with a due regard for all the circumstances, and any
injury that might be suffered by the passenger is right away attributable to the fault or negligence of the carrier
FACTS: PAL plane bound for Manila from Iloilo City crashed somewhere at Mt. Baco in Mindoro. All
passengers, including the relative of the plaintiffs, Judge Abeto, died instantly and their remains were scattered
Page 38

all over the area. Among the articles recovered was the leather bag of Judge Abeto with his name on it. PAL
would not hear demands for settlement of damages so the Abetos were compelled to institute the instant case.
The trial court found that PAL is liable because it did not exercise extraordinary diligence required to transport
passenger.
ISSUE: Whether or not PAL is liable.
HELD: YES. The prescribed route was not followed by the pilot by a clear showing that the crash site was not
within the area, this tragedy would not have happened had the pilot continued the indicated route. The weather
was clear, contrary to the claim of PAL, during that day so there was no need to divert from the prescribed
route. At any rate, in the absence of a satisfactory explanation as to how the accident occurred, the presumption
is that PAL is at fault. By the contract of carriage, the carrier assumes the express obligation to transport the
passenger to his destination safely and to observe extraordinary diligence.

NOCUM VS. LAGUNA TAYABAS BUS. CO. VS. COURT OF APPEALS

83 SCRA 386
DOCTRINE: Fairness demands that in measuring a common carrier's duty towards its passengers, allowance
must be given to the reliance that should be reposed on the sense of responsibility of all the passengers in regard
to their common safety. It is to be presumed that a passenger will not take with him anything dangerous to the
lives and limbs of his co-passengers, not to speak of his own. Not to be lightly considered must be the right to
privacy to which each passenger is entitled.
FACTS: A passenger boarded the respondents bus carrying a box which such person attested to the conductor
as containing clothes and miscellaneous items. Appellee, who was a passenger in appellant's Bus No. 120 then
making a trip within the barrio of Dita, Municipality of Bay, Laguna, was injured as a consequence of the
explosion of firecrackers, contained in the box brought by the co-passenger.
ISSUE: Whether or not LTB Co. exercised the extraordinary diligence required.
HELD: Yes, fairness demands that in measuring a common carrier's duty towards its passengers, allowance
must be given to the reliance that should be reposed on the sense of responsibility of all the passengers in regard
to their common safety. It is to be presumed that a passenger will not take with him anything dangerous to the
lives and limbs of his co-passengers, not to speak of his own. Not to be lightly considered must be the right to
privacy to which each passenger is entitled. He cannot be subjected to any unusual search, when he protests the
innocuousness of his baggage and nothing appears to indicate the contrary, as in the case at bar. In other words,
inquiry may be verbally made as to the nature of a passenger's baggage when such is not outwardly perceptible,
but beyond this, constitutional boundaries are already in danger of being transgressed. Calling a policeman to
his aid, as suggested by the service manual invoked by the trial judge, in compelling the passenger to submit to
more rigid inspection, after the passenger had already declared that the box contained mere clothes and other
miscellaneous, could not have justified invasion of a constitutionally protected domain.
BATANGAS TRANSPORTATION COMPANY VS. CAGUIMBAL
G.R. NO. L-22985, JANUARY 24, 1968
Page 39

DOCTRINE: 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 for by the passenger. By the contract of carriage, the
carrier assumes the express obligation to transport the passenger to his destination safely and to observe
extraordinary diligence with a due regard for all the circumstances, and any injury that might be suffered by the
passenger is right away attributable to the fault or negligence of the carrier.
FACTS: Caguimbal who was a paying pasenger of BatangasTransportation Company (BTCO) bus died when
the bus of the Bian Transportation Company (Binan) which was coming from the opposite direction and a
calesa managed by Makahiya, which was then ahead of the Bian bus met an accident.
A passenger requested the conductor of BTCO to stop as he was going to alight, and when he heard the signal of
the conductor, the driver slowed down his bus swerving it farther to the right in order to stop; at this juncture, a
calesa, then driven by Makahiya was at a distance of several meters facing the BTCO bus coming from the
opposite direction; that at the same time the Bian bus was about 100 meters away likewise going northward
and following the direction of the calesa; that upon seeing the Bian bus the driver of the BTCO bus dimmed
his light; that as the calesa and the BTCO bus were passing each other from the opposite directions, the Bian
bus following the calesa swerved to its left in an attempt to pass between the BTCO bus and the calesa; that
without diminishing its speed of about seventy (70) kilometers an hour, the Bian buspassed through the space
between the BTCO bus and the calesa hitting first the left side of the BTCO bus with the left front corner of its
body and then bumped and struck the calesa which was completely wrecked; that the driver was seriously
injured and the horse was killed; that the second and all other posts supporting the top of the left side of the
BTCO bus were completely smashed and half of the back wall to the left was ripped open. The BTCO bus
suffered damages for the repair of its damaged portion.As a consequence of this occurrence, Caguimbal and
Tolentino died, apart from others who were injured.
The widow and children of Caguimbal sued to recover damages from the BTCO. The latter, in turn, filed a
third-party complaint against the Bian and its driver, Ilagan. Subsequently, the Caguimbals amended their
complaint, to include therein, as defendants, said Bian and Ilagan.
CFI dismissed the complaint insofar as the BTCO is concerned, without prejudice to plaintiff's right to sue
Bian and Ilagan. CA reversed said decision and rendered judgment for Caguimbal. BTCO appealed to SC.
ISSUE: Whether BTCO is liable to pay damages for failure to exercise extraordinary diligence?
HELD: YES. BTCO has not proven the exercise of extraordinarydiligence on its part.
The recklessness of the driver of Binan was, manifestly, a major factor in the occurrence of the accident which
resultedin the death of Pedro Caguimbal. Indeed, as driver of the Bian bus, he overtook Makahiya's horsedriven rig or calesa and passed between the same and the BTCO bus despite the fact that the space available
was not big enough therefor, in view of which the Bian bus hit the left side of the BTCO bus and then the
calesa.
In order to permit one of them to disembark, the BTCO bus driver drove partly to the right shoulder of the
roadand partly on the asphalted portion thereof. Yet, he could have and should have seen to it had he
exercised "extraordinary diligence" that his bus was completely outside the asphalted portion of the road, and
fully within the shoulder thereof, the width of which being more than sufficient to accommodate the bus. When
the BTCO bus driver slowed down his BTCO bus to permit said passenger to disembark, he must have known,
therefore, that the Bian bus would overtake the calesa at about the time when the latter and BTCO bus would
Page 40

probably be on the same line, on opposite sides of the asphalted portions of the road, and that the space between
the BTCO bus and the "calesa" would not be enough to allow the Bian bus to go through. It is true that the
driver of the Bian bus should have slowed down or stopped, and, hence, was reckless in not doing so; but, he
had no especial obligations toward the passengers of the BTCO unlike the BTCO bus driver whose duty was to
exercise "utmost" or "extraordinary" diligence for their safety. Perez was thus under obligation to avoid a
situation which would be hazardous for his passengers, and, make their safety dependent upon thediligence of
the Bian driver.
MALLARI SR. VS. COURT OF APPEALS
324 SCRA 147
DOCTRINE: Clearly, the proximate cause of the collision resulting in the death of a passenger of the jeepney,
was the sole negligence of the driver of the passenger jeepney, petitioner Alfredo Mallari Jr., who recklessly
operated and drove his jeepney in a lane where overtaking was not allowed by traffic rules. Under Art. 2185 of
the Civil Code, unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has
been negligent if at the time of the mishap he was violating a traffic regulation.
FACTS: The passenger jeepney driven by petitioner Alfredo Mallari Jr. and owned by his co-petitioner Alfredo
Mallari Sr. collided with the delivery van of respondent Bulletin along the National Highway in Barangay San
Pablo, Dinalupihan, Bataan. The impact caused the jeepney to turn around and fall on its left side resulting in
injuries to its passengers one of whom was Israel Reyes who eventually died due to the gravity of his injuries.
The widow of the victim, filed a complaint for damages against petitioners and also against BULLETIN, its
driver Felix Angeles, and the N.V. Netherlands Insurance Company. The trial court found that the proximate
cause of the collision was the negligence of Felix Angeles, driver of the Bulletin delivery van, considering the
fact that the left front portion of the delivery truck driven by Felix Angeles hit and bumped the left rear portion
of the passenger jeepney driven by Alfredo Mallari Jr. Hence, the trial court held that BULLETIN and Felix
Angeles are jointly and severally liable. It also dismissed the complaint against the other defendants Alfredo
Mallari Sr. and Alfredo Mallari Jr. On appeal the Court of Appeals modified the decision of the trial court and
found no negligence on the part of Angeles and consequently of his employer, respondent BULLETIN. Instead,
the appellate court ruled that the collision was caused by the sole negligence of petitioner Alfredo Mallari Jr.
who admitted that immediately before the collision and after he rounded a curve on the highway, he overtook a
Fiera which had stopped on his lane and that he had seen the van driven by Angeles before overtaking the Fiera.
Hence this petition.
ISSUE: Whether or not petitioners are negligent.
HELD: Yes. The Court of Appeals correctly found, that the collision occurred immediately after petitioner
Mallari Jr. overtook a vehicle in front of it while traversing a curve on the highway. This act of overtaking was
in clear violation of Sec. 41, pars. (a) and (b), of RA 4136 as amended, otherwise known as The Land
Transportation and Traffic Code.
The rule is settled that a driver abandoning his proper lane for the purpose of overtaking another vehicle in an
ordinary situation has the duty to see to it that the road is clear and not to proceed if he cannot do so in safety.
When a motor vehicle is approaching or rounding a curve, there is special necessity for keeping to the right side
of the road and the driver does not have the right to drive on the left hand side relying upon having time to turn
to the right if a car approaching from the opposite direction comes into view. Under Art. 2185 of the Civil Code,
unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at

Page 41

the time of the mishap he was violating a traffic regulation. As found by the appellate court, petitioners failed to
present satisfactory evidence to overcome this legal presumption.

Page 42

Page 43