TRANSPO CASES

1. First Phil. Industrial Corp. vs CA, GR No. 125948 12/29/1998

2. De Guzman vs CA, GR No. L-47822 12/22/1988
3. AF Sanchez Brokerage, Inc. vs CA, GR No. 147079 12/21/2004
4. CompaniaMaritima vs CA, 164 SCRA 685
5. Sps. Perena vs. Zarate & CA, GR No. 157917 Aug. 19, 2012
6. Delsan Transport Lines vs. CA, GR No. 127897 Nov. 15, 2001
7. Loadmasters Customs Services, Inc. vs. Glodel Brokerage Corp., et al., GR No. 179446 Jan. 10, 2011
8. Philippine American General Insurance (PhilAmGen) vs. PKS Shipping, G.R. No. 149038 April 9, 2003
9. Lita Enterprises, Inc. vs. IAC, et al., G.R. No. L-64693 April 27, 1984
 Sps. Perena vs. Zarate & CA

DECISION
BERSAMIN, J.:
The operator of a school bus service is a common carrier in the eyes of the law. He is bound to observe
extraordinary diligence in the conduct of his business. He is presumed to be negligent when death occurs to a
passenger. His liability may include indemnity for loss of earning capacity even if the deceased passenger may only
be an unemployed high school student at the time of the accident.
The Case
By petition for review on certiorari, Spouses Teodoro and Nanette Pereña (Pereñas) appeal the adverse decision
promulgated on November 13, 2002, by which the Court of Appeals (CA) affirmed with modification the decision
rendered on December 3, 1999 by the Regional Trial Court (RTC), Branch 260, in Parañaque City that had decreed
them jointly and severally liable with Philippine National Railways (PNR), their co-defendant, to Spouses Nicolas
and Teresita Zarate (Zarates) for the death of their 15-year old son, Aaron John L. Zarate (Aaron), then a high school
student of Don Bosco Technical Institute (Don Bosco).

FACTS:
Perenas were engaged in the business of transporting students to Don Bosco. The Zarates engaged
Perenas services to transport their son, Aaron, to school.

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

The Zarates filed for damages against Alfaro, Perenas, PNR, and the train driver. The cause of action against Perena
was for contract of carriage while for PNR, quasi delict. Perena posited the defense of diligence of a good father in
the selection and supervision of their driver

ISSUE/S: Were Perenas and PNR jointly and severally liable for damages? Is the petitioner a common carrier?

RULING:

YES. A school bus operator is a common carrier.

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

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

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

Common Carrier is a person, corporation, firm or association engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air, for compensation, offering such services to the public. Diligence
required is to observe extraordinary diligence, and is presumed to be at fault or to have acted negligently in case of
the loss of effects of passengers, or death or injuries to passengers

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

The Perenas held themselves out as a ready transportation indiscriminately to the students of a particular school
living within or near where they operated the service and for a fee. Perena, being a common carrier, was already
presumed to be negligent at the time of the accident because death occurred to their passenger. The omissions of
care on the part of the driver constituted negligence.

Delsan Transport Lines vs. CA

FACTS:

The facts show that Caltex Philippines (Caltex for brevity) entered into a contract of affreightment with the
petitioner, Delsan Transport Lines, Inc., for a period of one year whereby the said common carrier agreed to
transport Caltex’s industrial fuel oil from the Batangas-Bataan Refinery to different parts of the country. Under the
contract, petitioner took on board its vessel, MT Maysun 2,277.314 kiloliters of industrial fuel oil of Caltex to be
delivered to the Caltex Oil Terminal in Zamboanga City. The shipment was insured with the private respondent,
American Home Assurance Corporation. During the voyage, the vessel sank. The insurer paid Caltex and now seeks
recovery under the right of subrogation. The trial court found the vessel seaworthy and the incident was caused by
force majeure hence, exempt from liability. CA reversed the trial court’s decision, explaining that petitioner was
liable as a common carrier due to lack of manpower and absent any explanation why the vessel sank.

ISSUE: Whether or not there was an implied admission of seaworthiness thus precluding the right of recovery by
private respondent as insurer.

Whether or not the non-presentation of the marine insurance policy bars the complaint for recovery of sum of
money for lack of cause of action.

RULING:

No. The payment made by the private respondent for the insured’s value of the lost cargo operates as waiver of its
(private respondent) right to enforce the term of the implied warranty against Caltex under the marine insurance
policy. However, the same cannot be validly interpreted as an automatic admission of the vessel’s seaworthiness
by the private respondent as to foreclose recourse against the petitioner for any liability under its contractual
obligation as a common carrier. The fact of payment grants the private respondent subrogatory right which
enables it to exercise legal remedies that would otherwise be available to Caltex as owner of the lost cargo against
the petitioner common carrier.

From the nature of their business and for reasons of public policy, common carriers are bound to observe
extraordinary diligence in the vigilance over the goods and for the safety of passengers transported by them,
according to all the circumstance of each case.In the event of loss, destruction or deterioration of the insured
goods, common carriers shall be responsible unless the same is brought about, among others, by flood, storm,
earthquake, lightning or other natural disaster or calamity. In all other cases, if the goods are lost, destroyed or
deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove
that they observed extraordinary diligence. The said presumption was not overturned by petitioner in this case.
Hence, private respondent as insurer can exercise its right of subrogation against petitioner.

Thus, as the appellate court correctly ruled, petitioner’s vessel, MT Maysun, sank with its entire cargo for the
reason that it was not seaworthy. There was no squall or bad weather or extremely poor sea condition in the
vicinity when the said vessel sank.

Anent the second issue, it is our view and so hold that the presentation in evidence of the marine insurance policy
is not indispensable in this case before the insurer may recover from the common carrier the insured value of the
lost cargo in the exercise of its subrogatory right. The subrogation receipt, by itself, is sufficient to establish not only
the relationship of herein private respondent as insurer and Caltex, as the assured shipper of the lost cargo of
industrial fuel oil, but also the amount paid to settle the insurance claim. The right of subrogation accrues simply
upon payment by the insurance company of the insurance claim.

Lita Enterprises vs. Intermediate Appellate Court

(129 SCRA 464)
Facts:
Spouses Nicasio Ocampo and Francisca Garcia (private respondents) purchased in installment from the
Delta Motor Sales Corporation five (5) Toyota Corona Standard cars to be used as taxi. Since they had no franchise
to operate taxicabs, they contracted with petitioner Lita Enterprise, Inc., through its representative Manuel
Concordia, for the use of the latter’s certificate of public convenience for a consideration of P1, 000.00 and a
monthly rental of P200.00/taxicab unit. For the agreement to take effect, the cars were registered in the name of
Lita Enterprises, Inc. The possession, however, remains with spouses Ocampo and Garcia who operated and
maintained the same under Acme Taxi, petitioner’s trade name.

A year later, one of the taxicabs, driven by their employee, Emeterio Martin, collided with a motorcycle.
Unfortunately the driver of the motorcycle, Florante Galvez died from the injuries it sustained.

Criminal case was filed against Emeterio Martin, while a civil case was filed by the heir of the victim against Lita
Enterprises. In the decision of the lower court Lita Enterprises was held liable for damages for the amount of P25,
000.00 and P7, 000.00 for attorney’s fees.

A writ of execution for the decision followed, 2 of the cars of the respondent’s spouses were levied and were sold
to a public auction.

On March 1973, respondent Ocampo decided to register his taxicabs in his own name. The manager of petitioner
refused to give him the registration papers. Thus, making spouses file a complaint against petitioner. In the
decision, Lita Enterprise was ordered to return the three certificate of registration not levied in the prior case.

Petitioner now prays that private respondent be held liable to pay the amount they have given to the heir of
Galvez.

Issue: Whether or not petitioner can recover from private respondent, knowing they are in an arrangement known
as “kabit system”.

Held:
“Kabit system” is defined as, when a person who has been granted a certificate of convenience allows another
person who owns a motor vehicle to operate under such franchise for a fee. This system is not penalized as a
criminal offense but is recognized as one that is against public policy; therefore it is void and inexistent.

It is fundamental that the court will not aid either of the party to enforce an illegal contract, but will leave them
both where it finds them. Upon this premise, it was flagrant error on the part of both trial and appellate courts to
have accorded the parties relief from their predicament. Specifically Article 1412 states that:

“If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the following
rules shall be observed: “when the fault, is on the part of both contracting parties, neither may recover what he
has given by virtue of the contract, or demand the performance of the other’s undertaking.”

The principle of in pari delicto is evident in this case. “the proposition is universal that no action arises, in equity or
at law, from an illegal contract; no suit can be maintained for its specific performance, or to recover the property
agreed to sold or delivered, or damages for its property agreed to be sold or delivered, or damages for its
violation.” The parties in this case are in pari delicto, therefore no affirmative relief can be granted to them.