AGAN VS PIATCO
Airport Terminals Co., Inc.
FACTS: This is a consolidated cases of the three
(3) petitions before the Supreme Court, to wit:
G.R. Nos 155001 and 155661
Filed by the employees of various service providers
affected by the issue having separate concession
contracts with MIAA and and continuing service
agreements with various international airlines to
provide in-flight catering, passenger handling, ramp
and ground support, aircraft maintenance and
provisions, cargo handling and warehousing and
other services. Also included as petitioners are
labor unions MIASCOR Workers Union-National
Labor Union and Philippine Airlines Employees
Association.
G.R. No. 155547
A petition for prohibition filed by the members of the
House of Representatives, citizens and taxpayers.
hey cite provisions of the PIATCO Contracts which
require disbursement of unappropriated amounts in
compliance with the contractual obligations of the
Government.
On October 5, 1994, AEDC submitted an
unsolicited proposal to the Government through the
DOTC/MIAA for the development of NAIA
International Passenger Terminal III (NAIA IPT III).
DOTC constituted the Prequalification Bids and
Awards Committee (PBAC) for the implementation
of the project and submitted with its endorsement
proposal to the NEDA, which approved the project.
On June 7, 14, and 21, 1996, DOTC/MIAA caused
the publication in two daily newspapers of an
invitation for competitive or comparative proposals
on AEDC’s unsolicited proposal, in accordance with
Sec. 4-A of RA 6957, as amended.
On September 20, 1996, the consortium composed
of People’s Air Cargo and Warehousing Co., Inc.
(Paircargo), Phil. Air and Grounds Services, Inc.
(PAGS) and Security Bank Corp. (Security Bank)
(collectively, Paircargo Consortium) submitted their
competitive proposal to the PBAC. PBAC awarded
the project to Paircargo Consortium. Because of
that, it was incorporated into Philippine International
AEDC subsequently protested the alleged undue
preference given to PIATCO and reiterated its
objections as regards the prequalification of
PIATCO.
On July 12, 1997, the Government and PIATCO
signed the “Concession Agreement for the Build-
Operate-and-Transfer Arrangement of the NAIA
Passenger Terminal III” (1997 Concession
Agreement). The Government granted PIATCO the
franchise to operate and maintain the said terminal
during the concession period and to collect the
fees, rentals and other charges in accordance with
the rates or schedules stipulated in the 1997
Concession Agreement. The Agreement provided
that the concession period shall be for twenty-five
(25) years commencing from the in-service date,
and may be renewed at the option of the
Government for a period not exceeding twenty-five
(25) years. At the end of the concession period,
PIATCO shall transfer the development facility to
MIAA.
Meanwhile, the MIAA which is charged with the
maintenance and operation of the NAIA Terminals I
and II, had existing concession contracts with
various service providers to offer international
airline airport services, such as in-flight catering,
passenger handling, ramp and ground support,
aircraft maintenance and provisions, cargo handling
and warehousing, and other services, to several
international airlines at the NAIA.
On September 17, 2002, the workers of the
international airline service providers, claiming that
they would lose their job upon the implementation
of the questioned agreements, filed a petition for
prohibition. Several employees of MIAA likewise
filed a petition assailing the legality of the various
agreements.
During the pendency of the cases, PGMA, on her
speech, stated that she will not “honor (PIATCO)
contracts which the Executive Branch’s legal offices
have concluded (as) null and void.”
The 1997 Concession Agreement further provides
under Article, Section 5.10 that:
c) In the event the development Facility or any part
thereof and/or the operations of Concessionaire or
any part thereof, become the subject matter of or
be included in any notice, notification, or
declaration concerning or relating to acquisition,
seizure or appropriation by GRP in times of war or
national emergency, GRP shall, by written notice to
Concessionaire, immediately take over the
operations of the Terminal and/or the Terminal
Complex. During such take over by GRP, the
Concession Period shall be suspended; provided,
that upon termination of war, hostilities or national
emergency, the operations shall be returned to
Concessionaire, at which time, the Concession
period shall commence to run
again. Concessionaire shall be entitled to
reasonable compensation for the duration of the
temporary take over by GRP, which compensation
shall take into account the reasonable cost for the
use of the Terminal and/or Terminal Complex,
(which is in the amount at least equal to the debt
service requirements of Concessionaire, if the
temporary take over should occur at the time when
Concessionaire is still servicing debts owed to
project lenders), any loss or damage to the
Development Facility, and other consequential
damages. If the parties cannot agree on the
reasonable compensation of Concessionaire, or on
the liability of GRP as aforesaid, the matter shall be
resolved in accordance with Section 10.01
[Arbitration]. Any amount determined to be payable
by GRP to Concessionaire shall be offset from the
amount next payable by Concessionaire to GRP.
ISSUE: Whether or not the State can temporarily
take over a business affected with public interest
without compensation to the owner.
HELD: YES. PIATCO cannot, by mere contractual
stipulation, contravene the Constitutional provision
on temporary government takeover and obligate
the government to pay “reasonable cost for the use
of the Terminal and/or Terminal Complex.” Article
XII, section 17 of the 1987 Constitution envisions a
situation wherein the exigencies of the times
necessitate the government to “temporarily take
over or direct the operation of any privately owned
public utility or business affected with public
interest.” It is the welfare and interest of the public
which is the paramount consideration in
determining whether or not to temporarily take over
a particular business. Clearly, the State in effecting
the temporary takeover is exercising its police
power. Police power is the “most essential,
insistent, and illimitable of powers.” Its exercise
therefore must not be unreasonably hampered nor
its exercise be a source of obligation by the
government in the absence of damage due to
arbitrariness of its exercise. Thus, requiring the
government to pay reasonable compensation for
the reasonable use of the property pursuant to the
operation of the business contravenes the
Constitution.
When the government temporarily takes over a
business affected with public interest pursuant to
Article XII, Section 17 of the Constitution, it is not
required to compensate the private entity-owner of
the said business as there is no transfer of
ownership, whether permanent or temporary, and
the private entity-owner affected by the temporary
takeover cannot, likewise, claim just compensation
for the use of the said business and its properties
as the temporary takeover by the government is in
exercise of its police power and not of its power of
eminent domain.
BASCOS vs. COURT OF APPEALS and
RODOLFO A. CIPRIANO
G.R. No. 101089 April 7, 1993
FACTS: Rodolfo A. Cipriano representing Cipriano
Trading Enterprise (CIPTRADE for short) entered
into a hauling contract with Jibfair Shipping Agency
Corp whereby the former bound itself to haul the
latter’s 2,000 m/tons of soya bean meal to the
warehouse in Calamba, Laguna. To carry out its
obligation, CIPTRADE, through Cipriano,
subcontracted with Bascos to transport and to
deliver 400 sacks of soya bean meal from the
Manila Port Area to Calamba, Laguna. Petitioner
failed to deliver the said cargo. As a consequence
of that failure, Cipriano paid Jibfair Shipping
Agency the amount of the lost goods in accordance
with their contract. Cipriano demanded
reimbursement from petitioner but the latter refused
to pay. Eventually, Cipriano filed a complaint for a
sum of money and damages with writ of preliminary
attachment for breach of a contract of carriage. The
trial court granted the writ of preliminary
attachment. In her answer, petitioner averred that
there was no contract of carriage since CIPTRADE
leased her cargo truck to load the cargo from
Manila Port Area to Laguna and that the truck
carrying the cargo was hijacked and being a force
majeure, exculpated petitioner from any liability.
After trial, the trial court rendered a decision in
favor of Cipriano and against Bascos ordering the
latter to pay the former for actual damages for
attorney’s fees and cost of suit. Petitioner appealed
to the Court of Appeals but the respondent Court
affirmed the trial court’s judgment.
ISSUE: WON petitioner a common carrier
RULING: Yes. In disputing the conclusion of the
trial and appellate courts that petitioner was a
common carrier, she alleged in this petition that the
contract between her and Cipriano was lease of the
truck. She also stated that: she was not catering to
the general public. Thus, in her answer to the
amended complaint, she said that she does
business under the same style of A.M. Bascos
Trucking, offering her trucks for lease to those who
have cargo to move, not to the general public but to
a few customers only in view of the fact that it is
only a small business. We agree with the
respondent Court in its finding that petitioner is a
common carrier. 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. But petitioner argues
that there was only a contract of lease because
they offer their services only to a select group of
people. Regarding the first contention, the holding
of the Court in De Guzman vs. Court of Appeals 14
is instructive. In referring to Article 1732 of the Civil
Code, it held thus: “The above article makes no
distinction between one whose principal business
activity is the carrying of persons or goods or both,
and one who does such carrying only as an
ancillary activity (in local idiom, as a “sideline”).
Article 1732 also carefully avoids making any
distinction between a person or enterprise offering
transportation service on a regular or scheduled
basis and one offering such service on an
occasional, episodic or unscheduled basis. Neither
does Article 1732 distinguish between a carrier
offering its services to the “general public,” i.e., the
general community or population, and one who
offers services or solicits business only from a
narrow segment of the general population. We think
that Article 1732 deliberately refrained from making
such distinctions.” Common carriers are obliged to
observe extraordinary diligence in the vigilance
over the goods transported by them. Accordingly,
they are presumed to have been at fault or to have
acted negligently if the goods are lost, destroyed or
deteriorated. There are very few instances when
the presumption of negligence does not attach and
these instances are enumerated in Article 1734. In
those cases where the presumption is applied, the
common carrier must prove that it exercised
extraordinary diligence in order to overcome the
presumption . . . The presumption of negligence
was raised against petitioner. It was petitioner's
burden to overcome it. Thus, contrary to her
assertion, private respondent need not introduce
any evidence to prove her negligence. Her own
failure to adduce sufficient proof of extraordinary
diligence made the presumption conclusive against
her.
AIR FRANCE, petitioner, vs. RAFAEL
CARRASCOSO and the HONORABLE COURT
OF APPEALS, respondents.
FACTS:
Plaintiff, a civil engineer, was a member of a group
of 48 Filipino pilgrims that left Manila for Lourdes on
March 30, 1958. On March 28, 1958, the
defendant, Air France, through its authorized agent,
Philippine Air Lines, Inc., issued to plaintiff a "first
class" round trip airplane ticket from Manila to
Rome. From Manila to Bangkok, plaintiff travelled in
"first class", but at Bangkok, the Manager of the
defendant airline forced plaintiff to vacate the "first
class" seat that he was occupying because, in the
words of the witness Ernesto G. Cuento, there was
a "white man", who, the Manager alleged, had a
"better right" to the seat. When asked to vacate his
"first class" seat, the plaintiff, as was to be
expected, refused, and told defendant's Manager
that his seat would be taken over his dead body.
After some commotion, plaintiff reluctantly gave his
"first class" seat in the plane.
ISSUE: Is Carrascoso entitled to damages?
RULING: Yes. The manager not only prevented
Carrascoso from enjoying his right to a first class
seat; worse, he imposed his arbitrary will; he
forcibly ejected him from his seat, made him suffer
the humiliation of having to go to the tourist class
compartment - just to give way to another
passenger whose right thereto has not been
established. Certainly, this is bad faith. Unless, of
course, bad faith has assumed a meaning different
from what is understood in law. For, "bad faith"
contemplates a "state of mind affirmatively
operating with furtive design or with some motive of
self-interest or will or for ulterior purpose." For the
willful malevolent act of petitioner's manager,
petitioner, his employer, must answer. Article 21 of
the Civil Code says: ART. 21. Any person who
willfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public
policy shall compensate the latter for the damage.
The contract of air carriage, therefore, generates a
relation attended with a public duty. Neglect or
malfeasance of the carrier's employees, naturally,
could give ground for an action for damages.
Passengers do not contract merely for
transportation. They have a right to be treated by
the carrier's employees with kindness, respect,
courtesy and due consideration. Although the
relation of passenger and carrier is "contractual
both in origin and nature" nevertheless "the act that
breaks the contract may be also a tort". The stress
of Carrascoso's action as we have said, is placed
upon his wrongful expulsion. This is a violation of
public duty by the petitioner air carrier — a case of
quasi-delict. Damages are proper.
Compania Maritima vs Court of Appeals and
Vicente Concepcion
Facts: Vicente Concepcion is a Civil Engineer
doing business under Consolidated Construction
and was contracted by the Civil Aeronautics
Administration in 1964 to construct the Airport in
Cagayan De Oro City Misamis Oriental. Since he is
a Manila-based contractor, he had to ship his
construction equipment to CDO through Compania
Maritima. A pay loader, 4 Reo trucks and a water
truck was loaded in MV Cebu and bound to be
shipped in CDO. The Reo trucks and water tank
were successfully delivered however, 2 meters
above the pier in the course of unloading, the
swivel pin of the heel block of the port block Hatch
No. 2 gave way causing the pay loader to fall
causing total damage thereto.
Concepcion demanded damages twice to no avail
since Compania Maritima allege that the damage
was caused by Concepcion's misrepresentation for
stating that the payloader weighed 2.5 tons in the
bill of lading when in fact it was 7.5 tons.
Concepcion filed a complaint in CFI Manila but it
was dismissed stating that the proximate cause of
the fall was Concepcion's misrepresentation of the
weight of the payloader. Concepcioan appealed
and the CA ruled in his favor. Thus, this petition.
Issue: WON Compania Maritima is entitled to
absolute exemption due to Concepcion's
misrepresentation
Held: No. Compania Maritima is liable and
responsible for the damage. Article 1735 and 1752
of NCC provides that common carriers are
presumed to have been at fault or to have acted
negligently in case goods transported by them are
lost, destroyed or had deteriorated. To overcome
such presumption, the carriers must prove that they
observed extraordinary diligence required under
Article 1733. Mere proof of delivery of goods in
good order tona common carrier and of their arrival
at the place of destination in bad order makes a
prima facie case against the carrier. If no
explanationnas to how the loss, deterioration or
destruction if the goods occurred, the common
carrier must be held responsible.
In this case the court was not persuaded that
Concepcion's misrepresentation of the actual
weight of the payloader was the proximate cause of
the fall. The laxity and carelessness of the carrier
was clearly established by the factbthat they never
checked the weight provided in the bill of lading and
assumed that it was correct. The damage would
have been avoided throughbexercise of reasonable
skill and attention on overseeing the unloading of
such obviously heavy equipment. Extraordinary
diligence requires the common carrier to know and
follow the required precaution for avoiding damage
to or destruction of goods, and use all reasonable
means to ascertain the nature and characteristics
of goods tendered for shipment and tonexercise
due care in handling and stowage. Observance of
extraordinary diligence commences and lasts from
the time goods are unconditionally placed in
possession of and received by the carrier until
delivery.
The damages awarded are reduced by 20% due to
the contributory negligence of Concepcion as
provided under Article 1741.
CHINA AIRLINES, LTD., vs.
INTERMEDIATE APPELLATE COURT and
CLAUDIA B. OSORIO,
FACTS: petitioner china airlines, ltd., as originally
scheduled, was to bring Claudia Osorio to Taipei in
time for her flight bound for Los Angeles. An engine
malfunction caused a four-day delay so the parties
agreed, prior to their departure from Manila that
private respondent and the nine (9) other
passengers similarly situated would spend the night
in Taipei at petitioner's expense and would be
brought the following day to San Francisco, U.S.A.,
where they would be furnished an immediate flight
connection to Los Angeles. Upon arriving in San
Francisco, they were asked to deplane and wait
since no instructions from Manila were received
regarding them due to the delay in the transmission
of the telex messages.
Later, when it appeared that they might have to
spend the night in San Francisco, they asked that
they be provided food and overnight
accommodations as transit passengers, but were
refused by petitioner's passenger service agent,
Dennis Cheng. Apparently private respondent and
some fellow passengers angrily left the airport
without leaving a contact address. It was only on
the following day, that private respondent learned
that her ticket for Los Angeles was already issued.
Notwithstanding, she preferred to pick up her
luggage a day after and fly with a Western Airlines
ticket which she purchased.
ISSUE: WHETHER there was palpable breach of
the contract of carriage failure of petitioner airline to
arrange for private respondent's immediate flight to
Los Angeles?
RULING: Verily, petitioner airlines committed a
breach of contract in failing to secure an immediate
flight connection for private respondent. Under
Article 1755 of the Civil Code of the Philippines,
petitioner, as a common carrier, is duty bound to
"carry passengers safely as far as human care and
foresight can provide, using the utmost diligence of
very cautious persons, with due regard for all the
circumstances." The reliance of petitioner on the
subject telex communications falls short of the
utmost diligence of a very cautious person
expected of it. However, we find that the breach of
contract committed by petitioner was not attended
by gross negligence, recklessness or wanton
disregard of the rights of private respondent as a
passenger. Telex was the established mode of
communication between petitioner's Manila and
San Francisco offices. They cannot be faulted for
wanting to verify private respondent's status before
acting upon her request for tickets to Los Angeles.
The breach of contract under consideration having
been incurred in good faith, petitioner airlines is
liable for damages which are the natural and
probable consequences of said breach and which
the parties have foreseen at the time the obligation
was constituted. With respect to moral damages,
the rule is that the same are recoverable in a
damage suit predicated upon a breach of contract
of carriage only where [1] the mishap results in the
death of a passenger and [2] it is proved that the
carrier was guilty of fraud or bad faith, even if death
does not result. As the present case does not fall
under either of the cited instances, the award of
moral damages should be, as it is hereby
disallowed.
[G.R. No. 118126. March 4, 1996]
TRANS-ASIA SHIPPING LINES, INC., petitioner,
vs. COURT OF APPEALS and ATTY. RENATO T.
ARROYO, respondents.
Statement of the Case: This is a Petition for
Review on Certiorari under Rule 45 of the Rules of
Court assailing the decision of the Court of Appeals
reversing the decision of the Regional Trial Court of
CDO, Branch24.
Statement of the Facts: Plaintiff [herein
private respondent Atty. Renato Arroyo], a public
attorney, bought a ticket from defendant [herein
petitioner], for the voyage of M/V Asia Thailand
vessel to Cagayan de Oro City from Cebu City on
November 12, 1991.
At around 5:30 in the evening of November 12,
1991, plaintiff boarded the M/V Asia Thailand
vessel. At that instance, plaintiff noticed that some
repair work were being undertaken on the engine of
the vessel. The vessel departed at around 11:00 in
the evening with only one engine running.
After an hour of slow voyage, the vessel stopped
near Kawit Island and dropped its anchor thereat.
After half an hour of stillness, some passengers
demanded that they should be allowed to return
to Cebu City for they were no longer willing to
continue their voyage to Cagayan de Oro City. The
captain acceded [sic] to their request and thus the
vessel headed back to Cebu City.
At Cebu City, plaintiff together with the other
passengers who requested to be brought back
to Cebu City, were allowed to disembark.
Thereafter, the vessel proceeded to Cagayan de
Oro City. Plaintiff, the next day, boarded the M/V
Asia Japan for its voyage to Cagayan de Oro City,
likewise a vessel of defendant.
On account of this failure of defendant to transport
him to the place of destination on November 12,
1991, plaintiff filed before the trial court a complaint
for damages against defendant.
In his pre-trial brief, the private respondent asserted
that his complaint was an action for damage and
arising from bad faith, breach of contract and from
tort, with the former arising from the petitioners
failure to carry [him] to his place of destination as
contracted, while the latter from the conduct of the
[petitioner] resulting [in] the infliction of emotional
distress to the private respondent.
After due trial, the trial court rendered its decision
and ruled that the action was only for breach of
contract for failure to carry and transport its
passengers safely to their destination.
Unsatisfied, the private respondent appealed to the
Court of Appeals (CA-G.R. CV No. 39901) and
submitted for its determination the following
assignment of errors: (1) the trial court erred in not
finding that the defendant-appellee was guilty of
fraud, delay, negligence, and bad faith; and (2) the
trial court erred in not awarding moral and
exemplary damages.
In its decision of 23 November 1994, the Court of
Appeals reversed the trial court’s decision by
applying Article 1755 in relation to Articles 2201,
2208, 2217, and 2232 of the Civil Code and,
accordingly, awarded compensatory, moral, and
exemplary damages.
Issue: Whether or not Trans-Asia Shipping Lines
was negligent by not making sure its ship was
seaworthy before, during, and after the voyage.
Ruling: YES.
Defendant-appellee at that instant failed to exercise
the diligence which all common carriers should
exercise in transporting or carrying passengers.
The law does not merely require extraordinary
diligence in the performance of the obligation. The
law mandates that common carrier[s] should
exercise utmost diligence in the transport of
passengers.
Article 1755 of the New Civil Code provides:
ART. 1755. A common carrier is bound to carry the
passengers safely as far as human care and
foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the
circumstances.
Utmost diligence of a VERY CAUTIOUS person
dictates that defendant-appellee should have
pursued the voyage only when its vessel was
already fit to sail. Defendant-appellee should have
made certain that the vessel [could] complete the
voyage before starting [to] sail. Anything less than
this, the vessel [could not] sail x x x with so many
passengers on board it.
However, defendant-appellee in complete disregard
of the safety of the passengers, chose to proceed
with its voyage even if only one engine was running
as the second engine was still being repaired
during the voyage. Defendant-appellee disregarded
the not very remote possibility that because of the
disability of the vessel, other problems might occur
which would endanger the lives of the passengers
sailing with a disabled vessel.
Before commencing the contracted voyage, the
petitioner undertook some repairs on the cylinder
head of one of the vessels engines. But even
before it could finish these repairs, it allowed the
vessel to leave the port of origin on only one
functioning engine, instead of two. Moreover, even
the lone functioning engine was not in perfect
condition as sometime after it had run its course, it
conked out. This caused the vessel to stop and
remain adrift at sea, thus in order to prevent the
ship from capsizing, it had to drop anchor. Plainly,
the vessel was unseaworthy even before the
voyage began.
For a vessel to be seaworthy, it must be adequately
equipped for the voyage and manned with a
sufficient number of competent officers and
crew. The failure of a common carrier to maintain in
seaworthy condition its vessel involved in a contract
of carriage is a clear breach of is duty prescribed in
Article 1755 of the Civil Code.
Fallo: WHEREFORE, the instant petition is
DENIED and the challenged decision of the Court
of Appeals in CA-G.R. CV No. 39901 is AFFIRMED
subject to the modification as to the award for
attorney’s fees which is hereby SET ASIDE.
Costs against the petitioner.
SO ORDERED.
The Philippine American General Insurance Co.,
Inc. vs. MCG Marine Services Inc.
G.R. No. 135645, March 8, 2002
Facts: San Miguel Corporation insured several
beer bottle cases with petitioner Philippine
American General Insurance Company to be
transported from Mandaue City to Bislig, Surigao
del Sur. After having been cleared by the Coast
Guard Station in Cebu the previous day, the vessel
left the port of Mandaue City for Bislig, Surigao del
Sur. The weather was calm when the vessel started
its voyage.
The following day, the vessel listed and
subsequently sunk off at Surigao del Sur. As a
consequence thereof, the cargo belonging to San
Miguel Corporation was lost. As a result, San
Miguel Corporation claimed the amount of its loss
from petitioner.
Upon petitioner's request, a surveyor from the
Manila Adjusters and Surveyors Co. went to
Taganauan Island, Cortes, Surigao del Sur where
the vessel was cast ashore, to investigate the
circumstances surrounding the loss of the cargo. In
his report, Mr. Sayo stated that the vessel was
structurally sound and that he did not see any
damage or crack thereon. Thereafter, petitioner
paid San Miguel Corporation the full amount of P5,
836,222.80 pursuant to the terms of their insurance
contract. Petitioner as the subrogee of San Miguel
Corporation filed with the Regional Trial Court of
Makati City a case for collection to recover the
amount it paid to San Miguel Corporation for the
loss of the latter's cargo.
Meanwhile, the Board of Marine Inquiry conducted
its own investigation, and rendered its decision
exonerating the captain and crew of the ill-fated
vessel for any administrative liability. It found that
the cause of the sinking of the vessel was the
existence of strong winds and enormous waves in
Surigao del Sur, a fortuitous event that could not
have been for seen at the time the M/V Peatheray
Patrick-G left the port of Mandaue City. It was
further held by the Board that said fortuitous event
was the proximate and only cause of the vessel's
sinking.
Issue: Whether or not the loss of cargoes
belonging to San Miguel Corporation should be
borne by MCG Marine Services Inc., as the
common carrier who transported it.
Ruling: No, the loss of cargoes belonging to San
Miguel Corporation should not be borne by MCG
Marine Services Inc., as the common carrier who
transported it.
Common carriers, from the nature of their business
and for reasons of public policy, are mandated to
observe extraordinary diligence in the vigilance
over the goods and for the safety of the passengers
transported by them. Owing to this high degree of
diligence required of them, common carriers, as a
general rule, are presumed to have been at fault or
negligent if the goods transported by them are lost,
destroyed or if the same deteriorated.
However, this presumption of fault or negligence
does not arise in the cases enumerated under
Article 1734 of the Civil Code, such as in cases of
flood, storm, earthquake, lightning or other natural
disaster or calamity.
In order that a common carrier may be absolved
from liability, where the loss, destruction or
deterioration of the goods is due to a natural
disaster or calamity, it must further be shown that
the such natural disaster or calamity was the
proximate and only cause of the loss; there must be
an entire exclusion of human agency from the
cause of the injury of the loss.
In the case at bar, it was adequately shown that
before the M/V Peatheray Patrick-G left the port of
Mandaue City, the Captain confirmed with the
Coast Guard that the weather condition would
permit the safe travel of the vessel to Bislig,
Surigao del Sur. Thus, he could not be expected to
have foreseen the unfavorable weather condition
that awaited the vessel in Cortes, Surigao del Sur.
It was the presence of the strong winds and
enormous waves which caused the vessel to list,
keel over, and consequently lose the cargo
contained therein. The appellate court likewise
found that there was no negligence on the part of
the crew of the M/V Peatheray Patrick-G.
The results of Board of Marine Inquiry investigation
as embodied in Court of Appeal’s decision on the
administrative case clearly indicate that the loss of
the cargo was due solely to the attendance of
strong winds and huge waves which caused the
vessel accumulate water, tilt to the port side and to
eventually keel over. There was thus no error on
the part of the Court of Appeals in relying on the
factual findings of the Board of Marine Inquiry, for
such factual findings, being supported by
substantial evidence are persuasive, considering
that said administrative body is an expert in matters
concerning marine casualties.
Hence, the loss of cargoes belonging to San Miguel
Corporation should not be borne by MCG Marine
Services Inc.
Spouses Perena v Spouses Zarate
G.R. No. 157917, August 29, 2012
BERSAMIN, J.
FACTS: By petition for review on certiorari,
Spouses Perenas appeal the adverse decision
promulgated on November 13, 2002, by which the
Court of Appeals affirmed with modification the
decision rendered on December 3, 1999 by the
Regional Trial Court, Branch 260, in Parañaque
City that had decreed them jointly and severally
liable with Philippine National Railways, their co-
defendant, to Spouses 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.
In June 1996, Spouses Zarate contracted Spouses
Pereña to transport their son, Aaron Zarate, to and
from school. The Pereñas were owners of a van
being used for private school transport. At about
6:45am of August 22, 1996, the driver of the said
private van, Clemente Alfaro, while the children
were on board including Aaron, decided to take a
short cut in order to avoid traffic. The usual short
cut was a railroad crossing of the Philippine
National Railway (PNR).
Alfaro saw that the pole used to block vehicles
crossing the railway was up which means it was
okay to cross. He then tried to overtake a bus.
However, there was in fact an oncoming train but
Alfaro no longer saw the train as his view was
already blocked by the bus he was trying to
overtake. The bus was able to cross unscathed but
the van’s rear end was hit. During the collision,
Aaron, was thrown off the van. His body hit the
railroad tracks and his head was severed. He was
only 15 years old.
The Zarates sued PNR and the Pereñas. Their
cause of action against PNR was based on quasi-
delict, while their cause of action against the
Pereñas was based on breach of contract of
common carriage.
In their defense, the Pereñas invoked that as
private carriers they were not negligent in selecting
Alfaro as their driver as they made sure that he had
a driver’s license and that he was not involved in
any accident prior to his being hired and that they
observed the diligence of a good father in selecting
their employee. PNR also disclaimed liability as
they insist that the railroad crossing they placed
there was not meant for railroad crossing.
The RTC ruled in favor of the Zarates. The Court of
Appeals affirmed the RTC. In the decision of the
RTC and the CA, they awarded damages in favor
of the Zarates for the loss of earning capacity of
their dead son.
The Pereñas appealed. They argued that the award
was improper as Aaron was merely a high school
student, hence, the award of such damages was
merely speculative. They cited the case of People
vs Teehankee where the Supreme Court did not
award damages for the loss of earning capacity
despite the fact that the victim there was enrolled in
a pilot school.
ISSUES: Whether or not the defense of due
diligence of a good father by the Pereñas is
untenable.
Whether or not the award of damages for loss of
income is proper.
HELD: Yes, in both issues.
Defense of Due Diligence of a Good Father
This defense is not tenable in this case. The
Pereñas are common carriers. They are not merely
private carriers.
A carrier is a person or corporation who undertakes
to transport or convey goods or persons from one
place to another, gratuitously or for hire. The carrier
is classified either as a private/special carrier or as
a common/public carrier. A private carrier is one
who, without making the activity a vocation, or
without holding himself or itself out to the public as
ready to act for all who may desire his or its
services, undertakes, by special agreement in a
particular instance only, to transport goods or
persons from one place to another either
gratuitously or for hire. The provisions on ordinary
contracts of the Civil Code govern the contract of
private carriage. The diligence required of a private
carrier is only ordinary, that is, the diligence of a
good father of the family. In contrast, a common
carrier is a person, corporation, firm or association
engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air,
for compensation, offering such services to the
public. Contracts of common carriage are governed
by the provisions on common carriers of the Civil
Code, the Public Service Act, and other special
laws relating to transportation. A common carrier is
required to observe extraordinary diligence, and is
presumed to be at fault or to have acted negligently
in case of the loss of the effects of passengers, or
the death or injuries to passengers.
In relation to common carriers, the Court defined
public use in the following terms in United States v.
Tan Piaco,viz:
“Public use” is the same as “use by the public”. The
essential feature of the public use is not confined to
privileged individuals, but is open to the indefinite
public. It is this indefinite or unrestricted quality that
gives it its public character. In determining whether
a use is public, we must look not only to the
character of the business to be done, but also to
the proposed mode of doing it. If the use is merely
optional with the owners, or the public benefit is
merely incidental, it is not a public use, authorizing
the exercise of the jurisdiction of the public utility
commission. There must be, in general, a right
which the law compels the owner to give to the
general public. It is not enough that the general
prosperity of the public is promoted. Public use is
not synonymous with public interest. The true
criterion by which to judge the character of the use
is whether the public may enjoy it by right or only by
permission.
In De Guzman v. Court of Appeals, the Court noted
that Article 1732 of the Civil Code avoided any
distinction between a person or an enterprise
offering transportation on a regular or an isolated
basis; and has not distinguished a carrier offering
his services to the general public, that is, the
general community or population, from one offering
his services only to a narrow segment of the
general population.
Nonetheless, the concept of a common carrier
embodied in Article 1732 of the Civil Code
coincides neatly with the notion of public service
under the Public Service Act, which supplements
the law on common carriers found in the Civil Code.
Public service, according to Section 13, paragraph
(b) of the Public Service Act, includes:
x x x every person that now or hereafter may own,
operate, manage, or control in the Philippines, for
hire or compensation, with general or limited
clientèle, whether permanent or occasional, and
done for the general business purposes, any
common carrier, railroad, street railway, traction
railway, subway motor vehicle, either for freight or
passenger, or both, with or without fixed route and
whatever may be its classification, freight or carrier
service of any class, express service, steamboat, or
steamship line, pontines, ferries and water craft,
engaged in the transportation of passengers or
freight or both, shipyard, marine repair shop, ice-
refrigeration plant, canal, irrigation system, gas,
electric light, heat and power, water supply and
power petroleum, sewerage system, wire or
wireless communications systems, wire or wireless
broadcasting stations and other similar public
services. x x x.
Private transport for schools are common carriers.
The Pereñas, as the operators of a school bus
service were: (a) engaged in transporting
passengers generally as a business, not just as a
casual occupation; (b) undertaking to carry
passengers over established roads by the method
by which the business was conducted; and (c)
transporting students for a fee. Despite catering to
a limited clientèle, the Pereñas operated as a
common carrier because they held themselves out
as a ready transportation indiscriminately to the
students of a particular school living within or near
where they operated the service and for a fee.
Being a common carrier, what is required of the
Pereñas is not mere diligence of a good father.
What is specifically required from them by law is
extraordinary diligence – a fact which they failed to
prove in court. Verily, their obligation as common
carriers did not cease upon their exercise of
diligently choosing Alfaro as their employee.
Award of Damages for Aaron’s loss of earning
capacity despite he being a high school student at
the time of his death
The award is proper. Aaron was enrolled in a
reputable school. He was of normal health and was
an able-bodied person. Further, the basis of the
computation of his earning capacity was not on
what he would have become. It was based on the
current minimum wage. The minimum wage was
validly used because with his circumstances at the
time of his death, it is most certain that had he
lived, he would at least be a minimum wage earner
by the time he starts working. This is not being
speculative at all.
The Teehankee case was different because in that
case, the reason why no damages were awarded
for loss of earning capacity was that the
defendants there were already assuming that the
victim would indeed become a pilot – hence, that
made the assumption speculative. But in the case
of Aaron, there was no speculation as to what he
might be – but whatever he’ll become, it is certain
that he will at the least be earning minimum wage.
G.R. No. L-47822 December 22, 1988
PEDRO DE GUZMAN, petitioner,
vs.
COURT OF APPEALS and ERNESTO
CENDANA, respondents.
Facts: Private respondent Cendana is a junk
dealer, engaged in buying used bottles and scrap
metal. He utilized and owned six-wheeler trucks
which he owned, while, petitioner Pedro De
Guzman, is a merchant and an authorized dealer of
General Milk Company.
Pedro took the services of Cendana for the
hauling of 750 cartons of Liberty filled milk from
Makati to petititoner’s establishment in Urdaneta.
Private respondent loaded the 600 cartons of filled
milk on board with Manuel Estrada, Cendana’s
driver and employee, whilst the remaining 150 were
placed on the truck driven by Cendana himself.
While in the course of delivering the said
cartons of milk, the truck driven by Estrada was
hijacked resulting to the immediate failure to deliver
the 600 cartons of milk to the petitioner. Due to the
fact that only 150 cartons of filled milk were
received by the petitioner, he commenced an action
demanding the value of the lost items plus
damages, since the respondent, being a common
carrier, has failed to exercise extraordinary
diligence. Cendana denied that he was a common
carrier and argued that he could not be held
responsible for the value of the lost goods, such
loss having been due to force majeure. The trial
court found Candana as a common carrier and
ordered him to pay the petitioner. On appeal, the
CA reversed the trial court’s decision for
considering Cendana as a common carrier and not
exempting him from liability on the ground of force
majeure. Hence, the case at bar.
Issue: WON private respondent is a common
carrier
Ruling: Yes.
Article 1732 of the New Civil Code defines common
carriers as:
“Common carriers are persons, corporations, firms
or associations engaged in the business of carrying
or transporting passengers or goods or both, by
land, water, or air for compensation, offering their
services to the public.”
This article makes no distinction between one
whose principal business activity is the carrying of
persons or goods or both, and one who does such
carrying only as an ancillary activity. Since the
private respondent is a common carrier, it is
presumed to have been at fault or to have acted
negligently which can only be overthrown by proof
of extraordinary diligence on the part of the private
respondent, which he has failed to do so, hence,
liable.
5. CHINA AIRLINES, LTD., vs.
INTERMEDIATE APPELLATE COURT and
CLAUDIA B. OSORIO,
FACTS: Petitioner china airlines, ltd., as originally
scheduled, was to bring Claudia Osorio to Taipei in
time for her flight bound for Los Angeles. An engine
malfunction caused a four-day delay so the parties
agreed, prior to their departure from Manila that
private respondent and the nine (9) other
passengers similarly situated would spend the night
in Taipei at petitioner's expense and would be
brought the following day to San Francisco, U.S.A.,
where they would be furnished an immediate flight
connection to Los Angeles. Upon arriving in San
Francisco, they were asked to deplane and wait
since no instructions from Manila were received
regarding them. The contact through telex with
Manila could not be done immediately because of
the time difference between the two places and
also due to the delay in the transmission of the
telex messages
Later, when it appeared that they might have to
spend the night in San Francisco, they asked that
they be provided food and overnight
accommodations as transit passengers, but were
refused by petitioner's passenger service agent,
Dennis Cheng. Apparently irked by this refusal, in
addition to the information that their luggage were
not unloaded, private respondent and some of her
fellow passengers angrily left petitioner's San
Francisco Office without leaving a contact address.
Thus, when word from Manila came authorizing the
issuance of tickets to private respondent and her
companions, the latter could not be informed
thereof.
It was only on the following day, after spending the
night at the YMCA, paying a fee of $5.00 therefor,
that private respondent learned thru her
companions Atty. Laud and Mrs. Sim that her ticket
and luggage were ready for pick-up any time.
Notwithstanding, private respondent preferred to
pick up her luggage the day after and to fly with a
Western Airlines ticket which she purchased for
$56.00. Private respondent spent a night in the
house of Mrs. Sims friend who did not charge
anything. Private respondent, however, bought
some groceries for her hostess.
ISSUE: WHETHER there was palpable breach of
the contract of carriage failure of petitioner airline to
arrange for private respondent's immediate flight to
Los Angeles?
RULING: Verily, petitioner airlines committed a
breach of contract in failing to secure an immediate
flight connection for private respondent. Under
Article 1755 of the Civil Code of the Philippines,
petitioner, as a common carrier, is duty bound to
"carry passengers safely as far as human care and
foresight can provide, using the utmost diligence of
very cautious persons, with due regard for all the
circumstances." The reliance of petitioner on the
subject telex communications falls short of the
utmost diligence of a very cautious person
expected of it.
However, we find that the breach of contract
committed by petitioner was not attended by gross
negligence, recklessness or wanton disregard of
the rights of private respondent as a passenger.
Telex was the established mode of communication
between petitioner's Manila and San Francisco
offices. They cannot be faulted for wanting to verify
private respondent's status before acting upon her
request for tickets to Los Angeles.
We are convinced that petitioner's personnel were
not motivated by ill will or malice in their dealings
with private respondent. Their refusal to accede to
her demands for a flight connection to Los Angeles
and/or food and hotel accommodations was due
primarily to lack of information or knowledge upon
which to act upon and not from a deliberate intent
to ignore or disregard private respondent's rights as
a passenger. They cannot be faulted for wanting to
verify with Manila private respondent's status
before acting upon her request as tickets for Los
Angeles cannot be used in going to San Francisco,
and possession of a ticket with Los Angeles as
destination was not an indication that one was a
transit or an involuntarily re-routed passenger.
The breach of contract under consideration having
been incurred in good faith, petitioner airlines is
liable for damages which are the natural and
probable consequences of said breach and which
the parties have foreseen at the time the obligation
was constituted. With respect to moral damages,
the rule is that the same are recoverable in a
damage suit predicated upon a breach of contract
of carriage only where [1] the mishap results in the
death of a passenger and [2] it is proved that the
carrier was guilty of fraud or bad faith, even if death
does not result. As the present case does not fall
under either of the cited instances, the award of
moral damages should be, as it is hereby
disallowed.