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Averell B. Abrasaldo – II-Sanchez Roman
II. COMMON CARRIERS IN GENERAL
A. Civil Code definition of a common carrier; Tests:
CASES:
G.R. No. L-47822 December 22, 1988
PEDRO DE GUZMAN, petitioner,
vs.
COURT OF APPEALS and ERNESTO
CENDANA, respondents.
Facts: Respondent Ernesto Cendana, a junk dealer, was engaged in
buying up used bottles and scrap metal in Pangasinan. Upon gathering
sufficient quantities of such scrap material, respondent would bring
such material to Manila for resale. He utilized two (2) six-wheeler trucks
which he owned for hauling the material to Manila. On the return trip to
Pangasinan, respondent would load his vehicles with cargo which
various merchants wanted delivered to differing establishments in
Pangasinan. For that service, respondent charged freight rates which
were commonly lower than regular commercial rates.
Sometime in November 1970, petitioner Pedro de Guzman a merchant
and authorized dealer of General Milk Company (Philippines), Inc. in
Urdaneta, Pangasinan, contracted with respondent for the hauling of
750 cartons of Liberty filled milk from a warehouse of General Milk in
Makati, Rizal, to petitioner's establishment in Urdaneta on or before 4
December 1970. Accordingly, on 1 December 1970, respondent loaded
in Makati the merchandise on to his trucks: 150 cartons were loaded on
a truck driven by respondent himself, while 600 cartons were placed on
board the other truck which was driven by Manuel Estrada,
respondent's driver and employee.
Only 150 boxes of Liberty filled milk were delivered to petitioner. The
other 600 boxes never reached petitioner, since the truck which carried
these boxes was hijacked somewhere along the MacArthur Highway in
Paniqui, Tarlac, by armed men who took with them the truck, its driver,
his helper and the cargo.
On 6 January 1971, petitioner commenced action against private
respondent in the Court of First Instance of Pangasinan, demanding
payment of P 22,150.00, the claimed value of the lost merchandise,
plus damages and attorney's fees. Petitioner argued that private
respondent, being a common carrier, and having failed to exercise the
extraordinary diligence required of him by the law, should be held liable
for the value of the undelivered goods.
In his Answer, private respondent 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.
Issue: (1.) Whether or not private respondent Ernesto Cendana may,
under the facts earlier set forth, be properly characterized as a
common carrier; and (2.) Whether or not Cendana is liable for the value
of undelivered cargo
Ruling: First issue: YES. Second issue: NO.
Principle #1: The Civil Code defines "common carriers" in the
following terms:
Article 1732. Common carriers are persons,
corporations, firms or associations engaged in the
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business of carrying or transporting passengers or
goods or both, by land, water, or air for
compensation, offering their services to the public.
The above article makes no distinction between one
whose principal business activity is the carrying of persons or goods or
both, and one who does such carrying only as an ancillary activity (in
local Idiom as "a sideline"). Article 1732 also carefully avoids making
any distinction between a person or enterprise offering transportation
service on a regular or scheduled basis and one offering such service
on an occasional, episodic or unscheduled basis. Neither does Article
1732 distinguish between a carrier offering its services to the "general
public," i.e., the general community or population, and one who offers
services or solicits business only from a narrow segment of the general
population. We think that Article 1733 deliberaom making such
distinctions.
So understood, the concept of "common carrier" under Article 1732
may be seen to coincide neatly with the notion of "public service,"
under the Public Service Act (Commonwealth Act No. 1416, as
amended) which at least partially supplements the law on common
carriers set forth in the Civil Code. Under Section 13, paragraph (b) of
the Public Service Act, "public service" includes:
... every person that now or hereafter may own,
operate, manage, or control in the Philippines, for
hire or compensation, with general or limited
clientele, whether permanent, occasional or
accidental, and done for general business
purposes, any common carrier, railroad, street
railway, traction railway, subway motor vehicle,
either for freight or passenger, or both, with or
without fixed route and whatever may be its
classification, freight or carrier service of any class,
express service, steamboat, or steamship line,
pontines, ferries and water craft, engaged in the
transportation of passengers or freight or both,
shipyard, marine repair shop, wharf or dock, ice
plant,
ice-refrigeration plant, canal, irrigation system,
gas, electric light, heat and power, water supply
and power petroleum, sewerage system, wire or
wireless communications systems, wire or wireless
broadcasting stations and other similar public
services. ... (Emphasis supplied)
Application: 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 back-hauling 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.
The Court of Appeals referred to the fact that private respondent held
no certificate of public convenience, and concluded he was not a
common carrier. This is palpable error. A certificate of public
convenience is not a requisite for the incurring of liability under the Civil
Code provisions governing common carriers. That liability arises the
moment a person or firm acts as a common carrier, without regard to
whether or not such carrier has also complied with the requirements of
the applicable regulatory statute and implementing regulations and has
been granted a certificate of public convenience or other franchise. To
exempt private respondent from the liabilities of a common carrier
because he has not secured the necessary certificate of public
convenience, would be offensive to sound public policy; that would be
to reward private respondent precisely for failing to comply with
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applicable statutory requirements. The business of a common carrier
impinges directly and intimately upon the safety and well being and
property of those members of the general community who happen to
deal with such carrier. The law imposes duties and liabilities upon
common carriers for the safety and protection of those who utilize their
services and the law cannot allow a common carrier to render such
duties and liabilities merely facultative by simply failing to obtain the
necessary permits and authorizations.
Principle #2: Common carriers, "by the nature of their business and for
reasons of public policy" 2 are held to a very high degree of care and
diligence ("extraordinary diligence") in the carriage of goods as well as
of passengers. The specific import of extraordinary diligence in the
care of goods transported by a common carrier is, according to Article
1733, "further expressed in Articles 1734,1735 and 1745, numbers 5, 6
and 7" of the Civil Code.
Article 1734 establishes the general rule that common carriers are
responsible for the loss, destruction or deterioration of the goods which
they carry, "unless the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning or other natural disaster or
calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character-of the goods or defects in the packing or-in the
containers; and
(5) Order or act of competent public authority.
It is important to point out that the above list of causes of loss,
destruction or deterioration which exempt the common carrier for
responsibility therefor, is a closed list. Causes falling outside the
foregoing list, even if they appear to constitute a species of force
majeure fall within the scope of Article 1735, which provides as
follows:
In all cases other than those mentioned in
numbers 1, 2, 3, 4 and 5 of the preceding article, if
the goods are lost, destroyed or deteriorated,
common carriers are presumed to have been at
fault or to have acted negligently, unless they
prove that they observed extraordinary
diligence as required in Article 1733. (Emphasis
supplied)
Application: Applying the above-quoted Articles 1734 and 1735, we
note firstly that the specific cause alleged in the instant case — the
hijacking of the carrier's truck — does not fall within any of the five (5)
categories of exempting causes listed in Article 1734. It would follow,
therefore, that the hijacking of the carrier's vehicle must be dealt with
under the provisions of Article 1735, in other words, that the private
respondent as common carrier is presumed to have been at fault or to
have acted negligently. This presumption, however, may be overthrown
by proof of extraordinary diligence on the part of private respondent.
Principle #3: As noted earlier, the duty of extraordinary diligence in the
vigilance over goods is, under Article 1733, given additional
specification not only by Articles 1734 and 1735 but also by Article
1745, numbers 4, 5 and 6, Article 1745 provides in relevant part:
Any of the following or similar stipulations shall be
considered unreasonable, unjust and contrary to
public policy:
xxx xxx xxx
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(5) that the common carrier shall not be responsible for the acts or
omissions of his or its employees;
(6) that the common carrier's liability for acts committed by thieves, or
of robbers who donot act with grave or irresistible threat, violence or
force, is dispensed with or diminished; and
(7) that the common carrier shall not responsible for the loss,
destruction or deterioration of goods on account of the defective
condition of the car vehicle, ship, airplane or other equipment used in
the contract of carriage. (Emphasis supplied)
Under Article 1745 (6) above, a common carrier is held responsible —
and will not be allowed to divest or to diminish such responsibility —
even for acts of strangers like thieves or robbers, except where such
thieves or robbers in fact acted "with grave or irresistible threat,
violence or force." We believe and so hold that the limits of the duty of
extraordinary diligence in the vigilance over the goods carried are
reached where the goods are lost as a result of a robbery which is
attended by "grave or irresistible threat, violence or force."
Application: In the instant case, armed men held up the second truck
owned by private respondent which carried petitioner's cargo. The
record shows that an information for robbery in band was filed in the
Court of First Instance of Tarlac, Branch 2, in Criminal Case No. 198
entitled "People of the Philippines v. Felipe Boncorno, Napoleon
Presno, Armando Mesina, Oscar Oria and one John Doe." There, the
accused were charged with willfully and unlawfully taking and carrying
away with them the second truck, driven by Manuel Estrada and
loaded with the 600 cartons of Liberty filled milk destined for delivery at
petitioner's store in Urdaneta, Pangasinan. The decision of the trial
court shows that the accused acted with grave, if not irresistible, threat,
violence or force.3 Three (3) of the five (5) hold-uppers were armed
with firearms. The robbers not only took away the truck and its cargo
but also kidnapped the driver and his helper, detaining them for several
days and later releasing them in another province (in Zambales). The
hijacked truck was subsequently found by the police in Quezon City.
The Court of First Instance convicted all the accused of robbery,
though not of robbery in band. 4
In these circumstances, we hold that the occurrence of the loss must
reasonably be regarded as quite beyond the control of the common
carrier and properly regarded as a fortuitous event. It is necessary to
recall that even common carriers are not made absolute insurers
against all risks of travel and of transport of goods, and are not held
liable for acts or events which cannot be foreseen or are inevitable,
provided that they shall have complied with the rigorous standard of
extraordinary diligence.
G.R. No. 101089. April 7, 1993.
ESTRELLITA M. BASCOS, petitioners,
vs.
COURT OF APPEALS and RODOLFO A. CIPRIANO,
respondents.
Facts: Rodolfo A. Cipriano representing Cipriano Trading Enterprise
(CIPTRADE for short) entered into a hauling contract 2 with Jibfair
Shipping Agency Corporation whereby the former bound itself to haul
the latter's 2,000 m/tons of soya bean meal from Magallanes Drive, Del
Pan, Manila to the warehouse of Purefoods Corporation in Calamba,
Laguna. To carry out its obligation, CIPTRADE, through Rodolfo
Cipriano, subcontracted with Estrellita Bascos (petitioner) to transport
and to deliver 400 sacks of soya bean meal worth P156,404.00 from
the Manila Port Area to Calamba, Laguna at the rate of P50.00 per
metric ton. Petitioner failed to deliver the said cargo. As a consequence
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of that failure, Cipriano paid Jibfair Shipping Agency the amount of the
lost goods in accordance with the contract which stated that:
"1. CIPTRADE shall be held liable and answerable for any loss in bags
due to theft, hijacking and non-delivery or damages to the cargo during
transport at market value, . . ." 3
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 4 for breach of
a contract of carriage.
Issue: 1) was petitioner a common carrier?; and (2) was the hijacking
referred to a force majeure?
Ruling: First issue: YES. Second issue: NO.
Principle #1: 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." 12 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.
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."
Application: The Court of Appeals, in holding that petitioner was a
common carrier, found that she admitted in her answer that she did
business under the name A.M. Bascos Trucking and that said
admission dispensed with the presentation by private respondent,
Rodolfo Cipriano, of proofs that petitioner was a common carrier. The
respondent Court also adopted in toto the trial court's decision that
petitioner was a common carrier, Moreover, both courts appreciated
the following pieces of evidence as indicators that petitioner was a
common carrier: the fact that the truck driver of petitioner, Maximo
Sanglay, received the cargo consisting of 400 bags of soya bean meal
as evidenced by a cargo receipt signed by Maximo Sanglay; the fact
that the truck helper, Juanito Morden, was also an employee of
petitioner; and the fact that control of the cargo was placed in
petitioner's care.
Principle #2: Common carriers are obliged to observe extraordinary
diligence in the vigilance over the goods transported by them. 17
Accordingly, they are presumed to have been at fault or to have acted
negligently if the goods are lost, destroyed or deteriorated. 18 There
are very few instances when the presumption of negligence does not
attach and these instances are enumerated in Article 1734. 19 In those
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cases where the presumption is applied, the common carrier must
prove that it exercised extraordinary diligence in order to overcome the
presumption.
In this case, petitioner alleged that hijacking constituted force majeure
which exculpated her from liability for the loss of the cargo. In De
Guzman vs. Court of Appeals, 20 the Court held that hijacking, not
being included in the provisions of Article 1734, must be dealt with
under the provisions of Article 1735 and thus, the common carrier is
presumed to have been at fault or negligent. To exculpate the carrier
from liability arising from hijacking, he must prove that the robbers or
the hijackers acted with grave or irresistible threat, violence, or force.
This is in accordance with Article 1745 of the Civil Code which
provides:
"Art. 1745. Any of the following or similar stipulations shall be
considered unreasonable, unjust and contrary to public policy;
xxx xxx xxx
(6) That the common carrier's liability for acts committed by thieves, or
of robbers who do not act with grave or irresistible threat, violences or
force, is dispensed with or diminished;"
In the same case, 21 the Supreme Court also held that:
"Under Article 1745 (6) above, a common carrier is held responsible —
and will not be allowed to divest or to diminish such responsibility —
even for acts of strangers like thieves or robbers except where such
thieves or robbers in fact acted with grave or irresistible threat, violence
or force. We believe and so hold that the limits of the duty of
extraordinary diligence in the vigilance over the goods carried are
reached where the goods are lost as a result of a robbery which is
attended by "grave or irresistible threat, violence or force."
Application: To establish grave and irresistible force, petitioner
presented her accusatory affidavit, 22 Jesus Bascos' affidavit, 23 and
Juanito Morden's 24 "Salaysay". However, both the trial court and the
Court of Appeals have concluded that these affidavits were not enough
to overcome the presumption. Petitioner's affidavit about the hijacking
was based on what had been told her by Juanito Morden. It was not a
first-hand account. While it had been admitted in court for lack of
objection on the part of private respondent, the respondent Court had
discretion in assigning weight to such evidence. We are bound by the
conclusion of the appellate court. In a petition for review on certiorari,
We are not to determine the probative value of evidence but to resolve
questions of law. Secondly, the affidavit of Jesus Bascos did not dwell
on how the hijacking took place. Thirdly, while the affidavit of Juanito
Morden, the truck helper in the hijacked truck, was presented as
evidence in court, he himself was a witness as could be gleaned from
the contents of the petition. Affidavits are not considered the best
evidence if the affiants are available as witnesses. 25 The subsequent
filing of the information for carnapping and robbery against the accused
named in said affidavits did not necessarily mean that the contents of
the affidavits were true because they were yet to be determined in the
trial of the criminal cases.
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.
G.R. No. 112287 December 12, 1997
From the Syllabus of Atty. Jessa Wong-Cantano

NATIONAL STEEL CORPORATION, petitioner,
vs.
COURT OF APPEALS AND VLASONS SHIPPING,
INC., respondents.
Facts: On July 17, 1974, plaintiff National Steel Corporation (NSC) as
Charterer and defendant Vlasons Shipping, Inc. (VSI) as Owner,
entered into a Contract of Voyage Charter Hire (Exhibit "B"; also
Exhibit "1") whereby NSC hired VSI's vessel, the MV "VLASONS I" to
make one (1) voyage to load steel products at Iligan City and discharge
them at North Harbor, Manila.
Under paragraph 10 thereof, it is provided that "(o)wners shall, before
and at the beginning of the voyage, exercise due diligence to make the
vessel seaworthy and properly manned, equipped and supplied and to
make the holds and all other parts of the vessel in which cargo is
carried, fit and safe for its reception, carriage and preservation. Owners
shall not be liable for loss of or damage of the cargo arising or resulting
from: unseaworthiness unless caused by want of due diligence on the
part of the owners to make the vessel seaworthy, and to secure that
the vessel is properly manned, equipped and supplied and to make the
holds and all other parts of the vessel in which cargo is carried, fit and
safe for its reception, carriage and preservation; . . . ; perils, dangers
and accidents of the sea or other navigable waters; . . . ; wastage in
bulk or weight or any other loss or damage arising from inherent defect,
quality or vice of the cargo; insufficiency of packing; . . . ; latent defects
not discoverable by due diligence; any other cause arising without the
actual fault or privity of Owners or without the fault of the agents or
servants of owners."
On September 6, 1974, on the basis of the aforesaid Report No. 1770,
plaintiff filed with the defendant its claim for damages suffered due to
the downgrading of the damaged tinplates in the amount of
P941,145.18. Then on October 3, 1974, plaintiff formally demanded
payment of said claim but defendant VSI refused and failed to pay.
Plaintiff filed its complaint against defendant on April 21, 1976 which
was docketed as Civil Case No. 23317, CFI, Rizal.
In its complaint, plaintiff claimed that it sustained losses in the
aforesaid amount of P941,145.18 as a result of the act, neglect and
default of the master and crew in the management of the vessel as well
as the want of due diligence on the part of the defendant to make the
vessel seaworthy and to make the holds and all other parts of the
vessel in which the cargo was carried, fit and safe for its reception,
carriage and preservation — all in violation of defendant's undertaking
under their Contract of Voyage Charter Hire.
In its answer, defendant denied liability for the alleged damage
claiming that the MV "VLASONS I" was seaworthy in all respects for
the carriage of plaintiff's cargo; that said vessel was not a "common
carrier" inasmuch as she was under voyage charter contract with the
plaintiff as charterer under the charter party
Issue: Whether or not the provisions of the Civil Code of the
Philippines on common carriers pursuant to which there exist[s] a
presumption of negligence against the common carrier in case of loss
or damage to the cargo are applicable to a private carrier. PRIVATE
CARRIER.
Ruling: Preliminary Matter: Common Carrier or Private Carrier?
At the outset, it is essential to establish whether VSI contracted with
NSC as a common carrier or as a private carrier. The resolution of this
preliminary question determines the law, standard of diligence and
burden of proof applicable to the present case.
Article 1732 of the Civil Code defines a common carrier as "persons,
corporations, firms or associations engaged in the business of carrying
or transporting passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public." It has been held
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that the true test of a common carrier is the carriage of passengers or
goods, provided it has space, for all who opt to avail themselves of its
transportation service for a fee.11 A carrier which does not qualify under
the above test is deemed a private carrier. "Generally, private carriage
is undertaken by special agreement and the carrier does not hold
himself out to carry goods for the general public. The most typical,
although not the only form of private carriage, is the charter party, a
maritime contract by which the charterer, a party other than the
shipowner, obtains the use and service of all or some part of a ship for
a period of time or a voyage or voyages."12
In the instant case, it is undisputed that VSI did not offer its services
to the general public. As found by the Regional Trial Court, it carried
passengers or goods only for those it chose under a "special contract
of charter party." 13 As correctly concluded by the Court of Appeals,
the MV Vlasons I "was not a common but a private
carrier."14Consequently, the rights and obligations of VSI and NSC,
including their respective liability for damage to the cargo, are
determined primarily by stipulations in their contract of private carriage
or charter party.15 Recently, in Valenzuela Hardwood and Industrial
Supply, Inc., vs. Court of Appeals and Seven Brothers Shipping
Corporation,16 the Court ruled:
. . . in a contract of private carriage, the parties may freely
stipulate their duties and obligations which perforce would be
binding on them. Unlike in a contract involving a common
carrier, private carriage does not involve the general public.
Hence, the stringent provisions of the Civil Code on common
carriers protecting the general public cannot justifiably be
applied to a ship transporting commercial goods as a private
carrier. Consequently, the public policy embodied therein is
not contravened by stipulations in a charter party that lessen
or remove the protection given by law in contracts involving
common carriers.
G.R. No. 125948 December 29, 1998
FIRST PHILIPPINE INDUSTRIAL CORPORATION,
petitioner,
vs.
COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN,
BATANGAS CITY and ADORACION C. ARELLANO, in her
official capacity as City Treasurer of Batangas,
respondents.
Facts: Petitioner is a grantee of a pipeline concession under Republic
Act No. 387, as amended, to contract, install and operate oil pipelines.
The original pipeline concession was granted in 19671 and renewed by
the Energy Regulatory Board in 1992. 2
Sometime in January 1995, petitioner applied for a mayor's permit with
the Office of the Mayor of Batangas City. However, before the mayor's
permit could be issued, the respondent City Treasurer required
petitioner to pay a local tax based on its gross receipts for the fiscal
year 1993 pursuant to the Local Government Code3. The respondent
City Treasurer assessed a business tax on the petitioner amounting to
P956,076.04 payable in four installments based on the gross receipts
for products pumped at GPS-1 for the fiscal year 1993 which amounted
to P181,681,151.00. In order not to hamper its operations, petitioner
paid the tax under protest in the amount of P239,019.01 for the first
quarter of 1993.
On January 20, 1994, petitioner filed a letter-protest addressed to the
respondent City Treasurer, the pertinent portion of which reads:
Please note that our Company (FPIC) is a pipeline
operator with a government concession granted
From the Syllabus of Atty. Jessa Wong-Cantano

under the Petroleum Act. It is engaged in the
business of transporting petroleum products from
the Batangas refineries, via pipeline, to Sucat and
JTF Pandacan Terminals. As such, our Company
is exempt from paying tax on gross receipts under
Section 133 of the Local Government Code of
1991 . . . .
Moreover, Transportation contractors are not
included in the enumeration of contractors under
Section 131, Paragraph (h) of the Local
Government Code. Therefore, the authority to
impose tax "on contractors and other independent
contractors" under Section 143, Paragraph (e) of
the Local Government Code does not include the
power to levy on transportation contractors.
The imposition and assessment cannot be
categorized as a mere fee authorized under
Section 147 of the Local Government Code. The
said section limits the imposition of fees and
charges on business to such amounts as may be
commensurate to the cost of regulation,
inspection, and licensing. Hence, assuming
arguendo that FPIC is liable for the license fee, the
imposition thereof based on gross receipts is
violative of the aforecited provision. The amount of
P956,076.04 (P239,019.01 per quarter) is not
commensurate to the cost of regulation, inspection
and licensing. The fee is already a revenue raising
measure, and not a mere regulatory imposition.4
On March 8, 1994, the respondent City Treasurer denied the protest
contending that petitioner cannot be considered engaged in
transportation business, thus it cannot claim exemption under Section
133 (j) of the Local Government Code.5
Issue: Whether or First Philippine is a common carrier so as to exempt
it from tax exemption
Ruling: YES.
Principle #1: A "common carrier" may be defined, broadly, as one who
holds himself out to the public as engaged in the business of
transporting persons or property from place to place, for compensation,
offering his services to the public generally.
Art. 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;
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
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4. The transportation must be for hire.
Application: 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.
In De Guzman vs. Court of Appeals 16we ruled that:
The above article (Art. 1732, 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 (in local idiom, as a
"sideline"). Article 1732 . . . 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 1877
deliberately refrained from making such distinctions.
So understood, the concept of "common carrier" under
Article 1732 may be seen to coincide neatly with the notion
of "public service," under the Public Service Act
(Commonwealth Act No. 1416, as amended) which at least
partially supplements the law on common carriers set forth in
the Civil Code. Under Section 13, paragraph (b) of the Public
Service Act, "public service" includes:
every person that now or hereafter may own, operate. manage, or
control in the Philippines, for hire or compensation, with general or
limited clientele, whether permanent, occasional or accidental, and
done for general business purposes, any common carrier, railroad,
street railway, traction railway, subway motor vehicle, either for freight
or passenger, or both, with or without fixed route and whatever may be
its classification, freight or carrier service of any class, express service,
steamboat, or steamship line, pontines, ferries and water
craft, engaged in the transportation of passengers or freight or both,
shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration
plant, canal, irrigation system gas, electric light heat and power, water
supply andpower petroleum, sewerage system, wire or wireless
communications systems, wire or wireless broadcasting stations and
other similar public services. (Emphasis Supplied)
G.R. No. 148496 March 19, 2002
VIRGINES CALVO doing business under the name and
style TRANSORIENT CONTAINER TERMINAL SERVICES,
INC., petitioner,
vs.
UCPB GENERAL INSURANCE CO., INC. (formerly Allied
Guarantee Ins. Co., Inc.) respondent.
Facts: Petitioner Virgines Calvo is the owner of Transorient Container
Terminal Services, Inc. (TCTSI), a sole proprietorship customs broker.
At the time material to this case, petitioner entered into a contract with
San Miguel Corporation (SMC) for the transfer of 114 reels of semi-
chemical fluting paper and 124 reels of kraft liner board from the Port
Area in Manila to SMC's warehouse at the Tabacalera Compound,
Romualdez St., Ermita, Manila. The cargo was insured by respondent
UCPB General Insurance Co., Inc.
From the Syllabus of Atty. Jessa Wong-Cantano

On July 14, 1990, the shipment in question, contained in 30 metal
vans, arrived in Manila on board "M/V Hayakawa Maru" and, after 24
hours, were unloaded from the vessel to the custody of the arrastre
operator, Manila Port Services, Inc. From July 23 to July 25, 1990,
petitioner, pursuant to her contract with SMC, withdrew the cargo from
the arrastre operator and delivered it to SMC's warehouse in Ermita,
Manila. On July 25, 1990, the goods were inspected by Marine Cargo
Surveyors, who found that 15 reels of the semi-chemical fluting paper
were "wet/stained/torn" and 3 reels of kraft liner board were likewise
torn. The damage was placed at P93,112.00.
SMC collected payment from respondent UCPB under its insurance
contract for the aforementioned amount. In turn, respondent, as
subrogee of SMC, brought suit against petitioner in the Regional Trial
Court, Branch 148, Makati City, which, on December 20, 1995,
rendered judgment finding petitioner liable to respondent for the
damage to the shipment.
Issue: Whether Calvo is a common carrier and whether it is liable for
damages
Ruling: YES and YES.
Principle #1: In De Guzman v. Court of Appeals,7 the Court dismissed
a similar contention and held the party to be a common carrier, thus -
The Civil Code defines "common carriers" in the following terms:
"Article 1732. Common carriers are persons, corporations,
firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or
air for compensation, offering their services to the public."
The above article makes no distinction between one
whose principal business activity is the carrying of persons or
goods or both, and one who does such carrying only as
an ancillary activity . . . Article 1732 also carefully avoids
making any distinction between a person or enterprise
offering transportation service on a regular or scheduled
basis and one offering such service on an occasional,
episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the
"general public," i.e., the general community or population,
and one who offers services or solicits business only from a
narrow segment of the general population. We think that
Article 1732 deliberately refrained from making such
distinctions.
So understood, the concept of "common carrier" under
Article 1732 may be seen to coincide neatly with the notion
of "public service," under the Public Service Act
(Commonwealth Act No. 1416, as amended) which at least
partially supplements the law on common carriers set forth in
the Civil Code. Under Section 13, paragraph (b) of the Public
Service Act, "public service" includes:
" x x x every person that now or hereafter may own, operate, manage,
or control in the Philippines, for hire or compensation, with general or
limited clientele, whether permanent, occasional or accidental, and
done for general business purposes, any common carrier, railroad,
street railway, traction railway, subway motor vehicle, either for freight
or passenger, or both, with or without fixed route and whatever may be
its classification, freight or carrier service of any class, express service,
steamboat, or steamship line, pontines, ferries and water craft,
engaged in the transportation of passengers or freight or both,
shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration
plant, canal, irrigation system, gas, electric light, heat and power, water
supply and power petroleum, sewerage system, wire or wireless
First Exam Reviewer
Transportation Laws 6
Averell B. Abrasaldo – II-Sanchez Roman
communications systems, wire or wireless broadcasting stations and
other similar public services. x x x"
Application: There is greater reason for holding petitioner to be a
common carrier because the transportation of goods is an integral part
of her business. To uphold petitioner's contention would be to deprive
those with whom she contracts the protection which the law affords
them notwithstanding the fact that the obligation to carry goods for her
customers, as already noted, is part and parcel of petitioner's
business.
Principle #2: In Compania Maritima v. Court of Appeals,9 the meaning
of "extraordinary diligence in the vigilance over goods" was explained
thus:
The extraordinary diligence in the vigilance over the goods
tendered for shipment requires the common carrier to know
and to follow the required precaution for avoiding damage to,
or destruction of the goods entrusted to it for sale, carriage
and delivery. It requires common carriers to render service
with the greatest skill and foresight and "to use all
reasonable means to ascertain the nature and characteristic
of goods tendered for shipment, and to exercise due care in
the handling and stowage, including such methods as their
nature requires."
Application: In the case at bar, petitioner denies liability for the
damage to the cargo. She claims that the "spoilage or wettage" took
place while the goods were in the custody of either the carrying vessel
"M/V Hayakawa Maru," which transported the cargo to Manila, or the
arrastre operator, to whom the goods were unloaded and who allegedly
kept them in open air for nine days from July 14 to July 23, 1998
notwithstanding the fact that some of the containers were deformed,
cracked, or otherwise damaged, as noted in the Marine Survey Report.
Contrary to petitioner's assertion, the Survey Report (Exh. H) of the
Marine Cargo Surveyors indicates that when the shipper transferred
the cargo in question to the arrastre operator, these were covered by
clean Equipment Interchange Report (EIR) and, when petitioner'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.
G.R. No. 141910 August 6, 2002
FGU INSURANCE CORPORATION, petitioner,
vs.
G.P. SARMIENTO TRUCKING CORPORATION and
LAMBERT M. EROLES, respondents.
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
From the Syllabus of Atty. Jessa Wong-Cantano

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 GPS Trucking Corporation is a common carrier.
Ruling: NO.
On the first issue, the Court finds the conclusion of the trial court and
the Court of Appeals to be amply justified. GPS, being an exclusive
contractor and hauler of Concepcion Industries, Inc., rendering or
offering its services to no other individual or entity, cannot be
considered a common carrier. Common carriers are persons,
corporations, firms or associations engaged in the business of carrying
or transporting passengers or goods or both, by land, water, or air, for
hire or compensation, offering their services to the public,8 whether to
the public in general or to a limited clientele in particular, but never on
an exclusive basis.9 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. 10Given accepted
standards, GPS scarcely falls within the term "common carrier."
G.R. No. 149038 April 9, 2003
PHILIPPINE AMERICAN GENERAL INSURANCE
COMPANY, petitioner,
vs.
PKS SHIPPING COMPANY, respondent.
Facts: Davao Union Marketing Corporation (DUMC) contracted the
services of respondent PKS Shipping Company (PKS Shipping) for the
shipment to Tacloban City of seventy-five thousand (75,000) bags of
cement worth Three Million Three Hundred Seventy-Five Thousand
Pesos (P3,375,000.00). DUMC insured the goods for its full value with
petitioner Philippine American General Insurance Company
(Philamgen). The goods were loaded aboard the dumb barge Limar
I belonging to PKS Shipping. On the evening of 22 December 1988,
about nine o’clock, while Limar Iwas being towed by respondent’s
tugboat, MT Iron Eagle, the barge sank a couple of miles off the coast
of Dumagasa Point, in Zamboanga del Sur, bringing down with it the
entire cargo of 75,000 bags of cement.
DUMC filed a formal claim with Philamgen for the full amount of the
insurance. Philamgen promptly made payment; it then sought
reimbursement from PKS Shipping of the sum paid to DUMC but the
shipping company refused to pay, prompting Philamgen to file suit
against PKS Shipping with the Makati RTC.
Issue: 1.) Whether PKS is a common carrier; and 2.) Whether PKS is
liable for the loss of DUMC Cargo
Ruling: First issue: Yes. Second issue: No.
Principle #1: The Civil Code defines "common carriers" in the
following terms:
First Exam Reviewer
Transportation Laws 7
Averell B. Abrasaldo – II-Sanchez Roman
"Article 1732. Common carriers are persons, corporations,
firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or
air for compensation, offering their services to the public."
Complementary to the codal definition is Section 13, paragraph (b), of
the Public Service Act; it defines "public service" to be –
"x x x every person that now or hereafter may own, operate,
manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general
business purposes, any common carrier, railroad, street
railway, 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, or
steamship line, pontines, ferries and water craft, engaged in
the transportation of passengers or freight or both, shipyard,
marine repair shop, wharf or dock, ice plant, ice refrigeration
plant, canal, irrigation system, gas, electric light, heat and
power, water supply and power petroleum, sewerage
system, wire or wireless communication systems, wire or
wireless broadcasting stations and other similar public
services. x x x. (Underscoring supplied)."
Much of the distinction between a "common or public carrier" and a
"private or special carrier" lies in the character of the business, such
that if the undertaking is an isolated transaction, not a part of the
business or occupation, and the carrier does not hold itself out to carry
the goods for the general public or to a limited clientele, although
involving the carriage of goods for a fee,3 the person or corporation
providing such service could very well be just a private carrier. A typical
case is that of a charter party which includes both the vessel and its
crew, such as in a bareboat or demise, where the charterer obtains the
use and service of all or some part of a ship for a period of time or a
voyage or voyages4 and gets the control of the vessel and its crew.
Application #1: Contrary to the conclusion made by the appellate
court, its factual findings indicate that PKS Shipping has engaged itself
in the business of carrying goods for others, although for a limited
clientele, undertaking to carry such goods for a fee. The regularity of its
activities in this area indicates more than just a casual activity on its
part.6 Neither can the concept of a common carrier change merely
because individual contracts are executed or entered into with patrons
of the carrier. Such restrictive interpretation would make it easy for a
common carrier to escape liability by the simple expedient of entering
into those distinct agreements with clients.
Principle #2: Article 1733 of the Civil Code requires common carriers
to observe extraordinary diligence in the vigilance over the goods they
carry. In case of loss, destruction or deterioration of goods, common
carriers are presumed to have been at fault or to have acted
negligently, and the burden of proving otherwise rests on them. 7 The
provisions of Article 1733, notwithstanding, common carriers are
exempt from liability for loss, destruction, or deterioration of the goods
due to any of the following causes:
(1) Flood, storm, earthquake, lightning, or other natural
disaster or calamity;
(2) Act of the public enemy in war, whether international or
civil;
(3) Act or omission of the shipper or owner of the goods;
From the Syllabus of Atty. Jessa Wong-Cantano

(4) The character of the goods or defects in the packing or in
the containers; and
(5) Order or act of competent public authority.8
Application #2: The appellate court ruled, gathered from the
testimonies and sworn marine protests of the respective vessel
masters of Limar I and MT Iron Eagle, that there was no way by which
the barge’s or the tugboat’s crew could have prevented the sinking
of Limar I. The vessel was suddenly tossed by waves of extraordinary
height of six (6) to eight (8) feet and buffeted by strong winds of 1.5
knots resulting in the entry of water into the barge’s hatches. The
official Certificate of Inspection of the barge issued by the Philippine
Coastguard and the Coastwise Load Line Certificate would attest to the
seaworthiness of Limar I and should strengthen the factual findings of
the appellate court.
G.R. No. 138334 August 25, 2003
ESTELA L. CRISOSTOMO, Petitioner,
vs.
The Court of Appeals and CARAVAN TRAVEL & TOURS
INTERNATIONAL, INC., Respondents.
Facts: In May 1991, petitioner Estela L. Crisostomo contracted the
services of respondent Caravan Travel and Tours International, Inc. to
arrange and facilitate her booking, ticketing and accommodation in a
tour dubbed "Jewels of Europe". The package tour included the
countries of England, Holland, Germany, Austria, Liechstenstein,
Switzerland and France at a total cost of P74,322.70. Petitioner was
given a 5% discount on the amount, which included airfare, and the
booking fee was also waived because petitioner’s niece, Meriam
Menor, was respondent company’s ticketing manager.
Without checking her travel documents, petitioner went to NAIA on
Saturday, June 15, 1991, to take the flight for the first leg of her journey
from Manila to Hongkong. To petitioner’s dismay, she discovered that
the flight she was supposed to take had already departed the previous
day. She learned that her plane ticket was for the flight scheduled on
June 14, 1991. She thus called up Menor to complain.
Upon petitioner’s return from Europe, she demanded from respondent
the reimbursement of P61,421.70, representing the difference between
the sum she paid for "Jewels of Europe" and the amount she owed
respondent for the "British Pageant" tour. Despite several demands,
respondent company refused to reimburse the amount, contending that
the same was non-refundable.1 Petitioner was thus constrained to file a
complaint against respondent for breach of contract of carriage and
damages, which was docketed as Civil Case No. 92-133 and raffled to
Branch 59 of the Regional Trial Court of Makati City.
Petitioner contends that respondent did not observe the standard of
care required of a common carrier when it informed her wrongly of the
flight schedule. She could not be deemed more negligent than
respondent since the latter is required by law to exercise extraordinary
diligence in the fulfillment of its obligation. If she were negligent at all,
the same is merely contributory and not the proximate cause of the
damage she suffered. Her loss could only be attributed to respondent
as it was the direct consequence of its employee’s gross negligence.
Issue: Whether Crisostomo and Caravan Travel &Tours International,
Inc. entered into a contract of carriage?
Ruling: NO.
First Exam Reviewer
Transportation Laws 8
Averell B. Abrasaldo – II-Sanchez Roman
Principle: By definition, a contract of carriage or transportation is one
whereby a certain person or association of persons obligate
themselves to transport persons, things, or news from one place to
another for a fixed price.9 Such person or association of persons are
regarded as carriers and are classified as private or special carriers
and common or public carriers.10 A common carrier is defined under
Article 1732 of the Civil Code as persons, corporations, firms or
associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water or air, for compensation,
offering their services to the public.
Application: It is obvious from the above definition that
respondent is not an entity engaged in the business of
transporting either passengers or goods and is therefore, neither
a private nor a common carrier. Respondent did not undertake to
transport petitioner from one place to another since its covenant
with its customers is simply to make travel arrangements in their
behalf. Respondent’s services as a travel agency include
procuring tickets and facilitating travel permits or visas as well as
booking customers for tours.
While petitioner concededly bought her plane ticket through the
efforts of respondent company, this does not mean that the latter
ipso facto is a common carrier. At most, respondent acted merely
as an agent of the airline, with whom petitioner ultimately
contracted for her carriage to Europe. Respondent’s obligation to
petitioner in this regard was simply to see to it that petitioner was
properly booked with the airline for the appointed date and time.
Her transport to the place of destination, meanwhile, pertained
directly to the airline.
The object of petitioner’s contractual relation with respondent is the
latter’s service of arranging and facilitating petitioner’s booking,
ticketing and accommodation in the package tour. In contrast, the
object of a contract of carriage is the transportation of passengers or
goods. It is in this sense that the contract between the parties in this
case was an ordinary one for services and not one of carriage.
Petitioner’s submission is premised on a wrong assumption.
The nature of the contractual relation between petitioner and
respondent is determinative of the degree of care required in the
performance of the latter’s obligation under the contract. For reasons of
public policy, a common carrier in a contract of carriage is bound by
law to carry passengers as far as human care and foresight can
provide using the utmost diligence of very cautious persons and with
due regard for all the circumstances.11 As earlier stated, however,
respondent is not a common carrier but a travel agency. It is thus not
bound under the law to observe extraordinary diligence in the
performance of its obligation, as petitioner claims.
Since the contract between the parties is an ordinary one for services,
the standard of care required of respondent is that of a good father of a
family under Article 1173 of the Civil Code.12 This connotes reasonable
care consistent with that which an ordinarily prudent person would
have observed when confronted with a similar situation. The test to
determine whether negligence attended the performance of an
obligation is: did the defendant in doing the alleged negligent act use
that reasonable care and caution which an ordinarily prudent person
would have used in the same situation? If not, then he is guilty of
negligence.13
G.R. No. 184300 July 11, 2012
MALAYAN INSURANCE CO., INC., Petitioner,
vs.
PHILIPPINES FIRST INSURANCE CO., INC. and
REPUTABLE FORWARDER SERVICES, INC., Respondents.
From the Syllabus of Atty. Jessa Wong-Cantano

Facts: Since 1989, Wyeth Philippines, Inc. (Wyeth) and respondent
Reputable Forwarder Services, Inc. (Reputable) had been annually
executing a contract of carriage, whereby the latter undertook to
transport and deliver the former’s products to its customers, dealers or
salesmen.3
On November 18, 1993, Wyeth procured Marine Policy No. MAR
13797 (Marine Policy) from respondent Philippines First Insurance Co.,
Inc. (Philippines First) to secure its interest over its own products.
Philippines First thereby insured Wyeth’s nutritional, pharmaceutical
and other products usual or incidental to the insured’s business while
the same were being transported or shipped in the Philippines. The
policy covers all risks of direct physical loss or damage from any
external cause, if by land, and provides a limit of P6,000,000.00 per
any one land vehicle.
The contract also required Reputable to secure an insurance policy on
Wyeth’s goods.7 Thus, on February 11, 1994, Reputable signed a
Special Risk Insurance Policy (SR Policy) with petitioner Malayan for
the amount of P1,000,000.00.
On October 6, 1994, during the effectivity of the Marine Policy and SR
Policy, Reputable received from Wyeth 1,000 boxes of Promil infant
formula worth P2,357,582.70 to be delivered by Reputable to Mercury
Drug Corporation in Libis, Quezon City. Unfortunately, on the same
date, the truck carrying Wyeth’s products was hijacked by about
10 armed men. They threatened to kill the truck driver and two of
his helpers should they refuse to turn over the truck and its
contents to the said highway robbers. The hijacked truck was
recovered two weeks later without its cargo.
Consequently, Philippines First instituted an action for sum of money
against Reputable on August 12, 1996.8 In its complaint, Philippines
First stated that Reputable is a "private corporation engaged in the
business of a common carrier." In its answer,9 Reputable claimed that it
is a private carrier. It also claimed that it cannot be made liable under
the contract of carriage with Wyeth since the contract was not signed
by Wyeth’s representative and that the cause of the loss was force
majeure, i.e., the hijacking incident.
Issue: 1.) Whether Reputable is a private carrier; and 2.) WWhether
Reputable is strictly bound by the stipulations in its contract of carriage
with Wyeth, such that it should be liable for any risk of loss or damage,
for any cause whatsoever, including that due to theft or robbery and
other force majeure.
Ruling: First issue: Yes. Second Issue: Yes.
Principle #1: Under Article 1732 of the Civil Code, common carriers
are persons, corporations, firms, or associations engaged in the
business of carrying or transporting passenger or goods, or both by
land, water or air for compensation, offering their services to the public.
On the other hand, a private carrier is one wherein the carriage is
generally undertaken by special agreement and it does not hold itself
out to carry goods for the general public.28 A common carrier becomes
a private carrier when it undertakes to carry a special cargo or
chartered to a special person only.29 For all intents and purposes,
therefore, Reputable operated as a private/special carrier with regard
to its contract of carriage with Wyeth.
Application #1: More importantly, the finding of the RTC and CA that
Reputable is a special or private carrier is warranted by the evidence
on record, primarily, the unrebutted testimony of Reputable’s Vice
President and General Manager, Mr. William Ang Lian Suan, who
expressly stated in open court that Reputable serves only one
customer, Wyeth.
First Exam Reviewer
Transportation Laws 9
Averell B. Abrasaldo – II-Sanchez Roman
Principle #2: The extent of a private carrier’s obligation is dictated by
the stipulations of a contract it entered into, provided its stipulations,
clauses, terms and conditions are not contrary to law, morals, good
customs, public order, or public policy. "The Civil Code provisions on
common carriers should not be applied where the carrier is not acting
as such but as a private carrier. Public policy governing common
carriers has no force where the public at large is not involved."
Application #2: Thus, being a private carrier, the extent of Reputable’s
liability is fully governed by the stipulations of the contract of carriage,
one of which is that it shall be liable to Wyeth for the loss of the
goods/products due to any and all causes whatsoever, including theft,
robbery and other force majeure while the goods/products are in transit
and until actual delivery to Wyeth’s customers, salesmen and dealers.
G.R. No. 157917 August 29, 2012
SPOUSES TEODORO1 and NANETTE PERENA, Petitioners,
vs.
SPOUSES TERESITA PHILIPPINE NICOLAS and L.
ZARATE, NATIONAL RAILWAYS, and the COURT OF
APPEALS Respondents.
Doctrine: 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.
Facts: The Pereñas were engaged in the business of transporting
students from their respective residences in Parañaque City to Don
Bosco in Pasong Tamo, Makati City, and back. In their business, the
Pereñas used a KIA Ceres Van (van) with Plate No. PYA 896, which
had the capacity to transport 14 students at a time, two of whom would
be seated in the front beside the driver, and the others in the rear, with
six students on either side. They employed Clemente Alfaro (Alfaro) as
driver of the van.
At about the time the van was to traverse the railroad crossing, PNR
Commuter No. 302 (train), operated by Jhonny Alano (Alano), was in
the vicinity of the Magallanes Interchange travelling northbound. As the
train neared the railroad crossing, Alfaro drove the van eastward
across the railroad tracks, closely tailing a large passenger bus. His
view of the oncoming train was blocked because he overtook the
passenger bus on its left side. The train blew its horn to warn motorists
of its approach. When the train was about 50 meters away from the
passenger bus and the van, Alano applied the ordinary brakes of the
train. He applied the emergency brakes only when he saw that a
collision was imminent. The passenger bus successfully crossed the
railroad tracks, but the van driven by Alfaro did not. The train hit the
rear end of the van, and the impact threw nine of the 12 students in the
rear, including Aaron, out of the van. Aaron landed in the path of the
train, which dragged his body and severed his head,
instantaneously killing him. Alano fled the scene on board the
train, and did not wait for the police investigator to arrive.
Devastated by the early and unexpected death of Aaron, the Zarates
commenced this action for damages against Alfaro, the Pereñas, PNR
and Alano
Issue: Were the Pereñas and PNR jointly
and severally liable for damages?
Ruling: YES.
From the Syllabus of Atty. Jessa Wong-Cantano

Principle: Although in this jurisdiction the operator of a school bus
service has been usually regarded as a private carrier, 9 primarily
because he only caters to some specific or privileged individuals, and
his operation is neither open to the indefinite public nor for public use,
the exact nature of the operation of a school bus service has not been
finally settled. This is the occasion to lay the matter to rest.
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.10 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.11 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. 12 Contracts of
common carriage are governed by the provisions on common carriers
of the Civil Code, the Public Service Act,13 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,15 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.
As all the foregoing indicate, the true test for a common carrier is not
the quantity or extent of the business actually transacted, or the
number and character of the conveyances used in the activity, but
whether the undertaking is a part of the activity engaged in by the
carrier that he has held out to the general public as his business or
occupation. If the undertaking is a single transaction, not a part of the
general business or occupation engaged in, as advertised and held out
to the general public, the individual or the entity rendering such service
is a private, not a common, carrier. The question must be determined
by the character of the business actually carried on by the carrier, not
by any secret intention or mental reservation it may entertain or assert
when charged with the duties and obligations that the law imposes.
Application: Applying these considerations to the case before us,
there is no question that the Pereñas as the operators of a school bus
service were: (a) engaged in transporting passengers generally as
a business, not just as a casual occupation; (b) undertaking to
carry passengers over established roads by the method by which
the business was conducted; and (c) transporting students for a
fee. Despite catering to a limited clientèle, the Pereñas operated
as a common carrier because they held themselves out as a ready
transportation indiscriminately to the students of a particular
First Exam Reviewer
Transportation Laws 10
Averell B. Abrasaldo – II-Sanchez Roman
school living within or near where they operated the service and
for a fee.
B. Can a common carrier become a private carrier?
G.R. No. 101503 September 15, 1993
PLANTERS PRODUCTS, INC., petitioner,
vs.
COURT OF APPEALS, SORIAMONT STEAMSHIP
AGENCIES AND KYOSEI KISEN KABUSHIKI
KAISHA, respondents.
Facts: Planters Products, Inc. (PPI), purchased from Mitsubishi
International Corporation (MITSUBISHI) of New York, U.S.A.,
9,329.7069 metric tons (M/T) of Urea 46% fertilizer which the latter
shipped in bulk on 16 June 1974 aboard the cargo vessel M/V "Sun
Plum" owned by private respondent Kyosei Kisen Kabushiki Kaisha
(KKKK) from Kenai, Alaska, U.S.A., to Poro Point, San Fernando, La
Union, Philippines, as evidenced by Bill of Lading No. KP-1 signed by
the master of the vessel and issued on the date of departure.
On 17 May 1974, or prior to its voyage, a time charter-party on the
vessel M/V "Sun Plum" pursuant to the Uniform General
Charter2 was entered into between Mitsubishi as shipper/charterer
and KKKK as shipowner, in Tokyo, Japan.3 Riders to the aforesaid
charter-party starting from par. 16 to 40 were attached to the pre-
printed agreement. Addenda Nos. 1, 2, 3 and 4 to the charter-party
were also subsequently entered into on the 18th, 20th, 21st and 27th of
May 1974, respectively.
It took eleven (11) days for PPI to unload the cargo, from 5 July to 18
July 1974 (except July 12th, 14th and 18th).10A private marine and
cargo surveyor, Cargo Superintendents Company Inc. (CSCI), was
hired by PPI to determine the "outturn" of the cargo shipped, by taking
draft readings of the vessel prior to and after discharge. 11 The survey
report submitted by CSCI to the consignee (PPI) dated 19 July 1974
revealed a shortage in the cargo of 106.726 M/T and that a portion of
the Urea fertilizer approximating 18 M/T was contaminated with dirt.
The same results were contained in a Certificate of Shortage/Damaged
Cargo dated 18 July 1974 prepared by PPI which showed that the
cargo delivered was indeed short of 94.839 M/T and about 23 M/T
were rendered unfit for commerce, having been polluted with sand, rust
and
dirt. 12
Consequently, PPI sent a claim letter dated 18 December 1974 to
Soriamont Steamship Agencies (SSA), the resident agent of the
carrier, KKKK, for P245,969.31 representing the cost of the alleged
shortage in the goods shipped and the diminution in value of that
portion said to have been contaminated with dirt.
Issue: Whether a common carrier becomes a private carrier by reason
of a charter-party; in the negative, whether the shipowner in the instant
case was able to prove that he had exercised that degree of diligence
required of him under the law. Or,
Does a charter-party1 between a shipowner and a charterer transform a
common carrier into a private one as to negate the civil law
presumption of negligence in case of loss or damage to its cargo?
Ruling: NO.
Principle #1: A "charter-party" is defined as a contract by which an
entire ship, or some principal part thereof, is let by the owner to another
From the Syllabus of Atty. Jessa Wong-Cantano

person for a specified time or use; 20 a contract of affreightment by
which the owner of a ship or other vessel lets the whole or a part of her
to a merchant or other person for the conveyance of goods, on a
particular voyage, in consideration of the payment of freight; 21
Charter parties are of two types: (a) contract of affreightment which
involves the use of shipping space on vessels leased by the owner in
part or as a whole, to carry goods for others; and, (b) charter by demise
or bareboat charter, by the terms of which the whole vessel is let to the
charterer with a transfer to him of its entire command and possession
and consequent control over its navigation, including the master and
the crew, who are his servants. Contract of affreightment may either
be time charter, wherein the vessel is leased to the charterer for a fixed
period of time, or voyage charter, wherein the ship is leased for a
single voyage. 22 In both cases, the charter-party provides for the hire
of vessel only, either for a determinate period of time or for a single or
consecutive voyage, the shipowner to supply the ship's stores, pay for
the wages of the master and the crew, and defray the expenses for the
maintenance of the ship.
Upon the other hand, the term "common or public carrier" is defined
in Art. 1732 of the Civil Code. 23 The definition extends to carriers either
by land, air or water which hold themselves out as ready to engage in
carrying goods or transporting passengers or both for compensation as
a public employment and not as a casual occupation. The distinction
between a "common or public carrier" and a "private or special carrier"
lies in the character of the business, such that if the undertaking is a
single transaction, not a part of the general business or occupation,
although involving the carriage of goods for a fee, the person or
corporation offering such service is a private carrier. 24
Article 1733 of the New Civil Code mandates that common carriers, by
reason of the nature of their business, should observe extraordinary
diligence in the vigilance over the goods they carry.25 In the case of
private carriers, however, the exercise of ordinary diligence in the
carriage of goods will suffice. Moreover, in the case of loss, destruction
or deterioration of the goods, common carriers are presumed to have
been at fault or to have acted negligently, and the burden of proving
otherwise rests on them.26 On the contrary, no such presumption
applies to private carriers, for whosoever alleges damage to or
deterioration of the goods carried has the onus of proving that the
cause was the negligence of the carrier.
Application #1: It is therefore imperative that a public carrier shall
remain as such, notwithstanding the charter of the whole or portion of a
vessel by one or more persons, provided the charter is limited to the
ship only, as in the case of a time-charter or voyage-charter. It is only
when the charter includes both the vessel and its crew, as in a
bareboat or demise that a common carrier becomes private, at least
insofar as the particular voyage covering the charter-party is
concerned. Indubitably, a shipowner in a time or voyage charter retains
possession and control of the ship, although her holds may, for the
moment, be the property of the charterer.
Principle #2: In an action for recovery of damages against a common
carrier on the goods shipped, the shipper or consignee should first
prove the fact of shipment and its consequent loss or damage while the
same was in the possession, actual or constructive, of the carrier.
Thereafter, the burden of proof shifts to respondent to prove that he
has exercised extraordinary diligence required by law or that the loss,
damage or deterioration of the cargo was due to fortuitous event, or
some other circumstances inconsistent with its liability.
Application #2: To our mind, respondent carrier has sufficiently
overcome, by clear and convincing proof, the prima facie presumption
of negligence.
First Exam Reviewer
Transportation Laws 11
Averell B. Abrasaldo – II-Sanchez Roman
The master of the carrying vessel, Captain Lee Tae Bo, in his
deposition taken on 19 April 1977 before the Philippine Consul and
Legal Attache in the Philippine Embassy in Tokyo, Japan, testified
that before the fertilizer was loaded, the four (4) hatches of the
vessel were cleaned, dried and fumigated. After completing the
loading of the cargo in bulk in the ship's holds, the steel pontoon
hatches were closed and sealed with iron lids, then covered with
three (3) layers of serviceable tarpaulins which were tied with
steel bonds. The hatches remained close and tightly sealed while
the ship was in transit as the weight of the steel covers made it
impossible for a person to open without the use of the ship's
boom. 32
It was also shown during the trial that the hull of the vessel was in good
condition, foreclosing the possibility of spillage of the cargo into the sea
or seepage of water inside the hull of the vessel. 33 When M/V "Sun
Plum" docked at its berthing place, representatives of the consignee
boarded, and in the presence of a representative of the shipowner, the
foreman, the stevedores, and a cargo surveyor representing CSCI,
opened the hatches and inspected the condition of the hull of the
vessel. The stevedores unloaded the cargo under the watchful eyes of
the shipmates who were overseeing the whole operation on rotation
basis. 34
Verily, the presumption of negligence on the part of the respondent
carrier has been efficaciously overcome by the showing of
extraordinary zeal and assiduity exercised by the carrier in the care of
the cargo.
C. Registered owner liable for operation of common
carriers; Kabit system:
G.R. No. L-9605 September 30, 1957
GAUDIOSO EREZO, ET AL., plaintiff-appellee,
vs.
AGUEDO JEPTE, defendant-appellant.
Facts: Defendant-appellant is the registered owner of a six by six truck
bearing plate No. TC-1253. 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 in criminal case
No. 10663 of the Court of First Instance of Manila.
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.
Issue: Whether defendant-appellant is liable for damages and what is
the legal basis for his (defendant-appellant's) liability?.
Ruling: YES.
Principle: We already have held that the registered owner of a
certificate of public convenience is liable to the public for the injuries or
damages suffered by passengers or third persons caused by the
From the Syllabus of Atty. Jessa Wong-Cantano

operation of said vehicle, even though the same had been transferred
to a third person.
The principle upon which this doctrine is based is that in dealing with
vehicles registered under the Public Service Law, the public has the
right to assume or presume that the registered owner is the actual
owner thereof, for it would be difficult for the public to enforce the
actions that they may have for injuries caused to them by the vehicles
being negligently operated if the public should be required to prove
who the actual owner is. How would the public or third persons know
against whom to enforce their rights in case of subsequent transfers of
the vehicles? We do not imply by this doctrine, however, that the
registered owner may not recover whatever amount he had paid by
virtue of his liability to third persons from the person to whom he had
actually sold, assigned or conveyed the vehicle.
Under the same principle the registered owner of any vehicle, even if
not used for a public service, should primarily be responsible to the
public or to third persons for injuries caused the latter while the vehicle
is being driven on the highways or streets.
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
(Chinchilla vs. Rafael and Verdaguer, 39 Phil. 888), but to permit the
use and operation of the vehicle upon any public highway (section 5
[a], Act No. 3992, as amended).The main aim of motor vehicle
registration is to identify the owner so that if any accident happens, or
that any damage or injury is caused by the vehicles on the public
highways, responsibility therefore can be fixed on a definite individual,
the registered owner. Instances are numerous where vehicles running
on public highways caused accidents or injuries to pedestrians or other
vehicles without positive identification of the owner or drivers, or with
very scant means of identification. It is to forestall those circumstances,
so inconvenient or prejudicial to the public, that the motor vehicle
registration is primarily ordained, in the interest of the determination of
persons responsible for damages or injuries caused on public
highways.
A victim of recklessness on the public highways is usually
without means to discover or identify the person actually causing
the injury or damage. He has no means other than by a recourse
to the registration in the Motor Vehicles Office to determine who
is the owner. The protection that the law aims to extend to him
would become illusory were the registered owner given the
opportunity to escape liability by disproving his ownership. If the
policy of the law is to be enforced and carried out, the registered
owner should be allowed to prove the contrary to the prejudice of
the person injured that is, to prove that a third person or another
has become the owner, so that he may thereby be relieved of the
responsibility to the injured person.
The above policy and application of the law may appear quite harsh
and would seem to conflict with truth and justice. We do not think it is
so. A registered owner who has already sold or transferred a vehicle
has the recourse to a third-party complaint, in the same action brought
against him to recover for the damage or injury done, against the
vendee or transferee of the vehicle. The inconvenience of the suit is no
justification for relieving him of liability; said inconvenience is the price
he pays for failure to comply with the registration that the law demands
and requires.
Application: In synthesis, we hold that the registered owner, the
defendant-appellant herein, is primarily responsible for the damage
caused to the vehicle of the plaintiff-appellee, but he (defendant-
appellant) has a right to be indemnified by the real or actual owner of
First Exam Reviewer
Transportation Laws 12
Averell B. Abrasaldo – II-Sanchez Roman
the amount that he may be required to pay as damage for the injury
caused to the plaintiff-appellant.
G.R. No. 70876 July 19, 1990
MA. LUISA BENEDICTO, petitioner,
vs.
HON. INTERMEDIATE APPELLATE COURT and
GREENHILLS WOOD INDUSTRIES COMPANY,
INC. respondents.
Facts: Sometime in May 1980, private respondent bound itself to sell
and deliver to Blue Star Mahogany, Inc., ("Blue Star") a company with
business operations in Valenzuela, Bulacan 100,000 board feet of
sawn lumber with the understanding that an initial delivery would be
made on 15 May 1980. 1 To effect its first delivery, private respondent's
resident manager in Maddela, Dominador Cruz, contracted Virgilio
Licuden, the driver of a cargo truck bearing Plate No. 225 GA TH to
transport its sawn lumber to the consignee Blue Star in Valenzuela,
Bulacan. This cargo truck was registered in the name of petitioner Ma.
Luisa Benedicto, the proprietor of Macoven Trucking, a business
enterprise engaged in hauling freight, with main office in B.F. Homes,
Parañaque.
On 15 May 1980, Cruz in the presence and with the consent of driver
Licuden, supervised the loading of 7,690 board feet of sawn lumber
with invoice value of P16,918.00 aboard the cargo truck. Before the
cargo truck left Maddela for Valenzuela, Bulacan, Cruz issued to
Licuden Charge Invoices Nos. 3259 and 3260 both of which were
initialed by the latter at the bottom left corner.2 The first invoice was for
the amount of P11,822.80 representing the value of 5,374 board feet of
sawn lumber, while the other set out the amount of P5,095.20 as the
value of 2,316 board feet. Cruz instructed Licuden to give the original
copies of the two (2) invoices to the consignee upon arrival in
Valenzuela, Bulacan 3 and to retain the duplicate copies in order that
he could afterwards claim the freightage from private respondent's
Manila office. 4
On 16 May 1980, the Manager of Blue Star called up by long distance
telephone Greenhills' president, Henry Lee Chuy, informing him that
the sawn lumber on board the subject cargo truck had not yet arrived in
Valenzuela, Bulacan. The latter in turn informed Greenhills' resident
manager in its Maddela saw-mill of what had happened. In a
letter 5 dated 18 May 1980, Blue Star's administrative and personnel
manager, Manuel R. Bautista, formally informed Greenhills' president
and general manager that Blue Star still had not received the sawn
lumber which was supposed to arrive on 15 May 1980 and
because of this delay, "they were constrained to look for other
suppliers."
On 25 June 1980, after confirming the above with Blue Star and
after trying vainly to persuade it to continue with their contract,
private respondent Greenhill's filed Criminal Case No. 668 against
driver Licuden for estafa. Greenhills also filed against petitioner
Benedicto Civil Case No. D-5206 for recovery of the value of the
lost sawn lumber plus damages before the RTC of Dagupan City.
In her answer, 6 petitioner Benedicto denied liability alleging that she
was a complete stranger to the contract of carriage, the subject truck
having been earlier sold by her to Benjamin Tee, on 28 February 1980
as evidenced by a deed of sale. 7 She claimed that the truck had
remained registered in her name notwithstanding its earlier sale to Tee
because the latter had paid her only P50,000.00 out of the total agreed
price of P68,000.00 However, she averred that Tee had been operating
the said truck in Central Luzon from that date (28 February 1980)
onwards, and that, therefore, Licuden was Tee's employee and not
hers.
From the Syllabus of Atty. Jessa Wong-Cantano

Issue: Whether or not under the facts and applicable law, the appellate
court was correct in finding that petitioner, being the registered owner
of the carrier, should be held liable for the value of the undelivered or
lost sawn lumber.
Ruling: YES.
Principle: The prevailing doctrine on common carriers makes the
registered owner liable for consequences flowing from the operations
of the carrier, even though the specific vehicle involved may already
have been transferred to another person. This doctrine rests upon the
principle that in dealing with vehicles registered under the Public
Service Law, the public has the right to assume that the registered
owner is the actual or lawful owner thereof It would be very difficult and
often impossible as a practical matter, for members of the general
public to enforce the rights of action that they may have for injuries
inflicted by the vehicles being negligently operated if they should be
required to prove who the actual owner is. 11 The registered owner is
not allowed to deny liability by proving the identity of the alleged
transferee. Thus, contrary to petitioner's claim, private respondent is
not required to go beyond the vehicle's certificate of registration to
ascertain the owner of the carrier. In this regard, the letter presented by
petitioner allegedly written by Benjamin Tee admitting that Licuden was
his driver, had no evidentiary value not only because Benjamin Tee
was not presented in court to testify on this matter but also because of
the aforementioned doctrine. To permit the ostensible or registered
owner to prove who the actual owner is, would be to set at naught the
purpose or public policy which infuses that doctrine.
Application: There is no dispute that petitioner Benedicto has
been holding herself out to the public as engaged in the business
of hauling or transporting goods for hire or compensation.
Petitioner Benedicto is, in brief, a common carrier.
In fact, private respondent had no reason at all to doubt the authority of
Licuden to enter into a contract of carriage on behalf of the registered
owner. It appears that, earlier, in the first week of May 1980, private
respondent Greenhills had contracted Licuden who was then driving
the same cargo truck to transport and carry a load of sawn lumber from
the Maddela sawmill to Dagupan City. 12 No one came forward to
question that contract or the authority of Licuden to represent the
owner of the carrier truck.
G.R. No. 98275 November 13, 1992
BA FINANCE CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS, REGIONAL TRIAL COURT OF
ANGELES CITY, BRANCH LVI, CARLOS OCAMPO, INOCENCIO
TURLA, SPOUSES MOISES AGAPITO and SOCORRO M. AGAPITO
and NICOLAS CRUZ, respondents.
Facts: The question of petitioner's responsibility for damages when on
March 6, 1983, an accident occurred involving petitioner's Isuzu
ten-wheeler truck then driven by an employee of Lino Castro is
the thrust of the petition for review on certiorari now before Us
considering that neither the driver nor Lino Castro appears to be
connected with petitioner.
Issue: Whether petitioner can be held responsible to the victim albeit
the truck was leased to Rock Component Philippines when the incident
occurred.
Ruling: YES.
Principle: In previous decisions, We already have held that the
registered owner of a certificate of public convenience is liable to the
First Exam Reviewer
Transportation Laws 13
Averell B. Abrasaldo – II-Sanchez Roman
public for the injuries or damages suffered by passengers or third
persons caused by the operation of said vehicle, even though the same
had been transferred to a third person. (Montoya vs. Ignacio, 94 Phil.,
182 50 Off. Gaz., 108; Roque vs. Malibay Transit, Inc., G.R. No. L-
8561, November 18, 1955; Vda. de Medina vs. Cresencia, 99 Phil.,
506, 52 Off. Gaz., [10], 4606.) The principle upon which this doctrine is
based is that in dealing with vehicles registered under the Public
Service Law, the public has the right to assume or presumed that the
registered owner is the actual owner thereof, for it would be difficult
with the public to enforce the actions that they may have for injuries
caused to them by the vehicles being negligently operated if the public
should be required to prove who actual the owner is. How would the
public or third persons know against whom to enforce their rights in
case of subsequent transfer of the vehicles? We do not imply by this
doctrine, however, that the registered owner may not recover whatever
amount he had paid by virtue of his liability to third persons from the
person to whom he had actually sold, assigned or conveyed the
vehicle.
Under the same principle the registered owner of any vehicle, even if
not used for a public service, should primarily responsible to the public
or to the third persons for injuries caused the latter while the vehicle is
being driven on the highways or streets. The members of the Court are
in agreement that the defendant-appellant should be held liable to
plaintiff-appellee for the injuries occasioned to the latter because of the
negligence of the driver, even if the defendant-appellant was no longer
an owner of the vehicle at the time of the damage because he had
previously sold it to another. What is the legal basis for his
(defendants-appellant's) liability?
There is a presumption that the owner of the guilty vehicle is the
defendant-appellant as he is the registered owner in the Motor Vehicle
Office. Should he not be allowed to prove the truth, that he had sold it
to another and thus shift the responsibility for the injury to the real and
the actual owner? The defendants hold the affirmative of this
proposition; the trial court hold the negative.
The Revised Motor Vehicle Law (Act No. 3992, as amended) provides
that the vehicle may be used or operated upon any public highway
unless the same is properly registered. It has been stated that the
system of licensing and the requirement that each machine must carry
a registration number, conspicuously displayed, is one of the
precautions taken to reduce the danger of injury of pedestrians and
other travelers from the careless management of automobiles, and to
furnish a means of ascertaining the identity of persons violating the
laws and ordinances, regulating the speed and operation of machines
upon the highways (2 R. C. L. 1176). Not only are vehicles to be
registered and that no motor vehicles are to be used or operated
without being properly registered from the current year, furnish the
Motor Vehicle 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. (Section 5[c], Act No.
3992, as amended.)
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
(Chinchilla vs. Rafael and Verdaguer, 39 Phil. 888), but to permit the
use and operation of the vehicle upon any public highway (section 5[a],
Act No. 3992, as amended). 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 vehicle on the public highways,
responsibility therefor can be fixed on a definite individual, the
registered owner. Instances are numerous where vehicles running on
public highways caused accidents or injuries to pedestrians or other
vehicles without positive identification of the owner or drivers, or with
very scant means of identification. It is to forestall these circumstances,
so inconvenient or prejudicial to the public, that the motor vehicle
From the Syllabus of Atty. Jessa Wong-Cantano

registration is primarily obtained, in the interest of the determinations of
persons responsible for damages or injuries caused on public
highways.
Principle purpose: One of the principle 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 my 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. The purpose of the statute is thwarted, and the displayed
number becomes a "share and delusion," if courts would entertain such
defenses as that put forward by appellee in this case. No responsible
person or corporation could be held liable for the most outrageous acts
of negligence, if they should be allowed to pace a "middleman"
between them and the public, and escape liability by the manner in
which they recompense their servants. (King vs. Breham Automobile
Co., Inc. 145 S. W. 278, 279.)
With the above policy in mind, the question that defendant-appellant
poses is: should not the registered owner be allowed at the trial to
prove who the actual and real owner is, and in accordance with
such proof escape or evade responsibility and lay the same on
the person actually owning the vehicle? We hold with the trial court
that the law does not allow him to do so; the law, with its aim and policy
in mind, does not relieve him directly of the responsibility that the law
fixes and places upon him as an incident or consequence of
registration. Were a registered owner allowed to evade responsibility
by proving who the supposed transferee or owner is, it would be easy
for him, by collusion with others or otherwise, to escape said
responsibility and transfer the same to an indefinite person, or to one
who possesses no property with which to respond financially for the
damage or injury done. A victim of recklessness on the public highways
is usually without means to discover or Identify the person actually
causing the injury or damage. He has no means other then by a
recourse to the registration in the Motor Vehicles Office to determine
who is the owner. The protection that the law aims to extend to him
would become illusory were the registered owner given the opportunity
to escape liability by disproving his ownership. If the policy of the law is
to be enforced and carried out, the registered owner should not be
allowed to prove the contrary to the prejudice of the person injured, that
is, to prove that a third person or another has become the owner, so
that he may thereby be relieved of the responsibility to the injured
person.
Application: If the foregoing words of wisdom were applied in solving
the circumstance whereof the vehicle had been alienated or sold to
another, there certainly can be no serious exception against utilizing
the same rationale to the antecedents of this case where the subject
vehicle was merely leased by petitioner to Rock Component
Philippines, Inc., with petitioner retaining ownership over the vehicle.
G.R. No. 125817 January 16, 2002
ABELARDO LIM and ESMADITO GUNNABAN, petitioners,
vs.
COURT OF APPEALS and DONATO H.
GONZALES, respondents.
Question asked: When a passenger jeepney covered by a
certificate of public convenience is sold to another who continues
to operate it under the same certificate of public convenience
under the so-called kabit system, and in the course thereof the
vehicle meets an accident through the fault of another vehicle,
may the new owner sue for damages against the erring vehicle?
Otherwise stated, does the new owner have any legal personality to
First Exam Reviewer
Transportation Laws 14
Averell B. Abrasaldo – II-Sanchez Roman
bring the action, or is he the real party in interest in the suit, despite the
fact that he is not the registered owner under the certificate of public
convenience?
Facts: Sometime in 1982 private respondent Donato Gonzales
purchased an Isuzu passenger jeepney from Gomercino Vallarta,
holder of a certificate of public convenience for the operation of public
utility vehicles plying the Monumento-Bulacan route. While private
respondent Gonzales continued offering the jeepney for public
transport services he did not have the registration of the vehicle
transferred in his name nor did he secure for himself a certificate of
public convenience for its operation. Thus Vallarta remained on record
as its registered owner and operator.1âwphi1.nêt
On 22 July 1990, while the jeepney was running northbound along
the North Diversion Road somewhere in Meycauayan, Bulacan, it
collided with a ten-wheeler-truck owned by petitioner Abelardo
Lim and driven by his co-petitioner Esmadito Gunnaban.
Gunnaban owned responsibility for the accident, explaining that while
he was traveling towards Manila the truck suddenly lost its brakes. To
avoid colliding with another vehicle, he swerved to the left until he
reached the center island. However, as the center island eventually
came to an end, he veered farther to the left until he smashed into a
Ferroza automobile, and later, into private respondent's passenger
jeepney driven by one Virgilio Gonzales. The impact caused severe
damage to both the Ferroza and the passenger jeepney and left one
(1) passenger dead and many others wounded.
In upholding the decision of the court a quo the appeals court
concluded that while an operator under the kabit system could not sue
without joining the registered owner of the vehicle as his principal,
equity demanded that the present case be made an exception. 7 Hence
this petition.
Issue: Does the new owner have any legal personality to bring the
action, or is he the real party in interest in the suit, despite the fact that
he is not the registered owner under the certificate of public
convenience?
Ruling: NO. But in this case, not applicable.
Principle: The kabit system is an arrangement whereby a person who
has been granted a certificate of public convenience allows other
persons who own motor vehicles to operate them under his license,
sometimes for a fee or percentage of the earnings. 9 Although the
parties to such an agreement are not outrightly penalized by law,
the kabit system is invariably recognized as being contrary to public
policy and therefore void and inexistent under Art. 1409 of the Civil
Code.
In the early case of Dizon v. Octavio10 the Court explained that one of
the primary factors considered in the granting of a certificate of public
convenience for the business of public transportation is the financial
capacity of the holder of the license, so that liabilities arising from
accidents may be duly compensated. The kabit system renders illusory
such purpose and, worse, may still be availed of by the grantee to
escape civil liability caused by a negligent use of a vehicle owned by
another and operated under his license. If a registered owner is
allowed to escape liability by proving who the supposed owner of the
vehicle is, it would be easy for him to transfer the subject vehicle to
another who possesses no property with which to respond financially
for the damage done. Thus, for the safety of passengers and the public
who may have been wronged and deceived through the
baneful kabit system, the registered owner of the vehicle is not allowed
to prove that another person has become the owner so that he may be
thereby relieved of responsibility. Subsequent cases affirm such basic
doctrine.11
From the Syllabus of Atty. Jessa Wong-Cantano

It would seem then that 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.
Application: In the present case it is at 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.
D. State regulation of common carriers:
G.R. No. L-8095 March 31, 1915
F.C. FISHER, plaintiff,
vs.
YANGCO STEAMSHIP COMPANY, J.S. STANLEY, as
Acting Collector of Customs of the Philippine Islands,
IGNACIO VILLAMOR, as Attorney-General of the Philippine
Islands, and W.H. BISHOP, as prosecuting attorney of the
city of Manila, respondents.
Facts:
Issue:
Ruling:
G.R. No. 47065 June 26, 1940
PANGASINAN TRANSPORTATION CO., INC., petitioner,
vs.
THE PUBLIC SERVICE COMMISSION, respondent.
Facts: The petitioner has been engaged for the past twenty years in
the business of transporting passengers in the Province of Pangasinan
and Tarlac and, to a certain extent, in the Province of Nueva Ecija and
Zambales, by means of motor vehicles commonly known as TPU
buses, in accordance with the terms and conditions of the certificates
of public convenience issued in its favor by the former Public Utility
Commission in cases Nos. 24948, 30973, 36830, 32014 and 53090.
On August 26, 1939, the petitioner filed with the Public Service
Commission an application for authorization to operate ten additional
new Brockway trucks (case No. 56641), on the ground that they were
needed to comply with the terms and conditions of its existing
certificates and as a result of the application of the Eight Hour Labor
Law.
Whereupon, on November 20, 1939, the present petition for a writ
of certiorari was instituted in this court praying that an order be issued
First Exam Reviewer
Transportation Laws 15
Averell B. Abrasaldo – II-Sanchez Roman
directing the secretary of the Public Service Commission to certify
forthwith to this court the records of all proceedings in case No. 56641;
that this court, after hearing, render a decision declaring section 1 of
Commonwealth Act No. 454 unconstitutional and void; that, if this court
should be of the opinion that section 1 of Commonwealth Act No. 454
is constitutional, a decision be rendered declaring that the provisions
thereof are not applicable to valid and subsisting certificates issued
prior to June 8, 1939. Stated in the language of the petitioner.
It is contended:
1. That the legislative powers granted to the Public Service
Commission by section 1 of Commonwealth Act No. 454, without
limitation, guide or rule except the unfettered discretion and judgment
of the Commission, constitute a complete and total abdication by the
Legislature of its functions in the premises, and for that reason, the Act,
in so far as those powers are concerned, is unconstitutional and void.
2. That even if it be assumed that section 1 of Commonwealth Act No.
454, is valid delegation of legislative powers, the Public Service
Commission has exceeded its authority because: (a) The Act applies
only to future certificates and not to valid and subsisting certificates
issued prior to June 8, 1939, when said Act took effect, and (b) the Act,
as applied by the Commission, violates constitutional guarantees.
Issue:
Ruling: Under the first paragraph of the aforequoted section 15 of Act
No. 146, as amended, no public service can operate without a
certificate of public convenience or certificate of convenience and
public necessity to the effect that the operation of said service and the
authorization to do business will "public interests in a proper and
suitable manner." Under the second paragraph, one of the conditions
which the Public Service Commission may prescribed the issuance of
the certificate provided for in the first paragraph is that "the service can
be acquired by the Commonwealth of the Philippines or by any
instrumental thereof upon payment of the cost price of its useful
equipment, less reasonable depreciation," a condition which is virtually
a restatement of the principle already embodied in the Constitution,
section 6 of Article XII, which provides that "the State may, in the
interest of national welfare and defense, establish and operate
industries and means of transportation and communication, and, upon
payment of just compensation, transfer to public ownership utilities and
other private enterprises to be operated by the Government. "Another
condition which the Commission may prescribed, and which is assailed
by the petitioner, is that the certificate "shall be valid only for a definite
period of time." As there is a relation between the first and second
paragraphs of said section 15, the two provisions must be read and
interpreted together. That is to say, in issuing a certificate, the
Commission must necessarily be satisfied that the operation of the
service under said certificate during a definite period fixed therein "will
promote the public interests in a proper and suitable manner." Under
section 16 (a) of Commonwealth Act. No. 146 which is a complement
of section 15, the Commission is empowered to issue certificates of
public convenience whenever it "finds that the operation of the public
service proposed and the authorization to do business will promote the
public interests in a proper and suitable manner." Inasmuch as the
period to be fixed by the Commission under section 15 is inseparable
from the certificate itself, said period cannot be disregarded by the
Commission in determining the question whether the issuance of the
certificate will promote the public interests in a proper and suitable
manner. Conversely, in determining "a definite period of time," the
Commission will be guided by "public interests," the only limitation to its
power being that said period shall not exceed fifty years (sec. 16 (a),
Commonwealth Act No. 146; Constitution, Art. XIII, sec. 8.) We have
already ruled that "public interest" furnishes a sufficient standard.
From the Syllabus of Atty. Jessa Wong-Cantano

The petitioner is mistaken in the suggestion that, simply because its
existing certificates had been granted before June 8, 1939, the date
when Commonwealth Act No. 454, amendatory of section 15 of
Commonwealth Act No. 146, was approved, it must be deemed to have
the right of holding them in perpetuity. Section 74 of the Philippine Bill
provided that "no franchise, privilege, or concession shall be granted to
any corporation except under the conditions that it shall be subject to
amendment, alteration, or repeal by the Congress of the United
States." The Jones Law, incorporating a similar mandate, provided, in
section 28, that "no franchise or right shall be granted to any individual,
firm, or corporation except under the conditions that it shall be subject
to amendment, alteration, or repeal by the Congress of the United
States." Lastly, the Constitution of the Philippines provided, in section 8
of Article XIII, that "no franchise or right shall be granted to any
individual, firm, or corporation, except under the condition that it shall
be subject to amendment, alteration, or repeal by the National
Assembly when the public interest so requires." The National
Assembly, by virtue of the Constitution, logically succeeded to the
Congress of the United States in the power to amend, alter or repeal
any franchise or right granted prior to or after the approval of the
Constitution; and when Commonwealth Acts Nos. 146 and 454 were
enacted, the National Assembly, to the extent therein provided, has
declared its will and purpose to amend or alter existing certificates of
public convenience.
Upon the other hand, statutes enacted for the regulation of public
utilities, being a proper exercise by the state of its police power, are
applicable not only to those public utilities coming into existence after
its passage, but likewise to those already established and in operation.
Nor is there any merit in petitioner's contention, that, because of the
establishment of petitioner's operations prior to May 1, 1917, they are
not subject to the regulations of the Commission. Statutes for the
regulation of public utilities are a proper exercise by the state of its
police power. As soon as the power is exercised, all phases of
operation of established utilities, become at once subject to the police
power thus called into operation. Procedures' Transportation Co. v.
Railroad Commission, 251 U. S. 228, 40 Sup. Ct. 131, 64 Law. ed.
239, Law v. Railroad Commission, 184 Cal. 737, 195 Pac. 423, 14 A. L.
R. 249. The statute is applicable not only to those public utilities
coming into existence after its passage, but likewise to those already
established and in operation. The 'Auto Stage and Truck
Transportation Act' (Stats. 1917, c. 213) is a statute passed in
pursuance of the police power. The only distinction recognized in the
statute between those established before and those established after
the passage of the act is in the method of the creation of their operative
rights. A certificate of public convenience and necessity it required for
any new operation, but no such certificate is required of any
transportation company for the operation which was actually carried on
in good faith on May 1, 1917, This distinction in the creation of their
operative rights in no way affects the power of the Commission to
supervise and regulate them. Obviously the power of the Commission
to hear and dispose of complaints is as effective against companies
securing their operative rights prior to May 1, 1917, as against those
subsequently securing such right under a certificate of public
convenience and necessity.
With the growing complexity of modern life, the multiplication of the
subjects of governmental regulation, and the increased difficulty of
administering the laws, there is a constantly growing tendency towards
the delegation of greater powers by the legislature, and towards the
approval of the practice by the courts. 14 It is generally recognized that
a franchise may be derived indirectly from the state through a duly
designated agency, and to this extent, the power to grant franchises
has frequently been delegated, even to agencies other than those of a
legislative nature. 15 In pursuance of this, it has been held that
privileges conferred by grant by local authorities as agents for the state
constitute as much a legislative franchise as though the grant had been
made by an act of the Legislature.
First Exam Reviewer
Transportation Laws 16
Averell B. Abrasaldo – II-Sanchez Roman
G.R. No. 119528 March 26, 1997
PHILIPPINE AIRLINES, INC., petitioner,
vs.
CIVIL AERONAUTICS BOARD and GRAND INTERNATIONAL
AIRWAYS, INC., respondents.
Facts: On November 24, 1994, private respondent GrandAir applied
for a Certificate of Public Convenience and Necessity with the Board,
which application was docketed as CAB Case No. EP-12711.
Petitioner, itself the holder of a legislative franchise to operate air
transport services, filed an Opposition to the application for a
Certificate of Public Convenience and Necessity on December 16,
1995 on the following grounds:
A. The CAB has no jurisdiction to hear the
petitioner's application until the latter has first
obtained a franchise to operate from Congress.
B. The petitioner's application is deficient in form
and substance in that:
1. The application does not indicate a route
structure including a computation of trunkline,
secondary and rural available seat kilometers
(ASK) which shall always be maintained at a
monthly level at least 5% and 20% of the ASK
offered into and out of the proposed base of
operations for rural and secondary, respectively.
2. It does not contain a project/feasibility study,
projected profit and loss statements, projected
balance sheet, insurance coverage, list of
personnel, list of spare parts inventory, tariff
structure, documents supportive of financial
capacity, route flight schedule, contracts on
facilities (hangars, maintenance, lot) etc.
C. Approval of petitioner's application would violate
the equal protection clause of the constitution.
D. There is no urgent need and demand for the
services applied for.
E. To grant petitioner's application would only
result in ruinous competition contrary to Section
4(d) of R.A. 776.
Issue: (1) Whether or not the Civil Aeronautics Board can issue the
Certificate of Public Convenience and Necessity or Temporary
Operating Permit to a prospective domestic air transport operator who
does not possess a legislative franchise to operate as such; and (2)
Whether or not Congress, in enacting Republic Act 776, has delegated
the authority to authorize the operation of domestic air transport
services to the respondent Board, such that Congressional mandate for
the approval of such authority is no longer necessary.
Ruling: BOTH YES.
Principle: Congress has granted certain administrative agencies the
power to grant licenses for, or to authorize the operation of certain
public utilities. With the growing complexity of modern life, the
multiplication of the subjects of governmental regulation, and the
increased difficulty of administering the laws, there is a constantly
From the Syllabus of Atty. Jessa Wong-Cantano

growing tendency towards the delegation of greater powers by the
legislature, and towards the approval of the practice by the courts. 14 It
is generally recognized that a franchise may be derived indirectly from
the state through a duly designated agency, and to this extent, the
power to grant franchises has frequently been delegated, even to
agencies other than those of a legislative nature. 15 In pursuance of
this, it has been held that privileges conferred by grant by local
authorities as agents for the state constitute as much a legislative
franchise as though the grant had been made by an act of the
Legislature. 16
The trend of modern legislation is to vest the Public Service
Commissioner with the power to regulate and control the operation of
public services under reasonable rules and regulations, and as a
general rule, courts will not interfere with the exercise of that discretion
when it is just and reasonable and founded upon a legal right. 17
It is this policy which was pursued by the Court in Albano vs. Reyes.
Thus, a reading of the pertinent issuances governing the Philippine
Ports Authority, 18 proves that the PPA is empowered to undertake by
itself the operation and management of the Manila International
Container Terminal, or to authorize its operation and management by
another by contract or other means, at its option. The latter power
having been delegated to the to PPA, a franchise from Congress to
authorize an entity other than the PPA to operate and manage the
MICP becomes unnecessary.
Application: Given the foregoing postulates, we find that the Civil
Aeronautics Board has the authority to issue a Certificate of Public
Convenience and Necessity, or Temporary Operating Permit to a
domestic air transport operator, who, though not possessing a
legislative franchise, meets all the other requirements prescribed by the
law. Such requirements were enumerated in Section 21 of R.A. 776.
There is nothing in the law nor in the Constitution, which indicates that
a legislative franchise is an indispensable requirement for an entity to
operate as a domestic air transport operator. Although Section 11 of
Article XII recognizes Congress' control over any franchise, certificate
or authority to operate a public utility, it does not mean Congress has
exclusive authority to issue the same. Franchises issued by Congress
are not required before each and every public utility may operate. 19 In
many instances, Congress has seen it fit to delegate this function to
government agencies, specialized particularly in their respective areas
of public service.
A reading of Section 10 of the same reveals the clear intent of
Congress to delegate the authority to regulate the issuance of a license
to operate domestic air transport services:
Sec. 10. Powers and Duties of the Board. (A)
Except as otherwise provided herein, the Board
shall have the power to regulate the economic
aspect of air transportation, and shall have general
supervision and regulation of, the jurisdiction and
control over air carriers, general sales agents,
cargo sales agents, and air freight forwarders as
well as their property rights, equipment, facilities
and franchise, insofar as may be necessary for the
purpose of carrying out the provision of this Act.
In support of the Board's authority as stated above, it is given the
following specific powers and duties:
(C) The Board shall have the following specific
powers and duties:
First Exam Reviewer
Transportation Laws 17
Averell B. Abrasaldo – II-Sanchez Roman
(1) In accordance with the provisions of Chapter IV
of this Act, to issue, deny, amend, revise, alter,
modify, cancel, suspend or revoke in whole or in
part upon petition or complaint or upon its own
initiative any Temporary Operating Permit or
Certificate of Public Convenience and Necessity:
Provided however, That in the case of foreign air
carriers, the permit shall be issued with the
approval of the President of the Republic of the
Philippines.
E. Nature and basis of liability:
G.R. No. L-12191 October 14, 1918
JOSE CANGCO, plaintiff-appellant,
vs.
MANILA RAILROAD CO., defendant-appellee.
Facts: At the time of the occurrence which gave rise to this litigation
the plaintiff, Jose Cangco, was in the employment of Manila Railroad
Company in the capacity of clerk, with a monthly wage of P25. He lived
in the pueblo of San Mateo, in the province of Rizal, which is located
upon the line of the defendant railroad company; and in coming daily
by train to the company's office in the city of Manila where he worked,
he used a pass, supplied by the company, which entitled him to ride
upon the company's trains free of charge. Upon the occasion in
question, January 20, 1915, the plaintiff arose from his seat in the
second class-car where he was riding and, making, his exit through the
door, took his position upon the steps of the coach, seizing the upright
guardrail with his right hand for support.
On the side of the train where passengers alight at the San Mateo
station there is a cement platform which begins to rise with a moderate
gradient some distance away from the company's office and extends
along in front of said office for a distance sufficient to cover the length
of several coaches. As the train slowed down another passenger,
named Emilio Zuñiga, also an employee of the railroad company, got
off the same car, alighting safely at the point where the platform begins
to rise from the level of the ground. When the train had proceeded a
little farther the plaintiff Jose Cangco stepped off also, but one or both
of his feet came in contact with a sack of watermelons with the result
that his feet slipped from under him and he fell violently on the
platform. His body at once rolled from the platform and was drawn
under the moving car, where his right arm was badly crushed and
lacerated. It appears that after the plaintiff alighted from the train the
car moved forward possibly six meters before it came to a full stop.
The accident occurred between 7 and 8 o'clock on a dark night, and as
the railroad station was lighted dimly by a single light located some
distance away, objects on the platform where the accident occurred
were difficult to discern especially to a person emerging from a lighted
car.
Upon August 31, 1915, he instituted this proceeding in the Court of
First Instance of the city of Manila to recover damages of the defendant
company, founding his action upon the negligence of the servants and
employees of the defendant in placing the sacks of melons upon the
platform and leaving them so placed as to be a menace to the security
of passenger alighting from the company's trains.
Issue: Whether defendant should be held liable for damages
Ruling: It can not be doubted that the employees of the railroad
company were guilty of negligence in piling these sacks on the platform
in the manner above stated; that their presence caused the plaintiff to
fall as he alighted from the train; and that they therefore constituted an
effective legal cause of the injuries sustained by the plaintiff. It
From the Syllabus of Atty. Jessa Wong-Cantano

necessarily follows that the defendant company is liable for the
damage thereby occasioned unless recovery is barred by the plaintiff's
own contributory negligence. In resolving this problem it is necessary
that each of these conceptions of liability, to-wit, the primary
responsibility of the defendant company and the contributory
negligence of the plaintiff should be separately examined.
It is important to note that the foundation of the legal liability of the
defendant is the contract of carriage, and that the obligation to respond
for the damage which plaintiff has suffered arises, if at all, from the
breach of that contract by reason of the failure of defendant to exercise
due care in its performance. That is to say, its liability is direct and
immediate, differing essentially, in legal viewpoint from that
presumptive responsibility for the negligence of its servants, imposed
by article 1903 of the Civil Code, which can be rebutted by proof of the
exercise of due care in their selection and supervision. Article 1903 of
the Civil Code is not applicable to obligations arising ex contractu, but
only to extra-contractual obligations — or to use the technical form of
expression, that article relates only to culpa aquiliana and not to culpa
contractual.
Application: As pertinent to the question of contributory negligence on
the part of the plaintiff in this case the following circumstances are to
be noted: The company's platform was constructed upon a level higher
than that of the roadbed and the surrounding ground. The distance
from the steps of the car to the spot where the alighting passenger
would place his feet on the platform was thus reduced, thereby
decreasing the risk incident to stepping off. The nature of the platform,
constructed as it was of cement material, also assured to the
passenger a stable and even surface on which to alight. Furthermore,
the plaintiff was possessed of the vigor and agility of young manhood,
and it was by no means so risky for him to get off while the train was
yet moving as the same act would have been in an aged or feeble
person. In determining the question of contributory negligence in
performing such act — that is to say, whether the passenger acted
prudently or recklessly — the age, sex, and physical condition of the
passenger are circumstances necessarily affecting the safety of the
passenger, and should be considered. Women, it has been observed,
as a general rule are less capable than men of alighting with safety
under such conditions, as the nature of their wearing apparel obstructs
the free movement of the limbs. Again, it may be noted that the place
was perfectly familiar to the plaintiff as it was his daily custom to get on
and of the train at this station. There could, therefore, be no uncertainty
in his mind with regard either to the length of the step which he was
required to take or the character of the platform where he was
alighting. Our conclusion is that the conduct of the plaintiff in
undertaking to alight while the train was yet slightly under way was not
characterized by imprudence and that therefore he was not guilty of
contributory negligence.
[G.R. No. L-8194. July 11, 1956.]
EMERENCIANA M. VDA. DE MEDINA, ET AL., Plaintiffs-Appellees,
vs. GUILLERMO CRESENCIA, ET AL., Defendants. GUILLERMO
CRESENCIA, Appellant.
Facts: It appears that on May 31, 1953, passenger jeepney bearing
plate No. TPU-2232 (Manila), driven by Brigido Avorque, smashed into
a Meralco post on Azcarraga Street, resulting in the death of Vicente
Medina, one of its passengers. A criminal case for homicide through
reckless imprudence was filed against Avorque (criminal case No.
22775 of the Court of First Instance of Manila), to which he pleaded
guilty on September 9, 1953. The heirs of the deceased, however,
reserved their right to file a separate action for damages, and on June
16, 1953, brought suit against the driver Brigido Avorque
and Appellant Guillermo Cresencia, the registered owner and operator
of the jeepney in question.
First Exam Reviewer
Transportation Laws 18
Averell B. Abrasaldo – II-Sanchez Roman
while Defendant Cresencia answered, disclaiming liability on the
ground that he had sold the jeepney in question on October 14, 1950 to
one Maria A. Cudiamat; chan roblesvirtualawlibrarythat the jeepney
had been repeatedly sold by one buyer after another, until the vehicle
was purchased on January 29, 1953 by Rosario Avorque, the absolute
owner thereof at the time of the accident. In view of Cresencia’s
answer, Plaintiffs filed leave, and was allowed, to amend their
complaint making Rosario Avorque a co-Defendant; chan
roblesvirtualawlibraryand the latter, by way of answer, admitted having
purchased the aforesaid jeepney on May 31, 1953, but alleged in
defense that she was never the public utility operator thereof. The case
then proceeded to trial, during which, after the Plaintiffs had presented
their evidence, Defendants Guillermo Cresencia and Rosario Avorque
made manifestations admitting that the former was still the registered
operator of the jeepney in question in the records of the Motor Vehicles
Office and the Public Service Commission, while the latter was the
owner thereof at the time of the accident.
The lower court, by Judge Jose Zulueta, held that as far as the public is
concerned, Defendant Cresencia, in the eyes of the law, continued to
be the legal owner of the jeepney in question
Issue: Whether or not Cresencia should be held liable
Ruling: YES.
Principle: The law (section 20 [g], C. A. No. 146 as amended) requires
the approval of the Public Service Commission in order that a
franchise, or any privilege pertaining thereto, may be sold or leased
without infringing the certificate issued to the grantee; and that if
property covered by the franchise is transferred or leased without this
requisite approval, the transfer is not binding against the public or the
Service Commission; and in contemplation of law, the grantee of
record continues to be responsible under the franchise in relation to the
Commission and to the public.
Since a franchise is personal in nature any transfer or lease thereof
should be notified to the Public Service Commission so that the latter
may take proper safeguards to protect the interest of the public. In fact,
the law requires that, before the approval is granted, there should be a
public hearing, with notice to all interested parties, in order that the
Commission may determine if there are good and reasonable grounds
justifying the transfer or lease of the property covered by the franchise,
or if the sale or lease is detrimental to public interest.
Application: As the sale of the jeepney here in question was
admittedly without the approval of the Public Service
Commission, Appellant herein, Guillermo Cresencia, who is the
registered owner and operator thereof, continued to be liable to the
Commission and the public for the consequences incident to its
operation. Wherefore, the lower court did not err in holding him, and
not the buyer Rosario Avorque, responsible for the damages sustained
by Plaintiff by reason of the death of Vicente Medina resulting from the
reckless negligence of the jeepney’s driver, Brigido Avorque.
[G.R. No. L-46558 : July 31, 1981.]
PHILIPPINE AIR LINES, INC., Petitioner, vs. THE COURT OF
APPEALS and JESUS V. SAMSON, Respondents.
Facts: The complaint filed on July 1, 1954 by plaintiff Jesus V.
Samson, private respondent herein, averred that on January 8, 1951,
he flew as co-pilot on a regular flight from Manila to Legaspi with stops
at Daet, Camarines Norte and Pili, Camarines Sur, with Captain Delfin
Bustamante as commanding pilot of a C-47 plane belonging to
defendant Philippine Air Lines, Inc., now the herein petitioner; that on
attempting to land the plane at Daet airport, Captain Delfin Bustamante
due to his very slow reaction and poor judgment overshot the airfield
and as a result, notwithstanding the diligent efforts of the plaintiff co-
From the Syllabus of Atty. Jessa Wong-Cantano

pilot to avert an accident, the airplane crashlanded beyond the runway;
that the jolt caused the head of the plaintiff to hit and break through the
thick front windshield of the airplane causing him severe brain
concussion, wounds and abrasions on the forehead with intense pain
and suffering cranad(par. 6, complaint).:onad
The complaint further alleged that instead of giving plaintiff expert and
proper medical treatment called for by the nature and severity of his
injuries, defendant simply referred him to a company physician, a
general medical practitioner, who limited the treatment to the exterior
injuries without examining the severe brain concussion of
plaintiff cranad(par. 7, complaint); that several days after the accident,
defendant Philippine Air Lines called back the plaintiff to active duty as
co-pilot, and inspite of the latter’s repeated request for expert medical
assistance, defendant had not given him any cranad(par. 8, complaint);
that as a consequence of the brain injury sustained by plaintiff from the
crash, he had been having periodic dizzy spells and had been suffering
from general debility and nervousness cranad(par. 9, complaint); that
defendant airline company instead of submitting the plaintiff to expert
medical treatment, discharged the latter from its employ on December
21, 1953 on grounds of physical disability, thereby causing plaintiff not
only to lose his job but to become physically unfit to continue as aviator
due to defendant’s negligence in not giving him the proper medical
attention cranad(pars. 10-11, complaint). Plaintiff prayed for damages
in the amount of P180,000.00 representing his unearned income,
P50,000.00 as moral damages, P20,000.00 as attorney’s fees and
P5,000.00 as expenses, or a total of P255,000.00.
Issue: Is there a causal connection between the injuries suffered by
private respondent during the accident on 8 January 1951 and the
subsequent “periodic dizzy spells, headache and general debility” of
which private respondent complained every now and then, on the one
hand, and such “periodic dizzy spells, headache and general debility”
allegedly caused by the accident and private respondent’s eventual
discharge from employment, on the other?
Ruling: YES.
Principle: The law is clear in requiring a common carrier to exercise
the highest degree of care in the discharge of its duty and business of
carriage and transportation under Arts. 1733, 1755 and 1756 of the
New Civil Code. These Articles provide:
Art. 1733. Common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary diligence
in the vigilance over the goods and for the safety of the passengers
transported by them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further
expressed in Articles 1734, and 1745, Nos. 5, 6, and 7, while the
extraordinary diligence for the safety of the passengers is further set
forth in articles 1755 and 1756.
Art. 1755. A common carrier is bound to carry the passenger 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.
Art. 1756. In case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence as prescribed in Articles 1733 and 1755.
Application: Petitioner is a common carrier engaged in the business of
carrying or transporting passengers or goods or both, by land, water, or
air, for compensation, offering their services to the public, as defined in
Art. 1732, New Civil Code.
We agree with the respondent court in finding that the dizzy spells,
headache and general debility of private respondent Samson was an
after-effect of the crash-landing and We find that such holding is
First Exam Reviewer
Transportation Laws 19
Averell B. Abrasaldo – II-Sanchez Roman
supported by substantial evidence, which We quote from the court’s
decision.
The duty to exercise the utmost diligence on the part of common
carriers is for the safety of passengers as well as for the members of
the crew or the complement operating the carrier, the airplane in the
case at bar. And this must be so for any omission, lapse or neglect
thereof will certainly result to the damage, prejudice, nay injuries and
even death to all aboard the plane, passengers and crew members
alike.
G.R. No. 153563 February 07, 2005
NATIONAL TRUCKING AND FORWARDING
CORPORATION, petitioner,
vs.
LORENZO SHIPPING CORPORATION, Respondent.
Facts: On June 5, 1987, the Republic of the Philippines, through the
Department of Health (DOH), and the Cooperative for American Relief
Everywhere, Inc. (CARE) signed an agreement wherein CARE would
acquire from the United States government donations of non-fat dried
milk and other food products from January 1, 1987 to December 31,
1989. In turn, the Philippines would transport and distribute the
donated commodities to the intended beneficiaries in the country.
The government entered into a contract of carriage of goods with
herein petitioner National Trucking and Forwarding Corporation
(NTFC). Thus, the latter shipped 4,868 bags of non-fat dried milk
through herein respondent Lorenzo Shipping Corporation (LSC) from
September to December 1988. The consignee named in the bills of
lading issued by the respondent was Abdurahman Jama, petitioner’s
branch supervisor in Zamboanga City.
On reaching the port of Zamboanga City, respondent’s agent, Efren
Ruste4 Shipping Agency, unloaded the 4,868 bags of non-fat dried milk
and delivered the goods to petitioner’s warehouse. Before each
delivery, Rogelio Rizada and Ismael Zamora, both delivery checkers of
Efren Ruste Shipping Agency, requested Abdurahman to surrender the
original bills of lading, but the latter merely presented certified true
copies thereof. Upon completion of each delivery, Rogelio and Ismael
asked Abdurahman to sign the delivery receipts. However, at times
when Abdurahman had to attend to other business before a delivery
was completed, he instructed his subordinates to sign the delivery
receipts for him.
Notwithstanding the precautions taken, the petitioner allegedly did not
receive the subject goods. Thus, in a letter dated March 11, 1989,
petitioner NTFC filed a formal claim for non-delivery of the goods
shipped through respondent.
Issue: (1) Is respondent presumed at fault or negligent as common
carrier for the loss or deterioration of the goods?
Ruling: NO.
Principle #1: Article 17338 of the Civil Code demands that a common
carrier observe extraordinary diligence over the goods transported by
it. Extraordinary diligence is that extreme measure of care and caution
which persons of unusual prudence and circumspection use for
securing and preserving their own property or rights. 9 This exacting
standard imposed on common carriers in a contract of carriage of
goods is intended to tilt the scales in favor of the shipper who is at the
mercy of the common carrier once the goods have been lodged for
shipment. Hence, in case of loss of goods in transit, the common
carrier is presumed under the law to have been at fault or
negligent.10 However, the presumption of fault or negligence, may be
From the Syllabus of Atty. Jessa Wong-Cantano

overturned by competent evidence showing that the common carrier
has observed extraordinary diligence over the goods.
Application #1: In the instant case, we agree with the court a quo that
the respondent adequately proved that it exercised extraordinary
diligence. Although the original bills of lading remained with petitioner,
respondent’s agents demanded from Abdurahman the certified true
copies of the bills of lading. They also asked the latter and in his
absence, his designated subordinates, to sign the cargo delivery
receipts.
Principle #2: In case the consignee, upon receiving the goods,
cannot return the bill of lading subscribed by the carrier, because
of its loss or of any other cause, he must give the latter a receipt
for the goods delivered, this receipt producing the same effects
as the return of the bill of lading.
Application #2: Conformably with the aforecited provision, the
surrender of the original bill of lading is not a condition precedent for a
common carrier to be discharged of its contractual obligation. If
surrender of the original bill of lading is not possible, acknowledgment
of the delivery by signing the delivery receipt suffices. This is what
respondent did.
G.R. No. 155550 January 31, 2008
NORTHWEST AIRLINES, INC., petitioner,
vs.
STEVEN P. CHIONG, respondent.
Facts: On March 14, 1989, Philimare Shipping and Seagull Maritime
Corporation (Philimare), as the authorized Philippine agent of
TransOcean Lines (TransOcean), hired respondent Steven Chiong as
Third Engineer of TransOcean’s vessel M/V Elbia at the San Diego,
California Port.
For this purpose, Philimare purchased for Chiong a Northwest plane
ticket for San Diego, California with a departure date of April 1, 1989
from Manila.
Calvo remained at the PCG Counter while Chiong proceeded to queue
at the Northwest check-in counter. When it was Chiong’s turn, the
Northwest personnel5 informed him that his name did not appear in the
computer’s list of confirmed departing passengers. Chiong was then
directed to speak to a "man in barong" standing outside Northwest’s
counters from whom Chiong could allegedly obtain a boarding pass.
Posthaste, Chiong approached the "man in barong" who demanded
US$100.00 in exchange therefor. Without the said amount, and
anxious to board the plane, Chiong queued a number of times at
Northwest’s Check-in Counter and presented his ticket. However, the
Northwest personnel at the counter told him to simply wait and that he
was being a pest.
It appears that Chiong’s name was crossed out and substituted with
"W. Costine" in Northwest’s Air Passenger Manifest.
Thus, on May 24, 1989, Chiong filed a Complaint for breach of contract
of carriage before the RTC.
Issue: Whether Northwest breached its contract of carriage
Ruling: YES.
Indeed, Chiong’s Northwest ticket for Flight No. 24 on April 1, 1989,
coupled with the PCG stamps on his passport showing the same date,
First Exam Reviewer
Transportation Laws 20
Averell B. Abrasaldo – II-Sanchez Roman
is direct evidence that he was present at MIA on said date as he
intended to fly to the United States on board that flight. As testified to
by POEA personnel and officers, the PCG stamp indicates that a
departing seaman has passed through the PCG counter at the airport,
surrendered the exit pass, and complied with government requirements
for departing seafarers. Calvo, Philimare’s liaison officer tasked to
assist Chiong at the airport, corroborated Chiong’s testimony on the
latter’s presence at the MIA and his check-in at the PCG counter
without a hitch. Calvo further testified that she purposely stayed at the
PCG counter to confirm that Chiong was able to board the plane, as it
was part of her duties as Philimare’s liaison officer, to confirm with their
principal, TransOcean in this case, that the seafarer had left the
country and commenced travel to the designated port where the vessel
is docked.21 Thus, she had observed that Chiong was unable to check-
in and board Northwest Flight No. 24, and was actually being given the
run-around by Northwest personnel.
F. Laws applicable:
G.R. No. 92501 March 6, 1992
PHILIPPINE AIR LINES, petitioner,
vs.
HON. COURT OF APPEALS and ISIDRO CO, respondents.
Facts: At about 5:30 a.m. on April 17, 1985, plaintiff [Co], accompanied
by his wife and son, arrived at the Manila International Airport aboard
defendant airline's PAL Flight No. 107 from San Francisco, California,
U.S.A. Soon after his embarking (sic), plaintiff proceeded to the
baggage retrieval area to claim his checks in his possession. Plaintiff
found eight of his luggage, but despite diligent search, he failed to
locate ninth luggage, with claim check number 729113 which is the one
in question in this case.
The incontestable evidence further shows that plaintiff lost luggage was
a Samsonite suitcase measuring about 62 inches in length, worth
about US$200.00 and containing various personal effects purchased
by plaintiff and his wife during their stay in the United States and similar
other items sent by their friends abroad to be given as presents to
relatives in the Philippines.
Co sued the airline for damages. The Regional Trial Court of Pasay
City found the defendant airline (now petitioner) liable.
Petitioner contends that under the Warsaw Convention, its liability, if
any, cannot exceed US $20.00 based on weight as private respondent
Co did not declare the contents of his baggage nor pay traditional
charges before the flight.
Issue: Whether or not Warsaw Convention is applicable in this case
Ruling: NO.
Principle: The liability of the common carrier for the loss, destruction
or deterioration of goods transported from a foreign country to the
Philippines is governed primarily by the New Civil Code. In all matters
not regulated by said Code, the rights and obligations of common
carriers shall be governed by the Code of Commerce and by Special
Laws.
The provisions of the New Civil Code on common carriers are Articles
1733, 1735 and 1753 which provide:
Art. 1733. Common carriers, from the nature of
their business and for reasons of public policy, are
From the Syllabus of Atty. Jessa Wong-Cantano

bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the
passengers transported by them, according to all
the circumstances of each case.
Art. 1735. In all cases other than those mentioned
in Nos. 1, 2, 3, 4 and 5 of the preceding article if
the goods are lost, destroyed or deteriorated,
common carriers are presumed to have been at
fault or to have acted negligently, unless they
prove that they observed extraordinary diligence
as required in article 1733.
Art. 1753. The law of the country to which the
goods are to be transported shall govern the
liability of the common carrier for their loss,
destruction or deterioration.
Application: Since the passenger's destination in this case was the
Philippines, Philippine law governs the liability of the carrier for the loss
of the passenger's luggage.
In this case, the petitioner failed to overcome, not only the
presumption, but more importantly, the private respondent's evidence,
proving that the carrier's negligence was the proximate cause of the
loss of his baggage. Furthermore, petitioner acted in bad faith in faking
a retrieval receipt to bail itself out of having to pay Co's claim.
G.R. No. 94149 May 5, 1992
AMERICAN HOME ASSURANCE, COMPANY, petitioner,
vs.
THE COURT OF APPEALS and NATIONAL MARINE
CORPORATION and/or NATIONAL MARINE CORPORATION
(Manila), respondents.
Facts: Both petitioner American Home Assurance Co. and the
respondent National Marine Corporation are foreign corporations
licensed to do business in the Philippines, the former through its
branch. The American Home Assurance Company (Philippines), Inc.
and the latter through its branch. The National Marine Corporation
(Manila) (Rollo, p. 20, Annex L, p.1).
That on or about June 19, 1988, Cheng Hwa Pulp Corporation shipped
5,000 bales (1,000 ADMT) of bleached kraft pulp from Haulien, Taiwan
on board "SS Kaunlaran", which is owned and operated by herein
respondent National Marine Corporation with Registration No. PID-224.
The said shipment was consigned to Mayleen Paper, Inc. of Manila,
which insured the shipment with herein petitioner American Home
Assurance Co. as evidenced by Bill of Lading No. HLMN-01.
On June 22, 1988, the shipment arrived in Manila and was discharged
into the custody of the Marina Port Services, Inc., for eventual delivery
to the consignee-assured. However, upon delivery of the shipment to
Mayleen Paper, Inc., it was found that 122 bales had either been
damaged or lost. The loss was calculated to be 4,360 kilograms with
an estimated value of P61,263.41.
Mayleen Paper, Inc. then duly demanded indemnification from
respondent National Marine Corporation for the aforesaid
damages/losses in the shipment but, for apparently no justifiable
reason, said demand was not heeded (Petition, p. 4).
As the shipment was insured with petitioner in the amount of
US$837,500.00, Mayleen Paper, Inc. sought recovery from the former.
Upon demand and submission of proper documentation, American
First Exam Reviewer
Transportation Laws 21
Averell B. Abrasaldo – II-Sanchez Roman
Home Assurance paid Mayleen Paper, Inc. the adjusted amount of
P31,506.75 for the damages/losses suffered by the shipment, hence,
the former was subrogated to the rights and interests on Mayleen
Paper, Inc.
On June 6, 1989, the petitioner, as subrogee, then brought suit against
respondent for the recovery of the amount of P31.506.75 and 25% of
the total amount due as attorney's fees, by filing a complaint for
recovery of sum of money (Petition, p. 4).
Respondent, National Marine Corporation, filed a motion to dismiss
dated August 7, 1989 stating that American Home Assurance
Company had no cause of action based on Article 848 of the Code of
Commerce which provides "that claims for averages shall not be
admitted if they do not exceed 5% of the interest which the claimant
may have in the vessel or in the cargo if it be gross average and 1% of
the goods damaged if particular average, deducting in both cases the
expenses of appraisal, unless there is an agreement to the contrary." It
contended that based on the allegations of the complaint, the loss
sustained in the case was P35,506.75 which is only .18% of
P17,420,000.00, the total value of the cargo.
On the other hand, petitioner countered that Article 848 does not apply
as it refers to averages and that a particular average presupposes that
the loss or damages is due to an inherent defect of the goods, an
accident of the sea, or a force majeure or the negligence of the crew of
the carrier, while claims for damages due to the negligence of the
common carrier are governed by the Civil Code provisions on Common
Carriers.
Issue: The pivotal issue to be resolved is the application of the law on
averages
Ruling: This issue has been resolved by this Court in National
Development Co. v. C.A. (164 SCRA 593 [1988]; citing Eastern
Shipping Lines, Inc. v. I.A.C., 150 SCRA 469, 470 [1987] where it was
held that "the law of the country to which the goods are to be
transported persons the liability of the common carrier in case of their
loss, destruction or deterioration." (Article 1753, Civil Code). Thus, for
cargoes transported to the Philippines as in the case at bar, the liability
of the carrier is governed primarily by the Civil Code and in all matters
not regulated by said Code, the rights and obligations of common
carrier shall be governed by the Code of Commerce and by special
laws (Article 1766, Civil Code).
Corollary thereto, the Court held further that under Article 1733 of the
Civil Code, common carriers from the nature of their business and for
reasons of public policy are bound to observe extraordinary diligence in
the vigilance over the goods and for the safety of passengers
transported by them according to all circumstances of each case. Thus,
under Article 1735 of the same Code, in all cases other than those
mentioned in Article 1734 thereof, the common carrier shall be
presumed to have been at fault or to have acted negligently, unless it
proves that it has observed the extraordinary diligence required by law
(Ibid., p. 595).
But more importantly, the Court ruled that common carriers cannot limit
their liability for injury or loss of goods where such injury or loss was
caused by its own negligence. Otherwise stated, the law on averages
under the Code of Commerce cannot be applied in determining liability
where there is negligence (Ibid., p. 606).
III COMMON CARRIERS OF GOODS
B. Liability for loss; presumption of negligence
From the Syllabus of Atty. Jessa Wong-Cantano

CASES:
YNCHAUSTI v. DEXTER
Facts: The Government employed Ynchausti, a common carrier, for
the transportation of 30 cases of White Rose mineral oil and 96 cases
of “Cock” Brand mineral oil on board the steamship Venus, which
would journey from Manila to Aparri.
The carrier received the goods, and to evidence the contract of
transportation, the parties duly executed and delivered a bill of lading.
The bill of lading stipulated that the carrier received the supplies in
apparent good condition, obligating itself to carry said supplies to the
place agreed upon, in accordance with the authorized and prescribed
rates and classifications, and subject to the law of common carriers in
force on the date of the shipment, and to the conditions prescribed by
the Insular Collector of Customs in Philippine Marine Regulations.
Upon delivery, the consignee claimed that one case of White Rose and
one case of “Cock” were delivered empty. The consignee noted these
claims on the bill of lading.
Ynchausti protested and demanded payment of the full amount due
them. The Insular Auditor refused the same and tendered a warrant
only for the reduced sum of P60.26.
Ynchausti filed this case (a petition for a writ of mandamus) to compel
the Government to pay the full amount of P82.79.
Ynchausti alleges that the shortages were due to causes unknown to it,
and that there was no fault or negligence on their part or on the part of
any of their agents or servants.
Issue: Who bears the loss?
Ruling: Ynchausti bears the loss.
Doctrine: General rule: mere proof of delivery of goods in good order
to a carrier, and proof of their arrival at the place of destination in bad
order, makes a prima facie case against the carrier.
Exception: if there is an explanation given. The carrier must prove the
loss is due to accident or some other circumstance inconsistent with its
liability.
MIRASOL v. DOLLAR
Facts: Mirasol is the owner and consignee of two cases of books,
shipped in good order and condition at New York, U.S.A., on board the
Robert Dollar Company's steamship President Garfield, for transport
and delivery to Mirasol in the City of Manila.
The two cases arrived in Manila in bad order and damaged
condition, resulting in the total loss of one case and a partial loss
of the other.
Mirasol filed claims but Dollar Company has refused and neglected to
pay, reasoning that the damage "was caused by sea water."
Mirasol alleges that he never entered into any contract with Dollar
Company limiting the latter's liability as a common carrier. When the
other case was found, Mirasol filed a claim for the real damage of the
books in the sum of $375.
Issue: Whether Dollar Company shall be liable for damages
Ruling: YES.
First Exam Reviewer
Transportation Laws 22
Averell B. Abrasaldo – II-Sanchez Roman
There is no claim or pretense that Mirasol signed the bill of lading or
that he knew of his contents at the time that it was issued. In that
situation he was not legally bound by the clause that purports to limit
Dollar Co.'s liability.
Principle: Shippers who are forced to ship goods on a ship have some
legal rights, and when goods are delivered on board ship in good order
and condition, and the shipowner delivers them to the shipper in bad
order and condition, it then devolves upon the shipowner to both allege
and prove that the goods were damaged by the reason of some fact
which legally exempts him from liability; otherwise, the shipper would
be left without any redress, no matter what may have caused the
damage.
Application: Dollar Co. having received the two boxes in good
condition, its legal duty was to deliver them to Mirasol in the same
condition in which it received them. From the time of their delivery
to Dollar Co. in New York until they are delivered to Mirasol in
Manila, the boxes were under the control and supervision of the
carrier and beyond the control of Mirasol.
Dollar Co. having admitted that the boxes were damaged while in
transit and in its possession, the burden of proof then shifted, and it
devolved upon the carrier to both allege and prove that the damage
was caused by reason of some fact which exempted it from liability. As
to how the boxes were damaged, when or where, was a matter
peculiarly and exclusively within the knowledge of the carrier.
The fact that the cases were damaged by "sea water," standing alone
and within itself, is not evidence that they were damaged by force
majeure or for a cause beyond the carrier's control. The carrier must
prove that the cases were damaged by “sea water,” as per Art. 361 of
the Code of Commerce.
STANDVAC v. LUZTEVECO
Facts: Defendant's barge No. L-522 was laden with gasoline belonging
to the plaintiff to be transported from Manila to the Port of Iloilo.
Defendant's tugboat "Snapper" picked up the barge outside the
breakwater. The barge was placed behind the tugboat, it being
connected to the latter by a tow rope. Behind the barge, three other
barges were likewise placed. The weather was good when on that day
the tugboat with its tow started on its voyage. The weather remained
good on February 3, 1947. About 3:00 AM on February 4, the engine of
the tugboat came to a dead stop. The engineer found out that the
trouble was due to a broken idler. A message was then sent to the
defendant's radio station in Manila informing its official of the
engine trouble. The master of the Snapper attempted to cast
anchor but the water areas around Elefante Island were so deep.
In the afternoon, the weather become worse and due to the rough
condition of the sea the anchor chains of the Snapper' and the
four barges broke. They were drifted and were dashed against the
rocks. A hole was opened in the hull of the Snapper', which
ultimately caused it to sink, while the barge No. L-522 was so
badly damaged that the gasoline it had on board leaked out.
Defendant failed to transport the gasoline so plaintiff brought an
action with CFI Manila to recover damages. Defendant pleaded that
its failure to deliver was due to fortuitous event or caused by
circumstances beyond its control and not to its fault or negligence or
that of any of its employees. The court found that the disaster was the
result of an unavoidable accident and the loss of the gasoline was due
to a fortuitous event hence it dismissed the case.
Issue: Whether or not defendant exercised extraordinary diligence and
that the accident was due to force majeure
Ruling: NO.
From the Syllabus of Atty. Jessa Wong-Cantano

While the breaking of the idler may be due to an accident, or to
something unexpected, the cause of the disaster which resulted
in the loss of the gasoline can only be attributed to the negligence
or lack of precaution to avert it on the part of defendant. Defendant
had enough time to effectuate the rescue if it had only a competent tug
for the purpose because the weather was good from 3:00 o'clock a.m.
to 12:00 o'clock noon of February 4, 1947 and it was only in the
afternoon that the wind began to blow with some intensity,1 but failed
to do so because of that shortcoming. The loss of the gasoline certainly
cannot be said to be due to force majeure or unforeseen event but to
the failure of defendant to extend adequate and proper help.
Considering these circumstances, the Court persuaded to conclude
that defendant has failed to established that it is exempt from liability
under the law. Defendant is hereby ordered to pay to plaintiff the sum
of P75,578.50, with legal interest from the date of the filing of the
complaint, with costs.
C. Exemption from Liability
(1) Natural Disaster or Calamity
CASES:
Tan Chiong v. Inchausti
Issue: Whether or not Inchausti is liable for the shipwreck?
Ruling: NO. Wreck of lorcha due to fortuitous event; Loss cannot be
attributed to Inchausti or its agents. From the moment that it is held that
the loss of the said lorcha was due to force majeure, a fortuitous event,
with no conclusive proof of negligence or of the failure to take the
precautions such as diligent and careful persons usually adopt to avoid
the loss of the boat and its cargo, it is neither just nor proper to attribute
the loss or damage of the goods in question to any fault, carelessness,
or negligence on the part of Inchausti and its agents and, especially,
the patron of the lorcha Pilar.
Inchausti took all measures for the salvage of goods recoverable after
the accident. Herein, subsequent to the wreck, Inchausti’s agent took
all the requisite measures for the salvage of such of the goods as could
be recovered after the accident, which he did with the knowledge of the
shipper, Ong Bieng Sip, and, in effecting their sale, he endeavored to
secure all possible advantage to the Chinese shipper; in all these
proceedings, he acted in obedience to the law.
Article 1601 of the Civil Code prescribes that “Carriers of goods by land
or by water shall be subject with regard to the keeping and
preservation of the things entrusted to them, to the same obligations as
determined for innkeepers by articles 1783 and 1784. The provisions of
this article shall be understood without prejudice to what is prescribed
by the Code of Commerce with regard to transportation by sea and
land.”
The general rule established in Article 840 is that the loss of the vessel
and of its cargo, as the result of shipwreck, shall fall upon the
respective owners thereof, save for the exceptions specified in the
second of the said articles. These legal provisions are in harmony with
those of articles 361 and 362 of the Code of Commerce, and are
applicable whenever it is proved that the loss of, or damage to, the
goods was the result of a fortuitous event or of force majeure; but the
carrier shall be liable for the loss or the damage arising from the
causes aforementioned, if it shall have been proven that they occurred
through his own fault or negligence or by his failure to take the same
precautions usually adopted by diligent and careful persons.
Eastern Shipping v. Court of Appeals
Ruling: Plainly, the heavy seas and rains referred to in the master's
report were not caso fortuito, but normal occurrences that an ocean-
First Exam Reviewer
Transportation Laws 23
Averell B. Abrasaldo – II-Sanchez Roman
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.
Principle: Moreover, under Article 1733 of the Civil Code, common
carriers are bound to observe "extra-ordinary vigilance over goods . . .
.according to all circumstances of each case," and Article 1735 of the
same Code states, to wit:
Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4,
and 5 of the preceding article, if the goods are lost, destroyed or
deteriorated, common carriers are presumed to have been at fault or to
have acted negligently, unless they prove that they observed
extraordinary diligence as required in article 1733.
Since the carrier has failed to establish any caso fortuito, the
presumption by law of fault or negligence on the part of the carrier
applies; and the carrier must present evidence that it has observed the
extraordinary diligence required by Article 1733 of the Civil Code in
order to escape liability for damage or destruction to the goods that it
had admittedly carried in this case. No such evidence exists of record.
Thus, the carrier cannot escape liability.
The presumption, therefore, that the cargo was in apparent good
condition when it was delivered by the vessel to the arrastre operator
by the clean tally sheets has been overturned and traversed. The
evidence is clear to the effect that the damage to the cargo was
suffered while aboard petitioner's vessel.
Eastern Shipping v. IAC
Issue: Whether or not the fire was considered a natural disaster that
would exempt the common carrier from liability
Ruling: NO.
Article 1735 of the Civil Code provides that all cases than those
mention 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. The burden is
upon Eastern Shipping Lines to prove that it has exercised the
extraordinary diligence required by law.
Note: fire – not considered a natural disaster or calamity within the
contemplation of Art. 1734 for 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
Having failed to discharge the burden of proving that it had exercised
the extraordinary diligence required by law, Eastern Shipping Lines
cannot escape liability for the loss of the cargo.
As it was at fault, it cannot seek the protective mantle of Sec. 4(2) of
Carriage of Goods by Sea Act which provides: “Neither the carrier nor
the ship shall be responsible for loss or damage arising or resulting
from x x x (b) Fire, unless caused by the actual fault or privity of the
carrier.”
There was actual fault of the carrier shown by lack of diligence in that
when the smoke was noticed, the fire was already big; that the fire
must have started 24 hours before the same was noticed; and that
From the Syllabus of Atty. Jessa Wong-Cantano

after the cargoes were stored in the hatches, no regular inspection was
made as to their condition during the voyage.
Important provision:
Civil Code, Art. 1734/1735.
EXCEPTIONS: Unless the loss, destruction, or deterioration of the
goods is due to any of the following causes only:
1. Flood, storm, earthquake, lightning, or other natural
disaster or calamity;
2. Act of the public enemy in war, whether international or
civil;
3. Act or omission of the shipper or owner of the goods;
4. The character of the goods or defects in the packing or in
the containers;
5. Order or act of competent public authority.
Delsan Transport Lines v. CA
Ruling: There was an issue on the weather condition, it was not
considered as a fortuitous event.
This tale of strong winds and big waves by the said officers of the
petitioner however, was effectively rebutted and belied by the weather
report of PAGASA, the independent government agency charged with
monitoring weather and sea conditions, showing that from 2:00 oclock
to 8:00 oclock in the morning on August 16, 1986, the wind speed
remained at ten (10) to twenty (20) knots per hour while the height of
the waves ranged from .7 to two (2) meters in the vicinity of Cuyo East
Pass and Panay Gulf where the subject vessel sank. Thus, as the
appellate court correctly ruled, petitioners 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.
Cokaliong v. UCPB General
Issue: Whether petitioner is liable for the loss of the goods
Ruling: YES.
The uncontroverted findings of the Philippine Coast Guard show that
the M/V Tandag sank due to a fire, which resulted from a crack in the
auxiliary engine fuel oil service tank. The crack was located on the side
of the fuel oil tank, which had a mere two-inch gap from the engine
room walling, thus precluding constant inspection and care by the crew
Having originated from an unchecked crack in the fuel oil service tank,
the fire could not have been caused by force majeure. Broadly
speaking, force majeure generally applies to a natural accident, such
as that caused by a lightning, an earthquake, a tempest or a public
enemy.
Principle: Hence, fire is not considered a natural disaster or
calamity. It does not fall within the category of an act of God unless
caused by lighting or by other natural disaster or calamity. It may even
be caused by the actual fault or privity of the carrier.
Peril of fire is not comprehended within the exceptions in Article 1734;
Article 1735 applies (please see provision)
First Exam Reviewer
Transportation Laws 24
Averell B. Abrasaldo – II-Sanchez Roman
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.
Ensuring the seaworthiness of the vessel is the first step in exercising
the required vigilance. Petitioner did not present sufficient evidence
showing what measures or acts it had undertaken to ensure the
seaworthiness of the vessel.
Application: It failed to show when the last inspection and care of the
auxiliary engine fuel oil service tank was made, or some other evidence
to establish that it had exercised extraordinary diligence.
It merely stated that constant inspection and care were not possible,
and that the last time the vessel was dry-docked was in November
1990.
DSR—Senator Lines v. Federal
Issue: Whether or not DSR-Senator Lines and C.F Sharp are liable for
the loss of the goods of the cargo
Ruling: YES.
Principle: Article 1734 of the Civil Code provides:
"Art. 1734. Common carriers are responsible for the loss, destruction,
or deterioration of the goods, unless the same is due to any of the
following causes only:
(1)Flood, storm, earthquake, lightning, or other natural disaster or
calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the
containers;
(5) Order or act of competent public authority."
Fire is not one of those enumerated under the above provision which
exempts a carrier from liability for loss or destruction of the cargo.
NOTE: In Eastern Shipping Lines, Inc. vs. Intermediate Appellate
Court, we ruled that since the peril of fire is not comprehended within
the exceptions in Article 1734, then the common carrier shall be
presumed to have been at fault or to have acted negligently, unless it
proves that it has observed the extraordinary diligence required by law.
Even if fire were to be considered a natural disaster within the purview
of Article 1734, it is required under Article 1739 of the same Code that
the natural disaster must have been the proximate and only cause of
the loss, and that the carrier has exercised due diligence to prevent or
minimize the loss before, during or after the occurrence of the disaster.
Respondent Federal Phoenix Assurance raised the presumption of
negligence against petitioners. However, they failed to overcome it by
sufficient proof of extraordinary diligence.
Central Shipping v. ICNA
Issue: whether the carrier is liable for the loss of the cargo
Ruling: In the present case, petitioner has not given the Court
sufficient cogent reasons to disturb the conclusion of the CA that the
weather encountered by the vessel was not a "storm" as
contemplated by Article 1734(1). Established is the fact that between
10:00 p.m. on July 25, 1990 and 1:25 a.m. on July 26, 1990, M/V
Central Bohol encountered a southwestern monsoon in the course of
its voyage.
From the Syllabus of Atty. Jessa Wong-Cantano

The Note of Marine Protest, which the captain of the vessel issued
under oath, stated that he and his crew encountered a southwestern
monsoon about 2200 hours on July 25, 1990, and another monsoon
about 2400 hours on July 26, 1990. Even petitioner admitted in its
Answer that the sinking of M/V Central Bohol had been caused by the
strong southwest monsoon.
Even if the weather encountered by the ship is to be deemed a natural
disaster under Article 1739 of the Civil Code, petitioner failed to show
that such natural disaster or calamity was the proximate and only
cause of the loss. Human agency must be entirely excluded from the
cause of injury or loss. In other words, the damaging effects blamed on
the event or phenomenon must not have been caused, contributed to,
or worsened by the presence of human participation.7 The defense of
fortuitous event or natural disaster cannot be successfully made when
the injury could have been avoided by human precaution. We also find
no reason to disturb the CA’s finding that the loss of the vessel was
caused not only by the southwestern monsoon, but also by the shifting
of the logs in the hold. Such shifting could been due only to improper
stowage.
The vessel proceeded through the first southwestern monsoon without
any mishap, and that it began to list only during the second monsoon
immediately after the logs had shifted and seawater had entered the
hold. Petitioner’s own witnesses, boatswain Eduardo Viñas Castro and
oiler Frederick Perena, are one in saying that the vessel encountered
two weather disturbances, one at around 10 o’clock to 11 o’clock in the
evening and the other at around 12 o’clock midnight. Both disturbances
were coupled with waves and heavy rains, yet, the vessel endured the
first and not the second. The reason is plain. The vessel felt the strain
during the second onslaught because the logs in the bodega shifted
and there were already seawater that seeped inside." In the hold,
the sloshing of tons of water back and forth had created pressures that
eventually caused the ship to sink. Had the logs not shifted, the ship
could have survived and reached at least the port of El Nido.
Lea Mer Industries v. Malayan
Issue: Whether or not petitioner is liable for the loss of the cargo
Ruling: YES.
Principle: Common carriers are presumed to have been at fault or to
have acted negligently for loss or damage to the goods that they have
transported. This presumption can be rebutted only by proof that they
observed extraordinary diligence, or that the loss or damage was
occasioned by any of the following causes:
"(1) Flood, storm, earthquake, lightning, or other natural disaster or
calamity;
"(2) Act of the public enemy in war, whether international or civil;
"(3) Act or omission of the shipper or owner of the goods;
"(4) The character of the goods or defects in the packing or in the
containers;
"(5) Order or act of competent public authority."
Article 1174 of the Civil Code provides that "no person shall be
responsible for a fortuitous event which could not be foreseen, or
which, though foreseen, was inevitable." Thus, if the loss or damage
was due to such an event, a common carrier is exempted from liability.
Elements of a "fortuitous event":
(a) the cause of the unforeseen and unexpected occurrence, or the
failure of the debtors to comply with their obligations, must have been
independent of human will;
(b) the event that constituted the caso fortuito must have been
impossible to foresee or, if foreseeable, impossible to avoid;
(c) the occurrence must have been such as to render it impossible for
the debtors to fulfill their obligation in a normal manner; and
First Exam Reviewer
Transportation Laws 25
Averell B. Abrasaldo – II-Sanchez Roman
(d) the obligor must have been free from any participation in the
aggravation of the resulting injury to the creditor.
To excuse the common carrier fully of any liability, the fortuitous event
must have been the proximate and only cause of the loss. Moreover, it
should have exercised due diligence to prevent or minimize the loss
before, during and after the occurrence of the fortuitous event.
Application: There is no controversy regarding the loss of the cargo in
the present case. As the common carrier, petitioner bore the burden of
proving that it had exercised extraordinary diligence to avoid the loss,
or that the loss had been occasioned by a fortuitous event -- an
exempting circumstance.
It was precisely this circumstance that petitioner cited to escape
liability. Lea Mer claimed that the loss of the cargo was due to the bad
weather condition brought about by Typhoon Trining. Evidence was
presented to show that petitioner had not been informed of the
incoming typhoon, and that the Philippine Coast Guard had given it
clearance to begin the voyage. On October 25, 1991, the date on
which the voyage commenced and the barge sank, Typhoon Trining
was allegedly far from Palawan, where the storm warning was only
"Signal No. 1."The evidence presented by petitioner in support of its
defense of fortuitous event was sorely insufficient.
First, petitioner presented no evidence that it had attempted to
minimize or prevent the loss before, during or after the alleged
fortuitous event.
Second, the alleged fortuitous event was not the sole and proximate
cause of the loss. There is a preponderance of evidence that the barge
was not seaworthy when it sailed for Manila. Respondent was able to
prove that, in the hull of the barge, there were holes that might have
caused or aggravated the sinking. Because the presumption of
negligence or fault applied to petitioner, it was incumbent upon it to
show that there were no holes; or, if there were, that they did not
aggravate the sinking.
Philamgen v. CA
Ruling: In this case, there was a super typhoon that took place which
caused the loss of the GI sheets and the bags of cement that were
boarded on the vessel.
The Supreme Court in this case considered the said typhoon as an
exception and did not hold the common carrier liable. Primarily, this
typhoon is a natural disaster. Second, the factual circumstances of the
case showed that the common carrier exercised due diligence to
prevent or minimize loss before, during, and after the typhoon. Third,
even if there was delay in the shipment, it must be noted that the delay
was not negligently incurred but due to the circumstances brought by
the typhoon itself.
From the Syllabus of Atty. Jessa Wong-Cantano