Compilation of Digests in Transpo

Transportation Law Case Digests

1

Cases Applying Articles 1732, 1733

and 1766 of the New Civil Code

General Provisions on

Common Carriers


2

Articles Applied:

Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public.

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, 1735, 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. 1766. In all matters not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws.


3

Pedro de Guzman v. Court of Appeals

G.R. No. L-47822

Facts:

Herein respondent Ernesto Cendana was engaged in buying up used bottles and scrap metal in

Pangasinan. Normally, after collection respondent would bring such material to Manila for resale. He

utilized (2) two six-wheelers trucks which he owned for the purpose. Upon returning to Pangasinan, he

would load his vehicle with cargo belonging to different merchants to different establishments in

Pangasisnan which respondents charged a freight fee for.

Sometime in November 1970, herein petitioner Pedro de Guzman, a merchant and dealer of

General Milk Company Inc. in Pangasinan contracted with respondent for hauling 750 cartons of milk.

Unfortunately, only 150 cartons made it, as the other 600 cartons were intercepted by hijackers along

Marcos Highway. Hence, petitioners commenced an action against private respondent.

In his defense, respondent argued that he cannot be held liable due to force majuere, and that he

is not a common carrier and hence is not required to exercise extraordinary diligence.

Issues:

1. Whether or not respondent can be held liable for loss of the cartons of milk due to force majeure. 2. Whether or not respondent is a common carrier.

Held:

1. The court ruled the affirmative. The circumstances do not fall under the exemption from liability as enumerated in Article 1734 of the Civil Code. The general rule is established by the article 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:

a. Flood, storm, earthquake, lightning or other natural disasters; b. Act of the public enemy, whether international or civil; c. Act or omission of the shipper or owner of the goods; d. Character of the goods or defects in the packing; e. Order or act of competent public authority.

2. The court ruled the affirmative. Article 1732 of the New Civil Code avoids any 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. It also avoids a distinction between a person or enterprise offering transportation services on a regular or scheduled basis and one offering such services on an occasional, episodic, and unscheduled basis.


4

Planters Products, Inc. v. Court of Appeals

G.R. No. 101503

Facts:

Planters Products (Planters) purchased from Mitsubishi International Corporation of USA of 9,000

metric tons of urea fertilizer which the latter shipped abroad the cargo vessel owned by private

respondent Kyosei Kisin Kabushiki Kaisha (KKKK) from America to La Union. Prior to its voyage, a time

charter party was entered into between Mitusbishi as shipper/charterer and KKKK as ship-owner. After

the Urea fertilizer was loaded in bulk by stevedored hired by the shipper, the steel hatches were closed

with heavy iron lids which remained closed during the entire journey.

Upon arrival of the vessel, the hatches were opened with the use of the vessel boom. Planters

unloaded the cargo from the holders into the steel bodied dump trucks. Each time the dump trucks were

filled up, its load of urea was covered with tarpaulin before it was transported to the consignee’s

warehouse located some (50) fifty meteres from the wharf. It took (11) eleven days from planters to

unload the cargo. The report submitted by private marine and cargo surveyors revealed a shortage in the

cargo, and some portion in the cargo was contaminated with dirt, rendering the same unfit for commerce.

Planters filed an action for damages bu the appellate court absolved the carrier from liability.

Issues:

1. Whether or not the respondent is a common carrier. 2. Whether or not the respondent is liable for damages.

Held:

1. The court rules the affirmative as to the respondent being a common carrier. The term common carrier is defined in Article 1732 of the Civil Code. The definition refers to carriers either by land, water, or air which holds themselves out as ready to engage in carrying goods on transporting passengers or both for compensation as a public employment and not as a casual occupation; if the undertaking is a single transaction, not a part of the general business or corporation, although involving the carriage of goods for a fee, then the person or corporation offering such services is a private carrier. In the case at bar respondent carrier transports goods indiscriminately for all persons. Being such, he is a common carrier.

2. The court rules the negative. True, being a common carrier, respondent must have observed extraordinary diligence over the goods it carries. In the case at bar it has been proven that the respondent has sufficiently overcome this, by clear and convincing proof, the prima facie presumption of negligence, due to the manner of storage of the goals during the vogyage. In fact, it was pointed out that there was a risk in shipping the urea due to its character.


5

F.C. Fisher v. Yangco Steamship Company

G.R. No. L-8095

Facts:

On June 10, 1912, the directors of Yangco Steamship Company which is duly licensced to

engage in the coastwise trade in the Philippines, adopted a resolution which was thereafter ratified and

affirmed by the shareholders of the company expressly declaring and providing that the classes of

merchandise to be carried by the company in its business as a common carrier to include dynamite,

power or other explosives and other expressly prohibiting the officers, agents, and servatnts of the

company from offering to carry or accepting to carry said articles.

In view of the resolution passed the collector of customs suspended the issuance of clearances

for the vessles unless they allow the carriage of such articles. Hence, herein petitioner a major

stockholder filed a petition for prohibition.

Issue:

Whether or not the resolution of Yanco is justified.

Held:

The court rules the negative. Common carrier in the jurisdiction cannot lawfully decline to accept

a particular class of goods, unless it appears that for some sufficient reason the discrimination is

reasonalble and necessary. Yangco Steamships Company has not met those conditions.

The nature of the business of a common carrier as a public employment is such that it is within

the power of the state to impose such just regulation in the interest of the public as the legistalors may

deem proper.


6

United States v. Quinajon

G.R. No. 8686

Facts:

Herein defendants were charged with the violation of Act No. 98. The accused herein have been

engaged for more than (4) four years in the transportation of passengers and merchandise in the port of

Curimao, in the loading and unloading of passengers and merchandise by means of voyages from the

shore. The facts state that sometime in September 1912, the said accused, by means of voyages,

unloaded 5,986 sacks of rice belonging to the provincial government of Ilocos Norte where they regularly

charge 6 cents for the unloading and loading of each package of merchandise.

Issue:

Whether or not the provincial government was prejudiced by the preferential privileges in favor of

the shippers.

Held:

The court rules the affirmative. Sec. 5 of Act No. 98, provides that any person or corporation who

may be damaged by the common carrier of any matter or things prohibited shall be entitled to sue or

recover all damges so incurred. It is not believed that that law prohibits common carrier from making

special rates for handling merchandise when the same are made for the purpose of increasing the

business which are regarded as sound. That does not require absolute equality in all cases; it only

applies where the services perfomed in the different cases are substantially the same and conditions

similar.


7

Loadstar Shipping Co. Inc. v. Court of Appelas

G.R. No. 131621

Facts:

On November 19, 1984 herein petitioner shipping company carried, a shipment of (3) three bulk

items on board its M/V Cherokee, which amounted to P6,067,178.00, the same being insured by the

Manila Insurance Co. (MIC). The vessel in turn was insured by Prudential Guarantee and Assurance,

Inc. of P4 million. Unfortunately the ship sank in the are of Limasawa.

MIC settled the insurance with the consignee and asked for the subrogation receipt, then MIC

filed a claim against Loadstar. PGAI alleging the sinking was due to the fault and negligence of Loadstar.

In their defense, Loadstar set up the argument of force majuere. PGAI was dropped from the case afer

proving MIC had no locus standi against them. Inter alia all other defenses, Loadstar argues that it

cannot be considered a common carrier because it was issued a certificate of public convenience and

that it carried a particular type of cargo for a particular shipper.

Issues:

1. Whether or not Loadstar’s Cherokee is a common carrier; 2. Wheter or not, considering the type of carriage the M/V is, the required amount of diligence was

observed;

Held:

1. The court rules the affirmative that the M/V Cherokee is a common carrier. It is not necessary that the carrier be issued a certificate of public convenience and their public character is not altered by the fact that the carriage of the goods in question was periodic, occasional, episodic, or unscheduled. Additionally, the second argument of Loadstar must fail; that the M/V Cherokee was carrying a particular type of cargo for one shipper which appears to be purely coincidental is not reason enough to convert a vessel that is a common carrier to a private one, especially where, as in the case, it was shown that the vessel was also carrying passengers.

2. The court rules the negative. Loadstar should have exercised extraordinary diligence since it is a common carrier; and the fact that it still allowed the voyage despite the knowledge of a typhoon present counters their exercise of extra ordinary diligence required.


8

First Philippine Industrial Corp. v. Court of Appeals

G.R. No. 125948

Facts:

Herein petitioner applied for a mayor’s permit to operate its pipeline concession. Before such

permit was issued, the City treasurer required petitioner to pay local tax. In order not to hamper its

operations, petitioner paid the tax under protest.

Then the petitioner filed a letter protest addressed to the treasurer claiming exemption from

payment of the tax because according to the Local Government Code of 1991, transportation contractors

are not included in the enumeration of contractors which are liable to pay taxes. The city treasurer denied

the protest. The petitioner filed a case before the trial court for tax refund, however it was subsequently

dismissed. Hence, this petition.

Issue:

Whether or not the petitioner is a common carrier as contemplated to be exempted under the law.

Held:

The court rules the affirmative. The court enunciated the (4) tests in determining whether the

carrier is that of a common carrier:

a. must be engaged int eh business of carrying goods for other as a public employment and must hold itself out as ready to engage in the transportation of goods generally as a business and not a casual occupation

b. it must undertake to carry goods of the kind which its business is confined; c. it must undertake the method by which his business is conducted and over its established

roads; d. the transportation must be for hire. In the case at bar, the court categorically ruled that the transporting of oil through pipelines is still

considered to be an activity of a common carrier. The petitioner is a common carrier because it is

engaged in the business of transporting passengers or goods; like petroleum. It undertakes to carry for

all persons indifferently. The fact that the petitioner has limited clientele does not exclude it from the

definition of common carrier. Under the petroleum act of the Philippines, the petitioner is considered a

common carrier even if it is a pipeline concessionaire.

And even as regards the petroleum operation, it is of public utility. Specifically, the Bureau of

Internal Revenue considers petitioners as common carrier not subject to withholding tax.


9

Home Insurance Co. v American Steamship Agencies

23 SCRA 24 April 4, 1968

Facts:

Consorcio Pasquero Del Perse of South America shipped a freight of 21,740 jute bags of

Peruvian fish meal through the SS Crowborough consigned to the Sam Miguel Brewery and insured by

Home Insurance Company for $202,505.00. It arrived in Manila on March 7, 1963 and was loaded into

the lighters of Luzon Stevedoring Company. However, it arrived with shortages. Thus SMB demanded

that Home Insurance pay the claim of P14,000.00. Home Insurance on the other hand filed for the

recovery of the P14,000.00 from Luzon Stevedoring. The Court of First Instance absolved Luzon

Stevedoring, but ordered the American Steamship Agencies to reimburse the amount to Home

Insurance, basing the ruling on Art. 587 of the Code of Commerce which makes the ship agent civilly

liable for damages in favor of third persons due to conduct of carrier’s captain and that the stipulation in

the charter party exempting the owner from liability is against public policy under Article 1744 of the New

Civil Code.

Issue:

Between the provisions of the New Civil Code and the Code of Commerce, which should apply.

Held:

The court rules the affirmative as to the non-applicability of the prohibition of the exemption of the

carrier from liability. The provisions of our Civil Code on common carriers were taken from Anglo-

American Law. Under American Jurisprudence, a common carrier undertakes to carry a special cargo or

chartered to a special person only, becomes a private carrier. And thus, as a private carrier, a stipulation

exempting the owner from liability for the negligence of its agent is not against public policy. The reason

is that there is no strict public policy applied.


10

San Pablo v. PANTRANCO South Express

G.R. No. L-61461

Facts:

Defendant PANTRANCO planned to operate a ferryboat service between Matnog and Allen as a

common carrier. It requested authority from the MARINA to purchase the vessel M/V Black Double in

accordance with the procedure provided for by law on such application for a certificate of public

convenience (CPC). Its request was denied as the said routes are adequately serviced by existing

authorized operators such as the Cardinal Shipping Company. However, the defendant continued to

purchase the vessel and started operating. Defendant contends that what it proposed was to operate a

PRIVATE FERRY BOAT service across a “small body of water” specially for its buses and trucks from

Matnog to Allen, Tacloban for the purpose of continuing the highway. Thus, the ferry is merely an

incident to its franchise to convey passengers and cargo from Pasay to Tacloban and need not secure a

separate CPC. Defendants also contend that they are not a PUBLIC FERRY BOAT as they do not

accept walkins.

The Board of Transportation (BOT) enjoined PANTRANCO from operating the ferry. The

petitioner along with Cardinal Shipping interposed their opposition as they are able to service the riding

public. BOT sought for the opinion of then Minister of Justice Ricardo Puno that rendered and affirmative

opinion in favor of PANTRACO. Justice Puno gave an opinion to the effect that there is no need for bus

operators to secure a separate CPC to operate a ferryboat service. BOT rendered its decision holding

that the ferry boat service is part of its CPC to operate from Pasay to Samar/Leyte by amending

PANTRANCO's CPC. Petitioners filed for motions of consideration and were denied by BOT.

Issue:

Whether or not the water transport service is a ferry service for purpose of continuing the highway

or a coastwise/ interland service.

Held:

The court holds that the water transport service between Matnog and Allen is not a ferryboat

service but a coastwise or interland shipping service. Under no circumstance can the sea between

Matnog and Allen be considered a continuation of the highway. While a ferry boat service has been

considered as a continuation of the highway when crossing rivers or even lakes, which are small body of

waters - separating the land, however, Matnog and Allen are separated by an open sea it can not be

considered as a continuation of the highway. Respondent PANTRANCO should secure a separate CPC

for the operation of an interisland or coastwise shipping service in accordance with the provisions of law.

Its CPC as a bus transportation cannot be merely amended to include this water service under the guise

that it is a mere private ferry service.

Argumento, PANTRANCO is a a ferry service, it is absurd to be called a Private ferry service. It

is confusing that respondent PANTRANCO claims that it is a private carrier in relation to its ferry service

but it affirms its obligation as a common carrier to observe extraordinary diligence and vigilance in the

transportation of its passengers and goods. By considering that the authority granted to PANTRANCO is

to operate a private ferry, it can still assert that it cannot be held to account as a common carrier towards

its passengers and cargo. Such an anomalous situation that will jeopardize the safety and interests of its

passengers and the cargo owners cannot be allowed.


11

National Steel Corporation v. Court of Appeals

G.R. Nos. 112287/112350

Facts:

Herein petitioner of G.R. No. 112350, Vlasons Shipping entered into a contract of afreightment on

contract of vogage4 charter line with the petitioner of the other consolidated case, National Steel

Corporation (NSC), whereby the latter hired Vlason’s vessel, the M/V Vlasons I to make a voyage to load

steel products from Ilagan City to Manila. Under the agreement, the loading and unloading of the cargoes

are the responsibility of the charter and the owner shall no be liable of the loss or damage of the cargo

arising from the unseaworthiness unless counsel by want of diligence on the part of the owners to make

the vessel seaworthy and to secure that it is properly manned, equipped and supplied.

Upon arrival on August 12, 1974, it was found that nearly all the tin plates and hot rolled sheets

were wet and rusty. The cargo was unloaded by the charterer Hence the petitioner filed for a claim of

damages amounting to P941,145.58, alleging the negligence of the master and crew of the ship.

Issue:

Whether or not Vlasons Shipping is made liable notwithstanding the Charter Party stipulations.

Held:

The courts rule the negative. At bottom, this appeal really hinges on a factual issue as to then,

how, and who caused the damages to the cargo. Ranged against NSC are two formidable truhs. First, it

was found that such damage was brought about during the unloading process when the rain seeped into

the cargo due to the negligence of the stevedores employed by it.

Second and more importantly, the agreement between the parties “The Contact of Voyage

Charter Party for Hire” placed the burden of proof of such loss or damage upon the shipper, not upon the

ship owner. Such stipulation, while disadvantageous to the NSC, is valid because the parties entered into

a contract of private charter, not one of common carriage.

Basic too is the doctrine that courts cannot relieve a party from the effects of a private contract

fully entered into, on the ground that it is allegedly one-sided or unfair to the plaintiff. It has been held

that the true test of a common carrier of passengers/goods is the carriage of the same, provided it has

space, for all who opt to avail for its transportation service for a fee.


12

Kilusang Mayo Uno Labor Center vs. Garcia Jr.

G.R. No. 115381

Facts:

Petition for certiorari assails the constitutionality and validity of circulars released by the Land

Transportation Franchising and Regulatory Board (LTFRB). Such circulars authorized provincial bus and

jeepney operators to increase or decrease the prescribed transportation fares without application with the

LTFRB fro a period of one year. Likewise, it established a presumption of public need for certificates of

public convenience (CPC). Petitioner KMU claims however that the authority given by LTFRB to

provincial bus operators to set a fare range is unconstitutional, invalid and illegal. Also, the establishment

of the presumption of public need for a proposed transport service without having to prove public

necessity, is likewise illegal it being violative of Public Service Act and the Rules of Court.

Issue:

Whether or not such circulars released by the LTFRB is valid.

Held:

The Supreme Court held that the authority given by the LTFRB to the provincial bus operators to

set a fare range over and above the authorized existing fare is illegal and invalid. This is tantamount to

an undue delegation of legislative authority. The policy of allowing the provincial bus operators to

change and increase their fares would result not only to a chaotic situation but also to an anarchic state

of affairs. This would leave the riding public at the mercy of transport operators who may change fares

every hour, every day, every month as he may wish to do so. The Supreme Court held that rate-fixing is

a delicate and sensitive government function that requires dexterity of judgment with a settled goal of

arriving at a just and reasonable rate accepted by both the public and the utility. With regard to the

presumption of public need, CPC is an authorization granted by the LTFRB for the operation of land

transportation services for public use as required by law. Public convenience or necessity generally

means something fitting for public need. Thus in the case at bar, it was founded that the LTFRB

committed grave abuse of discretion is issuing orders to regulate the transport sector. Such circulars are

deemed null and void and of no force or effect.


13

Tatad v. Garcia

G.R. No. 114222

Facts:

EDSA LRT Consortium, a foreign corporation, was awarded with the construction of Light Rail

Transit III (LRT III) as the only bidder who has qualified with the requirements provided by the PBAC.

The said foreign corporation will construct the LRT III in a “Built-Lease-Transfer” agreement that such

public utility will be leased by the government through the Department of Transportation and

Communication (DOTC) and then it would be subsequently sold by the corporation to the government.

An objection was raised by the petitioner stating that the awarding of the bid to the said corporation is

against the Constitution. It was provided in the Constitution that only Filipinos are entitled to operate a

public utility such as the LRT III.

Issue:

Whether or not the awarding of the bid to EDSA LRT Consortium is against the Constitution.

Held:

The Court held that there is a distinction in the “operation” of a public utility and ownership in the

facilities and equipment to serve the public. The EDSA LRT Consortium fall under the latter because the

said corporation will not operate the public utility. The said corporation will only own the facilities and

equipment such as the train carts, the railings and the booths. In addition, such ownership will then be

subsequently transferred to the government under “Built-Lease-Transfer” agreement. With that said, the

operation of the public utility will fall to the Filipinos through its government. Therefore, the awarding of

the bid to EDSA LRT Consortium is not against the provisions of the Constitution.


14

Samar Mining Co. v. Nordeutscher Lloyd & C.F. Sharp & Co. Inc.

G.R. No. L-28673

Facts:

Herein petitioner and defendant entered into a contract where the former agreed to ship a crate of

optima wielded wedge wire sleeves, with the Bill of Lading indicated the effective transportation from

Germany to Manila only.

From Manila, the crate was to be further transported to Davao. The carrier had unloaded and

delivered the goods in the rouded warehouse in Manila.

Unfortunately, the goods were lost and never reached Davao City.

Issue:

Whether or not herein petitioner is liable for the loss.

Held:

The court rules the negative, when the carrier under the terms of the Bill of Lading had delivered

the goods at the port of destination, at that point he merely becomes the agent of the consignee and

ceases to be liable for any loss a damage of goods transported.

Furthermore, there is no applicability of Article 1738 of the New Civil Code, which contemplates

liability of the carrier of the shipment of goods while stored in the warehouse of the carrier. However, in

the present case, the warehouse belonged to a third person.


15

Eastern Shipping Lines vs. IAC

150 SCRA 463

Facts:

In GR 69044, the M/S ASIATICA, a vessel operated by Eastern Shipping Lines loaded at Kobe,

Japan for Manila:

(1) 5,000 pieces of calorized lance pipes in 28 packages valued at P256,039.00 consigned to

Philippine Blooming Mills Co., Inc.,

(2) 7 cases of spare parts valued at P92,361.75, consigned to Central Textile Mills, Inc.

Both sets of goods were insured for their value with Development Insurance and Surety

Corporation.

In GR 71478, the same vessel took on board :

1. 128 cartons of garment fabrics and accessories, in 2 containers, consigned to Mariveles Apparel Corporation

2. two cases of surveying instruments consigned to Aman Enterprises and General Merchandise.

The 128 cartons were insured for their value by Nisshin Fire & Marine Insurance Co., for

US$46,583.00. The 2 cases by Dowa Fire & Marine Insurance Co., Ltd., for US$11,385.00. Enroute for

Kobe, Japan, to Manila, the vessel caught fire and sank, resulting in the total loss of ship and cargo. The

respective Insurers paid the corresponding marine insurance values to the consignees concerned and

were thus subrogated unto the rights of the latter as the insured.

Eastern Shipping denied liability mainly on the ground that the loss was due to an extraordinary

fortuitous event; hence, it is not liable under the law. The Trial Court rendered judgment in favor of

Development Insurance in the amounts of P256,039.00 and P92,361.75, respectively, with legal interest,

plus P35,000.00 as attorney’s fees and costs. Eastern Shipping took an appeal to the then Court of

Appeals which, on 14 August 1984, affirmed the decision of the trial court. Eastern Shipping filed a

petition for review on certiorari.

Nisshin, and Dowa, as subrogees of the insured, filed suit against Eastern Shipping for the

recovery of the insured value of the cargo lost imputing unseaworthiness of the ship and non-observance

of extraordinary diligence by Eastern Shipping. Eastern Shipping denied liability on the principal grounds

that the fire which caused the sinking of the ship is an exempting circumstance under Section 4(2) (b) of

the Carriage of Goods by Sea Act (COGSA); and that when the loss of fire is established, the burden of

proving negligence of the vessel is shifted to the cargo shipper. Trial Court rendered judgment in favor of

Nisshin and Dowa. CA affirmed decision. Hence this petition on certiorari.

Issue:

Whether or not the carrier exercised extraordinary diligence.

Held:

Eastern Shipping shall pay the Development Insurance the amount of P256,039 for the 28

packages of calorized lance pipes, and P71,540 for the 7 cases of spare parts, with interest at the legal


16

rate from the date of the filing of the Complaint on 13 June 1978, plus P5,000 as attorney’s fees, and the

costs. The Court, on the other hand, in GR 71478, affirmed the judgment.

The evidence of the defendant did not show that extraordinary diligence was observed by the

vessel to prevent the occurrence of fire at hatches nos. 2 and 3. Defendant’s evidence did not likewise

show the amount of diligence made by the crew, on orders, in the care of the cargoes. What appears is

that after the cargoes were stored in the hatches, no regular inspection was made as to their condition

during the voyage. The complete defense afforded by the COGSA when loss results from fire is

unavailing to Eastern Shipping. The Carriage of Goods by Sea Act (COGSA), a special law, is merely

suppletory to the provisions of the Civil Code The fire may not be considered a natural disaster or

calamity, as it arises almost invariably from some act of man or by human means. It does not fall within

the category of an act of God unless caused by lightning or by other natural disaster or calamity. It may

even be caused by the actual fault or privity of the carrier.


17

National Development Company v. Court of Appeals

164 SCRA 593

Facts:

In accordance with a memorandum entered into between defendants National Development

Company (NDC) and Maritime Company of the Philippines (MCP) on September 13, 1962, defendant

NDC as the first preferred mortgagee of three ocean-going vessels including one the name “Doña Nati”

appointed defendant MCP as its agent to manage and operate said vessels in its behalf.The E. Phillipp

Corporation of the New York loaded on board the vessel “Doña Nati” at San Francisco, California, a total

of 1,200 bales of American raw cotton consigned to Manila Banking Corporation, Manila and the

People’s Bank and Trust Company acting for and in behalf of the Pan Asiatic Commercial Company,

Inc., who represents Riverside Mills Corporation.The vessel figured in a collision at Ise Bay, Japan with a

japanese vessel as a result of which 550 bales of aforesaid cargo were lost and/or destroyed The

damage and lost cargo was worth P344,977.86 which amount, the plaintiff Development Insurance and

Surety Corporation as insurer, paid to the Riverside Mills Corporation as holder of the negotiable bills of

lading duly endorsed.The insurer filed before the CFI of Manila an action for the recovery of said amount

from NDC and MCP.

Issue:

Whether or not the law of country or port of destination shall apply.

Held:

In Easter Shipping Lines, Inc., v. IAC, 150 SCRA 469 (1987), we held under similar

circumstances that the law of the country to which the goods are to be transported governs the liability of

the common carrier in case of their loss, destruction or deterioration. Thus, the rule was specifically laid

down that for cargoes transported from Japan to the Philippines, 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 especial laws (Article 1766, Civil

Code). Hence, the carriage of Goods by Sea Act, a special law, is merely suppletory to the provisions of

the Civil Code. The goods in question were being transported from San Francisco, California and Tokyo,

Japan to the Philippines and that they were lost or damaged due to a collision which was found to have

been caused by negligence or fault of both captains of the colliding vessels.Under the above ruling, it is

evident that laws of the Philippines will apply, and it is immaterial that the collision actually occurred in

foreign waters, such as Ise Bay, Japan. It appears, however, that collision falls among matters not

specifically regulated by the Civil Code, so that no reversible error can be found in respondent

courtâ€™s application to the case at bar of Articles 826 to 839, Book Three of the Code of Commerce,

which deal exclusively with collision of vessels. Article 826 of the Code of Commerce provides that where

collision is imputable to the personnel of a vessel, the owner of the vessel at fault shall indemnify the

losses and damages incurred after an expert appraisal. But more in point to the instant case in is Article

827 of the same Code, which provides that if the collision is imputable to both vessels, each one shall

suffer its own damages and both shall be solidarily responsible for the losses and damages suffered by

their cargoes.There is, therefore, no room for NDCs interpretation that the Code of Commerce should

apply only to domestic trade and not to foreign trade.MCP next contends that it cannot be liable solidarily

with NDC because it is merely the manager and operator of the vessel “Doña Nati”, nor a ship agent. As

the general managing agent, according, to MCP, it can only be liable if it acted in excess of its authority.

The Memorandum Agreement of September 13, 1962 shows that NDC appointed MCP as agent, a term


18

broad enough to include the concept of ship agent in Maritime Law. In fact, MCP was even conferred all

the powers of the owner of the vessel, including the power to contract in the name of the NDC.

Consequently, under the circumstances, MCP cannot escape liability. It is well-settled that both the

owner and agent of the offending vessel are liable for the damage done where both are impleaded.


19

Cases Applying Articles 1734 – 1743

of the New Civil Code

Vigilance Over Goods

of Common Carriers


20

Articles Applied:

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 of 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.

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. 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them, without prejudice to the provisions of Article 1738.

Art. 1737. The common carrier's duty to observe extraordinary diligence over the goods remains in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner has made use of the right of stoppage in transitu.

Art. 1738. The extraordinary liability of the common carrier continues to be operative even during the time the goods are stored in a warehouse of the carrier at the place of destination, until the consignee has been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them.

Art. 1739. In order that the common carrier may be exempted from responsibility, the natural disaster must have been the proximate and only cause of the loss. However, the common carrier must exercise due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm or other natural disaster in order that the common carrier may be exempted from liability for the loss, destruction, or deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act of the public enemy referred to in Article 1734, No. 2.


21

Art. 1740. If the common carrier negligently incurs in delay in transporting the goods, a natural disaster shall not free such carrier from responsibility.

Art. 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods, the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in damages, which however, shall be equitably reduced.

Art. 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character of the goods, or the faulty nature of the packing or of the containers, the common carrier must exercise due diligence to forestall or lessen the loss.

Art. 1743. If through the order of public authority the goods are seized or destroyed, the common carrier is not responsible, provided said public authority had power to issue the order.


22

Gelisan v. Alday

154 SCRA 388

Facts:

Herein petitioner is Bienvenido Gelisan, is the owner of a freight truck. He and Roberto Espiritu

entered into a contract under which Espiritu hired the freight truck Gelisan for the purpose of hauling

sugar, flour, and fertilizers. It also stipulated that Espiritu shall bear the loss and damage attending the

goods to be hauled by him.

Benito Alday, a trucking operator who knew of Espiritu, had a contract to haul the fertilizers of

Atlas Fertilizer Corporation from Pier 4, North Harborn, to Mandaluyong.

Alday met Espiritu at the gate of Pier 4 and the latter offered the use of his truck with the driver

and helper. Alday accepted and instructed the checker to let Espiritu hau fertilizer.

Espiritu managed 200 bags of fertilizer per trip. The fertilizer was delivered to the driver and maid

with the necessary way bill receipt. However, Espiritu never delivered the fertilizer to the Atlas Fertilizer

bodega in Mandaluyong.

Hence, Alday was compelled to pay for the loss of 400 tags to Atlas Fertilizer Corporation and

filed a complaint against Espiritu and Gelisan with the CFI Manila.

While the CFI ruled that Espiritu alone is liable, the Court of Appeals ruled to include Gelisan.

Issue:

Whether or not Gelisan be held solidarily liable with Espiritu.

Held:

The court rules the affirmative, Gelisan being the registered owner of the truck. The court has

held invariably in several decisions that the registered owner of a public service vehicle is responsible for

damages that may arise from consequences incidental to its operation or that may be caused by any of

the passengers therein.

The claim that the petitioner is not liable in view of the lease contract executed by and between

him and Roberto Espiritu which exempts him from liability to third persons cannot be sustained because

it appears that the lease contract, adverted to, had not been approved by the Public Dercric Commision.

It is settled in our jurisprudence that if a property covered by a franchise is transferred or leased

to another without the requisite approval, the transfer is not binding upon the public and third persons,

However, Gelisan is not without recourse as he may be indemnified by Espiritu the amount he

many have been udered to pay for the damages.


23

Benedicto v. Intermediate Appellate Court

187 SCRA 547

Facts:

Herein private respondent Greenhills Wood Industries Co., Inc. operates saw hill in Quirino.

Sometime in May 1980, private respondents bound itself to sell and deliver to Blue Star Mahogany, Inc.

(Blue Star), a company in Bulacan 100,000 board feet of sawn lumber with the understanding that an

initial delivery would be made on May 15, 1980. to effect its first delivery, private respondents’ resident

manager, Dominador Cruz, contracted Virgitio Licuden, the drivear of a cargo truck to transport its sawn

lumber to the consignee, Blue Star, in Valenzuela, Bulacan. The cargo truck was registered in the name

of herein petitioner Luisa Benedicto, the proprietor of Macorem Trucking, a business enterprise engaged

in hauling freight.

On May 15, 1980, Cruz in the presence and with the consent of the driver Licuden, supervised

the loading of san lumber with invoice aboard the cargo truck. Thereafter, the manager of Blue Star

called up the manager of Greenhills informing the former that the sawn lumber had not yet arrived in

Bulacan. The manager of Greenhills was this informed. Still, Blue Star was constrained to look for other

suppliers.

Thus Greenhills filed a criminal case against Luciden for Estafa and also against Benedicto for

recovery of the value of the lost sawn lumber plus damages. The RTC ruled against Benedicto and

Luciden. Hence this petition from the IAC.

Issue:

Whether or not Benedicto, being the registered owner of the truck should be held liable for the

value of the undelivered or lost sawn lumber.

Held:

The court rules the affirmative. 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. In sum, Benedicto is a common carrier.

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 have already

been transferred to another person. The 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 their right of action against those that may have inflicted injuries should they be required

to prove who the actual owner is. The registered owner is not allowed to deny liability by proving the

identity of the alleged transferee.


24

Philtranco Service Enterprise v. Court of Appeals

273 SCRA 563

Facts:

The victim herein, Ramon Asuesta was riding in his easy rider tricycle along Calbayog City. Also

in the city, herein defendant Philtranco’s bus was driven by defendant Rogasiones Dolira Manilbing was

being pushed by some persons in order to start its engine. As the bus was pushed, its engine started

thereby the bus continued on its running motion and it occurred at the time when Ramon Asuesta, who

was still riding on his bicycle was directly (was) in front of the said bus. Due to the abrupt start of the bus’

engine, it thereby bumped on the victim Ramon. As a result, he fell and was run over by the bus

Still, the bus did not halt after hitting the victim. Thereafter P/Sgt. Yabao, who was then jogging

approached the driver defendant and signaled him to stop, but the driver only stopped when the former

introduced himself as a police officer. The trial court rendered a decision ordering the petitioner

(Philtranco) to jointly and severally pay the private respondents. On appeal, the CA affirmed the decision.

Issue:

Whether or not the court erred in holding Philtranco liable being the registered owner of a public

service for the tortuous act of the driver.

Held:

The courts ruled the negative. The Appellate court was correct in holding herein petitioner liable.

Article 2176 of the New Civil Code provides that “whoever by act or omission causes damage to another,

these being fault or negligence, is obligated to pay for the damage done.” Such fault or negligence, if

there is no pre-existing contractual relation between the parties is called a quasi-delict. Further, Article

2180 of the Civil Code states that “The obligation imposed by Article 2176 is demandable not only for

ones owns acts or omissions, but for whom one is responsible.”

In the case at bar, the liability of the registered owner of a public service vehicle, like petitioner

Philtranco, for damages arising from the tortuous acts of the driver are primary, direct and joint and

solidary, its only recourse if the judgement for damages is satisfied by it is to be recovered what it has

paid from its employee who committed the fault or negligence which gave rise to the action based on the

quasi-delict.


25

Santos v. Sibug

G.R. No. L-26815

Facts:

Santos, who owns a jeep, entered into an arrangement with Vivad that the latter will fictitiously

purchase the jeep so that Santos may use the Certificate of Public Convenience (CPC) of Vivad.

Subsequently, the Sibug was bumped by the said jeep. Damages was then awarded to Sibug against

Vivad and his driver. The Sheriff of Manila then levied the jeep and sold it in a public auction. Santos

then files of the third-party claim with the Sheriff stating that he owns the jeep and such sale is null and

void because the property levied is not owned by Vivad.

Issue:

Whether or not the levy and auction sale made on the jeep is null and void.

Held:

The Court held that the agreement entered into by Santos and Vivad is a “Kabit System,” which is

prohibited by law. Such system was not approved by the Public Service Commission (PSC) therefore

Vivad is the owner of the jeep in legal contemplation. Since Vivad is the owner of the jeep according to

law, then it cannot be said that the Sheriff seized the property belonging to a stranger. The auction sale

is still valid according to the Court.


26

Lita Enterprises, Inc. v. IAC

G.R. No. L-64693

Facts:

Spouse ocampo purchased 5 toyota standard cars from delta motors in installments to be used

as taxi cabs. However, since they do not have any franchise to operate a taxicabs, they entered in an

agreement with lita enterprises for the use of the latter’s certificate of public convenience, commonly

known as Kabit system. Later on, the taxi collided into a motorcycle resulting to the death of the driver of

the motorcycle Emeterio Martin. Lita enterprises were adjudged liable and two of the taxicabs were

levied upon and sold at a public auction. Thereafter the spouses ocampo decided to register the taxicabs

in their own name and ask Lita enterprise to return the papers but the latter refused. Hence this petition.

Issue:

Whether or not the agreement between the parties is valid.

Held:

The Court held that the agreement between the parties is not valid.Under the arrangement of

kabit system, whereby a person who has been granted a certificate of convenience allows another

person who owns motor vehicles to operate under such for a fee. The Kabit System has been identifies

as one of the root causes of prevalence of graft and corruption in the government transportation offices.

It is void being contrary to public policy. And the parties have no right of action against each other

because they are in pari delicto, the court will leave them both where it finds them.


27

Teja Marketing vs. IAC

148 SCRA 347 Facts:

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

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

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


28

Magboo v. Bernardo

G.R. No. L-16790

Facts:

The petitioners filed an action against the respondent who is the owner of the jeep and who is

being claimed to be responsible for the death of the petitioner’s 8 year old child in a vehicular accident.

The respondent denies being liable for the death of the said child because he claimed that there was no

employer-employee relationship between him and the driver of the said jeep because of the boundary

system that they are following. The respondent claims that only the driver should be liable because the

relationship between the two is that of a lessor-lessee. Respondent also claims that he should not be

held subsidiary liable because the driver of the jeep pleaded guilty to a criminal case without

respondent’s knowledge.

Issue:

Whether or not the respondent is liable for the death of the child of the petitioners.

Held:

The Court held that the respondent should be liable because the lease he made with the driver of

the jeep was not approved by the Public Service Commission (PSC). Since the lease was made without

such approval, the owner continued to be the operator of the jeep in legal contemplation and such was

responsible for the consequences of his operation. The Court also held that the claim of the respondent

in stating that he did not know of the plea made by the driver, which prevented him from proving his

innocence, was raised too late in the case therefore the respondent is estopped from enforcing any claim

regarding to that matter.


29

Eastern Shipping Lines vs. IAC

150 scra 463

Facts: In GR 69044, the M/S ASIATICA, a vessel operated by Eastern Shipping Lines loaded at

Kobe, Japan for Manila:

1.) 5,000 pieces of calorized lance pipes in 28 packages valued at P256,039.00 consigned to

Philippine Blooming Mills Co., Inc.,

2.) 7 cases of spare parts valued at P92,361.75, consigned to Central Textile Mills, Inc.

Both sets of goods were insured for their value with Development

Insurance and Surety Corporation.

In GR 71478, the same vessel took on board :

3. 128 cartons of garment fabrics and accessories, in 2 containers, consigned to Mariveles Apparel Corporation

4. two cases of surveying instruments consigned to Aman Enterprises and General Merchandise.

The 128 cartons were insured for their value by Nisshin Fire & Marine Insurance Co., for

US$46,583.00. The 2 cases by Dowa Fire & Marine Insurance Co., Ltd., for US$11,385.00. Enroute for

Kobe, Japan, to Manila, the vessel caught fire and sank, resulting in the total loss of ship and cargo. The

respective Insurers paid the corresponding marine insurance values to the consignees concerned and

were thus subrogated unto the rights of the latter as the insured.

Eastern Shipping denied liability mainly on the ground that the loss was due to an extraordinary

fortuitous event; hence, it is not liable under the law. The Trial Court rendered judgment in favor of

Development Insurance in the amounts of P256,039.00 and P92,361.75, respectively, with legal interest,

plus P35,000.00 as attorney’s fees and costs. Eastern Shipping took an appeal to the then Court of

Appeals which, on 14 August 1984, affirmed the decision of the trial court. Eastern Shipping filed a

petition for review on certiorari.

Nisshin, and Dowa, as subrogees of the insured, filed suit against Eastern Shipping for the

recovery of the insured value of the cargo lost imputing unseaworthiness of the ship and non-observance

of extraordinary diligence by Eastern Shipping. Eastern Shipping denied liability on the principal grounds

that the fire which caused the sinking of the ship is an exempting circumstance under Section 4(2) (b) of

the Carriage of Goods by Sea Act (COGSA); and that when the loss of fire is established, the burden of

proving negligence of the vessel is shifted to the cargo shipper. Trial Court rendered judgment in favor

of Nisshin and Dowa. CA affirmed decision. Hence this petition on certiorari.

Issue: Whether or not the carrier exercised extraordinary diligence.

Held: Eastern Shipping shall pay the Development Insurance the amount of P256,039 for the 28

packages of calorized lance pipes, and P71,540 for the 7 cases of spare parts, with interest at the legal

rate from the date of the filing of the Complaint on 13 June 1978, plus P5,000 as attorney’s fees, and the

costs. The Court, on the other hand, in GR 71478, affirmed the judgment.


30

The evidence of the defendant did not show that extraordinary diligence was observed by

the vessel to prevent the occurrence of fire at hatches nos. 2 and 3. Defendant’s evidence did not

likewise show the amount of diligence made by the crew, on orders, in the care of the cargoes. What

appears is that after the cargoes were stored in the hatches, no regular inspection was made as to their

condition during the voyage. The complete defense afforded by the COGSA when loss results from fire

is unavailing to Eastern Shipping. The Carriage of Goods by Sea Act (COGSA), a special law, is merely

suppletory to the provisions of the Civil Code The fire may not be considered a natural disaster or

calamity, as it arises almost invariably from some act of man or by human means. It does not fall within

the category of an act of God unless caused by lightning or by other natural disaster or calamity. It may

even be caused by the actual fault or privity of the carrier.


31

Ganzon v. Court of Appeals

161 SCRA 646

Facts:

Ganzon, petitioner herein, was hired by Tumambing to haul 305 tons of scrap iron. The contract

was for the petitioner to transport the scrap iron to Manila from Bataan. Tumambing delivered the scrap

iron to Niza, captain of the lighter LCT “Batman”, to board it on the same. The crew of the Batman started

to load the iron, and when they were about halfway through, Mayor Advincula arrived and demanded

P5,000 from Tumambing. The latter resisted and a heated argument started. Mayor Advincula drew his

gun and fired at Tumambing. He was brought to the hospital for treatment, lucky for him the wound was

not fatal.

A few days after this incident, the loading of the scrap metal was resumed. However, the acting

Mayor this time went to the port where the Batman was docked. He was accompanied by 3 policemen

and he ordered Captain Niza to dump the scrap iron where the lighter was docked. What was left or the

iron was confiscated by the Acting Mayor and brought to NASSCO. A receipt was issued showing that

the municipality had taken custody of the scraps or iron.

Tumambing filed a case in order to recover damages for the loss that he sustained. The lower

court rendered a decision in favor of Ganzon. However, on appeal the Court of Appeals reversed the

decision ordering Ganzon to pay Tumambing P5,895 as actual damages, P5,000 for exemplary

damages and attorney’s fees as well. Hence this petition by Ganzon.

Issue:

Whether or not Ganzon is liable for the loss that Tumambing sustained.

Held:

The Court held that Ganzon is liable for the loss of Tumambing. The defense that the scraps of

iron were not unconditionally placed in his custody and control is untenable. Petitioner herein admits that

the scraps of iron were delivered to Captain Niza by Tumambing in order to load the same on the lighter

Batman. The employees of Ganzon received the scraps of iron on his behalf, therefore the scraps of

metal were placed in his custody and control. Upon the receipt of the scraps by the carrier in order

transport the same, the contract of carriage was perfected. Upon perfection of the contract, the exercise

of extraordinary diligence in caring for the goods shall also commence to begin.

Article 1738 of the NCC provides that the exercise of extraordinary diligence shall cease only

upon delivery to the consignee or to the person who has the right to receive the same. In this case, there

was no delivery made to the consignee, therefore the carrier should have exercised extraordinary

diligence in taking care of the scraps of iron. It is irrelevant that the scraps of iron were only partially

loaded on the lighter. The scraps of iron were already under the custody and control of the carrier,

therefore he shall be liable for its loss.


32

Eastern Shipping Lines, Inc. vs. Court of Appeals

196 SCRA 570

Facts:

SS Eastern Comet, owned by defendant Eastern Shipping Lines was engaged in the business of

shipment from Japan to the Philippines. Through the SS Eastern Comet, two fiber drums of riboflavin

were shipped from Yokohama to Manila. The shipment was discharged upon arrival into the custody of

defendant Metro Port Service, Inc. However, the latter refused to one drum after claiming that such

unwanted drum was in bad order. Defendant Allied Brokerage Corporation received the shipment from

Metro Port and detected that one drum was opened and without seal. The goods were then delivered to

the consignee’s warehouse. The latter noted that one drum contained spillages, while the rest of the

contents were adulterated. As a consequence of the damage Mercantile Insurance Company paid the

consignee under its marine policy insurance and instituted civil action against defendants as subrogee.

The Court of Appeals affirmed judgment holding the common carrier, arrastre operator, and customs

brokers jointly and severally liable.

Issue:

Whether Eastern Shipping Lines, Inc. can be held severally and jointly liable with Metro Port and

Allied brokerage.

Held:

The Supreme Court held that Esatern Shipping Lines, Inc can be held liable. As what was

already decided in Fireman’s Fund Isurance, Co. vs Metro Port Service, Inc, the legal relationship

between the consignee and the arrastre operator is analogous to that of a depositor and a

warehouseman. Further explained, the relationship between the consignee and the common carrier is

comparable to that of the consignee and the arrastre operator. Since it is the duty of the Arrastre to take

good care of the goods that are in its custody and to deliver them in good condition to the consignee,

such responsibility also devolves upon the carrier. The duty of the consignee to guard the goods and

shelter it from destruction or impairment is also shouldered by the common carrier. Both are therefore

charged with the obligation to deliver the goods in good condition to the consignee.


33

Sarkies Tours Philipines, Inc. vs. CA

G.R. No. 108897

Facts:

Fatima Fortades was a passenger of one of the buses of petitioner Sarkies Tours bound for

Legazpi City. She had onboard luggages which contained important documents and personal

belongings. Her belongings were kept in the baggage compartment of the bus, but during a stopover at

Daet, it was discovered that only one bag remained in the open compartment. The others, including

Fatima's things, were missing and might have dropped along the way. Despite the suggestion of the

passengers to retrace its route in order to recover their luggage, the driver nevertheless neglected them

and continued driving. Consequently, respondents filed a case to recover the value of the remaining lost

items, as well as moral and exemplary damages, attorney's fees and expenses of litigation. They claimed

that the loss was due to petitioner's failure to observe extraordinary diligence in the care of Fatima's

luggage and that petitioner dealt with them in bad faith from the start. Petitioner, on the other hand,

disowned any liability for the loss on the ground that Fatima allegedly did not declare any excess

baggage upon boarding its bus.

Issue:

Whether or not Sarkies is liable for damages for lost propery of its passengers.

Held:

The Supreme Court held that Sarkies is liable for the loss. The cause of the loss was petitioner's

negligence in not ensuring that the doors of the baggage compartment of its bus were securely fastened.

As a result of this lack of care, almost the entire luggage was lost, to the prejudice of the paying

passengers. 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 transported by them. This

liability lasts from the time the goods are unconditionally placed in the possession of, and received by the

carrier for transportation until the same are delivered, actually or constructively, by the carrier to the

person who has a right to receive them. The awarding of actual damages to respondents is just because

their efforts in recovering the lost items must be well compensated. Moral and exemplary damages must

also be awarded in the presence of bad faith and negligence on the part of the common carrier.


34

Valenzuela Hardwood & Industrial Supply v. Court of Appeals

274 SCRA 642

Facts:

Valenzuela Hardwood & Industrial Supply (VHIS), plaintiff herein, hired the services of Seven

Brothers Shipping Corporation (SBC) to transport 940 round logs. VHIS shipped the logs at the port in

Isabella and said logs were placed on the M/V Seven Ambassador owned by SBC for transport. VHIS

insured the logs against loss or damage with South Sea Surety and Insurance Co. for the amount of

P2,000,000. Subsequently the M/V Seven Ambassador sank which resulted in the loss of the logs on

board the same. The plaintiff then filed a claim with the insurance company and the SBC. However both

claims were denied. The insurance company denied liability under the policy and SBC denied liability

claiming that they are a private carrier and that they cannot be held liable due to the stipulation that the

owners shall not be responsible for the loss, split, short-landing, breakages and any kind of damages to

the cargo.

Plaintiff filed a case in order to claim damages for the loss it incurred. The lower court rendered a

decision in favor of the plaintiff and ordered the insurance company and SBC to pay the plaintiff. On

appeal, the Court of Appeals affirmed the decision but set aside the decision against SBC holding that

the stipulation between the parties is valid. Hence this petition.

Issue:

1. Whether or not the stipulation between the parties is valid.

2. Whether or not SBC is liable for the loss of VHIS.

Held:

The Court held that the stipulation between the parties is valid. It is clear in this case that the SBC

is a private carrier and therefore a stipulation between the parties limiting the liability of the carrier is

valid. In a contract of private carriage, the parties may validly stipulate that the responsibility of the cargo

rests solely on the charterer. Such stipulations shall be valid as long as they are not contrary to law,

morals, good customs, public order and public policy.

It is a fact that the loss of the logs was due to the sinking of the M/V Seven Ambassador. The

sinking of the vessel was caused by the snapping of the iron chains holding the logs. Said snapping was

the consequence of the negligence of the captain in securing the logs. However, since there is a

stipulation between the parties regarding the responsibility of the loss of the cargo, the SBC cannot be

held liable for the loss of the logs.


35

Yobido v. Court of Appeals

281 SCRA 1

Facts:

The spouses Tumboy and their minor children boarded a bus operated by the Yobido Bus Liner

to Davao City. On the way to their destination, the front left tire of the bus exploded which led to the bus

falling into a ravine and causing the death of Tito Tumboy and physical injuries to the other passengers.

The defendants then filed a case against the petitioner for breach of the contract of carriage. The

petitioner claims that it is not liable because the tire explosion is a caso fortuito.

Issue:

Whether or not the petitioner is liable for the accident.

Held:

The Court held that the tire explosion cannot be considered as a fortuitous event. The reason is

that the common carrier has the burden of proof that it exercised extraordinary diligence in the carriage

of the passengers. There is always a presumption of negligence on the common carrier in cases of death

or injury and that the carrier needs to present contrary evidence that it was not negligent and that it

exercised the required diligence of the law. The carrier cannot rely on the defense that the tire was brand

new or that it had daily check ups regarding the parts of the bus.


36

Compania Maritima v. Insurance Co. of North America

12 SCRA 213

Facts: Macleod & Co., contracted, first by telephone and later confirmed by a formal written booking issued by Macleod & Co., the services of the petitioner Comapania Maritima for the shipment of bales of lamp from Davao to Manila. Two lighters of the petitioners loaded the said cargo from Macleod’s wharf at Davao awaiting the arrival of another vessel of the petitioner for reloading. One of the lighters sunk of which Macleod suffered a total of P64,018. Respondent insurers of said cargo paid Macleod, and being subrogated to Macleod’s right, filed a claim to collect from the petitioner the amount it paid to Macleod. Petitioner denied liability on the grounds that there was no bill of lading issued thereby resulting to be non-existence of the contract; that the sinking was due to a fortuitous event and the respondent has no personality. Issue: Whether or not there was a contract and whether or not there was a fortuitous event. Held: There was complete contract of carriage the consummation of which has already begun when the shipper delivered the cargo to the carrier and the latter took possession of the same by placing it on a lighter manned by its two authorized employers under which Macleod become entitled to the privilege of law. The responsibility of the carrier commenced on the actual delivery and receipt by, the carrier or its authorized agent of the goods. The barges or lighters were merely employed as the first step of the voyage. As to the issuance of the bill of lading, it is not required or essential to the contract, although it may become obligatory by reason of regulations or as a condition injured in the contract by the agreement of the parties themselves.


37

Lu Do v. Binamara

101 PHIL 120

Facts: Delta Company of New York shipped 6 cases of film and photographic supplies to respondent

herein. Having arrived at the Cebu port, it discharged her cargo placing it in the custody of the arrastre

operator appointed by the Bureau of Customs. The cargo was checked and found to be in good order.

Later on the goods were delivered to Binamara. After inspection it was found out that some cargo were

missing. Binamara demanded from the carrier indemnity for the loss it sustained. However, the carrier

denied liability relying on the stipulation in the contract of carriage. It provides that the carrier is no longer

liable for the cargo after delivery of the same to the customs authorities. The lower court rendered a

decision in favor of Binamara. Hence this petition.

Issue:

Whether or not the common carrier is liable for the lost cargo.

Held:

The Court held that the carrier is no longer liable for the loss of the goods. The general rule is that

delivery must be made to the consignee or the person authorized to receive the goods, without such

delivery the carrier shall be liable for the loss or destruction of goods while in their custody. However,

parties may agree to limit the liability of the carrier considering that the goods have to go through the

inspection of the customs authorities before they are actually turned over to the authorities. The

stipulation in this case is binding upon the parties it being not contrary to law, morals, or public policy.


38

American President Lines, Ltd. Vs. Klepper 110 Phil 243

Facts: Klepper on board SS Pre. Cleveland and Yokohama, Japan and lift van containing personal and household effects. Upon its arrival in Manila and while the lift van was being unloaded by crane, it fell on the pier and its contents were spilled and scattered, as a result of which, Klepper bought an action for damages against the carrier. While the carrier does not dispute liability, it, however, contends that the same cannot exceed $500, invoking in its favor the bill of lading and Sec. 4(5) of the carriage of goods by Sea Act (COGSA). The trial Court ordered the carrier to pay Klepper with a right to reimbursement from Delgado Brothers, the operator of the crane. The CA affirmed the said decision. The carrier appealed. Issue: Whether or not the carrier can be held liable beyond that stated in the bill of lading and that provided in COGSA. Held: The carrier should only pay Klepper the sum of $500. The shipper who accepted the bil of lading impliedly id bound by its items. While regard to the contention of the carrier that COGSA should control in this case, the same is of as moment. Art. 1763 of the New Civil Code provides that “the laws of the country to which the goods are transported shall govern the liability of the common carrier in case of loss, destruction and deterioration.” This means that the law of the Philippines on the New Civil Code. Under 1766 of NCC, “in all mater not regulated by this Code, the rights and obligations of common carriers shall be governed by the Code of Commerce and by Special Laws.” Art. 1736-1738, NCC govern said rights and obligations. Therefore, although Sec 4(5) of COGSA states that the carrier shall not be liable in an amount exceeding $500 per package unless the value of the goods had been declared by the shipper and asserted in the bill of lading, said section is merely supplementary to the provisions of the New Civil Code.


39

Servando v. Philippine Steam Navigation Co. 117 SCRA 832

Facts: Clara Uy Bico and Amparo Servando loaded on board the appellant's vessel, FS-176, for carriage from Manila to Pulupandan, Negros Occidental cargoes of cavans of rice and cartons of colored paper which were evidenced by bills of lading. Upon arrival of the vessel at Pulupandan the cargoes were discharged, complete and in good order, unto the warehouse of the Bureau of Customs. At about 2:00 in the afternoon of the same day, said warehouse was razed by a fire of unknown origin, destroying appellees' cargoes. Before the fire, however, appellee Uy Bico was able to take delivery of 907 cavans of rice Appellees' claims for the value of said goods were rejected by the appellant.

Issue:

Whether or not carrier is liable for the loss of the cargo.

Held:

The court a quo held that the delivery of the shipment in question to the warehouse of the Bureau of Customs is not the delivery contemplated by Article 1736; and since the burning of the warehouse occurred before actual or constructive delivery of the goods to the appellees, the loss is chargeable against the appellant. Article 1736 of the Civil Code imposes upon common carriers the duty to observe extraordinary diligence from the moment the goods are unconditionally placed in their possession "until the same are delivered, actually or constructively, by the carrier to the consignee or to the person who has a right to receive them, without prejudice to the provisions of Article 1738. " It should be pointed out, however, that in the bills of lading issued for the cargoes in question, the parties agreed to limit the responsibility of the carrier for the loss or damage that may be caused to the shipment by inserting therein the following stipulation:

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

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


40

Saludo, Jr. v. Court of Appeals 207 SCRA 498

Facts: Plaintiff herein together with Pomierski and Son Funeral Home of Chicago brought the remains of plaintiff’s mother to Continental Mortuary Air Services which booked the shipment of the remains from Chicago to San Francisco by Trans World Airways (TWA) and from San Francisco to Mania with Philippine Airlines (PAL). The remains were taken to the Chicago Airport, but it turned out that there were 2 bodies in the said airport. Somehow the 2 bodies were switched, and the remains of plaintiff’s mother was shipped to Mexico instead. The shipment was immediately loaded on another PAL flight and it arrived the day after the expected arrival. Plaintiff filed a claim for damages in court. The lower court absolved both airlines and upon appeal it was affirmed by the court. Issue: Whether or not the 2 airlines should be held liable for damages. Held: Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of the common carrier begins from the time the goods are delivered to the carrier. This responsibility remains in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner exercises the right of stoppage in transitu, and terminates only after the lapse of a reasonable time for the acceptance, of the goods by the consignee or such other person entitled to receive them. And, there is delivery to the carrier when the goods are ready for and have been placed in the exclusive possession, custody and control of the carrier for the purpose of their immediate transportation and the carrier has accepted them. Where such a delivery has thus been accepted by the carrier, the liability of the common carrier commences eo instanti. Hence, while we agree with petitioners that the extraordinary diligence statutorily required to be observed by the carrier instantaneously commences upon delivery of the goods thereto, for such duty to commence there must in fact have been delivery of the cargo subject of the contract of carriage. Only when such fact of delivery has been unequivocally established can the liability for loss, destruction or deterioration of goods in the custody of the carrier, absent the excepting causes under Article 1734, attach and the presumption of fault of the carrier under Article 1735 be invoked. As already demonstrated, the facts in the case at bar belie the averment that there was delivery of the cargo to the carrier on October 26, 1976. Rather, as earlier explained, the body intended to be shipped as agreed upon was really placed in the possession and control of PAL on October 28, 1976 and it was from that date that private respondents became responsible for the agreed cargo under their undertakings in PAL Airway Bill No. 079-01180454. Consequently, for the switching of caskets prior thereto which was not caused by them, and subsequent events caused thereby, private respondents cannot be held liable


41

Macam v. Court of Appeals 313 SCRA 77

Facts: Petitioner Macam exported watermelons and mangoes to Hong Kong, Great Prospect Company is the consignee. The bill of lading stated that one of the bill must be presented by the Pakistan Bank as consignee and GPC as the notify party. Upon arrival in Hong Kong, the shipment was delivered by the carrier directly to GPC and not to Pakistan Bank and without surrendering the bill of lading. Issue: Whether or not there was a valid delivery.

Held:

The extraordinary responsibility of common carriers last until actual or constructive delivery of the cargo to the consignee or his agent. Pakistan was indicted as consignee and GPC was the notify party. However, in the export invoice, GPC was clearly named as buyer or importer. Petitioner referred to GPC as such in his demand letter to respondent and his complaint before the court. This premise brings into conclusion that the deliveries of the cargo to GPC as buyer or importer is in conformity with Art. 1736 of the Civil Code. Therefore, there was a valid delivery.


42

Cases Applying Articles 1744-1754


Vigilance Over Goods

of Common Carriers


43

Articles Applied:

Art. 1744. A stipulation between the common carrier and the shipper or owner limiting the liability of the former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence shall be valid, provided it be:

(1) In writing, signed by the shipper or owner;

(2) Supported by a valuable consideration other than the service rendered by the common carrier; and

(3) Reasonable, just and not contrary to public policy.

Art. 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy:

(1) That the goods are transported at the risk of the owner or shipper;

(2) That the common carrier will not be liable for any loss, destruction, or deterioration of the goods;

(3) That the common carrier need not observe any diligence in the custody of the goods;

(4) That the common carrier shall exercise a degree of diligence less than that of a good father of a family, or of a man of ordinary prudence in the vigilance over the movables transported;

(5) That the common carrier shall not be responsible for the acts or omission of his or its employees;

(6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act with grave or irresistible threat, violence or force, is dispensed with or diminished;

(7) That the common carrier is 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.

Art. 1746. An agreement limiting the common carrier's liability may be annulled by the shipper or owner if the common carrier refused to carry the goods unless the former agreed to such stipulation.

Art. 1747. If the common carrier, without just cause, delays the transportation of the goods or changes the stipulated or usual route, the contract limiting the common carrier's liability cannot be availed of in case of the loss, destruction, or deterioration of the goods.


44

Art. 1748. An agreement limiting the common carrier's liability for delay on account of strikes or riots is valid.

Art. 1749. A stipulation that the common carrier's liability is limited to the value of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.

Art. 1750. A contract fixing the sum that may be recovered. by the owner or shipper for the loss, destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been fairly and freely agreed upon.

Art. 1751. The fact that the common carrier has no competitor along the line or route, or a part thereof, to which the contract refers shall be taken into consideration on the question of whether or not a stipulation limiting the common carrier's liability is reasonable, just and in consonance with public policy.

Art. 1752. Even when there is an agreement limiting the liability of the common carrier in the vigilance over the goods, the common carrier is disputably presumed to have been negligent in case of their loss, destruction or deterioration.

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.

Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger's baggage which is not in his personal custody or in that of his employee. As to other baggage, the rules in Articles 1998 and 2000 to 2003 concerning the responsibility of hotel-keepers shall be applicable.


45

Juan Ysmael & Co. v. Barreto & Co. 51 PHIL 90

Facts:

Plaintiff seeks to recover from defendant the alleged value of the four cases of merchandise which it delivered to the steamship ANDRES on October 23, 1922, at Manila, to be shipped to Surogao. Said shipment was never delivered to the consignee. The defendants rely only on clause 7 of the bill of lading whereby it was provided that action not brought within 610 days from the time the cause of action accrued still be barred, and on clause 12 which provided that the defendants are not liable for any package in excess of P300 unless the value and contracts of such package are correctly stated in the bill of lading at the time of the shipment. The goods in question were shipped from Manila on October 25, 1922, or a little less that 6 months after the shipment was made. Issue:

Whether or not the action was brought within a reasonable time. Held:

The action was brought within a reasonable time as those words are specified and defined in the authorities sited. It is true that both the plaintiff and the defendants are residents of the City of Manila, but it is also true that Surigao where the goods in question were to be delivered is one of the most distant places from Manila in the Philippine Islands. In the very nature of things, plaintiff would not want to commence its action until such time as it had made a full and careful investigation of all of the material facts and even the law of the case, so as to determine whether or not defendants were liable for its loss.

Clause 12 places a limit of P300 for “any single package of silk.” The evidence of each case very near P2,500. In this situation, the limit of defendant’s liability for each package of silk for loss or damage from any cause of for any reason, would put it in the power of the defendant to have taken the whole cargo of 64 cases of silk at a valuation of P300 of each case, or less than 1/8 of its actual value. If that rule of law should be sustained, no silk would ever be shipped from one island to another in the Philippines. Such a limitation in value is valid as against public policy.


46

Shewaram v. Philippine Airlines 17 SCRA 606

Facts: Shewaram, petitioner herein, is a Hindu from Davao. He boarded a PAL plane for a trip to

Manila. He checked in 3 pieces of baggage, a suitcase 2 other pieces. One of the suitcases were mistagged by the defendant and as a result the said suitcase did not arrive with him in Manila. He was shown a similar bag, but the contents did not belong to him. Among his things in the suitcase was a Rollflex camera and Transistor Radio 7. His baggage was later on returned but the camera and radio were missing. He demanded indemnity for his loss from PAL. The latter offered to pay P100 for his loss but Shewaram. Defendant herein claimed that the PAL ticket, on the reverse side, stated in fine print that if the value of baggage is not stated, and the baggage is lost, the maximum liability of PAL is P100.00. If value in excess of P100.00 is stated, PAL will charge extra because PAL is being held liable for an amount exceeding P100.00. Shewaram rejected the offer and demanded full payment of P800.00 for the amount of the things he lost. PAL refused to do so. Issue:

Whether the stipulation limiting the liability of PAL shall apply in the case at bar. Held:

The Court held that PAL is liable for the loss of the petitioner herein. The stipulation in at the back of the ticket shall not be binding against the petitioner. Article 1750 of the NCC provides that Article 1750 the pecuniary liability of a common carrier may, by contract, be limited to a fixed amount. It is required, however, that the contract must be "reasonable and just under the circumstances and has been fairly and freely agreed upon." In this case, the court believes that the requirements of said article have not been met. It cannot be said that the petitioner had actually entered into a contract with the PAL, embodying the conditions as printed at the back of the ticket stub that was to the petitioner. The fact that those conditions are printed at the back of the ticket stub in letters so small that they are hard to read would not warrant the presumption that the petitioner was aware of those conditions such that he had "fairly and freely agreed" to those conditions.


47

Sea-Land Service, Inc. v. Intermediate Appellate Court 153 SCRA 552

Facts:

Sea-Land, a foreign shipping and forwarding company licensed to do business in the Philippines, received from Sea-borne Trading Company in California, a shipment consigned to Sen Hiap Hing, the business name used by Cue. The shipper not having declared the value of the shipment , no value was indicated in the bill of lading. The shipment was discharged in Manila, and while awaiting transshipment to Cebu, the cargo was stolen and never recovered.

The trial court sentenced Sea-Land to pay Cue P186,048 representing the Philippine currency value of the lost cargo, P55, 814 for unrealized profit and P25,000 for attorney’s fees. CA affirmed the trial court’s decision. Issue:

Whether or not Sea-Land is liable to pay Cue. Held:

There is no question of the right of a consignee in a bill of lading to recover from the carrier or shipper for loss of, or damage to, goods being transported under said bill, although that document may have been drawn up only by the consignor and the carrier without the intervention of the consignee.

Since the liability of a common carrier for loss of or damage to goods transported by it under a contract of carriage os governed by the laws of the country of destination and the goods in question were shipped from the United States to the Philippines, the liability of Sea-Land has Cue is governed primarily by the Civil Code, and as ordained by the said Code, supplementary, in all matters not cluttered thereby, by the Code of Commerce and special laws. One of these supplementary special laws is the Carriage of goods by Sea Act (COGSA), made applicable to all contracts for the carriage by sea to and from the Philippines Ports in Foreign Trade by Comm. Act. 65.

Even if Section 4(5) of COGSA did not list the validity and binding effect of the liability limitation clause in the bill of lading here are fully substantial on the basis alone of Article 1749 and 1750 of the Civil Code. The justices of such stipulation is implicit in its giving the owner or shipper the option of avoiding accrual of liability limitation by the simple expedient of declaring the value of the shipment in the bill of lading.

The stipulation in the bill of lading limiting the liability of Sea-Land for loss or damages to the shipment covered by said rule to US$500 per package unless the shipper declares the value of the shipment and pays additional charges is valid and binding on Cue.


48

Citadel Lines, Inc. v. Court of Appeals

184 SCRA 544

Facts:

Citadel Lines, Inc., petitioner herein is the general agent of the vessel "Cardigan Bay/Strait Enterprise" . Manila Wine Merchants, Inc. (Consignee) is the importer of the subject shipment of Dunhill cigarettes from England. The said vessel loaded on board Filbrite cartons of manufactured cigarettes called "Dunhill International Filter" and "Dunhill International Menthol". The shipment arrived at the Port of Manila in a container. The said container was received by Metro Port Service, Inc., respondent herein. Subsequently the container van, which contained two shipments was stripped. One shipment was delivered and the other shipment containing cigarettes was palletized. Due to lack of space at the Special Cargo Coral, the aforesaid cigarettes were placed in two containers with two pallets with both containers duly padlocked and sealed by the representative of the petitioner.

The next day, petitioners headchecker discovered that the container van of the cigarettes had a different padlock and the seal was tampered with. This was reported to the Pier Superintendent it was found that 90 cases of imported British manufactured cigarettes were missing. When the Consignee found out that 90 cases were missing it filed a claim demanding the payment of the market value of the missing cargo. Petitioner, in its reply letter, admitted the loss but alleged that the same occurred at Pier 13, an area absolutely under the control of the arrastre (Metro Port Service, Inc). Manila Wine Merchants filed a formal claim, with the arrastre and demanded payment of the value of the goods but said claim was denied.

The lower court rendered a decision exonerating the arrastre of any liability on the ground that the subject container van was not formally turned over to its custody, and held the petitioner liable for the amount representing the market value of the lost shipment. On appeal the court of Appeals affirmed the decision of the lower court but deleted the award of attorney's fees and costs of suit. Hence this petition. Issue:

Whether the stipulation limiting the liability of the carrier contained in the bill of lading is binding on the consignee.

Held: The Court held that the stipulation limiting the liability of the carrier is valid and binding upon the consignee. It was expressly stipulated in the bill of lading that the carrier’s liability is limited to $2.00 per kilo. It has been held in previous cases that a stipulation appearing in the bill of lading limiting the liability of the carrier is binding, unless the owner or shipper declares a higher value. The consignee in this case did not declare a higher value and admits that the value of the goods does not appear in the bill of lading. Therefore the stipulation in the bill of lading should be applied. The contract had been freely agreed upon and the stipulation appears to be just and reasonable. Therefore, the award of damages should be reduced and computed with regard to the bill of lading.


49

Everett Steamship Corporation v. Court of Appeals 297 SCRA 496

Facts: Hernandez Trading Co., respondent herein, imported 3 crates of bus spare parts from its supplier,

Maruman Trading Company, Ltd., a foreign corporation based in Japan. The crates were shipped from Japan to Manila on board "ADELFAEVERETTE," a vessel owned by the principal of the petitioner herein, Everett Orient Lines. The said crates were covered by Bill of Lading No. NGO53MN. The vessel arrived in Manila and it was discovered that the one crate was missing. This was confirmed and admitted by petitioner in its letter of January 13, 1992 addressed to private respondent, which thereafter made a formal claim upon petitioner for the value of the lost cargo amounting to One Million Five Hundred Fifty Two Thousand Five Hundred (Y1,552,500.00) Yen, the amount shown in an Invoice No. MTM-941, dated November 14, 1991. However, petitioner offered to pay only One Hundred Thousand (Y100,000.00) Yen, the maximum amount stipulated under Clause 18 of the covering bill of lading which limits the liability of petitioner. Respondent rejected the offer and filed a case to collect payment for the loss against the petitioner.

Issue:

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

Held: A stipulation in the bill of lading limiting the liability of the common carrier for the loss, damages of cargo to a certain sum, unless the shipper declares or a higher value is sanctioned by law, particularly Articles 1749 and 1780 of the Civil Code. The stipulations in the bill of lading are reasonable and just. In the bill of lading, the carrier made it clear that its liability would only be up to Y100,000.00 (Yen). However, the shipper, Maruman Trading, had the option to declare a higher valuation if the value of its cargo was higher than the limited liability of the carrier. Considering that the shipper did not declare a higher valuation, it had itself to blame for not complying with the stipulations. The trial court’s decision that private respondent could not have fairly agreed to the limited liability clause in the bill of lading because the said condition were printed in small letters does not make the bill of lading invalid.


50

British Airways v. Court of Appeals G.R. No. 121824

Facts: On April 6, 1989, Mahtani decided to visit his relative in Bombay, India. In anticipation of his visit,

he obtained the services of a certain Mr. Gemar to prepare his travel plan. Since british Airways had no ticket flights from Manila to Bombay, Maktani had to take a connecting flight to Bombay on board British Airways. Prior to his departure, Maktani checked in the PAL counter in Manila his two pieces of luggage containing his clothing and personal effects, confident that upon reaching Hong Kong, the same would be transferred to the BA flight bound for Bombay, Unfortunately, when Maktani arrived in Bombay, he discovered that his luggage was missing and that upon inquiry from the BA representatives, he was told that the same might have been diverted to London. After plaintiff waiting for his luggage for one week, BA finally advised him to file a claim accomplishing the property. Issue:

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

Held:

The contract of transportation was exclusively between Maktani and BA. The latter merely endorsing the Manila to Hong Kong log of the former’s journey to PAL, as its subcontractor or agent. Conditions of contacts was one of continuous air transportation from Manila to Bombay. The Court of Appeals should have been cognizant of the well-settled rule that an agent is also responsible for any negligence in the performance of its function and is liable for damages which the principal may suffer by reason of its negligent act. Since the instant petition was based on breach of contract of carriage, Maktani can only sue BA and not PAL, since the latter was not a party in the contract.


51

Sweet Lines Inc. v. Teves G.R. No. L-37750

Facts: Private respondents Atty. Leovigildo Tandog and Rogelio Tirog bought tickets at the branch office

of the petitioner, a shipping company transporting inter-island passengers and cargoes, at the Cagayan de Oro City. Respondents were to board M/S “Sweet Hope”,however upon learning that it will not be proceeding to Bohol they decided to board M/S “Sweet Town.” On such vessel the respondents agreed to hide at the cargo section to avoid inspection of the officers of the Philippine Coast guard.

After suffering the inconviences in the cargo section and paying other tickets because those that are in their possession were no honored. The respondents sued the petitioners in the Court of First Instance of Misamis Oriental for breach of contract of carriage in the alleged sum of P110,000.00.

Petitioners moved for the dismissal of the complaint on the ground of improper venue for Conditon No. 14 printed on the ticket essentially provides that any actions arising out of the ticket will be filed at the competent court of Cebu.

The trial court ruled in favor of the respondents after denying the motion for dismissal. Having exhausted all the remedies available and still failed to obtain a ruling in their favor, the petitioner filed this instant petition for prohibition with preliminary injunction.

The Supreme Court gave due course to their petition and required them to submit their memoranda in support of their respective contention.

Respondents contend that condition No. 14 is not a part of the contract of carriage and that it is an independent contract requiring the mutual consent of the parties. In the case at bar the consent of the respondents was not sought it was imposed on them unilaterally. Venue of actions can only be waived if there is a “written agreement of the parties.” Condition No.14 not being agreed to by the respondents is not valid and enforceable. Supposing that it is otherwise, it is not exclusive and does not, therefore exclude the filing of the action in Misamis Oriental.

Petioner contend that condition No. 14 is valid and enforceable because private respondents acceded to it when they purchased passage tickets and it is an effective waiver of venue, valid and binding as such, since it is printed in bold and capital letters and not in fine print and merely assigns the place where the action arising from the contract is instituted. That condition No. 14 is unequivocal and mandatory, the words and phrases “any and all”, “irrespective of where it is issued,” and “shall” leave no doubt that the intention of Condition No. 14 is to fix the venue in the City of Cebu, to the exclusion of all other places. Issue:

Whether or not condition No. 14 is valid and enforceable. Held:

Condition No. 14 is subversive of public policy on transfers of venue of actions. For, although venue may be changed or transferred from one province to another by agreement of the parties in writing pursuant to Rule 4, Section 3, of the Rules of Court, such an agreement will not be held valid where it practically negates the action of the claimants, such as the private respondents herein. The philosophy underlying the provisions on transfer of venue of actions is the convenience of the plaintiffs as well as his witnesses and to promote the ends of justice. Considering the expense and trouble a passenger residing outside of Cebu City would incur to prosecute a claim in the City of Cebu, he would most probably decide not to file the action at all. The condition will thus defeat, instead of enhance, the ends of justice. Upon the other hand, petitioner has branches or offices in the respective ports of call of its vessels and can afford to litigate in any of these places. Hence, the filing of the suit in the CFI of Misamis Oriental, as was done in the instant case, will not cause inconvience to, much less prejudice, petitioner.


52

Public policy is “. . . that principle of the law which holds that no subject or citizen can lawfully do that which has a tendency to be injurious to the public or against the public good . . .”. Under this principle “. . . freedom of contract or private dealing is restricted by law for the good of the public.” Clearly, Condition No. 14, if enforced, will be subversive of the public good or interest, since it will frustrate in meritorious cases, actions of passenger claimants outside of Cebu City, thus placing petitioner company at a decided advantage over said persons, who may have perfectly legitimate claims against it. The said condition should, therefore, be declared void and unenforceable, as contrary to public policy — to make the courts accessible to all who may have need of their services.


53

Quisumbing Sr. vs. Court of Appeals

189 SCRA 605

Facts:

Norberto Quisumbing and Gunther Loeffler were passengers of PAL’s Fokker “Friendship” plane

flying from Macatan City bound to Manila. A senior NBI agent, Florencio O. Villarin, a senior NBI agent

and also one of the passengers of the said plane, saw a certain “Zaldy” boarded on the same flight.

Zaldy was a suspect for the killing of a Judge Valdez. Villarin sent a note to the Captain of the plane

requesting that they contact the NBI director to send agents on their point of destination because of the

presence of Zaldy. However, Captain Luis Bonnevie came out of the cockpit and informed Villarin the he

could not send the message because it would be heard by all ground aircraft stations. Villarin advised the

Captain of the danger having Zaldy and his companions onboard. Consequently, gunshots ensued

between Zaldy’s group and Villarin. Zaldy announced a hold-up and obtained the belongings of the

passengers. Zaldy and his companions successfully escaped upon landing in Manila. Petitioners now

demand from PAL indemnity for their lost belongings. The petitioners contended that PAL is liable for

breach of contract of carriage, for not transporting them and their belongings at the point of destination

without loss or damage. As a defense, PAL interposed that the incident was force majeure.

Issue:

Whether PAL can be held liable for the loss of petitioners’ belongings due to the hi-jacking?

Held:

The Supreme Court held that PAL cannot be held liable for the loss of property. Where the

defendants has faithfully complied with the requirements of government agencies and adhered to the

established procedures and precautions of the airline industry and particular time, its failure to take

certain steps that a passenger in hindsight believes should have been done is not the negligence or

misconduct which mingles with force majeure as an active and cooperative cause. It was proven that

PAL cannot be faulted with negligence. Hence, there was no breach of contract of carriage because

there was no clear evidence that PAL acted in bad faith in their obligation to transport the passengers

and their properties at the point of destination. The mandatory use of the most sophisticated electronic

devices may have minimized hijackings but all these have proved ineffective against truly determined

highjackers. Such incident which occurred was indeed force majeure.


54

Pan American World Airways vs. Rapadas G.R. No. 60673

Facts: Private respondent Jose Rapadas held passenger ticket and baggage claim check for petitioner’s

flight No. 841 with the route from Guam to Manila. While standing inline to board the flight at the Guam Airport, Rapadas was ordered by petitioner’s hand carry control agent to check-in his samsonite attaché case. Rapadas protested pointing to the fact that other co-pasengers were permitted to hand carry baggage. He stepped out of the line only to go back again at the end of it to try of he can get through without having to register his attaché case. However, the same man in charge of had carry control did not fail to notice him and ordered him again to register his baggage. Upon arriving in Manila on the same day, Rapadas claimed and was given all his checked in baggage except the attaché case. Issue:

Whether or not a passenger is bound by the terms of a passenger under the Warsaw convention, shall apply in case of loss, damage or destruction to a registered luggage of a passenger.

Held: After a review of the various arguments of the appointing parties, the court found sufficient basis

under the particular facts of the case for the availment of the liability limitations under the Warsaw Convention. There is no dispute and the courts below admit that there was such a notice appearing on page 2 of the airline ticket stating that the Warsaw Convention governs in case of death or injury of passengers or of loss, damage or destructionto a passenger’s luggage. Art. 22(4) of the Warsaw Convention does not preclude an award of attorney’s fees. That provision states that the limits of liability prescribed in the instrument shall not prevent the court from awarding in accordance with its own law, in addition, the whole or part of the court costs and other expenses of litigation incurred by the plaintiff.


55

H.E. Heacock Co. v. Macondray & Co. 42 PHIL 205

Facts: The plaintiff shipped Edmonton clocks from New York to Manila on board a vessel of the

defendant. It was agreed in the bill of lading that the value of the goods received does not exceed $500 per freight or on in proportion for any part of a ton, unless the value be expressly stated in the bill and freight [aid. It was also agreed that in the event of claims for shortage or damages the carrier shall not be liable for than the net invoice price plus freight and insurances loss charges, and any loss or damage for which the carrier may be liable shall be adjusted pro rata on said basis. The clocks were not delivered despite demands. Plaintiff claimed P420.00, the market value of the clocks, while defendant tendered only P76.36, the proportionate freight for value. The trial court decided in favor of the plaintiff freight ton value. The trial value plus freight and insurance. Issue:

Whether or not the stipulation in the bil og lading in the case at bar be followed. Held:

Three kinds of stipulation have after been made in a bill of lading. First, one exempting the carrier from any and all liability for ton and damage occasioned by its own negligence. Second, one providing for an agreed valuation. Third, one limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and pay of authority, the first and second kinds of stipulations are involved as being contrary to public policy, but the third is valid and enforceable.

The stipulation in a bill of lading which limits the liability of the carrier to a specified amount unless the shipper declares a higher value and pays a higher freight valid and enforceable. Thus, if a carrier gives to a shipper the choice of two takes, the lower of them cautioned upon his agreeing to a stipulated valuation of his property in case of loss even by carrier’s negligence, if the shipper makes the choice understandingly and freely, and names his valuation, he cannot thereafter recover move than the value which he puts on this places upon his property.


56

Augusto Ong Yiu v. Court of Appeals 91 SCRA 223

Facts:

Petitioner was paying passenger of respondent Philippine Airlines on board flight No. 946-R from Mactan Cebu bound for Butuan City. He was scheduled to attend the trial in the Court of First instance , Br. II thereat. As a passenger, he checked in one piece of luggage, a bull maleta. The plane left Mactan Airport, Cebu City at about 1pm and arrived at Bacasi Airport, Butuan City at past 2pm of the same day. Upon arrival, petitioner claimed his luggage but it could not be found. According to petitioner, it was only after reacting indignantly to the loss that the matter was attended by the porter clerk which however, the later denied. When the luggage was delivered to the petitioner with the information that the lock was open, he found out that the folder containing documents and transcripts were missing, aside from the two gift items for his parents-in-law. Petitioner refused to accept the luggage. Issue:

Whether or not PAL acted with gross negligence so as to entitle petitioner to an award of moral and exemplary damages.

Held: PAL did not act in bad faith. It was the duty of PAL to look for petitioner’s luggage which had

been miscarried. PAL exerted diligent efforts to locate the plaintiff’s baggage. Petitioner is neither entitled to exemplary damages. Exemplary damages can only be granted if the defendant asked in a wanton, fraudulent, reckless, oppressive or malevolent manner, which loss, in accordance with the stipulation written at the back of the ticket is limited to P100 per luggage plaintiff not having declared a greater value and not having called the attention of the defendant on its value ad paid the tariff thereon. Wherefore, for lack of merit, the instant petition is hereby denied, and judgment sought to be reviewed is hereby affirmed.


57

Alitalia v. Intermediate Appellate Court

192 SCRA 9

Facts:

Dr. Felipa Pablo, a professor from UP was invited to attend a meeting by the United Nations in

Ispra, Italy. She was to read a paper regarding foreign substances in food and the agriculture

environment which she had specialized knowledge of. She booked a flight to Italy with Alitalia airlines,

petitioner herein. She had arrived in Milan the day before the meeting however her luggage did not arrive

with her. The airline informed her that her luggage was delayed because it was placed in one of the

succeeding flights to Italy. She never got her luggage.

When she got back to Manila she demanded that Alitalia compensate her for the damages that

she suffered. Petitioner herein offered free airline tickets in order to compensate for the alleged

damages, however she rejected this offer and instead filed a case. Subsequently it was found out that

the luggages of Dr. Pablo were not placed in the succeeding flights. She received her luggage 11

months after and after she had already instituted a case against Alitalia.

The lower court rendered a decision in favor of Dr. Pablo and ordered plaintiff to pay damages.

On appeal, the Court of Appeals affirmed the decision and even increased the amount of damages to be

awarded to Dr. Pablo. Hence this petition for certiorari.

Issue:

Whether or not Alitalia is liable for damages incurred by Dr. Pablo.

Held:

The Court held that Alitalia is liable to pay Dr. Pablo for nominal damages. The Warsaw

Convention provides that an air carrier is made liable for damages when: (1) the death, wounding or

other bodily injury of a passenger if the accident causing it took place on board the aircraft or in the

course of its operations of embarking or disembarking; (2) the destruction or loss of, or damage to, any

registered luggage or goods, if the occurrence causing it took place during the carriage by air"; and (3)

delay in the transportation by air of passengers, luggage or goods. However, the claim for damages may

be brought subject to limitations provided in the said convention.

In this case, Dr. Pablo did not suffer any other injury other than not being able to read her paper

in Italy. This was due to the fact that Alitalia misplaced her luggage. There was no bad faith or malice on

the part of Alitalia in the said delay in the arrival of her luggage. Dr. Pablo received all her things which

were returned to her in good condition although 11 months late. Therefore she shall receive nominal

damages for the special injury caused.


58

Maerskline v. Court of Appeals

222 SCRA 108

Facts:

Respondent herein is a firm engaged in the manufacture of pharmaceutical products. It ordered

from Eli Lily, Inc. of Puerto Rico empty gelatin capsules. Said capsules were placed in 6 drums

containing 100 capsules each. The drums were placed on board the M/V Anders Maeerskline. However

the capsules were shipped to Virginia, USA instead of the Philippines. The goods arrived in the

Philippines 2 months after the original date of arrival, and respondent herein refused to accept the goods

due to its late arrival.

An action was filed by respondent to rescind the contract with Eli Lily, Inc. and Maersk together

with a claim for damages. The lower court dismissed the complaint against Eli Lily, Inc. and held Maersk

to be liable for breach of the contract of common carriage. On appeal, the court affirmed the lower court’s

decision. Hence this appeal.

Issue:

Whether or not Maersk is liable for breach of contract of common carriage.

Held:

The Court held that Maersk is liable for the breach of contract of common carriage. Common

carriers are not obligated by law to carry and deliver merchandise promptly unless the common carrier

previously assumes to deliver the goods at a given date or time. However, such delivery should be made

within a reasonable time.

In this case, it appears in the bill of lading that the goods will arrive on April 3. There was no

contract between the parties in this case, however the petitioner was aware of the date of the expected

arrival of the goods. The court finds that the delay of the delivery was unreasonable. It was due to the

negligence of the petitioner why the cargo arrived so late. Petitioner did not even explain the reason for

such delay. Therefore, petitioner herein is held liable for the breach of contract.


59

Nocum v. Laguna Tayabas Bus Co.

G.R. No. L-23733

Facts:

Petitioner boarded the respondent’s bus. Subsequently, a box containing fireworks inside the bus

exploded which cause the petitioner to be thrown out of the bus and obtained injuries. The petitioner then

filed a case against the respondent for breach of the contract of carriage. The petitioner claims that the

respondent was careless and did not exercised the diligence required of it when the latter’s employees

did not inspect the box which contained the fireworks and allowed such dangerous objects inside the

bus. The respondent in its defense claimed that it only relied on the statement of the person who carried

the box that such item is safe to be transported inside the bus.

Issue:

Whether or not the respondent committed a breach in the contract of carriage.

Held:

The Court held that the respondent did not commit a breach in the contract of carriage, The Court

applied Art. 1755 of the Civil Code stating that the common carrier is bound to carry the passengers

safely as far as human care and foresight can provide, using the utmost diligence of very cautious

person, with due regard to all circumstances. The Court emphasized that there was utmost diligence on

the part of the carrier when it asked the person who bought the box what its contents are. It is not duly

bound to open the box and inspect the contents. The carrier had regard to all the circumstances in the

case because allowances should be given to the passengers and their property bought for it is presumed

that passengers will not bring anything that will cause damage to him or to others. In addition, the Court

stressed the constitutional right to privacy which is always present. Therefore, the carrier is not liable.


60

Mecenas v. CA

180 SCRA 83

Facts:

M/T Tacloban City, owned by Philippine National Oil Company (PNOC) collided with M/T Don

Juan, was owned by respondents Negros Navigation Co., Inc. The petitioners in this case are the heirs of

two passengers who boarded the M/T Don Juan and perished due to the collision. The trial court held the

respondents liable for damages. On appeal, the respondents denied the liability by stating that between

the two vessels, the M/T Tacloban City was the one who is negligent and failed to follow the International

Rules of the Road when it did not turn starboard (right) to prevent the collision. The respondent court

reversed the decision applying the doctrine of last clear chance raised by the respondent. Petitioners

then appealed.

Issue:

Whether or not the respondent should be held liable.

Held:

The Court held that the respondent should be held liable and the respondent court erred in

reversing the decision of the trial court. The Court found the respondent to be gross negligent based on

certain instances. Such instances are first, the captain was playing mahjong at the time of the collision

and the captain stated that he was on break during the emergency when he should take charge of the

ship, second, the crew of the vessel failed to delay the sinking of the vessel because the ship sank

around ten to fifteen minutes, third, the ship was overloaded with passengers than that prescribed

number of passengers and lastly, there was no ample number of life saving devices such as rafts due to

the overloading of passengers. The respondent can not also raise the defense that it followed the

International Rules of the Road when it had the chance to prevent the collision with proper care and skill.

The doctrine of last clear chance cannot be applied in the case as well because the doctrine is only

applicable between two drivers that are negligent against each other and not to a passenger claiming for

damages to the carrier.


61

Negros Navigation Co., Inc. v. Court of Appeals

281 SCRA 534

Facts:

Ramon Miranda purchased tickets for his wife, daughter, son and niece for a trip to Bacolod on

board the M/V Don Juan. The said vessel is operated by the Negros Navigation Co., petitioner herein.

Unfortunately, the M/V Don Juan collided with the M/T Tacloban City which resulted to the sinking of the

former. Many perished in this accident and some of the bodies of the victims were washed to the shore.

Unfortunately, the bodies of his family members were never found.

Miranda filed a case in order to recover damages from Negros Navigation for the loss of his

family. Petitioner herein alleges that since the bodies of his family cannot be found there is no proof that

his family was in fact on board the vessel, hence they cannot be held liable for the loss of his family. The

lower court rendered a judgment in favor of Miranda. Pursuant to the legal maxim of "stare decisis et non

quieta movere", the court applied the ruling in the case of Mecenas v. Court of Appeals, and held that

Negros Navigation was negligent and that it is liable for the loss of the family of Miranda. On appeal the

court affirmed the decision of the lower court. Hence this petition.

Issue:

1. Whether or not the family members of Miranda were on the M/V Don Juan therefore making

them liable for the said loss.

2. Whether or not the legal maxim of stare decisis et non quieta movere is applicable in this

case.

Held:

The Court held that there was sufficient evidence to prove that Miranda’s family was in fact on

board the M/V Don Juan. Miranda testified that he personally brought his family to the vessel and

watched the departure of the same. This was further proven when the numbers of the purchased tickets

appeared on the passenger’s manifest of the vessel. There is no reason for Miranda to claim that he had

lost his whole family in the tragedy and even went through the anguish of looking for their bodies. In the

Mecenas case the bodies of the victims were likewise never recovered.

The legal maxim of stare decisis et non quieta movere (Follow past precedents and do not disturb

what has been settled) was properly applied in this case. When the same questions relating to the same

event have been put forward by parties similarly situated as in a previous case litigated and decided by a

competent court, the rule of stare decisis is a bar to any attempt to relitigate the same issue. Therefore,

Negros Navigation is liable to pay for the damages incurred by Miranda for the loss of his family.


62

Korean Airlines Co., Ltd. V. Court of Appeals

234 SCRA 717

Facts:

In 1980, Juanito C. Lopez, an automotive electrician, was contracted for employment in Jeddah ,

Saudi Arabia , for a period of one year through Pan Pacific Overseas Recruiting Services, Inc. Lapuz

was supposed to leave on November 8, 1980, via Korean Airlines. Initially, he was wait listed. When two

of such passengers did not appear, Lapuz and another person by the name of Perico were given two

unclaimed seats.

According to Lapuz, he was allowed to check in with one suitcase and one shoulder bag at the

check-in counter of KAL. He passed through the customs and immigration section for routine check-up

and was cleared by departure. He rode on the shuttle bus and proceeded to the ramp of the KAL aircraft

for boarding. However, when he was the third or fourth rung of the stairs, a KAL officer pointed to him

and shouted. “DOWN! DOWN!”and was barred from taking the flight. When he later asked for another

booking, his ticket was canceled by KAL. Consequently, he was unable to report for his work in Saudi

Arabia within the stipulated 2 week period and so lost his employment.

Issue:

Whether or not the petitioner should be liable for damages.

Held:

A perusal of the plaintiff-appellant’s contract of employment shows that the effectivity of the

contract is for only one year, renewable every year for five years. Although plaintiff-appellant intends to

renew his contract, such renewal will still be subject to his foreign employer. Plaintiff appellant had not

yet started working with his foreign, employer, hence, there can be no basis as to whether his contract

will be renewed by his foreign employer or not. Thus, the damages representing the loss of earnings of

plaintiff-appellant in the renewal of the contract of the employment is at most speculative. Damages may

not be awarded on the basis of speculation or conjecture (Gatchalian vs. Delim, 203 SCRA

126). Defendant appellant’s liability is limited to the one year contract only. Plaintiff appellant is therefore

entitled only to his lost earning for one year, i.e., P60,000.00 which is 1/5 of P300,000.00 the total

amount of actual damages , representing lost earnings for five years prayed for in the complaint. The

legal interest of 6% on the damages awarded to private respondent should commence from the date of

the decision of the trial court on November 14, 1990.


63

Fortune Express vs. Court of Appeals

305 SCRA 14

Facts:

A bus of petitioner Fortune Express, Inc. figured an accident with a jeepney in Lanao del Norte

which resulted to the death of several passengers of the jeepney including two Maranaos. A

Constabulary agent investigated that the jeepney was owned by a Maranao and certain Maranaos were

planning to take revenge on petitioner by burning some of its buses. Subsequently, the Operations

Manager of Fortune Express was advised to take precautionary measures. Four days after the accident,

three armed Maranaos pretended to be passengers of a bus of petitioner. They seized such bus and set

it on fire. The passengers of the bus were asked to get off, but one passenger, Atty. Talib Caorong went

back to retrieve something. He was shot and killed during the incident. Petitioner contends that the

seizure by the armed assailants was a fortuitous event thus it cannot be held liable.

Issue:

Whether or not Fortune Express is liable for the death of Atty. Caorong.

Held:

The Supreme Court held that the seizure of the bus by the armed Maranaos cannot be assailed

as a fortuitous event. The requisite of unforseeability to be considered forced majeure is lacking. Fortune

Express knew that Maranaos were planning to burn some of its passenger buses and yet petitioner did

nothing to protect the safety of its passengers. Petitioner’s employees failed to prevent the attack on one

of its passengers because they did not exercise the diligence of a good father of a family. Hence,

petitioner should be held liable for the death of Atty. Caorong. Art. 1763 of the New Civil Code provides

that the common carrier is responsible for injuries suffered by a passenger on account of willful acts of

other passengers, if the employees of the common carrier could have prevented the act through proper

diligence. Because of Fortune Express’s negligence, the seizure of the bus by the armed Maranaos was

made possible.


64

Philippine Rabbit Bus Lines, Inc. v. Intermediate Appellate Court

189 SCRA 158

Facts:

Several people boarded a jeepney owned by the spouses Isidro Mangue and Guillermo Carreon.

Said jeepney was driven by Manalo and was travelling to Pampanga to Pangasinan. The passengers

wre on their way home to spend Christmas together with their families. On its way to Pangasinan, one of

the rear tires of the jeepney was detached and it prompted the driver to step on the brakes. Upon

applying the brakes the jeepney made a sudden u-turn and it stopped on the opposite lane of the

highway. Subsequent to the unexpected u-turn a Philippine Rabbit bus bumped the jeepney from behind.

As a result of the collision, three passengers died and the others sustained physical injuries.

The heirs of the passengers filed a case to claim for damages. The lower court held that Manalo,

the driver of the jeep, was negligent. On appeal the Court of Appeals reversed the decision with regard to

the payment of damages to Philippine Rabbit Bus Lines. Hence this petition.

Issue:

1. Whether or not the doctrine of last clear chance is applicable in this case.

2. Whether or not Manalo is solely liable for the death and physical injuries of the victims.

Held:

The Court held that the doctrine of last clear chance is not applicable in this case. This doctrine

shall only apply to suits between the owners and drivers of the two colliding vehicles. The case at bar is a

case where the passengers are demanding indemnity from the carrier due to the contract of common

carriage.

It is clear from the evidence that it is Manalo and the owners of the jeepney who are negligent in

this case. There was no proper explanation as to why the rear wheel of the vehicle suddenly became

detached. Therefore the Court affirms the decision of the lower court and holds Manalo and the owners

liable to pay damages.


65

Bustamante v. Court of Appeals

G.R. No. 89880

Facts:

A sand and gravel truck was descending on a road, on the opposite direction, was a Mazada

passenger bus. The driver of the bus noticed that the truck was wiggling however; the driver still

increased its speed in order to overtake a tractor in front of it. This act of the bus led to the two vehicles

side swiping each other. Several passengers were thrown and caused death and injury to them. The

petitioners then filed a suit against the owner and driver of the truck and the owner and driver of the bus.

The trial court held that both drivers should be solidarily liable to the petitioners. From the decision, only

the owner and driver of the truck appealed. The respondent court reversed the decision as to the two

who appealed. The petitioners now filed this petition.

Issue:

Whether or not the respondents are liable.

Held:

The Court held that the respondents should be liable to the petitioners. The reason is that the

owner of the truck is negligent in hiring the driver and using the old truck in his business which is

detrimental to other due to its poor condition. On the other hand, the driver is liable for he was driving the

old truck in a descending road and in a fast rate. The driver also noticed the wiggling of the tires and did

not give regard to it. Furthermore, the vehicle which is going down or descending is more liable to get out

of control because it has added momentum as provided by the Court. The petitioners raised the doctrine

of last clear chance which the Court disregarded because such doctrine apply only to two drivers against

each other in a case and not in a case where the passenger is claiming for damages against the carrier.


66

Lara v. Valencia

104 PHIL 65

Facts:

The deceased was an inspector of the Bureau of Forestry in Davao who went to classify logs with

defendant in his Cotabato concession. Lara got sick of malaria. He asked defendant if he could take

him in pick-up back to Davao. Lara sat at the back of the vehicle on a bag. Lara fell off and later died.

CFI rendered judgment ordering defendant to pay damages.

Issue:

Whether or not defendant, as owner of the truck, liable to the death of Lara when the later fell off

his vehicle.

Held:

As accommodation passenger or invited guests, defendant as owner and driver of the pick-up

truck owes them merely the duty to exercise reasonable care so that they may be transported safely to

their destination. Thus, the rule is established by the weight of authority that the owner or operator of an

automobile owes the duty to an invited guest to exercise reasonable care and injury by increasing the

hazards of travels. The rule is that n owner of an automobile owes a guest the duty to exercise ordinary

or reasonable care to avoid injuring him. Since one riding in an automobile is no less a guest because

he asked for the privilege of doing so, the same obligation of care is imposed upon the driver as in case

of one expressing invitation to ride. The extraordinary diligence required of common carriers is not

required.

In the case at bar, declared himself chose the place where he would sit and he was half-asleep

when the accident took place so that the incident is attributed to his lack of care considering that the pick-

up was open and he was then in a crouching position. On the other hand, there is no showing that the

defendant failed to take the precautions necessary to conduct his passengers safely to this place of

destination. Defendant therefore is not liable for damages.


67

Necesito v. Paras

104 PHIL 75

Facts:

A mother and her son boarded a passenger auto-truck of the Philippine Rabbit Bus Line. While

entering a wooden bridge, its front wheels swerved to the right, the driver lost control and the truck fell

into a breast-deep creek. The mother drowned and the son sustained injuries. These cases involve

action ex contractu against the owner of PRBL filed by the son and heirs of the mother. Lower Court

dismissed the actions, holding that the accident was a fortuitous event.

Issue:

Whether or not the accident was considered a fortuitous event.

Held:

While the carrier is not an insurer of the safety of the passenger, it should nevertheless be held to

answer for the flaws of its equipment it such defects were discoverable. In this connection, the

manufacturer of the defective appliance is considered in law the agent of the carrier, and the good repute

of the manufacturer will not relieve the carrier from liability. The rationale of the carrier’s liability is the

fact that the passenger has no privity with the manufacturer of the defective equipment; hence he has

no remedy against him, while the carrier has. We find that the defect could be detected. The periodical,

usual inspection of the steering knuckle did not measure up to the utmost diligence of a very cautious

person as far as human care and foresight can provide• and therefore the knuckle’s failure can not be

considered a fortuitous event that exempts the carrier from responsibility. Judgment REVERSED, PRBL

to pay indemnity.


68

Japan Airlines v. Court of Appeals GR. No. 118864

Facts: Private respondents were passengers of Japan Airlines from California bound for Manila. The

flights were to make an overnight stopover at Nairita, Japan as an incentive for traveling. However, due to the eruption of Mt. Pinatubo which rendered the NAIA inaccessible, respondent’s flight from Japan to Manila was indefinitely. JAL assumed the hotel expenses for their unexpected overnight stay on June 15, 1991. However, JAL no longer settled their hotel and accommodation expenses during stay at Nauta, Japan. Since NAIA was only reopened for airline’s traffic on June 22, 1991, private respondent were forced to pay for their accommodations and meal expenses from their personal funds from June 16 to June 21, 1991. Hence, they commenced an action for damages against JAL for failing to provide care and comfort to its stranded passengers when it refused to pay for their hotel and accommodation expenses from June 16 to June 21, 1991. Issue:

Whether or not JAL was liable for the hotel and meal expenses defrayed by private respondents while pending destination.

Held:

The Supreme Court held that JAL cannot be held liable. In the case at bar, there was absence of bad faith and negligence on the part of Japan Airlines. Such occurrence of the eruption of Mt. Pinatubo amounts to a force majeure. When a party is unable to fulfill his obligation because of force majeure, the general rule is that he cannot be held liable for damages for non-performance. Common carriers are not insurer of all risks. Airline passengers must take such risks incident to the mode of travel. However, JAL is not completely absolved from liability. It has the obligation to make the necessary arrangements to transport private respondents on its first available flight to Manila.


69

Layugan v. Intermediate Appellate Court

G.R. No. 73998

Facts:

Petitioner and a companion was repairing the tire of a parked truck along the National Highway.

The respondent’s driver then recklessly hit the parked truck from behind which caused injuries to the

petitioner. The petitioner then filed for an action of damages against respondent. The lower court

awarded damages to the petitioner. On appeal, the respondent claimed that the petitioner was negligent

in not installing an early warning device. The appellate court then reversed the decision of the lower court

by finding the petitioner negligent based on the doctrine of res ipsa loquitur. Thus, the petitioner filed this

appeal.

Issue:

Whether or not the respondent should be held liable for the injuries incurred by the petitioner.

Held:

The Court held that the respondent court erred in applying the doctrine of res ipsa loquitur

because there were pieces of conclusive evidence which points to the negligence of the respondent. The

said doctrine only applies if there is no conclusive evidence to determine who is indeed negligent in the

accident. The respondent’s driver stated that when the accident occurred his brakes were not working

and that he was driving in a fast rate. This shows that the respondent was indeed negligent. The defense

of the respondent that there was no early warning device will not stand for there was actually a lamp

lighted and placed at the back of the truck which is considered as an early warning device. Therefore, the

Court found that the respondent is liable for the injuries of the petitioner.


70

Del Castillo v. Jaymalin

112 SCRA 629

Facts:

Mario a deaf mute is a son of Petitioner Del Castillo. They are paying passengers of defendant

Bicol Transportation operated by A.L Ammen Transportation. Mario fell upon aligting from the bus and

died.

An action for damages was filed against the driver, conductor and bus companies. The court

rendered a judgment in favor of the respondent. Trial court dismissed the petition based solely that

damages and liability of the carrier is based on the earning capacity of the victim. In the case at bar, the

court considered there is no loss of earning capacity considering the victim was deaf-mute.

Issue:

Whether or not the bus employees are liable for damages.

Held:

Common carriers are responsible for the death of their passengers as provided in Articles 1964

and 2206 of the Civil Code. It includes the loss of the deceased earning capacity. The conductor was

told and knowledgeable of passenger Mario being deaf and dumb. The court held that the conductor

should have taken extraordinary care for the safety of the said deaf passenger.

Court procedure demands that the case be remanded to the lower court for determination of the

amount of damages to be awarded. However, the court considered the pendency of the case being on

roll for 13 years. The Supreme Court determined the damages at Php12,000 as indemnity for the victims

death without interest and Php2,000 attorney;s fees. The loss of earning capacity is not awarded since

the vivtim is deaf-mute.


71

Gatchalian v. Delim

203 SCRA 126

Facts:

Reynalda Gatchalian boarded a minibus owned and operated by respondent herein. She boarded

the bus at La Union and it was bound for Bauang. While the bus was running, one of the passengers

noticed a snapping sound. She was alarmed and asked the driver about it, he then replied that it was

normal. Subsequently, the minibus hit a flower pot on the side of the road which caused the bus to turn

turtle and it fell into a ditch. Several passengers were injured in the accident. Gatchalian suffered injuries

on her leg, arm and face specifically the forehead.

The injured passengers were brought to the hospital for treatment of their injuries. While the

passengers were confined in the hospital, Mrs. Delim, wife of the respondent visited them and paid for

the medical expenses of the victims. Before leaving the hospital, she made the injured passengers sign a

prepared affidavit which stated that they were no longer interested in filing a complaint whether criminal

or civil against the driver and owner of the minibus. Gatchalian also signed the said document.

Subsequently, Gatchalian filed a complaint for damages even though she had already signed the

affidavit prepared by Mrs. Delim. The lower court dismissed the complaint of Gatchalian and held that

there was a valid waiver of the right to file a complaint. The Court of Appeals reversed the decision that

there was a valid waiver but denied petitioner’s claim for damages. Hence this petition.

Issue: Whether or not Gatchalian is entitled to the award of damages in lieu of the injuries that she

suffered.

Held:

The Court held that there was no valid waiver and that Gatchalian is entitled to the award of

damages. A waiver, in order to be valid, must be couched in clear and equivocal terms which leave no

doubt as to the intention of relinquishing a right that is legally his or hers. A waiver must not be contrary

to law, morals, public policy or good customs. The waiver in this case is not valid because the terms in

the affidavit did not clearly state the intention of giving up the right to file a complaint. The words “no

longer interested” do not manifestly show such intention. Also, such waiver is against public policy

because it would weaken the standard of utmost diligence required of common carriers in bringing their

passengers safely to their destination.

It was established through evidence that the common carrier is guilty of negligence. The reply of

the driver when asked about the snapping sound is sufficient proof to indicate that such sound had been

there for a while and that the common carrier did not look after the roadworthiness of the vehicle to

assure the safety of the passengers. There was gross negligence on the part of the driver because there

was wanton disregard for the passengers safety when he did not stop the minibus after hearing the

snapping sound and the remark of one of the passengers.

Therefore the petitioner in this case is entitled to receive actual or compensatory damages which

include 15,000 pesos for the cost of plastic surgery to remove the scar on Gatchalian’s face.


72

Cases Applying Articles1756-1763


Safety of Passengers


73

Articles Applied:

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.

Art. 1757. The responsibility of a common carrier for the safety of passengers as required in Articles 1733 and 1755 cannot be dispensed with or lessened by stipulation, by the posting of notices, by statements on tickets, or otherwise.

Art. 1758. When a passenger is carried gratuitously, a stipulation limiting the common carrier's liability for negligence is valid, but not for wilful acts or gross negligence.

The reduction of fare does not justify any limitation of the common carrier's liability.

Art. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or wilful acts of the former's employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers.

This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father of a family in the selection and supervision of their employees.

Art. 1760. The common carrier's responsibility prescribed in the preceding article cannot be eliminated or limited by stipulation, by the posting of notices, by statements on the tickets or otherwise.

Art. 1761. The passenger must observe the diligence of a good father of a family to avoid injury to himself.

Art. 1762. The contributory negligence of the passenger does not bar recovery of damages for his death or injuries, if the proximate cause thereof is the negligence of the common carrier, but the amount of damages shall be equitably reduced.


74

Art. 1763. A common carrier is responsible for injuries suffered by a passenger on account of the wilful acts or negligence of other passengers or of strangers, if the common carrier's employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission.

La Mallorca v. Court of Appeals

17 SCRA 739

Facts:

Plaintiffs husband and wife, together with their minor children, boarded a La Mallorca bus. Upon

arrival at their destination, plaintiffs and their children alighted from the bus and the father led them to a

shaded spot about 5 meters from the vehicle. The father returned to the bus to get a piece of baggage

which was not unloaded. He was followed by her daughter Raquel. While the father was still on the

running board awaiting for the conductor to give his baggage, the bus started to run so that the father

had to jump. Raquel, who was near the bus, was run over and killed.

Lower court rendered judgment for the plaintiff which was affirmed by CA, holding La Mallorca

liable for quasi-delict and ordering it to pay P6,000 plus P400. La Mallorco contended that when the child

was killed, she was no longer a passenger and therefore the contract of carriage terminated.

Issue:

Whether or not the contractual obligation between the parties ceases the moment the passenger

alighted form the vehicle.

Held:

On the question whether the liability of the carrier, as to the child who was already led a place 5

meters from the bus under the contract of carrier, still persists, we rule in the affirmative. It is a

recognized rules that the relation between carrier and passengers does not cease at the moment the

passenger alights from the carrier’s premises, to be determined from the circumstances. In this case,

there was no utmost diligence.• Firstly, the driver, although stopping the bus, did not put off the engine.

Secondly, he started to run the bus even before the bus conductor gave him the signal and while the

latter was unloading cargo. Here, the presence of said passenger near the bus was not unreasonable

and the duration of responsibility still exists. Averment of quasi-delict is permissible under the Rules of

Court, although incompatible with the contract of carriage. The Rules of Court allows the plaintiffs to

allege causes of action in the alternative, be they compatible with each other or not (Sec. 2, Rule 1).

Even assuming arguendo that the contract of carriage has already terminated, herein petitioner can be

held liable for the negligence of its driver pursuant to Art. 2180 of NCC. Decision MODIFIED. Only

question raised in the briefs can be passed upon, and as plaintiffs did not appeals the award of

P3,000.00 the increase by the CA of the award to P6,000.00 cannot be sustained.


75

Aboitiz Shipping Corporation vs. Court of Appeals

188 SCRA 387

Facts:

Anacleto Viana was a passenger of M/V Antonia bound for Manila which was owned by

defendant Aboitiz. After the said vessel has landed, the Pioneer Stevedoring Corp., as the arrastre

operator, took over the exclusive control of the cargoes loaded on it. One hour after the passengers had

disembarked, Pioneer Stevedoring started operation by unloading the cargoes using its crane. Viana

who had already disembarked remembered that some of his cargoes were still inside the vessel. While

pointing to the crew of the vessel the place where his cargoes were, the crane hit him, pinning him

between the side of the vessel and the crane which resulted to his death. Viana’s wife filed a complaint

for damages against Aboitiz for breach of contract f carriage. Aboitiz, however filed a third party

complaint against Pioneer since it had control completely over the vessel during the incident.

Furthermore, petitioner contends that one hour has already elapsed from the time Viana disembarked,

thus he has already ceased to be a passenger.

Issue:

Whether or not Aboitiz is liable for the death of Viana.

Held:

The Supreme Court held that the failure of Aboitiz to exercise extraordinary diligence for the

safety of its passengers makes Aboitiz liable. It has been recognized as a rule that the relation of the

carrier and passenger does not cease the moment the passenger alights from the carrier’s vehicle, but

continues until the passenger has had a reasonable time or a reasonable opportunity to leave the

carrier’s premises. A reasonable time or a reasonable delay within this rule is to be determined from all

the circumstances. The primary factor to be considered is the existence of a reasonable cause as will

justify the presence of the victim on or near the petitioner’s vessel. In the case at bar, such justifiable

cause exists because he had to come back for his cargo. Aboitiz has failed to safeguard its passenger

with extraordinary diligence in requiring or seeing to it that precautionary measures were strictly and

actually enforced to subserve their purpose of preventing entry into a forbidden area.


76

Mallari, Sr. v. Court of Appeals

324 SCRA 147

Facts:

Mallari Jr. was the driving a passenger jeepney owned by his father, co-petitioner herein. The

jeep collided with the delivery van of Bulletin Publishing Corp. while travelling on the National Nighway in

Bataan. Mallari Jr. proceeded to overtake a fiera which had stopped in front of him. He negotiated the

curve and moved in the opposite lane in order to overtake the fiera. As he passed the vehicle he saw the

delivery van of Bulletin and the vehicles collided. The points of collision were the and the left rear portion

of the passenger jeepney and the left front side of the delivery van. The 2 right wheels of the delivery van

were on the right shoulder of the road and pieces of debris from the accident were found scattered along

the shoulder of the road up to a certain portion of the lane travelled by the passenger jeepney. The

impact caused the jeepney to turn around and fall on its left side resulting in injuries to its passengers

one of whom was Israel Reyes who eventually died due to the gravity of his injuries.

The widow of Reyes filed a complaint to recover damages from Mallari, Jr. and Sr. and Bulletin

as well. The trial court found that the proximate cause of the collision was the negligence of the driver of

the Bulletin delivery van, considering the fact that the left front portion of the delivery truck hit and

bumped the left rear portion of the passenger jeepney. On appeal, the court reversed the decision of the

lower court and held that it was Mallari Jr. who was negligent. Hence this petition.

Issue: Whether or not petitioners herein should be held liable for the death of Reyes.

Held:

The Court affirmed the decision of the Court of Appeals and held that Mallari Jr. and Sr. who are responsible for the death of Reyes. The collision was caused by the sole negligence of petitioner Alfredo Mallari Jr. who admitted that immediately before the collision and after he rounded a curve on the highway, he overtook a Fiera which had stopped on his lane and that he had seen the van driven by Angeles before overtaking the Fiera. This act of overtaking was in clear violation of Sec. 41, pars. (a) and (b), of RA 4136 as amended, otherwise known as The Land Transportation and Traffic Code. The rule is settled that a driver abandoning his proper lane for the purpose of overtaking another vehicle in an ordinary situation has the duty to see to it that the road is clear and not to proceed if he cannot do so in safety. Article 2185 of the NCC, there is a presumption of negligence on the part of a person driving a motor vehicle if at the time of the mishap he was violating a traffic regulation. Petitioners herein failed to present satisfactory evidence to overcome this legal presumption. Therefore they shall be liable for the loss of Reyes’ life.


77

Bayasen v. Court of Appeals

G.R. No. L-25785

Facts:

Petitioner Saturnino Bayasen, the Rural Health Physician in Sagada, Mountain Province, went to

barrio Ambasing to visit a patient. Two nurses from the Saint Theodore’s Hospital in Sagada, Elena

Awichen and Dolores Balcita, rode with him in the jeep assigned for the use of the Rural Health Unit.

Later, at Ambasing, the girls, who wanted to gather flowers, again asked if they could ride with him up to

a certain place on the way to barrio Suyo which he intended to visit anyway. Dr. Bayasen again allowed

them to ride, Elena sitting herself between him and Dolores.

On the way, the jeep went over a precipice. About 8 feet below the road, it was blocked by a pine

tree. The three, were thrown out of the jeep. Elena was found lying in a creek further below. She

suffered a skull fracture which caused her death. Saturnino Bayasen was charged by with Homicide Thru

Reckless Imprudence. Trial Court found Bayasen sentenced him to an indeterminate penalty of 4 Months

and 1 Day of arresto mayor as minimum, to 1 Year, 7 Months and 10 Days of prision correccional, as

maximum, indemnify the heirs Elena Awichen P3,000.00 as compensatory damages, P1,000.00 as

attorney’s fees and P1,886.00 for burial expenses of the deceased, and to pay the costs. On Appeal, CA

affirmed the decision of the trial court with the modifications that the indemnity was increased to

P6,000.00; the award of attorney’s fees was set aside; and that the maximum of the prison term was

raised to 1 Year, 7 Months, and 17 Days of prision correccional. The motion for reconsideration of

Bayasen was denied. Hence, the petition for review on certiorari.

Issue:

Whether or not the reckless driving of accused-petitioner was the proximate cause of the death of

the victim.

Held:

The proximate cause of the tragedy was the skidding of the rear wheels of the jeep and not the

unreasonable speed of the petitioner because there was no evidence on record to prove or support the

finding that the petitioner was driving at “an unreasonable speed”. The star witness of the prosecution,

Dolores Balcita who was one of the passengers in the jeep, testified that Saturnino Bayasen was driving

his jeep moderately just before the accident and categorically stated that she did not know what caused

the jeep to fall into the precipice. It is a well-known physical fact that cars may skid on greasy or slippery

roads, as in the instant case, without fault on account of the manner of handling the car. Skidding means

partial or complete loss of control of the car under circumstances not necessarily implying negligence. It

may occur without fault. Herein, under the particular circumstances, Bayasen who skidded could not be

regarded as negligent, the skidding being an unforeseen event, so that Bayasen had a valid excuse for

his departure from his regular course.

The negligence of Bayasen has not having been sufficiently established, his guilt of the crime

charged has not been proven beyond reasonable doubt. He is, therefore, entitled to acquittal. The

Supreme Court set aside the decision of the Court of Appeals sought to be reviewed, and acquitted


78

Bayasen of the crime charged in the information in Criminal Case 1056 of the CFI of Mountain Province,

with costs de oficio.

Cervantes vs. Court of Appeals

304 SCRA 25

Facts:

In compliance with a Compromise Agreement entered into by the contending parties, PAL issued

to petitioner Nicholas Cervantes on March 27, 1989, a round trip ticket for Manila-Honolulu-Los Angeles-

Honolulu-Manila. Such ticket expressly provided an expiry date of one year from issuance. Four days

before the expiration of the subject ticket, Cervantes used it. Upon his arrival in Los Angeles, he

immediately booked his return ticket to Manila with PAL. The same was confirmed for April 2, 1990.

Upon learning that PAL was making a stop-over to San Francisco, Cervantes made arrangements with

PAL for him to board such flight. On April 2, when Cervantes checked in the PAL counter in San

Francisco, he was not allowed to board. The PAL personnel marked ticket “TICKET NOT ACCEPTED

DUE TO EXPIRATION OF VALIDITY” on his ticket. Cervantes filed a complaint for breach of contract.

Issue:

Whether or not PAL is liable for breach of contract.

Held:

The Supreme Court held that PAL is not liable. Petitioner Cervantes was fully aware that there

was a need to send a letter to the legal counsel of PAL for the extension of the period of validity of his

ticket. The PAL agent was not privy to the said agreement, thus the agent acted without authority when

they confirmed the flights of the petitioner. When the petitioner knows that the agent was acting beyond

his power, the principal cannot be held liable for the acts of the agent. It further held that Cervantes acted

in bad faith since he bought a back-up ticket to ensure his departure. The employees of PAL were guilty

only of simple negligence.


79

Calalas v. Court of Appeals

332 SCRA 356

Facts:

Private respondent Eliza Sunga, then freshman at Siliman University , took a passenger jeepney

owned and operated by petitioner Vicente Calalas. As the jeepney was filled to capacity, Sunga was

given by the conductor an extension seat, a wooden stool at the back of the door at the rear end of the

vehicle. When the jeepney stopped to a let passenger off and Sunga was about to give way to the

outgoing passenger, an Izuzu truck driven by Verena and owned by Salva bumped the left rear portion

of the jeepney. Sunga sustained multiple injuries and remained on a cast for three months.

Sunga filed a complaint for damages against Calalas, for breach of contract of carriage. Calalas,

on the other hand,filed a third party complaint against Francisco Salva, the owner of the truck. The lower

court rendered judgment against Salva and absolved Calalas of liability.

It took cognizance of other case (Civil Case No. 3490), filed by Calalas against Salva and Verena

,for quasi-delict, in which branch 37 of the same court held Salva and his driver Verena jointly liable to

Calalas for the damage to his jeepney

The CA reversed the lower courts ruling on the ground the ground that Sunga’s cause of action

was based on a contract of carriage, not quasi-deplict, and that the common carrier failed to exercise the

diligence required under the Civil Code. The appellate court dismissed the third-party complaint against

Salva and adjudged Calalas liable for damages to Sunga.

Issue:

Whether or not there was a breach of contract of carriage.

Held:

Iin quasi-delict, the negligence or fault should be clearly established because it is the basis of the

action, whereas in breach of contract, the action can be prosecuted merely by proving the existence of

the contract and the fact that the obligor, in this case the common carrier, failed to transport his

passenger safely to his destination. In case of death or injuries to passengers, Article 1756 of the Civil

Code provides that common carriers are presumed to have been at fault or have acted negligently unless

they proved that they observed extraordinary diligence as defined in Arts. 1733 and 1755 of the Code.

This provision necessarily shifts to the common carrier the burden of proof.

It is immaterial that the proximate cause of the collision between the jeepney and the truck was

the negligence of the truck driver. The doctrine of proximate cause is applicable only in action for quasi-

delict, not in actions involving breach of contract. The doctrine is a device for imputing liability to a person

where there is no relation between him and another party. In such a case, the obligation is created by

law itself. But, where there is a pre-existing contractual relation between parties, it is the parties

themselves who create the obligation, and the function of the law is merely to regulate the relation thus

created.


80

Pestaño vs. Spouses Sumayang

G.R. No. 139875

Facts:

On August 9, 1986, Ananias Sumayang along with his friend Manuel Romagos was riding a

motorcycle along the National highway in Cebu. Upon a junction where the highway was connected, they

were hit by a passenger bus driven by Gregorio Pestaño and owned by Metro Cebu Auto Bus Corp.

Such bus tried to overtake them sending the motorcycle upon the pavement, resulting to the death pf the

passengers of the motorcycle. Actions were filed by the heirs of Sumayang against the driver and the

owner of Metro Cubu and its insurer.

Issue:

Whether or not Metro Cebu and Pestaño are liable for the death of the passengers of the

motorcycle.

Held:

The Supreme Court held that Metro Cebu and Pestañ are liable for the death of Sumayang and

Romagos. As a professional driver operating a public transport bus, he should have anticipated that

overtaking at a junction was a perilous maneuver and thus should have exercised extreme caution. The

vehicular collision was caused by Pestaño’s negligence when he attempted to overtake the motorcycle.

In addition, Articles 2180 and 2176 of the Civil Code provide that owners and managers are responsible

for damages caused by their employees. The employer is presumed to be negligent in the selection or

supervision of its employees when an injury is caused by the latter’s negligence. As evidence has shown

that the bus operated with a defective speedometer, it further proved that Metro Cebu was negligent in

the supervision over its driver. It thus failed to conduct its business with the diligence required by law.


81

De Gillaco v. Manila Railroad Co.

G.R. No. L-8034

Facts:

Lt. Tomas Gillaco, husband of Cornelia A. de Gillaco, was a passenger in the early morning train

of the Manila Railroad Company (MRC) from Calamba, Laguna to Manila. When the train reached the

Paco Railroad station, Emilio Devesa, a train guard of MRC assigned in the Manila-San Fernando, La

Union Line, happened to be in said station waiting for the same train which would take him to Tutuban

Station, where he was going to report for duty. Devesa had a long standing personal grudge against

Tomas Gillaco dating back during the Japanese occupation. And because of this personal grudge,

Devesa shot Gillaco upon seeing him inside the train. The carbine furnished by the MRC for his use as

train guard. Tomas Gillaco died as a result of the wound sustained from the shot. Devesa was convicted

of homicide by final judgment of the Court of Appeals.

Wife of deceased petitioner, filed an action against the MRC at CFI Laguna. The trial court

sentenced the respondents to pay P4,000 damages to the petitioners. Thus this appeal.

Issue:

Whether or not the carrier should be held liable

Held:

While the passenger is entitled to protection from personal violence by the carrier or its agents or

employees, the responsibility of the carrier extends to those acts that the carrier could foresee or avoid

through the exercise of the degree of care or diligence required of it. The Old Civil Code did not impose

upon the carrier absolute liability for assaults of their employees upon the passenger. In the present

case, the act of Devesa is shooting the passenger was entirely unforeseeable by MRC. They had no

means to ascertain or anticipate that the two would meet, or could it reasonably foresee every personal

career that might exist between each of its may employee and any one of the thousands of passengers

riding in its train. The shooting was therefore, a caso fortuito, both being unforeseeable and inevitable,

under the circumstances. The resulting breach of Manila Railroad’s contract of safe carriage with the

late Tomas Gillaco was excused thereby. Furthermore, when the crime took place, the guard Devesa

had no duties to discharge in connection with the transportation of the deceased from Calamba to

Manila. The stipulation of facts is clear that when Devesa shot and killed Gillaco, Devesa was assigned

to guard the Manila-San Fernando (La Union) trains, and he was at Paco Station awaiting transportation

to Tutuban.

SC reversed the judgment appealed from, and dismissed the complaint, without costs.


82

Maranan v. Perez 20 SCRA 412

Facts: Rogelio Carachea was a passenger in a taxicab operated by Pascual perez when he was

stabbed and killed by the driver, who was found guilty of homicide in the CFI. While an appeal at the CA, Antonia Maranan, Rogelio’s mother, filed an action to recover damages for the death of her son. The CFI awarded her P3000 as damages against Perez dismissing the claim against the driver. Issue:

Whether or not the carrier is liable for the assaults of its employee upon the passengers. Held:

Under Art. 1739 of the Civil Code, “a common carrier are liable for the death of or injuries to passengers through the negligence or willful acts of the former’s employees, although such employees may have ached beyond the scope of their authority or in violation of the order of the common carrier.

It is the carrier’s strict obligation to select its drivers and similar employees with due regard not only to technical competence but also to this total personality, their behavior and thus moral fiber.

The dismissal of the claim against the driver is correct. Plaintiff’s action was predicated in breach of contract of carriage and the cab driver was not a part thereto. His civil liability is covered on the criminal case.


83

Philippine National Railways vs. CA

139 SCRA 87

Facts:

Winifredo Tupang was a paying passenger who boarded Train No. 516 f the Philippine National

Railways at Camarines Sur bound for Manila. Due to some mechanical defect, the train stopped which

took two hours before the train could resume its trip to Manila. Unfortunately, upon passing Iyam Bridge

at Lucena, Tupang fell off the train resulting to his death. Alarm was raised by the passengers that

somebody fell but the train did not stop. Instead, the train conductor called the station agent and

requested for verification of the confirmation. Rosario Tupang, the deceased’s widow filed a cmplaint

against PNR for breach of contract f carriage. However, PNR raised as a defense hat it was a mere

agency of the Philippine government without distinct or separate personality of it own. Likewise, they

contended that their funds are governmental in character, thus they are not subject to garnishment or

execution.

Issue:

Whether or not PNR could be held liable for damages for the death of Winifredo Tupang.

Held:

The Supreme Court held that PNR should be held liable. The Philippine National Railways is not

exempt from garnishment. It descends to a level of a citizen, thus it cannot assail non-suability as a bar

for damages. Under PA 4156, PNR was created generally with all powers of a corporation under the

Corporation Law. Hence, the characteristics and attributes of a corporation is fully applicable to PNR.

PNR may sue and be sued and could be subjected to court processes just like any other corporation.

The Supreme Court held that PNR should be held liable for the death of Winifredo Tupang because it

acted in bad faith as it did not stop despite the alarm raised by its passengers. PNR has the obligation to

transport its passengers to their destination and to observe extraordinary diligence in doing so.


84

Isaac v. A. L. Ammen Trans. Co., Inc.

1046 SCRA 101

Facts:

Cesar Isaac boarded one of the buses operated by defendant A.L. Ammen Trans. Co., Inc. But

before reaching his destination, the bus collided with a pick up type vehicle. The collision caused the

amputation of the left arm of the plaintiff. Due to the incident, the plaintiff went through several treatments

causing many expenses. Thus, plaintiff filed a case for damages alleging that the collision which resulted

in the loss of his left arm was mainly due to the gross incompetence and recklessness of the driver of the

bus operated by the defendant. In addition, he contended that the defendant incurred liability in culpa

contractual arising from its non-compliance with its obligation to transport plaintiff to his destination.

Defendant on its part set up the defense that the injury caused was due entirely to the fault or negligence

of the pick up car and a contributory negligence on the part of the plaintiff.

Issue:

Whether or not the common carrier liable for the injury caused.

Held:

The Supreme Court held that the defendant A.L. Ammen Trans. Co., Inc., exercised the diligence

required from it and is absolved from liability for the injury caused to its passengers. It was proven in the

case at bar, that the driver of the pick up car was the sole responsible for the accident. Reports show that

the bus was at moderate speed while the pick up was at a full speed and on the wrong lane. The

Supreme Court likewise held that there was indeed contributory negligence on the part of the plaintiff, as

he placed his elbow outside the window knowing that such was dangerous. The injuries caused by the

accident worsen.

The Supreme Court held that the following governs the liability of a common carrier: 1) the liability

of a carrier is contractual and arises upon breach of its obligation. There is a breach if it fails to exert

extraordinary diligence according to all the circumstances of each case; 2) a carrier is obliged to carry its

passengers with the utmost diligence of a very cautious person, having due regard for all circumstances;

3) a carrier is presumed to be at fault or to have acted negligently in case of death of, or injury to,

passengers, it being its duty to prove that it exercised extraordinary diligence; and 4) the carrier is not an

insurer against all risk of travel.


85

Bachelor Express, Inc. v. Court of Appeals

G.R. No. 85691

Facts:

Ornominio Beter and Narcisa Rautraut were passengers of a bus belonging to petitioner Bachelor

Express, Inc. While the bus was on its way to Cagayan de Oro, a passenger at the rear portion suddenly

stabbed another passenger. The stabbing cause commotion and panic amount the passengers such

that the passengers started running to the sole exit shoving each other resulting in the falling off the bus

by passengers Beter and Rautraut causing them fatal injuries. The heirs of the deceased sued the bus

company Evidence adduced showed that the bus driver did not immediately stop the bus at the height of

the commotion; the bus was speeding from a full stop; and the victims fell from the bus door when it was

opened or gave way while the bus was still running.

Petitioner denied liability on the ground that the death of its two passengers was caused by a

force majeure as it was due to the act of a third person who was beyond its control and supervision. In

line with this, petitioner also argued that it is not an insurer of its passengers.

Issue:

1. Whether or not the case at bar is within the context of force majeure. 2. Whether or not the petitioner should be absolved from liability for the death of its passengers.

Held:

The sudden act o the passenger who stabbed another passenger in the bus is within the context

of force majeure. However, in order that a common carrier may be absolved from liability in case of force

majeure, it is not enough that the accident was caused by force majeure. The common carrier must still

proves that it was not negligent in causing the injuries resulting from such accident. Considering the

factual findings in this case, it is clear that petitioner has failed to overcome the presumption of fault and

negligence found in the law governing common carriers. The argument that the petitioners are not

insurers of their passengers deserves no merit in view of the failure of the petitioners to observe

extraordinary diligence in transporting safely the passengers to their destination as warranted by law.


86

Fortune Express vs. Court of Appeals

305 SCRA 14

Facts:

A bus of petitioner Fortune Express, Inc. figured an accident with a jeepney in Lanao del Norte

which resulted to the death of several passengers of the jeepney including two Maranaos. A

Constabulary agent investigated that the jeepney was owned by a Maranao and certain Maranaos were

planning to take revenge on petitioner by burning some of its buses. Subsequently, the Operations

Manager of Fortune Express was advised to take precautionary measures. Four days after the accident,

three armed Maranaos pretended to be passengers of a bus of petitioner. They seized such bus and set

it on fire. The passengers of the bus were asked to get off, but one passenger, Atty. Talib Caorong went

back to retrieve something. He was shot and killed during the incident. Petitioner contends that the

seizure by the armed assailants was a fortuitous event thus it cannot be held liable.

Issue:

Whether or not Fortune Express is liable for the death of Atty. Caorong.

Held:

The Supreme Court held that the seizure of the bus by the armed Maranaos cannot be assailed

as a fortuitous event. The requisite of unforseeability to be considered forced majeure is lacking. Fortune

Express knew that Maranaos were planning to burn some of its passenger buses and yet petitioner did

nothing to protect the safety of its passengers. Petitioner’s employees failed to prevent the attack on one

of its passengers because they did not exercise the diligence of a good father of a family. Hence,

petitioner should be held liable for the death of Atty. Caorong. Art. 1763 of the New Civil Code provides

that the common carrier is responsible for injuries suffered by a passenger on account of willful acts of

other passengers, if the employees of the common carrier could have prevented the act through proper

diligence. Because of Fortune Express’s negligence, the seizure of the bus by the armed Maranaos was

made possible.


87

Liability of Common Carriers:

Payment of

Damages


88

Cariaga v. Laguna Tayabas Bus

110 PHIL 346

Facts:

Edgardo Cariaga, a fourth year medical student at the University of Santo Tomas suffered

physical injuries from a collision between a train of Manila Railroad and the Laguna Tayabas Bus (LTB)

which he was on board. The bus collided with the train while the former was about to cross the railroad.

He suffered a severe head injury which diminished his intelligence and he will no longer be able to

continue his studies as a medical student. The said injury that he sustained also made him physically

and mentally incapable of working. All of the medical expenses were paid LTB plus allowances.

A case was filed by Edgardo’s parents against LTB and Manila Railroad to recover actual,

compensatory, moral and exemplary damages amounting to 312,000 pesos. LTB filed a cross-complaint

alleging that it was MRR who was negligent by not blowing its whistle as a warning for the vehicles that

were crossing the railroad and that there was no crossing bar at the said crossing. The lower court held

that LTB was negligent in crossing and the injuries sustained by Edgardo Cariaga was due to the said

negligence of the driver of the bus. The cross-complaint was dismissed by the lower court and ordered

LTB to pay 10,490 pesos as compensatory damages plus interest. Hence this petition by LTB.

Issue:

1. Whether or not LTB should be held solely liable for the injuries of Edgardo Cariaga. 2. Whether or not the award of damages by the lower court is proper.

Held: The Court held that it was LTB that was negligent and not the driver of the train. The driver of the

bus ignored the whistle of the train. He should have exercised utmost diligence in crossing the railroad

tracks. The collision between the bus and the train even caused the latter to be derailed. Therefore LTB

should be solely liable for the payment of damages to the Cariaga’s.

As to the award of damages, the Court held that the amount of 10,490 pesos is inadequate.

Article 2201 of the NCC provides that a common carrier shall be liable for actual or compensatory

damages, those which are natural and probable consequences of the breach of the contract of common

carriage and which the parties had foreseen or could have reasonably foreseen at the time the obligation

was constituted, provided such damages have been duly provided. This means that, actual or

compensatory damages are not only limited to medical and other expenses. It includes the possible

income that Edgardo would have earned after graduating from medical school. Considering that Edgardo

was already a fourth year med student at the time that he boarded the bus, such income could be

foreseen. These circumstances would make it sufficient to presume that he would have finished school

and passed the board exam. The award of actual damages should be increased to 25,000 pesos

assuming that the income of Edgardo would have been 300 pesos a month.

The parents of Edgardo are not parties in this case because the contract of common carriage was

between LTB and Edgardo. They were not injured in the accident therefore their claim for damages is

without merit. No award of moral damages may be given because the circumstances of this case do not


89

fall under the enumeration provided in Article 2219 and Article 2220 of the NCC. Attorney’s fees cannot

be granted as well for the same reason that the circumstances do not fall under Article 2208 of the NCC.

Villa Rey Transit, Inc. v. Court of Appeals

31 SCRA 511

Facts:

Policarpio Quintos, Jr. boarded a Villa Rey Transit bus at Pangasinan which was bound for

Manila. He was seated at the first seat on the right side of the bus. The bus met an accident at a bridge

in Pampanga. It hit the back of a bullcart full of hay while it was crossing the said bridge. Unfortunately,

there was a bamboo pole tied to the cart and the end of this bamboo pole penetrated through the wind

shield of the bus and hit the face of Quintos. A La Mallorca bus was passing by the same bridge and

helped bring Quintos, Jr. and those who were on board the bullcart to the hospital. The bamboo pole

caused a severe injury to his eye and head which later on resulted into his death.

A complaint was filed by the sisters of Quintos to recover damages from Villa Rey Transit. The

Court of First Instance held that Villa Rey Transit is liable to pay actual or compensatory damages in the

amount of 63,750 pesos as well as attorney’s fees. Villa Rey Transit appealed the case and the Court of

Appeals affirmed the decision of the lower court. Hence this petition.

Issue:

Whether or not the amount awarded as damages to the heirs of Quintos is proper.

Held:

The Court modified the award of damages to the heirs of Quintos. It explained that the award of

damages is computed with regard to the life expectancy of the deceased and the rate of losses sustained

by the deceased sisters. The court emphasized that the life expectancy of the victim is very important in

the computation of actual damages however it is not the sole basis for computation of the said amount.

Expenses shall be deducted from the amount determined to be the monthly income of the deceased. It is

proper to deduct living expenses that the victim would have also incurred if he were alive.

Therefore the award of actual damages shall be 33,333 pesos with regard to Quintos’ possible

earnings, the amount of medical and burial expenses, and 12,000 pesos pursuant to Articles 104 and

107 of the RPC in relation to Article 2206 of the NCC. In addition to this, attorney’s fees shall be awarded

as well.


90

Gatchalian v. Delim

203 SCRA 126

Facts:

Reynalda Gatchalian boarded a minibus owned and operated by respondent herein. She boarded

the bus at La Union and it was bound for Bauang. While the bus was running, one of the passengers

noticed a snapping sound. She was alarmed and asked the driver about it, he then replied that it was

normal. Subsequently, the minibus hit a flower pot on the side of the road which caused the bus to turn

turtle and it fell into a ditch. Several passengers were injured in the accident. Gatchalian suffered injuries

on her leg, arm and face specifically the forehead.

The injured passengers were brought to the hospital for treatment of their injuries. While the

passengers were confined in the hospital, Mrs. Delim, wife of the respondent visited them and paid for

the medical expenses of the victims. Before leaving the hospital, she made the injured passengers sign a

prepared affidavit which stated that they were no longer interested in filing a complaint whether criminal

or civil against the driver and owner of the minibus. Gatchalian also signed the said document.

Subsequently, Gatchalian filed a complaint for damages even though she had already signed the

affidavit prepared by Mrs. Delim. The lower court dismissed the complaint of Gatchalian and held that

there was a valid waiver of the right to file a complaint. The Court of Appeals reversed the decision that

there was a valid waiver but denied petitioner’s claim for damages. Hence this petition.

Issue:

Whether or not Gatchalian is entitled to the award of damages in lieu of the injuries that she

suffered.

Held:

he Court held that there was no valid waiver and that Gatchalian is entitled to the award of

damages. A waiver, in order to be valid, must be couched in clear and equivocal terms which leave no

doubt as to the intention of relinquishing a right that is legally his or hers. A waiver must not be contrary

to law, morals, public policy or good customs. The waiver in this case is not valid because the terms in

the affidavit did not clearly state the intention of giving up the right to file a complaint. The words “no

longer interested” do not manifestly show such intention. Also, such waiver is against public policy

because it would weaken the standard of utmost diligence required of common carriers in bringing their

passengers safely to their destination.

It was established through evidence that the common carrier is guilty of negligence. The reply of

the driver when asked about the snapping sound is sufficient proof to indicate that such sound had been

there for a while and that the common carrier did not look after the roadworthiness of the vehicle to

assure the safety of the passengers. There was gross negligence on the part of the driver because there

was wanton disregard for the passengers safety when he did not stop the minibus after hearing the

snapping sound and the remark of one of the passengers.


91

Therefore the petitioner in this case is entitled to receive actual or compensatory damages which

include 15,000 pesos for the cost of plastic surgery to remove the scar on Gatchalian’s face.

Soberano v. Manila Railroad & Benguet Auto Line

18 SCRA 732

Facts:

Juana Soberano was a passenger of a Benguet Auto line bus bound for Baguio from Ilocos Sur.

She has brought on board the bus some eggs which was her business. When the bus reached Naguilian

road it hit a stone embankment, this caused the bus to fall from a 65-foot precipice. As a result of the

accident 2 passengers died and several passengers were injured. Soberano was also injured in the said

accident. All of her belongings were lost and destroyed as a result of the accident.

The defendant in this case offered to pay 5,000 pesos for the injury and loss caused by the

accident. However, Soberano rejected the offer and instituted a case to recover damages in the amount

of 76,757.76 pesos. The lower court awarded 5,000 pesos for actual or compensatory damages.

Petitioner herein claims that the award of damages is not enough and that the defendant herein was in

bad faith for not satisfying her claim. Hence this petition.

Issue:

Whether or not Soberano is entitled to recover a higher amount as to damages for the injury and

loss she sustained.

Held: The Court held that the award of actual damages, in relation to loss of earning capacity should be

increased from 5,000 to 15,000 pesos. Petitioner herein suffered physical injuries which resulted in a loss

of positive economic values. She had been a merchant since 1950 and she has been earning 1,500

pesos a year. Therefore, the award of damages with regard to her loss of earning capacity should be

increased to 15,000 pesos. In addition to this amount, the defendant herein shall also pay for the unpaid

allowances and the loss of profit for the eggs which were damaged in the accident.

Defendant herein cannot be held to be in bad faith for not satisfying the claim of the petitioner. It

was justified in rejecting the claim of the petitioner because the amount asked of them was too much.

The defendant in this case did not compel Soberano to file a case, she rejected the offer of the former

and decided to push through with this case. Therefore, no other damages should be awarded to the

petitioner.


92

Marchan vs. Mendoza

G.R. No. L-24471

Facts:

A passenger bus of the Philippine Rabbit Bus Lines, driven by Silverio Marchan, fell into a ditch

while travelling on its way to Manila. As a result of which respondents Arsenio Mendoza, his wife and

child, passengers of the said bus were thrown out to the ground resulting in their multiple injuries. It was

proven that the bus was traveling at high speed without due regard to the safety of its passengers and

that passengers complained and asked Machan, the driver to slow down. On the contrary, Marchan

increased its speed while approaching a truck which was then parked, apparently to avoid collision with

the incoming vehicle from the opposite direction. The rear tires of the bus skidded because of its high

speed which caused the bus to fall into a ditch. Subsequently, Marchan was convicted for physical

injuries through reckless imprudence.

Issue:

Whether or not Marchan and Philippine Rabbit Bus Lines are liable for the injuries suffered by its

passengers.

Held:

The Supreme Court held that the proximate cause of the accident was the gross negligence of

Marchan who when driving is expected to have employed the highest degree of care. He should have

been assiduously prudent in handling his vehicle to insure the safety of his passengers. There is no

reason why he shouldn’t stop the vehicle upon noticing a parked truck in front of him. He must have

taken precautionary measures in securing the safety of his passengers. Philippine Rabbit is also liable

because common carriers cannot escape liability for the death or injuries to passengers through the

negligence and willful acts of the former's employees, although such employees may have acted beyond

the scope of their authority or in violation of the orders. The awarding of compensatory damages is

reasonable because Arsenio Mendoza had suffered paralysis on the lower extremities, which will

incapacitate him to engage in his customary occupation throughout the remaining years of his life. The

awarding of exemplary damages likewise is found just although the plaintiffs did not specify such claim.

The court is called upon the exercise and can use its discretion in the imposition of punitive or exemplary

damages even though not expressly prayed or pleaded in the plaintiffs' complaint.


93

Philippine Airlines vs. Court of Appeals

185 SCRA 110

Facts:

The Stralight Flight of Philippine Airlines (PAL) with 33 passengers took off from Iloilo bpund for

Manila. An hour and fifteen after it crashed in Mindoro. The plane was manufacture 1942 and was

acquired by the airline 1948. It has been certified as airworthy by the Civil Aeronautics Administration.

Passenger Nicanor Padilla is 29 years old, single and dead. His only legal heir is his mother

Natividad Padilla who filed for damages. She demanded Php600,000 as actual and compensatory

damages, exemplary damages and Php60,000 attorney;s fees.

Issue:

How are damages computed.

Held:

The award of damages for death is computed on the life expectancy of the deceased and not of

the beneficiary. Artcle 1764 of the Civil Code provides that article 2206 shall also applu to death of

passenger caused by the breach of contract by the common carrier.

The manner of computing damages is taken from Davila vs. CA. Net yearly income multiplied by

the Life Expectancy of the deceased. The Life Expectancy is based on the American Expectancy Table

of Mortality formula (2/3x[80-30]) cited from Villa Rey Transit Inc. vs. CA.

The income and salary of Nicanor Padilla is evidenced by witnesses, the auditor and manager of

Allied Overseas Trading, pay rolls of the companies and his income tax returns.

The trial court determined the deceased gross annual income to be Php23,100 from his yearly

salary from Padilla shipping Company and Allied Overseas Trading Company. The court considered that

he is single and thus deducted Php9, 200 as yearly living expenses.

His NET INCOME is thus, 13,900 with a life expectancy of 30 years. (Net income x Life

Expectancy) is Php417, 000. This is the amount of indemnity his mother is to receive.

This includes a legal rate of interest of 6% annum from date of judgment on 31August1973 until

fully paid.


94

De Caliston vs. Court of Appeals

122 SCRA 958

Facts:

Juana Sonza Vda. De Darrocha was run over by a passenger bus driven by Dalmacio which

resulted to the former’s death. Da Rrocha was a USVA pensioner. She was survived by her only child,

Gloria Darrocha de Caliston. Dalmacio was convicted subsequently of homicide thru reckless

imprudence. He was sentenced to imprisonment and was ordered to pay de Caliston P15,000 for the

death of Darrocha, P5,000 as moral damages, P5,000 for burial expenses and P10,000 for loss of

pension, which the deceased had failed to receive. On appeal, the CA modified the CFI decision and

absolved Dalmacio from the payment of the P10,000 for loss of pension and credited him for the amount

of P5,000, previously paid to de Caliston under a vehicular insurance policy obtained by the bus owner.

Issue:

Whether or not the deletion of the P10, 000 awarded for the loss of pension proper.

Held:

Yes the deletion of damages for loss of pension was unwarranted. The pension of the decedent

being a sure income was cut short by her death, for which Dalmacio was responsible. The surviving heir,

de Caliston, is entitled to the award of P10, 000, which is just equivalent to the pension the decedent

would have received for one year if she did not die. The P5, 000 paid to de Caliston by the insurer of the

passenger bus which figured in the accident may be deemed to have come from the bus owner who

procured the insurance. Since the civil liability (ex-delicto) of the bus owner for the death caused by his

driver is subsidiary and, at bottom, arises from the same culpa, the insurance proceeds should be

credited in favor of the errant driver.


95

Philippine Airlines v. Court of Appeals

106 SCRA 391

Facts:

Samson is a licensed aviator employed by the Philippine Airlines. He was partnered with another

pilot Bustamante. Samson had complained on previous occasions to PAL that Bustamante was slow in

reacting and was having lapses of poor judgment during flights. PAL however still allowed Bustamante

to continue flying.

On a certain flight, Bustamante overshot the airfield while landing the plane at the Daet airport.

Samson tried to control the plane, but did not succeed. The plane crash-landed beyond the runway into

a mangrove. Samson hit his head on the windshield due to the impact of the crash. He suffered head

injuries such as brain concussions and wounds on his forehead. To make matters worse, plaintiff was

discharged from employment. Samson then filed an action for damages against PAL.

Issue:

Whether or not PAL is liable for damages. Held:

The Court held that PAL is liable for damages. There was gross negligence on the part of PAL because despite the knowledge of Bustamante’s condition the still allowed him to continue flying. Bustamante had a tumor in his nasopharynx which affected his vision. As provided in Articles 1732, 1733, and 1756 of the NCC, PAL being a common carrier should have exercised extraordinary diligence in the supervision of their employees and utmost diligence in bringing passengers to their destination.

The court affirmed the decision of the trial court in awaring damages. Private respondent is entitled to P198,000.00 as unearned income or compulsory damages, P80,000.00 for moral damages, P20,000 as attorney’s fees and P5,000 as expenses for litigation. This claim of the plaintiff for loss and impairment of earning capacity is based on the provision of Art. 2205, NCC. Even from the standpoint of the petitioner that there is employer-employee relationship between it and private respondent arising from the contract of employment, private respondent is still entitled to moral damages in view of the finding of bad faith or malice, applying the provisions of Art. 2220 of the NCC.


96

Cachero v. Manila Yellow Taxicab

101 PHIL 523

Facts:

Atty. Cachero, plaintiff herein, boarded a taxicab owned by the Manila Yellow Taxicab Co., Inc.

The said taxicab bumped against a Meralco post. The taxicab was badly smashed and the plaintiff fell

out of the vehicle to the ground. As a result of the accident, he suffered slight physical injuries. The driver

of the taxi was prosecuted and convicted criminally. Respondent herein offered to settle the case and the

plaintiff demanded the amount of P79,245.65 as for damages. Respondent refused to pay the said

amount. Plaintiff then proceeded to file a case to recover the same amount through the courts. The CFI

rendered a decision in favor of the plaintiff and ordered that respondent pay the amount of P700 for

medical and transportation allowances, attorney’s fees and professional fees. Both parties appealed and

the decision was affirmed. Hence this petition.

Issue: Whether or not Cachero is entitled to recover damages other than those already awarded.

Held:

The Court modified the decision of the lower court. The award of professional fees were reduced

to P2,000 and the award of moral damages of P2,000. Plaintiff in this case did not maintain his action

against all persons liable for the breach of the contract of common carriage. Since he did not include the

driver in this complaint he may not recover moral damages. Respondent herein did not commit any

criminal offense against the plaintiff, it was the driver who was the reason behind the injury. This case

does not fall under Article 2219 of the NCC therefore he is not entitled to be awarded moral damages.


97

Fores v. Miranda

105 PHIL 266

Facts:

Ireneo Miranda, a professor of Fine Arts, was a passenger of a passenger jeepney registered to

Fores but actuall operated by Sackerman. The vehicle was descending the Sta. Mesa bridge at an

excessive rate of speed, and the driver lost control of the same which caused it to swerve and to hit the

bridge wall. As a result of the accident, Five of the passengers were injured, including the respondent

herein. He suffered a fracture of the upper right humerus. He was taken to the National Orthopedic

Hospital for treatment, and later was subjected to a series of operations. At the time of the trial, it

appears that respondent had not yet recovered the use of his right arm. The driver was charged with

serious physical injuries through reckless imprudence, and upon interposing a plea of guilty was

sentenced accordingly. The lower court awarded actual damages to the respondent. On appeal, the

Court reduced the amount of actual damages and added the award of moral damages and attorney’s

fees. Hence this petition.

Issue:

Whether or not the award of moral damages and attorney’s fee was proper.

Held:

The Court held that the award of moral damages is not proper in this case. As a general rule,

moral damages are not awarded to the victim in cases of breach of contract of common carriage. The

exception is that if such accident resulted in the death of the passenger, in which case Article 1764 of the

NCC, makes the carrier subject to Article 2206 of the NCC. In case death did not result from the

accident, moral damages may be recovered if the common carrier is found guilty of gross negligence

amounting to bad faith or malice. In the case at bar there was no bad faith on the part of the common

carrier. Therefore, respondent is not entitled to moral damages. As to the issue of attorney’s fee, the

court may moto proprio award moral damages as the case may be. Attorney’s fees may be awarded by

the court if it is deemed to be just and equitable. Therefore, the Court set aside the decision of the Court

of Appeals as far as moral damages are concerned.


98

Lopez v. Pan American Airways

16 SCRA 431

Facts:

Senator Lopez and party (plaintiffs) made reservations for first class accommodations with Pan

American Airways (Pan Am) for a flight from Tokyo to San Francisco. Pan Am’s San Francisco Head

Office confirmed the reservations made by the plaintiffs. The first class tickets for the said flight were

subsequently issued by Pan Am in favor the plaintiffs. As scheduled, plaintiffs left Manila by Northwest

Airlines and arrived in Tokyo the same day. As soon they arrived, Senator Lopez requested Minister

Busuego of the Philippine Embassy to contact Pan Am’s Tokyo Office regarding their first class

accommodations for that evening’s flight. However, they found out that all first class seats were booked.

Pan Am’s agent mistakenly cancelled the reservation made by the plaintiffs and deliberately withheld the

incident from the latter. Pan Am took the chance that some of the passengers would cancel their first

class seats and they would be able to accommodate the plaintiffs. This never happened.

Since the first class seats therein were all taken, Pan Am’s Tokyo Office informed the plaintiffs

that it could not accommodate them in that trip as first-class passengers. Due to the urgency of their

arrival in the United States they were constrained to take the flight from Tokyo to San Francisco as

tourist passengers.

Issue: Whether or not Pan Am is liable for moral, exemplary damages and attorney’s fees. Held:

The Court held that Pan Am’s actions amounted to bad faith and malice which entitled the plaintiffs herein to be awarded moral and exemplary damages. The act of misleading plaintiffs to believe that they had in fact purchased first class tickets when in they have not was a willful breach of the contract of common carriage. Said actions of Pan Am may indeed have been prompted by nothing more that the promotion of its self-interest in holding on to Senator Lopez and party as passengers in its flight and foreclosing their chances to seek the services of other airlines that may have been able to afford them first class accommodations. Therefore plaintiffs are entitled to receive the award of moral damages. The award of exemplary damages is also proper in this case because such damages are recoverable in breach of contract where the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. Lastly, a working contract for an attorney’s fees, shall control the amount to be paid therefore unless found by the court to be unconscionable or unreasonable.


99

Ortigas, Jr. v. Lufthansa

64 SCRA 610

Facts:

Petitioner is booked on a first class accommodation in defendants airline from Rome to Manila.

The booking was confirmed by its airlines office. The airline employee upong seeing his Filipino

nationality disallowed his boarding and the seat was given to a Belgian. Petitioner has a heart ailment

and is advised by physician to take only frst class accommodations. He was promised to be transferred

to first class on all succeeding layovers from Cairo to Hongkong to no avail. Damages was filed. Trial

court awarded Moral and Exemplary damages.

Issue:

Whether or not defendant is liable for damages.

Held:

Yes. Inattenton and lack of care on the carrier rsulting in the failure of the passenger to be

accommodated in a class availed of and contracted amounts to bad faith and fraud. Furthermore, the

preference to a Belgian passenger is also a wanton disregard of his right from discrimination. The

successive false representations of transferring him to first class is an act of malice and bad faith. This

entitles petitioner to moral damages in accordance to Articlec 2220. Moral damages is increased to

Php15,000 and Exemplary damages to Php100,000.


100

Philippine Rabbit Bus Lines v. Esguerra

117 SCRA 741

Facts:

Respondent herein boarded a bus of the plaintiff herein which was bound for Pampanga from

Manila. He sat a few seats behind the driver on the left side of the bus near the window. While on route

to Pampanga, the bus sideswiped with a freight truck owned and operated by Transport Contractors, the

latter coming from the opposite side of the highway. The window glass near the driver's seat of the bus

was detached and the left side of its body was damaged. During the course of the accident, the left

forearm of Esguerra was hit by a hard blunt object. It caused the breaking of its bones into small

fragments while the soft tissues of the muscles and the skin were mascerated. He was immediately

brought to the Bulacan Provincial Hospital in Malolos, Bulacan for treatment. Unfortunately, because of

the severe damage caused, his left arm was amputated.

Defendant herein filed a case to recover damages. The lower court rendered a decision in favor

of Esguerra, finding that both vehicles were reckless in driving. On appeal, the court affirmed the

decision of the lower court and awarded actual and moral damages to the respondent herein. Hence this

petition.

Issue:

Whether or not the respondent is entitled to receive moral damages.

Held:

The Court held that the Court of Appeals erred in awarding moral damages to the respondent

herein. As a general rule moral damages are not recoverable in actions for damages predicated on a

breach of the contract of transportation, as in the instant case, in view of the provisions of Articles 2219

and 2220 of the New Civil Code. The exceptions are (1) where the mishap results in the death of a

passenger, and (2) where it is proved that the carrier was guilty of fraud or bad faith, even if death does

not result. In the case at bar, the Court finds that both vehicles were in their respective lanes and both

were equally negligent. The Court does not find that there was malice or bad faith on the part of the

driver of the petitioner herein. Therefore the award of moral damages is deleted and the rest affirmed.


101

Sweet Lines v. Court of Appeals

121 SCRA 769

Facts:

The respondents, having first class tickets, boarded the M/V Sweet Grace to Catbalogan. The

vessel had some engine problems which led to a change of schedule and they were thus delayed for a

substantial amount of time. Furthermore, the vessel bought the respondents to Tacloban instead of

Catbalogan. This led the respondents to purchase another set of tickets and to ride another ferryboat

going to Catbalogan. The respondents then sued the petitioner carrier for damages for the breach of

contract of carriage.

Issue:

Whether or not the petitioner is liable for damages.

Held:

The Court held that the petitioner is liable for damages specifically moral damages because there

was bad faith on its part. The Court found that such bad faith is present based on three circumstances

namely:

1. Petitioner did not give any notice to the respondents as to the change of schedule of the vessel.

2. The petitioner knew fully that it would take no less than fifteen (15) hours to effect the repairs of the damaged engine. The petitioner also assured that the vessel will leave within a short period of time and when the defendants wanted to leave the trip petitioner stated that the “the vessel is already leaving.”

3. The petitioner did not even offer to refund the tickets and provide for their transportation from Tacloban to Catbalogan.


102

Prudencio v. Alliance Transport System

148 SCRA 440

Facts:

Dra. Sofia L. Prudenciado was driving her own car along Taft Avenue to go to the Philippine

Normal College Compound where she would hold classes. As she was moving slowly in a normal rate,

her car was then hit by the taxi operated by the respondent. The accident caused the petitioner physical

injuries and a brain concussion. She then filed for an action for damages against respondent. The lower

court, finding the respondent’s driver to be negligent, granted the damages and the Court of Appeals

reduced the damages. The petitioner then appealed from the decision of the appellate court.

Issue:

Whether or not the award of damages by the Court of Appeals was correct.

Held:

The Court held that the reduction of the moral damages by the appellate court to the petitioner

was unreasonable and drastic. The reason was that the trial court found the respondent to be grossly

negligent in injuring the petitioner. The award of moral damages was proper. The appeal by the petitioner

is proper because, as a doctor, she has reasonable fears that such accident due to the carelessness of

the respondent’s driver can greatly affect her profession.

Exemplary damages are also awarded to the petitioner to provide for an example or correction to

public good. The reason is that the respondent’s driver was driving at a high speed on a rainy day and on

a slippery road with complete disregard with the safety of other people.


103

Pan American World Airways, Inc. v. Intermediate Appellate Court

153 SCRA 521

Facts:

Private respondent Tinitigan, filed a complaint against petitioner for damages arising from

defendant's alleged refusal to accommodate her on Pan Am Flight No. 431 from Sto. Domingo,

Republica Dominica to San Juan, Puerto Rico notwithstanding that she possessed a confirmed plane

ticket. She is a businesswoman and a multimillionaire (proprietor of Sampaguita Restaurant, New York

City USA; Treasurer of the Molave Development Corp., Phil., proprietor of Cavite Household Appliances

and Rowena's Handicraft, Phil.), was on a business trip with a Pan-Am ticket. While in Sto. Domingo,

Tinitigan is expected to be in San Juan that same day to meet a client to sign a contract or lose it. She

was expected to make a profit of $1,000 in said contract but her failure to board the flight, said profit was

lost.

The refusal of accommodation caused her to suffer mental anguish, serious anxiety, besmirched

reputation, wounded feelings and social humiliation She prayed that she be awarded moral damages of

P500,000.00, exemplary damages of P200,000.00, attorney's fees of P100,000.00 and actual damages

sustained by her in the amount of US$1,546.15. Defendant denied that plaintiff was a confirmed

passenger since the ticket issued to her was on an open space basis, which meant that she could only

be accommodated if any of the confirmed passengers failed to show up at the airport before departure.

The lower court rendered judgment in favor of plaintiff and awarded the amount of damages as prayed

for. Said decision was affirmed hence the instant petition.

Issue: Whether or not the award of damages was proper.

Held:

Yes, but subject to modifications. Other instances which caused moral damage to the plaintiff are

the following:

1. While plaintiff was standing in line to board the aircraft, a Pan Am employee ordered her in a loud

voice to step out of line because her ticket was not confirmed to her embarrassment in the presence of

several people who heard and order. Despite her Pleas she was not allowed to board the aircraft. And

her seat was also given to a Caucasian.

2. When the plane took off without her but with her luggage on board. She was forced to return to her

hotel without any luggage much less an extra dress.

Evidence shows petitioner as confirmed passenger. 1.) Defendant issued a Passenger Ticket and

Baggage Check with assigned seat and the corresponding pass and baggage claim symbol. 2.) Plaintiff

paid the fare and terminal fee. 3.) plaintiff's passport was stamped by immigration. 4.) Plaintiff's name

was included in the passenger manifest. There is a contract or carriage perfected between plaintiff and


104

defendant for the latter to take plaintiff to her place of destination. By refusing to accommodate plaintiff in

said flight, defendant had willfully and knowingly violated the contract of carriage and failed to bring the

plaintiff to her place of destination under its contract with plaintiff. There is showing of bad faith. Self-

enrichment or fraternal interest and not personal ill will may have been the motive of defendant, but it is

malice nevertheless. Malice is shown by the fact that that plaintiff was ordered out of the line under some

pretext in order to accommodate a white man.

Exemplary damages and Attorney’s fees are also awarded. The rational behind exemplary or

corrective damages is, to provide an example or correction for public good. SC reduced the moral and

exemplary damages to the combined total sum of Two Hundred Thousand (P200,000.00) Pesos and the

attorney's fees to Twenty Thousand (P20,000.00) Pesos. The award of actual damages in the amount of

One Thousand Five Hundred Forty Six American dollars and fifteen cents (US$1,546.15) computed at

the exchange rate prevailing at the time of payment is hereby retained and granted.


105

Trans World Airlines v. Court of Appeals

165 SCRA 143

Facts:

Atty. Vinluan purchased a first class ticket from the petitioner. Such ticket was twice confirmed

and yet the petitioner abruptly told the respondent that there were no longer any available seats in the

first class and that he will be downgraded to the economy class. When he protested an employee of the

petitioner arrogantly threatened the respondent. In addition, he also saw that several Caucasians who

arrived much later were accommodated in the first class when the other passengers did not show up.

The respondent then sued the petitioner for damages.

Issue:

Whether or not the petitioner is liable for damages.

Held:

The Court held that the petitioner is liable for moral and exemplary damages. The discrimination

in this case is obvious and the humiliation brought to the respondent is indisputable. The petitioner

showed lack of care in accommodating the respondent in the class that the latter contracted. In addition,

the petitioner rudely informed the respondent of such downgrading of class. Such awarding of damages

would serve as an example and a discouragement to carriers who may repeat such oppressive and

discriminatory acts.


106

Armovit v. Court of Appeals

184 SCRA 476

Facts:

The petitioners in this case all resided in the United States and went home to the Philippines for a

Christmas visit. On their return trip to the United States, they were bumped off at the airport due to an

erroneous entry in their plane tickets relating to the departure time. The petitioners checked in the airport

an hour and fifteen minutes earlier than what was indicated in their airline tickets. Upon their check in,

the employees of the respondent airlines impolitely informed them that the plane was already taking off

and that their check in time was way earlier and entirely different from what was stated in their tickets.

The petitioners then sued the respondent airlines for damages.

Issue:

Whether or not the respondent is liable for damages.

Held:

The Court held that the respondent is liable for damages. Actual damages were awarded to the

petitioner due to bumped off that occurred. Moral damages were also awarded because the Court found

that the respondent was gross negligent in the issuance of the tickets as to the correct time of departure.

In addition, the act of the respondent in rudely informing the petitioner of such bumped off is an indication

that there was bad faith and malice on the part of the respondent. Furthermore, the relative of the

petitioner stated how badly wounded the feelings of the petitioners were. Exemplary damages were also

awarded as to provide for an example to the public good. Lastly, nominal damages were properly deleted

since such damages cannot co-exist with actual damages.


107

Documents

Compilation of Digests in Transpo