Transpo Case Digests

FACTS: National Investment and Development Corporation (NIDC) and
Kawasaki Heavy Industries entered into a Joint Venture Agreement in a

shipyard business named PHILSECO, with a shareholding of 60-40
respectively. NIDCs interest was later transferred to the National
Government.
Pursuant to President Aquinos Proclamation No.5, which established the
Committee on Privatization (COP) and Asset Privatization Trust (APT), and
allowed for the disposition of the governments non-performing assets, the
latter allowed Kawasaki Heavy Industries to choose a company to which it
has stockholdings, to top the winning bid of JG Summit Holdings over
PHILSECO. JG Summit protested alleging that such act would effectively
increase Kawasakis interest in PHILSECOa shipyard is a public utility--and
thus violative of the Constitution.
ISSUE: Whether or not respondents act is valid.
HELD: No. A shipyard such as PHILSECO being a public utility as provided by
law, the following provision of the Article XII of the Constitution applies:
Sec. 11. No franchise, certificate, or any other form of authorization for the
operation of a public utility shall be granted except to citizens of the
Philippines or to corporations or associations organized under the laws of the
Philippines at least sixty per centum of whose capital is owned by such
citizens, nor shall such franchise, certificate, or authorization be exclusive in
character or for a longer period than fifty years. Neither shall any such
franchise or right be granted except under the condition that it shall be
subject to amendment, alteration, or repeal by the Congress when the
common good so requires. The State shall encourage equity participation in
public utilities by the general public. The participation of foreign investors in
the governing body of any public utility enterprise shall be limited to their
proportionate share in its capital, and all the executive and managing officers
of such corporation or association shall be citizens of the Philippines.
Notably, paragraph 1.4 of the JVA accorded the parties the right of first
refusal under the same terms. This phrase implies that when either party
exercises the right of first refusal under paragraph 1.4, they can only do so to
the extent allowed them by paragraphs 1.2 and 1.3 of the JVA or under the
proportion of 60%-40% of the shares of stock. Thus, should the NIDC opt to
sell its shares of stock to a third party, Kawasaki could only exercise its right
of first refusal to the extent that its total shares of stock would not exceed
40% of the entire shares of stock of SNS or PHILSECO. The NIDC, on the other
hand, may purchase even beyond 60% of the total shares. As a government
corporation and necessarily a 100% Filipino-owned corporation, there is
NOTES AND DIGESTS IN TRANSPORTATION LAW
JOHN C. ICALIA
San Beda, College of Law, Mendiola
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JG Summit Holdings vs Court of Appeals

GR No. 124293 September 24, 2003
nothing to prevent its purchase of stocks even beyond 60% of the

capitalization as the Constitution clearly limits only foreign capitalization.
National Development Company vs 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
Doa 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 Doa Nati at San Francisco, California, a total of 1,200
bales of American raw cotton consigned to Manila Banking Corporation,
Manila and the Peoples 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 courts application to the
Tatad Vs Garcia Jr. 243

SCRA 436
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
JOHN C. ICALIA
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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 Doa 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 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.
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.
British Airways vs Court of Appeals

218 SCRA 699
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
attorneys fee, as well as the dismissal of its third party complaint against PAL
HELD: The contract of transportation was exclusively between Maktani and BA.
The latter merely endorsing the Manila to Hong Kong log of the formers journey
to PAL, as its subcontractor or agent. Conditions of contacts was one of
continuous air transportation from Manila to Bombay. The Court of Appeals should
have been cognizant of the well-settled rule that an agent is also responsible for
any negligence in the performance of its function and is liable for damages which
the principal may suffer by reason of its negligent act. Since the instant petition
was based on breach of contract of carriage, Maktani can only sue BA and not
PAL, since the latter was not a party in the contract.
De Guzman vs Court of Appeals

168 SCRA 612
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 sixwheelers trucks which he owned for the purpose. Upon returning to
Pangasinan, he would load his vehicle with cargo belonging to different
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.
First Philippine Industrial Corporation vs Court of Appeals

300 SCRA 661
Facts:
Herein petitioner applied for a mayors permit to operate its pipeline
concession. Before such permit was issued, the City treasurer required
JOHN C. ICALIA
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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.
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.
FGU Insurance Corporation vs GPP Sarmiento Truckinh

GR No, 141910 August 6, 2002
Facts:
GPS is an exclusive contractor and hauler of Concepcion Industries,
Inc. One day, it was to deliver certain goods of Concepcion Industries, Inc.
aboard one of its trucks. On its way, the truck collided with an unidentified
truck, resulting in damage to the cargoes. FGU, insurer of the shipment paid
to Concepcion Industries, Inc. the amount of the damage and filed a suit
Issue: Whether or not GPS falls under the category of a common carrier.
Held:
Note that GPS is an exclusive contractor and hauler of Concepcion
Industries, Inc. offering its service to no other individual or entity. A common
carrier is one which offers its services whether to the public in general or to a
limited clientele in particular but never on an exclusive basis. Therefore, GPS
does not fit the category of a common carrier although it is not freed from its
liability based on culpa contractual.
Everett Stearnship Vs CA
297 SCRA 496
Whether or not the petitioner is liable for the actual value and not
the maximum value recoverable under the bill of lading.
Page
against GPS. GPS filed a motion to dismiss for failure to prove that it was a
common carrier.
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 courts 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.
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:

JOHN C. ICALIA
Spouses Cruz vs Sun Holidays Inc.

GR No. 186312, June 29, 2010
Facts:
Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on
January 25, 2001 against Sun Holidays, Inc. (respondent) with the Regional
Trial Court (RTC) of Pasig City for damages arising from the death of their son
Ruelito C. Cruz (Ruelito) who perished with his wife on September 11, 2000
on board the boat M/B Coco Beach III that capsized en route to Batangas from
Puerto Galera, Oriental Mindoro where the couple had stayed at Coco Beach
Island Resort (Resort) owned and operated by respondent.
On September 11, 2000, as it was still windy, Matute and 25 other
Resort guests including petitioners son and his wife trekked to the other side
of the Coco Beach mountain that was sheltered from the wind where they
boarded M/B Coco Beach III, which was to ferry them to Batangas.
Shortly after the boat sailed, it started to rain. As it moved farther away from
Puerto Galera and into the open seas, the rain and wind got stronger, causing
the boat to tilt from side to side and the captain to step forward to the front,
leaving the wheel to one of the crew members.
Help came after about 45 minutes when two boats owned by Asia Divers in
Sabang, Puerto Galera passed by the capsized M/B Coco Beach III. Boarded
on those two boats were 22 persons, consisting of 18 passengers and four
crew members, who were brought to Pisa Island. Eight passengers, including
petitioners son and his wife, died during the incident.
Issue: Whether or not respondent is a common carrier.
Held: The Civil Code defines "common carriers" in the following terms:
Article 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting passengers
or goods or both, by land, water, or air for compensation, offering their
services to the public.
The above article makes no distinction between one whose principal business
activity is the carrying of persons or goods or both, and one who does such
carrying only as an ancillary activity (in local idiom, as "a sideline"). Article
1732 also carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and
one offering such service on an occasional, episodic or unscheduled basis.
Neither does Article 1732 distinguish between a carrier offering its services to
the "general public," i.e., the general community or population, and one who
offers services or solicits business only from a narrow segment of the general
population. We think that Article 1733 deliberately refrained from making
such distinctions.
Indeed, respondent is a common carrier. Its ferry services are so intertwined
with its main business as to be properly considered ancillary thereto. The
constancy of respondents ferry services in its resort operations is
underscored by its having its own Coco Beach boats. And the tour packages it
offers, which include the ferry services, may be availed of by anyone who can
afford to pay the same. These services are thus available to the public.
That respondent does not charge a separate fee or fare for its ferry services
is of no moment. It would be imprudent to suppose that it provides said
services at a loss. The Court is aware of the practice of beach resort
operators offering tour packages to factor the transportation fee in arriving at
JOHN C. ICALIA
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The waves got more unwieldy. After getting hit by two big waves which came
one after the other, M/B Coco Beach III capsized putting all passengers
underwater. The passengers, who had put on their life jackets, struggled to
get out of the boat. Upon seeing the captain, Matute and the other
passengers who reached the surface asked him what they could do to save
the people who were still trapped under the boat. The captain replied "Iligtas
niyo na lang ang sarili niyo" (Just save yourselves).
the tour package price. That guests who opt not to avail of respondents ferry
services pay the same amount is likewise inconsequential. These guests may
only be deemed to have overpaid.
Erezo Vs Jepte
102 Phil 103
Facts:
Defendant-appellant is the registered owner of a six by six truck
bearing. On August, 9, 1949, while the same was being driven by Rodolfo
Espino y Garcia, it collided with a taxicab at the intersection of San Andres
and Dakota Streets, Manila. As the truck went off the street, it hit Ernesto
Erezo and another, and the former suffered injuries, as a result of which he
died.
The driver was prosecuted for homicide through reckless negligence. The
accused pleaded guilty and was sentenced to suffer imprisonment and to pay
the heirs of Ernesto Erezo the sum of P3,000. As the amount of the judgment
could not be enforced against him, plaintiff brought this action against the
registered owner of the truck, the defendant-appellant.
The defendant does not deny at the time of the fatal accident the cargo truck
driven by Rodolfo Espino y Garcia was registered in his name. He, however,
claims that the vehicle belonged to the Port Brokerage, of which he was the
broker at the time of the accident. He explained, and his explanation was
corroborated by Policarpio Franco, the manager of the corporation, that the
trucks of the corporation were registered in his name as a convenient
arrangement so as to enable the corporation to pay the registration fee with
his backpay as a pre-war government employee. Franco, however, admitted
that the arrangement was not known to the Motor Vehicle Office.
The trial court held that as the defendant-appellant represented himself to be
the owner of the truck and the Motor Vehicle Office, relying on his
representation, registered the vehicles in his name, the Government and all
persons affected by the representation had the right to rely on his declaration
of ownership and registration. It, therefore, held that the defendant-appellant
is liable because he cannot be permitted to repudiate his own declaration.
Issue: WoN Jepte should be liable to Erezo for the injuries occasioned to the
latter because of the negligence of the driver even if he was no longer the
owner of the vehicle at the time of the damage (because he had previously
sold it to another)
Held:
The Revised Motor Vehicle Law provides that no vehicle may be used or
operated upon any public highway unless the same is properly registered.
Not only are vehicles to be registered and that no motor vehicles are to be
used or operated without being properly registered for the current year, but
that dealers in motor vehicles shall furnish the Motor Vehicles Office a report
showing the name and address of each purchaser of motor vehicle during the
previous month and the manufacturer's serial number and motor number.
Registration is required not to make said registration the operative act by
which ownership in vehicles is transferred, as in land registration cases,
because the administrative proceeding of registration does not bear any
essential relation to the contract of sale between the parties, but to permit
the use and operation of the vehicle upon any public
The main aim of motor vehicle registration is to identify the owner so that if
any accident happens, or that any damage or injury is caused by the vehicles
on the public highways, responsibility therefore can be fixed on a definite
individual, the registered owner. A registered owner who has already sold or
transferred a vehicle has the recourse to a third-party complaint, in the same
action brought against him to recover for the damage or injury done,
against the vendee or transferee of the vehicle.
Lim vs Court of Appeals

Facts:
Private respondent herein purchased an Isuzu passenger jeepney
from Gomercino Vallarta, a holder of a certificate of public convenience for
the operation of a public utility vehicle. He continued to operate the public
transport business without transferring the registration of the vehicle to his
name. Thus, the original owner remained to be the registered owner and
operator of the vehicle. Unfortunately, the vehicle got involved in a road
mishap which caused it severe damage. The ten-wheeler-truck which caused
the accident was owned by petitioner Lim and was driven by co-petitioner
Gunnaban. Gunnaban admitted responsibility for the accident, so that
petitioner Lim shouldered the costs of hospitalization of those wounded,
compensation for the heirs of the deceased passenger and the restoration of
the other vehicle involved. He also negotiated for the repair of the private
JOHN C. ICALIA
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YES. The registered owner, the defendant-appellant herein, is

primarily responsible for the damage caused to the vehicle of the plaintiffappellee, but he (defendant-appellant) has a right to be indemnified by the
real or actual owner of the amount that he may be required to pay as
damage for the injury caused to the plaintiff-appellant
respondent's jeepney but the latter refused and demanded for its
replacement. Hence, private respondent filed a complaint for damages
against petitioners. Meanwhile, the jeepney was left by the roadside to
corrode and decay. The trial court decided in favor of private respondent and
awarded him his claim. On appeal, the Court of Appeals affirmed the
decision of the trial court. Hence, petitioner filed this petition.
Issue: WoN the new owner of a passenger jeepney who continued to operate
the same under the so-called kabit system and in the course thereof met an
accident has the legal personality to bring the action for damages against the
erring vehicle.
Held: YES. According to the Court, the thrust of the law in enjoining the kabit
system is not much as to penalize the parties but to identify the person upon
whom responsibility may be fixed in case of an accident with the end view of
protecting the riding public. In the present case, it is once apparent that the
evil sought to be prevented in enjoining the kabit system does not exist. First,
neither of the parties to the pernicious kabit system is being held liable for
damages. Second, the case arose from the negligence of another vehicle in
using the public road to whom no representation, or misrepresentation, as
regards the ownership and operation of the passenger jeepney was made
and to whom no such representation, or misrepresentation, was necessary.
Thus it cannot be said that private respondent Gonzales and the registered
owner of the jeepney were in estoppel for leading the public to believe that
the jeepney belonged to the registered owner. Third, the riding public was not
bothered nor inconvenienced at the very least by the illegal arrangement. On
the contrary, it was private respondent himself who had been wronged and
was seeking compensation for the damage done to him. Certainly, it would
be the height of inequity to deny him his right. Hence, the private respondent
has the right to proceed against petitioners for the damage caused on his
passenger jeepney as well as on his business
Lita Enterprises vs IAC

129 SCRA 347
Facts:
Spouses Nicasio Ocampo and Francisca Garcia (private respondents)
purchased in installment from the Delta Motor Sales Corporation five (5)
Toyota Corona Standard cars to be used as taxi. Since they had no franchise
to operate taxicabs, they contracted with petitioner Lita Enterprise, Inc.,
through its representative Manuel Concordia, for the use of the latters
certificate of public convenience for a consideration of P1, 000.00and a
monthly rental of P200.00/taxicab unit. For the agreement to take effect, the
cars were registered in the name of Lita Enterprises, Inc. The possession,
however, remains with spouses Ocampo and Garcia who operated and
maintained the same under Acme Taxi, petitioners trade name. A year later,
one of the taxicabs, driven by their employee, Emeterio Martin, collided with
a motorcycle. Unfortunately the driver of the motorcycle ,Florante Galvez
died from the injuries it sustained. Criminal case was filed against Emeterio
Martin, while a civil case was filed by the heir of the victim against Lita
Enterprises. In the decision of the lower court Lita Enterprises was held liable
for damages for the amount ofP25, 000.00 and P7, 000.00 for attorneys fees.
A writ of execution for the decision followed, 2 of the cars of the respondents
spouses were levied and were sold to a public auction. On March 1973,
respondent Ocampo decided to register his taxicabs in his own name. The
manager of petitioner refused to give him the registration papers. Thus,
making spouses file a complaint against petitioner. In the decision, Lita
Enterprise was ordered to return the three certificate of registration not
levied in the prior case. Petitioner now prays that private respondent be held
liable to pay the amount they have given to the heir of Galvez.
Facts:
Issue:
Issue:
Whether or not petitioner can recover from private respondent, knowing they
are in an arrangement known as kabit system.
Held:
Kabit system is defined as, when a person who has been granted a
certificate of convenience allows another person who owns a motor vehicle to
operate under such franchise for a fee. This system is not penalized as a
criminal offense but is recognized as one that is against public policy;
therefore it is void and inexistent. It is fundamental that the court will not aid
either of the party to enforce an illegal contract, but will leave them both
where it finds them. Upon this premise, it was flagrant error on the part of
both trial and appellate courts to have accorded the parties relief from their
predicament. Specifically Article1412 states that: If the act in which the
unlawful or forbidden cause consists does not constitute a criminal offense,
the following rules shall be observed: when the fault, is on the part of both
contracting parties, neither may recover what he has given by virtue of the
contract, or demand the performance of the others undertaking. The
principle of in pari delicto is evident in this case. the proposition is universal
that no action arises, in equity or at law, from an illegal contract; no suit can
be maintained for its specific performance, or to recover the property agreed
to sold or delivered, or damages for its property agreed to be sold or
delivered, or damages for its violation. The parties in this case are in
paridelicto, therefore no affirmative relief can be granted to them

JOHN C. ICALIA
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Teja Marketing Inc. vs IAC

148 SCRA 347
Pedro Nale bought from Teja Marketing a motorcycle with complete

accessories and a sidecar. A chattel mortgage was constituted as a security
for the payment of the balance of the purchase price. The records of the Land
Transportation Commission show that the motorcycle sold to the defendant
was first mortgaged to the Teja Marketing by Angel Jaucian though the Teja
Marketing and Angel Jaucian are one and the same, because it was made to
appear that way only as the defendant had no franchise of his own and he
attached the unit to the plaintiffs MCH Line. The agreement also of the
parties here was for the plaintiff to undertake the yearly registration of the
motorcycle with the Land Transportation Commission. The plaintiff, however
failed to register the motorcycle on that year on the ground that the
defendant failed to comply with some requirements such as the payment of
the insurance premiums and the bringing of the motorcycle to the LTC
forstenciling, the plaintiff said that the defendant was hiding the motorcycle
fromhim. Lastly, the plaintiff also explained that though the ownership of
themotorcycle was already transferred to the defendant, the vehicle was
stillmortgaged with the consent of the defendant to the Rural Bank of
Camaliganfor the reason that all motorcycle purchased from the plaintiff on
credit wasrediscounted with the bank. Teja Marketing made demands for the
payment of the motorcycle butjust the same Nale failed to comply, thus
forcing Teja Marketing to consult alawyer and file an action for damage before
the City Court of Naga in theamount of P546.21 for attorneys fees and
P100.00 for expenses of litigation.Teja Marketing also claimed that as of 20
February 1978, the total account ofNale was already P2, 731, 05 as shown in
a statement of account; includesnot only the balance of P1, 700.00 but an
additional 12% interest per annumon the said balance from 26 January 1976
to 27 February 1978; a 2% servicecharge; and P546.21 representing
attorneys fees. On his part, Nale did notdispute the sale and the outstanding
balance of P1,700.00 still payable toTeja Marketing; but contends that
because of this failure of Teja Marketing tocomply with his obligation to
register the motorcycle, Nale suffered damageswhen he failed to claim any
insurance indemnity which would amount to no less than P15,000.00 for the
more than 2 times that the motorcycle figured inaccidents aside from the loss
of the daily income of P15.00 as boundary feebeginning October 1976 when
the motorcycle was impounded by the LTC fornot being registered. The City
Court rendered judgment in favor of TejaMarketing, dismissing the
counterclaim, and ordered Nale to pay TejaMarketing On appeal to the Court
of First Instance of Camarines Sur, thedecision was affirmed in toto. Nale filed
a petition for review with theIntermediate Appellate Court. On 18 July 1983,
the appellate court set asidethe decision under review on the basis of
doctrine of "pari delicto," andaccordingly, dismissed the complaint of Teja
Marketing, as well as thecounterclaim of Nale; without pronouncements as to
costs. Hence, thepetition for review was filed by Teja Marketing and/or Angel
Jaucian.
Held:
Unquestionably,
the
parties
herein
operated
under
an
arrangement,commonly known as the "kabit system" whereby a person who
has beengranted a certificate of public convenience allows another person
who ownsmotor vehicles to operate under such franchise for a fee. A
certificate ofpublic convenience is a special privilege conferred by the
government. Abuseof this privilege by the grantees thereof cannot be
countenanced. The "kabit system" has been identified as one of the root
causes of theprevalence of graft and corruption in the government
transportation offices.Although not out rightly penalized as a criminal offense,
the kabit system isinvariably recognized as being contrary to public policy
and, therefore, voidand in existent under Article 1409 of the Civil Code. It is a
fundamentalprinciple that the court will not aid either party to enforce an
illegal contract,but will leave both where it finds then. Upon this premise it
would be error toaccord the parties relief from their predicament.
Santos vs Sibog
104 SCRA 520
Santos v. Sibug
Facts:
Petitioner Adolfo Santos was the owner of a passenger jeep, but hehad no
certificate of public conveyance for the operation of the vehicle as apublic
passenger jeep. Santos then transferred his jeep to the name of Vidadso that
it could be operated under the latters certificate of publicconvenience. In
other words, Santos became what is known as kabitoperator. Vidad executed
a re-transfer document presumably to be registeredit and when it was
decided that the passenger jeep of Santos was to bewithdrawn from kabit
arrangement. On the accident date, Abraham Sibug was bumped by the
saidpassenger jeep.
Issue:
Whether the Vidad is liable being the registered owner of the jeepney?
Held:
As the jeep in question was registered in the name of Vidad, thegovernment
or any person affected by the representation that said vehicle isregistered
under the name of the particular person had the right to rely on
hisdeclaration of his ownership and registration. And the registered owner or
JOHN C. ICALIA
8
Page
Whether the defendant can recover damages against the plaintiff?
anyother person for that matter cannot be permitted to repudiate said

declarationwith the objective of proving that the said registered vehicle is
owned byanother person and not by the registered owner. Santos, as the
kabit, should not be allowed to defeat the levy in hisvehicle and to avoid his
responsibility as a kabit owner for he had led thepublic to believe that the
vehicle belongs to Vidad. This is one way of curbingthe pernicious kabit
system that facilitates the commissions of fraud againstthe traveling public.
Sarkies Tours Philippines Inc vs Court of Appeals

280 SCRA 58
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
Westwind Shipping Corporation vs UCPB General Insurance

710 SCRA 544
De Guzman vs Court of Appeals, supra

Delivery of Cartons of Milk
Hijacked
Bascos vs Court of Appeals
221 SCRA 318
Facts:
Rodolfo Cipriano, representing CIPTRADE, entered into a hauling
contract with Jibfair Shipping Agency Corporation whereby the former bound
itself to haul the latters 2000m/tons of soya bean meal from Manila to
Calamba. CIPTRADE subcontracted with petitioner Estrellita Bascos to
transport and deliver the 400 sacks of soya beans. Petitioner failed to deliver
the cargo, and as a consequence, Cipriano paid Jibfair the amount of goods
lost in accordance with their contract. Cipriano demanded reimbursement
from petitioner but the latter refused to pay. Cipriano filed a complaint for
breach of contract of carriage. Petitioner denied that there was no contract of
carriage since CIPTRADE leased her cargo truck, and that the hijacking was a
force majeure. The trial court ruled against petitioner.
Issues:
(1) Was petitioner a common carrier?
(2) Was the hijacking referred to a force majeure?
Held:
(1) Article 1732 of the Civil Code defines a common carrier as "(a) person,
corporation or firm, or association engaged in the business of carrying or
transporting passengers or goods or both, by land, water or air, for
compensation, offering their services to the public." The test to determine a
common carrier is "whether the given undertaking is a part of the business
engaged in by the carrier which he has held out to the general public as his
occupation rather than the quantity or extent of the business transacted." In
this case, petitioner herself has made the admission that she was in the
trucking business, offering her trucks to those with cargo to move. Judicial
admissions are conclusive and no evidence is required to prove the same.
(2) Common carriers are obliged to observe extraordinary diligence in the
vigilance over the goods transported by them. Accordingly, they are
presumed to have been at fault or to have acted negligently if the goods are
lost, destroyed or deteriorated. There are very few instances when the
JOHN C. ICALIA
9
Page
damages must also be awarded in the presence of bad faith and negligence
on the part of the common carrier.
presumption of negligence does not attach and these instances are

enumerated in Article 1734. In those cases where the presumption is applied,
the common carrier must prove that it exercised extraordinary diligence in
order to overcome the presumption. The presumption of negligence was
raised against petitioner. It was petitioner's burden to overcome it. Thus,
contrary to her assertion, private respondent need not introduce any
evidence to prove her negligence. Her own failure to adduce sufficient proof
of extraordinary diligence made the presumption conclusive against her.
Servando vs Philippines Stream Navigator

117 SCRA 832
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
The Court sustains the validity of the above stipulation. There is

nothing therein that is contrary to law, morals or public policy. Therefore, the
carrier is no longer liable for the loss of the goods.
Edgar Cokaliong Shipping Lines vs UCPB General Insurance

404 SCRA 706
DOCTRINE: The liability of a common carrier for the loss of goods may, by
stipulation in the bill of lading, be limited to the value declared by the
shipper. On the other hand, the liability of the insurer is determined by the
actual value covered by the insurance policy and the insurance premiums
paid therefor, and not necessarily by the value declared in the bill of lading.
FACTS:
Shipper: ZosimaMercardo, Nestor Amelia
Carrier: EDGAR COKALIONG SHIPPING LINES, INC.
Vessel: M/V Tandag
Insurer: UCPB General Insurance Co. Inc. (Feliciana Legaspi insured the
cargoes)
Event: FIRE
Edgar did not pay UCPB. UCPB filed a complaint. RTC absolved Edgar of any
liability. CA affirmed.
ISSUE: 1. W/N Edgar is liable
2. What is the basis of liability? Amount in the bill of lading or actual amount?
RULING:
1. Yes. The uncontroverted findings of the Philippine Coast Guard show that
the M/V Tandag sank due to a fire, which resulted from a crack in the auxiliary
engine fuel oil service tank. Fuel spurted out of the crack and dripped to the
heating exhaust manifold, causing the ship to burst into flames. The crack
was located on the side of the fuel oil tank, which had a mere two-inch gap
from the engine room walling, thus precluding constant inspection and care
by the crew.
Having originated from an unchecked crack in the fuel oil service tank, the
fire could not have been caused by force majeure. May refer to Eastern
Shipping Lines, Inc. v. Intermediate Appellate Court.
A stipulation that limits liability is valid as long as it is not against public
policy.
Art. 1749. A stipulation that the common carriers 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.
JOHN C. ICALIA
10
Page
majeure, dangers or accidents of the sea or other waters; war; public

enemies; . . . fire . ...
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 freely and fairly
agreed upon.
2. Bill of lading. The bill of lading subject of the present controversy
specifically provides, among others:
18. All claims for which the carrier may be liable shall be adjusted and
settled on the basis of the shippers net invoice cost plus freight and
insurance premiums, if paid, and in no event shall the carrier be liable for any
loss of possible profits or any consequential loss.
The carrier shall not be liable for any loss of or any damage to or in any
connection with, goods in an amount exceeding One Hundred Thousand Yen
in Japanese Currency (100,000.00) or its equivalent in any other currency
per package or customary freight unit (whichever is least) unless the value of
the goods higher than this amount is declared in writing by the shipper
before receipt of the goods by the carrier and inserted in the Bill of Lading
and extra freight is paid as required.
In the present case, the stipulation limiting petitioners liability is not contrary
to public policy. In fact, its just and reasonable character is evident. The
shippers/consignees may recover the full value of the goods by the simple
expedient of declaring the true value of the shipment in the Bill of Lading.
Other than the payment of a higher freight, there was nothing to stop them
from placing the actual value of the goods therein. In fact, they committed
fraud against the common carrier by deliberately undervaluing the goods in
their Bill of Lading, thus depriving the carrier of its proper and just transport
fare.
It is well to point out that, for assuming a higher risk (the alleged actual value
of the goods) the insurance company was paid the correct higher premium by
Feliciana Legaspi; while petitioner was paid a fee lower than what it was
entitled to for transporting the goods that had been deliberately undervalued
by the shippers in the Bill of Lading. Between the two of them, the insurer
should bear the loss in excess of the value declared in the Bills of Lading.
Eastern Shipping Lines Inc. vs IAC

150
RA 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.
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 attorneys 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 attorneys 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
JOHN C. ICALIA
11
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.
Page
Both sets of goods were insured for their value with Development Insurance
and Surety Corporation.
hatches nos. 2 and 3. Defendants 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.
Ganzon vs 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 attorneys fees as well. Hence this petition by Ganzon.
Issue:
Whether or not Ganzon is liable for the loss that Tumambing sustained.
Held:
The Court held that Ganzon is liable for the loss of Tumambing. The
defense that the scraps of iron were not unconditionally placed in his custody
and control is untenable. Petitioner herein admits that the scraps of iron were
delivered to Captain Niza by Tumambing in order to load the same on the
lighter Batman. The employees of Ganzon received the scraps of iron on his
Calvo vs UCPB General Insurance Co.

379 SCRA 510
FACTS:
At the time material to this case, Transorient Container Terminal Services, Inc.
(TCTSI) owned by Virgines Calvo entered into a contract with San Miguel
Corporation (SMC) for the transfer of 114 reels of semi-chemical fluting paper and
124 reels of kraft liner board from the Port Area in Manila to SMC's warehouse at
the Tabacalera Compound, Romualdez St., Ermita, Manila. The cargo was insured
by respondent UCPB General Insurance Co., Inc. In July 14, 1990: arrived in Manila
on board "M/V Hayakawa Maru" and later on unloaded from the vessel to the
custody of the arrastre operator, Manila Port Services, Inc.. Calvo withdrew the
cargo from the arrastre operator and delivered it to SMC's warehouse in Ermita,
Manila. Goods were inspected by Marine Cargo Surveyors, who found that 15 reels
of the semi-chemical fluting paper were "wet/stained/torn" and 3 reels of kraft
liner board were likewise torn. SMC collected payment from UCPB the total
damage of P93,112 under its insurance contract . UCPB brought suit against Calvo
as subrogee of SMC. Calvo averred Art. 1734(4) The character of the goods or
defects in the packing or in the containers spoilage or wettage" took place while
the goods were in the custody of either the carrying vessel "M/V Hayakawa Maru,"
which transported the cargo to Manila, or the arrastre operator, to whom the
goods were unloaded and who allegedly kept them in open air for 9 days
notwithstanding the fact that some of the containers were deformed, cracked, or
otherwise damaged
ISSUE: W/N Calvo can be exempted from liability under Art. 1734(4)
HELD: NO. CA AFFIRMED. Mere proof of delivery of goods in good order to a
carrier, and of their arrival at the place of destination in bad order, makes out a
prima facie case against the carrier, so that if no explanation is given as to how
the injury occurred, the carrier must be held responsible extraordinary
responsibility lasts from the time the goods are unconditionally placed in the
possession of and received by the carrier for transportation until the same are

JOHN C. ICALIA
12
Page
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.
delivered actually or constructively by the carrier to the consignee or to the

person who has the right to receive the same
Article 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting passengers or
goods or both, by land, water, or air for compensation, offering their services to
the public."
The above article makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one who does
such carrying only as an ancillary activity . . . Article 1732 also carefully avoids
making any distinction between a person or enterprise offering transportation
service on a regular or scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish
between a carrier offering its services to the "general public," i.e., the general
community or population, and one who offers services or solicits business only
from a narrow segment of the general population.
When Calvo's employees withdrew the cargo from the arrastre operator, they did
so without exception or protest either with regard to the condition of container
vans or their contents
Calvo must do more than merely show the possibility that some other party could
be responsible for the damage. It must prove that it used "all reasonable means to
ascertain the nature and characteristic of goods tendered for transport and that it
exercised due care in the handling
Belgian Overseas Chartering vs Philippine First Insurance

383 SCRA 23
DOCTRINE: Proof of the delivery of goods in good order to a common carrier
and of their arrival in bad order at their destination constitutes prima facie
fault or negligence on the part of the carrier. If no adequate explanation is
given as to how the loss, the destruction or the deterioration of the goods
happened, the carrier shall be held liable therefor.
FACTS:
Shipper: CMC Trading A.G.
Carrier: BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V.
Subject: coils of various Prime Cold Rolled Steel sheets
Consignee: Philippine Steel Trading Corporation
Insurer: PHILIPPINE FIRST INSURANCE CO., INC.
Goods found to be in bad order. Belgian refused to pay. Thus, Phil First did.
Impugning the propriety of the suit against them, defendants-appellees
imputed that the damage and/or loss was due to pre-shipment damage, to
the inherent nature, vice or defect of the goods, or to perils, danger and
accidents of the sea, or to insufficiency of packing thereof, or to the act or
omission of the shipper of the goods or their representatives.
ISSUES: Whether petitioners have overcome the presumption of negligence

of a common carrier.
RULING:
No. A review of the records and more so by the evidence shows
First, as stated in the Bill of Lading, petitioners received the subject shipment
in good order and condition in Hamburg, Germany.
Second, prior to the unloading of the cargo, an Inspection Report prepared
and signed by representatives of both parties showed the steel bands broken,
the metal envelopes rust-stained and heavily buckled, and the contents
thereof exposed and rusty.
Third, Bad Order Tally Sheet No. 154979 issued by Jardine Davies Transport
Services, Inc., stated that the four coils were in bad order and condition.
Normally, a request for a bad order survey is made in case there is an
apparent or a presumed loss or damage.
Fourth, the Certificate of Analysis stated that, based on the sample submitted
and tested, the steel sheets found in bad order were wet with fresh water.
Fifth, petitioners -- in a letter addressed to the Philippine Steel Coating
Corporation and dated October 12, 1990 -- admitted that they were aware of
the condition of the four coils found in bad order and condition.
Further, petitioners failed to prove that they observed the extraordinary
diligence and precaution which the law requires a common carrier to know
and to follow to avoid damage to or destruction of the goods entrusted to it
for safe carriage and delivery.
True, the words "metal envelopes rust stained and slightly dented" were
noted on the Bill of Lading; however, there is no showing that petitioners
exercised due diligence to forestall or lessen the loss. The master of the
vessel should have known at the outset that metal envelopes in the said
state would eventually deteriorate when not properly stored while in
transit.The master of the vessel and his crew should have undertaken
precautionary measures to avoid possible deterioration of the cargo. But
none of these measures was taken.
In their attempt to escape liability, petitioners further contend that they are
exempted from liability under Article 1734(4) of the Civil Code. They cite the
notation "metal envelopes rust stained and slightly dented" printed on the
JOHN C. ICALIA
13
Page
RTC dismissed. CA ruled that Belgian liable. Failed to overcome presumption

of negligence. Belgian inadequately proven petitioners' claim that the loss or
the deterioration of the goods was due to pre-shipment damage.
Bill of Lading as evidence that the character of the goods or defect in the
packing or the containers was the proximate cause of the damage
From the evidence on record, it cannot be reasonably concluded that the
damage to the four coils was due to the condition noted on the Bill of Lading.
The aforecited exception refers to cases when goods are lost or damaged
while in transit as a result of the natural decay of perishable goods or the
fermentation or evaporation of substances liable therefor, the necessary and
natural wear of goods in transport, defects in packages in which they are
shipped, or the natural propensities of animals. None of these is present in
the instant case.
Further, even if the fact of improper packing was known to the carrier or its
crew or was apparent upon ordinary observation, it is not relieved of liability
for loss or injury resulting therefrom, once it accepts the goods
notwithstanding such condition.
May 2nd at 3rd issue pa pero di ko na sinama. Notice of loss. Dapat within 3
days dawsiyanagfile, 1 yr prescription if there was an inspection. Limited
liability. No stipulation in the bill of lading, Letter of credit attached to the bill
of lading does not count.
Macam vs 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.
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.
Saludo Jr. vs Court of Appeals

207 SCRA 498
Facts: Plaintiff herein together with Pomierski and Son Funeral Home of
Chicago brought the remains of plaintiffs 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 plaintiffs 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.
14
Page
Samar Mining Co vs Nordeutscher Lloyd

132 SCRA 529
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
Magellan Marketing vs CA
GR No. 95529 August 22, 1991
FACTS:
Issue: Whether or not the 2 airlines should be held liable for damages.
JOHN C. ICALIA
Choju Co., Ltd purchased from Magellan Manufacturers Marketing Corp.

(MMMC) 136,000 anahaw fans for $23,220. MMMC contracted with F.E.
ISSUE: W/N the bill of lading which reflected the transhipment against
the letter of credit is consented by MMMC
HELD: YES. Transhipment is the act of taking cargo out of one ship and
loading it in another.
the transfer of goods from the vessel stipulated in the

contract of affreightment to another vessel before the place of
destination named in the contract has been reached
transfer for further transportation from one ship or

conveyance to another
the fact of transhipment is not dependent upon the ownership of the

transporting ships or conveyances or in the change of carriers, as the
petitioner seems to suggest, but rather on the fact of actual physical
transfer of cargo from one vessel to another
appears on the face of the bill of lading the entry "Hong Kong" in the
blank space labeled "Transhipment," which can only mean that
transhipment actually took place
bill of lading
operates both as a receipt and as a contract
receipt for the goods shipped
contract to transport and deliver the same as

therein stipulated

JOHN C. ICALIA
15
Page
Zuellig, a shipping agent of Orient Overseas Container Lines, Inc.,

(OOCL) specifying that he needed an on-board bill of lading and that
transhipment is not allowed under the letter of credit . MMMC paid F.E. Zuellig
the freight charges and secured a copy of the bill of lading which was
presented to Allied Bank. The bank then credited the amount of US$23,220
covered by the letter of credit to MMMC. When MMMC's President James Cu,
went back to the bank later, he was informed that the payment was refused
by the buying for lack of bill of lading and there was a transhipment of goods .
The anahaw fans were shipped back to Manila through OOCL who are
demanding from MMMC P246,043.43 (freight charges from Japan to
Manila, demurrage incurred in Japan and Manila from October 22, 1980 up to
May 20, 1981 and charges for stripping the container van of the Anahaw fans
on May 20, 1981). MMMC abandoned the whole cargo and asked OOCL for
damages. OOCL raised that the bill of lading clearly shows that there will be a
transhipment and that petitioner was well aware that MV (Pacific) Despatcher
was only up to Hongkong where the subject cargo will be transferred to
another vessel for Japan
names
the
parties,
which
includes
the consignee, fixes the route, destination, and freight rates or charges,
and stipulates the rights and obligations assumed by the parties
law between the parties who are bound by
its terms and conditions provided that these are not contrary to law,
morals, good customs, public order and public policy
GR: acceptance of the bill without dissent raises the presumption
that all the terms therein were brought to the knowledge of the shipper
and agreed to by him and, in the absence of fraud or mistake, he is
estopped from thereafter denying that he assented to such term
There clearly appears on the face of the bill of lading under column
"PORT OF TRANSHIPMENT" an entry "HONGKONG'
On board bill of lading vs. received for shipment bill of lading:
on board bill of lading
stated that the goods have been received on board
the vessel which is to carry the goods
received for shipment bill of lading
stated that the goods have been received for
shipment with or without specifying the vessel by which the goods are to
be shipped
issued whenever conditions are not normal and
there is insufficiency of shipping space
certification of F.E. Zuellig, Inc. cannot qualify the bill of lading, as
originally issued, into an on board bill of lading as required by the terms
of the letter of credit issued in favor of petitioner - it is a received for
shipment bill of lading
issued only on July 19, 1980, way beyond the expiry date of
June 30, 1980 specified in the letter of credit for the presentation of an
on board bill of lading
Demurrage
compensation provided for in the contract of affreightment
for the detention of the vessel beyond the time agreed on for loading
and unloading
claim for damages for failure to accept delivery
before it could be charged for demurrage charges it should have
been notified of the arrival of the goods first
Since abandon option was communicated, the same is binding upon
the parties on legal and equitable considerations of estoppel
Facts: On May 11, 1975, Anacleto Viana boarded M/|V Antonio from
Occidental Mindoro bound for Manila. Upon arrival on May 12, 1975, the
passengers therein disembarked through a gangplank connecting the vessel
to the pier. Viana, instead of disembarking through the gangplank,
disembarked through the third deck, which was at the same level with the
pier. An hour after the passengers disembarked, Pioneer stevedoring started
to operate in unloading the cargo from the ship. Viana then went back,
remembering some of his cargoes left at the vessel. At that time, while he
was pointing at the crew of the vessel to where his cargoes were loaded, the
crane hit him, pinning him between the crane and the side of the vessel. He
was brought to the hospital where he died 3 days after (May 15). The parents
of Anacleto filed a complaint against Aboitiz for breach of contract of
carriage.
The trial court ruled in favor of the plaintiffs. Then both Aboitiz and Pioneer
filed a motion for reconsideration, upon which the trial court issued an order
absolving Pioneer from liability but not Aboitiz. On appeal, CA affirmed the
trial court ruling. Hence, this petition.
Issue: Whether or not Viana is still considered a passenger at the time of the
incident?
Held: Yes. The La Mallorca case is applicable in the case at bar.
The rule is that the relation of carrier and passenger continues until the
passenger has been landed at the port of destination and has left the vessel
owners dock or premises. Once created, the relationship will not ordinarily
terminate until the passenger has, after reaching his destination, safely
alighted from the carriers conveyance or had a reasonable opportunity to
leave the carriers premises. All persons who remain on the premises a
reasonable time after leaving the conveyance are to be deemed passengers,
and what is a reasonable time or a reasonable delay within this rule is to be
determined from all the circumstances, and includes a reasonable time to see
after his baggage and prepare for his departure. The carrier-passenger
relationship is not terminated merely by the fact that the person transported
has been carried to his destination if, for example, such person remains in
the carriers premises to claim his baggage.
The reasonableness of the time should be made to depend on the attending
circumstances of the case, such as the kind of common carrier, the nature of
its business, the customs of the place, and so forth, and therefore precludes a
JOHN C. ICALIA
16
Page
Aboitiz Shipping Corporation vs. CA

179 SCRA 95
consideration of the time element per se without taking into account such
other factors.
Where a passenger dies or is injured, the common carrier is presumed to
have been at fault or to have acted negligently. This gives rise to an action
for breach of contract where all that is required of plaintiff is to prove the
existence of the contract of carriage and its non-performance by the carrier,
that is, the failure of the carrier to carry the passenger safely to his
destination, which, in the instant case, necessarily includes its failure to
safeguard its passenger with extraordinary diligence while such relation
subsists.
La Mallorca vs. CA
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 carriers 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
Dangwa Transportation vs. CA

17 SCRA 739
FACTS:
May 13, 1985: Theodore M. Lardizabal was driving a passenger bus belonging
to DangwaTransportation Co. Inc. (Dangwa). The bus was at full stop bet.
Bunkhouses 53 and 54 when Pedro alighted. Pedro Cudiamat fell from the
platform of the bus when it suddenly accelerated forward. Pedro was ran over
by the rear right tires of the vehicle. Theodore first brought his other
passengers and cargo to their respective destinations before bringing Pedro
to Lepanto Hospital where he expired. Private respondents filed
a complaint for damages against Dangwa for the death of Pedro Cudiamat.
Dangwa:
observed
and
continued
to
observe
the
extraordinary diligence required in theoperation of the co. and the
supervision of the employees even as they are not absolute insurers of the
public at large. RTC: in favour of Dangwa holding Pedrito as negligent and his
negligence was the cause of his death but still ordered to pay in equity P
10,000 to the heirs of Pedrito. CA: reversed and ordered to pay Pedrito
indemnity, moral damages, actual and compensatory damages and cost of
the suit
ISSUE: W/N Dangwa should be held liable for the negligence of its driver
Theodore
HELD: YES. A public utility once it stops, is in effect making a continuous
offer to bus riders (EVEN when moving as long as it is still slow in motion) It is
the duty of the driver to not make acts that would have the effect of
increasing peril to a passenger while he is attempting to board the same.
Premature acceleration of the bus in this case = breach of duty. Stepping and
standing on the platform of the bus is already considered a passenger and
isentitled all the rights and protection pertaining to such a contractual
relation. Duty extends to boarding and alighting. Failure to immediately bring
Pedrito to the hospital despite his serious condition is equivalent to patent
and incontrovertible proof of their negligence. Hospital was in Bunk 56 yet
they first proceeded to Bunk 70 to allow a passenger (who later called the
family of Pedrito on his own will) to alight and deliver a refrigerator. In tort,
actual damages is based on net earnings
Vda. De Nueva vs. Manila Railroad Company

CA-GR No. 31731
JOHN C. ICALIA
17
Page
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.
Facts: Fermin Nueca brought 7 sacks of palay to Manila Railroad Co. (MRC) at
its station in Barrio del Rosario, Camarines Sur, to be shipped to the
municipality of Libmanan of the same province. He paid P 0.70 as freight
charge and was issued Way Bill No. 56515. The cargo was loaded on the
freight wagon of Train 537. Passengers boarded the train and shunting
operations started to hook a wagon thereto. Before the train reached the
turnoff switch, its passenger coach fell on its side some 40 m from the
station. The wagon pinned Nueca, killing him instantly.-Nuecas widow and
children bring this claim for damages, alleging that the Nueca was a
passenger and his death was caused by MRCs negligence.-MRC disclaimed
liability stating: (1) it exercised due care in safeguarding the passengers
during the shunting operation, (2) Nueca was not a passenger but a
trespasser, (3) even if Nueca were a passenger, he illegally boarded the train
without permission by not paying the fare, (4) the mishap was not
attributable to any defect in MRC equipment, (5) that the accident happened
due to force majeur.-MRC presented evidence showing there was no
mechanical defect, but it did not explain why the accident occurred or show
that force majeur caused the mishap.-The lower court absolved MRC of
liability and held that Nueca was a trespasser since he did not buy any ticket,
and in any case, was not in a proper place for passengers
.Issue:.Whether or not Nueca was a passenger?
Held: .No, Nueca was not a passenger thus, MRC did not owe him
extraordinary diligence. A passenger is one who travels in a public
conveyance by virtue of a contract, express or implied, with the carrier as to
the payment of the fare, or that which is accepted as an equivalent. The
relation of passenger and carrier commences when one puts himself in the
care of the carrier, or directly under its control, with the bona fide intention of
becoming a passenger, and is accepted as such by the carrier as where he
makes a contract for transportation and presents himself at the proper place
and in a proper manner to be transported.
Japan Airlines vs. CA

294 SCRA 19
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, respondents flight from
18
Page
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 airlines 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.
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:
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.
PAL vs. CA
226 SCRA 423
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.
JOHN C. ICALIA
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.
Tiu vs. Arriesgado

437 SCRA 426
FACTS:
At about 10:00 pm of March 15, 1987, the cargo truck marked " Condor
Hollow Blocks and General Merchandise" was loaded with firewood in Bogo,
Cebu and left for Cebu City. Upon reaching Sitio Aggies, Poblacion
Compostela, Cebu, just as the truck passed over the bridge, one of its rear
tires exploded. The driver, Sergio Pedrano, then parked along the right side
of the bridge and removed the damaged tire to have it vulcanized at a
nearby shop. Pedrano left his helper, Jose Militante Jr. to keep watch over the
As the bus was approaching the bridge, Las Pinas saw the stalled truck. He
applied the brakes and tried to swerve to the left to avoid hitting the truck.
But it was too late; the bus rammed into the truck's left rear. Pedro
Arriesgado lost consciousness and suffered a fracture in his colles. His wife
Felisa died after being transferred to Island Medical Center. Arriesgado then
filed a complaint against Wiliam Tiu, operator of D Rough and his driver Las
Pinas for breach of contract of carriage
ISSUE: Whether the doctrine of last clear chance is applicable as the
petitioner
asserts.
HELD: Contrary to the petitioner's contention, the principle of last clear
chance is inapplicable in the instant case, as it only applies in a suit between
the owners and drivers of two colliding vehicles. It does not arise where the
passenger demands responsibility from the carrier to enforce its contractual
obligations, for it would be inequitable to exempt the negligent driver and its
owner on the ground that the other driver was likewise guilty negligence.
The common law notion of last clear chance permitted courts to grant
recovery to a plaintiff who has also been negligent provided that the
defendant had the last clear chance to avoid the casualty and failed to do so.
Spouses Arriesgado were passengers of a bus owned by the petitioner. The
respondents sustained injures when the bus collided with a cargo truck. In its
defense, petitioner invoked the defense of last clear chance.
The SC held that Doctrine of last clear chance applies to a suit involving the
owners of the two colliding vehicle. It does not apply to a suit involving
breach for a contract of carriage.
Necesito vs. Paras

104 PHIL 75
FACTS:
Serverina Garces and her 1 yr old son, Precillano Necesito were passengers
on a Philippine Rabbit bus form Pangasinan to Manila driven by Bardonell. As
the bus was traversing a wooden bridge, its wheels swerved to the right and
the driver lost control. The bus fell into a creek and the mother, Severina
drowned while the baby suffered injuries.
JOHN C. ICALIA
19
Page
stalled vehicle, and instructed the latter to place a spare tire 6 fathoms
behind the stalled truck to serve as a warning for oncoming vehicles. The
truck's tail lights were also left on. At about 4:45 am. D rough Riders
Passenger bus driven by Virgilio te Las Pinas was crushing along the national
highway of Sitio Aggies also bound for Cebu City. Among its passengers were
the Sposes Pedro A. Arriesgado and Felisa Pepito Arriesgado, who were
seated at the right side of the bus.
An action for damages was filed by the heirs of Severina Garces( the
husband) but the TC dismissed the claim saying the accident was not caused
by the negligence of the driver, who was driving slowly due to the bad road
conditions, but by a fracture in the right steering knuckle of the bus i.e.
defective parts.
ISSUE: Whether or not the carrier is liable for damages for the
manufacturing defect of the steering knuckle and if it discharged its duty
under Art. 1755
HELD: YES.
ART. 1755. A common carrier is bound to carry the passengers safely as far
as human care and foresight can provide, using the utmost diligence of very
cautious persons, with a due regard for the all the circumstances.
It is clear that the carrier is not the passengers insurer, his liability is based
on negligence and Art. 1756 states that if a passenger dies, the carrier has
the burden to prove that the carrier exercised the requisite diligence.
American jurisprudence holds: "The preponderance of authority is in favor
of the doctrine that a passenger is entitled to recover damages from a carrier
for an injury resulting from a defect in an appliance purchased from a
manufacturer, whenever it appears that the defect would have been
discovered by the carrier if it had exercised the degree of care which under
the circumstances was incumbent upon it, with regard to inspection and
application of the necessary tests. For the purposes of this doctrine, the
manufacturer is considered as being in law the agent or servant of the
carrier, as far as regards the work of constructing the appliance. According to
this theory, 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
neither choice nor control over the carrier in the selection and use of the
equipment and appliances in use by the carrier. Having no privity whatever
with the manufacturer or vendor of the defective equipment, the passenger
has no remedy against him, while the carrier usually has. It is but logical,
therefore, that the carrier, while not in insurer of the safety of his passengers,
should nevertheless be held to answer for the flaws of his equipment if such
flaws were at all discoverable.
Juntilla vs. Fontanar GR No. L-45637

FACTS:
When the jeepney reached Mandaue City, the right rear tire exploded causing
the vehicle to turn turtle. Roberto Juntilla was sitting at the front seat was
thrown out of the vehicle.
Upon landing on the ground, he momentarily lost consciousness. When he
came to his senses, he found that he had a lacerated wound on his right
palm. He also injured his left arm, right thigh and on his back.
Because of his shock and injuries, he went back to Danao City but on the
way, he discovered that his "Omega" wrist watch worth P 852.70 was lost.
Upon his arrival in Danao City, he immediately entered the Danao City
Hospital to attend to his injuries, and also requested his father-in-law
to proceed immediately to the place of the accident and look for the watch.
Roberto Juntilla filed for breach of contract with damages. Respondents
stated that it was beyond the control since tire that exploded was newly
bought and was only slightly used
ISSUE: W/N there is a fortuitous event
HELD: NO. Passenger jeepney was running at a very fast speed before the
accident at a regular and safe speed will not jump into a ditch when its right
rear tire blows up passenger jeepney was overloaded.
In the case at bar, the cause of the unforeseen and unexpected occurrence
was not independent of the human will. The accident was caused either
through the negligence of the driver or because of mechanical defects in the
tire. Common carriers should teach their drivers not to overload their
vehicles, not to exceed safe and legal speed limits, and to know the correct
measures to take when a tire blows up thus insuring the safety of passengers
at all times
Maranan vs. Perez

20 SCRA 412
20
awarded her P3000 as damages against Perez dismissing the claim against
the driver.
Page
Jeepney was driven by Berfol Camoro from Danao City to Cebu City. It
was Clemente Fontanar but was actually owned by defendant
Fernando Banzon.
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 formers 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 carriers 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. Plaintiffs
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.
De Gillaco vs. Manila Railroad Company

97 PHIL 884
Facts:
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, Rogelios
mother, filed an action to recover damages for the death of her son. The CFI
JOHN C. ICALIA
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
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
Railroads 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.
LRT vs. Natividad

297 SCRA 75
FACTS: Nicanor Navidad, then drunk, entered the EDSA LRT station after
purchasing a token (representing payment of the fare). While Navidad was
standing on the platform near the LRT tracks, Junelito Escartin, the security
guard assigned to the area approached him. A misunderstanding or an
altercation between the two apparently ensued that led to a fist fight. No
evidence, however, was adduced to indicate how the fight started or who,
between the two, delivered the first blow or how Navidad later fell on the LRT
tracks. At the exact moment that Navidad fell, an LRT train, operated by
petitioner Rodolfo Roman, was coming in. Navidad was struck by the moving
train, and he was killed instantaneously. The widow of Nicanor, Marjorie
Navidad, along with her children, filed a complaint for damages against
JOHN C. ICALIA
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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.
Junelito Escartin, Rodolfo Roman, the LRTA, the Metro Transit Organization,
Inc. (Metro Transit), and Prudent for the death of her husband. Trial court
ruled in favor Navidads wife and against the defendants Prudent Security
and Junelito Escartin . LRTA and Rodolfo Roman were dismissed for lack of
merit. CA held LRTA and Roman liable, hence the petition.
ISSUE: Whether or not there was a perfected contract of carriage between
Navidad and LRTA
HELD:
AFFIRMED with MODIFICATION but only in that (a) the award of nominal
damages is DELETED and (b) petitioner Rodolfo Roman is absolved from
liability
Contract of carriage was deemed created from the moment Navidad paid the
fare at the LRT station and entered the premises of the latter, entitling
Navidad to all the rights and protection under a contractual relation. The
appellate court had correctly held LRTA and Roman liable for the death of
Navidad in failing to exercise
Marchan vs. Mendoza

24 SCRA 75
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
Bachelor Express vs.

CA 188 SCRA 210
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: Whether or not the case at bar is within the context of force majeure.
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
JOHN C. ICALIA
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passengers. There is no reason why he shouldnt 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.
of the failure of the petitioners to observe extraordinary diligence in

transporting safely the passengers to their destination as warranted by law.
Fortune Express vs. CA

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. Petitioners
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 Expresss negligence, the seizure of the bus by
the armed Maranaos was made possible.
Gacal vs. PAL

183 SCRA 189
Facts: Gacal et al. boarded the plane of PAL from Davao, heading towards
Manila. Unknown to them, six MNLF members were also inside the plane.
10min after take off, they announced a hijack, and forced the pilot to take
Issue: Whether hijacking or air piracy during martial law is a caso fortuito
which would exempt and aircraft from payment of damages to its passengers
whose lives were put in jeopardy and whose personal belongings were lost
during the incident
Ruling: Yes it is a case of force majeure. There are four elements of a force
majeure: 1. The cause of the breach of the obligation must be independent of
the human will
2. The event must be either unforeseeable or unavoidable
3. The event must be such as to render it impossible for the debtor to fulfill
his obligation in a normal manner
4. The debtor must be free from any participation in, or aggravation of the
injury to the creditor
The first element, the failure to transport was due to the hijacking done by
the MNLF. The second element, although foreseeable, it was due to the
military take over of the airport during martial law that made it impossible for
PAL to perform its obligations (of frisking and checking the baggage of the
passengers). The third element, the hijacking rendered the obligation
impossible. The fourth element was supposedly satisfied, according to the
case. Thus, PAL is exempted from the payment of damages to its passengers.
SULPICIO V. CA
FACTS: Sulpicio Lines and ALC entered into a Contract of Carriage for the
transport of latters timber from Surigao del Sur.
On a late date, Sulpicio sent its tugboat MT Edmund and barge Solid VI to
pick up ALCs timber but no loading could be made because of the heavy
downpour.
The next morning, several stevedores of CBL, who were hired by ALC,
boarded Solid VI and opened its storeroom despite being warned by the
employees of Sulpicio of the gas and heat generated by the copra stored in
the holds of the ship. Leonicio Pamalaran was one of those who entered the
ship. He lost consciousness and eventually died of gas poisoning.
Pamalarans heirs filed a Civil Case for damages against Sulpicio, CBL, ALC
and its manager, Ernie Santiago.
JOHN C. ICALIA
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them to Sabah. Due to lack of fuel, they had to land at the Zamboanga
Airport, where military personnel were waiting for them. After a few days,
negotiation failed, and battle ensued, where 10 passengers were killed (buti
na lang hindi foreigners yung hostage). Gacal et al. filed the case, but was
dismissed by the RTC.
ISSUE: Whether Sulpicio Lines, Inc. is liable as a common carrier despite the
fact that Pamalaran was never a passenger.
HELD: YES.
RATIO: ALC had a contract of carriage with petitioner. The presence of the
stevedores sent by ALC on board the barge of Sulpicio was called for by the
contract of carriage.
Petitioner knew of the presence and role of the stevedores, as those
who place the timbers on board the ship, and thus, consented to their
presence. Hence, petitioner was responsible for their safety while on board
the barge.
Moreover, Sulpicios claim that its employees even warned the
stevedores and tried to prevent their entry into the storeroom does not have
merit. It failed to prove that its employees were actually trained or given
specific instructions to see to it that the barge is fit and safe not only in
transporting goods but also for people who would be loading the cargo into
the bodega of the barge. Thus, it failed to exercise due diligence in the
selection and supervision of its employees.
Pilapil vs. CA
180 SCRA 546
Facts: On September 16, 1971, Jose Pilapil boarded defendants bus bearing
No. 409 at San Nicolas, Iriga City at about 6:00PM. Upon reaching the vicinity
of the cemetery of the Municipality of Baao, Camarines Sur, on the way to
Naga City City, an unidentified man ( a bystander) hurled a stone at the left
side of the bus, which apparently hit petitioner above his left eye. He was
then immediately brought by private respondents personnel to the provincial
hospital in Naga City.
Issue: Whether or not the nature of the business of a transportation
company requires the assumption of certain risks and the stroking of the bus
by a bystander resulting in injury to petitioner-passenger is one such risk
from which the common carrier may not exempt itself from liability?
Held: The Supreme Court held that while the law requires the highest degree
of diligence from common carriers in the safe transport of their passengers
and creates a presumption of negligence against them, it does not however,
make the carrier an insurer of absolute safety of its passengers. A tort,
committed by a stranger which causes an injury to a passenger does not
accord the latter a cause of action against the carrier. The negligence for
which a common carrier is responsible is the negligent omission by the
carriers employees to prevent the tort from being committed when the same
could have been foreseen and prevented by them. Further, it is to be noted
that when the violation of the contract is due to the willful acts of strangers,
as in the instant case, the degree of care essential to be exercised by the
Cervantes VS CA
GR 125138
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.
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
JOHN C. ICALIA
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common carrier for the protection of its passenger is only that of a good
father of the family.
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 deceaseds 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.
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.
VDA De Abeto vs PAL

Facts:
PAL plane bound for Manila from Iloilo City crashed somewhere at Mt. Baco in
Mindoro. All passengers, including the relative of the plaintiffs, Judge Abeto,
died instantly and their remains were scattered all over the area. Among the
articles recovered was the leather bag of Judge Abeto with his name on it.
PAL would not hear demands for settlement of damages so the Abetos were
compelled to institute the instant case. The trial court found that PAL is liable
because it did not exercise extraordinary diligence required to transport
passenger.
25
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.
Page
Held:
Nocum v. Laguna Tayabas Bus Co.

G.R. No. L-23733
Facts:
Petitioner boarded the respondents 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 latters 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.
Issue: W/N PAL is liable

Held: YES. The prescribed route was not followed by the pilot by a clear
showing that the crash site was not within the area, this tragedy would not
have happened had the pilot continued the indicated route. The weather was
clear, contrary to the claim of PAL, during that day so there was no need to
divert from the prescribed route. At any rate, in the absence of a satisfactory
explanation as to how the accident occurred, the presumption is that PAL is at
fault. By the contract of carriage, the carrier assumes the express obligation
to transport the passenger to his destination safely and to observe
extraordinary diligence

JOHN C. ICALIA
Batangas Transportation Co. vs Caguimbal

22 Scra 171
Facts: Caguimbal who was a paying pasenger of Batangas Transportation
Company (BTCO) bus died when the bus of the Bian Transportation
Company (Binan) which was coming from the opposite direction and a calesa
managed by Makahiya, which was then ahead of the Bian bus met an
accident.
The widow and children of Caguimbal sued to recover damages from the
BTCO. The latter, in turn, filed a third-party complaint against the Bian and
its driver, Ilagan. Subsequently, the Caguimbals amended their complaint, to
include therein, as defendants, said Bian and Ilagan.
Issue: Whether BTCO is liable to pay damages for failure to exercise
extraordinary diligence?
Held: YES. BTCO has not proven the exercise of extraordinary diligence on its
part.
The recklessness of the driver of Binan was, manifestly, a major factor in the
occurrence of the accident which resultedin the death of Pedro Caguimbal.
Indeed, as driver of the Bian bus, he overtook Makahiya's horse-driven rig or
calesa and passed between the same and the BTCO bus despite the fact that
the space available was not big enough therefor, in view of which the Bian
bus hit the left side of the BTCO bus and then the calesa.
Article 1733 of the Civil Code provides the general rule that extraordinary
diligence must be exercised by the driver of a bus in the vigilance for the
safety of his passengers.
The record shows that, in order to permit one of them to disembark, the
BTCO bus driver drove partly to the right shoulder of the road and partly on
the asphalted portion thereof. Yet, he could have and should have seen to it
JOHN C. ICALIA
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A passenger requested the conductor of BTCO to stop as he was going to

alight, and when he heard the signal of the conductor, the driver slowed
down his bus swerving it farther to the right in order to stop; at this juncture,
a calesa, then driven by Makahiya was at a distance of several meters facing
the BTCO bus coming from the opposite direction; that at the same time the
Bian bus was about 100 meters away likewise going northward and
following the direction of the calesa; that upon seeing the Bian bus the
driver of the BTCO bus dimmed his light; that as the calesa and the BTCO bus
were passing each other from the opposite directions, the Bian bus following
the calesa swerved to its left in an attempt to pass between the BTCO bus
and the calesa; that without diminishing its speed of about seventy (70)
kilometers an hour, the Bian bus passed through the space between the
BTCO bus and the calesa hitting first the left side of the BTCO bus with the
left front corner of its body and then bumped and struck the calesa which
was completely wrecked; that the driver was seriously injured and the horse
was killed; that the second and all other posts supporting the top of the left
side of the BTCO bus were completely smashed and half of the back wall to
the left was ripped open. The BTCO bus suffered damages for the repair of its
damaged portion.As a consequence of this occurrence, Caguimbal and
Tolentino died, apart from others who were injured.
had he exercised "extraordinary diligence" that his bus was completely

outside the asphalted portion of the road, and fully within the shoulder
thereof, the width of which being more than sufficient to accommodate the
bus. When the BTCO bus driver slowed down his BTCO bus to permit said
passenger to disembark, he must have known, therefore, that the Bian bus
would overtake the calesa at about the time when the latter and BTCO bus
would probably be on the same line, on opposite sides of the asphalted
portions of the road, and that the space between the BTCO bus and the
"calesa" would not be enough to allow the Bian bus to go through. It is true
that the driver of the Bian bus should have slowed down or stopped, and,
hence, was reckless in not doing so; but, he had no especial obligations
toward the passengers of the BTCO unlike the BTCO bus driver whose duty
was to exercise "utmost" or "extraordinary" diligence for their safety. Perez
was thus under obligation to avoid a situation which would be hazardous for
his passengers, and, make their safety dependent upon the diligence of the
Bian driver.
In an action based on a contract of carriage, the court need not make an
express finding of fault or negligence on the part of the carrier in order to
hold it responsible to pay the damages sought for by the passenger. By the
contract of carriage, the carrier assumes the express obligation to transport
the passenger to his destination safely and to observe extraordinary
diligence with a due regard for all the circumstances, and any injury that
might be suffered by the passenger is right away attributable to the fault or
negligence of the carrier (Article 1756, new Civil Code). This is an exception
to the general rule that negligence must be proved, and it is therefore
incumbent upon the carrier to prove that it has exercised extraordinary
diligence as prescribed in Articles 1733 and 1755 of the new Civil Code.
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
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.
PAL vs. CA and ZAPATOS

G.R. No. L-82619 September 15, 1993
Facts:
JOHN C. ICALIA
27
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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.
Private respondent was among the 21 passengers of Flight 477 that took off
from Cebu bound for Ozamiz City. The routing of this flight was Cebu-OzamizCotabato. The pilot received a radio message that Ozamiz airport was closed
due to heavy rains and inclement weather and that he should proceed to
Cotabato City instead.
Upon arrival at Cotabato City, the PAL Station Agent informed the passengers
of their options to return to Cebu on the same day and then to Ozamiz, or
take the next flight to Cebu the following day, or remain at Cotabato and take
the next available flight to Ozamiz City. Flight 560 bound for Manila would
make a stop-over at Cebu to bring some of the diverted passengers; that
there were only 6 seats available.
Private respondent chose to return to Cebu but was not accommodated
because he checked-in as passenger No. 9 on Flight 477.
He was forced to stay at Cotabato City despite the local war between the
military and the muslim rebels. He tried to ferry the Ford Fiera loaded with
PAL personnel but said pick-up vehicle did not accommodate him. The
personnel of PAL did not secure his accommodation in Cotabato City.
He received a free ticket on a flight to Iligan, but chose to buy his own. He
lost his personal belongings, including a camera.
Issue: WON PAL can properly invoke the defense of fortuitous event of bad
weather in Ozamiz to exempt itself from paying damages to the PR
Held: No. PAL remissed in its duty of extending utmost care to private
respondent while being stranded in Cotabato City.
PALs diversion of its flight due to inclement weather was a fortuitous event.
Nonetheless, such occurrence did not terminate PALs contract with its
passengers. Being in the business of air carriage and the sole one to operate
in the country, PAL is deemed equipped to deal with situations as in the case
at bar. The relation of carrier and passenger continues until the latter has
been landed at the port of destination and has left the carriers premises.
Hence, PAL necessarily would still have to exercise extraordinary diligence in
safeguarding the comfort, convenience and safety of its stranded passengers
until they have reached their final destination. PAL grossly failed considering
the then ongoing battle between government forces and Muslim rebels in
Cotabato City and the fact that the private respondent was a stranger to the
place.
Since part of the failure to comply with the obligation of common carrier to
deliver its passengers safely to their destination lay in the defendants failure

JOHN C. ICALIA
28
Page
A contract to transport passengers is quite different in kind and degree from

any other contractual relation. Because of the relation which an air carrier
sustains with the public. Its business is mainly with the travelling public. It
invites people to avail of the comforts and advantages it offers. The contract
of air carriage, therefore, generates a relation attended with a public duty.
to provide comfort and convenience to its stranded passengers using extraordinary diligence, the cause of non-fulfillment is not solely and exclusively
due to fortuitous event, but due to something which defendant airline could
have prevented, PAL becomes liable to plaintiff.

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