1. PP vs. Quasha, GR No.

L-6055, June 12, 1953

Summary:
Petitioner, William H. Quasha, was charged with the crime of falsification
of public and commercial documents. He was entrusted with the preparation and
registration of the articles of incorporation of Pacific Airways Corporation, and
caused it to appear that Arsenio Baylon, a Filipino citizen, had subscribed to and
was the owner of 60% of the subscribed capital stock, although in reality, the real
owners of said portions were American citizens.
Facts:
 Petitioner, William H. Quasha, is a member of the Philippine bar;

 He was charged with the crime of falsification of a public and commercial

document for causing it to appear that Arsenio Baylon, a Filipino citizen,
had subscribed to and was the owner of 60.005 % of the subscribed capital
stock of Pacific Airways Corp., a domestic corporation organized for the
purpose of engaging in business as a common carrier;

 In reality, the owner of the portion of the capital stock subscribed to by

Baylon and the money paid thereon were American citizens whose name
did not appear in the article of incorporation;

 This was made to circumvent the constitutional mandate that no no

corporation shall be authorize to operate as a public utility in the Philippines
unless 60 per cent of its capital stock is owned by Filipinos;

 Found guilty after trial and sentenced to a term of imprisonment and a fine,
Petitioner, appealed to this Court;

Additional Notes:

 Ostensibly the owner of, or subscriber to, 60.005 per cent of the subscribed
capital stock of the corporation, Baylon nevertheless did not have the
controlling vote because of the difference in voting power between the
preferred shares and the common shares;

 That its capital stock was P1,000,000, represented by 9,000 preferred and
100,000 common shares, each preferred share being of the par value of p100
 and entitled to 1/3 vote and each common share, of the par value of P1 and
entitled to one vote;

 That Baylon's subscription was for 1,145 preferred shares, of the total value
of P114,500, and for 6,500 common shares, of the total par value of P6,500,
while the aggregate subscriptions of the American subscribers were for 200
preferred shares, of the total par value of P20,000, and 59,000 common
shares, of the total par value of P59,000;

 The article stated that the primary purpose of the corporation was to carry
on the business of a common carrier by air, land or water;

Issue:
WON it is necessary for a corporation to be organized with 60% of its capital stock
owned by Filipinos for it to be entitled to operate as a public utility.

Ruling:
No, it is not necessary.

Sec. 8, Article XIV of the 1935 Constitution, provides in part that "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
corporation or other entities organized under the law of the Philippines, sixty per
centum of the capital of which is owned by citizens of the Philippines . . . ."

In this case, it is clear that what the Constitution prohibits is the granting of
a franchise or other form of authorization for the operation of a public utility to
a corporation already in existence but without the requisite proportion of Filipino
capital. Therefore, the Constitution does not prohibit the mere formation of a
public utility corporation with the alien capital, as such in this case.
 2. Tawang Multi-Purpose Cooperative vs La Trinidad Water District
GR No. 166471, March 22, 2011

Summary:
Petitioner, Tawang Multi-Purpose Cooperative (TMPC), filed with the
National Water Resources Board (NWRB) an application for a certificate of public
convenience (CPC) to operate and maintain a waterworks system in Barangay
Tawang. Respondent, La Trinidad Water District (LTWD), opposed TMPC’s
application, claiming that LTWD claimed that under Sec. 47 of PD No. 198, as
amended, its franchise is exclusive. NWRB held that LTWD’s franchise cannot be
exclusive since exclusive franchises are unconstitutional. Upon appeal of LTWD
to the RTC, the latter cancelled TMPC’s CPC.

Facts:
 Petitioner Tawang Multi-Purpose Cooperative (TMPC) was organized to
provide domestic water services in Brgy. Twang, La Trinidad, Benguet.

 Respondent La Trinidad Water District (LTWD) is a government owned and

controlled corporation, a local water utility created under PD No. 198,
authorized to supply water for domestic, industrial and commercial purpose
within municipality of La Trinidad, Benguet.

 October 9, 2000 - TMPC filed with National Water Resources Board an

application for Certificate of Public Convenience (CPC) to operate and
maintain a waterworks system in Brgy. Tawang LTWD claimed that under
Sec. 47 of PD No. 198, as amended, its franchise is exclusive.

 August 15, 2002 - the NWRB held that LTWD’s franchise cannot be
exclusive since exclusive franchises are unconstitutional under Sec. 2, Art.
XII.

RTC (Judicial Region 1, Branch 62, La Trinidad, Benguet):

 October 1, 2004 - upon appeal of LTWD to the RTC, the latter cancelled
TMPC’s CPC and held that Sec. 47 of PD No. 198 is valid;
 o That the ultimate purpose of the Constitution is for the State, through
its authorized agencies or instrumentalities, to be able to keep and
maintain ultimate control and supervision over the operation of public
utilities.

o What is repugnant to the Constitution is a grant of franchise exclusive

in character so as to preclude the State itself from granting a franchise
to any other person or entity than the present grantee when public
interest so requires.

 November 6, 2004 - RTC denied the motion for reconsideration filed by

TMPC.

Issue:
Whether or not the RTC erred in holding that Sec. 47 of PD No. 198, as amended,
is valid.

Ruling:
Yes, the RTC erred in holding that Sec. 47 of PD No. 198, as amended, is
valid.
In Alvarez v. PICOP Resources, Inc., the Court held that, "What one cannot
do directly, he cannot do indirectly." Furthermore, under Sec. 2 and 11, Art. XII
of the 1987 Constitution, the President, Congress, and Court cannot create
directly franchises for the operation of a public utility that are exclusive in
character.
In this case, sec. 47 of PD No. 198 is in conflict with the above-mentioned
provision of the Constitution. And the rule is that in case of conflict between the
Constitution and a statute, the former prevails, because the constitution is the
basic law to which all other laws must conform to.
 3. De Guzman vs CA, GR No. L-47822, December 22, 1988
Summary:
Respondent, Ernesto Cendana, was a junk dealer who buys scrap materials
and brings them to Manila for resale using 2 six-wheeler trucks and on the return
trip to Pangasinan, he would load his vehicle with cargo which various merchants
wanted delivered, charging fees lower than the commercial rates. Petitioner,
Pedro de Guzman, contracted with respondent for the delivery of 750 cartons of
Liberty Milk, however, only 150 boxes were delivered because the truck carrying
the boxes was hijacked along the way. Petitioner commenced an action claiming
the value of the lost merchandise, arguing that Respondent, being a common
carrier, is bound to exercise extraordinary diligence.

Facts:
 Respondent Ernesto Cendaña, a junk dealer, was engaged in buying up used
bottles and scrap metal in Pangasinan.
 Upon gathering sufficient quantities of such scrap material, respondent
would bring such material to Manila for resale. He utilized two (2) six-
wheeler trucks which he owned for hauling the material to Manila.
 On the return trip to Pangasinan, respondent would load his vehicles with
cargo which various merchants wanted delivered to differing establishments
in Pangasinan.
 For that service, respondent charged freight rates which were commonly
lower than regular commercial rates.
 Sometime in November 1970, petitioner Pedro de Guzman, a merchant and
authorized dealer of General Milk Company (Philippines), Inc. in Urdaneta,
Pangasinan, contracted with respondent for the hauling of 750 cartons of
Liberty filled milk from a warehouse of General Milk in Makati, Rizal, to
petitioner’s establishment in Urdaneta on or before 4 December 1970.
 Accordingly, on 1 December 1970, respondent loaded in Makati the
merchandise on to his trucks: 150 cartons were loaded on a truck driven by
respondent himself; while 600 cartons were placed on board the other truck
which was driven by Manuel Estrada, respondent’s driver and employee.
 Only 150 boxes of Liberty filled milk were delivered to petitioner.
 The other 600 boxes never reached petitioner, since the truck which carried
these boxes was hijacked somewhere along the MacArthur Highway in
 Paniqui, Tarlac, by armed men who took with them the truck, its driver, his
helper and the cargo.
 On 6 January 1971, petitioner commenced action against private respondent
in the Court of First Instance of Pangasinan, demanding payment of
P22,150.00, the claimed value of the lost merchandise, plus damages and
attorney’s fees.
 On December 10, 1975, the trial court rendered a Decision finding private
respondent to be a common carrier and holding him liable for the value of
the undelivered goods (P22,150.00) as well as for P4,000.00 as damages and
P2,000.00 as attorney’s fees.
 The Court of Appeals reversed the judgment of the trial court and held that
respondent had been engaged in transporting return loads of freight, as a
casual occupation a sideline to his scrap iron business and not as a common
carrier.

Issue:
Whether or not private respondent is a common carrier.
Ruling:
Yes, Private Respondent is a common carrier.
Article 1732 of the Civil Code provides that, “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.”
In this case, the law makes no distinctions regarding if the carrying of
persons or goods is its principal or ancillary business activity; if the offered service
is scheduled or unscheduled; or if it offers its services to the general public or a
narrow segment of the general population. Therefore, Private respondent is
properly characterized as a common carrier even though he merely "back-hauled"
goods for other merchants, although such back-hauling was done on a periodic or
occasional, and even though private respondent's principal occupation was not
the carriage of goods for others.
 4. Crisostomo vs. CA, GR No. 138334, August 25, 2003

Summary:
Petitioner, Estela L. Crisostomo, contracted the services of Respondent,
Caravan Travel and Tours International, Inc., to arrange and facilitate her
booking, ticketing and accommodation in a tour dubbed Jewels of Europe. When
given her travel documents on June 12, 1991, she was told that her flight was on
Saturday. Without checking her travel documents, she went to NAIA but the date
of the flight she was supposed to take had already departed the previous day.
Petitioner demanded a refund contending that in the contract of carriage the
common carrier is obliged to observe utmost care and extraordinary diligence.

Facts:
 In May 1991, petitioner Estela L. Crisostomo contracted the services of
respondent Caravan Travel and Tours International, Inc. to arrange and
facilitate her booking, ticketing and accommodation in a tour dubbed
“Jewels of Europe”.

o The package tour included the countries of England, Holland,

Germany, Austria, Liechstenstein, Switzerland and France at a total
cost of P74,322.70.

 Pursuant to said contract, Menor, respondent Company’s ticketing manager,

went to her aunt’s residence on June 12, 1991 – Wednesday – to deliver
petitioner’s travel documents and plane tickets. Menor then told her to be
at the Ninoy Aquino International Airport (NAIA) on Saturday, two hours
before her flight on board British Airways.

 Without checking her travel documents, petitioner went to NAIA on

Saturday, June 15, 1991, to take the flight for the first leg of her journey from
Manila to Hong Kong.

 To petitioner’s dismay, she discovered that the flight she was supposed to
take had already departed the previous day. She learned that her plane ticket
was for the flight scheduled on June 14, 1991.
  She thus called up Menor to complain. Subsequently, Menor prevailed upon
petitioner to take another tour the “British Pageant” which included
England, Scotland and Wales in its itinerary. For this tour package,
petitioner was asked anew to pay US$785.00 or P20,881.00.

 She gave respondent US$300 or P7,980.00 as partial payment and

commenced the trip in July 1991.

 Upon petitioner’s return from Europe, she demanded from respondent the
reimbursement of P61,421.70, representing the difference between the sum
she paid for “Jewels of Europe” and the amount she owed respondent for the
“British Pageant” tour.

 Despite several demands, respondent company refused to reimburse the

amount, contending that the same was non-refundable.

RTC, Makati:

 Petitioner filed a complaint against respondent for breach of contract of

carriage and damages at Regional Trial Court of Makati City.

 The trial court held that respondent was negligent in erroneously advising
petitioner of her departure date through its employee, Menor, who was not
presented as witness to rebut petitioner’s testimony.

 However, petitioner should have verified the exact date and time of
departure by looking at her ticket and should have simply not relied on
Menor’s verbal representation.

 The trial court thus declared that petitioner was guilty of contributory
negligence and accordingly, deducted 10% from the amount being claimed
as refund.

CA:

 Respondent appealed to the Court of Appeals, which likewise found both

parties to be at fault.

 However, the appellate court held that petitioner is more negligent than
respondent because as a lawyer and well-traveled person, she should have
known better than to simply rely on what was told to her.
  This being so, she is not entitled to any form of damages. Petitioner also
forfeited her right to the “Jewels of Europe” tour and must therefore pay
respondent the balance of the price for the “British Pageant” tour.

Issue:

Whether or not Private Respondent is a common carrier.

HELD:

No, Private Respondent is not a common carrier.

Article 1732 of the Civil Code as persons, corporations, firms or associations

engaged in the business of carrying or transporting passengers or goods or both,
by land, water or air, for compensation, offering their services to the public.

In this case, it is obvious from the above definition that respondent is not an
entity engaged in the business of transporting either passengers or goods and is
therefore, neither a private nor a common carrier. Respondent did not undertake
to transport petitioner from one place to another since its covenant with its
customers is simply to make travel arrangements in their behalf.