Compilation of Digests Transpo

Transportation Law Case Digests
Cases Applying Articles 1732, 1733

and 1766 of the New Civil Code
General Provisions on
Common Carriers
Articles Applied:
Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public.
Art. 1733. Common carriers, from the nature of their business and for reasons of public policy,
are bound to observe extraordinary diligence in the vigilance over the goods and for the safety
of the passengers transported by them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in Articles
1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the
passengers is further set forth in Articles 1755 and 1756.
Art. 1766. In all matters not regulated by this Code, the rights and obligations of common
carriers shall be governed by the Code of Commerce and by special laws.

Pedro de Guzman v. Court of Appeals
G.R. No. L-47822
Facts:
Herein respondent Ernesto Cendana was engaged in buying up used bottles and scrap metal in
Pangasinan. Normally, after collection respondent would bring such material to Manila for resale. He
utilized (2) two six-wheelers trucks which he owned for the purpose. Upon returning to Pangasinan, he
would load his vehicle with cargo belonging to different merchants to different establishments in
Pangasisnan which respondents charged a freight fee for.
Sometime in November 1970, herein petitioner Pedro de Guzman, a merchant and dealer of
General Milk Company Inc. in Pangasinan contracted with respondent for hauling 750 cartons of milk.
Unfortunately, only 150 cartons made it, as the other 600 cartons were intercepted by hijackers along
Marcos Highway. Hence, petitioners commenced an action against private respondent.
In his defense, respondent argued that he cannot be held liable due to force majuere, and that he
is not a common carrier and hence is not required to exercise extraordinary diligence.
Issues:
1. Whether or not respondent can be held liable for loss of the cartons of milk due to force majeure.
2. Whether or not respondent is a common carrier.
Held:
1. The court ruled the affirmative. The circumstances do not fall under the exemption from liability as
enumerated in Article 1734 of the Civil Code. The general rule is established by the article that
common carriers are responsible for the loss, destruction or deterioration of the goods which they
carry, unless the same is due to any of the following causes only:
a. Flood, storm, earthquake, lightning or other natural disasters;
b. Act of the public enemy, whether international or civil;
c. Act or omission of the shipper or owner of the goods;
d. Character of the goods or defects in the packing;
e. Order or act of competent public authority.
2. The court ruled the affirmative. Article 1732 of the New Civil Code avoids any distinction between
one whose principal business activity is the carrying of persons or goods or both and one who
does such carrying only as an ancillary activity. It also avoids a distinction between a person or
enterprise offering transportation services on a regular or scheduled basis and one offering such
services on an occasional, episodic, and unscheduled basis.

Planters Products, Inc. v. Court of Appeals
G.R. No. 101503
Facts:
Planters Products (Planters) purchased from Mitsubishi International Corporation of USA of 9,000
metric tons of urea fertilizer which the latter shipped abroad the cargo vessel owned by private
respondent Kyosei Kisin Kabushiki Kaisha (KKKK) from America to La Union. Prior to its voyage, a time
charter party was entered into between Mitusbishi as shipper/charterer and KKKK as ship-owner. After
the Urea fertilizer was loaded in bulk by stevedored hired by the shipper, the steel hatches were closed
with heavy iron lids which remained closed during the entire journey.
Upon arrival of the vessel, the hatches were opened with the use of the vessel boom. Planters
unloaded the cargo from the holders into the steel bodied dump trucks. Each time the dump trucks were
filled up, its load of urea was covered with tarpaulin before it was transported to the consignees
warehouse located some (50) fifty meteres from the wharf. It took (11) eleven days from planters to
unload the cargo. The report submitted by private marine and cargo surveyors revealed a shortage in the
cargo, and some portion in the cargo was contaminated with dirt, rendering the same unfit for commerce.
Planters filed an action for damages bu the appellate court absolved the carrier from liability.
Issues:
1. Whether or not the respondent is a common carrier.
2. Whether or not the respondent is liable for damages.
Held:
1. The court rules the affirmative as to the respondent being a common carrier. The term common
carrier is defined in Article 1732 of the Civil Code. The definition refers to carriers either by land,
water, or air which holds themselves out as ready to engage in carrying goods on transporting
passengers or both for compensation as a public employment and not as a casual occupation; if
the undertaking is a single transaction, not a part of the general business or corporation, although
involving the carriage of goods for a fee, then the person or corporation offering such services is
a private carrier. In the case at bar respondent carrier transports goods indiscriminately for all
persons. Being such, he is a common carrier.
2. The court rules the negative. True, being a common carrier, respondent must have observed
extraordinary diligence over the goods it carries. In the case at bar it has been proven that the
respondent has sufficiently overcome this, by clear and convincing proof, the prima facie
presumption of negligence, due to the manner of storage of the goals during the vogyage. In fact,
it was pointed out that there was a risk in shipping the urea due to its character.

F.C. Fisher v. Yangco Steamship Company
G.R. No. L-8095
Facts:
On June 10, 1912, the directors of Yangco Steamship Company which is duly licensced to
engage in the coastwise trade in the Philippines, adopted a resolution which was thereafter ratified and
affirmed by the shareholders of the company expressly declaring and providing that the classes of
merchandise to be carried by the company in its business as a common carrier to include dynamite,
power or other explosives and other expressly prohibiting the officers, agents, and servatnts of the
company from offering to carry or accepting to carry said articles.
In view of the resolution passed the collector of customs suspended the issuance of clearances
for the vessles unless they allow the carriage of such articles. Hence, herein petitioner a major
stockholder filed a petition for prohibition.
Issue:
Whether or not the resolution of Yanco is justified.
Held:
The court rules the negative. Common carrier in the jurisdiction cannot lawfully decline to accept
a particular class of goods, unless it appears that for some sufficient reason the discrimination is
reasonalble and necessary. Yangco Steamships Company has not met those conditions.
The nature of the business of a common carrier as a public employment is such that it is within
the power of the state to impose such just regulation in the interest of the public as the legistalors may
deem proper.

United States v. Quinajon
G.R. No. 8686
Facts:
Herein defendants were charged with the violation of Act No. 98. The accused herein have been
engaged for more than (4) four years in the transportation of passengers and merchandise in the port of
Curimao, in the loading and unloading of passengers and merchandise by means of voyages from the
shore. The facts state that sometime in September 1912, the said accused, by means of voyages,
unloaded 5,986 sacks of rice belonging to the provincial government of Ilocos Norte where they regularly
charge 6 cents for the unloading and loading of each package of merchandise.
Issue:
Whether or not the provincial government was prejudiced by the preferential privileges in favor of
the shippers.
Held:
The court rules the affirmative. Sec. 5 of Act No. 98, provides that any person or corporation who
may be damaged by the common carrier of any matter or things prohibited shall be entitled to sue or
recover all damges so incurred. It is not believed that that law prohibits common carrier from making
special rates for handling merchandise when the same are made for the purpose of increasing the
business which are regarded as sound. That does not require absolute equality in all cases; it only
applies where the services perfomed in the different cases are substantially the same and conditions
similar.

Loadstar Shipping Co. Inc. v. Court of Appelas
G.R. No. 131621
Facts:
On November 19, 1984 herein petitioner shipping company carried, a shipment of (3) three bulk
items on board its M/V Cherokee, which amounted to P6,067,178.00, the same being insured by the
Manila Insurance Co. (MIC). The vessel in turn was insured by Prudential Guarantee and Assurance,
Inc. of P4 million. Unfortunately the ship sank in the are of Limasawa.
MIC settled the insurance with the consignee and asked for the subrogation receipt, then MIC
filed a claim against Loadstar. PGAI alleging the sinking was due to the fault and negligence of Loadstar.
In their defense, Loadstar set up the argument of force majuere. PGAI was dropped from the case afer
proving MIC had no locus standi against them. Inter alia all other defenses, Loadstar argues that it
cannot be considered a common carrier because it was issued a certificate of public convenience and
that it carried a particular type of cargo for a particular shipper.
Issues:
1. Whether or not Loadstars Cherokee is a common carrier;
2. Wheter or not, considering the type of carriage the M/V is, the required amount of diligence was
observed;
Held:
1. The court rules the affirmative that the M/V Cherokee is a common carrier. It is not necessary that
the carrier be issued a certificate of public convenience and their public character is not altered by
the fact that the carriage of the goods in question was periodic, occasional, episodic, or
unscheduled. Additionally, the second argument of Loadstar must fail; that the M/V Cherokee was
carrying a particular type of cargo for one shipper which appears to be purely coincidental is not
reason enough to convert a vessel that is a common carrier to a private one, especially where, as
in the case, it was shown that the vessel was also carrying passengers.
2. The court rules the negative. Loadstar should have exercised extraordinary diligence since it is a
common carrier; and the fact that it still allowed the voyage despite the knowledge of a typhoon
present counters their exercise of extra ordinary diligence required.

First Philippine Industrial Corp. v. Court of Appeals
G.R. No. 125948
Facts:
Herein petitioner applied for a mayors permit to operate its pipeline concession. Before such
permit was issued, the City treasurer required petitioner to pay local tax. In order not to hamper its
operations, petitioner paid the tax under protest.
Then the petitioner filed a letter protest addressed to the treasurer claiming exemption from
payment of the tax because according to the Local Government Code of 1991, transportation contractors
are not included in the enumeration of contractors which are liable to pay taxes. The city treasurer denied
the protest. The petitioner filed a case before the trial court for tax refund, however it was subsequently
dismissed. Hence, this petition.
Issue:
Whether or not the petitioner is a common carrier as contemplated to be exempted under the law.
Held:
The court rules the affirmative. The court enunciated the (4) tests in determining whether the
carrier is that of a common carrier:
a. must be engaged int eh business of carrying goods for other as a public employment and
must hold itself out as ready to engage in the transportation of goods generally as a business
and not a casual occupation
b. it must undertake to carry goods of the kind which its business is confined;
c. it must undertake the method by which his business is conducted and over its established
roads;
d. the transportation must be for hire.
In the case at bar, the court categorically ruled that the transporting of oil through pipelines is still
considered to be an activity of a common carrier. The petitioner is a common carrier because it is
engaged in the business of transporting passengers or goods; like petroleum. It undertakes to carry for
all persons indifferently. The fact that the petitioner has limited clientele does not exclude it from the
definition of common carrier. Under the petroleum act of the Philippines, the petitioner is considered a
common carrier even if it is a pipeline concessionaire.
And even as regards the petroleum operation, it is of public utility. Specifically, the Bureau of
Internal Revenue considers petitioners as common carrier not subject to withholding tax.

Home Insurance Co. v American Steamship Agencies
23 SCRA 24 April 4, 1968
Facts:
Consorcio Pasquero Del Perse of South America shipped a freight of 21,740 jute bags of
Peruvian fish meal through the SS Crowborough consigned to the Sam Miguel Brewery and insured by
Home Insurance Company for $202,505.00. It arrived in Manila on March 7, 1963 and was loaded into
the lighters of Luzon Stevedoring Company. However, it arrived with shortages. Thus SMB demanded
that Home Insurance pay the claim of P14,000.00. Home Insurance on the other hand filed for the
recovery of the P14,000.00 from Luzon Stevedoring. The Court of First Instance absolved Luzon
Stevedoring, but ordered the American Steamship Agencies to reimburse the amount to Home
Insurance, basing the ruling on Art. 587 of the Code of Commerce which makes the ship agent civilly
liable for damages in favor of third persons due to conduct of carriers captain and that the stipulation in
the charter party exempting the owner from liability is against public policy under Article 1744 of the New
Civil Code.
Issue:
Between the provisions of the New Civil Code and the Code of Commerce, which should apply.
Held:
The court rules the affirmative as to the non-applicability of the prohibition of the exemption of the
carrier from liability. The provisions of our Civil Code on common carriers were taken from AngloAmerican Law. Under American Jurisprudence, a common carrier undertakes to carry a special cargo or
chartered to a special person only, becomes a private carrier. And thus, as a private carrier, a stipulation
exempting the owner from liability for the negligence of its agent is not against public policy. The reason
is that there is no strict public policy applied.

San Pablo v. PANTRANCO South Express
G.R. No. L-61461
Facts:
Defendant PANTRANCO planned to operate a ferryboat service between Matnog and Allen as a
common carrier. It requested authority from the MARINA to purchase the vessel M/V Black Double in
accordance with the procedure provided for by law on such application for a certificate of public
convenience (CPC). Its request was denied as the said routes are adequately serviced by existing
authorized operators such as the Cardinal Shipping Company. However, the defendant continued to
purchase the vessel and started operating. Defendant contends that what it proposed was to operate a
PRIVATE FERRY BOAT service across a small body of water specially for its buses and trucks from
Matnog to Allen, Tacloban for the purpose of continuing the highway. Thus, the ferry is merely an
incident to its franchise to convey passengers and cargo from Pasay to Tacloban and need not secure a
separate CPC. Defendants also contend that they are not a PUBLIC FERRY BOAT as they do not
accept walkins.
The Board of Transportation (BOT) enjoined PANTRANCO from operating the ferry. The
petitioner along with Cardinal Shipping interposed their opposition as they are able to service the riding
public. BOT sought for the opinion of then Minister of Justice Ricardo Puno that rendered and affirmative
opinion in favor of PANTRACO. Justice Puno gave an opinion to the effect that there is no need for bus
operators to secure a separate CPC to operate a ferryboat service. BOT rendered its decision holding
that the ferry boat service is part of its CPC to operate from Pasay to Samar/Leyte by amending
PANTRANCO's CPC. Petitioners filed for motions of consideration and were denied by BOT.
Issue:
Whether or not the water transport service is a ferry service for purpose of continuing the highway
or a coastwise/ interland service.
Held:
The court holds that the water transport service between Matnog and Allen is not a ferryboat
service but a coastwise or interland shipping service. Under no circumstance can the sea between
Matnog and Allen be considered a continuation of the highway. While a ferry boat service has been
considered as a continuation of the highway when crossing rivers or even lakes, which are small body of
waters - separating the land, however, Matnog and Allen are separated by an open sea it can not be
considered as a continuation of the highway. Respondent PANTRANCO should secure a separate CPC
for the operation of an interisland or coastwise shipping service in accordance with the provisions of law.
Its CPC as a bus transportation cannot be merely amended to include this water service under the guise
that it is a mere private ferry service.
Argumento, PANTRANCO is a a ferry service, it is absurd to be called a Private ferry service. It
is confusing that respondent PANTRANCO claims that it is a private carrier in relation to its ferry service
but it affirms its obligation as a common carrier to observe extraordinary diligence and vigilance in the
transportation of its passengers and goods. By considering that the authority granted to PANTRANCO is
to operate a private ferry, it can still assert that it cannot be held to account as a common carrier towards
its passengers and cargo. Such an anomalous situation that will jeopardize the safety and interests of its
passengers and the cargo owners cannot be allowed.
10

National Steel Corporation v. Court of Appeals
G.R. Nos. 112287/112350
Facts:
Herein petitioner of G.R. No. 112350, Vlasons Shipping entered into a contract of afreightment on
contract of vogage4 charter line with the petitioner of the other consolidated case, National Steel
Corporation (NSC), whereby the latter hired Vlasons vessel, the M/V Vlasons I to make a voyage to load
steel products from Ilagan City to Manila. Under the agreement, the loading and unloading of the cargoes
are the responsibility of the charter and the owner shall no be liable of the loss or damage of the cargo
arising from the unseaworthiness unless counsel by want of diligence on the part of the owners to make
the vessel seaworthy and to secure that it is properly manned, equipped and supplied.
Upon arrival on August 12, 1974, it was found that nearly all the tin plates and hot rolled sheets
were wet and rusty. The cargo was unloaded by the charterer Hence the petitioner filed for a claim of
damages amounting to P941,145.58, alleging the negligence of the master and crew of the ship.
Issue:
Whether or not Vlasons Shipping is made liable notwithstanding the Charter Party stipulations.
Held:
The courts rule the negative. At bottom, this appeal really hinges on a factual issue as to then,
how, and who caused the damages to the cargo. Ranged against NSC are two formidable truhs. First, it
was found that such damage was brought about during the unloading process when the rain seeped into
the cargo due to the negligence of the stevedores employed by it.
Second and more importantly, the agreement between the parties The Contact of Voyage
Charter Party for Hire placed the burden of proof of such loss or damage upon the shipper, not upon the
ship owner. Such stipulation, while disadvantageous to the NSC, is valid because the parties entered into
a contract of private charter, not one of common carriage.
Basic too is the doctrine that courts cannot relieve a party from the effects of a private contract
fully entered into, on the ground that it is allegedly one-sided or unfair to the plaintiff. It has been held
that the true test of a common carrier of passengers/goods is the carriage of the same, provided it has
space, for all who opt to avail for its transportation service for a fee.
11

Kilusang Mayo Uno Labor Center vs. Garcia Jr.
G.R. No. 115381
Facts:
Petition for certiorari assails the constitutionality and validity of circulars released by the Land
Transportation Franchising and Regulatory Board (LTFRB). Such circulars authorized provincial bus and
jeepney operators to increase or decrease the prescribed transportation fares without application with the
LTFRB fro a period of one year. Likewise, it established a presumption of public need for certificates of
public convenience (CPC). Petitioner KMU claims however that the authority given by LTFRB to
provincial bus operators to set a fare range is unconstitutional, invalid and illegal. Also, the establishment
of the presumption of public need for a proposed transport service without having to prove public
necessity, is likewise illegal it being violative of Public Service Act and the Rules of Court.
Issue:
Whether or not such circulars released by the LTFRB is valid.
Held:
The Supreme Court held that the authority given by the LTFRB to the provincial bus operators to
set a fare range over and above the authorized existing fare is illegal and invalid. This is tantamount to
an undue delegation of legislative authority. The policy of allowing the provincial bus operators to
change and increase their fares would result not only to a chaotic situation but also to an anarchic state
of affairs. This would leave the riding public at the mercy of transport operators who may change fares
every hour, every day, every month as he may wish to do so. The Supreme Court held that rate-fixing is
a delicate and sensitive government function that requires dexterity of judgment with a settled goal of
arriving at a just and reasonable rate accepted by both the public and the utility. With regard to the
presumption of public need, CPC is an authorization granted by the LTFRB for the operation of land
transportation services for public use as required by law. Public convenience or necessity generally
means something fitting for public need. Thus in the case at bar, it was founded that the LTFRB
committed grave abuse of discretion is issuing orders to regulate the transport sector. Such circulars are
deemed null and void and of no force or effect.
12

Tatad v. Garcia
G.R. No. 114222
Facts:
EDSA LRT Consortium, a foreign corporation, was awarded with the construction of Light Rail
Transit III (LRT III) as the only bidder who has qualified with the requirements provided by the PBAC.
The said foreign corporation will construct the LRT III in a Built-Lease-Transfer agreement that such
public utility will be leased by the government through the Department of Transportation and
Communication (DOTC) and then it would be subsequently sold by the corporation to the government.
An objection was raised by the petitioner stating that the awarding of the bid to the said corporation is
against the Constitution. It was provided in the Constitution that only Filipinos are entitled to operate a
public utility such as the LRT III.
Issue:
Whether or not the awarding of the bid to EDSA LRT Consortium is against the Constitution.
Held:
The Court held that there is a distinction in the operation of a public utility and ownership in the
facilities and equipment to serve the public. The EDSA LRT Consortium fall under the latter because the
said corporation will not operate the public utility. The said corporation will only own the facilities and
equipment such as the train carts, the railings and the booths. In addition, such ownership will then be
subsequently transferred to the government under Built-Lease-Transfer agreement. With that said, the
operation of the public utility will fall to the Filipinos through its government. Therefore, the awarding of
the bid to EDSA LRT Consortium is not against the provisions of the Constitution.
13

Samar Mining Co. v. Nordeutscher Lloyd & C.F. Sharp & Co. Inc.
G.R. No. L-28673
Facts:
Herein petitioner and defendant entered into a contract where the former agreed to ship a crate of
optima wielded wedge wire sleeves, with the Bill of Lading indicated the effective transportation from
Germany to Manila only.
From Manila, the crate was to be further transported to Davao. The carrier had unloaded and
delivered the goods in the rouded warehouse in Manila.
Unfortunately, the goods were lost and never reached Davao City.
Issue:
Whether or not herein petitioner is liable for the loss.
Held:
The court rules the negative, when the carrier under the terms of the Bill of Lading had delivered
the goods at the port of destination, at that point he merely becomes the agent of the consignee and
ceases to be liable for any loss a damage of goods transported.
Furthermore, there is no applicability of Article 1738 of the New Civil Code, which contemplates
liability of the carrier of the shipment of goods while stored in the warehouse of the carrier. However, in
the present case, the warehouse belonged to a third person.
14

Eastern Shipping Lines vs. IAC
150 SCRA 463
Facts:
In GR 69044, the M/S ASIATICA, a vessel operated by Eastern Shipping Lines loaded at Kobe,
Japan for Manila:
(1) 5,000 pieces of calorized lance pipes in 28 packages valued at P256,039.00 consigned to
Philippine Blooming Mills Co., Inc.,
(2) 7 cases of spare parts valued at P92,361.75, consigned to Central Textile Mills, Inc.
Both sets of goods were insured for their value with Development Insurance and Surety
Corporation.
In GR 71478, the same vessel took on board :
1. 128 cartons of garment fabrics and accessories, in 2 containers, consigned to Mariveles
Apparel Corporation
2. two cases of surveying instruments consigned to Aman Enterprises and General
Merchandise.
The 128 cartons were insured for their value by Nisshin Fire & Marine Insurance Co., for
US$46,583.00. The 2 cases by Dowa Fire & Marine Insurance Co., Ltd., for US$11,385.00. Enroute for
Kobe, Japan, to Manila, the vessel caught fire and sank, resulting in the total loss of ship and cargo. The
respective Insurers paid the corresponding marine insurance values to the consignees concerned and
were thus subrogated unto the rights of the latter as the insured.
Eastern Shipping denied liability mainly on the ground that the loss was due to an extraordinary
fortuitous event; hence, it is not liable under the law. The Trial Court rendered judgment in favor of
Development Insurance in the amounts of P256,039.00 and P92,361.75, respectively, with legal interest,
plus P35,000.00 as 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
15

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 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.
16

National Development Company v. Court of Appeals
164 SCRA 593
Facts:
In accordance with a memorandum entered into between defendants National Development
Company (NDC) and Maritime Company of the Philippines (MCP) on September 13, 1962, defendant
NDC as the first preferred mortgagee of three ocean-going vessels including one the name 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 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
17

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.
18
Cases Applying Articles 1734 1743

of the New Civil Code
Vigilance Over Goods

of Common Carriers
19

Articles Applied:
Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods,
unless the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act of omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.
Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the
goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to
have acted negligently, unless they prove that they observed extraordinary diligence as required in
Article 1733.
Art. 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are
unconditionally placed in the possession of, and received by the carrier for transportation until the same
are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right
to receive them, without prejudice to the provisions of Article 1738.
Art. 1737. The common carrier's duty to observe extraordinary diligence over the goods remains in full
force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or
owner has made use of the right of stoppage in transitu.
Art. 1738. The extraordinary liability of the common carrier continues to be operative even during the
time the goods are stored in a warehouse of the carrier at the place of destination, until the consignee
has been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove
them or otherwise dispose of them.
Art. 1739. In order that the common carrier may be exempted from responsibility, the natural disaster
must have been the proximate and only cause of the loss. However, the common carrier must exercise
due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm or other
natural disaster in order that the common carrier may be exempted from liability for the loss, destruction,
or deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act of
the public enemy referred to in Article 1734, No. 2.
20

Art. 1740. If the common carrier negligently incurs in delay in transporting the goods, a natural disaster
shall not free such carrier from responsibility.
Art. 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods,
the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in
damages, which however, shall be equitably reduced.
Art. 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character
of the goods, or the faulty nature of the packing or of the containers, the common carrier must exercise
due diligence to forestall or lessen the loss.
Art. 1743. If through the order of public authority the goods are seized or destroyed, the common carrier
is not responsible, provided said public authority had power to issue the order.
21

Gelisan v. Alday
154 SCRA 388
Facts:
Herein petitioner is Bienvenido Gelisan, is the owner of a freight truck. He and Roberto Espiritu
entered into a contract under which Espiritu hired the freight truck Gelisan for the purpose of hauling
sugar, flour, and fertilizers. It also stipulated that Espiritu shall bear the loss and damage attending the
goods to be hauled by him.
Benito Alday, a trucking operator who knew of Espiritu, had a contract to haul the fertilizers of
Atlas Fertilizer Corporation from Pier 4, North Harborn, to Mandaluyong.
Alday met Espiritu at the gate of Pier 4 and the latter offered the use of his truck with the driver
and helper. Alday accepted and instructed the checker to let Espiritu hau fertilizer.
Espiritu managed 200 bags of fertilizer per trip. The fertilizer was delivered to the driver and maid
with the necessary way bill receipt. However, Espiritu never delivered the fertilizer to the Atlas Fertilizer
bodega in Mandaluyong.
Hence, Alday was compelled to pay for the loss of 400 tags to Atlas Fertilizer Corporation and
filed a complaint against Espiritu and Gelisan with the CFI Manila.
While the CFI ruled that Espiritu alone is liable, the Court of Appeals ruled to include Gelisan.
Issue:
Whether or not Gelisan be held solidarily liable with Espiritu.
Held:
The court rules the affirmative, Gelisan being the registered owner of the truck. The court has
held invariably in several decisions that the registered owner of a public service vehicle is responsible for
damages that may arise from consequences incidental to its operation or that may be caused by any of
the passengers therein.
The claim that the petitioner is not liable in view of the lease contract executed by and between
him and Roberto Espiritu which exempts him from liability to third persons cannot be sustained because
it appears that the lease contract, adverted to, had not been approved by the Public Dercric Commision.
It is settled in our jurisprudence that if a property covered by a franchise is transferred or leased
to another without the requisite approval, the transfer is not binding upon the public and third persons,
However, Gelisan is not without recourse as he may be indemnified by Espiritu the amount he
many have been udered to pay for the damages.
22
Benedicto v. Intermediate Appellate Court

187 SCRA 547
Facts:
Herein private respondent Greenhills Wood Industries Co., Inc. operates saw hill in Quirino.
Sometime in May 1980, private respondents bound itself to sell and deliver to Blue Star Mahogany, Inc.
(Blue Star), a company in Bulacan 100,000 board feet of sawn lumber with the understanding that an
initial delivery would be made on May 15, 1980. to effect its first delivery, private respondents resident
manager, Dominador Cruz, contracted Virgitio Licuden, the drivear of a cargo truck to transport its sawn
lumber to the consignee, Blue Star, in Valenzuela, Bulacan. The cargo truck was registered in the name
of herein petitioner Luisa Benedicto, the proprietor of Macorem Trucking, a business enterprise engaged
in hauling freight.
On May 15, 1980, Cruz in the presence and with the consent of the driver Licuden, supervised
the loading of san lumber with invoice aboard the cargo truck. Thereafter, the manager of Blue Star
called up the manager of Greenhills informing the former that the sawn lumber had not yet arrived in
Bulacan. The manager of Greenhills was this informed. Still, Blue Star was constrained to look for other
suppliers.
Thus Greenhills filed a criminal case against Luciden for Estafa and also against Benedicto for
recovery of the value of the lost sawn lumber plus damages. The RTC ruled against Benedicto and
Luciden. Hence this petition from the IAC.
Issue:
Whether or not Benedicto, being the registered owner of the truck should be held liable for the
value of the undelivered or lost sawn lumber.
Held:
The court rules the affirmative. There is no dispute that petitioner Benedicto has been holding
herself out to the public as engaged in the business of hauling or transporting goods for hire or
compensation. In sum, Benedicto is a common carrier.
The prevailing doctrine on common carriers makes the registered owner liable for consequences
flowing from the operations of the carrier , even though the specific vehicle involved may have already
been transferred to another person. The doctrine rests upon the principle that in dealing with vehicles
registered under the Public Service Law, the public has the right to assume that the registered owner is
the actual or lawful owner thereof.
It would be very difficult and often impossible as a practical matter, for members of the general
public to enforce their right of action against those that may have inflicted injuries should they be required
to prove who the actual owner is. The registered owner is not allowed to deny liability by proving the
identity of the alleged transferee.
23
Philtranco Service Enterprise v. Court of Appeals

273 SCRA 563
Facts:
The victim herein, Ramon Asuesta was riding in his easy rider tricycle along Calbayog City. Also
in the city, herein defendant Philtrancos bus was driven by defendant Rogasiones Dolira Manilbing was
being pushed by some persons in order to start its engine. As the bus was pushed, its engine started
thereby the bus continued on its running motion and it occurred at the time when Ramon Asuesta, who
was still riding on his bicycle was directly (was) in front of the said bus. Due to the abrupt start of the bus
engine, it thereby bumped on the victim Ramon. As a result, he fell and was run over by the bus
Still, the bus did not halt after hitting the victim. Thereafter P/Sgt. Yabao, who was then jogging
approached the driver defendant and signaled him to stop, but the driver only stopped when the former
introduced himself as a police officer. The trial court rendered a decision ordering the petitioner
(Philtranco) to jointly and severally pay the private respondents. On appeal, the CA affirmed the decision.
Issue:
Whether or not the court erred in holding Philtranco liable being the registered owner of a public
service for the tortuous act of the driver.
Held:
The courts ruled the negative. The Appellate court was correct in holding herein petitioner liable.
Article 2176 of the New Civil Code provides that whoever by act or omission causes damage to another,
these being fault or negligence, is obligated to pay for the damage done. Such fault or negligence, if
there is no pre-existing contractual relation between the parties is called a quasi-delict. Further, Article
2180 of the Civil Code states that The obligation imposed by Article 2176 is demandable not only for
ones owns acts or omissions, but for whom one is responsible.
In the case at bar, the liability of the registered owner of a public service vehicle, like petitioner
Philtranco, for damages arising from the tortuous acts of the driver are primary, direct and joint and
solidary, its only recourse if the judgement for damages is satisfied by it is to be recovered what it has
paid from its employee who committed the fault or negligence which gave rise to the action based on the
quasi-delict.
24
Santos v. Sibug
G.R. No. L-26815
Facts:
Santos, who owns a jeep, entered into an arrangement with Vivad that the latter will fictitiously
purchase the jeep so that Santos may use the Certificate of Public Convenience (CPC) of Vivad.
Subsequently, the Sibug was bumped by the said jeep. Damages was then awarded to Sibug against
Vivad and his driver. The Sheriff of Manila then levied the jeep and sold it in a public auction. Santos
then files of the third-party claim with the Sheriff stating that he owns the jeep and such sale is null and
void because the property levied is not owned by Vivad.
Issue:
Whether or not the levy and auction sale made on the jeep is null and void.
Held:
The Court held that the agreement entered into by Santos and Vivad is a Kabit System, which is
prohibited by law. Such system was not approved by the Public Service Commission (PSC) therefore
Vivad is the owner of the jeep in legal contemplation. Since Vivad is the owner of the jeep according to
law, then it cannot be said that the Sheriff seized the property belonging to a stranger. The auction sale
is still valid according to the Court.
25

Lita Enterprises, Inc. v. IAC
G.R. No. L-64693
Facts:
Spouse ocampo purchased 5 toyota standard cars from delta motors in installments to be used
as taxi cabs. However, since they do not have any franchise to operate a taxicabs, they entered in an
agreement with lita enterprises for the use of the latters certificate of public convenience, commonly
known as Kabit system. Later on, the taxi collided into a motorcycle resulting to the death of the driver of
the motorcycle Emeterio Martin. Lita enterprises were adjudged liable and two of the taxicabs were
levied upon and sold at a public auction. Thereafter the spouses ocampo decided to register the taxicabs
in their own name and ask Lita enterprise to return the papers but the latter refused. Hence this petition.
Issue:
Whether or not the agreement between the parties is valid.
Held:
The Court held that the agreement between the parties is not valid.Under the arrangement of
kabit system, whereby a person who has been granted a certificate of convenience allows another
person who owns motor vehicles to operate under such for a fee. The Kabit System has been identifies
as one of the root causes of prevalence of graft and corruption in the government transportation offices.
It is void being contrary to public policy. And the parties have no right of action against each other
because they are in pari delicto, the court will leave them both where it finds them.
26

Teja Marketing vs. IAC
148 SCRA 347
Facts:
Respondent purchased from petitioner a tiyajle. Such tiyalje amounted to a total value of P800.
Respondent was able to pay the purchase price but however left a balance of P1, 700. Subsequently, a
chattel mortgage was executed over the said balance. It was found by the court that the defendant
purchased the motorcycle for the purpose of engaging and using the same for transportation business.
To be able to use the vehicle, the tricycle was attached to the plaintiffs transportation line, which had the
franchise. In effect, the registration certificate is under petitioners name. It appeared that they agreed
that the petitioner would undertake the yearly registration of the unit in the Land Transportation
Commission.
Issue:
Whether or not relief may be granted to any of the parties.
Held:
The Supreme Court held that neither of the two parties are entitled for relief. Both parties have
entered into an illegal contract, thus no action arises out from any illicit transaction. The parties operated
under an agreement known as the Kabit System. Such system operates when a person who has been
granted a certificate of public convenience allows another person who owns a motor vehicle to operate
under such franchise for a fee. A certificate of public convenience is a special privilege which cannot be
countenanced. This illegitimate arrangement has been recognized as one of the root causes of the
frequency of graft and corruption in the government transportation affairs. It is declared void it being
against public policy. It is a fundamental principle that the court will not aid either party to enforce an
illegal contract and will leave both where it finds them. The defects of the contract are permanent and
cannot be ratified. Thus, both parties are culpable of their illicit indenture.
27
Magboo v. Bernardo
G.R. No. L-16790
Facts:
The petitioners filed an action against the respondent who is the owner of the jeep and who is
being claimed to be responsible for the death of the petitioners 8 year old child in a vehicular accident.
The respondent denies being liable for the death of the said child because he claimed that there was no
employer-employee relationship between him and the driver of the said jeep because of the boundary
system that they are following. The respondent claims that only the driver should be liable because the
relationship between the two is that of a lessor-lessee. Respondent also claims that he should not be
held subsidiary liable because the driver of the jeep pleaded guilty to a criminal case without
respondents knowledge.
Issue:
Whether or not the respondent is liable for the death of the child of the petitioners.
Held:
The Court held that the respondent should be liable because the lease he made with the driver of
the jeep was not approved by the Public Service Commission (PSC). Since the lease was made without
such approval, the owner continued to be the operator of the jeep in legal contemplation and such was
responsible for the consequences of his operation. The Court also held that the claim of the respondent
in stating that he did not know of the plea made by the driver, which prevented him from proving his
innocence, was raised too late in the case therefore the respondent is estopped from enforcing any claim
regarding to that matter.
28
Eastern Shipping Lines vs. IAC

150 scra 463
Facts:
In GR 69044, the M/S ASIATICA, a vessel operated by Eastern Shipping Lines loaded at
Kobe, Japan for Manila:
1.) 5,000 pieces of calorized lance pipes in 28 packages valued at P256,039.00 consigned to
Philippine Blooming Mills Co., Inc.,
2.) 7 cases of spare parts valued at P92,361.75, consigned to Central Textile Mills, Inc.
Both sets of goods were insured for their value with Development
Insurance and Surety Corporation.
In GR 71478, the same vessel took on board :
3. 128 cartons of garment fabrics and accessories, in 2 containers, consigned to Mariveles
Apparel Corporation
4. two cases of surveying instruments consigned to Aman Enterprises and General
Merchandise.
The 128 cartons were insured for their value by Nisshin Fire & Marine Insurance Co., for
US$46,583.00. The 2 cases by Dowa Fire & Marine Insurance Co., Ltd., for US$11,385.00. Enroute for
Kobe, Japan, to Manila, the vessel caught fire and sank, resulting in the total loss of ship and cargo. The
respective Insurers paid the corresponding marine insurance values to the consignees concerned and
were thus subrogated unto the rights of the latter as the insured.
Eastern Shipping denied liability mainly on the ground that the loss was due to an extraordinary
fortuitous event; hence, it is not liable under the law. The Trial Court rendered judgment in favor of
Development Insurance in the amounts of P256,039.00 and P92,361.75, respectively, with legal interest,
plus P35,000.00 as 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.
29

The evidence of the defendant did not show that extraordinary diligence was observed by
the vessel to prevent the occurrence of fire at hatches nos. 2 and 3. 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.
30
Ganzon v. Court of Appeals

161 SCRA 646
Facts:
Ganzon, petitioner herein, was hired by Tumambing to haul 305 tons of scrap iron. The contract
was for the petitioner to transport the scrap iron to Manila from Bataan. Tumambing delivered the scrap
iron to Niza, captain of the lighter LCT Batman, to board it on the same. The crew of the Batman started
to load the iron, and when they were about halfway through, Mayor Advincula arrived and demanded
P5,000 from Tumambing. The latter resisted and a heated argument started. Mayor Advincula drew his
gun and fired at Tumambing. He was brought to the hospital for treatment, lucky for him the wound was
not fatal.
A few days after this incident, the loading of the scrap metal was resumed. However, the acting
Mayor this time went to the port where the Batman was docked. He was accompanied by 3 policemen
and he ordered Captain Niza to dump the scrap iron where the lighter was docked. What was left or the
iron was confiscated by the Acting Mayor and brought to NASSCO. A receipt was issued showing that
the municipality had taken custody of the scraps or iron.
Tumambing filed a case in order to recover damages for the loss that he sustained. The lower
court rendered a decision in favor of Ganzon. However, on appeal the Court of Appeals reversed the
decision ordering Ganzon to pay Tumambing P5,895 as actual damages, P5,000 for exemplary
damages and 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 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.
31
Eastern Shipping Lines, Inc. vs. Court of Appeals

196 SCRA 570
Facts:
SS Eastern Comet, owned by defendant Eastern Shipping Lines was engaged in the business of
shipment from Japan to the Philippines. Through the SS Eastern Comet, two fiber drums of riboflavin
were shipped from Yokohama to Manila. The shipment was discharged upon arrival into the custody of
defendant Metro Port Service, Inc. However, the latter refused to one drum after claiming that such
unwanted drum was in bad order. Defendant Allied Brokerage Corporation received the shipment from
Metro Port and detected that one drum was opened and without seal. The goods were then delivered to
the consignees warehouse. The latter noted that one drum contained spillages, while the rest of the
contents were adulterated. As a consequence of the damage Mercantile Insurance Company paid the
consignee under its marine policy insurance and instituted civil action against defendants as subrogee.
The Court of Appeals affirmed judgment holding the common carrier, arrastre operator, and customs
brokers jointly and severally liable.
Issue:
Whether Eastern Shipping Lines, Inc. can be held severally and jointly liable with Metro Port and
Allied brokerage.
Held:
The Supreme Court held that Esatern Shipping Lines, Inc can be held liable. As what was
already decided in Firemans Fund Isurance, Co. vs Metro Port Service, Inc, the legal relationship
between the consignee and the arrastre operator is analogous to that of a depositor and a
warehouseman. Further explained, the relationship between the consignee and the common carrier is
comparable to that of the consignee and the arrastre operator. Since it is the duty of the Arrastre to take
good care of the goods that are in its custody and to deliver them in good condition to the consignee,
such responsibility also devolves upon the carrier. The duty of the consignee to guard the goods and
shelter it from destruction or impairment is also shouldered by the common carrier. Both are therefore
charged with the obligation to deliver the goods in good condition to the consignee.
32
Sarkies Tours Philipines, Inc. vs. CA

G.R. No. 108897
Facts:
Fatima Fortades was a passenger of one of the buses of petitioner Sarkies Tours bound for
Legazpi City. She had onboard luggages which contained important documents and personal
belongings. Her belongings were kept in the baggage compartment of the bus, but during a stopover at
Daet, it was discovered that only one bag remained in the open compartment. The others, including
Fatima's things, were missing and might have dropped along the way. Despite the suggestion of the
passengers to retrace its route in order to recover their luggage, the driver nevertheless neglected them
and continued driving. Consequently, respondents filed a case to recover the value of the remaining lost
items, as well as moral and exemplary damages, attorney's fees and expenses of litigation. They claimed
that the loss was due to petitioner's failure to observe extraordinary diligence in the care of Fatima's
luggage and that petitioner dealt with them in bad faith from the start. Petitioner, on the other hand,
disowned any liability for the loss on the ground that Fatima allegedly did not declare any excess
baggage upon boarding its bus.
Issue:
Whether or not Sarkies is liable for damages for lost propery of its passengers.
Held:
The Supreme Court held that Sarkies is liable for the loss. The cause of the loss was petitioner's
negligence in not ensuring that the doors of the baggage compartment of its bus were securely fastened.
As a result of this lack of care, almost the entire luggage was lost, to the prejudice of the paying
passengers. Common carriers, from the nature of their business and for reasons of public policy, are
bound to observe extraordinary diligence in the vigilance over the goods transported by them. This
liability lasts from the time the goods are unconditionally placed in the possession of, and received by the
carrier for transportation until the same are delivered, actually or constructively, by the carrier to the
person who has a right to receive them. The awarding of actual damages to respondents is just because
their efforts in recovering the lost items must be well compensated. Moral and exemplary damages must
also be awarded in the presence of bad faith and negligence on the part of the common carrier.
33
Valenzuela Hardwood & Industrial Supply v. Court of Appeals

274 SCRA 642
Facts:
Valenzuela Hardwood & Industrial Supply (VHIS), plaintiff herein, hired the services of Seven
Brothers Shipping Corporation (SBC) to transport 940 round logs. VHIS shipped the logs at the port in
Isabella and said logs were placed on the M/V Seven Ambassador owned by SBC for transport. VHIS
insured the logs against loss or damage with South Sea Surety and Insurance Co. for the amount of
P2,000,000. Subsequently the M/V Seven Ambassador sank which resulted in the loss of the logs on
board the same. The plaintiff then filed a claim with the insurance company and the SBC. However both
claims were denied. The insurance company denied liability under the policy and SBC denied liability
claiming that they are a private carrier and that they cannot be held liable due to the stipulation that the
owners shall not be responsible for the loss, split, short-landing, breakages and any kind of damages to
the cargo.
Plaintiff filed a case in order to claim damages for the loss it incurred. The lower court rendered a
decision in favor of the plaintiff and ordered the insurance company and SBC to pay the plaintiff. On
appeal, the Court of Appeals affirmed the decision but set aside the decision against SBC holding that
the stipulation between the parties is valid. Hence this petition.
Issue:
1. Whether or not the stipulation between the parties is valid.
2. Whether or not SBC is liable for the loss of VHIS.
Held:
The Court held that the stipulation between the parties is valid. It is clear in this case that the SBC
is a private carrier and therefore a stipulation between the parties limiting the liability of the carrier is
valid. In a contract of private carriage, the parties may validly stipulate that the responsibility of the cargo
rests solely on the charterer. Such stipulations shall be valid as long as they are not contrary to law,
morals, good customs, public order and public policy.
It is a fact that the loss of the logs was due to the sinking of the M/V Seven Ambassador. The
sinking of the vessel was caused by the snapping of the iron chains holding the logs. Said snapping was
the consequence of the negligence of the captain in securing the logs. However, since there is a
stipulation between the parties regarding the responsibility of the loss of the cargo, the SBC cannot be
held liable for the loss of the logs.
34
Yobido v. Court of Appeals

281 SCRA 1
Facts:
The spouses Tumboy and their minor children boarded a bus operated by the Yobido Bus Liner
to Davao City. On the way to their destination, the front left tire of the bus exploded which led to the bus
falling into a ravine and causing the death of Tito Tumboy and physical injuries to the other passengers.
The defendants then filed a case against the petitioner for breach of the contract of carriage. The
petitioner claims that it is not liable because the tire explosion is a caso fortuito.
Issue:
Whether or not the petitioner is liable for the accident.
Held:
The Court held that the tire explosion cannot be considered as a fortuitous event. The reason is
that the common carrier has the burden of proof that it exercised extraordinary diligence in the carriage
of the passengers. There is always a presumption of negligence on the common carrier in cases of death
or injury and that the carrier needs to present contrary evidence that it was not negligent and that it
exercised the required diligence of the law. The carrier cannot rely on the defense that the tire was brand
new or that it had daily check ups regarding the parts of the bus.
35
Compania Maritima v. Insurance Co. of North America

12 SCRA 213
Facts:
Macleod & Co., contracted, first by telephone and later confirmed by a formal written booking
issued by Macleod & Co., the services of the petitioner Comapania Maritima for the shipment of bales of
lamp from Davao to Manila. Two lighters of the petitioners loaded the said cargo from Macleods wharf
at Davao awaiting the arrival of another vessel of the petitioner for reloading. One of the lighters sunk of
which Macleod suffered a total of P64,018. Respondent insurers of said cargo paid Macleod, and being
subrogated to Macleods right, filed a claim to collect from the petitioner the amount it paid to Macleod.
Petitioner denied liability on the grounds that there was no bill of lading issued thereby resulting to be
non-existence of the contract; that the sinking was due to a fortuitous event and the respondent has no
personality.
Issue:
Whether or not there was a contract and whether or not there was a fortuitous event.
Held:
There was complete contract of carriage the consummation of which has already begun when the
shipper delivered the cargo to the carrier and the latter took possession of the same by placing it on a
lighter manned by its two authorized employers under which Macleod become entitled to the privilege of
law. The responsibility of the carrier commenced on the actual delivery and receipt by, the carrier or its
authorized agent of the goods. The barges or lighters were merely employed as the first step of the
voyage. As to the issuance of the bill of lading, it is not required or essential to the contract, although it
may become obligatory by reason of regulations or as a condition injured in the contract by the
agreement of the parties themselves.
36
Lu Do v. Binamara
101 PHIL 120
Facts:
Delta Company of New York shipped 6 cases of film and photographic supplies to respondent
herein. Having arrived at the Cebu port, it discharged her cargo placing it in the custody of the arrastre
operator appointed by the Bureau of Customs. The cargo was checked and found to be in good order.
Later on the goods were delivered to Binamara. After inspection it was found out that some cargo were
missing. Binamara demanded from the carrier indemnity for the loss it sustained. However, the carrier
denied liability relying on the stipulation in the contract of carriage. It provides that the carrier is no longer
liable for the cargo after delivery of the same to the customs authorities. The lower court rendered a
decision in favor of Binamara. Hence this petition.
Issue:
Whether or not the common carrier is liable for the lost cargo.
Held:
The Court held that the carrier is no longer liable for the loss of the goods. The general rule is that
delivery must be made to the consignee or the person authorized to receive the goods, without such
delivery the carrier shall be liable for the loss or destruction of goods while in their custody. However,
parties may agree to limit the liability of the carrier considering that the goods have to go through the
inspection of the customs authorities before they are actually turned over to the authorities. The
stipulation in this case is binding upon the parties it being not contrary to law, morals, or public policy.
37
American President Lines, Ltd. Vs. Klepper

110 Phil 243
Facts:
Klepper on board SS Pre. Cleveland and Yokohama, Japan and lift van containing personal and
household effects. Upon its arrival in Manila and while the lift van was being unloaded by crane, it fell on
the pier and its contents were spilled and scattered, as a result of which, Klepper bought an action for
damages against the carrier. While the carrier does not dispute liability, it, however, contends that the
same cannot exceed $500, invoking in its favor the bill of lading and Sec. 4(5) of the carriage of goods by
Sea Act (COGSA). The trial Court ordered the carrier to pay Klepper with a right to reimbursement from
Delgado Brothers, the operator of the crane. The CA affirmed the said decision. The carrier appealed.
Issue:
Whether or not the carrier can be held liable beyond that stated in the bill of lading and that
provided in COGSA.
Held:
The carrier should only pay Klepper the sum of $500. The shipper who accepted the bil of lading
impliedly id bound by its items. While regard to the contention of the carrier that COGSA should control in
this case, the same is of as moment. Art. 1763 of the New Civil Code provides that the laws of the
country to which the goods are transported shall govern the liability of the common carrier in case of loss,
destruction and deterioration. This means that the law of the Philippines on the New Civil Code. Under
1766 of NCC, in all mater not regulated by this Code, the rights and obligations of common carriers shall
be governed by the Code of Commerce and by Special Laws. Art. 1736-1738, NCC govern said rights
and obligations. Therefore, although Sec 4(5) of COGSA states that the carrier shall not be liable in an
amount exceeding $500 per package unless the value of the goods had been declared by the shipper
and asserted in the bill of lading, said section is merely supplementary to the provisions of the New Civil
Code.
38
Servando v. Philippine Steam Navigation Co.

117 SCRA 832
Facts:
Clara Uy Bico and Amparo Servando loaded on board the appellant's vessel, FS-176, for carriage
from Manila to Pulupandan, Negros Occidental cargoes of cavans of rice and cartons of colored paper
which were evidenced by bills of lading.
Upon arrival of the vessel at Pulupandan the cargoes were discharged, complete and in good
order, unto the warehouse of the Bureau of Customs. At about 2:00 in the afternoon of the same day,
said warehouse was razed by a fire of unknown origin, destroying appellees' cargoes. Before the fire,
however, appellee Uy Bico was able to take delivery of 907 cavans of rice Appellees' claims for the value
of said goods were rejected by the appellant.
Issue:
Whether or not carrier is liable for the loss of the cargo.
Held:
The court a quo held that the delivery of the shipment in question to the warehouse of the Bureau
of Customs is not the delivery contemplated by Article 1736; and since the burning of the warehouse
occurred before actual or constructive delivery of the goods to the appellees, the loss is chargeable
against the appellant. Article 1736 of the Civil Code imposes upon common carriers the duty to observe
extraordinary diligence from the moment the goods are unconditionally placed in their possession "until
the same are delivered, actually or constructively, by the carrier to the consignee or to the person who
has a right to receive them, without prejudice to the provisions of Article 1738. "
It should be pointed out, however, that in the bills of lading issued for the cargoes in question, the
parties agreed to limit the responsibility of the carrier for the loss or damage that may be caused to the
shipment by inserting therein the following stipulation:
Clause 14. Carrier shall not be responsible for loss or damage to shipments billed 'owner's risk'
unless such loss or damage is due to negligence of carrier. Nor shall carrier be responsible for
loss or damage caused by force majeure, dangers or accidents of the sea or other waters; war;
public enemies; . . . fire . ...
The Court sustains the validity of the above stipulation. There is nothing therein that is contrary to
law, morals or public policy. Therefore, the carrier is no longer liable for the loss of the goods.
39
Saludo, Jr. v. Court of Appeals

207 SCRA 498
Facts:
Plaintiff herein together with Pomierski and Son Funeral Home of Chicago brought the remains of
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.
Issue:
Whether or not the 2 airlines should be held liable for damages.
Held:
Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of the
common carrier begins from the time the goods are delivered to the carrier. This responsibility remains in
full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or
owner exercises the right of stoppage in transitu, and terminates only after the lapse of a reasonable time
for the acceptance, of the goods by the consignee or such other person entitled to receive them. And,
there is delivery to the carrier when the goods are ready for and have been placed in the exclusive
possession, custody and control of the carrier for the purpose of their immediate transportation and the
carrier has accepted them. Where such a delivery has thus been accepted by the carrier, the liability of
the common carrier commences eo instanti. Hence, while we agree with petitioners that the extraordinary
diligence statutorily required to be observed by the carrier instantaneously commences upon delivery of
the goods thereto, for such duty to commence there must in fact have been delivery of the cargo subject
of the contract of carriage. Only when such fact of delivery has been unequivocally established can the
liability for loss, destruction or deterioration of goods in the custody of the carrier, absent the excepting
causes under Article 1734, attach and the presumption of fault of the carrier under Article 1735 be
invoked.
As already demonstrated, the facts in the case at bar belie the averment that there was delivery
of the cargo to the carrier on October 26, 1976. Rather, as earlier explained, the body intended to be
shipped as agreed upon was really placed in the possession and control of PAL on October 28, 1976
and it was from that date that private respondents became responsible for the agreed cargo under their
undertakings in PAL Airway Bill No. 079-01180454. Consequently, for the switching of caskets prior
thereto which was not caused by them, and subsequent events caused thereby, private respondents
cannot be held liable
40
Macam v. Court of Appeals

313 SCRA 77
Facts:
Petitioner Macam exported watermelons and mangoes to Hong Kong, Great Prospect Company
is the consignee. The bill of lading stated that one of the bill must be presented by the Pakistan Bank as
consignee and GPC as the notify party. Upon arrival in Hong Kong, the shipment was delivered by the
carrier directly to GPC and not to Pakistan Bank and without surrendering the bill of lading.
Issue:
Whether or not there was a valid delivery.
Held:
The extraordinary responsibility of common carriers last until actual or constructive delivery of the
cargo to the consignee or his agent. Pakistan was indicted as consignee and GPC was the notify party.
However, in the export invoice, GPC was clearly named as buyer or importer. Petitioner referred to GPC
as such in his demand letter to respondent and his complaint before the court. This premise brings into
conclusion that the deliveries of the cargo to GPC as buyer or importer is in conformity with Art. 1736 of
the Civil Code. Therefore, there was a valid delivery.
41
Cases Applying Articles 1744-1754

Vigilance Over Goods

of Common Carriers
42
Articles Applied:
Art. 1744. A stipulation between the common carrier and the shipper or owner limiting the liability of the
former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary
diligence shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the service rendered by the common carrier;
and
(3) Reasonable, just and not contrary to public policy.
Art. 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and
contrary to public policy:
(1) That the goods are transported at the risk of the owner or shipper;
(2) That the common carrier will not be liable for any loss, destruction, or deterioration of the
goods;
(3) That the common carrier need not observe any diligence in the custody of the goods;
(4) That the common carrier shall exercise a degree of diligence less than that of a good father of
a family, or of a man of ordinary prudence in the vigilance over the movables transported;
(5) That the common carrier shall not be responsible for the acts or omission of his or its
employees;
(6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act
with grave or irresistible threat, violence or force, is dispensed with or diminished;
(7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods
on account of the defective condition of the car, vehicle, ship, airplane or other equipment used in
the contract of carriage.
Art. 1746. An agreement limiting the common carrier's liability may be annulled by the shipper or owner if
the common carrier refused to carry the goods unless the former agreed to such stipulation.
Art. 1747. If the common carrier, without just cause, delays the transportation of the goods or changes
the stipulated or usual route, the contract limiting the common carrier's liability cannot be availed of in
case of the loss, destruction, or deterioration of the goods.
43
Art. 1748. An agreement limiting the common carrier's liability for delay on account of strikes or riots is
valid.
Art. 1749. A stipulation that the common carrier's liability is limited to the value of the goods appearing in
the bill of lading, unless the shipper or owner declares a greater value, is binding.
Art. 1750. A contract fixing the sum that may be recovered. by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances,
and has been fairly and freely agreed upon.
Art. 1751. The fact that the common carrier has no competitor along the line or route, or a part thereof, to
which the contract refers shall be taken into consideration on the question of whether or not a stipulation
limiting the common carrier's liability is reasonable, just and in consonance with public policy.
Art. 1752. Even when there is an agreement limiting the liability of the common carrier in the vigilance
over the goods, the common carrier is disputably presumed to have been negligent in case of their loss,
destruction or deterioration.
Art. 1753. The law of the country to which the goods are to be transported shall govern the liability of the
common carrier for their loss, destruction or deterioration.
Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger's baggage which is not in
his personal custody or in that of his employee. As to other baggage, the rules in Articles 1998 and 2000
to 2003 concerning the responsibility of hotel-keepers shall be applicable.
44
Juan Ysmael & Co. v. Barreto & Co.

51 PHIL 90
Facts:
Plaintiff seeks to recover from defendant the alleged value of the four cases of merchandise
which it delivered to the steamship ANDRES on October 23, 1922, at Manila, to be shipped to Surogao.
Said shipment was never delivered to the consignee. The defendants rely only on clause 7 of the bill of
lading whereby it was provided that action not brought within 610 days from the time the cause of action
accrued still be barred, and on clause 12 which provided that the defendants are not liable for any
package in excess of P300 unless the value and contracts of such package are correctly stated in the bill
of lading at the time of the shipment. The goods in question were shipped from Manila on October 25,
1922, or a little less that 6 months after the shipment was made.
Issue:
Whether or not the action was brought within a reasonable time.
Held:
The action was brought within a reasonable time as those words are specified and defined in the
authorities sited. It is true that both the plaintiff and the defendants are residents of the City of Manila,
but it is also true that Surigao where the goods in question were to be delivered is one of the most distant
places from Manila in the Philippine Islands. In the very nature of things, plaintiff would not want to
commence its action until such time as it had made a full and careful investigation of all of the material
facts and even the law of the case, so as to determine whether or not defendants were liable for its loss.
Clause 12 places a limit of P300 for any single package of silk. The evidence of each case very
near P2,500. In this situation, the limit of defendants liability for each package of silk for loss or damage
from any cause of for any reason, would put it in the power of the defendant to have taken the whole
cargo of 64 cases of silk at a valuation of P300 of each case, or less than 1/8 of its actual value. If that
rule of law should be sustained, no silk would ever be shipped from one island to another in the
Philippines. Such a limitation in value is valid as against public policy.
45
Shewaram v. Philippine Airlines

17 SCRA 606
Facts:
Shewaram, petitioner herein, is a Hindu from Davao. He boarded a PAL plane for a trip to
Manila. He checked in 3 pieces of baggage, a suitcase 2 other pieces. One of the suitcases were
mistagged by the defendant and as a result the said suitcase did not arrive with him in Manila. He was
shown a similar bag, but the contents did not belong to him. Among his things in the suitcase was a
Rollflex camera and Transistor Radio 7. His baggage was later on returned but the camera and radio
were missing. He demanded indemnity for his loss from PAL. The latter offered to pay P100 for his loss
but Shewaram. Defendant herein claimed that the PAL ticket, on the reverse side, stated in fine print that
if the value of baggage is not stated, and the baggage is lost, the maximum liability of PAL is P100.00. If
value in excess of P100.00 is stated, PAL will charge extra because PAL is being held liable for an
amount exceeding P100.00. Shewaram rejected the offer and demanded full payment of P800.00 for the
amount of the things he lost. PAL refused to do so.
Issue:
Whether the stipulation limiting the liability of PAL shall apply in the case at bar.
Held:
The Court held that PAL is liable for the loss of the petitioner herein. The stipulation in at the back
of the ticket shall not be binding against the petitioner. Article 1750 of the NCC provides that Article 1750
the pecuniary liability of a common carrier may, by contract, be limited to a fixed amount. It is required,
however, that the contract must be "reasonable and just under the circumstances and has been fairly
and freely agreed upon." In this case, the court believes that the requirements of said article have not
been met. It cannot be said that the petitioner had actually entered into a contract with the PAL,
embodying the conditions as printed at the back of the ticket stub that was to the petitioner. The fact that
those conditions are printed at the back of the ticket stub in letters so small that they are hard to read
would not warrant the presumption that the petitioner was aware of those conditions such that he had
"fairly and freely agreed" to those conditions.
46
Sea-Land Service, Inc. v. Intermediate Appellate Court

153 SCRA 552
Facts:
Sea-Land, a foreign shipping and forwarding company licensed to do business in the Philippines,
received from Sea-borne Trading Company in California, a shipment consigned to Sen Hiap Hing, the
business name used by Cue. The shipper not having declared the value of the shipment , no value was
indicated in the bill of lading. The shipment was discharged in Manila, and while awaiting transshipment
to Cebu, the cargo was stolen and never recovered.
The trial court sentenced Sea-Land to pay Cue P186,048 representing the Philippine currency
value of the lost cargo, P55, 814 for unrealized profit and P25,000 for attorneys fees. CA affirmed the
trial courts decision.
Issue:
Whether or not Sea-Land is liable to pay Cue.
Held:
There is no question of the right of a consignee in a bill of lading to recover from the carrier or
shipper for loss of, or damage to, goods being transported under said bill, although that document may
have been drawn up only by the consignor and the carrier without the intervention of the consignee.
Since the liability of a common carrier for loss of or damage to goods transported by it under a
contract of carriage os governed by the laws of the country of destination and the goods in question were
shipped from the United States to the Philippines, the liability of Sea-Land has Cue is governed primarily
by the Civil Code, and as ordained by the said Code, supplementary, in all matters not cluttered thereby,
by the Code of Commerce and special laws. One of these supplementary special laws is the Carriage of
goods by Sea Act (COGSA), made applicable to all contracts for the carriage by sea to and from the
Philippines Ports in Foreign Trade by Comm. Act. 65.
Even if Section 4(5) of COGSA did not list the validity and binding effect of the liability limitation
clause in the bill of lading here are fully substantial on the basis alone of Article 1749 and 1750 of the
Civil Code. The justices of such stipulation is implicit in its giving the owner or shipper the option of
avoiding accrual of liability limitation by the simple expedient of declaring the value of the shipment in the
bill of lading.
The stipulation in the bill of lading limiting the liability of Sea-Land for loss or damages to the
shipment covered by said rule to US$500 per package unless the shipper declares the value of the
shipment and pays additional charges is valid and binding on Cue.
47
Citadel Lines, Inc. v. Court of Appeals

184 SCRA 544
Facts:
Citadel Lines, Inc., petitioner herein is the general agent of the vessel "Cardigan Bay/Strait
Enterprise" . Manila Wine Merchants, Inc. (Consignee) is the importer of the subject shipment of Dunhill
cigarettes from England. The said vessel loaded on board Filbrite cartons of manufactured cigarettes
called "Dunhill International Filter" and "Dunhill International Menthol". The shipment arrived at the Port
of Manila in a container. The said container was received by Metro Port Service, Inc., respondent herein.
Subsequently the container van, which contained two shipments was stripped. One shipment was
delivered and the other shipment containing cigarettes was palletized. Due to lack of space at the
Special Cargo Coral, the aforesaid cigarettes were placed in two containers with two pallets with both
containers duly padlocked and sealed by the representative of the petitioner.
The next day, petitioners headchecker discovered that the container van of the cigarettes had a
different padlock and the seal was tampered with. This was reported to the Pier Superintendent it was
found that 90 cases of imported British manufactured cigarettes were missing. When the Consignee
found out that 90 cases were missing it filed a claim demanding the payment of the market value of the
missing cargo. Petitioner, in its reply letter, admitted the loss but alleged that the same occurred at Pier
13, an area absolutely under the control of the arrastre (Metro Port Service, Inc). Manila Wine Merchants
filed a formal claim, with the arrastre and demanded payment of the value of the goods but said claim
was denied.
The lower court rendered a decision exonerating the arrastre of any liability on the ground that the
subject container van was not formally turned over to its custody, and held the petitioner liable for the
amount representing the market value of the lost shipment. On appeal the court of Appeals affirmed the
decision of the lower court but deleted the award of attorney's fees and costs of suit. Hence this petition.
Issue:
Whether the stipulation limiting the liability of the carrier contained in the bill of lading is binding
on the consignee.
Held:
The Court held that the stipulation limiting the liability of the carrier is valid and binding upon the
consignee. It was expressly stipulated in the bill of lading that the carriers liability is limited to $2.00 per
kilo. It has been held in previous cases that a stipulation appearing in the bill of lading limiting the liability
of the carrier is binding, unless the owner or shipper declares a higher value.
The consignee in this case did not declare a higher value and admits that the value of the goods
does not appear in the bill of lading. Therefore the stipulation in the bill of lading should be applied. The
contract had been freely agreed upon and the stipulation appears to be just and reasonable. Therefore,
the award of damages should be reduced and computed with regard to the bill of lading.
48
Everett Steamship Corporation v. Court of Appeals

297 SCRA 496
Facts:
Hernandez Trading Co., respondent herein, imported 3 crates of bus spare parts from its supplier,
Maruman Trading Company, Ltd., a foreign corporation based in Japan. The crates were shipped from
Japan to Manila on board "ADELFAEVERETTE," a vessel owned by the principal of the petitioner herein,
Everett Orient Lines. The said crates were covered by Bill of Lading No. NGO53MN. The vessel arrived
in Manila and it was discovered that the one crate was missing. This was confirmed and admitted by
petitioner in its letter of January 13, 1992 addressed to private respondent, which thereafter made a
formal claim upon petitioner for the value of the lost cargo amounting to One Million Five Hundred Fifty
Two Thousand Five Hundred (Y1,552,500.00) Yen, the amount shown in an Invoice No. MTM-941, dated
November 14, 1991. However, petitioner offered to pay only One Hundred Thousand (Y100,000.00) Yen,
the maximum amount stipulated under Clause 18 of the covering bill of lading which limits the liability of
petitioner. Respondent rejected the offer and filed a case to collect payment for the loss against the
petitioner.
Issue:
Whether or not the petitioner is liable for the actual value and not the maximum value recoverable
under the bill of lading.
Held:
A stipulation in the bill of lading limiting the liability of the common carrier for the loss, damages of cargo
to a certain sum, unless the shipper declares or a higher value is sanctioned by law, particularly Articles
1749 and 1780 of the Civil Code. The stipulations in the bill of lading are reasonable and just. In the bill
of lading, the carrier made it clear that its liability would only be up to Y100,000.00 (Yen). However, the
shipper, Maruman Trading, had the option to declare a higher valuation if the value of its cargo was
higher than the limited liability of the carrier. Considering that the shipper did not declare a higher
valuation, it had itself to blame for not complying with the stipulations. The trial 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.
49
British Airways v. Court of Appeals

G.R. No. 121824
Facts:
On April 6, 1989, Mahtani decided to visit his relative in Bombay, India. In anticipation of his visit,
he obtained the services of a certain Mr. Gemar to prepare his travel plan. Since british Airways had no
ticket flights from Manila to Bombay, Maktani had to take a connecting flight to Bombay on board British
Airways. Prior to his departure, Maktani checked in the PAL counter in Manila his two pieces of luggage
containing his clothing and personal effects, confident that upon reaching Hong Kong, the same would
be transferred to the BA flight bound for Bombay, Unfortunately, when Maktani arrived in Bombay, he
discovered that his luggage was missing and that upon inquiry from the BA representatives, he was told
that the same might have been diverted to London. After plaintiff waiting for his luggage for one week,
BA finally advised him to file a claim accomplishing the property.
Issue:
Whether or not defendant BA is liable for compulsory damages and 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.
50
Sweet Lines Inc. v. Teves

G.R. No. L-37750
Facts:
Private respondents Atty. Leovigildo Tandog and Rogelio Tirog bought tickets at the branch office
of the petitioner, a shipping company transporting inter-island passengers and cargoes, at the Cagayan
de Oro City. Respondents were to board M/S Sweet Hope,however upon learning that it will not be
proceeding to Bohol they decided to board M/S Sweet Town. On such vessel the respondents agreed
to hide at the cargo section to avoid inspection of the officers of the Philippine Coast guard.
After suffering the inconviences in the cargo section and paying other tickets because those that
are in their possession were no honored. The respondents sued the petitioners in the Court of First
Instance of Misamis Oriental for breach of contract of carriage in the alleged sum of P110,000.00.
Petitioners moved for the dismissal of the complaint on the ground of improper venue for
Conditon No. 14 printed on the ticket essentially provides that any actions arising out of the ticket will be
filed at the competent court of Cebu.
The trial court ruled in favor of the respondents after denying the motion for dismissal. Having
exhausted all the remedies available and still failed to obtain a ruling in their favor, the petitioner filed this
instant petition for prohibition with preliminary injunction.
The Supreme Court gave due course to their petition and required them to submit their
memoranda in support of their respective contention.
Respondents contend that condition No. 14 is not a part of the contract of carriage and that it is
an independent contract requiring the mutual consent of the parties. In the case at bar the consent of the
respondents was not sought it was imposed on them unilaterally. Venue of actions can only be waived if
there is a written agreement of the parties. Condition No.14 not being agreed to by the respondents is
not valid and enforceable. Supposing that it is otherwise, it is not exclusive and does not, therefore
exclude the filing of the action in Misamis Oriental.
Petioner contend that condition No. 14 is valid and enforceable because private respondents
acceded to it when they purchased passage tickets and it is an effective waiver of venue, valid and
binding as such, since it is printed in bold and capital letters and not in fine print and merely assigns the
place where the action arising from the contract is instituted. That condition No. 14 is unequivocal and
mandatory, the words and phrases any and all, irrespective of where it is issued, and shall leave no
doubt that the intention of Condition No. 14 is to fix the venue in the City of Cebu, to the exclusion of all
other places.
Issue:
Whether or not condition No. 14 is valid and enforceable.
Held:
Condition No. 14 is subversive of public policy on transfers of venue of actions. For, although
venue may be changed or transferred from one province to another by agreement of the parties in writing
pursuant to Rule 4, Section 3, of the Rules of Court, such an agreement will not be held valid where it
practically negates the action of the claimants, such as the private respondents herein. The philosophy
underlying the provisions on transfer of venue of actions is the convenience of the plaintiffs as well as his
witnesses and to promote the ends of justice. Considering the expense and trouble a passenger residing
outside of Cebu City would incur to prosecute a claim in the City of Cebu, he would most probably decide
not to file the action at all. The condition will thus defeat, instead of enhance, the ends of justice. Upon
the other hand, petitioner has branches or offices in the respective ports of call of its vessels and can
afford to litigate in any of these places. Hence, the filing of the suit in the CFI of Misamis Oriental, as was
done in the instant case, will not cause inconvience to, much less prejudice, petitioner.
51

Public policy is . . . that principle of the law which holds that no subject or citizen can lawfully do
that which has a tendency to be injurious to the public or against the public good . . .. Under this
principle . . . freedom of contract or private dealing is restricted by law for the good of the public.
Clearly, Condition No. 14, if enforced, will be subversive of the public good or interest, since it will
frustrate in meritorious cases, actions of passenger claimants outside of Cebu City, thus placing
petitioner company at a decided advantage over said persons, who may have perfectly legitimate claims
against it. The said condition should, therefore, be declared void and unenforceable, as contrary to public
policy to make the courts accessible to all who may have need of their services.
52
Quisumbing Sr. vs. Court of Appeals

189 SCRA 605
Facts:
Norberto Quisumbing and Gunther Loeffler were passengers of PALs Fokker Friendship plane
flying from Macatan City bound to Manila. A senior NBI agent, Florencio O. Villarin, a senior NBI agent
and also one of the passengers of the said plane, saw a certain Zaldy boarded on the same flight.
Zaldy was a suspect for the killing of a Judge Valdez. Villarin sent a note to the Captain of the plane
requesting that they contact the NBI director to send agents on their point of destination because of the
presence of Zaldy. However, Captain Luis Bonnevie came out of the cockpit and informed Villarin the he
could not send the message because it would be heard by all ground aircraft stations. Villarin advised the
Captain of the danger having Zaldy and his companions onboard. Consequently, gunshots ensued
between Zaldys group and Villarin. Zaldy announced a hold-up and obtained the belongings of the
passengers. Zaldy and his companions successfully escaped upon landing in Manila. Petitioners now
demand from PAL indemnity for their lost belongings. The petitioners contended that PAL is liable for
breach of contract of carriage, for not transporting them and their belongings at the point of destination
without loss or damage. As a defense, PAL interposed that the incident was force majeure.
Issue:
Whether PAL can be held liable for the loss of petitioners belongings due to the hi-jacking?
Held:
The Supreme Court held that PAL cannot be held liable for the loss of property. Where the
defendants has faithfully complied with the requirements of government agencies and adhered to the
established procedures and precautions of the airline industry and particular time, its failure to take
certain steps that a passenger in hindsight believes should have been done is not the negligence or
misconduct which mingles with force majeure as an active and cooperative cause. It was proven that
PAL cannot be faulted with negligence. Hence, there was no breach of contract of carriage because
there was no clear evidence that PAL acted in bad faith in their obligation to transport the passengers
and their properties at the point of destination. The mandatory use of the most sophisticated electronic
devices may have minimized hijackings but all these have proved ineffective against truly determined
highjackers. Such incident which occurred was indeed force majeure.
53
Pan American World Airways vs. Rapadas

G.R. No. 60673
Facts:
Private respondent Jose Rapadas held passenger ticket and baggage claim check for petitioners
flight No. 841 with the route from Guam to Manila. While standing inline to board the flight at the Guam
Airport, Rapadas was ordered by petitioners hand carry control agent to check-in his samsonite attach
case. Rapadas protested pointing to the fact that other co-pasengers were permitted to hand carry
baggage. He stepped out of the line only to go back again at the end of it to try of he can get through
without having to register his attach case. However, the same man in charge of had carry control did
not fail to notice him and ordered him again to register his baggage. Upon arriving in Manila on the same
day, Rapadas claimed and was given all his checked in baggage except the attach case.
Issue:
Whether or not a passenger is bound by the terms of a passenger under the Warsaw convention,
shall apply in case of loss, damage or destruction to a registered luggage of a passenger.
Held:
After a review of the various arguments of the appointing parties, the court found sufficient basis
under the particular facts of the case for the availment of the liability limitations under the Warsaw
Convention. There is no dispute and the courts below admit that there was such a notice appearing on
page 2 of the airline ticket stating that the Warsaw Convention governs in case of death or injury of
passengers or of loss, damage or destructionto a passengers luggage. Art. 22(4) of the Warsaw
Convention does not preclude an award of attorneys fees. That provision states that the limits of liability
prescribed in the instrument shall not prevent the court from awarding in accordance with its own law, in
addition, the whole or part of the court costs and other expenses of litigation incurred by the plaintiff.
54
H.E. Heacock Co. v. Macondray & Co.

42 PHIL 205
Facts:
The plaintiff shipped Edmonton clocks from New York to Manila on board a vessel of the
defendant. It was agreed in the bill of lading that the value of the goods received does not exceed $500
per freight or on in proportion for any part of a ton, unless the value be expressly stated in the bill and
freight [aid. It was also agreed that in the event of claims for shortage or damages the carrier shall not
be liable for than the net invoice price plus freight and insurances loss charges, and any loss or damage
for which the carrier may be liable shall be adjusted pro rata on said basis. The clocks were not
delivered despite demands. Plaintiff claimed P420.00, the market value of the clocks, while defendant
tendered only P76.36, the proportionate freight for value. The trial court decided in favor of the plaintiff
freight ton value. The trial value plus freight and insurance.
Issue:
Whether or not the stipulation in the bil og lading in the case at bar be followed.
Held:
Three kinds of stipulation have after been made in a bill of lading. First, one exempting the
carrier from any and all liability for ton and damage occasioned by its own negligence. Second, one
providing for an agreed valuation. Third, one limiting the liability of the carrier to an agreed valuation
unless the shipper declares a higher value and pay of authority, the first and second kinds of stipulations
are involved as being contrary to public policy, but the third is valid and enforceable.
The stipulation in a bill of lading which limits the liability of the carrier to a specified amount unless
the shipper declares a higher value and pays a higher freight valid and enforceable. Thus, if a carrier
gives to a shipper the choice of two takes, the lower of them cautioned upon his agreeing to a stipulated
valuation of his property in case of loss even by carriers negligence, if the shipper makes the choice
understandingly and freely, and names his valuation, he cannot thereafter recover move than the value
which he puts on this places upon his property.
55
Augusto Ong Yiu v. Court of Appeals

91 SCRA 223
Facts:
Petitioner was paying passenger of respondent Philippine Airlines on board flight No. 946-R from
Mactan Cebu bound for Butuan City. He was scheduled to attend the trial in the Court of First instance ,
Br. II thereat. As a passenger, he checked in one piece of luggage, a bull maleta. The plane left Mactan
Airport, Cebu City at about 1pm and arrived at Bacasi Airport, Butuan City at past 2pm of the same day.
Upon arrival, petitioner claimed his luggage but it could not be found. According to petitioner, it was only
after reacting indignantly to the loss that the matter was attended by the porter clerk which however, the
later denied. When the luggage was delivered to the petitioner with the information that the lock was
open, he found out that the folder containing documents and transcripts were missing, aside from the two
gift items for his parents-in-law. Petitioner refused to accept the luggage.
Issue:
Whether or not PAL acted with gross negligence so as to entitle petitioner to an award of moral
and exemplary damages.
Held:
PAL did not act in bad faith. It was the duty of PAL to look for petitioners luggage which had
been miscarried. PAL exerted diligent efforts to locate the plaintiffs baggage. Petitioner is neither
entitled to exemplary damages. Exemplary damages can only be granted if the defendant asked in a
wanton, fraudulent, reckless, oppressive or malevolent manner, which loss, in accordance with the
stipulation written at the back of the ticket is limited to P100 per luggage plaintiff not having declared a
greater value and not having called the attention of the defendant on its value ad paid the tariff thereon.
Wherefore, for lack of merit, the instant petition is hereby denied, and judgment sought to be reviewed is
hereby affirmed.
56
Alitalia v. Intermediate Appellate Court

192 SCRA 9
Facts:
Dr. Felipa Pablo, a professor from UP was invited to attend a meeting by the United Nations in
Ispra, Italy. She was to read a paper regarding foreign substances in food and the agriculture
environment which she had specialized knowledge of. She booked a flight to Italy with Alitalia airlines,
petitioner herein. She had arrived in Milan the day before the meeting however her luggage did not arrive
with her. The airline informed her that her luggage was delayed because it was placed in one of the
succeeding flights to Italy. She never got her luggage.
When she got back to Manila she demanded that Alitalia compensate her for the damages that
she suffered. Petitioner herein offered free airline tickets in order to compensate for the alleged
damages, however she rejected this offer and instead filed a case. Subsequently it was found out that
the luggages of Dr. Pablo were not placed in the succeeding flights. She received her luggage 11
months after and after she had already instituted a case against Alitalia.
The lower court rendered a decision in favor of Dr. Pablo and ordered plaintiff to pay damages.
On appeal, the Court of Appeals affirmed the decision and even increased the amount of damages to be
awarded to Dr. Pablo. Hence this petition for certiorari.
Issue:
Whether or not Alitalia is liable for damages incurred by Dr. Pablo.
Held:
The Court held that Alitalia is liable to pay Dr. Pablo for nominal damages. The Warsaw
Convention provides that an air carrier is made liable for damages when: (1) the death, wounding or
other bodily injury of a passenger if the accident causing it took place on board the aircraft or in the
course of its operations of embarking or disembarking; (2) the destruction or loss of, or damage to, any
registered luggage or goods, if the occurrence causing it took place during the carriage by air"; and (3)
delay in the transportation by air of passengers, luggage or goods. However, the claim for damages may
be brought subject to limitations provided in the said convention.
In this case, Dr. Pablo did not suffer any other injury other than not being able to read her paper
in Italy. This was due to the fact that Alitalia misplaced her luggage. There was no bad faith or malice on
the part of Alitalia in the said delay in the arrival of her luggage. Dr. Pablo received all her things which
were returned to her in good condition although 11 months late. Therefore she shall receive nominal
damages for the special injury caused.
57
Maerskline v. Court of Appeals

222 SCRA 108
Facts:
Respondent herein is a firm engaged in the manufacture of pharmaceutical products. It ordered
from Eli Lily, Inc. of Puerto Rico empty gelatin capsules. Said capsules were placed in 6 drums
containing 100 capsules each. The drums were placed on board the M/V Anders Maeerskline. However
the capsules were shipped to Virginia, USA instead of the Philippines. The goods arrived in the
Philippines 2 months after the original date of arrival, and respondent herein refused to accept the goods
due to its late arrival.
An action was filed by respondent to rescind the contract with Eli Lily, Inc. and Maersk together
with a claim for damages. The lower court dismissed the complaint against Eli Lily, Inc. and held Maersk
to be liable for breach of the contract of common carriage. On appeal, the court affirmed the lower courts
decision. Hence this appeal.
Issue:
Whether or not Maersk is liable for breach of contract of common carriage.
Held:
The Court held that Maersk is liable for the breach of contract of common carriage. Common
carriers are not obligated by law to carry and deliver merchandise promptly unless the common carrier
previously assumes to deliver the goods at a given date or time. However, such delivery should be made
within a reasonable time.
In this case, it appears in the bill of lading that the goods will arrive on April 3. There was no
contract between the parties in this case, however the petitioner was aware of the date of the expected
arrival of the goods. The court finds that the delay of the delivery was unreasonable. It was due to the
negligence of the petitioner why the cargo arrived so late. Petitioner did not even explain the reason for
such delay. Therefore, petitioner herein is held liable for the breach of contract.
58
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.
59
Mecenas v. CA
180 SCRA 83
Facts:
M/T Tacloban City, owned by Philippine National Oil Company (PNOC) collided with M/T Don
Juan, was owned by respondents Negros Navigation Co., Inc. The petitioners in this case are the heirs of
two passengers who boarded the M/T Don Juan and perished due to the collision. The trial court held the
respondents liable for damages. On appeal, the respondents denied the liability by stating that between
the two vessels, the M/T Tacloban City was the one who is negligent and failed to follow the International
Rules of the Road when it did not turn starboard (right) to prevent the collision. The respondent court
reversed the decision applying the doctrine of last clear chance raised by the respondent. Petitioners
then appealed.
Issue:
Whether or not the respondent should be held liable.
Held:
The Court held that the respondent should be held liable and the respondent court erred in
reversing the decision of the trial court. The Court found the respondent to be gross negligent based on
certain instances. Such instances are first, the captain was playing mahjong at the time of the collision
and the captain stated that he was on break during the emergency when he should take charge of the
ship, second, the crew of the vessel failed to delay the sinking of the vessel because the ship sank
around ten to fifteen minutes, third, the ship was overloaded with passengers than that prescribed
number of passengers and lastly, there was no ample number of life saving devices such as rafts due to
the overloading of passengers. The respondent can not also raise the defense that it followed the
International Rules of the Road when it had the chance to prevent the collision with proper care and skill.
The doctrine of last clear chance cannot be applied in the case as well because the doctrine is only
applicable between two drivers that are negligent against each other and not to a passenger claiming for
damages to the carrier.
60
Negros Navigation Co., Inc. v. Court of Appeals

281 SCRA 534
Facts:
Ramon Miranda purchased tickets for his wife, daughter, son and niece for a trip to Bacolod on
board the M/V Don Juan. The said vessel is operated by the Negros Navigation Co., petitioner herein.
Unfortunately, the M/V Don Juan collided with the M/T Tacloban City which resulted to the sinking of the
former. Many perished in this accident and some of the bodies of the victims were washed to the shore.
Unfortunately, the bodies of his family members were never found.
Miranda filed a case in order to recover damages from Negros Navigation for the loss of his
family. Petitioner herein alleges that since the bodies of his family cannot be found there is no proof that
his family was in fact on board the vessel, hence they cannot be held liable for the loss of his family. The
lower court rendered a judgment in favor of Miranda. Pursuant to the legal maxim of "stare decisis et non
quieta movere", the court applied the ruling in the case of Mecenas v. Court of Appeals, and held that
Negros Navigation was negligent and that it is liable for the loss of the family of Miranda. On appeal the
court affirmed the decision of the lower court. Hence this petition.
Issue:
1. Whether or not the family members of Miranda were on the M/V Don Juan therefore making
them liable for the said loss.
2. Whether or not the legal maxim of stare decisis et non quieta movere is applicable in this
case.
Held:
The Court held that there was sufficient evidence to prove that Mirandas family was in fact on
board the M/V Don Juan. Miranda testified that he personally brought his family to the vessel and
watched the departure of the same. This was further proven when the numbers of the purchased tickets
appeared on the passengers manifest of the vessel. There is no reason for Miranda to claim that he had
lost his whole family in the tragedy and even went through the anguish of looking for their bodies. In the
Mecenas case the bodies of the victims were likewise never recovered.
The legal maxim of stare decisis et non quieta movere (Follow past precedents and do not disturb
what has been settled) was properly applied in this case. When the same questions relating to the same
event have been put forward by parties similarly situated as in a previous case litigated and decided by a
competent court, the rule of stare decisis is a bar to any attempt to relitigate the same issue. Therefore,
Negros Navigation is liable to pay for the damages incurred by Miranda for the loss of his family.
61
Korean Airlines Co., Ltd. V. Court of Appeals

234 SCRA 717
Facts:
In 1980, Juanito C. Lopez, an automotive electrician, was contracted for employment in Jeddah ,
Saudi Arabia , for a period of one year through Pan Pacific Overseas Recruiting Services, Inc. Lapuz
was supposed to leave on November 8, 1980, via Korean Airlines. Initially, he was wait listed. When two
of such passengers did not appear, Lapuz and another person by the name of Perico were given two
unclaimed seats.
According to Lapuz, he was allowed to check in with one suitcase and one shoulder bag at the
check-in counter of KAL. He passed through the customs and immigration section for routine check-up
and was cleared by departure. He rode on the shuttle bus and proceeded to the ramp of the KAL aircraft
for boarding. However, when he was the third or fourth rung of the stairs, a KAL officer pointed to him
and shouted. DOWN! DOWN!and was barred from taking the flight. When he later asked for another
booking, his ticket was canceled by KAL. Consequently, he was unable to report for his work in Saudi
Arabia within the stipulated 2 week period and so lost his employment.
Issue:
Whether or not the petitioner should be liable for damages.
Held:
A perusal of the plaintiff-appellants contract of employment shows that the effectivity of the
contract is for only one year, renewable every year for five years. Although plaintiff-appellant intends to
renew his contract, such renewal will still be subject to his foreign employer. Plaintiff appellant had not
yet started working with his foreign, employer, hence, there can be no basis as to whether his contract
will be renewed by his foreign employer or not. Thus, the damages representing the loss of earnings of
plaintiff-appellant in the renewal of the contract of the employment is at most speculative. Damages may
not be awarded on the basis of speculation or conjecture (Gatchalian vs. Delim, 203 SCRA
126). Defendant appellants liability is limited to the one year contract only. Plaintiff appellant is therefore
entitled only to his lost earning for one year, i.e., P60,000.00 which is 1/5 of P300,000.00 the total
amount of actual damages , representing lost earnings for five years prayed for in the complaint. The
legal interest of 6% on the damages awarded to private respondent should commence from the date of
the decision of the trial court on November 14, 1990.
62
Fortune Express vs. Court of Appeals

305 SCRA 14
Facts:
A bus of petitioner Fortune Express, Inc. figured an accident with a jeepney in Lanao del Norte
which resulted to the death of several passengers of the jeepney including two Maranaos. A
Constabulary agent investigated that the jeepney was owned by a Maranao and certain Maranaos were
planning to take revenge on petitioner by burning some of its buses. Subsequently, the Operations
Manager of Fortune Express was advised to take precautionary measures. Four days after the accident,
three armed Maranaos pretended to be passengers of a bus of petitioner. They seized such bus and set
it on fire. The passengers of the bus were asked to get off, but one passenger, Atty. Talib Caorong went
back to retrieve something. He was shot and killed during the incident. Petitioner contends that the
seizure by the armed assailants was a fortuitous event thus it cannot be held liable.
Issue:
Whether or not Fortune Express is liable for the death of Atty. Caorong.
Held:
The Supreme Court held that the seizure of the bus by the armed Maranaos cannot be assailed
as a fortuitous event. The requisite of unforseeability to be considered forced majeure is lacking. Fortune
Express knew that Maranaos were planning to burn some of its passenger buses and yet petitioner did
nothing to protect the safety of its passengers. 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.
63
Philippine Rabbit Bus Lines, Inc. v. Intermediate Appellate Court

189 SCRA 158
Facts:
Several people boarded a jeepney owned by the spouses Isidro Mangue and Guillermo Carreon.
Said jeepney was driven by Manalo and was travelling to Pampanga to Pangasinan. The passengers
wre on their way home to spend Christmas together with their families. On its way to Pangasinan, one of
the rear tires of the jeepney was detached and it prompted the driver to step on the brakes. Upon
applying the brakes the jeepney made a sudden u-turn and it stopped on the opposite lane of the
highway. Subsequent to the unexpected u-turn a Philippine Rabbit bus bumped the jeepney from behind.
As a result of the collision, three passengers died and the others sustained physical injuries.
The heirs of the passengers filed a case to claim for damages. The lower court held that Manalo,
the driver of the jeep, was negligent. On appeal the Court of Appeals reversed the decision with regard to
the payment of damages to Philippine Rabbit Bus Lines. Hence this petition.
Issue:
1. Whether or not the doctrine of last clear chance is applicable in this case.
2. Whether or not Manalo is solely liable for the death and physical injuries of the victims.
Held:
The Court held that the doctrine of last clear chance is not applicable in this case. This doctrine
shall only apply to suits between the owners and drivers of the two colliding vehicles. The case at bar is a
case where the passengers are demanding indemnity from the carrier due to the contract of common
carriage.
It is clear from the evidence that it is Manalo and the owners of the jeepney who are negligent in
this case. There was no proper explanation as to why the rear wheel of the vehicle suddenly became
detached. Therefore the Court affirms the decision of the lower court and holds Manalo and the owners
liable to pay damages.
64
Bustamante v. Court of Appeals

G.R. No. 89880
Facts:
A sand and gravel truck was descending on a road, on the opposite direction, was a Mazada
passenger bus. The driver of the bus noticed that the truck was wiggling however; the driver still
increased its speed in order to overtake a tractor in front of it. This act of the bus led to the two vehicles
side swiping each other. Several passengers were thrown and caused death and injury to them. The
petitioners then filed a suit against the owner and driver of the truck and the owner and driver of the bus.
The trial court held that both drivers should be solidarily liable to the petitioners. From the decision, only
the owner and driver of the truck appealed. The respondent court reversed the decision as to the two
who appealed. The petitioners now filed this petition.
Issue:
Whether or not the respondents are liable.
Held:
The Court held that the respondents should be liable to the petitioners. The reason is that the
owner of the truck is negligent in hiring the driver and using the old truck in his business which is
detrimental to other due to its poor condition. On the other hand, the driver is liable for he was driving the
old truck in a descending road and in a fast rate. The driver also noticed the wiggling of the tires and did
not give regard to it. Furthermore, the vehicle which is going down or descending is more liable to get out
of control because it has added momentum as provided by the Court. The petitioners raised the doctrine
of last clear chance which the Court disregarded because such doctrine apply only to two drivers against
each other in a case and not in a case where the passenger is claiming for damages against the carrier.
65
Lara v. Valencia
104 PHIL 65
Facts:
The deceased was an inspector of the Bureau of Forestry in Davao who went to classify logs with
defendant in his Cotabato concession. Lara got sick of malaria. He asked defendant if he could take
him in pick-up back to Davao. Lara sat at the back of the vehicle on a bag. Lara fell off and later died.
CFI rendered judgment ordering defendant to pay damages.
Issue:
Whether or not defendant, as owner of the truck, liable to the death of Lara when the later fell off
his vehicle.
Held:
As accommodation passenger or invited guests, defendant as owner and driver of the pick-up
truck owes them merely the duty to exercise reasonable care so that they may be transported safely to
their destination. Thus, the rule is established by the weight of authority that the owner or operator of an
automobile owes the duty to an invited guest to exercise reasonable care and injury by increasing the
hazards of travels. The rule is that n owner of an automobile owes a guest the duty to exercise ordinary
or reasonable care to avoid injuring him. Since one riding in an automobile is no less a guest because
he asked for the privilege of doing so, the same obligation of care is imposed upon the driver as in case
of one expressing invitation to ride. The extraordinary diligence required of common carriers is not
required.
In the case at bar, declared himself chose the place where he would sit and he was half-asleep
when the accident took place so that the incident is attributed to his lack of care considering that the pickup was open and he was then in a crouching position. On the other hand, there is no showing that the
defendant failed to take the precautions necessary to conduct his passengers safely to this place of
destination. Defendant therefore is not liable for damages.
66
Necesito v. Paras
104 PHIL 75
Facts:
A mother and her son boarded a passenger auto-truck of the Philippine Rabbit Bus Line. While
entering a wooden bridge, its front wheels swerved to the right, the driver lost control and the truck fell
into a breast-deep creek. The mother drowned and the son sustained injuries. These cases involve
action ex contractu against the owner of PRBL filed by the son and heirs of the mother. Lower Court
dismissed the actions, holding that the accident was a fortuitous event.
Issue:
Whether or not the accident was considered a fortuitous event.
Held:
While the carrier is not an insurer of the safety of the passenger, it should nevertheless be held to
answer for the flaws of its equipment it such defects were discoverable. In this connection, the
manufacturer of the defective appliance is considered in law the agent of the carrier, and the good repute
of the manufacturer will not relieve the carrier from liability. The rationale of the carriers liability is the
fact that the passenger has no privity with the manufacturer of the defective equipment; hence he has
no remedy against him, while the carrier has. We find that the defect could be detected. The periodical,
usual inspection of the steering knuckle did not measure up to the utmost diligence of a very cautious
person as far as human care and foresight can provide and therefore the knuckles failure can not be
considered a fortuitous event that exempts the carrier from responsibility. Judgment REVERSED, PRBL
to pay indemnity.
67
Japan Airlines v. Court of Appeals

GR. No. 118864
Facts:
Private respondents were passengers of Japan Airlines from California bound for Manila. The
flights were to make an overnight stopover at Nairita, Japan as an incentive for traveling. However, due
to the eruption of Mt. Pinatubo which rendered the NAIA inaccessible, respondents flight from Japan to
Manila was indefinitely. JAL assumed the hotel expenses for their unexpected overnight stay on June
15, 1991. However, JAL no longer settled their hotel and accommodation expenses during stay at Nauta,
Japan. Since NAIA was only reopened for 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.
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.
68
Layugan v. Intermediate Appellate Court

G.R. No. 73998
Facts:
Petitioner and a companion was repairing the tire of a parked truck along the National Highway.
The respondents driver then recklessly hit the parked truck from behind which caused injuries to the
petitioner. The petitioner then filed for an action of damages against respondent. The lower court
awarded damages to the petitioner. On appeal, the respondent claimed that the petitioner was negligent
in not installing an early warning device. The appellate court then reversed the decision of the lower court
by finding the petitioner negligent based on the doctrine of res ipsa loquitur. Thus, the petitioner filed this
appeal.
Issue:
Whether or not the respondent should be held liable for the injuries incurred by the petitioner.
Held:
The Court held that the respondent court erred in applying the doctrine of res ipsa loquitur
because there were pieces of conclusive evidence which points to the negligence of the respondent. The
said doctrine only applies if there is no conclusive evidence to determine who is indeed negligent in the
accident. The respondents driver stated that when the accident occurred his brakes were not working
and that he was driving in a fast rate. This shows that the respondent was indeed negligent. The defense
of the respondent that there was no early warning device will not stand for there was actually a lamp
lighted and placed at the back of the truck which is considered as an early warning device. Therefore, the
Court found that the respondent is liable for the injuries of the petitioner.
69
Del Castillo v. Jaymalin

112 SCRA 629
Facts:
Mario a deaf mute is a son of Petitioner Del Castillo. They are paying passengers of defendant
Bicol Transportation operated by A.L Ammen Transportation. Mario fell upon aligting from the bus and
died.
An action for damages was filed against the driver, conductor and bus companies. The court
rendered a judgment in favor of the respondent. Trial court dismissed the petition based solely that
damages and liability of the carrier is based on the earning capacity of the victim. In the case at bar, the
court considered there is no loss of earning capacity considering the victim was deaf-mute.
Issue:
Whether or not the bus employees are liable for damages.
Held:
Common carriers are responsible for the death of their passengers as provided in Articles 1964
and 2206 of the Civil Code. It includes the loss of the deceased earning capacity. The conductor was
told and knowledgeable of passenger Mario being deaf and dumb. The court held that the conductor
should have taken extraordinary care for the safety of the said deaf passenger.
Court procedure demands that the case be remanded to the lower court for determination of the
amount of damages to be awarded. However, the court considered the pendency of the case being on
roll for 13 years. The Supreme Court determined the damages at Php12,000 as indemnity for the victims
death without interest and Php2,000 attorney;s fees. The loss of earning capacity is not awarded since
the vivtim is deaf-mute.
70
Gatchalian v. Delim
203 SCRA 126
Facts:
Reynalda Gatchalian boarded a minibus owned and operated by respondent herein. She boarded
the bus at La Union and it was bound for Bauang. While the bus was running, one of the passengers
noticed a snapping sound. She was alarmed and asked the driver about it, he then replied that it was
normal. Subsequently, the minibus hit a flower pot on the side of the road which caused the bus to turn
turtle and it fell into a ditch. Several passengers were injured in the accident. Gatchalian suffered injuries
on her leg, arm and face specifically the forehead.
The injured passengers were brought to the hospital for treatment of their injuries. While the
passengers were confined in the hospital, Mrs. Delim, wife of the respondent visited them and paid for
the medical expenses of the victims. Before leaving the hospital, she made the injured passengers sign a
prepared affidavit which stated that they were no longer interested in filing a complaint whether criminal
or civil against the driver and owner of the minibus. Gatchalian also signed the said document.
Subsequently, Gatchalian filed a complaint for damages even though she had already signed the
affidavit prepared by Mrs. Delim. The lower court dismissed the complaint of Gatchalian and held that
there was a valid waiver of the right to file a complaint. The Court of Appeals reversed the decision that
there was a valid waiver but denied petitioners claim for damages. Hence this petition.
Issue: Whether or not Gatchalian is entitled to the award of damages in lieu of the injuries that she
suffered.
Held:
The Court held that there was no valid waiver and that Gatchalian is entitled to the award of
damages. A waiver, in order to be valid, must be couched in clear and equivocal terms which leave no
doubt as to the intention of relinquishing a right that is legally his or hers. A waiver must not be contrary
to law, morals, public policy or good customs. The waiver in this case is not valid because the terms in
the affidavit did not clearly state the intention of giving up the right to file a complaint. The words no
longer interested do not manifestly show such intention. Also, such waiver is against public policy
because it would weaken the standard of utmost diligence required of common carriers in bringing their
passengers safely to their destination.
It was established through evidence that the common carrier is guilty of negligence. The reply of
the driver when asked about the snapping sound is sufficient proof to indicate that such sound had been
there for a while and that the common carrier did not look after the roadworthiness of the vehicle to
assure the safety of the passengers. There was gross negligence on the part of the driver because there
was wanton disregard for the passengers safety when he did not stop the minibus after hearing the
snapping sound and the remark of one of the passengers.
Therefore the petitioner in this case is entitled to receive actual or compensatory damages which
include 15,000 pesos for the cost of plastic surgery to remove the scar on Gatchalians face.
71
Cases Applying Articles1756-1763

Safety of Passengers
72
Articles Applied:
Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at
fault or to have acted negligently, unless they prove that they observed extraordinary diligence as
prescribed in Articles 1733 and 1755.
Art. 1757. The responsibility of a common carrier for the safety of passengers as required in Articles
1733 and 1755 cannot be dispensed with or lessened by stipulation, by the posting of notices, by
statements on tickets, or otherwise.
Art. 1758. When a passenger is carried gratuitously, a stipulation limiting the common carrier's liability for
negligence is valid, but not for wilful acts or gross negligence.
The reduction of fare does not justify any limitation of the common carrier's liability.
Art. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or
wilful acts of the former's employees, although such employees may have acted beyond the scope of
their authority or in violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they exercised all the diligence of a
good father of a family in the selection and supervision of their employees.
Art. 1760. The common carrier's responsibility prescribed in the preceding article cannot be eliminated or
limited by stipulation, by the posting of notices, by statements on the tickets or otherwise.
Art. 1761. The passenger must observe the diligence of a good father of a family to avoid injury to
himself.
Art. 1762. The contributory negligence of the passenger does not bar recovery of damages for his death
or injuries, if the proximate cause thereof is the negligence of the common carrier, but the amount of
damages shall be equitably reduced.
73

Art. 1763. A common carrier is responsible for injuries suffered by a passenger on account of the wilful
acts or negligence of other passengers or of strangers, if the common carrier's employees through the
exercise of the diligence of a good father of a family could have prevented or stopped the act or
omission.
La Mallorca v. Court of Appeals
17 SCRA 739
Facts:
Plaintiffs husband and wife, together with their minor children, boarded a La Mallorca bus. Upon
arrival at their destination, plaintiffs and their children alighted from the bus and the father led them to a
shaded spot about 5 meters from the vehicle. The father returned to the bus to get a piece of baggage
which was not unloaded. He was followed by her daughter Raquel. While the father was still on the
running board awaiting for the conductor to give his baggage, the bus started to run so that the father
had to jump. Raquel, who was near the bus, was run over and killed.
Lower court rendered judgment for the plaintiff which was affirmed by CA, holding La Mallorca
liable for quasi-delict and ordering it to pay P6,000 plus P400. La Mallorco contended that when the child
was killed, she was no longer a passenger and therefore the contract of carriage terminated.
Issue:
Whether or not the contractual obligation between the parties ceases the moment the passenger
alighted form the vehicle.
Held:
On the question whether the liability of the carrier, as to the child who was already led a place 5
meters from the bus under the contract of carrier, still persists, we rule in the affirmative. It is a
recognized rules that the relation between carrier and passengers does not cease at the moment the
passenger alights from the 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 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.
74
Aboitiz Shipping Corporation vs. Court of Appeals

188 SCRA 387
Facts:
Anacleto Viana was a passenger of M/V Antonia bound for Manila which was owned by
defendant Aboitiz. After the said vessel has landed, the Pioneer Stevedoring Corp., as the arrastre
operator, took over the exclusive control of the cargoes loaded on it. One hour after the passengers had
disembarked, Pioneer Stevedoring started operation by unloading the cargoes using its crane. Viana
who had already disembarked remembered that some of his cargoes were still inside the vessel. While
pointing to the crew of the vessel the place where his cargoes were, the crane hit him, pinning him
between the side of the vessel and the crane which resulted to his death. Vianas wife filed a complaint
for damages against Aboitiz for breach of contract f carriage. Aboitiz, however filed a third party
complaint against Pioneer since it had control completely over the vessel during the incident.
Furthermore, petitioner contends that one hour has already elapsed from the time Viana disembarked,
thus he has already ceased to be a passenger.
Issue:
Whether or not Aboitiz is liable for the death of Viana.
Held:
The Supreme Court held that the failure of Aboitiz to exercise extraordinary diligence for the
safety of its passengers makes Aboitiz liable. It has been recognized as a rule that the relation of the
carrier and passenger does not cease the moment the passenger alights from the carriers vehicle, but
continues until the passenger has had a reasonable time or a reasonable opportunity to leave the
carriers premises. A reasonable time or a reasonable delay within this rule is to be determined from all
the circumstances. The primary factor to be considered is the existence of a reasonable cause as will
justify the presence of the victim on or near the petitioners vessel. In the case at bar, such justifiable
cause exists because he had to come back for his cargo. Aboitiz has failed to safeguard its passenger
with extraordinary diligence in requiring or seeing to it that precautionary measures were strictly and
actually enforced to subserve their purpose of preventing entry into a forbidden area.
75
Mallari, Sr. v. Court of Appeals

324 SCRA 147
Facts:
Mallari Jr. was the driving a passenger jeepney owned by his father, co-petitioner herein. The
jeep collided with the delivery van of Bulletin Publishing Corp. while travelling on the National Nighway in
Bataan. Mallari Jr. proceeded to overtake a fiera which had stopped in front of him. He negotiated the
curve and moved in the opposite lane in order to overtake the fiera. As he passed the vehicle he saw the
delivery van of Bulletin and the vehicles collided. The points of collision were the and the left rear portion
of the passenger jeepney and the left front side of the delivery van. The 2 right wheels of the delivery van
were on the right shoulder of the road and pieces of debris from the accident were found scattered along
the shoulder of the road up to a certain portion of the lane travelled by the passenger jeepney. The
impact caused the jeepney to turn around and fall on its left side resulting in injuries to its passengers
one of whom was Israel Reyes who eventually died due to the gravity of his injuries.
The widow of Reyes filed a complaint to recover damages from Mallari, Jr. and Sr. and Bulletin
as well. The trial court found that the proximate cause of the collision was the negligence of the driver of
the Bulletin delivery van, considering the fact that the left front portion of the delivery truck hit and
bumped the left rear portion of the passenger jeepney. On appeal, the court reversed the decision of the
lower court and held that it was Mallari Jr. who was negligent. Hence this petition.
Issue: Whether or not petitioners herein should be held liable for the death of Reyes.
Held:
The Court affirmed the decision of the Court of Appeals and held that Mallari Jr. and Sr. who are
responsible for the death of Reyes. The collision was caused by the sole negligence of petitioner Alfredo
Mallari Jr. who admitted that immediately before the collision and after he rounded a curve on the
highway, he overtook a Fiera which had stopped on his lane and that he had seen the van driven by
Angeles before overtaking the Fiera. This act of overtaking was in clear violation of Sec. 41, pars. (a) and
(b), of RA 4136 as amended, otherwise known as The Land Transportation and Traffic Code. The rule is
settled that a driver abandoning his proper lane for the purpose of overtaking another vehicle in an
ordinary situation has the duty to see to it that the road is clear and not to proceed if he cannot do so in
safety. Article 2185 of the NCC, there is a presumption of negligence on the part of a person driving a
motor vehicle if at the time of the mishap he was violating a traffic regulation. Petitioners herein failed to
present satisfactory evidence to overcome this legal presumption. Therefore they shall be liable for the
loss of Reyes life.
76
Bayasen v. Court of Appeals

G.R. No. L-25785
Facts:
Petitioner Saturnino Bayasen, the Rural Health Physician in Sagada, Mountain Province, went to
barrio Ambasing to visit a patient. Two nurses from the Saint Theodores Hospital in Sagada, Elena
Awichen and Dolores Balcita, rode with him in the jeep assigned for the use of the Rural Health Unit.
Later, at Ambasing, the girls, who wanted to gather flowers, again asked if they could ride with him up to
a certain place on the way to barrio Suyo which he intended to visit anyway. Dr. Bayasen again allowed
them to ride, Elena sitting herself between him and Dolores.
On the way, the jeep went over a precipice. About 8 feet below the road, it was blocked by a pine
tree. The three, were thrown out of the jeep. Elena was found lying in a creek further below. She
suffered a skull fracture which caused her death. Saturnino Bayasen was charged by with Homicide Thru
Reckless Imprudence. Trial Court found Bayasen sentenced him to an indeterminate penalty of 4 Months
and 1 Day of arresto mayor as minimum, to 1 Year, 7 Months and 10 Days of prision correccional, as
maximum, indemnify the heirs Elena Awichen P3,000.00 as compensatory damages, P1,000.00 as
attorneys fees and P1,886.00 for burial expenses of the deceased, and to pay the costs. On Appeal, CA
affirmed the decision of the trial court with the modifications that the indemnity was increased to
P6,000.00; the award of attorneys fees was set aside; and that the maximum of the prison term was
raised to 1 Year, 7 Months, and 17 Days of prision correccional. The motion for reconsideration of
Bayasen was denied. Hence, the petition for review on certiorari.
Issue:
Whether or not the reckless driving of accused-petitioner was the proximate cause of the death of
the victim.
Held:
The proximate cause of the tragedy was the skidding of the rear wheels of the jeep and not the
unreasonable speed of the petitioner because there was no evidence on record to prove or support the
finding that the petitioner was driving at an unreasonable speed. The star witness of the prosecution,
Dolores Balcita who was one of the passengers in the jeep, testified that Saturnino Bayasen was driving
his jeep moderately just before the accident and categorically stated that she did not know what caused
the jeep to fall into the precipice. It is a well-known physical fact that cars may skid on greasy or slippery
roads, as in the instant case, without fault on account of the manner of handling the car. Skidding means
partial or complete loss of control of the car under circumstances not necessarily implying negligence. It
may occur without fault. Herein, under the particular circumstances, Bayasen who skidded could not be
regarded as negligent, the skidding being an unforeseen event, so that Bayasen had a valid excuse for
his departure from his regular course.
The negligence of Bayasen has not having been sufficiently established, his guilt of the crime
charged has not been proven beyond reasonable doubt. He is, therefore, entitled to acquittal. The
Supreme Court set aside the decision of the Court of Appeals sought to be reviewed, and acquitted
77

Bayasen of the crime charged in the information in Criminal Case 1056 of the CFI of Mountain Province,
with costs de oficio.
Cervantes vs. Court of Appeals

304 SCRA 25
Facts:
In compliance with a Compromise Agreement entered into by the contending parties, PAL issued
to petitioner Nicholas Cervantes on March 27, 1989, a round trip ticket for Manila-Honolulu-Los AngelesHonolulu-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.
78
Calalas v. Court of Appeals

332 SCRA 356
Facts:
Private respondent Eliza Sunga, then freshman at Siliman University , took a passenger jeepney
owned and operated by petitioner Vicente Calalas. As the jeepney was filled to capacity, Sunga was
given by the conductor an extension seat, a wooden stool at the back of the door at the rear end of the
vehicle. When the jeepney stopped to a let passenger off and Sunga was about to give way to the
outgoing passenger, an Izuzu truck driven by Verena and owned by Salva bumped the left rear portion
of the jeepney. Sunga sustained multiple injuries and remained on a cast for three months.
Sunga filed a complaint for damages against Calalas, for breach of contract of carriage. Calalas,
on the other hand,filed a third party complaint against Francisco Salva, the owner of the truck. The lower
court rendered judgment against Salva and absolved Calalas of liability.
It took cognizance of other case (Civil Case No. 3490), filed by Calalas against Salva and Verena
,for quasi-delict, in which branch 37 of the same court held Salva and his driver Verena jointly liable to
Calalas for the damage to his jeepney
The CA reversed the lower courts ruling on the ground the ground that Sungas cause of action
was based on a contract of carriage, not quasi-deplict, and that the common carrier failed to exercise the
diligence required under the Civil Code. The appellate court dismissed the third-party complaint against
Salva and adjudged Calalas liable for damages to Sunga.
Issue:
Whether or not there was a breach of contract of carriage.
Held:
Iin quasi-delict, the negligence or fault should be clearly established because it is the basis of the
action, whereas in breach of contract, the action can be prosecuted merely by proving the existence of
the contract and the fact that the obligor, in this case the common carrier, failed to transport his
passenger safely to his destination. In case of death or injuries to passengers, Article 1756 of the Civil
Code provides that common carriers are presumed to have been at fault or have acted negligently unless
they proved that they observed extraordinary diligence as defined in Arts. 1733 and 1755 of the Code.
This provision necessarily shifts to the common carrier the burden of proof.
It is immaterial that the proximate cause of the collision between the jeepney and the truck was
the negligence of the truck driver. The doctrine of proximate cause is applicable only in action for quasidelict, not in actions involving breach of contract. The doctrine is a device for imputing liability to a person
where there is no relation between him and another party. In such a case, the obligation is created by
law itself. But, where there is a pre-existing contractual relation between parties, it is the parties
themselves who create the obligation, and the function of the law is merely to regulate the relation thus
created.
79
Pestao vs. Spouses Sumayang

G.R. No. 139875
Facts:
On August 9, 1986, Ananias Sumayang along with his friend Manuel Romagos was riding a
motorcycle along the National highway in Cebu. Upon a junction where the highway was connected, they
were hit by a passenger bus driven by Gregorio Pestao and owned by Metro Cebu Auto Bus Corp.
Such bus tried to overtake them sending the motorcycle upon the pavement, resulting to the death pf the
passengers of the motorcycle. Actions were filed by the heirs of Sumayang against the driver and the
owner of Metro Cubu and its insurer.
Issue:
Whether or not Metro Cebu and Pestao are liable for the death of the passengers of the
motorcycle.
Held:
The Supreme Court held that Metro Cebu and Pesta are liable for the death of Sumayang and
Romagos. As a professional driver operating a public transport bus, he should have anticipated that
overtaking at a junction was a perilous maneuver and thus should have exercised extreme caution. The
vehicular collision was caused by Pestaos negligence when he attempted to overtake the motorcycle.
In addition, Articles 2180 and 2176 of the Civil Code provide that owners and managers are responsible
for damages caused by their employees. The employer is presumed to be negligent in the selection or
supervision of its employees when an injury is caused by the latters negligence. As evidence has shown
that the bus operated with a defective speedometer, it further proved that Metro Cebu was negligent in
the supervision over its driver. It thus failed to conduct its business with the diligence required by law.
80
De Gillaco v. Manila Railroad Co.

G.R. No. L-8034
Facts:
Lt. Tomas Gillaco, husband of Cornelia A. de Gillaco, was a passenger in the early morning train
of the Manila Railroad Company (MRC) from Calamba, Laguna to Manila. When the train reached the
Paco Railroad station, Emilio Devesa, a train guard of MRC assigned in the Manila-San Fernando, La
Union Line, happened to be in said station waiting for the same train which would take him to Tutuban
Station, where he was going to report for duty. Devesa had a long standing personal grudge against
Tomas Gillaco dating back during the Japanese occupation. And because of this personal grudge,
Devesa shot Gillaco upon seeing him inside the train. The carbine furnished by the MRC for his use as
train guard. Tomas Gillaco died as a result of the wound sustained from the shot. Devesa was convicted
of homicide by final judgment of the Court of Appeals.
Wife of deceased petitioner, filed an action against the MRC at CFI Laguna. The trial court
sentenced the respondents to pay P4,000 damages to the petitioners. Thus this appeal.
Issue:
Whether or not the carrier should be held liable
Held:
While the passenger is entitled to protection from personal violence by the carrier or its agents or
employees, the responsibility of the carrier extends to those acts that the carrier could foresee or avoid
through the exercise of the degree of care or diligence required of it. The Old Civil Code did not impose
upon the carrier absolute liability for assaults of their employees upon the passenger. In the present
case, the act of Devesa is shooting the passenger was entirely unforeseeable by MRC. They had no
means to ascertain or anticipate that the two would meet, or could it reasonably foresee every personal
career that might exist between each of its may employee and any one of the thousands of passengers
riding in its train. The shooting was therefore, a caso fortuito, both being unforeseeable and inevitable,
under the circumstances. The resulting breach of Manila 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.
SC reversed the judgment appealed from, and dismissed the complaint, without costs.
81
Maranan v. Perez
20 SCRA 412
Facts:
Rogelio Carachea was a passenger in a taxicab operated by Pascual perez when he was
stabbed and killed by the driver, who was found guilty of homicide in the CFI. While an appeal at the CA,
Antonia Maranan, Rogelios mother, filed an action to recover damages for the death of her son. The
CFI awarded her P3000 as damages against Perez dismissing the claim against the driver.
Issue:
Whether or not the carrier is liable for the assaults of its employee upon the passengers.
Held:
Under Art. 1739 of the Civil Code, a common carrier are liable for the death of or injuries to
passengers through the negligence or willful acts of the 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.
82
Philippine National Railways vs. CA

139 SCRA 87
Facts:
Winifredo Tupang was a paying passenger who boarded Train No. 516 f the Philippine National
Railways at Camarines Sur bound for Manila. Due to some mechanical defect, the train stopped which
took two hours before the train could resume its trip to Manila. Unfortunately, upon passing Iyam Bridge
at Lucena, Tupang fell off the train resulting to his death. Alarm was raised by the passengers that
somebody fell but the train did not stop. Instead, the train conductor called the station agent and
requested for verification of the confirmation. Rosario Tupang, the 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.
83
Isaac v. A. L. Ammen Trans. Co., Inc.

1046 SCRA 101
Facts:
Cesar Isaac boarded one of the buses operated by defendant A.L. Ammen Trans. Co., Inc. But
before reaching his destination, the bus collided with a pick up type vehicle. The collision caused the
amputation of the left arm of the plaintiff. Due to the incident, the plaintiff went through several treatments
causing many expenses. Thus, plaintiff filed a case for damages alleging that the collision which resulted
in the loss of his left arm was mainly due to the gross incompetence and recklessness of the driver of the
bus operated by the defendant. In addition, he contended that the defendant incurred liability in culpa
contractual arising from its non-compliance with its obligation to transport plaintiff to his destination.
Defendant on its part set up the defense that the injury caused was due entirely to the fault or negligence
of the pick up car and a contributory negligence on the part of the plaintiff.
Issue:
Whether or not the common carrier liable for the injury caused.
Held:
The Supreme Court held that the defendant A.L. Ammen Trans. Co., Inc., exercised the diligence
required from it and is absolved from liability for the injury caused to its passengers. It was proven in the
case at bar, that the driver of the pick up car was the sole responsible for the accident. Reports show that
the bus was at moderate speed while the pick up was at a full speed and on the wrong lane. The
Supreme Court likewise held that there was indeed contributory negligence on the part of the plaintiff, as
he placed his elbow outside the window knowing that such was dangerous. The injuries caused by the
accident worsen.
The Supreme Court held that the following governs the liability of a common carrier: 1) the liability
of a carrier is contractual and arises upon breach of its obligation. There is a breach if it fails to exert
extraordinary diligence according to all the circumstances of each case; 2) a carrier is obliged to carry its
passengers with the utmost diligence of a very cautious person, having due regard for all circumstances;
3) a carrier is presumed to be at fault or to have acted negligently in case of death of, or injury to,
passengers, it being its duty to prove that it exercised extraordinary diligence; and 4) the carrier is not an
insurer against all risk of travel.
84
Bachelor Express, Inc. v. Court of Appeals

G.R. No. 85691
Facts:
Ornominio Beter and Narcisa Rautraut were passengers of a bus belonging to petitioner Bachelor
Express, Inc. While the bus was on its way to Cagayan de Oro, a passenger at the rear portion suddenly
stabbed another passenger. The stabbing cause commotion and panic amount the passengers such
that the passengers started running to the sole exit shoving each other resulting in the falling off the bus
by passengers Beter and Rautraut causing them fatal injuries. The heirs of the deceased sued the bus
company Evidence adduced showed that the bus driver did not immediately stop the bus at the height of
the commotion; the bus was speeding from a full stop; and the victims fell from the bus door when it was
opened or gave way while the bus was still running.
Petitioner denied liability on the ground that the death of its two passengers was caused by a
force majeure as it was due to the act of a third person who was beyond its control and supervision. In
line with this, petitioner also argued that it is not an insurer of its passengers.
Issue:
1. Whether or not the case at bar is within the context of force majeure.
2. Whether or not the petitioner should be absolved from liability for the death of its passengers.
Held:
The sudden act o the passenger who stabbed another passenger in the bus is within the context
of force majeure. However, in order that a common carrier may be absolved from liability in case of force
majeure, it is not enough that the accident was caused by force majeure. The common carrier must still
proves that it was not negligent in causing the injuries resulting from such accident. Considering the
factual findings in this case, it is clear that petitioner has failed to overcome the presumption of fault and
negligence found in the law governing common carriers. The argument that the petitioners are not
insurers of their passengers deserves no merit in view of the failure of the petitioners to observe
extraordinary diligence in transporting safely the passengers to their destination as warranted by law.
85
Fortune Express vs. Court of Appeals

305 SCRA 14
Facts:
A bus of petitioner Fortune Express, Inc. figured an accident with a jeepney in Lanao del Norte
which resulted to the death of several passengers of the jeepney including two Maranaos. A
Constabulary agent investigated that the jeepney was owned by a Maranao and certain Maranaos were
planning to take revenge on petitioner by burning some of its buses. Subsequently, the Operations
Manager of Fortune Express was advised to take precautionary measures. Four days after the accident,
three armed Maranaos pretended to be passengers of a bus of petitioner. They seized such bus and set
it on fire. The passengers of the bus were asked to get off, but one passenger, Atty. Talib Caorong went
back to retrieve something. He was shot and killed during the incident. Petitioner contends that the
seizure by the armed assailants was a fortuitous event thus it cannot be held liable.
Issue:
Whether or not Fortune Express is liable for the death of Atty. Caorong.
Held:
The Supreme Court held that the seizure of the bus by the armed Maranaos cannot be assailed
as a fortuitous event. The requisite of unforseeability to be considered forced majeure is lacking. Fortune
Express knew that Maranaos were planning to burn some of its passenger buses and yet petitioner did
nothing to protect the safety of its passengers. 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.
86
Liability of Common Carriers:
Payment of
Damages
87
Cariaga v. Laguna Tayabas Bus

110 PHIL 346
Facts:
Edgardo Cariaga, a fourth year medical student at the University of Santo Tomas suffered
physical injuries from a collision between a train of Manila Railroad and the Laguna Tayabas Bus (LTB)
which he was on board. The bus collided with the train while the former was about to cross the railroad.
He suffered a severe head injury which diminished his intelligence and he will no longer be able to
continue his studies as a medical student. The said injury that he sustained also made him physically
and mentally incapable of working. All of the medical expenses were paid LTB plus allowances.
A case was filed by Edgardos parents against LTB and Manila Railroad to recover actual,
compensatory, moral and exemplary damages amounting to 312,000 pesos. LTB filed a cross-complaint
alleging that it was MRR who was negligent by not blowing its whistle as a warning for the vehicles that
were crossing the railroad and that there was no crossing bar at the said crossing. The lower court held
that LTB was negligent in crossing and the injuries sustained by Edgardo Cariaga was due to the said
negligence of the driver of the bus. The cross-complaint was dismissed by the lower court and ordered
LTB to pay 10,490 pesos as compensatory damages plus interest. Hence this petition by LTB.
Issue:
1. Whether or not LTB should be held solely liable for the injuries of Edgardo Cariaga.
2. Whether or not the award of damages by the lower court is proper.
Held: The Court held that it was LTB that was negligent and not the driver of the train. The driver of the
bus ignored the whistle of the train. He should have exercised utmost diligence in crossing the railroad
tracks. The collision between the bus and the train even caused the latter to be derailed. Therefore LTB
should be solely liable for the payment of damages to the Cariagas.
As to the award of damages, the Court held that the amount of 10,490 pesos is inadequate.
Article 2201 of the NCC provides that a common carrier shall be liable for actual or compensatory
damages, those which are natural and probable consequences of the breach of the contract of common
carriage and which the parties had foreseen or could have reasonably foreseen at the time the obligation
was constituted, provided such damages have been duly provided. This means that, actual or
compensatory damages are not only limited to medical and other expenses. It includes the possible
income that Edgardo would have earned after graduating from medical school. Considering that Edgardo
was already a fourth year med student at the time that he boarded the bus, such income could be
foreseen. These circumstances would make it sufficient to presume that he would have finished school
and passed the board exam. The award of actual damages should be increased to 25,000 pesos
assuming that the income of Edgardo would have been 300 pesos a month.
The parents of Edgardo are not parties in this case because the contract of common carriage was
between LTB and Edgardo. They were not injured in the accident therefore their claim for damages is
without merit. No award of moral damages may be given because the circumstances of this case do not
88

fall under the enumeration provided in Article 2219 and Article 2220 of the NCC. Attorneys fees cannot
be granted as well for the same reason that the circumstances do not fall under Article 2208 of the NCC.
Villa Rey Transit, Inc. v. Court of Appeals

31 SCRA 511
Facts:
Policarpio Quintos, Jr. boarded a Villa Rey Transit bus at Pangasinan which was bound for
Manila. He was seated at the first seat on the right side of the bus. The bus met an accident at a bridge
in Pampanga. It hit the back of a bullcart full of hay while it was crossing the said bridge. Unfortunately,
there was a bamboo pole tied to the cart and the end of this bamboo pole penetrated through the wind
shield of the bus and hit the face of Quintos. A La Mallorca bus was passing by the same bridge and
helped bring Quintos, Jr. and those who were on board the bullcart to the hospital. The bamboo pole
caused a severe injury to his eye and head which later on resulted into his death.
A complaint was filed by the sisters of Quintos to recover damages from Villa Rey Transit. The
Court of First Instance held that Villa Rey Transit is liable to pay actual or compensatory damages in the
amount of 63,750 pesos as well as attorneys fees. Villa Rey Transit appealed the case and the Court of
Appeals affirmed the decision of the lower court. Hence this petition.
Issue:
Whether or not the amount awarded as damages to the heirs of Quintos is proper.
Held:
The Court modified the award of damages to the heirs of Quintos. It explained that the award of
damages is computed with regard to the life expectancy of the deceased and the rate of losses sustained
by the deceased sisters. The court emphasized that the life expectancy of the victim is very important in
the computation of actual damages however it is not the sole basis for computation of the said amount.
Expenses shall be deducted from the amount determined to be the monthly income of the deceased. It is
proper to deduct living expenses that the victim would have also incurred if he were alive.
Therefore the award of actual damages shall be 33,333 pesos with regard to Quintos possible
earnings, the amount of medical and burial expenses, and 12,000 pesos pursuant to Articles 104 and
107 of the RPC in relation to Article 2206 of the NCC. In addition to this, attorneys fees shall be awarded
as well.
89
Gatchalian v. Delim
203 SCRA 126
Facts:
Reynalda Gatchalian boarded a minibus owned and operated by respondent herein. She boarded
the bus at La Union and it was bound for Bauang. While the bus was running, one of the passengers
noticed a snapping sound. She was alarmed and asked the driver about it, he then replied that it was
normal. Subsequently, the minibus hit a flower pot on the side of the road which caused the bus to turn
turtle and it fell into a ditch. Several passengers were injured in the accident. Gatchalian suffered injuries
on her leg, arm and face specifically the forehead.
The injured passengers were brought to the hospital for treatment of their injuries. While the
passengers were confined in the hospital, Mrs. Delim, wife of the respondent visited them and paid for
the medical expenses of the victims. Before leaving the hospital, she made the injured passengers sign a
prepared affidavit which stated that they were no longer interested in filing a complaint whether criminal
or civil against the driver and owner of the minibus. Gatchalian also signed the said document.
Subsequently, Gatchalian filed a complaint for damages even though she had already signed the
affidavit prepared by Mrs. Delim. The lower court dismissed the complaint of Gatchalian and held that
there was a valid waiver of the right to file a complaint. The Court of Appeals reversed the decision that
there was a valid waiver but denied petitioners claim for damages. Hence this petition.
Issue:
Whether or not Gatchalian is entitled to the award of damages in lieu of the injuries that she
suffered.
Held:
he Court held that there was no valid waiver and that Gatchalian is entitled to the award of
damages. A waiver, in order to be valid, must be couched in clear and equivocal terms which leave no
doubt as to the intention of relinquishing a right that is legally his or hers. A waiver must not be contrary
to law, morals, public policy or good customs. The waiver in this case is not valid because the terms in
the affidavit did not clearly state the intention of giving up the right to file a complaint. The words no
longer interested do not manifestly show such intention. Also, such waiver is against public policy
because it would weaken the standard of utmost diligence required of common carriers in bringing their
passengers safely to their destination.
It was established through evidence that the common carrier is guilty of negligence. The reply of
the driver when asked about the snapping sound is sufficient proof to indicate that such sound had been
there for a while and that the common carrier did not look after the roadworthiness of the vehicle to
assure the safety of the passengers. There was gross negligence on the part of the driver because there
was wanton disregard for the passengers safety when he did not stop the minibus after hearing the
snapping sound and the remark of one of the passengers.
90

Therefore the petitioner in this case is entitled to receive actual or compensatory damages which
include 15,000 pesos for the cost of plastic surgery to remove the scar on Gatchalians face.
Soberano v. Manila Railroad & Benguet Auto Line

18 SCRA 732
Facts:
Juana Soberano was a passenger of a Benguet Auto line bus bound for Baguio from Ilocos Sur.
She has brought on board the bus some eggs which was her business. When the bus reached Naguilian
road it hit a stone embankment, this caused the bus to fall from a 65-foot precipice. As a result of the
accident 2 passengers died and several passengers were injured. Soberano was also injured in the said
accident. All of her belongings were lost and destroyed as a result of the accident.
The defendant in this case offered to pay 5,000 pesos for the injury and loss caused by the
accident. However, Soberano rejected the offer and instituted a case to recover damages in the amount
of 76,757.76 pesos. The lower court awarded 5,000 pesos for actual or compensatory damages.
Petitioner herein claims that the award of damages is not enough and that the defendant herein was in
bad faith for not satisfying her claim. Hence this petition.
Issue:
Whether or not Soberano is entitled to recover a higher amount as to damages for the injury and
loss she sustained.
Held: The Court held that the award of actual damages, in relation to loss of earning capacity should be
increased from 5,000 to 15,000 pesos. Petitioner herein suffered physical injuries which resulted in a loss
of positive economic values. She had been a merchant since 1950 and she has been earning 1,500
pesos a year. Therefore, the award of damages with regard to her loss of earning capacity should be
increased to 15,000 pesos. In addition to this amount, the defendant herein shall also pay for the unpaid
allowances and the loss of profit for the eggs which were damaged in the accident.
Defendant herein cannot be held to be in bad faith for not satisfying the claim of the petitioner. It
was justified in rejecting the claim of the petitioner because the amount asked of them was too much.
The defendant in this case did not compel Soberano to file a case, she rejected the offer of the former
and decided to push through with this case. Therefore, no other damages should be awarded to the
petitioner.
91
Marchan vs. Mendoza

G.R. No. L-24471
Facts:
A passenger bus of the Philippine Rabbit Bus Lines, driven by Silverio Marchan, fell into a ditch
while travelling on its way to Manila. As a result of which respondents Arsenio Mendoza, his wife and
child, passengers of the said bus were thrown out to the ground resulting in their multiple injuries. It was
proven that the bus was traveling at high speed without due regard to the safety of its passengers and
that passengers complained and asked Machan, the driver to slow down. On the contrary, Marchan
increased its speed while approaching a truck which was then parked, apparently to avoid collision with
the incoming vehicle from the opposite direction. The rear tires of the bus skidded because of its high
speed which caused the bus to fall into a ditch. Subsequently, Marchan was convicted for physical
injuries through reckless imprudence.
Issue:
Whether or not Marchan and Philippine Rabbit Bus Lines are liable for the injuries suffered by its
passengers.
Held:
The Supreme Court held that the proximate cause of the accident was the gross negligence of
Marchan who when driving is expected to have employed the highest degree of care. He should have
been assiduously prudent in handling his vehicle to insure the safety of his passengers. There is no
reason why he 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.
92
Philippine Airlines vs. Court of Appeals

185 SCRA 110
Facts:
The Stralight Flight of Philippine Airlines (PAL) with 33 passengers took off from Iloilo bpund for
Manila. An hour and fifteen after it crashed in Mindoro. The plane was manufacture 1942 and was
acquired by the airline 1948. It has been certified as airworthy by the Civil Aeronautics Administration.
Passenger Nicanor Padilla is 29 years old, single and dead. His only legal heir is his mother
Natividad Padilla who filed for damages. She demanded Php600,000 as actual and compensatory
damages, exemplary damages and Php60,000 attorney;s fees.
Issue:
How are damages computed.
Held:
The award of damages for death is computed on the life expectancy of the deceased and not of
the beneficiary. Artcle 1764 of the Civil Code provides that article 2206 shall also applu to death of
passenger caused by the breach of contract by the common carrier.
The manner of computing damages is taken from Davila vs. CA. Net yearly income multiplied by
the Life Expectancy of the deceased. The Life Expectancy is based on the American Expectancy Table
of Mortality formula (2/3x[80-30]) cited from Villa Rey Transit Inc. vs. CA.
The income and salary of Nicanor Padilla is evidenced by witnesses, the auditor and manager of
Allied Overseas Trading, pay rolls of the companies and his income tax returns.
The trial court determined the deceased gross annual income to be Php23,100 from his yearly
salary from Padilla shipping Company and Allied Overseas Trading Company. The court considered that
he is single and thus deducted Php9, 200 as yearly living expenses.
His NET INCOME is thus, 13,900 with a life expectancy of 30 years. (Net income x Life
Expectancy) is Php417, 000. This is the amount of indemnity his mother is to receive.
This includes a legal rate of interest of 6% annum from date of judgment on 31August1973 until
fully paid.
93
De Caliston vs. Court of Appeals

122 SCRA 958
Facts:
Juana Sonza Vda. De Darrocha was run over by a passenger bus driven by Dalmacio which
resulted to the formers death. Da Rrocha was a USVA pensioner. She was survived by her only child,
Gloria Darrocha de Caliston. Dalmacio was convicted subsequently of homicide thru reckless
imprudence. He was sentenced to imprisonment and was ordered to pay de Caliston P15,000 for the
death of Darrocha, P5,000 as moral damages, P5,000 for burial expenses and P10,000 for loss of
pension, which the deceased had failed to receive. On appeal, the CA modified the CFI decision and
absolved Dalmacio from the payment of the P10,000 for loss of pension and credited him for the amount
of P5,000, previously paid to de Caliston under a vehicular insurance policy obtained by the bus owner.
Issue:
Whether or not the deletion of the P10, 000 awarded for the loss of pension proper.
Held:
Yes the deletion of damages for loss of pension was unwarranted. The pension of the decedent
being a sure income was cut short by her death, for which Dalmacio was responsible. The surviving heir,
de Caliston, is entitled to the award of P10, 000, which is just equivalent to the pension the decedent
would have received for one year if she did not die. The P5, 000 paid to de Caliston by the insurer of th e
passenger bus which figured in the accident may be deemed to have come from the bus owner who
procured the insurance. Since the civil liability (ex-delicto) of the bus owner for the death caused by his
driver is subsidiary and, at bottom, arises from the same culpa, the insurance proceeds should be
credited in favor of the errant driver.
94
Philippine Airlines v. Court of Appeals

106 SCRA 391
Facts:
Samson is a licensed aviator employed by the Philippine Airlines. He was partnered with another
pilot Bustamante. Samson had complained on previous occasions to PAL that Bustamante was slow in
reacting and was having lapses of poor judgment during flights. PAL however still allowed Bustamante
to continue flying.
On a certain flight, Bustamante overshot the airfield while landing the plane at the Daet airport.
Samson tried to control the plane, but did not succeed. The plane crash-landed beyond the runway into
a mangrove. Samson hit his head on the windshield due to the impact of the crash. He suffered head
injuries such as brain concussions and wounds on his forehead. To make matters worse, plaintiff was
discharged from employment. Samson then filed an action for damages against PAL.
Issue:
Whether or not PAL is liable for damages.
Held:
The Court held that PAL is liable for damages. There was gross negligence on the part of PAL
because despite the knowledge of Bustamantes condition the still allowed him to continue flying.
Bustamante had a tumor in his nasopharynx which affected his vision. As provided in Articles 1732,
1733, and 1756 of the NCC, PAL being a common carrier should have exercised extraordinary diligence
in the supervision of their employees and utmost diligence in bringing passengers to their destination.
The court affirmed the decision of the trial court in awaring damages. Private respondent is
entitled to P198,000.00 as unearned income or compulsory damages, P80,000.00 for moral damages,
P20,000 as attorneys fees and P5,000 as expenses for litigation. This claim of the plaintiff for loss and
impairment of earning capacity is based on the provision of Art. 2205, NCC. Even from the standpoint of
the petitioner that there is employer-employee relationship between it and private respondent arising
from the contract of employment, private respondent is still entitled to moral damages in view of the
finding of bad faith or malice, applying the provisions of Art. 2220 of the NCC.
95
Cachero v. Manila Yellow Taxicab

101 PHIL 523
Facts:
Atty. Cachero, plaintiff herein, boarded a taxicab owned by the Manila Yellow Taxicab Co., Inc.
The said taxicab bumped against a Meralco post. The taxicab was badly smashed and the plaintiff fell
out of the vehicle to the ground. As a result of the accident, he suffered slight physical injuries. The driver
of the taxi was prosecuted and convicted criminally. Respondent herein offered to settle the case and the
plaintiff demanded the amount of P79,245.65 as for damages. Respondent refused to pay the said
amount. Plaintiff then proceeded to file a case to recover the same amount through the courts. The CFI
rendered a decision in favor of the plaintiff and ordered that respondent pay the amount of P700 for
medical and transportation allowances, attorneys fees and professional fees. Both parties appealed and
the decision was affirmed. Hence this petition.
Issue: Whether or not Cachero is entitled to recover damages other than those already awarded.
Held:
The Court modified the decision of the lower court. The award of professional fees were reduced
to P2,000 and the award of moral damages of P2,000. Plaintiff in this case did not maintain his action
against all persons liable for the breach of the contract of common carriage. Since he did not include the
driver in this complaint he may not recover moral damages. Respondent herein did not commit any
criminal offense against the plaintiff, it was the driver who was the reason behind the injury. This case
does not fall under Article 2219 of the NCC therefore he is not entitled to be awarded moral damages.
96
Fores v. Miranda
105 PHIL 266
Facts:
Ireneo Miranda, a professor of Fine Arts, was a passenger of a passenger jeepney registered to
Fores but actuall operated by Sackerman. The vehicle was descending the Sta. Mesa bridge at an
excessive rate of speed, and the driver lost control of the same which caused it to swerve and to hit the
bridge wall. As a result of the accident, Five of the passengers were injured, including the respondent
herein. He suffered a fracture of the upper right humerus. He was taken to the National Orthopedic
Hospital for treatment, and later was subjected to a series of operations. At the time of the trial, it
appears that respondent had not yet recovered the use of his right arm. The driver was charged with
serious physical injuries through reckless imprudence, and upon interposing a plea of guilty was
sentenced accordingly. The lower court awarded actual damages to the respondent. On appeal, the
Court reduced the amount of actual damages and added the award of moral damages and attorneys
fees. Hence this petition.
Issue:
Whether or not the award of moral damages and attorneys fee was proper.
Held:
The Court held that the award of moral damages is not proper in this case. As a general rule,
moral damages are not awarded to the victim in cases of breach of contract of common carriage. The
exception is that if such accident resulted in the death of the passenger, in which case Article 1764 of the
NCC, makes the carrier subject to Article 2206 of the NCC. In case death did not result from the
accident, moral damages may be recovered if the common carrier is found guilty of gross negligence
amounting to bad faith or malice. In the case at bar there was no bad faith on the part of the common
carrier. Therefore, respondent is not entitled to moral damages. As to the issue of attorneys fee, the
court may moto proprio award moral damages as the case may be. Attorneys fees may be awarded by
the court if it is deemed to be just and equitable. Therefore, the Court set aside the decision of the Court
of Appeals as far as moral damages are concerned.
97
Lopez v. Pan American Airways

16 SCRA 431
Facts:
Senator Lopez and party (plaintiffs) made reservations for first class accommodations with Pan
American Airways (Pan Am) for a flight from Tokyo to San Francisco. Pan Ams San Francisco Head
Office confirmed the reservations made by the plaintiffs. The first class tickets for the said flight were
subsequently issued by Pan Am in favor the plaintiffs. As scheduled, plaintiffs left Manila by Northwest
Airlines and arrived in Tokyo the same day. As soon they arrived, Senator Lopez requested Minister
Busuego of the Philippine Embassy to contact Pan Ams Tokyo Office regarding their first class
accommodations for that evenings flight. However, they found out that all first class seats were booked.
Pan Ams agent mistakenly cancelled the reservation made by the plaintiffs and deliberately withheld the
incident from the latter. Pan Am took the chance that some of the passengers would cancel their first
class seats and they would be able to accommodate the plaintiffs. This never happened.
Since the first class seats therein were all taken, Pan Ams Tokyo Office informed the plaintiffs
that it could not accommodate them in that trip as first-class passengers. Due to the urgency of their
arrival in the United States they were constrained to take the flight from Tokyo to San Francisco as
tourist passengers.
Issue: Whether or not Pan Am is liable for moral, exemplary damages and attorneys fees.
Held:
The Court held that Pan Ams actions amounted to bad faith and malice which entitled
the plaintiffs herein to be awarded moral and exemplary damages. The act of misleading plaintiffs to
believe that they had in fact purchased first class tickets when in they have not was a willful breach of the
contract of common carriage. Said actions of Pan Am may indeed have been prompted by nothing more
that the promotion of its self-interest in holding on to Senator Lopez and party as passengers in its flight
and foreclosing their chances to seek the services of other airlines that may have been able to afford
them first class accommodations. Therefore plaintiffs are entitled to receive the award of moral damages.
The award of exemplary damages is also proper in this case because such damages are recoverable in
breach of contract where the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner. Lastly, a working contract for an attorneys fees, shall control the amount to be paid therefore
unless found by the court to be unconscionable or unreasonable.
98
Ortigas, Jr. v. Lufthansa

64 SCRA 610
Facts:
Petitioner is booked on a first class accommodation in defendants airline from Rome to Manila.
The booking was confirmed by its airlines office. The airline employee upong seeing his Filipino
nationality disallowed his boarding and the seat was given to a Belgian. Petitioner has a heart ailment
and is advised by physician to take only frst class accommodations. He was promised to be transferred
to first class on all succeeding layovers from Cairo to Hongkong to no avail. Damages was filed. Trial
court awarded Moral and Exemplary damages.
Issue:
Whether or not defendant is liable for damages.
Held:
Yes. Inattenton and lack of care on the carrier rsulting in the failure of the passenger to be
accommodated in a class availed of and contracted amounts to bad faith and fraud. Furthermore, the
preference to a Belgian passenger is also a wanton disregard of his right from discrimination. The
successive false representations of transferring him to first class is an act of malice and bad faith. This
entitles petitioner to moral damages in accordance to Articlec 2220. Moral damages is increased to
Php15,000 and Exemplary damages to Php100,000.
99
Philippine Rabbit Bus Lines v. Esguerra

117 SCRA 741
Facts:
Respondent herein boarded a bus of the plaintiff herein which was bound for Pampanga from
Manila. He sat a few seats behind the driver on the left side of the bus near the window. While on route
to Pampanga, the bus sideswiped with a freight truck owned and operated by Transport Contractors, the
latter coming from the opposite side of the highway. The window glass near the driver's seat of the bus
was detached and the left side of its body was damaged. During the course of the accident, the left
forearm of Esguerra was hit by a hard blunt object. It caused the breaking of its bones into small
fragments while the soft tissues of the muscles and the skin were mascerated. He was immediately
brought to the Bulacan Provincial Hospital in Malolos, Bulacan for treatment. Unfortunately, because of
the severe damage caused, his left arm was amputated.
Defendant herein filed a case to recover damages. The lower court rendered a decision in favor
of Esguerra, finding that both vehicles were reckless in driving. On appeal, the court affirmed the
decision of the lower court and awarded actual and moral damages to the respondent herein. Hence this
petition.
Issue:
Whether or not the respondent is entitled to receive moral damages.
Held:
The Court held that the Court of Appeals erred in awarding moral damages to the respondent
herein. As a general rule moral damages are not recoverable in actions for damages predicated on a
breach of the contract of transportation, as in the instant case, in view of the provisions of Articles 2219
and 2220 of the New Civil Code. The exceptions are (1) where the mishap results in the death of a
passenger, and (2) where it is proved that the carrier was guilty of fraud or bad faith, even if death does
not result. In the case at bar, the Court finds that both vehicles were in their respective lanes and both
were equally negligent. The Court does not find that there was malice or bad faith on the part of the
driver of the petitioner herein. Therefore the award of moral damages is deleted and the rest affirmed.
100
Sweet Lines v. Court of Appeals

121 SCRA 769
Facts:
The respondents, having first class tickets, boarded the M/V Sweet Grace to Catbalogan. The
vessel had some engine problems which led to a change of schedule and they were thus delayed for a
substantial amount of time. Furthermore, the vessel bought the respondents to Tacloban instead of
Catbalogan. This led the respondents to purchase another set of tickets and to ride another ferryboat
going to Catbalogan. The respondents then sued the petitioner carrier for damages for the breach of
contract of carriage.
Issue:
Whether or not the petitioner is liable for damages.
Held:
The Court held that the petitioner is liable for damages specifically moral damages because there
was bad faith on its part. The Court found that such bad faith is present based on three circumstances
namely:
1. Petitioner did not give any notice to the respondents as to the change of schedule of
the vessel.
2. The petitioner knew fully that it would take no less than fifteen (15) hours to effect the
repairs of the damaged engine. The petitioner also assured that the vessel will leave
within a short period of time and when the defendants wanted to leave the trip
petitioner stated that the the vessel is already leaving.
3. The petitioner did not even offer to refund the tickets and provide for their
transportation from Tacloban to Catbalogan.
101
Prudencio v. Alliance Transport System

148 SCRA 440
Facts:
Dra. Sofia L. Prudenciado was driving her own car along Taft Avenue to go to the Philippine
Normal College Compound where she would hold classes. As she was moving slowly in a normal rate,
her car was then hit by the taxi operated by the respondent. The accident caused the petitioner physical
injuries and a brain concussion. She then filed for an action for damages against respondent. The lower
court, finding the respondents driver to be negligent, granted the damages and the Court of Appeals
reduced the damages. The petitioner then appealed from the decision of the appellate court.
Issue:
Whether or not the award of damages by the Court of Appeals was correct.
Held:
The Court held that the reduction of the moral damages by the appellate court to the petitioner
was unreasonable and drastic. The reason was that the trial court found the respondent to be grossly
negligent in injuring the petitioner. The award of moral damages was proper. The appeal by the petitioner
is proper because, as a doctor, she has reasonable fears that such accident due to the carelessness of
the respondents driver can greatly affect her profession.
Exemplary damages are also awarded to the petitioner to provide for an example or correction to
public good. The reason is that the respondents driver was driving at a high speed on a rainy day and on
a slippery road with complete disregard with the safety of other people.
102
Pan American World Airways, Inc. v. Intermediate Appellate Court

153 SCRA 521
Facts:
Private respondent Tinitigan, filed a complaint against petitioner for damages arising from
defendant's alleged refusal to accommodate her on Pan Am Flight No. 431 from Sto. Domingo,
Republica Dominica to San Juan, Puerto Rico notwithstanding that she possessed a confirmed plane
ticket. She is a businesswoman and a multimillionaire (proprietor of Sampaguita Restaurant, New York
City USA; Treasurer of the Molave Development Corp., Phil., proprietor of Cavite Household Appliances
and Rowena's Handicraft, Phil.), was on a business trip with a Pan-Am ticket. While in Sto. Domingo,
Tinitigan is expected to be in San Juan that same day to meet a client to sign a contract or lose it. She
was expected to make a profit of $1,000 in said contract but her failure to board the flight, said profit was
lost.
The refusal of accommodation caused her to suffer mental anguish, serious anxiety, besmirched
reputation, wounded feelings and social humiliation She prayed that she be awarded moral damages of
P500,000.00, exemplary damages of P200,000.00, attorney's fees of P100,000.00 and actual damages
sustained by her in the amount of US$1,546.15. Defendant denied that plaintiff was a confirmed
passenger since the ticket issued to her was on an open space basis, which meant that she could only
be accommodated if any of the confirmed passengers failed to show up at the airport before departure.
The lower court rendered judgment in favor of plaintiff and awarded the amount of damages as prayed
for. Said decision was affirmed hence the instant petition.
Issue: Whether or not the award of damages was proper.
Held:
Yes, but subject to modifications. Other instances which caused moral damage to the plaintiff are
the following:
1. While plaintiff was standing in line to board the aircraft, a Pan Am employee ordered her in a loud
voice to step out of line because her ticket was not confirmed to her embarrassment in the presence of
several people who heard and order. Despite her Pleas she was not allowed to board the aircraft. And
her seat was also given to a Caucasian.
2. When the plane took off without her but with her luggage on board. She was forced to return to her
hotel without any luggage much less an extra dress.
Evidence shows petitioner as confirmed passenger. 1.) Defendant issued a Passenger Ticket and
Baggage Check with assigned seat and the corresponding pass and baggage claim symbol. 2.) Plaintiff
paid the fare and terminal fee. 3.) plaintiff's passport was stamped by immigration. 4.) Plaintiff's name
was included in the passenger manifest. There is a contract or carriage perfected between plaintiff and
103

defendant for the latter to take plaintiff to her place of destination. By refusing to accommodate plaintiff in
said flight, defendant had willfully and knowingly violated the contract of carriage and failed to bring the
plaintiff to her place of destination under its contract with plaintiff. There is showing of bad faith. Self enrichment or fraternal interest and not personal ill will may have been the motive of defendant, but it is
malice nevertheless. Malice is shown by the fact that that plaintiff was ordered out of the line under some
pretext in order to accommodate a white man.
Exemplary damages and Attorneys fees are also awarded. The rational behind exemplary or
corrective damages is, to provide an example or correction for public good. SC reduced the moral and
exemplary damages to the combined total sum of Two Hundred Thousand (P200,000.00) Pesos and the
attorney's fees to Twenty Thousand (P20,000.00) Pesos. The award of actual damages in the amount of
One Thousand Five Hundred Forty Six American dollars and fifteen cents (US$1,546.15) computed at
the exchange rate prevailing at the time of payment is hereby retained and granted.
104
Trans World Airlines v. Court of Appeals

165 SCRA 143
Facts:
Atty. Vinluan purchased a first class ticket from the petitioner. Such ticket was twice confirmed
and yet the petitioner abruptly told the respondent that there were no longer any available seats in the
first class and that he will be downgraded to the economy class. When he protested an employee of the
petitioner arrogantly threatened the respondent. In addition, he also saw that several Caucasians who
arrived much later were accommodated in the first class when the other passengers did not show up.
The respondent then sued the petitioner for damages.
Issue:
Whether or not the petitioner is liable for damages.
Held:
The Court held that the petitioner is liable for moral and exemplary damages. The discrimination
in this case is obvious and the humiliation brought to the respondent is indisputable. The petitioner
showed lack of care in accommodating the respondent in the class that the latter contracted. In addition,
the petitioner rudely informed the respondent of such downgrading of class. Such awarding of damages
would serve as an example and a discouragement to carriers who may repeat such oppressive and
discriminatory acts.
105
Armovit v. Court of Appeals

184 SCRA 476
Facts:
The petitioners in this case all resided in the United States and went home to the Philippines for a
Christmas visit. On their return trip to the United States, they were bumped off at the airport due to an
erroneous entry in their plane tickets relating to the departure time. The petitioners checked in the airport
an hour and fifteen minutes earlier than what was indicated in their airline tickets. Upon their check in,
the employees of the respondent airlines impolitely informed them that the plane was already taking off
and that their check in time was way earlier and entirely different from what was stated in their tickets.
The petitioners then sued the respondent airlines for damages.
Issue:
Whether or not the respondent is liable for damages.
Held:
The Court held that the respondent is liable for damages. Actual damages were awarded to the
petitioner due to bumped off that occurred. Moral damages were also awarded because the Court found
that the respondent was gross negligent in the issuance of the tickets as to the correct time of departure.
In addition, the act of the respondent in rudely informing the petitioner of such bumped off is an indication
that there was bad faith and malice on the part of the respondent. Furthermore, the relative of the
petitioner stated how badly wounded the feelings of the petitioners were. Exemplary damages were also
awarded as to provide for an example to the public good. Lastly, nominal damages were properly deleted
since such damages cannot co-exist with actual damages.
106
107

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