driven by respondent himself, while 600 cartons were placed on

G.R. No. L-47822 December 22, 1988 board the other truck which was driven by Manuel Estrada,
respondent's driver and employee.
PEDRO DE GUZMAN, ​petitioner,
Only 150 boxes of Liberty filled milk were delivered to petitioner. The
vs. other 600 boxes never reached petitioner, since the truck which
carried these boxes was hijacked somewhere along the MacArthur
COURT OF APPEALS and ERNESTO CENDANA, ​respondents.
Highway in Paniqui, Tarlac, by armed men who took with them the
Vicente D. Millora for petitioner. truck, its driver, his helper and the cargo.

Jacinto Callanta for private respondent. On 6 January 1971, petitioner commenced action against private
respondent in the Court of First Instance of Pangasinan, demanding
payment of P 22,150.00, the claimed value of the lost merchandise,
plus damages and attorney's fees. Petitioner argued that private
FELICIANO, ​J.: respondent, being a common carrier, and having failed to exercise
the extraordinary diligence required of him by the law, should be held
Respondent Ernesto Cendana, a junk dealer, was engaged in buying liable for the value of the undelivered goods.
up used bottles and scrap metal in Pangasinan. Upon gathering
sufficient quantities of such scrap material, respondent would bring In his Answer, private respondent denied that he was a common
such material to Manila for resale. He utilized two (2) six-wheeler carrier and argued that he could not be held responsible for the value
trucks which he owned for hauling the material to Manila. On the of the lost goods, such loss having been due to ​force majeure​.
return trip to Pangasinan, respondent would load his vehicles with
cargo which various merchants wanted delivered to differing On 10 December 1975, the trial court rendered a Decision 1​ finding
establishments in Pangasinan. For that service, respondent charged private respondent to be a common carrier and holding him liable for
freight rates which were commonly lower than regular commercial the value of the undelivered goods (P 22,150.00) as well as for P
rates. 4,000.00 as damages and P 2,000.00 as attorney's fees.

Sometime in November 1970, petitioner Pedro de Guzman a On appeal before the Court of Appeals, respondent urged that the
merchant and authorized dealer of General Milk Company trial court had erred in considering him a common carrier; in finding
(Philippines), Inc. in Urdaneta, Pangasinan, contracted with that he had habitually offered trucking services to the public; in not
respondent for the hauling of 750 cartons of Liberty filled milk from a exempting him from liability on the ground of ​force majeure; and in
warehouse of General Milk in Makati, Rizal, to petitioner's ordering him to pay damages and attorney's fees.
establishment in Urdaneta on or before 4 December 1970.
Accordingly, on 1 December 1970, respondent loaded in Makati the
merchandise on to his trucks: 150 cartons were loaded on a truck
The Court of Appeals reversed the judgment of the trial court and offers services or solicits business only from a narrow segment of the
held that respondent had been engaged in transporting return loads general population. We think that Article 1733 deliberaom making
of freight "as a casual such distinctions.

occupation — a sideline to his scrap iron business" and not as a So understood, the concept of "common carrier" under Article 1732
common carrier. Petitioner came to this Court by way of a Petition for may be seen to coincide neatly with the notion of "public service,"
Review assigning as errors the following conclusions of the Court of under the Public Service Act (Commonwealth Act No. 1416, as
Appeals: amended) which at least partially supplements the law on common
carriers set forth in the Civil Code. Under Section 13, paragraph (b)
1. that private respondent was not a common carrier; of the Public Service Act, "public service" includes:

2. that the hijacking of respondent's truck was ​force majeure​; and ... every person that now or hereafter may own, operate, manage, or
control in the Philippines, for hire or compensation, ​with general or
3. that respondent was not liable for the value of the undelivered limited clientele, whether permanent, occasional or accidental, and
cargo. (Rollo, p. 111) done for general business purposes, any common carrier, railroad,
street railway, traction railway, subway motor vehicle, either for
We consider first the issue of whether or not private respondent
freight or passenger, or both, with or without fixed route and
Ernesto Cendana may, under the facts earlier set forth, be properly
whatever may be its classification, freight or carrier service of any
characterized as a common carrier.
class, express service, steamboat, or steamship line, pontines,
The Civil Code defines "common carriers" in the following terms: ferries and water craft, engaged in the transportation of passengers
or freight or both, shipyard, marine repair shop, wharf or dock, ice
Article 1732. Common carriers are persons, corporations, firms or plant,
associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air for compensation, ice-refrigeration plant, canal, irrigation system, gas, electric light,
offering their services to the public. heat and power, water supply and power petroleum, sewerage
system, wire or wireless communications systems, wire or wireless
The above article makes no distinction between one whose ​principal broadcasting stations and other similar public services. ... (Emphasis
business activity is the carrying of persons or goods or both, and one supplied)
who does such carrying only as an ​ancillary activity (in local Idiom as
"a sideline"). Article 1732 also carefully avoids making any distinction It appears to the Court that private respondent is properly
between a person or enterprise offering transportation service on a characterized as a common carrier even though he merely
regular or scheduled basis and one offering such service on an "back-hauled" goods for other merchants from Manila to Pangasinan,
occasional, episodic or unscheduled basis.​ Neither does Article 1732 although such back-hauling was done on a periodic or occasional
distinguish between a carrier offering its services to the "​general rather than regular or scheduled manner, and even though private
public,​ " i.e., the general community or population, and one who respondent's ​principal ​occupation was not the carriage of goods for
others. There is no dispute that private respondent charged his 1733, "further expressed in Articles 1734,1735 and 1745, numbers 5,
customers a fee for hauling their goods; that fee frequently fell below 6 and 7" of the Civil Code.
commercial freight rates is not relevant here.
Article 1734 establishes the general rule that common carriers are
The Court of Appeals referred to the fact that private respondent held responsible for the loss, destruction or deterioration of the goods
no certificate of public convenience, and concluded he was not a which they carry, "​unless the same is due to ​any of the following
common carrier. This is palpable error. A certificate of public causes only​:
convenience is not a requisite for the incurring of liability under the
Civil Code provisions governing common carriers. That liability arises (1) Flood, storm, earthquake, lightning or other natural disaster or
the moment a person or firm acts as a common carrier, without calamity;
regard to whether or not such carrier has also complied with the
requirements of the applicable regulatory statute and implementing (2) Act of the public enemy in war, whether international or civil;
regulations and has been granted a certificate of public convenience
(3) Act or omission of the shipper or owner of the goods;
or other franchise. To exempt private respondent from the liabilities
of a common carrier because he has not secured the necessary (4) The character-of the goods or defects in the packing or-in the
certificate of public convenience, would be offensive to sound public containers; and
policy; that would be to reward private respondent precisely for
failing to comply with applicable statutory requirements. The (5) Order or act of competent public authority.
business of a common carrier impinges directly and intimately upon
the safety and well being and property of those members of the It is important to point out that the above list of causes of loss,
general community who happen to deal with such carrier. The law destruction or deterioration which exempt the common carrier for
imposes duties and liabilities upon common carriers for the safety responsibility therefor, is a closed list. Causes falling outside the
and protection of those who utilize their services and the law cannot foregoing list, even if they appear to constitute a species of force
allow a common carrier to render such duties and liabilities merely majeure fall within the scope of Article 1735, which provides as
facultative by simply failing to obtain the necessary permits and follows:
authorizations.
In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5
We turn then to the liability of private respondent as a common of the preceding article, if the goods are lost, destroyed or
carrier. deteriorated, common carriers are presumed to have been at fault or
to have acted negligently, unless they prove that they observed
Common carriers, "by the nature of their business and for reasons of extraordinary diligence as required in Article 1733. (Emphasis
public policy" 2​ are held to a very high degree of care and diligence supplied)
("extraordinary diligence") in the carriage of goods as well as of
passengers. The specific import of extraordinary diligence in the care Applying the above-quoted Articles 1734 and 1735, we note firstly
of goods transported by a common carrier is, according to Article that the specific cause alleged in the instant case — the hijacking of
the carrier's truck — does not fall within any of the five (5) categories (5) that the common carrier shall not be responsible for the acts or
of exempting causes listed in Article 1734. It would follow, therefore, omissions of his or its employees;
that the hijacking of the carrier's vehicle must be dealt with under the
provisions of Article 1735, in other words, that the private respondent (6) that the common carrier's liability for acts committed by thieves,
as common carrier is presumed to have been at fault or to have or of r​obbers who do not act with ​grave or irresistible t​hreat, violence
acted negligently. This presumption, however, may be overthrown by or force​, is dispensed with or diminished; and
proof of extraordinary diligence on the part of private respondent.
(7) that the common carrier shall not responsible for the loss,
Petitioner insists that private respondent had not observed destruction or deterioration of goods on account of the defective
extraordinary diligence in the care of petitioner's goods. Petitioner condition of the car vehicle, ship, airplane or other equipment used in
argues that in the circumstances of this case, private respondent the contract of carriage. (Emphasis supplied)
should have hired a security guard presumably to ride with the truck
carrying the 600 cartons of Liberty filled milk. We do not believe, Under Article 1745 (6) above, a common carrier is held responsible
however, that in the instant case, the standard of extraordinary — and will not be allowed to divest or to diminish such responsibility
diligence required private respondent to retain a security guard to — even for acts of strangers like thieves or robbers, ​except where
ride with the truck and to engage brigands in a firelight at the risk of such thieves or robbers in fact acted "with grave or irresistible threat,
his own life and the lives of the driver and his helper. violence or force." We believe and so hold that the limits of the duty
of extraordinary diligence in the vigilance over the goods carried are
The precise issue that we address here relates to the specific reached where the goods are lost as a result of a robbery which is
requirements of the duty of extraordinary diligence in the vigilance attended by "grave or irresistible threat, violence or force."
over the goods carried in the specific context of hijacking or armed
robbery. In the instant case, armed men held up the second truck owned by
private respondent which carried petitioner's cargo. The record
As noted earlier, the duty of extraordinary diligence in the vigilance shows that an information for robbery in band was filed in the Court
over goods is, under Article 1733, given additional specification not of First Instance of Tarlac, Branch 2, in Criminal Case No. 198
only by Articles 1734 and 1735 but also by Article 1745, numbers 4, entitled "​People of the Philippines v. Felipe Boncorno, Napoleon
5 and 6, Article 1745 provides in relevant part: Presno, Armando Mesina, Oscar Oria and one John Doe​." There, the
accused were charged with willfully and unlawfully taking and
Any of the following or similar stipulations shall be considered carrying away with them the second truck, driven by Manuel Estrada
unreasonable, unjust and contrary to public policy: and loaded with the 600 cartons of Liberty filled milk destined for
delivery at petitioner's store in Urdaneta, Pangasinan. The decision
xxx xxx xxx of the trial court shows that the accused acted with grave, if not
irresistible, threat, violence or force.​3 Three (3) of the five (5)
hold-uppers were armed with firearms. The robbers not only took
away the truck and its cargo but also kidnapped the driver and his
helper, detaining them for several days and later releasing them in UCPB GENERAL INSURANCE CO., INC. (formerly Allied
another province (in Zambales). The hijacked truck was Guarantee Ins. Co., Inc.) ​respondent.
subsequently found by the police in Quezon City. The Court of First
Instance convicted all the accused of robbery, though not of robbery MENDOZA, ​J.:
in band.​ ​4
This is a petition for review of the decision,​1 dated May 31, 2001, of
In these circumstances, we hold that the occurrence of the loss must the Court of Appeals, affirming the decision​2 of the Regional Trial
reasonably be regarded as quite beyond the control of the common Court, Makati City, Branch 148, which ordered petitioner to pay
carrier and properly regarded as a fortuitous event. It is necessary to respondent, as subrogee, the amount of ​P​93,112.00 with legal
recall that even common carriers are not made absolute insurers interest, representing the value of damaged cargo handled by
against all risks of travel and of transport of goods, and are not held petitioner, 25% thereof as attorney's fees, and the cost of the
liable for acts or events which cannot be foreseen or are inevitable, suit.1âwphi1.nêt
provided that they shall have complied with the rigorous standard of
extraordinary diligence. The facts are as follows:

We, therefore, agree with the result reached by the Court of Appeals Petitioner Virgines Calvo is the owner of Transorient Container
that private respondent Cendana is not liable for the value of the Terminal Services, Inc. (TCTSI), a sole proprietorship customs
undelivered merchandise which was lost because of an event broker. At the time material to this case, petitioner entered into a
entirely beyond private respondent's control. contract with San Miguel Corporation (SMC) for the transfer of 114
reels of semi-chemical fluting paper and 124 reels of kraft liner board
ACCORDINGLY, the Petition for Review on certiorari is hereby from the Port Area in Manila to SMC's warehouse at the Tabacalera
DENIED and the Decision of the Court of Appeals dated 3 August Compound, Romualdez St., Ermita, Manila. The cargo was insured
1977 is AFFIRMED. No pronouncement as to costs. by respondent UCPB General Insurance Co., Inc.

SO ORDERED. On July 14, 1990, the shipment in question, contained in 30 metal

vans, arrived in Manila on board "M/V Hayakawa Maru" and, after 24
hours, were unloaded from the vessel to the custody of the arrastre
operator, Manila Port Services, Inc. From July 23 to July 25, 1990,
G.R. No. 148496 March 19, 2002 petitioner, pursuant to her contract with SMC, withdrew the cargo
from the arrastre operator and delivered it to SMC's warehouse in
VIRGINES CALVO doing business under the name and style Ermita, Manila. On July 25, 1990, the goods were inspected by
TRANSORIENT CONTAINER TERMINAL SERVICES, INC., Marine Cargo Surveyors, who found that 15 reels of the
petitioner, semi-chemical fluting paper were "wet/stained/torn" and 3 reels of

vs.
kraft liner board were likewise torn. The damage was placed at precaution [she] performed to prevent [the] said incident, hence the
P​93,112.00. presumption is that the moment the defendant accepts the cargo
[she] shall perform such extraordinary diligence because of the
SMC collected payment from respondent UCPB under its insurance nature of the cargo.
contract for the aforementioned amount. In turn, respondent, as
subrogee of SMC, brought suit against petitioner in the Regional ....
Trial Court, Branch 148, Makati City, which, on December 20, 1995,
rendered judgment finding petitioner liable to respondent for the Generally speaking under Article 1735 of the Civil Code, if the goods
damage to the shipment. are proved to have been lost, destroyed or deteriorated, common
carriers are presumed to have been at fault or to have acted
The trial court held: negligently, unless they prove that they have observed the
extraordinary diligence required by law. The burden of the plaintiff,
It cannot be denied . . . that the subject cargoes sustained damage therefore, is to prove merely that the goods he transported have
while in the custody of defendants. Evidence such as the Warehouse been lost, destroyed or deteriorated. Thereafter, the burden is shifted
Entry Slip (Exh. "E"); the Damage Report (Exh. "F") with entries to the carrier to prove that he has exercised the extraordinary
appearing therein, classified as "TED" and "TSN", which the claims diligence required by law. Thus, it has been held that the mere proof
processor, Ms. Agrifina De Luna, claimed to be tearrage at the end of delivery of goods in good order to a carrier, and of their arrival at
and tearrage at the middle of the subject damaged cargoes the place of destination in bad order, makes out a prima facie case
respectively, coupled with the Marine Cargo Survey Report (Exh. "H" against the carrier, so that if no explanation is given as to how the
- "H-4-A") confirms the fact of the damaged condition of the subject injury occurred, the carrier must be held responsible. It is incumbent
cargoes. The surveyor[s'] report (Exh. "H-4-A") in particular, which upon the carrier to prove that the loss was due to accident or some
provides among others that: other circumstances inconsistent with its liability." (cited in
Commercial Laws of the Philippines by Agbayani, p. 31, Vol. IV,
" . . . we opine that damages sustained by shipment is attributable to 1989 Ed.)
improper handling in transit presumably whilst in the custody of the
broker . . . ." Defendant, being a customs brother, warehouseman and at the
same time a common carrier is supposed [to] exercise [the]
is a finding which cannot be traversed and overturned. extraordinary diligence required by law, hence the extraordinary
responsibility lasts from the time the goods are unconditionally
The evidence adduced by the defendants is not enough to sustain
placed in the possession of and received by the carrier for
[her] defense that [she is] are not liable. Defendant by reason of the
transportation until the same are delivered actually or constructively
nature of [her] business should have devised ways and means in
by the carrier to the consignee or to the person who has the right to
order to prevent the damage to the cargoes which it is under
receive the same.​3
obligation to take custody of and to forthwith deliver to the
consignee. Defendant did not present any evidence on what
Accordingly, the trial court ordered petitioner to pay the following the same to select parties with whom she may contract in the
amounts -- conduct of her business.

1. The sum of ​P​93,112.00 plus interest; The contention has no merit. In ​De Guzman v. Court of Appeals,7​ the
Court dismissed a similar contention and held the party to be a
2. 25% thereof as lawyer's fee; common carrier, thus -

3. Costs of suit.​4 The Civil Code defines "common carriers" in the following terms:

The decision was affirmed by the Court of Appeals on appeal. Hence "Article 1732. Common carriers are persons, corporations, firms or
this petition for review on ​certiorari​. associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air for compensation,
Petitioner contends that: offering their services to the public."

I. THE COURT OF APPEALS COMMITTED SERIOUS AND The above article makes no distinction between one whose ​principal
REVERSIBLE ERROR [IN] DECIDING THE CASE NOT ON THE business activity is the carrying of persons or goods or both, and one
EVIDENCE PRESENTED BUT ON PURE SURMISES, who does such carrying only as an ​ancillary activity . . . Article 1732
SPECULATIONS AND MANIFESTLY MISTAKEN INFERENCE. also carefully avoids making any distinction between a person or
enterprise offering transportation service on a ​regular or scheduled
II. THE COURT OF APPEALS COMMITTED SERIOUS AND
basis ​and one offering such service on an ​occasional, episodic or
REVERSIBLE ERROR IN CLASSIFYING THE PETITIONER AS A
unscheduled basis. ​Neither does Article 1732 distinguish between a
COMMON CARRIER AND NOT AS PRIVATE OR SPECIAL
carrier offering its services to the "​general public,​" i.e., the general
CARRIER WHO DID NOT HOLD ITS SERVICES TO THE PUBLIC.​5
community or population, and one who offers services or solicits
It will be convenient to deal with these contentions in the inverse business only from a narrow ​segment of the general population. We
order, for if petitioner is not a common carrier, although both the trial think that Article 1732 deliberately refrained from making such
court and the Court of Appeals held otherwise, then she is indeed distinctions.
not liable beyond what ordinary diligence in the vigilance over the
So understood, the concept of "common carrier" under Article 1732
goods transported by her, would require.​6 Consequently, any
may be seen to coincide neatly with the notion of "public service,"
damage to the cargo she agrees to transport cannot be presumed to
under the Public Service Act (Commonwealth Act No. 1416, as
have been due to her fault or negligence.
amended) which at least partially supplements the law on common
Petitioner contends that contrary to the findings of the trial court and carriers set forth in the Civil Code. Under Section 13, paragraph (b)
the Court of Appeals, she is not a common carrier but a private of the Public Service Act, "public service" includes:
carrier because, as a customs broker and warehouseman, she does
not indiscriminately hold her services out to the public but only offers
" x x x every person that now or hereafter may own, operate, In ​Compania Maritima v. Court of Appeals,9​ ​the meaning of
manage, or control in the Philippines, for hire or compensation, ​with "extraordinary diligence in the vigilance over goods" was explained
general or limited clientele, whether permanent, occasional or thus:
accidental, and done for general business purposes, any common
carrier, ​railroad, street railway, traction railway, subway motor The extraordinary diligence in the vigilance over the goods tendered
vehicle, either for freight or passenger, or both, with or without fixed for shipment requires the common carrier to know and to follow the
route and whatever may be its classification, freight or carrier service required precaution for avoiding damage to, or destruction of the
of any class, express service, steamboat, or steamship line, goods entrusted to it for sale, carriage and delivery. It requires
pontines, ferries and water craft, engaged in the transportation of common carriers to render service with the greatest skill and
passengers or freight or both, shipyard, marine repair shop, wharf or foresight and "to use all reasonable means to ascertain the nature
dock, ice plant, ice-refrigeration plant, canal, irrigation system, gas, and characteristic of goods tendered for shipment, and to exercise
electric light, heat and power, water supply and power petroleum, due care in the handling and stowage, including such methods as
sewerage system, wire or wireless communications systems, wire or their nature requires."
wireless broadcasting stations and other similar public services. x x
x" 8​ In the case at bar, petitioner denies liability for the damage to the
cargo. She claims that the "spoilage or wettage" took place while the
There is greater reason for holding petitioner to be a common carrier goods were in the custody of either the carrying vessel "M/V
because the transportation of goods is an integral part of her Hayakawa Maru," which transported the cargo to Manila, or the
business. To uphold petitioner's contention would be to deprive those arrastre operator, to whom the goods were unloaded and who
with whom she contracts the protection which the law affords them allegedly kept them in open air for nine days from July 14 to July 23,
notwithstanding the fact that the obligation to carry goods for her 1998 notwithstanding the fact that some of the containers were
customers, as already noted, is part and parcel of petitioner's deformed, cracked, or otherwise damaged, as noted in the Marine
business. Survey Report (Exh. H), to wit:

Now, as to petitioner's liability, Art. 1733 of the Civil Code provides: MAXU-2062880 - rain gutter deformed/cracked

Common carriers, from the nature of their business and for reasons ICSU-363461-3 - left side rubber gasket on door
of public policy, are bound to observe extraordinary diligence in the distorted/partly loose
vigilance over the goods and for the safety of the passengers
transported by them, according to all the circumstances of each PERU-204209-4 - with pinholes on roof panel right portion
case. . . .
TOLU-213674-3 - wood flooring we[t] and/or with signs of
water soaked

MAXU-201406-0 - with dent/crack on roof panel

ICSU-412105-0 - rubber gasket on left side/door panel partly Transfer/Delivery:
detached loosened.​10
On July 23, 1990, ​shipment housed onto 30' x 20' cargo containers
In addition, petitioner claims that Marine Cargo Surveyor Ernesto was [withdrawn] by Transorient Container Services, Inc. . . . ​without
Tolentino testified that he has no personal knowledge on whether the exception​.
container vans were first stored in petitioner's warehouse prior to
their delivery to the consignee. She likewise claims that after [The cargo] was finally delivered to the consignee's storage
withdrawing the container vans from the arrastre operator, her driver, warehouse located at Tabacalera Compound, Romualdez Street,
Ricardo Nazarro, immediately delivered the cargo to SMC's Ermita, Manila from July 23/25, 1990.​12
warehouse in Ermita, Manila, which is a mere thirty-minute drive
from the Port Area where the cargo came from. Thus, the damage to As found by the Court of Appeals:
the cargo could not have taken place while these were in her
From the [Survey Report], it [is] clear that the shipment was
custody.​11
discharged from the vessel to the arrastre, Marina Port Services Inc.,
Contrary to petitioner's assertion, the Survey Report (Exh. H) of the in good order and condition as evidenced by clean Equipment
Marine Cargo Surveyors indicates that when the shipper transferred Interchange Reports (EIRs). Had there been any damage to the
the cargo in question to the arrastre operator, these were covered by shipment, there would have been a report to that effect made by the
clean Equipment Interchange Report (EIR) and, when petitioner's arrastre operator. The cargoes were withdrawn by the
employees withdrew the cargo from the arrastre operator, they did so defendant-appellant from the arrastre still in good order and
without exception or protest either with regard to the condition of condition as the same were received by the former ​without
container vans or their contents. The Survey Report pertinently reads exception​, that is, without any report of damage or loss. Surely, if the
-- container vans were deformed, cracked, distorted or dented, the
defendant-appellant would report it immediately to the consignee or
Details of Discharge: make an exception on the delivery receipt or note the same in the
Warehouse Entry Slip (WES). None of these took place. To put it
Shipment, provided with our protective supervision was noted simply, the defendant-appellant received the shipment in good order
discharged ex vessel to dock of Pier #13 South Harbor, Manila on 14 and condition and delivered the same to the consignee damaged.
July 1990, containerized onto 30' x 20' secure metal vans, covered We can only conclude that the damages to the cargo occurred while
by clean EIRs. ​Except for slight dents and paint scratches on side it was in the possession of the defendant-appellant. Whenever the
and roof panels, these containers were deemed to have [been] thing is lost (or damaged) in the possession of the debtor (or obligor),
received in good condition​. it shall be presumed that the loss (or damage) was due to his fault,
unless there is proof to the contrary. No proof was proffered to rebut
.... this legal presumption and the presumption of negligence attached to
a common carrier in case of loss or damage to the goods.​13
Anent petitioner's insistence that the cargo could not have been case or that she is exempt from liability, the presumption of
damaged while in her custody as she immediately delivered the negligence as provided under Art. 1735​15​ holds.
containers to SMC's compound, suffice it to say that to prove the
exercise of extraordinary diligence, petitioner must do more than WHEREFORE, the decision of the Court of Appeals, dated May 31,
merely show the possibility that some other party could be 2001, is AFFIRMED.1âwphi1.nêt
responsible for the damage. It must prove that it used "all reasonable
means to ascertain the nature and characteristic of goods tendered SO ORDERED.
for [transport] and that [it] exercise[d] due care in the handling
[thereof]." Petitioner failed to do this.
G.R. No. 147246 August 19, 2003
Nor is there basis to exempt petitioner from liability under Art.
1734(4), which provides -- ASIA LIGHTERAGE AND SHIPPING, INC., ​petitioner,

Common carriers are responsible for the loss, destruction, or vs.

deterioration of the goods, unless the same is due to any of the
following causes only: COURT OF APPEALS and PRUDENTIAL GUARANTEE AND
ASSURANCE, INC., ​respondents.
....
PUNO, ​J.:​
(4) The character of the goods or defects in the packing or in the
containers. On appeal is the Court of Appeals' May 11, 2000 Decision​1 in
CA-G.R. CV No. 49195 and February 21, 2001 Resolution​2 affirming
.... with modification the April 6, 1994 Decision​3 of the Regional Trial
Court of Manila which found petitioner liable to pay private
For this provision to apply, the rule is that if the improper packing or,
respondent the amount of indemnity and attorney's fees.
in this case, the defect/s in the container, is/are known to the carrier
or his employees or apparent upon ordinary observation, but he First, the facts.
nevertheless accepts the same without protest or exception
notwithstanding such condition, he is not relieved of liability for On June 13, 1990, 3,150 metric tons of Better Western White Wheat
damage resulting therefrom.​14 In this case, petitioner accepted the in bulk, valued at US$423,192.35​4 was shipped by Marubeni
cargo without exception despite the apparent defects in some of the American Corporation of Portland, Oregon on board the vessel M/V
container vans. Hence, for failure of petitioner to prove that she NEO CYMBIDIUM V-26 for delivery to the consignee, General Milling
exercised extraordinary diligence in the carriage of goods in this Corporation in Manila, evidenced by Bill of Lading No. PTD/Man-4.​5
The shipment was insured by the private respondent Prudential
Guarantee and Assurance, Inc. against loss or damage for On September 14, 1990, a bidding was conducted to dispose of the
P​14,621,771.75 under Marine Cargo Risk Note RN 11859/90.​6 damaged wheat retrieved and loaded on the three other barges.​13
The total proceeds from the sale of the salvaged cargo was
On July 25, 1990, the carrying vessel arrived in Manila and the cargo P​201,379.75.​14
was transferred to the custody of the petitioner Asia Lighterage and
Shipping, Inc. The petitioner was contracted by the consignee as On the same date, September 14, 1990, consignee sent a claim
carrier to deliver the cargo to consignee's warehouse at Bo. Ugong, letter to the petitioner, and another letter dated September 18, 1990
Pasig City. to the private respondent for the value of the lost cargo.

On August 15, 1990, 900 metric tons of the shipment was loaded on On January 30, 1991, the private respondent indemnified the
barge PSTSI III, evidenced by Lighterage Receipt No. 0364​7 for consignee in the amount of ​P​4,104,654.22.​15 Thereafter, as
delivery to consignee. The cargo did not reach its destination. subrogee, it sought recovery of said amount from the petitioner, but
to no avail.
It appears that on August 17, 1990, the transport of said cargo was
suspended due to a warning of an incoming typhoon. On August 22, On July 3, 1991, the private respondent filed a complaint against the
1990, the petitioner proceeded to pull the barge to Engineering petitioner for recovery of the amount of indemnity, attorney's fees
Island off Baseco to seek shelter from the approaching typhoon. and cost of suit.​16​ Petitioner filed its answer with counterclaim.​17
PSTSI III was tied down to other barges which arrived ahead of it
while weathering out the storm that night. A few days after, the barge The Regional Trial Court ruled in favor of the private respondent. The
developed a list because of a hole it sustained after hitting an dispositive portion of its Decision states:
unseen protuberance underneath the water. The petitioner filed a
Marine Protest on August 28, 1990.​8 It likewise secured the services WHEREFORE​, premises considered, judgment is hereby rendered
of Gaspar Salvaging Corporation which refloated the barge.​9 The ordering defendant Asia Lighterage & Shipping, Inc. liable to pay
hole was then patched with clay and cement. plaintiff Prudential Guarantee & Assurance Co., Inc. the sum of
P​4,104,654.22 with interest from the date complaint was filed on July
The barge was then towed to ISLOFF terminal before it finally 3, 1991 until fully satisfied plus 10% of the amount awarded as and
headed towards the consignee's wharf on September 5, 1990. Upon for attorney's fees. Defendant's counterclaim is hereby DISMISSED.
reaching the Sta. Mesa spillways, the barge again ran aground due With costs against defendant.​18
to strong current. To avoid the complete sinking of the barge, a
portion of the goods was transferred to three other barges.​10 Petitioner appealed to the Court of Appeals insisting that it is not a
common carrier. The appellate court affirmed the decision of the trial
The next day, September 6, 1990, the towing bits of the barge broke. court with modification. The dispositive portion of its decision reads:
It sank completely, resulting in the total loss of the remaining cargo.​11
A second Marine Protest was filed on September 7, 1990.​12 WHEREFORE, the decision appealed from is hereby AFFIRMED
with modification in the sense that the salvage value of ​P​201,379.75
shall be deducted from the amount of ​P​4,104,654.22. Costs against (1) Whether the petitioner is a common carrier; and,
appellant.
(2) Assuming the petitioner is a common carrier, whether it exercised
SO ORDERED. extraordinary diligence in its care and custody of the consignee's
cargo.
Petitioner's Motion for Reconsideration dated June 3, 2000 was
likewise denied by the appellate court in a Resolution promulgated On the first issue, we rule that petitioner is a common carrier.
on February 21, 2001.
Article 1732 of the Civil Code defines ​common carriers as persons,
Hence, this petition. Petitioner submits the following errors allegedly corporations, firms or associations engaged in the business of
committed by the appellate court, ​viz​:19
​ carrying or transporting passengers or goods or both, by land, water,
or air, for compensation, offering their services to the public.
(1) THE COURT OF APPEALS DECIDED THE CASE A QUO IN A
WAY NOT IN ACCORD WITH LAW AND/OR WITH THE Petitioner contends that it is not a common carrier but a private
APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT carrier. Allegedly, it has no fixed and publicly known route, maintains
HELD THAT PETITIONER IS A COMMON CARRIER. no terminals, and issues no tickets. It points out that it is not obliged
to carry indiscriminately for any person. It is not bound to carry goods
(2) THE COURT OF APPEALS DECIDED THE CASE A QUO IN A unless it consents. In short, it does not hold out its services to the
WAY NOT IN ACCORD WITH LAW AND/OR WITH THE general public.​20
APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT
AFFIRMED THE FINDING OF THE LOWER COURT A QUO THAT We disagree.
ON THE BASIS OF THE PROVISIONS OF THE CIVIL CODE
APPLICABLE TO COMMON CARRIERS, "​THE LOSS OF THE In ​De Guzman vs. Court of Appeals​,21 ​ we held that the definition of
CARGO IS, THEREFORE, BORNE BY THE CARRIER IN ALL common carriers in Article 1732 of the Civil Code makes no
CASES EXCEPT IN THE FIVE (5) CASES ENUMERATED​." distinction between one whose principal business activity is the
carrying of persons or goods or both, and one who does such
(3) THE COURT OF APPEALS DECIDED THE CASE A QUO IN A carrying only as an ancillary activity. We also did not distinguish
WAY NOT IN ACCORD WITH LAW AND/OR WITH THE between a person or enterprise offering transportation service on a
APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT regular or scheduled basis and one offering such service on an
EFFECTIVELY CONCLUDED THAT PETITIONER FAILED TO occasional, episodic or unscheduled basis. Further, we ruled that
EXERCISE DUE DILIGENCE AND/OR WAS NEGLIGENT IN ITS Article 1732 does not distinguish between a carrier offering its
CARE AND CUSTODY OF THE CONSIGNEE'S CARGO. services to the ​general public​, and one who offers services or solicits
business only from a narrow segment of the general population.
The issues to be resolved are:
In the case at bar, the principal business of the petitioner is that of diligence. There are, however, exceptions to this rule. Article 1734 of
lighterage and drayage​22 and it offers its barges to the public for the Civil Code enumerates the instances when the presumption of
carrying or transporting goods by water for compensation. Petitioner negligence does not attach:
is clearly a common carrier. In ​De Guzman​, ​supra,​ 23
​ we considered
private respondent Ernesto Cendaña to be a common carrier even if Art. 1734. Common carriers are responsible for the loss, destruction,
his principal occupation was not the carriage of goods for others, but or deterioration of the goods, unless the same is due to any of the
that of buying used bottles and scrap metal in Pangasinan and following causes only:
selling these items in Manila.
(1) Flood, storm, earthquake, lightning, or other natural disaster or
We therefore hold that petitioner is a common carrier whether its calamity;
carrying of goods is done on an irregular rather than scheduled
manner, and with an only limited clientele. A common carrier need (2) Act of the public enemy in war, whether international or civil;
not have fixed and publicly known routes. Neither does it have to
(3) Act or omission of the shipper or owner of the goods;
maintain terminals or issue tickets.
(4) The character of the goods or defects in the packing or in the
To be sure, petitioner fits the test of a common carrier as laid down
containers;
in ​Bascos vs. Court of Appeals​.24 ​ The test to determine a common
carrier is "whether the given undertaking is a part of the business (5) Order or act of competent public authority.
engaged in by the carrier which he has held out to the general public
as his occupation rather than the quantity or extent of the business In the case at bar, the barge completely sank after its towing bits
transacted."​25 In the case at bar, the petitioner admitted that it is broke, resulting in the total loss of its cargo. Petitioner claims that
engaged in the business of shipping and lighterage,​26 offering its this was caused by a typhoon, hence, it should not be held liable for
barges to the public, despite its limited clientele for carrying or the loss of the cargo. However, petitioner failed to prove that the
transporting goods by water for compensation.​27 typhoon is the proximate and only cause of the loss of the goods,
and that it has exercised due diligence before, during and after the
On the second issue, we uphold the findings of the lower courts that occurrence of the typhoon to prevent or minimize the loss.​30 The
petitioner failed to exercise extraordinary diligence in its care and evidence show that, even before the towing bits of the barge broke, it
custody of the consignee's goods. had already previously sustained damage when it hit a sunken object
while docked at the Engineering Island. It even suffered a hole.
Common carriers are bound to observe extraordinary diligence in the
Clearly, this could not be solely attributed to the typhoon. The
vigilance over the goods transported by them.​28 They are presumed
partly-submerged vessel was refloated but its hole was patched with
to have been at fault or to have acted negligently if the goods are
only clay and cement. The patch work was merely a provisional
lost, destroyed or deteriorated.​29 To overcome the presumption of
remedy, not enough for the barge to sail safely. Thus, when
negligence in the case of loss, destruction or deterioration of the
petitioner persisted to proceed with the voyage, it recklessly exposed
goods, the common carrier must prove that it exercised extraordinary
the cargo to further damage. A portion of the cross-examination of responsibility.​32 A part of the testimony of Robert Boyd, Cargo
Alfredo Cunanan, cargo-surveyor of Tan-Gatue Adjustment Co., Inc., Operations Supervisor of the petitioner, reveals:
states:
DIRECT-EXAMINATION BY ATTY. LEE:​33
31
CROSS-EXAMINATION BY ATTY. DONN LEE:​
xxx xxx xxx
xxx xxx xxx
q - Now, Mr. Witness, did it not occur to you it might be safer to
q - Can you tell us what else transpired after that incident? just allow the Barge to lie where she was instead of towing it?

a - After the first accident, through the initiative of the barge a - Since that time that the Barge was refloated, GMC (General
owners, they tried to pull out the barge from the place of the Milling Corporation, the consignee) as I have said was in a hurry for
accident, and bring it to the anchor terminal for safety, then after their goods to be delivered at their Wharf since they needed badly
deciding if the vessel is stabilized, they tried to pull it to the the wheat that was loaded in PSTSI-3. It was needed badly by the
consignee's warehouse, now while on route another accident consignee.
occurred, now this time the barge totally hitting something in the
course. q - And this is the reason why you towed the Barge as you did?

q - You said there was another accident, can you tell the court a - Yes, sir.
the nature of the second accident?
xxx xxx xxx
a - The sinking, sir.
CROSS-EXAMINATION BY ATTY. IGNACIO:​34
q - Can you tell the nature . . . can you tell the court, if you know
what caused the sinking? xxx xxx xxx

a - Mostly it was related to the first accident because there was q - And then from ISLOFF Terminal you proceeded to the
already a whole ​(sic)​ on the bottom part of the barge. premises of the GMC? Am I correct?

xxx xxx xxx a - The next day, in the morning, we hired for additional two (2)
tugboats as I have stated.
This is not all. Petitioner still headed to the consignee's wharf despite
knowledge of an incoming typhoon. During the time that the barge q - Despite of the threats of an incoming typhoon as you
was heading towards the consignee's wharf on September 5, 1990, testified a while ago?
typhoon "Loleng" has already entered the Philippine area of
a - It is already in an inner portion of Pasig River. The typhoon IN VIEW THEREOF​, the petition is DENIED. The Decision of the
would be coming and it would be dangerous if we are in the vicinity Court of Appeals in CA-G.R. CV No. 49195 dated May 11, 2000 and
of Manila Bay. its Resolution dated February 21, 2001 are hereby AFFIRMED.
Costs against petitioner.
q - But the fact is, the typhoon was incoming? Yes or no?
SO ORDERED.
a - Yes.

q - And yet as a standard operating procedure of your

Company, you have to secure a sort of Certification to determine the G.R. No. 125948 December 29, 1998
weather condition, am I correct?
FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner,
a - Yes, sir.
vs.
q - So, more or less, you had the knowledge of the incoming
typhoon, right? COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN,
BATANGAS CITY and ADORACION C. ARELLANO, in her official
a - Yes, sir. capacity as City Treasurer of Batangas, respondents.

q - And yet you proceeded to the premises of the GMC?

a - ISLOFF Terminal is far from Manila Bay and anytime even MARTINEZ, ​J.:
with the typhoon if you are already inside the vicinity or inside Pasig
entrance, it is a safe place to tow upstream. This petition for review on certiorari ​assails the Decision of the
Court of Appeals dated November 29, 1995, in CA-G.R. SP No.
Accordingly, the petitioner cannot invoke the occurrence of the 36801, affirming the decision of the Regional Trial Court of
typhoon as force majeure to escape liability for the loss sustained by Batangas City, Branch 84, in Civil Case No. 4293, which
the private respondent. Surely, meeting a typhoon head-on falls dismissed petitioners' complaint for a business tax refund
short of due diligence required from a common carrier. More imposed by the City of Batangas.
importantly, the officers/employees themselves of petitioner admitted
that when the towing bits of the vessel broke that caused its sinking Petitioner is a grantee of a pipeline concession under Republic
and the total loss of the cargo upon reaching the Pasig River, it was Act No. 387, as amended, to contract, install and operate oil
no longer affected by the typhoon. The typhoon then is not the pipelines. The original pipeline concession was granted in 1967​1
proximate cause of the loss of the cargo; a human factor, ​i.e.,​ and renewed by the Energy Regulatory Board in 1992. 2​
negligence had intervened.
Sometime in January 1995, petitioner applied for a mayor's on business to such amounts as may be commensurate to the
permit with the Office of the Mayor of Batangas City. However, cost of regulation, inspection, and licensing. Hence, assuming
before the mayor's permit could be issued, the respondent City arguendo that FPIC is liable for the license fee, the imposition
Treasurer required petitioner to pay a local tax based on its thereof based on gross receipts is violative of the aforecited
gross receipts for the fiscal year 1993 pursuant to the Local provision. The amount of P956,076.04 (P239,019.01 per quarter)
Government Code​3​. The respondent City Treasurer assessed a is not commensurate to the cost of regulation, inspection and
business tax on the petitioner amounting to P956,076.04 licensing. The fee is already a revenue raising measure, and not
payable in four installments based on the gross receipts for a mere regulatory imposition.​4
products pumped at GPS-1 for the fiscal year 1993 which
amounted to P181,681,151.00. In order not to hamper its On March 8, 1994, the respondent City Treasurer denied the
operations, petitioner paid the tax under protest in the amount protest contending that petitioner cannot be considered
of P239,019.01 for the first quarter of 1993. engaged in transportation business, thus it cannot claim
exemption under Section 133 (j) of the Local Government Code.​5
On January 20, 1994, petitioner filed a letter-protest addressed
to the respondent City Treasurer, the pertinent portion of which On June 15, 1994, petitioner filed with the Regional Trial Court
reads: of Batangas City a complaint​6 for tax refund with prayer for writ
of preliminary injunction against respondents City of Batangas
Please note that our Company (FPIC) is a pipeline operator with and Adoracion Arellano in her capacity as City Treasurer. In its
a government concession granted under the Petroleum Act. It is complaint, petitioner alleged, inter alia,​ that: (1) the imposition
engaged in the business of transporting petroleum products and collection of the business tax on its gross receipts violates
from the Batangas refineries, via pipeline, to Sucat and JTF Section 133 of the Local Government Code; (2) the authority of
Pandacan Terminals. As such, our Company is exempt from cities to impose and collect a tax on the gross receipts of
paying tax on gross receipts under Section 133 of the Local "contractors and independent contractors" under Sec. 141 (e)
Government Code of 1991 . . . . and 151 does not include the authority to collect such taxes on
transportation contractors for, as defined under Sec. 131 (h),
Moreover, Transportation contractors are not included in the the term "contractors" excludes transportation contractors;
enumeration of contractors under Section 131, Paragraph (h) of and, (3) the City Treasurer illegally and erroneously imposed
the Local Government Code. Therefore, the authority to impose and collected the said tax, thus meriting the immediate refund
tax "on contractors and other independent contractors" under of the tax paid.​7
Section 143, Paragraph (e) of the Local Government Code does
not include the power to levy on transportation contractors. Traversing the complaint, the respondents argued that
petitioner cannot be exempt from taxes under Section 133 (j) of
The imposition and assessment cannot be categorized as a the Local Government Code as said exemption applies only to
mere fee authorized under Section 147 of the Local Government "transportation contractors and persons engaged in the
Code. The said section limits the imposition of fees and charges transportation by hire and common carriers by air, land and
water." Respondents assert that pipelines are not included in special carrier extending its services and facilities to a single
the term "common carrier" which refers solely to ordinary specific or "special customer" under a "special contract."
carriers such as trucks, trains, ships and the like. Respondents
further posit that the term "common carrier" under the said 2. The Local Tax Code of 1992 was basically enacted to give
code pertains to the mode or manner by which a product is more and effective local autonomy to local governments than
delivered to its destination.​8 the previous enactments, to make them economically and
financially viable to serve the people and discharge their
On October 3, 1994, the trial court rendered a decision functions with a concomitant obligation to accept certain
dismissing the complaint, ruling in this wise: devolution of powers, . . . So, consistent with this policy even
franchise grantees are taxed (Sec. 137) and contractors are also
. . . Plaintiff is either a contractor or other independent taxed under Sec. 143 (e) and 151 of the Code.​9
contractor.
Petitioner assailed the aforesaid decision before this Court via ​a
. . . the exemption to tax claimed by the plaintiff has become petition for review. On February 27, 1995, we referred the case
unclear. It is a rule that tax exemptions are to be strictly to the respondent Court of Appeals for consideration and
construed against the taxpayer, taxes being the lifeblood of the ​ On November 29, 1995, the respondent court
adjudication. 10
government. Exemption may therefore be granted only by clear rendered a decision 11 ​ affirming the trial court's dismissal of
and unequivocal provisions of law. petitioner's complaint. Petitioner's motion for reconsideration
​
was denied on July 18, 1996. 12
Plaintiff claims that it is a grantee of a pipeline concession
under Republic Act 387. (Exhibit A) whose concession was Hence, this petition. At first, the petition was denied due course
lately renewed by the Energy Regulatory Board (Exhibit B). Yet in a Resolution dated November 11, 1996. 13 ​ Petitioner moved
neither said law nor the deed of concession grant any tax for a reconsideration which was granted by this Court in a
exemption upon the plaintiff. ​ of January 22, 1997. Thus, the petition was
Resolution 14
reinstated.
Even the Local Government Code imposes a tax on franchise
holders under Sec. 137 of the Local Tax Code. Such being the Petitioner claims that the respondent Court of Appeals erred in
situation obtained in this case (exemption being unclear and holding that (1) the petitioner is not a common carrier or a
equivocal) resort to distinctions or other considerations may be transportation contractor, and (2) the exemption sought for by
of help: petitioner is not clear under the law.

1. That the exemption granted under Sec. 133 (j) encompasses There is merit in the petition.
​ o as not to overburden the riding public
only ​common carriers s
or commuters with taxes. Plaintiff i​ s not a common carrier, but a A "common carrier" may be defined, broadly, as one who holds
himself out to the public as engaged in the business of
transporting persons or property from place to place, for The above article (Art. 1732, Civil Code) makes no distinction
compensation, offering his services to the public generally. between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying
Art. 1732 of the Civil Code defines a "common carrier" as "any only as an ancillary activity (in local idiom, as a "sideline").
person, corporation, firm or association engaged in the Article 1732 . . . avoids making any distinction between a person
business of carrying or transporting passengers or goods or or enterprise offering transportation service on a regular o ​ r
both, by land, water, or air, for compensation, offering their scheduled basis and one offering such service on an
services to the public." occasional, episodic or unscheduled basis.​ Neither does Article
1732 distinguish between a carrier offering its services to the
The test for determining whether a party is a common carrier of "​general public,"​ ​i​.​e​., the general community or population, and
goods is: one who offers services or solicits business only from a narrow
segment of the general population. We think that Article 1877
1. He must be engaged in the business of carrying goods for
deliberately refrained from making such distinctions.
others as a public employment, and must hold himself out as
ready to engage in the transportation of goods for person So understood, the concept of "common carrier" under Article
generally as a business and not as a casual occupation; 1732 may be seen to coincide neatly with the notion of "public
service," under the Public Service Act (Commonwealth Act No.
2. He must undertake to carry goods of the kind to which his
1416, as amended) which at least partially supplements the law
business is confined;
on common carriers set forth in the Civil Code. Under Section
3. He must undertake to carry by the method by which his 13, paragraph (b) of the Public Service Act, "public service"
business is conducted and over his established roads; and includes:

​
4. The transportation must be for hire. 15 every person that now or hereafter may own, operate. manage,
or control in the Philippines, for hire or compensation, with
Based on the above definitions and requirements, there is no general or limited clientele, whether permanent, occasional or
doubt that petitioner is a common carrier. It is engaged in the accidental, and done for general business purposes, any
business of transporting or carrying goods, i.​ ​e.​ petroleum common carrier, railroad, street railway, traction railway,
products, for hire as a public employment. It undertakes to subway motor vehicle, either for freight or passenger, or both,
carry for all persons indifferently, that is, to all persons who with or without fixed route and whatever may be its
choose to employ its services, and transports the goods by classification, freight or carrier service of any class, express
land and for compensation. The fact that petitioner has a limited service, steamboat, or steamship line, pontines, ferries and
clientele does not exclude it from the definition of a common water craft, ​engaged in the transportation of ​passengers or
​ we ruled that:
carrier. In ​De Guzman vs. Court of Appeals 16​ freight or both, shipyard, marine repair shop, wharf or dock, ice
plant, ice-refrigeration plant, canal, irrigation system gas,
electric light heat and power, water supply and power
petroleum, sewerage system, wire or wireless communications refining, storage, or ​transportation by special methods of
systems, wire or wireless broadcasting stations and other petroleum,​ is hereby declared to be a public utility​. (Emphasis
similar public services. (Emphasis Supplied) Supplied)

Also, respondent's argument that the term "common carrier" as The Bureau of Internal Revenue likewise considers the
used in Section 133 (j) of the Local Government Code refers petitioner a "common carrier." In BIR Ruling No. 069-83, it
only to common carriers transporting goods and passengers declared:
through moving vehicles or vessels either by land, sea or water,
is erroneous. . . . since [petitioner] is a pipeline concessionaire that is
engaged only in transporting petroleum products, it is
As correctly pointed out by petitioner, the definition of considered a common carrier under Republic Act No. 387 . . . .
"common carriers" in the Civil Code makes no distinction as to Such being the case, it is not subject to withholding tax
the means of transporting, as long as it is by land, water or air. prescribed by Revenue Regulations No. 13-78, as amended.
It does not provide that the transportation of the passengers or
goods should be by motor vehicle. In fact, in the United States, From the foregoing disquisition, there is no doubt that
oil pipe line operators are considered common carriers. ​17 petitioner is a "common carrier" and, therefore, exempt from the
business tax as provided for in Section 133 (j), of the Local
Under the Petroleum Act of the Philippines (Republic Act 387), Government Code, to wit:
petitioner is considered a "common carrier." Thus, Article 86
thereof provides that: Sec. 133. ​Common Limitations on the Taxing Powers of Local
Government Units​. — Unless otherwise provided herein, the
Art. 86. Pipe line concessionaire as common carrier. — A pipe exercise of the taxing powers of provinces, cities,
line shall have the preferential right to utilize installations for municipalities, and barangays shall not extend to the levy of the
the transportation of petroleum owned by him, but is obligated following:
to utilize the remaining transportation capacity pro rata for the
transportation of such other petroleum as may be offered by xxx xxx xxx
others for transport, and to charge without discrimination such
rates as may have been approved by the Secretary of (j) Taxes on the gross receipts of transportation contractors and
Agriculture and Natural Resources. persons engaged in the transportation of passengers or freight
by hire and common carriers by air, land or water, except as
Republic Act 387 also regards petroleum operation as a public provided in this Code.
utility. Pertinent portion of Article 7 thereof provides:
The deliberations conducted in the House of Representatives
that everything relating to the exploration for and exploitation of on the Local Government Code of 1991 are illuminating:
petroleum . . . and everything relating to the manufacture,
MR. AQUINO (A). Thank you, Mr. Speaker. exception under Section 125 [now Sec. 137] that a province may
impose this tax at a specific rate.
Mr. Speaker, we would like to proceed to page 95, line
MR. AQUINO (A.). Thank you for that clarification, Mr. Speaker. .
1. It states: "SEC. 121 [now Sec. 131]. Common Limitations on ​
. . 18
the Taxing Powers of Local Government Units." . . .
It is clear that the legislative intent in excluding from the taxing
MR. AQUINO (A.). Thank you Mr. Speaker. power of the local government unit the imposition of business
tax against common carriers is to prevent a duplication of the
Still on page 95, subparagraph 5, on taxes on the business of so-called "common carrier's tax."
transportation. This appears to be one of those being deemed
to be exempted from the taxing powers of the local government Petitioner is already paying three (3%) percent common
units. May we know the reason why the transportation business carrier's tax on its gross sales/earnings under the National
is being excluded from the taxing powers of the local Internal Revenue Code. 19​ To tax petitioner again on its gross
government units? receipts in its transportation of petroleum business would
defeat the purpose of the Local Government Code.
MR. JAVIER (E.). Mr. Speaker, there is an exception contained in
Section 121 (now Sec. 131), line 16, paragraph 5. It states that WHEREFORE, the petition is hereby GRANTED. The decision of
local government units may not impose taxes on the business the respondent Court of Appeals dated November 29, 1995 in
of transportation, except as otherwise provided in this code. CA-G.R. SP No. 36801 is REVERSED and SET ASIDE.

Now, Mr. Speaker, if the Gentleman would care to go to page 98 SO ORDERED.

of Book II, one can see there that provinces have the power to
impose a tax on business enjoying a franchise at the rate of not
more than one-half of 1 percent of the gross annual receipts.
So, transportation contractors who are enjoying a franchise G.R. No. 149038 April 9, 2003
would be subject to tax by the province. That is the exception,
Mr. Speaker. PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY,
petitioner,
What we want to guard against here, Mr. Speaker, is the
imposition of taxes by local government units on the carrier vs.
business. Local government units may impose taxes on top of
PKS SHIPPING COMPANY,​ respondent.
what is already being imposed by the National Internal Revenue
Code which is the so-called "common carriers tax." We do not VITUG, ​J​.:
want a duplication of this tax, so we just provided for an
The petition before the Court seeks a review of the decision of the Philamgen interposed an appeal to the Court of Appeals which
Court of Appeals in C.A. G.R. CV No. 56470, promulgated on 25 affirmed ​in toto the decision of the trial court. The appellate court
June 2001, which has affirmed ​in toto the judgment of the Regional ruled that evidence to establish that PKS Shipping was a common
Trial Court (RTC), Branch 65, of Makati, dismissing the complaint for carrier at the time it undertook to transport the bags of cement was
damages filed by petitioner insurance corporation against wanting because the peculiar method of the shipping company’s
respondent shipping company. carrying goods for others was not generally held out as a business
but as a casual occupation. It then concluded that PKS Shipping, not
Davao Union Marketing Corporation (DUMC) contracted the services being a common carrier, was not expected to observe the stringent
of respondent PKS Shipping Company (PKS Shipping) for the extraordinary diligence required of common carriers in the care of
shipment to Tacloban City of seventy-five thousand (75,000) bags of goods. The appellate court, moreover, found that the loss of the
cement worth Three Million Three Hundred Seventy-Five Thousand goods was sufficiently established as having been due to fortuitous
Pesos (P3,375,000.00). DUMC insured the goods for its full value event, negating any liability on the part of PKS Shipping to the
with petitioner Philippine American General Insurance Company shipper.
(Philamgen). The goods were loaded aboard the dumb barge ​Limar I
belonging to PKS Shipping. On the evening of 22 December 1988, In the instant appeal, Philamgen contends that the appellate court
about nine o’clock, while ​Limar I was being towed by respondent’s has committed a patent error in ruling that PKS Shipping is not a
tugboat, ​MT Iron Eagle,​ the barge sank a couple of miles off the common carrier and that it is not liable for the loss of the subject
coast of Dumagasa Point, in Zamboanga del Sur, bringing down with cargo. The fact that respondent has a limited clientele, petitioner
it the entire cargo of 75,000 bags of cement. argues, does not militate against respondent’s being a common
carrier and that the only way by which such carrier can be held
DUMC filed a formal claim with Philamgen for the full amount of the exempt for the loss of the cargo would be if the loss were caused by
insurance. Philamgen promptly made payment; it then sought natural disaster or calamity. Petitioner avers that typhoon "APIANG"
reimbursement from PKS Shipping of the sum paid to DUMC but the has not entered the Philippine area of responsibility and that, even if
shipping company refused to pay, prompting Philamgen to file suit it did, respondent would not be exempt from liability because its
against PKS Shipping with the Makati RTC. employees, particularly the tugmaster, have failed to exercise due
diligence to prevent or minimize the loss.
The RTC dismissed the complaint after finding that the total loss of
the cargo could have been caused either by a fortuitous event, in PKS Shipping, in its comment, urges that the petition should be
which case the ship owner was not liable, or through the negligence denied because what Philamgen seeks is not a review on points or
of the captain and crew of the vessel and that, under Article 587 of errors of law but a review of the undisputed factual findings of the
the Code of Commerce adopting the "Limited Liability Rule," the ship RTC and the appellate court. In any event, PKS Shipping points out,
owner could free itself of liability by abandoning, as it apparently so the findings and conclusions of both courts find support from the
did, the vessel with all her equipment and earned freightage. evidence and applicable jurisprudence.
The determination of possible liability on the part of PKS Shipping whatever may be its classification, freight or carrier service of any
boils down to the question of whether it is a private carrier or a class, express service, steamboat, or steamship, or steamship line,
common carrier and, in either case, to the other question of whether pontines, ferries and water craft, engaged in the transportation of
or not it has observed the proper diligence (ordinary, if a private passengers or freight or both, shipyard, marine repair shop, wharf or
carrier, or extraordinary, if a common carrier) required of it given the dock, ice plant, ice refrigeration plant, canal, irrigation system, gas,
circumstances. electric light, heat and power, water supply and power petroleum,
sewerage system, wire or wireless communication systems, wire or
The findings of fact made by the Court of Appeals, particularly when wireless broadcasting stations and other similar public services. x x
such findings are consistent with those of the trial court, may not at x. (Underscoring supplied)."
liberty be reviewed by this Court in a petition for review under Rule
45 of the Rules of Court.​1 The conclusions derived from those factual The prevailing doctrine on the question is that enunciated in the
findings, however, are not necessarily just matters of fact as when leading case of ​De Guzman vs. Court of Appeals​.2​ Applying Article
they are so linked to, or inextricably intertwined with, a requisite 1732 of the Code, in conjunction with Section 13(b) of the Public
appreciation of the applicable law. In such instances, the conclusions Service Act, this Court has held:
made could well be raised as being appropriate issues in a petition
for review before this Court. Thus, an issue whether a carrier is "The above article makes no distinction between one whose ​principal
private or common on the basis of the facts found by a trial court or business activity is the carrying of persons or goods or both, and one
the appellate court can be a valid and reviewable question of law. who does such carrying only as an ​ancillary activity (in local idiom,
as `a sideline’). Article 1732 also carefully avoids making any
The Civil Code defines "common carriers" in the following terms: distinction between a person or enterprise offering transportation
service on a ​regular or scheduled basis and one offering such
"Article 1732. Common carriers are persons, corporations, firms or service on an ​occasional, episodic or unscheduled basis​. Neither
associations engaged in the business of carrying or transporting does Article 1732 distinguish between a carrier offering its services
passengers or goods or both, by land, water, or air for compensation, to the `​general public​,’ ​i.e.​ , the general community or population, and
offering their services to the public." one who offers services or solicits business only from a ​narrow
segment of the general population. We think that Article 1732
Complementary to the codal definition is Section 13, paragraph (b), deliberately refrained from making such distinctions.
of the Public Service Act; it defines "public service" to be –
"So understood, the concept of `common carrier’ under Article 1732
"x x x every person that now or hereafter may own, operate, may be seen to coincide neatly with the notion of `public service,’
manage, or control in the Philippines, for hire or compensation, ​with under the Public Service Act (Commonwealth Act No. 1416, as
general or limited clientele, whether permanent, occasional or amended) which at least partially supplements the law on common
accidental, and done for general business purposes, any common carriers set forth in the Civil Code."
carrier​, railroad, street railway, subway motor vehicle, either for
freight or passenger, or both, with or without fixed route and
Much of the distinction between a "common or public carrier" and a (1) Flood, storm, earthquake, lightning, or other natural disaster or
"private or special carrier" lies in the character of the business, such calamity;
that if the undertaking is an isolated transaction, not a part of the
business or occupation, and the carrier does not hold itself out to (2) Act of the public enemy in war, whether international or civil;
carry the goods for the general public or to a limited clientele,
although involving the carriage of goods for a fee,​3 the person or (3) Act or omission of the shipper or owner of the goods;
corporation providing such service could very well be just a private
(4) The character of the goods or defects in the packing or in the
carrier. A typical case is that of a charter party which includes both
containers; and
the vessel and its crew, such as in a bareboat or demise, where the
charterer obtains the use and service of all or some part of a ship for (5) Order or act of competent public authority.​8
a period of time or a voyage or voyages​4 and gets the control of the
vessel and its crew.​5 Contrary to the conclusion made by the The appellate court ruled, gathered from the testimonies and sworn
appellate court, its factual findings indicate that PKS Shipping has marine protests of the respective vessel masters of ​Limar I and ​MT
engaged itself in the business of carrying goods for others, although Iron Eagle​, that there was no way by which the barge’s or the
for a limited clientele, undertaking to carry such goods for a fee. The tugboat’s crew could have prevented the sinking of ​Limar I​. The
regularity of its activities in this area indicates more than just a vessel was suddenly tossed by waves of extraordinary height of six
casual activity on its part.​6 Neither can the concept of a common (6) to eight (8) feet and buffeted by strong winds of 1.5 knots
carrier change merely because individual contracts are executed or resulting in the entry of water into the barge’s hatches. The official
entered into with patrons of the carrier. Such restrictive interpretation Certificate of Inspection of the barge issued by the Philippine
would make it easy for a common carrier to escape liability by the Coastguard and the Coastwise Load Line Certificate would attest to
simple expedient of entering into those distinct agreements with the seaworthiness of ​Limar I and should strengthen the factual
clients. findings of the appellate court.

Addressing now the issue of whether or not PKS Shipping has Findings of fact of the Court of Appeals generally conclude this
exercised the proper diligence demanded of common carriers, Article Court; none of the recognized exceptions from the rule - (1) when the
1733 of the Civil Code requires common carriers to observe factual findings of the Court of Appeals and the trial court are
extraordinary diligence in the vigilance over the goods they carry. In contradictory; (2) when the conclusion is a finding grounded entirely
case of loss, destruction or deterioration of goods, common carriers on speculation, surmises, or conjectures; (3) when the inference
are presumed to have been at fault or to have acted negligently, and made by the Court of Appeals from its findings of fact is manifestly
the burden of proving otherwise rests on them.​7 The provisions of mistaken, absurd, or impossible; (4) when there is a grave abuse of
Article 1733, notwithstanding, common carriers are exempt from discretion in the appreciation of facts; (5) when the appellate court, in
liability for loss, destruction, or deterioration of the goods due to any making its findings, went beyond the issues of the case and such
of the following causes: findings are contrary to the admissions of both appellant and
appellee; (6) when the judgment of the Court of Appeals is premised
on a misapprehension of facts; (7) when the Court of Appeals failed occurs to a passenger. His liability may include indemnity for loss of
to notice certain relevant facts which, if properly considered, would earning capacity even if the deceased passenger may only be an
justify a different conclusion; (8) when the findings of fact are unemployed high school student at the time of the accident.
themselves conflicting; (9) when the findings of fact are conclusions
without citation of the specific evidence on which they are based; The Case
and (10) when the findings of fact of the Court of Appeals are
premised on the absence of evidence but such findings are By petition for review on ​certiorari,​ Spouses Teodoro and Nanette
contradicted by the evidence on record – would appear to be clearly Perefia (Perefias) appeal the adverse decision promulgated on
extant in this instance. November 13, 2002, by which the Court of Appeals (CA) affirmed
with modification the decision rendered on December 3, 1999 by the
All given then, the appellate court did not err in its judgment Regional Trial Court (RTC), Branch 260, in Parañaque City that had
absolving PKS Shipping from liability for the loss of the DUMC cargo. decreed them jointly and severally liable with Philippine National
Railways (PNR), their co-defendant, to Spouses Nicolas and
WHEREFORE​, the petition is ​DENIED​. No costs. Teresita Zarate (Zarates) for the death of their 15-year old son,
Aaron John L. Zarate (Aaron), then a high school student of Don
SO ORDERED​. Bosco Technical Institute (Don Bosco).

Antecedents

G.R. No. 157917 August 29, 2012 The Pereñas were engaged in the business of transporting students
from their respective residences in Parañaque City to Don Bosco in
SPOUSES TEODORO​1 ​and NANETTE PERENA, ​Petitioners, Pasong Tamo, Makati City, and back. In their business, the Pereñas
used a KIA Ceres Van (van) with Plate No. PYA 896, which had the
vs.
capacity to transport 14 students at a time, two of whom would be
SPOUSES TERESITA PHILIPPINE NICOLAS and L. ZARATE, seated in the front beside the driver, and the others in the rear, with
NATIONAL RAILWAYS, and the COURT OF APPEALS six students on either side. They employed Clemente Alfaro (Alfaro)
Respondents. as driver of the van.

DECISION In June 1996, the Zarates contracted the Pereñas to transport Aaron
to and from Don Bosco. On August 22, 1996, as on previous school
BERSAMIN, ​J.: days, the van picked Aaron up around 6:00 a.m. from the Zarates’
residence. Aaron took his place on the left side of the van near the
The operator of a. school bus service is a common carrier in the rear door. The van, with its air-conditioning unit turned on and the
eyes of the law. He is bound to observe extraordinary diligence in the stereo playing loudly, ultimately carried all the 14 student riders on
conduct of his business. He is presumed to be negligent when death their way to Don Bosco. Considering that the students were due at
Don Bosco by 7:15 a.m., and that they were already running late answers, with cross-claims against each other, but Alfaro could not
because of the heavy vehicular traffic on the South Superhighway, be served with summons.
Alfaro took the van to an alternate route at about 6:45 a.m. by
traversing the narrow path underneath the Magallanes Interchange At the pre-trial, the parties stipulated on the facts and
that was then commonly used by Makati-bound vehicles as a short issues, viz:
cut into Makati. At the time, the narrow path was marked by piles of
construction materials and parked passenger jeepneys, and the A. FACTS:
railroad crossing in the narrow path had no railroad warning signs, or
(1) That spouses Zarate were the legitimate parents of
watchmen, or other responsible persons manning the crossing. In
Aaron John L. Zarate;
fact, the bamboo barandilla was up, leaving the railroad crossing
open to traversing motorists. (2) Spouses Zarate engaged the services of spouses
Pereña for the adequate and safe transportation
At about the time the van was to traverse the railroad crossing, PNR
carriage of the former spouses' son from their
Commuter No. 302 (train), operated by Jhonny Alano (Alano), was in
residence in Parañaque to his school at the Don Bosco
the vicinity of the Magallanes Interchange travelling northbound. As
Technical Institute in Makati City;
the train neared the railroad crossing, Alfaro drove the van eastward
across the railroad tracks, closely tailing a large passenger bus. His (3) During the effectivity of the contract of carriage and
view of the oncoming train was blocked because he overtook the in the implementation thereof, Aaron, the minor son of
passenger bus on its left side. The train blew its horn to warn spouses Zarate died in connection with a
motorists of its approach. When the train was about 50 meters away vehicular/train collision which occurred while Aaron
from the passenger bus and the van, Alano applied the ordinary was riding the contracted carrier Kia Ceres van of
brakes of the train. He applied the emergency brakes only when he spouses Pereña, then driven and operated by the
saw that a collision was imminent. The passenger bus successfully latter's employee/authorized driver Clemente Alfaro,
crossed the railroad tracks, but the van driven by Alfaro did not. The which van collided with the train of PNR, at around 6:45
train hit the rear end of the van, and the impact threw nine of the 12 A.M. of August 22, 1996, within the vicinity of the
students in the rear, including Aaron, out of the van. Aaron landed in Magallanes Interchange in Makati City, Metro Manila,
the path of the train, which dragged his body and severed his head, Philippines;
instantaneously killing him. Alano fled the scene on board the train,
and did not wait for the police investigator to arrive. (4) At the time of the vehicular/train collision, the
subject site of the vehicular/train collision was a
Devastated by the early and unexpected death of Aaron, the Zarates railroad crossing used by motorists for crossing the
commenced this action for damages against Alfaro, the Pereñas, railroad tracks;
PNR and Alano. The Pereñas and PNR filed their respective
(5) During the said time of the vehicular/train collision, (1) Whether or not defendant-driver of the van is, in the
there were no appropriate and safety warning signs performance of his functions, liable for negligence
and railings at the site commonly used for railroad constituting the proximate cause of the vehicular
crossing; collision, which resulted in the death of plaintiff
spouses' son;
(6) At the material time, countless number of Makati
bound public utility and private vehicles used on a daily (2) Whether or not the defendant spouses Pereña
basis the site of the collision as an alternative route and being the employer of defendant Alfaro are liable for
short-cut to Makati; any negligence which may be attributed to defendant
Alfaro;
(7) The train driver or operator left the scene of the
incident on board the commuter train involved without (3) Whether or not defendant Philippine National
waiting for the police investigator; Railways being the operator of the railroad system is
liable for negligence in failing to provide adequate
(8) The site commonly used for railroad crossing by safety warning signs and railings in the area commonly
motorists was not in fact intended by the railroad used by motorists for railroad crossings, constituting
operator for railroad crossing at the time of the the proximate cause of the vehicular collision which
vehicular collision; resulted in the death of the plaintiff spouses' son;

(9) PNR received the demand letter of the spouses (4) Whether or not defendant spouses Pereña are
Zarate; liable for breach of the contract of carriage with
plaintiff-spouses in failing to provide adequate and safe
(10) PNR refused to acknowledge any liability for the transportation for the latter's son;
vehicular/train collision;
(5) Whether or not defendants spouses are liable for
(11) The eventual closure of the railroad crossing actual, moral damages, exemplary damages, and
alleged by PNR was an internal arrangement between attorney's fees;
the former and its project contractor; and
(6) Whether or not defendants spouses Teodorico and
(12) The site of the vehicular/train collision was within Nanette Pereña observed the diligence of employers
the vicinity or less than 100 meters from the and school bus operators;
Magallanes station of PNR.
(7) Whether or not defendant-spouses are civilly liable
B. ISSUES for the accidental death of Aaron John Zarate;
 (8) Whether or not defendant PNR was grossly For its part, PNR tended to show that the proximate cause of the
negligent in operating the commuter train involved in collision had been the reckless crossing of the van whose driver had
the accident, in allowing or tolerating the motoring not first stopped, looked and listened; and that the narrow path
public to cross, and its failure to install safety devices traversed by the van had not been intended to be a railroad crossing
or equipment at the site of the accident for the for motorists.
protection of the public;
Ruling of the RTC
(9) Whether or not defendant PNR should be made to
reimburse defendant spouses for any and whatever On December 3, 1999, the RTC rendered its decision,​3
amount the latter may be held answerable or which disposing:
they may be ordered to pay in favor of plaintiffs by
reason of the action; WHEREFORE, premises considered, judgment is
hereby rendered in favor of the plaintiff and against the
(10) Whether or not defendant PNR should pay defendants ordering them to jointly and severally pay
plaintiffs directly and fully on the amounts claimed by the plaintiffs as follows:
the latter in their Complaint by reason of its gross
negligence; (1) (for) the death of Aaron- Php50,000.00;

(11) Whether or not defendant PNR is liable to (2) Actual damages in the amount of Php100,000.00;
defendants spouses for actual, moral and exemplary
(3) For the loss of earning capacity- Php2,109,071.00;
damages and attorney's fees.​2
(4) Moral damages in the amount of Php4,000,000.00;
The Zarates’ claim against the Pereñas was upon breach of the
contract of carriage for the safe transport of Aaron; but that against (5) Exemplary damages in the amount of
PNR was based on quasi-delict under Article 2176, Civil Code. Php1,000,000.00;

In their defense, the Pereñas adduced evidence to show that they (6) Attorney’s fees in the amount of Php200,000.00;
had exercised the diligence of a good father of the family in the and
selection and supervision of Alfaro, by making sure that Alfaro had
been issued a driver’s license and had not been involved in any (7) Cost of suit.
vehicular accident prior to the collision; that their own son had taken
the van daily; and that Teodoro Pereña had sometimes accompanied SO ORDERED.
Alfaro in the van’s trips transporting the students to school.
On June 29, 2000, the RTC denied the Pereñas’ motion for
reconsideration,​4 ​reiterating that the cooperative gross negligence of
the Pereñas and PNR had caused the collision that led to the death Railways and in not holding the latter and its train driver
of Aaron; and that the damages awarded to the Zarates were not primarily responsible for the incident.
excessive, but based on the established circumstances.
The trial court erred in awarding excessive damages
The CA’s Ruling and attorney’s fees.

Both the Pereñas and PNR appealed (C.A.-G.R. CV The trial court erred in awarding damages in the form
No. 68916). of deceased’s loss of earning capacity in the absence
of sufficient basis for such an award.
PNR assigned the following errors, to wit:​5
On November 13, 2002, the CA promulgated its decision, affirming
The Court ​a quo​ erred in: the findings of the RTC, but limited the moral damages to ₱
2,500,000.00; and deleted the attorney’s fees because the RTC did
1. In finding the defendant-appellant Philippine National not state the factual and legal bases, to wit:​6
Railways jointly and severally liable together with
defendant-appellants spouses Teodorico and Nanette WHEREFORE, premises considered, the assailed
Pereña and defendant-appellant Clemente Alfaro to Decision of the Regional Trial Court, Branch 260 of
pay plaintiffs-appellees for the death of Aaron Zarate Parañaque City is AFFIRMED with the modification that
and damages. the award of Actual Damages is reduced to ₱
59,502.76; Moral Damages is reduced to ₱
2. In giving full faith and merit to the oral testimonies of 2,500,000.00; and the award for Attorney’s Fees is
plaintiffs-appellees witnesses despite overwhelming Deleted.
documentary evidence on record, supporting the case
of defendants-appellants Philippine National Railways. SO ORDERED.

The Pereñas ascribed the following errors to the RTC, The CA upheld the award for the loss of Aaron’s earning capacity,
namely: taking cognizance of the ruling in Cariaga v. Laguna Tayabas Bus
Company and Manila Railroad Company,​7 ​wherein the Court gave
The trial court erred in finding defendants-appellants the heirs of Cariaga a sum representing the loss of the deceased’s
jointly and severally liable for actual, moral and earning capacity despite Cariaga being only a medical student at the
exemplary damages and attorney’s fees with the other time of the fatal incident. Applying the formula adopted in the
defendants. American Expectancy Table of Mortality:–

The trial court erred in dismissing the cross-claim of the 2/3 x (80 - age at the time of death) = life expectancy
appellants Pereñas against the Philippine National
the CA determined the life expectancy of Aaron to be 39.3 years III. The lower court erred in not reducing further the
upon reckoning his life expectancy from age of 21 (the age when he amount of damages awarded, assuming petitioners are
would have graduated from college and started working for his own liable at all.
livelihood) instead of 15 years (his age when he died). Considering
that the nature of his work and his salary at the time of Aaron’s death Ruling
were unknown, it used the prevailing minimum wage of ₱ 280.00/day
to compute Aaron’s gross annual salary to be ₱ 110,716.65, inclusive The petition has no merit.
of the thirteenth month pay. Multiplying this annual salary by Aaron’s
1.
life expectancy of 39.3 years, his gross income would aggregate to ₱
4,351,164.30, from which his estimated expenses in the sum of ₱ Were the Pereñas and PNR jointly
2,189,664.30 was deducted to finally arrive at P 2,161,500.00 as net
income. Due to Aaron’s computed net income turning out to be and severally liable for damages?
higher than the amount claimed by the Zarates, only ₱ 2,109,071.00,
the amount expressly prayed for by them, was granted. The Zarates brought this action for recovery of damages against
both the Pereñas and the PNR, basing their claim against the
On April 4, 2003, the CA denied the Pereñas’ motion for Pereñas on breach of contract of carriage and against the PNR on
reconsideration.​8 quasi-delict.

Issues The RTC found the Pereñas and the PNR negligent. The CA
affirmed the findings.
In this appeal, the Pereñas list the following as the errors committed
by the CA, to wit: We concur with the CA.

I. The lower court erred when it upheld the trial court’s To start with, the Pereñas’ defense was that they exercised the
decision holding the petitioners jointly and severally diligence of a good father of the family in the selection and
liable to pay damages with Philippine National supervision of Alfaro, the van driver, by seeing to it that Alfaro had a
Railways and dismissing their cross-claim against the driver’s license and that he had not been involved in any vehicular
latter. accident prior to the fatal collision with the train; that they even had
their own son travel to and from school on a daily basis; and that
II. The lower court erred in affirming the trial court’s Teodoro Pereña himself sometimes accompanied Alfaro in
decision awarding damages for loss of earning capacity transporting the passengers to and from school. The RTC gave
of a minor who was only a high school student at the scant consideration to such defense by regarding such defense as
time of his death in the absence of sufficient basis for inappropriate in an action for breach of contract of carriage.
such an award.
We find no adequate cause to differ from the conclusions of the In relation to common carriers, the Court defined public use in the
lower courts that the Pereñas operated as a common carrier; and following terms in United States v. Tan Piaco,​15 ​viz:
that their standard of care was extraordinary diligence, not the
ordinary diligence of a good father of a family. "Public use" is the same as "use by the public". The
essential feature of the public use is not confined to
Although in this jurisdiction the operator of a school bus service has privileged individuals, but is open to the indefinite
been usually regarded as a private carrier,​9 ​primarily because he only public. It is this indefinite or unrestricted quality that
caters to some specific or privileged individuals, and his operation is gives it its public character. In determining whether a
neither open to the indefinite public nor for public use, the exact use is public, we must look not only to the character of
nature of the operation of a school bus service has not been finally the business to be done, but also to the proposed
settled. This is the occasion to lay the matter to rest. mode of doing it. If the use is merely optional with the
owners, or the public benefit is merely incidental, it is
A carrier is a person or corporation who undertakes to transport or not a public use, authorizing the exercise of the
convey goods or persons from one place to another, gratuitously or jurisdiction of the public utility commission. There must
for hire. The carrier is classified either as a private/special carrier or be, in general, a right which the law compels the owner
as a common/public carrier.​10 ​A private carrier is one who, without to give to the general public. It is not enough that the
making the activity a vocation, or without holding himself or itself out general prosperity of the public is promoted. Public use
to the public as ready to act for all who may desire his or its services, is not synonymous with public interest. The true
undertakes, by special agreement in a particular instance only, to criterion by which to judge the character of the use is
transport goods or persons from one place to another either whether the public may enjoy it by right or only by
gratuitously or for hire.​11 ​The provisions on ordinary contracts of the permission.
Civil Code govern the contract of private carriage.The diligence
required of a private carrier is only ordinary, that is, the diligence of a In ​De Guzman v. Court of Appeals,​16 ​the Court noted that Article
good father of the family. In contrast, a common carrier is a person, 1732 of the Civil Code avoided any distinction between a person or
corporation, firm or association engaged in the business of carrying an enterprise offering transportation on a regular or an isolated
or transporting passengers or goods or both, by land, water, or air, basis; and has not distinguished a carrier offering his services to the
for compensation, offering such services to the public.​12 ​Contracts of general public, that is, the general community or population, from
common carriage are governed by the provisions on common one offering his services only to a narrow segment of the general
carriers of the Civil Code, the Public Service Act,​13 ​and other special population.
laws relating to transportation. A common carrier is required to
observe extraordinary diligence, and is presumed to be at fault or to Nonetheless, the concept of a common carrier embodied in Article
have acted negligently in case of the loss of the effects of 1732 of the Civil Code coincides neatly with the notion of public
passengers, or the death or injuries to passengers.​14 service under the Public Service Act, which supplements the law on
common carriers found in the Civil Code. Public service, according to service is a private, not a common, carrier. The question must be
Section 13, paragraph (b) of the Public Service Act, includes: determined by the character of the business actually carried on by
the carrier, not by any secret intention or mental reservation it may
x x x every person that now or hereafter may own, entertain or assert when charged with the duties and obligations that
operate, manage, or control in the Philippines, for hire the law imposes.​21
or compensation, with general or limited clientèle,
whether permanent or occasional, and done for the Applying these considerations to the case before us, there is no
general business purposes, any common carrier, question that the Pereñas as the operators of a school bus service
railroad, street railway, traction railway, subway motor were: (a) engaged in transporting passengers generally as a
vehicle, either for freight or passenger, or both, with or business, not just as a casual occupation; (b) undertaking to carry
without fixed route and whatever may be its passengers over established roads by the method by which the
classification, freight or carrier service of any class, business was conducted; and (c) transporting students for a fee.
express service, steamboat, or steamship line, Despite catering to a limited clientèle, the Pereñas operated as a
pontines, ferries and water craft, engaged in the common carrier because they held themselves out as a ready
transportation of passengers or freight or both, transportation indiscriminately to the students of a particular school
shipyard, marine repair shop, ice-refrigeration plant, living within or near where they operated the service and for a fee.
canal, irrigation system, gas, electric light, heat and
power, water supply and power petroleum, sewerage The common carrier’s standard of care and vigilance as to the safety
system, wire or wireless communications systems, wire of the passengers is defined by law. Given the nature of the business
or wireless broadcasting stations and other similar and for reasons of public policy, the common carrier is bound "to
public services. x x x.​17 observe extraordinary diligence in the vigilance over the goods and
for the safety of the passengers transported by them, according to all
Given the breadth of the aforequoted characterization of a common the circumstances of each case."​22 ​Article 1755 of the Civil Code
carrier, the Court has considered as common carriers pipeline specifies that the common carrier should "carry the passengers
operators,​18 ​custom brokers and warehousemen,​19 ​and barge safely as far as human care and foresight can provide, using the
operators​20 ​even if they had limited clientèle. utmost diligence of very cautious persons, with a due regard for all
the circumstances." To successfully fend off liability in an action upon
As all the foregoing indicate, the true test for a common carrier is not the death or injury to a passenger, the common carrier must prove
the quantity or extent of the business actually transacted, or the his or its observance of that extraordinary diligence; otherwise, the
number and character of the conveyances used in the activity, but legal presumption that he or it was at fault or acted negligently would
whether the undertaking is a part of the activity engaged in by the stand.​23 ​No device, whether by stipulation, posting of notices,
carrier that he has held out to the general public as his business or statements on tickets, or otherwise, may dispense with or lessen the
occupation. If the undertaking is a single transaction, not a part of the responsibility of the common carrier as defined under Article 1755 of
general business or occupation engaged in, as advertised and held ​
the Civil Code. 24
out to the general public, the individual or the entity rendering such
And, secondly, the Pereñas have not presented any compelling going into the Makati area to cross the railroad tracks. Although that
defense or reason by which the Court might now reverse the CA’s point had been used by motorists as a shortcut into the Makati area,
findings on their liability. On the contrary, an examination of the that fact alone did not excuse their driver into taking that route. On
records shows that the evidence fully supported the findings of the the other hand, with his familiarity with that shortcut, their driver was
CA. fully aware of the risks to his passengers but he still disregarded the
risks. Compounding his lack of care was that loud music was playing
As earlier stated, the Pereñas, acting as a common carrier, were inside the air-conditioned van at the time of the accident. The
already presumed to be negligent at the time of the accident loudness most probably reduced his ability to hear the warning horns
because death had occurred to their passenger.​25 ​The presumption of the oncoming train to allow him to correctly appreciate the lurking
of negligence, being a presumption of law, laid the burden of dangers on the railroad tracks. Also, he sought to overtake a
evidence on their shoulders to establish that they had not been passenger bus on the left side as both vehicles traversed the railroad
negligent.​26 ​It was the law no less that required them to prove their tracks. In so doing, he lost his view of the train that was then coming
observance of extraordinary diligence in seeing to the safe and from the opposite side of the passenger bus, leading him to
secure carriage of the passengers to their destination. Until they did miscalculate his chances of beating the bus in their race, and of
so in a credible manner, they stood to be held legally responsible for getting clear of the train. As a result, the bus avoided a collision with
the death of Aaron and thus to be held liable for all the natural the train but the van got slammed at its rear, causing the fatality.
consequences of such death. Lastly, he did not slow down or go to a full stop before traversing the
railroad tracks despite knowing that his slackening of speed and
There is no question that the Pereñas did not overturn the going to a full stop were in observance of the right of way at railroad
presumption of their negligence by credible evidence. Their defense tracks as defined by the traffic laws and regulations.​28 ​He thereby
of having observed the diligence of a good father of a family in the violated a specific traffic regulation on right of way, by virtue of which
selection and supervision of their driver was not legally sufficient. he was immediately presumed to be negligent.​29
According to Article 1759 of the Civil Code, their liability as a
common carrier did not cease upon proof that they exercised all the The omissions of care on the part of the van driver constituted
diligence of a good father of a family in the selection and supervision negligence,​30 ​which, according to Layugan v. Intermediate Appellate
of their employee. This was the reason why the RTC treated this Court,​31 ​is "the omission to do something which a reasonable man,
defense of the Pereñas as inappropriate in this action for breach of guided by those considerations which ordinarily regulate the conduct
contract of carriage. of human affairs, would do, or the doing of something which a
prudent and reasonable man would not do,​32 ​or as Judge Cooley
The Pereñas were liable for the death of Aaron despite the fact that defines it, ‘(t)he failure to observe for the protection of the interests of
their driver might have acted beyond the scope of his authority or another person, that degree of care, precaution, and vigilance which
even in violation of the orders of the common carrier.​27 ​In this the circumstances justly demand, whereby such other person suffers
connection, the records showed their driver’s actual negligence. injury.’"​33
There was a showing, to begin with, that their driver traversed the
railroad tracks at a point at which the PNR did not permit motorists
The test by which to determine the existence of foresight of harm, followed by the ignoring of the
negligence in a particular case has been aptly stated in suggestion born of this prevision, is always necessary
the leading case of Picart v. Smith,​34 ​thuswise: before negligence can be held to exist. Stated in these
terms, the proper criterion for determining the existence
The test by which to determine the existence of of negligence in a given case is this: Conduct is said to
negligence in a particular case may be stated as be negligent when a prudent man in the position of the
follows: Did the defendant in doing the alleged tortfeasor would have foreseen that an effect harmful to
negligent act use that reasonable care and caution another was sufficiently probable to warrant his
which an ordinarily prudent person would have used in foregoing the conduct or guarding against its
the same situation? If not, then he is guilty of consequences. (Emphasis supplied)
negligence. The law here in effect adopts the standard
supposed to be supplied by the imaginary conduct of Pursuant to the ​Picart v. Smith test of negligence, the Pereñas’ driver
the discreet paterfamilias of the Roman law. The was entirely negligent when he traversed the railroad tracks at a
existence of negligence in a given case is not point not allowed for a motorist’s crossing despite being fully aware
determined by reference to the personal judgment of of the grave harm to be thereby caused to his passengers; and when
the actor in the situation before him. The law considers he disregarded the foresight of harm to his passengers by overtaking
what would be reckless, blameworthy, or negligent in the bus on the left side as to leave himself blind to the approach of
the man of ordinary intelligence and prudence and the oncoming train that he knew was on the opposite side of the bus.
determines liability by that.
Unrelenting, the Pereñas cite Phil. National Railways v. Intermediate
The question as to what would constitute the conduct Appellate Court,​35 ​where the Court held the PNR solely liable for the
of a prudent man in a given situation must of course be damages caused to a passenger bus and its passengers when its
always determined in the light of human experience train hit the rear end of the bus that was then traversing the railroad
and in view of the facts involved in the particular case. crossing. But the circumstances of that case and this one share no
Abstract speculation cannot here be of much value but similarities. In Philippine National Railways v. Intermediate Appellate
this much can be profitably said: Reasonable men Court, no evidence of contributory negligence was adduced against
govern their conduct by the circumstances which are the owner of the bus. Instead, it was the owner of the bus who
before them or known to them. They are not, and are proved the exercise of extraordinary diligence by preponderant
not supposed to be, omniscient of the future. Hence evidence. Also, the records are replete with the showing of
they can be expected to take care only when there is negligence on the part of both the Pereñas and the PNR. Another
something before them to suggest or warn of danger. distinction is that the passenger bus in Philippine National Railways
Could a prudent man, in the case under consideration, v. Intermediate Appellate Court was traversing the dedicated railroad
foresee harm as a result of the course actually crossing when it was hit by the train, but the Pereñas’ school van
pursued? If so, it was the duty of the actor to take traversed the railroad tracks at a point not intended for that purpose.
precautions to guard against that harm. Reasonable
At any rate, the lower courts correctly held both the Pereñas and the able-bodied child prior to his death. The basis for the computation of
PNR "jointly and severally" liable for damages arising from the death Aaron’s earning capacity was not what he would have become or
of Aaron. They had been impleaded in the same complaint as what he would have wanted to be if not for his untimely death, but
defendants against whom the Zarates had the right to relief, whether the minimum wage in effect at the time of his death. Moreover, the
jointly, severally, or in the alternative, in respect to or arising out of RTC’s computation of Aaron’s life expectancy rate was not reckoned
the accident, and questions of fact and of law were common as to from his age of 15 years at the time of his death, but on 21 years, his
the Zarates.​36 ​Although the basis of the right to relief of the Zarates age when he would have graduated from college.
(i.e., breach of contract of carriage) against the Pereñas was distinct
from the basis of the Zarates’ right to relief against the PNR (i.e., We find the considerations taken into account by the lower courts to
quasi-delict under Article 2176, Civil Code), they nonetheless could be reasonable and fully warranted.
be held jointly and severally liable by virtue of their respective
negligence combining to cause the death of Aaron. As to the PNR, Yet, the Pereñas submit that the indemnity for loss of earning
the RTC rightly found the PNR also guilty of negligence despite the capacity was speculative and unfounded.1âwphi1 They cited People
school van of the Pereñas traversing the railroad tracks at a point not v. Teehankee, Jr.,​37 ​where the Court deleted the indemnity for victim
dedicated by the PNR as a railroad crossing for pedestrians and Jussi Leino’s loss of earning capacity as a pilot for being speculative
motorists, because the PNR did not ensure the safety of others due to his having graduated from high school at the International
through the placing of crossbars, signal lights, warning signs, and School in Manila only two years before the shooting, and was at the
other permanent safety barriers to prevent vehicles or pedestrians time of the shooting only enrolled in the first semester at the Manila
from crossing there. The RTC observed that the fact that a crossing Aero Club to pursue his ambition to become a professional pilot.
guard had been assigned to man that point from 7 a.m. to 5 p.m. was That meant, according to the Court, that he was for all intents and
a good indicium that the PNR was aware of the risks to others as purposes only a high school graduate.
well as the need to control the vehicular and other traffic there.
We reject the Pereñas’ submission.
Verily, the Pereñas and the PNR were joint tortfeasors.
First of all, a careful perusal of the Teehankee, Jr. case shows that
2.
the situation there of Jussi Leino was not akin to that of Aaron here.
Was the indemnity for loss of The CA and the RTC were not speculating that Aaron would be
some highly-paid professional, like a pilot (or, for that matter, an
Aaron’s earning capacity proper? engineer, a physician, or a lawyer). Instead, the computation of
Aaron’s earning capacity was premised on him being a lowly
The RTC awarded indemnity for loss of Aaron’s earning capacity. minimum wage earner despite his being then enrolled at a
Although agreeing with the RTC on the liability, the CA modified the prestigious high school like Don Bosco in Makati, a fact that would
amount. Both lower courts took into consideration that Aaron, while have likely ensured his success in his later years in life and at work.
only a high school student, had been enrolled in one of the reputable
schools in the Philippines and that he had been a normal and
And, secondly, the fact that Aaron was then without a history of students of the University of the Philippines in Los Baños, the
earnings should not be taken against his parents and in favor of the country’s leading educational institution in agriculture.
defendants whose negligence not only cost Aaron his life and his
right to work and earn money, but also deprived his parents of their 3.
right to his presence and his services as well. Our law itself states
that the loss of the earning capacity of the deceased shall be the Were the amounts of damages excessive?
liability of the guilty party in favor of the heirs of the deceased, and
The Pereñas plead for the reduction of the moral and exemplary
shall in every case be assessed and awarded by the court "unless
damages awarded to the Zarates in the respective amounts of ₱
the deceased on account of permanent physical disability not caused
2,500,000.00 and ₱ 1,000,000.00 on the ground that such amounts
by the defendant, had no earning capacity at the time of his death."​38
were excessive.
Accordingly, we emphatically hold in favor of the indemnification for
Aaron’s loss of earning capacity despite him having been The plea is unwarranted.
unemployed, because compensation of this nature is awarded not for
loss of time or earnings but for loss of the deceased’s power or The moral damages of ₱ 2,500,000.00 were really just and
ability to earn money.​39 reasonable under the established circumstances of this case
because they were intended by the law to assuage the Zarates’ deep
This favorable treatment of the Zarates’ claim is not unprecedented. mental anguish over their son’s unexpected and violent death, and
In Cariaga v. Laguna Tayabas Bus Company and Manila Railroad their moral shock over the senseless accident. That amount would
Company,​40 ​fourth-year medical student Edgardo Carriaga’s earning not be too much, considering that it would help the Zarates obtain
capacity, although he survived the accident but his injuries rendered the means, diversions or amusements that would alleviate their
him permanently incapacitated, was computed to be that of the suffering for the loss of their child. At any rate, reducing the amount
physician that he dreamed to become. The Court considered his as excessive might prove to be an injustice, given the passage of a
scholastic record sufficient to justify the assumption that he could long time from when their mental anguish was inflicted on them on
have finished the medical course and would have passed the August 22, 1996.
medical board examinations in due time, and that he could have
possibly earned a modest income as a medical practitioner. Also, in Anent the ₱ 1,000,000.00 allowed as exemplary damages, we should
People v. Sanchez,​41 ​the Court opined that murder and rape victim not reduce the amount if only to render effective the desired example
Eileen Sarmienta and murder victim Allan Gomez could have easily for the public good. As a common carrier, the Pereñas needed to be
landed good-paying jobs had they graduated in due time, and that vigorously reminded to observe their duty to exercise extraordinary
their jobs would probably pay them high monthly salaries from ₱ diligence to prevent a similarly senseless accident from happening
10,000.00 to ₱ 15,000.00 upon their graduation. Their earning again. Only by an award of exemplary damages in that amount
capacities were computed at rates higher than the minimum wage at would suffice to instill in them and others similarly situated like them
the time of their deaths due to their being already senior agriculture
the ever-present need for greater and constant vigilance in the Planters Products, Inc. (PPI), purchased from Mitsubishi
conduct of a business imbued with public interest. International Corporation (MITSUBISHI) of New York, U.S.A.,
9,329.7069 metric tons (M/T) of Urea 46% fertilizer which the latter
WHEREFORE​, we ​DENY the petition for review on ​certiorari​; shipped in bulk on 16 June 1974 aboard the cargo vessel M/V "Sun
AFFIRM the decision promulgated on November 13, 2002; and Plum" owned by private respondent Kyosei Kisen Kabushiki Kaisha
ORDER​ the petitioners to pay the costs of suit. (KKKK) from Kenai, Alaska, U.S.A., to Poro Point, San Fernando, La
Union, Philippines, as evidenced by Bill of Lading No. KP-1 signed
SO ORDERED. by the master of the vessel and issued on the date of departure.

On 17 May 1974, or prior to its voyage, a time charter-party on the

vessel M/V "Sun Plum" pursuant to the Uniform General Charter​2
was entered into between Mitsubishi as shipper/charterer and KKKK
G.R. No. 101503 September 15, 1993
as shipowner, in Tokyo, Japan.​3 Riders to the aforesaid charter-party
PLANTERS PRODUCTS, INC., ​petitioner, starting from par. 16 to 40 were attached to the pre-printed
agreement. Addenda Nos. 1, 2, 3 and 4 to the charter-party were
vs. also subsequently entered into on the 18th, 20th, 21st and 27th of
May 1974, respectively.
COURT OF APPEALS, SORIAMONT STEAMSHIP AGENCIES
AND KYOSEI KISEN KABUSHIKI KAISHA, ​respondents. Before loading the fertilizer aboard the vessel, four (4) of her holds​4
were all presumably inspected by the charterer's representative and
Gonzales, Sinense, Jimenez & Associates for petitioner. found fit to take a load of urea in bulk pursuant to par. 16 of the
charter-party which reads:
Siguion Reyna, Montecillo & Ongsiako Law Office for private
respondents. 16. . . . At loading port, notice of readiness to be accomplished by
certificate from National Cargo Bureau inspector or substitute
appointed by charterers for his account certifying the vessel's
readiness to receive cargo spaces. ​The vessel's hold to be properly
BELLOSILLO, ​J.:
swept, cleaned and dried at the vessel's expense and the vessel to
be presented clean for use in bulk to the satisfaction of the inspector
Does a charter-party​1 between a shipowner and a charterer
before daytime commences​. (emphasis supplied)
transform a common carrier into a private one as to negate the civil
law presumption of negligence in case of loss or damage to its After the Urea fertilizer was loaded in bulk by stevedores hired by
cargo? and under the supervision of the shipper, the steel hatches were
closed with heavy iron lids, covered with three (3) layers of tarpaulin,
then tied with steel bonds. The hatches remained closed and tightly by PPI which showed that the cargo delivered was indeed short of
sealed throughout the entire voyage.​5 94.839 M/T and about 23 M/T were rendered unfit for commerce,
having been polluted with sand, rust and
Upon arrival of the vessel at her port of call on 3 July 1974, the steel
pontoon hatches were opened with the use of the vessel's boom. ​
dirt. 12
Petitioner unloaded the cargo from the holds into its steelbodied
dump trucks which were parked alongside the berth, using metal Consequently, PPI sent a claim letter dated 18 December 1974 to
scoops attached to the ship, pursuant to the terms and conditions of Soriamont Steamship Agencies (SSA), the resident agent of the
the charter-partly (which provided for an F.I.O.S. clause).​6 The carrier, KKKK, for P245,969.31 representing the cost of the alleged
hatches remained open throughout the duration of the discharge.​7 shortage in the goods shipped and the diminution in value of that
​
portion said to have been contaminated with dirt. 13
Each time a dump truck was filled up, its load of Urea was covered
with tarpaulin before it was transported to the consignee's Respondent SSA explained that they were not able to respond to the
warehouse located some fifty (50) meters from the wharf. Midway to consignee's claim for payment because, according to them, what
the warehouse, the trucks were made to pass through a weighing they received was just a request for shortlanded certificate and not a
scale where they were individually weighed for the purpose of formal claim, and that this "request" was denied by them because
ascertaining the net weight of the cargo. The port area was windy, they "had nothing to do with the discharge of the shipment." 14 ​
certain portions of the route to the warehouse were sandy and the Hence, on 18 July 1975, PPI filed an action for damages with the
weather was variable, raining occasionally while the discharge was Court of First Instance of Manila. The defendant carrier argued that
in progress.​8 The petitioner's warehouse was made of corrugated the strict public policy governing common carriers does not apply to
galvanized iron (GI) sheets, with an opening at the front where the them because they have become private carriers by reason of the
dump trucks entered and unloaded the fertilizer on the warehouse provisions of the charter-party. The court ​a quo however sustained
floor. Tarpaulins and GI sheets were placed in-between and the claim of the plaintiff against the defendant carrier for the value of
alongside the trucks to contain spillages of the ferilizer.​9 the goods lost or damaged when it ruled thus: 15​

It took eleven (11) days for PPI to unload the cargo, from 5 July to 18 . . . Prescinding from the provision of the law that a common carrier
July 1974 (except July 12th, 14th and 18th).​10 A private marine and is presumed negligent in case of loss or damage of the goods it
cargo surveyor, Cargo Superintendents Company Inc. (CSCI), was contracts to transport, ​all that a shipper has to do in a suit to recover
hired by PPI to determine the "outturn" of the cargo shipped, by for loss or damage is to show receipt by the carrier of the goods and
​ The
taking draft readings of the vessel prior to and after discharge. 11 to delivery by it of less than what it received.​ After that, the burden of
survey report submitted by CSCI to the consignee (PPI) dated 19 proving that the loss or damage was due to any of the causes which
July 1974 revealed a shortage in the cargo of 106.726 M/T and that exempt him from liability is shipted to the carrier, common or private
a portion of the Urea fertilizer approximating 18 M/T was he may be​. Even if the provisions of the charter-party aforequoted
contaminated with dirt. The same results were contained in a are deemed valid, and the defendants considered private carriers, it
Certificate of Shortage/Damaged Cargo dated 18 July 1974 prepared was still incumbent upon them to prove that the shortage or
contamination sustained by the cargo is attributable to the fault or ​ (emphasis
carrier was not negligent in performing its obligation . . . 18
negligence on the part of the shipper or consignee in the loading, supplied).
stowing, trimming and discharge of the cargo​. This they failed to do.
By this omission, coupled with their failure to destroy the Petitioner PPI appeals to us by way of a petition for review assailing
presumption of negligence against them, the defendants are liable the decision of the Court of Appeals. Petitioner theorizes that the
(emphasis supplied). Home Insurance case has no bearing on the present controversy
because the issue raised therein is the validity of a stipulation in the
On appeal, respondent Court of Appeals reversed the lower court charter-party delimiting the liability of the shipowner for loss or
and absolved the carrier from liability for the value of the cargo that damage to goods cause by want of due deligence on its part or that
was lost or damaged. 16 ​ Relying on the 1968 case of ​Home of its manager to make the vessel seaworthy in all respects, and not
Insurance Co​. v​. American Steamship Agencies, Inc​.,​17 the appellate whether the presumption of negligence provided under the Civil
court ruled that the cargo vessel M/V "Sun Plum" owned by private Code applies only to common carriers and not to private carriers. 19 ​
respondent KKKK was a private carrier and not a common carrier by Petitioner further argues that since the possession and control of the
reason of the time charterer-party. Accordingly, the Civil Code vessel remain with the shipowner, absent any stipulation to the
provisions on common carriers which set forth a presumption of contrary, such shipowner should made liable for the negligence of
negligence do not find application in the case at bar. Thus — the captain and crew. In fine, PPI faults the appellate court in not
applying the presumption of negligence against respondent carrier,
. . . In the absence of such presumption, ​it was incumbent upon the and instead shifting the ​onus probandi on the shipper to show want
plaintiff-appellee to adduce sufficient evidence to prove the of due deligence on the part of the carrier, when he was not even at
negligence of the defendant carrier ​as alleged in its complaint. It is hand to witness what transpired during the entire voyage.
an old and well settled rule that if the plaintiff, upon whom rests the
burden of proving his cause of action, fails to show in a satisfactory As earlier stated, the primordial issue here is whether a common
manner the facts upon which he bases his claim, the defendant is carrier becomes a private carrier by reason of a charter-party; in the
under no obligation to prove his exception or defense (​Moran​, negative, whether the shipowner in the instant case was able to
Commentaries on the Rules of Court​, Volume 6, p. 2, citing Belen v. prove that he had exercised that degree of diligence required of him
Belen, 13 Phil. 202). under the law.

But, ​the record shows that the plaintiff-appellee dismally failed to It is said that etymology is the basis of reliable judicial decisions in
prove the basis of its cause of action, i​.e​ ​. the alleged negligence of commercial cases. This being so, we find it fitting to first define
defendant carrier.​ It appears that the plaintiff was under the important terms which are relevant to our discussion.
impression that it did not have to establish defendant's negligence.
Be that as it may, contrary to the trial court's finding, the record of the A "charter-party" is defined as a contract by which an entire ship, or
instant case discloses ample evidence showing that defendant some principal part thereof, is let by the owner to another person for
a specified time or use; 20​ a contract of affreightment by which the
owner of a ship or other vessel lets the whole or a part of her to a
merchant or other person for the conveyance of goods, on a are presumed to have been at fault or to have acted negligently, and
particular voyage, in consideration of the payment of freight; 21 ​ the burden of proving otherwise rests on them.​26 On the contrary, no
Charter parties are of two types: (a) contract of affreightment which such presumption applies to private carriers, for whosoever alleges
involves the use of shipping space on vessels leased by the owner in damage to or deterioration of the goods carried has the onus of
part or as a whole, to carry goods for others; and, (b) charter by proving that the cause was the negligence of the carrier.
demise or bareboat charter, by the terms of which the whole vessel
is let to the charterer with a transfer to him of its entire command and It is not disputed that respondent carrier, in the ordinary course of
possession and consequent control over its navigation, including the business, operates as a common carrier, transporting goods
master and the crew, who are his servants. Contract of affreightment indiscriminately for all persons. When petitioner chartered the vessel
may either be time charter, wherein the vessel is leased to the M/V "Sun Plum", the ship captain, its officers and compliment were
charterer for a fixed period of time, or voyage charter, wherein the under the employ of the shipowner and therefore continued to be
ship is leased for a single voyage. 22 ​ In both cases, the charter-party under its direct supervision and control. Hardly then can we charge
provides for the hire of vessel only, either for a determinate period of the charterer, a stranger to the crew and to the ship, with the duty of
time or for a single or consecutive voyage, the shipowner to supply caring for his cargo when the charterer did not have any control of
the ship's stores, pay for the wages of the master and the crew, and the means in doing so. This is evident in the present case
defray the expenses for the maintenance of the ship. considering that the steering of the ship, the manning of the decks,
the determination of the course of the voyage and other technical
Upon the other hand, the term "common or public carrier" is defined incidents of maritime navigation were all consigned to the officers
in Art. 1732 of the Civil Code. 23​ The definition extends to carriers and crew who were screened, chosen and hired by the shipowner. 27 ​
either by land, air or water which hold themselves out as ready to
engage in carrying goods or transporting passengers or both for It is therefore imperative that a public carrier shall remain as such,
compensation as a public employment and not as a casual notwithstanding the charter of the whole or portion of a vessel by one
occupation. The distinction between a "common or public carrier" or more persons, provided the charter is limited to the ship only, as in
and a "private or special carrier" lies in the character of the business, the case of a time-charter or voyage-charter. It is only when the
such that if the undertaking is a single transaction, not a part of the charter includes both the vessel and its crew, as in a bareboat or
general business or occupation, although involving the carriage of demise that a common carrier becomes private, at least insofar as
goods for a fee, the person or corporation offering such service is a the particular voyage covering the charter-party is concerned.
​
private carrier. 24 Indubitably, a shipowner in a time or voyage charter retains
possession and control of the ship, although her holds may, for the
Article 1733 of the New Civil Code mandates that common carriers, ​
moment, be the property of the charterer. 28
by reason of the nature of their business, should observe
extraordinary diligence in the vigilance over the goods they carry.​25 In Respondent carrier's heavy reliance on the case of ​Home Insurance
the case of private carriers, however, the exercise of ordinary Co​. v​. American Steamship Agencies, supra​, is misplaced for the
diligence in the carriage of goods will suffice. Moreover, in the case reason that the meat of the controversy therein was the validity of a
of loss, destruction or deterioration of the goods, common carriers stipulation in the charter-party exempting the shipowners from
liability for loss due to the negligence of its agent, and not the effects To our mind, respondent carrier has sufficiently overcome, by clear
of a special charter on common carriers. At any rate, the rule in the and convincing proof, the​ prima facie​ presumption of negligence.
United States that a ship chartered by a single shipper to carry
special cargo is not a common carrier, 29 ​ does not find application in The master of the carrying vessel, Captain Lee Tae Bo, in his
our jurisdiction, for we have observed that the growing concern for deposition taken on 19 April 1977 before the Philippine Consul and
safety in the transportation of passengers and /or carriage of goods Legal Attache in the Philippine Embassy in Tokyo, Japan, testified
by sea requires a more exacting interpretation of admiralty laws, that before the fertilizer was loaded, the four (4) hatches of the
more particularly, the rules governing common carriers. vessel were cleaned, dried and fumigated. After completing the
loading of the cargo in bulk in the ship's holds, the steel pontoon
We quote with approval the observations of Raoul Colinvaux, the hatches were closed and sealed with iron lids, then covered with
​ —
learned barrister-at-law 30​ three (3) layers of serviceable tarpaulins which were tied with steel
bonds. The hatches remained close and tightly sealed while the ship
As a matter of principle, it is difficult to find a valid distinction was in transit as the weight of the steel covers made it impossible for
between cases in which a ship is used to convey the goods of one ​
a person to open without the use of the ship's boom. 32
and of several persons. Where the ship herself is let to a charterer,
so that he takes over the charge and control of her, the case is It was also shown during the trial that the hull of the vessel was in
different; the shipowner is not then a carrier. But where her services good condition, foreclosing the possibility of spillage of the cargo into
only are let, the same grounds for imposing a strict responsibility the sea or seepage of water inside the hull of the vessel. 33 ​ When
exist, whether he is employed by one or many. The master and the M/V "Sun Plum" docked at its berthing place, representatives of the
crew are in each case his servants, the freighter in each case is consignee boarded, and in the presence of a representative of the
usually without any representative on board the ship; the same shipowner, the foreman, the stevedores, and a cargo surveyor
opportunities for fraud or collusion occur; and the same difficulty in representing CSCI, opened the hatches and inspected the condition
discovering the truth as to what has taken place arises . . . of the hull of the vessel. The stevedores unloaded the cargo under
the watchful eyes of the shipmates who were overseeing the whole
In an action for recovery of damages against a common carrier on ​
operation on rotation basis. 34
the goods shipped, the shipper or consignee should first prove the
fact of shipment and its consequent loss or damage while the same Verily, the presumption of negligence on the part of the respondent
was in the possession, actual or constructive, of the carrier. carrier has been efficaciously overcome by the showing of
Thereafter, the burden of proof shifts to respondent to prove that he extraordinary zeal and assiduity exercised by the carrier in the care
has exercised extraordinary diligence required by law or that the of the cargo. This was confirmed by respondent appellate court thus
loss, damage or deterioration of the cargo was due to fortuitous —
​
event, or some other circumstances inconsistent with its liability. 31
. . . Be that as it may, contrary to the trial court's finding, ​the record of
the instant case discloses ample evidence showing that defendant
carrier was not negligent in performing its obligations​. Particularly,
the following testimonies of plaintiff-appellee's own witnesses clearly majeure​, or the inherent defect of the goods, shall be for the account
show absence of negligence by the defendant carrier; that the hull of and risk of the shipper, and that proof of these accidents is
the vessel at the time of the discharge of the cargo was sealed and incumbent upon the carrier. 37 ​ The carrier, nonetheless, shall be
nobody could open the same except in the presence of the owner of liable for the loss and damage resulting from the preceding causes if
the cargo and the representatives of the vessel (TSN, 20 July 1977, it is proved, as against him, that they arose through his negligence or
p. 14); that the cover of the hatches was made of steel and it was by reason of his having failed to take the precautions which usage
overlaid with tarpaulins, three layers of tarpaulins and therefore their has established among careful persons. 38 ​
contents were protected from the weather (TSN, 5 April 1978, p. 24);
and, that to open these hatches, the seals would have to be broken, Respondent carrier presented a witness who testified on the
all the seals were found to be intact (TSN, 20 July 1977, pp. 15-16) characteristics of the fertilizer shipped and the expected risks of bulk
(emphasis supplied). shipping. Mr. Estanislao Chupungco, a chemical engineer working
with Atlas Fertilizer, described Urea as a chemical compound
The period during which private respondent was to observe the consisting mostly of ammonia and carbon monoxide compounds
degree of diligence required of it as a public carrier began from the which are used as fertilizer. Urea also contains 46% nitrogen and is
time the cargo was unconditionally placed in its charge after the highly soluble in water. However, during storage, nitrogen and
vessel's holds were duly inspected and passed scrutiny by the ammonia do not normally evaporate even on a long voyage,
shipper, up to and until the vessel reached its destination and its hull provided that the temperature inside the hull does not exceed eighty
was reexamined by the consignee, but prior to unloading. This is (80) degrees centigrade. Mr. Chupungco further added that in
clear from the limitation clause agreed upon by the parties in the unloading fertilizer in bulk with the use of a clamped shell, losses due
Addendum to the standard "GENCON" time charter-party which to spillage during such operation amounting to one percent (1%)
provided for an F.I.O.S., meaning, that the loading, stowing, trimming against the bill of lading is deemed "normal" or "tolerable." The
and discharge of the cargo was to be done by the charterer, free primary cause of these spillages is the clamped shell which does not
​ Moreover, a shipowner is
from all risk and expense to the carrier. 35 seal very tightly. Also, the wind tends to blow away some of the
liable for damage to the cargo resulting from improper stowage only materials during the unloading process.
when the stowing is done by stevedores employed by him, and
therefore under his control and supervision, not when the same is The dissipation of quantities of fertilizer, or its daterioration in value,
done by the consignee or stevedores under the employ of the latter. is caused either by an extremely high temperature in its place of
36 storage, or when it comes in contact with water. When Urea is
drenched in water, either fresh or saline, some of its particles
Article 1734 of the New Civil Code provides that common carriers dissolve. But the salvaged portion which is in liquid form still remains
are not responsible for the loss, destruction or deterioration of the potent and usable although no longer saleable in its original market
goods if caused by the charterer of the goods or defects in the value.
packaging or in the containers. The Code of Commerce also
provides that all losses and deterioration which the goods may suffer The probability of the cargo being damaged or getting mixed or
during the transportation by reason of fortuitous event, force contaminated with foreign particles was made greater by the fact that
the fertilizer was transported in "bulk," thereby exposing it to the remise in the exercise of due diligence in order to minimize the loss
inimical effects of the elements and the grimy condition of the various or damage to the goods it carried.
pieces of equipment used in transporting and hauling it.
WHEREFORE, the petition is ​DISMISSED​. The assailed decision of
The evidence of respondent carrier also showed that it was highly the Court of Appeals, which reversed the trial court, is ​AFFIRMED​.
improbable for sea water to seep into the vessel's holds during the Consequently, Civil Case No. 98623 of the then Court of the First
voyage since the hull of the vessel was in good condition and her Instance, now Regional Trial Court, of Manila should be, as it is
hatches were tightly closed and firmly sealed, making the M/V "Sun hereby ​DISMISSED​.
Plum" in all respects seaworthy to carry the cargo she was chartered
for. If there was loss or contamination of the cargo, it was more likely Costs against petitioner.
to have occurred while the same was being transported from the ship
to the dump trucks and finally to the consignee's warehouse. This SO ORDERED.
may be gleaned from the testimony of the marine and cargo surveyor
of CSCI who supervised the unloading. He explained that the 18 M/T
of alleged "bar order cargo" as contained in their report to PPI was G.R. No. 140349 June 29, 2005
just an approximation or estimate made by them ​after the fertilizer
was discharged from the vessel and segregated from the rest of the SULPICIO LINES, INC.,​ petitioner,
cargo.
vs.
The Court notes that it was in the month of July when the vessel
arrived port and unloaded her cargo. It rained from time to time at the FIRST LEPANTO-TAISHO INSURANCE CORPORATION,
harbor area while the cargo was being discharged according to the respondent.
supply officer of PPI, who also testified that it was windy at the
waterfront and along the shoreline where the dump trucks passed DECISION
enroute to the consignee's warehouse.
CHICO-NAZARIO, ​J.:
Indeed, we agree with respondent carrier that bulk shipment of highly
soluble goods like fertilizer carries with it the risk of loss or damage. Before Us is a Petition for Review on ​Certiorari assailing the
More so, with a variable weather condition prevalent during its Decision​1 of the Court of Appeals reversing the Decision​2 of the
unloading, as was the case at bar. This is a risk the shipper or the Regional Trial Court (RTC) of Manila, Branch XIV, dismissing the
owner of the goods has to face. Clearly, respondent carrier has complaint for damages for failure of the plaintiff to prove its case with
sufficiently proved the inherent character of the goods which makes a preponderance of evidence. Assailed as well is the Resolution​3 of
it highly vulnerable to deterioration; as well as the inadequacy of its the Court of Appeals denying petitioner’s Motion for Reconsideration.
packaging which further contributed to the loss. On the other hand,
no proof was adduced by the petitioner showing that the carrier was
THE FACTS filed claims for reimbursement from Delbros, Inc. and
petitioner-carrier Sulpicio Lines, Inc. which were subsequently
On 25 February 1992, Taiyo Yuden Philippines, Inc. (owner of the denied.
goods) and Delbros, Inc. (shipper) entered into a contract, evidenced
by Bill of Lading No. CEB/SIN-008/92 issued by the latter in favor of On 04 November 1992, respondent-insurer filed a suit for damages
the owner of the goods, for Delbros, Inc. to transport a shipment of docketed as Civil Case No. 92-63337 with the trial court against
goods consisting of three (3) wooden crates containing one hundred Delbros, Inc. and herein petitioner-carrier. On 05 February 1993,
thirty-six (136) cartons of inductors and LC compound on board the petitioner-carrier filed its Answer with Counterclaim. Delbros, Inc.
V Singapore V20 from Cebu City to Singapore in favor of the filed on 15 April 1993 its Answer with Counterclaim and Cross-claim,
consignee, Taiyo Yuden Singapore Pte, Ltd. alleging that assuming the contents of the crate in question were
truly in bad order, fault is with herein petitioner-carrier which was
For the carriage of said shipment from Cebu City to Manila, Delbros, responsible for the unloading of the crates.
Inc. engaged the services of the vessel M/V Philippine Princess,
owned and operated by petitioner Sulpicio Lines, Inc. (carrier). The Petitioner-carrier filed its Answer to Delbros, Inc.’s cross-claim
vessel arrived at the North Harbor, Manila, on 24 February 1992. asserting that it observed extraordinary diligence in the handling,
storage and general care of the shipment and that subsequent
During the unloading of the shipment, one crate containing forty-two inspection of the shipment by the Manila Adjusters and Surveyors
(42) cartons dropped from the cargo hatch to the pier apron. The Company showed that the contents of the third crate that had fallen
owner of the goods examined the dropped cargo, and upon an were found to be in apparent sound condition, except that "2 cello
alleged finding that the contents of the crate were no longer usable bags each of 50 pieces ferri inductors No. LC FL 112270K-60 (c)
for their intended purpose, they were rejected as a total loss and were unaccounted for and missing as per packaging list."
returned to Cebu City.
After hearing, the trial court dismissed the complaint for damages as
The owner of the goods filed a claim with herein petitioner-carrier for well as the counterclaim filed by therein defendant Sulpicio Lines,
the recovery of the value of the rejected cargo which was refused by Inc. and the cross-claim filed by Delbros, Inc. According to the RTC:
the latter. Thereafter, the owner of the goods sought payment from
respondent First Lepanto-Taisho Insurance Corporation (insurer) The plaintiff has failed to prove its case. The first witness for the
under a marine insurance policy issued to the former. plaintiff merely testified about the payment of the claim based on the
Respondent-insurer paid the claim less thirty-five percent (35%) documents accompanying the claim which were the Packing List,
salvage value or P194, 220.31. Commercial Invoices, Bill of Lading, Claims Statement, Marine
Policies, Survey Report, Marine Risk Note, and the letter to Third
The payment of the insurance claim of the owner of the goods by the Party carriers and shipping lines (Exhibit A-J).
respondent-insurer subrogated the latter to whatever right or legal
action the owner of the goods may have against Delbros, Inc. and
petitioner-carrier, Sulpicio Lines, Inc. Thus, respondent-insurer then
The check was paid and delivered to the assured as evidenced by WHEREFORE, the appeal is granted. The decision appealed from is
the check voucher and the subrogation receipt. REVERSED. Defendants-appellees Delbros and Sulpicio Lines are
hereby ordered to pay, jointly and severally, plaintiff-appellant the
On cross-examination by counsel for the Sulpicio Lines, he said that sum of P194,220.31 representing actual damages, plus legal interest
their company paid the claim less 35% salvage value based on the counted from the filing of the complaint until fully paid.​5
adjuster report. This testimony is hearsay.
The appellate court disposed of the issues in the case in this wise:
The second witness for the plaintiff, Arturo Valdez, testified, among
others, that he, together with a co-surveyor and a representative of Furthermore, the evidence shows that one of the three crates fell
Sulpicio Lines had conducted a survey of the shipment at the during the unloading at the pier in Manila. The wooden crate which
compound of Sulpicio Lines. He prepared a survey report (Exhibits G fell was damaged such that this particular crate was not anymore
and G-1) and took a picture of shipment (Exhibit G-2). sent to Singapore and was instead shipped back to Cebu from
Manila. Upon examination, it was found that two (2) cartons of the
On cross-examination, he said that two cartons were torn at the forty-two (42) cartons contained in this crate were externally
sides with top portion flaps opened and the 41 cartons were properly damaged. They were torn at the sides and their top portions or flaps
sealed and in good order conditions. Two cartons were already were open. These facts were admitted by all the parties.
opened and slightly damaged. He merely looked at them but did not Defendant-appellees, however, insist that it was only the external
conduct an inspection of the contents. What he was referring to as packaging that was damaged, and that there was no actual damage
slightly damaged were the cartons only and not the contents. to the goods such that would make them liable to the shipper. This
theory is erroneous. When the goods are placed at a common
From the foregoing evidence, it is apparent that the plaintiff had carrier’s possession for delivery to a specified consignee, they are in
failed to prove its case with a preponderance of evidence. good order and condition and are supposed to be transported and
delivered to the consignee in the same state. In the case herein, the
….
goods were received by defendant-appellee Delbros in Cebu
WHEREFORE, in view of the foregoing considerations, judgment is properly packed in cardboard cartons and then placed in wooden
hereby rendered dismissing the Complaint, defendant Sulpicio Lines’ crates, for delivery to the consignee in Singapore. However, before
counterclaim and defendant Delbros Inc.’s cross-claim.​4 the shipment reached Singapore (while it was in Manila) one crate
and 2 cartons contained therein were not anymore in their original
A Motion for Reconsideration was then filed by herein state. They were no longer fit to be sent to Singapore.
respondent-insurer and subsequently denied by the trial court in an
Order dated 07 February 1995 on the ground that it did not raise any ….
new issue. Thus, respondent-insurer instituted an appeal with the
As We have already found, there is damage suffered by the goods of
Court of Appeals, which reversed the dismissal of the complaint by
the shipper. This consists in the destruction of one wooden crate and
the lower court, the decretal portion of which reads:
the tearing of two of the cardboard boxes therein rendering then unfit
to be sent to Singapore. Defendant-appellee Sulpicio Lines admits 2. ​The Court of Appeals erred in not dismissing the appeal for failure
that this crate fell while it was being unloaded at the Manila pier. of appellant to comply with the technical requirement of the Rules of
Falling of the crate was negligence on the part of defendant-appellee Court.
Sulpicio Lines under the doctrine of ​res ipsa loquitur.
Defendant-appellee Sulpicio Lines cannot exculpate itself from RULING OF THE COURT
liability because it failed to prove that it exercised due diligence in the
selection and supervision of its employees to prevent the damage.​6 We shall first address the procedural issue raised by
petitioner-carrier, Sulpicio Lines, Inc. that the Court of Appeals
On 21 June 1999, herein petitioner-carrier filed its Motion for should have dismissed the appeal for failure of respondent-insurer to
Reconsideration of the decision of the Court of Appeals which was attach a copy of the decision of the trial court to its appellant’s brief in
subsequently denied in a Resolution dated 13 October 1999. Hence, violation of Rule 44, Section 13(h) of the Rules of Civil Procedure.​8
the instant petition.
A perusal of the records will show, however, that in a Resolution​9
During the pendency of the appeal before this Court, Delbros, Inc. dated 13 August 1996, the Court of Appeals required herein
filed a manifestation stating that its appeal​7 filed before this Court respondent-insurer to submit seven (7) copies of the questioned
had been dismissed for being filed out of time and thus the case as decision within five (5) days from notice. Said Resolution was
against it was declared closed and terminated. As a consequence, it properly complied with.
paid in full the amount of the damages awarded by the appellate
court to the respondent-insurer. Before this Court, Delbros, Inc. As a rule, the right to appeal is a statutory right and one who seeks
prays for reimbursement, contribution, or indemnity from its to avail of that right must comply with the manner required by the
co-defendant, herein petitioner-carrier Sulpicio Lines, Inc. for pertinent rules for the perfection of an appeal. Nevertheless, this
whatever it had paid to respondent-insurer in consonance with the Court has allowed the filing of an appeal upon subsequent
decision of the appellate court declaring both Delbros, Inc. and compliance with the requirements imposed by law, where a strict
petitioner-carrier Sulpicio Lines, Inc. jointly and severally liable. application of the technical rules will impair the proper administration
of justice. As enunciated by the Court in the case of ​Jaro v. Court of
ISSUES Appeals​:10
​

Petitioner-carrier raises the following issues in its petition: There is ample jurisprudence holding that the subsequent and
substantial compliance of an appellant may call for the relaxation of
1. ​The Court of Appeals erred in not holding that the trial court justly the rules of procedure. In ​Cusi-Hernandez vs. Diaz ​[336 SCRA 113]
and correctly dismissed the complaint against Sulpicio Lines, which and ​Piglas-Kamao vs. National Labor Relations Commission
dismissal is already final. [357SCRA 640], we ruled that the subsequent submission of the
missing documents with the motion for reconsideration amounts to
substantial compliance. The reasons behind the failure of the
petitioners in these two cases to comply with the required final destination because of the ruined packaging, indeed, resulted in
attachments were no longer scrutinized.​11 damages on the part of the owner of the goods.

We see no error, therefore, on the part of the Court of Appeals when The falling of the crate during the unloading is evidence of
it gave due course to the appeal after respondent-insurer had petitioner-carrier’s negligence in handling the cargo. As a common
submitted copies of the RTC decision, albeit belatedly. carrier, it is expected to observe extraordinary diligence in the
handling of goods placed in its possession for transport.​12 The
We now come to the substantial issues alleged by petitioner-carrier. standard of extraordinary diligence imposed upon common carriers
The pivotal question to be considered in the resolution of this issue is is considerably more demanding than the standard of ordinary
whether or not, based on the evidence presented during the trial, the diligence, ​i.e.​, the diligence of a good ​paterfamilias ​established in
owner of the goods, respondent-insurer’s predecessor-in-interest, did respect of the ordinary relations between members of society.​13 A
incur damages, and if so, whether or not petitioner-carrier is liable for common carrier is bound to transport its cargo and its passengers
the same. safely "​as far as human care and foresight can provide,​ using the
utmost diligence ​of ​a very cautious person, ​with due regard to all
It cannot be denied that the shipment sustained damage while in the circumstances."​14 The extraordinary diligence in the vigilance over
custody of petitioner-carrier. It is not disputed that one of the three the goods tendered for shipment requires the common carrier to
(3) crates did fall from the cargo hatch to the pier apron while know and to follow the required precaution for avoiding the damage
petitioner-carrier was unloading the cargo from its vessel. Neither is to, or destruction of, the goods entrusted to it for safe carriage and
it impugned that upon inspection, it was found that two (2) cartons delivery.​15 It requires common carriers to render service with the
were torn on the side and the top flaps were open and that two (2) greatest skill and foresight and "to use all reasonable means to
cello bags, each of 50 pieces ferri inductors, were missing from the ascertain the nature and characteristic of goods tendered for
cargo. shipment, and to exercise due care in the handling and stowage,
including such methods as their nature requires."​16
Petitioner-carrier contends that its liability, if any, is only to the extent
of the cargo damage or loss and should not include the lack of Thus, when the shipment suffered damages as it was being
fitness of the shipment for transport to Singapore due to the unloaded, petitioner-carrier is presumed to have been negligent in
damaged packing. This is erroneous. Petitioner-carrier seems to the handling of the damaged cargo. Under Articles 1735​17 and 1752​18
belabor under the misapprehension that a distinction must be made of the Civil Code, common carriers are presumed to have been at
between the cargo packaging and the contents of the cargo. fault or to have acted negligently in case the goods transported by
According to it, damage to the packaging is not tantamount to them are lost, destroyed or had deteriorated. To overcome the
damage to the cargo. It must be stressed that in the case at bar, the presumption of liability for loss, destruction or deterioration of goods
damage sustained by the packaging of the cargo while in under Article 1735, the common carrier must prove that they
petitioner-carrier’s custody resulted in its unfitness to be transported observed extraordinary diligence as required in Article 1733​19 of the
to its consignee in Singapore. Such failure to ship the cargo to its Civil Code.​20
Petitioner-carrier miserably failed to adduce any shred of evidence of exculpate itself from liability because it failed to prove that it
the required extraordinary diligence to overcome the presumption exercised extraordinary diligence.​27
that it was negligent in transporting the cargo.
Hence, we uphold the ruling of the appellate court that herein
Coming now to the issue of the extent of petitioner-carrier’s liability, it petitioner-carrier is liable to pay the amount paid by
is undisputed that respondent-insurer paid the owner of the goods respondent-insurer for the damages sustained by the owner of the
under the insurance policy the amount of P194,220.31 for the goods.
alleged damages the latter has incurred. Neither is there dispute as
to the fact that Delbros, Inc. paid P194,220.31 to respondent-insurer As stated in the manifestation filed by Delbros, Inc., however,
in satisfaction of the whole amount of the judgment rendered by the respondent-insurer had already been paid the full amount granted by
Court of Appeals. The question then is: To what extent is Sulpicio the Court of Appeals, hence, it will be tantamount to unjust
Lines, Inc., as common carrier, liable for the damages suffered by enrichment for respondent-insurer to again recover damages from
the owner of the goods? herein petitioner-carrier.

Upon respondent-insurer’s payment of the alleged amount of loss With respect to Delbros, Inc.’s prayer contained in its manifestation
suffered by the insured (the owner of the goods), the insurer is that, in case the decision in the instant case be adverse to
entitled to be subrogated ​pro tanto ​to any right of action which the petitioner-carrier, a pronouncement as to the matter of
insured may have against the common carrier whose negligence or reimbursement, indemnification or contribution in favor of Delbros,
wrongful act caused the loss.​21 Subrogation is the substitution of one Inc. be included in the decision, this Court will not pass upon said
person in the place of another with reference to a lawful claim or issue since Delbros, Inc. has no personality before this Court, it not
right, so that he who is substituted succeeds to the rights of the other being a party to the instant case. Notwithstanding, this shall not bar
in relation to a debt or claim, including its remedies or securities.​22 any action Delbros, Inc. may institute against petitioner-carrier
The rights to which the subrogee succeeds are the same as, but not Sulpicio Lines, Inc. with respect to the damages the latter is liable to
greater than, those of the person for whom he is substituted, that is, pay.
he cannot acquire any claim, security or remedy the subrogor did not
have.​23 In other words, a subrogee cannot succeed to a right not WHEREFORE​, premises considered, the assailed Decision of the
possessed by the subrogor.​24 A subrogee in effect steps into the Court of Appeals dated 26 May 1999 and its Resolution dated 13
shoes of the insured and can recover only if the insured likewise October 1999 are hereby AFFIRMED. No costs.
could have recovered.​25
SO ORDERED.
As found by the Court of Appeals, there was damage suffered by the
goods which consisted in the destruction of one wooden crate and
the tearing of two (2) cardboard boxes therein which rendered them G.R. No. 151783 July 8, 2003
unfit to be sent to Singapore.​26 The falling of the crate was
negligence on the part of Sulpicio Lines, Inc. for which it cannot
VICTORINO SAVELLANO, VIRGINIA B. SAVELLANO and "WHEREFORE, premises considered, decision is hereby rendered in
DEOGRACIAS B. SAVELLANO,​ petitioners, favor of the plaintiffs and against the defendant, sentencing the latter
to pay to the former, the following amounts:
vs.
1. P500,000.00 as actual damages;
NORTHWEST AIRLINES,​ respondent.
2. P3,000,000.00 as moral damages;
PANGANIBAN, ​J​.:
3. P500,000.00 as exemplary damages; and
When, as a result of engine malfunction, a commercial airline is
unable to ferry its passengers on the original contracted route, it 4. P500,000.00 as attorney's fees;
nonetheless has the duty of fulfilling its responsibility of carrying
them to their contracted destination on the most convenient route "All such sums shall bear legal interest, ​i.e.​, 6% per annum pursuant
possible. Failing in this, it cannot just unilaterally shuttle them, to Article 2209 of the Civil Code (Reformina vs. Tomol, 139 SCRA
without their consent, to other routes or stopping places outside of 260) from the date of the filing of the complaint until fully paid. Costs
the contracted sectors. However, moral damages cannot be awarded against the x x x Northwest Airlines, Inc.
without proof of the carrier's bad faith, ill will, malice or wanton
conduct. Neither will actual damages be granted in the absence of "[Respondent's] counterclaim is ordered dismissed, for lack of
convincing and timely proof of loss. But nominal damages may be merit."​5
allowed under the circumstances in the case herein.
The Facts
The Case
The facts of the case are summarized by the CA as follows:
Before the Court is a Petition for Review under Rule 45 of the Rules
"[Petitioner] Victorino Savellano (Savellano) was a Cabugao, Ilocos
of Court, seeking to set aside the June 29, 2001 Decision​1 of the
Sur mayor for many terms, former Chairman of the Commission on
Court of Appeals​2 (CA) in CA-GR CV No. 47165. The dispositive part
Elections and Regional Trial Court (RTC) judge. His wife, [Petitioner]
of the Decision reads:
Virginia is a businesswoman and operates several rural banks in
"WHEREFORE, the judgment of July 29, 1994 is hereby Ilocos Sur. The couple's x x x son [Petitioner] Deogracias was, at the
REVERSED and SET ASIDE and another rendered DISMISSING time [of] the incident subject of the case, the Vice-Governor of Ilocos
[petitioners'] Complaint. No pronouncement as to costs."​3 Sur.

On the other hand, the dispositive portion of the Regional Trial Court "On October 27, 1991, at around 1:45 p.m., [petitioners] departed
(RTC) Decision​4​ that was reversed by the CA disposed thus: from San Francisco, USA on board Northwest Airlines (NW) Flight
27, Business Class, bound for Manila, Philippines using the NW
round-trip tickets which were issued at [respondent's] Manila were leaving the next day, October 29, 1991, on board the same
ticketing office. plane with the same itinerary.

"[Petitioners] were expected to arrive at the Ninoy Aquino "On account of the 'engine failure' of the plane, [petitioner] Virginia
International Airport (NAIA), Manila on October 29, 1991 (Manila developed nervousness. On getting wind of information that they
time) or after twelve (12) hours of travel. were 'bumped off', she took 'valium' to calm her nerves and 'cough
syrup' for the fever and colds she had developed during the trip.
"After being airborne for approximately two and one-half (2½) hours
or at about 4:15 p.m. of the same day, October 27, 1991 (Seattle, "When [petitioners] reached the Seattle Airport, [respondent's]
USA time), NW Flight 27's pilot made an emergency landing in ground stewardess belatedly advised them that instead of flying to
Seattle after announcing that a fire had started in one of the plane's Manila they would have to board NW Flight 94, a DC-10 plane,
engines. bound for a 3-hour flight to Los Angeles for a connecting flight to
Manila. When [Petitioner] Savellano insisted theirs was a direct flight
"[Petitioners] and the other passengers proceeded to Gate 8 of the to Manila, the female ground stewardess just told them to hurry up
Seattle Airport where they were instructed to go home to Manila the as they were the last passengers to board.
next day, 'using the same boarding passes with the same seating
arrangements'. "In Los Angeles, [petitioners] and the other passengers became
confused for while 'there was a sort of a board' which announced a
"[Respondent's] shuttle bus thereafter brought all passengers to the Seoul-Bangkok flight, none was posted for a Manila flight. It was only
Seattle Red Lion Hotel where they were billeted by, and at the after they complained to the NW personnel that the latter 'finally
expense of [respondent]. changed the board to include Manila.'

"[Petitioners] who were travelling as a family were assigned one "Before boarding NW Flight 23 for Manila via Seoul, [petitioners]
room at the hotel. At around 12:00 midnight, they were awakened by encountered another problem. Their three small handcarried items
a phone call from [respondent's] personnel who advised them to be which were not padlocked as they were merely ​closed by zippers
at the Seattle Airport by 7:00 a.m. (Seattle time) the following day, were 'not allowed' to be placed inside the passengers' baggage
October 28, 1991, for departure. To reach the airport on time, the compartments of the plane by an arrogant NW ground stewardess.
NW shuttle bus fetched them early, making them skip the 6:30 a.m.
hotel breakfast. "On [petitioners'] arrival at the NAIA, Manila where they saw Col.
Delfin and his wife as well as the other passengers of the distressed
"Prior to leaving the hotel, however, [petitioners] met at the lobby flight who unlike them [petitioners] who left Seattle on October 28,
Col. Roberto Delfin, a Filipino co-passenger who was also travelling 1991, left Seattle on October 29, 1991, they were teased for taking
Business Class, who informed them that he and some passengers the longer and tiresome route to the Philippines.
"When [petitioners] claimed their luggage at the baggage carousel, "The subpoena ​duces tecum was served on December 1, 1993 but
they discovered that the would-have-been handcarried items which was not complied with, however, by [respondent], it proffering that its
were not allowed to be placed inside the passengers' baggage Minneapolis head office retains documents only for one year after
compartment had been ransacked and the contents thereof stolen. which they are destroyed.
Virginia was later to claim having lost her diamond earrings costing
P300,000.00, two (2) Perry Gan shoes worth US$250.00, four (4) " x x x Branch 24 of the RTC of Cabugao, Ilocos Sur rendered
watches costing US$40.00 each, two (2) pieces of Tag Heuer watch judgment in favor of [petitioners] x x x.
and three (3) boxes of Elizabeth Arden [perfumes]. Deogracias, on
the other hand, claimed to have lost two (2) pairs of Cole Haan "In granting moral and actual damages to [petitioners], the [RTC]
shoes which he bought for his wife, and the clothes, camera, credited [petitioners'] claim that they were excluded from the
personal computer, and jeans he bought for his children. Seattle-Tokyo-Manila flight to accommodate several Japanese
passengers bound for Japan. And as basis of its award of actual
"By letter of November 22, 1991, [petitioners] through counsel damages arising from the allegedly lost articles contained in the
demanded from [respondent] the amount of P3,000,000.00 as would-have-been handcarried [luggage], the [RTC], passing on the
damages for what they claimed to be the humiliation and lack of receipts covering the same, took judicial notice of the
inconvenience they suffered in the hands of its personnel. Filipinos' practice of often bringing home pasalubong for friends and
[Respondent] did not accede to the demand, however, impelling relatives."​6
[petitioners] to file a case for damages at the RTC of Cabugao,
Ilocos Sur — subject of the present appeal. Ruling of the Court of Appeals

"[Petitioners] concede that they were not downgraded in any of the The CA ruled that petitioners had failed to show respondent's bad
flights on their way home to Manila. Their only complaint is that they faith, negligence or malice in transporting them via the Seattle-Los
suffered inconvenience, embarrassment, and humiliation for taking a Angeles-Seoul-Manila route. Hence, it held that there was no basis
longer route. for the RTC's award of moral and exemplary damages. Neither did it
find any reason to grant attorney's fees.
"During the trial, the [RTC], on motion of [petitioners], issued on
October 29, 1993 a subpoena ​duces tecum directing [respondent] to It further ruled:
submit the passengers' manifest of the distressed flight from San
"[Petitioners'] ​testimonial claim of losses is unsupported by any other
Francisco to Tokyo on October 27, 1991, the passengers' manifest of
evidence at all. It is odd and even contrary to human experience for
the same distressed plane from Seattle to Tokyo which took off on
[petitioner] Virginia not to have taken out a P300,000.00 pair of
October 29, 1991, and the passenger manifest of the substitute
diamond earrings from an unlocked ​small luggage after such
plane from Seattle to Los Angeles and Los Angeles to Seoul enroute
luggage was not allowed to be placed inside the passenger's
to Manila which took off on October 28, 1991.
baggage compartment, given the ease with which it could have been
done as the small luggage was merely closed by zipper. Just as it is
odd why no receipts for alleged purchases for valuable ​pasalubongs itinerary, but its substitution, which they allegedly had not contracted
including Tag Huer watches, camera and personal computer were for or agreed to. They insist that, like the other passengers of the
presented x x x "​7 distressed flight, they had the right to be placed on Flight 27, which
had a connecting flight from Japan to Manila. They add that in being
Thus, even the trial court's award of actual damages was reversed treated differently and shabbily, they were being discriminated
by the appellate court. against.

Hence this Petition.​8 A contract is the law between the parties.​10 Thus, in determining
whether petitioners' rights were violated, we must look into its
Issues provisions, which are printed on the airline ticket. Condition 9 in the
agreement states that a " x x x [c]arrier may without notice substitute
In their appeal, petitioners ask this Court to rule on these issues:
alternate carriers or aircraft, and may alter or omit stopping places
" x x x [W]hether or not petitioners' discriminatory bump-off from NW shown on the ticket in case of necessity. x x x ."​11
Flight No. 0027 on 28 October 1991 (not the diversion of the
The basis of the Complaint was the way respondent allegedly treated
distressed plane to Seattle the day before, ​i.e. NW Flight 27 on 27
petitioners like puppets that could be shuttled to Manila via Los
October 1991) constitutes breach by respondent airline of its
Angeles and Seoul without their consent.​12 Undeniably, it did not take
air-carriage contract?
the time to explain how it would be meeting its contractual obligation
"And if so, whether or not petitioners are entitled to actual, moral and to transport them to their final destination. Its employees merely
exemplary damages — including attorney's fees — as a hustled the confused petitioners into boarding one plane after
consequence?"​9 another without giving the latter a choice from other courses of action
that were available. It unilaterally decided on the most expedient way
The Court's Ruling for them to reach their final destination.

The Petition is partly meritorious. Passengers' Consent

First Issue: After an examination of the conditions printed on the airline ticket, we
find nothing there authorizing Northwest to decide unilaterally, after
Breach of Contract the distressed flight landed in Seattle, ​what other stopping places
petitioners should take and ​when they should fly​. True, Condition 9
Petitioners' contract of carriage with Northwest was for the San on the ticket allowed respondent to substitute alternate carriers or
Francisco-Tokyo (Narita)-Manila flights scheduled for October 27, aircraft without notice. However, nothing there permits shuttling
1991. This itinerary was not followed when the aircraft used for the passengers — without so much as a by your-leave — to stopping
first segment of the journey developed engine trouble. Petitioners places that they have not been previously notified of, much less
stress that they are questioning, not the cancellation of the original agreed to or been prepared for. Substituting ​aircrafts or carriers
without notice is entirely different from changing ​stopping places or have preferred to the more circuitous one unilaterally chosen for
connecting cities​ without notice. them by respondent.

The ambiguities in the contract, being one of adhesion, should be In the absence of evidence as to the actual situation, the Court is
construed against the party that caused its preparation — in this hard pressed to determine if there was a "case of necessity"
case, respondent.​13 Since the conditions enumerated on the ticket do sanctioning the alteration of the Tokyo stopping place in the case of
not specifically allow it to change stopping places or to fly the petitioners. Thus, we hold that in the absence of a demonstrated
passengers to alternate connecting cities without consulting them, necessity thereof and their rerouting to Los Angeles and Seoul as
then it must be construed to mean that such unilateral change was stopping places without their consent, respondent committed a
not permitted. breach of the contract of carriage.

Proof of Necessity of Alteration Second Issue:

Furthermore, the change in petitioners' flight itinerary does not fall Damages
under the situation covered by the phrase "may alter or omit stopping
places shown on the ticket in case of necessity."​14 A case of Being guilty of a breach of their contract, respondent may be held
necessity must first be proven. The burden of proving it necessarily liable for damages suffered by petitioners in accordance with Articles
fell on respondent. This responsibility it failed to discharge. 1170 and 2201 of the Civil Code, which state:

Petitioners do not question the stop in Seattle, so we will not delve "Art. 1170. Those who in the performance of their obligations are
into this matter. The airplane engine trouble that developed during guilty of fraud, negligence, or delay and those who ​in any manner
the flight bound for Tokyo from San Francisco definitely merited the contravene the tenor thereof are liable for damages." (Emphasis
"necessity" of landing the plane at some place for repair — in this supplied)
case, Seattle — but not that of shuttling petitioners to ​other
connecting points thereafter without their consent. "Art. 2201. In contracts and quasi-contracts, the damages for which
the obligor who acted in good faith is liable shall be those that are
Northwest failed to show a "case of necessity" for changing the the natural and probable consequences of the breach of the
stopping place from Tokyo to Los Angeles and Seoul. It is a fact that obligation, and which the parties have foreseen or could have
some of the passengers on the distressed flight continued on to the reasonably foreseen at the time the obligation was constituted."
Tokyo (Narita) connecting place. No explanation whatsoever was
given to petitioners as to why they were not similarly allowed to do "In case of fraud, bad faith, malice or wanton attitude, the obligor
so. It may be that the Northwest connecting flight from Seattle to shall be responsible for all damages which may be reasonably
Tokyo to Manila could no longer accommodate them. Yet it may also attributed to the non-performance of the obligation."
be that there were other carriers that could have accommodated
As a general rule, the factual findings of the CA when supported by
them for these sectors of their journey, and whose route they might
substantial evidence on record are final and conclusive and may not
be reviewed on appeal.​15 An exception to this rule is when the lower In ​Lopez​, Honorable Fernando Lopez, then an incumbent senator
court and the CA arrive at different factual findings.​16 In this case, the and former Vice President of the Philippines — together with his
trial court found the presence of bad faith and hence awarded moral wife, his daughter and his son-in-law — made first-class reservations
and exemplary damages; while the CA found none and hence with the Pan American World Airways on its Tokyo-San Francisco
deleted the award of damages. Thus, the Court is now behooved to flight. The reservation having been confirmed, first-class tickets were
review the basis for sustaining the award or deletion of damages. subsequently issued in their favor. Mistakenly, however, defendant's
agent cancelled the reservation. But expecting other cancellations
Petitioners impute oppression, discrimination, recklessness and before the flight scheduled a month later, the reservations supervisor
malevolence to respondent. We are not convinced. There is no decided to withhold the information from them, with the result that
persuasive evidence that they were maliciously singled out to fly the upon arrival in Tokyo, the Lopezes discovered they had no first-class
Seattle-Los Angeles-Seoul-Manila route. It appears that the accommodations. Thus, they were compelled to take the tourist
passengers of the distressed flight were randomly divided into two class, just so the senator could be on time for his pressing
groups. One group was made to take the Tokyo-Manila flight; and engagements in the United States.
the other, the Los Angeles-Seoul-Manila flight. The selection of who
was to take which flight was handled via the computer reservation In the light of these facts, the Court held there was a breach of the
system, which took into account only the passengers' final contract of carriage. The failure of the defendant to inform the
destination.​17 plaintiffs on time that their reservations for the first class had long
been cancelled was considered as the element of bad faith entitling
The records show that respondent was impelled by sincere motives them to moral damages for the contractual breach. According to the
to get petitioners to their final destination by whatever was the most Court, such omission had placed them in a predicament that enabled
expeditious course — in its judgment, if not in theirs. Though they the company to keep them as — their passengers in the tourist
claim that they were not accommodated on Flight 27 from Seattle to class. Thus, the defendant was able to retain the business and to
Tokyo because respondent had taken on Japanese passengers, promote its self-interest at the expense of embarrassment,
petitioners failed to present convincing evidence to back this discomfort and humiliation on their part.
allegation. In the absence of convincing evidence, we cannot find
respondent guilty of bad faith. In ​Zulueta​, the passenger was coming home to Manila from Honolulu
via a Pan-American flight. The plane had a stopover at Wake Island,
Lopez, Zulueta and Ortigas Rulings Not Applicable where Rafael Zulueta went down to relieve himself. At flight time, he
could not be located immediately. Upon being found, an altercation
Petitioners cite the cases of ​Lopez v. Pan American World Airways​,18
​ ensued between him and the Pan-Am employees. One of them
Zulueta v. Pan American World Airways, Inc.19 ​ and ​Ortigas Jr. v. remonstrated: "What in the hell do you think you are? Get on that
Lufthansa German Airlines20 ​ to support their claim for moral and plane." An exchange of angry words followed, and the pilot went to
exemplary damages. the extent of referring to the Zuluetas as "those monkeys."
Subsequently, for his "belligerent" attitude, Rafael Zulueta was
intentionally off-loaded and left at Wake Island with the prospect of
being stranded there for a week, with malice aforethought. The Court the same entrepreneurial motive or self-interest as in ​Lopez or with ill
awarded to the Zuluetas P500,000.00 as moral damages, will as in ​Zulueta and ​Ortigas.​ Petitioners have failed to show
P200,000.00 as exemplary damages and P75,000.00 as attorney's convincingly that they were rerouted by respondent to Los Angeles
fees, apart from the actual damages of P5,502.85. and Seoul because of malice, profit motive or self-interest. Good
faith is presumed, while bad faith is a matter of fact that needs to be
In ​Ortigas​, Francisco Ortigas Jr. had a confirmed and validated proved​21​ by the party alleging it.
first-class ticket for Lufthansa's Flight No. 646. His reserved first
class seat was, however, given to a Belgian. As a result, he was In the absence of bad faith, ill will, malice or wanton conduct,
forced to take economy class on the same flight. Lufthansa respondent cannot be held liable for moral damages. Article 2219 of
succeeded in keeping him as a passenger by assuring him that he the Civil Code​22 enumerates the instances in which moral damages
would be given first-class accommodation at the next stop. The may be awarded. In a breach of contract, such damages are not
proper arrangements therefor had supposedly been made already, awarded if the defendant is not shown to have acted fraudulently or
when in truth such was not the case. In justifying the award of moral with malice or bad faith.​23 Insufficient to warrant the award of moral
and exemplary damages, the Court explained. damages is the fact that complainants suffered economic hardship,
or that they worried and experienced mental anxiety.​24
" x x x [W]hen it comes to contracts of common carriage, inattention
and lack of care on the part of the carrier resulting in the failure of the Neither are exemplary damages proper in the present case. The Civil
passenger to be accommodated in the class contracted for amounts Code provides that "[i]n contracts and quasi-contracts, the court may
to bad faith or fraud which entitles the passenger to the award of award exemplary damages if the defendant acted in a wanton,
moral damages in accordance with Article 2220 of the Civil Code. fraudulent, reckless, oppressive, or malevolent manner."​25
But in the instant case, the breach appears to be of graver nature, Respondent has not been proven to have acted in that manner. At
since the preference given to the Belgian passenger over plaintiff most, it can only be found guilty of having acted without first
was done willfully and in wanton disregard of plaintiff's rights and his considering and weighing all other possible courses of actions it
dignity as a human being and as a Filipino, who may not be could have taken, and without consulting petitioners and securing
discriminated against with impunity." their consent to the new stopping places.

To summarize, in Loipez despite sufficient time — one month — to The unexpected and sudden requirement of having to arrange the
inform the passengers of what had happened to their booking, the connecting flights of every single person in the distressed plane in
airline agent intentionally withheld that information from them. In just a few hours, in addition to the Northwest employees' normal
Zulueta​, the passenger was deliberately off-loaded after being workload, was difficult to satisfy perfectly. We cannot find respondent
gravely insulted during an altercation. And in ​Ortigas​, the passenger liable for exemplary damages for its imperfection of neglecting to
was intentionally downgraded in favor of a European. consult with the passengers beforehand.

These cases are different from and inapplicable to the present case.
Here, there is no showing that the breach of contract was done with
Nevertheless, herein petitioners will not be totally deprived of to respondent. The Conditions printed on the airline ticket plainly
compensation. Nominal damages may be awarded as provided by read:
the Civil Code, from which we quote:
"2. Carriage hereunder is subject to the rules and limitations relating
"Art. 2221. Nominal damages are adjudicated in order that a right of to liability established by the Warsaw Convention unless such
the plaintiff, which has been violated or invaded by the defendant, carriage is not `International carriage' as defined by that Convention.
may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him." xxx xxx xxx

"Art. 2222. The court may award nominal damages in every "7. Checked baggage will be delivered to bearer of the baggage
obligation arising from any source enumerated in article 1157, or in check. In case of damage to baggage moving in international
every case where any property right has been invaded." transportation complaint must be made in writing to carrier forthwith
after discovery of damage, and at the latest, within 7 days from
Nominal damages are recoverable if no actual, substantial or specific receipt; in case of delay, complaint must be made within 21 days
damages were shown to have resulted from the breach.​26 The from date the baggage was delivered. x x x ."​30
amount of such damages is addressed to the sound discretion of the
court, taking into account the relevant circumstances.​27 The pertinent provisions of the Rules Relating to International
Carriage by Air (Warsaw Convention) state:
In the present case, we must consider that petitioners suffered the
inconvenience of having to wake up early after a bad night and "Article 26
having to miss breakfast; as well as the fact that they were business
class passengers. They paid more for better service; thus, rushing 1. Receipt by the person entitled to delivery of luggage or goods
them and making them miss their small comforts was not a trivial without complaint is ​prima facie evidence that the same have been
thing. We also consider their social and official status. Victorino delivered in good condition and in accordance with the document of
Savellano was a former mayor, regional trial court judge and carriage.
chairman of the Commission on Elections. Virginia B. Savellano was
2. In case of damage, the person entitled to delivery must complain
the president of five rural banks, and Deogracias Savellano was then
to the carrier forthwith after the discovery of the damage, and, at the
the incumbent vice governor of Ilocos Sur. Hence, it will be proper to
latest, within three days from the date of receipt in the case of
grant one hundred fifty thousand pesos (P150,000) as nominal
luggage and seven days from date of receipt in the case of goods. In
damages​28 to each of them, in order to vindicate and recognize their
the case of delay the complaint must be made at the latest within
right​29 to be notified and consulted before their contracted stopping
fourteen days from the date on which the luggage or goods have
place was changed.
been placed at his disposal.
A claim for the alleged lost items from the baggage of petitioners
cannot prosper, because they failed to give timely notice of the loss
3. Every complaint must be made in writing upon the document of SYLLABUS
carriage or by separate notice in writing dispatched within the times
aforesaid. 1. CIVIL LAW; COMMON CARRIERS; DEFINED; TEST TO
DETERMINE COMMON CARRIER. — Article 1732 of the Civil Code
4. Failing complaint within the times aforesaid, no action shall lie defines a common carrier as "(a) person, corporation or firm, or
against the carrier, save in the case of fraud on his part." association engaged in the business of carrying or transporting
passengers or goods or both, by land, water or air, for compensation,
After allegedly finding that their luggage had been ransacked, offering their services to the public." The test to determine a common
petitioners never lodged a complaint with any Northwest airport carrier is "whether the given undertaking is a part of the business
personnel. Neither did they mention the alleged loss of their engaged in by the carrier which he has held out to the general public
valuables in their November 22, 1991 demand letter.​31 Hence, in as his occupation rather than the quantity or extent of the business
accordance with the parties' contract of carriage, no claim can be transacted." . . . The holding of the Court in De Guzman vs. Court of
heard or admitted against respondent with respect to alleged Appeals is instructive. In referring to Article 1732 of the Civil Code, it
damage to or loss of petitioners' baggage. held thus: "The above article makes no distinction between one
whose principal business activity is the carrying of persons or goods
WHEREFORE, the Petition is hereby PARTIALLY GRANTED, and or both, and one who does such carrying only as an ancillary activity
the assailed Decision MODIFIED. Respondent is ORDERED to pay (in local idiom, as a "sideline"). Article 1732 also carefully avoids
one hundred fifty thousand pesos (P150,000) to each of the three making any distinction between a person or enterprise offering
petitioners as nominal damages. No. pronouncement as to costs. transportation service on a regular or scheduled basis and one
offering such service on an occasional, episodic or unscheduled
SO ORDERED.
basis. Neither does Article 1732 distinguished between a carrier
offering its services to the "general public," i.e., the general
community or population, and one who offers services or solicits
G.R. No. 101089. April 7, 1993. business only from a narrow segment of the general population. We
think that Article 1732 deliberately refrained from making such
ESTRELLITA M. BASCOS, petitioners, distinctions."

vs. 2. ID.; ID.; DILIGENCE REQUIRED IN VIGILANCE OVER GOODS

TRANSPORTED; WHEN PRESUMPTION OF NEGLIGENCE
COURT OF APPEALS and RODOLFO A. CIPRIANO, respondents. ARISES; HOW PRESUMPTION OVERCAME; WHEN
PRESUMPTION MADE ABSOLUTE. — Common carriers are
Modesto S. Bascos for petitioner. obliged to observe extraordinary diligence in the vigilance over the
goods transported by them. Accordingly, they are presumed to have
Pelaez, Adriano & Gregorio for private respondent.
been at fault or to have acted negligently if the goods are lost,
destroyed or deteriorated. There are very few instances when the
presumption of negligence does not attach and these instances are 4. REMEDIAL LAW; EVIDENCE; JUDICIAL ADMISSIONS
enumerated in Article 1734. In those cases where the presumption is CONCLUSIVE. — In this case, petitioner herself has made the
applied, the common carrier must prove that it exercised admission that she was in the trucking business, offering her trucks
extraordinary diligence in order to overcome the presumption . . . to those with cargo to move. Judicial admissions are conclusive and
The presumption of negligence was raised against petitioner. It was no evidence is required to prove the same.
petitioner's burden to overcome it. Thus, contrary to her assertion,
private respondent need not introduce any evidence to prove her 5. ID.; ID.; BURDEN OF PROOF RESTS WITH PARTY WHO
negligence. Her own failure to adduce sufficient proof of ALLEGES A FACT. — Petitioner presented no other proof of the
extraordinary diligence made the presumption conclusive against existence of the contract of lease. He who alleges a fact has the
her. burden of proving it.

3. ID.; ID.; HIJACKING OF GOODS; CARRIER PRESUMED 6. ID.; ID.; AFFIDAVITS NOT CONSIDERED BEST EVIDENCE IF
NEGLIGENT; HOW CARRIER ABSOLVED FROM LIABILITY. — In AFFIANTS AVAILABLE AS WITNESSES. — While the affidavit of
De Guzman vs. Court of Appeals, the Court held that hijacking, not Juanito Morden, the truck helper in the hijacked truck, was presented
being included in the provisions of Article 1734, must be dealt with as evidence in court, he himself was a witness as could be gleaned
under the provisions of Article 1735 and thus, the common carrier is from the contents of the petition. Affidavits are not considered the
presumed to have been at fault or negligent. To exculpate the carrier best evidence if the affiants are available as witnesses.
from liability arising from hijacking, he must prove that the robbers or
the hijackers acted with grave or irresistible threat, violence, or force. 7. CIVIL LAW; OBLIGATIONS AND CONTRACTS; CONTRACT IS
This is in accordance with Article 1745 of the Civil Code which WHAT LAW DEFINES IT TO BE. — Granting that the said evidence
provides: "Art. 1745. Any of the following or similar stipulations shall were not self-serving, the same were not sufficient to prove that the
be considered unreasonable, unjust and contrary to public policy . . . contract was one of lease. It must be understood that a contract is
(6) That the common carrier's liability for acts committed by thieves, what the law defines it to be and not what it is called by the
or of robbers who do not act with grave or irresistible threat, contracting parties.
violences or force, is dispensed with or diminished"; In the same
DECISION
case, the Supreme Court also held that: "Under Article 1745 (6)
above, a common carrier is held responsible — and will not be CAMPOS, JR., J p:
allowed to divest or to diminish such responsibility — even for acts of
strangers like thieves or robbers, except where such thieves or This is a petition for review on certiorari of the decision ** of the
robbers in fact acted "with grave of irresistible threat, violence of Court of Appeals in "RODOLFO A. CIPRIANO, doing business under
force," We believe and so hold that the limits of the duty of the name CIPRIANO TRADING ENTERPRISES plaintiff-appellee,
extraordinary diligence in the vigilance over the goods carried are vs. ESTRELLITA M. BASCOS, doing business under the name of
reached where the goods are lost as a result of a robbery which is
attended by "grave or irresistible threat, violence or force."
BASCOS TRUCKING, defendant-appellant," C.A.-G.R. CV No. "4. That this action is one of those specifically mentioned in Sec. 1,
25216, the dispositive portion of which is quoted hereunder: Rule 57 the Rules of Court, whereby a writ of preliminary attachment
may lawfully issue, namely:
"PREMISES considered, We find no reversible error in the decision
appealed from, which is hereby affirmed in toto. Costs against "(e) in an action against a party who has removed or disposed of his
appellant." 1 property, or is about to do so, with intent to defraud his creditors;"

The facts, as gathered by this Court, are as follows: 5. That there is no sufficient security for the claim sought to be
enforced by the present action;
Rodolfo A. Cipriano representing Cipriano Trading Enterprise
(CIPTRADE for short) entered into a hauling contract 2 with Jibfair 6. That the amount due to the plaintiff in the above-entitled case is
Shipping Agency Corporation whereby the former bound itself to haul above all legal counterclaims;"
the latter's 2,000 m/tons of soya bean meal from Magallanes Drive,
Del Pan, Manila to the warehouse of Purefoods Corporation in The trial court granted the writ of preliminary attachment on February
Calamba, Laguna. To carry out its obligation, CIPTRADE, through 17, 1987.
Rodolfo Cipriano, subcontracted with Estrellita Bascos (petitioner) to
transport and to deliver 400 sacks of soya bean meal worth In her answer, petitioner interposed the following defenses: that
P156,404.00 from the Manila Port Area to Calamba, Laguna at the there was no contract of carriage since CIPTRADE leased her cargo
rate of P50.00 per metric ton. Petitioner failed to deliver the said truck to load the cargo from Manila Port Area to Laguna; that
cargo. As a consequence of that failure, Cipriano paid Jibfair CIPTRADE was liable to petitioner in the amount of P11,000.00 for
Shipping Agency the amount of the lost goods in accordance with loading the cargo; that the truck carrying the cargo was hijacked
the contract which stated that: along Canonigo St., Paco, Manila on the night of October 21, 1988;
that the hijacking was immediately reported to CIPTRADE and that
"1. CIPTRADE shall be held liable and answerable for any loss in petitioner and the police exerted all efforts to locate the hijacked
bags due to theft, hijacking and non-delivery or damages to the properties; that after preliminary investigation, an information for
cargo during transport at market value, . . ." 3 robbery and carnapping were filed against Jose Opriano, et al.; and
that hijacking, being a force majeure, exculpated petitioner from any
Cipriano demanded reimbursement from petitioner but the latter liability to CIPTRADE.
refused to pay. Eventually, Cipriano filed a complaint for a sum of
money and damages with writ of preliminary attachment 4 for breach After trial, the trial court rendered a decision *** the dispositive
of a contract of carriage. The prayer for a Writ of Preliminary portion of which reads as follows:
Attachment was supported by an affidavit 5 which contained the
following allegations: "WHEREFORE, judgment is hereby rendered in favor of plaintiff and
against defendant ordering the latter to pay the former:
1. The amount of ONE HUNDRED FIFTY-SIX THOUSAND FOUR III. THE RESPONDENT COURT ERRED IN AFFIRMING THE
HUNDRED FOUR PESOS (P156,404.00) as an (sic) for actual FINDING OF THE TRIAL COURT THAT PETITIONER'S MOTION
damages with legal interest of 12% per cent per annum to be TO DISSOLVE/LIFT THE WRIT OF PRELIMINARY ATTACHMENT
counted from December 4, 1986 until fully paid; HAS BEEN RENDERED MOOT AND ACADEMIC BY THE
DECISION OF THE MERITS OF THE CASE." 7
2. The amount of FIVE THOUSAND PESOS (P5,000.00) as and for
attorney's fees; and The petition presents the following issues for resolution: (1) was
petitioner a common carrier?; and (2) was the hijacking referred to a
3. The costs of the suit. force majeure?

The "Urgent Motion To Dissolve/Lift preliminary Attachment" dated The Court of Appeals, in holding that petitioner was a common
March 10, 1987 filed by defendant is DENIED for being moot and carrier, found that she admitted in her answer that she did business
academic. under the name A.M. Bascos Trucking and that said admission
dispensed with the presentation by private respondent, Rodolfo
SO ORDERED." 6 Cipriano, of proofs that petitioner was a common carrier. The
respondent Court also adopted in toto the trial court's decision that
Petitioner appealed to the Court of Appeals but respondent Court
petitioner was a common carrier, Moreover, both courts appreciated
affirmed the trial court's judgment.
the following pieces of evidence as indicators that petitioner was a
Consequently, petitioner filed this petition where she makes the common carrier: the fact that the truck driver of petitioner, Maximo
following assignment of errors; to wit: Sanglay, received the cargo consisting of 400 bags of soya bean
meal as evidenced by a cargo receipt signed by Maximo Sanglay;
"I. THE RESPONDENT COURT ERRED IN HOLDING THAT THE the fact that the truck helper, Juanito Morden, was also an employee
CONTRACTUAL RELATIONSHIP BETWEEN PETITIONER AND of petitioner; and the fact that control of the cargo was placed in
PRIVATE RESPONDENT WAS CARRIAGE OF GOODS AND NOT petitioner's care.
LEASE OF CARGO TRUCK.
In disputing the conclusion of the trial and appellate courts that
II. GRANTING, EX GRATIA ARGUMENTI, THAT THE FINDING OF petitioner was a common carrier, she alleged in this petition that the
THE RESPONDENT COURT THAT THE CONTRACTUAL contract between her and Rodolfo A. Cipriano, representing
RELATIONSHIP BETWEEN PETITIONER AND PRIVATE CIPTRADE, was lease of the truck. She cited as evidence certain
RESPONDENT WAS CARRIAGE OF GOODS IS CORRECT, affidavits which referred to the contract as "lease". These affidavits
NEVERTHELESS, IT ERRED IN FINDING PETITIONER LIABLE were made by Jesus Bascos 8 and by petitioner herself. 9 She
THEREUNDER BECAUSE THE LOSS OF THE CARGO WAS DUE further averred that Jesus Bascos confirmed in his testimony his
TO FORCE MAJEURE, NAMELY, HIJACKING. statement that the contract was a lease contract. 10 She also stated
that: she was not catering to the general public. Thus, in her answer
to the amended complaint, she said that she does business under
the same style of A.M. Bascos Trucking, offering her trucks for lease distinction between a person or enterprise offering transportation
to those who have cargo to move, not to the general public but to a service on a regular or scheduled basis and one offering such
few customers only in view of the fact that it is only a small business. service on an occasional, episodic or unscheduled basis. Neither
11 does Article 1732 distinguish between a carrier offering its services
to the "general public," i.e., the general community or population, and
We agree with the respondent Court in its finding that petitioner is a one who offers services or solicits business only from a narrow
common carrier. segment of the general population. We think that Article 1732
deliberately refrained from making such distinctions."
Article 1732 of the Civil Code defines a common carrier as "(a)
person, corporation or firm, or association engaged in the business Regarding the affidavits presented by petitioner to the court, both the
of carrying or transporting passengers or goods or both, by land, trial and appellate courts have dismissed them as self-serving and
water or air, for compensation, offering their services to the public." petitioner contests the conclusion. We are bound by the appellate
The test to determine a common carrier is "whether the given court's factual conclusions. Yet, granting that the said evidence were
undertaking is a part of the business engaged in by the carrier which not self-serving, the same were not sufficient to prove that the
he has held out to the general public as his occupation rather than contract was one of lease. It must be understood that a contract is
the quantity or extent of the business transacted." 12 In this case, what the law defines it to be and not what it is called by the
petitioner herself has made the admission that she was in the contracting parties. 15 Furthermore, petitioner presented no other
trucking business, offering her trucks to those with cargo to move. proof of the existence of the contract of lease. He who alleges a fact
Judicial admissions are conclusive and no evidence is required to has the burden of proving it. 16
prove the same. 13
Likewise, We affirm the holding of the respondent court that the loss
But petitioner argues that there was only a contract of lease because of the goods was not due to force majeure.
they offer their services only to a select group of people and because
the private respondents, plaintiffs in the lower court, did not object to Common carriers are obliged to observe extraordinary diligence in
the presentation of affidavits by petitioner where the transaction was the vigilance over the goods transported by them. 17 Accordingly,
referred to as a lease contract. they are presumed to have been at fault or to have acted negligently
if the goods are lost, destroyed or deteriorated. 18 There are very
Regarding the first contention, the holding of the Court in De few instances when the presumption of negligence does not attach
Guzman vs. Court of Appeals 14 is instructive. In referring to Article and these instances are enumerated in Article 1734. 19 In those
1732 of the Civil Code, it held thus: cases where the presumption is applied, the common carrier must
prove that it exercised extraordinary diligence in order to overcome
"The above article makes no distinction between one whose principal the presumption.
business activity is the carrying of persons or goods or both, and one
who does such carrying only as an ancillary activity (in local idiom, In this case, petitioner alleged that hijacking constituted force
as a "sideline"). Article 1732 also carefully avoids making any majeure which exculpated her from liability for the loss of the cargo.
In De Guzman vs. Court of Appeals, 20 the Court held that hijacking, a first-hand account. While it had been admitted in court for lack of
not being included in the provisions of Article 1734, must be dealt objection on the part of private respondent, the respondent Court
with under the provisions of Article 1735 and thus, the common had discretion in assigning weight to such evidence. We are bound
carrier is presumed to have been at fault or negligent. To exculpate by the conclusion of the appellate court. In a petition for review on
the carrier from liability arising from hijacking, he must prove that the certiorari, We are not to determine the probative value of evidence
robbers or the hijackers acted with grave or irresistible threat, but to resolve questions of law. Secondly, the affidavit of Jesus
violence, or force. This is in accordance with Article 1745 of the Civil Bascos did not dwell on how the hijacking took place. Thirdly, while
Code which provides: the affidavit of Juanito Morden, the truck helper in the hijacked truck,
was presented as evidence in court, he himself was a witness as
"Art. 1745. Any of the following or similar stipulations shall be could be gleaned from the contents of the petition. Affidavits are not
considered unreasonable, unjust and contrary to public policy; considered the best evidence if the affiants are available as
witnesses. 25 The subsequent filing of the information for carnapping
xxx xxx xxx and robbery against the accused named in said affidavits did not
necessarily mean that the contents of the affidavits were true
(6) That the common carrier's liability for acts committed by thieves,
because they were yet to be determined in the trial of the criminal
or of robbers who do not act with grave or irresistible threat,
cases.
violences or force, is dispensed with or diminished;"
The presumption of negligence was raised against petitioner. It was
In the same case, 21 the Supreme Court also held that:
petitioner's burden to overcome it. Thus, contrary to her assertion,
"Under Article 1745 (6) above, a common carrier is held responsible private respondent need not introduce any evidence to prove her
— and will not be allowed to divest or to diminish such responsibility negligence. Her own failure to adduce sufficient proof of
— even for acts of strangers like thieves or robbers except where extraordinary diligence made the presumption conclusive against
such thieves or robbers in fact acted with grave or irresistible threat, her.
violence or force. We believe and so hold that the limits of the duty of
Having affirmed the findings of the respondent Court on the
extraordinary diligence in the vigilance over the goods carried are
substantial issues involved, We find no reason to disturb the
reached where the goods are lost as a result of a robbery which is
conclusion that the motion to lift/dissolve the writ of preliminary
attended by "grave or irresistible threat, violence or force."
attachment has been rendered moot and academic by the decision
To establish grave and irresistible force, petitioner presented her on the merits.
accusatory affidavit, 22 Jesus Bascos' affidavit, 23 and Juanito
In the light of the foregoing analysis, it is Our opinion that the
Morden's 24 "Salaysay". However, both the trial court and the Court
petitioner's claim cannot be sustained. The petition is DISMISSED
of Appeals have concluded that these affidavits were not enough to
and the decision of the Court of Appeals is hereby AFFIRMED.
overcome the presumption. Petitioner's affidavit about the hijacking
was based on what had been told her by Juanito Morden. It was not
SO ORDERED. Upon a finding that the third party defendant was not liable under the
insurance contract, the lower court dismissed the third party
G.R. No. 113003 October 17, 1997 complaint. No amicable settlement having been arrived at by the
parties, trial on the merits ensued.
ALBERTA YOBIDO and CRESENCIO YOBIDO, ​petitioners,
The plaintiffs asserted that violation of the contract of carriage
vs. between them and the defendants was brought about by the driver's
failure to exercise the diligence required of the carrier in transporting
COURT OF APPEALS, LENY TUMBOY, ARDEE TUMBOY and
passengers safely to their place of destination. According to Leny
JASMIN TUMBOY, ​respondents.
Tumboy, the bus left Mangagoy at 3:00 o'clock in the afternoon. The
In this petition for review on ​certiorari of the decision of the Court of winding road it traversed was not cemented and was wet due to the
Appeals, the issue is whether or not the explosion of a newly rain; it was rough with crushed rocks. The bus which was full of
installed tire of a passenger vehicle is a fortuitous event that exempts passengers had cargoes on top. Since it was "running fast," she
the carrier from liability for the death of a passenger. cautioned the driver to slow down but he merely stared at her
through the mirror. At around 3:30 p.m., in Trento, she heard
On April 26, 1988, spouses Tito and Leny Tumboy and their minor something explode and immediately, the bus fell into a ravine.
children named Ardee and Jasmin, bearded at Mangagoy, Surigao
del Sur, a Yobido Liner bus bound for Davao City. Along Picop Road For their part, the defendants tried to establish that the accident was
in Km. 17, Sta. Maria, Agusan del Sur, the left front tire of the bus due to a fortuitous event. Abundio Salce, who was the bus conductor
exploded. The bus fell into a ravine around three (3) feet from the when the incident happened, testified that the 42-seater bus was not
road and struck a tree. The incident resulted in the death of full as there were only 32 passengers, such that he himself managed
28-year-old Tito Tumboy and physical injuries to other passengers. to get a seat. He added that the bus was running at a speed of "60 to
50" and that it was going slow because of the zigzag road. He
On November 21, 1988, a complaint for breach of contract of affirmed that the left front tire that exploded was a "brand new tire"
carriage, damages and attorney's fees was filed by Leny and her that he mounted on the bus on April 21, 1988 or only five (5) days
children against Alberta Yobido, the owner of the bus, and Cresencio before the incident. The Yobido Liner secretary, Minerva Fernando,
Yobido, its driver, before the Regional Trial Court of Davao City. bought the new Goodyear tire from Davao Toyo Parts on April 20,
When the defendants therein filed their answer to the complaint, they 1988 and she was present when it was mounted on the bus by
raised the affirmative defense of ​caso fortuito​. They also filed a Salce. She stated that all driver applicants in Yobido Liner underwent
third-party complaint against Philippine Phoenix Surety and actual driving tests before they were employed. Defendant Cresencio
Insurance, Inc. This third-party defendant filed an answer with Yobido underwent such test and submitted his professional driver's
compulsory counterclaim. At the pre-trial conference, the parties license and clearances from the barangay, the fiscal and the police.
agreed to a stipulation of facts.​1
On August 29, 1991, the lower court rendered a decision​2 dismissing
the action for lack of merit. On the issue of whether or not the tire
blowout was a ​caso fortuito​, it found that "the falling of the bus to the not known does not relieve the carrier of liability. Owing to the
cliff was a result of no other outside factor than the tire blow-out." It statutory presumption of negligence against the carrier and its
held that the ruling in the ​La Mallorca and Pampanga Bus Co.​ ​v.​ ​De obligation to exercise the utmost diligence of very cautious persons
Jesus3​ that a tire blowout is "a mechanical defect of the conveyance to carry the passenger safely as far as human care and foresight can
or a fault in its equipment which was easily discoverable if the bus provide, it is the burden of the defendants to prove that the cause of
had been subjected to a more thorough or rigid check-up before it the blow-out was a fortuitous event. It is not incumbent upon the
took to the road that morning" is inapplicable to this case. It reasoned plaintiff to prove that the cause of the blow-out is not ​caso-fortuito​.
out that in said case, it was found that the blowout was caused by
the established fact that the inner tube of the left front tire "was Proving that the tire that exploded is a new Goodyear tire is not
pressed between the inner circle of the left wheel and the rim which sufficient to discharge defendants' burden. As enunciated in ​Necesito
had slipped out of the wheel." In this case, however, "the cause of vs​. ​Paras​, the passenger has neither choice nor control over the
the explosion remains a mystery until at present." As such, the court carrier in the selection and use of its equipment, and the good repute
added, the tire blowout was "a ​caso fortuito which is completely an of the manufacturer will not necessarily relieve the carrier from
extraordinary circumstance independent of the will" of the defendants liability.
who should be relieved of "whatever liability the plaintiffs may have
suffered by reason of the explosion pursuant to Article 1174​4 of the Moreover, there is evidence that the bus was moving fast, and the
Civil Code." road was wet and rough. The driver could have explained that the
blow-out that precipitated the accident that caused the death of Toto
Dissatisfied, the plaintiffs appealed to the Court of Appeals. They Tumboy could not have been prevented even if he had exercised
ascribed to the lower court the following errors: (a) finding that the due care to avoid the same, but he was not presented as witness.
tire blowout was a ​caso fortuito​; (b) failing to hold that the defendants
did not exercise utmost and/or extraordinary diligence required of The Court of Appeals thus disposed of the appeal as follows:
carriers under Article 1755 of the Civil Code, and (c) deciding the
WHEREFORE, the judgment of the court ​a quo is set aside and
case contrary to the ruling in ​Juntilla v​. ​Fontanar​,5​ and N​ecesito v.​
another one entered ordering defendants to pay plaintiffs the sum of
Paras.​ 6​
P50,000.00 for the death of Tito Tumboy, P30,000.00 in moral
On August 23, 1993, the Court of Appeals rendered the Decision​7 damages, and P7,000.00 for funeral and burial expenses. SO
reversing that of the lower court. It held that: ORDERED.

To Our mind, the explosion of the tire is not in itself a fortuitous The defendants filed a motion for reconsideration of said decision
event. The cause of the blow-out, if due to a factory defect, improper which was denied on November 4, 1993 by the Court of Appeals.
mounting, excessive tire pressure, is not an unavoidable event. On Hence, the instant petition asserting the position that the tire blowout
the other hand, there may have been adverse conditions on the road that caused the death of Tito Tumboy was a ​caso fortuito.​ Petitioners
that were unforeseeable and/or inevitable, which could make the claim further that the Court of Appeals, in ruling contrary to that of
blow-out a ​caso fortuito​. The fact that the cause of the blow-out was the lower court, misapprehended facts and, therefore, its findings of
fact cannot be considered final which shall bind this Court. Hence, need not make an express finding of fault or negligence on the part
they pray that this Court review the facts of the case. of the carrier to hold it responsible for damages sought by the
passenger.​12
The Court did re-examine the facts and evidence in this case
because of the inapplicability of the established principle that the In view of the foregoing, petitioners' contention that they should be
factual findings of the Court of Appeals are final and may not be exempt from liability because the tire blowout was no more than a
reviewed on appeal by this Court. This general principle is subject to fortuitous event that could not have been foreseen, must fail. A
exceptions such as the one present in this case, namely, that the fortuitous event is possessed of the following characteristics: (a) the
lower court and the Court of Appeals arrived at diverse factual cause of the unforeseen and unexpected occurrence, or the failure of
findings.​8 However, upon such re-examination, we found no reason the debtor to comply with his obligations, must be independent of
to overturn the findings and conclusions of the Court of Appeals. human will; (b) it must be impossible to foresee the event which
constitutes the ​caso fortuito​, or if it can be foreseen, it must be
As a rule, when a passenger boards a common carrier, he takes the impossible to avoid; (c) the occurrence must be such as to render it
risks incidental to the mode of travel he has taken. After all, a carrier impossible for the debtor to fulfill his obligation in a normal manner;
is not an insurer of the safety of its passengers and is not bound and (d) the obliger must be free from any participation in the
absolutely and at all events to carry them safely and without injury.​9 aggravation of the injury resulting to the creditor.​13 As Article 1174
However, when a passenger is injured or dies while travelling, the provides, no person shall be responsible for a fortuitous event which
law presumes that the common carrier is negligent. Thus, the Civil could not be foreseen, or which, though foreseen, was inevitable. In
Code provides: other words, there must be an entire exclusion of human agency
from the cause of injury or loss.​14
Art. 1756. In case of death or injuries to passengers, common
carriers are presumed to have been at fault or to have acted Under the circumstances of this case, the explosion of the new tire
negligently, unless they prove that they observed extraordinary may not be considered a fortuitous event. There are human factors
diligence as prescribed in articles 1733 and 1755. involved in the situation. The fact that the tire was new did not imply
that it was entirely free from manufacturing defects or that it was
Article 1755 provides that "(a) common carrier is bound to carry the properly mounted on the vehicle. Neither may the fact that the tire
passengers safely as far as human care and foresight can provide, bought and used in the vehicle is of a brand name noted for quality,
using the utmost diligence of very cautious persons, with a due resulting in the conclusion that it could not explode within five days'
regard for all the circumstances." Accordingly, in ​culpa contractual​, use. Be that as it may, it is settled that an accident caused either by
once a passenger dies or is injured, the carrier is presumed to have defects in the automobile or through the negligence of its driver is not
been at fault or to have acted negligently. This disputable a ​caso fortuito that would exempt the carrier from liability for
presumption may only be overcome by evidence that the carrier had damages.​15
observed extraordinary diligence as prescribed by Articles 1733,​10
1755 and 1756 of the Civil Code or that the death or injury of the Moreover, a common carrier may not be absolved from liability in
passenger was due to a fortuitous event.​11 Consequently, the court case of force majeure or fortuitous event alone. The common carrier
must still prove that it was ​not negligent in causing the death or injury portions the failure of which may endanger the safety of the
resulting from an accident.​16​ This Court has had occasion to state: passengers.​18

While it may be true that the tire that blew-up was still good because Having failed to discharge its duty to overthrow the presumption of
the grooves of the tire were still visible, this fact alone does not make negligence with clear and convincing evidence, petitioners are
the explosion of the tire a fortuitous event. No evidence was hereby held liable for damages. Article 1764​19 in relation to Article
presented to show that the accident was due to adverse road 2206​20 of the Civil Code prescribes the amount of at least three
conditions or that precautions were taken by the jeepney driver to thousand pesos as damages for the death of a passenger. Under
compensate for any conditions liable to cause accidents. The sudden prevailing jurisprudence, the award of damages under Article 2206
blowing-up, therefore, could have been caused by too much air has been increased to fifty thousand pesos (P50,000.00).​21
pressure injected into the tire coupled by the fact that the jeepney
was overloaded and speeding at the time of the accident.​17 Moral damages are generally not recoverable in ​culpa contractual
except when bad faith had been proven. However, the same
It is interesting to note that petitioners proved through the bus damages may be recovered when breach of contract of carriage
conductor, Salce, that the bus was running at "60-50" kilometers per results in the death of a passenger,​22 as in this case. Exemplary
hour only or within the prescribed lawful speed limit. However, they damages, awarded by way of example or correction for the public
failed to rebut the testimony of Leny Tumboy that the bus was good when moral damages are awarded,​23 may likewise be
running so fast that she cautioned the driver to slow down. These recovered in contractual obligations if the defendant acted in wanton,
contradictory facts must, therefore, be resolved in favor of liability in fraudulent, reckless, oppressive, or malevolent manner.​24 Because
view of the presumption of negligence of the carrier in the law. petitioners failed to exercise the extraordinary diligence required of a
Coupled with this is the established condition of the road — rough, common carrier, which resulted in the death of Tito Tumboy, it is
winding and wet due to the rain. It was incumbent upon the defense deemed to have acted recklessly.​25 As such, private respondents
to establish that it took precautionary measures considering partially shall be entitled to exemplary damages.
dangerous condition of the road. As stated above, proof that the tire
was new and of good quality is not sufficient proof that it was ​not WHEREFORE, the Decision of the Court of Appeals is hereby
negligent. Petitioners should have shown that it undertook AFFIRMED subject to the modification that petitioners shall, in
extraordinary diligence in the care of its carrier, such as conducting addition to the monetary awards therein, be liable for the award of
daily routinary check-ups of the vehicle's parts. As the late Justice exemplary damages in the amount of P20,000.00. Costs against
J.B.L. Reyes said: petitioners.

It may be impracticable, as appellee argues, to require of carriers to SO ORDERED.

test the strength of each and every part of its vehicles before each
trip; but we are of the opinion that a due regard for the carrier's
obligations toward the traveling public demands adequate periodical
tests to determine the condition and strength of those vehicle