G.R. No.
80447 January 31, 1989
BALIWAG TRANSIT, INC., petitioner, vs. HON. COURT OF APPEALS and SPS.
SOTERO CAILIPAN, JR. and ZENAIDA LOPEZ and GEORGE L.
CAILIPAN, respondents.
On 10 April 1985 a Complaint for damages arising from breach of contract of carriage
was filed by private respondents, the Spouses Sotero Cailipan, Jr. and Zenaida Lopez,
and their son George, of legal age, against petitioner Baliwag Transit (Baliwag, for
brevity). The Complaint alleged that George, who was a paying passenger on a Baliwag
bus on 17 December 1984, suffered multiple serious physical injuries when he was
thrown off said bus driven in a careless and negligent manner by Leonardo Cruz, the
authorized bus driver, along Barangay Patubig, Marilao, Bulacan. As a result, he was
confined in the hospital for treatment, incurring medical expenses, which were borne by
his parents, the respondent Spouses, in the sum of about P200,000.00 plus other
incidental expenses of about P10,000.00.
On 26 April 1985 an Answer was filed by petitioner alleging that the cause of the injuries
sustained by George was solely attributable to his own voluntary act in that, without
warning and provocation, he suddenly stood up from his seat and headed for the door of
the bus as if in a daze, opened it and jumped off while said bus was in motion, in spite of
the protestations by the driver and without the knowledge of the conductor.
Baliwag then filed a Third-Party Complaint against Fortune Insurance & Surety
Company, Inc., on its third-party liability insurance in the amount of P50,000.00. In its
Answer, Fortune Insurance claimed limited liability, the coverage being subject to a
Schedule of Indemnities forming part of the insurance policy.
On 14 November 1985 and 18 November 1985, respectively, Fortune Insurance and
Baliwag each filed Motions to Dismiss on the ground that George, in consideration of the
sum of P8,020.50 had executed a "Release of Claims" dated 16 May 1985. These
Motions were denied by the Trial Court in an Order dated 13 January 1986 as they were
filed beyond the time for pleading and after the Answer were already filed.
On 5 February 1986 Baliwag filed a Motion to Admit Amended Answer, which was
granted by the Trial Court. The Amended Answer incorporated the affirmative defense in
the Motion to Dismiss to the effect that on 16 May 1985, George bad been paid all his
claims for damages arising from the incident subject matter of the complaint when he
executed the following "Release of Claims":
For and in consideration of the payment to me/us of the sum of EIGHT
THOUSAND TWENTY and 50/100 PESOS ONLY (P8,020.50), the
receipt of which is hereby acknowledged, I/we, being of lawful age, do
hereby release, acquit and forever discharge Fortune Insurance and/or
Baliwag transit, Inc. his/her heirs, executors and assigns, from any and
all liability now accrued or hereafter to accrue on account of any and all
claims or causes of action which I/we now or may here after have for
personal injuries, damage to property, loss of services, medical
expenses, losses or damages of any and every kind or nature
whatsoever, now known or what may hereafter develop by me/us
sustained or received on or about 17th day of December, 1984 through
Reckless Imprudence Resulting to Physical Injuries, and I/we hereby
declare that I/we fully understand the terms of this settlement and
voluntarily accept said sum for the purpose of making a full and final
compromise adjustment and settlement of the injuries and damages,
expenses and inconvenience above mentioned. (Rollo, p. 11)
During the preliminary hearing on the aforementioned affirmative defense, Baliwag
waived the presentation of testimonial evidence and instead offered as its Exhibit "1" the
"Release of Claims" signed by George and witnessed by his brother Benjamin L.
Cailipan, a licensed engineer.
By way of opposition to petitioner's affirmative defense, respondent Sotero Cailipan, Jr.
testified that be is the father of George, who at the time of the incident was a student,
living with his parents and totally dependent on them for their support; that the expenses
for his hospitalization were shouldered by his parents; and that they had not signed the
"Release of Claims."
In an Order dated 29 August 1986, the Regional Trial Court of Bulacan, Branch
20, 1 dismissed the Complaint and Third-party Complaint, ruling that since the contract of
carriage is between Baliwag and George L. Cailipan, the latter, who is of legal age, had
the exclusive right to execute the Release of Claims despite the fact that he is still a
student and dependent on his parents for support. Consequently, the execution by
George of the Release of Claims discharges Baliwag and Fortune Insurance.
Aggrieved, the Spouses appealed to respondent Court of Appeals.
On 22 October 1987, the Appellate Court rendered a Decision 2 setting aside the
appealed Order and holding that the "Release of Claims" cannot operate as a valid
ground for the dismissal of the case because it does not have the conformity of all the
parties, particularly George's parents, who have a substantial interest in the case as they
stand to be prejudiced by the judgment because they spent a sizeable amount for the
medical bills of their son; that the Release of Claims was secured by Fortune Insurance
for the consideration of P8,020.50 as the full and final settlement of its liability under the
insurance policy and not for the purpose of releasing Baliwag from its liability as a carrier
in this suit for breach of contract. The Appellate Court also ordered the remand of the
case to the lower Court for trial on the merits and for George to return the amount of
P8,020.50 to Fortune Insurance.
Hence, this Petition for Review on certiorari by Baliwag assailing the Appellate Court
judgment.
The issue brought to the fore is the legal effect of the Release of Claims executed by
George during the pendency of this case.
We hold that since the suit is one for breach of contract of carriage, the Release of
Claims executed by him, as the injured party, discharging Fortune Insurance and
Baliwag from any and all liability is valid. He was then of legal age, a graduating student
of Agricultural Engineering, and had the capacity to do acts with legal effect (Article 37 in
relation to Article 402, Civil Code). Thus, he could sue and be sued even without the
assistance of his parents.
Significantly, the contract of carriage was actually between George, as the paying
passenger, and Baliwag, as the common carrier. As such carrier, Baliwag was bound to
carry its passengers safely as far as human care and foresight could provide, and is
liable for injuries to them through the negligence or wilful acts of its employees (Articles
1755 and 1759, Civil Code). Thus, George had the right to be safely brought to his
destination and Baliwag had the correlative obligation to do so. Since a contract may be
violated only by the parties thereto, as against each other, in an action upon that
contract, the real parties in interest, either as plaintiff or as defendant, must be parties to
said contract (Marimperio Compania Naviera, S.A. vs. Court of Appeals, No. L-40234,
December 14, 1987, 156 SCRA 368). A real party-in-interest -plaintiff is one who has a
legal right while a real party-in-interest-defendant is one who has a correlative legal
obligation whose act or omission violates the legal right of the former (Lee vs. Romillo,
Jr., G.R. No. 60973, May 28, 1988). In the absence of any contract of carriage between
Baliwag and George's parents, the latter are not real parties-in-interest in an action for
breach of that contract.
Insurance and/or Baliwag from any and all liabilities now accrued or to accrue on
account of any and all claims or causes of action ... for personal injuries, damage to
property, loss of services, medical expenses, losses or damages of any and every kind
or nature whatsoever, sustained by him on 17 December 1984 thru Reckless
Imprudence Resulting to Physical Injuries." Consequently, the ruling of respondent
Appellate Court that the "Release of Claims" was intended only as the full and final
settlement of a third-party liability for bodily injury claim and not for the purpose of
releasing Baliwag from its liability, if any, in a breach of a contract of carriage, has to be
rejected for being contrary to the very terms thereof. If the terms of a contract are clear
and leave no doubt upon the intention of the contracting parties, the literal meaning of its
stipulations shall control (Article 1370, Civil Code). The phraseology "any and all claims
or causes of action" is broad enough to include all damages that may accrue to the
injured party arising from the unfortunate accident.
The Release of Claims had the effect of a compromise agreement since it was entered
into for the purpose of making a full and final compromise adjustment and settlement of
the cause of action involved. A compromise is a contract whereby the parties, by making
reciprocal concessions, avoid a litigation or put an end to one already commenced
(Article 2028, Civil Code). The Release of Claims executed by the injured party himself
wrote finish to this litigation.
WHEREFORE, the Decision dated 22 October 1987 of respondent Court of Appeals is
SET ASIDE, the Decision of the Regional Trial Court of Bulacan, Branch 20, is
REINSTATED, and the Complaint and Third-Party Complaint are hereby ordered
DISMISSED. No costs.
SO ORDERED.

The general rule of the common law is that every action must be brought
in the name of the party whose legal right has been invaded or infringed.
15 Enc. P1. & Pr. p. 484. "For the immediate wrong and damage the
person injured is the only one who can maintain the action." Id. p. 578.
The person who sustains an injury is the person to bring an action for the
injury against the wrongdoer." Dicey parties to Actions, 347. (Cited in
Green v. Shoemaker, 73 A 688, 23 L.R.A., N.S. 667).

There is no question regarding the genuineness and due execution of the Release of
Claims. It is a duly notarized public document. It clearly stipulates that the consideration
of P8,020.50 received by George was "to release and forever discharge Fortune
G.R. No. 111127 July 26, 1996
MR. & MRS. ENGRACIO FABRE, JR. and PORFIRIO CABIL, petitioners,
vs. COURT OF APPEALS, THE WORD FOR THE WORLD CHRISTIAN
FELLOWSHIP, INC., AMYLINE ANTONIO, JOHN RICHARDS, GONZALO
GONZALES, VICENTE V. QUE, JR., ICLI CORDOVA, ARLENE GOJOCCO,
ALBERTO ROXAS CORDERO, RICHARD BAUTISTA, JOCELYN GARCIA,
YOLANDA CORDOVA, NOEL ROQUE, EDWARD TAN, ERNESTO NARCISO,
ENRIQUETA LOCSIN, FRANCIS NORMAN O. LOPES, JULIUS CAESAR, GARCIA,
ROSARIO MA. V. ORTIZ, MARIETTA C. CLAVO, ELVIE SENIEL, ROSARIO MARA-
MARA, TERESITA REGALA, MELINDA TORRES, MARELLA MIJARES, JOSEFA
CABATINGAN, MARA NADOC, DIANE MAYO, TESS PLATA, MAYETTE JOCSON,
ARLENE Y. MORTIZ, LIZA MAYO, CARLOS RANARIO, ROSAMARIA T. RADOC and
BERNADETTE FERRER, respondents.
This is a petition for review on certiorari of the decision of the Court of Appeals1 in CA-
GR No. 28245, dated September 30, 1992, which affirmed with modification the decision
of the Regional Trial Court of Makati, Branch 58, ordering petitioners jointly and severally
to pay damages to private respondent Amyline Antonio, and its resolution which denied
petitioners' motion for reconsideration for lack of merit.
Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model Mazda
minibus. They used the bus principally in connection with a bus service for school
children which they operated in Manila. The couple had a driver, Porfirio J. Cabil, whom
they hired in 1981, after trying him out for two weeks, His job was to take school children
to and from the St. Scholastica's College in Malate, Manila.
On November 2, 1984 private respondent Word for the World Christian Fellowship Inc.
(WWCF) arranged with petitioners for the transportation of 33 members of its Young
Adults Ministry from Manila to La Union and back in consideration of which private
respondent paid petitioners the amount of P3,000.00.
The group was scheduled to leave on November 2, 1984, at 5:00 o'clock in the
afternoon. However, as several members of the party were late, the bus did not leave
the Tropical Hut at the corner of Ortigas Avenue and EDSA until 8:00 o'clock in the
evening. Petitioner Porfirio Cabil drove the minibus.
The usual route to Caba, La Union was through Carmen, Pangasinan. However, the
bridge at Carmen was under repair, sot hat petitioner Cabil, who was unfamiliar with the
area (it being his first trip to La Union), was forced to take a detour through the town of
Baay in Lingayen, Pangasinan. At 11:30 that night, petitioner Cabil came upon a sharp
curve on the highway, running on a south to east direction, which he described as
"siete." The road was slippery because it was raining, causing the bus, which was
running at the speed of 50 kilometers per hour, to skid to the left road shoulder. The bus
hit the left traffic steel brace and sign along the road and rammed the fence of one Jesus
Escano, then turned over and landed on its left side, coming to a full stop only after a
series of impacts. The bus came to rest off the road. A coconut tree which it had hit fell
on it and smashed its front portion.
Several passengers were injured. Private respondent Amyline Antonio was thrown on
the floor of the bus and pinned down by a wooden seat which came down by a wooden
seat which came off after being unscrewed. It took three persons to safely remove her
from this portion. She was in great pain and could not move.
The driver, petitioner Cabil, claimed he did not see the curve until it was too late. He said
he was not familiar with the area and he could not have seen the curve despite the care
he took in driving the bus, because it was dark and there was no sign on the road. He
said that he saw the curve when he was already within 15 to 30 meters of it. He
allegedly slowed down to 30 kilometers per hour, but it was too late.
The Lingayen police investigated the incident the next day, November 3, 1984. On the
basis of their finding they filed a criminal complaint against the driver, Porfirio Cabil. The
case was later filed with the Lingayen Regional Trial Court. Petitioners Fabre paid Jesus
Escano P1,500.00 for the damage to the latter's fence. On the basis of Escano's affidavit
of desistance the case against petitioners Fabre was dismissed.
Amyline Antonio, who was seriously injured, brought this case in the RTC of Makati,
Metro Manila. As a result of the accident, she is now suffering from paraplegia and is
permanently paralyzed from the waist down. During the trial she described the
operations she underwent and adduced evidence regarding the cost of her treatment
and therapy. Immediately after the accident, she was taken to the Nazareth Hospital in
Baay, Lingayen. As this hospital was not adequately equipped, she was transferred to
the Sto. Niño Hospital, also in the town of Ba-ay, where she was given sedatives. An x-
ray was taken and the damage to her spine was determined to be too severe to be
treated there. She was therefore brought to Manila, first to the Philippine General
Hospital and later to the Makati Medical Center where she underwent an operation to
correct the dislocation of her spine.
In its decision dated April 17, 1989, the trial court found that:
No convincing evidence was shown that the minibus was properly checked for travel to a
long distance trip and that the driver was properly screened and tested before being
admitted for employment. Indeed, all the evidence presented have shown the negligent
act of the defendants which ultimately resulted to the accident subject of this case.
Accordingly, it gave judgment for private respondents holding:
Considering that plaintiffs Word for the World Christian Fellowship, Inc. and Ms. Amyline
Antonio were the only ones who adduced evidence in support of their claim for
damages, the Court is therefore not in a position to award damages to the other
plaintiffs.
WHEREFORE, premises considered, the Court hereby renders judgment against
defendants Mr. & Mrs. Engracio Fabre, Jr. and Porfirio Cabil y Jamil pursuant to articles
2176 and 2180 of the Civil Code of the Philippines and said defendants are ordered to
pay jointly and severally to the plaintiffs the following amount:
1) P93,657.11 as compensatory and actual damages;
2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff
Amyline Antonio;
3) P20,000.00 as moral damages;
4) P20,000.00 as exemplary damages; and
5) 25% of the recoverable amount as attorney's fees;
6) Costs of suit.
SO ORDERED.
The Court of Appeals affirmed the decision of the trial court with respect to Amyline
Antonio but dismissed it with respect to the other plaintiffs on the ground that they failed
to prove their respective claims. The Court of Appeals modified the award of damages
as follows:
1) P93,657.11 as actual damages;
2) P600,000.00 as compensatory damages;
3) P50,000.00 as moral damages;
4) P20,000.00 as exemplary damages;
5) P10,000.00 as attorney's fees; and
6) Costs of suit.
The Court of Appeals sustained the trial court's finding that petitioner Cabil failed to
exercise due care and precaution in the operation of his vehicle considering the time and
the place of the accident. The Court of Appeals held that the Fabres were themselves
presumptively negligent. Hence, this petition. Petitioners raise the following issues:
I. WHETHER OR NOT PETITIONERS WERE NEGLIGENT.
II. WHETHER OF NOT PETITIONERS WERE LIABLE FOR THE INJURIES
SUFFERED BY PRIVATE RESPONDENTS.
III WHETHER OR NOT DAMAGES CAN BE AWARDED AND IN THE POSITIVE, UP
TO WHAT EXTENT.
Petitioners challenge the propriety of the award of compensatory damages in the
amount of P600,000.00. It is insisted that, on the assumption that petitioners are liable
an award of P600,000.00 is unconscionable and highly speculative. Amyline Antonio
testified that she was a casual employee of a company called "Suaco," earning
P1,650.00 a month, and a dealer of Avon products, earning an average of P1,000.00
monthly. Petitioners contend that as casual employees do not have security of tenure,
the award of P600,000.00, considering Amyline Antonio's earnings, is without factual
basis as there is no assurance that she would be regularly earning these amounts.
With the exception of the award of damages, the petition is devoid of merit.
First, it is unnecessary for our purpose to determine whether to decide this case on the
theory that petitioners are liable for breach of contract of carriage or culpa contractual or
on the theory of quasi delict or culpa aquiliana as both the Regional Trial Court and the
Court of Appeals held, for although the relation of passenger and carrier is "contractual
both in origin and nature," nevertheless "the act that breaks the contract may be also a
tort." 2 In either case, the question is whether the bus driver, petitioner Porfirio Cabil, was
negligent.
The finding that Cabil drove his bus negligently, while his employer, the Fabres, who
owned the bus, failed to exercise the diligence of a good father of the family in the
selection and supervision of their employee is fully supported by the evidence on record.
These factual findings of the two courts we regard as final and conclusive, supported as
they are by the evidence. Indeed, it was admitted by Cabil that on the night in question,
it was raining, and as a consequence, the road was slippery, and it was dark. He
averred these facts to justify his failure to see that there lay a sharp curve ahead.
However, it is undisputed that Cabil drove his bus at the speed of 50 kilometers per hour
and only slowed down when he noticed the curve some 15 to 30 meters ahead. 3 By
then it was too late for him to avoid falling off the road. Given the conditions of the road
and considering that the trip was Cabil's first one outside of Manila, Cabil should have
driven his vehicle at a moderate speed. There is testimony 4 that the vehicles passing on
that portion of the road should only be running 20 kilometers per hour, so that at 50
kilometers per hour, Cabil was running at a very high speed.
Considering the foregoing — the fact that it was raining and the road was slippery, that it
was dark, that he drove his bus at 50 kilometers an hour when even on a good day the
normal speed was only 20 kilometers an hour, and that he was unfamiliar with the
terrain, Cabil was grossly negligent and should be held liable for the injuries suffered by
private respondent Amyline Antonio.
Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to the
presumption that his employers, the Fabres, were themselves negligent in the selection
and supervisions of their employee.
Due diligence in selection of employees is not satisfied by finding that the applicant
possessed a professional driver's license. The employer should also examine the
applicant for his qualifications, experience and record of service. 5 Due diligence in
supervision, on the other hand, requires the formulation of rules and regulations for the
guidance of employees and issuance of proper instructions as well as actual
implementation and monitoring of consistent compliance with the rules.6
In the case at bar, the Fabres, in allowing Cabil to drive the bus to La Union, apparently
did not consider the fact that Cabil had been driving for school children only, from their
homes to the St. Scholastica's College in Metro Manila. 7They had hired him only after a
two-week apprenticeship. They had hired him only after a two-week apprenticeship.
They had tested him for certain matters, such as whether he could remember the names
of the children he would be taking to school, which were irrelevant to his qualification to
drive on a long distance travel, especially considering that the trip to La Union was his
first. The existence of hiring procedures and supervisory policies cannot be casually
invoked to overturn the presumption of negligence on the part of an employer. 8
Petitioners argue that they are not liable because (1) an earlier departure (made
impossible by the congregation's delayed meeting) could have a averted the mishap and
(2) under the contract, the WWCF was directly responsible for the conduct of the trip.
Neither of these contentions hold water. The hour of departure had not been fixed. Even
if it had been, the delay did not bear directly on the cause of the accident. With respect
to the second contention, it was held in an early case that:
[A] person who hires a public automobile and gives the driver directions as to the place
to which he wishes to be conveyed, but exercises no other control over the conduct of
the driver, is not responsible for acts of negligence of the latter or prevented from
recovering for injuries suffered from a collision between the automobile and a train,
caused by the negligence or the automobile driver. 9
As already stated, this case actually involves a contract of carriage. Petitioners, the
Fabres, did not have to be engaged in the business of public transportation for the
provisions of the Civil Code on common carriers to apply to them. As this Court has
held: 10
Art. 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air for compensation,
offering their services to the public.
The above article makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one
who does such carrying only as an ancillary activity (in local idiom, as "a
sideline"). Article 1732 also carefully avoids making any distinction
between a person or enterprise offering transportation service on a
regular or scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the "general public,"
i.e., the general community or population, and one who offers services or
solicits business only from a narrow segment of the general population.
We think that Article 1732 deliberately refrained from making such
distinctions.
As common carriers, the Fabres were found to exercise "extraordinary
diligence" for the safe transportation of the passengers to their
destination. This duty of care is not excused by proof that they exercise
the diligence of a good father of the family in the selection and
supervision of their employee. As Art. 1759 of the Code provides:
Common carriers are liable for the death of or injuries to passengers
through the negligence or willful acts of the former's employees although
such employees may have acted beyond the scope of their authority or
in violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they
exercised all the diligence of a good father of a family in the selection
and supervision of their employees.
The same circumstances detailed above, supporting the finding of the trial court and of
the appellate court that petitioners are liable under Arts. 2176 and 2180 for quasi delict,
fully justify findings them guilty of breach of contract of carriage under Arts. 1733, 1755
and 1759 of the Civil Code.
Secondly, we sustain the award of damages in favor of Amyline Antonio. However, we
think the Court of Appeals erred in increasing the amount of compensatory damages
because private respondents did not question this award as inadequate. 11 To the
contrary, the award of P500,000.00 for compensatory damages which the Regional Trial
Court made is reasonable considering the contingent nature of her income as a casual
employee of a company and as distributor of beauty products and the fact that the
possibility that she might be able to work again has not been foreclosed. In fact she
testified that one of her previous employers had expressed willingness to employ her
again.
With respect to the other awards, while the decisions of the trial court and the Court of
Appeals do not sufficiently indicate the factual and legal basis for them, we find that they
are nevertheless supported by evidence in the records of this case. Viewed as an action
for quasi delict, this case falls squarely within the purview of Art. 2219(2) providing for
the payment of moral damages in cases of quasi delict. On the theory that petitioners
are liable for breach of contract of carriage, the award of moral damages is authorized
by Art. 1764, in relation to Art. 2220, since Cabil's gross negligence amounted to bad
faith.12 Amyline Antonio's testimony, as well as the testimonies of her father and
copassengers, fully establish the physical suffering and mental anguish she endured as
a result of the injuries caused by petitioners' negligence.
The award of exemplary damages and attorney's fees was also properly made.
However, for the same reason that it was error for the appellate court to increase the
award of compensatory damages, we hold that it was also error for it to increase the
award of moral damages and reduce the award of attorney's fees, inasmuch as private
respondents, in whose favor the awards were made, have not appealed. 13
As above stated, the decision of the Court of Appeals can be sustained either on the
theory of quasi delict or on that of breach of contract. The question is whether, as the
two courts below held, petitioners, who are the owners and driver of the bus, may be
made to respond jointly and severally to private respondent. We hold that they may be.
In Dangwa Trans. Co. Inc. v. Court of Appeals, 14 on facts similar to those in this case,
this Court held the bus company and the driver jointly and severally liable for damages
for injuries suffered by a passenger. Again, in Bachelor Express, Inc. v. Court of
Appeals 15 a driver found negligent in failing to stop the bus in order to let off passengers
when a fellow passenger ran amuck, as a result of which the passengers jumped out of
the speeding bus and suffered injuries, was held also jointly and severally liable with the
bus company to the injured passengers.
The same rule of liability was applied in situations where the negligence of the driver of
the bus on which plaintiff was riding concurred with the negligence of a third party who
was the driver of another vehicle, thus causing an accident. In Anuran
v. Buño, 16 Batangas Laguna Tayabas Bus Co. v. Intermediate Appellate
Court, 17 and Metro Manila Transit Corporation v. Court of Appeals, 18 the bus company,
its driver, the operator of the other vehicle and the driver of the vehicle were jointly and
severally held liable to the injured passenger or the latters' heirs. The basis of this
allocation of liability was explained in Viluan v. Court of Appeals, 19 thus:
Nor should it make any difference that the liability of petitioner [bus
owner] springs from contract while that of respondents [owner and driver
of other vehicle] arises from quasi-delict. As early as 1913, we already
ruled in Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of injury to a
passenger due to the negligence of the driver of the bus on which he
was riding and of the driver of another vehicle, the drivers as well as the
owners of the two vehicles are jointly and severally liable for damages.
Some members of the Court, though, are of the view that under the
circumstances they are liable on quasi-delict. 20
It is true that in Philippine Rabbit Bus Lines, Inc. v. Court of Appeals 21 this Court
exonerated the jeepney driver from liability to the injured passengers and their families
while holding the owners of the jeepney jointly and severally liable, but that is because
that case was expressly tried and decided exclusively on the theory of culpa contractual.
As this Court there explained:
The trial court was therefore right in finding that Manalo (the driver) and spouses
Mangune and Carreon (the jeepney owners) were negligent. However, its ruling that
spouses Mangune and Carreon are jointly and severally liable with Manalo is erroneous.
The driver cannot be held jointly and severally liable with carrier in case of breach of the
contract of carriage. The rationale behind this is readily discernible. Firstly, the contract
of carriage is between the carrier is exclusively responsible therefore to the passenger,
even if such breach be due to the negligence of his driver (see Viluan v. The Court of
Appeals, et al., G.R. Nos. L-21477-81, April 29, 1966, 16 SCRA 742). 22
As in the case of BLTB, private respondents in this case and her coplaintiffs did not
stake out their claim against the carrier and the driver exclusively on one theory, much
less on that of breach of contract alone. After all, it was permitted for them to allege
alternative causes of action and join as many parties as may be liable on such causes of
action 23 so long as private respondent and her coplaintiffs do not recover twice for the
same injury. What is clear from the cases is the intent of the plaintiff there to recover
from both the carrier and the driver, thus, justifying the holding that the carrier and the
driver were jointly and severally liable because their separate and distinct acts concurred
to produce the same injury.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with MODIFICATION
as to award of damages. Petitioners are ORDERED to PAY jointly and severally the
private respondent Amyline Antonio the following amounts:
1) P93,657.11 as actual damages;
2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff Amyline
Antonio;
3) P20,000.00 as moral damages;
4) P20,000.00 as exemplary damages;
5) 25% of the recoverable amount as attorney's fees; and
6) costs of suit.
SO ORDERED.
G.R. No. 92288 February 9, 1993
BRITISH AIRWAYS, INC., petitioner,
vs. THE HON. COURT OF APPEALS, Twelfth Division, and FIRST INTERNATIONAL
TRADING AND GENERAL SERVICES, respondents.
This is a petition for review on certiorari to annul and set aside the decision dated November
15, 1989 of the Court of Appeals1 affirming the decision of the trial court2 in ordering
petitioner British Airways, Inc. to pay private respondent First International Trading and
General Services actual damages, moral damages, corrective or exemplary damages,
attorney's fees and the costs as well as the Resolution dated February 15, 1990 3 denying
petitioner's Motion for Reconsideration in the appealed decision.
It appears on record that on February 15, 1981, private respondent First International
Trading and General Services Co., a duly licensed domestic recruitment and placement
agency, received a telex message from its principal ROLACO Engineering and Contracting
Services in Jeddah, Saudi Arabia to recruit Filipino contract workers in behalf of said
principal.4
During the early part of March 1981, said principal paid to the Jeddah branch of petitioner
British Airways, Inc. airfare tickets for 93 contract workers with specific instruction to
transport said workers to Jeddah on or before March 30, 1981.
As soon as petitioner received a prepaid ticket advice from its Jeddah branch to transport the
93 workers, private respondent was immediately informed by petitioner that its principal had
forwarded 93 prepaid tickets. Thereafter, private respondent instructed its travel agent, ADB
Travel and Tours. Inc., to book the 93 workers with petitioner but the latter failed to fly said
workers, thereby compelling private respondent to borrow money in the amount of
P304,416.00 in order to purchase airline tickets from the other airlines as evidenced by the
cash vouchers (Exhibits "B", "C" and "C-1 to C-7") for the 93 workers it had recruited who
must leave immediately since the visas of said workers are valid only for 45 days and the
Bureau of Employment Services mandates that contract workers must be sent to the job site
within a period of 30 days.
Sometime in the first week of June, 1981, private respondent was again informed by the
petitioner that it had received a prepaid ticket advice from its Jeddah branch for the
transportation of 27 contract workers. Immediatety, private respondent instructed its travel
agent to book the 27 contract workers with the petitioner but the latter was only able to book
and confirm 16 seats on its June 9, 1981 flight. However, on the date of the scheduled flight
only 9 workers were able to board said flight while the remaining 7 workers were rebooked to
June 30, 1981 which bookings were again cancelled by the petitioner without any prior notice
to either private respondent or the workers. Thereafter, the 7 workers were rebooked to the
July 4,1981 flight of petitioner with 6 more workers booked for said flight. Unfortunately, the
confirmed bookings of the 13 workers were again cancelled and rebooked to July 7, 1981.
On July 6, 1981, private respondent paid the travel tax of the said workers as required by the
petitioner but when the receipt of the tax payments was submitted, the latter informed private
respondent that it can only confirm the seats of the 12 workers on its July 7, 1981 flight.
However, the confirmed seats of said workers were again cancelled without any prior notice
either to the private respondent or said workers. The 12 workers were finally able to leave for
Jeddah after private respondent had bought tickets from the other airlines.
As a result of these incidents, private respondent sent a letter to petitioner demanding
compensation for the damages it had incurred by the latter's repeated failure to transport its
contract workers despite confirmed bookings and payment of the corresponding travel taxes.
On July 23, 1981, the counsel of private respondent sent another letter to the petitioner
demanding the latter to pay the amount of P350,000.00 representing damages and
unrealized profit or income which was denied by the petitioner.
On August 8, 1981, private respondent received a telex message from its principal cancelling
the hiring of the remaining recruited workers due to the delay in transporting the workers to
Jeddah.5
On January 27, 1982, private respondent filed a complaint for damages against petitioner
with the Regional Trial Court of Manila, Branch 1 in Civil Case No. 82-4653.
On the other hand, petitioner, alleged in its Answer with counterclaims that it received a telex
message from Jeddah on March 20, 1981 advising that the principal of private respondent
had prepaid the airfares of 100 persons to transport private respondent's contract workers
from Manila to Jeddah on or before March 30, 1981. However, due to the unavailability of
space and limited time, petitioner had to return to its sponsor in Jeddah the prepaid ticket
advice consequently not even one of the alleged 93 contract workers were booked in any of
its flights.
On June 5, 1981, petitioner received another prepaid ticket advice to transport 16 contract
workers of private respondent to Jeddah but the travel agent of the private respondent
booked only 10 contract workers for petitioner's June 9, 1981 flight. However, only 9 contract
workers boarded the scheduled flight with 1 passenger not showing up as evidenced by the
Philippine Airlines' passenger manifest for Flight BA-020 (Exhibit "7", "7-A", "7-B" and "7-C").6
Thereafter, private respondent's travel agent booked seats for 5 contract workers on
petitioner's July 4, 1981 flight but said travel agent cancelled the booking of 2 passengers
while the other 3 passengers did not show up on said flight.
Sometime in July 1981, the travel agent of the private respondent booked 7 more contract
workers in addition to the previous 5 contract workers who were not able to board the July 4,
1981 flight with the petitioner's July 7, 1981 flight which was accepted by petitioner subject to
reconfirmation.
However on July 6, 1981, petitioner's computer system broke down which resulted to
petitioner's failure to get a reconfirmation from Saudi Arabia Airlines causing the automatic
cancellation of the bookings of private respondent's 12 contract workers. In the morning of
July 7, 1981, the computer system of the petitioner was reinstalled and immediately
petitioner tried to reinstate the bookings of the 12 workers with either Gulf Air or Saudi Arabia
Airlines but both airlines replied that no seat was available on that date and had to place the
12 workers on the wait list. Said information was duly relayed to the private respondent and
the 12 workers before the scheduled flight.
After due trial on or on August 27, 1985, the trial court rendered its decision, the dispositive
portion of which reads as follows:
WHEREFORE, in view of all the foregoing, this Court renders judgment:
1. Ordering the defendant to pay the plaintiff actual damages in the sum of P308,016.00;
2. Ordering defendant to pay moral damages to the plaintiff in the amount of P20,000.00;
3. Ordering the defendant to pay the plaintiff P10,000.00 by way of corrective or
exemplary damages;
4. Ordering the defendant to pay the plaintiff 30% of its total claim for and as attorney's
fees; and
5. To pay the costs.7
On March 13, 1986, petitioner appealed said decision to respondent appellate court after the
trial court denied its Motion for Reconsideration on February 28, 1986.
On November 15, 1989, respondent appellate court affirmed the decision of the trial court,
the dispositive portion of which reads:
WHEREFORE, the decision appealed from is hereby AFFIRMED with costs against the
appellant.8
On December 9, 1989, petitioner filed a Motion for Reconsideration which was also denied.
Hence, this petition.
It is the contention of petitioner that private respondent has no cause of action against it
there being no perfected contract of carriage existing between them as no ticket was ever
issued to private respondent's contract workers and, therefore, the obligation of the petitioner
to transport said contract workers did not arise. Furthermore, private respondent's failure to
attach any ticket in the complaint further proved that it was never a party to the alleged
transaction.
Petitioner's contention is untenable.
Private respondent had a valid cause of action for damages against petitioner. A cause of
action is an act or omission of one party in violation of the legal right or rights of the
other.9 Petitioner's repeated failures to transport private respondent's workers in its flight
despite confirmed booking of said workers clearly constitutes breach of contract and bad
faith on its part. In resolving petitioner's theory that private respondent has no cause of action
in the instant case, the appellate court correctly held that:
In dealing with the contract of common carriage of passengers for purpose of accuracy,
there are two (2) aspects of the same, namely: (a) the contract "to carry (at some future
time)," which contract is consensual and is necessarily perfected by mere consent (See
Article 1356, Civil Code of the Philippines), and (b) the contract "of carriage" or "of
common carriage" itself which should be considered as a real contract for not until the
carrier is actually used can the carrier be said to have already assumed the obligation of
a carrier. (Paras, Civil Code Annotated, Vol. V, p. 429, Eleventh Ed.)
In the instant case, the contract "to carry" is the one involved which is consensual and is
perfected by the mere consent of the parties.
There is no dispute as to the appellee's consent to the said contract "to carry" its
contract workers from Manila to Jeddah. The appellant's consent thereto, on the other
hand, was manifested by its acceptance of the PTA or prepaid ticket advice that
ROLACO Engineering has prepaid the airfares of the appellee's contract workers
advising the appellant that it must transport the contract workers on or before the end of
March, 1981 and the other batch in June, 1981.
Even if a PTA is merely an advice from the sponsors that an airline is authorized to
issue a ticket and thus no ticket was yet issued, the fact remains that the passage had
already been paid for by the principal of the appellee, and the appellant had accepted
such payment. The existence of this payment was never objected to nor questioned by
the appellant in the lower court. Thus, the cause or consideration which is the fare paid
for the passengers exists in this case.
The third essential requisite of a contract is an object certain. In this contract "to carry",
such an object is the transport of the passengers from the place of departure to the
place of destination as stated in the telex.
Accordingly, there could be no more pretensions as to the existence of an oral contract
of carriage imposing reciprocal obligations on both parties.
In the case of appellee, it has fully complied with the obligation, namely, the payment of
the fare and its willingness for its contract workers to leave for their place of destination.
On the other hand, the facts clearly show that appellant was remiss in its obligation to
transport the contract workers on their flight despite confirmation and bookings made by
appellee's travelling agent.
 xxx xxx xxx
Besides, appellant knew very well that time was of the essence as the prepaid ticket
advice had specified the period of compliance therewith, and with emphasis that it could
only be used if the passengers fly on BA. Under the circumstances, the appellant
should have refused acceptance of the PTA from appellee's principal or to at least
inform appellee that it could not accommodate the contract workers.
xxx xxx xxx
While there is no dispute that ROLACO Engineering advanced the payment for the
airfares of the appellee's contract workers who were recruited for ROLACO Engineering
and the said contract workers were the intended passengers in the aircraft of the
appellant, the said contract "to carry" also involved the appellee for as recruiter he had
to see to it that the contract workers should be transported to ROLACO Engineering in
Jeddah thru the appellant's transportation. For that matter, the involvement of the
appellee in the said contract "to carry" was well demonstrated when
the appellant upon receiving the PTA immediately advised the appellee thereof. 10
Petitioner also contends that the appellate court erred in awarding actual damages in the
amount of P308,016.00 to private respondent since all expenses had already been
subsequently reimbursed by the latter's principal.
In awarding actual damages to private respondent, the appellate court held that the amount
of P308,016.00 representing actual damages refers to private respondent's second cause of
action involving the expenses incurred by the latter which were not reimbursed by ROLACO
Engineering. However, in the Complaint 11 filed by private respondent, it was alleged that
private respondent suffered actual damages in the amount of P308,016.00 representing the
money it borrowed from friends and financiers which is P304,416.00 for the 93 airline tickets
and P3,600.00 for the travel tax of the 12 workers. It is clear therefore that the actual
damages private respondent seeks to recover are the airline tickets and travel taxes it spent
for its workers which were already reimbursed by its principal and not for any other expenses
it had incurred in the process of recruiting said contract workers. Inasmuch as all expenses
including the processing fees incurred by private respondent had already been paid for by
the latter's principal on a staggered basis as admitted in open court by its managing director,
Mrs. Bienvenida Brusellas. 12 We do not find anymore justification in the appellate court's
decision in granting actual damages to private respondent.
Thus, while it may be true that private respondent was compelled to borrow money for the
airfare tickets of its contract workers when petitioner failed to transport said workers, the
reimbursements made by its principal to private respondent failed to support the latter's claim
that it suffered actual damages as a result of petitioner's failure to transport said workers. It is
undisputed that private respondent had consistently admitted that its principal had
reimbursed all its expenses.
Article 2199 of the Civil Code provides that:
Except as provided by law or by stipulations, one is entitled to an adequate
compensation only for such pecuniary loss suffered by him as he has duly proved. Such
compensation is referred to as actual or compensatory damages.
Furthermore, actual or compensatory damages cannot be presumed, but must be duly
proved, and proved with reasonable degree of certainty. A court cannot rely on speculation,
conjecture or guesswork as to the fact and amount of damages, but must depend upon
competent proof that they have suffered and on evidence of the actual amount thereof. 13
However, private respondent is entitled to an award of moral and exemplary damages for the
injury suffered as a result of petitioner's failure to transport the former's workers because of
the latter's patent bad faith in the performance of its obligation. As correctly pointed out by
the appellate court:
As evidence had proved, there was complete failure on the part of the appellant to
transport the 93 contract workers of the appellee on or before March 30, 1981 despite
receipt of the payment for their airfares, and acceptance of the same by the appellant,
with specific instructions from the appellee's principal to transport the contract workers on
or before March 30, 1981. No previous notice was ever registered by the appellant that it
could not comply with the same. And then followed the detestable act of appellant in
unilaterally cancelling, booking and rebooking unreasonably the flight of appellee's
contract workers in June to July, 1981 without prior notice. And all of these actuations of
the appellant indeed constitute malice and evident bad faith which had caused damage
and besmirched the reputation and business image of the appellee. 14
As to the alleged damages suffered by the petitioner as stated in its counterclaims, the
record shows that no claim for said damages was ever made by the petitioner immediately
after their alleged occurrence therefore said counterclaims were mere afterthoughts when
private respondent filed the present case.
WHEREFORE, the assailed decision is hereby AFFIRMED with the MODIFICATION that the
award of actual damages be deleted from said decision.
SO ORDERED.
G.R. No. L-18965 October 30, 1964
COMPAÑIA MARITIMA, petitioner,
vs. INSURANCE COMPANY OF NORTH AMERICA, respondent.
Sometime in October, 1952, Macleod and Company of the Philippines contracted by
telephone the services of the Compañia Maritima, a shipping corporation, for the
shipment of 2,645 bales of hemp from the former's Sasa private pier at Davao City to
Manila and for their subsequent transhipment to Boston, Massachusetts, U.S.A. on
board the S.S. Steel Navigator. This oral contract was later on confirmed by a formal and
written booking issued by Macleod's branch office in Sasa and handcarried to Compañia
Maritima's branch office in Davao in compliance with which the latter sent to Macleod's
private wharf LCT Nos. 1023 and 1025 on which the loading of the hemp was completed
on October 29, 1952. These two lighters were manned each by a patron and an
assistant patron. The patrons of both barges issued the corresponding carrier's receipts
and that issued by the patron of Barge No. 1025 reads in part:
Received in behalf of S.S. Bowline Knot in good order and condition from
MACLEOD AND COMPANY OF PHILIPPINES, Sasa Davao, for transhipment at
Manila onto S.S. Steel Navigator.
FINAL DESTINATION: Boston.
Thereafter, the two loaded barges left Macleod's wharf and proceeded to and moored at
the government's marginal wharf in the same place to await the arrival of the S.S.
Bowline Knot belonging to Compañia Maritima on which the hemp was to be loaded.
During the night of October 29, 1952, or at the early hours of October 30, LCT No. 1025
sank, resulting in the damage or loss of 1,162 bales of hemp loaded therein. On October
30, 1952, Macleod promptly notified the carrier's main office in Manila and its branch in
Davao advising it of its liability. The damaged hemp was brought to Odell Plantation in
Madaum, Davao, for cleaning, washing, reconditioning, and redrying. During the period
from November 1-15, 1952, the carrier's trucks and lighters hauled from Odell to
Macleod at Sasa a total of 2,197.75 piculs of the reconditioned hemp out of the original
cargo of 1,162 bales weighing 2,324 piculs which had a total value of 116,835.00. After
reclassification, the value of the reconditioned hemp was reduced to P84,887.28, or a
loss in value of P31,947.72. Adding to this last amount the sum of P8,863.30
representing Macleod's expenses in checking, grading, rebating, and other fees for
washing, cleaning and redrying in the amount of P19.610.00, the total loss adds up to
P60,421.02.
All abaca shipments of Macleod, including the 1,162 bales loaded on the carrier's LCT
No. 1025, were insured with the Insurance Company of North America against all losses
and damages. In due time, Macleod filed a claim for the loss it suffered as above stated
with said insurance company, and after the same had been processed, the sum of
P64,018.55 was paid, which was noted down in a document which aside from being a
receipt of the amount paid, was a subrogation agreement between Macleod and the
insurance company wherein the former assigned to the latter its rights over the insured
and damaged cargo. Having failed to recover from the carrier the sum of P60,421.02,
which is the only amount supported by receipts, the insurance company instituted the
present action on October 28, 1953. After trial, the court a quo rendered judgment
ordering the carrier to pay the insurance company the sum of P60,421.02, with legal
interest thereon from the date of the filing of the complaint until fully paid, and the costs.
This judgment was affirmed by the Court of Appeals on December 14, 1960. Hence, this
petition for review.
The issues posed before us are: (1) Was there a contract of carriage between the carrier
and the shipper even if the loss occurred when the hemp was loaded on a barge owned
by the carrier which was loaded free of charge and was not actually loaded on the S.S.
Bowline Knot which would carry the hemp to Manila and no bill of lading was issued
therefore?; (2) Was the damage caused to the cargo or the sinking of the barge where it
was loaded due to a fortuitous event, storm or natural disaster that would exempt the
carrier from liability?; (3) Can respondent insurance company sue the carrier under its
insurance contract as assignee of Macleod in spite of the fact that the liability of the
carrier as insurer is not recognized in this jurisdiction?; (4) Has the Court of Appeals
erred in regarding Exhibit NNN-1 as an implied admission by the carrier of the
correctness and sufficiency of the shipper's statement of accounts contrary to the burden
of proof rule?; and (5) Can the insurance company maintain this suit without proof of its
personality to do so?
1. This issue should be answered in the affirmative. As found by the Court of Appeals,
Macleod and Company contracted by telephone the services of petitioner to ship the
hemp in question from the former's private pier at Sasa, Davao City, to Manila, to be
subsequently transhipped to Boston, Massachusetts, U.S.A., which oral contract was
later confirmed by a formal and written booking issued by the shipper's branch office,
Davao City, in virtue of which the carrier sent two of its lighters to undertake the service.
It also appears that the patrons of said lighters were employees of the carrier with due
authority to undertake the transportation and to sign the documents that may be
necessary therefor so much so that the patron of LCT No. 1025 signed the receipt
covering the cargo of hemp loaded therein as follows: .
Received in behalf of S.S. Bowline Knot in good order and condition from
MACLEOD AND COMPANY OF PHILIPPINES, Sasa Davao, for transhipment at
Manila onto S.S. Steel Navigator.
FINAL DESTINATION: Boston.
The fact that the carrier sent its lighters free of charge to take the hemp from Macleod's
wharf at Sasa preparatory to its loading onto the ship Bowline Knot does not in any way
impair the contract of carriage already entered into between the carrier and the shipper,
for that preparatory step is but part and parcel of said contract of carriage. The lighters
were merely employed as the first step of the voyage, but once that step was taken and
the hemp delivered to the carrier's employees, the rights and obligations of the parties
attached thereby subjecting them to the principles and usages of the maritime law. In
other words, here we have a complete contract of carriage the consummation of which
has already begun: the shipper delivering the cargo to the carrier, and the latter taking
possession thereof by placing it on a lighter manned by its authorized employees, under
which Macleod became entitled to the privilege secured to him by law for its safe
transportation and delivery, and the carrier to the full payment of its freight upon
completion of the voyage.
The receipt of goods by the carrier has been said to lie at the foundation of the
contract to carry and deliver, and if actually no goods are received there can be
no such contract. The liability and responsibility of the carrier under a contract for
the carriage of goods commence on their actual delivery to, or receipt by, the
carrier or an authorized agent. ... and delivery to a lighter in charge of a vessel
for shipment on the vessel, where it is the custom to deliver in that way, is a
good delivery and binds the vessel receiving the freight, the liability commencing
at the time of delivery to the lighter. ... and, similarly, where there is a contract to
carry goods from one port to another, and they cannot be loaded directly on the
vessel and lighters are sent by the vessel to bring the goods to it, the lighters are
for the time its substitutes, so that the bill of landing is applicable to the goods as
soon as they are placed on the lighters. (80 C.J.S., p. 901, emphasis supplied)
... The test as to whether the relation of shipper and carrier had been established
is, Had the control and possession of the cotton been completely surrendered by
the shipper to the railroad company? Whenever the control and possession of
goods passes to the carrier and nothing remains to be done by the shipper, then
it can be said with certainty that the relation of shipper and carrier has been
established. Railroad Co. v. Murphy, 60 Ark. 333, 30 S.W. 419, 46 A. St. Rep.
202; Pine Bluff & Arkansas River Ry. v. MaKenzie, 74 Ark. 100, 86 S.W. 834;
Matthews & Hood v. St. L., I.M. & S.R. Co., 123 Ark. 365, 185 S.W. 461, L.R.A.
1916E, 1194. (W.F. Bogart & Co., et al. v. Wade, et al., 200 S.W. 148).
The claim that there can be no contract of affreightment because the hemp was not
actually loaded on the ship that was to take it from Davao City to Manila is of no
moment, for, as already stated, the delivery of the hemp to the carrier's lighter is in line
with the contract. In fact, the receipt signed by the patron of the lighter that carried the
hemp stated that he was receiving the cargo "in behalf of S.S. Bowline Knot in good
order and condition." On the other hand, the authorities are to the effect that a bill of
lading is not indispensable for the creation of a contract of carriage.
Bill of lading not indispensable to contract of carriage. — As to the issuance of a
bill of lading, although article 350 of the Code of Commerce provides that "the
shipper as well as the carrier of merchandise or goods may mutua-lly demand
that a bill of lading is not indispensable. As regards the form of the contract of
carriage it can be said that provided that there is a meeting of the minds and
from such meeting arise rights and obligations, there should be no limitations as
to form." The bill of lading is not essential to the contract, although it may
become obligatory by reason of the regulations of railroad companies, or as a
condition imposed in the contract by the agreement of the parties themselves.
The bill of lading is juridically a documentary proof of the stipulations and
conditions agreed upon by both parties. (Del Viso, pp. 314-315; Robles vs.
Santos, 44 O.G. 2268). In other words, the Code does not demand, as
necessary requisite in the contract of transportation, the delivery of the bill of
lading to the shipper, but gives right to both the carrier and the shipper to
mutually demand of each other the delivery of said bill. (Sp. Sup. Ct. Decision,
May 6, 1895). (Martin, Philippine Commercial Laws, Vol. II, Revised Edition, pp.
12-13)
The liability of the carrier as common carrier begins with the actual delivery of
the goods for transportation, and not merely with the formal execution of a
receipt or bill of lading; the issuance of a bill of lading is not necessary to
complete delivery and acceptance. Even where it is provided by statute that
liability commences with the issuance of the bill of lading, actual delivery and
acceptance are sufficient to bind the carrier. (13 C.J.S., p. 288)
2. Petitioner disclaims responsibility for the damage of the cargo in question shielding
itself behind the claim of force majeure or storm which occurred on the night of October
29, 1952. But the evidence fails to bear this out.
Rather, it shows that the mishap that caused the damage or loss was due, not to force
majeure, but to lack of adequate precautions or measures taken by the carrier to prevent
the loss as may be inferred from the following findings of the Court of Appeals:
Aside from the fact that, as admitted by appellant's own witness, the ill-fated
barge had cracks on its bottom (pp. 18-19, t.s.n., Sept. 13, 1959) which admitted
sea water in the same manner as rain entered "thru tank man-holes", according
to the patron of LCT No. 1023 (exh. JJJ-4) — conclusively showing that the
barge was not seaworthy — it should be noted that on the night of the nautical
accident there was no storm, flood, or other natural disaster or calamity.
Certainly, winds of 11 miles per hour, although stronger than the average 4.6
miles per hour then prevailing in Davao on October 29, 1952 (exh. 5), cannot be
classified as storm. For according to Beaufort's wind scale, a storm has wind
velocities of from 64 to 75 miles per hour; and by Philippine Weather Bureau
standards winds should have a velocity of from 55 to 74 miles per hour in order
 to be classified as storm (Northern Assurance Co., Ltd. vs. Visayan Stevedore
Transportation Co., CA-G.R. No. 23167-R, March 12, 1959).
The Court of Appeals further added: "the report of R. J. del Pan & Co., Inc., marine
surveyors, attributes the sinking of LCT No. 1025 to the 'non-water-tight conditions of
various buoyancy compartments' (exh. JJJ); and this report finds confirmation on the
above-mentioned admission of two witnesses for appellant concerning the cracks of the
lighter's bottom and the entrance of the rain water 'thru manholes'." We are not prepared
to dispute this finding of the Court of Appeals.
3. There can also be no doubt that the insurance company can recover from the carrier
as assignee of the owner of the cargo for the insurance amount it paid to the latter under
the insurance contract. And this is so because since the cargo that was damaged was
insured with respondent company and the latter paid the amount represented by the
loss, it is but fair that it be given the right to recover from the party responsible for the
loss. The instant case, therefore, is not one between the insured and the insurer, but
one between the shipper and the carrier, because the insurance company merely
stepped into the shoes of the shipper. And since the shipper has a direct cause of action
against the carrier on account of the damage of the cargo, no valid reason is seen why
such action cannot be asserted or availed of by the insurance company as a subrogee
of the shipper. Nor can the carrier set up as a defense any defect in the insurance policy
not only because it is not a privy to it but also because it cannot avoid its liability to the
shipper under the contract of carriage which binds it to pay any loss that may be caused
to the cargo involved therein. Thus, we find fitting the following comments of the Court of
Appeals:
It was not imperative and necessary for the trial court to pass upon the question
of whether or not the disputed abaca cargo was covered by Marine Open Cargo
Policy No. MK-134 isued by appellee. Appellant was neither a party nor privy to
this insurance contract, and therefore cannot avail itself of any defect in the
policy which may constitute a valid reason for appellee, as the insurer, to reject
the claim of Macleod, as the insured. Anyway, whatever defect the policy
contained, if any, is deemed to have been waived by the subsequent payment of
Macleod's claim by appellee. Besides, appellant is herein sued in its capacity as
a common carrier, and appellee is suing as the assignee of the shipper pursuant
to exhibit MM. Since, as above demonstrated, appellant is liable to Macleod and
Company of the Philippines for the los or damage to the 1,162 bales of hemp
after these were received in good order and condition by the patron of
appellant's LCT No. 1025, it necessarily follows that appellant is likewise liable to
appellee who, as assignee of Macleod, merely stepped into the shoes of and
substi-tuted the latter in demanding from appellant the payment for the loss and
damage aforecited.
4. It should be recalled in connection with this issue that during the trial of this case the
carrier asked the lower court to order the production of the books of accounts of the
Odell Plantation containing the charges it made for the loss of the damaged hemp for
verification of its accountants, but later it desisted therefrom on the claim that it finds
their production no longer necessary. This desistance notwithstanding, the shipper
however pre-sented other documents to prove the damage it suffered in connection with
the cargo and on the strength thereof the court a quo ordered the carrier to pay the sum
of P60,421.02. And after the Court of Appeals affirmed this award upon the theory that
the desistance of the carrier from producing the books of accounts of Odell Plantation
implies an admission of the correctness of the statements of accounts contained therein,
petitioner now contends that the Court of Appeals erred in basing the affirmance of the
award on such erroneous interpretation.
There is reason to believe that the act of petitioner in waiving its right to have the books
of accounts of Odell Plantation presented in court is tantamount to an admission that the
statements contained therein are correct and their verification not necessary because its
main defense here, as well as below, was that it is not liable for the loss because there
was no contract of carriage between it and the shipper and the loss caused, if any, was
due to a fortuitous event. Hence, under the carrier's theory, the correctness of the
account representing the loss was not so material as would necessitate the presentation
of the books in question. At any rate, even if the books of accounts were not produced,
the correctness of the accounts cannot now be disputed for the same is supported by
the original documents on which the entries in said books were based which were
presented by the shipper as part of its evidence. And according to the Court of Appeals,
these documents alone sufficiently establish the award of P60,412.02 made in favor of
respondent.
5. Finally, with regard to the question concerning the personality of the insurance
company to maintain this action, we find the same of no importance, for the attorney
himself of the carrier admitted in open court that it is a foreign corporation doing
business in the Philippines with a personality to file the present action.
WHEREFORE, the decision appealed from is affirmed, with costs against petitioner.
G.R. No. 145804 February 6, 2003
LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, petitioners,
vs. MARJORIE NAVIDAD, Heirs of the Late NICANOR NAVIDAD & PRUDENT
SECURITY AGENCY, respondents.
The case before the Court is an appeal from the decision and resolution of the Court of
Appeals, promulgated on 27 April 2000 and 10 October 2000, respectively, in CA-G.R.
CV No. 60720, entitled "Marjorie Navidad and Heirs of the Late Nicanor Navidad vs.
Rodolfo Roman, et. al.," which has modified the decision of 11 August 1998 of the
Regional Trial Court, Branch 266, Pasig City, exonerating Prudent Security Agency
(Prudent) from liability and finding Light Rail Transit Authority (LRTA) and Rodolfo
Roman liable for damages on account of the death of Nicanor Navidad.
On 14 October 1993, about half an hour past seven o’clock in the evening, Nicanor
Navidad, then drunk, entered the EDSA LRT station after purchasing a "token"
(representing payment of the fare). While Navidad was standing on the platform near the
LRT tracks, Junelito Escartin, the security guard assigned to the area approached
Navidad. A misunderstanding or an altercation between the two apparently ensued that
led to a fist fight. No evidence, however, was adduced to indicate how the fight started or
who, between the two, delivered the first blow or how Navidad later fell on the LRT
tracks. At the exact moment that Navidad fell, an LRT train, operated by petitioner
Rodolfo Roman, was coming in. Navidad was struck by the moving train, and he was
killed instantaneously.
On 08 December 1994, the widow of Nicanor, herein respondent Marjorie Navidad,
along with her children, filed a complaint for damages against Junelito Escartin, Rodolfo
Roman, the LRTA, the Metro Transit Organization, Inc. (Metro Transit), and Prudent for
the death of her husband. LRTA and Roman filed a counterclaim against Navidad and a
cross-claim against Escartin and Prudent. Prudent, in its answer, denied liability and
averred that it had exercised due diligence in the selection and supervision of its security
guards.
The LRTA and Roman presented their evidence while Prudent and Escartin, instead of
presenting evidence, filed a demurrer contending that Navidad had failed to prove that
Escartin was negligent in his assigned task. On 11 August 1998, the trial court rendered
its decision; it adjudged:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the
defendants Prudent Security and Junelito Escartin ordering the latter to pay jointly and
severally the plaintiffs the following:
"a) 1) Actual damages of P44,830.00;
2) Compensatory damages of P443,520.00;
3) Indemnity for the death of Nicanor Navidad in the sum of P50,000.00;
"b) Moral damages of P50,000.00;
"c) Attorney’s fees of P20,000;
"d) Costs of suit.
"The complaint against defendants LRTA and Rodolfo Roman are dismissed for lack of
merit.
"The compulsory counterclaim of LRTA and Roman are likewise dismissed."1
Prudent appealed to the Court of Appeals. On 27 August 2000, the appellate court
promulgated its now assailed decision exonerating Prudent from any liability for the
death of Nicanor Navidad and, instead, holding the LRTA and Roman jointly and
severally liable thusly:
"WHEREFORE, the assailed judgment is hereby MODIFIED, by exonerating the
appellants from any liability for the death of Nicanor Navidad, Jr. Instead, appellees
Rodolfo Roman and the Light Rail Transit Authority (LRTA) are held liable for his death
and are hereby directed to pay jointly and severally to the plaintiffs-appellees, the
following amounts:
a) P44,830.00 as actual damages;
b) P50,000.00 as nominal damages;
c) P50,000.00 as moral damages;
d) P50,000.00 as indemnity for the death of the deceased; and
e) P20,000.00 as and for attorney’s fees."2
The appellate court ratiocinated that while the deceased might not have then as yet
boarded the train, a contract of carriage theretofore had already existed when the victim
entered the place where passengers were supposed to be after paying the fare and
getting the corresponding token therefor. In exempting Prudent from liability, the court
stressed that there was nothing to link the security agency to the death of Navidad. It
said that Navidad failed to show that Escartin inflicted fist blows upon the victim and the
evidence merely established the fact of death of Navidad by reason of his having been
hit by the train owned and managed by the LRTA and operated at the time by Roman.
The appellate court faulted petitioners for their failure to present expert evidence to
establish the fact that the application of emergency brakes could not have stopped the
train.
The appellate court denied petitioners’ motion for reconsideration in its resolution of 10
October 2000.
In their present recourse, petitioners recite alleged errors on the part of the appellate
court; viz:
"I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY DISREGARDING
THE FINDINGS OF FACTS BY THE TRIAL COURT
"II.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT
PETITIONERS ARE LIABLE FOR THE DEATH OF NICANOR NAVIDAD, JR.
"III.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT
RODOLFO ROMAN IS AN EMPLOYEE OF LRTA."3
Petitioners would contend that the appellate court ignored the evidence and the factual
findings of the trial court by holding them liable on the basis of a sweeping conclusion
that the presumption of negligence on the part of a common carrier was not overcome.
Petitioners would insist that Escartin’s assault upon Navidad, which caused the latter to
fall on the tracks, was an act of a stranger that could not have been foreseen or
prevented. The LRTA would add that the appellate court’s conclusion on the existence
of an employer-employee relationship between Roman and LRTA lacked basis because
Roman himself had testified being an employee of Metro Transit and not of the LRTA.
Respondents, supporting the decision of the appellate court, contended that a contract
of carriage was deemed created from the moment Navidad paid the fare at the LRT
station and entered the premises of the latter, entitling Navidad to all the rights and
protection under a contractual relation, and that the appellate court had correctly held
LRTA and Roman liable for the death of Navidad in failing to exercise extraordinary
diligence imposed upon a common carrier.
Law and jurisprudence dictate that a common carrier, both from the nature of its
business and for reasons of public policy, is burdened with the duty of exercising utmost
diligence in ensuring the safety of passengers.4 The Civil Code, governing the liability of
a common carrier for death of or injury to its passengers, provides:
"Article 1755. A common carrier is bound to carry the passengers safely as far as human
care and foresight can provide, using the utmost diligence of very cautious persons, with
a due regard for all the circumstances.
"Article 1756. In case of death of or injuries to passengers, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove that they
observed extraordinary diligence as prescribed in articles 1733 and 1755."
"Article 1759. Common carriers are liable for the death of or injuries to passengers
through the negligence or willful acts of the former’s employees, although such
employees may have acted beyond the scope of their authority or in violation of the
orders of the common carriers.
"This liability of the common carriers does not cease upon proof that they exercised all
the diligence of a good father of a family in the selection and supervision of their
employees."
"Article 1763. A common carrier is responsible for injuries suffered by a passenger on
account of the willful acts or negligence of other passengers or of strangers, if the
common carrier’s employees through the exercise of the diligence of a good father of a
family could have prevented or stopped the act or omission."
The law requires common carriers to carry passengers safely using the utmost diligence
of very cautious persons with due regard for all circumstances.5 Such duty of a common
carrier to provide safety to its passengers so obligates it not only during the course of
the trip but for so long as the passengers are within its premises and where they ought
to be in pursuance to the contract of carriage.6 The statutory provisions render a
common carrier liable for death of or injury to passengers (a) through the negligence or
wilful acts of its employees or b) on account of wilful acts or negligence of other
passengers or of strangers if the common carrier’s employees through the exercise of
due diligence could have prevented or stopped the act or omission.7 In case of such
death or injury, a carrier is presumed to have been at fault or been negligent, and8 by
simple proof of injury, the passenger is relieved of the duty to still establish the fault or
negligence of the carrier or of its employees and the burden shifts upon the carrier to
prove that the injury is due to an unforeseen event or to force majeure.9 In the absence
of satisfactory explanation by the carrier on how the accident occurred, which
petitioners, according to the appellate court, have failed to show, the presumption would
be that it has been at fault,10 an exception from the general rule that negligence must be
proved.11
The foundation of LRTA’s liability is the contract of carriage and its obligation to
indemnify the victim arises from the breach of that contract by reason of its failure to
exercise the high diligence required of the common carrier. In the discharge of its
commitment to ensure the safety of passengers, a carrier may choose to hire its own
employees or avail itself of the services of an outsider or an independent firm to
undertake the task. In either case, the common carrier is not relieved of its
responsibilities under the contract of carriage.
Should Prudent be made likewise liable? If at all, that liability could only be for tort under
the provisions of Article 217612 and related provisions, in conjunction with Article
2180,13 of the Civil Code. The premise, however, for the employer’s liability is negligence
or fault on the part of the employee. Once such fault is established, the employer can
then be made liable on the basis of the presumption juris tantum that the employer failed
to exercise diligentissimi patris families in the selection and supervision of its employees.
The liability is primary and can only be negated by showing due diligence in the
selection and supervision of the employee, a factual matter that has not been shown.
Absent such a showing, one might ask further, how then must the liability of the common
carrier, on the one hand, and an independent contractor, on the other hand, be
described? It would be solidary. A contractual obligation can be breached by tort and
when the same act or omission causes the injury, one resulting in culpa contractual and
the other in culpa aquiliana, Article 219414 of the Civil Code can well apply.15 In fine, a
liability for tort may arise even under a contract, where tort is that which breaches the
contract.16 Stated differently, when an act which constitutes a breach of contract would
have itself constituted the source of a quasi-delictual liability had no contract existed
between the parties, the contract can be said to have been breached by tort, thereby
allowing the rules on tort to apply.17

Regrettably for LRT, as well as perhaps the surviving spouse and heirs of the late
Nicanor Navidad, this Court is concluded by the factual finding of the Court of Appeals
that "there is nothing to link (Prudent) to the death of Nicanor (Navidad), for the reason
that the negligence of its employee, Escartin, has not been duly proven x x x." This
finding of the appellate court is not without substantial justification in our own review of
the records of the case.

There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of any
culpable act or omission, he must also be absolved from liability. Needless to say, the
contractual tie between the LRT and Navidad is not itself a juridical relation between the
latter and Roman; thus, Roman can be made liable only for his own fault or negligence.

The award of nominal damages in addition to actual damages is untenable. Nominal

damages are adjudicated in order that a right of the plaintiff, which has been violated or
invaded by the defendant, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him.18 It is an established rule that
nominal damages cannot co-exist with compensatory damages.19

WHEREFORE, the assailed decision of the appellate court is AFFIRMED with

MODIFICATION but only in that (a) the award of nominal damages is DELETED and (b)
petitioner Rodolfo Roman is absolved from liability. No costs.

SO ORDERED.
G.R. No. L-47822 December 22, 1988
PEDRO DE GUZMAN, petitioner,
vs. COURT OF APPEALS and ERNESTO CENDANA, respondents.
Respondent Ernesto Cendana, a junk dealer, was engaged in buying up used bottles
and scrap metal in Pangasinan. Upon gathering sufficient quantities of such scrap
material, respondent would bring such material to Manila for resale. He utilized two (2)
six-wheeler trucks which he owned for hauling the material to Manila. On the return trip
to Pangasinan, respondent would load his vehicles with cargo which various merchants
wanted delivered to differing establishments in Pangasinan. For that service, respondent
charged freight rates which were commonly lower than regular commercial rates.
Sometime in November 1970, petitioner Pedro de Guzman a merchant and authorized
dealer of General Milk Company (Philippines), Inc. in Urdaneta, Pangasinan, contracted
with respondent for the hauling of 750 cartons of Liberty filled milk from a warehouse of
General Milk in Makati, Rizal, to petitioner's establishment in Urdaneta on or before 4
December 1970. Accordingly, on 1 December 1970, respondent loaded in Makati the
merchandise on to his trucks: 150 cartons were loaded on a truck driven by respondent
himself, while 600 cartons were placed on board the other truck which was driven by
Manuel Estrada, respondent's driver and employee.
Only 150 boxes of Liberty filled milk were delivered to petitioner. The other 600 boxes
never reached petitioner, since the truck which carried these boxes was hijacked
somewhere along the MacArthur Highway in Paniqui, Tarlac, by armed men who took
with them the truck, its driver, his helper and the cargo.
On 6 January 1971, petitioner commenced action against private respondent in the
Court of First Instance of Pangasinan, demanding payment of P 22,150.00, the claimed
value of the lost merchandise, plus damages and attorney's fees. Petitioner argued that
private respondent, being a common carrier, and having failed to exercise the
extraordinary diligence required of him by the law, should be held liable for the value of
the undelivered goods.
In his Answer, private respondent denied that he was a common carrier and argued that
he could not be held responsible for the value of the lost goods, such loss having been
due to force majeure.
On 10 December 1975, the trial court rendered a Decision 1 finding private respondent to
be a common carrier and holding him liable for the value of the undelivered goods (P
22,150.00) as well as for P 4,000.00 as damages and P 2,000.00 as attorney's fees.
On appeal before the Court of Appeals, respondent urged that the trial court had erred in
considering him a common carrier; in finding that he had habitually offered trucking
services to the public; in not exempting him from liability on the ground of force
majeure; and in ordering him to pay damages and attorney's fees.
The Court of Appeals reversed the judgment of the trial court and held that respondent
had been engaged in transporting return loads of freight "as a casual
occupation — a sideline to his scrap iron business" and not as a common carrier.
Petitioner came to this Court by way of a Petition for Review assigning as errors the
following conclusions of the Court of Appeals:
1. that private respondent was not a common carrier;
2. that the hijacking of respondent's truck was force majeure; and
3. that respondent was not liable for the value of the undelivered cargo.
(Rollo, p. 111)
We consider first the issue of whether or not private respondent Ernesto Cendana may,
under the facts earlier set forth, be properly characterized as a common carrier.
The Civil Code defines "common carriers" in the following terms:
Article 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air for compensation,
offering their services to the public.
The above article makes no distinction between one whose principal business activity is
the carrying of persons or goods or both, and one who does such carrying only as
an ancillary activity (in local Idiom as "a sideline"). Article 1732 also carefully avoids
making any distinction between a person or enterprise offering transportation service on
a regular or scheduled basis and one offering such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its
services to the "general public," i.e., the general community or population, and one who
offers services or solicits business only from a narrow segment of the general
population. We think that Article 1733 deliberaom making such distinctions.
So understood, the concept of "common carrier" under Article 1732 may be seen to
coincide neatly with the notion of "public service," under the Public Service Act
(Commonwealth Act No. 1416, as amended) which at least partially supplements the law
on common carriers set forth in the Civil Code. Under Section 13, paragraph (b) of the
Public Service Act, "public service" includes:
 ... every person that now or hereafter may own, operate, manage, or control in the
Philippines, for hire or compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general business purposes, any
common carrier, railroad, street railway, traction railway, subway motor vehicle,
either for freight or passenger, or both, with or without fixed route and whatever
may be its classification, freight or carrier service of any class, express service,
steamboat, or steamship line, pontines, ferries and water craft, engaged in the
transportation of passengers or 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 systems, wire or wireless broadcasting stations and other similar
public services. ... (Emphasis supplied)
It appears to the Court that private respondent is properly characterized as a common
carrier even though he merely "back-hauled" goods for other merchants from Manila to
Pangasinan, although such back-hauling was done on a periodic or occasional rather
than regular or scheduled manner, and even though private
respondent's principal occupation was not the carriage of goods for others. There is no
dispute that private respondent charged his customers a fee for hauling their goods; that
fee frequently fell below commercial freight rates is not relevant here.
The Court of Appeals referred to the fact that private respondent held no certificate of
public convenience, and concluded he was not a common carrier. This is palpable error.
A certificate of public convenience is not a requisite for the incurring of liability under the
Civil Code provisions governing common carriers. That liability arises the moment a
person or firm acts as a common carrier, without regard to whether or not such carrier
has also complied with the requirements of the applicable regulatory statute and
implementing regulations and has been granted a certificate of public convenience or
other franchise. To exempt private respondent from the liabilities of a common carrier
because he has not secured the necessary certificate of public convenience, would be
offensive to sound public policy; that would be to reward private respondent precisely for
failing to comply with applicable statutory requirements. The business of a common
carrier impinges directly and intimately upon the safety and well being and property of
those members of the general community who happen to deal with such carrier. The law
imposes duties and liabilities upon common carriers for the safety and protection of
those who utilize their services and the law cannot allow a common carrier to render
such duties and liabilities merely facultative by simply failing to obtain the necessary
permits and authorizations.
We turn then to the liability of private respondent as a common carrier.
Common carriers, "by the nature of their business and for reasons of public policy" 2 are
held to a very high degree of care and diligence ("extraordinary diligence") in the
carriage of goods as well as of passengers. The specific import of extraordinary
diligence in the care of goods transported by a common carrier is, according to Article
1733, "further expressed in Articles 1734,1735 and 1745, numbers 5, 6 and 7" of the
Civil Code.
Article 1734 establishes the general rule that common carriers are responsible for the
loss, destruction or deterioration of the goods which they carry, "unless the same is due
to any of the following causes only:
(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character-of the goods or defects in the packing or-in the containers; and
(5) Order or act of competent public authority.
It is important to point out that the above list of causes of loss, destruction or
deterioration which exempt the common carrier for responsibility therefor, is a closed list.
Causes falling outside the foregoing list, even if they appear to constitute a species of
force majeure fall within the scope of Article 1735, which provides as follows:
In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of the preceding
article, if the goods are lost, destroyed or deteriorated, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove that
they observed extraordinary diligence as required in Article 1733. (Emphasis
supplied)
Applying the above-quoted Articles 1734 and 1735, we note firstly 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 of exempting causes listed in Article 1734. It would
follow, therefore, 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 as common carrier
is presumed to have been at fault or to have acted negligently. This presumption,
however, may be overthrown by proof of extraordinary diligence on the part of private
respondent.
Petitioner insists that private respondent had not observed extraordinary diligence in the
care of petitioner's goods. Petitioner argues that in the circumstances of this case,
private respondent should have hired a security guard presumably to ride with the truck
carrying the 600 cartons of Liberty filled milk. We do not believe, however, that in the
instant case, the standard of extraordinary diligence required private respondent to
retain a security guard to ride with the truck and to engage brigands in a firelight at the
risk of his own life and the lives of the driver and his helper.
The precise issue that we address here relates to the specific requirements of the duty
of extraordinary diligence in the vigilance over the goods carried in the specific context
of hijacking or armed robbery.
As noted earlier, the duty of extraordinary diligence in the vigilance over goods is, under
Article 1733, given additional specification not only by Articles 1734 and 1735 but also
by Article 1745, numbers 4, 5 and 6, Article 1745 provides in relevant part:
Any of the following or similar stipulations shall be considered unreasonable,
unjust and contrary to public policy:
xxx xxx xxx
(5) that the common carrier shall not be responsible for the acts or omissions of
his or its employees;
and its cargo but also kidnapped the driver and his helper, detaining them for several
days and later releasing them in another province (in Zambales). The hijacked truck was
subsequently found by the police in Quezon City. The Court of First Instance convicted
all the accused of robbery, though not of robbery in band. 4
In these circumstances, we hold that the occurrence of the loss must reasonably be
regarded as quite beyond the control of the common carrier and properly regarded as a
fortuitous event. It is necessary to recall that even common carriers are not made
absolute insurers against all risks of travel and of transport of goods, and are not held
liable for acts or events which cannot be foreseen or are inevitable, provided that they
shall have complied with the rigorous standard of extraordinary diligence.
We, therefore, agree with the result reached by the Court of Appeals that private
respondent Cendana is not liable for the value of the undelivered merchandise which
was lost because of an event entirely beyond private respondent's control.

(6) that the common carrier's liability for acts committed by thieves, or of ACCORDINGLY, the Petition for Review on certiorari is hereby DENIED and the
robbers who donot act with grave or irresistible threat, violence or force, is Decision of the Court of Appeals dated 3 August 1977 is AFFIRMED. No
dispensed with or diminished; and pronouncement as to costs.

(7) that the common carrier shall not responsible for the loss, destruction or SO ORDERED.
deterioration of goods on account of the defective condition of the car
vehicle, ship, airplane or other equipment used in the contract of carriage.
(Emphasis supplied)

Under Article 1745 (6) above, a common carrier is held responsible — and will not be
allowed to divest or to diminish such responsibility — even for acts of strangers like
thieves or robbers, except where such thieves or robbers in fact acted "with grave or
irresistible threat, 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 reached where the
goods are lost as a result of a robbery which is attended by "grave or irresistible threat,
violence or force."

In the instant case, armed men held up the second truck owned by private respondent
which carried petitioner's cargo. The record shows that an information for robbery in
band was filed in the Court of First Instance of Tarlac, Branch 2, in Criminal Case No.
198 entitled "People of the Philippines v. Felipe Boncorno, Napoleon Presno, Armando
Mesina, Oscar Oria and one John Doe." There, the accused were charged with willfully
and unlawfully taking and carrying away with them the second truck, driven by Manuel
Estrada and loaded with the 600 cartons of Liberty filled milk destined for delivery at
petitioner's store in Urdaneta, Pangasinan. The decision 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
G.R. No. 125948 December 29, 1998
FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner,
vs. COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN, BATANGAS CITY
and ADORACION C. ARELLANO, in her official capacity as City Treasurer of
Batangas, respondents.
This petition for review on certiorari assails the Decision of the Court of Appeals dated
November 29, 1995, in CA-G.R. SP No. 36801, affirming the decision of the Regional
Trial Court of Batangas City, Branch 84, in Civil Case No. 4293, which dismissed
petitioners' complaint for a business tax refund imposed by the City of Batangas.
Petitioner is a grantee of a pipeline concession under Republic Act No. 387, as
amended, to contract, install and operate oil pipelines. The original pipeline concession
was granted in 19671 and renewed by the Energy Regulatory Board in 1992. 2
Sometime in January 1995, petitioner applied for a mayor's permit with the Office of the
Mayor of Batangas City. However, before the mayor's permit could be issued, the
respondent City Treasurer required petitioner to pay a local tax based on its gross
receipts for the fiscal year 1993 pursuant to the Local Government Code3. The
respondent City Treasurer assessed a business tax on the petitioner amounting to
P956,076.04 payable in four installments based on the gross receipts for products
pumped at GPS-1 for the fiscal year 1993 which amounted to P181,681,151.00. In order
not to hamper its operations, petitioner paid the tax under protest in the amount of
P239,019.01 for the first quarter of 1993.
On January 20, 1994, petitioner filed a letter-protest addressed to the respondent City
Treasurer, the pertinent portion of which reads:
Please note that our Company (FPIC) is a pipeline operator with a government
concession granted under the Petroleum Act. It is engaged in the business of
transporting petroleum products from the Batangas refineries, via pipeline, to Sucat
and JTF Pandacan Terminals. As such, our Company is exempt from paying tax on
gross receipts under Section 133 of the Local Government Code of 1991 . . . .
Moreover, Transportation contractors are not included in the enumeration of
contractors under Section 131, Paragraph (h) of the Local Government Code.
Therefore, the authority to impose tax "on contractors and other independent
contractors" under Section 143, Paragraph (e) of the Local Government Code does
not include the power to levy on transportation contractors.
The imposition and assessment cannot be categorized as a mere fee authorized
under Section 147 of the Local Government Code. The said section limits the
imposition of fees and charges on business to such amounts as may be
commensurate to the cost of regulation, inspection, and licensing. Hence, assuming
arguendo that FPIC is liable for the license fee, the imposition thereof based on gross
receipts is violative of the aforecited provision. The amount of P956,076.04
(P239,019.01 per quarter) is not commensurate to the cost of regulation, inspection
and licensing. The fee is already a revenue raising measure, and not a mere
regulatory imposition.4
On March 8, 1994, the respondent City Treasurer denied the protest contending that
petitioner cannot be considered engaged in transportation business, thus it cannot claim
exemption under Section 133 (j) of the Local Government Code.5
On June 15, 1994, petitioner filed with the Regional Trial Court of Batangas City a
complaint6 for tax refund with prayer for writ of preliminary injunction against
respondents City of Batangas and Adoracion Arellano in her capacity as City Treasurer.
In its complaint, petitioner alleged, inter alia, that: (1) the imposition and collection of the
business tax on its gross receipts violates Section 133 of the Local Government Code;
(2) the authority of cities to impose and collect a tax on the gross receipts of "contractors
and independent contractors" under Sec. 141 (e) and 151 does not include the authority
to collect such taxes on transportation contractors for, as defined under Sec. 131 (h), the
term "contractors" excludes transportation contractors; and, (3) the City Treasurer
illegally and erroneously imposed and collected the said tax, thus meriting the immediate
refund of the tax paid.7
Traversing the complaint, the respondents argued that petitioner cannot be exempt from
taxes under Section 133 (j) of the Local Government Code as said exemption applies
only to "transportation contractors and persons engaged in the transportation by hire and
common carriers by air, land and water." Respondents assert that pipelines are not
included in the term "common carrier" which refers solely to ordinary carriers such as
trucks, trains, ships and the like. Respondents further posit that the term "common
carrier" under the said code pertains to the mode or manner by which a product is
delivered to its destination.8
On October 3, 1994, the trial court rendered a decision dismissing the complaint, ruling
in this wise:
. . . Plaintiff is either a contractor or other independent contractor.
. . . the exemption to tax claimed by the plaintiff has become unclear. It is a rule
that tax exemptions are to be strictly construed against the taxpayer, taxes being
the lifeblood of the government. Exemption may therefore be granted only by clear
and unequivocal provisions of law.
 Plaintiff claims that it is a grantee of a pipeline concession under Republic Act 387.
(Exhibit A) whose concession was lately renewed by the Energy Regulatory Board
(Exhibit B). Yet neither said law nor the deed of concession grant any tax
exemption upon the plaintiff.
Even the Local Government Code imposes a tax on franchise holders under Sec.
137 of the Local Tax Code. Such being the situation obtained in this case
(exemption being unclear and equivocal) resort to distinctions or other
considerations may be of help:
1. That the exemption granted under Sec. 133 (j) encompasses only common
carriers so as not to overburden the riding public or commuters with
taxes. Plaintiff is not a common carrier, but a special carrier extending its
services and facilities to a single specific or "special customer" under a
"special contract."
2. The Local Tax Code of 1992 was basically enacted to give more and
effective local autonomy to local governments than the previous
enactments, to make them economically and financially viable to serve the
people and discharge their functions with a concomitant obligation to accept
certain devolution of powers, . . . So, consistent with this policy even
franchise grantees are taxed (Sec. 137) and contractors are also taxed
under Sec. 143 (e) and 151 of the Code.9
Petitioner assailed the aforesaid decision before this Court via a petition for review. On
February 27, 1995, we referred the case to the respondent Court of Appeals for
consideration and adjudication. 10 On November 29, 1995, the respondent court
rendered a decision 11 affirming the trial court's dismissal of petitioner's complaint.
Petitioner's motion for reconsideration was denied on July 18, 1996. 12
Hence, this petition. At first, the petition was denied due course in a Resolution dated
November 11, 1996. 13Petitioner moved for a reconsideration which was granted by this
Court in a Resolution 14 of January 22, 1997. Thus, the petition was reinstated.
Petitioner claims that the respondent Court of Appeals erred in holding that (1) the
petitioner is not a common carrier or a transportation contractor, and (2) the exemption
sought for by petitioner is not clear under the law.
There is merit in the petition.
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
compensation, offering his services to the public generally.
Art. 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firm
or association engaged in the business of carrying or transporting passengers or goods
or both, by land, water, or air, for compensation, offering their services to the public."
The test for determining whether a party is a common carrier of goods is:
1. He must be engaged in the business of carrying goods for others as a
public employment, and must hold himself out as ready to engage in the
transportation of goods for person generally as a business and not as a
casual occupation;
2. He must undertake to carry goods of the kind to which his business is
confined;
3. He must undertake to carry by the method by which his business is
conducted and over his established roads; and
4. The transportation must be for hire. 15
Based on the above definitions and requirements, there is no doubt that petitioner is a
common carrier. It is engaged in the business of transporting or carrying goods, i.e.
petroleum products, for hire as a public employment. It undertakes to carry for all
persons indifferently, that is, to all persons who choose to employ its services, and
transports the goods by land and for compensation. The fact that petitioner has a limited
clientele does not exclude it from the definition of a common carrier. In De Guzman vs.
Court of Appeals 16we ruled that:
The above article (Art. 1732, Civil Code) makes no distinction between one
whose principal business activity is the carrying of persons or goods or both, and
one who does such carrying only as an ancillary activity (in local idiom, as a
"sideline"). Article 1732 . . . avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and
one offering such service on an occasional, episodic or unscheduled basis.
Neither does Article 1732 distinguish between a carrier offering its services to
the "general public," i.e., the general community or population, and one who
offers services or solicits business only from a narrow segment of the general
population. We think that Article 1877 deliberately refrained from making such
distinctions.
So understood, the concept of "common carrier" under Article 1732 may be seen
to coincide neatly with the notion of "public service," under the Public Service Act
(Commonwealth Act No. 1416, as amended) which at least partially supplements
 the law on common carriers set forth in the Civil Code. Under Section 13,
paragraph (b) of the Public Service Act, "public service" includes:
every person that now or hereafter may own, operate. manage, or control
in the Philippines, for hire or compensation, with general or limited
clientele, whether permanent, occasional or accidental, and done for
general business purposes, any common carrier, railroad, street railway,
traction railway, subway motor vehicle, either for freight or passenger, or
both, with or without fixed route and whatever may be its classification,
freight or carrier service of any class, express service, steamboat, or
steamship line, pontines, ferries and water craft, engaged in the
transportation of passengers or 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 andpower
petroleum, sewerage system, wire or wireless communications systems,
wire or wireless broadcasting stations and other similar public services.
(Emphasis Supplied)
Also, respondent's argument that the term "common carrier" as used in Section 133 (j) of
the Local Government Code refers only to common carriers transporting goods and
passengers through moving vehicles or vessels either by land, sea or water, is
erroneous.
As correctly pointed out by petitioner, the definition of "common carriers" in the Civil
Code makes no distinction as to the means of transporting, as long as it is by land, water
or air. It does not provide that the transportation of the passengers or goods should be
by motor vehicle. In fact, in the United States, oil pipe line operators are considered
common carriers. 17
Under the Petroleum Act of the Philippines (Republic Act 387), petitioner is considered a
"common carrier." Thus, Article 86 thereof provides that:
Art. 86. Pipe line concessionaire as common carrier. — A pipe line shall have
the preferential right to utilize installations for the transportation of petroleum
owned by him, but is obligated to utilize the remaining transportation capacity
pro rata for the transportation of such other petroleum as may be offered by
others for transport, and to charge without discrimination such rates as may
have been approved by the Secretary of Agriculture and Natural Resources.
Republic Act 387 also regards petroleum operation as a public utility. Pertinent portion of
Article 7 thereof provides:
that everything relating to the exploration for and exploitation of petroleum . . .
and everything relating to the manufacture, refining, storage, or transportation by
special methods of petroleum, is hereby declared to be a public utility.
(Emphasis Supplied)
The Bureau of Internal Revenue likewise considers the petitioner a "common carrier." In
BIR Ruling No. 069-83, it declared:
. . . since [petitioner] is a pipeline concessionaire that is engaged only in
transporting petroleum products, it is considered a common carrier under
Republic Act No. 387 . . . . Such being the case, it is not subject to withholding
tax prescribed by Revenue Regulations No. 13-78, as amended.
From the foregoing disquisition, there is no doubt that petitioner is a "common carrier"
and, therefore, exempt from the business tax as provided for in Section 133 (j), of the
Local Government Code, to wit:
Sec. 133. Common Limitations on the Taxing Powers of Local Government
Units. — Unless otherwise provided herein, the exercise of the taxing powers of
provinces, cities, municipalities, and barangays shall not extend to the levy of the
following:
xxx xxx xxx
(j) Taxes on the gross receipts of transportation contractors and persons
engaged in the transportation of passengers or freight by hire and common
carriers by air, land or water, except as provided in this Code.
The deliberations conducted in the House of Representatives on the Local Government
Code of 1991 are illuminating:
MR. AQUINO (A). Thank you, Mr. Speaker.
Mr. Speaker, we would like to proceed to page 95, line
1. It states: "SEC. 121 [now Sec. 131]. Common Limitations on the Taxing
Powers of Local Government Units." . . .
MR. AQUINO (A.). Thank you Mr. Speaker.
Still on page 95, subparagraph 5, on taxes on the business of transportation.
This appears to be one of those being deemed to be exempted from the taxing
 powers of the local government units. May we know the reason why the
transportation business is being excluded from the taxing powers of the local
government units?

MR. JAVIER (E.). Mr. Speaker, there is an exception contained in Section 121
(now Sec. 131), line 16, paragraph 5. It states that local government units may
not impose taxes on the business of transportation, except as otherwise
provided in this code.

Now, Mr. Speaker, if the Gentleman would care to go to page 98 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 would be subject to tax by the province. That is the exception, Mr.
Speaker.

What we want to guard against here, Mr. Speaker, is the imposition of taxes by
local government units on the carrier business. Local government units may
impose taxes on top of what is already being imposed by the National Internal
Revenue Code which is the so-called "common carriers tax." We do not want a
duplication of this tax, so we just provided for an exception under Section 125
[now Sec. 137] that a province may impose this tax at a specific rate.

MR. AQUINO (A.). Thank you for that clarification, Mr. Speaker. . . . 18

It is clear that the legislative intent in excluding from the taxing power of the local
government unit the imposition of business tax against common carriers is to prevent a
duplication of the so-called "common carrier's tax."

Petitioner is already paying three (3%) percent common carrier's tax on its gross
sales/earnings under the National Internal Revenue Code. 19 To tax petitioner again on
its gross receipts in its transportation of petroleum business would defeat the purpose of
the Local Government Code.

WHEREFORE, the petition is hereby GRANTED. The decision of the respondent Court
of Appeals dated November 29, 1995 in CA-G.R. SP No. 36801 is REVERSED and SET
ASIDE.

SO ORDERED.
G.R. No. 101503 September 15, 1993
PLANTERS PRODUCTS, INC., petitioner,
vs.
COURT OF APPEALS, SORIAMONT STEAMSHIP AGENCIES AND KYOSEI KISEN
KABUSHIKI KAISHA, respondents.
Gonzales, Sinense, Jimenez & Associates for petitioner.
Siguion Reyna, Montecillo & Ongsiako Law Office for private respondents.
BELLOSILLO, J.:
Does a charter-party1 between a shipowner and a charterer 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 cargo?
Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation
(MITSUBISHI) of New York, U.S.A., 9,329.7069 metric tons (M/T) of Urea 46% fertilizer
which the latter shipped in bulk on 16 June 1974 aboard the cargo vessel M/V "Sun
Plum" owned by private respondent Kyosei Kisen Kabushiki Kaisha (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 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 Charter2 was entered into between Mitsubishi as
shipper/charterer and KKKK as shipowner, in Tokyo, Japan.3 Riders to the aforesaid
charter-party 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 also subsequently entered into on
the 18th, 20th, 21st and 27th of May 1974, respectively.
Before loading the fertilizer aboard the vessel, four (4) of her holds4 were all presumably
inspected by the charterer's representative and found fit to take a load of urea in bulk
pursuant to par. 16 of the charter-party which reads:
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 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 before daytime commences.
(emphasis supplied)
After the Urea fertilizer was loaded in bulk by stevedores hired by 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 sealed throughout the entire voyage.5
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. Petitioner unloaded the cargo from the
holds into its steelbodied dump trucks which were parked alongside the berth, using
metal scoops attached to the ship, pursuant to the terms and conditions of the charter-
partly (which provided for an F.I.O.S. clause).6 The hatches remained open throughout
the duration of the discharge.7
Each time a dump truck was filled up, its load of Urea was covered with tarpaulin before
it was transported to the consignee's warehouse located some fifty (50) meters from the
wharf. Midway to the warehouse, the trucks were made to pass through a weighing
scale where they were individually weighed for the purpose of ascertaining the net
weight of the cargo. The port area was windy, certain portions of the route to the
warehouse were sandy and the weather was variable, raining occasionally while the
discharge was in progress.8 The petitioner's warehouse was made of corrugated
galvanized iron (GI) sheets, with an opening at the front where the dump trucks entered
and unloaded the fertilizer on the warehouse floor. Tarpaulins and GI sheets were
placed in-between and alongside the trucks to contain spillages of the ferilizer.9
It took eleven (11) days for PPI to unload the cargo, from 5 July to 18 July 1974 (except
July 12th, 14th and 18th).10A private marine and cargo surveyor, Cargo Superintendents
Company Inc. (CSCI), was hired by PPI to determine the "outturn" of the cargo shipped,
by taking draft readings of the vessel prior to and after discharge. 11 The survey report
submitted by CSCI to the consignee (PPI) dated 19 July 1974 revealed a shortage in the
cargo of 106.726 M/T and that a portion of the Urea fertilizer approximating 18 M/T was
contaminated with dirt. The same results were contained in a Certificate of
Shortage/Damaged Cargo dated 18 July 1974 prepared by PPI which showed that the
cargo delivered was indeed short of 94.839 M/T and about 23 M/T were rendered unfit
for commerce, having been polluted with sand, rust and
dirt. 12
Consequently, PPI sent a claim letter dated 18 December 1974 to Soriamont Steamship
Agencies (SSA), the resident agent of the carrier, KKKK, for P245,969.31 representing
the cost of the alleged shortage in the goods shipped and the diminution in value of that
portion said to have been contaminated with dirt. 13
Respondent SSA explained that they were not able to respond to the consignee's claim
for payment because, according to them, what they received was just a request for
shortlanded certificate and not a formal claim, and that this "request" was denied by
them because they "had nothing to do with the discharge of the shipment." 14 Hence, on
18 July 1975, PPI filed an action for damages with the Court of First Instance of Manila.
The defendant carrier argued that the strict public policy governing common carriers
does not apply to them because they have become private carriers by reason of the
provisions of the charter-party. The court a quo however sustained the claim of the
plaintiff against the defendant carrier for the value of the goods lost or damaged when it
ruled thus: 15
. . . Prescinding from the provision of the law that a common carrier is
presumed negligent in case of loss or damage of the goods it contracts
to transport, all that a shipper has to do in a suit to recover for loss or
damage is to show receipt by the carrier of the goods and to delivery by
it of less than what it received. After that, the burden of proving that the
loss or damage was due to any of the causes which exempt him from
liability is shipted to the carrier, common or private he may be. Even if
the provisions of the charter-party aforequoted are deemed valid, and the
defendants considered private carriers, it was still incumbent upon them
to prove that the shortage or contamination sustained by the cargo is
attributable to the fault or negligence on the part of the shipper or
consignee in the loading, stowing, trimming and discharge of the cargo.
This they failed to do. By this omission, coupled with their failure to
destroy the presumption of negligence against them, the defendants are
liable (emphasis supplied).
On appeal, respondent Court of Appeals reversed the lower court and absolved the
carrier from liability for the value of the cargo that was lost or damaged. 16 Relying on the
1968 case of Home Insurance Co. v. American Steamship Agencies, Inc.,17 the
appellate court ruled that the cargo vessel M/V "Sun Plum" owned by private respondent
KKKK was a private carrier and not a common carrier by reason of the time charterer-
party. Accordingly, the Civil Code provisions on common carriers which set forth a
presumption of negligence do not find application in the case at bar. Thus —
. . . In the absence of such presumption, it was incumbent upon the
plaintiff-appellee to adduce sufficient evidence to prove the negligence of
the defendant carrier as alleged in its complaint. It is 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 manner the facts upon
which he bases his claim, the defendant is under no obligation to prove
his exception or defense (Moran, Commentaries on the Rules of Court,
Volume 6, p. 2, citing Belen v. Belen, 13 Phil. 202).
But, the record shows that the plaintiff-appellee dismally failed to prove
the basis of its cause of action, i.e. the alleged negligence of defendant
carrier. It appears that the plaintiff was under the 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 instant case discloses ample
evidence showing that defendant carrier was not negligent in performing
its obligation . . . 18 (emphasis supplied).
Petitioner PPI appeals to us by way of a petition for review assailing the decision of the
Court of Appeals. Petitioner theorizes that the Home Insurance case has no bearing on
the present controversy because the issue raised therein is the validity of a stipulation in
the charter-party delimiting the liability of the shipowner for loss or damage to goods
cause by want of due deligence on its part or that of its manager to make the vessel
seaworthy in all respects, and not whether the presumption of negligence provided
under the Civil Code applies only to common carriers and not to private
carriers. 19 Petitioner further argues that since the possession and control of the vessel
remain with the shipowner, absent any stipulation to the contrary, such shipowner
should made liable for the negligence of the captain and crew. In fine, PPI faults the
appellate court in not applying the presumption of negligence against respondent carrier,
and instead shifting the onus probandi on the shipper to show want of due deligence on
the part of the carrier, when he was not even at hand to witness what transpired during
the entire voyage.
As earlier stated, the primordial issue here is whether a common carrier becomes a
private carrier by reason of a charter-party; in the negative, whether the shipowner in the
instant case was able to prove that he had exercised that degree of diligence required of
him under the law.
It is said that etymology is the basis of reliable judicial decisions in commercial cases.
This being so, we find it fitting to first define important terms which are relevant to our
discussion.
A "charter-party" is defined as a contract by which an entire ship, or 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 particular voyage, in
consideration of the payment of freight; 21 Charter parties are of two types: (a) contract
of affreightment which involves the use of shipping space on vessels leased by the
owner in part or as a whole, to carry goods for others; and, (b) charter by 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 possession and consequent control over its
navigation, including the master and the crew, who are his servants. Contract of
affreightment may either be time charter, wherein the vessel is leased to the charterer
for a fixed period of time, or voyage charter, wherein the ship is leased for a single
voyage. 22 In both cases, the charter-party provides for the hire of vessel only, either for
a determinate period of time or for a single or consecutive voyage, the shipowner to
supply the ship's stores, pay for the wages of the master and the crew, and defray the
expenses for the maintenance of the ship.
Upon the other hand, the term "common or public carrier" is defined in Art. 1732 of the
Civil Code. 23 The definition extends to carriers either by land, air or water which hold
themselves out as ready to engage in carrying goods or transporting passengers or both
for compensation as a public employment and not as a casual occupation. The
distinction between a "common or public carrier" and a "private or special carrier" lies in
the character of the business, such that if the undertaking is a single transaction, not a
part of the general business or occupation, although involving the carriage of goods for a
fee, the person or corporation offering such service is a private carrier. 24
Article 1733 of the New Civil Code mandates that common carriers, by reason of the
nature of their business, should observe extraordinary diligence in the vigilance over the
goods they carry.25 In the case of private carriers, however, the exercise of ordinary
diligence in the carriage of goods will suffice. Moreover, in the case of loss, destruction
or deterioration of the goods, common carriers are presumed to have been at fault or to
have acted negligently, and the burden of proving otherwise rests on them.26 On the
contrary, no such presumption applies to private carriers, for whosoever alleges damage
to or deterioration of the goods carried has the onus of proving that the cause was the
negligence of the carrier.
It is not disputed that respondent carrier, in the ordinary course of business, operates as
a common carrier, transporting goods indiscriminately for all persons. When petitioner
chartered the vessel M/V "Sun Plum", the ship captain, its officers and compliment were
under the employ of the shipowner and therefore continued to be under its direct
supervision and control. Hardly then can we charge the charterer, a stranger to the crew
and to the ship, with the duty of caring for his cargo when the charterer did not have any
control of the means in doing so. This is evident in the present case considering that the
steering of the ship, the manning of the decks, the determination of the course of the
voyage and other technical incidents of maritime navigation were all consigned to the
officers and crew who were screened, chosen and hired by the shipowner. 27
It is therefore imperative that a public carrier shall remain as such, notwithstanding the
charter of the whole or portion of a vessel by one or more persons, provided the charter
is limited to the ship only, as in the case of a time-charter or voyage-charter. It is only
when the charter includes both the vessel and its crew, as in a bareboat or demise that a
common carrier becomes private, at least insofar as the particular voyage covering the
charter-party is concerned. Indubitably, a shipowner in a time or voyage charter retains
possession and control of the ship, although her holds may, for the moment, be the
property of the charterer. 28
Respondent carrier's heavy reliance on the case of Home Insurance Co. v. American
Steamship Agencies, supra, is misplaced for the reason that the meat of the controversy
therein was the validity of a stipulation in the charter-party exempting the shipowners
from liability for loss due to the negligence of its agent, and not the effects of a special
charter on common carriers. At any rate, the rule in the 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 our jurisdiction, for we have observed that the growing concern for
safety in the transportation of passengers and /or carriage of goods by sea requires a
more exacting interpretation of admiralty laws, more particularly, the rules governing
common carriers.
We quote with approval the observations of Raoul Colinvaux, the learned barrister-at-
law 30 —
As a matter of principle, it is difficult to find a valid distinction between
cases in which a ship is used to convey the goods of one 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 different; the shipowner is
not then a carrier. But where her services only are let, the same grounds
for imposing a strict responsibility exist, whether he is employed by one
or many. The master and the crew are in each case his servants, the
freighter in each case is usually without any representative on board the
ship; the same opportunities for fraud or collusion occur; and the same
difficulty in discovering the truth as to what has taken place arises . . .
In an action for recovery of damages against a common carrier on the goods shipped,
the shipper or consignee should first prove the fact of shipment and its consequent loss
or damage while the same was in the possession, actual or constructive, of the carrier.
Thereafter, the burden of proof shifts to respondent to prove that he has exercised
extraordinary diligence required by law or that the loss, damage or deterioration of the
cargo was due to fortuitous event, or some other circumstances inconsistent with its
liability. 31
To our mind, respondent carrier has sufficiently overcome, by clear and convincing
proof, the prima faciepresumption of negligence.
The master of the carrying vessel, Captain Lee Tae Bo, in his deposition taken on 19
April 1977 before the Philippine Consul and Legal Attache in the Philippine Embassy in
Tokyo, Japan, testified that before the fertilizer was loaded, the four (4) hatches of the
vessel were cleaned, dried and fumigated. After completing the loading of the cargo in
bulk in the ship's holds, the steel pontoon hatches were closed and sealed with iron lids,
then covered with three (3) layers of serviceable tarpaulins which were tied with steel
bonds. The hatches remained close and tightly sealed while the ship was in transit as
the weight of the steel covers made it impossible for a person to open without the use of
the ship's boom. 32
It was also shown during the trial that the hull of the vessel was in good condition,
foreclosing the possibility of spillage of the cargo into the sea or seepage of water inside
the hull of the vessel. 33 When M/V "Sun Plum" docked at its berthing place,
representatives of the consignee boarded, and in the presence of a representative of the
shipowner, the foreman, the stevedores, and a cargo surveyor representing CSCI,
opened the hatches and inspected the condition of the hull of the vessel. The stevedores
unloaded the cargo under the watchful eyes of the shipmates who were overseeing the
whole operation on rotation basis. 34
Verily, the presumption of negligence on the part of the respondent carrier has been
efficaciously overcome by the showing of extraordinary zeal and assiduity exercised by
the carrier in the care of the cargo. This was confirmed by respondent appellate court
thus —
. . . 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 show absence of negligence by the defendant
carrier; that the hull of the vessel at the time of the discharge of the cargo was
sealed and nobody could open the same except in the presence of the owner of the
cargo and the representatives of the vessel (TSN, 20 July 1977, p. 14); that the
cover of the hatches was made of steel and it was overlaid with tarpaulins, three
layers of tarpaulins and therefore their 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, all the seals were found to be intact (TSN, 20 July 1977, pp. 15-16)
(emphasis supplied).
The period during which private respondent was to observe the degree of diligence
required of it as a public carrier began from the time the cargo was unconditionally
placed in its charge after the vessel's holds were duly inspected and passed scrutiny by
the shipper, up to and until the vessel reached its destination and its hull was
reexamined by the consignee, but prior to unloading. This is clear from the limitation
clause agreed upon by the parties in the Addendum to the standard "GENCON" time
charter-party which provided for an F.I.O.S., meaning, that the loading, stowing,
trimming and discharge of the cargo was to be done by the charterer, free from all risk
and expense to the carrier. 35 Moreover, a shipowner is liable for damage to the cargo
resulting from improper stowage only when the stowing is done by stevedores employed
by him, and therefore under his control and supervision, not when the same is done by
the consignee or stevedores under the employ of the latter. 36
Article 1734 of the New Civil Code provides that common carriers are not responsible for
the loss, destruction or deterioration of the goods if caused by the charterer of the goods
or defects in the packaging or in the containers. The Code of Commerce also provides
that all losses and deterioration which the goods may suffer during the transportation by
reason of fortuitous event, force majeure, or the inherent defect of the goods, shall be for
the account and risk of the shipper, and that proof of these accidents is incumbent upon
the carrier. 37 The carrier, nonetheless, shall be liable for the loss and damage resulting
from the preceding causes if it is proved, as against him, that they arose through his
negligence or by reason of his having failed to take the precautions which usage has
established among careful persons. 38
Respondent carrier presented a witness who testified on the characteristics of the
fertilizer shipped and the expected risks of bulk shipping. Mr. Estanislao Chupungco, a
chemical engineer working with Atlas Fertilizer, described Urea as a chemical compound
consisting mostly of ammonia and carbon monoxide compounds which are used as
fertilizer. Urea also contains 46% nitrogen and is highly soluble in water. However,
during storage, nitrogen and ammonia do not normally evaporate even on a long
voyage, provided that the temperature inside the hull does not exceed eighty (80)
degrees centigrade. Mr. Chupungco further added that in unloading fertilizer in bulk with
the use of a clamped shell, losses due to spillage during such operation amounting to
one percent (1%) against the bill of lading is deemed "normal" or "tolerable." The primary
cause of these spillages is the clamped shell which does not seal very tightly. Also, the
wind tends to blow away some of the materials during the unloading process.
The dissipation of quantities of fertilizer, or its daterioration in value, is caused either by
an extremely high temperature in its place of storage, or when it comes in contact with
water. When Urea is drenched in water, either fresh or saline, some of its particles
dissolve. But the salvaged portion which is in liquid form still remains potent and usable
although no longer saleable in its original market value.
The probability of the cargo being damaged or getting mixed or contaminated with
foreign particles was made greater by the fact that the fertilizer was transported in "bulk,"
thereby exposing it to the inimical effects of the elements and the grimy condition of the
various pieces of equipment used in transporting and hauling it.
The evidence of respondent carrier also showed that it was highly improbable for sea
water to seep into the vessel's holds during the voyage since the hull of the vessel was
in good condition and her hatches were tightly closed and firmly sealed, making the M/V
"Sun 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 to have occurred while the
same was being transported from the ship to the dump trucks and finally to the
consignee's warehouse. This 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 just an approximation or
estimate made by them after the fertilizer was discharged from the vessel and
segregated from the rest of the cargo.

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 harbor area while the cargo was
being discharged according to the supply officer of PPI, who also testified that it was
windy at the waterfront and along the shoreline where the dump trucks passed enroute
to the consignee's warehouse.

Indeed, we agree with respondent carrier that bulk shipment of highly soluble goods like
fertilizer carries with it the risk of loss or damage. More so, with a variable weather
condition prevalent during its unloading, as was the case at bar. This is a risk the
shipper or the owner of the goods has to face. Clearly, respondent carrier has
sufficiently proved the inherent character of the goods which makes it highly vulnerable
to deterioration; as well as the inadequacy of its packaging which further contributed to
the loss. On the other hand, no proof was adduced by the petitioner showing that the
carrier was remise in the exercise of due diligence in order to minimize the loss or
damage to the goods it carried.

WHEREFORE, the petition is DISMISSED. The assailed decision of the Court of

Appeals, which reversed the trial court, is AFFIRMED. Consequently, Civil Case No.
98623 of the then Court of the First Instance, now Regional Trial Court, of Manila should
be, as it is hereby DISMISSED.

Costs against petitioner.

SO ORDERED.