CONCEPT OF COMMON CARRIER

PERENA v ZARATE GR NO 157917

AUGUST 29, 2012
FACTS:
Spouses Teodoro and Nanette Pereñas were engaged in the business of transporting students
from their respective residences in Parañaque City to Don Bosco in Pasong Tamo, Makati
City, and back. In their business, the Pereñas used a KIA Ceres Van which had a capacity to
transport 14 students at a time. They employed Clemente Alfaro as driver of the van.
In June 1996, spouses Nicolas and Teresita Zarate, contracted the Pereñas to transport their
15-year-old son, Aaron. On August 22, 1996, as on previous school days, the van picked
Aaron up around 6:00 a.m. The van, with its air-conditioning unit turned on and the stereo
playing loudly, ultimately carried all the 14 student riders on their way to Don Bosco.
Considering that the students were due at Don Bosco by 7:15 a.m., and that they were already
running late because of the heavy vehicular traffic on SLEX, Alfaro took an alternate route at
about 6:45 a.m. by traversing the narrow path underneath the Magallanes Interchange that
was then commonly used as a short cut. At the time, the narrow path was marked by piles of
construction materials and parked passenger jeepneys, and the railroad crossing in the narrow
path had no railroad warning signs, or watchmen, or other responsible persons manning the
crossing, the bamboo barandilla was up, leaving the railroad crossing open to traversing
motorists.
At about the time the van was to traverse the railroad crossing, the PNR train was in the
vicinity of the Magallanes Interchange travelling northbound. As the train neared the railroad
crossing, Alfaro drove the van across the railroad tracks, closely tailing a large passenger bus.
His view of the oncoming train was blocked because he overtook the passenger bus on its left
side. The train blew its horn to warn motorists of its approach. When the train was about 50
meters away from the passenger bus and the van, Alano, the train operator, applied the
ordinary brakes of the train. He applied the emergency brakes only when he saw that a
collision was imminent. The passenger bus successfully crossed the railroad tracks, but the
van did not. The train hit the rear end of the van, and the impact threw nine of the 12 students
in the rear, including Aaron, out of the van. Aaron landed in the path of the train, which
dragged his body and severed his head, instantaneously killing him. Alano fled the scene on
board the train, and did not wait for the police investigator to arrive.
Devastated by the early and unexpected death of Aaron, the Zarates commenced this action
for damages against Alfaro, the Pereñas, PNR and Alano.
ISSUE:
WON the Pereñas and PNR are jointly and severally liable for damages.
HELD:
The RTC found the Pereñas and the PNR negligent. The CA affirmed the findings. The SC
concur with the CA.
The Pereñas defense was that they exercised the diligence of a good father of the family in
the selection and supervision of the van driver, by seeing to it that Alfaro had a driver’s
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license and that he had not been involved in any vehicular accident prior to the fatal collision
with the train; that they even had their own son travel to and from school on a daily basis; and
that Teodoro Pereña himself sometimes accompanied Alfaro in transporting the passengers to
and from school. The RTC gave scant consideration to such defense by regarding such
defense as inappropriate in an action for breach of contract of carriage.
Perena’s defense of diligence of a good father in the selection and supervision of their driver
is unavailable for breach of contract of carriage. Perenas operated as a common carrier; and
their standard of care was extraordinary diligence, not only diligence of a good father.
A carrier is a person or corporation who undertakes to transport or convey goods from one
place to another, gratuitously or for hire. They may be private or common;
Private carrier is one who, without holding himself or itself out to the public as ready to act
for all who may desire his or its services, undertakes, by special agreement in a particular
instance only, to transport goods or persons from one place to another either gratutitously or
for hire. The diligence required of a private carrier is only ordinary.
Common Carrier is a 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 such services to the public. Diligence required is to observe extraordinary diligence,
and is presumed to be at fault or to have acted negligently in case of the loss of effects of
passengers, or death or injuries to passengers.
The true test for a common carrier is not the quantity or extent of business actually
transacted, or the number of conveyances, but whether the undertaking is a part of the activity
that he has held out to the general public as his business or occupation. The Perenas held
themselves out as a ready transportation indiscriminately to the students of a particular school
living within or near where they operated the service and for a fee. Perena, being a common
carrier, was already presumed to be negligent at the time of the accident because death
occurred to their passenger. The omissions of care on the part of the driver constituted
negligence.
Article 1755 of the Civil Code specifies that the common carrier should "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." To successfully fend off
liability in an action upon the death or injury to a passenger, the common carrier must prove
his or its observance of that extraordinary diligence; otherwise, the legal presumption that he
or it was at fault or acted negligently would stand.

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CRISOSTOMO V CA G.R. No. 138334
August 25, 2003
FACTS:
Petitioner Estela Crisostomo contracted the services of respondent Caravan Travel and Tours
International to arrange and facilitate her booking, ticketing and accommodation in a tour
dubbed "Jewels of Europe". The package tour included the countries of England, Holland,
Germany, Austria, Liechstenstein, Switzerland and France at a total cost of P74,322.70. She
was given a 5% discount on the amount, which included airfare, and the booking fee was also
waived because petitioner’s niece, Meriam Menor, was respondent company’s ticketing
manager.
Menor went to her aunt to deliver the petitioner’s travel documents and plane tickets.
Petitioner then gave her full payment for the package. She was told to be at NAIA on
Saturday(June 15, 1991), two hours before her flight.
Without checking her travel documents, petitioner went to NAIA on Saturday, to take the
flight for the first leg of her journey from Manila to Hongkong. She discovered that the flight
she was supposed to take had already departed the previous day. She learned that her plane
ticket was for the flight scheduled on June 14, 1991. She thus called up Menor to complain.
Menor prevailed upon Estela to take another tour the "British Pageant”, which cost P20, 881.
She then gave caravan travel and tours P7, 980.00 as partial payment and commenced the trip
in July 1991.
Upon petitioner’s return from Europe, she demanded from respondent the reimbursement of
P61,421.70, representing the difference between the sum she paid for "Jewels of Europe" and
the amount she owed respondent for the "British Pageant" tour. Despite several demands,
respondent company refused to reimburse the amount, contending that the same was non-
refundable. Petitioner was thus constrained to file a complaint against respondent for breach
of contract of carriage and damages.
Petitioner alleged that her failure to join "Jewels of Europe" was due to respondent’s fault
since it did not clearly indicate the departure date on the plane ticket. Respondent was also
negligent in informing her of the wrong flight schedule through its employee Menor. She
insisted that the "British Pageant" was merely a substitute for the "Jewels of Europe" tour,
such that the cost of the former should be properly set-off against the sum paid for the latter.
Respondent company denied responsibility for the petitioner’s failure to join the first tour.
They insisted that petitioner was informed of the correct departure date, which was clearly
and legibly printed on the plane ticket. The travel documents were given to petitioner two
days ahead of the scheduled trip. Petitioner had only herself to blame for missing the flight,
as she did not bother to read or confirm her flight schedule as printed on the ticket. They can
no loner reimburse the amount paid considering that the same had already been remitted to its
principal which already billed the same even if the petitioner did not join the tour.
Respondent also maintained that the "British Pageant" was not a substitute for the package
tour that she missed. This tour was independently procured by petitioner after realizing that
she made a mistake in missing her flight for "Jewels of Europe". Petitioner was allowed to
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make a partial payment of only US$300.00 for the second tour because her niece was then an
employee of the travel agency. Consequently, respondent prayed that petitioner be ordered to
pay the balance of P12,901.00 for the "British Pageant" package tour.
RTC held that respondent was negligent in erroneously advising petitioner of her departure
date through its employee. However, petitioner should have verified the exact date and time
of departure by looking at her ticket and should have simply not relied on Menor’s verbal
representation. The trial court thus declared that petitioner was guilty of contributory
negligence and accordingly, deducted 10% from the amount being claimed as refund.
CA likewise found both parties at fault. However, it held that the petitioner is more negligent
than respondent because as a lawyer and well-traveled person, she should have known better
than to simply rely on what was told to her. This being so, she is not entitled to any form of
damages. Petitioner also forfeited her right to the "Jewels of Europe" tour and must therefore
pay respondent the balance of the price for the "British Pageant" tour.
ISSUE:
WON Caravan Travel and Tours, as a travel agency, is required to exercise extraordinary
diligence within the purview of a common carrier.
RULING:
A common carrier is defined under Article 1732 of the Civil Code as persons, corporations,
firms or associations engaged in the business of carrying or transporting passengers or goods
or both, by land, water or air, for compensation, offering their services to the public.
It is obvious from the above definition that respondent is not an entity engaged in the
business of transporting either passengers or goods and is therefore, neither a private nor a
common carrier. Respondent did not undertake to transport petitioner from one place to
another since its covenant with its customers is simply to make travel arrangements in their
behalf. Respondent’s services as a travel agency include procuring tickets and facilitating
travel permits or visas as well as booking customers for tours.
Respondent not being a common carrier but a travel agency is not bound under the law to
observe extraordinary diligence in the performance of its obligation. The nature of the
contractual relation between petitioner and respondent is determinative of the degree of care
required in the performance of the latter’s obligation under the contract. For reasons of public
policy, a common carrier in a contract of carriage is bound by law to carry passengers as far
as human care and foresight can provide using the utmost diligence of very cautious persons
and with due regard for all the circumstances. As earlier stated, however, respondent is not a
common carrier but a travel agency. It is thus not bound under the law to observe
extraordinary diligence in the performance of its obligation, as petitioner claims.
WHEREFORE, the instant petition is DENIED for lack of merit. The decision of the Court of
Appeals in CA-G.R. CV No. 51932 is AFFIRMED. Accordingly, petitioner is ordered to pay
respondent the amount of P12,901.00 representing the balance of the price of the British
Pageant Package Tour, with legal interest thereon at the rate of 6% per annum, to be
computed from the time the counterclaim was filed until the finality of this Decision. After
this Decision becomes final and executory, the rate of 12% per annum shall be imposed until

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the obligation is fully settled, this interim period being deemed to be by then an equivalent to
a forbearance of credit

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FIRST PHILIPPINES INDUSTRIAL v CA
Common Carrier Definition
FACTS:

 Petitioner (FPIC) 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 1967 and renewed by the Energy Regulatory Board in
1992.
 In January 1995, FPIC 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 FPIC to pay a local tax based on its gross receipts for the
fiscal year 1993 pursuant to the LGC.[3] The respondent City Treasurer assessed a
business tax on the FPIC 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, FPIC paid
the tax under protest in the amount of P239,019.01 for the first quarter of 1993.
 On January 20, 1994, FPIC filed a letter-protest[4] addressed to the respondent City
Treasurer, alleging exemption under Section 133 (j) of the LGC. City Treasurer
denied the protest contending that FPIC cannot be considered engaged in
transportation business, thus it cannot claim.[5]
 "Section 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
(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."
 On June 15, 1994, FPIC filed with the Regional Trial Court of Batangas City a
complaint[6] for tax refund with prayer for a writ of preliminary injunction against
respondents City of Batangas and City Treasurer.
 Respondents argued that FPIC cannot be exempt from taxes under Section 133 (j) of
the LGC 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, RTC ruled against FPIC. CA ruled against FPIC. Affirmed RTC.
MR denied.

ISSUE: Is FPIC a common carrier?

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HELD: 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.

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.

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LOADMASTERS v GLODEL
Common Carrier v Private Carrier

FACTS:

 The case is a petition for review on certiorari under Rule 45 of the Revised Rules of
Court assailing the August 24, 2007 Decision of the Court of Appeals (CA) in CA-
G.R. CV No. 82822.
 On August 28, 2001, R&B Insurance issued Marine Policy No. MN-00105/2001 in
favor of Columbia to insure the shipment of 132 bundles of electric copper cathodes
against All Risks. On August 28, 2001, the cargoes were shipped on board the vessel
"Richard Rey" from Isabela, Leyte, to Pier 10, North Harbor, Manila. They arrived on
the same date.
 Columbia engaged the services of Glodel for the release and withdrawal of the
cargoes from the pier and the subsequent delivery to its warehouses/plants. Glodel, in
turn, engaged the services of Loadmasters for the use of its delivery trucks to
transport the cargoes to Columbia’s warehouses/plants in Bulacan
and Valenzuela City.
 The goods were loaded on board twelve (12) trucks owned by Loadmasters, driven by
its employed drivers and accompanied by its employed truck helpers. Of the six (6)
trucks route to Balagtas, Bulacan, only five (5) reached the destination. One (1) truck,
loaded with 11 bundles or 232 pieces of copper cathodes, failed to deliver its cargo.
 Later on, the said truck, was recovered but without the copper cathodes. Because of
this incident, Columbia filed with R&B Insurance a claim for insurance indemnity in
the amount of P1,903,335.39. After the investigation, R&B Insurance
paid Columbia the amount of P1,896,789.62 as insurance indemnity.
 R&B Insurance, thereafter, filed a complaint for damages against both Loadmasters
and Glodel before the Regional Trial Court, Branch 14, Manila (RTC), It sought
reimbursement of the amount it had paid to Columbia for the loss of the subject cargo.
It claimed that it had been subrogated "to the right of the consignee to recover from
the party/parties who may be held legally liable for the loss."
 On November 19, 2003, the RTC rendered a decision holding Glodel liable for
damages for the loss of the subject cargo and dismissing Loadmasters’ counterclaim
for damages and attorney’s fees against R&B Insurance.
 Both R&B Insurance and Glodel appealed the RTC decision to the CA.
 On August 24, 2007, the CA rendered that the appellee is an agent of appellant
Glodel, whatever liability the latter owes to appellant R&B Insurance Corporation as

8
 insurance indemnity must likewise be the amount it shall be paid by appellee
Loadmasters. Hence, Loadmasters filed the present petition for review on certiorari.

ISSUE:
Whether or not Loadmasters and Glodel are common carriers to determine their liability for
the loss of the subject cargo.
RULING:
The petition is PARTIALLY GRANTED. Judgment is rendered declaring petitioner
Loadmasters Customs Services, Inc. and respondent Glodel Brokerage Corporation jointly
and severally liable to respondent

Under Article 1732 of the Civil Code, common carriers are persons, corporations, firms, or
associations engaged in the business of carrying or transporting passenger or goods, or both
by land, water or air for compensation, offering their services to the public. Loadmasters is a
common carrier because it is engaged in the business of transporting goods by land, through
its trucking service. It is a common carrier as distinguished from a private carrier wherein
the carriage is generally undertaken by special agreement and it does not hold itself out to
carry goods for the general public. The distinction is significant in the sense that "the rights
and obligations of the parties to a contract of private carriage are governed principally by
their stipulations, not by the law on common carriers."11

In the present case, there is no indication that the undertaking in the contract between
Loadmasters and Glodel was private in character. There is no showing that Loadmasters
solely and exclusively rendered services to Glodel.

Glodel is also considered a common carrier within the context of Article 1732.  For as stated
and well provided in the case  of Schmitz Transport & Brokerage Corporation v. Transport
Venture, Inc., a customs broker is also regarded as a common carrier, the transportation of
goods being an integral part of its business.
Loadmasters and Glodel, being both common carriers, are mandated from the nature of their
business and for reasons of public policy, to observe the extraordinary diligence in the
vigilance over the goods transported by them according to all the circumstances of such case,
as required by Article 1733 of the Civil Code. When the Court speaks of extraordinary
diligence, it is that extreme measure of care and caution which persons of unusual prudence
and circumspection observe for securing and preserving their own property or rights. With
respect to the time frame of this extraordinary responsibility, the Civil Code provides that the
exercise of extraordinary diligence lasts from the time the goods are unconditionally placed
in the possession of, and received by, the carrier for transportation until the same are
delivered, actually or constructively, by the carrier to the consignee, or to the person who has
a right to receive them.

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G.R. No. 101503 September 15, 1993
PLANTERS PRODUCTS, INC., petitioner, vs. COURT OF APPEALS, SORIAMONT
STEAMSHIP AGENCIES AND KYOSEI KISEN KABUSHIKI KAISHA,

Facts:
Planters Products, Inc. purchased from Mitsubishi International Corporation 9,329.7069
metric tons of Urea 46% fertilizer, which the latter shipped aboard the cargo vessel M/V Sun
Plum on June 16, 1974. Prior to its voyage, a time-charter party was entered into between
Mitsubishi as shipper, and Kyosei Kisen Kabushiki Kaisha as shipowner. Before loading the
fertilizer aboard the vessel, four of her holds were presumably inspected by the charterer’s
representative and found it fit to take the load. After loading the cargo, the steel hatches were
closed with heavy iron lids, covered with 3 layers of tarpaulin then tied with steel bonds. It
remained sealed throughout the entire voyage.
Upon arrival of the vessel, petitioner unloaded the cargo, which took 11 days. A private
marine and cargo surveyor, Cargo Superintendents Company, Inc. (CSCI) was hired by
petitioner to determine the outturn of the cargo shipped. CSCI reported shortage of 106.726
metric tons, and contamination of 18 metric tons due to dirt. PPI sent a claim letter against
Soriamont Steamship Agencies, the resident agent of KKKK. The request was denied, hence,
PPI filed an action for damages before the CFI Manila. The lower court sustained the
petitioner’s claim, but such decision was reversed by the appellate court, which absolved the
carrier from liability. The appellate court ruled that the vessel was a private carrier and not a
common carrier by reason of the charter party.

Issue:
1. Whether a common carrier becomes a private carrier by reason of a charter party
2. Whether the ship owner was able to prove the exercise of the diligence required under the
circumstances

Ruling:
1. No
A Public Carrier remains 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 vessels and

10
its crew, as in a bareboat or demise that a common carrier becomes a private, at least insofar
as the particular voyage covering the charter-party is concerned.
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; 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. While the term "common or public carrier" is defined
in Art. 1732 of the Civil Code. 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.
2.
Yes. respondent carrier has sufficiently overcome, by clear and convincing proof, the prima
facie presumption of negligence. The Captain of the vessel 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.”
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. Such is clear from the limitation clause agreed upon by the parties, that
the loading, stowing, trim min and discharge of the cargo was to be done by the charterer,
free from all risk and expense to the carrier.
Respondent carrier 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 the
hatches were tightly closed and firmly sealed, making the M/V "Sun Plum" seaworthy to
carry the cargo it 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. The Court noted that vessel arrived in the
month of July and it was also raining from time to time at the harbor area while the cargo was
being discharge, hence the risk of loss or damage considering the high soluble quality of
fertilizer as it was unloaded to the dump trucks and passed enroute to the consignee’s
warehouse. 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.

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G.R. No. 184300               July 11, 2012
MALAYAN INSURANCE CO., INC., Petitioner, vs. PHILIPPINES FIRST
INSURANCE CO., INC. and REPUTABLE FORWARDER SERVICES,
INC., Respondents

FACTS:
Wyeth Philippines, Inc. (Wyeth) and respondent Reputable Forwarder Services, Inc.
(Reputable) had been annually executing a contract of carriage, whereby the latter undertook
to transport and deliver the former’s products to its customers, dealers or salesmen
Philippines First insured Wyeth’s nutritional, pharmaceutical and other products usual or
incidental to the insured’s business while the same were being transported or shipped in the
Philippines.
Under the contract, Reputable undertook to answer for “all risks with respect to the goods and
shall be liable to Wyeth, for the loss, destruction, or damage of the goods/products due to any
and all causes whatsoever, including theft, robbery, flood, storm, earthquakes, lightning, and
other force majeure while the goods/products are in transit and until actual delivery to the
customers, salesmen, and dealers of Wyeth”.
Reputable signed a Special Risk Insurance Policy (SR Policy) with petitioner Malayan for the
amount of P1,000,000.00.
During the effectivity of the Marine Policy and SR Policy, Reputable received from Wyeth
1,000 boxes of Promil infant formula worth P2,357,582.70 to be delivered by Reputable to
Mercury Drug in Libis, Quezon City. Unfortunately, the truck carrying Wyeth s products was
hijacked by about 10 armed men. The hijacked truck was recovered two weeks later without
its cargo
Philippines First, pursuant to the Marine Policy, paid Wyeth P2,133,257.00 as indemnity.
Philippines First then demanded reimbursement from Reputable, having been subrogated to
the rights of Wyeth by virtue of the payment. The latter, however, ignored the demand.
Philippines First instituted an action for sum of money against Reputable and alleged that
Reputable is a “private corporation engaged in the business of a common carrier.”
In its answer, Reputable claimed that it is a private carrier.
The RTC rendered its Decision finding Reputable liable to Philippines First for the amount of
indemnity it paid to Wyeth, among others. In turn, Malayan was found to be liable to
Reputable to the extent of the policy coverage.
The CA ruled, among others, that: (1) Reputable is estopped from assailing the validity of the
contract of carriage on the ground of lack of signature of Wyeth’s representative/s; (2)
Reputable is liable under the contract for the value of the goods even if the same was lost due
to fortuitous event; and (3) Section 12 of the SR Policy prevails over Section 5, it being the
latter provision;

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ISSUE:
Whether or not Reputable is a common carrier

RULING:

The Court agrees with the RTC and CA that Reputable is a private carrier.
Under Article 1732 of the Civil Code, common carriers are persons, corporations, firms, or
associations engaged in the business of carrying or transporting passenger or goods, or both
by land, water or air for compensation, offering their services to the public.
On the other hand, a private carrier is one wherein the carriage is generally undertaken by
special agreement and it does not hold itself out to carry goods for the general public.
A common carrier becomes a private carrier when it undertakes to carry a special cargo or
chartered to a special person only. For all intents and purposes, therefore, Reputable operated
as a private/special carrier with regard to its contract of carriage with Wyeth.
The extent of a private carrier’s obligation is dictated by the stipulations of a contract it
entered into, provided its stipulations, clauses, terms and conditions are not contrary to law,
morals, good customs, public order, or public policy. “The Civil Code provisions on common
carriers should not be applied where the carrier is not acting as such but as a private carrier.
Public policy governing common carriers has no force where the public at large is not
involved.”

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G.R. No. 150255. April 22, 2005
SCHMITZ TRANSPORT & BROKERAGE CORPORATION, Petitioners, 
vs.
TRANSPORT VENTURE, INC., INDUSTRIAL INSURANCE COMPANY, LTD., and
BLACK SEA SHIPPING AND DODWELL now INCHCAPE SHIPPING
SERVICES, Respondents.

Customs Broker as Common Carrier

FACTS:
545 hot rolled steel sheets in coil were shipped to be discharged at the port of Manila in favor
of the consignee, Little Giant Steel Pipe Corporation (Little Giant). The cargoes were insured
against all risks with Industrial Insurance Company Ltd. (Industrial Insurance).

When the vessel arrived at the port of Manila, the consignee, Little Giant, engaged Schmitz
Transport’s services to secure the requisite clearances, to receive the cargoes from the
shipside, and to deliver them to its (the consignee’s) warehouse at Cainta, Rizal. Schmitz
Transport in turn engaged the services of TVI to send a barge and tugboat at shipside.

On October 26, 1991, around 4:30 p.m., TVI’s tugboat "Lailani" towed the barge "Erika V"
to shipside. By 7:00 p.m. also of October 26, 1991, the tugboat, after positioning the barge
alongside the vessel, left and returned to the port terminal.

At 9:00 p.m., arrastre operator Ocean Terminal Services Inc. commenced to unload 37 of the
545 coils from the vessel unto the barge and by 12:30 a.m. of October 27, 1991 during which
the weather condition had become inclement due to an approaching storm, the unloading unto
the barge of the 37 coils was accomplished. However, no tugboat pulled the barge back to the
pier.

At around 5:30 a.m. of October 27, 1991, due to strong waves, the crew of the barge
abandoned it and transferred to the vessel. The barge pitched and rolled with the waves and
eventually capsized, washing the 37 coils into the sea. At 7:00 a.m., a tugboat finally arrived
to pull the already empty and damaged barge back to the pier. Earnest efforts on the part of
both the consignee Little Giant and Industrial Insurance to recover the lost cargoes proved
futile.

Little Giant thus filed a formal claim against Industrial Insurance which paid it the amount of
₱5,246,113.11. Later on, Industrial Insurance filed a complaint against the defendants before
the RTC of Manila, for the recovery of the amount it paid to Little Giant plus adjustment

14
fees, attorney’s fees, and litigation expenses. Industrial Insurance faulted the defendants for
undertaking the unloading of the cargoes while typhoon signal No. 1 was raised in Metro
Manila.

RTC held all the defendants negligent for unloading the cargoes outside of the breakwater
notwithstanding the storm signal. All the defendants appealed to the Court of Appeals which,
by decision of June 27, 2001, affirmed in toto the decision of the trial court, it finding that all
the defendants were common carriers.

Subsequently, petitioner Schmitz Transport filed the present petition against TVI, Industrial
Insurance and Black Sea assailing, among others, the finding that it is a common carrier.
ISSUE:
Should liability for the loss attach to Schmitz Transport as a common carrier?

RULING: YES.
The proximate cause of the loss is proved to be that no tugboat towed back the barge to the
pier after the cargoes were completely loaded by 12:30 in the morning. Had the barge been
towed back promptly to the pier, the deteriorating sea conditions notwithstanding, the loss
could have been avoided.
The Court, as did the appellate court, finds that petitioner is a common carrier for it
undertook to transport the cargoes from the shipside of "M/V Alexander Saveliev" to the
consignee’s warehouse at Cainta, Rizal. As the appellate court put it, "as long as a person or
corporation holds itself to the public for the purpose of transporting goods as a business, it is
already considered a common carrier regardless if it owns the vehicle to be used or has to hire
one."
It is settled that under a given set of facts, a customs broker may be regarded as a common
carrier.
As it was held in A.F. Sanchez Brokerage, Inc. v. The Honorable Court of Appeals, Article
1732 does not distinguish between one whose principal business activity is the carrying of
goods and one who does such carrying only as an ancillary activity. The contention,
therefore, of petitioner that it is not a common carrier but a customs broker whose principal
function is to prepare the correct customs declaration and proper shipping documents as
required by law is bereft of merit. It suffices that petitioner undertakes to deliver the goods
for pecuniary consideration.
In Calvo v. UCPB General Insurance Co. Inc., this Court held that as the transportation of
goods is an integral part of a customs broker, the customs broker is also a common carrier.
For to declare otherwise "would be to deprive those with whom it contracts the protection
which the law affords them notwithstanding the fact that the obligation to carry goods for its
customers, is part and parcel of petitioner’s business."

15
Further, it is true petitioner was the broker-agent of Little Giant in securing the release of the
cargoes. However, in effecting the transportation of the cargoes from the shipside and into
Little Giant’s warehouse, petitioner was discharging its own personal obligation under a
contact of carriage.
Thus, liability may still attach to petitioner as a common carrier. For TVI, its liability arose
due to its negligence for failure to promptly provide a tugboat – it being the proximate cause
of the loss.

16
G.R. No. 131621 September 28, 1999
LOADSTAR SHIPPING CO., INC., petitioner, 
vs.
COURT OF APPEALS and THE MANILA INSURANCE CO., INC., respondents.

Lack of Certificate of Public Convenience

FACTS:
On 19 November 1984, LOADSTAR received on board its vessel, M/V "Cherokee", several
goods for shipment.
The goods, amounting to P6,067,178, were insured for the same amount with MIC against
various risks including "TOTAL LOSS BY TOTAL OF THE LOSS THE VESSEL." The
vessel, in turn, was insured by Prudential Guarantee & Assurance, Inc. (hereafter PGAI) for
P4 million.

On 20 November 1984, on its way to Manila, the vessel, along with its cargo, sank off
Limasawa Island. As a result of the total loss of its shipment, the consignee made a claim
with LOADSTAR which, however, ignored the same. As the insurer, MIC paid P6,075,000
to the insured in full settlement of its claim, and the latter executed a subrogation receipt
therefor.

On 4 February 1985, MIC filed a complaint against LOADSTAR and PGAI, alleging that the
sinking of the vessel was due to the fault and negligence of LOADSTAR and its employees.
In its answer, LOADSTAR denied any liability for the loss of the shipper's goods and
claimed that sinking of its vessel was due to force majeure.

The court a quo rendered judgment in favor of MIC, prompting LOADSTAR to elevate the
matter to the court of Appeals, which, however, agreed with the trial court and affirmed its
decision in toto.

ISSUE:
Is the M/V "Cherokee" of LOADSTAR a private carrier because, among others, it was not
issued certificate of public convenience?

RULING: NO. LOADSTAR is a common carrier.

The Court held that it is not necessary that the carrier be issued a certificate of public
convenience, and this public character is not altered by the fact that the carriage of the goods
in question was periodic, occasional, episodic or unscheduled.

Under the facts and circumstances obtaining in this case, LOADSTAR fits the definition of a
common carrier under Article 1732 of the Civil Code. In the case of De Guzman v. Court of
Appeals, the Court juxtaposed the statutory definition of "common carriers" with the peculiar
circumstances of that case, viz.:

17
 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 ancillary activity (“sideline”). Article 1732 also carefully avoids making any distinction
between a person or enterprise offering transportation service on a regular or scheduled
basis and one offering such service on an occasional, episodic or unscheduled basis. Neither
does Article 1732 distinguish between a carrier offering its services to the "general
public," i.e., the general community or population, and one who offers services or solicits
business only from a narrow segment of the general population. We think that Article 1733
deliberately refrained from making such distinctions.

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.

18
 VICTORY LINER, INC. VS. GAMMAD
Topic: Degree of Diligence Required; Presumption of Fault

FACTS:
 Marie Grace Pagulayan-Gammad, was on board an air-conditioned Victory Liner bus
bound for Tuguegarao, Cagayan from Manila.
 At about 3:00 a.m., the bus while running at a high speed fell on a ravine somewhere in
Barangay Baliling, Sta. Fe, Nueva Vizcaya, which resulted in the death of Marie Grace
and physical injuries to other passengers.
 On May 14, 1996, respondent heirs of the deceased filed a complaint for damages arising
from culpa contractual against petitioner.
 In its answer, the petitioner claimed that the incident was purely accidental and that it has
always exercised extraordinary diligence in its 50 years of operation.
ISSUE:
WoN petitioner should be held liable for breach of contract of carriage.
RULING: YES.
Petitioner was correctly found liable for breach of contract of carriage. A common carrier is
bound to carry its passengers safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with due regard to all the circumstances. In a
contract of carriage, it is presumed that the common carrier was at fault or was negligent
when a passenger dies or is injured. Unless the presumption is rebutted, the court need not
even make an express finding of fault or negligence on the part of the common carrier. This
statutory presumption may only be overcome by evidence that the carrier exercised
extraordinary diligence.
In the instant case, there is no evidence to rebut the statutory presumption that the proximate
cause of Marie Grace's death was the negligence of petitioner. Hence, the courts below
correctly ruled that petitioner was guilty of breach of contract of carriage.

19
 LEA MER INDUSTRIES, INC. VS. MALAYAN INSURANCE CO., INC.
TOPIC: Defenses Available to the Common Carrier
FACTS:
 Ilian Silica Mining entered into a contract of carriage with Lea Mer Industries, Inc., for
the shipment of 900 metric tons of silica sand valued at P565,000. Consigned to Vulcan
Industrial and Mining Corporation, the cargo was to be transported from Palawan to
Manila.
 On October 25, 1991, the silica sand was placed on board Judy VII, a barge leased by Lea
Mer. During the voyage, the vessel sank, resulting in the loss of the cargo.
 Malayan Insurance Co., Inc., as insurer, paid Vulcan the value of the lost cargo. In
exercise of its right of subrogation, Malayan demanded reimbursement from Lea Mer,
which refused to comply. Consequently, Malayan instituted a Complaint with the RTC of
Manila for the collection of P565,000 from Lea Mer.
 On October 7, 1999, the trial court dismissed the Complaint, upon finding that the cause
of the loss was a fortuitous event. The RTC noted that the vessel had sunk because of the
bad weather condition brought about by Typhoon Trining. The court ruled that petitioner
had no advance knowledge of the incoming typhoon, and that the vessel had been cleared
by the Philippine Coast Guard to travel from Palawan to Manila.
 CA reversed the ruling of the trial court, finding that the vessel was not seaworthy hen it
sailed for Manila. Thus, the loss of the cargo was occasioned by petitioner's fault, not by a
fortuitous event.

ISSUE
WoN petitioner is liable for the loss of the cargo.

RULING: YES.

The Supreme Court held Lea Mer liable. It found that the latter is a common carrier being
engaged in the business of transporting goods through its vessels and that it failed to exercise
the extraordinary diligence required of common carriers. In finding Lea Mer to be a common
carrier, it ruled that the charter contract between Lea Mer and the consignee was one for
affreightment, not bareboat or demise.
The SC distinguished the two types of charter thus: in a demise charter: a) the owner of the
vessel relinquishes its possession, command, and navigation to the charterer; b) it is of private
character, and c) what governs is the stipulation of the parties; it is beyond the ambit of the
law on common carriers. Whereas, in an affreightment charter, as in the case at hand: a) the
owner of the vessel maintains the manning and control over the boat, b) the owner is
considered a common carrier, and c) pertinent laws governing common carriers were
applicable. As such, Lea Mer had the burden of showing that it exercised extraordinary
diligence to prevent the loss or damage. In this case, the Court found Lea Mer’s rebuttal
evidence to be “sorely insufficient.”

Fortuitous event as a defense available to common carriers:

20
Article 1174 of the Civil Code provides that "no person shall be responsible for a fortuitous
event which could not be foreseen, or which, though foreseen, was inevitable." Thus, if the
loss or damage was due to such an event, a common carrier is exempted from liability.
Jurisprudence defines the elements of a "fortuitous event" as follows:
(a) the cause of the unforeseen and unexpected occurrence, or the failure of the
debtors to comply with their obligations, must have been independent of human will;
(b) the event that constituted the caso fortuito must have been impossible to foresee
or, if foreseeable, impossible to avoid; (c) the occurrence must have been such as to
render it impossible for the debtors to fulfill their obligation in a normal manner; and
(d) the obligor must have been free from any participation in the aggravation of the
resulting injury to the creditor.

To excuse the common carrier fully of any liability, the fortuitous event must have been the
proximate and only cause of the loss. Moreover, it should have exercised due diligence to
prevent or minimize the loss before, during and after the occurrence of the fortuitous event.

To be absolved from liability, the common carrier must not only show that there was an
unforeseen even, but also that it was free from any fault. As the common carrier, Lea Mer
bore the burden of proving that it had exercised extraordinary diligence to avoid the loss, or
that the loss had been occasioned by a fortuitous event -- an exempting circumstance. Lea
Mer claimed that the loss of the cargo was due to the bad weather condition brought about by
Typhoon Trining. Evidence was presented to show that petitioner had not been informed of
the incoming typhoon, and that the Philippine Coast Guard had given it clearance to begin the
voyage. On October 25, 1991, the date on which the voyage commenced and the barge sank,
Typhoon Trining was allegedly far from Palawan, where the storm warning was only "Signal
No. 1."

The evidence presented by Lea Mer in support of its defense of fortuitous event was sorely
insufficient. As required by the pertinent law, it was not enough for the common carrier to
show that there was an unforeseen or unexpected occurrence. It had to show that it was free
from any fault -- a fact it miserably failed to prove. Lea Mer presented no evidence that it had
attempted to minimize or prevent the loss before, during or after the alleged fortuitous event.
Its witness, Joey A. Draper, testified that he could no longer remember whether anything had
been done to minimize loss when water started entering the barge.

Also, Fortuitous event was not the sole and proximate cause of the loss (barge was not
seaworthy at the time of the voyage). There is a preponderance of evidence that the barge was
not seaworthy when it sailed for Manila. Respondent was able to prove that, in the hull of the
barge, there were holes that might have caused or aggravated the sinking. Because the
presumption of negligence or fault applied to Lea Mer, it was incumbent upon it to show that
there were no holes; or, if there were, that they did not aggravate the sinking. Le Mer offered
no evidence to rebut the existence of the holes. Its witness, Domingo A. Luna, testified that
the barge was in "tip-top" or excellent condition, but that he had not personally inspected it
when it left Palawan.

21
G.R. No. 111127 July 26, 1996

MR. & MRS. ENGRACIO FABRE, JR. and PORFIRIO CABIL, petitioners,

vs.
COURT OF APPEALS

Facts:
Engracio Fabre, Jr. and his wife were owners of a Mazda minibus. They used the bus
principally in connection with a bus service for school children which they operated in
Manila. The couple hired Porfirio Cabil as the driver after trying him for 2 weeks.
Private respondent Word for the World Christian Fellowship Inc. (WWCF) had an
arrangement with the Fabres for the transportation of 33 members of its Young Adults
Ministry from Manila to La Union and back in the amount of P3,000.00.

The usual route to Caba, La Union was through Carmen, Pangasinan. However, the bridge at
Carmen was under repair, so that 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 Ba-ay in Lingayen,
Pangasinan.
At 11:30 that night, Cabil came upon a sharp curve on the highway. As it was raining, the
road was slippery causing the bus, which was running at the speed of 50 kph, to skid to the
left road shoulder. The bus hit the left traffic steel brace and sign along the road, rammed a
fence then turned over and landed on its left side, coming to a full stop only after a series of
impacts. A coconut tree which it had hit fell on it and smashed its front portion. Because of
the mishap, several passengers were injured.

Criminal complaint was filed against the Cabil and the Spouses Fabres were also made
jointly liable. Spouses Fabre on the other hand contended that they are not liable since they
are not a common carrier.

Issue: Whether the spouses Fabre are common carriers?

Held: Yes. Spouses Fabre are common carriers.
The Supreme Court held that this case actually involves a contract of carriage. 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: 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

22
"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

G.R. No. 188288               January 16, 2012

SPOUSES FERNANDO and LOURDES VILORIA, Petitioners,

vs.
CONTINENTAL AIRLINES, INC.,

On or about July 21, 1997 and while in the United States, Fernando purchased for himself
and his wife, Lourdes, two (2) round trip airline tickets from San Diego, California to
Newark, New Jersey on board Continental Airlines. Fernando purchased the tickets at
US$400.00 each from a travel agency called "Holiday Travel" and was attended to by a
certain Margaret Mager (Mager). According to Spouses Viloria, Fernando agreed to buy the
said tickets after Mager informed them that there were no available seats at Amtrak, an
intercity passenger train service provider in the United States. Per the tickets, Spouses Viloria
were scheduled to leave for Newark on August 13, 1997 and return to San Diego on August
21, 1997.

Subsequently, Fernando requested Mager to reschedule their flight. Mager informed him that
flights to Newark, New Jersey, USA via CAI were fully booked and offered the alternative
flight via Frontier Air. Since alternative flight would be more costly and would mean
traveling by night, Fernando opted to request for a refund. Mager denied his request as said
tickets were non-refundable. When Fernando saw an Amtrak station nearby, he made
inquiries and was told that there were seats available anytime. Fernando confronted Mager
with the Amtrak tickets, telling her that she had misled them into buying CAI tickets by
misrepresenting that Amtrak was already fully booked. Fernando reiterated his demand for a
refund but Mager denied it. Fernando sent a letter to CAI demanding a refund. Continental
Micronesia denied his request and advised him that he may take said tickets to any CAI
ticketing location for re-issuance of new tickets. When Fernando went to CAI’s ticketing
office to have the tickets replaced by a single round trip ticket to Los Angeles under his
name, he was informed that Lourdes’ ticket was non-transferable, thus, cannot be used for the
purchase of a ticket in his favor. Sps. Viloria filed a complaint against CAI. CAI interposed,
among other things, that it should not be liable for Mager’s acts because she was not a CAI
employee.

RTC-Antipolo City ruled that Mager was CAI’s agent, hence, bound by her bad faith and
misrepresentation.

On appeal, the Court of Appeals reversed RTC-Antipolo City’s decision and ruled that CAI
cannot be held liable for Mager’s act in the absence of any proof that a principal-agent
relationship existed between CAI and HT, as the contract was not an agency but that of a
sale. Hence, this petition.

23
ISSUE:
1. Whether or not a principal-agent relationship existed between CAI and Holiday
Travel
2. assuming that an agency relationship existed between the two, would CAI be bound
by the acts of HT’s agents and employees such as Mager?

HELD

1. SC ruled that a principal-agent relationship exists between CAI and Holiday

Travel.
The essential elements of agency are: (1) there is consent, express or implied of the
parties to establish the relationship; (2) the object is the execution of a juridical act in
relation to a third person; (3) the agent acts elements were present as CAI did not
deny that it concluded an agreement with HT, whereby the latter would enter into
contracts of carriage with third persons on CAI’s behalf. The third element was
present as it was undisputed that HT merely acted in a representative capacity and it
was CAI and not HT who was bound by the contracts of carriage entered into by the
latter on its behalf. The fourth element was also present considering that CAI had not
made any allegation that HT exceeded the authority that was granted to it. In fact,
CAI consistently maintained validity of the contracts of carriage that HT executed
with Sps. Viloria and that Mager was not guilty of fraudulent misrepresentation. SC,
as early as 1970, had already formulated the guidelines that would aid in
differentiating the two contracts. In Commissioner of Internal Revenue v.
Constantino, SC extrapolated that the primordial differentiating consideration
between the two contracts is the transfer of ownership or title over the property
subject of the contract. In an agency, the principal retains ownership and control over
the property and the agent merely acts on the principal’s behalf and under his
instructions in furtherance of the objectives for which the agency was established. On
the other hand, the contract is clearly a sale if the parties intended that the delivery of
the property will affect a relinquishment of title, control and ownership in such a way
that the recipient may do with the property as he pleases. That the principal is bound
by all the obligations contracted by the agent within the scope of the authority granted
to him is clearly provided under Article 1910 of the Civil Code and this constitutes
the very notion of agency.

2. As to the subsequent issue, SC ruled that, in actions based on quasi-delict, a

principal can only be held liable for the tort committed by its agent’s employees
if it has been established by preponderance of evidence that the principal was
also at fault or negligent or that the principal exercise control and supervision
over them.

Considering that Holiday Travel is CAI’s agent, does it necessarily follow that CAI is liable
for the fault or negligence of Holiday Travel’s employees? Citing China Air Lines, Ltd. v.

24
Court of Appeals, et al., CAI argues that it cannot be held liable for the actions of the
employee of its ticketing agent in the absence of an employer-employee relationship.

An examination of this Court’s pronouncements in China Air Lines will reveal that an airline
company is not completely exonerated from any liability for the tort committed by its agent’s
employees. A prior determination of the nature of the passenger’s cause of action is
necessary. If the passenger’s cause of action against the airline company is premised
on culpa aquiliana  or quasi-delict for a tort committed by the employee of the airline
company’s agent, there must be an independent showing that the airline company was at fault
or negligent or has contributed to the negligence or tortuous conduct committed by the
employee of its agent. The mere fact that the employee of the airline company’s agent has
committed a tort is not sufficient to hold the airline company liable. There is no vinculum
juris between the airline company and its agent’s employees and the contractual relationship
between the airline company and its agent does not operate to create a juridical tie between
the airline company and its agent’s employees. Article 2180 of the Civil Code does not make
the principal vicariously liable for the tort committed by its agent’s employees and the
principal-agency relationship per se does not make the principal a party to such tort; hence,
the need to prove the principal’s own fault or negligence.

On the other hand, if the passenger’s cause of action for damages against the airline company
is based on contractual breach or culpa contractual, it is not necessary that there be evidence
of the airline company’s fault or negligence. As this Court previously stated in China Air
Lines and reiterated in Air France vs. Gillego, "in an action based on a breach of contract of
carriage, the aggrieved party does not have to prove that the common carrier was at fault or
was negligent. All that he has to prove is the existence of the contract and the fact of its non-
performance by the carrier."

Spouses Viloria’s cause of action on the basis of Mager’s alleged fraudulent

misrepresentation is clearly one of tort or quasi-delict, there being no pre-existing contractual
relationship between them. Therefore, it was incumbent upon Spouses Viloria to prove that
CAI was equally at fault.

However, the records are devoid of any evidence by which CAI’s alleged liability can be
substantiated. Apart from their claim that CAI must be held liable for Mager’s supposed
fraud because Holiday Travel is CAI’s agent, Spouses Viloria did not present evidence that
CAI was a party or had contributed to Mager’s complained act either by instructing or
authorizing Holiday Travel and Mager to issue the said misrepresentation.

It may seem unjust at first glance that CAI would consider Spouses Viloria bound by the
terms and conditions of the subject contracts, which Mager entered into with them on CAI’s
behalf, in order to deny Spouses Viloria’s request for a refund or Fernando’s use of Lourdes’
ticket for the re-issuance of a new one, and simultaneously claim that they are not bound by
Mager’s supposed misrepresentation for purposes of avoiding Spouses Viloria’s claim for
damages and maintaining the validity of the subject contracts. It may likewise be argued that
CAI cannot deny liability as it benefited from Mager’s acts, which were performed in
compliance with Holiday Travel’s obligations as CAI’s agent.

However, a person’s vicarious liability is anchored on his possession of control, whether

absolute or limited, on the tortfeasor. Without such control, there is nothing which could

25
justify extending the liability to a person other than the one who committed the tort. As this
Court explained in Cangco v. Manila Railroad Co.:

With respect to extra-contractual obligation arising from negligence, whether of act or

omission, it is competent for the legislature to elect — and our Legislature has so elected —
to limit such liability to cases in which the person upon whom such an obligation is imposed
is morally culpable or, on the contrary, for reasons of public policy, to extend that liability,
without regard to the lack of moral culpability, so as to include responsibility for the
negligence of those persons whose acts or omissions are imputable, by a legal fiction, to
others who are in a position to exercise an absolute or limited control over them. The
legislature which adopted our Civil Code has elected to limit extra-contractual liability —
with certain well-defined exceptions — to cases in which moral culpability can be directly
imputed to the persons to be charged. This moral responsibility may consist in having failed
to exercise due care in one's own acts, or in having failed to exercise due care in the selection
and control of one's agent or servants, or in the control of persons who, by reasons of their
status, occupy a position of dependency with respect to the person made liable for their
conduct.

It is incumbent upon Spouses Viloria to prove that CAI exercised control or supervision over
Mager by preponderant evidence. The existence of control or supervision cannot be presumed
and CAI is under no obligation to prove its denial or nugatory assertion. Citing Belen v.
Belen, this Court ruled in Jayme v. Apostol, that:

In Belen v. Belen, this Court ruled that it was enough for defendant to deny an alleged
employment relationship. The defendant is under no obligation to prove the negative
averment. This Court said:

"It is n old and well-settled rule of the courts that the burden of proving the action is upon the
plaintiff, and that if he fails satisfactorily to show the facts upon which he bases his claim, the
defendant is under no obligation to prove his exceptions. This [rule] is in harmony with the
provisions of Section 297 of the Code of Civil Procedure holding that each party must prove
his own affirmative allegations, etc."

Therefore, without a modicum of evidence that CAI exercised control over Holiday Travel’s
employees or that CAI was equally at fault, no liability can be imposed on CAI for Mager’s
supposed misrepresentation.

SC denied the petition.

26
 TIU VS. ARRIESGADO (437 SCRA 426 [2004])

FACTS:
At about 10p.m. of March 15, 1987, the cargo truck marked "Condor Hollow Blocks and
General Merchandise" was loaded with firewood and left for Cebu City. Just as the truck
passed over a bridge, one of its rear tires exploded. The driver, Sergio Pedrano, then parked
along the right side of the national highway and removed the damaged tire to have it
vulcanized at a nearby shop. Pedrano left his helper, Jose Mitante, Jr. to keep watch and
instructed the latter to place a spare tire six fathoms away behind the stalled truck to serve as
a warning for oncoming vehicles. The truck's tail lights were also left on. It was about 12
midnight.
At about 4:45 a.m., D' Rough Riders passenger bus driven by Virgilio Te Laspinas was
cruising along the national highway Among its passengers were the Spouses Pedro and Felisa
Arriesgado who were seated at the right front portion of the bus. Laspiñas saw the stalled
truck, about 25 meters away, and applied the breaks and tried to swerve to the left to avoid
hitting the truck. But it was too late; the bus rammed into the truck's left rear. The impact left
several passengers injured. Pedro Arriesgado lost consciousness and suffered a fracture in his
right colles. His wife, Felisa, was brought to the hospital but died.
Pedro Arriesgado filed a complaint for breach of contract of carriage and damages against the
petitioners, D' Rough Riders bus operator William Tiu and his driver, Virgilio Te Laspinas,
alleging that the passenger bus was cruising at a fast and high speed along the national road,
and that driver Laspinas did not take precautionary measures to avoid the accident.
Petitioners filed a Third-Party Complaint against Philippine Phoenix Surety and Insurance,
Inc. (PPSII) (Tiu's insurer), Benjamin Condor (registered owner of the cargo truck) and
Pedrano (driver of the truck). They alleged that Laspiñas was negotiating the uphill climb
along the national highway in a moderate and normal speed, that the truck was parked in a
slanted manner, its rear portion almost in the middle of the highway, and that no early
warning device was displayed.
After trial, the RTC ruled in favor of respondent Arriesgado. The RTC found that Tiu was
engaged in business as a common carrier, and his employee Laspiñas was negligent, and had
he not been driving at a fast pace, he could have easily swerved to the left to avoid hitting the
truck.
The Court of Appeals (CA) affirmed the RTC decision. The CA held that the claim was
based not on quasi-delict but on breach of contract of carriage. As a common carrier, it was

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incumbent upon Tiu to prove that extraordinary diligence was observed in ensuring the safety
of passengers during transportation.
Hence, the present petition. Petitioners highlight the absence of an early warning device
and/or built-in reflectors at the front and back of the cargo truck, in clear violation of Section
34 (g) of the Land Transportation and Traffic Code, and such violation is a proof of Pedrano's
negligence under Article 2185 of the New Civil Code. They also aver that the proximate
cause of the incident was the gross recklessness and imprudence of Pedrano, creating the
presumption of negligence on the part of Condor in supervising his employees, thus, Condor
and Pedrano should be held jointly and severally liable to Arriesgado.

HELD:

1. WON Driver Laspinas was negligent in driving the ill-fated bus -YES
Even in the absence of expert evidence, the damage sustained by the truck supports the
finding of both lower courts that the D' Rough Rider bus driven by Laspinas was traveling at
a fast pace. Since he saw the stalled truck at a distance of 25 meters, he had more than
enough time to swerve to his left to avoid hitting it; that is, if the speed of the bus was only 40
to 50 kilometers per hour as he claimed.
Laspinas failed to observe extraordinary diligence as a driver of the common carrier. It is
quite hard to accept his version of the incident that he did not see at a reasonable distance
ahead the cargo truck that was parked when the Rough Rider Bus just came out of the bridge
which is on a more elevated position than the place where the cargo truck was parked. With
its headlights fully on, he was in a vantage position to see the cargo truck ahead which was
parked and he could just easily have avoided hitting and bumping the same by maneuvering
to the left without hitting the said cargo truck. It is shown that there was still much room or
space for the bus to pass at the left lane of the national highway even if the cargo truck had
occupied the entire right lane thereof. At 4:45 a.m., the hour of the accident, there were no
oncoming vehicles at the opposite direction, Laspinas could have swerved to the left lane
with proper clearance, and, thus, could have avoided the truck.

2. WON Pedrano and Condor were likewise negligent - YES

Pedrano was also negligent in leaving the truck parked askew without any warning lights or
reflector devices to alert oncoming vehicles, and that such failure created the presumption of
negligence on the part of his employer, Condor, in supervising his employees properly and
adequately.
The negligence of the employee gives rise to the presumption of negligence on the part of the
employer. This is the presumed negligence in the selection and supervision of employee. The
theory of presumed negligence, in contrast with the American doctrine of respondeat
superior, where the negligence of the employee is conclusively presumed to be the negligence
of the employer, is clearly deducible from the last paragraph of Article 2180 of the Civil

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Code which provides that the responsibility therein mentioned shall cease if the employers
prove that they observed all the diligence of a good father of a family to prevent damages.
Pedrano failed to observe Article IV, Section 34(g) of the RA 4136: “Appropriate parking
lights or flares visible one hundred meters away shall be displayed at a corner of the vehicle
whenever such vehicle is parked on highways or in places that are not well-lighted or is
placed in such manner as to endanger passing traffic.”
The manner in which the truck was parked clearly endangered oncoming traffic on both
sides, considering that the tire blowout which stalled the truck in the first place occurred in
the wee hours of the morning. The Court can only now surmise that the unfortunate incident
could have been averted had Condor, the owner of the truck, equipped the said vehicle with
lights, flares, or, at the very least, an early warning device.
Condor and Pedrano cannot be absolved from liability simply because the proximate cause of
the collision was the fast speed at which Laspinas drove the bus. To accept this proposition
would be to [ignore] the fundamental principle of law that a man must respond for the
foreseeable consequences of his own negligent act or omission. Indeed, our law on quasi-
delicts seeks to reduce the risks and burdens of living in society and to allocate them among
its members.

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 PAJARITO VS. SENERIS (87 SCRA 275 [1978])

FACTS:
On May 9, 1975, Joselito Aizon, the driver-employee of an Isuzu Passenger Bus operated by
Felipe Aizon, caused the bus to turn turtle as a result of which two of his passengers on board
sustained injuries which caused their death. Thereafter, an information was filed in the CFI of
Zamboanga City charging the accused with double homicide through reckless imprudence.
Upon arraignment, respondent pleaded guilty and the court rendered a judgment convicting
him and to pay the amount of P12, 000.00. Due to the insolvency of the accused, petitioner
Lucia S. Pajarito, mother of the deceased passenger, filed with the court a motion for the
issuance of subsidiary writ of execution against the operator Felipe Aizon. The court denied
petitioner's motion for subsidiary writ of execution.

ISSUE:
WON the trial court erred in denying the motion for subsidiary writ of execution

HELD: YES.
The institution of the criminal action carries with it the institution of the civil action arising
therefrom. Considering that Felipe Aizon does not deny that he was the registered operator of
the bus, the proceeding for the enforcement of the subsidiary civil liability may be considered
as part of the proceeding for the execution of judgment.
Under Article 100 of the RPC, a person criminally liable for a felony is also civilly liable. As
a consequence, the institution of the criminal action carries with it the institution of the civil
action arising therefrom, except when there is a separate civil action or reservation of the
latter on the part of the complainant.
Pursuant to Article 103, in relation to Article 102, an employer may be subsidiary liable for
the employee's civil liability in a criminal action when: (1) the employer is engaged in any
kind of industry; (2) the employee committed the offense in the discharge of his duties; and
(3) he is insolvent and has not satisfied his civil liability. The subsidiary civil liability of the
employer, however, arises only after conviction of the employee in the criminal case.

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The purpose of procedure is not to thwart justice. Its proper aim is to facilitate the application
of justice to the rival claims of the contending parties. It was created not to hinder and delay
but to facilitate and promote the administration of justice. In proceedings to apply justice, it is
the duty of the courts "to assist the parties in obtaining just, speedy, and inexpensive
determination" of their rival claims. Thus, the Rules require that they should be liberally
construed "to promote their object and to assist the parties in obtaining just, speedy, and
inexpensive determination of every action and proceeding."

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