KPB MT Reviewer - TRANSPO (AMPIL)

KAYA PA BA (KPB) | ALS A2024 TRANSPORTATION LAW | Atty.
Francis Ampil
Alano. Arugay. Castro. Ginez. Go. Lat. Ludan. Macarilay. Mauleon. Napili. Yao. 1st Semester, A.Y. 2022-2023
Codals are logically (not chronologically) arranged for better understanding.

HELLO!
COMMON CARRIERS
We are KPB and we’re here to tell you, KAYA MO ‘YAN!
Eve Alano. Migs Arugay. Daryll Castro. Belle Ginez. Christian Go. Jess Lat. Liz Ludan.
Marielle Macarilay. Rain Mauleon. Vincent Napili. Bea Yao. TRANSPORTATION – a contract whereby one obligates itself/themselves to transport persons,
things, or news from one place to another for a fixed price.
This is a compilation of our personal notes, transcripts from class sessions, and Block A2024’s ● consensual contract perfected by meeting of the minds
notes and digests (A2024 best block!).
KINDS OF TRANSPORTATION
We would also like to give credit to where credit is due. Here are our reference materials: According to Object:
● Blue Notes 1. Transportation of things
● Starr Reviewer 2. Transportation of persons
● Butch Ramiro Reviewer 3. Transportation of news
Date Last Updated: October 1, 2022 According to the place of travel

1. Land
2. Water
~Some Thoughts~
a. Navigable canals
b. Lakes or rivers
This reviewer is meant for sharing. Law school is already a difficult place to be in. Let us not c. By sea
make it even harder by refusing to share. SHARING IS CARING! But please don’t forget to give 3. Air
credit. :) ● A contract of transportation by air may be regarded as commercial. (PAL v.
Mendoza)
Always read originals! Do not use this as a substitute to reading cases and readings in full.
DETERMINING W/N A SITUATION FALLS UNDER TRANSPORTATION LAW
Don’t forget to take care of yourself! Rest is an important part of the hustle. 1. Determine whether the carrier is common or private
a. If common, the law on common carriers applies
There is always room to be better. Do not compete with others, compete with yesterday’s version b. If private, the general law on contracts and obligations applies
of yourself. 2. Determine whether it involves carriage of goods or passengers
a. If it is for carriage of goods, Arts. 1734 to 1754 apply
Lagi’t lagi, Para sa Bayan! Let us study law not for ourselves but with the purpose of helping b. If it is for carriage of passengers, Arts. 1755 to 1763 apply
others – especially those who need it the most.
PARTIES TO A CONTRACT OF TRANSPORTATION OF GOODS
Shipper/Consignor – One who gives rise to the contract of transportation by agreeing to deliver
the things or news, or to present his own person or those of another/other in the case of
transportation of passengers.
Carrier/Conductor – One who binds himself to transport persons, things or news as the case may
be, or one employed in or engaged in the business of carrying goods for others for hire.
May be classified into:
1. Common
2. Private
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KAYA PA BA (KPB) | ALS A2024 TRANSPORTATION LAW | Atty. Francis Ampil
Consignee – The party to whom the carrier is to deliver the things being transported, or one to COMMON CARRIERS – One that holds itself out as ready to engage in the transportation of goods
whom the carrier may lawfully make delivery in accordance with the contract of carriage. The for hire as a public employment and not as a casual occupation.
shipper and consignee may be the same person.
A contract to transport passengers is a relationship imbued with public interest. Failure on the part
For transportation of passengers of the common carrier to live up to the exacting standards of care and diligence renders it liable for
1. The shipper, who is also the person transported any damages that may be sustained by its passengers. However, this is not to say that common
2. The carrier carriers are absolutely responsible for all injuries or damages even if the same were caused by a
fortuitous event. To rule otherwise would render the defense of “force majeure,” as an exception
For transportation of things: from any liability, illusory and ineffective. (Japan Airlines v. CA)
1. The shipper
2. The carrier PRIVATE CARRIER – Those who transport or undertake to transport in a particular instance for hire
3. The consignee or reward.
● A common carrier undertaking to carry a special cargo or chartered to a special person
For transportation of news: only becomes a private carrier. (Home Insurance v. American Steamship)
1. The remitter ● The general public enters into a contract of transportation without a hand in the
2. The carrier preparation thereof. Hence, the law on common carriers extends its protective mantle
3. The consignee against one-sided stipulations over which the riding public has no understanding, or
worse, choice. This is not so in the case of private carriers, where both parties can freely
FREIGHT – It has various definitions: enter and agree on stipulations, usually with consideration, therefore. (Valenzuela
1. The price or compensation paid for the transportation of goods by a carrier, at sea, from Hardwood v. CA)
port to port.
2. May also denote the hire paid for the carriage of goods on land from place to place or on DISTINGUISHING COMMON CARRIERS FROM PRIVATE CARRIERS
inland streams or lakes.
3. The goods or merchandise transported at sea, on land on inland streams or lakes.
COMMON CARRIER PRIVATE CARRIER
The term is used in 2 senses:
a. To designate the price for the carriage, known as freightage One available to the general public One available only to certain individuals
b. To designate the goods carried.
Holds himself out in common, that is, to all Agrees in some special cases with some
A contract of carriage is not affected, changed, or altered by the mere fact that the obligor avails of persons who choose to employ him, as ready private individual to carry for hire
other parties to effect the transportation agreed upon, as in the case of transportation of agents. to carry for hire
MEMORIZE: Bound to carry for all who offer such goods as Not bound to carry for any reason unless it
it is accustomed to carry and tender enters into a special agreement to do so
reasonable compensation for carrying them
ART. 1732
A public service and is thus subject to Does not hold itself out as engaged in the
Common carriers are: [PCFA]
regulation business for the public and is therefore not
1. Persons,
subject to regulation as a
2. Corporations,
common carrier
3. Firms or
4. Associations
Presumed negligent for injuries or loss No presumption of negligence for injuries or
loss
engaged in the business of carrying or transporting passengers or goods or both, by [LWA]
Land, Water, or Air, for compensation, offering their services to the public.
Required to exercise extraordinary diligence in Only required to exercise diligence agreed
transporting goods and passengers upon, and in default, ordinary diligence
This article contains the definition of a common carrier as per the law.
Governed by law on common Governed by law on obligations and contracts
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1. Undertakes to carry for all people indifferently; he is regarded in some respects, as a

carriers
public servant
2. Cannot lawfully decline to accept a particular class of goods for carriage to the prejudice
NOTE: If the entity enters into a contract to merely furnish vehicles (and not to actually carry) it is of the traffic in those goods
understandably neither a private nor a common carrier; it is not a carrier at all. (U.S. ex rel. Chicago, 3. No monopoly is favored
NY and B. Refrigerator Co. v. Interstate Commerce Commission) 4. Public convenience
In private carriers, the stringent provisions of the Civil Code on common carriers do not apply thus Public use – Use by the public, not confined to privileged individuals, but is open to the indefinite
allowing for stipulations that lessen or remove the protection given by law in contracts involving public. It is this quality that gives it a public character.
common carriers. (National Steel Corporation v. CA) ● Common carriers are prohibited from exercising unreasonable discrimination.
In case of accidents involving carriers, it is generally the employee in charge of the vehicle (not the The concept of “common carrier” under Art. 1732 may be seen to coincide neatly with the notion of
owner) who should be held liable for the payment of damages. The owner himself can be held liable “public service,” under the Public Service Act.
if he is wantonly at fault, fraudulent, reckless, or oppressive. (Sarkies Tour Philippines v. ● “Public service” includes … every person that now or hereafter may own, operate,
Intermediate Appellate Court; Art 2232) 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
TEST FOR COMMON CARRIER (FPIC v. CA) purposes, any common carrier… (Calvo v. UCPB General Insurance)
1. 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 persons, Common carriers are not obligated by law to carry and to deliver merchandise, and persons are not
generally as a business, and not as a casual occupation. vested with the right to prompt delivery unless such common carriers previously assume the
2. Must undertake to carry goods of the kind to which his business is confined. obligation. Said rights and obligations are created by a specific contract entered into by the parties.
3. Must undertake to carry by methods by which his business is conducted, and over his (PAL v. Mendoza)
established roads.
4. The transportation must be for hire.
CONSIDERED AS COMMON CARRIERS BY THE SUPREME NOT CONSIDERED
COURT COMMON CARRIERS
The true test: Whether the given undertaking is a part of the business engaged in by the carrier
which he has held out to the general public as his occupation rather than the quantity or extent of
the conveyances used in the employment. 1. Customs broker due to transportation of goods being 1. Travel agency
● Determined by the character of the business carried on by the carrier integral to the nature of the business (Calvo v. UCPB) (Crisostomo v. CA)
2. Oil pipeline operators are considered common 2. Exclusive
It is not necessary that a carrier be issued a certificate of public convenience, and this public carriers (First Philippine Industrial Corp v. CA) contractor and
character is not altered by the fact that the carriage of the goods in question was periodic, a. Civil Code does not provide that the hauler, rendering or
occasional, episodic, or unscheduled. (Loadstar Shipping v. CA) transportation of the passengers or goods offering its services
should be by motor vehicle. to an individual or
The Civil Code does not distinguish between: 3. Operator of a beach resort that accepts clients by entity (FGU
1. one whose principal activity is the carrying of goods and one who does such carrying of virtue of a tour package contracts that included Insurance v. G.P.
goods only as an ancillary activity. (A.F. Sanchez Brokerage Inc. v. CA) transportation to and from the resort and the point of Sarmiento)
2. a person or enterprise offering transportation services on a regular or scheduled basis departure (such as ferry services in its resort 3. Accomodation
and one offering such service on an unscheduled basis. (De Guzman v. CA) operations with its own Coco Beach boats) (Spouses driver (Lara v.
3. a carrier offering its services to the general population and one who offers its services Cruz v. Sun Holidays) Valencia)
only from a narrow segment of the general population (Id.) a. Sun Holiday is a common carrier because
4. the means of transporting, as long as it is by land, water, or air. It does not provide that its ferry services are intertwined with its
the transportation of the passengers or goods should be by motor vehicle. (FPIC v. CA) main business as to be properly
5. ownership i.e., whether it owns the vehicle it used or has to actually hire one as long as considered ancillary thereto. The
the entity holds itself out to the public for transport of goods as a business. constancy of respondent ferry services in
(Torres-Madrid Brokerage, Inc. v. FEB Mitsui Marine Insurance Co) its resort operations is underscored by its
having its own Coco Beach boats. And the
CHARACTERISTICS OF COMMON CARRIERS tour packages it offers, which include the
3
● The prevailing rule on common carriers makes the registered owner thereof liable for all
ferry services, may be availed of by anyone
consequences arising from the operations of the carrier. The public has the right to
who can afford to pay the same. These
assume that the registered owner is the actual owner thereof. Otherwise, they would be
services are thus available to the public.
put at a disadvantage if they have to prove first the real owner before they can recover
4. Bus principally used as a bus service for school
damages. (Benedicto v. IAC)
children, and which was hired by a group of persons
● Regardless of who the actual owner of a motor vehicle might be, the registered
although the owners were not engaged in the
owner is the operator of the same with respect to the public and third persons, and
business of public transportation (Fabre v. CA)
as such, directly and primarily responsible for the consequences of its operation. (First
5. Freight forwarder contracts to deliver goods to their
Malayan Leasing and Finance Corporation v. CA)
destination instead of merely arranging for their
● The registered owner of a certificate of public convenience is liable to the public for
transportation (Unsworth Transport v. CA)
the injuries or damages suffered by passengers or third persons caused by the operation
of said vehicle even though the same had been transferred to a third person. The
registered owner of any vehicle even if not used for a public service should be
responsible to the public or to third persons for injuries caused to the latter while the
vehicle is being driven on the highways or streets. A registered owner who has already
sold or transferred a vehicle has the recourse to a third party complaint in the same
ART. 1733 action brought against him to recover for the damage or injury done against the vendee
or transferee of the vehicle. (BA Finance Corp. v. CA)
Common carriers, from the nature of their business and for reasons of public policy, are bound ● A certificate of public convenience is not a requisite for the incurring of liability
to observe extraordinary diligence in the vigilance over the goods and for the safety of the under the Civil Code provisions governing common carriers. That liability arises the
passengers transported by them, according to all the circumstances of each case. 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
Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, implementing regulations and has been granted a certificate of public convenience or
1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the other franchise. (De Guzman v. CA)
passengers is further set forth in Articles 1755 and 1756. ● Extraordinary diligence is not applicable to private carriers. They are only required to
exercise ordinary diligence.
EXTRAORDINARY DILIGENCE IS REQUIRED OF COMMON CARRIERS – It is the duty of the ● Even common carriers are not made absolute insurers against all risks of travel and of
carrier “to properly and carefully handle, carry, keep and care for the goods carried” and “to transport of goods, and are not held liable for acts or events which cannot be
exercise due care to ascertain and consider the nature of the goods offered for shipment and to use foreseen or are inevitable, provided that they shall have complied with the rigorous
such methods for their care during the voyage as their nature require” standard of extraordinary diligence. (De Guzman v. CA)
WHY EXTRAORDINARY DILIGENCE? TRANSPORTATION OF GOODS VERSUS PASSENGERS

The nature of the business and the exigencies of public policy demand that they observe
such diligence. Such is impressed with a special public duty, subject to the control and regulation GOODS PASSENGERS
of the state (through the Public Service Commission). The public relies on the care and skill of
common carriers, and are forced to trust the utmost diligence and foresight of common carriers. To transport with greatest skill and utmost To carry passengers safely as far as human
(Code Commission) foresight care and foresight can provide,
WHO ARE LIABLE FOR THE FAILURE TO EXERCISE SUCH EXTRAORDINARY Utmost vigilance of very cautious person, Using utmost diligence of a very cautious
DILIGENCE? according to all circumstances person,
● The law requires the approval of the Public Service Commission in order that a franchise
or any privilege pertaining thereto may be sold or leased without infringing the certificate With due regard for all the circumstances
issued to the grantee; and that if property covered by the franchise is transferred or
leased without this requisite approval, the transfer is not binding against the public or the
Service Commission; and in contemplation of law, the grantee of record continues to be WHEN DOES THE OBLIGATION TO EXERCISE EXTRAORDINARY DILIGENCE BEGIN
responsible under the franchise in relation to the Commission and to the public. (Medina
v. Cresencia)
BEGINS ENDS
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GOODS Goods are unconditionally Goods are delivered, actually or

placed in the possession of, and constructively, by the carrier to the
received by the carrier for consignee or to the person who
transportation (Art. 1736) has a right to receive them or to his
duly authorized agent and a
reasonable time is given him to
remove the goods (Art. 1736)
PASSENGERS Two views: When the passenger alights from

1. Liberal: perfection of the vehicle at the place of
contract (or meeting of destination and has reasonable
the minds) between opportunity to leave the common
carrier and passenger carrier’s premises (Aboitiz Shipping
2. Strict: Actual physical Corporation v. CA)
contact + intention to
board (Ampil’s view)
DUTY TO EXERCISE EXTRAORDINARY DILIGENCE VERSUS PERFECTION OF THE

CONTRACT
● The contract of carriage may be perfected in January while the duty to exercise
extraordinary diligence may only start or commence in March.
● A passenger who signals for a ride with his thumb signifies that he is offering himself as a
passenger, but the passenger might not have ridden on the vehicle.
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VIGILANCE OVER THE GOODS ART. 1742
Even if the loss, destruction, or deterioration of the goods should be caused by the character of
DEFENSES the goods, or the faulty nature of the packing or of the containers, the common carrier must
exercise due diligence to forestall or lessen the loss.
MEMORIZE:
ART. 1743
ART. 1734
If through the order of public authority the goods are seized or destroyed, the common carrier is
Common carriers are responsible for the [LDD] Loss, Destruction, or Deterioration of the goods, not responsible, provided said public authority had power to issue the order.
unless the same is due to any of the following causes only: [CESCA]
(1) Flood, storm, earthquake, lightning, or other natural disaster or Calamity;

Three causes of action against a common carrier in the carriage of goods [LDD]
1. Loss
(2) Act of the public Enemy in war, whether international or civil;
2. Destruction
3. Deterioration
(3) Act or omission of the Shipper or owner of the goods;
If any of the events occurs in Art. 1734, will it exempt the common carrier from liability?
(4) The Character of the goods or defects in the packing or in the containers;
Yes, it is a complete defense. There are different requisites for each event, as provided for in the
succeeding sections.
(5) Order or act of competent public Authority.
DEFENSES OF COMMON CARRIERS
Note: This is an exclusive list.
ART. 1739
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity
In order that the common carrier may be exempted from responsibility, the natural disaster must
have been the proximate and only cause of the loss. However, the common carrier must exercise Requisites:
due diligence to prevent or minimize loss before, during and after the occurrence of flood, storm a. It must be the proximate and only cause. (Art. 1739)
or other natural disaster in order that the common carrier may be exempted from liability for the b. Common carrier must exercise due diligence to minimize or prevent the loss before,
loss, destruction, or deterioration of the goods. The same duty is incumbent upon the common during and after the occurrence. (Art. 1739)
carrier in case of an act of the public enemy referred to in article 1734, No. 2. c. No delay (Art. 1740)
i. Effect of delay – Natural disaster will not exempt carrier from responsibility, if
there was no negligence on the part of the shipper
ART. 1740 1. Mere delay to transport the goods or a refusal to transport them does
not necessarily render the common carrier liable in the event of the
If the common carrier negligently incurs in delay in transporting the goods, a natural disaster L/D/D of the goods. There must be negligence.
shall not free such carrier from responsibility.
Accident due to defects of carrier is no caso fortuito so as to exempt him from liability. In order that
a common carrier may be absolved from liability where the loss, destruction or deterioration of the
ART. 1741 goods is due to a natural disaster or calamity, it must be shown that such natural disaster or
calamity was the proximate and only cause of the loss. There must be "an entire exclusion of
If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods, human agency from the cause of the injury or the loss." (Phil. American Gen. Insurance v. MCG
the proximate cause thereof being the negligence of the common carrier, the latter shall be liable Marine Services)
in damages, which however, shall be equitably reduced.
Fortuitous events
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1. Before the vessel left the port, the Captain confirmed with the Coast Guard that the 7. The doors of the baggage compartment of its bus were not securely fastened, hence,
weather condition would permit the safe travel of the vessel. Thus, he could not be almost all of the luggage was lost, to the prejudice of the paying passengers. (Sarkies
expected to have foreseen the unfavorable weather condition that awaited the vessel in Tours Phils v. CA)
Cortes, Surigao del Sur. It was the presence of the strong winds and enormous waves
(ranging from six to ten feet in height) which caused the vessel to list, keel over, and (2) Act of the public enemy in war, whether international or civil
consequently lose the cargo contained therein. The presence of strong winds and
enormous waves at Cortes, Surigao del Sur on March 3, 1987 was shown to be the Requisites:
proximate and only cause of the sinking. (Phil. American Gen. Insurance v. MCG Marine a. Act of public enemy must be the proximate and only cause. (Art. 1739)
Services) b. Common carrier exercised due diligence in preventing or minimizing the loss, before
2. Under normal conditions, a period of 40 days is undoubtedly more than enough time during and after the act. (Art. 1739)
within which the unloading of the cargo (given its nature) from the vessel could be
completed. However, neither of the parties herein could be faulted for such delay, for the (3) Act or omission of the shipper or owner of the goods
delay was not due to negligence, but to several factors such as the natural conditions of
the Pasacao port, the customs of the place and the weather conditions obtaining at the Requisites:
time. (Phil. American Gen. Insurance v. CA) a. Act or omission of the shipper or owner of the goods must be the proximate cause
b. Immediate protest by the carrier if the problem with the goods or the packing or
Not fortuitous events containers is visible; otherwise, carrier may be in estoppel
1. Fire may not be considered a natural disaster or calamity, unless it is caused by lightning
or by other natural disasters or calamities (Eastern Shipping Lines v. IAC) (4) The character of the goods or defects in the packing or in the containers
2. Heavy seas and rains (Chan Keep v. Chan Gioco)
a. Babao actually knew there was a typhoon coming but did not bother to check Requisites:
where it was. Even though the Coast Guard gave the “all clear,” and the sea a. Exercise of due diligence to forestall or prevent loss
seemed calm, Babao should have still asked if there were any more incoming b. Immediate protest by the carrier if the problem with the goods or the packing or
typhoons and their directions. PAG-ASA even provided weather reports for the containers is visible; otherwise, carrier may be in estoppel
days when Babao would be at sea, and such reports indicated high chances of As long as the damage is due to the inherent nature or defect of the goods or the containers
rainshowers and large waves. All these Babao failed to heed. Furthermore, it thereof, the carrier cannot be held responsible.
appears that the crew were unlicensed under the Philippine Merchant Marine
Officers Law. (Arada v. CA) This particular exempting cause only refers to cases when goods are lost or damaged while in
b. That rain water (not sea water) found its way into the holds of the Jupri Venture transit as a result of:
clearly indicates that care and foresight did not attend the closing of the ship’s 1. Natural decay of perishable goods;
hatches so that rain water would not find its way into the cargo holds. (Eastern 2. Fermentation or evaporation of substances liable therefor;
Shipping Lines, Inc. v. CA) 3. Necessary and natural wear and tear of goods in transport;
3. Mechanical defects are not force majeure if the same were discoverable by regular and 4. Defects in the packages; or
adequate inspections (Necesito v. Paras) 5. Natural propensities of animals. (Belgian Overseas Chartering and Shipping N.V. v.
4. Tire blowout (Yobido v. CA) Philippine First Insurance Co)
5. Hijacking, unless attended by grave and irresistible threat, violence or force. (De Guzman
v CA) If the fact of improper packing is known to the carrier or his servants, or apparent upon ordinary
6. The inaccurate and false weight submitted by Concepcion was entered into the bill of observation, but it accepts the goods notwithstanding such condition, it is not relieved of liability for
lading by Compania through its company collector without seeing the equipment to be loss or injury resulting therefrom. (Southern Lines v. CA; Calvo v. UCPB)
shipped. The employees never checked the information entered in the bill of lading.
a. The weights stated in a bill of lading are prima facie evidence of the amount (5) Order or act of competent public authority
received and the fact that the weighing was done by another will not relieve the To exempt common carrier from liability, public authority must have power to issue to the order. If it
common carrier where it accepted such weight and entered it on the bill of was issued without legal process, common carrier will be held liable.
lading. Concepcion’s act of furnishing an inaccurate weight cannot excuse
liability for the damage caused, as the same could have been avoided had ELEMENTS OF FORCE MAJEURE: (Philippine American General Insurance Co., Inc. v. MGG
Compania utilized the “jumbo” lifting apparatus which has a capacity of lifting Marine Services, Inc.)
20 to 25 tons of heavy cargoes. (Compania Maritima v. CA) a. The cause of the unforeseen and unexpected occurrence, or the failure of the debtor to
comply with his obligations, must be independent of human will;
7
b. It must be impossible to foresee the event which constitutes the caso fortuito, or if it can ● EXCEPTION: Art. 1734.
be seen, it must be impossible to avoid;
c. The occurrence must be such as to render it impossible for the debtor to fulfill his BURDENS
obligation in a normal manner; and ● Burden of plaintiff: That the foods transported have been lost, destroyed or deteriorated.
d. The obligor must be free from any participation in the aggravation of the injury resulting to Thereafter, the burden is shifted to carrier.
the creditor. ● Burden of carrier: That they exercised extraordinary diligence required by law.
○ When a carrier fails to establish any caso fortuito, the presumption by law of
To exempt a common carrier upon the ground of force majeure, the carrier must clearly show not fault or negligence on the part of the carrier applies. (Eastern Shipping Lines v.
only that the efficient cause of the casualty was entirely independent of the human will, but also that CA)
it was impossible to avoid. Any participation by the common carrier in the occurrence of the injury
will defeat the defense of force majeure. (Gatchalian v. Delim) There is no occasion for the necessity of discussing the diligence required of a carrier or of the
theory of prima facie liability of the carrier, for from all indications, when the shipment did not suffer
May the shipper hold the employee of the common carrier liable? loss or damage while it was under the care of the carrier, or of the arrastre operator, it must be
No. The action is based on a contract which binds only the parties to it, and the employee is not added. (Bankers v. CA)
such party. Thus, no action may be had against the latter.
Where the common carrier accepted its passenger’s baggage for transportation and even had it
placed in the vehicle by its own employee, it is responsible for the consequent loss of the baggage.
ART. 1735
(Sarkies Tours Phil. v. CA)
In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the
Though the evidence shows that the fluctuation of temperature occurred after the cargo had been
goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault
discharged, it does not disprove that the condenser fan — which caused the fluctuation of the
or to have acted negligently, unless they prove that they observed extraordinary diligence as
temperature in the refrigerated container — was not damaged while the cargo was being unloaded
required in article 1733.
from the ship. RCL and EDSA Shipping could have offered evidence before the trial court to show
that the damage to the condenser fan did not occur: (1) while the cargo was in transit; (2) while they
were in the act of discharging it from the vessel; or (3) while they were delivering it actually or
RESPONSIBILITY OF COMMON CARRIERS constructively to the consignee. (Regional Container v. The Netherlands Insurance Co.)
Such arises from contract, as the relation of carriers with their patrons is contractual in nature.
● A breach of a contract of carriage is culpa contractual and not culpa aquiliana. Does this mean that if the common carrier presents evidence to show extraordinary
diligence, it will already win?
Because of the extraordinary diligence required of common carriers, they are given wide discretion No. According to the codal provision, a showing of extraordinary diligence will merely rebut the
in the selection and supervision of persons to handle goods. presumption of negligence or fault on the part of the CC. Evidence still has to be presented by both
● But, due diligence in selection and supervision may not exempt a common carrier for parties.
breach of contract of carriage for failure to exercise the extraordinary diligence required of
it.
EXTRAORDINARY DILIGENCE
The loss or destruction or deterioration of goods turned over to the common carrier for the
conveyance to a designated destination raises instantly a presumption of fault or negligence on the
ART. 1736
part of the carrier, save only where such loss, destruction or damage arises from extreme
circumstances such as a natural disaster or calamity.
The extraordinary responsibility of the common carrier lasts from the time the goods are
● In order that the common carrier may be exempted from liability, the natural disaster must
unconditionally placed in the possession of, and received by the carrier for transportation until
have been the proximate and only cause of the loss.
the same are delivered, actually or constructively, by the carrier to the consignee, or to the
● However, the common carrier must exercise due diligence to prevent or minimize the loss
person who has a right to receive them, without prejudice to the provisions of article 1738.
before, during, and after the occurrence of the natural disaster in order to be exempted
from liability. (Arada v. CA)
WHEN CARRIER’S RESPONSIBILITY BEGINS – From the time the goods are unconditionally
PRESUMPTION OF NEGLIGENCE placed in the possession of, and received by the carrier for transportation
● RULE: The common carrier is presumed to have been at fault or to have acted negligently
when the goods transported are lost, destroyed or deteriorated.
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WHEN CARRIER’S RESPONSIBILITY ENDS – The extraordinary diligence of the common carrier ● Cargoes while being unloaded generally remain under the custody of the carrier. Thus,
would cease only when the goods are delivered, actually or constructively, by the carrier to the there is no delivery yet. (Regional Container v. Netherlands Insurance)
consignee, or to the person who has a right to receive them. (Ganzon v. CA; Eastern Shipping v. CA) ● There can be actual delivery of the goods from the common carrier “as carrier” to the
same common carrier “as agent of the consignee”. Upon such delivery, the common
The liability and responsibility of the carrier under a contract for the carriage of goods commence carrier, as a former carrier, ceases to be responsible for any loss or damage that may
on their actual delivery to, or receipt by, the carrier or an authorized agent. Delivery to a “lighter” in befall the goods from that point onwards. Thus, the character of carrier;’s possession also
charge of a vessel for shipment on the vessel, where it is the custom to deliver in that way, is a changes, from possession in its own name as carrier, into possession in the name of
good delivery and binds the vessel receiving the freight, the liability commencing at the time of consignee as the latter's agent. Such being the case, there was, in effect, actual delivery
delivery to the lighter. Similarly, where there is a contract to carry goods from one port to another, of the goods from appellant as carrier to the same appellant as agent of the consignee.
and they cannot be loaded directly on the vessel and lighters are sent by the vessel to bring the (Samar Mining Co., Inc. v. Nordeutscher Lloyd)
goods to it, the lighters are for the time its substitutes, so that the bill of landing is applicable to the ● While delivery of the cargo to the customs authorities is not delivery to the consignee, or
goods as soon as they are placed on the lighters. The liability of the carrier as common carrier “to the person who has a right to receive them”, contemplated in Art. 1736 of the NCC,
begins with the actual delivery of the goods for transportation, and not merely with the formal because in such case the goods are still in the hands of the Government and the owner
execution of a receipt or bill of lading; the issuance of a bill of lading is not necessary to complete cannot exercise dominion over them, however the parties may agree to limit the liability of
delivery and acceptance. Even where it is provided by statute that liability commences with the the carrier considering that the goods have still to go through the inspection of the
issuance of the bill of lading, actual delivery and acceptance are sufficient to bind the carrier. customs authorities before they are actually turned over to the consignee. This is a
(Compania Maritima v. Insurance Company) situation where the carrier loses control of the goods because of a custom regulation and
● For context: A lighter is like a “shuttle” which transports goods from a port to the main it is unfair that it be made responsible for any loss or damage that may be caused to the
vessel of the common carrier. goods arising during the interregnum. (Lu Do v. Binamira)
● Delivery need not always be to consignee, but may be made to a “person who has a right
BILL OF LADING to receive” the goods. (Macam v. CA)
● A document the carrier delivers to the shipper, through which the former admits the ● In constructive delivery, notice of arrival of goods is necessary.
receipt of goods from the latter in order to transport them to a certain port. ○ When notice is sent by the carrier to the consignee or person who has a right to
○ Usually issued on the goods loading or after loading them on board the ship, as receive the goods, it is placed in the latter’s disposal, and thus automatically
a proof of the loading act itself and as a confirmation of the transporter’s releases the carrier of the extraordinary responsibility over the goods.
receipt of the goods.
CONTAINERIZED SHIPMENT
Functions of a bill of lading The goods under this arrangement are stuffed, packed, and loaded by the shipper at a place of his
● The Bill of lading is evidence that the carrier has received the goods. choice, usually his own warehouse, in the absence of the carrier. The container is sealed by the
● The Bill of lading is a device that confirms the maritime transportation contract of goods. shipper and thereafter picked up by the carrier. Consequently, the bill of lading for goods thus
● The Bill of lading is a title deed to the loaded goods. transported ordinarily would declare "Said to Contain", "Shipper's Load and Count", "Full Container
Load", and the amount or quantity of goods in the container in a particular package is only prima
The bill of lading is juridically a documentary proof of the stipulations and conditions agreed upon facie evidence of the amount or quantity which may be overthrown by parol evidence. A shipment
by both parties. In other words, the Code does not demand, as necessary requisite in the contract under this arrangement is not inspected or inventoried by the carrier whose duty is only to transport
of carriage, the delivery of the bill of lading to the shipper, but gives right to both parties to mutually and deliver the containers in the same condition as when the carrier received and accepted the
demand of each other the delivery of said bill. (Compania Maritima v. Insurance Company) containers for transport. (Bankers and Manufacturers Assurance Corp. v. CA)
Surrender of the original Bill of Lading is NOT a condition precedent for a Common Carrier to be The cargo was released to the care of the consignee's broker, the RGS Customs Brokerage. The
discharged of its contractual obligation. If surrender of the original Bill of Lading is not an option, broker, accepting the shipment without exception as to bad order, delivered the same to the
acknowledgment of the delivery by signing the delivery receipt suffices (National Trucking and consignee's warehouse in Makati. It was at that place, when the contents of the two container vans
Forwarding v. Lorenzo Shipping) were removed and inspected, that petitioner's surveyors reported, that checked against the packing
list, the shipment in one container van was short of seven cases. If any of the goods were found in
Legal basis why a consignee who is not a party to the drawing up of a bill of lading can still bad condition, or if any inspection of the goods was to be done in order to determine the condition
be bound by the contract thereof, the same should have been done at pierside, the pier warehouse, or at any time and place
1. Stipulation pour autrui in favor of the consignee while the container vanswere under the care and custody of the carrier or of the arrastre operator.
2. Agency between consignee and the shipper or consignor Unfortunately for the carrier, even as one of the three container vans was inspected and stripped,
the two other container vanswere not similarly gone over (these were not stripped of its contents at
MANNER OF DELIVERY – Delivery need not be actual, and may be constructive. the pier zone). Rather, these two container vansand the contents of the one previously stripped
were accepted without exception as to any supposed bad order or condition by petitioner's own
9
broker. To all appearances, therefore, the shipment was accepted by petitioner in good order.
Comprehends the handling of cargo on the Refers to the handling of the cargo in the
(Bankers and Manufacturers Assurance Corp. v. CA)
wharf or between the establishment of the holds of the vessel or between the ship's
consignee or shipper and the ship's tackle tackle and the holds of the
vessel
Liability of shipper for delay in obtaining delivery of goods – Demurrage
● Demurrage – A charge which is permitted and recognized to afford compensation to the
carrier for additional service and to obtain prompt release of the goods, and to prevent The responsibility of the arrastre operator lasts The responsibility of the stevedore ends upon
interference with the general traffic of the carrier. until the delivery of the cargo to the consignee. the loading and stowing of the cargo in the
● The shipper is liable for lost earnings occasioned by the unnecessary delay in the use of The service is usually performed by vessel.
the vehicle belonging to the carrier, due in turn to the failure of the goods at the place of longshoremen.
destination, to unload forthwith and take away the cargo form the vehicles. Where delay
in unloading of cargo not due to negligence of carrier it cannot be held liable for A stevedore is not a common carrier for it does not transport goods or passengers; it is not akin to
damages. Diligence shown by shipmaster to protect cargo from typhoon and pilferages a warehouseman for it does not store goods for profit. The loading and stowing of cargoes would
exempts carrier from damages. (Philamgen v. CA) not have a far reaching public ramification as that of a common carrier and a warehouseman; the
● The extraordinary diligence in the vigilance over the goods tendered for shipment requires public is adequately protected by our laws on contract and on quasi-delict. The public policy
the common carrier to know and to follow the required precaution for avoiding damage considerations in legally imposing upon a common carrier or a warehouseman a higher degree of
to, or destruction of the goods entrusted to it for safe carriage and delivery. It requires diligence is not present in a stevedoring outfit which mainly provides labor in loading and stowing of
common carriers to render service with the greatest skill and foresight and to use all cargoes for its clients. (Mindanao Terminal v. Phoenix Assurance)
reasonable means to ascertain the nature and characteristics of goods tendered for
shipment and to exercise due care in the handling and stowing, including such methods
as their nature requires. If the shipper or owner merely contributed to the loss, destruction ART. 1737
or deterioration of the goods, the proximate cause thereof being the negligence of the
common carrier, the latter shall be liable in damages, which however, shall be equitably The common carrier’s duty to observe extraordinary diligence in the vigilance over the goods
reduced. (Compania Maritima v. CA) remains in full force and effect even when they are temporarily unloaded or stored in transit,
● Demurrage, in its strict sense, is the compensation provided for in the contract of unless the shipper or owner has made use of the right of stoppage in transitu.
affreightment for the detention of the vessel beyond the time agreed on for loading and
unloading. Essentially, demurrage is the claim for damages for failure to accept delivery.
EFFECT OF STORING IN TRANSIT
In a broad sense, every improper detention of a vessel may be considered a demurrage.
● RULE: When goods are unloaded or stored in transit, this does not interrupt the
● Liability for demurrage, using the word in its strictly technical sense, exists only when
extraordinary responsibility of the common carrier.
expressly stipulated in the contract. Using the term in its broader sense, damages in the
● EXCEPTION: When the shipper or owner has made use of the right of stoppage in
nature of demurrage are recoverable for a breach of the implied obligation to load or
transitu
unload the cargo with reasonable dispatch, but only by the party to whom the duty is
owed and only against one who is a party to the shipping contract. Notice of arrival of
STOPPAGE IN TRANSITU – The act by which the unpaid vendor of goods stops their progress and
vessels or conveyances, or of their placement for purposes of unloading is often a
resumes possession of them, while they are in the course of transit from him to the purchaser, and
condition precedent to the right to collect demurrage charges. (Magellan Manufacturing v.
not yet actually delivered to the latter.
CA)
When the right of stoppage in transitu may be exercised:
Duty of Arrastre Operator: The legal relationship between the consignee and the arrastre operator
1. When buyer is/becomes insolvent
is similar to that of a depositor and warehouseman. It is the duty of the arrastre to take good care of
2. Unpaid seller has parted with possession of the goods
the goods that are in its custody and to deliver the goods in its custody and to deliver them in good
3. Prior to actual delivery to buyer
condition to the consignee, such responsibility also devolves upon the carrier. (Fireman’s Fund
Insurance v. MetroPort Services)
● Unpaid seller may resume possession of the goods at any time, and he will become
entitled to the same right as if he had not parted with the goods
ARRASTRE1 STEVEDORE
Responsibility of carrier when right is exercised: Extraordinary responsibility of the carrier
ceases. The carrier holds the goods in the concept of a bailee or warehouseman and is liable only
as such. The care required is only such care in regard to the goods as a reasonable careful owner of
1 similar goods would exercise.
This is a Spanish word referring to the hauling of cargo.
10
A stipulation between the common carrier and the shipper or owner limiting the liability of the
ART. 1738 former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary
diligence shall be valid, provided it be:
The extraordinary liability of the common carrier continues to be operative even during the time (1) In writing, signed by the shipper or owner;
the goods are stored in a warehouse of the carrier at the place of destination, until the consignee (2) Supported by a valuable consideration other than the service rendered by the common
has been advised of the arrival of the goods and has had reasonable opportunity thereafter to carrier; and
remove them or otherwise dispose of them. (3) Reasonable, just and not contrary to public policy.
EFFECT OF STORAGE IN WAREHOUSE OF CARRIER The just and reasonable character of the stipulation is implicit in giving the shipper or owner the
option of avoiding accrual of liability limitation by the simple and surely far from onerous expedient
When liability of warehouseman begins of declaring the nature and value of the shipment in the bill of lading. (Sea-Land Services v. IAC)
Where the goods being transported upon arrival at the place of destination are stored in the
carrier’s warehouse Basic is the rule, long since enshrined as a statutory provision, that a stipulation limiting the liability
of the carrier to the value of the goods appearing in the bill of the carrier to the value of the goods
When liability of warehouseman will cease appearing in the bill of lading, unless the shipper or owner declares a greater value, is binding.
Extraordinary liability will cease only if the consignee has been advised of the arrival of the goods (Citadel Lines v. CA)
and has had reasonable time to remove them or otherwise dispose of them.
While delivery to the customs authorities is not the same as delivery to the consignee, the parties
Intervening Factors: may limit the liability of the carrier given that the goods will still have to pass through customs
A. Art. 1737: The goods may be temporarily unloaded or stored in transit and the duty of ED before being delivered to the consignee. The turnover of the goods to the customs is a situation
still remains in effect. However, the shipper/owner may exercise his right of stoppage in where the carrier loses control of the goods and it is unfair that it be made responsible for what may
transit. happen at this time. This is what the parties stipulated in their bill of lading, viz: “The Carrier shall
● Effect: the duty of ED ceases. The carrier only holds such goods in the capacity not be liable in any capacity whatsoever for any delay, nondelivery or misdelivery, or loss of or
of a warehouseman/bailee (“such care in regard to them as a reasonable damage to the goods occurring while the goods are not in the actual custody of the Carrier. The
careful owner of similar goods would exercise”) responsibility of the Carrier in any capacity shall altogether cease and the goods shall be
B. Art. 1738: When the carrier’s ship docks at its place of destination, it may store the considered to be delivered and at their own risk and expense in every respect when taken into the
goods it is transporting in its warehouse. During this time, still has the duty to exercise ED custody of customs or other authorities.” Hence, the carrier is not responsible for the loss in
over the goods question, it appearing that the same happened after the shipment had been delivered to the
● Until when? Until the consignee has been 1) ADVISED of the arrival of the customs authorities. (Lu Do v. Binamira)
goods AND has had 2) reasonable opportunity to REMOVE or OTHERWISE
DISPOSE of them. A stipulation providing that the goods held by a common carrier are being transported at the
owner’s risk unless the loss or damage is caused by the negligence of the carrier is a valid one and
does not contravene public policy. (Servando v. Philippine Steam)
STIPULATIONS LIMITING LIABILITY
A stipulation in the contract of shipment requiring the owner of the goods to present a notice of his
THREE KINDS (H.E. Heacock Co. v. Macondray & Co.) claim within a specified time after the goods have arrived at their destination is in the nature of a
1. One exempting the carrier from any and all liability for loss or damage occasioned by its condition precedent to the owner’s right to enforce recovery, that he must show in the first instance
own negligence – VOID that he has complied with the condition, or that the circumstances were such that to have complied
2. One providing for an unqualified limitation of such liability to an agreed valuation – VOID with it would have required him to do an unreasonable thing. The weight of authority, however,
3. One limiting the liability of the carrier to an agreed valuation, unless the shipper declares sustains the view that such a stipulation is more in the nature of a limitation upon the owner’s right
a higher value and pays a higher rate of freight – VALID to recovery, and that the burden of proof is according on the carrier to show that the limitation was
reasonable and in proper form or within the time stated. (Southern Lines v. CA)
ART. 1744
11
public. Hence, the stringent provisions of the Civil Code on common carriers protecting the general
ART. 1745
public cannot be applied to a ship transporting commercial goods as a private carrier. (Valenzuela
Hardwood and Industrial Supply v. CA)
Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary
to public policy:
(1) That the goods are transported at the risk of the owner or shipper;
(2) That the common carrier will not be liable for any loss, destruction, or deterioration of ART. 1751
the goods;
(3) That the common carrier need not observe any diligence in the custody of the goods; The fact that the common carrier has no competitor along the line or route, or a part thereof, to
(4) That the common carrier shall exercise a degree of diligence less than that of a good which the contract refers shall be taken into consideration on the question of whether or not a
father of a family, or of a man of ordinary prudence in the vigilance over the movables stipulation limiting the common carrier's liability is reasonable, just and in consonance with
transported; public policy.
(5) That the common carrier shall not be responsible for the acts or omission of his or its
employees;
(6) That the common carrier's liability for acts committed by thieves, or of robbers who do Art. 1745 Shall be considered unreasonable, unjust and contrary to public policy
not act with grave or irresistible threat, violence or force, is dispensed with or
diminished; Art. 1751 May be considered unreasonable, unjust and contrary to public policy
(7) That the common carrier is not responsible for the loss, destruction, or deterioration of
goods on account of the defective condition of the car, vehicle, ship, airplane or other
equipment used in the contract of carriage.
ART. 1746
The specific cause alleged in the instant case — the hijacking of the carrier's truck — does not fall An agreement limiting the common carrier's liability may be annulled by the shipper or owner if
within any of the five (5) categories of exempting causes listed in Article 1734. It would follow, the common carrier refused to carry the goods unless the former agreed to
therefore, that the hijacking of the carrier's vehicle must be dealt with under the provisions of Article such stipulation.
1735, in other words, that the 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
EFFECT IF THE SHIPPER REFUSED TO CARRY THE GOODS – Voidable at the instance of the
the part of the common carrier. The limits of the duty of extraordinary diligence in the vigilance over
shipper
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.Three (3) of the five (5) ART. 1747
hold-uppers were armed with firearms. The robbers not only took away the truck and its cargo but
also kidnapped the driver and his helper, detaining them for several days and later releasing them in If the common carrier, without just cause, delays the transportation of the goods or changes the
another province. In these circumstances, we hold that the occurrence of the loss must reasonably stipulated or usual route, the contract limiting the common carrier's liability cannot be availed of
be regarded as quite beyond the control of the common carrier and properly regarded as a in case of the loss, destruction, or deterioration of the goods.
fortuitous event. (De Guzman v. CA; Bascos v. CA)
A stipulation providing that the goods held by a common carrier are being transported at the WHEN STIPULATION LIMITING LIABILITY CAN BE REFUSED
owner’s risk unless the loss or damage is caused by the negligence of the carrier is a valid one and 1. Where the common carrier delays the transportation of the goods
does not contravene public policy. (Servando v. Philippine Steam) 2. Common carrier changes the stipulated or usual route
PRIVATE CARRIERS NOT SUBJECT TO THIS RULE In both cases, the delay or the change of route must be without just cause.
In a contract of private carriage, the parties may validly stipulate that the responsibility for the cargo
rests solely on the charterer, exempting the ship owner from liability for loss of or damage to the
cargo caused even by the negligence of the ship captain, given that it was freely entered by the
parties and the same is not contrary to law, morals, good customs, public order, or public policy.
Thus, their contract of private carriage is not even a contract of adhesion. In a contract of private
carriage, the parties may freely stipulate their duties and obligations which would be binding on
them. Unlike in a contract involving a common carrier, private carriage does not involve the general
12
The above stipulations are, to our mind, reasonable and just. In the bill of lading, the carrier made it
ART. 1748
clear that its liability would only be up to 100,000.00 Yen. However, the shipper had the option to
declare a higher valuation if the value of its cargo was higher than the limited liability of the carrier.
An agreement limiting the common carrier's liability for delay on account of strikes or riots is
In fact, the value of the cargo here amounted to 1,552,500.00 Yen. Considering that the shipper did
valid.
not declare a higher valuation, it had itself to blame for not complying with the stipulations. (Everett
Steamship Corp. v. CA)
ART. 1750
ART. 1749
A contract fixing the sum that may be recovered. by the owner or shipper for the loss,
A stipulation that the common carrier's liability is limited to the value of the goods appearing in
destruction, or deterioration of the goods is valid, if it is reasonable and just under the
the bill of lading, unless the shipper or owner declares a greater value, is binding.
circumstances, and has been fairly and freely agreed upon.
ART. 1752
A bill of lading operates both as a receipt and as a contract. It is presumed that the stipulations of
Even when there is an agreement limiting the liability of the common carrier in the vigilance over
the bill were, in the absence of fraud, concealment or improper conduct, known to the shipper, and
the goods, the common carrier is disputably presumed to have been negligent in case of their
he is generally bound by his acceptance whether he reads the bill or not. However, this ruling
loss, destruction or deterioration.
applies only if such contracts will not create an absurd situation. If the questioned provision in the
subject bill of lading has the effect of practically leaving the date of arrival of the subject shipment
on the sole determination and will of the carrier, such may not be upheld. (Maersk Line v. CA)
ART. 1753
If a common carrier gives to a shipper the choice of two rates, the lower of the conditioned upon his
agreeing to a stipulated valuation of his property in case of loss, even by the carrier's negligence, if The law of the country to which the goods are to be transported shall govern the liability of the
the shipper makes such a choice, understandingly and freely, and names his valuation, he cannot common carrier for their loss, destruction or deterioration.
thereafter recover more than the value which he thus places upon his property. Estoppel is the
basis — that, having accepted the benefit of the lower rate, in common honesty, the shipper may
not repudiate the conditions on which it was obtained, — but the rule and the effect of it are clearly ART. 1754
established. (Heacock Co. v. Macondray)
The provisions of articles 1733 to 1753 shall apply to the passenger's baggage which is not in
Cue, by making claim for loss on the basis of the bill of lading, to all intents and purposes accepted his personal custody or in that of his employee. As to other baggage, the rules in articles 1998
said bill. Having done so, he becomes bound by all stipulations contained therein whether on the and 2000 to 2003 concerning the responsibility of hotel-keepers shall be applicable.
front or the back thereof. He cannot elude its provisions simply because they prejudice him and
take advantage of those that are beneficial. The fact that Cue shipped his goods on board the ship
of the carrier and paid the corresponding freight thereon shows that he impliedly accepted the bill ART. 1998
of lading. Hence, Cue is bound by the liability limitation clause in the bill of lading. (Sea Land
Service, Inc. v. IAC) The deposit of effects made by travellers in hotels or inns shall also be regarded as necessary.
The keepers of hotels or inns shall be responsible for them as depositaries, provided that notice
The award of damages in the amount of P312,800 for the value of the goods lost, based on the was given to them, or to their employees, of the effects brought by the guests and that, on the
alleged market value is erroneous. Clause 6 of the bills of lading issued by the CARRIER provide part of the latter, they take the precautions which said hotel-keepers or their substitutes advised
that its liability is limited to $2.00 per kilo. A stipulation limiting the liability of the carrier to the value relative to the care and vigilance of their effects.
of the goods appearing in the bill of lading, unless the shipper or owner declares a greater value, is
binding. The bill of lading shows that 120 cartons weigh 2,978 kilos or 24.82 kilos per carton. Since
90 cartons were lost and the weight of said cartons is 2,233.80 kilos, at $2.00 per kilo the ART. 2000
CARRIER's liability amounts to only US$4,467.60. (Citadel Lines, Inc. v. CA)
13
a. Actual notice not required.

The responsibility referred to in the two preceding articles shall include the loss of, or injury to
2. Passenger took precautions which the common carrier advised relative to the care and
the personal property of the guests caused by the servants or employees of the keepers of
vigilance of their baggage (Art. 1998)
hotels or inns as well as strangers; but not that which may proceed from any force majeure. The
fact that travellers are constrained to rely on the vigilance of the keeper of the hotels or inns shall
By allowing him to board the vessel with his belongings without any protest, Sulpicio Lines became
be considered in determining the degree of care required of him.
sufficiently notified of such belongings. So long as the belongings were brought inside the premises
of the vessel, Sulpicio Lines was thereby effectively notified and consequently duty-bound to
observe the required diligence in ensuring the safety of the belongings during the voyage. (Sulpicio
ART. 2001 v. Sesante)
The act of a thief or robber, who has entered the hotel is not deemed force majeure, unless it is INSTANCES WHEN COMMON CARRIER IS NOT RESPONSIBLE FOR THE LOSS AND INJURY
done with the use of arms or through an irresistible force. TO HAND-CARRIED BAGGAGE
1. Force majeure (Art. 2000)
2. Loss due to the act of passenger or his guest, his family, servants or visitors, or if the loss
ART. 2002 arises from the character of the things (Art. 2002)
3. Acts of thief or robber, done with the use of arms or through irresistible force (Art. 2001)
The hotel-keeper is not liable for compensation if the loss is due to the acts of the guest, his
family, servants or visitors, or if the loss arises from the character of the things brought into the STIPULATIONS LIMITING LIABILITY FOR HAND-CARRIED BAGGAGE
hotel. Common carrier cannot free himself from responsibility by posting notices to the effect that he is
not liable for the baggage brought by the passengers. Any stipulation between the common carrier
and passenger whereby responsibility in Arts. 1998 to 2001 is suppressed or diminished is void.
ART. 2003 (Art. 2003)
The hotel-keeper cannot free himself from responsibility by posting notices to the effect that he DUTY TO INSPECT PASSENGER BAGGAGE (Nocum v. Laguna Tayabas)
is not liable for the articles brought by the guest. Any stipulation between the hotel-keeper and ● RULE: Inquiry can only be made as to the nature of the baggage.
the guest whereby the responsibility of the former as set forth in articles 1998 to 2001 is ● It is to be presumed that a passenger will not take with him anything dangerous to the life
suppressed or diminished shall be void. and limbs of his co-passengers, not to speak of his own. Not to be considered lightly is
the right to privacy to which each passenger is entitled.
HAND-CARRIED CHECK-IN
Arts. 1998, 2000-2003 Arts. 1733-1753
The responsibility will be governed by the Civil The checked-in baggage is considered
Code provisions on hotelkeepers and passenger is considered goods and the the
innkeepers. Hand-carried baggage are shipper/consignee.
considered items of necessary deposit.
Common carriers shall be treated as
depositaries.
Diligence of a depositary (ordinary diligence) Extraordinary diligence
REQUISITES FOR HAND-CARRIED BAGGAGE (NECESSARY DEPOSIT)

1. Notice was given to the common carrier, or to their employees, of the baggage brought
by the passengers; and
14
● A high degree of care and extraordinary diligence is required of a carrier with respect to
its passengers. This is emphasized by the fact that it is charged to act with due regard to
SAFETY OF PASSENGERS
all the circumstances.
● This relation is contractual in nature as represented by the contract of carriage.
PASSENGER
One who travels in a public conveyance by virtue of an express or implied contract with the TWO COMPLETE DEFENSES OF A COMMON CARRIER
common carrier paying fare or what is equivalent thereof. (Jesusa Vda. De Nueca v. Manila Railroad 1. Fortuitous event
Company) 2. Extraordinary care (though the codal merely expresses the view that it is rebuttable)
WHO ARE NOT YET CONSIDERED AS PASSENGERS EXTRAORDINARY DILIGENCE

1. One who has not yet boarded any part of a vehicle regardless of whether or not he has a Extraordinary measures and diligence must be exercised by a common carrier for the safety of its
ticket passengers and their belongings. This includes firing an employee due to the threat he poses to the
2. One who remains on a carrier for an unreasonable length of time after he has been lives of the passengers. A pilot must be sober all the time for he may be called upon to fly a plane
afforded every safe opportunity to alight even before his regular scheduled hours, otherwise so many lives will be in danger if he is drunk. It
3. One who has boarded by fraud, stealth, or deceit would be unjust for an employer like PAL to be compelled to continue with the employment of a
4. One who attempts to board a moving vehicle, although he has a ticket, unless he attempt person whose continuance in the service is obviously inimical to its interests. (PAL v. NLRC)
be with the knowledge and consent of the carrier
5. One who has boarded a wrong vehicle, has been properly informed of such fact, and on
alighting, is injured by the carrier The extraordinary diligence required of common carriers demands that they take care of the goods
6. One who rides any part of the vehicle which is unsuitable or dangerous or which he or lives entrusted to their hands as if they were their own. (Spouses Cruz v. Sun Holidays)
knows is not designed or intended for passengers (Blue Notes)
Once a passenger in the course of travel is injured, or does not reach his destination safely, the
DEFENSES AVAILABLE carrier and driver are presumed to be at fault. (Bacarro v. Catano)
1. Fortuitous event
2. Extraordinary diligence Duty to stop
3. Passenger is the proximate cause of death or injury Though there is no obligation on the part of a street railway company to stop its car to take on
4. Employees could not have prevented by ordinary diligence the willful act or negligence of intending passengers at other points than those appointed for stoppage. Nevertheless when the
other passengers or strangers (which caused the death) motorman sees a person attempting to board the car while in motion, and at a place not appointed
5. If the contract of carriage is gratuitous and there is no willful act or negligence on the part for stopping, he should not do any act to increase the peril of such person. If in violation of this
of the carrier, a stipulation limiting liability is valid duty, the motorman in charge of a car prematurely accelerates speed while the intending passenger
is in the act of boarding the car, with the result that he slips and gets his foot crushed under the
wheel of the moving car, the company is civilly liable in damages. (Del Prado v. MRR)
EXTRAORDINARY DILIGENCE When the bus is not in motion, there is no need for a person who wants to ride the same to signal
his intention to board. A public utility bus, once it stops, is in effect making a continuous offer to
MEMORIZE: bus riders. Hence, it becomes the duty of the driver and the conductor, every time the bus stops, to
do no act that would have the effect of increasing the peril to a passenger while he was attempting
to board the same. The premature acceleration of the bus is a brach of such duty. (Dangwa
ART. 1755 Transport v. CA)
A common carrier is: [BUW] It is the duty of common carriers of passengers, including common carriers by railroad train,
1. Bound to carry the passengers safely as far as human care and foresight can provide, streetcar, or motorbus, to stop their conveyances a reasonable length of time in order to afford
2. Using the utmost diligence of very cautious persons, passengers an opportunity to board and enter, and they are liable for injuries suffered by boarding
3. With a due regard for all the circumstances. passengers resulting from the sudden starting up or jerking of their conveyances while they are
doing so. (Dangwa Transport v. CA)
● This provision deals with carriage of passengers, as opposed to carriers of goods. It
Q: If the carrier is a private carrier, will the carrier be presumed negligent in case of death or
follows then that if passengers are involved, this subsection applies.
injury of a passenger?
15
A: No. If the carrier is a private carrier then the provisions on common carrier under the Civil Code
In case of death of or injuries to passengers, common carriers are presumed to have been at
will not apply
fault or to have acted negligently, unless they prove that they observed extraordinary diligence
as prescribed in articles 1733 and 1755.
Q: If the carrier is a private carrier, what is the degree of diligence required to be exercised in
the safety of a passenger?
A: Generally, private carriers are only obligated to exercise ordinary diligence in the carrying of PRESUMPTION OF NEGLIGENCE
passenger. ● As in the case of carriage of goods (Art. 1735), when passengers suffer injuries or die, the
carrier will be presumed to have acted negligently.
DURATION ○ The court need not make an express finding of fault or negligence on the part
The victim herein, by stepping and standing on the platform of the bus, is already considered a of the carrier in order to hold it responsible for the payment of the damages
passenger and is entitled to all the rights and protection pertaining to such a contractual relation. sought by the passenger. (Batangas Laguna Tayabas Bus Co. v. IAC)
Hence, it has been held that the duty which the carrier of passengers owes to its patrons extends to ○ Presumption will be overcome when they prove they exercised extraordinary
persons boarding the cars as well as to those alighting therefrom. (Dangwa v. CA) diligence.
Such duty of a common carrier to provide safety to its passengers so obligates it not only during WHEN APPLICABLE; REQUISITES
the course of the trip but for so long as the passengers are within its premises and where they 1. A contract exists between the passenger and the common carrier; and
ought to be in pursuance to the contract of carriage. (LRTA v, Navidad) 2. The injury or death took place during the existence of the contract (Sulpicio Lines, Inc. v.
Sesante)
The relation does not necessarily cease where the latter, after alighting from the car, aids the
carrier’s servant or employee in removing his baggage from the car. The relation of carrier and Q: Is Art. 1734 applicable as a defense for the common carrier in death or injury of a
passenger does not cease at the moment the passenger alights from the carrier’s vehicle at a place passenger?
selected by the carrier at the point of destination, but continues until the passenger has had a A: No. Article 1734 explicitly provides for the responsibility of the common carrier over the loss,
reasonable time or a reasonable opportunity to leave the carrier’s premises. What is a reasonable destruction, or deterioration of goods – not persons.
time or a reasonable delay within this rule is to be determined from all the circumstances. (La
Mallorca v. CA) Q: In the case of persons and passengers, if Art. 1734 is not applicable, then what are the
defenses available to the common carrier to escape liability?
Thus: A: Article 1756, which provides that the common carrier may escape liability by proving that it has
1. A person who, after alighting from a train, walks along the station platform is considered exercised extraordinary diligence.
still a passenger. (La Mallorca v. CA)
2. A passenger has alighted at his destination and is proceeding by the usual way to leave Q: Is there a duty to exercise extraordinary diligence if the carrier is a private carrier?
the company's premises, but before actually doing so is halted by the report that his A: No. The Article only covers common carriers.
brother, a fellow passenger, has been shot, and he in good faith and without intent of
engaging in the difficulty, returns to relieve his brother, he is deemed reasonably and NOT INSURER OF ALL RISKS
necessarily delayed and thus continues to be a passenger. (La Mallorca v. CA) Events which cannot be foreseen and which, having been foreseen are inevitable” – an event that
3. A passenger alights from the car to aid the carrier’s servant or employee in removing his takes place by accident and could not have been foreseen, like destruction of houses, unexpected
baggage from the car, is considered still a passenger. (La Mallorca v. CA) fire, shipwreck, violence of robbers, etc. A carrier of passengers is not an absolute insurer against
4. Aboitiz remains to be a passenger even if 1 hour prior to the incident, the victim had the risks of travel from which the passenger may protect himself by exercising ordinary care and
already disembarked from the vessel. Even if he had already disembarked an hour earlier, diligence. (Lasam v. Smith)
his presence in Aboitiz’s premises was not without cause because the victim was in the
act of unloading his cargoes, which he had every right to do, from Aboitiz’s vessel. By the Common carriers are not absolutely responsible for all injuries or damages even if the same were
very nature of Aboitiz's business as a shipper, the passengers of vessels are allotted a caused by a fortuitous event. To rule otherwise would render the defense of "force majeure," as an
longer period of time (usually at least an hour) to disembark from the ship than other exception from any liability, illusory and ineffective. (Japan Airlines v. CA)
common carriers such as a passenger bus. (Aboitiz Shipping v. CA)
If the cause of non-fulfillment of the contract is due to a fortuitous event, it has to be the sole and
only cause. (PAL v. CA) If the event could have been foreseen and is avoidable, then it is not caso
fortuito so as to exempt the common carrier from liability. (Fortune Express v. CA)
ART. 1756
16
Article 1733 is not as unbending, for it reasonably qualifies the extraordinary diligence required of prevented nor avoided by the defendant since it was not authorized to search its
common carriers for the safety of the passengers "according to all the circumstances of each passengers for firearms and deadly weapons (Quisumbing v. CA)
case." Article 1755 repeats this same qualification: "A common carrier is bound to carry the 3. An unidentified man hurled a stone at the left side of the bus, which hit Pilapil above his
passengers safely as far as human care and foresight can provide, using the utmost diligence of left eye. (Pilapil v. CA)
very cautious persons, with due regard for all the circumstances." (Nocum v. Laguna Tayabas Bus) 4. The death of the spouse was caused by the reckless negligence of the driver of the Isuzu
trailer truck which lost its brakes and bumped the Celyrosa Express bus (common carrier)
Failure to take certain steps that a passenger in hindsight believes should have been taken is not and before the collision, the bus was cruising on its rightful lane when the trailer truck
the negligence or misconduct which mingles with force majeure as an active and cooperative coming from the opposite direction, on full speed, suddenly swerved and encroached on
cause. (Quisumbing v. CA) its lane, and bumped the passenger bus. (Mariano v. Callejas)
5. The bus conductor testified that the box belonged to a passenger whose name he does
Where, as in the instant case (throwing of rock by a stranger), the injury was in no way due to any not know. The other passenger told him that the box contained miscellaneous items and
defect in the means of transport or in the method of transporting or to the negligent/willful acts of clothes. There was also nothing indicating that the box contained firecrackers so he
the common carrier’s employees, and therefore involving no issue of negligence in its duty to decided not to inspect the contents of the box. (Nocum v. Laguna Tayabas Bus Co.)
provide safe and suitable cars as well as competent employees, with the injury arising wholly from
causes created by strangers over which the carrier had no control or even knowledge or could not NOT FORTUITOUS EVENTS CASES
have prevented, the presumption is rebutted, and the carrier is not to be held liable. (Pilapil v. CA) 1. The plane did not take the designated route because it was some 30 miles to the west
when it crashed at Mt. Baco (Vda. De Abeto v. PAL)
PRINCIPLES GOVERNING THE LIABILITY OF A COMMON CARRIER (Isaac v. A.L. Ammen) 2. When a passenger run amuck:
1. The liability of a carrier is contractual and arises upon breach of its obligation. There is a. The bus driver did not immediately stop the bus at the height of the
breach if it fails to exert extraordinary diligence according to all circumstances of each commotion;
case. b. The bus was speeding from a full stop;
2. A carrier is obliged to carry its passenger with the utmost diligence of a very cautious c. The victims fell from the bus door when it was opened or gave way while the
person, having due regard for all the circumstances bus was still running;
3. A carrier is presumed to be at fault or to have acted negligently in case of death of, or d. The conductor panicked and blew his whistle after people had already fallen off
injury to, passengers, it being its duty to prove that it exercised extraordinary diligence the bus; and
4. The carrier is not an insurer against all risks of travel e. The bus was not properly equipped with doors in accordance with law
(Bachelor Express, Inc. v. CA)
EMERGENCY RULE (Isaac v. A.L. Ammen) 3. Ignoring a report that the Maranaos were planning to take revenge by burning some of its
Where a carrier's employee is confronted with a sudden emergency, the fact that he is obliged to buses hence the Maranaos was able to sneak into the bus a large quantity of gasoline
act quickly and without a chance for deliberation must be taken into account, and he is held to the with them (Fortune Express v. CA)
some degree of care that he would otherwise be required to exercise in the absence of such 4. Driver should and must have known that in the position in which the overturned bus was,
emergency but must exercise only such care as any ordinary prudent person would exercise under gasoline could and must have leaked from the gasoline tank and soaked the area in and
like circumstances and conditions, and the failure on his part to exercise the best judgment the around the bus, and yet neither the driver nor the conductor would appear to have
case renders possible does not establish lack of care and skill on his part which renders the cautioned or taken steps to warn the rescuers not to bring the lighted torch (Vda. de
company liable. Bus 31 was running at moderate speed when the collision happened because it Bataclan v. Medina)
had just stopped at a school zone, while the pick-up was speeding and running outside of its 5. The chauffeur allowed his assistant, without a license, to drive the car and a defect in the
proper lane. The driver tried to avoid the collision, but it only had little space to maneuver, as there steering wheel made the car zigzag and went down a steep embankment. (Lasam v.
was a pile of stones at the rampart of the road. In this case, the SC found that the driver did Smith)
everything that a prudent man would have done under the circumstances. 6. A rear tire exploded, blasting a hole in the very place where Victoria was standing in front
of her mother hence, the child fell through the hole. The tire bursted since the bus was
CASES WHERE CARRIER WAS NOT LIABLE overcrowded and overspeeding and the tire was not strong and safe; the air pressure was
1. During Martial Law, where there was a military take-over of airport security, including the not properly checked; the load was heavy; the excessive speed of the bus must have
frisking of passengers and the inspection of their baggage preparatory to boarding overstrained the tire; and the high velocity generated heat in the tire which could have
domestic and international flights, hence members of the MNLF hijacked PAL (Gacal v. expanded the already compressed air therein. (M. Ruiz Highway Transit, Inc. v. CA)
PAL) 7. In order to allow one passenger to disembark, BTCO bus was parked partly to the right
2. While it is true that the use of arms was not taken advantage of by the robbers in gaining shoulder of the road and partly on the asphalted portion. Yet, the driver could and should
entrance to defendant's ill-fated plane, the robbers were able to gain entrance to the have seen to it that his bus was completely outside the asphalted portion of the road, and
plane with the guns they used already in their possession, which fact could not have been within the shoulder of the road, the width of which being more than sufficient to
17
accommodate the bus so that it would not be hit by an upcoming overspeeding bus. 1. The manufacturer of the defective appliance is considered in law the agent of the carrier,
(Batangas Transportation Co. v. Caguimbal) and the good repute of the manufacturer will not relieve the carrier from liability.
8. The driver failed to slacken the speed of the jeep at the time the truck was overtaking it, (Necessito v. Paras)
rather, he ran side by side with the cargo truck and even if he should have foreseen that 2. The passenger has no privity with the manufacturer of the defective equipment; hence, he
at the speed he was running, the vehicles were getting nearer the bridge and as the road has no remedy against him, while the carrier usually has. (Necessito v. Paras)
was getting narrower the truck would be too close to the jeep and would eventually a. AMPIL – This is not correct as the passenger can sue on the basis of
sideswipe it. (Bacarro v. Castano) quasi-delict.
9. BLTB bus who overtake a Ford Fiera car as he was negotiating the ascending bend of the 3. The passenger has neither choice nor control over the carrier in the selection and use of
highway, which was divided into two lanes by a continuous yellow strip (no-overtaking the equipment and appliances in use by the carrier. (Maranan v. Perez)
zone) (BLTB v. IAC)
10. When the passenger of the jeep alighted the vehicle, the jeepney was not properly
parked, its rear portion being exposed about two meters from the broad shoulders of the
STIPULATIONS LIMITING LIABILITY
highway, and facing the middle of the highway in a diagonal angle, and the passenger
was seated in an "extension seat" placed her in a peril greater than that to which the
other passengers were exposed. (Calalas v. CA)
11. Liability for defective equipment ART. 1757
a. Despite the importance of the knuckle’s resistance, the only test applied to the
steering knuckle in question was a purely visual inspection every thirty days, to The responsibility of a common carrier for the safety of passengers as required in articles 1733
see if any cracks developed; and the common carrier failed to ascertain and 1755 cannot be dispensed with or lessened:
whether its strength was up to standard, or that it had no hidden flaws that ● By stipulation,
would impair that strength (Necesito v. Paras) ● by the posting of notices,
b. Cross-joint of the bus broke, resulting in the malfunctioning of the motor ● by statements on tickets,
despite that only the day before the incident, the crossjoint in question was ● Or otherwise.
duly inspected and found to be in order (Landingin v. Pantranco)
c. Failure of common carrier to look after the roadworthiness and safety of the TICKET GIVEN TO A PASSENGER IS A WRITTEN CONTRACT
bus, coupled with the driver's refusal or neglect to stop the mini-bus after he Whenever a passenger boards a ship/vehicle of a carrier, he is normally issued a ticket which, in
had heard once again the "snapping sound", even if such sound is abnormal in turn, contains the terms and conditions. This ticket is a complete written contract by the carrier and
a bus, and the cry of alarm from one of the passengers (Gatchalian v. Delim) the passenger to wit:
d. Left front tire was pressed between the inner circle of the left wheel and the rim ● Consent: Passenger boards and the carrier consent or accepts him for transportation
which had slipped out of the wheel (La Mallorca v. De Jesus) ● Object: Transportation of the passenger from the place of departure to the place of
destination
LIABILITY FOR DEFECTIVE EQUIPMENTS IS NOT A FORTUITOUS EVENT ● Cause: The fare paid by the passenger (Singson v. CA)
While the carrier is not an insurer of the safety of the passengers, it should nevertheless be held to
answer for the laws its equipment if such flaws were at all discoverable. WAIVER OF COMMON CARRIER’S LIABILITY
Thus, in instances of injury or death, a waiver of the right to claim damages is strictly construed
A passenger is entitled to recover damages from a carrier for an injury resulting from a defect in an against the common carrier so as not to dilute or weaken the public policy behind the required
appliance purchased from a manufacturer, whenever it appears that the defect would have been standard of extraordinary diligence. It was for this reason that in Gatchalian, the waiver was
discovered by the carrier if it had exercised the degree of care which under the circumstances was considered offensive to public policy because it was shown that the passenger was still in the
incumbent upon it, with regard to inspection and hospital and was dizzy when she signed the document. It was also shown that when she saw the
application of the necessary tests. (Juntilla v. CA.) other passengers signing the document, she signed it without reading it. Similar to Gatchalian,
Colipano testified that she did not understand the document she signed. She also did not
The explosion of a tire found to be brand new and of a reputable brand is not ipso facto due to a understand the nature and extent of her waiver as the content of the document was not explained
fortuitous event, and the carrier must still show that it has not been negligent in carrying on its to her. The waiver is therefore void because it is contrary to public policy. (Sanico v. Castro)
contract. The state of the tire (being new) does not remove the possibility of improper mounting, too
much air pressure and the like. (Yobido v. CA) REQUISITES FOR A VALID WAIVER (Sanico v. Castro)
1. The person making the waiver possesses the right
Reasons: 2. He has the capacity and power to dispose of the right
18
3. The waiver must be clear and unequivocal although it may be made expressly or
impliedly, and ACTS OF EMPLOYEES
4. The waiver is not contrary to law, public policy, public order, morals, good customs or ● Common carriers are liable for death/injuries to passengers caused by their
prejudicial to a third person with a right recognized by law. employees’ (1) negligence or (2) willful acts
○ EVEN IF:
■ Such employees acted beyond the scope of their authority, or
ART. 1758
■ If they acted in violation of the orders of the common carriers
● DIFFERENCE FROM ART. 2180: The common carrier cannot interpose the defense that
When a passenger is carried gratuitously, a stipulation limiting the common carrier's liability for
it exercised ordinary diligence in the selection and supervision of its employees.
negligence is valid, but not for wilful acts or gross negligence.
○ Art. 2180 (vicarious liability) – employers will not be liable for damages caused
by their employees once they prove that they exercised ordinary diligence in
The reduction of fare does not justify any limitation of the common carrier's liability.
selection and supervision.
○ This is because the basis of carrier’s liability is the contract of carriage
VALID AND VOID AGREEMENTS (culpa contractual).
● The passenger cannot enter into agreement that: ○ On the other hand, Art. 2180 is applicable in cases of quasi-delict (culpa
○ Absolutely exempts the carrier from liability from the passenger’s aquiliana)
death/injuries ● A tort committed by a stranger does not give the injured passenger a cause of action
○ Lessening the extraordinary diligence required by law against the carrier. The carrier is liable only for the negligent omission by its
■ EXCEPTION: Gratuitous employees to prevent the tort from being committed when the same could have been
■ EXCEPTION TO THE EXCEPTION: For willful acts or gross foreseen and prevented by them. (Pilapil v. CA)
negligence
BUT NOT: Discounted
NOTE: The rule is different when it comes to carriage of goods under (Art. 1744)
PRIVATE CARRIERS
● Private carriers are not governed by extraordinary diligence as its liability is primarily
governed by its contract with the passenger/s.
● The owner or operator of an automobile owes the duty to an invited guest to exercise
CASE SOURCE OF PRESUMPTION POSSIBLE OTHER
reasonable care in its operation, and not unreasonably to expose him to danger and injury
OBLIGATION OF NEGLIGENCE DEFENSE POSSIBLE
by increasing the hazard of travel. An owner of an automobile owes a guest the duty to
LIABILITY
exercise ordinary or reasonable care to avoid injuring him. Since one riding in an
automobile is no less a guest because he asked for the privilege of doing so, the same
Plaintiff vs. Breach of YES No breach Administrative
obligation of care is imposed upon the driver as in the case of one expressly invited to
Common contract occurred; case for
ride". Defendant, therefore, is only required to observe ordinary care, and is not in duty
Carrier Cannot raise cancelation of
bound to exercise extraordinary diligence as required of a common carrier by our law.
diligence in S/S certificate of
(Lara v. Valencia)
public
Quasi-delict NO Ordinary convenience
ART. 1759 diligence in S/S
of employees
Common carriers are liable for the death of or injuries to passengers through the negligence or
wilful acts of the former's employees, although such employees may have acted beyond the Plaintiff vs. Quasi-delict NO Criminal case
scope of their authority or in violation of the orders of the common carriers. Driver
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 distinction between these two sorts of negligence is important, for the reason that where
liability arises from a mere tort (culpa aquiliana), not involving a breach of positive obligation, an
19
employer, or master, may exculpate himself, by proving that he had exercised due diligence to
prevent the damage. However, this defense is not available if the liability of the master arises from a The killing was perpetrated by the driver of the very cab transporting the passenger, in whose
breach of contractual duty (culpa contractual). (Del Prado v. MERALCO) hands the carrier had entrusted the duty of executing the contract of carriage. The killing of the
passenger here took place in the course of duty of the guilty employee and when the employee was
Q: Can the plaintiff sue the CC under Art 2180 and the driver under Art 2176 at the same time? acting within the scope of his duties. (Maranan v. Perez)
A: Yes.
ART. 1760
Q: Can the plaintiff sue the CC under Art 2180 and alternatively, for a breach of the contract
of carriage?
The common carrier's responsibility prescribed in the preceding article cannot be eliminated or
A: Yes. Plaintiff may sue under alternative causes of action.
limited by stipulation, by the posting of notices, by statements on the tickets or otherwise.
Q: Can the CC be liable when the plaintiff sues the driver for a criminal action?
A: If the driver is convicted (and insolvent), the employer will only be subsidiarily liable under the ● The liability for the death or injuries caused by the CCs employees also cannot be
RPC. However, the employer/CC cannot go to jail because subsidiary liability is only civil. limited by stipulations, notices and statements on the tickets or otherwise.
● This article further protects the passengers and enables them to recover notwithstanding
Q: What is respondent superior? Is this the basis for the common carrier’s liability if the COA such stipulations
is based on contra contractual or aquilana?
A: Culpa aquilana. Respondeat superior embodies the general rule that an employer is responsible
for the negligent acts or omissions of its employees. Under respondeat superior an employer is Art. 1757 Art. 1760
liable for the negligent act or omission of any employee acting within the course and scope of his
employment Covers common carrier Covers common carrier’s employees
SITUATION: Limitation of diligence allowed if gratuitous Limitation of diligence not allowed

X was a passenger of Bus A. Bus B hit Bus A which caused injuries to X. If X wants to
sue Bus A, what must his cause of action be?
● If he wants to sue Bus A: Breach of contract of carriage.
● If he wants to sue Bus B; Quasi delict (2176/2180); This is because he does not have a ART. 1761
contractual relationship with Bus B.
The passenger must observe the diligence of a good father of a family to avoid injury to himself.
JURISPRUDENCE EXAMPLES
1. Premature announcement of the next stop by the employee of the carrier, which caused
the death of a child and her grandmother, was made the basis of the liability of the
common carrier. Common carriers like trains and buses that before reaching a station or
flagstop they slow down and the conductor announces the name of the place. As the ● The law, in imposing extraordinary diligence on CC, is not one sided as passengers are
train or bus slackens its speed, some passengers usually stand and proceed to the also required to exercise ordinary diligence to avoid injury to himself when on board the
nearest exit, ready to disembark as the train or bus comes to a full stop. This is especially vehicle.
true of a train because passengers feel that if the train resumes its run before they are
able to disembark, there is no way to stop it as a bus may be stopped. (Brinas v. People) While it is true the passengers of appellant's bus should not be made to suffer for something over
2. The negligence and recklessness of the driver of the passenger jeepney is binding which they had no control, fairness demands that in measuring a common carrier's duty towards its
against petitioner Mallari Sr., who admittedly was the owner of the passenger jeepney passengers, allowance must be given to the reliance that should be reposed on the sense of
engaged as a common carrier, considering the fact that in an action based on contract of responsibility of all the passengers in regard to their common safety. (Nocum v. Laguna Tayabas
carriage. (Mallari v. CA) Bus Co.)
IN DUTY VERSUS OFF-DUTY

Where the crime was committed by a train guard who had no duties to discharge in connection with Q: What is the effect of negligence of the passenger?
the transportation of the victim, the crime stands on the same footing as if committed by a stranger A: Failure to exercise such diligence will preclude recovery for injuries/death.
or co-passenger, since the killing was not done in the line duty. Devesa was assigned to guard the ● Example: X was on a bus and he persisted on sticking his head out of the window even if
trains and his tour of duty was to start at 9:00 a.m., two hours after the commission of the crime. there was a sign that warned them not to do so. X hit his head on a post. In this case, as
(Gillaco v. Manila Railroad) long as there was no negligence on the CC’s part, then it is not liable.
20
1. Employees acted beyond the scope 1. Through the exercise of the

ART. 1762 of their authority, or diligence of a good father of a
2. If they acted in violation of the orders family, common carrier’s employees
The contributory negligence of the passenger does not bar recovery of damages for his death or of the common carriers could have prevented or stopped
injuries, if the proximate cause thereof is the negligence of the common carrier, but the amount the act or omission
of damages shall be equitably reduced. EXCEPT: not on duty
● This article qualifies Art 1761.

● When the proximate cause of the death or injury is the CC, the contributory negligence of
the passenger will not bar recovery. It will only equitably reduce the amount of damages.
● Example: In the same example above, if the reason why X’s head hit the post
was because the driver of the bus was speeding or was driving recklessly, then the
proximate cause of the injury can be attributed to the driver and the contributory
negligence of X will only mitigate, but not bar, his recovery.
It is not negligence per se, for one attempt to board a train or streetcar which is moving slowly. An
ordinarily prudent person would have made the attempt board the moving conveyance under the
same or similar circumstances. The fact that passengers board and alight from a slowly moving
vehicle is a matter of common experience both the driver and conductor in this case could not have
been unaware of such an ordinary practice. (Dangwa v. CA)
Taking an "extension seat" does not amount to an implied assumption of risk. It is akin to arguing
that the injuries to the many victims of the tragedies in our seas should not be compensated merely
because those passengers assumed a greater risk of drowning by boarding an overloaded ferry.
(Calalas v. CA)
ART. 1763
A common carrier is responsible for injuries suffered by a passenger on account of the wilful
acts or negligence of other passengers or of strangers, if the common carrier's employees
through the exercise of the diligence of a good father of a family could have prevented or
stopped the act or omission.
RULE: The CC is responsible for injuries suffered by a passenger due to negligence or wilful acts of
his co-passengers or a stranger.
EXCEPTION: If the injury to the passenger could not have been avoided by the exercise of ordinary
diligence, the CC is not liable.
Art. 1759 Art. 1763
Covers negligence or wilful acts of common Covers negligence or wilful acts of passengers
carrier’s employees and strangers
CC liable even if: CC liable only if:
21
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. (Cathay Pacific v. Sps. Fuentebella)
CARRIAGE OF GOODS CARRIAGE OF PASSENGERS

Parties
1. Common carrier 1. Common carrier
2. Shipper 2. Passenger
3. Consignee
Cause of liability
1. Loss 1. Death
2. Deterioration 2. Injury
3. Destruction
4. Delay
Duration of liability
1. From the time the goods are unconditionally placed in the possession of and received by the 1. Not only during the course of the trip, but for so long as the passengers are within its
carrier for transportation premises and where they ought to be in pursuance to the contract of carriage.
a. Remains even if: 2. Persons who remain on the premises within a reasonable time after leaving the conveyance
i. The goods are temporarily unloaded or stored in transit are to be deemed passengers.
1. Except if the shipper or owner has made use of the right of a. What is a reasonable time or a reasonable delay within this rule is to be determined
stoppage in transitu. (Art. 1737) from all the circumstances, and includes a reasonable time to see after his
ii. The goods are stored in a warehouse of the carrier at the place of baggage and prepare for his departure.
destination 3. Common carriers must stop their conveyances a reasonable length of time in order to afford
1. Except if the consignee has bee advised of the arrival of the passengers an opportunity to enter, and they are liable for injuries suffered from the sudden
goods and has had reasonable opportunity to remove them or starting up or jerking of their conveyances while doing so. The duty which the carrier of
otherwise dispose of them (Art. 1738) passengers owes to its patrons extends to persons boarding the cars as well as to those
2. Until the same are delivered actually or constructively by the carrier to the consignee or to the alighting therefrom (Dangwa Trans Co., Inc. vs. CA)
person who has the right to receive them
Presumption of negligence
Art. 1735: Arises upon Art. 1756:
1. Loss 1. Death
2. Deterioration 2. Injury
3. Destruction
To exempt from liability: It must prove that it observed extraordinary diligence as prescribed in articles
EXCEPT: 1733 and 1755.
1. Art. 1734
To exempt from liability: It must prove that they observed extraordinary diligence as required in Art.
1733.
Defenses
1. Exercise of extraordinary diligence 1. Exercise of extraordinary diligence
2. Art. 1734 2. Fortuitous event
22
● The defense of the exercise of all the diligence of a good father in the selection and supervision of their employees is appropriate only in quasi-delict or culpa aquiliana. Such defense is not available
in culpa contractual and therefore, a common carrier cannot raise such defense in action brought by its passengers based on contract.
● The defense of last clear chance is not applicable. It would call for application in a suit between the owners and drivers of the two colliding vehicles. It does not apply when the passenger demands
responsibility from the carrier to enforce its contractual obligation. (Anuran v. Buno)
Valid stipulations limiting liability
1. Reduction to a degree of ordinary diligence, provided: 1. Stipulation limiting liability when a passenger is carried gratuitously
a. In writing, signed by the shipper or owner a. EXCEPT: Willful acts or gross negligence.
b. Supported by a valuable consideration other than the service rendered by the i. Waiver of future fraud or gross negligence is invalid (Art. 1172)
carriers
c. Reasonable, just and not contrary to public policy. (Art. 1744)
NOTE: The diligence required in the carriage of the goods may be reduced by only one
degree, from extraordinary to ordinary diligence or diligence of a good father of a family.
2. Fixing amount of liability:

a. A contract fixing the sum to be recovered by the owner or shipper for the loss,
destruction or deterioration of the goods, if it is reasonable and just under the
circumstances and has been fairly and freely agreed upon. (Art. 1750)
b. A stipulation that the common carrier's liability is limited to the value of the goods
appearing in the bill of lading, unless the shipper or owner declares a greater value
(Art. 1749)
3. Limited liability for delay: An agreement limiting the common carrier’s liability for delay on
account of strikes or riots (Art. 1748)
When stipulations may be refused

1. Refusal to carry goods, UNLESS stipulation limiting liability is signed by shipper (Art. 1746)
2. Delay or deviation, without just cause (Art. 1747)
3. Lack or presence of competition (Art. 1751)
Void stipulation
1. That the goods are transported at the risk of the owner or shipper; 1. The common carrier's responsibility for the safety of passengers as required in Arts. 1733
2. That the common carrier will not be liable for any loss, destruction, or deterioration of the and 1755 (Art. 1757)
goods; 2. The common carrier's responsibility for negligence or wilful acts of its employees (Art. 1760)
3. That the common carrier need not observe any diligence in the custody of the goods;
4. That the common carrier shall exercise a degree of diligence less than that of a good father of
a family, or of a man of ordinary prudence in the vigilance over the movables transported;
5. That the common carrier shall not be responsible for the acts or omission of his or its
employees;
6. That the common carrier's liability for acts committed by thieves, or of robbers who do not
act with grave or irresistible threat, violence or force, is dispensed with or diminished;
7. That the common carrier is not responsible for the loss, destruction, or deterioration of goods
on account of the defective condition of the car, vehicle, ship, airplane or other equipment
used in the contract of carriage.
23
● Minimum amount of damages to be paid in case of death of the passenger (now

COMMON PROVISIONS
PhP50,000 as per jurisprudence)
● Liability for Loss of earning capacity, if applicable
● Liability to give Support if deceased was obliged to give support to one who is not an
ART. 1764 heir called to decedent’s inheritance (testate/intestate)
● Liability for Moral damages for mental anguish to be claimed by spouse, legitimate and
Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of illegitimate ascendants and descendants.
this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger
caused by the breach of contract by a common carrier. ART. 2206(1)
FORMULAS
ART. 2206 ● Damages = (life expectancy) * (rate)
● Life expectancy = ⅔ * (80 - age at death)
The amount of damages for death caused by a crime or quasi-delict shall be at least three ● Rate = (Total of the Earnings) - (Expenses necessary in the creation of such earnings)
thousand pesos, even though there may have been mitigating circumstances. In addition:
LIFE EXPECTANCY
(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and The determination of the indemnity to be awarded to the heirs of a deceased person has no fixed
the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case basis. Much is left to the discretion of the court considering the moral and material damages
be assessed and awarded by the court, unless the deceased on account of permanent involved, and so it has been said that "(t)here can be no exact or uniform rule for measuring the
physical disability not caused by the defendant, had no earning capacity at the time of value of a human life and the measure of damages cannot be arrived at by precise mathematical
his death; calculation, but the amount recoverable depends on the particular facts and circumstances of each
case. (Villa Rey Transit, Inc. v. CA)
(2) If the deceased was obliged to give support according to the provisions of article 291, HENCE – According to the formula adopted in Villa Rey Transit v. CA,, the formula is
the recipient who is not an heir called to the decedent's inheritance by the law of computed as (2/3 x [80 — 30 (Davila’s age)]). This makes one’s life expectancy 33 and ⅓
testate or intestate succession, may demand support from the person causing the years. However, considering the ailments, it is reasonable to make an allowance for these
death, for a period not exceeding five years, the exact duration to be fixed by the circumstances and consider, for purposes of this case, a reduction of his life expectancy
court; to 25 years. (Davila v. PAL)
(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased Under Article 1764 and Article 2206(1) of the Civil Code, the award of damages for death is
may demand moral damages for mental anguish by reason of the death of the computed on the basis of the life expectancy of the deceased, not of his beneficiary and not
deceased. whichever is shorter. (PAL v. CA)
CA erred when it used Colipano's age at the time she testified as basis for computing the loss of
INJURY DAMAGE DAMAGES earning capacity. The loss of earning capacity commenced when Colipano's leg was crushed on
December 1993. Given that Colipano was 30 years old when she testified on October 1997, she
The illegal invasion of a legal The loss, hurt, or harm which The recompense or was roughly 27 years old on December 1993 when the injury was sustained. Hence, life expectancy
right results from the injury compensation awarded for must be computed based on his age on December 1993, i.e., 27 years old. (Sanico v. Castro)
the damage suffered
LOSS OF EARNING CAPACITY
Earning capacity, as an element of damages to one's estate for his death by wrongful act is
Under Art. 2206 of the Civil Code of the Philippines, only deaths caused by a crime as quasi delict necessarily his net earning capacity or his capacity to acquire money, "less the necessary expense
are entitled to actual and compensatory damages without the need of proof of the said for his own living (as what the heirs stand to lose is the remaining amount, which is the support he
damages. However, Article 1764 expressly makes Art. 2206 applicable "to the death of a could have given them after providing for himself). The amount recoverable is not loss of the entire
passenger caused by the breach of contract by a common carrier. Accordingly, a common carrier is earning, but rather the loss of that portion of the earnings which the beneficiary would have
liable for actual or compensatory damages under Article 2206 in relation to Article 1764 for deaths received. (Villa Rey Transit, Inc. v. CA)
of its passengers caused by the breach of the contract of transportation. (Sulpicio v. CA)
Art. 2206 fixes the minimum indemnity for death at P3,000, which the courts may increase
Art. 2206 provides for: [MLSM] according to the circumstances. It is in fixing a greater amount of indemnity that courts may
consider the financial capacity of the common carrier, along with other factors. Essentially, the
24
common carrier, if liable, must be made to pay the minimum amount and this is without considering The second factor is computed by multiplying the life expectancy by the net earnings of the
its financial capacity. However, if its financial ability is such that it can pay a greater amount of deceased (life expectancy x net earnings), i.e., the total earnings less expenses necessary in the
indemnity as demanded by the circumstances of the case, then certainly it should be made to pay creation of such earnings or income and less living and other incidental expenses. The loss is not
more than P3,000. Its financial standing in such a case is material. Therefore, the request of the equivalent to the entire earnings of the deceased, but only such portion as he would have used to
general ledgers and financial statements of Patranco was for a good cause and the respondent support his dependents or heirs. Hence, to be deducted from his gross earnings are the necessary
Judge did not commit GAD. (Pangasinan Transportation Co. v. Legaspi) expenses supposed to be used by the deceased for his own needs.
● Gross Annual Income: life expectancy x net earnings of the deceased
At that time he was already a fourth-year student in medicine in a reputable university. While his ○ Net Earnings of the Deceased (do not confuse with Net Earning Capacity): total
scholastic record may not be first rate it is, nevertheless, sufficient to justify the assumption that he earnings - expenses necessary in the creation of such earnings or income
could have finished the course and would have passed the board test in due time. As regards the -incidental expenses
income that he could possibly earn as a medical practitioner, it appears that, according to Dr. In computing the third factor — necessary living expense, Smith Bell Dodwell Shipping Agency
Amado Doria, a witness for the LTB, the amount of P300.00 could easily be expected as the Corp. v. Borja teaches that when, as in this case, there is no showing that the living expenses
minimum monthly income of Edgardo had he finished his studies. Edgardo is entitled to P25,000 constituted the smaller percentage of the gross income, the living expenses are fixed at half of the
compensatory damages. (Cariaga v. LTB) gross income.
Given that the pension was sure income that was cut short by her death, De Calison is entitled to Applying the above guidelines, the Court determines Ruelito's life expectancy as follows:
Php 10,000, which is the just equivalent of one year’s worth of pension, which Juana would have Life expectancy = 2/3 x [80 — age of deceased at the time of death]
received, had she not died. (De Caliston v. CA) = 2/3 x [80 - 28]
= 2/3 x [52]
LOSS OF EARNING CAPACITY MUST BE PROVEN = Life expectancy = 35
● RULE: Documentary evidence should be presented to substantiate the claim for
damages for loss of earning capacity. IN THIS CASE:
● EXCEPTIONS: Damages for loss or impairment of earning capacity may be awarded Documentary evidence shows that Ruelito was earning a basic monthly salary of $900 which, when
despite the absence of documentary evidence when: converted to Philippine peso applying the annual average exchange rate of $1 = P44 in 2000,
1. The deceased [or the injured] was self-employed and earning less than the amounts to P39,600. Ruelito's net earning capacity is thus computed as follows:
minimum wage under current labor laws, in which case, judicial notice may be
taken of the fact that in the deceased's line of work no documentary evidence Net Earning Capacity = life expectancy x (gross annual income - reasonable and necessary living
is available; or expenses).
2. The deceased was employed as a daily worker earning less than the minimum = 35 x (P475,200 - P237,600)
wage under current labor laws. = 35 x (P237,600)
Net Earning Capacity = P8,316,000 (Sps. Cruz v. Sun Holidays)
ILLUSTRATION FOR COMPUTATION OF LOSS OF EARNING CAPACITY: Article 1764 27
vis-à-vis Article 2206 of the Civil Code holds the common carrier in breach of its contract of ART. 2206(3)
carriage that results in the death of a passenger liable to pay the following: (1) indemnity for death,
(2) indemnity for loss of earning capacity and (3) moral damages. Petitioners are entitled to See Art. 2220.
indemnity for the death of Ruelito which is fixed at P50,000.
ART. 1765
DAMAGES REPRESENTING UNEARNED INCOME: the formula for its computation is:
The Public Service Commission may, on its own motion or on petition of any interested party,
Net Earning Capacity = life expectancy x (gross annual income-reasonable and necessary living
after due hearing, cancel the certificate of public convenience granted to any common carrier
expenses).
that repeatedly fails to comply with his or its duty to observe extraordinary diligence as
prescribed in this Section.
Life expectancy is determined in accordance with the formula:
2/3 x [80 — age of deceased at the time of death]
● This article governs the cancellation of the certificate of public convenience to any
The first factor, i.e., life expectancy, is computed by applying the formula (2/3 x [80 — age at common carrier.
death]) adopted in the American Expectancy Table of Mortality or the Actuarial of Combined ● The PSC may act on its own initiative or petition of any interested party.
Experience Table of Mortality.
25
● After due hearing, the PSC may then cancel the certificate on the ground that the CC action are (1) Culpa contractual or Contractual negligence, and (2)
repeatedly fails to comply with his or its duty to observe ED (e.g. multiple accidents) Culpa aquiliana or tort or quasi delict.
● Culpa Contractual:
○ In Culpa Contractual or contractual negligence,
ART. 1766
as a cause of action, there is already
immediately a presumption of fault or
In all matters not regulated by this Code, the rights and obligations of common carriers shall be
negligence against the common carrier.
governed by the Code of Commerce and by special laws.
○ If the cause of action is culpa contractual, there
is also a duty on the part of the common
● The new CC now contains provisions on common carriers. Consequently, there is now no carrier to exercise extraordinary diligence.
distinction between a transportation contract of a common carrier under the Civil Code ○ If the cause of action is culpa contractual, the
and a transportation contract under the Code of Commerce. defense of diligence in the selection and
● NOTE: The CC did not repeal the provisions of the Code of Commerce on overland supervision of the employees is not available
transportation. Instead, these Code of Commerce provisions are suppletory to the to the public. Similarly, the doctrine of last clear
provisions of the new civil code. chance is also not available to the common
carrier.
○ Finally, if culpa contractual is the cause of action,
COMMON CARRIERS PRIVATE CARRIERS there are rules on stipulations limiting liability that
need to be complied with found in the Civil
This is the order followed: Private carriers are bound by: Code. There are some stipulations limiting
1. Civil Code 1. Their contracts. liability or agreements with limiting liability that
2. Code of Commerce are considered void, which we have already seen
3. Special laws in the codal.
● Culpa Aquilana:
○ If the cause of action used by the plaintiff is
culpa aquiliana or tort or quasi delict, they are all
ATTY. AMPIL SUMMARY DISCUSSION (PART 1) the same. Do not be confused.
○ If the cause of action is culpa aquiliana, also
known as tort or quasi delict, there will be no
In transportation cases, there are three basic fundamental questions. The first basic fundamental presumption of fault or negligence.
question is, is the carrier a common carrier or a private carrier? If the answer to the question is ○ There will also be no duty to exercise
the carrier is a private carrier, then there's no need to proceed to the second question. If the carrier extraordinary diligence on the part of the
is a private carrier, the law on transportation that we are taking up this semester, will not be defendant, common carrier.
applicable. ○ And another disadvantage to the plaintiff is the
cause of action is culpa aquiliana or tort or quasi
If the carrier is a private carrier, the law that will govern is contract law or obligations and contracts, delict is that the defense of diligence in the
as well as the law on tort or quasi delict also known as culpa aquiliana. Therefore, if the answer to selection and supervision of the employees
the question is the carrier is a private carrier, there's no need to the second question. However, if will be available defense for the common
the answer to the question is yes, the carrier is a common carrier then we proceed to the second carrier to escape vicarious liability based on
fundamental question. Article 2180
○ The second is a criminal action.
The second basic fundamental question is, is this the common carrier liable? To answer the ■ The plaintiff might decide to file a criminal case against the guilty
question whether or not the common carrier is liable, we need to look at two different things: party. In a civil action, based on culpa contractual, it can only be filed
● We need to look at first from the perspective of the plaintiff. The plaintiff has three against the common carrier. This is because only the shipper or the
different remedies, or three different cases that may be filled. passenger, have a contract with the common carrier. Based on the
○ The first remedy is a civil action. principle of relativity of contracts, the contract of carriage will only be
■ In the first remedy or a civil action, there are two causes of action binding on the common carrier and shipper, or the passenger.
that may be the basis for a civil case. The two different causes of However, if the cause of action is culpa aquiliana or tort or quasi
delict, the plaintiff can file a civil action against the employee who is
26
guilty as a party who is liable and also against the employer or carrier ● order or act of competent public authority.
as the party who is vicariously liable based on Article 2180. ● An additional defense to the common carrier in the carriage
■ However, if the cause of action or remedy selected by the plaintiff is a of goods is extraordinary diligence. The common carrier
criminal action, the criminal case will be reckless imprudence can use extraordinary diligence as a defense in a carriage
resulting in death or injury of a passenger or resulting in damage to of goods.
property. Do not forget that the in culpable felonies, what is penalized ○ Carriage of Passengers:
criminally is the negligence or recklessness and not the ■ In the carriage of passengers, the common carrier as a defendant
consequences or the result, it is not the death or injury to a only has two defenses available. These are:
passenger or the damage to goods or property that is punished in ● (1) fortuitous event found in article 1174, and
reckless imprudence or criminal negligence. What is being punished ● (2) extraordinary diligence.
is the recklessness or the negligence itself. Negligence is so bad that ■ In the carriage of goods, there are six defenses available to the
the person who is considered a criminal or will be sent to jail. carrier. However, in carriage of passengers or people, there are only
Therefore, since a criminal action is penal in nature, only the guilty two defenses. Article 1734 does not apply to passengers. Article
party such as the driver of a bus will be accused of a criminal case. 1734 only applies to goods. Do not confuse, vigilance over the goods
The common carrier or the employer cannot be held criminally liable. with safety of passengers.
■ If the employee is insolvent and there's an employer-employee
relationship that is established, it is also possible, however, that the Be careful in the difference between perfection of the contract of carriage and the start of the duty
employer/ common carrier may be held subsidiary liable based on to exercise extraordinary diligence. Sometimes the duty to exercise extraordinary diligence,
article 103 of the revised penal code on subsidiary liability of the happens simultaneously with the perfection of the contract of carriage. An example is when
employer. However, it requires the employee or the accused, somebody boards a bus. When somebody rides a bus, the contract of carriage is perfected
insolvent. And of course, found guilty beyond reasonable doubt simultaneously or at the same time, the duty to exercise extraordinary diligence begins. However,
○ The third remedy is an administrative action or administrative case. this is not an absolute rule such as when you buy a ticket for a certain date, then the duty to
■ In an administrative case or administrative action, the relief prayed for exercise extraordinary diligence does not yet arise but there is already a perfected contract of
is the cancellation, or revocation, or maybe suspension of the carriage.
franchise or the license of the common carrier to engage in the
business of transportation. Do not confuse the duty to exercise extraordinary diligence over goods with a duty to exercise
■ If what is involved is land transportation, the franchise would have extraordinary diligence over passengers.
been issued by the Land and Transportation Franchising and ● In the duty to exercise extraordinary diligence goods, it is easy to determine because the
Regulatory Board or LTFRB. If it is water transportation, it will be duty to exercise extraordinary diligence over goods starts or begins once the goods are
under the regulation and supervision of the Maritime industry placed in the unconditional possession of the carrier. This is based on common sense.
authority or Marina. If it is air transportation or air carriers, regulation ● If a common carrier does not have custody or possession, how can a common carrier
and supervision is under the jurisdiction of Civil Aviation Authority of take care of goods? So, it is easy to determine when the duty to exercise extraordinary
the Philippines of CAAP. diligence over goods starts or begins, but it's also easy to determine when the duty to
■ In an administrative case, nobody pays damages, and nobody goes exercise extraordinary diligence over goods ends or terminates. It ends or terminates
to jail. However, the reliefs obtained by the plaintiffs is suspension or once the goods are delivered to the consignee, actually or constructively or to any person
revocation of the license or the franchise of the common carrier to who's authorized to receive the goods. So, when it comes to goods, it is not difficult to
engage in the business of transportation. determine when the duty to exercise extraordinary diligence starts or when it ends.
● From the perspective or point of view of the defendant, it is important to determine ● However, in the case of passengers, we have a problem. When does the duty to exercise
whether or not the carriage involves goods or the carriage of passengers. extraordinary diligence over the passengers start or begin? Does it start once there is
○ Carriage of Goods: physical contact with a common carrier, or when there's an intent to board already? There
■ From the perspective of the defendant carrier, the carrier has six are many law students who believe that it needs to be both. The passenger must have (1)
defenses available in the carriage of goods. intent to board, and (2) must have actual physical contact with a common carrier whether
■ The 5 defenses are found in article 1734: it is two feet, one foot that both hands, one finger only. It does not matter. There must be
● Floods, storms, earthquake, lightning, or other natural physical contact. Otherwise, the person is not yet a passenger and there's still no duty to
disaster or calamity, exercise extraordinary diligence. However, additionally, more than just physical contact,
● act of the public enemy in war whether international or civil, there must be an intent to board.
● act or omission of the owner or shipper of the goods,
● character of the goods or defects in the packing or in the In determining the liability of a common carrier, it was also important to know who the approximate
containers, and cause of liability is. Sometimes the proximate cause is the common carrier itself. However,
27
sometimes the proximate cause, are the employees of the common carrier and not common carrier
itself. Sometimes the proximate cause of the death or injury to the passenger is not a common
carrier itself and are not its employees, but rather the proximate cause are fellow passengers or
outsiders or strangers. Why is it important to know who the proximate cause of fault or negligence
is? It is important to know because the rules are different.
The third basic fundamental question is the question of how much? In pesos and centavos.
Thus the topic of DAMAGES.
28
● To seek recovery of actual damages, it is necessary to prove with a preponderance of

evidence the actual amount of the loss suffered by the claiming party. Jurisprudence
DAMAGES
has even held that courts must point out specific facts which show a basis for the
amount of actual damages to be awarded.
● In general, to collect actual damages, one must
Article 2197 1) plead or allege the loss
Damages may be: 2) pray for relief that the claim for loss be granted and
1. Actual or compensatory; 3) prove the loss
2. Moral; ● The issue of whether a person is liable for damages is different from the issue of how
3. Nominal; much a person is liable for damages.
4. Temperate or moderate;
5. Liquidated; or PROF:
6. Exemplary or corrective. ● Actual or compensatory damages is called actual or compensatory damages because it
is supposed to compensate for financial loss or pecuniary loss.
● The evidence needed to establish the damages may not necessarily be the same
evidence needed to establish the amount. (Even if damages are proven, proof is still
DAMAGES DEFINITION needed for the amount)
Moral Physical suffering, mental anguish, fright, serious anxiety, besmirched ○ To establish damages (in order to establish fault/negligence of CC)
reputation, wounded feelings, moral shock, social humiliation, and similar injury ■ Documents such as death certificate or medical certificate
■ Witness testimonies such as those testifying in court that the driver
Though incapable of pecuniary computation, moral damages may be was intoxicated or smelled like scotch or beer
recovered if they are the proximate result of the defendant's wrongful act for ■ Laboratory results like X-ray
omission ○ To establish the amount (in order to establish actual/compensatory damages)
■ Credit card statement
Exemplary Corrective damages, to serve as an example to the public ■ Official receipts (e.g., from drug store for medication purchased)
Nominal Damages awarded to recognize a technical violation of right ■ Billing statement (e.g., from hospital or from doctor)
● Common mistake for some lawyers is that they stop with the presentation of evidence to
Temperate or Some pecuniary loss has been suffered but its amount cannot, from the nature establish fault and negligence. What will happen? The lawyer wins and establishes the
moderate of the case, be provided with certainty guilt of the common carrier but at the dispositive portion, no award for actual damages.
○ Do not commit the same mistake. Do not forget to present evidence to
Actual or An adequate compensation only for such pecuniary loss suffered by him
establish the amount after being able to establish fault or negligence.
compensatory
Liquidated Damages agreed upon by the parties, to be paid in case of breach of contract
Article 2200
● Available for culpa contractual and aquiliana.
Indemnification for damages shall comprehend not only the value of the loss suffered, but also
that of the profits which the obligee failed to obtain. (1106)
ACTUAL
ACTUAL DAMAGES/COMPENSATORY – Compensatory because it is supposed to compensate
for financial or pecuniary loss. It can be actual loss or it can be opportunity loss.
Article 2199
Q: What are the two kinds of actual or compensatory damages?
Except as provided by law or by stipulation, 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 TWO KINDS OF ACTUAL OR COMPENSATORY DAMAGES
as actual or compensatory damages. 1. The loss of what a person already possesses or damnum emergens;
2. The failure to receive as a benefit that would have pertained to him (also known as
unrealized profits) or lucrum cessans
ACTUAL OR COMPENSATORY DAMAGES
29
● Income which would have been earned were it not for the fault of the defendant While petitioner may have been negligent in view of the degree of diligence required by common
carriers in relying on telex communications only, such negligence cannot under the obtaining
Note: The amount of actual damages be limited by agreement or by contract. circumstances be said to be so gross as to amount to bad faith. Dennis Cheng’s refusal to accede
● Article 2226 – “Liquidated damages are those agreed upon by the parties to a contract, to passenger’s demands’s were due to lack of information or knowledge upon which to act upon
to be paid in case of breach thereof.” and not from a deliberate intent to ignore or disregard private respondent's rights as a passenger.
○ Liquidated damages are synonymous with obligations with a penal clause. It The breach of contract having been incurred in good faith, China Airlines is liable for
saves the court the trouble of determining itself how much to award in case of damages which are the natural and probable consequences of said breach and which the
breach. parties have foreseen at the time the obligation was constituted. With respect to moral
damages, the rule is that the same are recoverable in a damage suit predicated upon a breach of
contract of carriage only where: [1] the mishap results in the death of a passenger and [2] it is
Article 2201
proved that the carrier was guilty of fraud or bad faith, even if death does not result. As the present
case does not fall under either of the cited instances, the award of moral damages should be
In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is
disallowed. (China Airlines v. IAC)
liable shall be those that are the natural and probable consequences of the breach of the
obligation, and which the parties have foreseen or could have reasonably foreseen at the time
the obligation was constituted. Article 2203
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all The party suffering loss or injury must exercise the diligence of a good father of a family to
damages which may be reasonably attributed to the non-performance of the obligation. (1107a) minimize the damages resulting from the act or omission in question.
OBLIGOR EXTENT OF LIABILITY ● Plaintiff also has the concurrent obligation to mitigate the damages resulting from the
alleged act or omission in question. The lack of diligence on the part of the plaintiff is
In good faith 1. Those that are the natural and probable consequences considered to be contributory negligence.
2. Those which the parties have foreseen or could have ● The passenger who was injured should have also exercised ordinary diligence after the
reasonably foreseen at the time the obligation was accident caused by the CC. As an example, if a person is injured from an accident and
constituted instead of going to the hospital to treat his injuries, he instead goes on a drinking spree,
In case of fraud, bad faith, Those damages which may be reasonably attributed to the then damages awarded may be reduced.
malice or wanton attitude non-performance of the obligation ● Relate to Article 1761. The passenger must observe the diligence of a good father of a
family to avoid injury to himself.
The standard for the damages to be awarded is lowered to all
damages that can be reasonably attributed. Article 2205
Q: What is the difference between the first and the second paragraph? Damages may be recovered:
A: The difference is the extent of the liability or the damages to which the person who caused the (1) For loss or impairment of earning capacity in cases of temporary or permanent
injury is liable for. personal injury;
(2) For injury to the plaintiff's business standing or commercial credit.
Q: Will the plaintiff get more damages from the first paragraph or the second paragraph?
A: From the second paragraph. Because it contemplates all the damages, and it only needs to
● LOSS/IMPAIRMENT OF EARNING CAPACITY: Jurisprudence will show that victims of
prove that such damages was reasonably attributable to the act that was done by the person who
accidents who had jobs at the time of the accident will may be awarded actual damages
caused the injury.
for the loss of their earning capacity due to their injury. Oftentimes, these victims were
unable to work anymore because of the injuries.
Q: What is the reason why the damages in the second paragraph are bigger or greater than
● INJURY TO BUSINESS STANDING/COMMERCIAL CREDIT: if a bank wrongfully
the first?
dishonors a check and as a result, the drawer’s transaction was botched and his
A: In the second paragraph, there was bad faith from the person who caused the injury.
reputation was besmirched, then damage can be awarded.
Considering the gap of more than 24 hours between the time the telex messages were sent out and
SUBPARAGRAPH #1: LOSS/IMPAIRMENT OF EARNING CAPACITY
private respondent's expected arrival at San Francisco, it was not unreasonable for petitioner to
Q: Give example of #1.
expect that this time gap would cover whatever delay might be encountered at the Hongkong Link.
30
A: Loss of arm, loss of leg former is in fact, called an "equitable assignment"), no privity of contract is needed to
produce its legal effects. Accordingly, "the insurer can take nothing by subrogation but
Q: What is the best evidence to establish the amputation of the leg? the rights of the insured, and is subrogated only to such rights as the insured possesses.
A: The amputated leg. You can present the plaintiff himself and the doctor can corroborate the The rights of the insurer against the wrongdoer cannot rise higher than the rights of the
plaintiff’s testimony to establish the fact that the plaintiff’s leg was amputated. insured against such wrongdoer, since the insurer as subrogee, in contemplation of law,
stands in the place of the insured and succeeds to whatever rights he may have in the
Q: Now that the fact that the leg was amputated has been established, does it also matter.
necessarily establish the amount of actual damages to be recovered? ○ Therefore, any defense which a wrongdoer has against the insured is good
A: No. To establish the exact amount of actual damages, the plaintiff needs to present an official against the insurer subrogated to the rights of the insured, and this would
receipt issued by the hospital to prove that the medical bill was actually paid. (Note the medical bill clearly include the defense of prescription. Except only for the change in the
itself does not establish the fact of payment, the receipt establishes payment.) person of the creditor, the obligation subsists in all respects as before the
● Sir: As corroborating evidence for preponderance of evidence, one can also present the novation. (Henson v. UCPB)
credit card statement to prove that they have paid using a credit card and that the credit
card company was also paid. RULES ON PRESCRIPTIVE PERIOD WHEN THE INSURER IS SUBROGATED TO THE RIGHTS
OF THE INSURED AGAINST THE WRONGDOER FILES A CASE BASED ON A QUASI-DELICT
SUBPARAGRAPH #2: INJURY TO BUSINESS STANDING/COMMERCIAL CREDIT
Q: Give an example for #2. If filed before Henson – See when action was filed
A: If a bank wrongfully or unjustifiably dishonors a cheque and that resulted in the downpayment by If filed Before Vector 4 YEARS from the time the tort is committed against the
its client of the obligations that are already due that was supposed to be paid by that cheque. It insured by the wrongdoer.
would damage the reputation of the client and would in effect give the impression that such client is
not paying his or her obligation on time. If filed on or after Vector but before 10 YEARS from the time of payment by the insurer to the
Henson insured, which gave rise to an obligation created by law.
If filed on or after Henson – See when the tort was committed
Article 2207 If tort committed before Henson Whichever is earlier:
● 4 YEARS from the Henson Ruling
If the plaintiff's property has been insured, and he has received indemnity from the insurance ● 10 YEARS from the time the insurer is
company for the injury or loss arising out of the wrong or breach of contract complained of, the subrogated to the rights of the insured.
insurance company shall be subrogated to the rights of the insured against the wrongdoer or the
person who has violated the contract. If the amount paid by the insurance company does not If tort committed on or after Henson 4 YEARS from the time the tort is committed against the
fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from insured by the wrongdoer.
the person causing the loss or injury.
Take note of the relevant dates:
1. Aug 15, 2013 – Date of finality of Vector ruling
● This article provides for the right of subrogation of the insurer of a person’s property.
2. Aug 14, 2019 – Date of finality of Henson ruling
SUBROGATION
● In the cases, if the insurance company is already the plaintiff, it presumes therefore that Vector Henson Filcon
the insurance has already paid the proceeds to the plaintiff and therefore steps in the
shoes of the injured party. LOSS December 20, 1987 May 9, 2006 November 16, 2007
● IPSO FACTO: Payment by the insurer to the assured operates as an equitable
assignment to the former of all remedies which the latter may have against the third party SUBROGATION July 12, 1988 November 2, 2006 NOT STATED
whose negligence or wrongful act caused the loss.
○ The right of subrogation is not dependent upon, nor does it grow out of, any
EXTRAJUDICIAL NONE NONE YES, September 1,
privity of contract or upon written assignment of claim. It accrues simply upon
DEMAND? 2011
payment of the insurance claim by the insurer.
● STEPPING INTO THE SHOES AKA “ONE, SINGLE INDIVISIBLE CAUSE OF ACTION”:
FILING March 5, 1992 April 21, 2014 February 1, 2012
No new obligation is created by virtue of the insurer's payment under Article 2207 of the
Civil Code; also, as legal subrogation is not the same as an assignment of credit (as the
31
damages is 10 pesos. And the plaintiff or the injured party was paid by the insurance
PRESCRIBED? NO NO, Vector ruling NO, Vector ruling
company with insurance proceeds with the amount of 8 pesos. There’s a 2 pesos deficiency.
applies; filing was does not apply
Can the plaintiffs still recover the 2 pesos deficiency from the wrongdoer even if the
made during Vector
insurance company already paid 8 pesos?
Fresh period of 4
A: Yes. Art. 2207 states that “if the amount paid by the insurance company does not fully cover the
BUT – assuming years from written
injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing
Henson applies, extrajudicial demand
the loss or injury.”
already prescribed
● Q: In transportation who is usually the wrongdoer/person causing loss or injury? The
common carrier
Q: Explain the first sentence.

Article 2210
A: The first sentence particularly states that the plaintiff who owns the property and if the same has
been insured, and if such owner or the insured has been indemnified by the insurer from the loss
Interest may, in the discretion of the court, be allowed upon damages awarded for breach of
that arose from the contract that was breached, then the insurance company shall have the right of
contract.
subrogation against the against the person who committed the wrongdoing/breach.
Q: If the insurance company or the insurer pays the insured or the plaintiff, does the
Article 2213
insurance company or the insurer need to have a contract of indemnity or a contract of
reimbursement in order for the insurer or insurance company to run after the guilty party or
Interest cannot be recovered upon unliquidated claims or damages, except when the demand
the defendant for reimbursement? Or is it not needed? Why?
can be established with reasonable certainty.
A: It’s not needed. The mere fact that the insurer has already paid with respect to indemnifying the
insured makes it have the right of subrogation that it can enforce against the wrongdoer.
Q: Is interest computed from the time of promulgation of judgment or computed from the
The right of subrogation is not dependent upon, nor does it grow out of, any privity of contract or time the judgment becomes final and executory?
upon written assignment of claim. It accrues simply upon payment of the insurance claim by the A: From the time the decision becomes final and executory.
insurer.
Q: What is the legal interest rate?
Q: What is the right of subrogation? A: 6%
A: The right of subrogation, it makes the insurer step into the shoes of the insured in order to claim
against the wrongdoer. Q: What is the reason why the interest rate can only be compounded upon finality and
execution of the decision?
Q: What is this step into the shoes that commentators like to say? Commentators keep on A: This is because Art. 2213 states that “damages cannot be recovered except when demand can
saying this, “step into the shoes.”? be established with reasonable certainty.” The only time where damages can be certain is when the
A: It means that the insurer actually acquires all the rights, obligations, or even the remedies that decision becomes final and executory.
the insured has originally against the wrongdoer.
Q: Why is the award for actual damages not yet certain or still uncertain after promulgation of
The rights of a subrogee cannot be superior to the rights possessed by a subrogor. "Subrogation is judgment?
the substitution of one person in the place of another with reference to a lawful claim or right, so A: This is because motion for reconsideration or an appeal is still possible. The appellate courts can
that he who is substituted succeeds to the rights of the other in relation to a debt or claim, including still change the award for unliquidated damages.
its remedies or securities. The rights to which the subrogee succeeds are the same as, but not
greater than, those of the person for whom he is substituted, that is, he cannot acquire any claim,
security or remedy the subrogor did not have. In other words, a subrogee cannot succeed to a right Article 2215
not possessed by the subrogor. A subrogee in effect steps into the shoes of the insured and can
recover only if the insured likewise could have recovered." (Loadstar Shipping Company, Inc. v. In contracts, quasi-contracts, and quasi-delicts, the court may equitably mitigate the damages
Malayan Insurance Company) under circumstances other than the case referred to in the preceding article, as in the following
instances: [CBCRL]
Q: What if it turns of that the insurance proceeds are not enough to satisfy the claim for (1) That the plaintiff himself has Contravened the terms of the contract;
actual damages to the injured party of the plaintiff? For example, the claim for actual (2) That the plaintiff has derived some Benefit as a result of the contract;
32
(3) In cases where exemplary damages are to be awarded, that the defendant acted upon DAMAGES CAN IT BE AWARDED ALONE?
the advice of Counsel;
(4) That the loss would have Resulted in any event; Moral Yes
(5) That since the filing of the action, the defendant has done his best to Lessen the Nominal Yes
plaintiff's loss or injury.
Temperate Yes
● This article provides for the instances when the court may mitigate (lessen) the damages Exemplary No (Art. 2234)
to be awarded to the plaintiff. This article contemplates the situation wherein damage was
indeed suffered but the damages awarded may be still be lessened. Moral, temperate, nominal and exemplary Damages [MENT]
Q: Does the court still need evidence or proof to establish the basis or foundation for moral,
Q: What is the reason for #1? temperate, nominal, and exemplary [MENT] damages?
A: The plaintiff is guilty of breach of the contract. He did not come to court with clean hands, and A: Yes, proof is still needed to establish the basis or foundation of MENT but there is no need for
hence must also bear a part of the loss. evidence of the exact amount of MENT because this is left to the discretion of the court.
Q: What is the reason for #2? Q: Can the discretion of the court be 1 peso to 1 trillion pesos?
A: The reason for damages is to compensate, and so if there is already benefit received by the A: Yes, it is up to the discretion of the court, according to the circumstances of each case.
plaintiff, the court can mitigate the damages under the grounds of equity.
Liquidated Damages
Q: What is the reason for #3? Q: In law and damages, do not forget that the basis is different from the amount. The
A: The defendant acts upon the wrong advice counsel. The court recognizes that fault is upon the evidence or proof that is needed to establish the basis for an award of damages may not
counsel, and not the defendant. necessarily be the same evidence that will establish the exact amount in pesos and centavos.
In the case of liquidated damages, is there still need to present evidence to establish the
Q: What is the reason for 4? basis for liquidated damages?
A: The loss is unavoidable in any event. There is nothing that the defendant could do to avoid the A: Yes. There is still need to present proof of the basis of liquidated damages.
damage, loss or injury.
Q: What is the basis for an award of liquidated damages? What is the best evidence to prove
Q: What is the reason for #5? the basis for liquidated damages?
A: The plaintiff acted in good faith in trying to lessen the injury caused to the plaintiff. A: The contract itself. The contract itself will establish the breach of contract and the amount of
liquidated damages written in the contract.
Article 2216 MORAL
No proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or
exemplary damages, may be adjudicated. The assessment of such damages, except liquidated ART. 2217
ones, is left to the discretion of the court, according to the circumstances of each case.
Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though
● When proof of pecuniary loss is NOT required: [MENT]
incapable of pecuniary computation, moral damages may be recovered if they are the proximate
○ In MENT - the amount to be awarded is left to the discretion of the court in
result of the defendant's wrongful act for omission.
accordance with the circumstances.
○ EXCEPT: Liquidated damages/obligation with a penal clause.
■ Article 1226. In obligations with a penal clause, the penalty shall ● Moral damages are not punitive in nature but are designed to compensate the physical
substitute the indemnity for damages and the payment of interests in suffering, mental anguish etc.
case of noncompliance, if there is no stipulation to the contrary.
Nevertheless, damages shall be paid if the obligor refuses to pay the REQUISITES [ECPA]
penalty or is guilty of fraud in the fulfillment of the obligation. 1. Evidence of besmirched reputation or physical, mental or psychological suffering
sustained by the claimant;
33
2. A Culpable act or omission factually established;

Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of
3. Proof that the wrongful act or omission of the defendant is the proximate cause of
this Book, concerning Damages. Article 2206 shall also apply to the death of a passenger
damages sustained by the claimant; and
caused by the breach of contract by a common carrier.
4. That the case is predicated on any of the instances expressed or envisioned by Article
2219 and Article 2220 of the Civil Code.
Q: Is physical suffering the same as mental anguish? Not necessarily the same? ART. 2206
A: Not necessarily.
The amount of damages for death caused by a crime or quasi-delict shall be at least three
Q: Is it possible for a person to have physical suffering but without any mental anguish? thousand pesos, even though there may have been mitigating circumstances. In addition:
A: Yes
(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and
Q: Is it also possible that a person has mental anguish but does not have any physical the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case
suffering? be assessed and awarded by the court, unless the deceased on account of permanent
A: Yes physical disability not caused by the defendant, had no earning capacity at the time of
his death;
Q: Is serious anxiety the same as mental anguish or not necessarily?
A: Not necessarily (2) If the deceased was obliged to give support according to the provisions of article 291,
the recipient who is not an heir called to the decedent's inheritance by the law of
Q: Can a person have serious anxiety without any mental anguish? testate or intestate succession, may demand support from the person causing the
A: Yes death, for a period not exceeding five years, the exact duration to be fixed by the
court;
Q: Is it possible for a person to have mental anguish without any serious anxiety?
A: Yes (3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased
● Sir: Example of mental anguish without serious anxiety is during the midterm exam or may demand moral damages for mental anguish by reason of the death of the
final exam. Law students have mental anguish but they do not have any serious anxiety deceased.
during exam. The serious anxiety happens before the exam and after the exam. Before
the exam and after the exam, the student will already experience serious anxiety. But MORAL DAMAGES, IN GENERAL
without any mental anguish. Before and after the exam. However, during the exam itself, ● Two other grounds for awarding moral damages (this is however qualified by the
it is the reverse. There is no serious anxiety, only mental anguish. requirement that the “court should find that they are justly due”)
1. Willful injury to property
Q: Is besmirched reputation the same as social humiliation? Or are these different? 2. Breaches of contract where defendant acted with fraud or bad faith
A: They are different. Besmirched reputation is external, and social humiliation is internal a. This applies to contract of carriage. If a common carrier is proven
to have acted in bad faith in breaching the contract of transportation
Q: What is moral shock? (e.g. failing to take the passenger safely to his destination resulting to
A: Moral shock implies a shock to the moral senses. It is not the same as fright, which involves fear. injury and the driver is reckless [not merely negligent]), then moral
damages may be awarded.
ART. 2220
PURPOSE
Willful injury to property may be a legal ground for awarding moral damages if the court should Damages are not intended to enrich the complainant at the expense of the defendant but are
find that, under the circumstances, such damages are justly due. The same rule applies to awarded only to alleviate the moral suffering that the injured party had undergone by reason of the
breaches of contract where the defendant acted fraudulently or in bad faith. defendant's culpable action. (Singson v. CA)
MORAL DAMAGES, CONTRACT OF CARRIAGE

● RULE: Moral damages are not recoverable in actions for damages predicated on a
ART. 1764
breach of the contract of transportation, in view of the provisions of Articles 2219 and
2220 of the New Civil Code.
● EXCEPTIONS:
34
1. Where the mishap results in the death of a passenger, (enumarated heirs may computer that Singson indeed had reservations booked for travel on the return flight BUT Cathay
recover moral damages for mental anguish under Art. 1764 in relation to Art. still refused to confirm his flight [yet confirmed that of his companion’s]; (3) Cathay even told
2206(3)) and Singson to look for the SF coupon and verify it himself with Cathay’s SF office, despite the fact that
2. Where it is proved that the carrier was guilty of fraud or bad faith, even if Cathay had the necessary technology to facilitate the verification right there at its LA office; (4)
death does not result. (Art. 2220) Cathay’s employees did NOT act promptly on the request for verification. They sent a telex to its HK
■ NOTE: Gross negligence can virtually amount to bad faith (See office, but the latter replied more than 24 hours, when it could have taken them only a few minutes
discussion below) to verify. The grant of moral damages depends upon the discretion of the court based on the
circumstances of each case. However, this discretion is limited by the principle that the
Moral damages may be recovered in an action for breach of contract of transportation when death "amount awarded should not be palpably and scandalously excessive" as to indicate that it
results. Even if the passenger does not die, the passenger can recover moral damages if the carrier was the result of prejudice or corruption on the part of the trial court. (Singson v. CA)
is guilty of fraud or bad faith. However, only the passenger is entitled to moral damages, not anyone
else. Moral damages are recoverable in a breach of contract of carriage where the air carrier
through its agents acted fraudulently or in bad faith. Petitioner's agents, by giving permission to
FRAUD board Flight 296R to persons who were not among those with valid confirmations (special
Fraud has been defined to include an inducement through insidious machination. Insidious politicians) and who consequently had no right to be given preference in taking said flight,
machination refers to a deceitful scheme or plot with an evil or devious purpose. Deceit exists deliberately created a situation that would place, as it did place, petitioner in arrant violation of its
where the party, with intent to deceive, conceals or omits to state material facts and, by reason of contract with private respondents who were "bumped off" by reason thereof. The failure of
such omission or concealment, the other party was induced to give consent that would not petitioner to accommodate private respondents was not the result of an honest mistake, because
otherwise have been given. (Phil. Rabbit Lines v. Esguerra) its employees knew and were aware that what they were doing was wrong. There was a
"dishonest purpose" and "conscious doing of wrong" on the part of petitioner's employees in
BAD FAITH "bumping off" private respondents from the flight. The failure of petitioner to accommodate private
Bad faith does not simply connote bad judgment or negligence, it imports a dishonest purpose or respondents on Flight 296R was attended by bad faith. (PAL v. CA)
some moral obliquity and conscious doing of a wrong, a breach of known duty through some
motive or interest or ill-will that partakes of the nature of fraud. (Phil. Rabbit Lines v. Esguerra) The gross negligence committed by private respondent in the issuance of the tickets with entries as
to the time of the flight, the failure to correct such erroneous entries and the manner by which
NO PRESUMPTION OF BAD FAITH petitioners were rudely informed that they were bumped off are clear indicia of such malice
Bad faith under the law cannot be presumed; it must be established by clear and convincing and bad faith and establish that private respondent committed a breach of contract which entitles
evidence. In breach of contract cases where the defendant is not shown to have acted fraudulently petitioners to moral damages. (Armovit v. CA)
or in bad faith, liability for damages is limited to the natural and probable consequences of the
breach of the obligation which the parties had foreseen or could reasonably have foreseen. The The switch of planes from a Lockheed 1011 to a smaller Boeing 707 was because there were only
damages, however, will not include liability for moral damages. (PAL v. Miano) 138 confirmed economy class passengers who could very well be accommodated in the smaller
plane and not because of maintenance problems. Petitioner sacrificed the comfort of its first class
BAD FAITH CAN INCLUDE GROSS NEGLIGENCE (I.E., GROSS NEGLIGENCE AMOUNTING TO passengers including private respondent Vinluan for the sake of economy, his first class seat was
BAD FAITH) confirmed twice but was unceremoniously downgraded to economy. He was arrogantly threatened
Gross negligence amounting to bad faith in case of breach of contract of carriage shall warrant by one employee. Worst, while he was waiting for the flight, he saw that several Caucasians who
the award of moral damages. The same negligent acts may be the basis in finding a person liable arrived much later were accommodated in first class seats. Such inattention and lack of care for
under a quasi-delict and a breach of contract of carriage if the breach, independent of the contract, the interest of its passengers who are entitled to its utmost consideration, particularly as to
is an actionable wrong. (Fabre Jr. v. CA) their convenience, amount to bad faith which entitles the passenger to the award of moral
damages. (Trans World Airlines v. CA)
Although the rule is that moral damages predicated upon a breach of contract of carriage may only
be recoverable in instances where the mishap results in the death of a passenger, or where the Moral and exemplary damages are not ordinarily awarded in breach of contract cases. This Court
carrier is guilty of fraud or bad faith, there are situations where the negligence of the carrier is has held that damages may be awarded only when the breach is wanton and deliberately
so gross and reckless as to virtually amount to bad faith, in which case, the passenger likewise injurious, or the one responsible had acted fraudulently or with malice or bad faith. The bad
becomes entitled to recover moral damages. (Singson v. CA) faith in this case is pronounced because petitioner's ground staff physically manhandled the
passengers by shoving them to the line, after another staff had insulted them by turning her back on
The breach of contract was attended with bad faith because: (1) Cathay’s act/omission was the them. However, the award of P5 million as moral damages is excessive, considering that the
proximate cause of the loss/non-issuance of the coupon – either due to the negligence of Cathay’s highest amount ever awarded by this Court for moral damages in cases involving airlines is
agents in improperly detaching Singson’s flight coupons or failing to issue the flight coupon for P500,000. As We said in Air France v. Gillego, "the mere fact that respondent was a Congressman
SF-HK in the ticket booklet; (2) Cathay’s employee testified that he was able to see from his should not result in an automatic increase in the moral and exemplary damages. The social and
35
financial standing of a claimant may be considered only if he or she was subjected to

contemptuous conduct despite the offender's knowledge of his or her social and financial standing. The CA partially reversed the decision of the RTC, ruling that since the suit was grounded on a
" (Cathay Pacific v. Sps. Funtabella) breach of contract, only PRBL was liable, not for moral damages, absent the death of the
passenger or fraud or bad faith on the part of the carrier, given that the general rule is that moral
The CA found Julieta liable for contributory negligence since, instead of holding the hand of her damages are not recoverable for breach of contract, Thus, PRBL was only liable for actual
friend Myrna, who was seated beside her, she should have held on the bus itself, the Court believed damages. The general rule is that moral damages are not recoverable in actions for damages
that while the circumstances justify the reduction of moral damages, it does not justify predicated on a breach of contract, unless in cases where the mishap results in the death of
exemption therefrom. Laguna’s negligence in its failure to cover the right side of the bus in a passenger, or in cases where the common carrier is guilty of fraud or bad faith, none of
question with a bar or some other device to safeguard or protect the passengers warrants which are present in the case at bar. (Sps. Estrada v. Phil Rabbit Bus Lines)
grant of reduced moral damages. (Laguna Tayabas v. Cornista)
TAKE NOTE THOUGH ON WHO MAY RECOVER IN CASE OF DEATH (ART. 2206(3))
SIMPLE NEGLIGENCE OR CARELESSNESS DOES NOT AMOUNT TO BAD FAITH The general rule is that moral damages are not recoverable in actions for damages predicated on a
Moral damages must be discarded as such are not recoverable in damage actions predicated on a breach of contract, unless there is fraud or bad faith. However, moral damages may also be
break of the contract of transportation. In order to obtain damages from such contracts, proof awarded in case of breach of contract of carriage that results in the death of a passenger in
of bad faith must be shown. This is absent in this case as mere carelessness of the carrier's driver accordance with Article 1764, in relation to Article 2206 (3), of the CC. The omission from Article
does not per se constitute or justify an inference of malice or bad faith on the part of the carrier; and 2206 (3) of the brothers and sisters of the deceased passenger reveals the legislative intent to
in the case at bar there is no other evidence of such malice to support the award of moral damages exclude them from the recovery of moral damages for mental anguish by reason of the death of the
for breach of contract, therefore, without proof of bad faith or malice on the part of Paz, the same deceased. Thus, the CA erred in awarding moral damages to the respondents. It is true that under
should not be awarded. (Fores v. Miranda) Article 1003 of the CC, they succeeded to the entire estate of the late Dr. Curso in the absence of
the latter's descendants, ascendants, illegitimate children, and surviving spouse. However, they
As to moral damages, the SC has held in a number of cases that moral damages are not were not included among the persons entitled to recover moral damages under Article 2219 of the
recoverable in actions for damages predicated on a breach of the contract of transportation, CC. The provision does not include succession in the collateral line as a source of the right to
as in the instant case, in view of the provisions of Articles 2219 and 2220 of the New Civil Code. recover moral damages. Article 2206 of the Civil Code entitles the descendants, ascendants,
There are two exceptions: (1) where the mishap results in the death of a passenger, and (2) illegitimate children, and surviving spouse of the deceased passenger to demand moral
where it is proved that the carrier was guilty of fraud or bad faith, even if death does not damages for mental anguish by reason of the death of the deceased. (Sulpicio Lines v. Curso)
result. There is no bad faith here; the Court found that both vehicles sideswiped each other in the
middle of the road, and neither encroached on the lane of the other. Not falling into any of the In awarding to the heirs of the deceased Severina Garces an indemnity for the loss of her
exceptions, petitioners are not liable to pay moral damages. (Phil. Rabbit Lines v. Esguerra) "guidance, protection and company," although it is but moral damage, the Court took into account
that the case of a passenger who dies in the course of an accident, due to the carrier's negligence
In cases of breach of contracts, moral damages can be awarded only where the defendant has constitutes an exception to the general rule. While, as pointed out in the main decision, under
acted fraudulently or in bad faith. Mere negligence, even if thereby the plaintiff suffers mental Article 2220 of the new Civil Code there can be no recovery of moral damages for a breach of
anguish or serious fright is not a ground for awarding moral damages. Here, there is no finding contract in the absence of fraud malice) or bad faith, the case of a violation of the contract of
that the carrier’s delay in delivering Mrs. Fule’s luggage was wrongful or due to bad faith. While carriage leading to a passenger's death escapes this general rule, in view of Article 1764 in
there is failure on the part of the carrier in protecting Mrs. Fule et al from the rain, its neglect was connection with Article 2206, No. 3 of the new Civil Code. Being a special rule limited to cases
not so gross as to amount to bad faith or wantonness. What is involved in this case is simple of fatal injuries, these articles prevail over the general rule of Art. 2220. (Necesito v. Paras)
negligence, considering that the rain through which Mrs. Fule et al had to walk was a slight drizzle.
Nonetheless, there is still bad faith in making Mrs. Fule sign a quitclaim without informing her
of its contents. (Sabena Airlines v. CA)
NOMINAL
In breach of contract of carriage by air, moral damages are awarded only if the defendant acted
fraudulently or in bad faith. Bad faith means a breach of a known duty through some motive of
interest or ill will. The Court found that PAL did not act in bad faith as seen in how: PAL ART. 2221
immediately coordinated with its Central Baggage Services to trace Miano’s luggage and
succeeded in finding it. There was no tracer telex originating from Manila, meaning that there was Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or
no anomalies regarding his baggage on the flight from Manila. (Trace telex = Airline lingo meaning invaded by the defendant, may be vindicated or recognized, and not for the purpose of
an action of any station that the airlines operate from whom a passenger may complain or have not indemnifying the plaintiff for any loss suffered by him.
received his baggage upon his arrival.) It was in Frankfurt where they discovered that the interline
tag of Miano’s bag was accidentally taken off, which caused the delay in the delivery of his bag. NOMINAL DAMAGES
(PAL v. Miano)
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The court may award nominal damages in every obligation arising from any source enumerated
Q: In nominal damages, is there anything to reimburse or compensate the plaintiff?
in article 1157, or in every case where any property right has been invaded.
A: No. It is not for the purpose of indemnifying the plaintiff for the loss suffered. Nominal Damages
are damages awarded to recognize a technical violation of right.
Q: In nominal damages, did the court find that there is a right of the plaintiff that was violated TEMPERATE OR MODERATE
or impaired?
A: Yes.
Article 2224
Q: Example A wants to vote in the next presidential elections and he is already planning for a
particular candidate. However, B tells A that the election has been postponed to the next day Temperate or moderate damages, which are more than nominal but less than compensatory
because of computer problems. And B brings A to the internet cafe to play Warcraft, Counter damages, may be recovered when the court finds that some pecuniary loss has been suffered
Strike, or DoTA 2. It turns out that B was lying, the election was not postponed. And A was but its amount can not, from the nature of the case, be provided with certainty.
not able to vote for his favorite candidate. Did A suffer any of the following:
● Actual financial or pecuniary loss to be reimbursed? No.
TEMPERATE OR MODERATE DAMAGES – Damages recovered if there is pecuniary loss but its
● Compensatory damages? No.
amount, can not from the nature of the case, be provided with certainty.
● Violation of a right? Yes. The right of suffrage.
Q: What is the minimum and maximum amount that can be granted for temperate or
Q: The right of suffrage of A was violated or infringed by B. Even if A did not suffer any
moderate damages?
pecuniary or financial loss, can the court, can award damages? What kind of damages?
A: The minimum amount is the nominal damages, the ceiling amount is the compensatory
A: Yes. Nominal damages.
damages.
● Sir: An example of temperate or moderate damages is when all of the receipts have been
Q: How much can the court grant A?
destroyed by a storm or a typhoon, when all of the hospital records have been destroyed
A: The assessment of the damages is left to the discretion of the court according to the
by a fire because the hospital burned down and the fire destroyed all the hospital records.
circumstances of the case. The court can award zero to infinity.
Although the plaintiff suffered pecuniary or financial loss, we cannot establish the amount
anymore. So the court cannot grant actual or compensatory damages. What the court will
Q: Can nominal damages co-exist with actual damages? No. (Armovit v. CA)
grant instead is temperate or moderate damages. The reason is because the exact
amount cannot be established anymore.
NOMINAL DAMAGES CAN STILL BE AWARDED EVEN WHEN THERE IS FORTUITOUS EVENT
When JAL was prevented from resuming its flight to Manila due to the effects of Mt. Pinatubo
What the Sps Estrada actually prayed for are actual damages in the form of loss or impairment of
eruption, whatever losses or damages in the form of hotel and meal expenses the stranded
earning capacity however, to be recoverable, documentary evidence should be presented to
passengers incurred cannot be charged to JAL. The predicament of the private respondents was
substantiate the claim. Again, the Sps Estrada failed to present any, other than the testimony of the
not due to the fault or negligence of JAL. While JAL was no longer required to defray private
petitioner of being a teacher under DECS and having a sideline as a tricycle driver earning Php
respondents' living expenses during their stay in Narita on account of the fortuitous event, JAL had
80.00 a day. However, in cases where actual damages are not substantiated, the court may
the duty to make the necessary arrangements to transport private respondents on the first
award temperate damages, which it did in this case. (Sps. Estrada v. Phil Rabbit Lines)
available connecting flight to Manila. JAL reneged on its obligation to look after the comfort and
convenience of its passengers when it declassified private respondents from "transit passengers"
Temperate damages in lieu of actual damages for loss of earning capacity where earning capacity
to "new passengers" as a result of which private respondents were obliged to make the necessary
plainly established but no evidence was presented to support the allegation of the injured party's
arrangements themselves for the next flight to Manila. Hence, the award of nominal damages is in
actual income. (Sps. Estrada v. Phil Rabbit Lines)
order. Nominal damages are adjudicated in order that a right of a plaintiff, which has been
violated or invaded by the defendant, may be vindicated or recognized and not for the
purpose of indemnifying any loss suffered by him. The court may award nominal damages in Article 2226
every obligation arising from any source enumerated in Article 1157, or in every case where any
property right has been invaded. (Japan Airlines v. CA) Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of
breach thereof.
Article 2222
37
A: It is stipulated in the contract

Article 1226
ILLUSTRATION: Cabarroguis was riding an A/C jeepney (jeepney) in Davao City when it hit another
In obligations with a penal clause, the penalty shall substitute the indemnity for damages and the
vehicle at a street corner, causing her permanent partial disability to her right forearm. Vicente, the
payment of interests in case of noncompliance, if there is no stipulation to the contrary.
owner of the jeepney, entered into a compromise agreement with Cabarroguis to avoid litigation.
Nevertheless, damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud
The agreement stated he would pay her P2,500 as actual damages and that he would pay her
in the fulfillment of the obligation.
additional P200 if he doesn’t complete payment within 60 days as liquidated damages. He already
paid P1,500. Unfortunately, Vicente failed to pay the P1,000 balance despite repeated demands.
The penalty may be enforced only when it is demandable in accordance with the provisions of
Hence, Cabarroguis filed a case against him in the CFI, which ordered Vicente to pay P1,200 with
this Code.
interest at legal rate from the date of the filing of the complaint until full payment. In obligations with
a penal clause
LIQUIDATED DAMAGES Art. 1226 states that the penalty shall substitute the indemnity for damages and the payment of
● The amount of liquidated damages agreed upon by the parties answers for the damages interests. The exceptions to this rule are when the:
suffered by the obligee. These damages take the nature of penalties. A penal clause is an 1. Contrary is stipulated
accessory undertaking to assume a greater liability in case of a breach. 2. Debtor refuses to pay the penalty imposed in the obligation, in which case the
● In case liquidated damages have been agreed upon, no proof of loss is necessary in creditor is entitled to interest on the amount of the penalty, in accordance with
order that such may be recovered. The stipulation is intended to avoid controversy on the Article 2209; and
amount of the damages. 3. Obligor is guilty of fraud in the fulfillment of the obligation
Q: Does the court like liquidated damages or the court does not like it? In this case, no interest can be awarded on the principal obligation since the penalty of P200
A: The court likes liquidated damages. It makes the work of the trial court judge easier because it replaced the payment of such interest and indemnity for damages. Furthermore, the first exception
takes over the damages that may be claimed by the plaintiff. And if it is clear from their stipulations cannot apply as there was NO stipulation to the contrary nor the third exception as while defendant
in the contract that this amount is what will be awarded in case of breach, then the court follows was sued for breach of the compromise agreement, the breach was not occasioned by fraud.
that amount because the contract is the law between the parties.
However, with respect to the penalty, it has been held that in obligations with a penalty
Q: What are the six (6) kinds of obligation in Obligations and Contracts? Which one is also stipulated for default, both the principal obligation and the penalty can be demanded by the
called the liquidated damages? [CJ-PAT-D] creditor. Defendant having refused to pay when demand was made by plaintiff, the plaintiff is
1. Pure and Conditional obligations entitled to interest on the amount of the penalt). Article 2210 of the CC provides that in the
2. Obligations with a Term or period discretion of the court, interest may be allowed upon damages awarded for breach of contract. This
3. Alternative obligations interest is recoverable from the date of demand. As there is no showing as to when demand was
4. Joint and Solidary obligations made, plaintiff must be considered to have made such demand only from the filing of the complaint.
5. Divisible and indivisible obligations (Cabarroguis v. Vicente)
6. Obligations with a Penal Clause
EXEMPLARY OR CORRECTIVE
The last one, i.e., obligations with a penal clause, is also called liquidated damages. Whenever
a party to the contract acts or omits and it causes a breach of the contract, then the penalty clause
of the contract kicks in and it gives the injured party an award of damages when filed in the courts.
Article 2229
Q: What is the factual bases for liquidated damages?
Exemplary or corrective damages are imposed, by way of example or correction for the public
A: The contract.
good, in addition to the moral, temperate, liquidated or compensatory damages.
Q: Is there a need to establish a factual basis before the court can award damages?
A: Yes, there must still be evidence by presenting the contract - either testimonial or documentary EXEMPLARY/CORRECTIVE DAMAGES – Damages for example or correction for the public good.
evidence. ● Also known as punitive damages.
Q: After the factual basis of liquidated damages, how will the court know how much in pesos REQUISITES: [EEB]
and centavos will the court grant?
38
1. Imposed by way of Example or correction only in addition to actual damages, moral, ○ Oppressive – grave abuse of authority
temperate, and liquidated and cannot be recovered as a matter of right; (Art. 2233) ○ Malevolent – different from being oppressive, connotes cruelty and spitefulness
2. Claimant must Establish his right to either moral, temperate, liquidated or compensatory
damages Q: If a person is fraudulent, is the person also reckless at the same time? Or are the 2
3. The wrongful act must be accompanied by Bad faith (wanton, fraudulent, reckless, incompatible with one another?
oppressive or malevolent) (Art. 2232) A: The two are incompatible. Reckless presupposes that the person who is doing such conduct is
grossly negligent, it is not intentional. Whereas in fraudulent conduct, it presupposes an intent to
● Though exemplary damages may not be awarded as a matter of right, they need not be defraud or manifest bad faith, it is intentional.
proved.
● The amount of exemplary damages need not be pleaded in the complaint because the Q: If a person is oppressive, is the person also malevolent?
same cannot be predetermined by the court if in the cause of discretion the same is A: Not necessarily. A person can be one but not the other, but the person can also be both.
warranted by the evidence. ● Malevolent – having ill-will or ill-motive
● Oppressive – unjustly inflicting hardship and constraint, especially on a minority or other
Q: Is the purpose or objective or exemplary or corrective damages to compensate or subordinate group (power play)
reimburse the plaintiff for financial or pecuniary loss?
A: No. The purpose of exemplary damages is to set an example or to punish certain acts that are Q: What is the difference between wanton and reckless?
unacceptable, Sir. ● Wanton – a cruel or violent action which is deliberate and unprovoked
● Reckless – negligence, an action without thinking or caring about the consequences of an
Q: Is there a need to establish the factual basis and the amount in order to grant exemplary action
damages?
A: Only the basis. The amount is based on the court’s discretion. As regards the exemplary damages, Article 2232 of the Civil Code of the Philippines provides that,
in contracts and quasi-contracts the court may award exemplary damages if the defendant acted in
DISCUSSION: a "wanton, fraudulent, reckless, oppressive or malevolent manner." In the case at bar, petitioner's
● Exemplary or corrective damages – the civil penalty or the civil punishment in the civil driver and, hence its agent has been found guilty of recklessness, wherein despite knowing
law for violating civil rights. When civil rights are violated, the civil penalty or civil there were holes in the road the driver still maintained his speed leading to the injury.
punishment is called exemplary or corrective damages. It is a penalty or punishment. Moreover, under Article 2208 of the same Code, attorney's fees other than judicial costs may be
○ It is punitive in nature. awarded "when exemplary damages are awarded." The courts have discretion to grant or not to
○ It is similar to criminal penalty or criminal punishment. grant exemplary damages and that the circumstances obtaining in this case do not warrant
○ In civil law, when there is a violation of civil rights, the civil penalty is exemplary interference with the exercise of such discretion by the lower courts. (Laguna Tayabas v.
or corrective damages. It is a violation for violating civil rights (in criminal law, Diasante)
the penalty involves imprisonment)
○ There is no pecuniary or financial loss that was suffered to be reimbursed or The RTC found that PAL’s actions were not attended by bad faith. The Court also reiterated their
indemnified. However, there is something to be punished. ruling in LBC v. CA, where they stated that bad faith under the law cannot be presumed; it must be
■ It is the punishment but involves payment of money rather than established by clear and convincing evidence. The Court also did not award exemplary damages
imprisonment, which is the penalty in criminal law. because the prerequisite for the award of exemplary damages in cases of
contract/quasi-contract is that the defendant acted in wanton, fraudulent, reckless,
oppressive, or malevolent manner. The Court did not find that PAL acted in such a way. (PAL v.
Article 2232
Miano)
In contracts and quasi-contracts, the court may award exemplary damages if the defendant
Northwest Airlines was not guilty of willful misconduct. For willful misconduct to exist there must be
acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner.
a showing that the acts complained of were impelled by an intention to violate the law, or were in
persistent disregard of one's rights. It must be evidenced by a flagrantly or shamefully wrong or
● In contracts of transportation, the court may award exemplary damages if the CC acted in improper conduct. Here, there was nothing in the conduct of Northwest Airlines which showed that
bad faith. This is one of the elements of granting exemplary damages. they were motivated by malice or bad faith in loading her baggage onto another plane. Due to
● TERMS: weight and balance restrictions, as a safety measure, it baggage on a different flight, but with the
○ Wanton – disregard for the consequences of one’s own actions same expected date and time of arrival in the Philippines. Where in breaching the contract of
○ Fraudulent – deceit carriage the defendant airline is not shown to have acted fraudulently or in bad faith, liability
○ Reckless – extreme lack of care of a person without thinking for damages is limited to the natural and probable consequences of the breach of obligation
39
which the parties had foreseen or could have reasonably foreseen. In that case, such liability
would be entitled to moral, temperate or compensatory damages were it not for the stipulation
does not include moral and exemplary damages. (Tan v. Northwest Airlines)
for liquidated damages.
EXEMPLARY DAMAGES IS PERSONAL UNLESS AUTHORIZED OR RATIFIED
As a result of the injuries suffered by de Lara while riding as a passenger on a jeep owned and ● First sentence
operated by Munsayac, she filed an action for damages against Munsayac with the CFI. The lower ○ Plaintiff need not prove exemplary damages
courts granted exemplary damages. Munsayac argues that the act referred to in Art. 2232 must be ○ Plaintiff must prove entitlement to either moral, temperate or compensatory
one which is simultaneous with and characterizes the breach of contract on which the suit is based, damages before exemplary damages may be awarded
and not one which is subsequent to the breach and thus, there is no causal relation to the breach. ● Second sentence – This is also the case even if liquidated damages were agreed upon.
So, he was arguing that his failure to placate the sufferings of de Lara did not cause the ○ Plaintiff just must prove that he is entitled to moral, temperate or compensatory
breach of contract and thus, he cannot be held liable for exemplary damages. He cites Rotea damages had it not for the agreed liquidated damages.
v. Halili, wherein the Court stated that the principal or master can be held liable for exemplary or ○ Even if there is liquidated damages stipulated there should still be MTC
punitive damages based on the wrongful act of his agent or servant, only where he damages awarded by the court.
participated in the doing of such wrongful act or has previously authorized or subsequently
ratified it with full knowledge of the facts. The Court agrees with Munsayac. It is hard to conceive PH Rabbit Bus Lines argues that the amount of exemplary damages were not in the allegation, nor
how he, in breach of contract, could be held to have acted in a wanton, fraudulent, reckless, were they prayed for. To this, the court said that exemplary damages may be imposed by way of
oppressive or malevolent manner within the meaning of Art. 2232 for something he did/did not do example or correction only in addition, among others, to compensatory damages, but that they
after the breach, which had no causal connection with the breach. The law does not contemplate a cannot be recovered as a matter of right, their determination depending upon the discretion of the
vicarious liability on his part. It is not enough to say that an example should be made or corrective court. The amount of exemplary damages need not be proved, because its determination
measures employed, for the public good, especially in accident cases where public carriers are depends upon the amount of compensatory damages that may be awarded to the claimant. If
involved. For the causative negligence in such cases is personal to the employees in charge the amount need not be proved, it need not be alleged because it is merely incident or
of the vehicles, and it is they who should be made to pay this kind of damages by way of dependent on what the court may award as compensatory damages.Until compensatory
example or correction, unless by the demonstrated tolerance or approval of the owners, they damages are determined, the amount of exemplary damages would be a mere speculation.
themselves can be held at fault and their fault is of the character described in Art. 2232 of the As a necessary consequence, the amount of exemplary damages need not be pleaded in the
CC. (The court was saying because the driver was the one who was reckless and such complaint because the same cannot be predetermined. One can merely ask that it be
recklessness is personal to the employee and the operator did not approve of the recklessness of determined by the court if in the use of its discretion the same is warranted by the evidence.
the driver, it should be the driver who is made to pay the exemplary damages and not the operator (Marchan v. Mendoza)
without any evidence proving that the operator authorized such recklessness on the part of the
driver.) (Munsayac v. de Lara)
Article 2235
APPLYING MUNSAYAC – There is no showing that SARKIES acted "in a wanton . . .
or malevolent manner" Because it was the boat operator who was negligent in this A stipulation whereby exemplary damages are renounced in advance shall be null and void.
case, it was only proper that the damages SARKIES will pay to the injured parties be
reimbursed by said operator in line with Art. 2181: “Whoever pays for the damage ● Public policy demands that exemplary damages not be allowed to be renounced in
caused by his dependents or employees may recover from the latter what he has paid or advance because it goes against the purpose of exemplary damages (courts should not
delivered in satisfaction of the claim.” (Sarkies Tours v. IAC) be hindered from making an example for the public good).
Q: If exemplary damages are granted today, can the exemplary damages be waived or
Article 2234 renounced next week?
A: [Yes]. Although renunciation in the [advance] is not allowed, one can renounce or waive damages
While the amount of the exemplary damages need not be proved, the plaintiff must show that that were granted in the past.
he is entitled to moral, temperate or compensatory damages before the court may consider the
question of whether or not exemplary damages should be awarded. In case liquidated DISCUSSION:
damages have been agreed upon, although no proof of loss is necessary in order that such ● This article or provision is similar to the provision in obligations and contracts on the
liquidated damages may be recovered, nevertheless, before the court may consider the question prohibition against waiving for renouncing future fraud
of granting exemplary in addition to the liquidated damages, the plaintiff must show that he ○ Future fraud – Future fraud or fraud to be committed in the future cannot be
renounced or waived in advance
40
○ Past fraud – fraud that has already happened in the past or last week can be ● However, if the exact amount thereof cannot be established with proof or evidence, then
renounced or waived. If the court grants exemplary damages in the past, the an award of temperate or moderate damages will be applicable. Temperate or moderate
exemplary damages can be waived or renounced by the plaintiff. damages are awarded when the factual basis for an actual compensatory damages is
available however, the exact amount thereof cannot be established with certainty. In this
case, the court may award temperate or moderate damages, which must be somewhere
ATTY. AMPIL SUMMARY DISCUSSION (PART 2)
in between actual damages and nominal damages.
● Moderate or temperate damages must be within the range of actual or nominal damages.
In the law and damages, there are 2 things to pay attention to. The high limit or upper limit is actual or compensatory damages while the lower limit or
● Number 1, the factual basis for the damages and the base would be nominal damages.
● Number 2, the exact amount in pesos and centavos.
The evidence used to establish the first may not necessarily be the same evidence used to Nominal Damages
establish the second. In the law and damages, there are 2 things to determine. ● Nominal damages is awarded not to compensate the plaintiff. The plaintiff did not suffer
● Number 1, the factual basis for the award of damages and any monetary, financial, or pecuniary loss. However, the plaintiff suffered a violation of
● Number 2, the exact amount. The evidence used to establish the first may not necessarily constitutional, civil, or human rights.
be the same evidence used to establish the second. ● In order to recognize or vindicate the violation of the rights of the plaintiff, the court may
award nominal damages.
Actual Damages: ● In other words, nominal damages is not supposed to compensate or indemnify the
● In the case of actual damages, actual damages are also called compensatory damages. plaintiff for any financial, pecuniary, or monetary loss, but just to recognize a right that
Actual damages are called compensatory damages because actual damages are has been violated, like the right to privacy.
supposed to compensate a person for financial, monetary, or pecuniary loss. The
financial, pecuniary, or monetary loss can be actually or really suffered or money that was Liquidated Damages
actually lost or it can be lost earnings or unrealized profit, also known as lucrum cessans. ● Liquidated damages is also known as obligation with a penal clause. This is already
● In either case, where is actual, financial, monetary, or pecuniary loss. The factual basis for agreed upon by the parties beforehand or before there’s a breach of the contract.This will
actual damages must be proven with evidence such as fault or negligence or loss, make it easier for the trial court judge because the amount has already been agreed upon
destruction, or deterioration of goods, or the death or injury of a passenger. Evidence by the parties beforehand. The only evidence that needs to be presented is the contract
needs to be presented during trial to establish these facts. and its violation.
● Thereafter, the exact amount of actual damages also needs to establish the evidence.
The exact amount will be in pesos and centavos. The evidence or proof that will establish Exemplary Damages
the first may not necessarily be the same evidence that will establish the second. ● Exemplary damages is totally different from all the other forms of damages. Exemplary
damages is punitive or is a form of punishment. In criminal law, the punishment or
Moral Damages criminal penalty is imprisonment or deprivation of liberty. In civil law, the civil penalty for
● In the case of moral damages, the factual basis for moral damages must also be violation of civil rights is called exemplary damages. It is the payment of money. Payment
established with evidence or proof. The fact that a person has experienced physical of money is the civil penalty for violation of civil rights and civil law. This is different from
suffering, mental anguish, fright, moral shock, serious anxiety, besmirched reputation, criminal law where criminal penalty is deprivation of freedom or liberty, also known as
social humiliation, must also be established with proof or evidence, which may be in the imprisonment or jail time.
form of testimonial evidence for documentary evidence or real or object evidence or ● Exemplary damages, unlike other forms of damages, is actually a penalty. It is
evidence addressed to the senses of the court. Bring the plaintiff to the court and make punishment. However, it is not criminal punishment, it is civil punishment. Just like any
the plaintiff cry in front of the judge so the judge can see the witness crying and the other punishment, its purpose is number 1, to change behavior and number 2, to set an
witness or the plaintiff himself or herself will be the real or object evidence addressed to example. That’s why exemplary damages is also known as corrective damages.
the senses of the court. So the court can hear with, the trial court judge can hear with his Exemplary or corrective damages. Any kind of punishment is supposed to number 1,
own ears the screaming and the crying of the plaintiff. change behavior and number 2, set an example to other people.
● However, the exact amount of moral damages does not need to be proved with evidence ● Exemplary damages is actually a civil penalty. It is a punishment. This is why it is called
or proof. The exact amount is addressed to the discretion of the court. The court can punitive in nature. Just like in criminal law, the person who suffers the penalty is only the
award moral damages in any amount that it wants. wrongdoer and nobody else. It is based on the individual personal responsibility. So only
the wrongdoer will pay exemplary damages.
Temperate or Moderate Damages ● The exception is if the carrier authorized, consented, or participated in the wrongful act or
● If the factual basis for actual damages can be established with proof or evidence, then omission. Then of course, if that common carrier participated, consented, or ratified the
there’s no need for temperate or moderate damages. wrongful act or omission of its employee, the common carrier will also suffer the penalty
of exemplary damages as an exception to the general rule.
41
42

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KAYA PA BA (KPB) | ALS A2024 TRANSPORTATION LAW | Atty.

Codals are logically (not chronologically) arranged for better understanding.

Date Last Updated: October 1, 2022 According to the place of travel

1. Undertakes to carry for all people indifferently; he is regarded in some respects, as a

WHY EXTRAORDINARY DILIGENCE? TRANSPORTATION OF GOODS VERSUS PASSENGERS

GOODS Goods are unconditionally Goods are delivered, actually or

PASSENGERS Two views: When the passenger alights from

DUTY TO EXERCISE EXTRAORDINARY DILIGENCE VERSUS PERFECTION OF THE

VIGILANCE OVER THE GOODS ART. 1742

(1) Flood, storm, earthquake, lightning, or other natural disaster or Calamity;

a. Actual notice not required.

Arts. 1998, 2000-2003 Arts. 1733-1753

Diligence of a depositary (ordinary diligence) Extraordinary diligence

REQUISITES FOR HAND-CARRIED BAGGAGE (NECESSARY DEPOSIT)

WHO ARE NOT YET CONSIDERED AS PASSENGERS EXTRAORDINARY DILIGENCE

BUT NOT: Discounted

SITUATION: Limitation of diligence allowed if gratuitous Limitation of diligence not allowed

IN DUTY VERSUS OFF-DUTY

1. Employees acted beyond the scope 1. Through the exercise of the

● This article qualifies Art 1761.

Art. 1759 Art. 1763

CC liable even if: CC liable only if:

CARRIAGE OF GOODS CARRIAGE OF PASSENGERS

2. Fixing amount of liability:

When stipulations may be refused

● Minimum amount of damages to be paid in case of death of the passenger (now

● To seek recovery of actual damages, it is necessary to prove with a preponderance of

Q: Explain the first sentence.

Article 2216 MORAL

2. A Culpable act or omission factually established;

MORAL DAMAGES, CONTRACT OF CARRIAGE

financial standing of a claimant may be considered only if he or she was subjected to

A: It is stipulated in the contract

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