Transportation Law Student

1
TRANSPORTATION LAWS
INTRODUCTION
Q. What is transportation?
A. Transportation simply defined, is the movement of

things or persons from one place to another,1 whether by land,
by water or by air.2 The word ―transportation‖ in its practical
signification includes waiting time, loading and unloading,
stopping in transit, and all other accessorial services in
connection with the loaded movement.3
Q. What laws govern contracts of transportation by

land, sea or air within the Philippines? 4
A. The applicable laws to contracts of transportation by

land, sea or air within the Philippines are:
(1) The New Civil Code, particularly the section on

Common Carriers.5
(2) On matters not regulated by the New Civil Code,

the Code of Commerce and,
(3) Special laws6 such as the Carriage of Goods by Sea

Act; Salvage Law; Public Service Act; Land Transportation
and Traffic Code; Tariff and Customs Code and the Civil
Aeronautics Act.
1
Republic Oil Refining Co. v. Granger, D.C. Pa. 98 F. Supp. 921, 933.
2
Curtiss-Wright Flying Service v. Glose, C.C.A.N.J., 66 F. 2d 710, 712.
3
Consolidated Freightways v. Flagg, 176 P. 2d 239, 242, 180 Or. 442.
4
Asked, 1966 and 1969 Bar Exams.
5
Article 1732 to Article 1766, Civil Code.
6
Article 1766, Civil Code.
2
Q. What is the nature of a contract of transportation

or carriage?
A. A contract of transportation generates a relation

attended with public duty. Hence, neglect or malfeasance of
the carrier’s employees gives ground for an action for
damages.7
Q. What is a carrier in transportation?
A. A carrier is one who undertakes the transfer of

persons or property from one place to another for hire, or
gratuitously. He may either be a common carrier or a private
carrier.8
PART I
NEW CIVIL CODE
COMMON CARRIERS
Subsection 1
GENERAL PROVISIONS
Q. How may a contract of carriage be defined?
A. By definition, a contract of carriage or transportation

is one whereby a certain person or association of persons
obligate themselves to transport persons, things, or both from
one place to another for a fixed price. Such person or
association of persons are regarded as carriers and are
7
Pan American World Airways, Inc. vs. IAC, 153 SCRA 521; Zulueta vs.
Pan American World Airways, Inc., 43 SCRA 397.
8
Roeske v. Lamb, 41 P. 2d 522, 39 N.M. 111; Cushing v. White, 172 P.
229, 104 Wash. 172, L.R.A. 1918F 463; Central of Georgia R. Co. v.
Lippman, 36 S. E. 202, 110 Ga. 665, 50 L.R.A. 5.
3
classified as private or special carriers and common or public

carriers.9
Q. Who are common carriers?
A. Common carriers are persons, corporations, firms or

associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public.10
Hence, when the carrier’s service is offered to the

public for compensation, such carrier is a common carrier.11
Q. To be a common carrier, must the carrier’s

principal activity be the carriage of persons or goods?
A. Article 1732 of the Civil Code makes no distinction

between one whose principal business activity is the carrying
of persons or goods or both, and one who does such carrying
only as ancillary activity (in local idiom, as ―a sideline‖).
Article 1732 also carefully avoids making any distinction
between a person or enterprise offering transportation service
on a regular or scheduled basis and one offering such service
on an occasional, episodic or unscheduled basis. Neither does
Article 1732 distinguish between a carrier offering its services
to the ―general public,‖ i.e., the general community or
population, and one who offers services or solicits business
only from a narrow segment of the general population. We
think that Article 1732 deliberately refrained from making such
distinction.12
Q. Cendana was a junk dealer engaged in buying

used bottles and scrap metal in Pangasinan. Upon
9
Crisostomo vs. Court of Appeals, 409 SCRA 528, August 25, 2003.
10
Article 1732, Civil Code; Asked, 1996 Bar Exams.
11
Lea Mer Industries, Inc. vs. Malayan Insurance Co., Inc., 471 SCRA 698,
September 30, 2005.
12
Caltex (Phils.), Inc. vs. Court of Appeals, G. R. 131166, Sept. 30, 1999.
4
gathering sufficient quantities of such scrap material, he

would bring such material from Pangasinan to Manila. He
utilized two six- wheeler trucks which he owned for hauling
the materials to Manila. On the return trip to Pangasinan,
he would load his vehicles with cargo which various
merchants wanted to be delivered to Pangasinan. Cendana
charged freight rates which were lower than regular
commercial rates. Is Cendana a common carrier?
A. It is proper to characterize Cendana as a common

carrier even though he merely ―back-hauled‖ goods for other
merchants from Manila to Pangasinan, although such back-
hauling was done on a periodic or occasional rather than
regular or scheduled manner, and even though Cendana’s
principal occupation was not the carriage of goods for others.
The law defining a common carrier makes no distinction
whether the carriage of goods or persons is the principal or
merely ancillary activity of the carrier.13
Q. What are the requisites to be a common carrier

of goods?
A. The requisites to be a common carrier of goods are:
1. He must be engaged in the business of carrying

goods for others as a public employment, and must hold
himself out as ready to engage in the transportation of goods
for persons generally as a business and not as a casual
occupation;
2. He must undertake to carry goods of the kind to

which his business is confined;
3. He must undertake to carry by the method by which

his business is conducted and over his established routes, and
13
De Guzman vs. Court of Appeals 168 SCRA 612; Asked, 1991 Bar
Exams.
5
4. The transportation must be for hire.14
Q. May a customs broker be considered a common

carrier?
A. A customs brokerage whose principal business is the

preparation of the correct customs declaration and the proper
shipping documents may be considered a common carrier if it
also undertakes to deliver goods for its customers. The law
does not distinguish between one whose principal business
activity is the carrying of goods and one who undertakes this
task only as an ancillary activity. 15
Q. Sony engaged the services of Torres-Madrid

Brokerage, Inc. (TMBI) to facilitate, process, withdraw and
deliver the shipment for Sony from the port of Manila to its
warehouse in Binan, Laguna. TMBI did not own any
delivery truck so it contracted the services of BMT
Trucking Services (BMT) to transport the shipment to
Sony’s Binan warehouse. Four BMT trucks picked up the
shipment from the port but only three trucks arrived at
Sony’s Binan warehouse. The missing BMT truck driven
by Lapesura was found abandoned along the Diversion
road in Filinvest, Alabang. Both the driver and the
shipment were missing. After being informed of the loss,
Sony filed a claim with its insurer, Mitsui which paid the
value of the goods lost. Claiming, subrogation Mitsui
claimed from TMBI the payment of the lost goods. TMBI
refused to pay. TMBI denied that it was a common carrier
required to exercise extraordinary diligence because it does
not own a single truck to transport its shipment and it does
not offer transport services to the public for compensation.
It maintains that it exercised the diligence of a good father
of a family and should be absolved of liability because the
truck was “hijacked” which was fortuitous event. Issue: Is
14
First Philippine Industrial Pipeline vs. Court of Appeals, 300 SCRA 661.
15
Torres-Madrid Brokerage, Inc. vs. FEB Mitsui Marine Insurance Co.,
Inc., G. R. NO. 194121, July 11, 2016.
6
TMBI a common carrier bound to observe extraordinary

diligence in the vigilance over the goods it is bound to
transport?
A. Despite TMBI’s denials, we find that the delivery of

the goods an integral, albeit ancillary, part of its brokerage
services. TMBI admitted that it was contracted to facilitate,
process, and clear the shipments from the customs authorities,
withdraw from the pier, then transport and deliver them to
Sony’s warehouse in Laguna. That TMBI does not own trucks
and has to subcontract the delivery of its clients’ goods is
immaterial. As long as an entity holds itself to the public for
the transport of goods as a business, it is considered a common
carrier regardless of whether it owns the vehicle used or has to
actually hire one. Lastly, TMBI’s customs brokerage services
— including the transport/delivery of the cargo – are available
to anyone willing to pay its fees. It is undeniable that TMBI is
a common carrier. Consequently, TMBI should be held
responsible for the loss, destruction, or deterioration of the
goods it transports. Theft or the robbery of the goods is not
considered a fortuitous event or a force majeure. That the cargo
disappeared while in the custody of BMT – TMBI’s
subcontractor – did not diminish nor terminate TMBI’s
responsibility over the cargo.16
Q. TCTSI, owned by Calvo, entered into a contract

with SMC to transfer 114 reels of fluting paper and 124
reels of Kraft liner from the port area to the SMC
warehouse in Ermita, Manila. The cargo was insured by
UCPB. Upon delivery to the warehouse, it was found that
15 reels of fluting paper and 3 reels of kraft paper were
damaged. SMC collected from UCPB which then as
subrogee of SMC, brought an action against TCTSI. UCPB
claims that under Article 1735 of the Civil Code, if the
goods are proved to have been lost, destroyed or
deteriorated, common carries are presumed to have been at
16
Torres-Madrid Brokerage, Inc. vs. FEB Mitsui Marine Insurance Co.,
Inc., G. R. NO. 194121, July 11, 2016.
7
fault or to have acted negligently, unless they prove that

they have observed the extraordinary diligence required by
law. Petitioner TCTSI, on the other hand contends that she
is not a common carrier but a private carrier because as a
customs broker and warehouseman, she does not
indiscriminately hold her services out to the public but only
to select parties with whom she may contract in the course
of her business. Such being the case, petitioner maintains
that claimant must present evidence of negligence against
the former. Is petitioner, a customs broker considered a
common carrier?
A. The petitioner is a common carrier. There is greater

reason for holding the petitioner to be a common carrier
because the transportation of goods is an integral part of her
business. To uphold petitioner’s contention would be to
deprive those with whom she contracts the protection which
the law affords them notwithstanding the fact that the
obligation to carry goods for her customers is part and parcel of
petitioner’s business. The definition of common carriers
under Article 1732 of the Civil Code makes no distinction
between one who whose principal activity is the carrying of
passengers or goods or both and one who does such carrying
only as an ancillary activity. It does not make any distinction
between a person or enterprise offering such service on a
regular or scheduled service and one on an occasional basis.
Neither does the article distinguish between carriers offering its
services to the ―general public‖ nor one who offers services
only from a narrow segment of the general population.17
Q. Wyeth-Pharma shipped on board an aircraft of

KLM Royal Dutch Airlines at Dusseldorf, Germany oral
contraceptives. The tablets were placed in cartons and were
packed together in an aluminum container. Upon arrival of
the shipment at the airport, it was delivered to the
warehouse of the Philippine Skylanders, Inc. (PSI). To
17
Calvo vs. UCPB General Insurance Co., Inc., 379 SCRA 510, March 19,
2002.
8
secure the release of the cargoes from PSI, to assess its

customs duties, and to handle delivery to Hizon
Laboratories Inc., Wyeth-Suaco engaged the services of
Sanchez Brokerage. When Sanchez Brokerage picked up
the cargoes, its representative acknowledged the receipt of
the cargoes in good condition. Wyeth-Suaco being a regular
importer, the Customs Examiner did not inspect the
cargoes, which were then stripped from the aluminum
containers and loaded inside two transport vehicles hired
by Sanchez Brokerage. The cargoes however arrived in bad
order because the cartons were wet. Sanchez Brokerage
claimed that it was not a common carrier but a customs
broker. May Sanchez Brokerage be held liable as a
common carrier?
A. Article 1732 of the Civil Code does not distinguish

between one whose principal business activity is the carrying
of goods and one who does such carrying only as an ancillary
activity. The contention of Sanchez Brokerage that it is not a
common carrier but a customs broker whose principal function
is to prepare correct customs declaration and submit proper
shipping documents as required by law are bereft of merit. It
suffices that petitioner undertakes to deliver the goods for
pecuniary consideration.18
Q. To be a common carrier, must the carriage of

goods or persons be regularly undertaken?
A. It is not necessary that the carriage of goods or

persons be undertaken regularly to be considered as a common
carrier. Thus, the character of being a common carrier is not
altered by the fact the carriage of the goods was periodic,
occasional, episodic or unscheduled.19
18
A.F. Sanchez Brokerage, Inc. vs. CA, 447 SCRA 427, December 21,
2004.
19
Loadstar Shipping Co., Inc. vs. Court of Appeals, G. R. No. 131621,
Sept. 28, 1999.
9
Q. FPIC, a grantee of a pipeline concession applied

for a Mayor’s permit with the Office of the Mayor of
Batangas City. It was transporting petroleum products
through its pipelines. However, before the permit could be
issued, the City Treasurer required FPIC to pay a local tax
on its gross receipts for 1993. FPIC protested the payment
of the tax and argued that it was a pipeline operator
engaged in the business of transporting petroleum products
from the Batangas refineries, and as such, exempted from
paying the gross receipt tax being a common carrier. The
Treasurer denied the protest and claimed that FPIC can
not be considered a common carrier engaged in
transportation business, and thus cannot claim exemption
from the payment of tax on its gross receipts. Is FPIC a
common carrier?
A. FPIC is a common carrier. A ―common carrier‖ may

be defined broadly as one who holds himself out to the public
as engaged in the business of transporting persons or property
from place to place, for compensation, offering his services to
the public generally. The definition of ―common carrier‖ in
Article 1732 of the Civil Code makes no distinction as to the
means of transporting, as long as it is by land, water or air.
The fact a FPIC has a limited clientele does not exclude

it from the definition of common carrier. FPIC is engaged in
the business of transporting or carrying goods, i.e., petroleum
products for hire as a public employment. It undertakes to
carry for all persons indifferently, that is, to all persons who
choose to employ its services and transports the goods by land
for compensation.20
Q. To be a considered and liable as a common

carrier, must the carrier hold a certificate of public
convenience?
20
First Philippine Industrial Pipeline vs. Court of Appeals, 300 SCRA 661.
10
A. A common carrier is required to obtain a certificate

of public convenience,21 but the absence thereof does not mean
that it is not a common carrier. Thus, it is not necessary that the
carrier be issued a certificate of public convenience to be
considered a common carrier. A certificate of public
convenience is not a requisite to incur liability under the Civil
Code provisions governing common carriers. That liability
arises the moment a person or firm acts as a common carrier,
without regard to whether or not such carrier has also complied
with the requirements of the applicable regulatory statute and
implementing regulations and has been granted a certificate of
public convenience or other franchise. To exempt a carrier
from the liabilities of a common carrier because he has not
secured the necessary certificate of public convenience, would
be offensive to sound public policy; that would be to reward
such carrier precisely for failing to comply with the applicable
statutory requirements.22
Q. Who is a private carrier?
A. A private carrier is one who, without making it a

vocation, or holding himself out to the public as ready to act
for all who desire his services, undertakes, by special
agreement in a particular instance only, to transport property
from one place to another either gratuitously or for hire.23
Q. Distinguish a common carrier from a private

carrier.
A. A common carrier holds himself out as engaged in

public service to all persons indifferently24 while a private
21
Section 15, Public Service Act.
22
Loadstar Shipping Co., Inc. vs. Court of Appeals, G. R. No. 131621,
Sept. 28, 1999.
23
Stoner v. Underseth, 277 P. 437, 85 Mont. 11; Asked, 2000 Bar Exams.
24
Campbell River Mills Co. v. Chicago, M., St., P. & P. R. Co., D.C. Mo.,
42 F.2d 775.
11
carrier carries only for persons with whom he has an initial

contract, and assumes no obligation to carry for others.25
Q. What is the test to determine whether the carrier

is a common carrier or a private carrier?
A. The test in determining whether a carrier is a

―common carrier‖ or a ―private carrier‖ is whether or not the
enterprise is open to the use and service of all members of the
public who may require the service to the extent of its capacity.
If it is open to the public, the carrier is a common carrier;
otherwise, it is a private carrier.26
In other words, the test to determine a common carrier

is 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 business transacted.27
In the case of common carriers, the general public is

given a right, which the law compels the owner to give. The
true criterion by which to judge the character of the use of a
carrier is whether the public may enjoy it by RIGHT or only by
permission. Where the owner of a car operates it under a
special contract for carrying passengers and has not held
himself out to carry all passengers and freight, the operator is
not a common carrier.28 After all, the duty of a common carrier
is to carry all alike.29
25
Film Transport Co. v. Michigan Public Utilities Commission, D.C.
Mich., 17 F. 2d 857; Asked, 2000 Bar Exams.; No. VIII (a), 2002 Bar
Exams.
26
Marshall v. Public Service Commission, 195 A. 475, 129 Pa.Super. 272.
27
Asia Lighterage and Shipping, Inc. vs. Court of Appeals, 409 SCRA 340,
August 19, 2003; Asia Lighterage and Shipping, Inc. vs. Court of Appeals,
409 SCRA 340, August 19, 2003.
28
United States vs. Tan Piaco, 40 Phil. 853.
29
U.S. vs. Quinajon, 31 Phil. 189; Asked, 1996 and 2000 Bar Exams.; No.
VIII (a), 2002 Bar Exams.
12
Q. Give examples of common and private carriers.
A. An ordinary transportation enterprise accepting all

alike such as passenger jeepney, a bus company, or a taxi
company is a common carrier.30 The same may be said of
vessels engaged in inter-island shipping,31 a cargo truck to
transport anybody’s goods for a fee,32 or FX or Tamaraw
vehicles accepting any and all passengers, and even tricycles
ferrying passengers indiscriminately.
However, a car or vessel under a special contract for

carrying specific passengers or cargo is not a common carrier,33
such as a chartered vessel for the use of a single party,34 an
exclusive contractor for hauling the products of one particular
corporation and no other entity, 35 a school bus, funeral car or a
company bus ferrying employees to and from the place of
work. Said vehicles are private carriers.36
Q. GPS Trucking Corporation undertook to deliver

(30) units of Condura refrigerators aboard one of its Isuzu
truck. While the truck was traversing the north diversion
road it collided with an unidentified truck, causing it to fall
into a deep canal, resulting in damage to the cargoes. FGU
as insurer of the shipment paid to Concepcion Industries,
Inc., the value of the covered cargoes. FGU sought
reimbursement of the amount it paid to Concepcion
Industries from GPS. It was contended that GPS was only
30
Batangas Transportation Co. vs. Orlanes, 52 Phil. 455; Asked, 1991 Bar
Exams.
31
De Villola vs. Stanley, 32 Phil. 541.
32
Benedicto vs. IAC, 187 SCRA 547.
33
See U.S. vs. Tan Piaco, supra.
34
Home Insurance Co. vs. American Steamship Agencies, Inc., 23 SCRA
24.
35
F. G. U. Insurance Corporation vs. G. P. Sarmiento Trucking
Corporation, 386 SCRA 312, August 6, 2002.
36
Asked, 2000 Bar Exams.
13
the exclusive hauler of Concepcion Industries, Inc., since

1988, and it was not so engaged in business as a common
carrier. Respondent further claimed that the cause of
damage was purely accidental. (a) May GPS be considered
as a common carrier? (b) May GPS, either as a common
carrier or a private carrier, be presumed negligent when
the goods it undertook to transport safely were damaged
while in its protective custody and possession?
A. (a) No, GPS cannot be considered as a common

carrier. GPS, being an exclusive contractor and hauler of
Concepcion Industries, Inc., rendering or offering its services
to no other individual or entity, cannot be considered a
common carrier. Common carriers are persons, corporations,
firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or air,
for hire or compensation, offering their services to the public,
whether to the public in general or to a limited clientele in
particular, but never on an exclusive basis. The true test of a
common carrier is the carriage of passengers or goods,
providing space for those who opt to avail themselves of its
transportation service for a fee. GPS scarcely falls within the
term "common carrier."
(b) Yes, notwithstanding the fact that GPS cannot be

considered as a common carrier it still cannot escape liability.
In culpa contractual, upon which the action of petitioner rests
as being the subrogee of Concepcion Industries, Inc., the mere
proof of the existence of the contract and the failure of its
compliance justify, prima facie, a corresponding right of relief.
The law, recognizing the obligatory force of contracts, will not
permit a party to be set free from liability for any kind of non-
performance of the contractual undertaking or a contravention
of the tenor thereof. A breach upon the contract confers upon
14
the injured party a valid cause for recovering that which may
have been lost or suffered.37
Q. Crisostomo contracted the services of Caravan, a

travel agency to arrange and facilitate her booking,
ticketing and accommodation for a package tour to Europe.
Her niece who also worked for the agency went to her
house to deliver petitioner’s travel documents and plane
tickets. Petitioner, in turn gave her the full payment for the
package tour. Her niece informed her that her flight was on
a Saturday. Without checking her travel documents,
petitioner went to NAIA to take her flight. To her dismay
she discovered that the flight she was supposed to take had
already departed the previous day, a Friday. She learned
that her plane ticket was for the flight scheduled the day
before. She complained to Caravan which allowed the
petitioner to take another tour to Europe but with a
different itinerary. Upon her return she demanded from
the travel agency reimbursement representing the
difference between the sum she paid for her first tour and
the amount she owed for the second tour. Caravan refused
to reimburse the amount contending it was non-refundable
and it can no longer reimburse the amount paid
considering that the same had already been remitted to its
principal in Singapore which had already billed the same
even if petitioner did not take the tour. Was the travel
agency, Caravan a common carrier?
A. Caravan, the travel agency was not a common

carrier. Caravan was not an entity engaged in the business of
transporting either passengers or goods and is therefore, neither
a private nor a common carrier. Caravan did not undertake to
transport petitioner from one place to another since its
covenant with its customers is simply to make travel
arrangements in their behalf. While petitioner concededly
37
FGU Insurance Corporation vs. G. P. Sarmiento Trucking Corporation,
386 SCRA 312, August 6, 2002.
15
bought her plane ticket through the efforts of Caravan, this

does not mean that the latter ipso facto is a common carrier. At
most, Caravan acted merely as an agent of the airline, with
whom petitioner ultimately contracted for her carriage to
Europe. Caravan’s obligation to petitioner in this regard was
simply to see to it that petitioner was properly booked with the
airline for the appointed date and time. Her transport to the
place of destination, meanwhile, pertained directly to the
airline.
The object of petitioner’s contractual relation with

respondent is the latter’s service of arranging and facilitating
petitioner’s booking, ticketing and accommodation in the
package tour. In contrast, the object of a contract of carriage is
the transportation of passengers or goods. It is in this sense that
the contract between the parties in this case was an ordinary
one for services and not one of carriage.38
Q. May a common carrier act as a private carrier?
A. A common carrier may, under some circumstances,

act as a private carrier, and when, as a matter of
accommodation or special engagement, a common carrier
undertakes to carry something which it is not his business to
carry, he becomes a private carrier.39 A common carrier cannot,
however, avoid the duties required of him as such carrier, by
insisting on a special or private contract with the shipper.40
Q. Will charter party of a vessel belonging to a

common carrier necessarily convert the carrier into a
private carrier?41
38
Crisostomo vs. Court of Appeals, (409 SCRA 528, August 25, 2003.
39
New York Central R. Co. v. Lockwood, N.Y., 17 Wall. 357, 21 L.Ed.
627.
40
Denver & R. G. W. Ry. Co. v. Linck, C.C.A. Utah, 56 F.2d 957.
41
16
A. The public or common carrier shall remain as such,

notwithstanding the charter of the whole or portion of a vessel
by one or more persons, provided the charter is limited to the
ship only, as in the case of a time-charter or voyage-charter. It
is only when the charter includes both the vessel and its crew,
as in a bare-boat or demise that a common carrier becomes
private, at least insofar as the particular voyage covering the
charter-party is concerned. The reason is that a shipowner in a
time or voyage-charter retains possession and control of the
ship, although her holds may, for the moment, be the property
of the charterer.42
On the other hand, in a demise or bare-boat charter, the

charterer will generally be considered as the owner of the
voyage or service stipulated because the owner of the vessel
completely and exclusively relinquishes possession, command
and navigation of the vessel to the charterer. Thus, a demise or
bare-boat charter indicates a business undertaking that is
private in character. Consequently, the rights and obligations of
the parties to a contract of private carriage are governed
principally by their stipulations, not by the law on common
carriers.43
Q. Loadstar Shipping Co., Inc. is the registered

owner and operator of the vessel M/V Weasel. Loadstar
entered into a voyage-charter with Northern Mindanao
Transport Co., Inc. for the carriage of 65,000 bags of
cement from Iligan City to Manila. The shipment was
insured with Pioneer Asia Insurance Corp. M/V Weasel left
Iligan City in good weather on June 24 at 12:50 in the
afternoon. However, at 4:31 in the morning of June 25, the
captain of M/V Weasel ordered the vessel to be forced
aground. Consequently, the entire shipment of cement was
damaged due to exposure to sea water. The insurer paid the
consignee the amount of the shipment which was insured
42
Planters Products, Inc. vs. Court of Appeals, 226 SCRA 476.
43
Lea Mer Industries, Inc. vs. Malayan Insurance Co., Inc., 471 SCRA
698, September 30, 2005.
17
and claimed reimbursement from the Loadstar. Loadstar

claimed that at the time of the voyage the carrier’s voyage-
charter converted it into a private carrier and thus, the
presumption of negligence against common carriers cannot
apply. Is such contention correct?
A. The voyage-charter agreement between Loadstar and

Northern Mindanao Transport did not in any way convert the
common carrier into a private carrier. Loadstar remains a
common carrier notwithstanding the existence of the charter
agreement with Northern Mindanao Transport since the said
charter is limited to the ship only and does not involve both the
vessel and its crew. As a common carrier, Loadstar is required
to observe extraordinary diligence in the vigilance over the
goods it transports. When the goods placed in its care are lost,
Loadstar is presumed to have been at fault or to have acted
negligently. Loadstar has the burden of proving that it
observed extraordinary diligence in order to avoid
responsibility for the lost cargo.44
Q. In a charter party classified as a private carriage,

may the parties stipulate on the liability for the damage to
the cargo shipped?
A. In a charter party classified as a private carriage, the

parties may freely contract respecting liability for damage to
the goods and other matters. The basic principle is that the
―responsibility for cargo loss falls on the one who agreed to
perform the duty involved.‖ When so agreed therefore, the
charterer could be responsible for the care of the cargo during
the voyage.45
Q. A vessel was contracted as a private carrier,

pursuant to a charter party, to carry special cargo. In the
44
Loadstar Shipping Co., Inc. vs. Pioneer Asia Insurance Corp., 479 SCRA
655, January 24, 2006.
45
Maritime Agencies and Services, Inc. vs. Court of Appeals, 187 SCRA
346.
18
contract, it was stipulated that the carrier would be

exempted from liability for loss due to the negligence of its
agent. (a) Is such contract governed by the Civil Code
provisions on common carriers? (b) Is such stipulation
valid?
A. (a) The Civil Code provisions on common carriers

are not applicable where the carrier is not acting as a common
carrier but as a private carrier. (b) As a private carrier, a
stipulation exempting the owner from liability for the
negligence of its agent is valid. The stipulation in the charter
party absolving the owner would be void only if the strict
public policy governing common carriers is applied. Such
policy has no force where the public at large is not involved, as
in the case of a ship totally chartered for the use of a single
party. The stipulation exempting the owner from liability for
the negligence of its agent is not against public policy and is
deemed valid.46
Q. The charter party between the petitioner and the

respondent for the shipment of logs to Manila stipulated
that the ship owner “shall not be responsible for loss, short
landing, breakages and any kind of damages to the cargo.”
Respondent’s vessel sank resulting to the loss of the cargo.
Is the stipulation exempting the ship owner from liability
valid?
A. The stipulation is valid. 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 public. Compared to the general public, a
charterer in a contract of private carriage is not similarly
situated. It can and in fact it usually does, enter into a free and
voluntary agreement. In practice, the parties in a contract of
private carriage can stipulate the carrier’s obligations and
46
Home Insurance Co. vs. American Steamship Agencies, Inc. 23 SCRA
24; Asked, 1980, 1981, 1984, 1985, 1987 and 1991 Bar Exams.
19
liabilities over the shipment which, in turn, determines the

price or consideration of the charter. Thus, a charterer in
exchange for convenience and economy may opt to set aside
the protection from common carriers. When the charterer
decides to exercise this option, he takes a normal business risk.
In case of a private carrier, a stipulation exempting the owner
from liability even for the negligence of its agent is valid.47
Q. What is arrastre? How is it differentiated from

stevedoring service?
A. Arrastre, a Spanish word which refers to hauling of

cargo, comprehends the handling of cargo on the wharf or
between the establishment of the consignee or shipper and the
ship’s tackle. The service is usually performed by
longshoremen. On the other hand, stevedoring refers to the
handling of the cargo in the holds of the vessel or between the
ship’s tackle and the holds of the vessel.48
Q. Is an arrastre operator a common carrier?
A. An arrastre operator is not a common carrier.

Therefore, the one-year prescriptive period within which an
action can be filed against a common carrier as provided for in
the Carriage of Goods by Sea Act does not apply to an arrastre
operator.49
Q. What is the nature of the relationship between an

arrastre operator and the consignee?
A. The legal relationship between an arrastre operator

and the consignee is akin to that of a warehouseman and
47
Valenzuela Hardwood and Industrial Supply, Inc. vs. Court of Appeals,
274 SCRA 642; Asked, 1991 Bar Exams.
48
Compania Maritima vs. Allied Free Workers Union, 77 SCRA 24.
49
Insurance Co. of North America vs. Phil. Ports Terminal, Inc., 97 Phil.
288; Asked, 1988 Bar Exams.
20
depositor.50 Both as to the nature of the functions and the place

of their performance, an arrastre operator’s services are clearly
not maritime; they are no different from those of a depositary
or warehouseman.51
Q. Vulcan Industrial Mining imported machinery.

Upon arrival in Manila, the carrier turned over the cargo
to the arrastre operator in complete and good condition.
The cargo was loaded on a tractor owned by the carrier
and operated by an employee of the arrastre operator. The
cargo fell from the tractor thereby causing damage thereto.
The Court of Appeals limited the liability for the damage to
the cargo only to the carrier, because while the tractor was
operated by the employee of the arrastre operator, he was
technically and strictly performing a duty that properly
pertained to the carrier when he drove the tractor. Is the
carrier solely liable for the damage to the cargo?
A. No. Both the arrastre operator and the carrier are

charged with and obligated to deliver the goods in good
condition to the consignee. The legal relationship between the
consignee and the arrastre operator is akin to that of a depositor
and warehouseman. The relationship between the consignee
and the common carrier is similar to that of the consignee and
the arrastre operator. Since it was the duty of the arrastre
operator to take good care of the goods that are in its custody
and to deliver them in good condition to the consignee, such
responsibility also devolves upon the carrier.52
Q. Are maritime laws applicable to arrastre

operators?
A. The determination of the questions of whether or not

the arrastre operator had fully discharged its obligation to
50
Lua Kian vs. Manila Railroad Co., et al., 19 SCRA 5.
51
Insurance Co. of North America vs. Manila Port Service, 3 SCRA 553.
52
Insurance Co. of North America vs. Manila Port Service, 3 SCRA 553.
21
deliver the goods to the party entitled thereto, and, in the

negative case, the amount of indemnity which said operator is
bound to pay, does not require the application of any maritime
law and cannot affect either navigation or maritime
commerce.53 The reason for this is that both as to the nature of
the functions and the place of their performance (upon wharves
and piers shipside), an arrastre operator’s services are clearly
not maritime.54
Q. What is the degree of diligence required of

common carriers? What is the purpose thereof?
A. Common carriers, from the nature of their business

and for reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over the goods and for
the safety of passengers transported by them, according to all
the circumstances of each case.55
A common carrier is mandated under Art. 1733 of the

Civil Code, to observe extraordinary diligence in the vigilance
over the goods it transports according to all the circumstances
of each case. In the event that the goods are lost, destroyed or
deteriorated, it is presumed to have been at fault or to have
acted negligently, unless it proves that it observed
extraordinary diligence. When a common carrier received the
cargoes in good order, it was incumbent upon it to prove that it
exercised extraordinary diligence in the carriage of the goods. 56
The purpose of requiring extraordinary diligence is to

curb the recklessness of drivers which is a common sight in
crowded areas and in the highways throughout the country.57 It
53
Macondray & Co., Inc. vs. Delgado Brothers, Inc. L-13118, April 28,
1960; Asked, 1965 and 1988 Bar Exams.
54
Delgado Brothers, Inc. vs. Home Insurance Co., 1 SCRA 854.
55
56
Ibid.
57
Nocum vs. Laguna Tayabas Bus Co., 30 Phil. 69.
22
is for the safety of the passengers as well as the crew operating

the carrier.58
Q. What is the presumption when the goods

transported are lost, destroyed or deteriorated?
A. Common carriers from the nature of their business

and for reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over the goods and for
the safety of the passengers transported by them, according to
all the circumstances of each case. If the goods are lost,
destroyed or deteriorated, common carriers are presumed to
have been at fault or to have acted negligently, unless they can
prove extraordinary diligence as required by Article 1733 of
the Civil Code. The duty of the consignee is to prove merely
that the goods were lost. Thereafter, the burden is to the carrier
to prove it has exercised the extraordinary diligence required
by law. And, its extraordinary responsibility lasts from the
time the goods are unconditionally placed in the possession of,
and received by the carrier for transportation until the same are
delivered, actually or constructively, by the carrier to the
consignee or to the person who has the right to receive them.59
Common carriers are obliged to observe extraordinary

diligence in the vigilance over the goods transported by them.
Accordingly they are presumed to have been at fault or to have
acted negligently if the goods are lost, destroyed or
deteriorated. There are very few instances when the
presumption of negligence does not attach and these instances
are enumerated in Article 1734. In those cases where the
presumption is applied, the common carrier must prove that it
58
Phil. Air Lines, Inc. vs. CA, 195 Phil. 560 and 106 SCRA 291.
59
Citadel Lines, Inc. vs. Court of Appeals, 184 SCRA 544; Loadstar
Shipping Co., Inc. vs. Pioneer Asia Insurance Corp., 479 SCRA 655,
January 24, 2006.
23
exercised extraordinary diligence in order to overcome the

presumption.60
Q. Two hundred forty two (242) coils of prime cold

rolled steel were consigned to Philippines Steel and insured
with Philippine First Insurance. When the shipment
arrived it was discovered that four (4) coils were in bad
order and were unfit for the intended purpose. Philippine
Steel demanded payment for the loss from the insurance
company but despite the receipt of the formal demand, it
refused to pay Philippine Steel. Consequently, Belgian
Overseas as the common carrier paid for the damaged coils
amounting to 506,086.50. Belgian Overseas claiming that it
was subrogated to the rights of Philippine Steel, instituted a
complaint against the insurer for recovery of the amount it
paid to the consignee. The lower court ruled that Belgian
Overseas cannot recover from Philippines First Insurance
because there is a presumption that the loss was due to its
own negligence as a common carrier and therefore, cannot
recover from the insurance company. Was the ruling of the
lower court correct?
A. Yes, the ruling was correct. Well-settled is the rule

that common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary
diligence and vigilance with respect to the safety of the goods
and the passengers they transport. Thus, common carriers are
required to render service with the greatest skill and foresight
and "to use all reasonable means to ascertain the nature and
characteristics of the goods tendered for shipment, and to
exercise due care in the handling and stowage, including such
methods as their nature requires." The extraordinary
responsibility lasts from the time the goods are unconditionally
placed in the possession of and received for transportation by
60
DSR-Senator Lines vs. Federal Phoenix Assurance Co., Inc. 413 SCRA
14, October 7, 2003; Lea Mer Industries, Inc. vs. Malayan Insurance Co.,
Inc., 471 SCRA 698, September 30, 2005.
24
the carrier until they are delivered, actually or constructively,

to the consignee or to the person who has a right to receive
them.
Owing to this high degree of diligence required of

them, common carriers, as a general rule, are presumed to have
been at fault or negligent if the goods they transported
deteriorated or got lost or destroyed. That is, unless they prove
that they exercise extraordinary diligence in transporting the
goods.61
Q. Navidad, then drunk, paid the fare and entered

the EDSA LRT station. An altercation between the security
guard and Navidad ensued while the latter was waiting for
the train on the platform. As the train approached,
Navidad fell on the tracks and was struck by the moving
train killing him instantaneously. The operator of the train
was an employee of Metro Transit that was contracted by
Light Rail Transit Authority (LRTA). The widow of
Navidad filed a suit against LRTA for damages. LRTA
claimed that Navidad was not a passenger and that the
train operator was not an employee of LRTA but that of
Metro Transit. (a) Can LRTA be held liable as a common
carrier even if the deceased had not yet boarded the train?
(b) Can LRTA be made liable for the acts of the train
operator who was not its employee?
A. (a) LRT was liable as a common carrier. A contract

of carriage was deemed created from the moment Navidad paid
the fare and entered the LRT station, entitling him to all the
rights and protection under a contractual relation. LRTA was
liable due to its failure to exercise extraordinary diligence
imposed on a common carrier. Such duty to provide safety to
its passengers so obligates it not only during the course of the
trip but for so long as the passengers are within its premises
and where they ought to be in pursuance of the contract of
61
Belgian Overseas Chartering & Shipping N. V. vs. Philippines First
Insurance Co., Inc., 383 SCRA, 23, June 5, 2002.
25
carriage. The foundation of LRTA’s liability is the contract of

carriage and its obligation to indemnify the victim arises from
the breach of that contract by reason of its reason of its failure
to exercise the high diligence required of the common carrier.
(b) In the discharge of its commitment to exercise

extraordinary diligence in ensuring the safety of passengers, a
carrier may choose to hire its own employees or avail of the
services of a third person to undertake the task. In either case,
the common carrier is not relieved of its responsibilities under
the contract of carriage.62
Q. Is a travel agency required to exercise the same

degree of extraordinary diligence of a common carrier?
A. No, a travel agency not being a common carrier is

not required to exercise the same degree of extraordinary
diligence of a common carrier. The object of a passenger’s
contractual relation with a travel agency is the latter’s service
of arranging and facilitating passenger’s booking, ticketing and
accommodation in the package tour. In contrast, the object of a
contract of carriage is the transportation of passengers or
goods. The contract between the passenger and a travel agency
is an ordinary one for services and not one of carriage. Since
the contract between the parties is an ordinary one for services,
the standard of care required of a travel agency is only that of a
good father of a family.63
Q. The Department of Health (DOH) and

Cooperative for American Relief Everywhere, Inc. (CARE)
entered into an agreement wherein CARE would acquire
from the United States government donations of non-fat
dried milk, and other food products to be transported and
62
Light Rail Transit Authority vs. Navidad, 397 SCRA 75, February 6,
2003.
63
Crisostomo vs. Court of Appeals, supra.
26
distributed to the intended beneficiaries in the Philippines.

The government entered into a contract of carriage of
goods with National Trucking and Forwarding
Corporation (NTFC). The latter shipped 4,868 bags of non-
fat dried milk through respondent Lorenzo Shipping
Corporation (LSC). The consignee in the bills of lading was
Abdurahman Jama, petitioner NTFC’s branch supervisor.
LSC’s agent unloaded 4868 bags and delivered the goods to
petitioner’s warehouse. Before each delivery, the checkers
of LSC’s agent requested Abdurahman Jama to surrender
the original bills of lading, but the latter merely presented
delivery receipts. Abdurahman or his designated
subordinates signed the delivery receipts upon completion
of each delivery. Notwithstanding the precautions taken,
the petitioner allegedly did not receive the subject goods
which prompted the petitioners to file a complaint against
LSC for breach of contract of carriage. May the LSC as
carrier be held liable for its failure to exercise
extraordinary diligence required of common carriers?
A. Respondent LSC is not liable because it observed

extraordinary diligence. Extraordinary diligence is that extreme
measure of care and caution which persons of unusual
prudence and circumspection use for securing and preserving
their own property or rights. The presumption of fault or
negligence may be overturned by competent evidence showing
that the common carrier has observed extraordinary diligence
over the goods. In this case, the respondent adequately proved
that it exercised extraordinary diligence. Although, the original
bills of lading remained with petitioner, respondent’s agent
demanded from Abdurahman Jama the certified true copies of
the bills of lading. They also asked the latter to sign the cargo
delivery receipts. The surrender of the original bills of lading is
not a condition precedent for a common carrier to be
discharged of its contractual obligation. If surrender of the bill
of lading is not possible, acknowledgement of the delivery by
signing the delivery receipt suffices. And this is what
27
respondent did, making him not liable to petitioner although

the latter allegedly did not receive the goods. 64
Q. In exercising extraordinary diligence, how should

the employees of an airline company treat its passengers?
A. Passengers should be treated by the employees of an

airline carrier with kindness and courtesy and should be
protected against indignities, abuses, and injurious language
from such employees. In case of breach of contract, an airline
company shall be liable for damages.65 If passengers of an air
carrier are injured or killed, such air carrier is presumed to be
negligent unless it can prove that it exercised extraordinary
diligence in preventing injuries or death.66
Q. Is a common carrier always liable for all kinds of

injuries sustained by a passenger?
A. While the law requires the highest degree of

diligence from common carriers in the safe transport of their
passengers and creates a presumption of negligence against
them, it does not however, make the carrier an insurer of the
absolute safety of its passengers. Where the injury sustained by
the passenger was (1) in no way due to any defect in the means
of transport or in the method of transporting, or (2) to the
negligent or willful acts of the common carrier’s employees
with respect to the foregoing – such as when the injury arises
wholly from causes created by strangers which the carrier had
no control of or prior knowledge to prevent – there would be
no issue regarding the common carrier’s negligence in its duty
to provide safe and suitable care, as well as competent
employees in relation to its transport business, as such, the
64
Republic vs. Lorenzo Shipping Corporation, 450 SCRA 550, February 7,
2005.
65
Zulueta vs. Pan Amercian World Airways, Inc., 43 SCRA 397; Spouses
Jesus Fernando and Elizabeth Fernando vs. Northwest Airlines, G. R. No.
212038, February 8. 2017.
66
Davila vs. Philippine Air Lines, 49 SCRA 497.
28
presumption of fault negligence foisted under Article 1756 of

the Civil Code does not apply. 67
Q. Battung was shot by a co-passenger while riding

petitioner’s bus. While on their way, the bus driver stopped
the vehicle, alighted and checked the tires. It is at that
moment when a co-passenger shot the victim who was
sitting at the first row and immediately went down the bus.
The conductor informed the driver and they immediately
brought Battung to the hospital but was declared dead on
arrival. The heirs of Battung filed an action against the bus
company, its driver and conductor for breach of the
contract of carriage. Is the bus company liable for breach
of contract of carriage?
A. The carrier is not liable. While the law requires the

highest degree of diligence from common carriers in the safe
transport of their passengers and creates a presumption of
negligence against them, it does not however, make the carrier
an insurer of the absolute safety of its passengers. Where the
injury sustained by the passenger was (1) in no way due to any
defect in the means of transport or in the method of
transporting, or (2) to the negligent or willful acts of the
common carrier’s employees with respect to the foregoing –
such as when the injury arises wholly from causes created by
strangers which the carrier had no control of or prior
knowledge to prevent – there would be no issue regarding the
common carrier’s negligence in its duty to provide safe and
suitable care, as well as competent employees in relation to its
transport business, as such, the presumption of fault negligence
foisted under Article 1756 of the Civil Code does not apply. 68
67
G. V. Florida Transport, Inc. vs. Heirs of Romeo Battung, G. R. No.
208802, October 14, 2015, J. Perlas-Bernabe, ponente.
68
G. V. Florida Transport, Inc. vs. Heirs of Romeo Battung, G. R. No.
208802, October 14, 2015, J. Perlas-Bernabe, ponente.
29
Q. A passenger of Manila Railroad Company was

killed due to a personal grudge by a train guard who was
not on duty at the time. Was the Manila Railroad
Company liable for the death of such passenger?
A. Manila Railroad Company was not liable for the

death of the passenger who was killed by an off-duty guard due
to a personal grudge. It was a fortuitous event, which the
Manila Railroad Company could not have avoided. The guard
was off-duty at the time of the incident and was under no
obligation to safeguard the passengers of the train, where the
deceased was riding; and the killing of the passenger was not
done in line of duty. The position of the guard at the time was
that of another would-be passenger, a stranger also awaiting
transportation, and not that of an employee assigned to
discharge any of the duties the Railroad had assumed by its
contract with the deceased. As a result, the guard’s assault can
not be deemed in law a breach of the passenger’s contract of
transportation by a servant or employee of the carrier.69
Aside therefrom, the aforesaid case was decided under

the provisions of the Civil Code of 1889 which, unlike the
present Civil Code did not impose upon common carriers
absolute liability for the safety of passengers against willful
assaults or negligent acts committed by their employees.70
Under Article 1759 of the New Civil Code, ―Common carriers
are liable for the death of or injuries to passengers through the
negligence or willful acts of the former’s employees, although
such employees may have acted beyond the scope of their
authority or in violation of the orders of the common
carriers.‖71
Q. Due to the driver’s negligence, a bus overturned

and fell into a canal. Some persons carrying lighted torch
approached the bus whose gasoline leaked. The bus was
69
Gillaco vs. MRR Co., 97 Phil. 884).
70
Maranan vs. Perez, 20 SCRA 412, 415; Asked, 2011 Bar Exams.
71
See discussions under Art. 1759; Asked, 1968 Bar Exams.
30
burned causing the death of a passenger. Was the bus

operator liable for the death of the passenger?
A. The carrier was liable as the event was not due to a

fortuitous event. The proximate cause of the death of the
passenger was still the negligence of the driver.72
Q. A bus fell into a canal due to the driver’s

negligence or defect of the vehicle causing injuries to its
passenger. Was the bus company liable?
A. The bus company was liable as the accident that

caused the injuries of the passenger was not a fortuitous
event.73
Subsection 2
VIGILANCE OVER GOODS
Q. Are common carriers liable for the loss,

destruction or deterioration of the goods? What are the
exceptions, if any?
A. Common carriers are responsible for the loss,

destruction or deterioration of the goods, unless the same is due
to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other natural

disaster or other natural disaster or calamity;
(2) Act of the public enemy in war, whether

international or civil;
72
Bataclan vs. Medina, 102 Phil. 181; See further discussions under Art.
1755.
73
Son vs. Cebu Autobus Co., 94 Phil. 892.
31
(3) Act or omission of the shipper or owner of the

goods;
(4) The character of the goods or defects in the packing

or in the containers;
(5) An order or act of competent authority.74
Q. When is a common carrier presumed to be

negligent?
A. In case of death or injuries to passengers, common

carriers are presumed to have been at fault or to have acted
negligently unless they prove that they observed extraordinary
diligence as prescribed in Articles 1733 and 1755. The trial
court is not required to make an express finding of the common
carrier’s fault or negligence. Even the mere proof of injury
relieves the passengers from establishing the fault or
negligence of the carrier or its employees.
The presumption of negligence applies so long as there

is evidence showing that: (a) a contract exists between the
passenger and the common carrier; and (b) the injury or death
took place during the existence of such contract. In such event
the burden shifts to the common carrier to prove its observance
of extraordinary diligence, and that an unforeseen event or
force majeure had caused the injury. 75
Q. How may the legal presumption of negligence

when the goods are lost, destroyed or deteriorated in the
possession of a common carrier, be overcome?
74
Article 1734, Civil Code; Light Rail Transit Authority vs.
Navidad, 397 SCRA 75, February 6, 2003; Philippine Charter
Insurance Corporation vs. Unknown Owner of the Vessel M/V ―National
Honor‖, 463 SCRA 202, July 8, 2005.; Asked, 1991, 1995, 1996 and 1997
Bar Exams.
75
Sulpicio Lines, Inc. vs. Napoleon Sesante, et al., G. R. No. 172682, July
27, 2016, J. Bersamin, ponente.
32
A. In all cases other than those mentioned in Nos. 1, 2,

3, 4 and 5 of article 1734 of the Civil Code, if the goods are
lost, destroyed or deteriorated, common carriers are presumed
to have been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence as required in
article 1733.76
Thus, where the goods were proven to be in proper

order upon delivery to the common carrier and in a bad order
upon their arrival at the point of destination, there is a prima
facie presumption of negligence on the part of the carrier. To
be exempted from liability, the carrier must prove that the loss
was due to some circumstances inconsistent with its liability77
i.e., it exercised extraordinary diligence.
The presumption of fault or negligence does not apply

in the cases mentioned in Nos. 1, 2, 3, 4, and 5 of article 1734
of the Civil Code even to common carriers.78
Q. J Trading Co. Ltd. of Seoul, Korea, loaded a

shipment of parts and accessories on board the vessel of
M/V “National Honor”. The shipment was for the delivery
to Manila. The shipment was contained in two wooden
crates. There was no marking on the outer portion of the
crates except the name of the consignee. Upon arrival at the
port of destination, the inspector found the cargoes in good
condition. The stevedore began unloading the crates from
vessel. It was at this time that the mid-portion of the
wooden flooring of the crates snapped in the air, sending all
its contents crashing down hard, resulting in extensive
damage to the shipment. The shipper claims that the loss of
the cargo was due to the common carrier’s fault on the
ground that the carrier’s duty to exercise extraordinary
76
Article 1735, Civil Code; Asked, 1987 and 2011 Bar Exams.
77
Ynchausti Steamship Co. v. Dexter, 41 Phil. 289.
78
Light Rail Transit Authority vs. Navidad, 357 SCRA 75, February 6,
2003.
33
diligence is extinguished only when the goods are directly

discharged to the consignee. Is the shipper’s contention
proper?
A. No. Under Article 1734 of the New Civil Code, the

presumption does not apply in five causes. One of which is the
―character of the goods or defects in the packing or in the
containers‖. To exculpate itself from liability, the common
carrier has the burden to prove any of the five causes claimed
by it by a preponderance of evidence. If the carrier succeeds,
the burden of evidence is shifted to the shipper to prove that the
carrier is negligent. On the one hand, ―defect‖ is the want or
absence of something necessary for completeness or
perfection: a lack or absence of something essential to
completeness; a deficiency in something essential to the proper
use for the purpose for which a thing is to be uses. On the other
hand, ―inferior‖ means a poor quality, mediocre, or second
rate. A thing may be of inferior quality but not necessarily
defection. In other words, ―defectiveness‖ is not synonymous
to ―inferiority‖. In the case at bar, the crate should have three
solid and strong wooden batten placed side by side underneath
or on the flooring of the crate to support its contents. However,
in this case, although there were three wooden battens on its
flooring, the middle batten, which carried the substantial
volume of the cargo, had a knot hole, which considerably
affected, reduced and weakened its strength.79
Q. Will damage caused by fire relieve the common

carrier of liability for such damage?
A. The common carrier will not be relieved from

liability for damage caused by fire, because fire is not among
those enumerated by law that will exempt the carrier from
liability.80
79
Philippine Charter Insurance Corporation vs. Unknown Owner of the
Vessel M/V ―National Honor‖, 463 SCRA 202, July 8, 2005.
80
DSR-Senator Lines. vs. Federal Phoenix Assurance Co., Inc., 413 SCRA
14.
34
Q. Berde Plants delivered trees to C.F. Sharp, the

General Agent of DSR-Senator Lines for transportation
and delivery to Saudi Arabia. Federal Phoenix Assurance
insured the cargo against all risks. However, while in
transit, the vessel and all its cargo caught fire. Federal
Phoenix Assurance paid Berde Plants the amount of
insurance for the cargo and demanded payment from C.F.
Sharp. C.F. Sharp however, denied liability on the ground
that such liability was extinguished when the vessel
carrying the cargo was gutted by fire. Will a common
carrier’s liability be extinguished by reason of fire?
A. The common carrier’s liability will not be

extinguished by reason of fire. Article 1734 of the Civil Code
provides, common carriers are responsible for the loss,
destruction, or deterioration of the goods, unless the same is
due to any of the following causes only:
1. Flood, storm, earthquake, lightning, or other natural

disaster or calamity;
2. Act of the public enemy in war, whether international
or civil;
3. Act or omission of the shipper or owner of the goods;
4. The character of the goods or defects in the packing or
in the containers;
5. Order or act of competent public authority.
Fire is not one of those enumerated under the above

provision which exempts a carrier from liability for loss or
destruction of the cargo. Even if fire were to be considered a
natural disaster within the purview of Article 1734, it is
required under Article 1739 of the same Code that the natural
disaster must have been the proximate and only cause of the
loss, and that the carrier has exercised due diligence to prevent
35
or minimize the loss before, during or after the occurrence of

the disaster.81
Q. The vessel on which the cargo was loaded caught

fire and sunk. The carrier claims that the cause of the loss
is a natural disaster or calamity for which it should be
exempted. Is the common carrier exempted from liability?
A. Fire is not a natural disaster or calamity as it arises

almost invariably from some act of man or by human means. It
does not fall within the category of an act of God unless caused
by lightning or by other natural disaster or calamity. The
burden is on the carrier to prove that it exercised extraordinary
diligence required by law. And in case the carrier fails to prove
that extraordinary vigilance and care has been made by the
crew to prevent the occurrence of the fire, the common carrier
is liable to the consignees of the cargo. And even if fire were
to be considered a ―natural disaster,‖ it is required that the
―natural disaster‖ must have been the ―proximate and only
cause of the loss‖ and that the carrier has ―exercised due
diligence to prevent or minimize the loss before, during or after
the occurrence of the disaster,‖ which the carrier failed to
establish. The carrier is therefore, liable for the loss. 82
Q. Is a common carrier exempted from

responsibility for damages caused by natural disasters?
A. In order that the common carrier may be exempted

from responsibility, the natural disaster must have been the
proximate and only cause of the loss. However, the common
carrier must exercise due diligence to prevent or minimize loss
before, during and after the occurrence of flood, storm, or other
natural disaster in order that the common carrier may be
exempted from liability for the loss, destruction, or
81
DSR-Senator Lines vs. Federal Phoenix Assurance Co., Inc., 413 SCRA
14. October 7, 2003.
82
Eastern Shipping Lines, Inc. vs. Intermediate Appellate Court, 150
SCRA 464.
36
deterioration of the goods. The same duty is incumbent upon

the common carrier in case of an act of public enemy in war,
whether international or civil.83
In other words, the loss, destruction, or deterioration of

goods must be due to natural disaster or calamity and such
natural calamity must be the proximate and only cause of the
loss, to the exclusion of human agency from the cause of the
injury or loss.84
Thus, if the natural calamity or act of a public enemy is

not the proximate and only cause of the loss, the common
carrier is nonetheless liable for the loss. And even if a natural
calamity is the proximate and only cause of the loss, ―if the
common carrier negligently incurs in delay in transporting the
goods, a natural disaster shall not free such carrier from
responsibility‖.85
Therefore, the common carrier is still liable for a loss

caused by a natural disaster such as a flood or storm in the
following instances:86
(1) When the natural disaster is not the proximate and

only cause of the loss;
(2) When the common carrier failed to exercise due

diligence to prevent or minimize the loss before, during and
after the occurrence of the natural disaster; and
(3) When the common carrier negligently incurs in

delay in transporting the goods.
83
84
Philippine American General Ins. Co., vs. MGG Marine Services, Inc.,
378 SCRA 650; Lea Mer Industries, Inc. vs. Malayan Insurance Co., Inc.,
471 SCRA 698, September 30, 2005.
85
86
Asked, 1957, 1987 and 1998 Bar Exams.
37
Q. What is necessary for a common carrier to be

absolved from liability in case of force majeure?
A. For a common carrier to be absolved from liability

in case of force majeure, it is not enough that the accident was
caused by a fortuitous event. The common carrier must still
prove that it did not contribute to the occurrence of the incident
due to its own or its employees’ negligence.87
Q. San Miguel Corporation insured several cases of

beer bottles with Philippine American General Insurance
Co. Inc. The beer bottles were loaded on board the M/V
Peatheray. When cleared by the Coast Guard, the vessel
left the port of Mandaue for Bislig, Surigao del Sur. The
weather was calm when the vessel started with the voyage.
However, the following day there were strong winds and
enormous waves which caused the vessel to list, keel over,
and lose the cargo contained therein. Is the M/V Peatheray
absolved from liability?
A. The answer is in the affirmative. In order for

common carriers are absolved from liability where the loss,
destruction, or deterioration of goods is due to a natural
disaster or calamity, it must further be shown that such natural
disaster or calamity was the proximate and only cause of the
loss, there must be ―an entire exclusion of human agency from
the cause of the injury or the loss‖. Moreover, a common
carrier is required to exercise due diligence to prevent or
minimize the loss before, during and after the occurrence of the
natural disaster. All this present, the common carrier is exempt
from liability under the law for the loss of goods. Since the
presence of strong winds and enormous waves was shown to be
the proximate and only cause of the sinking of the M/V
87
38
Peatheray and the loss of the cargo belonging to San Miguel

Corporation, the carrier cannot be held liable for the said loss.88
Q. What is considered to be a fortuitous event?
A. In order to be considered a fortuitous event, the

cause of the unforeseen and unexpected occurrence, or the
failure of the debtor to comply with his obligation, (1) must be
independent of human will; (2) it must be impossible to foresee
the event which constitute the caso fortuito, or if it can be
foreseen it must be possible to avoid; (3) the occurrence must
be such as to render it impossible for the debtor to fulfill the
obligation in any manner, and (4) the obligor must be free
from an participation in the aggravation of the injury resulting
to the creditor.89
Q. When will the act of God relieve the carrier from

liability?
A. The act of God doctrine strictly requires that the act

must be occasioned solely by the violence of nature. Human
intervention is to be excluded from creating or entering into the
case of the mischief. When the effect is found to be in part the
result of the participation of man, whether due to his active
intervention or neglect or failure to act, the whole occurrence is
then humanized and removed from the rules applicable to the
acts of God.90
Q. Petitioner Central Shipping Company received

on board its vessel, M/V Central Bohol 376 pieces of
apitong logs and undertook to transport said shipment to
Manila for delivery to Alaska Lumber Co., Inc. During the
voyage, the vessel encountered weather disturbance which
88
Philippine American General Insurance co., Inc. vs. MGG Marine
Services, Inc., 378 SCRA 650.
89
90
Ibid.
39
caused the logs to shift in the hold of the vessel.

Consequently, the vessel sunk together with the logs loaded
therein. The weather disturbance was not a storm but
strong southwest monsoon winds. The owner of the logs
filed a complaint against petitioner for the loss of the logs
due to the fault and negligence of the petitioner and its
captain. The petitioner raised the defense that the
proximate cause of the sinking of its vessel and its cargo
was a natural disaster which could not be foreseen. Is the
petitioner liable for the loss of the cargo?
A. Yes, the petitioner is liable for the loss of the cargo

because it failed to observe extraordinary diligence required of
a common carrier, under Art 1733 of the Civil Code. In the
event of loss, destruction or deterioration of the goods,
common carriers are responsible; that is, unless they prove that
such loss, destruction or deterioration was brought about - -
among others – by ―flood, storm, earthquakes, lightning or
other natural disaster or calamity‖, as provided in Article 1734
of the Civil Code. In the present case, the weather disturbance
encountered by the vessel was not a storm but a strong
southwest monsoon winds. In other words, the defense of
natural disaster or fortuitous event cannot be used by petitioner
because the injury could have been avoided by the petitioner.
Furthermore, petitioner failed to prove that such natural
disaster or calamity was the proximate and only cause of the
loss. The defense of fortuitous event or natural disaster cannot
be successfully made when the injury could have been avoided
by human precaution. Therefore, petitioner cannot be exempt
from liability.91
Q. Petitioner Cebu Salvage Corporation and Maria

Cristina Chemicals Industries, Inc. (MCCII) entered into a
voyage charter wherein petitioner was to load silica quartz
on board the M/T Espiritu Santo at Ayungon, Negros
91
Central Shipping Company, Inc. vs. Insurance company of North
America, 438 SCRA 511, September 20, 2004.
40
Occidental for transport to and discharge at Tagoloan,

Misamis Oriental to consignee Ferrochrome Phils., Inc.
Pursuant to the contract, petitioner received and loaded
1,100 metric tons of silica quartz on board the M/T Espiritu
Santo which left Ayungon for Tagoloan the next day but
the shipment never reached its destination because the M/T
Espiritu Santo sank off the beach of Opol, Misamis
Oriental, resulting in the total loss of the cargo. MCCII
filed a claim for the loss of the shipment with its insurer,
respondent Philippine Home Assurance Corporation.
Respondent paid the claim and thereafter filed a claim for
reimbursement from petitioner. The lower court’s decision
in favor of respondent was upheld by the Court of Appeals.
In the Supreme Court petitioner argued that the Court of
Appeals erred when it affirmed the RTC finding that the
voyage charter it entered into with MCCII was a contract
of carriage. It insists that the agreement was merely a
contract of hire wherein MCCII hired the vessel from its
owner, ALS Timber Enterprises (ALS). Not being the
owner of the M/T Espiritu Santo, petitioner did not have
control and supervision over the vessel, its master and
crew. Thus, it could not be held liable for the loss of the
shipment caused by the sinking of a ship it did not own. (a)
May a carrier be held liable for the loss of cargo resulting
from the sinking of a ship it does not own? (b) Petitioner
next contends that if there was a contract of carriage, then
it was between MCCII and ALS as evidenced by the bill of
lading ALS issued. Is such contention correct? (c)
Petitioner asserts that MCCII should be held liable for its
own loss since the voyage charter stipulated that cargo
insurance was for the charterer’s account. Is such
assertion meritorious?
(a) Petitioner and MCCII entered into a ―voyage

charter,‖ also known as a contract of affreightment wherein the
ship was leased for a single voyage for the conveyance of
goods, in consideration of the payment of freight. Under a
voyage charter, the shipowner retains the possession, command
41
and navigation of the ship, the charterer or freighter merely

having use of the space in the vessel in return for his payment
of freight. An owner who retains possession of the ship
remains liable as carrier and must answer for loss or non-
delivery of the goods received for transportation. The petitioner
was a common carrier. At the time of the loss of the cargo, it
was engaged in the business of carrying and transporting goods
by water, for compensation, and offered its services to the
public.
From the nature of their business and for reasons of

public policy, common carriers are bound to observe
extraordinary diligence over the goods they transport according
to the circumstances of each case. In the event of loss of the
goods, common carriers are responsible, unless they can prove
that this was brought about by the causes specified in Article
1734 of the Civil Code. In all other cases, common carriers are
presumed to be at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence. Such being
the case petitioner should be made liable.
(b) The bill of lading was merely a receipt issued by

ALS to evidence the fact that the goods had been received for
transportation. It was not signed by MCCII, as in fact it was
simply signed by the supercargo of ALS. This is consistent
with the fact that MCCII did not contract directly with ALS.
While it is true that a bill of lading may serve as the contract of
carriage between the parties, it cannot prevail over the express
provision of the voyage charter that MCCII and petitioner
executed. In cases where a Bill of Lading has been issued by a
carrier covering goods shipped aboard a vessel under a charter
party, and the charterer is also the holder of the bill of lading,
―the bill of lading operates as the receipt for the goods, and as
document of title passing the property of the goods, but not as
varying the contract between the charterer and the shipowner.‖
The Bill of Lading becomes, therefore, only a receipt and not
the contract of carriage in a charter of the entire vessel, for the
contract is the Charter Party, and is the law between the parties
42
who are bound by its terms and condition provided that these
are not contrary to law, morals, good customs, public order and
public policy.
(c) This deserves scant consideration. This simply

meant that the charterer would take care of having the goods
insured. It could not exculpate the carrier from liability for the
breach of its contract of carriage. The law, in fact, prohibits it
and condemns it as unjust and contrary to public policy. 92
Q. When is the shipowners liability limited to its

share in the insurance proceeds?
A. When the unseaworthiness that caused the loss of the

vessel was not due to the fault or negligence of the shipowner,
its liability is limited to its pro rata share in the insurance
proceeds. So that such principle will not apply, the carrier must
show that the unseaworthiness of the vessel was not due to its
fault or negligence. Where the ship owner fails to overcome the
presumption of negligence, the doctrine of limited liability
cannot be applied.93
Q. On October 31, 1980, M/V P. Aboitiz, a vessel

owned by petitioner, sank on her voyage from Hong Kong to
Malaysia while the weather was moderate. Respondent is the
insurer of the lost cargoes loaded on board M/V P. Aboitiz and
consigned to General Textile, Inc. After respondent
indemnified General Textile, Inc., it was subrogated to its
rights, interests and actions against petitioner. Respondent
filed an action for recovery against petitioner, among others,
claiming P142, 401.60 as actual damages, attorney’s fees,
exemplary damages and costs of suit. The trial court held
that the vessel sank due to its unseaworthiness and hence,
petitioner was liable for the total value of the lost cargoes
92
Cebu Salvage Corporation vs. Phil. Home Assurance Corp., G. R. No.
150403, January 25, 2007.
93
Aboitiz Shipping Corporation vs. New India Assurance Co., Inc., G. R.
No. 156978, August 24, 2007.
43
instead of applying the doctrine of limited liability. The

Court of Appeals affirmed in toto the trial court’s decision.
Petitioner elevated the case to the Supreme Court raising the
issue of whether the doctrine of limited liability, which limits
respondent’s award of damages to its pro rata share in the
insurance proceeds, applies in this case. Should the petitioner
be liable for the total value of the cargo?
A. From the nature of their business and for reasons of

public policy, common carriers are bound to observe
extraordinary diligence over the goods they transport according to
all the circumstances of each case. In the event of loss,
destruction or deterioration of the insured goods, common carriers
are responsible, unless they can prove that the loss, destruction or
deterioration was brought about by the causes specified in Article
1734 of the Civil Code. In all other cases, common carriers are
presumed to have been at fault or to have acted negligently, unless
they prove that they observed extraordinary diligence. The
weather was moderate when M/V P. Aboitiz sank. Both the trial
and appellate courts also ruled that the M/V P. Aboitiz sank due to
its unseaworthiness and not due to typhoon. To limit petitioner’s
liability to the amount of the insurance proceeds, it has the burden
of showing that the unseaworthiness of the vessel was not due to
its fault or negligence. But it failed to do so. Where the
shipowner fails to overcome the presumption of negligence, the
doctrine of limited liability cannot be applied.94
Q. General Milling Corporation (GMC) contracted

the services of Asia Lighterage as carrier to deliver the
cargo to GMC’s warehouse. GMC insured the cargo with
Prudential. The transport of said cargo was suspended due
to a warning of an incoming typhoon. The carrier however,
proceeded to pull the barge to seek shelter from the
approaching typhoon and was tied down to other barges. A
few days after, the barge developed a list because of a hole
94
Aboitiz Shipping Corporation vs. New India Assurance Co. Inc. , G. R. No. 156978,
August 24, 2007.,
44
it sustained after hitting an unseen protuberance

underneath the water. The hole was then patched with clay
and cement. The barge was then towed to a terminal before
it was brought to the consignee’s wharf. The barge again
ran aground due to strong current. To avoid the complete
sinking of the barge, a portion of the goods was transferred
to three other barges. The next day, the towing bits of the
barge broke. It sank completely, resulting in the total loss
of the remaining cargo. Prudential indemnified GMC for
the loss and sought recovery from the carrier which refused
to pay on the ground that it was not a common carrier but
a private carrier and that if it were indeed a common
carrier, it would be exempt from liability because the barge
sank due to a typhoon. (a) Was the petitioner a common
carrier or a private carrier? (a) Was the petitioner’s
liability extinguished ?
A. (a) The principal business of the petitioner is that of

lighterage and drayage and it offers its barges to the public for
carrying or transporting goods by water for compensation.
Petitioner is a common carrier, not private. The Supreme Court
held that petitioner is a common carrier whether carrying of
goods is done on an irregular rather than scheduled manner,
and with an only limited clientele. A common carrier need not
have fixed and publicly known routes. Neither does it have to
maintain terminals or issue tickets.
(b) In the case at bar, the barge completely sank after its
towing bits broke, resulting in the total loss of its cargo.
Petitioner claims that this was caused by a typhoon; hence, it
should not be held liable for the loss of the cargo. However,
petitioner failed to prove that the typhoon is the proximate and
only cause of the loss of the goods, and that it exercised due
diligence before, during and after the occurrence of the
typhoon to prevent or minimize the loss. The evidence shows
that, even before the towing bits of the barge broke, it had
already previously sustained damage when it hit a sunken
object. It even suffered a hole. Clearly, this could not be solely
45
attributed to the typhoon. The partly-submerged vessel was

refloated but its hole was patched with only clay and cement.
The patchwork was merely a provisional remedy, not enough
for the barge to sail safely. Thus, when petitioner persisted to
proceed with the voyage, it recklessly exposed the cargo to
further damage.
In addition, testimonies have shown that the petitioner

still headed to the consignee’s wharf despite knowledge of an
incoming typhoon. Accordingly, the petitioner cannot invoke
the occurrence of the typhoon as force majeure to escape
liability for the loss sustained by the General Milling. Surely,
meeting a typhoon head-on falls short of due diligence required
from a common carrier. More importantly, the
officers/employees themselves of petitioner admitted that when
the towing bits of the vessel broke that caused its sinking and
the total loss of the cargo, it was no longer affected by the
typhoon. The typhoon then is not the proximate cause of the
loss of the cargo; a human factor, i.e., negligence had
intervened.95
Q. Ilian Silica Mining entered into a contract of

carriage with Lea Mer Industries, Inc. for the shipment of
900 metric tons of silica sand from Palawan to Manila. The
cargo was loaded on board Judy VII, a barge leased to Lea
Mer. During the voyage, the barge sank, resulting in the
loss of the cargo. Malayan Insurance paid the consignee
and in turn, demanded reimbursement from Lea Mer
which refused to pay. The trial court dismissed the
complaint on the ground that the cause of the loss was a
fortuitous event. The RTC noted that the vessel sunk
because of bad weather brought about by Typhoon
Trining. The Court ruled that Lea Mer had no advance
knowledge of the incoming typhoon and that the vessel had
been cleared by the Philippine Coast Guard to travel from
Palawan to Manila. The Court of Appeals reversed the
95
Asia Lighterage and Shipping, Inc. vs. Court of Appeals, (409 SCRA
340, Autust 19, 2003.
46
decision of the trial court and ruled that the vessel was not
seaworthy when it sailed for Manila, and hence the loss of
the cargo was petitioner’s fault, not by a fortuitous event.
Which decision is correct?
A. The Court of Appeals is correct. Common carriers

are bound to observe extraordinary diligence over the goods
and the safety of the passengers they transport, as required by
the nature of their business and for reasons of public policy.
Extraordinary diligence requires rendering service with the
greatest skill and foresight to avoid damage and destruction to
the goods entrusted for carriage and delivery. Common carriers
are presumed to have been at fault or to have acted negligently
for loss or damage to the goods they have transported. This
presumption can be rebutted only by proof that they observed
extraordinary diligence. The evidence presented by Lea Mer in
support of its defense of fortuitous event was insufficient. As
required by law, it was not enough for the common carrier to
show that there was an unforeseen or unexpected occurrence. It
had to show that it was free from any fault – a fact it miserably
failed to prove. First, petitioner presented no evidence that it
had attempted to minimize or prevent the loss before, during or
after the alleged fortuitous event. Second, the alleged fortuitous
event was not the sole and proximate cause of the loss. The
barge was not seaworthy when it sailed for Manila. The hull of
the barge had holes that might have caused or aggravated the
sinking.96
Q. Who has the burden of proving that the cause of

the loss, destruction or deterioration is one of the
exceptions provided by law?
A. The general rule is that the common carrier is liable

for the loss, destruction or deterioration of the goods while in
its possession. To be exempted from liability, such common
carrier must prove that the damage was caused by one of the
96
Lea Mer Industries, Inc. vs. Malayan Insurance Co., Inc. 471 SCRA 698,
September 30, 2005.
47
exceptions provided by law97 But once the carrier has proven

that the cause of the damage is one of the instances mentioned
in article 1734, the shipper has the onus probandi to show the
carrier’s fault so that the latter could be made liable.98
However, if the parties agreed that the payment of the

price of the copra sold was the ―net landed weight‖ upon
arrival at the point of destination, the vendor has the burden of
proof to show that the shortage in weight upon arrival was due
to the risks of the voyage and not due to the natural dying up of
the copra while in transit.99
Q. The carrier failed to deliver the merchandise to

Catarman, Samar because the vessel carrying the same was
wrecked by a typhoon. Is the carrier liable? Would your
answer be the same if the goods were not delivered because
the vessel carrying the same was unseaworthy?
A. The carrier is not liable where its inability to deliver

the transported merchandise was due to a typhoon. In such
case, the cause of the loss is a natural calamity100 for which the
common carrier is not liable.101 However, unseaworthiness of
the vessel is not a fortuitous event that would exempt the
carrier from liability.102
Q. Ganzon agreed to transport 305 tons of scrap

iron from Mariveles, Bataan to Manila for Tumambing on
board the lighter “Batman”. Tumambing delivered the
scrap iron to the captain of the lighter “Batman”, for
loading which begun on the same day. When half of the
scrap iron had been loaded, the Acting Mayor of Mariveles,
97
98
Martini Ltd., vs. Macondray & Co., 39 Phil. 934; Asked, 1987 Bar
Exams.
99
General Foods Corp. vs. National Coconut Corp., L-8717, Nov. 20,
1956, 53 O.G. 652).
100
Tan Chiong Sian vs. Inchausti & Co., 22 Phil. 142.
101
Article 1734 (1), Civil Code.
102
Standard Vaccum Oil Co. v. Luzon Stevedoring Co., Inc. 98 Phil. 817.
48
accompanied by three policemen, ordered the captain of

the lighter and his crew to dump the scrap iron into the sea,
which the latter did. (a) Were the goods already in the
custody of the carrier while being loaded? (b) Was the act
of the Acting Mayor the “order or act of competent public
authority”? (c) Was the carrier exempted from liability?
A. (a) The scrap iron were unconditionally placed in the

possession and control of the common carrier, and upon their
receipt by the carrier for transportation, the contract of carriage
was deemed perfected. The fact that part of the shipment had
not been loaded on board the lighter did not impair the said
contract of transportation as the goods remained in the custody
and control of the carrier, albeit still unloaded.
(b) There was no showing that the acting Mayor of

Mariveles had the power to issue the disputed order, or that it
was lawful, or that it was issued under legal process of
authority. The carrier was not duty bound to obey the illegal
order to dump into the sea the scrap iron. There was no
sufficient proof that the issuance of the said order was attended
with such force or intimidation as to completely overpower the
will of the carrier’s employees. The mere difficulty in the
fulfillment of the obligation was not considered force majeure.
Thus, the order of the acting Mayor did not constitute valid
authority for the carrier and his representatives to carry out.
(c) The carrier failed to show that the loss of the scrap
iron was due to any of the causes enumerated in Article 1734
of the Civil Code hence, he is presumed to have been at fault or
to have acted negligently. The carrier could have been
exempted from any liability had he been able to prove that he
observed extraordinary diligence in the vigilance over the
goods in his custody, or that the loss was due to an unforeseen
event or to force majeure. Hence, the carrier was liable for
damages.103
103
Ganzon vs. Court of Appeals, 161 SCRA 646.
49
Q. When does the extraordinary responsibility of the

common carrier begin and when does it end?
A. The extraordinary responsibility of the common

carrier lasts from the time the goods are unconditionally placed
in the possession of, and received by the carrier for
transportation until the same are delivered, actually or
constructively, by the carrier to the consignee, or to the person
who has a right to receive them, without prejudice to the
provisions of article 1738.104
Thus, the risk of the carrier, as such, begins on delivery

of the goods to it for immediate transportation, that is, as soon
as the delivery is complete so as to place on the carrier the
exclusive duty of seeing after their safety.105 And after the
carrier has received the goods for transportation it is liable as
common carrier, not merely as warehouseman, although they
have not yet been loaded for immediate carriage.106
Q. To whom must the carrier deliver the goods

transported?
A. The goods should be delivered to the consignee or to

the person who has a right to receive them.107
Q. Fortades boarded Sarkies Tours’ bus bound for

Legaspi City. She had three pieces of luggage placed in the
baggage compartment of the bus but during the stopover in
Daet, only one bag remained in the open compartment.
The others, including Fortades’ things, were missing and
might have dropped along the way. Some of the passengers
suggested retracing the route of the bus to try to recover
104
105
Charles J. Webb & Sons v. Central R. co. of New Jersey, C.C.A.N.J., 36
F.2d 702; Adair v. Yazoo & M.V.R. Co., 107 So. 371, 142 Miss. 345.
106
Hill Mfg. Co. v. New Orleans, M. & C. R. Co., 78 So. 187, 117 Miss.
548.
107
50
the lost items, but the driver ignored them and proceeded
to Legaspi City. Sarkies Tours merely offered P1,000 for
each piece of luggage lost. Fortades asked assistance from
the radio stations and even from Philtranco bus drivers
who plied the same route. The effort paid off when one of
the bags was recovered. Fortades then demanded payment
from Sarkies of the value of the lost luggage but the latter
denied liability on the ground that Fortades did not declare
any excess baggage upon boarding its bus. Was the refusal
of Sarkies Tours to pay the value of the lost pieces of
luggage correct?
A. The refusal of Sarkies Tours to pay for the value of

the lost luggage was not correct. The cause of the loss was
Sarkies Tours’ negligence in not ensuring that the doors of the
baggage compartment of its bus were securely fastened.
Common carriers from the nature of their business and for
reasons of public policy, are bound to observe extraordinary
diligence in the vigilance over the goods transported by them,
and this liability ―lasts from the time the goods are
unconditionally placed in the possession of, and received by
the carrier for transportation until the same are delivered,
actually or constructively, by the carrier to the consignee, or to
the person who has a right to receive them.‖ Hence, the carrier
was liable for actual damages, moral and exemplary damages
due to its negligence and bad faith.108
Q. What is the test as to whether the relation of

shipper and carrier had been established?
A. The test is: Had the control and possession of the

cargo been completely surrendered by the shipper to the
carrier? Whenever the control and possession of goods passes
to the carrier and nothing remains to be done by the shipper,
then it can be said with certainty that the relation of shipper and
carrier has been established.109
108
Sarkies Tours Philippines, Inc. vs. Court of Appeals, 280 SCRA 58.
109
W. F. Bogart & Co. v. Wade, 200 S. W. 148, 132 Ark. 49.
51
Example: Where the shipper had calves which he

intended to ship and their mothers which he did not intend to
ship inside the railroad stock pens, the railroad’s liability as
common carrier did not arise until the cows had been separated
from the calves to be shipped and placed under the control and
possession of the carrier.110
Q. Where the owner delivered the cargo to a carrier

and the latter took possession thereof by placing it on a
lighter or a barge, did the responsibility of the carrier
commence from such time?
A. Yes. In such case, there existed a complete contract

of carriage and the extraordinary responsibility of the common
carrier had already begun.111
Q. Is delivery by the common carrier to the customs

authorities considered as delivery to the consignee so as to
end the carrier’s extraordinary responsibility over the
goods?
A. Delivery of the cargo to the customs authorities is

not delivery to the consignee or ―to the person who has a right
to receive them‖ as contemplated in Article 1736 of the New
Civil Code, because in such case the goods are still in the
hands of the Government and the owner cannot exercise
dominion over them. However, the parties may agree to limit
the liability of the carrier considering that the goods have still
to go through the inspection of the customs authorities before
they are actually turned over to the consignee. This is a
situation where the carrier loses control of the goods because of
a custom regulation and it is unfair that it be made responsible
110
Chicago R. I. & P. Ry. Co. v. Garrison, 38 P.2d 502, 169 Okl. 634.
111
Compania Maritima vs. Insurance Co. of North America, 12 SCRA
213.
52
for any loss or damage that may be caused to the goods during
the interregnum.112
Q. A loaded his goods on board the vessel of B for

the voyage from Manila to Palupandan. The bill of lading
provided that the carrier shall not be responsible for loss or
damage caused to the shipment which not due to negligence
of the carrier or caused by force majeure. The cargo was
discharged and delivered to the warehouse of the Bureau of
Customs where the cargo was destroyed by fire. Was the
carrier liable for the loss?
A. The carrier was not liable. The stipulation

exempting the carrier from liability for causes not due to the
negligence of the carrier or due to force majeure is valid, not
being contrary to law, morals or public policy.113
Q. A imported wedge wire sieves and shipped the

same with B. The bill of lading issued by B provided that
the carrier shall not be liable after the goods leave the
ship’s tackle to be discharged, transshipped or forwarded.
Upon arrival of the shipment in Manila, the cargo was
unloaded and delivered in good order and condition to the
bonded warehouses of C. The goods were never delivered
to, nor received by A at the port of destination, Davao.
Was the carrier liable?
A. No liability for the loss of the shipment was

incurred. The stipulation in the bill of lading exempting the
carrier from liability for loss or damage to the goods when the
same are not in its actual custody is valid. Since the shipment
had already been unloaded in Manila for delivery to Davao, the
carrier was no longer liable for the loss thereof.114
112
Lu Do & Lu Ym Corp. vs. Binamira, 101 Phil. 120.
113
Servando vs. Phil. Steam Navigation Co., 117 SCRA 832.
114
Samar Mining Co., Inc. vs. Norduetscher Llyod, 132 SCRA 529.
53
Q. Is the seller of the goods shipped liable for

misdelivery by a carrier who was chosen by the buyer?
A. Misdelivery of the goods is attributable to the carrier

and not to the seller. And since the carrier was chosen and
authorized to make delivery by the buyer itself, the seller
cannot be held responsible for such misdelivery.115
The carrier however, who delivered to the wrong

person or misdelivered the goods can be held liable. This is
true even if the shipper had already attempted to recover from
the person to whom the goods were wrongfully delivered.116
Q. Does the responsibility of the common carrier

remain when the goods are temporarily unloaded or stored
in transit?
A. The common carrier’s duty to observe extraordinary

diligence in the vigilance over the goods remains in full force
and effect even when they are temporarily unloaded or stored
in transit, unless the shipper or owner has made use of the right
of stoppage in transitu.117
The responsibility of the common carrier under this

article may be summarized as follows:
(1) The extraordinary diligence of the common carrier

over the goods continues even when the goods are:
(a) Temporarily unloaded, or
(b) Stored in transit.
(2) Exception: when the shipper or owner has made use

of the right of stoppage in transitu.
115
Smith, Bell & Co. (Phils.), Inc. vs. Gimenez, 8 SCRA 407.
116
Tan Pho vs. Dalamal, 67 Phil. 555).
117
54
Q. The seller of goods delivered the same to a

carrier for transmission to the buyer who bought the same
on credit. While the goods were in transit and before the
carrier had delivered the goods to the buyer, the seller
stopped the goods on the ground that the buyer became
insolvent. After stoppage of the goods, (a) what obligation
does the carrier have? (b) When will the required
extraordinary diligence of the carrier cease?
A. (a) On receipt of a notice of stoppage of goods in

transitu which complies with the requirements relating thereto,
it is the duty of the carrier to return the goods to the owner, or
to divert the goods according to the instructions, and in so
doing incurs no liability to the consignee.118
(b) If, by the orders of one entitled to such action, the

goods are stopped in transit, and are held for such person, the
carrier while so holding is liable as a warehouseman only,119
and the extraordinary diligence required of a common carrier
ceases.
Q. Who has liability while the goods are in the

warehouse of the common carrier at the place of
destination? Give an example.
A. The extraordinary liability of the common carrier

continues to be operative even during the time the goods are
stored in a warehouse of the carrier at the place of destination,
until the consignee has been advised of the arrival of the goods
and has had reasonable opportunity thereafter to remove them
or otherwise dispose of them.120
Example: A shipped goods with B from San Francisco,

U.S.A. to Batangas City and consigned the same to C. Upon
118
Southern Ry. Co. v. Miller, 150 S. E. 100, 40 Ga.App. 448.
119
MacVeagh v. Atchison, R. Co., 5 P. 457, 3 N.M. 205.
120
55
arrival of the goods at the port of Batangas, B stored the same

in his warehouse until he could notify C of the arrival of the
goods. Before B could inform C of the arrival of the goods, the
extraordinary liability of the common carrier continues to be
operative.121 However, if C had already been informed of the
arrival of the goods and had reasonable opportunity to remove
the goods but failed to do so, B will no longer be bound by
extraordinary liability because ―the duty of the consignee to
receive the goods is as imperative as is the duty of the carrier to
deliver.‖122
Q. What is the effect of contributory negligence of

the shipper or owner?
A. If the shipper or owner merely contributed to the

loss, destruction or deterioration of the goods, the proximate
cause thereof being the negligence of the common carrier, the
latter shall be liable in damages, which however, shall be
equitably reduced.123
Q. May the accused raise contributory negligence as

a defense in a criminal prosecution for reckless
imprudence?
A. The defense of contributory negligence does not

apply in criminal cases committed through reckless
imprudence, since one cannot allege the negligence of another
to evade the effects of his own negligence.124
Q. What must the common carrier do to forestall or

lessen the loss caused by the character of the goods or
faulty packing?
121
See Missouri Pac. R. Co. v. Armstrong, 44 S.W.2d 1093, 184 Ark.
1076.
122
Tarbell v. Royal Exch. Shipping Co., 17 N.E. 721, 110 N.Y. 170, 6 Am.
S.R. 350.
123
124
Teodorico Manzanares vs. People, G. R. No. 153760-61, October 16,
2006.
56
A. Even if the loss, destruction, or deterioration of the

goods should be caused by the character of the goods, or the
faulty nature of the packing or of the containers, the common
carrier must exercise due diligence to forestall or lessen the
loss.125
Thus, if the fact of improper packing is known to the

carrier or its servants, or apparent upon ordinary observation,
but it accepts the goods notwithstanding such condition, it is
not relieved of liability for loss or injury resulting therefrom.126
Q. Wyeth-Pharma shipped on board an aircraft of

KLM oral contraceptives. The tablets were placed in
cartons and were packed together in an aluminum
container. It was delivered to the warehouse of the
Philippine Skylanders, Inc. (PSI). Wyeth-Suaco engaged
the services of Sanchez Brokerage to deliver it to Hizon
Laboratories. The cargoes however arrived in bad order
because the cartons were wet. Sanchez Brokerage claimed
that it received the goods in bad order and that the damage
was due to the fault or negligence of the shipper for failing
to properly pack them and to the inherent characteristics of
the goods. May Sanchez Brokerage be exempted from
liability?
A. No, Sanchez Brokerage cannot be exempted from

liability. Art. 1734, paragraph 4 of the Civil Code exempts a
common carrier from liability if the loss or damage is due to
the character of the goods or defects in the packing or in the
containers. The rule is that if the improper packing is known to
the carrier or his employees or is apparent upon ordinary
observation, but he nevertheless accepts the same without
protest or exception notwithstanding such condition, he is not
125
126
Southern Lines, Inc. vs. Court of Appeals, 4 SCRA 159; Asked, 1972,
1978 and 1985 Bar Exams.
57
relieved of liability for the resulting damage. In this case, if the

claim of Sanchez Brokerage that some cartons were already
damaged upon delivery to it were true, then it should naturally
have received the cargo under protest or with reservations duly
noted on the receipt issued by PSI. But it made no such protest
or reservation.127
Q. Is the common carrier liable if the goods are

seized or destroyed through the order of public authority?
A. If through the order of public authority the goods are

seized or destroyed, the common carrier is not responsible,
provided said public authority had power to issue the order.128
Thus, if the seizure is done pursuant to the order of an

acting mayor of Mariveles, Bataan, the common carrier will be
exempted from liability only if such mayor had the power to
issue such order.129
Q. Is the stipulation between the common carrier

and the shipper or owner limiting the liability of the former
to less than extraordinary diligence valid? 130
A. A stipulation between the common carrier and the

shipper or owner limiting the liability of the former for the loss,
destruction, or deterioration of the goods to a degree less than
extraordinary diligence shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the

service rendered by the common carrier; and
127
A.F. Sanchez Brokerage, Inc.. vs. CA, 447 SCRA 427 December 21,
2004.
128
129
See Ganzon vs. Court of Appeals, 161 SCRA 646.
130
Asked, 1973, 1978 and 1984 Bar Exams.; No. IX (1), 2002 Bar Exams.
58
(3) Reasonable, just and not contrary to public

policy.131
Q. What stipulations in a contract of carriage are

considered unreasonable, unjust and contrary to public
policy?
A. 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;132
(2) That the common carrier will not be liable for any
loss, destruction, or deterioration of the goods;
(3) That the common carrier need not observe any

diligence in the custody of the goods;
(4) That the common carrier shall exercise a degree of

diligence less than that of a good father of a family, or of a man
of ordinary prudence in the vigilance over the movables
transported;
(5) That the common carrier shall not be responsible for

the acts or omissions 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;133
(7) That the common carrier is not responsible for the

loss, destruction, or deterioration of goods on account of the
131
132
133
59
defective condition of the car, vehicle, ship, airplane or other

equipment used in the contract of carriage.134
Q. Cendana was contracted to haul 600 boxes of

milk which were loaded on one truck. These boxes were
hijacked by armed men. 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 another province. Cendena disowned
liability on the ground that the loss was caused by
fortuitous event. Can Cendana be made liable?
A. Cendana cannot be made liable. Under Article 1745

(6), a common carrier is held responsible – and will not be
allowed to divest or to diminish such responsibility – even for
acts of strangers like thieves or robbers except where such
thieves or robbers in fact acted ―with grave or irresistible
threat, violence or force.‖ The limits of the duty of
extraordinary diligence in the vigilance over the goods carried
are reached where the goods are lost as a result of a robbery,
which is attended by ―grave or irresistible threat, violence or
force.‖ The cause of the loss must reasonably be regarded as
beyond the control of the common carrier and properly
regarded as a fortuitous event.135
Q. The common carrier refused to carry the goods

unless the shipper or owner agrees to limit the former’s
liability, so the latter entered into such agreement. May
such agreement be annulled?
A. An agreement limiting the common carrier’s liability

may be annulled by the shipper or owner if the common carrier
refused to carry the goods unless the former agreed to such
stipulation.136
134
Article 1745.
135
De Guzman vs. Court of Appeals, 168 SCRA 612; Asked, 1991 Bar
Exams.
136
Art. 1746, Civil Code; Asked, 1987 Bar Exams.
60
Q. What is the effect if the common carrier, without

just cause, delays transporting the goods or changes the
stipulated or usual route?
A. If the common carrier, without just cause, delays the

transportation of the goods or changes the stipulated or usual
route, the contract limiting the common carrier’s liability
cannot be availed of in case of the loss, destruction, or
deterioration of the goods.137
Q. What is the effect of delay on account of strikes

or riots on the liability of the common carrier?
A. An agreement limiting the common carrier’s liability

for delay on account of strikes or riots is valid.138
Q. What are the kinds of stipulations often made in

the bill of lading concerning the liability of the common
carrier? Are these stipulations valid?
A. Three kinds of stipulations have often been made in

a bill of lading. The first is one exempting the carrier from
liability for loss or damage occasioned by its own negligence.
The second is one providing for an unqualified limitation on
such liability to an agreed valuation. And the third is one
limiting the liability of the carrier to an agreed valuation unless
the shipper declares a higher value and pays a higher rate of
freight. According to an almost uniform weight of authority,
the first and second kinds of stipulations are invalid as being
contrary to public policy, but the third is valid and
enforceable.139
137
138
139
Loadstar Shipping Co. Inc. vs. Court of Appeals, G. R. No. 131621,
Sept. 28, 1999; Asked, No. IX (2), 2002 Bar Exams.
61
Q. The bill of lading provides, “The shipper hereby

represents and declares that the value of each package
described on the face of this bill of lading does not exceed
the sum of P200.00, unless the shipper shall expressly
declare and there shall be written on the face thereof a
different value.” The fare collected is based on the value
declared. Is such stipulation valid?
A. A stipulation that the common carrier’s liability is

limited to the value of the goods appearing in the bill of lading,
unless the shipper or owner declares a greater value is
binding.140
Q. The bill of lading provides that $500 per package

is the maximum liability of the common carrier in the
absence of a higher valuation of the goods as indicated in
the bill of lading. In case the package shipped is lost, may
the carrier be made liable for the actual value thereof in
excess of $500?
A. By providing in the bill of lading that $500 is the

maximum liability unless a higher valuation has been declared,
the common carrier’s liability shall not exceed said amount as
such stipulation is valid. The right of the carrier to limit its
liability has been recognized not only in our jurisdiction but
also in American jurisprudence.141
Q. Is a contract fixing the sum that may be

recovered by the owner or shipper valid?142
140
Article 1749, Civil Code; Freixas & Co. vs. Pacific Mail Steamship
Co., 42 Phil. 199; Sealand Service, Inc. vs. IAC, 153 SCRA 552; Asked,
1978, 1983, 1985, 1987 and 1998 Bar Exams.; No. IX (2), 2002 Bar Exams.
141
14 Am. Jur. 2d p. 88; Eastern and Australian Steamship Co. Ltd. vs.
Great American Ins. Co., 108 SCRA 248; Phoenix Assurance Co. vs.
Macondray & Co., Inc., 64 SCRA 17; Asked, 1987 and 1989 Bar Exams.
142
62
A. A contract fixing the sum that may be recovered by

the owner of shipper for the loss, destruction, or deterioration
of the goods is valid, if it is reasonable and just under the
circumstances, and has been fairly and freely agreed upon.143
Thus, a stipulation limiting the liability of the carrier to the
value of the goods appearing in the bill of lading, unless the
shipper or owner declares a higher value, is binding on the
consignee.144
Q. ECSLI issued Bills of Lading containing the

stipulation that in case of claim for loss or for damage to
the shipped property, “the liability of the common carrier
xxx shall not exceed the value of the goods as appearing in
the bill of lading.” Is such a stipulation limiting the
common carrier’s liability valid?
A. Yes, a stipulation that limits liability is valid as long

as it is not against public policy. In Everett Steamship Corp. v.
Court of Appeals145 the Supreme Court stated: ―A stipulation
in the bill of lading limiting the common carrier’s liability for
loss or destruction of a cargo to a certain sum, unless the
shipper or owner declares a greater value, is sanctioned by law,
particularly Articles 1749 and 1750 of the Civil Code. 146
Q. ECSLI issued 2 separate bills of lading wherein

the value of the cargoes declared by the shippers/consignees
were P6,500 and P14,000 respectively. Legaspi insured the
same cargoes with UCPB for P50,000 and P100,000
respectively. Fire ensued in the engine room of the vessel
destroying the entire vessel resulting in the loss of the vessel
and the cargoes therein including the goods of Legaspi.
UCPB paid the loss to Legaspi, then as subrogee of Legaspi,
filed a complaint anchored on torts against ECSLI for the
143
144
Citadel Lines, Inc. vs. Court of Appeals, 184 SCRA 544.
145
358 SCRA 129, 135-136, October 8, 1998.
146
Edgar Cokaliong Shipping Lines, Inc. vs. UCPB General Insurance Co.,
Inc., 404 SCRA 706.
63
collection of the total principal amount of P148,500 which it

paid to Legaspi for the loss of the cargo. UCPB contends
that ECSLI’s liability should be based on the actual insured
value of the goods. On the other hand, ECSLI claims that
its liability should be limited to the value declared by the
shipper/consignee in the bill of lading. May ECSLI may
held liable for more than what was declared by the
shipper/consignee as the value of the goods in the bills of
lading?
A. In Aboitiz Shipping Corp. vs. Court of Appeals,147

the description of the nature and the value of the goods shipped
were declared and reflected in the bill of lading, like in the
present case. The Court therein considered this declaration as
the basis of the carrier’s liability and ordered payment based on
such amount. Following this ruling, ECSLI should not be held
liable for more than what was declared by the
shippers/consignees as the value of the goods in the bills of
lading.148
Q. Hernandez imported three crates of bus spare
parts from Japan. The crates were shipped by the supplier
from Japan to Manila on board a vessel owned by Everett
Orient Lines. Upon arrival in Manila it was discovered
that one of the crates costing Y 1,552,500 was missing. The
carrier offered to pay only Y 100,000, the maximum
amount stipulated under Clause 18 of the covering bill of
lading which limits the liability of the carrier. Hernandez
claimed that he was not bound by such clause since he was
not a signatory to the bill of lading. (a) Was the limited
liability clause in the bill of lading binding on the
consignee? (b) Was the stipulation in the bill of lading
limiting the common carrier’s liability binding considering
that it was a contract of adhesion?
147
188 SCRA 387, August 6, 1990.
148
Edgar Cokaliong Shipping Lines, Inc. vs. UCPB General Insurance Co.,
Inc., 404 SCRA 706.
64
A. (a) Even if a consignee was not a signatory to the

contract of carriage between the shipper and the carrier, the
consignee can still be bound by the contract. When the
consignee formally claims reimbursement for the missing
goods from the common carrier and subsequently files a case
against the latter on the very same bill of lading, he accepts the
provisions of the contract and thereby makes him a party
thereto.149
(b) The stipulation in the bill of lading limiting the

common carrier’s liability to a certain sum unless the shipper
or owner declares a greater value is sanctioned by law.
Contracts of adhesion wherein one party imposes a ready-made
form of contract on the other are contracts, which are not
entirely prohibited. The one who adheres to the contract is in
reality free to reject it even entirely; but if he adheres, he gives
his consent thereto and shall be bound by such contract.150
Q. The plane ticket which the plaintiff did not sign

stated at the back thereof, the following: “Baggage
Liability… The total liability of the Carrier for lost or
damaged baggage of the passenger is LIMITED TO
P100.00 for each ticket unless a passenger declares a higher
valuation in excess of P100.00, but not in excess, however,
of a total valuation of P1,000.00 and additional charges are
paid pursuant to Carrier’s tariffs.” Plaintiff did not declare
any higher value for his luggage, much less did he pay any
additional transportation charge. Plaintiff claimed that
certain documents and gift items contained in his luggage
were lost. May plaintiff recover more than P100.00?
A. Considering that plaintiff had failed to declare a

higher value for his baggage, he cannot be permitted a recovery
in excess of P100.00. While it is true that the plaintiff did not
sign the plane ticket, he is nevertheless, bound by the
149
Everett Steamship Corporation vs. Court of Appeals, 297 SCRA 496;
150
Ibid.
65
provisions thereof. Such provisions have been held to be a part

of the contract of carriage, and valid and binding upon the
passenger regardless of the latter’s lack of knowledge or assent
to the regulation.151
Q. When is the limitation on the carrier’s liability

not binding?
A. Where the conditions printed at the back of a ticket

stub are in letters so small that they are hard to read, this would
not warrant the presumption that the passenger was aware of
those conditions such that he had fairly and freely agreed to
them. He is not and cannot therefore, be bound by the
conditions of carriage found at the back of the ticket stub.152
Q. What is the effect of failure of the carrier to

object to questions during the trial regarding the amount of
the damages sustained by the passenger?
A. The general rule is that an air carrier is not liable for

the loss of baggage in an amount in excess of the limits
specified in the ticket which is binding on the passenger
regardless of the passenger’s lack of knowledge thereof or
assent thereto. However, such rule of limited liability of the
carrier is subject to waiver. When the air carrier failed to raise
timely objections during the trial when questions and answers
regarding the actual claims and damages sustained by the
passenger were asked, the air carrier thereby waived the
defense of limited liability. Thus, the air carrier had waived the
defense of limited liability when it allowed the passenger to
testify as to the actual damages he incurred due to the
misplacement of his luggage, without any objection.153
151
Ong Yiu vs. Court of Appeals, 91 SCRA 223, 231; Asked, 1998 Bar
Exams.
152
Shewaram vs. Philippine Air Lines, 17 SCRA 606.
153
British Airways vs. Court of Appeals, 285 SCRA 450.
66
Q. Which factor shall be taken into consideration on

the question of whether or not a stipulation limiting the
common carrier’s liability is reasonable, just and in
consonance with public policy?
A. The fact that the common carrier has no competitor

along the line or route or a part thereof, to which the contract
refers shall be taken into consideration on the question of
whether or not a stipulation limiting the common carrier’s
liability is reasonable, just and in consonance with public
policy.154
Q. What is the presumption of the law in case of

loss, destruction or deterioration of the goods while in the
care of a common carrier?155
A. Even when there is an agreement limiting the

liability of the common carrier in the vigilance over the goods,
the common carrier is disputably presumed to have been
negligent in case of their loss, destruction or deterioration.156
Q. What law shall govern the liability of the

common carrier where the goods are to be transported
from one country to another? 157
A. The law of the country to which the goods are to be

transported shall govern the liability of the common carrier for
their loss, destruction or deterioration.158
Example: The goods are shipped at San Francisco,

U.S.A. bound for Manila. In such case, Philippine laws shall
apply to the liability of the common carrier for the loss,
destruction or deterioration of the goods because the law of the
154
155
156
157
Asked, 1966, 1972 Bar Exams.
158
67
country to which the goods are to be transported shall

govern.159
Q. What provisions of law shall apply to a

passenger’s baggage?
A. The provisions of Articles 1733 to 1753 shall apply

to the passenger’s baggage which is not in his personal custody
or in that of his employees. As to the other baggage, the rules
in Articles 1998 and 2000 to 2003 concerning the
responsibility of hotel-keepers shall be applicable.160
Hence, with respect to the passenger’s baggage, which

is in his personal custody or in that of his employees, the
following rules shall apply:
(1) The common carrier shall be responsible as

depositaries for the effects brought by the passengers, provided
that notice was given to them, or to their employees, of the
effects brought in by the passengers and that on the part of the
latter, they take the precautions which said common carrier
advised relative to the care and vigilance of their effects.161
(2) For the effects brought in by the passengers as

mentioned above, the common carrier shall be responsible for
the loss or injury thereto that may be caused by the servants or
employees of the common carrier as well as by strangers; but
not that which may proceed from any force majeure. The fact
that the passengers are constrained to rely on the vigilance of
the common carrier shall be considered in determining the
degree of care required of him.162
159
Article 1753, Civil Code; American President Lines, Ltd. vs. Klepper,
L-15671, Nov. 29, 1960.
160
Article 1754, Civil Code; Asked, 1983, 1986, 1996 and 1997 Bar
Exams.
161
162
68
(3) The act of a thief or robber, who has entered the

vehicle is not deemed force majeure, unless it is done with the
use of arms or through an irresistible force.163
(4) The common carrier is not liable for compensation

if the loss is due to the acts of the passenger, his family,
servants or visitors, or if the loss arises from the character of
the things brought in the vehicle.164
(5) The common carrier cannot free himself from

responsibility by posting notices to the effect that he is not
liable for articles brought by the passengers. Any stipulation
between the common carrier and the passenger whereby the
responsibility of the former as set forth in articles 1998 to 2001
is suppressed or diminished shall be void.165
With respect however, to the effects checked-in or

entrusted by the passenger to the carrier, the provisions on the
liability of the common carrier shall apply.
Subsection 3
SAFETY OF PASSENGERS
Q. What is the obligation of the common carrier to

the passengers?
A. A common carrier is bound to carry the passengers

safely as far as human care and foresight can provide, using the
utmost diligence of very cautions persons, with a due regard
for all the circumstances.166
163
164
165
166
Article 1755, Civil Code; Asked, 1955, 1983, 1988, 2011 and 2015 Bar
Exams.
69
Q. A passenger brought into the bus a box which he

declared to the conductor to contain clothes and
miscellaneous items. It turned out that the box contained
firecrackers. A passenger was injured when the
firecrackers exploded. Was the carrier liable?
A. The carrier was not liable as it exercised

extraordinary diligence. Fairness demands that in measuring a
common carrier’s duty towards its passengers, allowance must
be given to the reliance that should be reposed on the sense of
responsibility of all the passengers in regard to their common
safety. It is to be presumed that a passenger will not take with
him anything dangerous to the lives and limbs of his co-
passengers, not to speak of his own. Not to be lightly
considered must be the right to privacy to which each
passenger is entitled. He cannot be subjected to any unusual
search, when he protests the innocuousness of his baggage and
nothing appears to indicate the contrary. 167
Q. A bus company was threatened by some

Maranaos that its bus will be burned by way of revenge for
the death of Maranaos in a vehicular accident involving a
bus of said company. No steps were taken by the carrier to
protect its passengers. Three Maranaos carrying large
quantity to gasoline boarded the bus and then forced the
driver to stop, shot the driver in the arm and poured
gasoline on the bus and the driver. One of the passengers
tried to stop the Maranaos and he was shot to death.
Should the carrier be liable for the death of its passenger?
A. The carrier should be made liable because it did not

exercise the diligence required by law. Despite the threat that
Maranaos were planning to take revenge by burning some of
the carrier’s buses, it did nothing to protect the safety of its
passengers. It should have frisked its passengers and inspected
167
Nocum vs. Laguna Tayabas Bus Co., 30 SCRA 69; Asked, 1992, and
2015 Bar Exams.
70
their baggage. Aside therefrom, the carrier failed to see that the
malefactors had a large quantity of gasoline with them.168
Q. Quisumbing was among the passengers on a

Manila bound Philippine Airlines (PAL) flight from Cebu.
After the plane had taken off, Villarin, a Senior NBI Agent
and one of the passengers recognized the presence of
“Zaldy”, a murder suspect seated near the cockpit. After
being certain of the identity of the suspect, Villarin
immediately scribbled a note to the pilot requesting the
latter to contact NBI agents in Manila. The pilot informed
Villarin that he could not send the message because it
would be heard by all ground aircraft stations. Thereafter,
an exchange of gunshots ensued between “Zaldy”, his three
companions and Villarin. “Zaldy” then announced a hold-
up, divesting the passengers of their belongings.
Quisumbing lost jewelry and cash, and suffered a shock
after a gun was pointed at him. Quisumbing claimed
damages from PAL but the latter denied liability and
claimed force majeuere. Was PAL guilty of negligence?
A. PAL’s failure to take certain steps that a passenger

in hindsight believes should have been taken is not the
negligence or misconduct which mingles with force majeuere
as an active and cooperative cause. This was not sufficient to
overcome the force majeure nature of the armed robbery. PAL
was not guilty of negligence.169
Q. What authority do airline companies have over

the packages and cargoes of the passenger or shipper?
A. Aircraft companies which operate as public utilities
or operators of aircraft which are for hire are authorized to
open and investigate suspicious packages and cargoes in the
presence of the owner or shipper, or his authorized
representatives if present, in order to help the authorities in the
168
Fortune Express, Inc. vs. Court of Appeals, G. R. 119756, March 18,
1999.
169
Quisumbing vs. Court of Appeals, 189 SCRA 605.
71
enforcement of the provisions of this Act; Provided, That if the

owner, shipper or his representative refuses to have the same
opened and inspected, the airline or air carrier is authorized to
refuse the loading thereof.170
Q. All passengers of an airplane died due to an

explosion which was caused by an explosive device that was
loaded on board the aircraft. Is the airline company liable?
A. Yes, the airline company is liable. The ruling in the

case of Nocum vs. Laguna Tayabas Bus Co.,171 cannot apply in
this case because while there is no law that authorizes bus
operators to open the luggage of their passengers, R. A. 6235
gives the airline companies operating as public utilities the
authority to open and investigate packages and cargoes being
loaded on board the aircraft. Should the personnel of the
airline company fail to discover the explosive devise, it could
only be due to their failure to exercise the utmost diligence of
very cautious persons for which the air carrier could be made
liable.172
Q. In carrying passengers, the common carrier

exercised ordinary diligence and provided the vehicle with
a professional driver. Is it sufficient compliance of the
common carrier’s obligation in carrying its passengers?
A. The common carrier did not comply with its

obligation to the passengers as the common carrier must
exercise utmost diligence of a very cautious person in carrying
its passengers, and ordinary care is not enough.173 Providing
the vehicle with a professional driver is not sufficient to
establish extraordinary diligence on the part of the common
170
Section 8, R.A. 6235.
171
30 SCRA 69.
172
173
72
carrier. It is not even sufficient proof of exercise of the

diligence of a good father of a family.174
Q. Spouses A and B together with their three minor

children boarded a bus. Upon reaching their destination,
they alighted from the bus and went to a shaded spot about
four or five meters away from the bus. A, the father
returned to the bus to get a piece of luggage. His youngest
daughter, aged 2 years old, must have followed him. While
A was still on the running board of the bus, waiting for the
conductor to give him his luggage, the bus started to run, so
that A had to jump down from the moving vehicle. The
child who was near the bus was run over and killed. It
turned out that all the while, the driver did not put off the
engine of the bus. Was the carrier liable?
A. The carrier was liable as it failed to exercise the

utmost diligence of a very cautious person required to be
observed by a common carrier in the discharge of its obligation
to transport safely its passengers. In the first place, the driver,
although stopping the bus, nevertheless did not put off the
engine. Secondly, he started to run the bus even before the bus
conductor gave him the signal to go and while the latter was
still unloading part of the baggage of the passenger. The
presence of the passengers near the bus was not considered
unreasonable and they are, therefore, to be considered still
passengers of the carrier entitled to protection under the
contract of carriage.175
Q. The bus of the defendant while running at full

speed fell into a canal and turned turtle because one of the
front tines burst causing the vehicle to zigzag. Four of the
passengers could not get out and cries for help were made
to the houses in the neighborhood. About ten men came,
174
Campo vs. Camarote, L-9147, Nov. 29, 1956.
175
La Mallorca vs. Court of Appeals, 17 SCRA 739; Asked, 1996 Bar
Exams.
73
one of them carrying a lighted torch and approached the

overturned vehicle. Almost immediately, fire broke out
burning the bus and the four passengers who were trapped
inside. Was the carrier liable?
A. The proximate cause of the death of the passengers

was the over-turning of the bus and when it was completely on
its back, the leaking of the gasoline from the tank was not
unnatural or unexpected. The coming of the men with a lighted
torch was in response to the call for help, and it was only
natural that said rescuers should innocently approach the
overturned vehicle to extend the help and effect the rescue
requested of them, which act started the fire and burned the bus
as well as the passengers trapped inside. The carrier was
therefore, liable.176
Q. A judgment was rendered finding Pestano of

Metro Cebu, a common carrier to have been negligent in
driving the passenger bus that hit the deceased. It was
shown that Pestano negligently attempted to overtake the
motorcycle at a dangerous speed as they were coming upon
a junction in the road. Metro Cebu was also held to be
directly and primary liable, along with Pestano, for failure
to observe the diligence of a good father of a family in the
supervision of its employees and in the maintenance of
vehicles. Pestano and Metro Cebu appealed contending that
the motorcycle was not in the middle of the road as found
by the trial and appellate courts, but was on the inner lane.
This they contended explained the location of the dents on
the bumper and the grill. Hence, they insisted it was the
victim who was negligent. Should the findings of the lower
court be disturbed?
A. No. There is no cogent reason to reverse or modify

the factual findings of the lower and appellate courts. The CA
agreed with the trail court that the vehicular collision was
caused by Pestano’s negligence when he attempted to overtake
176
Vda. de Bataclan vs. Medina, 102 Phil. 181.
74
the motorcycle. As a professional driver operating a public

transport bus, he should have anticipated that overtaking at a
junction was a perilous maneuver and should thus have
exercised extreme caution. 177
Q. Respondents Rebecca G. Estrella and her

granddaughter, Rachel E. Fletcher, boarded a BLTB bus
bound for Pasay City. Respondents never reached their
destination because their bus was rammed from behind by
a tractor-truck of CDCP at the South Expressway. The
strong impact pushed their seats forward and pinned their
knees to the seats in front of them. They regained
consciousness only when rescuers created a hole in the bus
and extricated their legs from under the seats. Both
passengers suffered serious injuries. (a)Could BLTB be
made liable for damages? (b) May respondents hold CDCP
liable and if so, what is the nature of its liability? (c) What
is the extent of the liability of BLTB Co. and CDCP?
A. (a) In an action for damages against CDCP and

BLTB Co., the trial court held that BLTB, as a common
carrier, was bound to observe extraordinary diligence in the
vigilance over the safety of its passengers. It must carry the
passengers safely as far as human care and foresight provide,
using the utmost diligence of very cautious persons, with a due
regard for all the circumstances. Thus, where a passenger dies
or is injured, the carrier is presumed to have been at fault or has
acted negligently. BLTB’s inability to carry respondents to
their destination gave rise to an action for breach of contract of
carriage while its failure to rebut the presumption of negligence
made it liable to respondents for the breach.
(b) Regarding CDCP, the trial court found that the

tractor-truck it owned bumped the BLTB bus from behind.
Evidence showed that CDCP’s driver was reckless and driving
very fast at the time of the incident. The gross negligence of its
driver raised the presumption that CDCP was negligent either
177
Pestano vs. Sumayang, 346 SCRA 870, December 4, 2000.
75
in the selection or in the supervision of its employees which it

failed to rebut thus making it and its driver liable to
respondents.
The case filed by respondents against petitioner CDCP

is an action for culpa aquiliana or quasi-delict under Article
2176 of the Civil Code. In this regard, Article 2180 provides
that the obligation imposed by Article 2176 is demandable for
the acts or omissions of those persons for whom one is
responsible. Consequently, an action based on quasi-delict
may be instituted against the employer for an employee’s act or
omission. The liability for the negligent conduct of the
subordinate is direct and primary, but is subject to the defense
of due diligence in the selection and supervision of the
employee. In the instant case, the trial court found that
petitioner failed to prove that it exercised the diligence of a
good father of a family in the selection and supervision of its
driver.
(c) It is well-settled that the owner of the other vehicle

which collided with a common carrier is solidarily liable to the
injured passenger of the carrier. The same rule of liability was
applied in situations where the negligence of the driver of the
bus on which the passenger was riding concurred with the
negligence of a third party who was the driver of another
vehicle, thus causing an accident. The bus company, its
driver, the operator of the other vehicle and the driver of
the vehicle are jointly and severally held liable to the
injured passenger or the latter’s heirs. The basis of this
allocation of liability is that -- It should not make any
difference that the liability of the bus owner springs from
contract while that of the owner and driver of the other
vehicle arises from quasi-delict. As early as 1913, it was
already ruled in Gutierrez vs. Gutierrez178, that in case of injury
to a passenger due to the negligence of the driver of the bus on
which he was riding and of the driver of another vehicle, the
178
56 Phil. 177.
76
drivers as well as the owners of the two vehicles are jointly and
severally liable for damages.179
Q. Delsan, a domestic corporation which owns and

operates the vessel MT Larusan received on board a
shipment of automotive diesel oil at the Bataan Refinery
Corporation for transportation and delivery to the bulk
depot in Bacolod City of Caltex Phils., Inc. pursuant to a
Contract of Afreightment. The shipment was insured with
respondent American Home Assurance Corporation
(AHAC) against all risks. When the unloading operations
commenced, it had to be stopped on account of the
discovery that the port bow mooring of the vessel was
intentionally cut or stolen by unknown persons. This
caused the vessel to drift and stretched the flexible rubber
hose connected to the tanker from the main delivery line at
sea bed level and ultimately caused the diesel oil to spill into
the sea. Moreover, the diesel oil that was earlier discharged
from the vessel into the shore tank of Caltex back flowed
upon failure to shut the storage tank gate valve. Hence loss
of diesel oil was incurred due to spillage and backflow from
the shore tank. Caltex sought recovery of the loss from
Delsan, but the latter refused to pay. As insurer, AHAC
paid Caltex the sum of P479, 262.57 for spillage. AHAC, as
Caltex’s subrogee, instituted a civil action against Delsan
for loss caused by the spillage and another suit for the loss
caused by the backflow. The Court of Appeals declared
that Delsan failed to exercise the extraordinary diligence of
a good father of a family in the handling of its cargo.
Delsan claimed that it was not liable due to the
contributory negligence of Caltex. (a) Can Delsan
exonerate itself from liability for the loss of cargo through
spillage due to the contributory negligence of Caltex? (b)
Should the loss through backflow be borne by Delsan
because the oil was already delivered to Caltex’s shore
tank?
179
CDCP vs. Estrella, et al.
77
A. (a) No, Delsan cannot be absolved from liability for

the loss of cargo through spillage. Common carriers are bound
to observe extraordinary diligence in the vigilance over the
goods transported by them. They are presumed to have been
at fault or to have acted negligently if the goods are lost,
destroyed or deteriorated.180 To overcome the presumption of
negligence in case of loss, destruction or deterioration of the
goods, the common carrier must prove that it exercised
extraordinary diligence. There are, however, exceptions to
this rule. Article 1734 of the Civil Code enumerates the
instances when the presumption of negligence does not attach.
Both the trial court and the CA uniformly ruled that Delsan
failed to prove its claim that there was a contributory
negligence on the part of the owner of the goods – Caltex. We
see no reason to depart therefrom. As aptly pointed out by the
CA, it had been established that the proximate cause of the
spillage and backflow of the diesel oil was due to the severance
of the port bow mooring line of the vessel and the failure of the
shore tender to close the storage tank gate valve even as a
check on the drain cock showed that there was still a product
on the pipeline.
(b) Delsan should bear the loss through backflow

because the diesel oil was not yet delivered to Caltex’s shore
tank. The extraordinary responsibility of common carrier lasts
from the time the goods are unconditionally placed in the
possession of, and received by, the carrier for transportation
until the same are delivered, actually or constructively, by the
carrier to the consignee, or to a person who has the right to
receive them.181 It had been settled that the subject cargo was
still in the custody of Delsan because the discharging thereof
has not yet been finished when the backflow occurred. Since
the discharging of the cargo into the depot has not yet been
completed at the time of the spillage when the backflow
180
Citing Asia Lighterage and Shipping, Inc. v. Court of Appeals and
Prudential Guarantee and Assurance, Inc., G.R. No. 147246, August 19,
2003, 403 SCRA 340.
181
78
occurred, there is no reason to imply that there was actual

delivery of the cargo to the consignee. The discharging of oil
products to Caltex Bulk Depot has not yet been finished.
Delsan still has the duty to guard and to preserve the cargo.
The carrier still has in it the responsibility to guard and
preserve the goods, a duty incident to its having the goods
transported.182
Q. Is a common carrier liable for damages due to

fortuitous event?
A. A common carrier’s liability does not extend to

damages caused by a fortuitous event.183 Accordingly, a
common carrier is not responsible for events which, could not
be foreseen, or which, though foreseen, are inevitable.184 After
all, the carrier is not an insurer against all risks of travel.185 If a
common carrier would be an insurer of the passenger’s safety,
it ought to be liable in case of death of, or injuries to,
passengers, although not negligent. But, the common carrier’s
liability rests upon negligence, its failure to exercise the utmost
diligence that the law requires.186
Q. When is there a caso fortuito which would exempt

the carrier from liability?
A. To constitute a caso fortuito that would exempt a

person from responsibility, it is necessary that (1) the event
must be independent of the human will; (2) the occurrence
must render it impossible for the debtor to fulfill the obligation
in a normal manner; (3) the obligor must be free of
participation in, or aggravation of, the injury to the creditor,‖
182
Delsan Transport Lines, Inc. vs. American Home Assurance
Corporation, G. R. No. 149019, August 15, 2006.
183
Ampang vs. Guinoo Trans. Co., 92 Phil. 1085.
184
Laguna Tayabas Co. vs. Tiongson, 16 SCRA 940; Asked, No. XX (b),
2001 Bar Exams.
185
Isaac vs. A. L. Ammen Transportation Co., Inc., L-9671, Aug. 23, 1957
186
Necesito vs. Paras, 104 Phil. 75.
79
and (4) the event must have been impossible to foresee, or if it

could be foreseen, must have been impossible to avoid.187
Thus, in a case, the defendant’s bus was bumped on the

left side by another bus which caused the defendant’s driver to
swerve his bus to the left so as to prevent it from falling into
the canal and striking a tree, a maneuver which led the bus to
skid and over-turn. It caused in the death of a passenger and
injuries to the others. It was held that this resulted from the
extraordinary circumstance of being struck by another bus,
independent of the will of, and unforeseen by the defendant’s
driver, and thus, a fortuitous event for which the carrier should
not be made liable.188
Likewise, where the injuries were caused by the

skidding of the rear wheels of the jeep and not the
unreasonable speed of the vehicle, the same is an unforeseen
event, for which the driver could not be made liable. It is well
known that cars may skid on greasy or slippery roads.189
Q. The scheduled flights of Japan Airlines (JAL)

from Narita, Japan to Manila were cancelled indefinitely
due to the eruption of Mt. Pinatubo which rendered NAIA
inaccessible to airline traffic. To accommodate all the
needs of the passengers, JAL rebooked all Manila-bound
passengers and paid their hotel expenses for their
unexpected overnight stay. The anticipated flights were
again cancelled due to NAIA’s indefinite closure. JAL
informed its passengers that it would no longer defray their
hotel and accommodation expenses during their extended
stay in Japan. The passengers were forced to use their
personal funds to pay for their accommodation during the
said extended stay. Was JAL liable for the expenses
187
Vasquez vs. Court of Appeals, 138 SCRA 553; Fortune Express, Inc. vs.
Court of Appeals, G. R. 119756, March 18, 1999; Asked XX (b), 2001 Bar
Exams.
188
Ampang vs. Guinoo Transportation Co., 92 Phil. 1085.
189
Bayasen vs. Court of Appeals, 103 SCRA 197.
80
incurred by the passengers for their extended stay in

Japan?
A. JAL was not liable. Common carriers are not

absolutely responsible for all injuries or damages sustained by
its passengers when caused by a fortuitous event. To rule
otherwise would render the defense of force majeure as an
exception from any liability, illusory and ineffective. When a
party is unable to fulfill his obligation because of force
majeure, the general rule is that he can not be held liable for
damages for non-performance. Airline passengers must take
such risks incident to the mode of travel. In this regard,
adverse weather conditions or extreme climatic changes are
some of the perils involved in air travel, the consequences of
which the passenger must assume or expect. After all,
common carriers are not the insurers of all risks.190
Q. Is an accident caused by defective brakes of a

vehicle or any other mechanical defect a caso fortuito?
A. A mishap caused by defective brakes could not be

considered as fortuitous in character. Some extraordinary
circumstance independent of the will of the obligor, or his
employees is an essential element of a caso fortuito.191
While a carrier is not an insurer of the safety of its

passengers, the carrier must nevertheless be held to answer for
the flaws in its equipment if such flaws were discoverable. The
manufacturer of the defective equipment is in law the carrier’s
agent, and the good repute of the carrier will not relieve it from
liability. The rationale of the carrier’s liability is the fact that
the passenger has no privity with the manufacturer of the
defective equipment. Hence, the passenger has no remedy
against the manufacturer while the carrier usually has. 192
190
Japan Airlines vs. Court of Appeals, 294 SCRA 19, 97 SCAD 165
(1998); Asked, No. XX (b), 2001 Bar Exams.
191
Tugade vs. Court of Appeals, 85 SCRA 226.
192
Necesito vs. Paras, 104 Phil. 75.
81
Likewise, when a bus overturned because its tire blew

up, the carrier was liable for the death of its passengers as it
was caused by the carrier’s negligence. 193 Also, where the
vehicle was running at a very high speed, and was overloaded
when the tire blew-up, the fact alone that tire was still good
because the grooves are still visible, does not make the blow-
up of the tire a fortuitous event, in the absence of evidence that
the accident was due to adverse road conditions or that
precautions were taken by the jeepney driver to compensate for
any condition liable to cause accident. The sudden blowing-up
could have been caused by too much air pressure injected into
the tire coupled by the fact the jeepney was overloaded and
speeding at the time of the accident.194
Q. A bus was transporting passengers from

Dagupan to Baguio. Upon reaching Camp 8, Kennon
Road, Baguio City, the bus malfunctioned due to breakage
of its cross-joint. The passengers panicked and jumped out
of the bus resulting to the death of some and physical
injuries to the others. Was the carrier liable?
A. An accident caused by defects in the automobile is

not a caso fortuito. The rationale of the carrier’s liability is the
fact that the passenger has neither the choice nor control over
the carrier in the selection and use of the equipment and
appliances in use by the carrier. As common carrier, the bus
company was duty bound to carry its passengers ―safely as far
as human care and foresight can provide, using the utmost
diligence of very cautious persons, with a due regard for all the
circumstances.‖ The bus company did not measure up to the
degree of care and foresight required under the circumstances.
The carrier failed to overcome the presumption of fault when a
passenger dies or is injured when it failed to consider that the
bus in which the deceased were riding was heavily laden with
passengers, and it would be traversing mountainous, circuitous
193
Vda. de Batacan vs. Medina, 102 Phil. 181.
194
Juntilla vs. Fontanar, L-45637, May 31, 1985.
82
and ascending roads. Thus, the entire bus, including its

mechanical parts, would naturally be taxed more heavily that it
would be under ordinary circumstances. Hence, the carrier was
liable.195
Q. The lower court rendered a judgment finding the

employer, Metro Cebu vicariously liable to the victims of a
vehicular accident. The appellate court held that allowing
its driver, Pestano, to ply his route with a defective
speedometer showed laxity on the part of Metro Cebu in
the operation of its business and in the supervision of its
employees. Is Metro Cebu liable to the injured passengers?
A. Metro Cebu was liable to the passengers. The fact

that Pestano was able to use a bus with a faulty speedometer
shows that Metro Cebu was remiss in the supervision of its
employees and in the proper care of its vehicles. It had thus
failed to conduct its business with the diligence required by
law.196
Q. A was a passenger of a passenger jeepney. While

running side by side with a cargo truck, the jeepney was
sideswiped causing injuries to A. Was the carrier liable?
A. The carrier was liable. The failure of the jeepney

driver to slacken his speed, instead of running side by side with
the cargo truck which sideswiped it, was negligence and not a
fortuitous event.197
Q. What is the presumption in case of death of or

injuries to passengers?
A. In case of death of or injuries to passengers,

common carriers are presumed to have been at fault or to have
195
Landingin vs. Pangasinan Transportation Co., 33 SCRA 284; See also
Necesito, et al. vs. Paras, et al., 104 Phil. 75.
196
Ibid.
197
Bacarro vs. Castano, 118 SCRA 187.
83
acted negligently, unless they prove that they observed

extraordinary diligence as prescribed in Articles 1733 and
1755.198
Thus, in case of death of a passenger, the presumption

is that the carrier was at fault in the absence of a satisfactory
explanation by the carrier as to how the accident occurred.199
A common carrier is vested with public interest. Once

a passenger in the course of travel is injured or does not reach
his destination safely, the carrier and driver are presumed to be
at fault.200
This statutory presumption may only be overcome by
evidence that the carrier exercised extraordinary diligence as
prescribed by law201 or that the death or injury of the passenger
was due to fortuitous event.202
Q. Garcia and her five-year old son boarded a

Baliwag Transit bus to Cabanatuan City. At around 7:30
p.m. the bus passengers saw a cargo truck parked at the
shoulder of the highway with its left rear jutted to the outer
lane, as the shoulder of the road was too narrow to
accommodate the whole truck. A kerosene lamp appeared
at the edge of the road to serve as an early warning device.
The truck driver was replacing a flat tire. The bus driver
was driving at a fast speed and failed to notice the kerosene
lamp. He ignored the passengers’ plea to slow down and
even carried on animated conversation with his co-
employee. The bus rammed the stalled cargo truck causing
the death of Santiago and injuries to passengers including
Garcia and her son. Baliwag Transit disclaimed liability on
the ground that the accident was caused by the truck
198
Article 1756, Civil Code; Asked, 1984, 1986 and 1997 Bar Exams.
199
Abeto vs. Philippine Airlines, Inc., 115 SCRA 589.
200
Bacarro vs. Castano, 118 SCRA 187.
201
Baliwag Transit Inc. vs. Court of Appeals, 256 SCRA 747.
202
Philippine Rabbit Bus Lines, Inc. vs. Intermediate Appellate Court, 189
SCRA 158.
84
driver’s failure to use an early warning device. Was

Baliwag Transit liable?
A. Baliwag Transit was liable. As a common carrier,

Baliwag Transit breached its contract of carriage when it failed
to deliver its passengers to their destination safe and sound. A
common carrier is bound to carry its passengers safely as far as
human care and foresight can provide, using the utmost
diligence of a very cautious person with due regard for all the
circumstances. In a contract of carriage, it is presumed that the
common carrier was at fault or was negligent when a passenger
dies or is injured. Unless the presumption is rebutted, the court
need not even make an express finding of fault or negligence
on the part of the common carrier. This statutory presumption
may only be overcome by evidence that the carrier exercised
extraordinary diligence as prescribed by law. Furthermore, a
kerosene lamp or torch at the end of the road, near the rear
portion of the truck to serve as an early warning device
substantially complies with Sec. 34(g) of the Land
Transportation and Traffic Code.203
Q. To hold the common carrier liable for death or

injury to a passenger, must the court make an express
finding of fault or negligence on the part of the common
carrier?
A. In an action based on a contract of carriage, the court

need not make an express finding of fault or negligence on the
part of the carrier in order to hold it responsible to pay the
damages sought for by the passenger. By the contract of
carriage, the carrier assumes the express obligation to transport
the passenger to his destination safely and to observe
extraordinary diligence with a due regard for all of the
circumstances, and any injury that might be suffered by the
passenger is right away attributable to the fault or negligence of
203
Baliwag Transit, Inc. vs. Court of Appeals, 256 SCRA 747.
85
the carrier.204 This is an exception to the general rule that

negligence must be proved, and it is therefore incumbent upon
the carrier to prove that it has exercised extraordinary diligence
as prescribed by law.205
Q. Is a common carrier liable for the personal

conduct of its employees which did not result in death or
injuries?
A. A common carrier is responsible for the conduct of

its employees. Passengers have a right to be treated by the
carrier’s employees with kindness, respect, courtesy and due
consideration. They are entitled to be protected against
personal misconduct, injurious language, indignities and abuses
from such employees. So any rude or discourteous conduct on
the part of the employees gives the latter an action against the
carrier.206
Thus, in the aforesaid case, plaintiff Carrascoso bought

a first class round-trip ticket from Manila to Rome. Upon
arrival in Bangkok, the manager of defendant Air France
forced the plaintiff to vacate the first class seat after he was
already seated, because there was a ―white man‖ who the
manager alleged, had a better right to the seat. The manager
went to the extent of threatening the plaintiff in the presence of
many passengers to have him thrown out of the airplane. The
airline was held liable for moral and exemplary damages as it
was guilty of bad faith.207
However, the carrier cannot be made liable for the

unauthorized act of its employee in confirming a reservation
made by a passenger with an expired ticket, especially if such
204
205
Batangas Transportation Co. vs. Caguimbal, 22 SCRA 171; Landingin
vs. Pangasinan Trans. Co., 33 SCRA 284; Asked, 1990 and 1997 Bar
Exams.
206
Air France vs. Carrascoso, 18 SCRA 155.
207
Air France vs. Carrascoso, 18 SCRA 155.
86
employee did not know the requirements to have such ticket

extended.208
Q. Plaintiffs were passengers of PANAM from

Honolulu to Manila, with a stop over at Wake Island.
Upon arrival at Wake Island, the passengers were advised
that they could disembark as the stop over was for 30
minutes. Plaintiff, Mr. Zulueta, having found the need to
relieve himself, went to the men’s comfort room at the
terminal building but finding it full of soldiers, he walked
own the beach some 100 yards away. Meanwhile the flight
was called and when the passengers had boarded the plane,
plaintiff Zulueta’s absence was noticed. The take-off was
accordingly, delayed and search for him was made.
Minutes later, Zulueta walked back toward the ramp of the
plane. Then the captain and other employees of PANAM,
with ugly stare subjected plaintiffs to abusive and insulting
language, with highly scornful reference to them as
monkeys. Plaintiff, Mr. Zulueta was arbitrarily not
allowed to board the plane, and was left at Wake Island.
Are the plaintiffs entitled to damages?
A. Plaintiffs are entitled to moral and exemplary

damages as well as attorney’s fees. Passengers do not contract
merely for transportation. They have the right to be treated by
the carrier’s employees with kindness, respect, courtesy and
due consideration. They are entitled to be protected against
personal misconduct, injurious language, indignities and abuses
from such employees. So it is, that any rude or discourteous
conduct on the part of the employees towards a passenger gives
the latter an action for damages.209
Q. Spouses Jose and Victoria Juliano were booked

on a 10:30 a.m. Alitalia flight from Rome to Hongkong.
Notwithstanding their early arrival at the airport, the
208
Cervantes vs. Court of Appeals, 304 SCRA 27.
209
Zulueta vs. Pan American World Airways, Inc., 43 SCRA 397.
87
Julianos had to contend with a long queue at the check-in

because there was no individual counter for Alitalia
passengers. Realizing that it was close to boarding time, the
Julianos armed with confirmed tickets, decided to
approach the check-in counter. At the counter, a lady
employee only brushed them aside and ordered them to fall
in line, which they did. Because the line was not moving,
the Julianos decided to call the attention of the airline
authorities to no avail. The Julianos noticed that despite the
fact the line was not moving, some of the passengers were
being escorted ahead of the line in order to be checked-in.
For failure to check-in on time, the spouses were “bumped
off” to accommodate embarking passengers at the other leg
of the trip. It turned out that Alitalia was overbooked and
could not accommodate all the passengers who showed up.
After they were denied embarkation, the couple did not use
their Alitalia tickets, and instead bought passage on Thai
Airways. Should Alitalia be made liable for damages?
A. Alitalia was liable for damages, including moral

damages. It is plain to see that the airline had deliberately
overbooked and in so doing, took the risk of having to deprive
some passengers of their seats in case all of them would show
up for check-in. That Alitalia had no intention to
accommodate all who had confirmed their flight reservations
could be seen in the absence of any measure to contact all
possible passengers of each flight who might be in the airport
premises. As a result, some passengers would really be left
behind in a long and disorderly queue at the check-in counter.
When an airline issues a ticket to a passenger confirmed on a
particular flight, on a certain date, a contract of carriage arises,
and the passenger has every right to expect that he would fly on
that flight and on that date. If he does not, then the carrier
opens itself to a suit for a breach of contract of carriage.
Passengers in a contract of carriage have a right to be treated
by the carrier’s employees with kindness, respect, courtesy and
consideration. Inattention to and lack of care for the interest of
its passengers who are entitled to its utmost consideration,
88
particularly as to their convenience amount to bad faith which

entitles the passengers to an award of moral damages. When a
passenger contracts for a specific flight, he has a purpose in
making that choice which must be respected. This choice once
exercised can not be impaired by a breach on the part of the
airline without incurring liability. The passenger cannot be
compelled to wait for another flight to risk a similar rebuff and
suffer the consequent further delay.210
Q. Lapuz, an overseas contract worker who was

supposed to leave for Saudi Arabia via Korean Airlines
(KAL) on November 8, 1980 was “wait-listed,” which
meant that he could only be accommodated if any of the
confirmed passengers failed to show up at the airport
before departure. When two passengers did not appear,
Lapuz was accommodated as a chance passenger by KAL.
Lapuz passed through customs and immigration and was
cleared for departure. His luggage was loaded on board the
plane. He rode the shuttle bus and proceeded to the ramp
of the KAL aircraft for boarding. However, when he was
about to board the plane, a KAL officer shouted at him
and barred him from entering the plane and taking the
flight. KAL claimed that only one seat became available
and so, Lapuz was not allowed to board. Lapuz later asked
for another booking but his ticket was cancelled by KAL.
When he was not able to arrive at Saudi Arabia on time, he
lost his employment. Was KAL liable for damages?
A. KAL was liable for damages. The status of Lapuz as

standby passenger was changed to that of a confirmed
passenger when his name was entered in the passenger
manifest. His clearance through immigration and customs
clearly shows that he had indeed been confirmed as passenger.
KAL thus committed a breach of contract of carriage. This was
aggravated when a KAL officer shouted at Lapuz while
pointing at him, thus causing him embarrassment and public
210
Alitalia Airways vs. Court of Appeals, 187 SCRA 763.
89
humiliation. The contract of air carriage generates a relation

attended with public duty and any discourteous conduct on the
part of the carrier’s employees toward a passenger gives the
latter an action for damages against the carrier.211
Q. Cervantes as issued a Manila-Los Angeles round-

trip ticket by Philippine Airlines (PAL) with March 27,
1990 as expiry date. The ticket was issued pursuant to a
compromise agreement between the parties in other cases.
Cervantes used the ticket four days before the expiry date
and upon arrival in Los Angeles, sought an extension from
the PAL office for his return flight to Manila. He did not
secure the authority from PAL’s legal office as agreed
upon. Not knowing the terms of the compromise
agreement, the PAL employees confirmed Cervantes’
return flight for April 2, 1990 but he was not allowed to
board due to the expiration of his ticket. He had to use a
back-up ticket which he previously bought. Was PAL
liable for damages?
A. PAL was not liable for damages. Cervantes was

fully aware that there was a need to secure the approval of the
legal counsel of PAL to have the ticket extended. For the
carrier to be liable for damages for breach of contract of
carriage the breach must be wanton and deliberately injurious
or the one responsible acted fraudulently or with malice or bad
faith. The PAL employees did not have authority to confirm an
expired ticket. Cervantes knew there was a strong possibility
that he could not use the ticket so that he bought a back-up
ticket to ensure his departure. Should there be a finding of bad
faith, it should be on Cervantes. No injury resulted on the part
of Cervantes because he had a back-up ticket should PAL
refuse to accommodate him with the use of the subject
ticket.212
211
Korean Airlines Ltd. vs. Court of Appeals, 234 SCRA 717.
212
Cervantes vs. Court of Appeals, 304 SCRA 27.
90
Q. May the responsibility of a common carrier for

the safety of passengers be dispensed with or lessened?
A. The responsibility of a common carrier for the safety

of passengers as required by law cannot be dispensed with or
lessened by stipulation, by the posting of notices, by statements
on tickets, or otherwise.213
Q. Is the carrier liable for negligence or willful acts

where a passenger is carried gratuitously?214
A. When a passenger is carried gratuitously, a

stipulation limiting the common carrier’s liability for
negligence is valid, but not for willful acts or gross negligence.
The reduction of fare does not justify any limitation of

the common carrier’s liability. 215
The foregoing provision means that the fact that a

passenger is carried gratuitously does not necessarily relieve
the carrier from responsibility to such passenger. The common
carrier is only allowed to stipulate with the passenger carried
gratuitously that the former is not responsible for simple
negligence. It also means that in the absence of a stipulation,
the carrier is still liable for negligence. But even with a
stipulation, the carrier cannot be exempted from liability for
willful acts or gross negligence to a non-paying passenger. And
a mere discount or reduction in fare does not justify any
limitation on the carrier’s liability.216
213
Article 1757, Civil Code; Asked, 1974, 1983 and 1984 Bar Exams.; No.
XX, 2001 Bar Exams.
214
215
Article 1758, Civil Code; Asked, 1974 and 1984 Bar Exams.; No. XX,
2001 Bar Exams.
216
91
Q. Are children who do not pay the fare considered

as passengers for whom the common carrier should be
responsible?
A. A child going on a train or car with its mother, or in

charge of another person who has a ticket or pays fare for
herself or himself, is a passenger, although no fare is paid for
such child.217 But this rule does not apply where the child is
unaccompanied by one having it in charge 218 and to newsboys
or children who are permitted to ride on a car gratuitously by
an employee who has no authority to do so.219
Q. A child and her parents were passengers of a bus.

Only the parents had paid tickets while the child was not a
paying passenger. The rear tire of the bus exploded
blasting a hole where the parents and the child were
located. As a result, the child fell through the hole and died.
The bus, at the time of the accident was overcrowded and
over-speeding and the floor thereof was weak. Was the
carrier liable?
A. The carrier was liable. The alleged absence of a

contract of carriage between the deceased child and the carrier
was no defense, her parents being paying passengers; the
carrier was duty bound to transport them, using the utmost
diligence of very cautious persons which it failed to do. That
the bus was overcrowded and over-speeding, and that the floor
was weak were persuasive indications of negligence of the
carrier and the accident cannot be attributed to an Act of
God.220
217
Ball v. Mobile Light Co., 39 So. 584, 146 Ala. 309, 119 Am.S.R. 32, 9
Ann.Cas. 962; Asked, 2009 Bar Exams.
218
Gulf R. Co. v. Dawkins, 12 S.W. 982, 77 Tex. 228; Asked, 2017 Bar
Exams.
219
Meloon v. Davis, C.C.A.N.H., 292 F. 82); Asked, 2017 Bar Exams.
220
M. Ruiz Highway Transit vs. Court of Appeals, 11 SCRA 98; Asked,
2009 Bar Exams.
92
Q. What are the effects on the liability of the carrier

of: (a) negligence or willful acts of the carrier’s employees;
(b) exercise of the diligence of a good father of the family in
the selection and supervision of its employees?
A. Common carriers are liable for the death of or

injuries to passengers through the negligence or willful acts of
the former’s employees, although such employees may have
acted beyond the scope of their authority or in violation of the
orders of the common carriers.
The 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.221
Q. Where is the defense of the exercise of the

diligence of a good father of a family in the selection and
supervision of their employees appropriate?
A. 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.222 It is
not available however, in culpa contractual and therefore, a
common carrier cannot raise such defense in action brought by
its passengers.223
Q. X was a passenger in a bus. The bus driver

negligently bumped a car owned by Y, thereby causing
damage to the car and injuries to X. X and Y filed separate
actions for damages against the owner of the bus. The
common carrier raised the defense that it exercised the
diligence of a good father of the family in the selection and
supervision of its drivers. Is such defense appropriate?
221
Article 1759, Civil Code; Asked, 1974, 1983, 1984 and 1986 Bar
Exams.
222
223
93
A. In the action filed by Y for the damage caused to the

car, the defense that the bus owner exercised the diligence of a
good father of the family in the selection and supervision of its
drivers is a proper defense because such defense is available in
quasi-delict or culpa aquiliana.224 The action filed by a non-
passenger against the common carrier based on the negligence
of the latter’s employees is based on quasi-delict where the
employer may raise the defense that in the selection of the
employee and in the supervision over him, the employer
exercised the care of a good father of a family.225
On the other hand, the action of X, a passenger injured

in the accident is based on his contract of carriage with the
owner of the bus or premised on culpa contractual where the
defense of diligence of a good father of the family in the
selection and supervision of its employees is not available.226
Q. The lower court rendered a judgment finding the

employer, Metro Cebu liable to the victims of a vehicular
accident. The appellate court held that allowing its driver,
Pestano, to ply his route with a defective speedometer
showed laxity on the part of Metro Cebu in the operation of
its business and in the supervision of its employees. Did the
employer exercise the care and diligence of a good father of
a family in the selection and supervision of its employees?
A. The fact that Pestano was able to use a bus with a

faulty speedometer shows that Metro Cebu was remiss in the
supervision of its employees and in the proper care of its
vehicles. It had thus failed to conduct its business with the
diligence required by law.227
224
225
Castro vs. Acro Taxicab Co., 82 Phil. 359.
226
Article 1759, Civil Code; Del Prado vs. Manila Electric Co., 52 Phil.
900.
227
Pestano vs. Sumayang, 346 SCRA 870, December 4, 2000.
94
Q. What is the difference between the provisions of

the old and the new Civil Code insofar as liability of the
common carrier for the acts committed by its employees is
concerned?
A. Unlike the old Civil Code, the new Civil Code

expressly makes the common carrier liable for intentional
assaults committed by its employees upon its passengers.228.
This rule was adopted from Anglo-American law, where the
majority view, as distinguished from the minority view based
on respondeat superior, is that the carrier is liable as long as
the assault occurs within the course of the performance of the
employee’s duty. It is no defense for the carrier that the act
was done in excess of authority or in disobedience of the
carrier’s orders. The carrier’s liability is absolute in the sense
that it practically secures the passengers from assaults
committed by its own employees.229
Q. Corachea was a passenger in a taxicab owned

and operated by Perez when he was stabbed and killed by
the driver, Valenzuela. Valenzuela claimed that the
deceased was killed in self-defense, since he first assaulted
the driver by stabbing him from behind. Valenzuela was
prosecuted and convicted of homicide. Valenzuela
appealed. While the appeal was pending, Maranan, the
mother of Corachea filed a civil action against Perez and
Valenzuela. The judgment of conviction was affirmed by
the Court of Appeals and became final. Perez claimed that
as common carrier, he was under no absolute liability for
assaults of its employees upon the passengers. Was the
carrier liable?
A. The killing of Corachea was perpetrated by the

driver of the very cab transporting the passenger, in whose
hands the carrier had entrusted the duty of executing the
contract of carriage. In other words, the killing of the
228
Article 1759.
229
Maranan vs. Perez, 20 SCRA 413.
95
passenger took place in the course of duty of the guilty

employee and when the employee was acting within the scope
of his duties. Hence, Perez was liable as Art. 1759 of the Civil
Code made the common carrier liable for the intentional
assaults committed by its employees upon its passengers.
However, Valenzuela, the driver was not liable since plaintiff’s
action was predicated on breach of contract of carriage, and the
cab driver was not a party thereto. His civil liability was
covered in the criminal case wherein he was convicted by final
judgment.230
Q. What are the reasons for Article 1759 of the Civil

Code in making the common carrier liable for injuries or
death caused by the negligence or willful acts of its
employees?
A. There are at least three cogent reasons for making

the common carrier liable for injuries or death caused by the
negligence or willful acts of its employees, which are:
(1) The special undertaking of the carrier requires that it

furnish its passenger that full measure of protection afforded by
the exercise of the high degree of care prescribed by law, inter
alia from violence and insults at the hands of strangers and
other passengers, but above all, from the acts of the carrier’s
own servants charged with the passenger’s safety;
(2) Said liability of the carrier for the servant’s

violation of duty to passengers, is the result of the former’s
confiding in the servant’s hands the performance of his
contract to safely transport the passenger, delegating therewith
the duty of protecting the passenger with the utmost care
prescribed by law; and
(3) As between the carrier and the passenger, the former

must bear the risk of wrongful acts of negligence of the
230
Maranan vs. Perez, supra.
96
carrier’s employees against passengers, since it, and not the

passengers, has power to select and remove them.231
Aside therefrom, the riding public is not expected to

inquire from time to time before they board the passenger bus
whether or not the driver who is at the steering wheel of said
bus was authorized to drive said vehicle or that said driver is
acting within the scope of his authority and observing the
existing rules and regulations required of him by the
management.232
Q. May the common carrier’s responsibility for the

negligence or willful acts of its employees be eliminated or
diminished by stipulation or otherwise?
A. The common carrier’s responsibility prescribed in

the preceding article cannot be eliminated or limited by
stipulation, by posting of notices, by statements on the tickets
or otherwise.233
Example: The ticket issued by the common carrier

stated that it is not be liable for the negligence or willful acts of
its employees. A passenger was injured due to the negligence
of the driver of the common carrier. In such case, the common
carrier is still liable notwithstanding the disclaimer of liability
stated in the ticket. Such stipulation is void for being against
public policy.234
Q. What degree of diligence must the passenger

observe to avoid injury to himself?
231
Maranan vs. Perez, 20 SCRA 413, 416-417.
232
Marchan vs. Mendoza, 24 SCRA 889.
233
Article 1760, Civil Code; Asked, 1984 Bar Exams.; No. XX, 2001 Bar
Exams.
234
Curtiss-Wright Flying Service v. Glose, C.C.A.N.J., 66 F.2d 710.
97
A. The passenger must observe the diligence of a good

father of a family to avoid injury to himself.235
Thus, where the proximate cause of the injury to the

passenger was his own negligence, the carrier cannot be held
liable.236
Q. What is the effect of contributory negligence of

the passenger?
A. The contributory negligence of the passenger does

not bar recovery of damages for his death or injuries, if the
proximate cause thereof is the negligence of the common
carrier, but the amount of damages shall be equitably
reduced.237
Q. Explain the extent of the effect of the passenger’s

contributory negligence?
A. Even when the common carrier failed to exercise

extraordinary diligence as required by law, a contributory
negligence of the passenger while not exempting the carrier
from liability, nevertheless justified the deletion of amount
adjudicated as moral damages. By the same token, the award
of exemplary damages must be set aside. Exemplary damages
may be allowed only in cases where the defendant acted in a
wanton, fraudulent, reckless, oppressive or malevolent
manner.238
Thus, in one case, the train of Philippine National

Railways (PNR) was overloaded which compelled the
passenger to sit on the open platform and did not cling
tenaciously to the upright metal bar found on the said platform.
235
236
Lara vs. Valencia, L-9907, June 30, 1958.
237
Article 1762, Civil Code; Asked, 1983 Bar Exams.; Estacion vs.
Bernardo, 483 SCRA 22, February 27, 2006.
238
Philippine National Railways vs. Court of Appeals, 139 SCRA 87.
98
As a result, the passenger fell off the train and died. Such
passenger was ruled to be guilty of contributory negligence.
Nonetheless, PNR was held liable for the payment of damages
for its failure to exercise extraordinary diligence, but no award
of moral and exemplary damages was allowed.239
In another case, the passenger was allowed by the

driver to hang on the rear portion of the Fiera in such a
dangerous position that created risk of harm to the passenger.
The passenger was injured in a collision. While the driver
failed to observe the degree of care, precaution and vigilance
that the circumstances demanded, the passenger was guilty of
contributory negligence. Thus, the award of damages was
reduced by 20% by the Supreme Court.240
Q. What is the responsibility of the common carrier

for willful acts or negligence of other passengers or of
strangers?
A. A common carrier is responsible for injuries suffered

by a passenger on account of the willful acts or negligence of
other passengers or of strangers, if the common carrier’s
employees through the exercise of the diligence of a good
father of a family could have prevented or stopped the act or
omission.241
Q. A bus of Fortune Express figured in an accident

with a jeepney in Kauswagan, Lanao del Norte, resulting in
the death of several passengers of the jeepney, including
two Maranaos. An investigation was conducted by the
Constabulary Regional Security Unit which found that the
owner of the jeepney was a Maranao and that certain
Maranaos were planning to take revenge on Fortune
Express by burning some of its buses. The operations
manager of Fortune Express was informed of the threat,
239
Philippine National Railways vs. Court of Appeals, supra.
240
Estacion vs. Bernardo, 483 SCRA 222, February 27, 2006.
241
99
and he assured Sgt. Bastasa of the Philippine Constabulary

Regional Headquarters that “we will have our action . . .
and I’ll be the one to settle it personally.” Later, three
armed Maranaos who pretended to be passengers seized a
bus of Fortune Express at Linamon, Lanao del Norte. The
leader of the Maranaos ordered the driver to stop the bus
and shot him on the arm. Another Maranao started
pouring gasoline inside the bus, as the other held the
passengers at bay with a handgun. The passengers, among
whom was Atty. Caorong, were ordered to get off the bus
and they complied. However, Atty. Caorong returned to
the bus to retrieve something. At that time, one of the
Maranaos was pouring gasoline on the head of the driver.
Atty. Caorong pleaded with the Maranaos to spare the
driver as he was innocent of any wrong doing and he was
only trying to make a living. During this exchange of
words, the driver climbed out of the left window of the bus
and crawled to the canal on the opposite side of the
highway. Atty. Caorong was shot and the bus was set on
fire. Some of the passengers were able to pull Atty.
Caorong out of the bus and brought him to the hospital.
Atty. Caorong died. Should Fortune Express be made liable
for damages for the death of Atty. Caorong?
A. Art. 1763 of the Civil Code provides that a common

carrier is responsible for injuries suffered by a passenger on
account of willful acts of other passengers, if the employees of
the common carrier could have prevented the act through the
exercise of the diligence of a good father of a family. In the
present case, it is clear that because of the negligence of
Fortune Express’ employees, the seizure of the bus by the
Maranaos was made possible. Despite the warning by the
Philippine Constabulary that the Maranaos were planning to
take revenge on Fortune Express by burning some of its buses
and the assurance of its operations manager that the necessary
precautions would be taken, Fortune Express did nothing to
protect the safety of its passengers. Had the carrier and its
employees been vigilant they would not have failed to see that
100
the malefactors had a large quantity of gasoline with them.

Under the circumstances, simple precautionary measures to
protect the safety of passengers, such as frisking passengers
and inspecting their baggage, preferably with non-intrusive
gadgets such as metal detectors, before allowing them on board
could have been employed without violating the passenger’s
constitutional rights. From the foregoing, it is evident that the
carrier’s employees failed to prevent the attack on one of its
buses because they did not exercise the diligence of a good
father of a family. Hence, Fortune Express should be held
liable for the death of Atty. Caorong.242
Q. What is the degree of diligence required of a

common carrier?
A. The degree of diligence required of a common

carrier is as follows:
(1) In transporting goods, the common carrier must

exercise extraordinary diligence;243
(2) In transporting passengers, the common carrier must

exercise the utmost diligence of very cautious persons, with a
due regard for all the circumstances;244
(3) In preventing or stopping injuries to a passenger on

account of the willful act or negligence of other passengers or
of strangers, the common carrier’s employees must exercise the
diligence of a good father of a family.245
Q. The driver of a passenger bus allowed a person

who was not an employee of the bus company to drive the
bus. The bus collided with a freight truck causing damage
242
Fortune Express vs. Court of Appeals, G. R. No. 119756, March 18,
1999.
243
Article 1733 and Art. 1735, Civil Code.
244
245
101
to the bus and injuries to its passengers. Is the common

carrier liable?
A. The common carrier is liable for damages and

injuries arising from the negligence of its driver in allowing
another person to drive the bus.246
Q. While a Bachelor Express bus was on its way to

Cagayan de Oro City, a passenger at the rear portion of the
bus suddenly stabbed a PC soldier which caused
commotion and panic among the passengers such that the
passengers started running to the sole exit of the bus. The
passengers shoved each other, as a result of which, two
passengers fell off the bus and died. The bus driver did not
immediately stop the bus at the height of the commotion so
that the victims fell while the bus was still running. The
bus company denied liability on the ground that it was not
an insurer of its passengers and that the death of the
passengers was caused by force majeure over which the
common carrier did not have any control. Was the carrier
liable?
A. The carrier was liable. While the sudden act of the

passenger who stabbed another passenger in the bus was within
the context of force majeure, it is not enough that the accident
was caused by force majeure for a carrier to be absolved from
liability. The common carrier must still prove that it was not
negligent in causing the injuries resulting from such accident.
Bachelor Express failed to overcome the presumption of fault
and negligence found in the law governing common carriers.
The argument that the carrier is not the insurer of the
passengers is not correct in view of the failure of the bus
company to prove that the deaths of the two passengers were
exclusively due to force majeure.247
246
Manila Railroad Company vs. Ballesteros, 16 SCRA 642.
247
Bachelor Express vs. Court of Appeals, 188 SCRA 216.
102
Subsection 4
COMMON PROVISIONS
Q. In an action based on culpa contractual, must the

driver of the carrier be included as party defendant? 248
A. For breach of contractual obligation to carry the

passengers safely to their place of destination, the common
carrier is primarily liable for damages, and the case may be
brought against the carrier alone, without the necessity of
including the driver.249
Q. Is the carrier’s contractual liability the same as

its driver’s civil liability arising from criminal negligence?
A. A civil action based on the contractual liability of a

common carrier is distinct from the criminal action instituted
against the carrier or its employee based on the latter’s criminal
negligence. The first is governed by the provisions of the Civil
Code, and not by those of the Revised Penal Code, and it being
entirely separate and distinct from the criminal action, the same
may be instituted and prosecuted independently of, and
regardless of the result of the latter.250
Q. Is the driver of the carrier jointly and severally

liable with the carrier in case of breach of contract of
carriage?
A. The driver is not jointly and severally liable with the

carrier in case of breach of contract of carriage. The rationale
behind this is that the contract of carriage is between the carrier
and the passenger, and in the event of contractual liability, the
248
249
Cachero vs. Manila Yellow Taxicab Co., Inc., L-8721, May 23, 1957.
250
Benaldes vs. Bohol Transportation Inc., 7 SCRA 277.
103
carrier is exclusively responsible therefore to the passenger,

even if such breach is due to the negligence of the driver.
Further, if the driver is jointly and severally liable with the
carrier that would make the carrier’s liability personal instead
of merely vicarious and consequently, entitled to recover only
the share which correspondents to the driver.251
Q. In case the registered owner/operator of a public

vehicle is leased or sold without the approval of the Land
Transportation Franchising Board (LTFRB), may such
registered owner/operator be made liable for damages
caused by said vehicle?252
A. The registered owner/operator is directly and

primarily responsible and liable for damages sustained by
passengers or third persons as a consequence of the negligent
or careless operation of the vehicle registered in his name. If
said vehicle had been leased, sold or transferred with the
requisite approval of the Public Service Commission253 to
another person who was at the time of the accident or mishap
actually operating the vehicle, the latter acted merely as agent
of the registered owner/operator.254 Thus, regardless of who the
actual owner of a vehicle is, the operator of record continues to
be the operator of the vehicle as regards the public and third
persons, and as such is directly and primarily responsible for
the consequences incident to its operation, so that, in the
contemplation of law, such owner/operator of record is the
employer of the driver, the actual operator being considered as
his agent.255
251
Philippine Rabbit Bus Lines vs. Intermediate Appellate Court, 189
SCRA 158; But see contra, Zamboanga Transportation Co., Inc. vs. Court
of Appeals, 30 SCRA 718 and De Leon Brokerage Co., Inc. vs. Court of
Appeals, 4 SCRA 518.
252
253
Now Land Transportation Franchising Board.
254
Rayos vs. Tamayo, L-12720, Mary 29, 1959; Vargas vs. Langcay, 6
SCRA 174.
255
Vargas vs. Langcay, supra.
104
However, the actual operator of the public vehicle is

jointly and severally liable with the registered owner for the
damages caused by said vehicle.256
Q. What are the damages that may be awarded

against a common carrier?
A. Damages that may be awarded against a common

carrier shall be in accordance with the provisions of the Civil
Code on Damages.257
Q. What damages may be recovered in case of death

of a passenger?258
A. When death occurs, the following items of damages

may be recovered: (1) an indemnity for the death of the victim;
(2) an indemnity for loss of earning capacity of the deceased;
(3) moral damages; (4) attorney’s fees and expenses of
litigation, and (5) interest in proper cases.259
Q. In fixing a greater amount of damages for death

of a passenger than that provided by law, what may the
courts consider?
A. Article 2206 of the Civil Code applies in case of

death caused by breach of contract by the common carrier.260 It
fixes the minimum indemnity for death at P3,000 which the
courts may increase 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 such
other factors as (1) the life expectancy of the deceased or of the
beneficiary, whichever is shorter, (2) pecuniary loss to the
plaintiff or beneficiary, (3) loss of support, (4) loss of service,
256
Zamboanga Trans. Co., Inc. vs. Court of Appeals, 30 SCRA 718.
257
258
259
Brinas vs. People, 125 SCRA 687.
260
105
(5) loss of society, (6) mental suffering of beneficiaries, and (7)

medical and funeral expenses.261 The amount of minimum
damage for death has been increased gradually through
jurisprudence by the Supreme Court to P12,000262 and then
later, to P30,000 and finally to P50,000 based on the current
value of the peso.263
In awarding compensatory damages, the age of the

plaintiff, his expected life span, and his earning capacity within
that life span must be taken into consideration. Thus, the fact
that the plaintiff was only in his twenties, when through the
negligence of the defendant, he lost the use of his limbs, being
condemned for the remainder of his life to be a paralytic, in
effect leading a maimed, well-nigh useless existence, were
taken into account in fixing compensatory damages.264
Q. How may the life expectancy of a person be

determined for purposes of fixing the amount of damages
that may be recovered?
A. In determining the number of years on the basis of

which the damages shall be computed and the rate at which the
losses sustained by said heirs should be fixed, the following
formula was adopted: ―2/3 x (80 – age of the decedent) = life
expectancy‖. This was adopted in the American Expectancy
Table of Mortality or the actuarial of Combined Experience
Table of Mortality. Thus, the life expectancy of the passenger
who died when he was over 29 years of age (or around 30
years for purposes of computation) was placed at 33 1/3 years,
following the foregoing formula.265 And where the passenger
261
Pangasinan Transportation Co., Inc., vs. Legaspi, 12 SCRA 592, 595.
262
People vs. Pantoja, L-18793, Oct. 11, 1968.
263
People vs. Escote, 431 SCRA 345, 353, June 8, 2004; Metro-Manila
Transit Corp., Pedro Musa, et al., vs. Court of Appeals, 298 SCRA 497,
November 16, 1998; See also People vs. Amaro, G. R. 92502, 235 SCRA 8,
August 4, 1994.
264
Marchan vs. Mendoza, 24 SCRA 889.
265
Villa Rey Transit, Inc. vs. Court of Appeals, 31 SCRA 514; Davila vs.
Philippine Air Lines, 49 SCRA 496.
106
was 37 years old when he died, he had a life expectancy of 28

2/3 more years.266
In the computation of the damages to be awarded, it

should be life expectancy of the passenger who died and not
the life expectancy of the beneficiary which should be
considered.267
Q. When is a common carrier liable for attorney’s

fees?
A. In the absence of stipulations, attorney’s fees and

expenses of litigation, other than judicial costs, cannot be
recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant’s act or omission has

compelled the plaintiff to litigate with third persons or to incur
expenses to protect his interest;
(3) Where the defendant acted in gross and evident bad

faith in refusing to satisfy the plaintiff’s plainly valid, just and
demandable claim;
(4) In a separate civil action to recover civil liability

arising from crime;
(5) When at least double judicial costs are awarded;
(6) In any other case where the court deems it just and
equitable that attorney’s fees and expenses of litigation should
be recovered.
266
Fortune Express, Inc. vs. Court of Appeals, G. R. No. 119756, March
18, 1999.
267
Philippine Air Lines vs. Court of Appeals, 185 SCRA 110.
107
In all cases, the attorney’s fees and expenses of

litigation must be reasonable.268
Q. As a general rule, may moral damages be

recovered in breach of contract of transportation?
A. Moral damages are not recoverable in damage

actions predicated on a breach of contract of transportation in
view of the provisions of Articles 2219 and 2220 of the New
Civil Code. The said provisions limited the award of moral
damages to those enumerated therein and ―analogous cases.‖ A
breach of contract cannot be considered included in the
descriptive term ―analogous cases‖ used in Article 2219 of the
New Civil Code, not only because Article 2220 specifically
provided for the damages that are caused by contractual breach,
but because the definition of quasi-delict in Article 2176 of the
Code expressly excludes the cases where there is a ―pre-
existing contractual relation between the parties.‖269
Q. What are the exceptions to the foregoing rule

when moral damages may be recovered in breach of
contract of transportation?
A. Moral damages may be recovered in an action for

breach of contract of transportation in the following cases:
(1) Where the mishap results in the death of a

passenger;270
(2) Where it is proved that the carrier was guilty of

fraud or bad faith, even if death does not result.271
268
269
Verzosa vs. Baytan, et al., 107 Phil. 1010; Martinez vs. Gonzales, 6
SCRA 331.
270
M. Ruiz Highway Transit, Inc. vs. Court of Appeals, 11 SCRA 98;
271
Rex Taxicab Co., Inc. vs. Bautista, L-15392, Sept. 30, 1960; Martinez
vs. Gonzales, 6 SCRA 331; Singson vs. Court of Appeals, 282 SCRA 149.
108
Under Article 2219 of the Civil Code, moral damages,

as a general rule, are not recoverable in actions for damages
predicated on breach of contract. As an exception, such
damages are recoverable (in an action for breach of contract):
(1) in cases in which the mishap results in the death of a
passenger, as provided in Article 1764 in relation to Article
2206(3) of the Civil Code; and (2) in cases in which the carrier
is guilty of fraud or bad faith, as provided in Article 2220.272
Fraud has been defined to include an inducement

through insidious machination. Insidious machination refers to
a deceitful scheme or plot with an evil or devious purpose.
Deceit exists where the party, with intent to deceive, conceals
or omits to state material facts and, by reason of such omission
or concealment, the other party was induced to give consent
that not otherwise have been given. 273
Bad faith on the other hand, does not simply connote

bad judgment or negligence; it imports a dishonest purpose or
some moral obliquity and conscious doing of wrong, a breach
of a known duty through some motive or interest or ill will that
partakes of the nature of fraud.274
Bad faith means a breach of a known duty through

some motive of interest or ill-will. Self enrichment or fraternal
interest, and not personal ill-will, may have been the motive,
but it is malice nevertheless which may be the ground for
awarding moral damages for breach of contract of carriage.275
The bad faith referred to may be bad faith in the securing and
in the execution of the contract and in the enforcement of its
272
Spouses Dionisio Estrada and Jovita R. Estrada vs. Philippine Rabbit
Bus Lines, Inc. and Eduardo R. Saylan, G. R. No. 203902, July 19, 2017, J.
del Castillo, ponente.
273
Ibid.
274
Ibid.
275
Lopez, et al., Pan American World Airways, 16 SCRA 431.
109
terms or any other kind of deceit which may have been used by
the carrier.276
Q. May moral damages be granted in case of breach

of contract of transportation which merely causes physical
injuries to passengers?
A. In case of breach of contract of carriage resulting

only to physical injuries of passengers, moral damages are not
recoverable,277 unless the carrier acted fraudulently or with
malice or in bad faith.278
Q. Petitioner Dionisio Estrada was a passenger of

the Philippine Rabbit Bus which was going the north
direction when it collided with the Isuzu truck which was
travelling towards the south direction. Petitioner was
injured and his right arm was amputated. The Court of
Appeals found Philippine Rabbit Bus Lines liable for
breach of contract of carriage. However, Philippine Rabbit
Bus Lines is not liable for moral damages in the absence of
evidence of fraud or bad faith on its part. Questions: (1) Is
the carrier liable for moral damages in this case when
petitioner merely suffered an injury? (2) Is the carrier
liable for moral damages in absence of clear and convincing
proof of bad faith on its part?
A. (1) Under Article 2219 of the Civil Code, moral

damages, as a general rule, are not recoverable in actions for
damages predicated on breach of contract. As an exception,
such damages are recoverable (in an action for breach of
contract: (1) in cases in which the mishap results in the death of
a passenger, as provided in Article 1764 in relation to Article
2206(3) of the Civil Code; and (2) in cases in which the carrier
276
Tamayo vs. Aquino, L-12634 & 12720, May 29, 1959; For more
discussion on moral damages in air transportation, see Part II, Air
Transportation.
277
Laguna Tayabas Bus Co. vs. Cornista, 11 SCRA 182.
278
Roque vs. Buan, 21 SCRA 651; Bulante vs. Chu Liante, 23 SCRA 604.
110
is guilty of fraud or bad faith, as provided in Article 2220. It is

obvious that this case does not come under the first of the
abovementioned exceptions since Dionisio did not die in the
mishap but merely suffered an injury.
(2) Petitioners contend that it falls under the second

category since they aver that Philippine Rabbit is guilty of
fraud or bad faith. In this case, the fraud or bad faith that must
be convincingly proved by petitioners should be one which was
committed by Philippine Rabbit in breaching its contract of
carriage with Dionisio. Fraud has been defined to include an
inducement through insidious machination. Insidious
machination refers to a deceitful scheme or plot with an evil or
devious purpose. Deceit exists where the party, with intent to
deceive, conceals or omits to state material facts and, by reason
of such omission or concealment, the other party was induced
to give consent that not otherwise have been given. Bad faith
on the other hand, does not simply connote bad judgment or
negligence; it imports a dishonest purpose or some moral
obliquity and conscious doing of wrong, a breach of a known
duty through some motive or interest or ill will that partakes of
the nature of fraud. There is no showing that Philippine Rabbit
induced Dionisio to enter into a contract of carriage with the
former through insidious machination. Neither is there any
indication or even an allegation of deceit or concealment or
omission of material facts by reason of which Dionisio boarded
the bus owned by Philippine Rabbit. Likewise, it was not
shown that Philippine Rabbit’s breach of its known duty, which
was to transport Dionisio from Urdaneta to La Union, was
attended by some motive, interest, or ill will. From these, no
fraud or bad faith could be attributed to Philippine Rabbit. The
Court finds no persuasive proof of fraud or bad faith; hence
moral damages are not recoverable in this case.279
279
Spouses Dionisio Estrada and Jovita R. Estrada vs. Philippine Rabbit
Bus Lines, Inc. and Eduardo R. Saylan, G. R. No. 203902, July 19, 2017, J.
del Castillo, ponente.
111
Q. Petitioners Judith and Joyce Darines were

passengers of Amianan Bus Line enroute from Carmen,
Rosales, Pangasinan to Baguio City, driven by respondent
Quitan. While travelling on Camp 3, Tuba, Benguet along
Kennon Road, the bus crashed into a truck which was
parked on the shoulder of Kennon Road. As a result, both
vehicles were damaged, two passengers of the bus died
while Joyce suffered cerebral concussion and Judith had an
eye wound which required an operation. Petitioners
argued that respondents Quitan, the driver and Quiñones,
the operator breached their contract of carriage as they
failed to bring them safely to their destination. They also
contended that Quitan’s reckless and negligent driving
caused the collision. Consequently they prayed for actual,
moral, exemplary and temperate damages, and costs of
suit. Respondents claimed that Quitain was driving in a
careful, prudent manner at the normal speed of 40
kilometers per hour. They claimed that the proximate
cause of the accident was the negligence of the truck driver
who parked the truck at the roadside right after the curve
without any early warning device. To prove moral
damages, petitioner Judith claimed she suffered sleepless
nights since she worried about the result and possible effect
of her operation. Are the petitioners entitled to moral and
exemplary damages?
A. The Court fully agrees with the CA ruling that in an

action for breach of contract, moral damages may be recovered
only when: a) death of a passenger results; or b) the carrier was
guilty of fraud and bad faith even if death does not result; and
that neither of these circumstances were present in the case at
bar. Since no moral damages were awarded then there is no
basis to grant exemplary damages and attorney’s fees to
petitioners. The principle that in an action for breach of
contract of carriage, moral damages may be awarded only in
case: (1) an accident results in the death of a passenger; or (2)
the carrier is guilty of fraud or bad faith, is pursuant to Article
1764, in relation to Article 2206(3) of the Civil Code, and
112
Article 2220 thereof. Clearly, unless it is fully established that

negligence in an action for breach of contract is so gross as to
amount to malice, then the claim of moral damages is without
merit. 280
Q. A passenger of the bus was injured because she

fell off the bus as it was running at a high speed on a curve,
and the right side of the bus was not covered or protected
by any bar to safeguard the passengers sitting at the
extreme end of the seats on the right side from falling
therefrom. Is the passenger entitled to moral damages?
A. Under the provisions of Art. 2220 of the New Civil

Code, in cases of breach of contract including one of
transportation or carriage, either fraud or bad faith, that is,
wanton and deliberately injurious conduct on the part of the
carrier, is necessary to justify an award of moral damages. The
carrier’s negligence consisting in its failure to cover the right
side of the bus in question with a bar or some other contrivance
to safeguard or protect passengers falls within this category of
misconduct. Hence, the carrier is liable for moral damages.281
Q. M/V Princess of the Orient, a passenger vessel

owned and operated by the petitioner, sank near Fortune
Island in Batangas. Of the 388 recorded passengers, 150
were lost. Napoleon Sesante was one of tbe passengers who
survived the sinking. He sued the petitioner for breach of
contract and damages. Sesante alleged that M/V Princess of
the Orient left the Port of Manila while there was stormy
weather. The vessel listed starboard so he went to the
uppermost deck where he witnessed the strong winds and
big waves pounding the vessel. Sesante claimed that the
carrier committed bad faith in allowing the vessel to sail
despite the storm signal. Petitioner, on the other hand
claimed that the vessel was seaworthy as it was cleared by
280
Judith D. Darines and Joyce D. Darines vs. Eduardo Quiñones and
Rolando Quitan, G. R. No. 206468, Aug. 2, 2017, J. Del Castillo, ponente.
281
Laguna Tayabas Bus Co., vs. Cornista, 11 SCRA 181, 183.
113
the authorities to sail from the Port of Manila; that the

sinking had been due to force majeure; that it had not been
negligent. However, the findings of the BMI contradicted
the claim of the petitioner, as follows: The Captain’s
erroneous maneuvers of the M/V Princess of the Orient
minutes before she sunk had caused the accident. The
proximate cause of the sinking of the vessel had been the
gross negligence of its captain in maneuvering the vessel.
During the pendency of the case, Sesante died and was
substituted in the case by his heirs. Issues: (1) Was the
action of Sesante purely personal that cannot be
transferred to his heirs upon his death? (2) Is the carrier
liable for death or injury of its passenger in the absence of
proof of bad faith or negligence? (3) When will the carrier
be absolved from liability by reason of force majeure
alone? (4) Was the carrier liable for moral damages?
A: (1) The heirs of the deceased may be allowed to be

substituted for the deceased, without requiring the appointment
of an executor or administrator and the court may appoint a
guardian ad litem for the minor hers. Substitution by the heirs
is not a matter of jurisdiction but a requirement of due process.
It protects the right of due process belonging to any party that
in the event of death the deceased litigant continues to be
protected and properly represented in the suit through the duly
appointed legal representative of this estate.
(2) In case of death or injuries to passengers, common

carriers are presumed to have been at fault or to have acted
negligently unless they prove that they observed extraordinary
diligence as prescribed in Articles 1733 and 1755. The trial
court is not required to make an express finding of the common
carrier’s fault or negligence. Even the mere proof of injury
relieves the passengers from establishing the fault or
negligence of the carrier or its employees. The presumption of
negligence applies so long as there is evidence showing that:
(a) a contract exists between the passenger and the common
carrier; and (b) the injury or death took place during the
114
existence of such contract. In such event the burden shifts to

the common carrier to prove its observance of extraordinary
diligence, and that an unforeseen event or force majeure had
caused the injury. Sesante sustained injuries thus, negligence of
the carrier is presumed.
(3) For a common carrier to be absolved from liability

in case of force majeure, it is not enough that the accident was
caused by a fortuitous event. The common carrier must still
prove that it did not contribute to the occurrence of the incident
due to its own or its employees’ negligence. In order to be
considered a fortuitous event, (1) the cause of the unforeseen
and unexpected occurrence, or the failure of the debtor to
comply with his obligation, must be independent of human
will; (2) it must be impossible to foresee the event which
constitute the caso fortuito, or if it can be foreseen it must be
possible to avoid; (3) the occurrence must be such as to render
it impossible for the debtor to fulfill the obligation in any
manner, and (4) the obligor must be free from an participation
in the aggravation of the injury resulting to the creditor.
The principle embodied in the act of God doctrine

strictly requires that the act must be occasioned solely by the
violence of nature. Human intervention is to be excluded from
creating or entering into the case of the mischief. When the
effect is found to be in part the result of the participation of
man, whether due to his active intervention or neglect or failure
to act, the whole occurrence is then humanized and removed
from the rules applicable to the acts of God.
(4) Moral damages may be recovered in an action upon

breach of contract of carriage only when: (a) death of a
passenger results, or (b) it is proved that the carrier was guilty
of fraud and bad faith, even if death does not result. However,
moral damages may be awarded if the contractual breach is
found to be wanton and deliberately injurious, or if the one
responsible acted fraudulently or with malice or bad faith.
Moral damages may be recovered in this case. The totality of
115
the negligence by the officers and crew of M/V Princess or the

Orient, coupled with the seeming indifference of the petitioner
to render assistance to Sesante warranted the award of moral
damages.282
Q. Is the doctrine of “last clear chance” applicable

to passengers of a common carrier?283
A. The principle about the ―last clear chance‖ would

call for application in a suit between the owners and drivers of
two colliding vehicles. It does not apply where a passenger
demands responsibility from the carrier to enforce its
contractual obligation. It would be inequitable to exempt the
negligent driver of the common carrier on the ground that the
other driver was likewise guilty of negligence.284
Q. Plaintiffs contracted a jeepney in Dau,

Pampanga to take them to Pangasinan. Upon reaching
Tarlac, the right wheel of the jeepney was detached,
causing it to run in an unbalanced position. As the driver
stepped on the brake, the jeepney made a U turn invading
the opposite lane, facing the south where it came from.
Almost at the same time when the jeepney made the turn, a
Philippine Rabbit bus coming from the north bumped from
behind the rear portion of the jeepney resulting in the
death and injuries of its passengers. The court ruled that
based on the doctrine of last clear chance, the passengers of
the jeepney should proceed against Philippine Rabbit, and
not against the jeepney owner. Is it correct to apply the
doctrine of last clear chance in culpa contractual?
A. It is not correct to apply the doctrine of last clear

chance in an action based on culpa contractual. The principle
about the ―last clear chance‖ would call for application in a suit
282
283
284
Anuran vs. Buno, 17 SCRA 224.
116
between owners and drivers of the two colliding vehicles. It

does not arise where a passenger demands responsibility from
the carrier to enforce it contractual obligations. For it would be
inequitable to exempt the negligent driver of the jeepney and
its owners on the ground that the other driver was likewise
guilty of negligence. In culpa contractual, the moment the
passenger dies or is injured, the carrier is presumed to have
been at fault or to have acted negligently. This disputable
presumption may be overcome only by evidence that he had
observed extraordinary diligence or that the death or injury of
the passenger was due to fortuitous event.285
Q. What may be done to the certificate of public

convenience granted to a common carrier that repeatedly
fails to comply with its duty to observe extraordinary
diligence?
A. The Public Service Commission286 may, on its own

motion or on petition of any interested party, after due hearing,
cancel the certificate of public convenience granted to any
common carrier that repeatedly fails to comply with its duty to
observe extraordinary diligence as prescribed in this Section.287
Q. What laws should apply for matters not

regulated by the Civil Code?
A. In all matters not regulated by this Code, the rights

and obligations of common carriers shall be governed by the
Code of Commerce and by special laws.288
285
Philippine Rabbit Bus Lines, Inc. vs. Intermediate Appellate Court, 189
SCRA 158; Asked, 2016 Bar Exams.
286
Now the Land Transportation Franchising Board, Maritime Industry
Authority or Civil Aeronautics Board, as the case may be.
287
288

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1

A. Transportation simply defined, is the movement of

Q. What laws govern contracts of transportation by

A. The applicable laws to contracts of transportation by

(1) The New Civil Code, particularly the section on

(2) On matters not regulated by the New Civil Code,

(3) Special laws6 such as the Carriage of Goods by Sea

Q. What is the nature of a contract of transportation

A. A contract of transportation generates a relation

Q. What is a carrier in transportation?

A. A carrier is one who undertakes the transfer of

NEW CIVIL CODE

Q. How may a contract of carriage be defined?

A. By definition, a contract of carriage or transportation

classified as private or special carriers and common or public

Q. Who are common carriers?

A. Common carriers are persons, corporations, firms or

Hence, when the carrier’s service is offered to the

Q. To be a common carrier, must the carrier’s

A. Article 1732 of the Civil Code makes no distinction

Q. Cendana was a junk dealer engaged in buying

gathering sufficient quantities of such scrap material, he

A. It is proper to characterize Cendana as a common

Q. What are the requisites to be a common carrier

A. The requisites to be a common carrier of goods are:

1. He must be engaged in the business of carrying

2. He must undertake to carry goods of the kind to

3. He must undertake to carry by the method by which

4. The transportation must be for hire.14

Q. May a customs broker be considered a common

A. A customs brokerage whose principal business is the

Q. Sony engaged the services of Torres-Madrid

TMBI a common carrier bound to observe extraordinary

A. Despite TMBI’s denials, we find that the delivery of

Q. TCTSI, owned by Calvo, entered into a contract

fault or to have acted negligently, unless they prove that

A. The petitioner is a common carrier. There is greater

Q. Wyeth-Pharma shipped on board an aircraft of

secure the release of the cargoes from PSI, to assess its

A. Article 1732 of the Civil Code does not distinguish

Q. To be a common carrier, must the carriage of

A. It is not necessary that the carriage of goods or

Q. FPIC, a grantee of a pipeline concession applied

A. FPIC is a common carrier. A ―common carrier‖ may

The fact a FPIC has a limited clientele does not exclude

Q. To be a considered and liable as a common

A. A common carrier is required to obtain a certificate

Q. Who is a private carrier?

A. A private carrier is one who, without making it a

Q. Distinguish a common carrier from a private

A. A common carrier holds himself out as engaged in

carrier carries only for persons with whom he has an initial

Q. What is the test to determine whether the carrier

A. The test in determining whether a carrier is a

In other words, the test to determine a common carrier

In the case of common carriers, the general public is

Q. Give examples of common and private carriers.

A. An ordinary transportation enterprise accepting all

However, a car or vessel under a special contract for

Q. GPS Trucking Corporation undertook to deliver

the exclusive hauler of Concepcion Industries, Inc., since

A. (a) No, GPS cannot be considered as a common

(b) Yes, notwithstanding the fact that GPS cannot be