1. SPS. FERNANDO VS. NORTHWEST AIRLINES, INC.

Issue: Whether there is a breach of contract of carriage in the case at bar 

Facts: Sometime on December 20, 2001, Jesus Fernando arrived at the Held: Yes. The Fernandos' cause of action against Northwest stemmed
LA Airport via Northwest Airlines Flight No. NW02 to join his family who from a breach of contract of carriage. A contract is a meeting of minds
flew earlier to the said place for a reunion for the Christmas holidays. He between two persons whereby one agrees to give something or render
was asked by the Immigration Officer to have his return ticket verified some service to another for a consideration. There is no contract unless
and validated since the date reflected thereon. Instead the personnel of the following requisites concur: (1) consent of the contracting parties;
the respondent merely glanced at his ticket without checking its status (2) an object certain which is the subject of the contract; and (3) the
with the computer and peremptorily said that the ticket has been used cause of the obligation which is established.[30]
and could not be considered as valid. He presented his Elite Platinum
World Perks Card but the personnel refused to check the validity of the A contract of carriage is defined as one whereby a certain person or
ticket in the computer, instead, looked at Jesus Fernando with contempt, association of persons obligate themselves to transport persons, things,
then informed the Immigration Officer that the ticket is not valid.  or goods from one place to another for a fixed price. Under Article 1732
of the Civil Code, this "persons, corporations, firms, or associations
The Immigration Officer brought Jesus Fernando to the interrogation engaged in the business of carrying or transporting passengers or goods
room of the Immigration and Naturalization Services (INS) where he or both, by land, water, or air, for compensation, offering their services
was asked humiliating questions for more than two (2) hours. When he to the public" is called a common carrier.Undoubtedly, a contract of
was finally cleared by the Immigration Officer, he was granted only a carriage existed between Northwest and the Fernandos. They
twelve (12)-day stay in the United States (US), instead of the usual six voluntarily and freely gave their consent to an agreement whose object
(6) months. He further incurred other expenses due to the said incident.  was the transportation of the Fernandos from LA to Manila, and whose
cause or consideration was the fare paid by the Fernandos to Northwest.
The second incident happened on January 29, 2002, the Fernandos were
on their way back to the Philippines. When the Fernandos reached the In Alitalia Airways v. CA, et al.,We held that when an airline issues a
gate area where boarding passes need to be presented, Northwest ticket to a passenger confirmed for a particular flight on a certain date, a
supervisor Linda Tang stopped them and demanded for the presentation contract of carriage arises. The passenger then has every right to expect
of their paper tickets. They failed to present the same since Northwest that he would fly on that flight and on that date. If he does not, then the
issued electronic tickets (attached to the boarding passes) which they carrier opens itself to a suit for breach of contract of carnage
showed to the supervisor. The personnel rudely pulled them out of the
queue. Elizabeth Fernando explained to Linda Tang that the matter could When Northwest confirmed the reservations of the Fernandos, it bound
be sorted out by simply verifying their electronic tickets in her computer itself to transport the Fernandos on their flight on 29 January 2002. We
and all she had to do was click and punch in their Elite Platinum World note that the witness of Northwest admitted on cross-examination that
Perks Card number. But Linda Tang arrogantly told them that if they based on the documents submitted by the Fernandos, they were
wanted to board the plane, they should produce their credit cards and confirmed passengers on the January 29, 2002 flight.
pay for their new tickets, otherwise Northwest would order their
luggage off-loaded from the plane. The Fernandos printed coupon tickets In an action based on a breach of contract of carriage, the aggrieved
and rushe back to the boarding gates since the plane was about to party does not have to prove that the common carrier was at fault or was
depart. But when the Fernandos reached the boarding gate, the plane negligent. All that he has to prove is the existence of the contract and the
had already departed. Hence this petition.  fact of its non-performance by the carrier. As the aggrieved party, the
Fernandos only had to prove the existence of the contract and the fact of

1
its non-performance by Northwest, as carrier, in order to be awarded Thus, on
compensatory and actual damages. February 11, 1994, Reputable signed a Special Risk Insurance Policy (SR
Policy) with petitioner Malayan for the amount of P1,000,000.00. On
Therefore, having proven the existence of a contract of carriage between October 6, 1994, during the effectivity of the Marine Policy and SR
Northwest and the Fernandos, and the fact of non-performance by Policy, Reputable received from Wyeth 1,000 boxes of Promil infant
Northwest of its obligation as a common carrier, it is clear that formula worth P2,357,582.70 to be delivered by Reputable to Mercury
Northwest breached its contract of carriage with the Fernandos. Thus, Drug Corporation in Libis, Quezon City. Unfortunately, on the same date,
Northwest opened itself to claims for compensatory, actual, moral and the truck carrying Wyeth’s products was hijacked by about 10 armed
exemplary damages, attorney's fees and costs of suit. men. They threatened to kill the truck driver and two of his helpers
should they refuse to turn over the truck and its contents to the said
2. MALAYAN INSURANCE CO. V. PHILIPPINES FIRST INSURANCE CO., highway robbers. The
hijacked truck was recovered two weeks later without its cargo. Malayan
Facts: questions its liability based on sections 5 and 12 of the SR Policy. The
Since 1989, Wyeth Philippines, Inc. (Wyeth) and respondent Reputable RTC rendered its Decision finding Reputable liable to Philippines First
Forwarder Services, Inc.(Reputable) had been annually executing a for the amount of indemnity it paid to Wyeth. Malayan was found by the
contract of carriage, whereby the latter undertook totransport and RTC to be liable to Reputable to the extent of the policy coverage the CA
deliver the former’s products to its customers, dealers or salesmen. On rendered the assailed decision sustaining the ruling of the RTC,
November, 1993, Wyeth procured Marine Policy No. MAR 13797
(Marine Policy) from respondent Philippines First Insurance Co., Inc. Issues:
(Philippines First) to secure its interest over its own products. 1. Whether Reputable is a private carrier;
Philippines First thereby insured Wyeth’s nutritional, 2. Whether Reputable is strictly bound by the stipulations in its contract
pharmaceutical and other products usual or incidental to the insured’s of carriage with Wyeth, such that it should be liable for any risk of loss or
business while the same were being transported or shipped in the damage, for any cause whatsoever, including that due to theft or robbery
Philippines. The policy covers all risks of direct physical loss or damage and other force majeure.
from any external cause, if by land, and provides a limit of P6,000,000.00
per any one land vehicle. On December 1, 1993, Wyeth executed its Ruling:
annual contract of carriage with Reputable. It turned out, however, that On the first issue Reputable is a private carrier. A common carrier
the contract was not signed by Wyeth’s representative/s. Nevertheless, becomes a private carrier when it undertakes to carry a special cargo or
it was admittedly signed by Reputable’s representatives, the terms chartered to a special person only. For all intent sand purposes,
thereof faithfully observed by the parties and, as previously stated, the therefore, Reputable operated as a private/special carrier with regard to
same contract of carriage had been annually executed by the parties its contract of carriage with Wyeth.
every year since 1989. Under the contract, Reputable undertook to
answer for “all risks with respect to the goods and shall be liable to the On the second issue Reputable is bound by the terms of the contract of
COMPANY (Wyeth), for the loss, destruction, or damage of the carriage. The extent of a private carrier's obligation is dictated by the
goods/products due to any and all causes whatsoever, including theft, stipulations of a contract it entered into, provided its stipulations,
robbery,flood, storm, earthquakes, lightning, and other force majeure clauses, terms and conditions are not contrary to law, morals, good
while the goods/products are in transit and until actual delivery to the customs, public order, or public policy.
customers, salesmen, and dealers of the COMPANY”. The contract also Thus, being a private carrier, the extent of Reputable's liability is
required Reputable to secure an insurance policy on Wyeth’s goods. fully governed by the stipulations of the contract of carriage, one of

2
which is that it shall be liable to Wyeth for the loss of the Private carrier is one who, without holding himself or itself out to the
goods/products due to any and all causes whatsoever, including theft, public as ready to act for all who may desire his or its services,
robbery and other force majeure while the goods/products are in transit undertakes, by special agreement in a particular instance only, to
and until actual delivery to Wyeth's customers, salesmen and dealers. transport goods or persons from one place to another either
gratutitously or for hire. The diligence required of a private carrier is
3. PERENA VS. ZARATE only ordinary

FACTS: Perenas were engaged in the business of transporting students Common Carrier is a person, corporation, firm or association engaged in
to Don Bosco. The Zarates engaged Perenas services to transport their the business of carrying or transporting passengers or goods or both, by
son, Aaron, to school. land, water, or air, for compensation, offering such services to the
public. Diligence required is to observe extraordinary diligence, and is
While on the way to school, the van’s air-conditioned unit was turned on presumed to be at fault or to have acted negligently in case of the loss of
and the stereo playing loudly. The driver took a detour because they effects of passengers, or death or injuries to passengers
were running late due to the traffic in SLEX. The detour was through a
narrow path underneath the Magallanes Interchange used as short cut The true test for a common carrier is not the quantity or extent of
into Makati.When the van was to traverse the PNR railroad crossing, the business actually transacted, or the number of conveyances, BUT
van was tailing a large passenger bus so the driver’s view of the WHETHER the undertaking is a part of the activity that he has held out
oncoming train was blocked. The train hit the van at the rear end and the to the general public as his business or occupation.
impact threw 9 students including Aaron out of the van. Aaron landed in
the path of the train which dragged his body and severed his head, The Perenas held themselves out as a ready transportation
instantaneously killing him. The Zarates filed for damages against Alfaro, indiscriminately to the students of a particular school living within or
Perenas, PNR, and the train driver. The cause of action against Perena near where they operated the service and for a fee. Perena, being a
was for contract of carriage while for PNR, quasi delict. Perena posited common carrier, was already presumed to be negligent at the time of the
the defense of diligence of a good father in the selection and supervision accident because death occurred to their passenger. The omissions of
of their driver care on the part of the driver constituted negligence.

ISSUE/S: Were Perenas and PNR jointly and severally liable for
damages? Is the petitioner a common carrier? 4. FIRST PHILIPPINE INDUSTRIAL CORP. VS. COURT OF APPEALS (101
SCRA 661, 1998)
RULING: YES. A school bus operator is a common carrier.
Facts: Petitioner is a grantee of a pipeline concession under R.A. No. 387,
Perena’s defense of diligence of a good father in the selection and as amended, a contract, install and operate oil pipelines. The original
supervision of their driver is unavailable for breach of contract of pipeline concession was granted in 1967 and renewed by the Energy
carriage. Perenas operated as a common carrier; and their standard of Regulatory Board in 1992.
care was extraordinary diligence, not only diligence of a good father.
Sometime in January 1995, petitioner applied for a mayor’s permit with
A carrier is a person or corporation who undertakes to transport or the Office of the Mayor of Batangas City. However, before the mayor’s
convey goods from one place to another, gratuitously or for hire. They permit could be issued, the respondent City Treasurer required
may be private or common petitioner to pay a local tax based on its gross receipts for the fiscal year

3
1993 pursuant to the Local Government Code. The respondent City property from place to place, for compensation, offering his services to
Treasure assessed a business tax on the petitioner amounting to the public generally.
P956,076.04 payable in four installments based on the gross receipts for
products pumped at GPS-1 for the fiscal year 1993 which amounted to Article 1732 of the Civil Code defines a “common carrier” as “any person,
P181,681,151.00. in order not to hamper its operations, petitioner paid corporation, firm or association engaged in the business of carrying or
the tax under protest in the amount of P239, transporting passengers or goods or both, by land, water, or air, for
019.01 for the first quarter of 1993. compensation, offering their services to the public.

On June 15, 1994, petitioner filed with the RTC of Batangas City a The test for determining whether a party is a common carrier of goods
complaint for tax refund with prayer for writ of preliminary injunction is:
against respondents City of Batangas and Adoracion Arellano in her He must be engaged in the carrying of goods for others as a public
capacity as City Treasurer. In its complaint, petitioner alleged, inter alia, employment, and must hold himself out as ready to engage in the
that: (1) the imposition and collection of the business tax on its gross transportation of goods or persons generally as a business and not as a
receipts violates Sec. 133 of the Local Government Code; (2) the casual occupation.
authority of cities to impose and collect a tax on the gross receipts of He must undertake to carry goods of the kind to which his business is
“contractors and independent contractors” under Sec. 141(e) and 151 confined;
does not include the authority to collect such taxes on transportation He must undertake to carry by the method by which his business is
contractors for, as defined under Sec. 131(h), the term “contractors” conducted and over his established roads; and
excludes transportation contactors; and (3) the City Treasurer illegally The transportation must be for hire.
and erroneously imposed and collected the said tax, thus meriting the
immediate refund of the tax paid.

Traversing the complaint, the respondents argued that petitioner cannot 5.TORRES-MADRID BROKERAGE, INC. v. FEB MITSUI MARINE
be exempt from taxes under Sec. 133 (J) of the Local Government Code INSURANCE CO., INC.
as said exemption applied only to “transportation contractors and
persons engaged in the transportation by hire and common carriers by Doctrine:
air land and water.” Respondents assert that pipelines are not included The theft or the robbery of goods is not considered a fortuitous event of
in the term “common carrier” which refers solely to ordinary carriers as a force majeure.
trucks, trains, ships and the like. Respondents further posit that the term
“common carrier” under the said Code pertains to the mode or manner Nevertheless, a common carrier may absolve itself of liability for a
by which a product is delivered to its destination. resulting loss:
If it proves that it exercised extraordinary diligence in transporting and
Issue: Whether or not the petitioner is a common carrier so that in the safekeeping the goods; or
affirmative, he is not liable to pay the carriers tax under the Local If it stipulated with the shipper/owner of the goods to limit its liability
Government Code of 1991? for the loss, destruction, or deterioration of the goods to a degree less
Held: Petitioner is a common carrier. than extraordinary diligence.

A “common carrier” may be defined, broadly, as one who holds himself However, a stipulation diminishing or dispensing with the common
out to the public as engaged in the business of transporting persons or carrier’s liability for acts committed by thieves or robbers who do not

4
act with grave or irresistible threat, violence, or force is void under Art. of the goods.
1745 of the Civil Code for being contrary to public policy. After evaluating the merits of the claim, Mitsui paid Sony P7.2M
corresponding to the value of the lost goodAfter being subrogated to
Sony’s rights, Mitsui sent TMBI a demand letter dated August 30, 2001
FACTS: for payment of the lost goods but the latter refused to pay Mitsui's claim.
On October 7, 2000, a shipment of electronic goods arrived at the Port of
Manila for Sony Philippines, Inc. Previous to the arrival, Sony had As a result, Mitsui filed a complaint against TMBI on November 6, 2001.
engaged the services of petitioner Torres-Madrid
Brokerage, Inc. (TMBI) to facilitate, process, withdraw, and deliver the In turn, TMBI impleaded Benjamin Manalastas, the proprietor of BMT, as
shipment to its warehouse in Biñ an, Laguna. a third- party defendant. TMBI alleged that BMT's driver, Lapesura, was
Since TMBI did not own any delivery trucks, it subcontracted the responsible for the theft/hijacking of the lost cargo and claimed BMT's
services of Benjamin Manalastas’ company, BMT Trucking Services to negligence as the proximate cause of the loss. It prayed that in the event
transport the shipment from the port to Sony’s warehouse in Biñ an. it is held liable to Mitsui for the loss, it should be reimbursed by BMT.
TMBI then notified Sony who had no objections to the arrangement.
At the trial, it was revealed that BMT and TMBI have been doing
On the said day of shipment at 11AM, four BMT trucks picked up the business with each other since the early 80's. It also came out that there
shipment. However, it could not immediately deliver to Sony’s had been a previous hijacking incident involving Sony's cargo in 1997,
warehouse because of the truck ban and because the following day was a but neither Sony nor its insurer filed a complaint against BMT or TMBI.
Sunday. Thus, it scheduled the delivery to October 9.
RTC’s RULING: In its Decision, it ruled that TMBI and Manalastas were
In the early morning of October 9, four trucks left BMT’s garage for common carriers and had acted negligently. It found both of them jointly
Laguna. However, only three trucks arrived at Sony’s warehouse. and solidarily liable to pay Mitsui PHP7,293,386.23 as actual damages,
At around 12NN, the truck driven by Rufo Reynaldo Lapesura was found attorney's fees equivalent to 25% of the amount claimed, and the costs
abandoned along the Diversion Road in Filinvest, Alabang. Both the of the suit.
driver and shipment were missing.
CA’s RULING: On appeal, the CA AFFIRMED the RTC’s decision but
Later that evening, BMT’s Operations Manager informed TMBI’s General reduced the award of attorney’s fees to PHP200,000.
Manager of the development. They then went to Muntinlupa together to
inspect the truck and report the matter to the police. ISSUES:
TMBI’s General Manager also filed a complaint with the NBI against the W/N the theft or the robbery of goods is considered a fortuitous event
missing driver, Lapesura for “hijacking”. The NBI then recommended the which will absolve a common carrier from liability? – NO.
prosecution of Lapesura for qualified theft. W/N TMBI and BMT are solidarily liable to Mitsui? – NO.
W/N BMT is liable to TMBI for breach of their contract of carriage?
On October 10, TMBI notified Sony of the loss through a letter. It also – YES.
sent BMT a letter dated March 29, 2001, demanding payment for the lost
shipment. RULING:
However, BMT refused to pay, insisting that the goods were “hijacked.” W/N the theft or the robbery of goods is considered a fortuitous event
which will absolve a common carrier from liability? – NO.
In the meantime, Sony filed an insurance claim with Mitsui, the insurer Common carriers are persons, corporations, firms or associations

5
engaged in the business of transporting carrier’s liability for acts committed by thieves or robbers who do not
passengers or goods or both, by land, water or air, for compensation, act with grave or irresistible threat, violence, or force is void under Art.
offering their services to the public. By the nature of their business and 1745 of the Civil Code for being contrary to public policy.
for reasons of public policy, they are bound to observe extraordinary o Jurisprudence, too, has expanded Article 1734's five exemptions. De
diligence in the vigilance over the goods and in the safety of their Guzman v. Court of Appeals interpreted Article 1745 to mean that a
passengers. robbery attended by "grave or irresistible threat, violence or force" is a
fortuitous event that absolves the common carrier from liability.
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 Under Art. 1736, a common carrier’s extraordinary responsibility over
owns the vehicle used or has to actually hire one. the shipper's goods lasts from the time these goods are unconditionally
placed in the possession of, and received by, the carrier for
TMBI, the common carrier should be held responsible for the loss, transportation, until they are delivered, actually or constructively, by the
destruction, or deterioration of the goods is transports UNLESS it results carrier to the consignee.
from:
In this case, instead of showing that it had acted with extraordinary
 Flood, storm, earthquake, lightning, or other natural disaster or diligence, TMBI simply argued that it was not a common carrier bound
calamity; to observe extraordinary diligence. Its failure to successfully establish
 Act of the public enemy in war, whether international or civil; this premise carries with it the presumption of fault or negligence, thus
 Act of omission of the shipper or owner of the goods; rendering it liable to Sony/Mitsui for breach of contract.
 The character of the goods or defects in the packing or in the
containers; W/N TMBI and BMT are solidarily liable to Mitsui? – NO.
 Order or act of competent public authority.
TMBI’s liability to Mitsui does NOT stem from a quasi- delict (culpa
For all other cases, such as theft or robbery, a common carrier is aquiliana) but from its breach of contract (culpa contractual). The tie
presumed to have been at fault or to have acted negligently, unless it can that binds TMBI with Mitsui is contractual, albeit one that passed on to
prove that it observed extraordinary diligence. Mitsui as a result of TMBI's contract of carriage with Sony to which
Mitsui had been subrogated as an insurer who had paid Sony's insurance
Simply put, the theft or the robbery of goods is not considered a claim. The legal reality that results from this contractual tie precludes
fortuitous event of a force majeure. the application of quasi-delict based Article 2194.
W/N BMT is liable to TMBI for breach of their contract of carriage?
Nevertheless, a common carrier may absolve itself of liability for a YES.
resulting loss:
If it proves that it exercised extraordinary diligence in transporting and This is not to say that TMBI must absorb the loss. By subcontracting the
safekeeping the goods; or cargo delivery to BMT, TMBI entered into its own contract of carriage
If it stipulated with the shipper/owner of the goods to limit its liability with a fellow common carrier.
for the loss, destruction, or deterioration of the goods to a degree less
than extraordinary diligence. Following Art. 1735, BMT is presumed to be at fault. Since BMT failed to
prove that it observed extraordinary diligence in the performance of its
However, a stipulation diminishing or dispensing with the common obligation to TMBI, it is liable to TMBI for breach of their contract of

6
carriage. a common carrier. The CA reversed.

In these lights, TMBI is liable to Sony (subrogated by Mitsui) for Issue: Whether or not Cendena is a common carrier?
breaching the contract of carriage. In turn, TMBI is entitled to
reimbursement from BMT due to the latter's own breach of its contract Held: Yes, Cendena is properly characterized as a common carrier even
of carriage with TMBI. though he merely backhauled goods for other merchants, and even if it
o The proverbial buck stops with BMT who may either: was done on a periodic basis rather than on a regular basis, and even if
Absorb the loss; or his principal occupation was not the carriage of goods.
Proceed after its missing driver, the suspected culprit, pursuant to Art.
2181. Article 1732 makes no distinction between one whose principal business
activity is the carrying of persons or goods or both, and one who does
DISPOSITIVE: WHEREFORE, the Court hereby ORDERS petitioner such carrying only as an ancillary activity. It also avoids making a
Torres-Madrid Brokerage, Inc. to pay the respondent FEB Mitsui Marine distinction between a person or enterprise offering transportation
Insurance Co., Inc. the following: services on a regular or scheduled basis and one offering service on an
occasional, episodic or unscheduled basis. Neither does it make a
Actual damages in the amount of PHP7,293,386.23 plus legal interest distinction between a carrier offering its services to the general public
from the time the complaint was filed until it is fully paid; and one who offers services or solicits business only from a narrow
Attorney's fees in the amount of PHP200,000.00; and segment of population.
Costs of suit.
7. HOME INSURANCE VS. AMEARICAN STEAMSHIP (23 SCRA 24)
Respondent Benjamin P. Manalastas is in turn ORDERED to REIMBURSE
Torres-Madrid Brokerage, Inc. of the above-mentioned amounts. Facts: The Consorcio Pesquero del Peru of South America shipped jute
bags of Peruvian fishmeal through SS Crowborough, consigned to San
Miguel Brewery, Inc. The cargo, which was insured by Home Insurance
6. DE GUZMAN VS. COURT OF APPEALS (168 SCRA 612) Company, arrived at the port of Manila and was discharged to the
lighters of the Luzon Stevedoring Corporation. When the same was
Facts: Cendena was a junk dealer and was engaged in buying used delivered to the consignee, there were shortages amounting to P 12,
bottles and scrap materials in Pangasinan and brought these to Manila 033.85, prompting the latter to pay against Luzon Stevedoring Co.
for resale. He used two 6-wheeler trucks. On the return trip to
Pangasinan, he would load his vehicles with cargo which various Because the others denied liability, Home Insurance paid San Miguel the
merchants wanted delivered to Pangasinan. For that service, he charged insurance value loss. This cost was brought by the former to recover
freight lower than regular rates. General Milk Co. contacted with him for indemnity from Luzon Stevedoring and the ship owner. Luzon
the hauling of 750 cartons of milk. On the way to Pangasinan, one of the Stevedoring raised the defense that it deliver with due diligence in the
trucks was hijacked by armed men who took with them the truck and its same from the carrier. Mexican Steamship Agencies denied liability on
cargo and kidnapped the driver and his helper. Only 150 cartons of milk the ground that the charter party referred to in the bills of lading, the
were delivered. The Milk Co. sued to claim the value of the lost charter, not the ship owner, was responsible for any loss or damage of
merchandise based on an alleged contract of carriage. Cendena denied the cargo. Furthermore, it claimed to have exercised due diligence in
that he was a common carrier and contended that he could not be liable stowing the goods and as a mere forwarding agent, it was not
for the loss it was due to force majeure. The trial court ruled that he was responsible for losses or damages to the cargo.

7
 said exemption applied only to “transportation contractors and persons
Issue: Whether or not the stipulation in the charter party to owner’s engaged in the transportation by hire and common carriers by air land
non- liability was valid as to absolve the American Steamship from and water.” Respondents assert that pipelines are not included in the
liability loss? term “common carrier” which refers solely to ordinary carriers as
trucks, trains, ships and the like. Respondents further posit that the term
Held: The Civil Code provision on common carriers should not be “common carrier” under the said Code pertains to the mode or manner
applied where the carrier is not acting as such but as a private carrier. by which a product is delivered to its destination.
The stipulation in the charter party absolving the owner from liability
for loss due to the negligence of its agent is void only if the strict public Issue: Whether the petitioner, an oil pipeline operator is a common
policy governing common carriers is applied. Such policy has no force carrier, and therefore exempted from paying local taxes?
where the public at large is not involved, as in the case of a ship totally
chartered for the use of a single party. Held: Yes. Petitioner is a common carrier.

8. FIRST PHILIPPINES INDUSTRIAL CORP. VS. CA (300 SCRA 661) Article 1732 of the Civil Code defines a “common carrier” as “any person,
corporation, firm or association engaged in the business of carrying or
Facts: Petitioner is a grantee of a pipeline concession under R.A. No. 387, transporting passengers or goods or both, by land, water, or air, for
as amended, a contract, install and operate oil pipelines. The original compensation, offering their services to the public.
pipeline concession was granted in 1967 and renewed by the Energy
Regulatory Board in 1992. 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
Sometime in January 1995, petitioner applied for a mayor’s permit with property from place to place, for compensation, offering his services to
the Office of the Mayor of Batangas City. However, before the mayor’s the public generally.
permit could be issued, the respondent City Treasurer required
petitioner to pay a local tax based on its gross receipts for the fiscal year The test for determining whether a party is a common carrier of goods
1993 pursuant to the Local Government Code. The respondent City is: 1. He must be engaged in the carrying of goods for others as a public
Treasure assessed a business tax on the petitioner amounting to employment, and must hold himself out as ready to engage in the
P956,076.04 payable in four installments based on the gross receipts for transportation of goods or persons generally as a business and not as a
products pumped at GPS-1 for the fiscal year 1993 which amounted to casual occupation; 2.He must undertake to carry goods of the kind to
P181,681,151.00. In order not to hamper its operations, petitioner paid which his business is confined; 3. He must undertake to carry by the
the tax but under protest in the amount of P239, method by which his business is conducted and over his established
019.01 for the first quarter of 1993. roads; and 4. The transportation must be for hire.

On June 15, 1994, petitioner filed with the RTC of Batangas City a Based on the above definition and requirements, there is no doubt that
complaint for tax refund with prayer for writ of preliminary injunction the petitioner is a common carrier.
against respondents City of Batangas and Adoracion Arellano in her
capacity as City Treasurer. 10. VALENZUELA HARDWOOD VS. CA (30 JUNE 1997,274 SCRA 643)

Traversing the complaint, the respondents argued that petitioner cannot Facts: On January 16, 1984, plaintiff entered into an agreement with
be exempt from taxes under Sec. 133(J) of the Local Government Code as Seven Brothers Shipping corporation whereby the latter undertook to

8
load on board its vessel M/V Seven Ambassadors 940 Lauan round logs On November 20, 1984, on its way to Manila from the port of Nasipit,
for shipment from Isabela to Manila. On January 20, plaintiff insured the Agusan Del Norte, the vessel, along with its cargo, sank off Limasawa
cargo with South Sea Surety and Insurance for two million pesos. Island. As a result of the total loss of its shipment, the consignee made a
However on January 25, 1984, the M/V Seven Ambassador sank, claim with loadstar which, however, ignored the same. As the insurer,
resulting in the loss of petitioners’ logs. Pursuant to the loss, petitioner MIC paid to the insured in full settlement of its claim, and the latter
filed a claim with South Sea Surety and Insurance for the insured amount executed a subrogation receipt therefor. MIC thereafter filed a complaint
of the logs, but the latter refused, denying liability under the policy. against loadstar alleging that the sinking of the vessel was due to fault
Petitioner likewise filed a formal claim against Seven Brothers Shipping and negligence of loadstar and its employees.
Corporation for the value of the lost logs, but the latter likewise denied
their claim. In its answer, Loadstar denied any liability for the loss of the shipper’s
goods and claimed that the sinking of its vessel was due to force
The trial court found for the plaintiff, holding South Sea and Seven majeure. The court a quo rendered judgment in favor of MIC., prompting
Brothers liable for the loss. On appeal, the Court of Appeals affirmed in loadstar to elevate the matter to the Court of Appeals, which however,
part the decision of the trial court. The Court of Appeals affirmed the agreed with the trial court and affirmed its decision in toto. On appeal,
liability of South Sea Surety and Assurance but exonerated Seven loadstar maintained that the vessel was a private carrier because it was
Brothers, stating that the latter is a private carrier therefore the not issued a Certificate of Public Convenience, it did not have a regular
provisions on common carriers is not applicable to their contract. Hence trip or schedule nor a fixed route, and there was only “one shipper, one
the present appeal. consignee for a special crago”.

Issue: Whether or not respondent Court of Appeals committed a Issue: Whether or not M/V Cherokee was a private carrier so as to
reversible error in upholding the validity of the stipulation in the charter exempt it from the provisions covering Common Carrier?
party executed between petitioner and Seven Brothers exempting the
latter from liability of loss arising from the negligence of its captain. Held: Loadstar is a common carrier.

Held: The decision of the Court of appeals is correct. The contract The Court held that LOADSTAR is a common carrier. It is not necessary
between petitioner and Seven Brothers is one of Private Carriage hence that the carrier be issued a certificate of public convenience, and this
the provisions on common carriage do not apply. In a contract of private public character is not altered by the fact that the carriage of the goods
carriage parties are free to stipulate that the responsibility for the cargo in question was periodic, occasional, episodic or unscheduled. Further,
rests solely in the charterer, such stipulations are valid because they are the bare fact that the vessel was carrying a particular type of cargo for
freely entered into by the parties and the same is not contrary to law, one shipper, which appears to be purely co-incidental; it is no reason
morals, good custom, public order or public policy. enough to convert the vessel from a common to a private carrier,
especially where, as in this case, it was shown that the vessel was also
11. LOADSTAR SHIPPING VS. CA (315 SCRA 339, 1999) carrying passengers.

Facts: On November 19, 1984, loadstar received on board its M/V Article 1732 also carefully avoids making any distinction between a
“Cherokee” bales of lawanit hardwood, tilewood and Apitong person or enterprise offering transportation service on a regular or
Bolidenized for shipment. The goods, amounting to P6,067, 178. Were scheduled basis and one offering such service on an occasional, episodic
insured for the same amount with the Manila Insurance Company or unscheduled basis. Neither does Article 1732 distinguish between a
against various risks including “Total Loss by Total Loss of the Vessel”. carrier offering its services to the "general public," i.e., the general

9
community or population, and one who offers services or solicits employees. The mere difficulty in the fullfilment of the obligation is not
business only from a narrow segment of the general population. considered force majeure. We agree with the private respondent that the
scraps could have been properly unloaded at the shore or at the NASSCO
13. GANZON VS. CA (161 SCRA 646) compound, so that after the dispute with the local officials concerned
was settled, the scraps could then be delivered in accordance with the
Facts: Gelacio Tumambing contracted the services of Mauro B. Ganzon to contract of carriage.
haul 305 tons of scrap iron from Mariveles, Bataan, to the port of Manila
on board the lighter LCT "Batman." Pursuant to this agreement, Mauro B. 16. SAMAR MINING CO., INC. VS. LLOYD (132 SCRA 529)
Ganzon sent his lighter "Batman" to Mariveles where it docked in 3 feet
of water. Then, Gelacio Tumambing delivered the scrap iron to Filomeno Facts: Samar Mining imported 1 crate optima welded wire (amounting
Niza, captain of the lighter, for loading which was actually begun on the to around USD 424 or PhP 1,700) from Germany, which was shipped on
same date by the crew of the lighter under the captain's supervision. a vessel owned by Nordeutscher Lloyd (M/S Schwabenstein). The
When about half of the scrap iron was already loaded, Mayor Jose shipment was unloaded in Manila into a barge for transshipment to
Advincula of Mariveles, Bataan, arrived and demanded P5,000.00 from Davao and temporarily stored in a bonded warehouse owned by AMCYL.
Gelacio Tumambing. The latter resisted the shakedown and after a The goods never reached Davao and were never delivered to or received
heated argument between them, Mayor Jose Advincula drew his gun and by the consignee, Samar Mining Co.
fired at Gelacio Tumambing. The gunshot was not fatal but Tumambing
had to be taken to a hospital in Balanga, Bataan, for treatment. After CFI ruled in favor of Samar Mining holding Nordeutscher Lloyd liable.
sometime, the loading of the scrap iron was resumed. But on 4 However, defendants may recoup whatever they may pay Samar Mining
December 1956, Acting Mayor Basilio Rub, accompanied by 3 policemen, by enforcing the judgment against third party defendant AMCYL.
ordered captain Filomeno Niza and his crew to dump the scrap iron
where the lighter was docked. The rest was brought to the compound of Issue: Whether Nordeustscher Lloyd is liable for the loss of the goods as
NASSCO. Later on Acting Mayor Rub issued a receipt stating that the common carrier?
Municipality of Mariveles had taken custody of the scrap iron.
Held: No. At the time of the loss of the goods, the character of possession
Tumambing instituted with CFI Manila an action against Ganzon for of Nordeutscher Lloyd shifted from common carrier to agent of Samar
damages based on culpa contractual. The trial court rendered a decision Mining Co.
absolving Ganzon from liability. On appeal, however, the appellate court
reversed and set aside the decision appealed. Hence, the petition for The Bill of Lading is serves both as a receipt of goods and is likewise the
review on certiorari. contract to transport and deliver the same as stipulated. It is a contract
and is therefore the law between the parties. The Bill of Lading in
Held: Now the petitioner is changing his theory to caso fortuito. Such a question stipulated that Nordeutscher Lloyd only undertook to transport
change of theory on appeal we cannot, however, allow. In any case, the the goods in its vessel only up to the port of discharge from ship, which
intervention of the municipal officials was not In any case, of a character is Manila. The Bill of Lading further stipulated that the goods were to be
that would render impossible the fulfillment by the carrier of its transshipped by the carrier from Manila to the port of destination –
obligation. The petitioner was not duty bound to obey the illegal order to Davao. By unloading the shipment in Manila and delivering the goods to
dump into the sea the scrap iron. Moreover, there is absence of sufficient the warehouse of AMCYL, the appellant was acting within the
proof that the issuance of the same order was attended with such force contractual stipulations contained in the Bill of Lading.
or intimidation as to completely overpower the will of the petitioner's

10
Article 1736 of the Civil Code relives the carrier of responsibility over They were carrying with them four pieces of baggage containing their
the shipment as soon as the carrier makes actual or constructive personal belonging. The conductor of the b us issued three tickets
delivery of the goods to the consignee or to the person who has a right to covering the full fares of the plaintiff and their eldest child Milagros. No
receive them. fare was charged on Raquel and Fe, since both were below the height
which fare is charged in accordance with plaintiff’s rules and regulations.
Under the Civil Code provisions governing Agency, an agent can only be
held liable in cases where his acts are attended by fraud, negligence, After about an hour’s trip, the bus reached Anao where it stopped to
deceit or if there is a conflict of interest between him and the principal. allow the passengers bound therefore, among whom were the plaintiffs
Under the same law an agent is likewise liable if he appoints a substitute and their children to get off. Mariano Beltran, carrying some of their
when he was not given the power to appoint one or otherwise appoints baggage was the first to get down the bus, followed by his wife and
one that is notoriously incompetent or insolvent. These facts were not children. Mariano led his companion to a shaded spot on the left
proven in the record. pedestrian side of the road about four or five meters away from the
vehicle. Afterwards, he returned to the bus in controversy to get his
18. SHEWARAM VS, PAL (17 SCRA 606, (1966) paying, which he had left behind, but in so doing, his daughter followed
him unnoticed by his father. While said Mariano Beltran was on he
Facts: A PAL ticket, on the reverse side, stated in fine print that if the running board of the bus waiting for the conductor to hand him his
value of baggage is not stated, and the baggage is lost, the maximum bayong which he left under one its seats near the door, the bus, whose
liability of PAL is P100.00 if value in excess of P100.00 is stated, PAL will motor was not shut off while unloading suddenly started moving
charge extra because PAL is being held liable for an amount exceeding forward, evidently to resume its trip, notwithstanding the fact that the
P100.00. Shewaram, a Hindu from Davao, boarded a PAL plane for conductor was still attending to the baggage left behind by Mariano
Manila. Among his baggage was a camera with P800.00 and it was lost. Beltran. Incidentally, when the bus was again placed in a complete stop,
PAL offered to pay P100.00. Shewaram wanted full payment of P800.00. it had traveled about 10 meters from point where plaintiffs had gotten
off.
Issue: Whether the limited liability rule shall apply in the case at bar? Sensing the bus was again in motion; Mariano immediately jumped form
the running board without getting his bayong from conductor. He landed
Held: The limited liability rule shall not apply. Since this is a stipulation on the side of the road almost board in front of the shaded place where
on qualified liability, which operates to reduce the liability of the carrier, he left his wife and his children. At that time, he saw people beginning to
the carrier and the shipper must agree thereupon. Otherwise, the carrier gather around the body of a child lying prostrate on the ground, her skull
will be liable for full. PAL is fully liable (for full) because Shewaran did crushed, and without life. The child was none other than his daughter
not agree to the stipulation on the ticket, as manifested by the fact that Raquel, who was run over by the bus in which she rode earlier together
Shewaram did not sign the ticket. Ticket should have been signed. her parent.
LA MALLORCA VS. CA (G.R. NO. L-20761, 27 JULY 1966, 17 SCRA 739)
For the death of the said child, plaintiffs comment the suit against the
Facts: Plaintiffs, husband and wife, together with their three minor defendant to recover from the latter damages.
daughters (Milagros, 13 years old, Raquel, about 4 years old and Fe, 2
years old) boarded the Pambusco at San Fernando Pampanga, bound for Issue: Whether or not the child was no longer the passenger of the bus
Anao, Mexico, Pampanga. Such bus is owned and operated by the involved in the incident, and therefore, the contract of carriage was
defendant. already terminated?

11
Held: There can be no controversy that as far as the father is concerned, started to operate in unloading the cargo from the ship. Viana then went
when he returned to the bus for his bayong which was not unloaded, the back, remembering some of his cargoes left at the vessel. At that time,
relation of passenger and carrier between him and the petitioner while he was pointing at the crew of the vessel to where his cargoes
remained subsisting. The relation of carrier and passenger does not were loaded, the crane hit him, pinning him between the crane and the
necessarily cease where the latter, after alighting from the car aids the side of the vessel. He was brought to the hospital where he died 3 days
carrier’s servant or employee in removing his baggage from the car. after (May 15). The parents of Anacleto filed a complaint against Aboitiz
for breach of contract of carriage.
It is a rule that the relation of carrier and passenger does not cease the
moment the passenger alights from the carrier’s vehicle at a place The trial court ruled in favor of the plaintiffs. Then both Aboitiz and
selected by the carrier at the point of destination but continues until the Pioneer filed a motion for reconsideration, upon which the trial court
passenger has had a reasonable time or a reasonable opportunity to issued an order absolving Pioneer from liability but not Aboitiz. On
leave the carrier’s premises. appeal, CA affirmed the trial court ruling. Hence, this petition.

The father returned to the bus to get one of his baggages which was not Issue: Whether or not Viana is still considered a passenger at the time of
unloaded when they alighted from the bus. Raquel must have followed the incident?
her father. However, although the father was still on the running board
of the bus awaiting for the conductor to hand him the bag or bayong, the Held: Yes. The La Mallorca case is applicable in the case at bar.
bus started to run, so that even he had jumped down from the moving
vehicle. It was that this instance that the child, who must be near the bus, The rule is that the relation of carrier and passenger continues until the
was run over and killed. In the circumstances, it cannot be claimed that passenger has been landed at the port of destination and has left the
the carrier’s agent had exercised the “utmost diligence” of a “very vessel owner’s dock or premises. Once created, the relationship will not
cautious person” required by Article 1755 of the Civil Code to be ordinarily terminate until the passenger has, after reaching his
observed by a common carrier in the discharge of its obligation to destination, safely alighted from the carrier’s conveyance or had a
transport safely its passengers. The driver, although stopping the bus, reasonable opportunity to leave the carrier’s premises. All persons who
nevertheless did not put off the engine. He started to run the bus even remain on the premises a reasonable time after leaving the conveyance
before the conductor gave him the signal to go and while the latter was are to be deemed passengers, and what is a reasonable time or a
still unloading part of the baggage of the passengers Beltran and family. reasonable delay within this rule is to be determined from all the
The presence of the said passengers near the bus was not unreasonable circumstances, and includes a reasonable time to see after his baggage
and they are, therefore, to be considered still as passengers of the and prepare for his departure. The carrier-passenger relationship is not
carrier, entitled to the protection under their contract of carriage. terminated merely by the fact that the person transported has been
carried to his destination if, for example, such person remains in the
20. ABOITIZ SHIPPING CORP. VS. CA (179 SCRA 95) carrier’s premises to claim his baggage.

Facts: On May 11, 1975, Anacleto Viana boarded M/|V Antonio from The reasonableness of the time should be made to depend on the
Occidental Mindoro bound for Manila. Upon arrival on May 12, 1975, the attending circumstances of the case, such as the kind of common carrier,
passengers therein disembarked through a gangplank connecting the the nature of its business, the customs of the place, and so forth, and
vessel to the pier. Viana, instead of disembarking through the gangplank, therefore precludes a consideration of the time element per se without
disembarked through the third deck, which was at the same level with taking into account such other factors.
the pier. An hour after the passengers disembarked, Pioneer stevedoring Where a passenger dies or is injured, the common carrier is presumed

12
to have been at fault or to have acted negligently. This gives rise to an
action for breach of contract where all that is required of plaintiff is to
prove the existence of the contract of carriage and its non-performance
by the carrier, that is, the failure of the carrier to carry the passenger
safely to his destination, which, in the instant case, necessarily includes
its failure to safeguard its passenger with extraordinary diligence while
such relation subsists.

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