A.

Concept:

 SPOUSES CRUZ v. SUN HOLIDAYS, INC.,

FACTS: The stay of the newlywed Ruelito and his wife at the Resort was by virtue of a tour
package contract with respondent that included transportation to and from the Resort and the
point of departure in Batangas. On September 11, 2000, as it was still windy, Matute and 25
other Resort guests including petitioners’ son and his wife trekked to the other side of the Coco
Beach mountain that was sheltered from the wind where they boarded M/B Coco Beach III,
which was to ferry them to Batangas.
Shortly after the boat sailed, there was rain and winds and the boat was hit by two big
waves which came one after the other, M/B Coco Beach III capsized putting all passengers
underwater.
Help came after about 45 minutes. Eight passengers, including petitioners son and his
wife, died during the incident.Now claiming for damages and indemnification, respondent
denied any responsibility for the incident which it considered to be a fortuitous event. It
nevertheless offered the amount of P10,000 to petitioners upon their signing of a waiver, which
the petitioners declined. They also deny being a common carrier.

ISSUE: WON the boat was a CC.

HELD: YES, respondent is a common carrier. Its ferry services are so intertwined with its main
business as to be properly considered ancillary thereto. The constancy of respondents ferry
services in its resort operations is underscored by its having its own Coco Beach boats. And the
tour packages it offers, which include the ferry services, may be availed of by anyone who can
afford to pay the same. These services are thus available to the public.
That respondent does not charge a separate fee or fare for its ferry services is of no moment. It
would be imprudent to suppose that it provides said services at a loss. The Court is aware of the
practice of beach resort operators offering tour packages to factor the transportation fee in
arriving at the tour package price. That guests who opt not to avail of respondents ferry services
pay the same amount is likewise inconsequential. These guests may only be deemed to have
overpaid.
When a passenger dies or is injured in the discharge of a contract of carriage, it is presumed that
the common carrier is at fault or negligent. In fact, there is even no need for the court to 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.

 Caltex [Philippines], Inc. vs. Sulpicio Lines, Inc.

Facts:

On December 20, 1987, motor tanker MV Vector, carrying petroleum products of Caltex, collided
in the open sea with passenger ship MV Doña Paz, causing the death of all but 25 of the latter’s
passengers. Among those who died were Sebastian Canezal and his daughter Corazon Canezal.
On March 22, 1988, the board of marine inquiry found that Vector Shipping Corporation was at
fault. On February 13, 1989, Teresita Cañezal and Sotera E. Cañezal, Sebastian Cañezal’s wife and
mother respectively, filed with the Regional Trial Court of Manila a complaint for damages
arising from breach of contract of carriage against Sulpicio Lines. Sulpicio filed a third-party
complaint against Vector and Caltex. The trial court dismissed the complaint against Caltex, but
the Court of Appeals included the same in the liability. Hence, Caltex filed this petition.

Issue:

Is the charterer of a sea vessel liable for damages resulting from a collision between the
chartered vessel and a passenger ship?

Held:

First: The charterer has no liability for damages under Philippine Maritime laws.

Petitioner and Vector entered into a contract of affreightment, also known as a voyage charter.

A charter party is a contract by which an entire ship, or some principal part thereof, is let by the
owner to another person for a specified time or use; a contract of affreightment is one by which
the owner of a ship or other vessel lets the whole or part of her to a merchant or other person for
the conveyance of goods, on a particular voyage, in consideration of the payment of freight. A
contract of affreightment may be either time charter, wherein the leased vessel is leased to the
charterer for a fixed period of time, or voyage charter, wherein the ship is leased for a single
voyage. In both cases, the charter-party provides for the hire of the vessel only, either for a
determinate period of time or for a single or consecutive voyage, the ship owner to supply the
ship’s store, pay for the wages of the master of the crew, and defray the expenses for the
maintenance of the ship. If the charter is a contract of affreightment, which leaves the general
owner in possession of the ship as owner for the voyage, the rights and the responsibilities of
ownership rest on the owner. The charterer is free from liability to third persons in respect of
the ship.

Second: MT Vector is a common carrier

The charter party agreement did not convert the common carrier into a private carrier. The
parties entered into a voyage charter, which retains the character of the vessel as a common
carrier. It is imperative that a public carrier shall remain as such, notwithstanding the charter of
the whole or portion of a vessel by one or more persons, provided the charter is limited to the
ship only, as in the case of a time-charter or voyage charter. It is only when the charter includes
both the vessel and its crew, as in a bareboat or demise that a common carrier becomes private,
at least insofar as the particular voyage covering the charter-party is concerned. Indubitably, a
ship-owner 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. A common carrier is a person or
corporation whose regular business is to carry passengers or property for all persons who may
choose to employ and to remunerate him. 16 MT Vector fits the definition of a common carrier
under Article 1732 of the Civil Code.
The public must of necessity rely on the care and skill of common carriers in the vigilance over
the goods and safety of the passengers, especially because with the modern development of
science and invention, transportation has become more rapid, more complicated and somehow
more hazardous. For these reasons, a passenger or a shipper of goods is under no obligation to
conduct an inspection of the ship and its crew, the carrier being obliged by law to impliedly
warrant its seaworthiness.

Third: Is Caltex liable for damages under the Civil Code?

The charterer of a vessel has no obligation before transporting its cargo to ensure that the vessel
it chartered complied with all legal requirements. The duty rests upon the common carrier
simply for being engaged in "public service." The relationship between the parties in this case is
governed by special laws. Because of the implied warranty of seaworthiness, shippers of goods,
when transacting with common carriers, are not expected to inquire into the vessel’s
seaworthiness, genuineness of its licenses and compliance with all maritime laws. To demand
more from shippers and hold them liable in case of failure exhibits nothing but the futility of our
maritime laws insofar as the protection of the public in general is concerned. Such a practice
would be an absurdity in a business where time is always of the essence. Considering the nature
of transportation business, passengers and shippers alike customarily presume that common
carriers possess all the legal requisites in its operation.

 FIRST PHILIPPINE INDUSTRIAL CORPORATION v. CA

GR. 125948, December 29, 1998

FACTS:

Petitioner First Philippine Industrial Corporation (FIPC) is a grantee of a pipeline concession

under Republic Act No. 387, to contract, install and operate oil pipelines. Sometime in January
1995, petitioner applied for mayor’s permit in Batangas. However, the Treasurer required
petitioner to pay a local tax based on gross receipts amounting to P956,076.04 payable in four
installments. In order not to hamper its operations, petitioner paid the tax for the first quarter of
1993. On January 20, 1994, petitioner filed a letter-protest to the City Treasurer, claiming that it
is exempt from local tax since it is engaged in transportation business. The respondent City
Treasurer denied the protest contending that petitioner cannot be considered engaged in
trasportation business thus it cannot claim exemption under Section 133 (j) of the Local
Government Code. Petitioner filed a complaint before the Regional Trial Court of Batangas for tax
refund. Respondents assert that pipelines are not included in the term “common carrier” which
refers solely to ordinary carriers such as trucks, trains, ships and the like, that the term “common
Carrier” pertains to the mode or manner by which a product is delivered to its destination. The
trial court dismissed the complaint, and such was affirmed by the Court of Appeals.

ISSUE/S:

Whether or not FIPC is a common carrier?

HELD/RULING:

Yes, FIPC 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.Article 1732
of the Civil Code defines a "common carrier" as "any person, corporation, firm or association engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public."

The test for determining whether a party is a common carrier of goods is:

(1) He must be engaged in the business of carrying goods for others as a public employment, and must hold himself out as ready to
engage in the transportation of goods for person generally as a business and not as a casual occupation;

(2) He must undertake to carry goods of the kind to which his business is confined;

(3) He must undertake to carry by the method by which his business is conducted and over his established roads; and

(4) The transportation must be for hire.

Based on the above definitions and requirements, there is no doubt that petitioner is a common carrier. It is engaged in the business of
transporting or carrying goods, i.e. petroleum products, for hire as a public employment. It undertakes to carry for all persons indifferently,
that is, to all persons who choose to employ its services, and transports the goods by land and for compensation. The fact that petitioner has
a limited clientele does not exclude it from the definition of a common carrier. The definition of "common carriers" in the Civil Code makes
no distinction as to the means of transporting, as long as it is by land, water or air. It does not provide that the transportation of the
passengers or goods should be by motor vehicle.

 DE GUZMAN VS. COURT OF APPEALS

168 SCRA 612

Facts: Cendena was a junk dealer and was engaged in buying used bottles and scrap materials in Pangasinan and brought these to Manila for
resale. He used two 6-wheeler trucks. On the return trip to Pangasinan, he would load his vehicles with cargo which various merchants
wanted delivered to Pangasinan. For that service, he charged freight lower than regular rates. General Milk Co. contacted with him for the
hauling of 750 cartons of milk. On the way to Pangasinan, one of the trucks was hijacked by armed men who took with them the truck and its
cargo and kidnapped the driver and his helper. Only 150 cartons of milk were delivered. The Milk Co. sued to claim the value of the lost
merchandise based on an alleged contract of carriage. Cendena denied that he was a common carrier and contended that he could not be
liable for the loss it was due to force majeure. The trial court ruled that he was a common carrier. The CA reversed.

Issue: Whether or not Cendena is a common carrier?

Held: Yes, Cendena is properly characterized as a common carrier even though he merely backhauled goods for other merchants, and even if
it was done on a periodic basis rather than on a regular basis, and even if his principal occupation was not the carriage of goods.

Article 1732 makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who
does such carrying only as an ancillary activity. It also avoids making a distinction between a person or enterprise offering transportation
services on a regular or scheduled basis and one offering service on an occasional, episodic or unscheduled basis. Neither does it make a
distinction between a carrier offering its services to the general public and one who offers services or solicits business only from a narrow
segment of population.

 Loadstar Shipping vs. Court of Appeals

315 SCRA 339, 1999

Facts: On November 19, 1984, loadstar received on board its M/V “Cherokee” bales of lawanit hardwood, tilewood and Apitong Bolidenized
for shipment. The goods, amounting to P6,067, 178. Were insured for the same amount with the Manila Insurance Company against various
risks including “Total Loss by Total Loss of the Vessel”. On November 20, 1984, on its way to Manila from the port of Nasipit, Agusan Del
Norte, the vessel, along with its cargo, sank off Limasawa Island. As a result of the total loss of its shipment, the consignee made a claim with
loadstar which, however, ignored the same. As the insurer, MIC paid to the insured in full settlement of its claim, and the latter executed a
subrogation receipt therefor. MIC thereafter filed a complaint against loadstar alleging that the sinking of the vessel was due to fault and
negligence of loadstar and its employees.

In its answer, Loadstar denied any liability for the loss of the shipper’s goods and claimed that the sinking of its vessel was due to force
majeure. The court a quo rendered judgment in favor of MIC., prompting loadstar to elevate the matter to the Court of Appeals, which
however, agreed with the trial court and affirmed its decision in toto. On appeal, loadstar maintained that the vessel was a private carrier
because it was not issued a Certificate of Public Convenience, it did not have a regular trip or schedule nor a fixed route, and there was only
“one shipper, one consignee for a special crago”.
Issue: Whether or not M/V Cherokee was a private carrier so as to exempt it from the provisions covering Common Carrier?

Held: Loadstar is a common carrier.

The Court held that LOADSTAR is a common carrier. It is not necessary that the carrier be issued a certificate of public convenience, and this
public character is not altered by the fact that the carriage of the goods in question was periodic, occasional, episodic or unscheduled.
Further, the bare fact that the vessel was carrying a particular type of cargo for one shipper, which appears to be purely co-incidental; it is no
reason 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 carrying passengers.

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.

B. Common Carrier v. Private Carrier

 PLANTERS PRODUCTS VS. CA CASE DIGEST

G.R. No. 101503 September 15, 1993

Facts: Planters Product Inc. purchased from Mitsubishi international corporation metric tons of Urea fertilizer, which the latter shipped
aboard the cargo vessel M/V Sun Plum owned by private respondent Kyosei Kisen Kabushiki Kaisha. Prior to its voyage, a time charter-party
on the vessel respondent entered into between Mitsubishi as shipper/charterer and KKKK as ship owner, in Tokyo, Japan.

Before loading the fertilizer aboard the vessel, (4) of her holds were presumably inspected by the charterer’s representative and found fit to
take a load of urea in bulk. After the Urea fertilizer was loaded in bulk by stevedores hired by and under the supervision of the shipper, the
steel hatches were closed with heavy iron lids. Upon arrival of vessel at port, the petitioner unloaded the cargo pursuant to the terms and
conditions of the charter-party. The hatches remained open throughout the duration of the discharge.

Upon arrival at petitioner’s warehouse a survey conducted over the cargo revealed a shortage and the most of the fertilizer was
contaminated with dirt. As such, Planters filed an action for damages. The defendant argued that the public policy governing common
carriers do not apply to them because they have become private carriers by reason of the provisions of the charter-party.

Issue: Whether or not the charter-party contract between the ship owner and the charterer transforms a common carrier into a private
carrier?

Held: A charter party may either her be time charter wherein the vessel is leased to the charterer, wherein the ship is leased to the charterer
for a fixed period of time or voyage charter, wherein the ship is leased for a single voyage. In both cases, the charter party provides for the
hire of the vessel only, either for a determinate time or for a single or consecutive voyage.

It is therefor imperative that such common carrier shall remain as such, notwithstanding the charter of the whole or part of the 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 ship and its crew as in bareboat or demise that it becomes a private carrier. Undoubtedly, a shipowner in a time or
voyage charter retains in possession and control of the ship, although her holds may be the property of the charterer.

 NATIONAL STEEL CORP. v. CA

283 SCRA 45,

FACTS:

1. On July 17, 1974, plaintiff National Steel Corporation (NSC) as Charterer and defendant Vlasons Shipping, Inc. (VSI) as Owner, entered into
a Contract
of Voyage Charter Hire whereby NSC hired VSI's vessel, the MV 'VLASONS I' to make one (1) voyage to load steel products at Iligan City and
discharge them
at North Harbor, Manila.

2. When the vessel's three (3) hatches containing the shipment were opened by plaintiff's agents, nearly all the skids of tinplates and hot
rolled sheets
were allegedly found to be wet and rusty. The cargo was discharged and unloaded by stevedores hired by the plaintiff.
3. Plaintiff filed with the defendant its claim for damages suffered due to the downgrading of the damaged tinplates in the amount of
P941,145.18 but defendant
VSI refused and failed to pay. Hence, this suit.

Issue:
Whether VSI contracted with NSC as a common carrier or as a private carrier.

Held:
The resolution of this preliminary question determines the law, standard of diligence and burden of proof applicable to the present case.

Article 1732 of the Civil Code defines a common carrier. It has been held that the true test of a common carrier is the carriage of passengers
or goods, provided it has space, for all who opt to avail themselves of its transportation service for a fee. A carrier which does not qualify
under the above test is deemed a private carrier. Generally, private carriage is undertaken by special agreement and the carrier does not
hold himself out to carry goods for the general public. The most typical, although not the only form of private carriage, is the charter party, a
maritime contract by which the charterer, a party other than the shipowner, obtains the use and service of all or some part of a ship for a
period of time or a voyage or voyages. In the instant case, it is undisputed that VSI did not offer its services to the general public. It carried
passengers or goods only for those it chose under a special contract of charter party. MV Vlasons I was not a common but a private carrier. It
is a private carrier that renders tramping service and, as such, does not transport cargo or shipment for the general public. Its services are
available only to specific persons who enter into a special contract of charter party with its owner. Consequently, the rights and obligations
of VSI and NSC, including their respective liability for damage to the cargo, are determined primarily by stipulations in their contract of
private carriage or charter party.
Unlike in a contract involving a common carrier, private carriage does not involve the general public. Hence, the stringent provisions of the
Civil Code on common carriers protecting the general public cannot justifiably be applied to a ship transporting commercial goods as a
private carrier. It is clear from the parties' Contract of Voyage Charter Hire, dated July 17, 1974, that VSI "shall not be responsible for losses
except on proven willful negligence of the officers of the vessel." The NANYOZAI Charter Party, which was incorporated in the parties'
contract of transportation, further provided that the ship owner shall not be liable for loss of or damage to the cargo arising or resulting from
unseaworthiness, unless the same was caused by its lack of d diligence to make the vessel seaworthy or to ensure that the same e was
"properly manned, equipped and supplied." In view of the above, NSC must prove that the damage to its shipment was caused by VSI's willful
negligence or failure to exercise due diligence in making MV Vlasons I seaworthy and fit for holding, carrying and safekeeping the cargo.
Ineluctably, the burden of proof was placed on NSC by the parties' agreement. The CA decision, affirming the RTC decision in favor of
defendant and dismissing the complaint is AFFIRMED.

 Fabre vs. Court of Appeals

259 SCRA 426

Facts: Petitioners Engracio Fabre, Jr. and his wife were owners of a Mazda minibus. They used the bus principally in connection with a bus
service for school children which they operated in Manila. It was driven by Porfirio Cabil.

On November 2, 1984 private respondent Word for the World Christian Fellowship Inc. (WWCF) arranged with the petitioners for the
transportation of 33 members of its Young Adults Ministry from Manila to La Union and back in consideration of which private respondent
paid petitioners the amount of P3,000.00.

The usual route to Caba, La Union was through Carmen, Pangasinan. However, the bridge at Carmen was under repair, so that petitioner
Cabil, who was unfamiliar with the area (it being his first trip to La Union), was forced to take a detour through the town of Ba-ay in
Lingayen, Pangasinan. At 11:30 that night, petitioner Cabil came upon a sharp curve on the highway. The road was slippery because it was
raining, causing the bus, which was running at the speed of 50 kilometers per hour, to skid to the left road shoulder. The bus hit the left
traffic steel brace and sign along the road and rammed the fence of one Jesus Escano, then turned over and landed on its left side, coming to a
full stop only after a series of impacts. The bus came to rest off the road. A coconut tree which it had hit fell on it and smashed its front
portion. Because of the mishap, several passengers were injured particularly Amyline Antonio.

Criminal complaint was filed against the driver and the spouses were also made jointly liable. Spouses Fabre on the other hand contended
that they are not liable since they are not a common carrier. The RTC of Makati ruled in favor of the plaintiff and the defendants were
ordered to pay jointly and severally to the plaintiffs. The Court of Appeals affirmed the decision of the trial court.

Issue: Whether the spouses Fabre are common carriers?

Held: Petition was denied. Spouses Fabre are common carriers.

The Supreme Court held that this case actually involves a contract of carriage. Petitioners, the Fabres, did not have to be engaged in the
business of public transportation for the provisions of the Civil Code on common carriers to apply to them. As this Court has held: 10 Art.
1732, Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or
goods or both, by land, water, or air for compensation, offering their services to the public.
The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one
who does such carrying only as an ancillary activity (in local idiom, as "a sideline"). Article 1732 also carefully avoids making any distinction
between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the "general
public," i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the
general population. We think that Article 1732 deliberately refrained from making such distinctions.

 DELSAN TRANSPORT LINES, INC., vs. CA

FACTS: The facts show that Caltex Philippines (Caltex for brevity) entered into a contract of affreightment with the petitioner, Delsan
Transport Lines, Inc., for a period of one year whereby the said common carrier agreed to transport Caltex’s industrial fuel oil from the
Batangas-Bataan Refinery to different parts of the country. Under the contract, petitioner took on board its vessel, MT Maysun 2,277.314
kiloliters of industrial fuel oil of Caltex to be delivered to the Caltex Oil Terminal in Zamboanga City. The shipment was insured with the
private respondent, American Home Assurance Corporation. During the voyage, the vessel sank. The insurer paid Caltex and now seeks
recovery under the right of subrogation. The trial court found the vessel seaworthy and the incident was caused by force majeure hence,
exempt from liability. CA reversed the trial court’s decision, explaining that petitioner was liable as a common carrier due to lack of
manpower and absent any explanation why the vessel sank.

ISSUE: Whether or not there was an implied admission of seaworthiness thus precluding the right of recovery by private respondent as
insurer.

Whether or not the non-presentation of the marine insurance policy bars the complaint for recovery of sum of money for lack of cause of
action.

RULING: No. The payment made by the private respondent for the insured’s value of the lost cargo operates as waiver of its (private
respondent) right to enforce the term of the implied warranty against Caltex under the marine insurance policy. However, the same cannot
be validly interpreted as an automatic admission of the vessel’s seaworthiness by the private respondent as to foreclose recourse against the
petitioner for any liability under its contractual obligation as a common carrier. The fact of payment grants the private respondent
subrogatory right which enables it to exercise legal remedies that would otherwise be available to Caltex as owner of the lost cargo against
the petitioner common carrier.

From the nature of their business and for reasons of public policy, common carriers 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 circumstance of each case.In the event of
loss, destruction or deterioration of the insured goods, common carriers shall be responsible unless the same is brought about, among
others, by flood, storm, earthquake, lightning or other natural disaster or calamity. In all other cases, 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. The said presumption was not overturned by petitioner in this case. Hence, private respondent as insurer can
exercise its right of subrogation against petitioner.

Thus, as the appellate court correctly ruled, petitioner’s vessel, MT Maysun, sank with its entire cargo for the reason that it was not
seaworthy. There was no squall or bad weather or extremely poor sea condition in the vicinity when the said vessel sank.

Anent the second issue, it is our view and so hold that the presentation in evidence of the marine insurance policy is not indispensable in this
case before the insurer may recover from the common carrier the insured value of the lost cargo in the exercise of its subrogatory right. The
subrogation receipt, by itself, is sufficient to establish not only the relationship of herein private respondent as insurer and Caltex, as the
assured shipper of the lost cargo of industrial fuel oil, but also the amount paid to settle the insurance claim. The right of subrogation accrues
simply upon payment by the insurance company of the insurance claim.
 C. Governing Laws
2. Carriage from Foreign Ports to Philippine Ports

 NATIONAL DEVELOPMENT COMPANY vs. CA

G.R. No. L-49407 19 August 1988

Facts:

National Development Company (NDC) appointed Maritime Company of the Philippines (MCP) as its agent to manage and operate its vessel,
‘Dona Nati’, for and in behalf of its account. In 1964, while en route to Japan from San Francisco, Dona Nati collided with a Japanese vessel,
‘SS Yasushima Maru’, causing its cargo to be damaged and lost. The private respondent, as insurer to the consigners, paid almost
Php400,000.00 for said lost and damaged cargo. Hence, the private respondent instituted an action to recover from NDC.

Issue:

Which laws govern the loss and destruction of goods due to collision of vessels outside Philippine waters?

Ruling:

In a previously decided case, it was held that the law of the country to which the goods are to be transported governs the liability of the
common carrier in case of their loss, destruction or deterioration pursuant to Article 1753 of the Civil Code. It is immaterial that the collision
actually occurred in foreign waters, such as Ise Bay, Japan.

It appears, however, that collision falls among matters not specifically regulated by the Civil Code, hence, we apply Articles 826 to 839, Book
Three of the Code of Commerce, which deal exclusively with collision of vessels.

5. Air Transportation

 Alitalia v. IAC

Facts:

Dr. Felipa Pablo, an associate professor in the University of the Philippines and a research grantee of the Philippine Atomic Energy Agency,
was invited to take part at a meeting of the Department of Research and Isotopes in Italy in view of her specialized knowledge in “foreign
substances in food and the agriculture environment”. She would be the second speaker on the first day of the meeting. Dr. Pablo booked
passage on petitioner Alitalia. She arrived in Milan on the day before the meeting, but was told that her luggage was delayed and was in a
succeeding flight from Rome to Milan. The luggage included her materials for the presentation. The succeeding flights did not carry her
luggage. Desperate, she went to Rome to try to locate the luggage herself, but to no avail. She returned to Manila without attending the
meeting. She demanded reparation for the damages. She rejected Alitalia’s offer of free airline tickets and commenced an action for damages.
As it turned out, the luggage was actually forwarded to Ispra, but only a day after the scheduled appearance. It was returned to her after 11
months. The trial court ruled in favor of Dr. Pablo, and this was affirmed by the Court of Appeals.

Issues:

(1) Whether the Warsaw Convention should be applied to limit Alitalia’s liability

(2) Whether Dr. Pablo is entitled to nominal damages

Held:

(1) Under the Warsaw Convention, an air carrier is made liable for damages for:

a. The death, wounding or other bodily injury of a passenger if the accident causing it took place on board the aircraft or I the course of
its operations of embarking or disembarking;

b. The destruction or loss of, or damage to, any registered luggage or goods, if the occurrence causing it took place during the carriage
by air; and

c. Delay in the transportation by air of passengers, luggage or goods.

The convention however denies to the carrier availment of the provisions which exclude or limit his liability, if the damage is caused by his
wilful misconduct, or by such default on his part as is considered to be equivalent to wilful misconduct. The Convention does not thus
operate as an exclusive enumeration of the instances of an airline's liability, or as an absolute limit of the extent of that liability. It should be
deemed a limit of liability only in those cases where the cause of the death or injury to person, or destruction, loss or damage to property or
delay in its transport is not attributable to or attended by any wilful misconduct, bad faith, recklessness, or otherwise improper conduct on
the part of any official or employee for which the carrier is responsible, and there is otherwise no special or extraordinary form of resulting
injury.

In the case at bar, no bad faith or otherwise improper conduct may be ascribed to the employees of petitioner airline; and Dr. Pablo's luggage
was eventually returned to her, belatedly, it is true, but without appreciable damage. The fact is, nevertheless, that some species of injury
was caused to Dr. Pablo because petitioner ALITALIA misplaced her baggage and failed to deliver it to her at the time appointed - a breach of
its contract of carriage. Certainly, the compensation for the injury suffered by Dr. Pablo cannot under the circumstances be restricted to that
prescribed by the Warsaw Convention for delay in the transport of baggage.

(2) She is not, of course, entitled to be compensated for loss or damage to her luggage. She is however entitled to nominal damages which, as
the law says, is adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated and
recognized, and not for the purpose of indemnifying the plaintiff that for any loss suffered and this Court agrees that the respondent Court of
Appeals correctly set the amount thereof at PhP 40,000.00.

The Court also agrees that respondent Court of Appeals correctly awarded attorney’s fees to Dr. Pablo and the amount of PhP 5,000.00 set by
it is reasonable in the premises. The law authorizes recovery of attorney’s fees inter alia where, as here, the defendant’s act or omission has
compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest or where the court deems it just and
equitable.

 MAPA VS CA

Facts: Mapa purchased from TWA Trans World Airlines 2 airline tickets in Bankok Thailand, for Los Angeles- New York – Boston St. Louis –
Chicago, all of the USA. The domicile of the carrier TWA was Kansas City, Missouri USA, Where its principal place of business was likewise
located. The place of business of TWA where the contract was made was in Bangkok Thailand. The place of destination was Chicago-USA.
The MAPAS left Manila on board Pal for L-A, They left checked in 7 pieces of luggage’s at TWA counter at JFK airport but failed to board the
plane because they went to the wrong gate. Hey were however allowed to take a later TWA plane to Boston which was delayed because of
the thunder storm. Upon arrival at boston they were only retrieved 3 out of 7 luggage’s which loss was immediately reported to TWA with a
total value of S 2,560 as constituting full satisfaction of their claim which the MAPAS accepted as partial payment for the actual loss of their
baggage’s. Thereafter MAPA filed a case against TWA in the Philippines Similar to the case of Santos III , TWA move to dismiss for lack of
jurisdiction based on section 28(1) warsaw contending that the complaint should have been brought either in Bankok where the contract
was entered into , or in boston which was the place of destination or in Kansas City which was the carriers domicile and principla place of
business. MAPAS claimed that the WARSAW convention was not applicable because the contract was not an Internationl Transportation as
contemplated under the provision of the WARSAW convention the RTC as affirmed by the C-A dismiss the case for lack of jurisdiction.

ISSUE: Is the Warsaw Convention applicable?

Held: Warsaw convention was not applicable because the contract does not involve an “INTERANTIONAL TRANPORTATION” base on the
two categories.

(1) that where the place of departure and the place of destination are situated within the territories of two High Contracting Parties
regardless of whether or not there be a break in the transportation or a transshipment; and

(2) that where the place of departure and the place of destination are within the territory of a single High Contracting Party if there is an
agreed stopping place within a territory subject to the sovereignty, mandate, or authority of another power, even though the power is not a
party of the Convention.
 D. Contract of Carriage of Passengers

1. Nature of Contact of Carriage

 Japan Airlines V. Asuncion

G.R No. 161730

FACTS:
This petition for review seeks to reverse and set aside the October 9, 2002 decision of the Court of Appeals and its January 12, 2004
resolution, which affirmed in toto the June 10, 1997 decision of the Regional Trial Court of Makati City, Branch 61 in Civil Case No. 92-3635.

On March 27, 1992, respondents Michael and Jeanette Asuncion left Manila on board Japan Airlines’ (JAL) Flight 742 bound for Los Angeles.
Their itinerary included a stop-over in Narita and an overnight stay at Hotel Nikko Narita. Upon arrival at Narita, Mrs. Noriko Etou-Higuchi
of JAL endorsed their applications for shore pass and directed them to the Japanese immigration official. A shore pass is required of a
foreigner aboard a vessel or aircraft who desires to stay in the neighborhood of the port of call for not more than 72 hours.

During their interview, the Japanese immigration official noted that Michael appeared shorter than his height as indicated in his passport.
Because of this inconsistency, respondents were denied shore pass entries and were brought instead to the Narita Airport Rest House where
they were billeted overnight.

Mr. Atsushi Takemoto of the International Service Center (ISC), the agency tasked by Japan’s Immigration Department to handle passengers
who were denied shore pass entries, brought respondents to the Narita Airport Rest House where they stayed overnight until their
departure the following day for Los Angeles. Respondents were charged US$400.00 each for their accommodation, security service and
meals.

On December 12, 1992, respondents filed a complaint for damages claiming that JAL did not fully apprise them of their travel requirements
and that they were rudely and forcibly detained at Narita Airport.

Issue: Whether or not JAL is liable of breach of contract of carriage.

Side Issues:
· Whether or not JAL is liable for moral, exemplary damages,
· Whether or not the plaintiff is liable for attorney’s fee and cost of suit incurred (JAL counterclaim)

Ruling:
The court finds that JAL did not breach its contract of carriage with respondents. It may be true that JAL has the duty to inspect whether its
passengers have the necessary travel documents, however, such duty does not extend to checking the veracity of every entry in these
documents. JAL could not vouch for the authenticity of a passport and the correctness of the entries therein. The power to admit or not an
alien into the country is a sovereign act which cannot be interfered with even by JAL. This is not within the ambit of the contract of carriage
entered into by JAL and herein respondents. As such, JAL should not be faulted for the denial of respondents’ shore pass applications.

In the Respondents claim that petitioner breached its contract of carriage when it failed to explain to the immigration authorities that they
had overnight vouchers at the Hotel Nikko Narita. They imputed that JAL did not exhaust all means to prevent the denial of their shore pass
entry applications. JAL or any of its representatives have no authority to interfere with or influence the immigration authorities. The most
that could be expected of JAL is to endorse respondents’ applications, which Mrs. Higuchi did immediately upon their arrival in Narita.

Moral damages may be recovered in cases where one willfully causes injury to property, or in cases of breach of contract where the other
party acts fraudulently or in bad faith. Exemplary damages are imposed by way of example or correction for the public good, when the party
to a contract acts in wanton, fraudulent, oppressive or malevolent manner. Attorney’s fees are allowed when exemplary damages are
awarded and when the party to a suit is compelled to incur expenses to protect his interest.[17] There being no breach of contract nor proof
that JAL acted in wanton, fraudulent or malevolent manner, there is no basis for the award of any form of damages.

Neither should JAL be held liable to reimburse respondents the amount of US$800.00. It has been sufficiently proven that the amount
pertained to ISC, an agency separate and distinct from JAL, in payment for the accommodations provided to respondents. The payments did
not in any manner accrue to the benefit of JAL.

However, we find that the Court of Appeals correctly dismissed JAL’s counterclaim for litigation expenses, exemplary damages and
attorney’s fees. The action was filed by respondents in utmost good faith and not manifestly frivolous. Respondents honestly believed that
JAL breached its contract. A person’s right to litigate should not be penalized by holding him liable for damages. This is especially true when
the filing of the case is to enforce what he believes to be his rightful claim against another although found to be erroneous.[

WHEREFORE, in view of the foregoing, the instant petition is PARTLY GRANTED. The October 9, 2002 decision of the Court of Appeals and
its January 12, 2004 resolution in CA-G.R. CV No. 57440, are REVERSED and SET ASIDE insofar as the finding of breach on the part of
petitioner and the award of damages, attorney’s fees and costs of the suit in favor of respondents is concerned. Accordingly, there being no
breach of contract on the part of petitioner, the award of actual, moral and exemplary damages, as well as attorney’s fees and costs of the suit
in favor of respondents Michael and Jeanette Asuncion, is DELETED for lack of basis. However, the dismissal for lack of merit of petitioner’s
counterclaim for litigation expenses, exemplary damages and attorney’s fees, is SUSTAINED. No pronouncement as to costs.

 Herminio Mariano, Jr. v. Ildefonso C. Callejas and Edgar De Borja

G.R. No. 166640

Facts:

Petitioner Herminio Mariano, Jr. is the surviving spouse of Dr. Frelinda Mariano who was a passenger of a Celyrosa Express bus bound for
Tagaytay when she met her death. Respondent Ildefonso C. Callejas is the registered owner of Celyrosa Express, while respondent Edgar de
Borja was the driver of the bus on which the deceased was a passenger.

On November 12, 1991, the Celyrosa Express bus, carrying Dr. Mariano as its passenger, collided with an Isuzu truck with trailer. The
passenger bus was bound for Tagaytay while the trailer truck came from the opposite direction, bound for Manila. The trailer truck bumped
the passenger bus on its left middle portion. Due to the impact, the passenger bus fell on its right side on the right shoulder of the highway
and caused the death of Dr. Mariano and physical injuries to four other passengers.

Petitioner filed a complaint for breach of contract of carriage and damages against respondents. Respondents denied liability for the death of
Dr. Mariano. They claimed that the proximate cause of the accident was the recklessness of the driver of the trailer truck which bumped
their bus while allegedly at a halt on the shoulder of the road in its rightful lane. Thus, respondent Callejas filed a third-party complaint
against LiongChio Chang, the owner of the trailer truck.

The trial court found the respondents Callejas and De Borja together with LiongChio Chang, jointly and severally liable to pay the petitioner.

The Court of Appeals reversed the decision of the trial court.

Issue:

Whether or not Callejas and De Borjawere negligent

Ruling:

No. Callejas and De Borja exercised utmost diligence in the discharge of their duty.

Celyrosa Express, a common carrier, has the express obligation to carry the passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with a due regard for all the circumstances, and to observe extraordinary diligence in
the discharge of its duty. The death of the wife of the petitioner in the course of transporting her to her destination gave rise to the
presumption of negligence of the carrier. To overcome the presumption, respondents have to show that they observed extraordinary
diligence in the discharge of their duty, or that the accident was caused by a fortuitous event.

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.

Thus, it is clear that neither the law nor the nature of the business of a transportation company makes it an insurer of the passenger's safety,
but that its liability for personal injuries sustained by its passenger rests upon its negligence, its failure to exercise the degree of diligence
that the law requires.

In the case at bar, petitioner cannot succeed in his contention that respondents failed to overcome the presumption of negligence against
them. The totality of evidence shows that the death of petitioners spouse was caused by the reckless negligence of the driver of the Isuzu
trailer truck which lost its brakes and bumped the Celyrosa Express bus.

In fine, the evidence shows that before the collision, the passenger bus was cruising on its rightful lane along the Aguinaldo Highway when
the trailer truck coming from the opposite direction, on full speed, suddenly swerved and encroached on its lane, and bumped the passenger
bus on its left middle portion. Respondent driver De Borja had every right to expect that the trailer truck coming from the opposite direction
would stay on its proper lane. He was not expected to know that the trailer truck had lost its brakes. The swerving of the trailer truck was
abrupt and it was running on a fast speed as it was found 500 meters away from the point of collision. Secondly, any doubt as to the
culpability of the driver of the trailer truck ought to vanish when he pleaded guilty to the charge of reckless imprudence resulting to multiple
slight physical injuries and damage to property in Criminal Case No. 2223-92, involving the same incident.
3. Selection of Remedies of Injured Party

 Virata v. Ochoa

FACTS: In September 1975, Borilla was driving a jeep when he hit Arsenio Virata thereby causing the latter’s death. The heirs of Virata sued
Borilla through an action for homicide through reckless imprudence in the CFI of Rizal. Virata’s lawyer reserved their right to file a separate
civil action the he later withdrew said motion. But in June 1976, pending the criminal case, the Viratas again reserved their right to file a
separate civil action. Borilla was eventually acquitted as it was ruled that what happened was a mere accident. The heirs of Virata then sued
Borilla and Ochoa (the owner of the jeep and employer of Borilla) for damages based on quasi delict. Ochoa assailed the civil suit alleging
that Borilla was already acquitted and that the Virata’s were merely trying to recover damages twice. The lower court agreed with Ochoa
and dismissed the civil suit.

ISSUE: Whether or not the heirs of Virata may file a separate civil suit.

HELD: Yes. It is settled that in negligence cases the aggrieved parties may choose between an action under the Revised Penal Code or of
quasi-delict under Article 2176 of the Civil Code of the Philippines. What is prohibited by Article 2177 of the Civil Code of the Philippines is
to recover twice for the same negligent act. Therefore, under the proposed Article 2177, acquittal from an accusation of criminal negligence,
whether on reasonable doubt or not, shall not be a bar to a subsequent civil action, not for civil liability arising from criminal negligence, but
for damages due to a quasi-delict or ‘culpa aquiliana’. But said article forestalls a double recovery.

 Yakult Phils. and Larry Salvado vs. Court of Appeals

FACTS:

Petitioner was charged with the crime of reckless imprudence resulting in slight physical injuries. Later, a complaint for damages was filed
by respondent represented by his father, against petitioners in the Regional Trial Court. Trial court rendered decision awarding damages to
respondents. Petitioners’ appealed on the thesis that the civil action for damages for injuries arising from alleged criminal negligence of
Salvado, being without malice, cannot be filed independently of the criminal action under Article 33 of the Civil Code. Further, it is contended
that under Section 1, Rule 111 of the 1985 Rules on Criminal Procedure such a separate civil action may not be filed unless reservation
thereof is expressly made. The appeal was dismissed.

ISSUE:

Whether or not a civil action instituted after the criminal action was filed, before presentation of evidence by the prosecution, would prosper
even if there was no reservation to file a separate civil action.

HELD:

YES. Petition was denied. Decision of the Court of Appeals was affirmed.

RATIO:

[T]he civil action for the recovery of civil liability is impliedly instituted with the criminal action unless the offended party waives the civil
action, reserves his right to institute it separately or institutes the civil action prior to the criminal action. Such civil action includes recovery
of indemnity under the Revised Penal Code, and damages under Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines arising from
the same act or omission of the accused. The purpose of this rule requiring reservation is to prevent the offended party from recovering
damages twice for the same act or omission.

Although the separate civil action filed in this case was without previous reservation in the criminal case, nevertheless since it was instituted
before the prosecution presented evidence in the criminal action, and the judge handling the criminal case was informed thereof, then the
actual filing of the civil action is even far better than a compliance with the requirement of an express reservation that should be made by
the offended party before the prosecution presents its evidence.

Procedural laws have retroactive application.