TRANSPO CASES FOR RECIT TUESDAY

1. VDA. DE NUECA v. MANILA RAILROAD CO.

Facts:

- At 3 p.m. on Dec. 22, 1958, Fermin Nueca brought 7 sacks of palay to Manila Railroad Co. (MRC) at its station in Barrio del
Rosario, Camarines Sur, to be shipped to the municipality of Libmanan of the same province.

- He paid P 0.70 as freight charge and was issued Way Bill No. 56515.

- The cargo was loaded on the freight wagon of Train 537. Passengers boarded the train and shunting operations started to
hook a wagon thereto.

- Before the train reached the turnoff switch, its passenger coach fell on its side some 40 m from the station. The wagon pinned
Nueca, killing him instantly.

- Nueca’s widow and children bring this claim for damages, alleging that the Nueca was a passenger and his death was caused
by MRC’s negligence.

- MRC disclaimed liability stating: (1) it exercised due care in safeguarding the passengers during the shunting operation, (2)
Nueca was not a passenger but a trespasser, (3) even if Nueca were a passenger, he illegally boarded the train without
permission by not paying the fare, (4) the mishap was not attributable to any defect in MRC equipment, (5) that the accident
happened due to force majeur.

- MRC presented evidence showing there was no mechanical defect, but it did not explain why the accident occurred or show
that force majeur caused the mishap.

- The lower court absolved MRC of liability and held that Nueca was a trespasser since he did not buy any ticket, and in any
case, was not in a proper place for passengers.

Issue:

1. W/N Nueca was a passenger?

2. W/N MRC is liable?
3. Was the accident due to MRC’s negligence or force majeur?
4. Is Nueca liable for contributory negligence?

Held:

1. No, Nueca was not a passenger thus, MRC did not owe him extraordinary diligence.

A passenger is one who travels in a public conveyance by virtue of a contract, express or implied, with the carrier as to the payment of
the fare, or that which is accepted as an equivalent.

The relation of passenger and carrier commences when one puts himself in the care of the carrier, or directly under its control, with the
bona fide intention of becoming a passenger, and is accepted as such by the carrier – as where he makes a contract for trasportation
and presents himself at the proper place and in a proper manner to be transported.

Even disregarding the matter of tickets, and assuming Nueca intended to be a passenger, he was never accepted as such by MRC as he
did not present himself at the proper place and in a proper manner to be transported.

2. Yes, the liability of railroad companies to persons upon the premises is determined by the general rules of negligence
relating to duties of owners/occupiers of property.

While railroad companies are not bound to the same degree of care in regard to strangers who are unlawfully upon the premises of its
passengers, it may still be liable to such strangers for negligent or tortious acts.

Here, Nueca was not on the track, but either unlawfully inside the baggage car or beside the track.
It is normal for people to walk on the track or roadbed when there is no oncoming train and to walk beside the track when a train
passes. This practice is tolerated by MRC. Generally, MRC’s stations are not enclosed, and is easily accessible to the public.

1. MRC is negligent; doctrine of res ipsa loquitur applied.

The train was under the complete control of the railroad company at the time of the accident. The baggage car would not have been
derailed if the train had been properly operated.

Res ipsa loquitur is a rule of evidence peculiar to the law of negligence which recognizes that prima facie negligence may be
established without direct proof and furnishes a substitute for specific proof of negligence.

4. No.

An invitation to stay in the premises is implied from the lack of prohibition to outsiders to keep off the premises, hence, a stranger
who is injured by a derailed train while staying beside a railroad track is not guilty of contributory negligence.

Note: Our law on common carriers is lifted from Anglo-American statutes.

2. G.R. No. 80447 January 31, 1989

BALIWAG TRANSIT, INC., petitioner,

vs.
HON. COURT OF APPEALS and SPS. SOTERO CAILIPAN, JR. and ZENAIDA LOPEZ and GEORGE L.
CAILIPAN, respondents.

Sta. Maria & Associates for petitioner.

Punzalan and Associates Law Office for respondents.

MELENCIO-HERRERA, J.:

On 10 April 1985 a Complaint for damages arising from breach of contract of carriage was filed by private respondents, the Spouses
Sotero Cailipan, Jr. and Zenaida Lopez, and their son George, of legal age, against petitioner Baliwag Transit (Baliwag, for brevity).
The Complaint alleged that George, who was a paying passenger on a Baliwag bus on 17 December 1984, suffered multiple serious
physical injuries when he was thrown off said bus driven in a careless and negligent manner by Leonardo Cruz, the authorized bus
driver, along Barangay Patubig, Marilao, Bulacan. As a result, he was confined in the hospital for treatment, incurring medical
expenses, which were borne by his parents, the respondent Spouses, in the sum of about P200,000.00 plus other incidental expenses of
about P10,000.00.

On 26 April 1985 an Answer was filed by petitioner alleging that the cause of the injuries sustained by George was solely attributable
to his own voluntary act in that, without warning and provocation, he suddenly stood up from his seat and headed for the door of the
bus as if in a daze, opened it and jumped off while said bus was in motion, in spite of the protestations by the driver and without the
knowledge of the conductor.

Baliwag then filed a Third-Party Complaint against Fortune Insurance & Surety Company, Inc., on its third-party liability insurance in
the amount of P50,000.00. In its Answer, Fortune Insurance claimed limited liability, the coverage being subject to a Schedule of
Indemnities forming part of the insurance policy.

On 14 November 1985 and 18 November 1985, respectively, Fortune Insurance and Baliwag each filed Motions to Dismiss on the
ground that George, in consideration of the sum of P8,020.50 had executed a "Release of Claims" dated 16 May 1985. These Motions
were denied by the Trial Court in an Order dated 13 January 1986 as they were filed beyond the time for pleading and after the
Answer were already filed.
On 5 February 1986 Baliwag filed a Motion to Admit Amended Answer, which was granted by the Trial Court. The Amended Answer
incorporated the affirmative defense in the Motion to Dismiss to the effect that on 16 May 1985, George bad been paid all his claims
for damages arising from the incident subject matter of the complaint when he executed the following "Release of Claims":

For and in consideration of the payment to me/us of the sum of EIGHT THOUSAND TWENTY and 50/100 PESOS
ONLY (P8,020.50), the receipt of which is hereby acknowledged, I/we, being of lawful age, do hereby release,
acquit and forever discharge Fortune Insurance and/or Baliwag transit, Inc. his/her heirs, executors and assigns, from
any and all liability now accrued or hereafter to accrue on account of any and all claims or causes of action which
I/we now or may here after have for personal injuries, damage to property, loss of services, medical expenses, losses
or damages of any and every kind or nature whatsoever, now known or what may hereafter develop by me/us
sustained or received on or about 17th day of December, 1984 through Reckless Imprudence Resulting to Physical
Injuries, and I/we hereby declare that I/we fully understand the terms of this settlement and voluntarily accept said
sum for the purpose of making a full and final compromise adjustment and settlement of the injuries and damages,
expenses and inconvenience above mentioned. (Rollo, p. 11)

During the preliminary hearing on the aforementioned affirmative defense, Baliwag waived the presentation of testimonial evidence
and instead offered as its Exhibit "1" the "Release of Claims" signed by George and witnessed by his brother Benjamin L. Cailipan, a
licensed engineer.

By way of opposition to petitioner's affirmative defense, respondent Sotero Cailipan, Jr. testified that be is the father of George, who
at the time of the incident was a student, living with his parents and totally dependent on them for their support; that the expenses for
his hospitalization were shouldered by his parents; and that they had not signed the "Release of Claims."

In an Order dated 29 August 1986, the Regional Trial Court of Bulacan, Branch 20, 1 dismissed the Complaint and Third-party
Complaint, ruling that since the contract of carriage is between Baliwag and George L. Cailipan, the latter, who is of legal age, had the
exclusive right to execute the Release of Claims despite the fact that he is still a student and dependent on his parents for support.
Consequently, the execution by George of the Release of Claims discharges Baliwag and Fortune Insurance.

Aggrieved, the Spouses appealed to respondent Court of Appeals.

On 22 October 1987, the Appellate Court rendered a Decision 2 setting aside the appealed Order and holding that the "Release of
Claims" cannot operate as a valid ground for the dismissal of the case because it does not have the conformity of all the parties,
particularly George's parents, who have a substantial interest in the case as they stand to be prejudiced by the judgment because they
spent a sizeable amount for the medical bills of their son; that the Release of Claims was secured by Fortune Insurance for the
consideration of P8,020.50 as the full and final settlement of its liability under the insurance policy and not for the purpose of
releasing Baliwag from its liability as a carrier in this suit for breach of contract. The Appellate Court also ordered the remand of the
case to the lower Court for trial on the merits and for George to return the amount of P8,020.50 to Fortune Insurance.

Hence, this Petition for Review on certiorari by Baliwag assailing the Appellate Court judgment.

The issue brought to the fore is the legal effect of the Release of Claims executed by George during the pendency of this case.

We hold that since the suit is one for breach of contract of carriage, the Release of Claims executed by him, as the injured party,
discharging Fortune Insurance and Baliwag from any and all liability is valid. He was then of legal age, a graduating student of
Agricultural Engineering, and had the capacity to do acts with legal effect (Article 37 in relation to Article 402, Civil Code). Thus, he
could sue and be sued even without the assistance of his parents.

Significantly, the contract of carriage was actually between George, as the paying passenger, and Baliwag, as the common carrier. As
such carrier, Baliwag was bound to carry its passengers safely as far as human care and foresight could provide, and is liable for
injuries to them through the negligence or wilful acts of its employees (Articles 1755 and 1759, Civil Code). Thus, George had the
right to be safely brought to his destination and Baliwag had the correlative obligation to do so. Since a contract may be violated only
by the parties thereto, as against each other, in an action upon that contract, the real parties in interest, either as plaintiff or as
defendant, must be parties to said contract (Marimperio Compania Naviera, S.A. vs. Court of Appeals, No. L-40234, December 14,
1987, 156 SCRA 368). A real party-in-interest -plaintiff is one who has a legal right while a real party-in-interest-defendant is one
who has a correlative legal obligation whose act or omission violates the legal right of the former (Lee vs. Romillo, Jr., G.R. No.
60973, May 28, 1988). In the absence of any contract of carriage between Baliwag and George's parents, the latter are not real parties-
in-interest in an action for breach of that contract.

The general rule of the common law is that every action must be brought in the name of the party whose legal right
has been invaded or infringed. 15 Enc. P1. & Pr. p. 484. "For the immediate wrong and damage the person injured is
 the only one who can maintain the action." Id. p. 578. The person who sustains an injury is the person to bring an
action for the injury against the wrongdoer." Dicey parties to Actions, 347. (Cited in Green v. Shoemaker, 73 A 688,
23 L.R.A., N.S. 667).

There is no question regarding the genuineness and due execution of the Release of Claims. It is a duly notarized public document. It
clearly stipulates that the consideration of P8,020.50 received by George was "to release and forever discharge Fortune Insurance
and/or Baliwag from any and all liabilities now accrued or to accrue on account of any and all claims or causes of action ... for
personal injuries, damage to property, loss of services, medical expenses, losses or damages of any and every kind or nature
whatsoever, sustained by him on 17 December 1984 thru Reckless Imprudence Resulting to Physical Injuries." Consequently, the
ruling of respondent Appellate Court that the "Release of Claims" was intended only as the full and final settlement of a third-party
liability for bodily injury claim and not for the purpose of releasing Baliwag from its liability, if any, in a breach of a contract of
carriage, has to be rejected for being contrary to the very terms thereof. If the terms of a contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its stipulations shall control (Article 1370, Civil Code). The phraseology
"any and all claims or causes of action" is broad enough to include all damages that may accrue to the injured party arising from the
unfortunate accident.

The Release of Claims had the effect of a compromise agreement since it was entered into for the purpose of making a full and final
compromise adjustment and settlement of the cause of action involved. A compromise is a contract whereby the parties, by making
reciprocal concessions, avoid a litigation or put an end to one already commenced (Article 2028, Civil Code). The Release of Claims
executed by the injured party himself wrote finish to this litigation.

WHEREFORE, the Decision dated 22 October 1987 of respondent Court of Appeals is SET ASIDE, the Decision of the Regional
Trial Court of Bulacan, Branch 20, is REINSTATED, and the Complaint and Third-Party Complaint are hereby ordered DISMISSED.
No costs.

SO ORDERED.

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

MR. & MRS. ENGRACIO FABRE, JR. and PORFIRIO CABIL, petitioners,
vs.
COURT OF APPEALS, THE WORD FOR THE WORLD CHRISTIAN FELLOWSHIP, INC., AMYLINE ANTONIO,
JOHN RICHARDS, GONZALO GONZALES, VICENTE V. QUE, JR., ICLI CORDOVA, ARLENE GOJOCCO, ALBERTO
ROXAS CORDERO, RICHARD BAUTISTA, JOCELYN GARCIA, YOLANDA CORDOVA, NOEL ROQUE, EDWARD
TAN, ERNESTO NARCISO, ENRIQUETA LOCSIN, FRANCIS NORMAN O. LOPES, JULIUS CAESAR, GARCIA,
ROSARIO MA. V. ORTIZ, MARIETTA C. CLAVO, ELVIE SENIEL, ROSARIO MARA-MARA, TERESITA REGALA,
MELINDA TORRES, MARELLA MIJARES, JOSEFA CABATINGAN, MARA NADOC, DIANE MAYO, TESS PLATA,
MAYETTE JOCSON, ARLENE Y. MORTIZ, LIZA MAYO, CARLOS RANARIO, ROSAMARIA T. RADOC and
BERNADETTE FERRER, respondents.

MENDOZA, J.:p

This is a petition for review on certiorari of the decision of the Court of Appeals1 in CA-GR No. 28245, dated September 30, 1992,
which affirmed with modification the decision of the Regional Trial Court of Makati, Branch 58, ordering petitioners jointly and
severally to pay damages to private respondent Amyline Antonio, and its resolution which denied petitioners' motion for
reconsideration for lack of merit.

Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model Mazda minibus. They used the bus principally in connection
with a bus service for school children which they operated in Manila. The couple had a driver, Porfirio J. Cabil, whom they hired in
1981, after trying him out for two weeks, His job was to take school children to and from the St. Scholastica's College in Malate,
Manila.

On November 2, 1984 private respondent Word for the World Christian Fellowship Inc. (WWCF) arranged with 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 group was scheduled to leave on November 2, 1984, at 5:00 o'clock in the afternoon. However, as several members of the party
were late, the bus did not leave the Tropical Hut at the corner of Ortigas Avenue and EDSA until 8:00 o'clock in the evening.
Petitioner Porfirio Cabil drove the minibus.

The usual route to Caba, La Union was through Carmen, Pangasinan. However, the bridge at Carmen was under repair, sot hat
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
Baay in Lingayen, Pangasinan. At 11:30 that night, petitioner Cabil came upon a sharp curve on the highway, running on a south to
east direction, which he described as "siete." 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.

Several passengers were injured. Private respondent Amyline Antonio was thrown on the floor of the bus and pinned down by a
wooden seat which came down by a wooden seat which came off after being unscrewed. It took three persons to safely remove her
from this portion. She was in great pain and could not move.

The driver, petitioner Cabil, claimed he did not see the curve until it was too late. He said he was not familiar with the area and he
could not have seen the curve despite the care he took in driving the bus, because it was dark and there was no sign on the road. He
said that he saw the curve when he was already within 15 to 30 meters of it. He allegedly slowed down to 30 kilometers per hour, but
it was too late.

The Lingayen police investigated the incident the next day, November 3, 1984. On the basis of their finding they filed a criminal
complaint against the driver, Porfirio Cabil. The case was later filed with the Lingayen Regional Trial Court. Petitioners Fabre paid
Jesus Escano P1,500.00 for the damage to the latter's fence. On the basis of Escano's affidavit of desistance the case against petitioners
Fabre was dismissed.

Amyline Antonio, who was seriously injured, brought this case in the RTC of Makati, Metro Manila. As a result of the accident, she is
now suffering from paraplegia and is permanently paralyzed from the waist down. During the trial she described the operations she
underwent and adduced evidence regarding the cost of her treatment and therapy. Immediately after the accident, she was taken to the
Nazareth Hospital in Baay, Lingayen. As this hospital was not adequately equipped, she was transferred to the Sto. Niño Hospital, also
in the town of Ba-ay, where she was given sedatives. An x-ray was taken and the damage to her spine was determined to be too severe
to be treated there. She was therefore brought to Manila, first to the Philippine General Hospital and later to the Makati Medical
Center where she underwent an operation to correct the dislocation of her spine.

In its decision dated April 17, 1989, the trial court found that:

No convincing evidence was shown that the minibus was properly checked for travel to a long distance trip and that the driver was
properly screened and tested before being admitted for employment. Indeed, all the evidence presented have shown the negligent act
of the defendants which ultimately resulted to the accident subject of this case.

Accordingly, it gave judgment for private respondents holding:

Considering that plaintiffs Word for the World Christian Fellowship, Inc. and Ms. Amyline Antonio were the only ones who adduced
evidence in support of their claim for damages, the Court is therefore not in a position to award damages to the other plaintiffs.

WHEREFORE, premises considered, the Court hereby renders judgment against defendants Mr. & Mrs. Engracio Fabre, Jr. and
Porfirio Cabil y Jamil pursuant to articles 2176 and 2180 of the Civil Code of the Philippines and said defendants are ordered to pay
jointly and severally to the plaintiffs the following amount:

1) P93,657.11 as compensatory and actual damages;

2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff Amyline Antonio;

3) P20,000.00 as moral damages;

4) P20,000.00 as exemplary damages; and

5) 25% of the recoverable amount as attorney's fees;

 6) Costs of suit.

SO ORDERED.

The Court of Appeals affirmed the decision of the trial court with respect to Amyline Antonio but dismissed it with respect to the
other plaintiffs on the ground that they failed to prove their respective claims. The Court of Appeals modified the award of damages as
follows:

1) P93,657.11 as actual damages;

2) P600,000.00 as compensatory damages;

3) P50,000.00 as moral damages;

4) P20,000.00 as exemplary damages;

5) P10,000.00 as attorney's fees; and

6) Costs of suit.

The Court of Appeals sustained the trial court's finding that petitioner Cabil failed to exercise due care and precaution in the operation
of his vehicle considering the time and the place of the accident. The Court of Appeals held that the Fabres were themselves
presumptively negligent. Hence, this petition. Petitioners raise the following issues:

I. WHETHER OR NOT PETITIONERS WERE NEGLIGENT.

II. WHETHER OF NOT PETITIONERS WERE LIABLE FOR THE INJURIES SUFFERED BY
PRIVATE RESPONDENTS.

III WHETHER OR NOT DAMAGES CAN BE AWARDED AND IN THE POSITIVE, UP TO

WHAT EXTENT.

Petitioners challenge the propriety of the award of compensatory damages in the amount of P600,000.00. It is insisted that, on the
assumption that petitioners are liable an award of P600,000.00 is unconscionable and highly speculative. Amyline Antonio testified
that she was a casual employee of a company called "Suaco," earning P1,650.00 a month, and a dealer of Avon products, earning an
average of P1,000.00 monthly. Petitioners contend that as casual employees do not have security of tenure, the award of P600,000.00,
considering Amyline Antonio's earnings, is without factual basis as there is no assurance that she would be regularly earning these
amounts.

With the exception of the award of damages, the petition is devoid of merit.

First, it is unnecessary for our purpose to determine whether to decide this case on the theory that petitioners are liable for breach of
contract of carriage or culpa contractual or on the theory of quasi delict or culpa aquiliana as both the Regional Trial Court and the
Court of Appeals held, for although the relation of passenger and carrier is "contractual both in origin and nature," nevertheless "the
act that breaks the contract may be also a tort." 2 In either case, the question is whether the bus driver, petitioner Porfirio Cabil, was
negligent.

The finding that Cabil drove his bus negligently, while his employer, the Fabres, who owned the bus, failed to exercise the diligence
of a good father of the family in the selection and supervision of their employee is fully supported by the evidence on record. These
factual findings of the two courts we regard as final and conclusive, supported as they are by the evidence. Indeed, it was admitted by
Cabil that on the night in question, it was raining, and as a consequence, the road was slippery, and it was dark. He averred these facts
to justify his failure to see that there lay a sharp curve ahead. However, it is undisputed that Cabil drove his bus at the speed of 50
kilometers per hour and only slowed down when he noticed the curve some 15 to 30 meters ahead. 3 By then it was too late for him to
avoid falling off the road. Given the conditions of the road and considering that the trip was Cabil's first one outside of Manila, Cabil
should have driven his vehicle at a moderate speed. There is testimony 4 that the vehicles passing on that portion of the road should
only be running 20 kilometers per hour, so that at 50 kilometers per hour, Cabil was running at a very high speed.
Considering the foregoing — the fact that it was raining and the road was slippery, that it was dark, that he drove his bus at 50
kilometers an hour when even on a good day the normal speed was only 20 kilometers an hour, and that he was unfamiliar with the
terrain, Cabil was grossly negligent and should be held liable for the injuries suffered by private respondent Amyline Antonio.

Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to the presumption that his employers, the Fabres, were
themselves negligent in the selection and supervisions of their employee.

Due diligence in selection of employees is not satisfied by finding that the applicant possessed a professional driver's license. The
employer should also examine the applicant for his qualifications, experience and record of service. 5 Due diligence in supervision, on
the other hand, requires the formulation of rules and regulations for the guidance of employees and issuance of proper instructions as
well as actual implementation and monitoring of consistent compliance with the rules. 6

In the case at bar, the Fabres, in allowing Cabil to drive the bus to La Union, apparently did not consider the fact that Cabil had been
driving for school children only, from their homes to the St. Scholastica's College in Metro Manila. 7They had hired him only after a
two-week apprenticeship. They had hired him only after a two-week apprenticeship. They had tested him for certain matters, such as
whether he could remember the names of the children he would be taking to school, which were irrelevant to his qualification to drive
on a long distance travel, especially considering that the trip to La Union was his first. The existence of hiring procedures and
supervisory policies cannot be casually invoked to overturn the presumption of negligence on the part of an employer. 8

Petitioners argue that they are not liable because (1) an earlier departure (made impossible by the congregation's delayed meeting)
could have a averted the mishap and (2) under the contract, the WWCF was directly responsible for the conduct of the trip. Neither of
these contentions hold water. The hour of departure had not been fixed. Even if it had been, the delay did not bear directly on the
cause of the accident. With respect to the second contention, it was held in an early case that:

[A] person who hires a public automobile and gives the driver directions as to the place to which he wishes to be conveyed, but
exercises no other control over the conduct of the driver, is not responsible for acts of negligence of the latter or prevented from
recovering for injuries suffered from a collision between the automobile and a train, caused by the negligence or the automobile
driver. 9

As already stated, 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.

As common carriers, the Fabres were found to exercise "extraordinary diligence" for the safe transportation of the
passengers to their destination. This duty of care is not excused by proof that they exercise the diligence of a good
father of the family in the selection and supervision of their employee. As Art. 1759 of the Code provides:

Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the
former's employees although such employees may have acted beyond the scope of their authority or in violation of
the orders of the common carriers.

This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father
of a family in the selection and supervision of their employees.

The same circumstances detailed above, supporting the finding of the trial court and of the appellate court that petitioners are liable
under Arts. 2176 and 2180 for quasi delict, fully justify findings them guilty of breach of contract of carriage under Arts. 1733, 1755
and 1759 of the Civil Code.
Secondly, we sustain the award of damages in favor of Amyline Antonio. However, we think the Court of Appeals erred in increasing
the amount of compensatory damages because private respondents did not question this award as inadequate. 11 To the contrary, the
award of P500,000.00 for compensatory damages which the Regional Trial Court made is reasonable considering the contingent
nature of her income as a casual employee of a company and as distributor of beauty products and the fact that the possibility that she
might be able to work again has not been foreclosed. In fact she testified that one of her previous employers had expressed willingness
to employ her again.

With respect to the other awards, while the decisions of the trial court and the Court of Appeals do not sufficiently indicate the factual
and legal basis for them, we find that they are nevertheless supported by evidence in the records of this case. Viewed as an action
for quasi delict, this case falls squarely within the purview of Art. 2219(2) providing for the payment of moral damages in cases
of quasi delict. On the theory that petitioners are liable for breach of contract of carriage, the award of moral damages is authorized by
Art. 1764, in relation to Art. 2220, since Cabil's gross negligence amounted to bad faith. 12 Amyline Antonio's testimony, as well as the
testimonies of her father and copassengers, fully establish the physical suffering and mental anguish she endured as a result of the
injuries caused by petitioners' negligence.

The award of exemplary damages and attorney's fees was also properly made. However, for the same reason that it was error for the
appellate court to increase the award of compensatory damages, we hold that it was also error for it to increase the award of moral
damages and reduce the award of attorney's fees, inasmuch as private respondents, in whose favor the awards were made, have not
appealed. 13

As above stated, the decision of the Court of Appeals can be sustained either on the theory of quasi delict or on that of breach of
contract. The question is whether, as the two courts below held, petitioners, who are the owners and driver of the bus, may be made to
respond jointly and severally to private respondent. We hold that they may be. In Dangwa Trans. Co. Inc. v. Court of Appeals, 14 on
facts similar to those in this case, this Court held the bus company and the driver jointly and severally liable for damages for injuries
suffered by a passenger. Again, in Bachelor Express, Inc. v. Court of
Appeals 15 a driver found negligent in failing to stop the bus in order to let off passengers when a fellow passenger ran amuck, as a
result of which the passengers jumped out of the speeding bus and suffered injuries, was held also jointly and severally liable with the
bus company to the injured passengers.

The same rule of liability was applied in situations where the negligence of the driver of the bus on which plaintiff was riding
concurred with the negligence of a third party who was the driver of another vehicle, thus causing an accident. In Anuran
v. Buño, 16 Batangas Laguna Tayabas Bus Co. v. Intermediate Appellate Court, 17 and Metro Manila Transit Corporation v. Court of
Appeals, 18 the bus company, its driver, the operator of the other vehicle and the driver of the vehicle were jointly and severally held
liable to the injured passenger or the latters' heirs. The basis of this allocation of liability was explained in Viluan v. Court of
Appeals, 19 thus:

Nor should it make any difference that the liability of petitioner [bus owner] springs from contract while that of
respondents [owner and driver of other vehicle] arises from quasi-delict. As early as 1913, we already ruled
in Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of injury to a passenger due to the negligence of the driver of the
bus on which he was riding and of the driver of another vehicle, the drivers as well as the owners of the two vehicles
are jointly and severally liable for damages. Some members of the Court, though, are of the view that under the
circumstances they are liable on quasi-delict. 20

It is true that in Philippine Rabbit Bus Lines, Inc. v. Court of Appeals 21 this Court exonerated the jeepney driver from liability to the
injured passengers and their families while holding the owners of the jeepney jointly and severally liable, but that is because that case
was expressly tried and decided exclusively on the theory of culpa contractual. As this Court there explained:

The trial court was therefore right in finding that Manalo (the driver) and spouses Mangune and Carreon (the jeepney owners) were
negligent. However, its ruling that spouses Mangune and Carreon are jointly and severally liable with Manalo is erroneous. The driver
cannot be held jointly and severally liable with carrier in case of breach of the contract of carriage. The rationale behind this is readily
discernible. Firstly, the contract of carriage is between the carrier is exclusively responsible therefore to the passenger, even if such
breach be due to the negligence of his driver (see Viluan v. The Court of Appeals, et al., G.R. Nos. L-21477-81, April 29, 1966, 16
SCRA 742). 22

As in the case of BLTB, private respondents in this case and her coplaintiffs did not stake out their claim against the carrier and the
driver exclusively on one theory, much less on that of breach of contract alone. After all, it was permitted for them to allege alternative
causes of action and join as many parties as may be liable on such causes of action 23 so long as private respondent and her coplaintiffs
do not recover twice for the same injury. What is clear from the cases is the intent of the plaintiff there to recover from both the carrier
and the driver, thus, justifying the holding that the carrier and the driver were jointly and severally liable because their separate and
distinct acts concurred to produce the same injury.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with MODIFICATION as to award of damages. Petitioners are
ORDERED to PAY jointly and severally the private respondent Amyline Antonio the following amounts:

1) P93,657.11 as actual damages;

2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff Amyline Antonio;

3) P20,000.00 as moral damages;

4) P20,000.00 as exemplary damages;

5) 25% of the recoverable amount as attorney's fees; and

6) costs of suit.

SO ORDERED.

4. G.R. No. 121824 January 29, 1998

BRITISH AIRWAYS, Petitioner, vs. COURT OF APPEALS, GOP MAHTANI, and PHILIPPINE AIRLINES, Respondents.

ROMERO, J.:

In this appeal by certiorari, petitioner British Airways (BA) seeks to set aside the decision of respondent Court of
Appeals 1 promulgated on September 7, 1995, which affirmed the award of damages and attorney's fees made by the Regional Trial
Court of Cebu, 7th Judicial Region, Branch 17, in favor of private respondent GOP Mahtani as well as the dismissal of its third-party
complaint against Philippine Airlines (PAL). 2

The material and relevant facts are as follows:

On April 16, 1989, Mahtani decided to visit his relatives in Bombay, India. In anticipation of his visit, he obtained the services of a
certain Mr. Gumar to prepare his travel plans. The latter, in turn, purchased a ticket from BA where the following itinerary was
indicated: 3

CARRIER FLIGHT DATE TIME STATUS

MANILA MNL PR 310 Y 16 APR. 1730 OK

HONGKONG HKG BA 20 M 16 APR. 2100 OK

BOMBAY BOM BA 19 M 23 APR. 0840 OK

HONGKONG HKG PR 311 Y

MANILA MNL

Since BA had no direct flights from Manila to Bombay, Mahtani had to take a flight to Hongkong via PAL, and upon arrival in
Hongkong he had to take a connecting flight to Bombay on board BA.

Prior to his departure, Mahtani checked in at the PAL counter in Manila his two pieces of luggage containing his clothings and
personal effects, confident that upon reaching Hongkong, the same would be transferred to the BA flight bound for Bombay.

Unfortunately, when Mahtani arrived in Bombay he discovered that his luggage was missing and that upon inquiry from the BA
representatives, he was told that the same might have been diverted to London. After patiently waiting for his luggage for one week,
BA finally advised him to file a claim by accomplishing the "Property Irregularity Report." 4
Back in the Philippines, specifically on June 11, 1990, Mahtani filed his complaint for damages and attorney's fees 5 against BA and
Mr. Gumar before the trial court, docketed as Civil Case No. CEB-9076.

On September 4, 1990, BA filed its answer with counter claim 6 to the complaint raising, as special and affirmative defenses, that
Mahtani did not have a cause of action against it. Likewise, on November 9, 1990, BA filed a third-party complaint 7 against PAL
alleging that the reason for the non-transfer of the luggage was due to the latter's late arrival in Hongkong, thus leaving hardly any
time for the proper transfer of Mahtani's luggage to the BA aircraft bound for Bombay.

On February 25, 1991, PAL filed its answer to the third-party complaint, wherein it disclaimed any liability, arguing that there was, in
fact, adequate time to transfer the luggage to BA facilities in Hongkong. Furthermore, the transfer of the luggage to Hongkong
authorities should be considered as transfer to BA. 8

After appropriate proceedings and trial, on March 4, 1993, the trial court rendered its decision in favor of Mahtani, 9 the dispositive
portion of which reads as follows:

WHEREFORE, premises considered, judgment is rendered for the plaintiff and against the defendant for which defendant is ordered
to pay plaintiff the sum of Seven Thousand (P7,000.00) Pesos for the value of the two (2) suit cases; Four Hundred U.S. ($400.00)
Dollars representing the value of the contents of plaintiff's luggage; Fifty Thousand (P50,000.00) Pesos for moral and actual damages
and twenty percent (20%) of the total amount imposed against the defendant for attorney's fees and costs of this action.

The Third-Party Complaint against third-party defendant Philippine Airlines is DISMISSED for lack of cause of action.

SO ORDERED.

Dissatisfied, BA appealed to the Court of Appeals, which however, affirmed the trial court's findings. Thus:

WHEREFORE, in view of all the foregoing considerations, finding the Decision appealed from to be in accordance with law and
evidence, the same is hereby AFFIRMED in toto, with costs against defendant-appellant.

SO ORDERED. 10

BA is now before us seeking the reversal of the Court of Appeals' decision.

In essence, BA assails the award of compensatory damages and attorney's fees, as well as the dismissal of its third-party complaint
against PAL. 11

Regarding the first assigned issue, BA asserts that the award of compensatory damages in the separate sum of P7,000.00 for the loss of
Mahtani's two pieces of luggage was without basis since Mahtani in his complaint 12 stated the following as the value of his personal
belongings:

8. On the said travel, plaintiff took with him the following items and its corresponding value, to wit:

1. personal belonging P10,000.00

2. gifts for his parents and relatives $5,000.00

Moreover, he failed to declare a higher valuation with respect to his luggage, a condition provided for in the ticket, which reads: 13

Liability for loss, delay, or damage to baggage is limited unless a higher value is declared in advance and additional charges are paid:

1. For most international travel (including domestic corporations of international journeys) the liability limit is approximately U.S.
$9.07 per pound (U.S. $20.000) per kilo for checked baggage and U.S. $400 per passenger for unchecked baggage.

Before we resolve the issues raised by BA, it is needful to state that the nature of an airline's contract of carriage partakes of two types,
namely: a contract to deliver a cargo or merchandise to its destination and a contract to transport passengers to their destination. A
business intended to serve the traveling public primarily, it is imbued with public interest, hence, the law governing common carriers
imposes an exacting standard. 14 Neglect or malfeasance by the carrier's employees could predictably furnish bases for an action for
damages. 15
In the instant case, it is apparent that the contract of carriage was between Mahtani and BA. Moreover, it is indubitable that his
luggage never arrived in Bombay on time. Therefore, as in a number of cases 16 we have assessed the airlines' culpability in the form
of damages for breach of contract involving misplaced luggage.

In determining the amount of compensatory damages in this kind of cases, it is vital that the claimant satisfactorily prove during the
trial the existence of the factual basis of the damages and its causal connection to defendant's acts. 17

In this regard, the trial court granted the following award as compensatory damages:

Since plaintiff did not declare the value of the contents in his luggage and even failed to show receipts of the alleged gifts for the
members of his family in Bombay, the most that can be expected for compensation of his lost luggage (2 suit cases) is Twenty U.S.
Dollars ($20.00) per kilo, or combined value of Four Hundred ($400.00) U.S. Dollars for Twenty kilos representing the contents plus
Seven Thousand (P7,000.00) Pesos representing the purchase price of the two (2) suit cases.

However, as earlier stated, it is the position of BA that there should have been no separate award for the luggage and the contents
thereof since Mahtani failed to declare a separate higher valuation for the luggage, 18 and therefore, its liability is limited, at most, only
to the amount stated in the ticket.

Considering the facts of the case, we cannot assent to such specious argument.

Admittedly, in a contract of air carriage a declaration by the passenger of a higher value is needed to recover a greater amount. Article
22(1) of the Warsaw Convention, 19 provides as follows:

xxx xxx xxx

(2) In the transportation of checked baggage and goods, the liability of the carrier shall be limited to a sum of 250 francs per kilogram,
unless the consignor has made, at time the package was handed over to the carrier, a special declaration of the value at delivery and
has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared
sum, unless he proves that the sum is greater than the actual value to the consignor at delivery.

American jurisprudence provides that an air carrier is not liable for the loss of baggage in an amount in excess of the limits specified
in the tariff which was filed with the proper authorities, such tariff being binding, on the passenger regardless of the passenger's lack
of knowledge thereof or assent thereto. 20 This doctrine is recognized in this jurisdiction. 21

Notwithstanding the foregoing, we have, nevertheless, ruled against blind reliance on adhesion contracts where the facts and
circumstances justify that they should be disregarded. 22

In addition, we have held that benefits of limited liability are subject to waiver such as when the air carrier failed to raise timely
objections during the trial when questions and answers regarding the actual claims and damages sustained by the passenger were
asked. 23

Given the foregoing postulates, the inescapable conclusion is that BA had waived the defense of limited liability when it allowed
Mahtani to testify as to the actual damages he incurred due to the misplacement of his luggage, without any objection. In this regard,
we quote the pertinent transcript of stenographic notes of Mahtani's direct testimony: 24

Q - How much are you going to ask from this court?

A - P100,000.00.

Q - What else?

A - Exemplary damages.

Q - How much?

A - P100,000.00.

Q - What else?
A - The things I lost, $5,000.00 for the gifts I lost and my personal belongings, P10,000.00.

Q - What about the filing of this case?

A - The court expenses and attorney's fees is 30%.

Indeed, it is a well-settled doctrine that where the proponent offers evidence deemed by counsel of the adverse party to be
inadmissible for any reason, the latter has the right to object. However, such right is a mere privilege which can be waived.
Necessarily, the objection must be made at the earliest opportunity, lest silence when there is opportunity to speak may operate as a
waiver of objections. 25 BA has precisely failed in this regard.

To compound matters for BA, its counsel failed, not only to interpose a timely objection, but even conducted his own cross-
examination as well. 26 In the early case of Abrenica v. Gonda, 27 we ruled that:

. . . (I)t has been repeatedly laid down as a rule of evidence that a protest or objection against the admission of any evidence must be
made at the proper time, and that if not so made it will be understood to have been waived. The proper time to make a protest or
objection is when, from the question addressed to the witness, or from the answer thereto, or from the presentation of proof, the
inadmissibility of evidence is, or may be inferred.

Needless to say, factual findings of the trial court, as affirmed by the Court of Appeals, are entitled to great respect. 28 Since the actual
value of the luggage involved appreciation of evidence, a task within the competence of the Court of Appeals, its ruling regarding the
amount is assuredly a question of fact, thus, a finding not reviewable by this Court. 29

As to the issue of the dismissal of BA's third-party complaint against PAL, the Court of Appeals justified its ruling in this wise, and
we quote: 30

Lastly, we sustain the trial court's ruling dismissing appellant's third-party complaint against PAL.

The contract of air transportation in this case pursuant to the ticket issued by appellant to plaintiff-appellee was exclusively between
the plaintiff Mahtani and defendant-appellant BA. When plaintiff boarded the PAL plane from Manila to Hongkong, PAL was merely
acting as a subcontractor or agent of BA. This is shown by the fact that in the ticket issued by appellant to plaintiff-appellee, it is
specifically provided on the "Conditions of Contract," paragraph 4 thereof that:

4. . . . carriage to be performed hereunder by several successive carriers is regarded as a single operation.

The rule that carriage by plane although performed by successive carriers is regarded as a single operation and that the carrier issuing
the passenger's ticket is considered the principal party and the other carrier merely subcontractors or agent, is a settled issue.

We cannot agree with the dismissal of the third-complaint.

In Firestone Tire and Rubber Company of the Philippines v. Tempengko, 31 we expounded on the nature of a third-party complaint
thus:

The third-party complaint is, therefore, a procedural device whereby a "third party" who is neither a party nor privy to the act or deed
complained of by the plaintiff, may be brought into the case with leave of court, by the defendant, who acts, as third-party plaintiff to
enforce against such third-party defendant a right for contribution, indemnity, subrogation or any other relief, in respect of the
plaintiff's claim. The third-party complaint is actually independent of and separate and distinct from the plaintiff's complaint. Were it
not for this provision of the Rules of Court, it would have to be filed independently and separately from the original complaint by the
defendant against the third-party. But the Rules permit defendant to bring in a third-party defendant or so to speak, to litigate his
separate cause of action in respect of plaintiff's claim against a third-party in the original and principal case with the object of avoiding
circuitry of action and unnecessary proliferation of law suits and of disposing expeditiously in one litigation the entire subject matter
arising from one particular set of facts.

Undeniably, for the loss of his luggage, Mahtani is entitled to damages from BA, in view of their contract of carriage. Yet, BA
adamantly disclaimed its liability and instead imputed it to PAL which the latter naturally denies. In other words, BA and PAL are
blaming each other for the incident.

In resolving this issue, it is worth observing that the contract of air transportation was exclusively between Mahtani and BA, the latter
merely endorsing the Manila to Hongkong leg of the former's journey to PAL, as its subcontractor or agent. In fact, the fourth
paragraph of the "Conditions of Contracts" of the ticket 32 issued by BA to Mahtani confirms that the contract was one of continuous
air transportation from Manila to Bombay.

4. . . . carriage to be performed hereunder by several successive carriers is regarded as a single operation.

Prescinding from the above discussion, it is undisputed that PAL, in transporting Mahtani from Manila to Hongkong acted as the agent
of BA.

Parenthetically, the Court of Appeals should have been cognizant of the well-settled rule that an agent is also responsible for any
negligence in the performance of its function. 33 and is liable for damages which the principal may suffer by reason of its negligent
act. 34 Hence, the Court of Appeals erred when it opined that BA, being the principal, had no cause of action against PAL, its agent or
sub-contractor.

Also, it is worth mentioning that both BA and PAL are members of the International Air Transport Association (IATA), wherein
member airlines are regarded as agents of each other in the issuance of the tickets and other matters pertaining to their
relationship. 35 Therefore, in the instant case, the contractual relationship between BA and PAL is one of agency, the former being the
principal, since it was the one which issued the confirmed ticket, and the latter the agent.

Our pronouncement that BA is the principal is consistent with our ruling in Lufthansa German Airlines v. Court of Appeals. 36 In that
case, Lufthansa issued a confirmed ticket to Tirso Antiporda covering five-leg trip aboard different airlines. Unfortunately, Air Kenya,
one of the airlines which was to carry Antiporda to a specific destination "bumped" him off.

An action for damages was filed against Lufthansa which, however, denied any liability, contending that its responsibility towards its
passenger is limited to the occurrence of a mishap on its own line. Consequently, when Antiporda transferred to Air Kenya, its
obligation as a principal in the contract of carriage ceased; from there on, it merely acted as a ticketing agent for Air Kenya.

In rejecting Lufthansa's argument, we ruled:

In the very nature of their contract, Lufthansa is clearly the principal in the contract of carriage with Antiporda and remains to be so,
regardless of those instances when actual carriage was to be performed by various carriers. The issuance of confirmed Lufthansa
ticket in favor of Antiporda covering his entire five-leg trip abroad successive carriers concretely attest to this.

Since the instant petition was based on breach of contract of carriage, Mahtani can only sue BA alone, and not PAL, since the latter
was not a party to the contract. However, this is not to say that PAL is relieved from any liability due to any of its negligent acts.
In China Air Lines, Ltd. v. Court of Appeals, 37 while not exactly in point, the case, however, illustrates the principle which governs
this particular situation. In that case, we recognized that a carrier (PAL), acting as an agent of another carrier, is also liable for its own
negligent acts or omission in the performance of its duties.

Accordingly, to deny BA the procedural remedy of filing a third-party complaint against PAL for the purpose of ultimately
determining who was primarily at fault as between them, is without legal basis. After all, such proceeding is in accord with the
doctrine against multiplicity of cases which would entail receiving the same or similar evidence for both cases and enforcing separate
judgments therefor. It must be borne in mind that the purpose of a third-party complaint is precisely to avoid delay and circuitry of
action and to enable the controversy to be disposed of in one suit. 38 It is but logical, fair and equitable to allow BA to sue PAL for
indemnification, if it is proven that the latter's negligence was the proximate cause of Mahtani's unfortunate experience, instead of
totally absolving PAL from any liability.

WHEREFORE, in view of the foregoing, the decision of the Court of Appeals in CA-G.R. CV No. 43309 dated September 7, 1995 is
hereby MODIFIED, reinstating the third-party complaint filed by British Airways dated November 9, 1990 against Philippine
Airlines. No costs.

SO ORDERED

5.

G.R. No. L-18965 October 30, 1964

COMPAÑIA MARITIMA, petitioner,

vs.
INSURANCE COMPANY OF NORTH AMERICA, respondent.
Rafael Dinglasan for petitioner.
Ozaeta Gibbs & Ozaeta for respondent.

BAUTISTA ANGELO, J.:

Sometime in October, 1952, Macleod and Company of the Philippines contracted by telephone the services of the Compañia
Maritima, a shipping corporation, for the shipment of 2,645 bales of hemp from the former's Sasa private pier at Davao City to Manila
and for their subsequent transhipment to Boston, Massachusetts, U.S.A. on board the S.S. Steel Navigator. This oral contract was later
on confirmed by a formal and written booking issued by Macleod's branch office in Sasa and handcarried to Compañia Maritima's
branch office in Davao in compliance with which the latter sent to Macleod's private wharf LCT Nos. 1023 and 1025 on which the
loading of the hemp was completed on October 29, 1952. These two lighters were manned each by a patron and an assistant patron.
The patrons of both barges issued the corresponding carrier's receipts and that issued by the patron of Barge No. 1025 reads in part:

Received in behalf of S.S. Bowline Knot in good order and condition from MACLEOD AND COMPANY OF
PHILIPPINES, Sasa Davao, for transhipment at Manila onto S.S. Steel Navigator.

FINAL DESTINATION: Boston.

Thereafter, the two loaded barges left Macleod's wharf and proceeded to and moored at the government's marginal wharf in the same
place to await the arrival of the S.S. Bowline Knot belonging to Compañia Maritima on which the hemp was to be loaded. During the
night of October 29, 1952, or at the early hours of October 30, LCT No. 1025 sank, resulting in the damage or loss of 1,162 bales of
hemp loaded therein. On October 30, 1952, Macleod promptly notified the carrier's main office in Manila and its branch in Davao
advising it of its liability. The damaged hemp was brought to Odell Plantation in Madaum, Davao, for cleaning, washing,
reconditioning, and redrying. During the period from November 1-15, 1952, the carrier's trucks and lighters hauled from Odell to
Macleod at Sasa a total of 2,197.75 piculs of the reconditioned hemp out of the original cargo of 1,162 bales weighing 2,324 piculs
which had a total value of 116,835.00. After reclassification, the value of the reconditioned hemp was reduced to P84,887.28, or a loss
in value of P31,947.72. Adding to this last amount the sum of P8,863.30 representing Macleod's expenses in checking, grading,
rebating, and other fees for washing, cleaning and redrying in the amount of P19.610.00, the total loss adds up to P60,421.02.

All abaca shipments of Macleod, including the 1,162 bales loaded on the carrier's LCT No. 1025, were insured with the Insurance
Company of North America against all losses and damages. In due time, Macleod filed a claim for the loss it suffered as above stated
with said insurance company, and after the same had been processed, the sum of P64,018.55 was paid, which was noted down in a
document which aside from being a receipt of the amount paid, was a subrogation agreement between Macleod and the insurance
company wherein the former assigned to the latter its rights over the insured and damaged cargo. Having failed to recover from the
carrier the sum of P60,421.02, which is the only amount supported by receipts, the insurance company instituted the present action on
October 28, 1953. After trial, the court a quo rendered judgment ordering the carrier to pay the insurance company the sum of
P60,421.02, with legal interest thereon from the date of the filing of the complaint until fully paid, and the costs. This judgment was
affirmed by the Court of Appeals on December 14, 1960. Hence, this petition for review.

The issues posed before us are: (1) Was there a contract of carriage between the carrier and the shipper even if the loss occurred when
the hemp was loaded on a barge owned by the carrier which was loaded free of charge and was not actually loaded on the S.S.
Bowline Knot which would carry the hemp to Manila and no bill of lading was issued therefore?; (2) Was the damage caused to the
cargo or the sinking of the barge where it was loaded due to a fortuitous event, storm or natural disaster that would exempt the carrier
from liability?; (3) Can respondent insurance company sue the carrier under its insurance contract as assignee of Macleod in spite of
the fact that the liability of the carrier as insurer is not recognized in this jurisdiction?; (4) Has the Court of Appeals erred in regarding
Exhibit NNN-1 as an implied admission by the carrier of the correctness and sufficiency of the shipper's statement of accounts
contrary to the burden of proof rule?; and (5) Can the insurance company maintain this suit without proof of its personality to do so?

1. This issue should be answered in the affirmative. As found by the Court of Appeals, Macleod and Company contracted by
telephone the services of petitioner to ship the hemp in question from the former's private pier at Sasa, Davao City, to Manila, to be
subsequently transhipped to Boston, Massachusetts, U.S.A., which oral contract was later confirmed by a formal and written booking
issued by the shipper's branch office, Davao City, in virtue of which the carrier sent two of its lighters to undertake the service. It also
appears that the patrons of said lighters were employees of the carrier with due authority to undertake the transportation and to sign the
documents that may be necessary therefor so much so that the patron of LCT No. 1025 signed the receipt covering the cargo of hemp
loaded therein as follows: .

Received in behalf of S.S. Bowline Knot in good order and condition from MACLEOD AND COMPANY OF
PHILIPPINES, Sasa Davao, for transhipment at Manila onto S.S. Steel Navigator.

FINAL DESTINATION: Boston.

The fact that the carrier sent its lighters free of charge to take the hemp from Macleod's wharf at Sasa preparatory to its loading onto
the ship Bowline Knot does not in any way impair the contract of carriage already entered into between the carrier and the shipper, for
that preparatory step is but part and parcel of said contract of carriage. The lighters were merely employed as the first step of the
voyage, but once that step was taken and the hemp delivered to the carrier's employees, the rights and obligations of the parties
attached thereby subjecting them to the principles and usages of the maritime law. In other words, here we have a complete contract of
carriage the consummation of which has already begun: the shipper delivering the cargo to the carrier, and the latter taking possession
thereof by placing it on a lighter manned by its authorized employees, under which Macleod became entitled to the privilege secured
to him by law for its safe transportation and delivery, and the carrier to the full payment of its freight upon completion of the voyage.

The receipt of goods by the carrier has been said to lie at the foundation of the contract to carry and deliver, and if actually no
goods are received there can be no such contract. The liability and responsibility of the carrier under a contract for the
carriage of goods commence on their actual delivery to, or receipt by, the carrier or an authorized agent. ... and delivery to a
lighter in charge of a vessel for shipment on the vessel, where it is the custom to deliver in that way, is a good delivery and
binds the vessel receiving the freight, the liability commencing at the time of delivery to the lighter. ... and, similarly, where
there is a contract to carry goods from one port to another, and they cannot be loaded directly on the vessel and lighters are
sent by the vessel to bring the goods to it, the lighters are for the time its substitutes, so that the bill of landing is applicable
to the goods as soon as they are placed on the lighters. (80 C.J.S., p. 901, emphasis supplied)

... The test as to whether the relation of shipper and carrier had been established is, Had the control and possession of the
cotton been completely surrendered by the shipper to the railroad company? Whenever the control and possession of goods
passes to the carrier and nothing remains to be done by the shipper, then it can be said with certainty that the relation of
shipper and carrier has been established. Railroad Co. v. Murphy, 60 Ark. 333, 30 S.W. 419, 46 A. St. Rep. 202; Pine Bluff
& Arkansas River Ry. v. MaKenzie, 74 Ark. 100, 86 S.W. 834; Matthews & Hood v. St. L., I.M. & S.R. Co., 123 Ark. 365,
185 S.W. 461, L.R.A. 1916E, 1194. (W.F. Bogart & Co., et al. v. Wade, et al., 200 S.W. 148).

The claim that there can be no contract of affreightment because the hemp was not actually loaded on the ship that was to take it from
Davao City to Manila is of no moment, for, as already stated, the delivery of the hemp to the carrier's lighter is in line with the
contract. In fact, the receipt signed by the patron of the lighter that carried the hemp stated that he was receiving the cargo "in behalf
of S.S. Bowline Knot in good order and condition." On the other hand, the authorities are to the effect that a bill of lading is not
indispensable for the creation of a contract of carriage.

Bill of lading not indispensable to contract of carriage. — As to the issuance of a bill of lading, although article 350 of the
Code of Commerce provides that "the shipper as well as the carrier of merchandise or goods may mutua-lly demand that a
bill of lading is not indispensable. As regards the form of the contract of carriage it can be said that provided that there is a
meeting of the minds and from such meeting arise rights and obligations, there should be no limitations as to form." The bill
of lading is not essential to the contract, although it may become obligatory by reason of the regulations of railroad
companies, or as a condition imposed in the contract by the agreement of the parties themselves. The bill of lading is
juridically a documentary proof of the stipulations and conditions agreed upon by both parties. (Del Viso, pp. 314-315;
Robles vs. Santos, 44 O.G. 2268). In other words, the Code does not demand, as necessary requisite in the contract of
transportation, the delivery of the bill of lading to the shipper, but gives right to both the carrier and the shipper to mutually
demand of each other the delivery of said bill. (Sp. Sup. Ct. Decision, May 6, 1895). (Martin, Philippine Commercial Laws,
Vol. II, Revised Edition, pp. 12-13)

The liability of the carrier as common carrier begins with the actual delivery of the goods for transportation, and not merely
with the formal execution of a receipt or bill of lading; the issuance of a bill of lading is not necessary to complete delivery
and acceptance. Even where it is provided by statute that liability commences with the issuance of the bill of lading, actual
delivery and acceptance are sufficient to bind the carrier. (13 C.J.S., p. 288)

2. Petitioner disclaims responsibility for the damage of the cargo in question shielding itself behind the claim of force majeure or
storm which occurred on the night of October 29, 1952. But the evidence fails to bear this out.

Rather, it shows that the mishap that caused the damage or loss was due, not to force majeure, but to lack of adequate precautions or
measures taken by the carrier to prevent the loss as may be inferred from the following findings of the Court of Appeals:

Aside from the fact that, as admitted by appellant's own witness, the ill-fated barge had cracks on its bottom (pp. 18-19, t.s.n.,
Sept. 13, 1959) which admitted sea water in the same manner as rain entered "thru tank man-holes", according to the patron
of LCT No. 1023 (exh. JJJ-4) — conclusively showing that the barge was not seaworthy — it should be noted that on the
night of the nautical accident there was no storm, flood, or other natural disaster or calamity. Certainly, winds of 11 miles per
hour, although stronger than the average 4.6 miles per hour then prevailing in Davao on October 29, 1952 (exh. 5), cannot be
classified as storm. For according to Beaufort's wind scale, a storm has wind velocities of from 64 to 75 miles per hour; and
 by Philippine Weather Bureau standards winds should have a velocity of from 55 to 74 miles per hour in order to be
classified as storm (Northern Assurance Co., Ltd. vs. Visayan Stevedore Transportation Co., CA-G.R. No. 23167-R, March
12, 1959).

The Court of Appeals further added: "the report of R. J. del Pan & Co., Inc., marine surveyors, attributes the sinking of LCT No. 1025
to the 'non-water-tight conditions of various buoyancy compartments' (exh. JJJ); and this report finds confirmation on the above-
mentioned admission of two witnesses for appellant concerning the cracks of the lighter's bottom and the entrance of the rain water
'thru manholes'." We are not prepared to dispute this finding of the Court of Appeals.

3. There can also be no doubt that the insurance company can recover from the carrier as assignee of the owner of the cargo for the
insurance amount it paid to the latter under the insurance contract. And this is so because since the cargo that was damaged was
insured with respondent company and the latter paid the amount represented by the loss, it is but fair that it be given the right to
recover from the party responsible for the loss. The instant case, therefore, is not one between the insured and the insurer, but one
between the shipper and the carrier, because the insurance company merely stepped into the shoes of the shipper. And since the
shipper has a direct cause of action against the carrier on account of the damage of the cargo, no valid reason is seen why such action
cannot be asserted or availed of by the insurance company as a subrogee of the shipper. Nor can the carrier set up as a defense any
defect in the insurance policy not only because it is not a privy to it but also because it cannot avoid its liability to the shipper under
the contract of carriage which binds it to pay any loss that may be caused to the cargo involved therein. Thus, we find fitting the
following comments of the Court of Appeals:

It was not imperative and necessary for the trial court to pass upon the question of whether or not the disputed abaca cargo
was covered by Marine Open Cargo Policy No. MK-134 isued by appellee. Appellant was neither a party nor privy to this
insurance contract, and therefore cannot avail itself of any defect in the policy which may constitute a valid reason for
appellee, as the insurer, to reject the claim of Macleod, as the insured. Anyway, whatever defect the policy contained, if any,
is deemed to have been waived by the subsequent payment of Macleod's claim by appellee. Besides, appellant is herein sued
in its capacity as a common carrier, and appellee is suing as the assignee of the shipper pursuant to exhibit MM. Since, as
above demonstrated, appellant is liable to Macleod and Company of the Philippines for the los or damage to the 1,162 bales
of hemp after these were received in good order and condition by the patron of appellant's LCT No. 1025, it necessarily
follows that appellant is likewise liable to appellee who, as assignee of Macleod, merely stepped into the shoes of and substi-
tuted the latter in demanding from appellant the payment for the loss and damage aforecited.

4. It should be recalled in connection with this issue that during the trial of this case the carrier asked the lower court to order the
production of the books of accounts of the Odell Plantation containing the charges it made for the loss of the damaged hemp for
verification of its accountants, but later it desisted therefrom on the claim that it finds their production no longer necessary. This
desistance notwithstanding, the shipper however pre-sented other documents to prove the damage it suffered in connection with the
cargo and on the strength thereof the court a quo ordered the carrier to pay the sum of P60,421.02. And after the Court of Appeals
affirmed this award upon the theory that the desistance of the carrier from producing the books of accounts of Odell Plantation implies
an admission of the correctness of the statements of accounts contained therein, petitioner now contends that the Court of Appeals
erred in basing the affirmance of the award on such erroneous interpretation.

There is reason to believe that the act of petitioner in waiving its right to have the books of accounts of Odell Plantation presented in
court is tantamount to an admission that the statements contained therein are correct and their verification not necessary because its
main defense here, as well as below, was that it is not liable for the loss because there was no contract of carriage between it and the
shipper and the loss caused, if any, was due to a fortuitous event. Hence, under the carrier's theory, the correctness of the account
representing the loss was not so material as would necessitate the presentation of the books in question. At any rate, even if the books
of accounts were not produced, the correctness of the accounts cannot now be disputed for the same is supported by the original
documents on which the entries in said books were based which were presented by the shipper as part of its evidence. And according
to the Court of Appeals, these documents alone sufficiently establish the award of P60,412.02 made in favor of respondent.

5. Finally, with regard to the question concerning the personality of the insurance company to maintain this action, we find the same
of no importance, for the attorney himself of the carrier admitted in open court that it is a foreign corporation doing business in the
Philippines with a personality to file the present action.

WHEREFORE, the decision appealed from is affirmed, with costs against petitioner.

G.R. No. 145804 February 6, 2003

LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, petitioners,
vs.
MARJORIE NAVIDAD, Heirs of the Late NICANOR NAVIDAD & PRUDENT SECURITY AGENCY, respondents.

DECISION

VITUG, J.:

The case before the Court is an appeal from the decision and resolution of the Court of Appeals, promulgated on 27 April 2000 and 10
October 2000, respectively, in CA-G.R. CV No. 60720, entitled "Marjorie Navidad and Heirs of the Late Nicanor Navidad vs.
Rodolfo Roman, et. al.," which has modified the decision of 11 August 1998 of the Regional Trial Court, Branch 266, Pasig City,
exonerating Prudent Security Agency (Prudent) from liability and finding Light Rail Transit Authority (LRTA) and Rodolfo Roman
liable for damages on account of the death of Nicanor Navidad.

On 14 October 1993, about half an hour past seven o’clock in the evening, Nicanor Navidad, then drunk, entered the EDSA LRT
station after purchasing a "token" (representing payment of the fare). While Navidad was standing on the platform near the LRT
tracks, Junelito Escartin, the security guard assigned to the area approached Navidad. A misunderstanding or an altercation between
the two apparently ensued that led to a fist fight. No evidence, however, was adduced to indicate how the fight started or who,
between the two, delivered the first blow or how Navidad later fell on the LRT tracks. At the exact moment that Navidad fell, an LRT
train, operated by petitioner Rodolfo Roman, was coming in. Navidad was struck by the moving train, and he was killed
instantaneously.

On 08 December 1994, the widow of Nicanor, herein respondent Marjorie Navidad, along with her children, filed a complaint for
damages against Junelito Escartin, Rodolfo Roman, the LRTA, the Metro Transit Organization, Inc. (Metro Transit), and Prudent for
the death of her husband. LRTA and Roman filed a counterclaim against Navidad and a cross-claim against Escartin and Prudent.
Prudent, in its answer, denied liability and averred that it had exercised due diligence in the selection and supervision of its security
guards.

The LRTA and Roman presented their evidence while Prudent and Escartin, instead of presenting evidence, filed a demurrer
contending that Navidad had failed to prove that Escartin was negligent in his assigned task. On 11 August 1998, the trial court
rendered its decision; it adjudged:

"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants Prudent Security and Junelito
Escartin ordering the latter to pay jointly and severally the plaintiffs the following:

"a) 1) Actual damages of P44,830.00;

2) Compensatory damages of P443,520.00;

3) Indemnity for the death of Nicanor Navidad in the sum of P50,000.00;

"b) Moral damages of P50,000.00;

"c) Attorney’s fees of P20,000;

"d) Costs of suit.

"The complaint against defendants LRTA and Rodolfo Roman are dismissed for lack of merit.

"The compulsory counterclaim of LRTA and Roman are likewise dismissed." 1

Prudent appealed to the Court of Appeals. On 27 August 2000, the appellate court promulgated its now assailed decision exonerating
Prudent from any liability for the death of Nicanor Navidad and, instead, holding the LRTA and Roman jointly and severally liable
thusly:

"WHEREFORE, the assailed judgment is hereby MODIFIED, by exonerating the appellants from any liability for the death of
Nicanor Navidad, Jr. Instead, appellees Rodolfo Roman and the Light Rail Transit Authority (LRTA) are held liable for his death and
are hereby directed to pay jointly and severally to the plaintiffs-appellees, the following amounts:
 a) P44,830.00 as actual damages;

b) P50,000.00 as nominal damages;

c) P50,000.00 as moral damages;

d) P50,000.00 as indemnity for the death of the deceased; and

e) P20,000.00 as and for attorney’s fees."2

The appellate court ratiocinated that while the deceased might not have then as yet boarded the train, a contract of carriage theretofore
had already existed when the victim entered the place where passengers were supposed to be after paying the fare and getting the
corresponding token therefor. In exempting Prudent from liability, the court stressed that there was nothing to link the security agency
to the death of Navidad. It said that Navidad failed to show that Escartin inflicted fist blows upon the victim and the evidence merely
established the fact of death of Navidad by reason of his having been hit by the train owned and managed by the LRTA and operated
at the time by Roman. The appellate court faulted petitioners for their failure to present expert evidence to establish the fact that the
application of emergency brakes could not have stopped the train.

The appellate court denied petitioners’ motion for reconsideration in its resolution of 10 October 2000.

In their present recourse, petitioners recite alleged errors on the part of the appellate court; viz:

"I.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY DISREGARDING THE FINDINGS OF FACTS BY THE
TRIAL COURT

"II.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT PETITIONERS ARE LIABLE FOR THE
DEATH OF NICANOR NAVIDAD, JR.

"III.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT RODOLFO ROMAN IS AN EMPLOYEE
OF LRTA."3

Petitioners would contend that the appellate court ignored the evidence and the factual findings of the trial court by holding them
liable on the basis of a sweeping conclusion that the presumption of negligence on the part of a common carrier was not overcome.
Petitioners would insist that Escartin’s assault upon Navidad, which caused the latter to fall on the tracks, was an act of a stranger that
could not have been foreseen or prevented. The LRTA would add that the appellate court’s conclusion on the existence of an
employer-employee relationship between Roman and LRTA lacked basis because Roman himself had testified being an employee of
Metro Transit and not of the LRTA.

Respondents, supporting the decision of the appellate court, contended that a contract of carriage was deemed created from the
moment Navidad paid the fare at the LRT station and entered the premises of the latter, entitling Navidad to all the rights and
protection under a contractual relation, and that the appellate court had correctly held LRTA and Roman liable for the death of
Navidad in failing to exercise extraordinary diligence imposed upon a common carrier.

Law and jurisprudence dictate that a common carrier, both from the nature of its business and for reasons of public policy, is burdened
with the duty of exercising utmost diligence in ensuring the safety of passengers. 4 The Civil Code, governing the liability of a common
carrier for death of or injury to its passengers, provides:

"Article 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with a due regard for all the circumstances.

"Article 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755."
"Article 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the
former’s employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the
common carriers.

"This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father of a family in the
selection and supervision of their employees."

"Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the willful acts or negligence of
other passengers or of strangers, if the common carrier’s employees through the exercise of the diligence of a good father of a family
could have prevented or stopped the act or omission."

The law requires common carriers to carry passengers safely using the utmost diligence of very cautious persons with due regard for
all circumstances.5 Such duty of a common carrier to provide safety to its passengers so obligates it not only during the course of the
trip but for so long as the passengers are within its premises and where they ought to be in pursuance to the contract of carriage. 6 The
statutory provisions render a common carrier liable for death of or injury to passengers (a) through the negligence or wilful acts of its
employees or b) on account of wilful acts or negligence of other passengers or of strangers if the common carrier’s employees through
the exercise of due diligence could have prevented or stopped the act or omission. 7 In case of such death or injury, a carrier is
presumed to have been at fault or been negligent, and 8 by simple proof of injury, the passenger is relieved of the duty to still establish
the fault or negligence of the carrier or of its employees and the burden shifts upon the carrier to prove that the injury is due to an
unforeseen event or to force majeure.9 In the absence of satisfactory explanation by the carrier on how the accident occurred, which
petitioners, according to the appellate court, have failed to show, the presumption would be that it has been at fault, 10 an exception
from the general rule that negligence must be proved. 11

The foundation of LRTA’s liability is the contract of carriage and its obligation to indemnify the victim arises from the breach of that
contract by reason of its failure to exercise the high diligence required of the common carrier. In the discharge of its commitment to
ensure the safety of passengers, a carrier may choose to hire its own employees or avail itself of the services of an outsider or an
independent firm to undertake the task. In either case, the common carrier is not relieved of its responsibilities under the contract of
carriage.

Should Prudent be made likewise liable? If at all, that liability could only be for tort under the provisions of Article 2176 12 and related
provisions, in conjunction with Article 2180,13 of the Civil Code. The premise, however, for the employer’s liability is negligence or
fault on the part of the employee. Once such fault is established, the employer can then be made liable on the basis of the presumption
juris tantum that the employer failed to exercise diligentissimi patris families in the selection and supervision of its employees. The
liability is primary and can only be negated by showing due diligence in the selection and supervision of the employee, a factual
matter that has not been shown. Absent such a showing, one might ask further, how then must the liability of the common carrier, on
the one hand, and an independent contractor, on the other hand, be described? It would be solidary. A contractual obligation can be
breached by tort and when the same act or omission causes the injury, one resulting in culpa contractual and the other in culpa
aquiliana, Article 219414 of the Civil Code can well apply.15 In fine, a liability for tort may arise even under a contract, where tort is
that which breaches the contract.16 Stated differently, when an act which constitutes a breach of contract would have itself constituted
the source of a quasi-delictual liability had no contract existed between the parties, the contract can be said to have been breached by
tort, thereby allowing the rules on tort to apply. 17

Regrettably for LRT, as well as perhaps the surviving spouse and heirs of the late Nicanor Navidad, this Court is concluded by the
factual finding of the Court of Appeals that "there is nothing to link (Prudent) to the death of Nicanor (Navidad), for the reason that
the negligence of its employee, Escartin, has not been duly proven x x x." This finding of the appellate court is not without substantial
justification in our own review of the records of the case.

There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of any culpable act or omission, he must also be
absolved from liability. Needless to say, the contractual tie between the LRT and Navidad is not itself a juridical relation between the
latter and Roman; thus, Roman can be made liable only for his own fault or negligence.

The award of nominal damages in addition to actual damages is untenable. Nominal damages are adjudicated in order that a right of
the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him. 18 It is an established rule that nominal damages cannot co-exist with
compensatory damages.19

WHEREFORE, the assailed decision of the appellate court is AFFIRMED with MODIFICATION but only in that (a) the award of
nominal damages is DELETED and (b) petitioner Rodolfo Roman is absolved from liability. No costs.

SO ORDERED.
7

G.R. No. L-47822 December 22, 1988

PEDRO DE GUZMAN, petitioner,

vs.
COURT OF APPEALS and ERNESTO CENDANA, respondents.

Vicente D. Millora for petitioner.

Jacinto Callanta for private respondent.

FELICIANO, J.:

Respondent Ernesto Cendana, a junk dealer, was engaged in buying up used bottles and scrap metal in Pangasinan. Upon gathering
sufficient quantities of such scrap material, respondent would bring such material to Manila for resale. He utilized two (2) six-wheeler
trucks which he owned for hauling the material to Manila. On the return trip to Pangasinan, respondent would load his vehicles with
cargo which various merchants wanted delivered to differing establishments in Pangasinan. For that service, respondent charged
freight rates which were commonly lower than regular commercial rates.

Sometime in November 1970, petitioner Pedro de Guzman a merchant and authorized dealer of General Milk Company (Philippines),
Inc. in Urdaneta, Pangasinan, contracted with respondent for the hauling of 750 cartons of Liberty filled milk from a warehouse of
General Milk in Makati, Rizal, to petitioner's establishment in Urdaneta on or before 4 December 1970. Accordingly, on 1 December
1970, respondent loaded in Makati the merchandise on to his trucks: 150 cartons were loaded on a truck driven by respondent himself,
while 600 cartons were placed on board the other truck which was driven by Manuel Estrada, respondent's driver and employee.

Only 150 boxes of Liberty filled milk were delivered to petitioner. The other 600 boxes never reached petitioner, since the truck which
carried these boxes was hijacked somewhere along the MacArthur Highway in Paniqui, Tarlac, by armed men who took with them the
truck, its driver, his helper and the cargo.

On 6 January 1971, petitioner commenced action against private respondent in the Court of First Instance of Pangasinan, demanding
payment of P 22,150.00, the claimed value of the lost merchandise, plus damages and attorney's fees. Petitioner argued that private
respondent, being a common carrier, and having failed to exercise the extraordinary diligence required of him by the law, should be
held liable for the value of the undelivered goods.

In his Answer, private respondent denied that he was a common carrier and argued that he could not be held responsible for the value
of the lost goods, such loss having been due to force majeure.

On 10 December 1975, the trial court rendered a Decision 1 finding private respondent to be a common carrier and holding him liable
for the value of the undelivered goods (P 22,150.00) as well as for P 4,000.00 as damages and P 2,000.00 as attorney's fees.

On appeal before the Court of Appeals, respondent urged that the trial court had erred in considering him a common carrier; in finding
that he had habitually offered trucking services to the public; in not exempting him from liability on the ground of force majeure; and
in ordering him to pay damages and attorney's fees.

The Court of Appeals reversed the judgment of the trial court and held that respondent had been engaged in transporting return loads
of freight "as a casual
occupation — a sideline to his scrap iron business" and not as a common carrier. Petitioner came to this Court by way of a Petition for
Review assigning as errors the following conclusions of the Court of Appeals:

1. that private respondent was not a common carrier;

2. that the hijacking of respondent's truck was force majeure; and

3. that respondent was not liable for the value of the undelivered cargo. (Rollo, p. 111)
We consider first the issue of whether or not private respondent Ernesto Cendana may, under the facts earlier set forth, be properly
characterized as a common carrier.

The Civil Code defines "common carriers" in the following terms:

Article 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 1733 deliberaom making such distinctions.

So understood, the concept of "common carrier" under Article 1732 may be seen to coincide neatly with the notion of "public service,"
under the Public Service Act (Commonwealth Act No. 1416, as amended) which at least partially supplements the law on common
carriers set forth in the Civil Code. Under Section 13, paragraph (b) of the Public Service Act, "public service" includes:

... every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general
business purposes, any common carrier, railroad, street railway, traction railway, subway motor vehicle, either for
freight or passenger, or both, with or without fixed route and whatever may be its classification, freight or carrier
service of any class, express service, steamboat, or steamship line, pontines, ferries and water craft, engaged in the
transportation of passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant,
ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power, water supply and power
petroleum, sewerage system, wire or wireless communications systems, wire or wireless broadcasting stations and
other similar public services. ... (Emphasis supplied)

It appears to the Court that private respondent is properly characterized as a common carrier even though he merely "back-hauled"
goods for other merchants from Manila to Pangasinan, although such back-hauling was done on a periodic or occasional rather than
regular or scheduled manner, and even though private respondent's principal occupation was not the carriage of goods for others.
There is no dispute that private respondent charged his customers a fee for hauling their goods; that fee frequently fell below
commercial freight rates is not relevant here.

The Court of Appeals referred to the fact that private respondent held no certificate of public convenience, and concluded he was not a
common carrier. This is palpable error. A certificate of public convenience is not a requisite for the incurring of liability under the
Civil Code provisions governing common carriers. That liability arises the moment a person or firm acts as a common carrier, without
regard to whether or not such carrier has also complied with the requirements of the applicable regulatory statute and implementing
regulations and has been granted a certificate of public convenience or other franchise. To exempt private respondent from the
liabilities of a common carrier because he has not secured the necessary certificate of public convenience, would be offensive to sound
public policy; that would be to reward private respondent precisely for failing to comply with applicable statutory requirements. The
business of a common carrier impinges directly and intimately upon the safety and well being and property of those members of the
general community who happen to deal with such carrier. The law imposes duties and liabilities upon common carriers for the safety
and protection of those who utilize their services and the law cannot allow a common carrier to render such duties and liabilities
merely facultative by simply failing to obtain the necessary permits and authorizations.

We turn then to the liability of private respondent as a common carrier.

Common carriers, "by the nature of their business and for reasons of public policy" 2 are held to a very high degree of care and
diligence ("extraordinary diligence") in the carriage of goods as well as of passengers. The specific import of extraordinary diligence
in the care of goods transported by a common carrier is, according to Article 1733, "further expressed in Articles 1734,1735 and 1745,
numbers 5, 6 and 7" of the Civil Code.

Article 1734 establishes the general rule that common carriers are responsible for the loss, destruction or deterioration of the goods
which they carry, "unless the same is due to any of the following causes only:

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

(2) Act of the public enemy in war, whether international or civil;
 (3) Act or omission of the shipper or owner of the goods;
(4) The character-of the goods or defects in the packing or-in the containers; and
(5) Order or act of competent public authority.

It is important to point out that the above list of causes of loss, destruction or deterioration which exempt the common carrier for
responsibility therefor, is a closed list. Causes falling outside the foregoing list, even if they appear to constitute a species of force
majeure fall within the scope of Article 1735, which provides as follows:

In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of the preceding article, if the goods are lost,
destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless
they prove that they observed extraordinary diligence as required in Article 1733. (Emphasis supplied)

Applying the above-quoted Articles 1734 and 1735, we note firstly that the specific cause alleged in the instant case — the hijacking
of the carrier's truck — does not fall within any of the five (5) categories of exempting causes listed in Article 1734. It would follow,
therefore, that the hijacking of the carrier's vehicle must be dealt with under the provisions of Article 1735, in other words, that the
private respondent as common carrier is presumed to have been at fault or to have acted negligently. This presumption, however, may
be overthrown by proof of extraordinary diligence on the part of private respondent.

Petitioner insists that private respondent had not observed extraordinary diligence in the care of petitioner's goods. Petitioner argues
that in the circumstances of this case, private respondent should have hired a security guard presumably to ride with the truck carrying
the 600 cartons of Liberty filled milk. We do not believe, however, that in the instant case, the standard of extraordinary diligence
required private respondent to retain a security guard to ride with the truck and to engage brigands in a firelight at the risk of his own
life and the lives of the driver and his helper.

The precise issue that we address here relates to the specific requirements of the duty of extraordinary diligence in the vigilance over
the goods carried in the specific context of hijacking or armed robbery.

As noted earlier, the duty of extraordinary diligence in the vigilance over goods is, under Article 1733, given additional specification
not only by Articles 1734 and 1735 but also by Article 1745, numbers 4, 5 and 6, Article 1745 provides in relevant part:

Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy:

xxx xxx xxx

(5) that the common carrier shall not be responsible for the acts or omissions of his or its
employees;

(6) that the common carrier's liability for acts committed by thieves, or of robbers who donot act
with grave or irresistible threat, violence or force, is dispensed with or diminished; and

(7) that the common carrier shall not responsible for the loss, destruction or deterioration of goods
on account of the defective condition of the car vehicle, ship, airplane or other equipment used in
the contract of carriage. (Emphasis supplied)

Under Article 1745 (6) above, a common carrier is held responsible — and will not be allowed to divest or to diminish such
responsibility — even for acts of strangers like thieves or robbers, except where such thieves or robbers in fact acted "with grave or
irresistible threat, violence or force." We believe and so hold that the limits of the duty of extraordinary diligence in the vigilance over
the goods carried are reached where the goods are lost as a result of a robbery which is attended by "grave or irresistible threat,
violence or force."

In the instant case, armed men held up the second truck owned by private respondent which carried petitioner's cargo. The record
shows that an information for robbery in band was filed in the Court of First Instance of Tarlac, Branch 2, in Criminal Case No. 198
entitled "People of the Philippines v. Felipe Boncorno, Napoleon Presno, Armando Mesina, Oscar Oria and one John Doe." There,
the accused were charged with willfully and unlawfully taking and carrying away with them the second truck, driven by Manuel
Estrada and loaded with the 600 cartons of Liberty filled milk destined for delivery at petitioner's store in Urdaneta, Pangasinan. The
decision of the trial court shows that the accused acted with grave, if not irresistible, threat, violence or force. 3 Three (3) of the five (5)
hold-uppers were armed with firearms. The robbers not only took away the truck and its cargo but also kidnapped the driver and his
helper, detaining them for several days and later releasing them in another province (in Zambales). The hijacked truck was
subsequently found by the police in Quezon City. The Court of First Instance convicted all the accused of robbery, though not of
robbery in band. 4

In these circumstances, we hold that the occurrence of the loss must reasonably be regarded as quite beyond the control of the
common carrier and properly regarded as a fortuitous event. It is necessary to recall that even common carriers are not made absolute
insurers against all risks of travel and of transport of goods, and are not held liable for acts or events which cannot be foreseen or are
inevitable, provided that they shall have complied with the rigorous standard of extraordinary diligence.

We, therefore, agree with the result reached by the Court of Appeals that private respondent Cendana is not liable for the value of the
undelivered merchandise which was lost because of an event entirely beyond private respondent's control.

ACCORDINGLY, the Petition for Review on certiorari is hereby DENIED and the Decision of the Court of Appeals dated 3 August
1977 is AFFIRMED. No pronouncement as to costs.

SO ORDERED.

First Philippine Industrial Corp. vs. CA

Facts:

Petitioner is a grantee of a pipeline concession under Republic Act No. 387. 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. In
order not to hamper its operations, petitioner paid the taxes for the first quarter of 1993 amounting to P239,019.01 under protest. 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, thus, 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 or motor vehicles. The trial court dismissed the complaint, and such was affirmed by the Court of Appeals.

Issue:

Whether a pipeline business is included in the term “common carrier” so as to entitle the petitioner to the exemption

Held:

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.

G.R. No. 157917 August 29, 2012

SPOUSES TEODORO1 and NANETTE PERENA, Petitioners,
vs.
SPOUSES TERESITA PHILIPPINE NICOLAS and L. ZARATE, NATIONAL RAILWAYS, and the COURT OF
APPEALS Respondents.

DECISION

BERSAMIN, J.:

The operator of a. school bus service is a common carrier in the eyes of the law. He is bound to observe extraordinary diligence in the
conduct of his business. He is presumed to be negligent when death occurs to a passenger. His liability may include indemnity for loss
of earning capacity even if the deceased passenger may only be an unemployed high school student at the time of the accident.

The Case

By petition for review on certiorari, Spouses Teodoro and Nanette Perefia (Perefias) appeal the adverse decision promulgated on
November 13, 2002, by which the Court of Appeals (CA) affirmed with modification the decision rendered on December 3, 1999 by
the Regional Trial Court (RTC), Branch 260, in Parañaque City that had decreed them jointly and severally liable with Philippine
National Railways (PNR), their co-defendant, to Spouses Nicolas and Teresita Zarate (Zarates) for the death of their 15-year old son,
Aaron John L. Zarate (Aaron), then a high school student of Don Bosco Technical Institute (Don Bosco).

Antecedents

The Pereñas were engaged in the business of transporting students from their respective residences in Parañaque City to Don Bosco in
Pasong Tamo, Makati City, and back. In their business, the Pereñas used a KIA Ceres Van (van) with Plate No. PYA 896, which had
the capacity to transport 14 students at a time, two of whom would be seated in the front beside the driver, and the others in the rear,
with six students on either side. They employed Clemente Alfaro (Alfaro) as driver of the van.

In June 1996, the Zarates contracted the Pereñas to transport Aaron to and from Don Bosco. On August 22, 1996, as on previous
school days, the van picked Aaron up around 6:00 a.m. from the Zarates’ residence. Aaron took his place on the left side of the van
near the rear door. The van, with its air-conditioning unit turned on and the stereo playing loudly, ultimately carried all the 14 student
riders on their way to Don Bosco. Considering that the students were due at Don Bosco by 7:15 a.m., and that they were already
running late because of the heavy vehicular traffic on the South Superhighway, Alfaro took the van to an alternate route at about 6:45
a.m. by traversing the narrow path underneath the Magallanes Interchange that was then commonly used by Makati-bound vehicles as
a short cut into Makati. At the time, the narrow path was marked by piles of construction materials and parked passenger jeepneys,
and the railroad crossing in the narrow path had no railroad warning signs, or watchmen, or other responsible persons manning the
crossing. In fact, the bamboo barandilla was up, leaving the railroad crossing open to traversing motorists.

At about the time the van was to traverse the railroad crossing, PNR Commuter No. 302 (train), operated by Jhonny Alano (Alano),
was in the vicinity of the Magallanes Interchange travelling northbound. As the train neared the railroad crossing, Alfaro drove the van
eastward across the railroad tracks, closely tailing a large passenger bus. His view of the oncoming train was blocked because he
overtook the passenger bus on its left side. The train blew its horn to warn motorists of its approach. When the train was about 50
meters away from the passenger bus and the van, Alano applied the ordinary brakes of the train. He applied the emergency brakes only
when he saw that a collision was imminent. The passenger bus successfully crossed the railroad tracks, but the van driven by Alfaro
did not. The train hit the rear end of the van, and the impact threw nine of the 12 students in the rear, including Aaron, out of the van.
Aaron landed in the path of the train, which dragged his body and severed his head, instantaneously killing him. Alano fled the scene
on board the train, and did not wait for the police investigator to arrive.

Devastated by the early and unexpected death of Aaron, the Zarates commenced this action for damages against Alfaro, the Pereñas,
PNR and Alano. The Pereñas and PNR filed their respective answers, with cross-claims against each other, but Alfaro could not be
served with summons.

At the pre-trial, the parties stipulated on the facts and issues, viz:

A. FACTS:

That spouses Zarate were the legitimate parents of Aaron John L. Zarate;(1)
 Spouses Zarate engaged the services of spouses Pereña for the adequate and safe transportation carriage of the former
spouses' son from their residence in Parañaque to his school at the Don Bosco Technical Institute in Makati City;(2)

During the effectivity of the contract of carriage and in the implementation thereof, Aaron, the minor son of spouses Zarate
died in connection with a vehicular/train collision which occurred while Aaron was riding the contracted carrier Kia Ceres
van of spouses Pereña, then driven and operated by the latter's employee/authorized driver Clemente Alfaro, which van
collided with the train of PNR, at around 6:45 A.M. of August 22, 1996, within the vicinity of the Magallanes Interchange in
Makati City, Metro Manila, Philippines;(3)

At the time of the vehicular/train collision, the subject site of the vehicular/train collision was a railroad crossing used by
motorists for crossing the railroad tracks;(4)

During the said time of the vehicular/train collision, there were no appropriate and safety warning signs and railings at the
site commonly used for railroad crossing;(5)

At the material time, countless number of Makati bound public utility and private vehicles used on a daily basis the site of
the collision as an alternative route and short-cut to Makati;(6)

The train driver or operator left the scene of the incident on board the commuter train involved without waiting for the police
investigator;(7)

The site commonly used for railroad crossing by motorists was not in fact intended by the railroad operator for railroad
crossing at the time of the vehicular collision;(8)

PNR received the demand letter of the spouses Zarate;(9)

PNR refused to acknowledge any liability for the vehicular/train collision;(10)

The eventual closure of the railroad crossing alleged by PNR was an internal arrangement between the former and its project
contractor; and(11)

The site of the vehicular/train collision was within the vicinity or less than 100 meters from the Magallanes station of
PNR.(12)

B. ISSUES

(1) Whether or not defendant-driver of the van is, in the performance of his functions, liable for negligence constituting the
proximate cause of the vehicular collision, which resulted in the death of plaintiff spouses' son;

(2) Whether or not the defendant spouses Pereña being the employer of defendant Alfaro are liable for any negligence which
may be attributed to defendant Alfaro;

(3) Whether or not defendant Philippine National Railways being the operator of the railroad system is liable for negligence
in failing to provide adequate safety warning signs and railings in the area commonly used by motorists for railroad
crossings, constituting the proximate cause of the vehicular collision which resulted in the death of the plaintiff spouses' son;

(4) Whether or not defendant spouses Pereña are liable for breach of the contract of carriage with plaintiff-spouses in failing
to provide adequate and safe transportation for the latter's son;

(5) Whether or not defendants spouses are liable for actual, moral damages, exemplary damages, and attorney's fees;

(6) Whether or not defendants spouses Teodorico and Nanette Pereña observed the diligence of employers and school bus
operators;

(7) Whether or not defendant-spouses are civilly liable for the accidental death of Aaron John Zarate;
 (8) Whether or not defendant PNR was grossly negligent in operating the commuter train involved in the accident, in
allowing or tolerating the motoring public to cross, and its failure to install safety devices or equipment at the site of the
accident for the protection of the public;

(9) Whether or not defendant PNR should be made to reimburse defendant spouses for any and whatever amount the latter
may be held answerable or which they may be ordered to pay in favor of plaintiffs by reason of the action;

(10) Whether or not defendant PNR should pay plaintiffs directly and fully on the amounts claimed by the latter in their
Complaint by reason of its gross negligence;

(11) Whether or not defendant PNR is liable to defendants spouses for actual, moral and exemplary damages and attorney's
fees.2

The Zarates’ claim against the Pereñas was upon breach of the contract of carriage for the safe transport of Aaron; but that against
PNR was based on quasi-delict under Article 2176, Civil Code.

In their defense, the Pereñas adduced evidence to show that they had exercised the diligence of a good father of the family in the
selection and supervision of Alfaro, by making sure that Alfaro had been issued a driver’s license and had not been involved in any
vehicular accident prior to the collision; that their own son had taken the van daily; and that Teodoro Pereña had sometimes
accompanied Alfaro in the van’s trips transporting the students to school.

For its part, PNR tended to show that the proximate cause of the collision had been the reckless crossing of the van whose driver had
not first stopped, looked and listened; and that the narrow path traversed by the van had not been intended to be a railroad crossing for
motorists.

Ruling of the RTC

On December 3, 1999, the RTC rendered its decision, 3 disposing:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendants ordering them to
jointly and severally pay the plaintiffs as follows:

(1) (for) the death of Aaron- Php50,000.00;

(2) Actual damages in the amount of Php100,000.00;

(3) For the loss of earning capacity- Php2,109,071.00;

(4) Moral damages in the amount of Php4,000,000.00;

(5) Exemplary damages in the amount of Php1,000,000.00;

(6) Attorney’s fees in the amount of Php200,000.00; and

(7) Cost of suit.

SO ORDERED.

On June 29, 2000, the RTC denied the Pereñas’ motion for reconsideration, 4 reiterating that the cooperative gross negligence of the
Pereñas and PNR had caused the collision that led to the death of Aaron; and that the damages awarded to the Zarates were not
excessive, but based on the established circumstances.

The CA’s Ruling

Both the Pereñas and PNR appealed (C.A.-G.R. CV No. 68916).

PNR assigned the following errors, to wit:5

The Court a quo erred in:

1. In finding the defendant-appellant Philippine National Railways jointly and severally liable together with defendant-
appellants spouses Teodorico and Nanette Pereña and defendant-appellant Clemente Alfaro to pay plaintiffs-appellees for the
death of Aaron Zarate and damages.

2. In giving full faith and merit to the oral testimonies of plaintiffs-appellees witnesses despite overwhelming documentary
evidence on record, supporting the case of defendants-appellants Philippine National Railways.

The Pereñas ascribed the following errors to the RTC, namely:

The trial court erred in finding defendants-appellants jointly and severally liable for actual, moral and exemplary damages and
attorney’s fees with the other defendants.

The trial court erred in dismissing the cross-claim of the appellants Pereñas against the Philippine National Railways and in not
holding the latter and its train driver primarily responsible for the incident.

The trial court erred in awarding excessive damages and attorney’s fees.

The trial court erred in awarding damages in the form of deceased’s loss of earning capacity in the absence of sufficient basis for such
an award.

On November 13, 2002, the CA promulgated its decision, affirming the findings of the RTC, but limited the moral damages to ₱
2,500,000.00; and deleted the attorney’s fees because the RTC did not state the factual and legal bases, to wit:6

WHEREFORE, premises considered, the assailed Decision of the Regional Trial Court, Branch 260 of Parañaque City is AFFIRMED
with the modification that the award of Actual Damages is reduced to ₱ 59,502.76; Moral Damages is reduced to ₱ 2,500,000.00; and
the award for Attorney’s Fees is Deleted.

SO ORDERED.

The CA upheld the award for the loss of Aaron’s earning capacity, taking cognizance of the ruling in Cariaga v. Laguna Tayabas Bus
Company and Manila Railroad Company, 7 wherein the Court gave the heirs of Cariaga a sum representing the loss of the deceased’s
earning capacity despite Cariaga being only a medical student at the time of the fatal incident. Applying the formula adopted in the
American Expectancy Table of Mortality:–

2/3 x (80 - age at the time of death) = life expectancy

the CA determined the life expectancy of Aaron to be 39.3 years upon reckoning his life expectancy from age of 21 (the age when he
would have graduated from college and started working for his own livelihood) instead of 15 years (his age when he died).
Considering that the nature of his work and his salary at the time of Aaron’s death were unknown, it used the prevailing minimum
wage of ₱ 280.00/day to compute Aaron’s gross annual salary to be ₱ 110,716.65, inclusive of the thirteenth month pay. Multiplying
this annual salary by Aaron’s life expectancy of 39.3 years, his gross income would aggregate to ₱ 4,351,164.30, from which his
estimated expenses in the sum of ₱ 2,189,664.30 was deducted to finally arrive at P 2,161,500.00 as net income. Due to Aaron’s
computed net income turning out to be higher than the amount claimed by the Zarates, only ₱ 2,109,071.00, the amount expressly
prayed for by them, was granted.

On April 4, 2003, the CA denied the Pereñas’ motion for reconsideration.8

Issues

In this appeal, the Pereñas list the following as the errors committed by the CA, to wit:

I. The lower court erred when it upheld the trial court’s decision holding the petitioners jointly and severally liable to pay damages
with Philippine National Railways and dismissing their cross-claim against the latter.

II. The lower court erred in affirming the trial court’s decision awarding damages for loss of earning capacity of a minor who was only
a high school student at the time of his death in the absence of sufficient basis for such an award.
III. The lower court erred in not reducing further the amount of damages awarded, assuming petitioners are liable at all.

Ruling

The petition has no merit.

1.
Were the Pereñas and PNR jointly
and severally liable for damages?

The Zarates brought this action for recovery of damages against both the Pereñas and the PNR, basing their claim against the Pereñas
on breach of contract of carriage and against the PNR on quasi-delict.

The RTC found the Pereñas and the PNR negligent. The CA affirmed the findings.

We concur with the CA.

To start with, the Pereñas’ defense was that they exercised the diligence of a good father of the family in the selection and supervision
of Alfaro, the van driver, by seeing to it that Alfaro had a driver’s license and that he had not been involved in any vehicular accident
prior to the fatal collision with the train; that they even had their own son travel to and from school on a daily basis; and that Teodoro
Pereña himself sometimes accompanied Alfaro in transporting the passengers to and from school. The RTC gave scant consideration
to such defense by regarding such defense as inappropriate in an action for breach of contract of carriage.

We find no adequate cause to differ from the conclusions of the lower courts that the Pereñas operated as a common carrier; and that
their standard of care was extraordinary diligence, not the ordinary diligence of a good father of a family.

Although in this jurisdiction the operator of a school bus service has been usually regarded as a private carrier, 9primarily because he
only caters to some specific or privileged individuals, and his operation is neither open to the indefinite public nor for public use, the
exact nature of the operation of a school bus service has not been finally settled. This is the occasion to lay the matter to rest.

A carrier is a person or corporation who undertakes to transport or convey goods or persons from one place to another, gratuitously or
for hire. The carrier is classified either as a private/special carrier or as a common/public carrier.10 A private carrier is one who,
without making the activity a vocation, or without holding himself or itself out to the public as ready to act for all who may desire his
or its services, undertakes, by special agreement in a particular instance only, to transport goods or persons from one place to another
either gratuitously or for hire.11 The provisions on ordinary contracts of the Civil Code govern the contract of private carriage.The
diligence required of a private carrier is only ordinary, that is, the diligence of a good father of the family. In contrast, a common
carrier is a person, corporation, firm or association engaged in the business of carrying or transporting passengers or goods or both, by
land, water, or air, for compensation, offering such services to the public. 12 Contracts of common carriage are governed by the
provisions on common carriers of the Civil Code, the Public Service Act, 13 and other special laws relating to transportation. A
common carrier is required to observe extraordinary diligence, and is presumed to be at fault or to have acted negligently in case of the
loss of the effects of passengers, or the death or injuries to passengers.14

In relation to common carriers, the Court defined public use in the following terms in United States v. Tan Piaco, 15viz:

"Public use" is the same as "use by the public". The essential feature of the public use is not confined to privileged individuals, but is
open to the indefinite public. It is this indefinite or unrestricted quality that gives it its public character. In determining whether a use
is public, we must look not only to the character of the business to be done, but also to the proposed mode of doing it. If the use is
merely optional with the owners, or the public benefit is merely incidental, it is not a public use, authorizing the exercise of the
jurisdiction of the public utility commission. There must be, in general, a right which the law compels the owner to give to the general
public. It is not enough that the general prosperity of the public is promoted. Public use is not synonymous with public interest. The
true criterion by which to judge the character of the use is whether the public may enjoy it by right or only by permission.

In De Guzman v. Court of Appeals,16 the Court noted that Article 1732 of the Civil Code avoided any distinction between a person or
an enterprise offering transportation on a regular or an isolated basis; and has not distinguished a carrier offering his services to the
general public, that is, the general community or population, from one offering his services only to a narrow segment of the general
population.
Nonetheless, the concept of a common carrier embodied in Article 1732 of the Civil Code coincides neatly with the notion of public
service under the Public Service Act, which supplements the law on common carriers found in the Civil Code. Public service,
according to Section 13, paragraph (b) of the Public Service Act, includes:

x x x every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with
general or limited clientèle, whether permanent or occasional, and done for the general business purposes, any common carrier,
railroad, street railway, traction railway, subway motor vehicle, either for freight or passenger, or both, with or without fixed route and
whatever may be its classification, freight or carrier service of any class, express service, steamboat, or steamship line, pontines,
ferries and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine repair shop, ice-refrigeration
plant, canal, irrigation system, gas, electric light, heat and power, water supply and power petroleum, sewerage system, wire or
wireless communications systems, wire or wireless broadcasting stations and other similar public services. x x x. 17

Given the breadth of the aforequoted characterization of a common carrier, the Court has considered as common carriers pipeline
operators,18 custom brokers and warehousemen,19 and barge operators20 even if they had limited clientèle.

As all the foregoing indicate, the true test for a common carrier is not the quantity or extent of the business actually transacted, or the
number and character of the conveyances used in the activity, but whether the undertaking is a part of the activity engaged in by the
carrier that he has held out to the general public as his business or occupation. If the undertaking is a single transaction, not a part of
the general business or occupation engaged in, as advertised and held out to the general public, the individual or the entity rendering
such service is a private, not a common, carrier. The question must be determined by the character of the business actually carried on
by the carrier, not by any secret intention or mental reservation it may entertain or assert when charged with the duties and obligations
that the law imposes.21

Applying these considerations to the case before us, there is no question that the Pereñas as the operators of a school bus service were:
(a) engaged in transporting passengers generally as a business, not just as a casual occupation; (b) undertaking to carry passengers
over established roads by the method by which the business was conducted; and (c) transporting students for a fee. Despite catering to
a limited clientèle, the Pereñas operated as a common carrier because they held themselves out as a ready transportation
indiscriminately to the students of a particular school living within or near where they operated the service and for a fee.

The common carrier’s standard of care and vigilance as to the safety of the passengers is defined by law. Given the nature of the
business and for reasons of public policy, the common carrier is bound "to observe extraordinary diligence in the vigilance over the
goods and for the safety of the passengers transported by them, according to all the circumstances of each case." 22 Article 1755 of the
Civil Code specifies that the common carrier should "carry the passengers safely as far as human care and foresight can provide, using
the utmost diligence of very cautious persons, with a due regard for all the circumstances." To successfully fend off liability in an
action upon the death or injury to a passenger, the common carrier must prove his or its observance of that extraordinary diligence;
otherwise, the legal presumption that he or it was at fault or acted negligently would stand. 23 No device, whether by stipulation,
posting of notices, statements on tickets, or otherwise, may dispense with or lessen the responsibility of the common carrier as defined
under Article 1755 of the Civil Code. 24

And, secondly, the Pereñas have not presented any compelling defense or reason by which the Court might now reverse the CA’s
findings on their liability. On the contrary, an examination of the records shows that the evidence fully supported the findings of the
CA.

As earlier stated, the Pereñas, acting as a common carrier, were already presumed to be negligent at the time of the accident because
death had occurred to their passenger.25 The presumption of negligence, being a presumption of law, laid the burden of evidence on
their shoulders to establish that they had not been negligent. 26 It was the law no less that required them to prove their observance of
extraordinary diligence in seeing to the safe and secure carriage of the passengers to their destination. Until they did so in a credible
manner, they stood to be held legally responsible for the death of Aaron and thus to be held liable for all the natural consequences of
such death.

There is no question that the Pereñas did not overturn the presumption of their negligence by credible evidence. Their defense of
having observed the diligence of a good father of a family in the selection and supervision of their driver was not legally sufficient.
According to Article 1759 of the Civil Code, their liability as a common carrier did not cease upon proof that they exercised all the
diligence of a good father of a family in the selection and supervision of their employee. This was the reason why the RTC treated this
defense of the Pereñas as inappropriate in this action for breach of contract of carriage.

The Pereñas were liable for the death of Aaron despite the fact that their driver might have acted beyond the scope of his authority or
even in violation of the orders of the common carrier. 27 In this connection, the records showed their driver’s actual negligence. There
was a showing, to begin with, that their driver traversed the railroad tracks at a point at which the PNR did not permit motorists going
into the Makati area to cross the railroad tracks. Although that point had been used by motorists as a shortcut into the Makati area, that
fact alone did not excuse their driver into taking that route. On the other hand, with his familiarity with that shortcut, their driver was
fully aware of the risks to his passengers but he still disregarded the risks. Compounding his lack of care was that loud music was
playing inside the air-conditioned van at the time of the accident. The loudness most probably reduced his ability to hear the warning
horns of the oncoming train to allow him to correctly appreciate the lurking dangers on the railroad tracks. Also, he sought to overtake
a passenger bus on the left side as both vehicles traversed the railroad tracks. In so doing, he lost his view of the train that was then
coming from the opposite side of the passenger bus, leading him to miscalculate his chances of beating the bus in their race, and of
getting clear of the train. As a result, the bus avoided a collision with the train but the van got slammed at its rear, causing the fatality.
Lastly, he did not slow down or go to a full stop before traversing the railroad tracks despite knowing that his slackening of speed and
going to a full stop were in observance of the right of way at railroad tracks as defined by the traffic laws and regulations.28He thereby
violated a specific traffic regulation on right of way, by virtue of which he was immediately presumed to be negligent. 29

The omissions of care on the part of the van driver constituted negligence,30 which, according to Layugan v. Intermediate Appellate
Court,31 is "the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the
conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would not do, 32 or as Judge
Cooley defines it, ‘(t)he failure to observe for the protection of the interests of another person, that degree of care, precaution, and
vigilance which the circumstances justly demand, whereby such other person suffers injury.’" 33

The test by which to determine the existence of negligence in a particular case has been aptly stated in the leading case of Picart v.
Smith,34 thuswise:

The test by which to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in doing
the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same
situation? If not, then he is guilty of negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary
conduct of the discreet paterfamilias of the Roman law. The existence of negligence in a given case is not determined by reference to
the personal judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy, or negligent in
the man of ordinary intelligence and prudence and determines liability by that.

The question as to what would constitute the conduct of a prudent man in a given situation must of course be always determined in the
light of human experience and in view of the facts involved in the particular case. Abstract speculation cannot here be of much value
but this much can be profitably said: Reasonable men govern their conduct by the circumstances which are before them or known to
them. They are not, and are not supposed to be, omniscient of the future. Hence they can be expected to take care only when there is
something before them to suggest or warn of danger. Could a prudent man, in the case under consideration, foresee harm as a result of
the course actually pursued? If so, it was the duty of the actor to take precautions to guard against that harm. Reasonable foresight of
harm, followed by the ignoring of the suggestion born of this prevision, is always necessary before negligence can be held to exist.
Stated in these terms, the proper criterion for determining the existence of negligence in a given case is this: Conduct is said to be
negligent when a prudent man in the position of the tortfeasor would have foreseen that an effect harmful to another was sufficiently
probable to warrant his foregoing the conduct or guarding against its consequences. (Emphasis supplied)

Pursuant to the Picart v. Smith test of negligence, the Pereñas’ driver was entirely negligent when he traversed the railroad tracks at a
point not allowed for a motorist’s crossing despite being fully aware of the grave harm to be thereby caused to his passengers; and
when he disregarded the foresight of harm to his passengers by overtaking the bus on the left side as to leave himself blind to the
approach of the oncoming train that he knew was on the opposite side of the bus.

Unrelenting, the Pereñas cite Phil. National Railways v. Intermediate Appellate Court, 35 where the Court held the PNR solely liable for
the damages caused to a passenger bus and its passengers when its train hit the rear end of the bus that was then traversing the railroad
crossing. But the circumstances of that case and this one share no similarities. In Philippine National Railways v. Intermediate
Appellate Court, no evidence of contributory negligence was adduced against the owner of the bus. Instead, it was the owner of the
bus who proved the exercise of extraordinary diligence by preponderant evidence. Also, the records are replete with the showing of
negligence on the part of both the Pereñas and the PNR. Another distinction is that the passenger bus in Philippine National Railways
v. Intermediate Appellate Court was traversing the dedicated railroad crossing when it was hit by the train, but the Pereñas’ school van
traversed the railroad tracks at a point not intended for that purpose.

At any rate, the lower courts correctly held both the Pereñas and the PNR "jointly and severally" liable for damages arising from the
death of Aaron. They had been impleaded in the same complaint as defendants against whom the Zarates had the right to relief,
whether jointly, severally, or in the alternative, in respect to or arising out of the accident, and questions of fact and of law were
common as to the Zarates.36 Although the basis of the right to relief of the Zarates (i.e., breach of contract of carriage) against the
Pereñas was distinct from the basis of the Zarates’ right to relief against the PNR (i.e., quasi-delict under Article 2176, Civil Code),
they nonetheless could be held jointly and severally liable by virtue of their respective negligence combining to cause the death of
Aaron. As to the PNR, the RTC rightly found the PNR also guilty of negligence despite the school van of the Pereñas traversing the
railroad tracks at a point not dedicated by the PNR as a railroad crossing for pedestrians and motorists, because the PNR did not
ensure the safety of others through the placing of crossbars, signal lights, warning signs, and other permanent safety barriers to prevent
vehicles or pedestrians from crossing there. The RTC observed that the fact that a crossing guard had been assigned to man that point
from 7 a.m. to 5 p.m. was a good indicium that the PNR was aware of the risks to others as well as the need to control the vehicular
and other traffic there. Verily, the Pereñas and the PNR were joint tortfeasors.

2.
Was the indemnity for loss of
Aaron’s earning capacity proper?

The RTC awarded indemnity for loss of Aaron’s earning capacity. Although agreeing with the RTC on the liability, the CA modified
the amount. Both lower courts took into consideration that Aaron, while only a high school student, had been enrolled in one of the
reputable schools in the Philippines and that he had been a normal and able-bodied child prior to his death. The basis for the
computation of Aaron’s earning capacity was not what he would have become or what he would have wanted to be if not for his
untimely death, but the minimum wage in effect at the time of his death. Moreover, the RTC’s computation of Aaron’s life expectancy
rate was not reckoned from his age of 15 years at the time of his death, but on 21 years, his age when he would have graduated from
college.

We find the considerations taken into account by the lower courts to be reasonable and fully warranted.

Yet, the Pereñas submit that the indemnity for loss of earning capacity was speculative and unfounded.1âwphi1 They cited People v.
Teehankee, Jr.,37 where the Court deleted the indemnity for victim Jussi Leino’s loss of earning capacity as a pilot for being
speculative due to his having graduated from high school at the International School in Manila only two years before the shooting, and
was at the time of the shooting only enrolled in the first semester at the Manila Aero Club to pursue his ambition to become a
professional pilot. That meant, according to the Court, that he was for all intents and purposes only a high school graduate.

We reject the Pereñas’ submission.

First of all, a careful perusal of the Teehankee, Jr. case shows that the situation there of Jussi Leino was not akin to that of Aaron here.
The CA and the RTC were not speculating that Aaron would be some highly-paid professional, like a pilot (or, for that matter, an
engineer, a physician, or a lawyer). Instead, the computation of Aaron’s earning capacity was premised on him being a lowly
minimum wage earner despite his being then enrolled at a prestigious high school like Don Bosco in Makati, a fact that would have
likely ensured his success in his later years in life and at work.

And, secondly, the fact that Aaron was then without a history of earnings should not be taken against his parents and in favor of the
defendants whose negligence not only cost Aaron his life and his right to work and earn money, but also deprived his parents of their
right to his presence and his services as well. Our law itself states that the loss of the earning capacity of the deceased shall be the
liability of the guilty party in favor of the heirs of the deceased, and shall in every case be assessed and awarded by the court "unless
the deceased on account of permanent physical disability not caused by the defendant, had no earning capacity at the time of his
death."38 Accordingly, we emphatically hold in favor of the indemnification for Aaron’s loss of earning capacity despite him having
been unemployed, because compensation of this nature is awarded not for loss of time or earnings but for loss of the deceased’s power
or ability to earn money.39

This favorable treatment of the Zarates’ claim is not unprecedented. In Cariaga v. Laguna Tayabas Bus Company and Manila Railroad
Company,40 fourth-year medical student Edgardo Carriaga’s earning capacity, although he survived the accident but his injuries
rendered him permanently incapacitated, was computed to be that of the physician that he dreamed to become. The Court considered
his scholastic record sufficient to justify the assumption that he could have finished the medical course and would have passed the
medical board examinations in due time, and that he could have possibly earned a modest income as a medical practitioner. Also, in
People v. Sanchez,41 the Court opined that murder and rape victim Eileen Sarmienta and murder victim Allan Gomez could have easily
landed good-paying jobs had they graduated in due time, and that their jobs would probably pay them high monthly salaries from ₱
10,000.00 to ₱ 15,000.00 upon their graduation. Their earning capacities were computed at rates higher than the minimum wage at the
time of their deaths due to their being already senior agriculture students of the University of the Philippines in Los Baños, the
country’s leading educational institution in agriculture.

3.
Were the amounts of damages excessive?

The Pereñas plead for the reduction of the moral and exemplary damages awarded to the Zarates in the respective amounts of ₱
2,500,000.00 and ₱ 1,000,000.00 on the ground that such amounts were excessive.

The plea is unwarranted.

The moral damages of ₱ 2,500,000.00 were really just and reasonable under the established circumstances of this case because they
were intended by the law to assuage the Zarates’ deep mental anguish over their son’s unexpected and violent death, and their moral
shock over the senseless accident. That amount would not be too much, considering that it would help the Zarates obtain the means,
diversions or amusements that would alleviate their suffering for the loss of their child. At any rate, reducing the amount as excessive
might prove to be an injustice, given the passage of a long time from when their mental anguish was inflicted on them on August 22,
1996.

Anent the ₱ 1,000,000.00 allowed as exemplary damages, we should not reduce the amount if only to render effective the desired
example for the public good. As a common carrier, the Pereñas needed to be vigorously reminded to observe their duty to exercise
extraordinary diligence to prevent a similarly senseless accident from happening again. Only by an award of exemplary damages in
that amount would suffice to instill in them and others similarly situated like them the ever-present need for greater and constant
vigilance in the conduct of a business imbued with public interest.

WHEREFORE, we DENY the petition for review on certiorari; AFFIRM the decision promulgated on November 13, 2002;
and ORDER the petitioners to pay the costs of suit.

SO ORDERED.

LUCAS P. BERSAMIN

10

Transportation Case Digest: Planters Products Inc V. CA (1993)

G.R. No. 101503 September 15, 1993

Lessons Applicable: Charter Party (Transportation)

FACTS:

 June 16 1974: Mitsubishi International Corporation (Mitsubishi) of New York, U.S.A., 9,329.7069 M/T of Urea 46% fertilizer
bought by Planters Products, Inc. (PPI) on aboard the cargo vessel M/V "Sun Plum" owned by private Kyosei Kisen Kabushiki
Kaisha (KKKK) from Kenai, Alaska, U.S.A., to Poro Point, San Fernando, La Union, Philippines, as evidenced by Bill of Lading
 May 17 1974: a time charter-party on the vessel M/V "Sun Plum" pursuant to the Uniform General Charter was entered into
between Mitsubishi as shipper/charterer and KKKK as shipowner, in Tokyo, Japan
 Before loading the fertilizer aboard the vessel, 4 of her holds were all presumably inspected by the charterer's representative and
found fit
 The hatches remained closed and tightly sealed throughout the entire voyage
 July 3, 1974: PPI unloaded the cargo from the holds into its steelbodied dump trucks which were parked alongside the berth, using
metal scoops attached to the ship, pursuant to the terms and conditions of the charter-partly
 hatches remained open throughout the duration of the discharge
 Each time a dump truck was filled up, its load of Urea was covered with tarpaulin before it was transported to the consignee's
warehouse located some 50 meters from the wharf
 Midway to the warehouse, the trucks were made to pass through a weighing scale where they were individually weighed for the
purpose of ascertaining the net weight of the cargo.
 The port area was windy, certain portions of the route to the warehouse were sandy and the weather was variable, raining
occasionally while the discharge was in progress.
 Tarpaulins and GI sheets were placed in-between and alongside the trucks to contain spillages of the ferilizer
 It took 11 days for PPI to unload the cargo
 Cargo Superintendents Company Inc. (CSCI), private marine and cargo surveyor, was hired by PPI to determine the "outturn" of
the cargo shipped, by taking draft readings of the vessel prior to and after discharge
 shortage in the cargo of 106.726 M/T and that a portion of the Urea fertilizer approximating 18 M/T was contaminated with dirt
 Certificate of Shortage/Damaged Cargo prepared by PPI
 short of 94.839 M/T and about 23 M/T were rendered unfit for commerce, having been polluted with sand, rust and dirt
 PPI sent a claim letter 1974 to Soriamont Steamship Agencies (SSA), the resident agent of the carrier, KKKK, for P245,969.31
representing the cost of the alleged shortage in the goods shipped and the diminution in value of that portion said to have been
contaminated with dirt
 SSA: what they received was just a request for shortlanded certificate and not a formal claim, and that they "had nothing to do with
the discharge of the shipment
 RTC: failure to destroy the presumption of negligence against them, SSA are liable
 CA: REVERSED - failed to prove the basis of its cause of action
ISSUE: W/N a time charter between a shipowner and a charterer transforms a common carrier into a private one as to negate the civil
law presumption of negligence in case of loss or damage to its cargo

HELD: NO. petition is DISMISSED

 When PPI chartered the vessel M/V "Sun Plum", the ship captain, its officers and compliment were under the employ of the
shipowner and therefore continued to be under its direct supervision and control. Hardly then can we charge the charterer, a
stranger to the crew and to the ship, with the duty of caring for his cargo when the charterer did not have any control of the means
in doing so
 carrier has sufficiently overcome, by clear and convincing proof, the prima facie presumption of negligence. The hatches remained
close and tightly sealed while the ship was in transit as the weight of the steel covers made it impossible for a person to open
without the use of the ship's boom.
 bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss or damage. More so, with a variable weather
condition prevalent during its unloading
 This is a risk the shipper or the owner of the goods has to face. Clearly, KKKK has sufficiently proved the inherent character of
the goods which makes it highly vulnerable to deterioration; as well as the inadequacy of its packaging which further contributed
to the loss.
 On the other hand, no proof was adduced by the petitioner showing that the carrier was remise in the exercise of due diligence in
order to minimize the loss or damage to the goods it carried.