ATENEO LAW SCHOOL 2. Calvo v.
UCPB General Insurance, 379 SCRA 510
TRANSPORTATION LAW
3-A SY 2016-2017
Atty. Norianne Tan
I. Common Carriers; Carriage of Goods (NCC: Art. 1732-1754)
1. First Phil. Industrial Corp v. CA, 300 SCRA 661
 A “common carrier” may be defined, broadly, as one who holds
himself out to the public as engaged in the business of
transporting persons or property from place to place, for
compensation, offering his services to the public generally.
Article 1732 of the Civil Code defines a “common carrier” as
“any person, corporation, firm or association engaged in the
business of carrying or transporting passengers or goods or
both, by land, water, or air, for compensation, offering their
services to the public.”
 The test for determining whether a party is a common carrier of
goods is: 1. He must be engaged in the business of carrying
goods for others as a public employment, and must hold
himself out as ready to engage in the transportation of goods
for person generally as a business and not as a casual
occupation; 2. He must undertake to carry goods of the kind to
which his business is confined; 3. He must undertake to carry
by the method by which his business is conducted and over his
established roads; and 4. The transportation must be for hire.
 The fact that petitioner has a limited clientele does not exclude
it from the definition of a common carrier.
 As correctly pointed out by petitioner, the definition of “common
carriers” in the Civil Code makes no distinction as to the means
of transporting, as long as it is by land, water or air. It does not
provide that the transportation of the passengers or goods
should be by motor vehicle. In fact, in the United States, oil
pipe line operators are considered common carriers.
 It is clear that the legislative intent in excluding from the taxing
power of the local government unit the imposition of business
tax against common carriers is to prevent a duplication of the
so­called “common carrier’s tax.”
o Thus, to tax petitioner again on its gross receipts in its
transportation of petroleum business would defeat the
purpose of the Local Government Code.
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 The common carrier provision did not make any distinction
upon the following:
o 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.
o 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.
o 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.
o The SC thinks that Article 1732 deliberately refrained
from making such distinctions to encompass all of
them.
 Common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary
diligence in the vigilance over the goods and for the safety of
the passengers transported by them, according to all the
circumstances of such case.
o The extraordinary diligence in the vigilance over the
goods tendered for shipment requires the common
carrier to know and to follow the required precaution
for avoiding damage to, or destruction of the goods
entrusted to it for sale, carriage and delivery.
o It requires common carriers to render service with the
greatest skill and foresight and “to use all reasonable
means to ascertain the nature and characteristic of
goods tendered for shipment, and to exercise due care
in the handling and stowage, including such methods
as their nature requires.”
 To prove the exercise of extraordinary diligence, a customs
broker must do more than merely show the possibility that
some other party could be responsible for the damage.
o It must prove that it used “all reasonable means to
ascertain the nature and characteristic of goods
tendered for [transport] and that [it] exercise[d] due
care in the handling [thereof].”
o Basically, do not just point fingers.
 If the improper packing or the defects in the container are
known to the carrier or his employees or apparent upon
ordinary observation, but he nevertheless accepts the same
 without protest or exception notwithstanding such condition, he
is not relieved of liability for damage resulting therefrom.
o In this case, petitioner accepted the cargo without
exception despite the apparent defects in some of the
container vans. Hence, for failure of petitioner to prove
that she exercised extraordinary diligence in the
carriage of goods in this case or that she is exempt
from liability, the presumption of negligence as
provided under Art. 1735 holds.
3. Valenzuela Hardwood v. CA, 274 SCRA 642
 As adverted to earlier, it is undisputed that private respondent
had acted as a private carrier in transporting petitioner’s lauan
logs. Thus, Article 1745 and other Civil Code provisions on
common carriers which were cited by petitioner may not be
applied unless expressly stipulated by the parties in their
charter party.
 In a contract of private carriage, the parties may freely stipulate
their duties and obligations which perforce would be binding on
them. Unlike in a contract involving common carrier, private
carriage does not involve the general public.
o In a contract of private carriage, the parties may validly
stipulate that responsibility for the cargo rests solely on
the charterer, exempting the shipowner from liability for
loss of or damage to the cargo caused even by the
negligence of the ship captain.
 Pursuant to Article 1306 of the Civil Code,
such stipulation is valid because it is freely
entered into by the parties and the same is not
contrary to law, morals, good customs, public
order, or public policy.
o Hence, the stringent provisions of the Civil Code on
common carriers protecting the general public cannot
justifiably be applied to a ship transporting commercial
goods as a private carrier.
 As a private carrier, a stipulation exempting the owner from
liability for the negligence of its agent is not against public
policy, and is deemed valid.
 As a private carrier, a stipulation exempting the owner from
liability for the negligence of its agent is not against public
policy, and is deemed valid. Such doctrine the SC finds
reasonable.
o The Civil Code provisions on common carriers should
not be applied where the carrier is not acting as such
but as a private carrier. The stipulation in the charter
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party absolving the owner from liability for loss due to
the negligence of its agent would be void only if the
strict public policy governing common carriers is
applied. Such policy has no force where the public at
large is not involved, as in this case of a ship totally
chartered for the use of a single party.”
4. National Steel Corp v. CA, 283 SCRA 45
 In an action against a private carrier for loss of, or injury to,
cargo, the burden is on the plaintiff to prove that the carrier was
negligent or unseaworthy, and the fact that the goods were lost
or damaged while in the carrier’s custody does not put the
burden of proof on the carrier.
o As found in the article 361 and 362 of the Come of
Commerce.
 Because the MV Vlasons I was a private carrier, the
shipowner’s obligations are governed by the foregoing
provisions of the Code of Commerce and not by the Civil Code
which, as a general rule, places the prima facie presumption of
negligence on a common carrier.
o It is a hornbook doctrine that: “In an action against a
private carrier for loss of, or injury to, cargo, the burden
is on the plaintiff to prove that the carrier was negligent
or unseaworthy, and the fact that the goods were lost
or damaged while in the carrier’s custody does not put
the burden of proof on the carrier.”
 A Stevedore company engaged in discharging cargo has the
duty to load the cargo in a prudent manner, and it is liable for
injury to, or loss of, cargo caused by its negligence and where
the officers and members and crew of the vessel do nothing
and have no responsibility in the discharge of cargo by
stevedores the vessel is not liable for loss of, or damage to, the
cargo caused by the negligence of the stevedores.
o Subject to the laws of prescription.
5. FGU Insurance v. GP Sarmiento Trucking, 386 SCRA 312
 A trucking company which is an exclusive contractor and
hauler of another company, rendering or offering its services to
no other individual or entity, cannot be considered a common
carrier.
o Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or
transporting passengers or goods or both, by land,
water, or air, for hire or compensation, offering their
services to the public, whether to the public in general
 or to a limited clientele in particular, but never on an
exclusive basis.
 In culpa contractual, the mere proof of the existence of the
contract and the failure of its compliance justify, prima facie, a
corresponding right of relief. The law, recognizing the
obligatory force of contracts, will not permit a party to be set
free from liability for any kind of mis-performance of the
contractual undertaking or a contravention of the tenor thereof.
A breach upon the contract confers upon the injured party a
valid cause for recovering that which may have been lost or
suffered.
o The effect of every infraction is to create a new duty,
that is, to make recompense to the one who has been
injured unless he can show extenuating
circumstances, like proof of his exercise of due
diligence (normally that of the diligence of a good
father of a family or, exceptionally by stipulation or by
law such as in the case of common carriers, that of
extraordinary diligence) or of the attendance of
fortuitous event, to excuse him from his ensuing
liability.
 The driver, not being a party to the contract of carriage, may
not be held liable under the agreement—action against him
can only be based on culpa aquiliana, which, unlike culpa
contractual, would require the claimant for damages to prove
negligence or fault on his part.
o The petitioner’s civil action against the driver can only
be based on culpa aquiliana, which, unlike culpa
contractual, would require the claimant for damages to
prove negligence or fault on the part of the defendant.
 Res ipsa loquitur is not a rule of substantive law and, as such,
it does not create an independent ground of liability—instead, it
is regarded as a mode of proof, and relieves the plaintiff of the
burden of producing specific proof of negligence.
o For the doctrine to apply, should be understood as
being confined only to cases of pure (non-contractual)
tort since obviously the presumption of negligence in
culpa contractual, as previously so pointed out,
immediately attaches by a failure of the covenant or its
tenor.
6. Loadstar Shipping Co. v. CA, 315 SCRA 339
 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.
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It would be to reward private respondent precisely for failing to
comply with applicable statutory requirements.
o 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.
o 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.
 For a vessel to be seaworthy, it must be adequately equipped
for the voyage and manned with a sufficient number of
competent officers and crew.
o The failure of a common carrier to maintain in
seaworthy condition its vessel involved in a contract of
carriage is a clear breach of its duty prescribed in
Article 1755 of the Civil Code.
 The doctrine of limited liability does not apply where there was
negligence on the part of the vessel owner or agent.
LOADSTAR was at fault or negligent in not maintaining a
seaworthy vessel and in having allowed its vessel to sail
despite knowledge of an approaching typhoon.
o In any event, it did not sink because of any storm that
may be deemed as force majeure, inasmuch as the
wind condition in the area where it sank was
determined to be moderate.
o Since it was remiss in the performance of its duties,
LOADSTAR cannot hide behind the “limited liability”
doctrine to escape responsibility for the loss of the
vessel and its cargo.
7. Delsan Transport Lines Inc. v. CA, 369 SCRA 24
 While the payment by the insurer for the insured value of the
lost cargo operates as a waiver of the insurer’s right to enforce
the term of the implied warranty against the assured under the
marine insurance policy, the same cannot be validly interpreted
as an automatic admission of the vessel’s seaworthiness by
the insurer as to foreclose recourse against the common
carrier for any liability under the contractual obligation as such
common carrier.
o The fact of payment grants the private respondent,
insurer, subrogatory right which enables it to exercise
legal remedies that would otherwise be available to
 Caltex, insured, as owner of the lost cargo against the
petitioner common carrier, assured.
o The right of subrogation has its roots in equity. It is
designed to promote and to accomplish justice and is
the mode which equity adopts to compel the ultimate
payment of a debt by one who in justice and good
conscience ought to pay. It is not dependent upon, nor
does it grow out of, any privity of contract or upon
written assignment of claim. It accrues simply upon
payment by the insurance company of the insurance
claim.
 In the event of loss, destruction or deterioration of the insured
goods, common carriers shall be responsible unless the same
is brought about, among others, by flood, storm, earthquake,
lightning or other natural disaster or calamity, and in all other
cases, if the goods are lost, destroyed or deteriorated, common
carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence.
 Certificates tending to show that at the time of dry-docking and
inspection by the Philippine Coast Guard, the vessel was fit for
voyage do not necessarily take into account the actual
condition of the vessel at the time of the commencement of the
voyage.
 Exoneration of the vessel’s officers and crew by the Board of
Marine Inquiry merely concerns their respective administrative
liabilities—it does not in any way operate to absolve the
common carrier from its civil liability arising from its failure to
observe extraordinary diligence in the vigilance over the goods
it was transporting and for the negligent acts or omissions of its
employees, the determination of which properly belongs to the
courts.
 Presentation in evidence of the marine insurance policy is not
indispensable before the insurer may recover from the
common carrier the insured value of the lost cargo in the
exercise of its subrogatory right—the subrogatory receipt, by
itself, is sufficient to establish not only the relationship of the
insurer and the assured shipper of the lost cargo, but also the
amount paid to settle the insurance claim.
8. Sarkies Tour Phil. v. CA, 280 SCRA 58
 Common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary
diligence in the vigilance over the goods transported by them,
and this liability “lasts from the time the goods are
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unconditionally placed in the possession of, and received by
the carrier for transportation until the same are delivered,
actually or constructively, by the carrier to the person who has
a right to receive them” unless the loss is due to any of the
excepted causes under Article 1734 thereof.
o Check codal on constructive delivery.
9. Phil. Am. Gen. Insurance v. MCG Marine Services, 378 SCRA
650
 Owing to the high degree of diligence required of them,
common carriers, as a general rule, are presumed to have
been at fault or negligent if the goods transported by them are
lost, destroyed or if the same deteriorated.
 In order that a common carrier may be absolved from liability
where the loss, destruction or deterioration of the goods is due
to a natural disaster or calamity, it must further be shown that
such natural disaster or calamity was the proximate and only
cause of the loss.
o Even in cases where a natural disaster is the
proximate and only cause of the loss, a common
carrier is still required to exercise due diligence to
prevent or minimize loss before, during and after the
occurrence of the natural disaster, for it to be exempt
from liability under the law for the loss of the goods.
 An event is considered fortuitous if the following elements
concur: x x x (a) the cause of the unforeseen and unexpected
occurrence, or the failure of the debtor to comply with his
obligations, must be independent of human will; (b) it must be
impossible to foresee the event which constitutes the caso
fortuito, or if it can be foreseen, it must be impossible to avoid;
(c) the occurrence must be such as to render it impossible for
the debtor to fulfill his obligation in a normal manner; and (d)
the obligor must be free from any participation in the
aggravation of the injury resulting to the creditor.
10. Ganzon v. CA, 161 SCRA 646
 Pursuant to Art. 1736, such extraordinary responsibility would
cease only upon the delivery, actual or constructive, by the
carrier to the consignee, or to the person who has a right to
receive them.
o The fact that part of the shipment had not been loaded
on board the lighter did not impair the said contract of
transportation as the goods remained in the custody
and control of the carrier, albeit still unloaded.
  The petitioner is presumed to have been at fault or to have
acted negligently. By reason of this presumption, the court is
not even required to make an express finding of fault or
negligence before it could hold the petitioner answerable for
the breach. of the contract of carriage.
o Still, the petitioner could have been exempted from any
liability had he been able to prove that he observed
extraordinary diligence in the vigilance over the goods
in his custody, according to all the circumstances of
the case, or that the loss was due to an unforeseen
event or to force majeure.
o As it was, there was hardly any attempt on the part of
the petitioner to prove that he exercised such
extraordinary diligence.
 The contention that it was “an order or act of competent
authority was not sustained.
o In any case, the intervention of the municipal officials
was not of a character that would render impossible
the fulfillment by the carrier of its obligation. The
petitioner was not duty bound to obey the illegal order
to dump into the sea the scrap iron.
o Moreover, there is absence of sufficient proof that the
issuance of the same order was attended with such
force or intimidation as to completely overpower the
will of the petitioner’s employees. The mere difficulty in
the fulfillment of the obligation is not considered force
majeure.
 It should been a lawful order and one issued
with authority???
11. Macam v. CA, 313 SCRA 77
 The extraordinary responsibility of the common carriers lasts
until actual or constructive delivery of the cargoes to the
consignee or to the person who has a right to receive them.
o PAKISTAN BANK was indicated in the bills of lading as
consignee whereas GPC was the notify party.
However, in the export invoices GPC was clearly
named as buyer/importer.
o The shipper also referred to GPC as the
buyer/importer in his demand letter to respondent
WALLEM, carrier, and in his complaint before the trial
court.
o This premise draws us to conclude that the delivery of
the cargoes to GPC as buyer/importer which,
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conformably with Art. 1736 had, other than the
consignee, the right to receive them was proper.
12. Phil. Am. Gen. Insurance v. CA, 222 SCRA 155
 Where delay in unloading of cargo not due to negligence of
carrier it cannot be held liable for damages.
o While it is true that there was indeed delay in
discharging the cargo from the vessel, we agree with
the Court of Appeals that neither of the parties herein
could be faulted for such delay, for the same (delay)
was due not to negligence, but to several factors
outside their control. T
o The cargo having been lost due to typhoon “Saling”,
and the delay incurred in its unloading not being due to
negligence, carrier is exempt from liability for the loss
of the cargo, pursuant to Article 1740 of the Civil Code.
o Diligence shown by shipmaster to protect cargo from
typhoon and pilferages exempts carrier from damages.
 Res judicata doctrine does not apply to courts where prior
decision was done by Board of Marine Inquiry.
o The cause of action in the marine protest was to
enforce the administrative liability of the
shipmaster/captain of the ship.
o In this case, it is a claim for a sum of money premised
on negligence or breach of contract.
13. Maersk Line v. CA, 222 SCRA 108
 When a common carrier undertakes to convey goods, the law
implies a contract that they shall be delivered at destination
within a reasonable time, in the absence, of any agreement as
to the time of delivery.
o A delay in delivery of gelatin capsules for use in
pharmaceutical products for a period of two (2) months
and seven (7) days considered beyond the realm of
reasonableness.
o Failure of the petitioner to explain cause of delay in the
delivery of subject shipment makes it liable for breach
of contract of carriage through gross negligence
amounting to bad faith, entitling respondent’s recovery
of moral damages.
 But where a carrier has made an express contract to transport
and deliver property within a specified time, it is bound to fulfill
its contract and is liable for any delay, no matter from what
cause it may have arisen.
14. Everett Steamship Corp. v. CA, 297 SCRA 496
 A stipulation in the bill of lading limiting the common carrier's
liability for loss or destruction of a cargo to a certain sum,
unless the shipper or owner declares a greater value, is
sanctioned by law, particularly Articles 1749 and 1750 of the
Civil Code. Such limited-liability clause has also been
consistently upheld by this Court in a number of cases.
o It is required that the stipulation limiting the common
carrier's liability for loss must be “reasonable and just
under the circumstances, and has been freely and
fairly agreed upon.”
o In the bill of lading, the carrier made it clear that its
liability would only be up to One Hundred Thousand
(¥100,000.00) Yen. However, the shipper, Maruman
Trading, had the option to declare a higher valuation if
the value of its cargo was higher than the limited
liability of the carrier.
o Considering that the shipper did not declare a higher
valuation, it had itself to blame for not complying with
the stipulations. To defeat the carrier's limited liability,
the aforecited Clause 18 of the bill of lading requires
that the shipper should have declared in writing a
higher valuation of its goods before receipt thereof by
the carrier and insert the said declaration in the bill of
lading, with the extra freight paid. These requirements
in the bill of lading were never complied with by the
shipper, hence, the liability of the carrier under the
limited liability clause stands.
 Even if the consignee is not a signatory to the contract of
carriage between the shipper and the carrier, the consignee is
still bound by such contract as there is either agency or a
stipulation pour autrui.
15. Regional Container v. Netherlands Insurance, 598 SCRA 304
 The rules for the liability of a common carrier for lost or
damaged cargo as follows: (1) Common carriers are bound to
observe extraordinary diligence over the goods they transport,
according to all the circumstances of each case; (2) In the
event of loss, destruction, or deterioration of the insured goods,
common carriers are responsible, unless they can prove that
such loss, destruction, or deterioration was brought about by,
among others, “flood, storm, earthquake, lightning, or other
natural disaster or calamity”; and (3) In all other cases not
specified under Article 1734 of the Civil Code, common carriers
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are presumed to have been at fault or to have acted
negligently, unless they observed extraordinary diligence.
 To overcome the presumption of negligence, the common
carrier must establish by adequate proof that it exercised
extraordinary diligence over the goods. It must do more than
merely show that some other party could be responsible for the
damage.
 It is settled in maritime law jurisprudence that cargoes while
being unloaded generally remain under the custody of the
carrier.
o In the present case, RCL and EDSA Shipping failed to
prove that they did exercise that degree of diligence
required by law over the goods they transported.
o Indeed, there is sufficient evidence showing that the
fluctuation of the temperature in the refrigerated
container van, as recorded in the temperature chart,
occurred after the cargo had been discharged from the
vessel and was already under the custody of the
arrastre operator, ICTSI.
o This evidence, however, does not disprove that the
condenser fan—which caused the fluctuation of the
temperature in the refrigerated container—was not
damaged while the cargo was being unloaded from the
ship.
o It is settled in maritime law jurisprudence that cargoes
while being unloaded generally remain under the
custody of the carrier; RCL and EDSA Shipping failed
to dispute this.
16. Mindanao Terminal v. Phoenix Assurance, 587 SCRA 421
 Arrastre refers to hauling of cargo, comprehends the handling
of cargo on the wharf or between the establishment of the
consignee or shipper and the ship's tackle. The responsibility
of the arrastre operator lasts until the delivery of the cargo to
the consignee. The service is usually performed by
longshoremen.
 On the other hand, stevedoring refers to the handling of the
cargo in the holds of the vessel or between the ship's tackle
and the holds of the vessel.
o The responsibility of the stevedore ends upon the
loading and stowing of the cargo in the vessel.
o Unless there is a contractual stipulation that the
stevedore must exercise a higher degree of diligence
then ordinary diligence is enough.
  An arrastre operator should observe the same degree of Charter Party agreement with Northern Transport since
diligence as that required of a common carrier and a the said agreement was not limited to the ship only but
warehouseman while a stevedoring is not. extends even to the control of its crew.
 It is not disputed that Mindanao Terminal was performing
purely stevedoring function while the private respondent in the
Summa case was performing arrastre function.
o In the present case, Mindanao Terminal, as a
stevedore, was only charged with the loading and
stowing of the cargoes from the pier to the ship’s cargo
hold; it was never the custodian of the shipment of Del
Monte Produce.
o A stevedore is not a common carrier for it does not
transport goods or passengers; it is not akin to a
warehouseman for it does not store goods for profit.
The loading and stowing of cargoes would not have a
far reaching public ramification as that of a common
carrier and a warehouseman; the public is adequately
protected by our laws on contract and on quasi-delict.

17. Federal Phoenix Assurance v. Fortune, 775 SCRA 169

 Time and again, the Supreme Court have ruled that in
determining the nature of a contract, courts are not bound by
the title or name given by the parties.
o The decisive factor in evaluating an agreement is the
intention of the parties, as shown, not necessarily by
the terminology used in the contract but by their
conduct, words, actions and deeds prior to, during and
immediately after executing the agreement.”
 Although the master and crew of the vessel were those of the
shipowner, the Time Charter Party Agreement show that at the
time of the execution of the charter party, Fortune Sea had
completely relinquished possession, command, and navigation
of M/V Ricky Rey to Northern Transport.
o As such, the master and all the crew of the ship were
all made subject to the direct control and supervision of
the charterer.
o In fact, the instructions, both written and verbal, on the
voyage and other relative directions or orders were
handed out by Northern Transport AND NOT
FORTUNE SEA.
 Despite the denomination as Time Charter by the parties, their
agreement undoubtedly reflected that their intention was to
enter into a Bareboat Charter Agreement.
o Thus, M/V Ricky Rey was converted into a private
carrier notwithstanding the existence of the Time
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II. Common Carriers; Carriage of Passengers (NCC: Art. 1755-
1766)
1. Phil Rabbit Bus Lines v. IAC, 189 SCRA 158
 The principle about the ‘last clear chance’ would call for
application in a suit between the owners and drivers of the two
colliding vehicles (TORT). It does not arise where a passenger
demands responsibility from the carrier to enforce its
contractual obligations.
 In culpa contractual, the moment a passenger dies or is
injured, the carrier is presumed to have been at fault or to have
acted negligently, and this disputable presumption may only be
overcome by evidence that he had observed extra-ordinary
diligence as prescribed in Articles 1733, 1755 and 1756 of the
New Civil Code or that the death or injury of the passenger was
due to a fortuitous event.
 In any event, “in an action for damages against the carrier for
his failure to safely carry his passenger to his destination, an
accident caused either by defects in the automobile or through
the negligence of its driver, is not a caso fortuito which would
avoid the carrier’s liability for damages.
 Driver, not jointly and severally liable with carrier in case of
breach of contract of carriage.
o In culpa-contractual, it is only the carrier whose liable
even if the breach is due to the negligence of the
driver.
 On the presumption that drivers who bump the rear of another
vehicle guilty and the cause of the accident, unless
contradicted by other evidence.
o It does not apply as the U-turn of the jeepney was
abrupt. Hence, the private respondent, could not have
anticipated the sudden U-turn executed by petitioner’s
driver.
 Under the substantial factor test that if the actor’s conduct is a
substantial factor in bringing about harm to another, the fact
that the actor neither foresaw nor should have foreseen the
extent of the harm or the manner in which it occurred does not
prevent him from being liable.
2. Yobido v. CA, 281 SCRA 1
 When a passenger boards a common carrier, he takes the
risks incidental to the mode of travel he has taken—after all, a
carrier is not an insurer of the safety of its passengers and is
not bound absolutely and at all events to carry them safely and
without injury.
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o However, when a passengers is injured or dies while
travelling, the law presumes that the common carrier is
negligent.
 A fortuitous event is possessed of the following characteristics:
(a) the cause of the unforeseen and unexpected occurrence, or
the failure of the debtor to comply with his obligations, must be
independent of human will; (b) it must be impossible to foresee
the event which constitutes the caso fortuito, or if it can be
foreseen, it must be impossible to avoid; (c) the occurrence
must be such as to render it impossible for the debtor to fulfill
his obligation in a normal manner; and (d) the obligor must be
free from any participation in the aggravation of the injury
resulting to the creditor.
 Under the circumstances of this case, the explosion of the new
tire may not be considered a fortuitous event.
o There are human factors involved in the situation. The
fact that the tire was new did not imply that it was
entirely free from manufacturing defects or that it was
properly mounted on the vehicle. Neither may the fact
that the tire bought and used in the vehicle is of a
brand name noted for quality, resulting in the
conclusion that it could not explode within five days’
use.
 It is settled that an accident caused either by defects in the
automobile or through the negligence of its driver is not a caso
fortuito that would exempt the carrier from liability for damages.
 A common carrier may not be absolved from liability in case of
force majeure or fortuitous event alone—the common carrier
must still prove that it was not negligent in causing the death or
injury resulting from an accident.
o No evidence was presented to show that the accident
was due to adverse road conditions or that precautions
were taken by the jeepney driver to compensate for
any conditions liable to cause accidents.
o The sudden blowing-up, therefore, could have been
caused by too much air pressure injected into the tire
coupled by the fact that the jeepney was overloaded
and speeding at the time of the accident.
 Where a common carrier failed to exercise the extraordinary
diligence required of it, which resulted in the death of a
passenger, it is deemed to have acted recklessly, and the heirs
of the passenger shall be entitled to exemplary damages.

3. Calalas v. CA, 332 SCRA 356
 In quasi-delict, the negligence or fault should be clearly
established because it is the basis of the action, whereas in
breach of contract, the action can be prosecuted merely by
proving the existence of the contract and the fact that the
obligor, in this case the common carrier, failed to transport his
passenger safely to his destination.
o In case of death or injuries to passengers, Art. 1756 of
the Civil Code provides that common carriers are
presumed to have been at fault or to have acted
negligently unless they prove that they observed
extraordinary diligence as defined in Arts. 1733 and
1755 of the Code.
o This provision necessarily shifts to the common carrier
the burden of proof.
 The doctrine of proximate cause is applicable only in actions
for quasi-delicts, not in actions involving breach of contract.
 Upon the happening of the accident, the presumption of
negligence at once arises, and it becomes the duty of a
common carrier to prove that he observed extraordinary
diligence in the care of his passengers.
 The taking of an “extension seat” is not an implied assumption
of risk on the part of the passenger. A caso fortuito is an event
which could not be foreseen, or which, though foreseen, was
inevitable.
o An extension seat is a wooden stool at the back of the
door at the rear end of the vehicle.
 The common carrier’s admission in open court that his driver
failed to assist the injured passenger in going to a nearby
hospital cannot be construed as an admission of bad faith.
4. Mallari v. CA, 324 SCRA 147
 The rule is settled that a driver abandoning his proper lane for
the purpose of overtaking another vehicle in an ordinary
situation has the duty to see to it that the road is clear and not
to proceed if he cannot do so in safety.
 When a motor vehicle is approaching or rounding a curve,
there is special necessity for keeping to the right side of the
road and the driver does not have the right to drive on the left
hand side relying upon having time to turn to the right if a car
approaching from the opposite direction comes into view.
 Under Article 2185 of the Civil Code, unless there is proof to
the contrary, it is presumed that a person driving a motor
9
vehicle has been negligent if at the time of the mishap he was
violating a traffic regulation.
o In this case, the Court found that the sole negligence
of Mallari Jr., was the proximate cause of the collision.
o Mallari, Jr.’s overtaking was not allowed by a traffic
law. Therefore, he was deemed negligent at the time of
the mishap.
o Not being able to overcome the presumption with
evidence, Mallari, Jr. is considered liable.
 In an action based on a contract of carriage, the Court need
not make an express finding of fault or negligence on the part
of the carrier in order to hold it responsible for the payment of
damages claimed by the passenger.
o Under Art. 1756 of the Civil Code, unless the carrier
proves that it exercised extraordinary diligence, it is
presumed to have been at fault or have acted
negligently in case of death or injuries to passengers.
5. PAL v. CA, 226 SCRA 423
 Contract of carriage is imbued with public interest requiring
common carriers to carry passengers safely using utmost
diligence of very cautious person with due regard for all
circumstances.
 The occurrence of a fortuitous event did not terminate PAL’s
contract with its passengers who must still necessarily have to
exercise extraordinary diligence in safeguarding the stranded
passengers until they have reached their final destination.
o Undisputably, PAL’s diversion of its flight due to
inclement weather was a fortuitous event.
Nonetheless, such occurrence did not terminate PAL’s
contract with its passengers.
o As the relation of carrier and passenger continues until
the latter has been landed at the port of destination
and has left the carrier’s premises, PAL necessarily
would still have to exercise extraordinary diligence in
safeguarding the comfort, convenience and safety of
its stranded passengers until they have reached their
final destination.
 Since part of the failure to comply with the obligation of
common carrier to deliver its passengers safely to their
destination lay in the defendant’s failure to provide comfort and
convenience to its stranded passengers using extra-ordinary
diligence, the cause of non-fulfillment is not solely and
exclusively due to fortuitous event, but due to something which
 defendant airline could have prevented, defendant becomes
liable to plaintiff.”
o PAL did not provide a return trip to Cebu.
o PAL neither provided the stranded victims with
transportation from the airport to the city proper nor
food and accommodation for his stay while stranded.
6. Japan Airlines v. CA, 294 SCRA 19
 Common carriers are not absolutely responsible for all injuries
or damages even if the same were caused by a fortuitous
event.
o There is no question that when a party is unable to
fulfill his obligation because of “force majeure,” the
general rule is that he cannot be held liable for
damages for non-performance.
 If the fortuitous event was accompanied by neglect and
malfeasance by the carrier’s employees, an action for
damages against the carrier is permissible.
o We are not oblivious to the fact that the cancellation of
JAL flights to Manila from June 15 to June 21, 1991
caused considerable disruption in passenger booking
and reservation.
o In fact, it would be unreasonable to expect, considering
NAIA’s closure, that JAL flight operations would be
normal on the days affected.
o JAL even assumed the hotel expenses for the
passengers due to the delay. But the closure of NAIA
was too much and we cannot expect JAL to cover all of
that.
 However, this does not excuse JAL from its obligation to make
the necessary arrangements to transport private respondents
on its first available flight to Manila. After all, it had a contract to
transport private respondents from the United States to Manila
as their final destination.
 Different from PAL Case.
o The factual background of the PAL case is different
from the instant petition. In that case there was indeed
a fortuitous event resulting in the diversion of the PAL
flight. However, the unforeseen diversion was
worsened when private respondents (passenger) was
left at the airport and could not even hitch a ride in a
Ford Fiera loaded with PAL personnel, not to mention
the apparent apathy of the PAL station manager as to
the predicament of the stranded passengers.
10
o In light of these circumstances, we held that if the
fortuitous event was accompanied by neglect and
malfeasance by the carrier’s employees, an action for
damages against the carrier is permissible.
o Unfortunately, for private respondents, none of these
conditions are present in the instant petition.
7. Fortune Express Inc v. CA, 305 SCRA 14
 A common carrier can be held liable for failing to prevent a
hijacking by frisking passengers and inspecting their baggages.
o Under the circumstances, simple precautionary
measures to protect the safety of passengers, such as
frisking passengers and inspecting their baggages,
preferably with non-intrusive gadgets such as metal
detectors, before allowing them on board could have
been employed without violating the passenger’s
constitutional rights.
o In Gacal v. Philippine Air Lines, Inc., a common carrier
can be held liable for failing to prevent a hijacking by
frisking passengers and inspecting their baggages.
 In Yobido v. Court of Appeals, it was held that to considered as
force majeure, it is necessary that (1) the cause of the breach
of the obligation must be independent of the human will; (2) the
event must be either unforeseeable or unavoidable; (3) the
occurence must be render it impossible for the debtor to fulfill
the obligation in a normal manner; and (4) the obligor must be
free of participation in, or aggravation of, the injury to the
creditor. The absence of any of the requisites mentioned above
would prevent the obligor from being excused from liability.
o In this case, despite the report of PC agent Generalao
that the Maranaos were going to attack its buses,
petitioner took no steps to safeguard the lives and
properties of its passengers. The seizure of the bus of
the petitioner was foreseeable and, therefore, was not
a fortuitous event which would exempt petitioner from
liabilty.
o The event was forseeable and also avoidable if they
frisk and check the passengers.
8. Quisimbing v. CA, 189 SCRA 605
 The evidence fail to prove any want of diligence on the part of
PAL, or that, more specifically, it had failed to comply with
applicable regulations or universally accepted and observed
procedures to preclude hijacking.
 o The mere fact that the petitioner did not call the ground
control and informed them of Zaldy, the highjacker,
was on board does not demonstrate negligence to
overcome the force majeure nature of the armed
robbery.
 PAL's "failure to take certain steps that a passenger in
hindsight believes should have been taken, is not the
negligence or misconduct which mingles with force majeure as
an active and cooperative cause."
 The lives of the rest of the passengers and crew were more
important than their properties. Cooperation with the hijackers
until they released their hostages at the runway end near the
South Superhighway was dictated by the circumstances.
o Thus, not liable for the properties stolen by the
robbers.
9. Baliwag Transit v. CA, 256 SCRA 746
 In a contract of carriage, it is presumed that the common
carrier was at fault or was negligent when a passenger dies or
is injured.
o A common carrier is bound to carry its passengers
safely as far as human care and foresight can provide,
using the utmost diligence of a very cautious person,
with due regard for all the circumstances. In a contract
of carriage, it is presumed that the common carrier was
at fault or was negligent when a passenger dies or is
injured.
o Unless the presumption is rebutted, the court need not
even make an express finding of fault or negligence on
the part of the common carrier.
o This statutory presumption may only be overcome by
evidence that the carrier exercised extraordinary
diligence as prescribed in Articles 1733 and 1755 of
the Civil Code.
 A kerosene lamp or torch at the edge of the road, near the rear
portion of the truck to serve as an early warning device
substantially complies with Section 34(g) of the Land
Transportation and Traffic Cod [which requires a triangular
reflectorized plates in red and yellow].
o Baliwag cannot evade its liability by insisting that the
accident was caused solely by the negligence of A & J
Trading and Julio Recontique.
 The records are bereft of any proof to show that Baliwag
exercised extraordinary diligence. On the contrary, the
evidence demonstrates its driver's recklessness.
11
o Leticia testified that the bus was running at a very high
speed despite the drizzle and the darkness of the
highway;
o the driver did not slow down despite their plea;
o the driver was smelling of liquor.
o Another passenger testified that immediately before
the collision, the bus driver was conversing with a co-
employee.
o All these prove the bus driver's wanton disregard for
the physical safety of his passengers, which make
Baliwag as a common carrier liable for damages under
Article 1759 of the Civil Code.
10. Fabre Jr. v. CA, 259 SCRA 426
 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
supervision of their employee.
 Due diligence in selection of employees is not satisfied by
finding that the applicant possessed a professional driver’s
license.
o The employer should also examine the applicant for
his qualifications, experience and record of service.
o Due diligence in supervision, on the other hand,
requires the formulation of rules and regulations for the
guidance of employees and the issuance of proper
instructions as well as actual implementation and
monitoring of consistent compliance with the rules.
 The existence of hiring procedures and supervisory policies
cannot be casually invoked to overturn the presumption of
negligence on the part of an employer.
o Must show that the driver was really qualified.
o Fabres, in allowing Cabil to drive the bus to La Union,
o 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.
o They had hired him only after a two- week
apprenticeship.
 o 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.
 As common carriers, the Fabres were bound to exercise
“extraordinary diligence” for the safe transportation of the
passengers to their destination.
o This duty of care is not excused by proof that they
exercised the diligence of a good father of the family in
the selection and supervision of their employee.
o Pursuant to Article 1759 of the Civil Code, petitioners
are liable. It provides, “Common carriers are liable for
the death of or injuries to passengers through the
negligence or willful acts of the formers employees,
although such employees may have acted beyond the
scope of their authority or in violation of the orders of
the common carriers.”
11. Sulpicio Lines v. CA, 246 SCRA 299
 A common carrier is liable as such to a stevedore who was
hired by a shipper to help load cargo, even if such stevedore
was not himself a passenger.
o It is not enough that the carrier’s employees have
warned the laborers not to enter the barge after the
hatch was opened.
o The carrier’s employees should have been sufficiently
instructed to see to it that the hatch of the barge is not
opened by any unauthorized person and that the hatch
is not easily opened by anyone.
 Thus, Suplico is liable for the death of the stevedore’s who
were loading the cargo.
12. H. Mariano v. I. Callejas, 594 SCRA 569
 In accord with the above provisions, Celyrosa Express, a
common carrier, through its driver, respondent De Borja, and
its registered owner, respondent Callejas, has the express
obligation “to carry the passengers safely as far as human care
and foresightcan provide, using the utmost diligence of very
cautious persons, with a due regard for all the circumstances,”
and to observe extraordinary diligence in the discharge of its
duty.
12
o The death of the wife of the petitioner in the course of
transporting her to her destination gave rise to the
presumption of negligence of the carrier.
o To overcome the presumption, respondents have to
show that they observed extraordinary diligence in the
discharge of their duty, or that the accident was
caused by a fortuitous event.
 While the law requires the highest degree of diligence from
common carriers in the safe transport of their passengers and
creates a presumption of negligence against them, it does not,
however, make the carrier an insurer of the absolute safety of
its passengers.
o Article 1755 of the Civil Code qualifies the duty of
extraordinary care, vigilance and precaution in the
carriage of passengers by common carriers to only
such as human care and foresight can provide.
 What constitutes compliance with said duty is
adjudged with due regard to all the
circumstances.
o The presumption of negligence is rebuttable by proof
that the common carrier had exercised extraordinary
diligence as required by law in the performance of its
contractual obligation, or that the injury suffered by the
passenger was solely due to a fortuitous event.
 Neither the law nor the nature of the business
of a transportation company makes it an
insurer of the passenger's safety, but that its
liability for personal injuries sustained by its
passenger rests upon its negligence, its failure
to exercise the degree of diligence that the law
requires.
 In this case, evidence shows that the death of petitioners
spouse was caused by the reckless negligence of the driver of
the Isuzu trailer truck which lost its brakes and bumped the
bus.
o Before the collision, the passenger bus was cruising on
its rightful lane along the Aguinaldo Highway when the
trailer truck coming from the opposite direction, on full
speed, suddenly swerved and encroached on its lane,
and bumped the passenger bus on its left middle
portion.
o Respondent driver De Borja had every right to expect
that the trailer truck coming from the opposite direction
would stay on its proper lane. He was not expected to
know that the trailer truck had lost its brakes. The
 swerving of the trailer truck was abrupt and it was
running on a fast speed as it was found 500 meters
away from the point of collision (while the bus was
found just 5 meters away).
o Also, any doubt as to the culpability of the driver of the
trailer truck ought to vanish when he pleaded guilty to
the charge of reckless imprudence resulting to multiple
slight physical injuries and damage to property in
Criminal Case No. 2223-92, involving the same
incident.
13. R Transport Corp. v. Luisito Yu, 750 SCRA 696
 Negligence has been defined as “the 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.”
o Verily, foreseeability is the fundamental test of
negligence. It 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.
o Both the trial and appellate courts found driver Gimena
negligent in hitting and running over the victim and
ruled that his negligence was the proximate cause of
her death.
 Once negligence on the part of the employee is established, a
presumption instantly arises that the employer was remiss in
the selection and/or supervision of the negligent employee.
o Under Article 2180 of the New Civil Code, employers
are liable for the damages caused by their employees
acting within the scope of their assigned tasks.
o Once negligence on the part of the employee is
established, a presumption instantly arises that the
employer was remiss in the selection and/or
supervision of the negligent employee.
o To avoid liability for the quasi-delict committed by its
employee, it is incumbent upon the employer to rebut
this presumption by presenting adequate and
convincing proof that it exercised the care and
diligence of a good father of a family in the selection
and supervision of its employees.
 Tamayo (breach of contract of carriage)– registered owner
or the operator is the one liable and not the actual owner to the
injured party
13
o However, the registered owner or operator has the
right to be indemnified by the real or actual owner of
the amount that he may be required to pay as damage
for the injury caused.
 In this case (TORTS and Negligence), the liability of the
employer for the negligent conduct of its subordinate is direct
and primary, subject only to the defense of due diligence in the
selection and supervision of the employee.
o It must be noted that the case at hand does not involve
a breach of contract of carriage, as in Tamayo v.
Aquino, but a tort or quasi-delict under Article 2176, in
relation to Article 2180 of the New Civil Code. As such,
the liability for which petitioner is being made
responsible actually arises not from a preexisting
contractual relation between petitioner and the
deceased, but from a damage caused by the
negligence of its employee.
o Petitioner, the actual owner, cannot, therefore, rely on
our ruling in Tamayo and escape its solidary liability for
the liability of the employer for the negligent conduct of
its subordinate is direct and primary, subject only to the
defense of due diligence in the selection and
supervision of the employee.
o He cannot pass on the liability to the registered owner
which is MMTC.
o The Supreme Court (SC) has consistently been of
the view that it is for the better protection of the
public for both the owner of record and the actual
operator to be adjudged jointly and severally liable
with the driver.
14. Metro Manila Transit Corp. v. Reynaldo Cuevas, June 15, 2015
 In view of Metro Manila Transit Corporation’s (MMTC’s)
admission in its pleadings that it had remained the registered
owner of the bus at the time of the incident, it could not escape
liability for the personal injuries and property damage suffered
by the Cuevases.
o Registration is required not to make said registration
the operative act by which ownership in vehicles is
transferred because the administrative proceeding of
registration does not bear any essential relation to the
contract of sale.
o The main aim of motor vehicle registration is to identify
the owner so that if any accident happens, or that any
damage or injury is caused by the vehicle on the public
 highways, responsibility therefor can be fixed on a
definite individual, the registered owner.
 The registered owner of the motor vehicle is considered as the
employer of the tortfeasor-driver, and is made primarily liable
for the tort committed by the latter under Article 2176, in
relation with Article 2180, of the Civil Code.
o This is because of the registered-owner rule, whereby
the registered owner of the motor vehicle involved in a
vehicular accident could be held liable for the
consequences.
o In so far as third persons are concerned, the registered
owner of the motor vehicle is the employer of the
negligent driver, and the actual employer is considered
merely as an agent of such owner.
o Regardless of sales made of a motor vehicle, the
registered owner is the lawful operator insofar as the
public and third persons are concerned; consequently,
it is directly and primarily responsible for the
consequences of its operation.
 Although the registered-owner rule might seem to be unjust
towards MMTC, the law did not leave it without any remedy or
recourse.
o MMTC could recover from Mina's Transit, the actual
employer of the negligent driver, under the principle of
unjust enrichment, by means of a cross-claim seeking
reimbursement of all the amounts that it could be
required to pay as damages arising from the driver's
negligence.
15. GV Florida Transport Inc. v. Heirs of Romeo Battung, Oct. 14,
2015
 While the law requires the highest degree of diligence from
common carriers in the safe transport of their passengers and
creates a presumption of negligence against them, it does not,
however, make the carrier an insurer of the absolute safety of
its passengers.
o 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.
o This disputable presumption may also be overcome by
a showing that the accident was due to fortuitous
event.
14
 Being a mere presumption, however, it is rebuttable by proof
that the common carrier had exercised extraordinary diligence
as required by law in the performance of its contractual
obligation, or that the injury suffered by the passenger was
solely due to a fortuitous event.
 In Pilapil v. CA, 180 SCRA 546 (1989), the Court clarified that
where the injury sustained by the passenger was in no way
due (1) to any defect in the means of transport or in the method
of transporting, or (2) to the negligent or willful acts of the
common carrier’s employees with respect to the foregoing —
such as when the injury arises wholly from causes
created by strangers which the carrier had no control of or
prior knowledge to prevent — there would be no issue
regarding the common carrier’s negligence in its duty to
provide safe and suitable care, as well as competent
employees in relation to its transport business; as such, the
presumption of fault/negligence foisted under Article 1756 of
the Civil Code should not apply.
 Since Battung’s death was caused by a co­passenger, the
applicable provision is Article 1763 of the Civil Code, which
states that “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.”
 Case law states that the concept of diligence of a good father
of a family connotes reasonable care consistent with that which
an ordinarily prudent person would have observed when
confronted with a similar situation.
III. Common Carriers; Damages (NCC: Arts. 2197,2199-2201, 2203,
2205, 2207, 2215-2217, 2220, 2226, 2229, 2232, 2235)
1. PAL v. CA, 185 SCRA 110
 For the settlement of the issue at hand, there are enough
applicable local laws and jurisprudence. Under Article 1764
and Article 2206 (1) of the Civil Code, the award of damages
for death is computed on the basis of the life expectancy of the
deceased, not of his beneficiary.
 Formula for life expectancy = 2/3 [80- actual age] [gross annual
income – expenses]
2. Sulpicio v. CA, 246 SCRA 376
 Actual or compensatory damages, to be recovered, must be
proved, and if the proof is flimsy, no damages will be awarded.
o There could be no recovery of actual damages where
the trial court merely mentioned the fact of the loss and
the value of the contents of the pieces of baggage
without stating the evidence on which it based its
findings.
o There is no showing that the value of the contents of
the lost pieces of baggage was based on the bill of
lading or was previously declared by respondent Tito
D. Tabuquilde before he boarded the ship. Hence,
there can be no basis to award actual damages in the
amount of P27,850.00.
 A common carrier is liable for actual or compensatory damages
under Article 2206 in relation to Article 1764 of the Civil Code
for deaths of its passengers caused by the breach of the
contract of transportation.
o In relation to death, the award of damages under
Article 2206 has been increased to P50,000.00.
 In breach of contract of carriage, moral damages may be
recovered when it results in the death of a passenger.
o With respect to the award of moral damages, the
general rule is that said damages are not recoverable
in culpa contractual EXCEPT when the presence of
bad faith was proven.
o However, in breach of contract of carriage, moral
damages may be recovered when it results in the
death of a passenger.
 With respect to the award of exemplary damages, Article 2232
of the Civil Code of the Philippines gives the Court the
discretion to grant said damages in breach of contract when
15
the defendant acted in a wanton, fraudulent and reckless
manner.
o The Court takes judicial notice of the dreadful
regularity with which grievous maritime disasters occur
in our waters with massive loss of life.
o This was the Court’s basis in awarding exemplary
damages.
3. PAL v. Miano, 242 SCRA 235
 In breach of contract of carriage by air, moral damages are
awarded only if the defendant acted fraudulently or in bad faith.
Bad faith means a breach of a known duty through some
motive of interest or ill will.
o The established facts evince that petitioner’s late
delivery of the baggage for eleven (11) days was not
motivated by ill will or bad faith. In fact, it immediately
coordinated with its Central Baggage Services to trace
private respondent’s suitcase and succeeded in finding
it.
 In LBC vs. Court of Appeals, we ruled: “Bad faith under the law
cannot be presumed; it must be established by clear and
convincing evidence. Again, the unbroken jurisprudence is that
in breach of contract cases where the defendant is not shown
to have acted fraudulently or in bad faith, liability for damages
is limited to the natural and probable consequences of the
breach of the obligation which the parties had foreseen or
could reasonably have foreseen. The damages, however, will
not include liability for moral damages.”
 The prerequisite for the award of exemplary damages in cases
of contract or quasi-contract is that defendant acted in wanton,
fraudulent, reckless, oppressive or malevolent manner.
 The award of attorney’s fees must also be disallowed for lack
of legal leg to stand on. The fact that private respondent was
compelled to litigate and incur expenses to protect and enforce
his claim did not justify the award of attorney’s fees.
o The general rule is that attorney’s fees cannot be
recovered as part of damages because of the policy
that no premium should be placed on the right to
litigate.
o Petitioner is willing to pay the just claim of $200.00 as
a result of the delay in the transportation of the
luggage in accord with the Warsaw Convention.
 Needless to say, the award of attorney’s fees must be deleted
where the award of moral and exemplary damages are
eliminated.

4. Tan v. Northwest Airlines, 327 SCRA 263
 For willful misconduct to exist, there must be a showing that
the acts complained of were impelled by an intention to violate
the law, or were in persistent disregard of one’s rights.
o No malice or bad faith may be imputed to an airline
where, due to weight and balance restrictions, its act of
transporting a passenger’s baggage on another plane
was done as a safety measure.
 “Bad faith does not simply connote bad judgment or
negligence, it imports a dishonest purpose or some moral
obliquity and conscious doing of a wrong, a breach of known
duty through some motive or interest or ill-will that partakes of
the nature of fraud.”
o “Where in breaching the contract of carriage the
defendant airline is not shown to have acted
fraudulently or in bad faith, liability for damages is
limited to the natural and probable consequences of
the breach of obligation which the parties had foreseen
or could have reasonably foreseen. In that case, such
liability does not include moral and exemplary
damages.”
5. Korean Airlines v. CA, 234 SCRA 717
 The contract of air carriage generates a relation attended with
a public duty. So it is that any discourteous conduct on the part
of these employees toward a passenger gives the latter an
action for damages against the carrier.
o Passengers have the right to be treated by the carrier’s
employees with kindness, respect, courtesy and due
consideration. They are entitled to be protected against
personal misconduct, injurious language, indignities
and abuses from such employees.
o The breach of contract was aggravated in this case
when, instead of courteously informing Lapuz of his
being a “wait­listed” passenger, a KAL officer rudely
shouted “Down! Down!” while pointing at him, thus
causing him embarrassment and public humiliation.
 Damages are not intended to enrich the complainant at the
expense of the defendant and there is no hard-and-fast rule in
the determination of what would be a fair amount of moral
damages since each case must be governed by its own
peculiar facts.
16
o CA correctly held that KAL acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner
when it "bumped off" plaintiff-appellant on November 8,
1980, and in addition treated him rudely and arrogantly
as a "patay gutom na contract worker fighting Korean
Air Lines," which clearly shows malice and bad faith,
thus entitling plaintiff-appellant to moral damages.
o However, Lapuz’ prayer for moral damages of not less
than P1 million and exemplary damages of not less
than P500,000.00 is overblown.
 The injury suffered by Lapuz is not so serious
or extensive as to warrant an award of P1.5
million. The assessment of P100,000 as moral
and exemplary damages in his favor is, in our
view, reasonable and realistic.
 Questions not assigned as errors may be considered on
appeal if necessary for the just and complete resolution of the
case.
o Court of Appeals was therefore justified in decreasing
the award of actual damages.
o Lapuz’s contract of employment shows that the
effectivity of the contract is for only one year,
renewable every year for five years. Since he had not
yet started working with his foreign employer, hence,
there can be no basis as to whether his contract will be
renewed by his foreign employer or not.
o Hence, he is entitled only to his lost earnings for one
year, i.e., P60,000.00, which is 1/5 of P300,000.00, the
total amount of actual damages, representing lost
earnings for five years prayed for in the Complaint.
 Legal interest of six percent (6%) on the amount of damages
adjudged in favor of a litigant should commence from the time
of the rendition of the trial court’s decision instead of the date
of the filing of the complaint.
o If suit were for payment of a definite sum of money, the
contention might be tenable [from the filing of the
complaint].
o However, if it is for damages, unliquidated and not
known until definitely ascertained, assessed and
determined by the courts after proof, interest should be
from the date of the decision.
6. PAL v. CA, 275 SCRA 621
 The contract of air carriage generates a relation attended with
a public duty, and neglect or malfeasance of the carrier’s
 employees naturally could give ground for an action for
damages.
 Assuming arguendo that the airline passengers have no vested
right to these amenities in case a flight is cancelled due to
force majeure, what makes petitioner liable for damages in this
particular case and under the facts obtaining herein is its
blatant refusal to accord the so-called amenities equally to all
its stranded passengers who were bound for Surigao City. No
compelling or justifying reason was advanced for such
discriminatory and prejudicial conduct.
o PAL was saying that the respondent should have just
taken the cash assistance and could not get the hotel
accomodations.
o SC stated that assuming that it was not a vested right;
however, what makes the petitioner liable is the
different treatment of passengers and it did not give
any compelling or justifying reason for the
discriminatory and prejudicial conduct.
 More importantly, it has been sufficiently established that it is
petitioner’s standard company policy, whenever a flight has
been cancelled, to extend to its hapless passengers cash
ssistance or to provide them accommodations in hotels with
which it has existing tie-ups.
o The fact that PAL gives hotel accommodations to a
number of people stranded (which was shown through
multiple testimonies) shows that the actions of PAL is
ex debito and not ex gratia as it claims.
 Finally, the fact that the refund of hotel expenses was
surreptitiously and discriminatorily made by PAL since the
same was not made known to everyone except through word
of mouth to a handful of passengers is a sad commentary on
the quality of service and professionalism of an airline
company which is the country’s flag carrier at that.
 The discriminatory act of petitioner against respondent
ineludibly makes the former liable for moral damages under
Article 21 in relation to Article 2219 (10) of the Civil Code. As
held in Alitalia Airways vs. CA, et al., such inattention to and
lack of care by petitioner airline for the interest of its
passengers who are entitled to its utmost consideration,
particularly as to their convenience, amount to bad faith which
entitles the passenger to the award of moral damages.
o The fact that PAL firstly refused to accommodate the
hotel and did not reimburse the respondent for the
hotel expense while others were reimbursed.
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 Moral damages are emphatically not intended to enrich a
plaintiff at the expense of the defendant. They are awarded
only to allow the former to obtain means, diversion, or
amusements that will serve to alleviate the moral suffering he
has undergone due to the defendant’s culpable action and
must, perforce, be proportional to the suffering inflicted.
However, substantial damages do not translate into excessive
damages.
o Under the peculiar circumstances of this case, the SC
was convinced that the awards for actual, moral and
exemplary damages granted in the judgment of
respondent court, for the reasons meticulously
analyzed and thoroughly explained in its decision, are
just and equitable.
 The denial by the CA of the cost of suit and
attorney’s fees was affirmed by the SC.
7. Singson v. CA, 282 SCRA 149
 Contention of CATHAY that there was no contract of carriage
that was breached because petitioner’s ticket was open­dated
is untenable.
o To begin with, the round trip ticket issued by the carrier
to the passenger was in itself a complete written
contract by and between the carrier and the
passenger. It had all the elements of a complete
written contract, to wit:
 Consent: passenger agreed to be transported
by the carrier, and the carrier accepted to
bring him to his destination and back home;
 Cause: fare as stated in the ticket; and
 Object: transportation of the passenger from
the place of departure to the place of
destination and back.
o In fact, the contract is already partially executed. The
other half of the contract (i.e. transport back to the
Philippines) was left to be done.
 To hold that no contractual breach was committed by CATHAY
and totally absolve it from any liability would in effect put a
premium on the negligence of its agents, contrary to the policy
of the law requiring common carriers to exercise extraordinary
diligence.
o One of two (2) things may be surmised from the
circumstances of this case: first, US Air (CA­THAY’s
agent) had mistakenly detached the San
Francisco-Hongkong flight coupon thinking that it was
 the San Francisco­Los Angeles portion; or, second,
petitioner’s booklet of tickets did not from issuance
include a San Francisco-Hongkong flight coupon. In
either case, the loss of the coupon was attributable to
the negligence of CATHAY’s agents and was the
proximate cause of the non­confirmation of petitioner’s
return flight on 1 July 1988.
 Although the rule is that moral damages predicated upon a
breach of contract of carriage may only be recoverable in
instances where the mishap results in the death of a
passenger, or where the carrier is guilty of fraud or bad faith,
there are situations where the negligence of the carrier is so
gross and reckless as to virtually amount to bad faith, in which
case, the passenger likewise becomes entitled to recover
moral damages.
 Where in breaching the contract of carriage the defendant
airline is shown to have acted fraudulently, with malice or in
bad faith, the award of moral and exemplary damages, in
addition to actual damages, is proper.
o Anent the accusation that private respondent’s
personnel were rude and arrogant, petitioner failed to
adduce sufficient evidence to substantiate his claim.
o Nonetheless, such fact will not in any manner affect
the disposition of this case. Private respondent’s
mistake in removing the wrong coupon was
compounded by several other independent acts of
negligence above-enumerated. Taken together, they
indubitably signify more than ordinary inadvertence or
inattention and thus constitute a radical departure from
the extraordinary standard of care required of common
carriers.
 As regards attorney’s fees, they may be awarded when the
defendant’s act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his
interest. It was therefore erroneous for the Court of Appeals to
delete the award made by the trial court. Consequently,
petitioner should be awarded attorney’s fees and the amount of
P25,000.00, instead of P100,000.00 earlier awarded, may be
considered rational, fair and reasonable.
8. Zalamea v. CA, 228 SCRA 23
 Foreign laws do not prove themselves. They must be alleged
and proved.
o The U.S. law or regulation allegedly authorizing
overbooking has never been proved. Foreign laws do
18
not prove themselves nor can the courts take judicial
notice of them.
 However, in the Philippines, it is not allowed. Overbooking
amounts to bad faith, entitling the passengers to award of
moral damages.
o Existing jurisprudence explicitly states that
overbooking amounts to bad faith, entitling the
passengers concerned to an award of moral damages.
In Alitalia Airways v. Court of Appeals, where
passengers with confirmed bookings were refused
carriage on the last minute, this Court held that when
an airline issues a ticket to a passenger confirmed on a
particular flight, on a certain date, a contract of
carriage arises, and the passenger has every right to
expect that he would fly on that flight and on that date.
o If he does not, then the carrier opens itself to a suit for
breach of contract of carriage. Where an airline had
deliberately overbooked, it took the risk of having to
deprive some passengers of their seats in case all of
them would show up for check in.
o For the indignity and inconvenience of being refused a
confirmed seat on the last minute, said passenger is
entitled to an award of moral damages.
 Similarly, in Korean Airlines Co., Ltd. v. Court of Appeals,
where private respondent was not allowed to board the plane
because her seat had already been given to another
passenger even before the allowable period for passengers to
check in had lapsed despite the fact that she had a confirmed
ticket and she had arrived on time, this Court held that
petitioner airline acted in bad faith in violating private
respondent’s rights under their contract of carriage and is
therefore liable for the injuries she has sustained as a result.
 Award of damages is proper where a confirmed passenger
included in the manifest was denied accommodation in such
flight.
o In Pan American World Airways, Inc. v. Intermediate
Appellate Court, where a would-be passenger had the
necessary ticket, baggage claim and clearance from
immigration all clearly and unmistakably showing that
she was indeed a confirmed passenger and that she
was, in fact, included in the passenger manifest for
said flight, and yet was denied accommodation in said
flight, this Court did not hesitate to affirm the lower
court’s finding awarding her damages.
 Inattention and lack of care for the interest of its passengers
who are entitled to its utmost consideration entitles the
passenger to an award of moral damages.
o Thus, it was also held that the switch of planes from
Lockheed 1011 to a smaller Boeing 707 because there
were only 138 confirmed economy class passengers
who could very well be accommodated in the smaller
planes, thereby sacrificing the comfort of its first class
passengers for the sake of economy, amounts to bad
faith.
o Such inattention and lack of care for the interest of its
passengers who are entitled to its utmost consideration
entitles the passenger to an award of moral damages.
 Even on the assumption that overbooking is allowed,
respondent TWA is still guilty of bad faith in not informing its
passengers beforehand that it could breach the contract of
carriage even if they have confirmed tickets if there was
overbooking. Respondent TWA should have incorporated
stipulations on overbooking on the tickets issued or to properly
inform its passengers about these policies so that the latter
would be prepared for such eventuality or would have the
choice to ride with another airline.
 Moreover, respondent TWA was also guilty of not informing its
passengers of its alleged policy of giving less priority to
discounted tickets. While the petitioners had checked in at the
same time, and held confirmed tickets, yet, only one of them
was allowed to board the plane ten minutes before departure
time because the full-fare ticket he was holding was given
priority over discounted tickets. The other two petitioners were
left behind.
 Respondent airline is responsible for all damages which may
be reasonably attributed to the non-performance of its
obligations.
o The evidence shows that petitioners Suthira and Liana
were constrained to take the American Airlines flight to
Los Angeles not because they “opted not to use their
TWA tickets on another TWA flight” but because
respondent TWA could not accommodate them either
on the next TWA flight which was also fully booked.
The purchase of the American Airlines tickets by
petitioners Suthira and Liana was the consequence of
respondent TWA’s unjustifiable breach of its contracts
of carriage with petitioners.
o In accordance with Article 2201, New Civil Code,
respondent TWA should, therefore, be responsible for
19
all damages which may be reasonably attributed to the
non-performance of its obligation.
o SC ordered TWA to refund the ticket purchased by
respondents for its transportation due to non-
accommodation.
9. Trans-Asia Shipping Lines v. CA, 254 SCRA 260
 In contracts or quasi-contracts, the obligor is liable for all the
damages which may be reasonably attributed to the
non-performance of the obligation if he is guilty of fraud, bad
faith, malice, or wanton attitude.
o Actual or compensatory damages represent the
adequate compensation for pecuniary loss suffered
and for profits the obligee failed to obtain.
o In contracts or quasi-contracts, the obligor is liable for
all the damages which may be reasonably attributed to
the non-performance of the obligation if he is guilty of
fraud, bad faith, malice, or wanton attitude.
 Anent a breach of a contract of common carriage, moral
damages may be awarded if the common carrier acted
fraudulently or in bad faith.
 In contracts and quasi-contracts, exemplary damages may be
awarded if the defendant acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner.
o Before the court may consider an award for exemplary
damages, the plaintiff must first show that he is entitled
to moral, temperate or compensatory damages, but it
is not necessary that he prove the monetary value
thereof.
 Where the delay in a contracted voyage is incurred after the
commencement of such voyage, Article 698 of the Code of
Commerce, not Article 1169 of the Civil Code, applies.
o Where the common carrier fails to observe
extraordinary diligence resulting in delay or interruption
of the voyage, it shall be liable for any pecuniary loss
or loss of profits which the passengers may suffer by
reason thereof.
o Come of commerce applies and there is no need for
demand under Art. 1169 of the Civil Code.
 To merit the award of attorney’s fees, it is settled that the
amount thereof must be proven, and that it must be specifically
prayed for—it may not be deemed incorporated within a
general prayer for “such other relief and remedy as this court
may deem just and equitable.”

10. R Transport Corp. v. E. Pante, 599 SCRA 747
 Common carriers, like petitioner bus company, from the nature
of their business and for reasons of public policy, are bound to
observe extraordinary diligence for the safety of the
passengers transported by them, according to all the
circumstances of each case.
 Further, Article 1759 of the Civil Code provides that “[c]ommon
carriers are liable for the death or injury to passengers through
the negligence or willful acts of the former’s employees. 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 SC awarded actual damages for hospitalization expenses
that was evidenced by a statement of account issued by the
Makati Medical Center [for physical injuries].
 The Court of Appeals correctly sustained the award of moral
damages which awarded moral damages to paying
passengers, who suffered physical injuries on board a bus that
figured in an accident.
o In Spouses Ong, the SC held that a person is entitled
to the integrity of his body and if that integrity is
violated, damages are due and assessable. Thus, the
usual practice is to award moral damages for physical
injuries sustained. In Spouses Ong, the Court awarded
moral damages in the amount of P50,000.00 to a
passenger who was deemed to have suffered mental
anguish and anxiety because her right arm could not
function in a normal manner.
 Article 2232 of the Civil Code states that “[i]n contracts and
quasi-contracts, the court may award exemplary damages if
the defendant acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner.
o In this case, respondent’s testimonial evidence showed
that the bus driver, Johnny Merdiquia, was driving the
bus very fast in a reckless, negligent and imprudent
manner. Hence, the bus hit a tree and a house along
the highway in Baliuag, Bulacan.
o Hence award for exemplary damages was proper.
 NOTE* -- moral damages was given due to the physical
injuries suffered. In other instances, no physical injury was
suffered nor death. There was a breach of contract of carriage
though.
11. Sulpicio Lines v. D. Curso, 615 SCRA 575
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 The omission from Article 2206(3) of the brothers and sisters of
the deceased passenger reveals the legislative intent to
exclude them from the recovery of moral damages for mental
anguish by reason of the death of the deceased—the solemn
power and duty of the courts to interpret and apply the law do
not include the power to correct the law by reading into it was
is not written therein.
o The purpose of moral damages is indemnity or
reparation, that is, to enable the injured party to obtain
the means, diversions, or amusements that will serve
to alleviate the moral suffering he has undergone by
reason of the tragic event.
 According to Villanueva v. Salvador, the conditions for
awarding moral damages are: (a) there must be an injury,
whether physical, mental, or psychological, clearly
substantiated by the claimant; (b) there must be a culpable act
or omission factually established; (c) the wrongful act or
omission of the defendant must be the proximate cause of the
injury sustained by the claimant; and (d) the award of damages
is predicated on any of the cases stated in Article 2219 of the
Civil Code.
12. Phil Hawk v. Tan Lee, 612 SCRA 576
 Foreseeability is the fundamental test of negligence—to be
negligent, a defendant must have acted or failed to act in such
a way that an ordinary reasonable man would have realized
that certain interests of certain persons were unreasonably
subjected to a general but definite class of risks.
 Whenever an employee’s negligence causes damage or injury
to another, there instantly arises a presumption that the
employer failed to exercise the due diligence of a good father
of a family in the selection or supervision of its employees.
o To avoid liability for a quasi-delict committed by his
employee, an employer must overcome the
presumption by presenting convincing proof that he
exercised the care and diligence of a good father of a
family in the selection and supervision of his employee.
 The indemnity for loss of earning capacity of the deceased is
awarded not for loss of earnings, but for loss of capacity to
earn money; As a rule, documentary evidence should be
presented to substantiate the claim for damages for loss of
earning capacity.
o By way of exception, damages for loss of earning
capacity may be awarded despite the absence of
documentary evidence when: (1) the deceased is
 self-employed and earning less than the minimum
wage under current labor laws, in which case, judicial
notice may be taken of the fact that in the deceased’s
line of work no documentary evidence is available; or
(2) the deceased is employed as a daily wage worker
earning less than the minimum wage under current
labor laws.
 In the computation of loss of earning capacity, only net
earnings, not gross earnings, are to be considered; that is, the
total of the earnings less expenses necessary for the creation
of such earnings or income, less living and other incidental
expenses.
o In the computation of loss of earning capacity, only net
earnings, not gross earnings, are to be considered;
that is, the total of the earnings less expenses
necessary for the creation of such earnings or income,
less living and other incidental expenses.
o In the absence of documentary evidence, it is
reasonable to peg necessary expenses for the lease
and operation of the gasoline station at 80 percent of
the gross income, and peg living expenses at 50
percent of the net income (gross income less
necessary expenses).

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