Hernando, Ortega, Soriano, Tan, Ti, Yaokasin

Commercial Law Review - Digests

Atty. Zarah Villanueva-Castro

TRANSPORTATION LAW Issue:

1. PERENA V. NICOLAS (2012) W/N Perenas and PNR are jointly and severally liable for
damages.
Doctrine:
W/N the indemnity for loss of Aaron’s earning capacity was
The operator of a school bus service is a common carrier in the proper.
eyes of the law. He is bound to observe extraordinary diligence
in the conduct of his business. He is presumed to be negligent W/N the amounts of damages were excessive.
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 Ratio:
the time of the accident.
Yes, they are joint tortfeasors. Perenas operated as a common
carrier; and that their standard of care was extraordinary
Facts: diligence, not the ordinary diligence of a good father of a
family. Although the operator of a school bus service has been
Spouses Perenas were engaged in the business of transporting usually regarded as a private carrier, the true test for a
students from their respective residences in Paranaque to Don common carrier is not the quantity or extent of the business
Bosco, Makati; and back. They used a KIA Ceres Van (PYA 896), actually transacted, or the number and character of the
with a capacity of 14 students at a time; 2 in front, and 12 in conveyances used in the activity, but whether the undertaking
the rear equally balanced on either side. They employed Alfaro is a part of the activity engaged in by the carrier that he has
as driver. held out to the general public as his business or occupation.
There is no question that the Pereñ as as the operators of a
Spouses Zarate contracted with the Perenas to transport school bus service were: (a) engaged in transporting
Aaron, an unemployed high school student in Don Bosco. passengers generally as a business, not just as a casual
Aaron sat on the left side of the van near the rear door. To occupation; (b) undertaking to carry passengers over
avoid being late to school, Alfaro traversed the narrow part established roads by the method by which the business was
underneath Magallanes Interchange, which were marked by conducted; and (c) transporting students for a fee. Despite
piles of construction materials and parked passenger jeepneys, catering to a limited clientè le, the Pereñ as operated as a
and the railroad crossing had no railroad warning signs, common carrier because they held themselves out as a ready
watchmen, or other responsible persons manning the crossing. transportation indiscriminately to the students of a particular
The bamboo barandilla was up, leaving the railroad crossing school living within or near where they operated the service
open to traversing motorists. Alfaro, and another passenger and for a fee. Article 1755 of the Civil Code specifies that the
bus, traversed the railroad crossing while PNR Commuter No. common carrier should "carry the passengers safely as far as
302 (train), operated by Alano, was travelling northbound. The human care and foresight can provide, using the utmost
train blew its horn to warn motorists of its approach. Alano diligence of very cautious persons, with a due regard for all the
even applied emergency brakes when he saw that a collision circumstances." To successfully fend off liability in an action
was imminent. upon the death or injury to a passenger, the common carrier
Fortunately, the passenger bus successfully crossed the must prove his or its observance of that extraordinary
railroad tracks. However, the train hit the rear end of the van, diligence; otherwise, the legal presumption that he or it was at
causing 9 of the 12 students in the rear to be thrown out of the fault or acted negligently would stand. Moreover, the fact of
van. Aaron’s head was severed. Alano fled the scene, and did death of one of their passenger gives rise to the presumption of
not wait for the police investigator to arrive. negligence, which they failed to overturn. The Perenas were
liable for the death of Aaron despite the fact that their driver
Spouses Zarate commenced an action for damages against might have acted beyond the scope of his authority or even in
Alfaro, Spouses Perenas, PNR and Alano. violation of the orders of the common carrier for crossing a
shortcut that he knew was risky to his passengers. The
Perenas claimed that they exercised the diligence of a good
loudness of Alfaro’s music may have also reduced his ability to
father of the family in the selection and supervision of Alfaro,
hear the warning horns of PNR. The omission of care on the
by making sure that he has a driver’s license and that he had
part of Alfaro was negligence. PNR is also guilty of negligence
not been involved in any vehicular accident prior to the
because the railroad tracks traversed was not dedicated by the
collision; that their own son had taken the van daily; and that
PNR as a railroad crossing for pedestrians and motorists, and
Teodoro Perena had sometimes accompanied Alfaro in the
that the PNR did not ensure the safety of others through the
van’s trips.
placing of warning signs, and the like.
PNR claimed that the proximate cause of the collision was the
Yes, the award was proper. While only a high school student,
reckless crossing of the van; and that the narrow path had not
had been enrolled in one of the reputable schools in the
been intended to be a crossing for motorists.
Philippines and that he had been a normal and able-bodied
The Court ruled in favor of the plaintiff and against the child prior to his death. The basis for the computation of
defendants ordering them to jointly and severally pay the Aaron’s earning capacity was the minimum wage in effect at
plaintiff. In RTC, Perenas’ motion for reconsideration was the time of his death. Moreover, the RTC’s computation of
denied, reiterating that the cooperative gross negligence of the Aaron’s life expectancy rate was not reckoned from his age of
Perenas and PNR had caused the collision, and that the 15 years at the time of his death, but on 21 years, his age when
damages were not excessive. CA affirmed the decision of the he would have graduated from college. It is not speculative and
RTC. unfounded because the courts premised on Aaron being a
lowly minimum wage earner, and not a professional, despite
Hence, this review on certiorari. his being then enrolled at a prestigious school. 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
 Hernando, Ortega, Soriano, Tan, Ti, Yaokasin
Commercial Law Review - Digests
Atty. Zarah Villanueva-Castro

deceased, and shall in every case be assessed and awarded by arising from damaged tablets. Wyeth-Suaco filed an insurance
the court "unless the deceased on account of permanent claim against FGU Insurance, issuing a Subrogation Receipt.
physical disability not caused by the defendant, had no earning
capacity at the time of his death.” FGU Insurance filed a complaint for damages before the RTC
against Sanchez Brokerage. RTC dismissed the complaint on
No. Moral damages were reasonable because of deep mental the ground that the Survey Report of Elite Surveyors is bereft
anguish over their son’s unexpected and violent death. of any evidentiary support and a mere product of pure
Exemplary damages were also reasonable since as a common guesswork. CA reversed the decision and held that Sanchez
carrier, the Pereñ as needed to be vigorously reminded to Brokerage was engaged not only in the business of customs
observe their duty to exercise extraordinary diligence to brokerage, but also in the transportation and delivery of the
prevent a similarly senseless accident from happening again. cargo to its clients, hence, a common carrier within the
purview of Article 1732 of NCC. Because of this, Sanchez
Brokerage is presumed negligent and upon it rested the
2. AF SANCHEZ BROKERAGE V. CA (2004) burden of proving that it exercised extraordinary negligence
not only in instances when negligence is directly proven but
Doctrine: also in those cases when the cause of the damage is not known
or unknown.
Customs broker may be a common carrier. as defined under
Article 1732 of the Civil Code. Sanchez Brokerage’s MR was denied. Hence, this petition.

Facts: Issue:
Wyeth-Pharma GMBH shipped on board an aircraft of KLM W/N Sanchez Brokerage is a common carrier.
Royal Dutch Airlines at Dusseldorf, Germany oral
contraceptives for delivery to Manila in favor of the consignee,
Wyeth-Suaco Laboratories, Inc. Specifically, the Femenal Ratio:
tablets were placed in 124 cartons and the Nordiol tablets
were placed in 20 cartons which were packed together in one Yes. A customs broker, to be also a common carrier, as defined
(1) LD3 aluminum container, while the Trinordial tablets were under Article 1732 of the Civil Code, to wit: Art. 1732. Common
packed in two pallets, each of which contained 30 cartons. carriers are persons, corporations, firms or associations
Wyeth-Pharma insured the shipment against all risks with FGU engaged in the business of carrying or transporting passengers
Insurance. or goods or both, by land, water, or air, for compensation,
offering their services to the public. Sanchez Brokerage’s
Upon its arrival in NAIA, it was discharged without exception services offers include the delivery of goods to the warehouse
and delivered to the warehouse of the Philippine Skylanders, of the consignee or importer. While paragraph No. 4 of Article
Inc. (PSI) for safekeeping. 1734 of the Civil Code exempts a common carrier from liability
To secure release from PSI and Bureau of Customs, Wyeth- if the loss or damage is due to the character of the goods or
Suaco engaged the services of Sanchez Brokerage which had defects in the packing or in the containers, the rule is that if the
been its licensed broker since 1984. Mitzi Morales and Ernesto improper packing is known to the carrier or his employees or
Mendoza, representatives of Sanchez Brokerage, paid the is apparent upon ordinary observation, but he nevertheless
storage fee. On the receipt, another representative of Sanchez accepts the same without protest or exception notwithstanding
Brokerage, M. Sison, acknowledged that he received the such condition, he is not relieved of liability for the resulting
cargoes consisting of three pieces in good condition. damage. Since petitioner received all the cargoes in good order
and condition at the time they were turned over by the PSI
Wyeth-Suaco being a regular importer, the customs examiner warehouseman, and upon their delivery to Hizon Laboratories,
did not inspect the cargoes. Among those who witnessed the Inc. a portion thereof was found to be in bad order, it was
release of the cargoes from the PSI warehouse were Ruben incumbent on petitioner to prove that it exercised
Alonso and Tony Akas, employees of Elite Surveryors, a marine extraordinary diligence in the carriage of the goods. It did not,
and cargo surveryor and insurance claim adjusters firm however. Hence, its presumed negligence under Article 1735 of
engaged by Wyeth-Suaco on behalf of FGU Insurance. the Civil Code remains unrebutted.
The cargoes were delivered to Hizon Laboratories for quality
control check. The delivery receipt indicated that the delivery
consisted of one container with 144 cartons of Femenal and 3. CRUZ V. SUN HOLIDAYS (2010)
Nordiol and 1 pallet containing Trinordiol. Ronnie Likas, a
representative of Wyeth-Suaco, acknowledged the delivery by
affixing his signature on the delivery receipt. Doctrine:
Upon inspection, however, Ronnie Likas and Ruben Alonso Neither does Article 1732 distinguish between a carrier
discovered that 44 cartons containing Femenal and Nordiol offering its services to the general public, i.e., the general
were in bad order. Hence, Ronnie Likas placed a note above his community or population, and one who offers services or
signature on the delivery receipt stating that these were in bad solicits business only from a narrow segment of the general
order. In the Annexed Schedule of Elite Surveryors, it was population. Indeed, respondent is a common carrier. Its ferry
noted that there were slight to heavy rains at the time of services are so intertwined with its main business as to be
delivery. Hizon Laboratories issued a Report confirming that properly considered ancillary thereto.
the tablets were heavily damaged with water and emitted foul
smell. Wyeth-Suaco issued a Notice of Materials Rejection, and
demanded from Sanchez Brokerage payment for the loss Facts:
 Hernando, Ortega, Soriano, Tan, Ti, Yaokasin
Commercial Law Review - Digests
Atty. Zarah Villanueva-Castro

Spouses Cruz filed a Complaint against Sun Holidays, Inc. with diligence would thus not brave such stormy weather and put
the RTC for damages arising from the death of their son Ruelito other peoples lives at risk. The extraordinary diligence
and his wife on board the boat M/B Coco Beach III that required of common carriers demands that they take care of
capsized en route to Batangas from Puerto Galera, Oriental the goods or lives entrusted to their hands as if they were their
Mindoro where the couple had stayed at Coco Beach Island own. This respondent failed to do. To fully free a common
Resort owned and operated by respondent. The stay at the carrier from any liability, the fortuitous event must have been
Resort was by virtue of a tour package-contract with the proximate and only cause of the loss. And it should have
respondent that included transportation to and from the exercised due diligence to prevent or minimize the loss before,
Resort and the point of departure in Batangas. during and after the occurrence of the fortuitous event.
Matute, a scuba diving instructor, testified that it was windy
when Ruelito and his wife trekked to the other side of the
Resort mountain, where they boarded the boat. Shortly after, it 4. VILLANUEVA vs. DOMINGO
began rain, hence, the boat capsized. FACTS
At the time of his death, Ruelito was 28 years old and - Priscilla R. Domingo is the registered owner of a
employed as a contractual worker for Mitsui Engineering & silver Mitsubishi Lancer Car model 1980 bearing plate No.
Shipbuilding Arabia, Ltd. in Saudi Arabia, with a basic monthly NDW 781 91 with Leandro Luis R. Domingo as authorized
salary of $900. driver
Sun Holidays denied responsibility raising the defense of - Nostradamus Villanueva was then the registered
fortuitous event. Sun Holidays denied being a common carrier, owner of a green Mitsubishi Lancer bearing Plate No. PHK
alleging that its boats are not available to the general public as 201 91.
they only ferry Resort guests and crew members. Nonetheless,
it claimed that it exercised the utmost diligence in ensuring the - That while respondents were traversing the South
safety of its passengers, where the Coast Guard cleared the Superhighway with a green traffic light, a green
voyage and that there was no storm. There was also sufficient Mitsubishi lancer driven by Renato Del Cruz Ocfemia
life jackets and the boat was not filled to capacity. Carlos darted from Vito Cruz hit them which cause on the left
Bonquin, the captain, averred that they met the four front portion which caused the car to be thrown away
conditions, to wit: 1) the sea is calm, 2) there is clearance from thereby hitting another two other parked vehicles
the Coast Guard, 3) there is clearance from the captain, and 4)
- Renato dela Cruz Ocfemia was driving with expired
there is clearance from the Resorts assistant manager.
license and positive for alcoholic breath
RTC and CA affirmed that the respondent is a private carrier
- Hence, an information for reckless imprudence
which is only required to observe ordinary diligence, and that
resulting to (sic) damage to property and physical
the proximate cause of the incident was a fortuitous event.
injuries was filed against Ocfemia
Petitioners maintain that the respondent is a common carrier
NOTE:
since by its tour package, the transporting of its guests is an
integral part of its resort business. The original complaint was amended twice: first, impleading
Auto Palace Car Exchange as commercial agent and/or buyer-
seller and second, impleading Albert Jaucian as principal
Issue: defendant doing business under the name and style of Auto
Palace Car Exchange.
W/N Sun Holidays is a common carrier.
- Nostradamus Villanueva claimed that he was no
longer the owner of the car at the time of the mishap
Ratio: because it was swapped with a Pajero owned by Albert
Jaucian/Auto Palace Car Exchange
Yes. Sun Holidays is a common carrier as defined under Article
1732. The above article makes no distinction between one - Albert Jaucian claimed that he was not the owner of
whose principal business activity is the carrying of persons or the vehicle. In addition, he cannot be held subsidiary
goods or both, and one who does such carrying only as an liable as employer because Ocfemia was off-duty nor
ancillary activity (in local idiom, as a sideline). Article 1732 performing a a duty related to his work
also carefully avoids making any distinction between a person RTC:
or enterprise offering transportation service on a regular or
scheduled basis and one offering such service on an occasional, - Albert Jaucian was ordered to pay respondent actual,
episodic or unscheduled basis. Neither does Article 1732 moral, exemplary damages plus attorneys fees
distinguish between a carrier offering its services to the
CA
general public, i.e., the general community or population, and
one who offers services or solicits business only from a narrow - Upheld but deleted appearance and attorney’s fees
segment of the general population. Indeed, respondent is a
common carrier. Its ferry services are so intertwined with its ISSUE
main business as to be properly considered ancillary thereto.
1. Whether or not the registered owner of a motor vehicle be
The Court is aware of the practice of beach resort operators
held liable for damages arising from a vehicular accident
offering tour packages to factor the transportation fee in
involving his motor vehicle while being operated by the
arriving at the tour package price. That guests who opt not to
employee of its buyer without the latter’s consent and
avail of respondents ferry services pay the same amount is
knowledge
likewise inconsequential. These guests may only be deemed to
have overpaid. A very cautious person exercising the utmost
 Hernando, Ortega, Soriano, Tan, Ti, Yaokasin
Commercial Law Review - Digests
Atty. Zarah Villanueva-Castro

2. Should not the registered owner be allowed at the trial to - Pursuant to an insurance agreement, plaintiff-
prove who the actual and real owner is, and in accordance with appellee paid SMC the amount of ₱1,703,381.40
such proof escape or evade responsibility by and lay the same representing the value of the damaged unit. In turn a
on the person actually owning the vehicle? Subrogation form was executed in favor of UCPB
3. Whether or not Albert Jaucian is correct in arguing that he - plaintiff-appellee filed a Complaint on July 21, 1992
should escape liability because Roberto Ocfemia was not in the as subrogee of SMC seeking to recover from defendants
perfromance of his duty at the time of the incident the amount it had paid SMC.
HELD - EAST ASIATIC was impleaded in the complaint as
general agent of DAMCO
1. YES.
- However, the court a quo noted the dismissal of the
We have consistently ruled that the registered owner of any complaint against defendant EAST in its Order dated
vehicle is directly and primarily responsible to the public and December 5, 1997. Thus, trial ensued with respect to the
third persons while it is being operated.[6] The rationale remaining defendants.
behind such doctrine was explained way back in 1957 in Erezo
vs. Jepte: RTC:
The principle upon which this doctrine is based is that in - DAMCO and ABOITIZ solidarily liable to plaintiff-
dealing with vehicles registered under the Public Service Law, subrogee for the damaged shipment
the public has the right to assume or presume that the
registered owner is the actual owner thereof, for it would be CA
difficult for the public to enforce the actions that they may - Reversed
have for injuries caused to them by the vehicles being
negligently operated if the public should be required to prove o UCPB’s right of action against
who the actual owner is. We do not imply by his doctrine, respondents did not accrue because
however, that the registered owner may not recover whatever UCPB failed to file a formal notice of
amount he had paid by virtue of his liability to third persons claim within 24 hours from (SMC’s)
from the person to whom he had actually sold, assigned or receipt of the damaged merchandise
conveyed the vehicle. as required under Art. 366 of the
Code of Commerce. It is a condition
2. NO. precedent for the accrual of the right
We hold with the trial court that the law does not allow him to of action against the carrier for the
do so; the law, with its aim and policy in mind, does not relieve damages
him directly of the responsibility that the law fixes and places - UCPB in its memorandum asserts that on
upon him as an incident or consequence of registration. Were a transshipment, the cargo was already damaged when
registered owner allowed to evade responsibility by proving loaded on board the inter-island carrier. UCPB claims that
who the supposed transferee or owner is, it would be easy for under the Carriage of Goods by Sea Act (COGSA), notice of
him, by collusion with others or otherwise, to escape said loss need not be given if the condition of the cargo has
responsibility and transfer the same to an indefinite person, or been the subject of joint inspection
to one who possesses no property with which to respond
financially for the damage or injury done. ISSUE

3. NO. Whether or not a formal notice of claim is mandatory

requirement for the accrual of the right of action against the
Whether the driver is authorized or not by the actual owner is carrier for damages
irrelevant to determining the liability of the registered owner
who the law holds primarily and directly responsible for any HELD:
accident, injury or death caused by the operation of the vehicle
YES
in the streets and highways. To require the driver of the
vehicle to be authorized by the actual owner before the Art. 366 of the Code of Commerce states:
registered owner can be held accountable is to defeat the very
purpose why motor vehicle legislations are enacted in the first Art. 366. Within twenty-four hours following the receipt of the
place. merchandise, the claim against the carrier for damage or
average which may be found therein upon opening the
_________________________________________________ packages, may be made, provided that the indications of the
damage or average which gives rise to the claim cannot be
5. UCPB vs. ABOTIZ & DAMCO
ascertained from the outside part of such packages, in which
FACTS: case the claim shall be admitted only at the time of receipt.

- SMC (San Mig Corp.) purchased three (3) units of After the periods mentioned have elapsed, or the
waste water treatment plant with accessories from Super transportation charges have been paid, no claim shall be
Max Engineering Enterprise of Taiwan. It cam from admitted against the carrier with regard to the condition in
Charleston, USA and arrived here in Manila via MV which the goods transported were delivered
"SCANDUTCH STAR", then transported to Cebu on board
We have construed the 24-hour claim requirement as a
MV "ABOITIZ SUPERCON II"
condition precedent to the accrual of a right of action against a
- Upon receipt by SMC it was then discovered that one carrier for loss of, or damage to, the goods. The shipper or
electrical motor of DBS Drive Unit Model DE-30-7 was consignee must allege and prove the fulfillment of the
damaged. condition. Otherwise, no right of action against the carrier can
accrue in favor of the former.
 Hernando, Ortega, Soriano, Tan, Ti, Yaokasin
Commercial Law Review - Digests
Atty. Zarah Villanueva-Castro

The shipment in this case was received by SMC on August 2, The cardinal purpose of the Warsaw Convention is to provide
1991. However, as found by the Court of Appeals, the claims uniformity of rules governing claims arising from international
were dated October 30, 1991, more than three (3) months air travel; thus, it precludes a passenger from maintaining an
from receipt of the shipment and, at that, even after the extent action for personal injury damages under local law when his or
of the loss had already been determined by SMC’s surveyor. her claim does not satisfy the conditions of liability under the
The claim was, therefore, clearly filed beyond the 24-hour time Convention.
frame prescribed by Art. 366 of the Code of Commerce.
This Court notes that jurisprudence in the Philippines and the
_________________________________________________ United States also recognizes that the Warsaw Convention
does not "exclusively regulate" the relationship between
6. PAL vs. SAVILLO passenger and carrier on an international flight.
FACTS In United Airlines v. Uy,18 this Court distinguished between
- Private respondent was invited to participate in the the (1) damage to the passenger’s baggage and (2) humiliation
1993 ASEAN Seniors Annual Golf Tournament held in he suffered at the hands of the airline’s employees. The first
Jakarta, Indonesia. He and several companions decided to cause of action was covered by the Warsaw Convention which
purchase their respective passenger tickets from PAL prescribes in two years, while the second was covered by the
with the following points of passage: MANILA- provisions of the Civil Code on torts, which prescribes in four
SINGAPORE-JAKARTA-SINGAPORE-MANILA. years.

- Private respondent and his companions were made Had the present case merely consisted of claims incidental to
to understand by PAL that its plane would take them from the airlines’ delay in transporting their passengers, the private
Manila to Singapore, while Singapore Airlines would take respondent’s Complaint would have been time-barred under
them from Singapore to Jakarta. Article 29 of the Warsaw Convention. However, the present
case involves a special species of injury resulting from the
- Upon their arrival in Singapore, Singapore Airlines failure of PAL and/or Singapore Airlines to transport private
rejected the tickets of private respondent and his group respondent from Singapore to Jakarta – the profound distress,
because they were not endorsed by PAL. fear, anxiety and humiliation that private respondent
experienced when, despite PAL’s earlier assurance that
- Eventually, private respondent and his companions
Singapore Airlines confirmed his passage, he was prevented
were forced to purchase tickets from Garuda Airlines and
from boarding the plane and he faced the daunting possibility
board its last flight bound for Jakarta.
that he would be stranded in Singapore Airport because the
- This incident according to the complainant brought PAL office was already closed.
them humiliation, embarrassment, mental anguish,
These claims are covered by the Civil Code provisions on tort,
serious anxiety, fear and distress.
and not within the purview of the Warsaw Convention. Hence,
- Upon their return in the country, he sent a demand the applicable prescription period is that provided under
letter to PAL on 20 December 1993 and another to Article 1146 of the Civil Code:
Singapore Airlines on 21 March 1994.
Art. 1146. The following actions must be instituted within four
- On 15 August 1997, private respondent filed a years:
Complaint for Damages.
(1) Upon an injury to the rights of the plaintiff;
- PAL filed a motion to dismiss on the ground that the
(2) Upon a quasi-delict.
said complaint was barred on the ground of prescription
Private respondent’s Complaint was filed with the RTC on 15
o PAL argued that the Warsaw
August 1997, which was less than four years since PAL
Convention,10 particularly Article
received his extrajudicial demand on 25 January 1994. Thus,
29 thereof, governed this case, as it
private respondent’s claims have not yet prescribed and PAL’s
provides that any claim for damages
Motion to Dismiss must be denied.
in connection with the international
transportation of persons is subject _________________________________________________
to the prescription period of two
years. 6. CRISOSTOMO vs. CA

RTC FACTS

- Ruled in favor of complainant, Civil Code is the - Petitioner Estela L. Crisostomo contracted the
applicable law and not the Warsaw Convention services of respondent Caravan Travel and Tours
International, Inc. to arrange and facilitate her booking,
CA ticketing and accommodation in a tour dubbed Jewels of
Europe (England, Holland, Germany, Austria,
- Affirmed
Liechstenstein, Switzerland and France) at a total cost of
ISSUE: P74,322.70. Petitioners niece, Meriam Menor, was
respondent companys ticketing manager.
Whether or not the CA erred in not applying the provisions of
the Warsaw Convention despite the fact that complainant’s - Without checking her travel documents, and by
cause of action arose from a breach of contract for relying to Meriam’s statement that her flight is on June
international air transport 15, 1991, petitioner went to NAIA on that date. To her
surprise her plane ticket was for the flight scheduled on
HELD June 14, 1991
NO
 Hernando, Ortega, Soriano, Tan, Ti, Yaokasin
Commercial Law Review - Digests
Atty. Zarah Villanueva-Castro

- Thus she called Meriam menor to complain, who was the contract between the parties in this case was an ordinary
able to convince her to take another tour the British one for services and not one of carriage.
Pageant which included England, Scotland and Wales in
its itinerary. For this package she was asked to pay anew Since the contract between the parties is an ordinary one for
P20,881.00. Partial payment was allowed services, the standard of care required of respondent is that of
a good father of a family under Article 1173 of the Civil Code
- Upon her return from Europe, she demanded from
respondent the reimbursement of P61,421.70,
representing the difference between the sum she paid for 7. G.R. No. 144274. September 20, 2004
Jewels of Europe and the amount she owed respondent
for the British Pageant tour. Respondent refused. NOSTRADAMUS VILLANUEVA vs. PRISCILLA R. DOMINGO and
LEANDRO LUIS R. DOMINGO
- Respondent insisted that petitioner had only herself
to blame for missing the flight, as she did not bother to CORONA, J.:
read or confirm her flight schedule as printed on the
ticket. respondent maintained that the British Pageant
was not a substitute for the package tour that petitioner
Petitioner: Nostradamus Villanueva- registered owner of a
missed. This tour was independently procured by
green Mitsubishi Lancer
petitioner after realizing that she made a mistake in
missing her flight for Jewels of Europe. Actual owner of green Lancer: Albert Jaucian- business buy and
sell under the name Auto Palace Car Exchange
RTC
Respondent: Priscilla Domingo- registered owner of a silver
- Respondent was negligent in erroneously advising
Mitsubishi Lancer Car model 1980
petitioner of her departure date through its employee,
Menor. However, petitioner was guilty of contributory Co-respondent: Leandro Domingo- authorized driver of
negligence and accordingly, deducted 10% from the Priscilla
amount being claimed as refund.
CA
FACTS: On 22 October 1991 at about 9:45 in the evening,
- Set aside the decision of RTC, but appellate court held
following a green traffic light, respondent Priscilla’s car then
that petitioner is more negligent than respondent
driven by co-respondent, Leandro, was cruising along the
because as a lawyer and well-traveled person thus not
middle lane of South Superhighway at moderate speed from
entitled to any form of damages
north to south. Suddenly, a petitioner’s car driven by Renato
- Thus, this present petition Ocfemia darted from Vito Cruz Street towards the South
Superhighway directly into the path of respondent’s car,
o Petitioner contends that respondent thereby hitting and bumping its left front portion. And
did not observe the standard of care petitioner’s car then hit two (2) parked vehicles at the
required of a common carrier when roadside, the second hitting another parked car in front of it.
it informed her wrongly of the flight
schedule.
ISSUE Petitioner claimed that he was no longer the owner of the car
Whether or not respondent is a common carrier, thus requiring at the time of the mishap because it was swapped with a Pajero
it to exercise utmost diligence owned by Albert Jaucian/Auto Palace Car Exchange. Auto
Palace Car Exchange represented by Albert Jaucian claimed
HELD that he was not the registered owner of the car. Moreover, it
could not be held subsidiary liable as employer of Ocfemia
No because the latter was off-duty as utility employee at the time
A common carrier is defined under Article 1732 of the Civil of the incident. Neither was Ocfemia performing a duty related
Code as persons, corporations, firms or associations engaged in to his employment. Ocfemia was driving with expired license
the business of carrying or transporting passengers or goods and positive for alcoholic breathe- as such information for
or both, by land, water or air, for compensation, offering their reckless imprudence resulting to damage to property and
services to the public. physical injuries was recommended by the assistant
prosecutor. The original complaint was amended twice:
impleading Auto Palace Car Exchange and Albert Jaucian as
principal defendant doing business under the former.
It is obvious from the above definition that respondent is not
an entity engaged in the business of transporting either
passengers or goods and is therefore, neither a private nor a
common carrier. Respondent did not undertake to transport RTC Manila: Petitioner liable and ordered him to pay
petitioner from one place to another since its covenant with its respondent actual, moral and exemplary damages plus
customers is simply to make travel arrangements in their appearance and attorneys fees. Albert Jaucian is hereby
behalf. ordered to indemnify Nostradamus Villanueva for whatever
amount the latter is hereby ordered to pay under the
The object of petitioners contractual relation with respondent judgment.
is the latters service of arranging and facilitating petitioners
booking, ticketing and accommodation in the package tour. In CA: Upheld the trial courts decision but deleted the award for
contrast, the object of a contract of carriage is the appearance and attorneys fees because the justification for the
transportation of passengers or goods. It is in this sense that grant was not stated in the body of the decision.
 Hernando, Ortega, Soriano, Tan, Ti, Yaokasin
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Finally, the issue of whether or not the driver of the vehicle

during the accident was authorized is not at all relevant to
ISSUE: MAY THE REGISTERED OWNER OF A MOTOR VEHICLE determining the liability of the registered owner. This must be
BE HELD LIABLE FOR DAMAGES ARISING FROM A VEHICULAR so if we are to comply with the rationale and principle behind
ACCIDENT INVOLVING HIS MOTOR VEHICLE WHILE BEING the registration requirement under the motor vehicle law.
OPERATED BY THE EMPLOYEE OF ITS BUYER WITHOUT THE
LATTERS CONSENT AND KNOWLEDGE?
8. G.R. No. 162267 July 4, 2008

HELD: Yes. The Revised Motor Vehicle Law provides that no PCI LEASING AND FINANCE, INC. vs UCPB GENERAL
vehicle may be used or operated upon any public highway INSURANCE CO., INC.
unless the same is property registered. It has been stated that
the system of licensing and the requirement that each machine
must carry a registration number, conspicuously displayed, is FACTS: On October 19, 1990 at about 10:30 p.m., a Mitsubishi
one of the precautions taken to reduce the danger of injury to Lancer car with Plate Number PHD-206 owned by United
pedestrians and other travelers from the careless management Coconut Planters Bank was traversing the Laurel Highway,
of automobiles. And to furnish a means of ascertaining the Barangay Balintawak, Lipa City. The car was insured with
identity of persons violating the laws and ordinances, plantiff-appellee [UCPB General Insurance Inc.], then driven by
regulating the speed and operation of machines upon the Flaviano Isaac with Conrado Geronimo, the Asst. Manager of
highways (2 R.C.L. 1176). Not only are vehicles to be registered said bank, was hit and bumped by an 18-wheeler Fuso Tanker
and that no motor vehicles are to be used or operated without Truck with Plate No. PJE-737 and Trailer Plate No. NVM-133,
being properly registered for the current year, but that dealers owned by defendants-appellants PCI Leasing & Finance, Inc.
in motor vehicles shall furnish thee Motor Vehicles Office a allegedly leased to and operated by defendant-appellant
report showing the name and address of each purchaser of Superior Gas & Equitable Co., Inc. (SUGECO) and driven by its
motor vehicle during the previous month and the employee, defendant appellant Renato Gonzaga.
manufacturers serial number and motor number. (Section 5(c),
Act No. 3992, as amended.) The impact caused heavy damage to the Mitsubishi Lancer car
resulting in an explosion of the rear part of the car. The driver
and passenger suffered physical injuries. However, the driver
defendant-appellant Gonzaga continued on its [sic] way to its
Registration is required not to make said registration the [sic] destination and did not bother to bring his victims to the
operative act by which ownership in vehicles is transferred. hospital.
The main purpose of vehicle registration is the easy
identification of the owner who can be held responsible for any Plaintiff-appellee paid the assured UCPB the amount of
accident, damage or injury caused by the vehicle. Easy P244,500.00 representing the insurance coverage of the
identification prevents inconvenience and prejudice to a third damaged car.
party injured by one who is unknown or unidentified. To allow
As the 18-wheeler truck is registered under the name of PCI
a registered owner to escape liability by claiming that the
Leasing, repeated demands were made by plaintiff-appellee for
driver was not authorized by the new (actual) owner results in
the payment of the aforesaid amounts. However, no payment
the public detriment the law seeks to avoid.
was made. Thus, plaintiff-appellee filed the instant case on
March 13, 1991.

A registered owner who has already sold or transferred a Petitioner interposed the defense that it could not be held
vehicle has the recourse to a third-party complaint, in the same liable for the collision, since the driver of the truck, Gonzaga,
action brought against him to recover for the damage or injury was not its employee, but that of its co-defendant Superior Gas
done, against the vendee or transferee of the vehicle. The & Equitable Co., Inc. (SUGECO). In fact, it was SUGECO, and not
inconvenience of the suit is no justification for relieving him of petitioner, that was the actual operator of the truck, pursuant
liability; said inconvenience is the price he pays for failure to to a Contract of Lease signed by petitioner and SUGECO.
comply with the registration that the law demands and Petitioner, however, admitted that it was the owner of the
requires. truck in question.
RTC Makati: judgment is rendered in favor of plaintiff UCPB
General Insurance [respondent], ordering the defendants PCI
The registered owner, the defendant-appellant herein, is Leasing and Finance, Inc., [petitioner] and Renato Gonzaga, to
primarily responsible for the damage caused to the vehicle of pay jointly and severally the former
the plaintiff-appellee, but he (defendant-appellant) has a right CA: Upheld the ruling of RTC. Under the Public Service Act, if
to be indemnified by the real or actual owner of the amount the property covered by a franchise is transferred or leased to
that he may be required to pay as damage for the injury caused another without obtaining the requisite approval, the transfer
to the plaintiff-appellant. is not binding on the Public Service Commission and, in
contemplation of law, the grantee continues to be responsible
under the franchise in relation to the operation of the vehicle,
Whether the driver is authorized or not by the actual owner is such as damage or injury to third parties due to collisions.
irrelevant to determining the liability of the registered owner
who the law holds primarily and directly responsible for any
accident, injury or death caused by the operation of the vehicle ISSUE: Whether petitioner, as registered owner of a motor
in the streets and highways. It is immaterial whether or not the vehicle that figured in a quasi-delict may be held liable, jointly
driver was actually employed by the operator of record.
 Hernando, Ortega, Soriano, Tan, Ti, Yaokasin
Commercial Law Review - Digests
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and severally, with the driver thereof, for the damages caused Under this policy, the evil sought to be avoided is the
to third parties? exacerbation of the suffering of victims of tragic vehicular
accidents in not being able to identify a guilty party. A contrary
ruling will not serve the ends of justice. The failure to register a
lease, sale, transfer or encumbrance, should not benefit the
HELD: Although the Public Service Act is inapplicable, as parties responsible, to the prejudice of innocent victims.
correctly argued by petitioner stating that the vehicle’s
involved are not common carriers. However, the registered The non-registration of the lease contract between petitioner
owner of the vehicle driven by a negligent driver may still be and its lessee precludes the former from enjoying the benefits
held liable under applicable jurisprudence involving laws on under Section 12 of R.A. No. 8556. Petitioner may resort to
compulsory motor vehicle registration and the liabilities of third-party complaints against their lessees or whoever are the
employers for quasi-delicts under the Civil Code. actual operators of their vehicles.
In case a separate civil action is filed, the long-standing
principle is that the registered owner of a motor vehicle is
primarily and directly responsible for the consequences of its 9. G.R. No. 142305. December 10, 2003
operation, including the negligence of the driver, with respect SINGAPORE AIRLINES LIMITED vs. ANDION FERNANDEZ
to the public and all third persons. In contemplation of law, the
registered owner of a motor vehicle is the employer of its
driver, with the actual operator and employer, such as a lessee,
being considered as merely the owner's agent. This being the FACTS: Respondent is an acclaimed soprano here in the
case, even if a sale has been executed before a tortious Philippines and abroad. At the time of the incident, she was
incident, the sale, if unregistered, has no effect as to the right of availing an educational grant from the Federal Republic of
the public and third persons to recover from the registered Germany, pursuing a Masters Degree in Music majoring in
owner. The public has the right to conclusively presume that Voice. She was invited to sing before the King and Queen of
the registered owner is the real owner, and may sue Malaysia on February 3 and 4, 1991. For this singing
accordingly. engagement, an airline passage ticket was purchased from
petitioner Singapore Airlines which would transport her to
In the case now before the Court, there is not even a sale of the Manila from Frankfurt, Germany on January 28, 1991. From
vehicle involved, but a mere lease, which remained Manila, she would proceed to Malaysia on the next day. It was
unregistered up to the time of the occurrence of the quasi- necessary for the respondent to pass by Manila in order to
delict that gave rise to the case. Since a lease, unlike a sale, does gather her wardrobe; and to rehearse and coordinate with her
not even involve a transfer of title or ownership, but the mere pianist her repertoire for the aforesaid performance.
use or enjoyment of property, there is more reason, therefore,
in this instance to uphold the policy behind the law, which is to The petitioner issued the respondent a Singapore Airlines
protect the unwitting public and provide it with a definite ticket leaving Frankfurt, Germany on January 27, 1991 bound
person to make accountable for losses or injuries suffered in for Singapore with onward connections from Singapore to
vehicular accidents. Manila. Flight No. SQ 27 was scheduled to leave Frankfurt at
1:45 in the afternoon of January 27, 1991, arriving at Singapore
The Court recognizes that the business of financing companies at 8:50 in the morning of January 28, 1991. The connecting
has a legitimate and commendable purpose. In earlier cases, it flight from Singapore to Manila was leaving Singapore at 11:00
considered a financial lease or financing lease a legal contract in the morning of January 28, 1991, arriving in Manila at 2:20
though subject to the restrictions of the so-called Recto Law or in the afternoon of the same day. However, on that date, from
Articles 1484 and 1485 of the Civil Code. Frankfurt to Singapore, the flight arrive 2 hours late and the
Petitioners argues that the enactment of R.A. No. 8556, aircraft bound for Manila had left as scheduled, leaving the
especially its addition of the new Sec. 12 to the old law, is respondent and about 25 other passengers stranded in the
deemed to have absolved petitioner from liability, fails to Changi Airport in Singapore.
convince the Court. Sec 12. Reads: Liability of lessors. Financing The respondent approached the transit counter who referred
companies shall not be liable for loss, damage or injury caused her to the nightstop counter and told the lady employee
by a motor vehicle, aircraft, vessel, equipment, machinery or thereat that it was important for her to reach Manila on that
other property leased to a third person or entity except when day, January 28, 1991. The lady employee told her that there
the motor vehicle, aircraft, vessel, equipment or other property were no more flights to Manila for that day and that
is operated by the financing company, its employees or agents respondent had no choice but to stay in Singapore. Upon
at the time of the loss, damage or injury. respondents persistence, she was told that she can actually fly
The new law, R.A. No. 8556, notwithstanding developments in to Hong Kong going to Manila but since her ticket was non-
foreign jurisdictions, do not supersede or repeal the law on transferable, she would have to pay for the ticket. The
compulsory motor vehicle registration. No part of the law respondent could not accept the offer because she had no
expressly repeals Section 5(a) and (e) of R.A. No. 4136, as money to pay for it. Her pleas for the respondent to make
amended, otherwise known as the Land Transportation and arrangements to transport her to Manila were unheeded. The
Traffic Code. respondent then requested the lady employee to use their
phone to make a call to Manila. Over the employees reluctance,
Thus, the rule remains the same: a sale, lease, or financial lease, the respondent telephoned her mother to inform the latter that
for that matter, that is not registered with the Land she missed the connecting flight. The respondent was able to
Transportation Office, still does not bind third persons who are contact a family friend who picked her up from the airport for
aggrieved in tortious incidents, for the latter need only to rely her overnight stay in Singapore.
on the public registration of a motor vehicle as conclusive
evidence of ownership. A lease such as the one involved in the The next day, after being brought back to the airport, the
instant case is an encumbrance in contemplation of law, which respondent proceeded to petitioners counter which says:
needs to be registered in order for it to bind third parties. Immediate Attention To Passengers with Immediate Booking.
 Hernando, Ortega, Soriano, Tan, Ti, Yaokasin
Commercial Law Review - Digests
Atty. Zarah Villanueva-Castro

There were four or five passengers in line. The respondent claims to be and with the complexities of air travel, it was
approached petitioners male employee at the counter to make certainly well-equipped to be able to foresee and deal with
arrangements for immediate booking only to be told: Cant you such situation. The petitioners indifference and negligence by
see I am doing something. She explained her predicament but its absence and insensitivity was exposed by the trial court.
the male employee uncaringly retorted: Its your problem, not The petitioners diligence in communicating to its passengers
ours. the consequences of the delay in their flights was wanting. The
respondent was not remiss in conveying her apprehension
The respondent never made it to Manila and was forced to take about the delay of the flight when she was still in Frankfurt.
a direct flight from Singapore to Malaysia on January 29, 1991, Upon the assurance of petitioners personnel in Frankfurt that
through the efforts of her mother and travel agency in Manila. she will be transported to Manila on the same date, she had
Her mother also had to travel to Malaysia bringing with her every right to expect that obligation fulfilled.
respondents wardrobe and personal things needed for the
performance that caused them to incur an expense of about When a passenger contracts for a specific flight, he has a
P50,000. purpose in making that choice which must be respected. This
choice, once exercised, must not be impaired by a breach on
As a result of this incident, the respondents performance the part of the airline without the latter incurring any liability.
before the Royal Family of Malaysia was below par. Because of For petitioners failure to bring the respondent to her
the rude and unkind treatment she received from the destination, as scheduled, we find the petitioner clearly liable
petitioners personnel in Singapore, the respondent was for the breach of its contract of carriage with the respondent.
engulfed with fear, anxiety, humiliation and embarrassment
causing her to suffer mental fatigue and skin rashes. She was the petitioner acted in bad faith. Bad faith means a breach of
thereby compelled to seek immediate medical attention upon known duty through some motive of interest or ill will. Self-
her return to Manila for acute urticarial. enrichment or fraternal interest, and not personal ill will, may
well have been the motive; but it is malice nevertheless. Bad
RTC Pasig: Singapore Airlines is ordered to pay herein plaintiff faith was imputed by the trial court when it found that the
Fernandez damages (actual, moral, exemplary, attorney’s fees petitioners employees at the Singapore airport did not accord
and cost of suit) the respondent the attention and treatment allegedly
CA: Upheld RTC Ruling warranted under the circumstances. The trial court concluded
that this inattentiveness and rudeness of petitioners personnel
to respondents plight was gross enough amounting to bad
faith.
ISSUE: Whether or not damages was correctly awarded by
reason of failure to exercise extraordinary diligence and bad Article 2232 of the Civil Code provides that in a contractual or
faith? quasi-contractual relationship, exemplary damages may be
awarded only if the defendant had acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner. In this
case, petitioners employees acted in a wanton, oppressive or
HELD: Yes. When an airline issues a ticket to a passenger, malevolent manner. The award of exemplary damages is,
confirmed for a particular flight on a certain date, a contract of therefore, warranted in this case.
carriage arises. The passenger then has every right to expect
that he be transported on that flight and on that date. If he does
not, then the carrier opens itself to a suit for a breach of 10. JAPAN AIRLINES, petitioner, vs. MICHAEL ASUNCION and
contract of carriage. JEANETTE ASUNCION, respondents.
The contract of air carriage is a peculiar one. Imbued with G.R. No. 161730. January 28, 2005.
public interest, the law requires common carriers to carry the
passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons
with due regard for all the circumstances. In an action for FACTS: Michael and Jeanette Asuncion left Manila on board
breach of contract of carriage, the aggrieved party does not Japan Airlines’ bound for Los Angeles. Their itinerary included
have to prove that the common carrier was at fault or was a stopover in Narita. Upon arrival thereat, their applications for
negligent. All that is necessary to prove is the existence of the shore pass, which is required of a foreigner aboard a vessel or
contract and the fact of its non-performance by the carrier. aircraft who desires to stay in the neighborhood of the port of
call for not more than 72 hours, were endorsed to the Japanese
In the case at bar, it is undisputed that the respondent carried a immigration official. During their interview, the immigration
confirmed ticket for the two-legged trip from Frankfurt to official noted that Michael appeared shorter than his height as
Manila: 1) Frankfurt-Singapore; and 2) Singapore-Manila. In indicated in his passport. Consequently, respondents were
her contract of carriage with the petitioner, the respondent denied shore pass entries, and were instead taken to the Narita
certainly expected that she would fly to Manila on Flight No. SQ Airport Rest House where they stayed overnight until their
72 on January 28, 1991. Since the petitioner did not transport departure the following day for Los Angeles. The immigration
the respondent as covenanted by it on said terms, the official also handed Mrs. Haguchi of JAL a notice stating that
petitioner clearly breached its contract of carriage with the respondents were to be watched so as not to escape. The
respondent. The respondent had every right to sue the couple later filed a complaint for damages, claiming that JAL
petitioner for this breach. The defense that the delay was due did not fully apprise them of their travel requirements and that
to fortuitous events and beyond petitioners control is they were rudely and forcibly detained at Narita Airport. JAL,
unavailing. on the other hand, denied the allegations of respondents,
In the instant case, petitioner was not without recourse to maintaining that the refusal of the Japanese immigration
enable it to fulfill its obligation to transport the respondent authorities to issue shore passes to respondents is an act of
safely as scheduled as far as human care and foresight can state, which JAL cannot interfere with or prevail upon. The trial
provide to her destination. Tagged as a premiere airline as it court ruled in favor of respondents, and dismissed JAL’s
 Hernando, Ortega, Soriano, Tan, Ti, Yaokasin
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counterclaim for litigation expenses, exemplary damages and ALITALIA make reparation for the damages thus suffered by
attorney’s fees, which decision was affirmed in toto by the her. ALITALIA offered her "free airline tickets to compensate
Court of Appeals. JAL then proceeded to file a petition for her for any alleged damages x x." She rejected the offer, and
review seeking to reverse and set aside the decision of the forthwith commenced an action. As it turned out, Prof. Pablo’s
Court of Appeals. suitcases were in fact located and forwarded to Ispra, Italy, but
only on the day after her scheduled appearance and
participation at the U.N. meeting there. By then, Dr. Pablo was
no longer there to accept delivery, and her suitcases were not
ISSUE: Whether JAL is guilty of breach of contract restored to her until 11 months later. The Court of First
Instance rendered judgment in Dr. Pablo’s favor, ordering
ALITALIA to pay nominal damages, attorney’s fees, and costs of
RULING: No. Under Article 1755 of the Civil Code, a common the suit. ALITALIA appealed to the IAC but failed to obtain a
carrier such as JAL is bound to carry its passengers safely as far reversal of the judgment. ALITALIA then appealed via petition
as human care and foresight can provide, using the utmost for certiorari to review said decision, claiming that the Warsaw
diligence of very cautious persons, with due regard for all the Convention should be applied to limit its liability.
circumstances. When an airline issues a ticket to a passenger,
confirmed for a particular flight on a certain date, a contract of
carriage arises. The passenger has every right to expect that he ISSUE: Whether the Warsaw Convention should have been
be transported on that flight and on that date and it becomes applied to limit ALITALIA’s liability
the carrier’s obligation to carry him and his luggage safely to
the agreed destination. If the passenger is not so transported
or if in the process of transporting he dies or is injured, the
carrier may be held liable for a breach of contract of carriage. RULING: No. Under the Warsaw Convention, an air carrier is
While it may be true that JAL has the duty to inspect whether made liable for the destruction or loss of, or damage to, any
its passengers have the necessary travel documents, however, registered luggage or goods, if the occurrence causing it took
such duty does not extend to checking the veracity of every place during the carriage by air delay in the transportation by
entry in these documents. JAL could not vouch for the air of passengers, luggage or goods, among others. In these
authenticity of a passport and the correctness of the entries cases, it is provided in the Convention that the "action for
therein. The power to admit or not an alien into the country is damages, however founded, can only be brought subject to the
a sovereign act, which cannot be interfered with even by JAL. conditions and limits set out" therein. In the case of loss,
This is not within the ambit of the contract of carriage entered damage or delay of part of registered baggage or cargo, or of
into by JAL and herein respondents. As such, JAL should not be any object contained therein, the weight to be taken into
faulted for the denial of respondents’ shore pass applications. consideration in determining the amount to which the carrier's
The most that could be expected of JAL is to endorse liability is limited shall be only the total weight of the package
respondents’ applications, which Mrs. Higuchi did immediately or packages concerned. The Warsaw Convention however
upon their arrival in Narita. denies to the carrier availment "of the provisions which
exclude or limit his liability, if the damage is caused by his
wilful misconduct or by such default on his part as, in
11. ALITALIA, petitioner, vs. INTERMEDIATE APPELLATE accordance with the law of the court seized of the case, is
COURT and FELIPA E. PABLO, respondents. considered to be equivalent to wilful misconduct," or "if the
damage is (similarly) caused x x by any agent of the carrier
acting within the scope of his employment. The Convention
does not thus operate as an exclusive enumeration of the
G.R. No. 71929. December 4, 1990. instances of an airline's liability, or as an absolute limit of the
extent of that liability. Moreover, it should be deemed a limit of
liability only in those cases where the cause of the death or
injury to person, or destruction, loss or damage to property or
FACTS: Dr. Felipa Pablo, an associate professor in the
delay in its transport is not attributable to or attended by any
University of the Philippines, and a research grantee of the
wilful misconduct, bad faith, recklessness, or otherwise
Philippine Atomic Energy Agency, was invited to take part at a
improper conduct on the part of any official or employee for
meeting of the Department of Research and Isotopes of the
which the carrier is responsible, and there is otherwise no
Joint FAO-IAEA Division of Atomic Energy in Food and
special or extraordinary form of resulting injury. The
Agriculture of the United Nations in Ispra, Italy, where she
Convention's provisions, in short, do not "regulate or exclude
would be the second speaker on the first day of the meeting. To
liability for other breaches of contract by the carrier” or
fulfill this engagement, Dr. Pablo booked passage on petitioner
misconduct of its officers and employees, or for some
airline, ALITALIA. She arrived in Milan on the day before the
particular or exceptional type of damage. On the other hand,
meeting in accordance with the itinerary, however, she was
the Warsaw Convention has invariably been held inapplicable,
told by the ALITALIA personnel that her luggage was “delayed
or as not restrictive of the carrier's liability, where there was
inasmuch as the same was in one of the succeeding flights from
satisfactory evidence of malice or bad faith attributable to its
Rome to Milan.” – one of which contained her scientific papers,
officers and employees. In the case at bar, no bad faith or
slides and other research material. But the other flights
otherwise improper conduct may be ascribed to the employees
arriving from Rome did not have her baggage on board. Feeling
of petitioner airline; and Dr. Pablo's luggage was eventually
desperate, she went to Rome to try to locate her bags herself.
returned to her, belatedly, it is true, but without appreciable
There, she inquired about her suitcases in the domestic and
damage. The fact is, nevertheless, that some special species of
international airports, and filled out the forms prescribed by
injury was caused to Dr. Pablo because petitioner ALITALIA
ALITALIA for people in her predicament. However, her
misplaced her baggage and failed to deliver it to her at the time
baggage could not be found. Completely distraught and
appointed—a breach of its contract of carriage, to be sure—
discouraged, she returned to Manila without attending the
with the result that she was unable to read the paper and make
meeting in Ispra, Italy. Once back in Manila she demanded that
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the scientific presentation (consisting of slides, RULING: NO. Art. 1733 of the [Civil] Code provides that from
autoradiograms or films, tables and tabulations) that she had the very nature of their business and by reasons of public
painstakingly labored over, at the prestigious international policy, common carriers are bound to observe extraordinary
conference, to attend which she had traveled hundreds of diligence in the vigilance over the goods transported by them.
miles, to her chagrin and embarrassment and the This extraordinary responsibility, according to Art. 1736, lasts
disappointment and annoyance of the organizers. Certainly, from the time the goods are unconditionally placed in the
the compensation for the injury suffered by Dr. Pablo cannot possession of and received by the carrier until they are
under the circumstances be restricted to that prescribed by the delivered actually or constructively to the consignee or person
Warsaw Convention for delay in the transport of baggage. She who has the right to receive them. Art. 1737 states that the
is not, of course, entitled to be compensated for loss or damage common carrier’s duty to observe extraordinary diligence in
to her luggage. As already mentioned, her baggage was the vigilance over the goods transported by them ‘remains in
ultimately delivered to her in Manila, tardily but safely. She is full force and effect even when they are temporarily unloaded
however entitled to nominal damages and attorney’s fees. or stored in transit.’ And Art. 1735 establishes the presumption
that if the goods are lost, destroyed or deteriorated, common
carriers are presumed to have been at fault or to have acted
12. SABENA BELGIAN WORLD AIRLINES, petitioner, vs. HON. negligently, unless they prove that they had observed
COURT OF APPEALS and MA. PAULA SAN AGUSTIN, extraordinary diligence as required in Article 1733. The only
respondents. exceptions to the foregoing extraordinary responsibility of the
common carrier is when the loss, destruction, or deterioration
G.R. No. 104685. March 14, 1996. of the goods is due to any of the following causes: (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
FACTS: Ma. Paula San Agustin was a passenger on board Flight
owner of the goods; (4)The character of the goods or defects in
SN 284 of Sabena Belgian World Airlines originating from
the packing or in the containers; (5)Order or act of competent
Casablanca to Brussels, Belgium, on her way back to Manila.
public authority. Not one of the above excepted causes obtains
She checked in her luggage which contained her valuables,
in this case. Furthermore, the loss of said baggage not only
namely jewelries, clothes, shoes/bag, accessories – all of which
once but twice underscores the wanton negligence and lack of
amounted to USD 4,625.00, for which she was issued Tag No.
care on the part of the carrier. The above findings, which
71423. She stayed overnight in Brussels and her luggage was
certainly cannot be said to be without basis, foreclose
left on board Flight SN 284. Upon arrival at Manila
whatever rights petitioner might have had to the possible
International Airport, however, her luggage was missing and
limitation of liabilities enjoyed by international air carriers
could not be released upon submission of her tag. She was
under the Warsaw Convention, as it denies to the carrier
advised to accomplish and submit a property Irregularity
availment of the provisions which exclude or limit his liability
Report which she submitted and filed on the same day. She
if the damage is caused by his wiful misconduct or by such
followed up her claim nearly two weeks later, but the luggage
default on his part as in accordance with the law of the court
remained to be missing. She then filed a formal complaint with
seized of the case, is considered to be equivalent to wilful
the office of the Local Manager of the airline company,
misconduct,’ or ‘if the damage is (similarly) caused x x by any
demanding immediate attention. On the occasion of her
agent of the carrier acting within the scope of his employment.’
following up of her luggage claim once again, she was
furnished copies of Sabena Belgian World Airlines’ telefaxes
with an information that its Brussel’s Office found the luggage
and that they had broken the locks for identification. She was 13. [G.R. No. 122308. July 8, 1997]
then assured of the safe return of her luggage, only to find out
later on that the luggage had been lost for a second time. She PURITA S. MAPA, CARMINA S. MAPA ansd CORNELIO P. MAPA,
then filed a complaint, demanding Sabena Belgian to pay the petitioners, vs. COURT OF APPEALS and TRANS-WORLD
money value of the luggage and its contents, but the latter FACTS: Plaintiffs Mapa entered into contract of air
refused on the ground that the loss was due to the former’s transportation with defendant TWA as evidenced by TWA
sole if not contributory negligence, that she did not declare the tickets , purchased in Bangkok, Thailand. Said TWA tickets are
valuable items in her checked in luggage at the flight counter for Los Angeles-New York-Boston-St. Louis-Chicago ....
upon checking in, and that her Sabena Plane Ticket contained a
warning that ‘Items of value should be carried on your person’ Domicile of carrier TWA is Kansas City, Missouri, USA. Its
and that some carriers assume no liability for fragile, valuable principal place of business is Kansas City, Missouri, USA. TWAs
or perishable articles and that further information may be place of business through which the contracts were made is
obtained from the carrier for guidance’; that granting without Bangkok, Thailand.The place of destination is Chicago, USA.
conceding that defendant is liable, its liability is limited only to
US $20.00 per kilo due to plaintiff’s failure to declare a higher On August 10, 1990, plaintiffs Carmina and Purita left Manila
value on the contents of her checked in luggage and pay on board PAL flight No. 104 for Los Angeles. Carmina was to
additional charges thereon.” The trial court rendered commence schooling and thus was accompanied by Purita to
judgment, ordering petitioner to pay private respondent. assist her in settling down at the University.Upon arriving in
Sabena appealed the decision to the Court of Appeals, which Boston, plaintiffs Purita and Carmina proceeded to the
affirmed the trial court’s judgment. carousel to claim their baggages and found only three out of
the seven they checked in.
Despite demands by plaintiffs, TWA failed and refused without
ISSUE: Whether Sabena’s liability may be limited by virtue of just cause to indemnify and redress plaintiffs for the grave
the Warsaw Convention injury and damages they have suffered. [4]Purita S. Mapa,
Carmina S. Mapa, and Cornelio P. Mapa (herein petitioners)
then filed with the trial court on 1 August 1991 a complaint [5]
for damages.
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On 26 February 1992, TWA filed its Answer to the Amended the first category of international transportation is to link them
Complaint raising, as special and affirmative defense, lack of with, or to make them an integral part of, the Manila-Los
jurisdiction of Philippine courts over the action for damages in Angeles travel of Purita and Carmina through PAL aircraft.
that pursuant to Article 28(1) of the Warsaw Convention, the
action could only be brought either in Bangkok where the It must be underscored athat the first category of international
contract was entered into, or in Boston which was the place of transportation under the Warsaw Convention is based on the
destination, or in Kansas City which is the carrier's domicile contract made by the parties. TWA does not claim that the
and principal place of business.On 24 July 1992, the trial court Manila-Los Angeles contracts of transportation which brought
issued an Order[19] dismissing the case for lack of jurisdiction in Purita and Carmina to Los Angeles were also its contracts. It
light of Article 28(1) of the Warsaw Convention. does not deny the assertion of the petitioners that those
contracts were independent of the TWA tickets issued in
The appellate court affirmed the order of the trial court. It held Bangkok, Thailand.
that the Warsaw Convention is the law which governs the
dispute between the petitioners and TWA because what is The flaw of respondents position is the presumption that the
involved is international transportation defined by said parties have regarded as an undivided carriage or as a single
Convention in Article I(2). This holding is founded on its operation the carriage from Manila to Los Angeles through PAL
determination that the two TWA tickets for Los Angeles-New then to New York-Boston- St. Louis-Chicago through TWA.
York-Boston-St. Louis-Chicago purchased in Bangkok, WHEREFORE, the instant petition is GRANTED.
Thailand, were issued in conjunction with, and therefore
formed part of, the contract of transportation performed from
Manila, Philippines, to the United States.
14. G.R. No. L-22272 June 26, 1967
Issue: whether the contracts of transportation between Purita
ANTONIA MARANAN, plaintiff-appellant,
and Carmina Mapa, on the one hand, and TWA, on the other,
were contracts of international transportation under the vs.
Warsaw Convention.
PASCUAL PEREZ, ET AL., defendants.
PASCUAL PEREZ, defendant appellant.
HELD: There are then two categories of international
transportation, viz., (1) that where the place of departure and FACTS: Rogelio Corachea, was a passenger in a taxicab owned
the place of destination are situated within the territories of and operated by Pascual Perez when he was stabbed and killed
two High Contracting Parties regardless of whether or not by the driver, Simeon Valenzuela. Valenzuela was prosecuted
there be a break in the transportation or a transshipment; and for homicide in the Court of First Instance of Batangas. Found
(2) that where the place of departure and the place of guilty.
destination are within the territory of a single High Contracting On December 6 1961, while appeal was pending in the Court of
Party if there is an agreed stopping place within a territory Appeals, Antonia Maranan, Rogelio's mother, filed an action in
subject to the sovereignty, mandate, or authority of another the Court of First Instance of Batangas to recover damages
power, even though the power is not a party to the Convention. from Perez and Valenzuela for the death of her son. Defendants
(Page 62) asserted that the deceased was killed in self-defense, since he
The High Contracting Parties referred to in the Convention are first assaulted the driver by stabbing him from behind.
the signatories thereto and those which subsequently adhered Defendant Perez further claimed that the death was a caso
to it. In the case of the Philippines, the Convention was fortuito for which the carrier was not liable.
concurred in by the Senate, through Resolution No. 19, on 16 Issue: WON the death was caso fortuito for which the carrier
May 1950. The Philippine instrument of accession was signed was not liable.
by President Elpidio Quirino on 13 October 1950 and was
deposited with the Polish Government on 9 November 1950. Held: YES. Defendant-appellant relies solely on the ruling
The Convention became applicable to the Philippines on 9 enunciated in Gillaco v. Manila Railroad, that the carrier is
February 1951. Then, on 23 September 1955, President Ramon under no absolute liability for assaults of its employees upon
Magsaysay issued Proclamation No. 201, declaring the the passengers. The attendant facts and controlling law of that
Philippines formal adherence thereto, to the end that the same case and the one at bar are very different however. In the
and every article and clause thereof may be observed and Gillaco case, the passenger was killed outside the scope and the
fulfilled in good faith by the Republic of the Philippines and the course of duty of the guilty employee. As this Court there
citizens thereof[26](Page 61). found.
The contracts of transportation in this case are evidenced by Now here, the killing was perpetrated by the driver of the very
the two TWA tickets, No. 015:9475:153:304 and No. cab transporting the passenger, in whose hands the carrier had
015:9475:153:305, both purchased and issued in Bangkok, entrusted the duty of executing the contract of carriage. In
Thailand.On the basis alone of the provisions therein, it is other words, unlike the Gillaco case, the killing of the passenger
obvious that the place of departure and the place of destination here took place in the course of duty of the guilty employee
are all in the territory of the United States, or of a single High and when the employee was acting within the scope of his
Contracting Party. The contracts, therefore, cannot come duties.
within the purview of the first category of international
transportation. Neither can it be under the second category Moreover, the Gillaco case was decided under the provisions of
since there was NO agreed stopping place within a territory the Civil Code of 1889 which, unlike the present Civil Code, did
subject to the sovereignty, mandate, or authority of another not impose upon common carriers absolute liability for the
power. safety of passengers against wilful assaults or negligent acts
committed by their employees. Unlike the old Civil Code, the
The only way to bring the contracts between Purita and new Civil Code of the Philippines expressly makes the common
Carmina Mapa, on the one hand, and TWA, on the other, within
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carrier liable for intentional assaults committed by its Fairwind, the vessel's master contracted the services of, among
employees upon its passengers as provided by Art 1759. others, private respondent Gregorio Candongo to serve as
The Civil Code provisions on the subject of Common Carriers 1 Third Engineer for a period of twelve (12) months with a
are new and were taken from Anglo-American Law. 2There, the monthly wage of US$500.00. This agreement was executed
basis of the carrier's liability for assaults on passengers before the Cebu Area Manning Unit of the NSB. Thereafter,
committed by its drivers rests either on (1) the doctrine of private respondent boarded the vessel.
respondeat superior or (2) the principle that it is the carrier's On 28 December 1976, before expiration of his contract,
implied duty to transport the passenger safely.3 private respondent was required to disembark at Port Kelang,
Under the first, which is the minority view, the carrier is liable Malaysia, and was returned to the Philippines on 5 January
only when the act of the employee is within the scope of his 1977. The cause of the discharge was described in his Seaman's
authority and duty. It is not sufficient that the act be within the Book as 'by owner's arrange".1
course of employment only.4 Under the second view, upheld by Shortly after returning to the Philippines, private respondent
the majority and also by the later cases, it is enough that the
filed a complaint before public respondent NSB, for violation of
assault happens within the course of the employee's duty. It is
no defense for the carrier that the act was done in excess of contract, against Mullion as the shipping company and
authority or in disobedience of the carrier's orders. 5 The petitioner Litonjua as agent of the shipowner and of the
carrier's liability here is absolute in the sense that it practically charterer of the vessel.
secures the passengers from assaults committed by its own In the instant Petition for Certiorari, petitioner Litonjua assails
employees.6 the decision of public respondent NSB declaring the charterer
As can be gleaned from Art. 1759, the Civil Code of the Fairwind as employer of private respondent, and for whose
Philippines evidently follows the rule based on the second liability petitioner was made responsible, as constituting a
view. At least three very cogent reasons underlie this rule. As grave abuse of discretion amounting to lack of jurisdiction.
explained in Texas. v. Monroe, , and Haver v. Central Railroad Petitioner Litonjua contends that the shipowner, not the
Co.,: (1) the special undertaking of the carrier requires that it charterer, was the employer of private respondent; and that
furnish its passenger that full measure of protection afforded
liability for damages cannot be imposed upon petitioner which
by the exercise of the high degree of care prescribed by the
law, inter alia from violence and insults at the hands of was a mere agent of the charterer.
strangers and other passengers, but above all, from the acts of It is insisted that private respondent's contract of employment
the carrier's own servants charged with the passenger's safety; and affidavit of undertaking clearly showed that the party with
(2) said liability of the carrier for the servant's violation of duty whom he had contracted was none other than Mullion, the
to passengers, is the result of the formers confiding in the shipowner, represented by the ship's master. 7 Petitioner
servant's hands the performance of his contract to safely Litonjua thus argues that being the agent of the charterer and
transport the passenger, delegating therewith the duty of
not of the shipowner, it accordingly should not have been held
protecting the passenger with the utmost care prescribed by
law; and (3) as between the carrier and the passenger, the liable on the contract of employment of private respondent.
former must bear the risk of wrongful acts or negligence of the ISSUE: whether or not the charterer Fairwind was properly
carrier's employees against passengers, since it, and not the regarded as the employer of private respondent Candongo.
passengers, has power to select and remove them. (thus making Litonjua liable as agent of Fairwind).
Accordingly, it is the carrier's strict obligation to select its HELD: YES
drivers and similar employees with due regard not only to The first basis is the charter party which existed between
their technical competence and physical ability, but also, no Mullion, the shipowner, and Fairwind, the charterer. In modern
less important, to their total personality, including their maritime law and usage, there are three (3) distinguishable
patterns of behavior, moral fibers, and social attitude. types of charter parties: (a) the "bareboat" or "demise" charter;
Applying this stringent norm to the facts in this case, therefore, (b) the "time" charter; and (c) the "voyage" or "trip" charter.
the lower court rightly adjudged the defendant carrier liable It is well settled that in a demise or bare boat charter, the
pursuant to Art. 1759 of the Civil Code. The dismissal of the charterer is treated as owner pro hac vice of the vessel, the
claim against the defendant driver was also correct. Plaintiff's charterer assuming in large measure the customary rights and
action was predicated on breach of contract of carriage 7 and liabilities of the shipowner in relation to third persons who
the cab driver was not a party thereto. His civil liability is
have dealt with him or with the vessel. 10 In such case, the
covered in the criminal case wherein he was convicted by final
judgment. Master of the vessel is the agent of the charterer and not of the
shipowner.11 The charterer or owner pro hac vice, and not the
general owner of the vessel, is held liable for the expenses of
15. G.R. No. L-51910 August 10, 1989 the voyage including the wages of the seamen.12
LITONJUA SHIPPING COMPANY INC., petitioner Treating Fairwind as owner pro hac vice, petitioner Litonjua
vs. having failed to show that it was not such, we believe and so
NATIONAL SEAMEN BOARD and GREGORIO P. CANDONGO hold that petitioner Litonjua, as Philippine agent of the
respondents. charterer, may be held liable on the contract of employment
Petitioner Litonjua is the duly appointed local crewing between the ship captain and the private respondent.
Managing Office of the Fairwind Shipping Corporation There is a second and ethically more compelling basis for
('Fairwind). The M/V Dufton Bay is an ocean-going vessel of holding petitioner Litonjua liable on the contract of
foreign registry owned by the R.D. Mullion Ship Broking employment of private respondent. The charterer of the vessel,
Agency Ltd. ("Mullion"). On 11 September 1976, while the Fairwind, clearly benefitted from the employment of private
Dufton Bay was in the port of Cebu and while under charter by respondent as Third Engineer of the Dufton Bay.Moreover,
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there is also no question that petitioner Litonjua did assist the Petitioner shipped the payloader to Manila where it
Master of the vessel in locating and recruiting private was weighed at the San Miguel Corporation. Finding that the
respondent as Third Engineer of the vessel as well as ten (10) payloader weighed 7.5 tons and not 2.5 tons as declared in the
other Filipino seamen as crew members. In so doing, petitioner B-111 of Lading, petitioner denied the claim for damages,
Litonjua certainly in effect represented that it was taking care contending that had Vicente E. Concepcion declared the actual
of the crewing and other requirements of a vessel chartered by weight of the payloader, damage to their ship as well as to his
its principal, Fairwind.15 payloader could have been prevented.
Last, but certainly not least, there is the circumstance that
extreme hardship would result for the private respondent if ISSUE:
petitioner Litonjua, as Philippine agent of the charterer, is not
held liable to private respondent upon the contract of
employment. Clearly, the private respondent, and the other Whether or not the act of private respondent
Filipino crew members of the vessel, would be defenseless Vicente E. Concepcion in furnishing petitioner Compañ ia
against a breach of their respective contracts. While wages of Maritima with an inaccurate weight of 2.5 tons instead of the
crew members constitute a maritime lien upon the vessel, payloader's actual weight of 7.5 tons was the proximate and
private respondent is in no position to enforce that lien. If only only cause of the damage on the Oliver Payloader OC-12 when
because the vessel, being one of foreign registry and not it fell while being unloaded by petitioner's crew, as would
ordinarily doing business in the Philippines or making regular absolutely exempt petitioner from liability for damages under
calls on Philippine ports cannot be effectively held to answer paragraph 3 of Article 1734 of the Civil Code
for such claims in a Philippine forum.
We conclude that private respondent was properly regarded as HELD:
an employee of the charterer Fairwind and that petitioner NO, petitioner in not exempt from liability because it seems to
Litonjua may be held to answer to private respondent for the have overlooked the extraordinary diligence required of
latter's claims as the agent in the Philippines of Fairwind. We common carriers in the vigilance over the goods transported
think this result, which public respondent reached, far from by them. The Court of Appeals is not persuaded by the
constituting a grave abuse of discretion, is compelled by proffered explanation of petitioner alleged to be the proximate
equitable principles and by the demands of substantial justice. cause of the fall of the payloader while it was being unloaded at
the Cagayan de Oro City pier. Petitioner seems to have
16. COMPAÑ IA MARITIMA, petitioner, vs. overlooked the extraordinary diligence required of common
COURT OF APPEALS and VICENTE CONCEPCION, respondents. carriers in the vigilance over the goods transported by them by
G.R. No. L-31379 virtue of the nature of their business, which is impressed with
August 29, 1988 a special public duty.
Petitioner, upon the testimonies of its own crew,
failed to take the necessary and adequate precautions for
avoiding damage to, or destruction of, the payloader entrusted
FACTS: to it for safe carriage and delivery to Cagayan de Oro City, it
Private respondent Vicente E. Concepcion, a civil engineer, had cannot be reasonably concluded that the damage caused to the
a contract with the Civil Aeronautics Administration (CAA) payloader was due to the alleged misrepresentation of private
sometime in 1964 for the construction of the airport in respondent Concepcion as to the correct and accurate weight
Cagayan de Oro City Misamis Oriental. Being a Manila — based of the payloader. As found by the respondent Court of Appeals,
contractor, Vicente E. Concepcion had to ship his construction the fact is that petitioner used a 5-ton capacity lifting
equipment to Cagayan de Oro City. Having shipped some of his apparatus to lift and unload a visibly heavy cargo like a
equipment through petitioner, Concepcion negotiated anew payloader. Private respondent has, likewise, sufficiently
with petitioner, thru its collector, Pacifico Fernandez, on established the laxity and carelessness of petitioner's crew in
August 28, 1964 for the shipment to Cagayan de Oro City of their methods of ascertaining the weight of heavy cargoes
one (1) unit payloader, four (4) units 6x6 Reo trucks and two offered for shipment before loading and unloading them, as is
(2) pieces of water tanks. He was issued Bill of Lading 113 on customary among careful persons.
the same date upon delivery of the equipment at the Manila While the act of private respondent in furnishing
North Harbor. petitioner with an inaccurate weight of the payloader cannot
These equipment were loaded aboard the MV Cebu successfully be used as an excuse by petitioner to avoid
in its Voyage No. 316, which left Manila on August 30, 1964 liability to the damage thus caused, said act constitutes a
and arrived at Cagayan de Oro City in the afternoon of contributory circumstance to the damage caused on the
September 1, 1964. The Reo trucks and water tanks were payloader, which mitigates the liability for damages of
safely unloaded within a few hours after arrival, but while the petitioner in accordance with Article 1741 of the Civil Code.
payloader was about two (2) meters above the pier in the
course of unloading, the swivel pin of the heel block of the port
block of Hatch No. 2 gave way, causing the payloader to fall. 3
The payloader was damaged and was thereafter taken to DOCTRINES:
petitioner's compound in Cagayan de Oro City.
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The general rule under Articles 1735 and 1752 of

the Civil Code is that common carriers are presumed to have
been at fault or to have acted negligently in case the goods
transported by them are lost, destroyed or had deteriorated. In G.R. No. 69044, sometime in or prior to June,
To overcome the presumption of liability for the loss, 1977, the M/S ASIATICA, a vessel operated by petitioner
destruction or deterioration of the goods under Article 1735, Eastern Shipping Lines, Inc., (referred to hereinafter as
the common carriers must prove that they observed Petitioner Carrier) loaded at Kobe, Japan for transportation to
extraordinary diligence as required in Article 1733 of the Civil Manila, 5,000 pieces of calorized lance pipes in 28 packages
Code. The responsibility of observing extraordinary diligence valued at P256,039.00 consigned to Philippine Blooming Mills
in the vigilance over the goods is further expressed in Article Co., Inc., and 7 cases of spare parts valued at P92,361.75,
1734 of the same Code, the article invoked by petitioner to consigned to Central Textile Mills, Inc. Both sets of goods were
avoid liability for damages. insured against marine risk for their stated value with
respondent Development Insurance and Surety Corporation.
In G.R. No. 71478, during the same period, the same
Corollary is the rule that mere proof of delivery of vessel took on board 128 cartons of garment fabrics and
the goods in good order to a common carrier, and of their accessories, in two (2) containers, consigned to Mariveles
arrival at the place of destination in bad order, makes out Apparel Corporation, and two cases of surveying instruments
prima facie case against the common carrier, so that if no consigned to Aman Enterprises and General Merchandise. The
explanation is given as to how the loss, deterioration or 128 cartons were insured for their stated value by respondent
destruction of the goods occurred, the common carrier must be Nisshin Fire & Marine Insurance Co., for US $46,583.00, and the
held responsible. 10 Otherwise stated, it is incumbent upon the 2 cases by respondent Dowa Fire & Marine Insurance Co., Ltd.,
common carrier to prove that the loss, deterioration or for US $11,385.00.
destruction was due to accident or some other circumstances Enroute for Kobe, Japan, to Manila, the vessel caught
inconsistent with its liability. fire and sank, resulting in the total loss of ship and cargo. The
respective respondent Insurers paid the corresponding marine
Under 1736 of the Civil Code, the responsibility to insurance values to the consignees concerned and were thus
observe extraordinary diligence commences and lasts from the subrogated unto the rights of the latter as the insured.
time the goods are unconditionally placed in the possession of,
and received by the carrier for transportation until the same G.R. NO. 69044
are delivered, actually or constructively, by the carrier to the On May 11, 1978, respondent Development
consignee, or to the person who has the right to receive them Insurance & Surety Corporation (Development Insurance, for
without prejudice to the provisions of Article 1738. short), having been subrogated unto the rights of the two
insured companies, filed suit against petitioner Carrier for the
recovery of the amounts it had paid to the insured. Petitioner-
Carrier denied liability mainly on the ground that the loss was
due to an extraordinary fortuitous event, hence, it is not liable
under the law. On August 31, 1979, the Trial Court rendered
judgment in favor of Development Insurance in the amounts of
P256,039.00 and P92,361.75, respectively, with legal interest,
plus P35,000.00 as attorney's fees and costs. Petitioner Carrier
took an appeal to the then Court of Appeals which, on August
14, 1984, affirmed.

G.R. NO. 71478

On June 16, 1978, respondents Nisshin Fire &
Marine Insurance Co. NISSHIN for short), and Dowa Fire &
Marine Insurance Co., Ltd. (DOWA, for brevity), as subrogees of
the insured, filed suit against Petitioner Carrier for the
recovery of the insured value of the cargo lost, imputing
unseaworthiness of the ship and non-observance of
extraordinary diligence by petitioner Carrier. Petitioner
Carrier denied liability on the principal grounds that the fire
17. EASTERN SHIPPING LINES, INC., petitioner, vs.
which caused the sinking of the ship is an exempting
INTERMEDIATE APPELLATE COURT and DEVELOPMENT
circumstance under Section 4(2) (b) of the Carriage of Goods
INSURANCE & SURETY CORPORATION, respondents.
by Sea Act (COGSA); and that when the loss of fire is
150 SCRA 469
established, the burden of proving negligence of the vessel is
shifted to the cargo shipper. On September 15, 1980, the Trial
Court rendered judgment in favor of NISSHIN and DOWA in the
FACTS: amounts of US $46,583.00 and US $11,385.00, respectively,
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with legal interest, plus attorney's fees of P5,000.00 and costs. common carrier shall be presumed to have been at fault or to
On appeal by petitioner, the then Court of Appeals on have acted negligently, unless it proves that it has observed the
September 10, 1984, affirmed with modification the Trial extraordinary diligence required by law.
Court's judgment by decreasing the amount recoverable by
DOWA to US $1,000.00 because of $500 per package limitation
of liability under the COGSA.
DOCTRINES:

ISSUES:
Petitioner Carrier failed to prove that it has exercised the
extraordinary diligence required by law:
1. Which law should govern in case of loss,
destruction or deterioration of goods transported?
The Civil Code or the Carriage of Goods by In this case, the respective Insurers. as subrogees of
Sea Act? the cargo shippers, have proven that the transported goods
have been lost. Petitioner Carrier has also proved that the loss
was caused by fire. The burden then is upon Petitioner Carrier
2. Who has the burden of proof to show negligence
to prove that it has exercised the extraordinary diligence
of the carrier?
required by law. In this regard, the Trial Court, concurred in by
the Appellate Court, made the following Finding of fact: The
cargoes in question were, according to the witnesses defendant
HELD: placed in hatches No, 2 and 3 cf the vessel, Boatswain Ernesto
Pastrana noticed that smoke was coming out from hatch No. 2
and hatch No. 3; that where the smoke was noticed, the fire
1. The law of the country to which the goods are to was already big; that the fire must have started twenty-four
be transported governs the liability of the common carrier in (24) hours before the same was noticed; that carbon dioxide
case of their loss, destruction or deterioration. As the cargoes was ordered released and the crew was ordered to open the
in question were transported from Japan to the Philippines, the hatch covers of No. 2 hold for commencement of firefighting by
liability of Petitioner Carrier is governed primarily by the Civil sea water: that all of these effort were not enough to control
Code. 5 However, in all matters not regulated by said Code, the the fire.
rights and obligations of common carrier shall be governed by Pursuant to Article 1733, common carriers are
the Code of Commerce and by special laws. Thus, the Carriage bound to extraordinary diligence in the vigilance over the
of Goods by Sea Act, a special law, is suppletory to the goods. The evidence of the defendant did not show that
provisions of the Civil Code. extraordinary vigilance was observed by the vessel to prevent
the occurrence of fire at hatches numbers 2 and 3. Defendant's
2. Under the Civil Code, common carriers, from the evidence did not likewise show he amount of diligence made
nature of their business and for reasons of public policy, are by the crew, on orders, in the care of the cargoes. What appears
bound to observe extraordinary diligence in the vigilance over is that after the cargoes were stored in the hatches, no regular
goods, according to all the circumstances of each case. inspection was made as to their condition during the voyage.
Common carriers are responsible for the loss, destruction, or Consequently, the crew could not have even explain what could
deterioration of the goods unless the same is due to any of the have caused the fire. The defendant, in the Court's mind, failed
following causes only: “(1)Flood, storm, earthquake, lightning to satisfactorily show that extraordinary vigilance and care had
or other natural disaster or calamity; xxx xxxxxx” been made by the crew to prevent the occurrence of the fire.
Petitioner Carrier claims that the loss of the vessel The defendant, as a common carrier, is liable to the consignees
by fire exempts it from liability under the phrase "natural for said lack of diligence required of it under Article 1733 of
disaster or calamity." However, we are of the opinion that fire the Civil Code. 15 Having failed to discharge the burden of
may not be considered a natural disaster or calamity. This proving that it had exercised the extraordinary diligence
must be so as it arises almost invariably from some act of man required by law, Petitioner Carrier cannot escape liability for
or by human means. It does not fall within the category of an the loss of the cargo.
act of God unless caused by lightning or by other natural And even if fire were to be considered a "natural
disaster or calamity. It may even be caused by the actual fault disaster" within the meaning of Article 1734 of the Civil Code,
or privity of the carrier. it is required under Article 1739 of the same Code that the
Article 1680 of the Civil Code, which considers fire "natural disaster" must have been the "proximate and only
as an extraordinary fortuitous event refers to leases of rural cause of the loss," and that the carrier has "exercised due
lands where a reduction of the rent is allowed when more than diligence to prevent or minimize the loss before, during or
one-half of the fruits have been lost due to such event, after the occurrence of the disaster.” This Petitioner Carrier
considering that the law adopts a protection policy towards has also failed to establish satisfactorily.
agriculture.
As the peril of the fire is not comprehended within Circumstances showing Petitioner Carrier’s negligence:
the exception in Article 1734, Article 1735 of the Civil Code
provides that all cases than those mention in Article 1734, the
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1. There was actual fault of the carrier shown by lack awarding moral damages are: (a) there must be an injury,
of diligence in that “when the smoke was noticed, the fire was whether physical, mental, or psychological, clearly
already big; the fire must have started twenty-four (24) hours substantiated by the claimant; (b) there must be a culpable act
before the same was noticed;” or omission factually established; (c) the wrongful act or
2. “After the cargoes were stored in the hatches, no omission of the defendant must be the proximate cause of the
regular inspection was made as to their condition during the injury sustained by the claimant; and (d) the award of damages
voyage.” is predicated on any of the cases stated in Article 2219 of the
Civil Code.
The foregoing suffices to show that the
circumstances under which the fire originated and spread are
such as to show that Petitioner Carrier or its servants were
negligent in connection therewith. Consequently, the complete
defense afforded by COGSA when loss results from fire is
unavailing. 19. Westwind Shipping v UCPB Gen. Insurance
Gr no. 200289
Facts:
Petitioner had a vessel w/c transported metal containers/skids
18. Sulpicio Lines v Curso of tine-free steel from Japan to the Philippines. The Consignee
Gr no. 157009 was San Miguel Corporation w/c engaged the services of UCPB
Facts: in order to insure the cargo. Upon arrival at the port of Manila,
Dr. Curso boarded a vessel operated by petitioner w/c was ATI was in charge of unloading the cargo from the ship onto
bound for Tacloban City. Unfortunately, due to inclement sea the port as arrastre. It was found that there were 6 containers
and weather conditions caused by Typhoon Unsang, the vessel that were damaged by ATI’s forklifts. Upon delivery to SMC’s
sank. This resulted in the deaths of many passengers including factory in Laguna, an additional 9 containers were found to be
Dr. Curso. Respondents in this case are the surviving brothers damaged. SMC therefore instituted an action against Westwind,
and sisters of Dr. Curso who filed an action for damages against UCPB and ATI. UCPB paid 200k+ Php to SMC and subrogated
petitioner for breach of contract of carriage by sea, averring the latter. UCPB then filed a case against Westwind and ATI for
that the latter had acted negligently thus making them liable damaging the containers. The RTC dismissed the case but the
even though there was force majeure. The RTC dismissed the CA reversed the same, claiming that the 2 were liable.
complaint but this was reversed by the CA w/c said that due to Issue: WON Westwind and ATI are liable.
weather reports before the voyage, the crew of the vessel Held:
should have had the foresight to know that the typhoon was Yes. The SC held that common carriers, from the nature of their
affecting their intended route and should have acted business and for reasons of public policy, are bound to observe
accordingly. There was also an issue of the ship’s hydraulic extraordinary diligence in vigilance over the goods and for the
system w/c broke down mid-voyage that negated the ship’s safety of the passengers transported by them, according to all
seaworthiness. The CA awarded moral damages to the the circumstances of each case. The mere proof of delivery of
respondents. goods in good order to the carrier, and their arrival in the place
Issue: WON the respondents are entitled to moral damages. of destination in bad order, make out a prima facie case against
Held: the carrier, so that if no explanation is given as to how the
injury occurred, the carrier must be held responsible. It is
No. The SC held that moral damages may be recovered in an incumbent upon the carrier to prove that the loss was due to
action upon breach of contract of carriage only when: (a) accident or some other circumstances inconsistent with its
where death of a passenger results, or (b) it is proved that the liability. Thus Westwind is liable.
carrier was guilty of fraud and bad faith, even if death does not Article 1732 does not distinguish between one whose principal
result. Article 2206 of the Civil Code entitles the descendants, business activity is the carrying of goods and one who does
ascendants, illegitimate children, and surviving spouse of the such carrying only as an ancillary activity. The contention,
deceased passenger to demand moral damages for mental therefore, of petitioner that it is not a common carrier but a
anguish by reason of the death of the deceased. customs broker whose principal function is to prepare the
Since the respondents are the siblings of the deceased, they are correct customs declaration and proper shipping documents as
not entitled to moral damages. required by law is bereft of merit. It suffices that petitioner
The petitioner has correctly relied on the holding in Receiver undertakes to deliver the goods for pecuniary consideration.
for North Negros Sugar Company, Inc. v. Ybaez, to the effect Thus ATI is liable.
that in case of death caused by quasi-delict, the brother of the
deceased was not entitled to the award of moral damages
based on Article 2206 of the Civil Code. 20. Air France v Gillego
Essentially, the purpose of moral damages is indemnity or Gr no. 165266
reparation, that is, to enable the injured party to obtain the Facts:
means, diversions, or amusements that will serve to alleviate Gillego boarded a plane operated by AF going to Budapest as a
the moral suffering he has undergone by reason of the tragic keynote speaker in a human rights conference. Upon his
event. According to Villanueva v. Salvador, the conditions for arrival, his luggage was nowhere to be found at the airport and
 Hernando, Ortega, Soriano, Tan, Ti, Yaokasin
Commercial Law Review - Digests
Atty. Zarah Villanueva-Castro

so he complained to AF who assured him that his belongings

would be delivered to his hotel w/in the day. This was not
done and so Gillego made several attempts at getting back his
luggage but was ignored by AF. Gillego filed a complaint for
damages against AF for negligence and breach of obligation to
transport and deliver his luggage. He claims that his luggage
contained his medicine and notes for the speeches he was
supposed to give at the conference. Due to the loss, he had to
endure physical and emotional anguish due to making new
speeches and having hypertension. Gillego asked for moral
damages of 1M Php, exemplary damages of 500k and other
costs. This was granted by the RTC and the CA.
Issue: WON AF is liable for moral and exemplary damages.
Held:
Yes but the amounts are excessive.
In awarding moral damages for breach of contract of carriage,
the breach must be wanton and deliberately injurious or the
one responsible acted fraudulently or with malice or bad faith.
[25] Not every case of mental anguish, fright or serious anxiety
calls for the award of moral damages.[26] Where in breaching
the contract of carriage the 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 the
obligation which the parties had foreseen or could have
reasonably foreseen. In such a case the liability does not
include moral and exemplary damages.
Bad faith should be established by clear and convincing
evidence. The settled rule is that the law always presumes
good faith such that any person who seeks to be awarded
damages due to the acts of another has the burden of proving
that the latter acted in bad faith or with ill motive.
Due to AF’s willful ignorance of Gillego’s inquiries and failure
to establish a reason for the loss, they are liable for moral and
exemplary damages.