De Guzman v.

CA
Facts:
Respondent Ernesto Cendana was a junk dealer. He buys scrap materials and brings
those that he gathered to Manila for resale using 2 six-wheeler trucks. On the return trip
to Pangasinan, respondent would load his vehicle with cargo which various merchants
wanted delivered, charging fee lower than the commercial rates. Sometime in November
1970, petitioner Pedro de Guzman contracted with respondent for the delivery of 750
cartons of Liberty Milk. On December 1, 1970, respondent loaded the cargo. Only 150
boxes were delivered to petitioner because the truck carrying the boxes was hijacked
along the way. Petitioner commenced an action claiming the value of the lost
merchandise. Petitioner argues that respondent, being a common carrier, is bound to
exercise extraordinary diligence, which it failed to do. Private respondent denied that he
was a common carrier, and so he could not be held liable for force majeure. The trial
court ruled against the respondent, but such was reversed by the Court of Appeals.
Issues:
(1) Whether or not private respondent is a common carrier
(2) Whether private respondent is liable for the loss of the goods
Held:
(1) Article 1732 makes no distinction between one whose principal business activity is
the carrying of persons or goods or both, and one who does such carrying only as an
ancillary activity. Article 1732 also carefully avoids making any distinction between a
person or enterprise offering transportation service on a regular or scheduled basis and
one offering such service on an occasional, episodic or unscheduled basis. Neither does
Article 1732 distinguish between a carrier offering its services to the "general public,"
i.e., the general community or population, and one who offers services or solicits
business only from a narrow segment of the general population. It appears to the Court
that private respondent is properly characterized as a common carrier even though he
merely "back-hauled" goods for other merchants from Manila to Pangasinan, although
such backhauling was done on a periodic or occasional rather than regular or scheduled
manner, and even though private respondent's principal occupation was not the carriage
of goods for others. There is no dispute that private respondent charged his customers a
fee for hauling their goods; that fee frequently fell below commercial freight rates is not
relevant here. A certificate of public convenience is not a requisite for the incurring of
liability under the Civil Code provisions governing common carriers.
(2) Article 1734 establishes the general rule that common carriers are responsible for the
loss, destruction or deterioration of the goods which they carry, "unless the same is due
to any of the following causes only:
a. Flood, storm, earthquake, lightning, or other natural disaster or calamity;
b. Act of the public enemy in war, whether international or civil;
c. Act or omission of the shipper or owner of the goods;
d. The character of the goods or defects in the packing or in the containers; and
e. Order or act of competent public authority."
The hijacking of the carrier's truck - does not fall within any of the five (5) categories of
exempting causes listed in Article 1734. Private respondent as common carrier is
presumed to have been at fault or to have acted negligently. This presumption, however,
may be overthrown by proof of extraordinary diligence on the part of private
respondent. We believe and so hold that the limits of the duty of extraordinary diligence
in the vigilance over the goods carried are reached where the goods are lost as a result of
a robbery which is attended by "grave or irresistible threat, violence or force." we hold
that the occurrence of the loss must reasonably be regarded as quite beyond the control
of the common carrier and properly regarded as a fortuitous event. It is necessary to
recall that even common carriers are not made absolute insurers against all risks of
travel and of transport of goods, and are not held liable for acts or events which cannot
be foreseen or are inevitable, provided that they shall have complied with the rigorous
standard of extraordinary diligence.

Spouses Perea vs Spouses Zarate
In June 1996, Nicolas and Teresita Zarate contracted Teodoro and Nanette Perea to transport their
(Zarates) son, Aaron Zarate, to and from school. The Pereas were owners of a van being used for
private school transport.
At about 6:45am of August 22, 1996, the driver of the said private van, Clemente Alfaro, while the
children were on board including Aaron, decided to take a short cut in order to avoid traffic. The
usual short cut was a railroad crossing of the Philippine National Railway (PNR).
Alfaro saw that the barandilla (the pole used to block vehicles crossing the railway) was up which
means it was okay to cross. He then tried to overtake a bus. However, there was in fact an
oncoming train but Alfaro no longer saw the train as his view was already blocked by the bus he was
trying to overtake. The bus was able to cross unscathed but the vans rear end was hit. During the
collision, Aaron, was thrown off the van. His body hit the railroad tracks and his head was severed.
He was only 15 years old.
It turns out that Alfaro was not able to hear the train honking from 50 meters away before the
collision because the vans stereo was playing loudly.
The Zarates sued PNR and the Pereas (Alfaro became at-large). Their cause of action against
PNR was based on quasi-delict. Their cause of action against the Pereas was based on breach of
contract of common carriage.
In their defense, the Pereas invoked that as private carriers they were not negligent in selecting
Alfaro as their driver as they made sure that he had a drivers license and that he was not involved in
any accident prior to his being hired. In short, they observed the diligence of a good father in
selecting their employee.
PNR also disclaimed liability as they insist that the railroad crossing they placed there was not meant
for railroad crossing (really, thats their defense!).
The RTC ruled in favor of the Zarates. The Court of Appeals affirmed the RTC. In the decision of the
RTC and the CA, they awarded damages in favor of the Zarates for the loss of earning capacity of
their dead son.
The Pereas appealed. They argued that the award was improper as Aaron was merely a high
school student, hence, the award of such damages was merely speculative. They cited the case of
People vs Teehankee where the Supreme Court did not award damages for the loss of earning
capacity despite the fact that the victim there was enrolled in a pilot school.
ISSUES: Whether or not the defense of due diligence of a good father by the Pereas is untenable.
Whether or not the award of damages for loss of income is proper.
HELD: Yes, in both issues.
Defense of Due Diligence of a Good Father
This defense is not tenable in this case. The Pereas are common carriers. They are not merely
private carriers. (Prior to this case, the status of private transport for school services or school buses
is not well settled as to whether or not they are private or common carriers but they were generally
regarded as private carriers). Private transport for schools are common carriers. The Pereas, as
the operators of a school bus service were: (a) engaged in transporting passengers generally as a
business, not just as a casual occupation; (b) undertaking to carry passengers over established
roads by the method by which the business was conducted; and (c) transporting students for a fee.
Despite catering to a limited clientle, the Pereas operated as a common carrier because they held
themselves out as a ready transportation indiscriminately to the students of a particular school living
within or near where they operated the service and for a fee.
Being a common carrier, what is required of the Pereas is not mere diligence of a good father.
What is specifically required from them by law is extraordinary diligence a fact which they failed to
prove in court. Verily, their obligation as common carriers did not cease upon their exercise of
diligently choosing Alfaro as their employee.
(It is recommended that you read the full text, the Supreme Court made an elaborate and extensive
definition of common and private carriers as well as their distinctions.)
Award of Damages for Aarons loss of earning capacity despite he being a high school student at the
time of his death
The award is proper. Aaron was enrolled in a reputable school (Don Bosco). He was of normal
health and was an able-bodied person. Further, the basis of the computation of his earning capacity
was not on what he would have become. It was based on the current minimum wage. The minimum
wage was validly used because with his circumstances at the time of his death, it is most certain that
had he lived, he would at least be a minimum wage earner by the time he starts working. This is not
being speculative at all.
The Teehankee case was different because in that case, the reason why no damages were awarded
for loss of earning capacity was that the defendants there were already assuming that the victim
would indeed become a pilot hence, that made the assumption speculative. But in the case of
Aaron, there was no speculation as to what he might be but whatever hell become, it is certain
that he will at the least be earning minimum wage.


IRON BULK SHIPPING CO LTD v. REMINGTON
INDUSTRIAL SALES CORP.
FACTS:
> Remington Industrial ordered 194 hot rolled steel sheets from Wangs. Wangs forwarded the order to its
supplier Burwill. The sheets were loaded on MV Indian Reliance in Poland and shipped to the Philippines
under a Bill of Lading. Iron Bulk Shipping represented the charterer in the Philippines.
> Upon discharge of the cargo, the sheets were found to be wet and with rust extending to 50 to 60% of
each sheet.
> No one honored the claims of loss and as recourse, Remington filed an action for collection. Both lower
and appellate courts ruled in favor of Remington.
> The charterers defense (Iron Bulk) was that the sheets were already rusty when they were loaded on
the ship. However, the Bill of Lading it issued was found to be a clean bill of lading (i.e. it does
not indicate any defect on the goods covered by it). The sheets were found to be in a fair, usually
accepted condition.
> The suppliers defense (Wangs) was that Iron Bulk did not exercise extraordinary diligence in shipping
the sheets.
> The appellate court dismissed the case against Wangs and now, only Iron Bulk raised the case on
certiorari.

ISSUES:
1. Whether or not Iron Bulk exercised extraordinary diligence?
No.
> Diligence required: Even if the cargo was already in a damaged condition at the time it was accepted
for transportation, the carrier is not relieved from its responsibility to exercise due care in handling
the merchandise and in employing the necessary precautions to prevent the cargo from further
deteriorating. Extraordinary diligence requires the common carrier to know and to follow the required
precaution for avoiding damage to, or destruction of the goods entrusted to it for safe carriage and
delivery. The common carrier must exercise due diligence to forestall or lessen the loss (by
applying additional safety measures to make sure that the cargo is protected from corrosion).
> Presumption: Except in the cases mentioned under Art. 1734, if the goods are lost, destroyed or
deteriorated, common carriers are presumed to have been at fault or to have acted negligently unless
they prove that they observed extraordinary diligence.
2. Whether or not the CA erred in relying on the pro forma Bill of
Lading? No.
> Two-fold character: A bill of lading operates as both a receipt and a contract. It is a receipt for the goods
shipped (dates, place, description, quality and value) and a contract to transport and deliver the same as
therein stipulated.
Estoppel: Since Iron Bulk shipping failed to annotate in the bill of lading the alleged damaged condition of
the cargo when it was loaded, they are bound by the description contained therein and they are now
estopped from denying the contents of the said bill of lading.
FGU Insurance Corp. v. CA
Facts:
On April 21, 1987, a car owned by private respondent FILCAR Transport Inc.,
rented to and driven by Dahl-Jensen, a Danish tourist, swerved into the right
and hit the car owned by Lydia Soriano and driven by Benjamin Jacildone.
Dahl-Jensen did not possess a Philippine drivers license. Petitioner, as the
insurer of Sorianos car, paid the latter P25,382.20 and, by way of
subrogation, sued FILCAR, Dahl-Jensen, and Fortune Insurance Corporation,
FILCARs insurer, for quasi-delict. The trial court dismissed the petition for
failure to substantiate the claim for subrogation. The Court of Appeals
affirmed the decision, but on the ground that only Dahl-Jensens negligence
was proven, not that of FILCAR. Hence, this instant petition.
Issues:
(1) Whether an action based on quasi-delict will prosper against a rent-a-car
company and, consequently, its insurer for fault or negligence of the car lessee
in driving the rented vehicle
(2) Whether the ruling in MYC-Agro-Industrial Corporation v. Vda. de Caldo
is applicable in the case at bar
Held:
(1) We find no reversible error committed by respondent court in upholding
the dismissal of petitioner's complaint. The pertinent provision is Art. 2176 of
the Civil Code which states: "Whoever by act or omission causes damage to
another, there being fault or negligence, is obliged to pay for the damage
done. Such fault or negligence, if there is no pre-existing contractual relation
between the parties, is called a quasi-delict . . . . ". To sustain a claim based
thereon, the following requisites must concur: (a) damage suffered by the
plaintiff; (b) fault or negligence of the defendant; and, (c) connection of cause
and effect between the fault or negligence of the defendant and the damage
incurred by the plaintiff. We agree with respondent court that petitioner failed
to prove the existence of the second requisite, i.e., fault or negligence of
defendant FILCAR, because only the fault or negligence of Dahl-Jensen was
sufficiently established, not that of FILCAR. It should be noted that the
damage caused on the vehicle of Soriano was brought about by the
circumstance that Dahl-Jensen swerved to the right while the vehicle that he
was driving was at the center lane. It is plain that the negligence was solely
attributable to Dahl-Jensen thus making the damage suffered by the other
vehicle his personal liability. Respondent FILCAR did not have any
participation therein. Respondent FILCAR being engaged in a rent-a-car
business was only the owner of the car leased to Dahl-Jensen. As such, there
was no vinculum juris between them as employer and employee. Respondent
FILCAR cannot in any way be responsible for the negligent act of Dahl-Jensen,
the former not being an employer of the latter.
(2) Petitioner's insistence on MYC-Agro-Industrial Corporation is rooted in a
misapprehension of our ruling therein. In that case, the negligent and reckless
operation of the truck owned by petitioner corporation caused injuries to
several persons and damage to property. Intending to exculpate itself from
liability, the corporation raised the defense that at the time of the collision it
had no more control over the vehicle as it was leased to another; and, that the
driver was not its employee but of the lessee. The trial court was not
persuaded as it found that the true nature of the alleged lease contract was
nothing more than a disguise effected by the corporation to relieve itself of the
burdens and responsibilities of an employer. We upheld this finding and
affirmed the declaration of joint and several liability of the corporation with its
driver.

Transportation Case Digest: Isaac V. A.L.
Ammen Trans. Co. (1957)
G.R.No. L-9671 August 23, 1957
Lessons Applicable: Legal Effect (Transportation)

FACTS:
May 31, 1951: Cesar Isaac boarded Bus No. 31 from Ligao, Albay bound for Pili,
Camarines Sur and seated himself on the left side resting his left arm on the
window sill but with his left elbow outside the window
Before reaching his destination, a pick-up car at full speed and was running
outside of its proper lane came from the opposite direction
The driver of the bus swerved the bus to the very extreme right of the road until
its front and rear wheels have gone over the pile of stones or gravel situated on
the rampart of the road.
The bus could not bus farther right and run over a greater portion of the pile of
gravel, the peak of which was about 3 feet high, without endangering the safety
of his passengers.
Despite efforts, the rear left side of the bus was hit by the pick-up car
He was rushed to a hospital in Iriga, Camarines Sur where he was given blood
transfusion to save his life
After 4 days, he was transferred to another hospital in Tabaco, Albay, where he
under went treatment for 3 months
Later, he was moved to the Orthopedic Hospital where he was operated on and
stayed for another 2 months.
He incurred expenses of P623.40, excluding medical fees which were paid by
A.L. Ammen Trans. Co.
Trial Court: Dismissed the complaint - collision occurred due to the negligence of
the driver of the pick-up car
ISSUE: W/N if there is no negligence on the part of the common carrier but that the
accident resulting in injuries is due to causes which are inevitable and which could
not have been avoided or anticipated notwithstanding the exercise of that high
degree of care and skill which the carrier is bound to exercise for the safety of his
passengers neither the common carrier nor the driver is liable therefor

HELD: YES. Appealed decision is AFFIRMED.

ART. 1733. Common carriers, from the nature of their business and for reasons of
public policy, are bound to observe extra ordinary diligence in the vigilance over the
goods and for the safety of the passengers transported by them according to all the
circumstances of each case.

Such extraordinary diligence in the vigilance over the goods is further expressed in
articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence
for the safety of the passengers is further set forth in articles 1755 and 1756
Ooom.

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

ART. 1756. In case of death of or injuries to passengers, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove that
they observed extraordinary diligence as prescribed in articles 1733 and 1755.


principles governing the liability of a common carrier:
1. the liability of a carrier is contractual and arises upon breach of its obligation.
There is breach if it fails to exert extraordinary diligence according to all
circumstances of each case
2. a carrier is obliged to carry its passenger with the utmost diligence of a very
cautious person, having due regard for all the circumstances
3. a carrier is presumed to be at fault or to have acted negligently in case of
death of, or injury to, passengers, it being its duty to prove that it exercised
extraordinary diligence
4. the carrier is not an insurer against all risks of travel
where a carrier's employee is confronted with a sudden emergency, the fact that
he is obliged to act quickly and without a chance for deliberation must be taken
into account, and he is held to the some degree of care that he would otherwise
be required to exercise in the absence of such emergency but must exercise
only such care as any ordinary prudent person would exercise under like
circumstances and conditions, and the failure on his part to exercise the best
judgment the case renders possible does not establish lack of care and skill on
his part
Considering all the circumstances, we are persuaded to conclude that the driver
of the bus has done what a prudent man could have done to avoid the collision
It is true that Isaac's contributory negligence cannot relieve A.L. Ammen of its
liability but will only entitle it to a reduction of the amount of damage caused
(Article 1762, new Civil Code), but this is a circumstance which further militates
against the position taken by Isaac


DSR-SENATOR vs. FEDERAL

FACTS

Berde Plants delivered 632 units of artificial trees to C.F. Sharp, the General Ship Agent of DSR-Senator Lines, a
foreign shipping corporation, for transportation and delivery to the consignee, Al-Mohr International Group, in
Riyadh, Saudi Arabia.

C.F. Sharp issued International Bill of Lading for the cargo the port of discharge for the cargo was at the Khor
Fakkan port and the port of delivery was Riyadh, Saudi Arabia, via Port Dammam. The cargo was loaded in M/S
Arabian Senator.

Federal Phoenix Assurance insured the cargo against all risks.

On June 7, 1993, M/S Arabian Senator left the Manila South Harbor for Saudi Arabia with the cargo on
board. When the vessel arrived in Khor Fakkan Port, the cargo was reloaded on board DSR-Senator Lines feeder
vessel, M/V Kapitan Sakharov, bound for Port Dammam, Saudi Arabia.

However, while in transit, the vessel and all its cargo caught fire.

On July 5, 1993, DSR-Senator Lines informed Berde Plants that M/V Kapitan Sakharov with its cargo was gutted
by fire and sank on or about July 4, 1993. On December 16, 1993, C.F. Sharp issued a certification to that effect

Consequently, Federal Phoenix Assurance paid Berde Plants P941,429.61 corresponding to the amount of
insurance for the cargo. In turn Berde Plants executed in its favor a Subrogation Receipt dated January 17, 1994.

On February 8, 1994, Federal Phoenix Assurance sent a letter to C.F. Sharp demanding payment of P941,429.61 on
the basis of the Subrogation Receipt. C.F. Sharp denied any liability on the ground that such liability was
extinguished when the vessel carrying the cargo was gutted by fire.
On March 11, 1994, Federal Phoenix Assurance filed with the RTC, Branch 16, Manila a complaint for damages
against DSR-Senator Lines and C.F. Sharp, praying that the latter be ordered to pay actual damages of P941,429.61,
compensatory damages of P100,000.00 and costs.
ISSUE

W/N DSR-Senator is liable YES

RULING

Under Article 1734, Fire is not one of those enumerated under the above provision which exempts a carrier from
liability for loss or destruction of the cargo. Since the peril of fire is not comprehended within the exceptions in
Article 1734, then the common carrier shall be presumed to have been at fault or to have acted negligently, unless
it proves that it has observed the extraordinary diligence required by law.

The natural disaster must have been the proximate and only cause of the loss, and that the carrier has exercised
due diligence to prevent or minimize the loss before, during or after the occurrence of the disaster.

When the goods shipped either are lost or arrive in damaged condition, a presumption arises against the carrier of
its failure to observe that diligence, and there need not be an express finding of negligence to hold it liable.

Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods transported by
them. Accordingly, they are presumed to have been at fault or to have acted negligently if the goods are lost,
destroyed or deteriorated.

Respondent Federal Phoenix Assurance raised the presumption of negligence against petitioners. However, they
failed to overcome it by sufficient proof of extraordinary diligence.