Transpo Case Digests

JG Summit Holdings Inc. vs. CA G.R. No. 124293, November 20, 2000 FACTS: The National Investment and Development Corporation (NIDC), a government corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. for the construction, operation and management of the Subic National Shipyard, Inc., later became the Philippine Shipyard and Engineering Corporation (PHILSECO). Under the JVA, NIDC and Kawasaki would maintain a shareholding proportion of 60%-40% and that the parties have the right of first refusal in case of a sale. Through a series of transfers, NIDC’s rights, title and interest in PHILSECO eventually went to the National Government. In the interest of national economy, it was decided that PHILSECO should be privatized by selling 87.67% of its total outstanding capital stock to private entities. After negotiations, it was agreed that Kawasaki’s right of first refusal under the JVA be “exchanged” for the right to top by five percent the highest bid for said shares. Kawasaki that Philyards Holdings, Inc. (PHI), in which it was a stockholder, would exercise this right in its stead. During bidding, Kawasaki/PHI Consortium is the losing bidder. Even so, because of the right to top by 5% percent the highest bid, it was able to top JG Summit’s bid. JG Summit protested, contending that PHILSECO, as a shipyard is a public utility and, hence, must observe the 60%-40% Filipino-foreign capitalization. By buying 87.67% of PHILSECO’s capital stock at bidding, Kawasaki/PHI in effect now owns more than 40% of the stock. ISSUE: Whether or not PHILSECO is a public utility HELD: In arguing that PHILSECO, as a shipyard, was a public utility, JG Summit relied on sec. 13, CA No. 146. On the other hand, Kawasaki/PHI argued that PD No. 666 explicitly stated that a “shipyard” was not a “public utility.” But the SC stated that sec. 1 of PD No. 666 was expressly repealed by sec. 20, BP Blg. 391 and when BP Blg. 391 was subsequently repealed by EO 226, the latter law did not revive sec. 1 of PD No. 666. Therefore, the law that states that a shipyard is a public utility still stands. National Development Company v. Court of Appeals 164 SCRA 593 Facts: In accordance with a memorandum entered into between defendants National Development Company (NDC) and Maritime Company of the Philippines (MCP) on September 13, 1962, defendant NDC as the first preferred mortgagee of three oceangoing vessels including one the name “Doña Nati” appointed defendant MCP as its agent to manage and operate said vessels in its behalf.The E. Phillipp Corporation of the New York loaded on board the vessel “Doña Nati” at San Francisco, California, a total of 1,200 bales of American raw cotton consigned to Manila Banking Corporation, Manila and the People’s Bank and Trust Company acting for and in behalf of the Pan

Asiatic Commercial Company, Inc., who represents Riverside Mills Corporation.The vessel figured in a collision at Ise Bay, Japan with a japanese vessel as a result of which 550 bales of aforesaid cargo were lost and/or destroyed The damage and lost cargo was worth P344,977.86 which amount, the plaintiff Development Insurance and Surety Corporation as insurer, paid to the Riverside Mills Corporation as holder of the negotiable bills of lading duly endorsed.The insurer filed before the CFI of Manila an action for the recovery of said amount from NDC and MCP. Issue: Whether or not the law of country or port of destination shall apply. Held: In Easter Shipping Lines, Inc., v. IAC, 150 SCRA 469 (1987), we held under similar circumstances that the law of the country to which the goods are to be transported governs the liability of the common carrier in case of their loss, destruction or deterioration. Thus, the rule was specifically laid down that for cargoes transported from Japan to the Philippines, the liability of the carrier is governed primarily by the Civil Code and in all matters not regulated by said Code, the rights and obligations of common carrier shall be governed by the Code of Commerce and by especial laws (Article 1766, Civil Code). Hence, the carriage of Goods by Sea Act, a special law, is merely suppletory to the provisions of the Civil Code. The goods in question were being transported from San Francisco, California and Tokyo, Japan to the Philippines and that they were lost or damaged due to a collision which was found to have been caused by negligence or fault of both captains of the colliding vessels. Under the above ruling, it is evident that laws of the Philippines will apply, and it is immaterial that the collision actually occurred in foreign waters, such as Ise Bay, Japan. It appears, however, that collision falls among matters not specifically regulated by the Civil Code, so that no reversible error can be found in respondent court’s application to the case at bar of Articles 826 to 839, Book Three of the Code of Commerce, which deal exclusively with collision of vessels. Article 826 of the Code of Commerce provides that where collision is imputable to the personnel of a vessel, the owner of the vessel at fault shall indemnify the losses and damages incurred after an expert appraisal. But more in point to the instant case in is Article 827 of the same Code, which provides that if the collision is imputable to both vessels, each one shall suffer its own damages and both shall be solidarily responsible for the losses and damages suffered by their cargoes.There is, therefore, no room for NDCs interpretation that the Code of Commerce should apply only to domestic trade and not to foreign trade.MCP next contends that it cannot be liable solidarily with NDC because it is merely the manager and operator of the vessel “Doña Nati”, nor a ship agent. As the general managing agent, according, to MCP, it can only be liable if it acted in excess of its authority. The Memorandum Agreement of September 13, 1962 shows that NDC appointed MCP as agent, a term broad enough to include the concept of ship agent in Maritime Law. In fact, MCP was even conferred all the powers of the owner of the vessel, including the power to contract in the name of the NDC. Consequently, under the circumstances, MCP cannot escape liability. It is wellsettled that both the owner and agent of the offending vessel are liable for the damage done where both are impleaded. Tatad v. Garcia

G.R. No. 114222 Facts: EDSA LRT Consortium, a foreign corporation, was awarded with the construction of Light Rail Transit III (LRT III) as the only bidder who has qualified with the requirements provided by the PBAC. The said foreign corporation will construct the LRT III in a “Built-Lease-Transfer” agreement that such public utility will be leased by the government through the Department of Transportation and Communication (DOTC) and then it would be subsequently sold by the corporation to the government. An objection was raised by the petitioner stating that the awarding of the bid to the said corporation is against the Constitution. It was provided in the Constitution that only Filipinos are entitled to operate a public utility such as the LRT III. Issue: Whether or not the awarding of the bid to EDSA LRT Consortium is against the Constitution. Held: The Court held that there is a distinction in the “operation” of a public utility and ownership in the facilities and equipment to serve the public. The EDSA LRT Consortium fall under the latter because the said corporation will not operate the public utility. The said corporation will only own the facilities and equipment such as the train carts, the railings and the booths. In addition, such ownership will then be subsequently transferred to the government under “Built-Lease-Transfer” agreement. With that said, the operation of the public utility will fall to the Filipinos through its government. Therefore, the awarding of the bid to EDSA LRT Consortium is not against the provisions of the Constitution.

British Airways v. Court of Appeals G.R. No. 121824 Facts: On April 6, 1989, Mahtani decided to visit his relative in Bombay, India. In anticipation of his visit, he obtained the services of a certain Mr. Gemar to prepare his travel plan. Since british Airways had no ticket flights from Manila to Bombay, Maktani had to take a connecting flight to Bombay on board British Airways. Prior to his departure, Maktani checked in the PAL counter in Manila his two pieces of luggage containing his clothing and personal effects, confident that upon reaching Hong Kong, the same would be transferred to the BA flight bound for Bombay, Unfortunately, when Maktani arrived in Bombay, he discovered that his luggage was missing and that upon inquiry from the BA representatives, he was told that the same might have been diverted to London. After plaintiff waiting for his luggage for one week, BA finally advised him to file a claim accomplishing the property. Issue: Whether or not defendant BA is liable for compulsory damages and attorney’s fee, as well as the dismissal of its third party complaint against PAL Held: The contract of transportation was exclusively between Maktani and BA. The latter merely endorsing the Manila to Hong Kong log of the former’s journey to PAL, as

its subcontractor or agent. Conditions of contacts was one of continuous air transportation from Manila to Bombay. The Court of Appeals should have been cognizant of the well-settled rule that an agent is also responsible for any negligence in the performance of its function and is liable for damages which the principal may suffer by reason of its negligent act. Since the instant petition was based on breach of contract of carriage, Maktani can only sue BA and not PAL, since the latter was not a party in the contract. Pedro de Guzman v. Court of Appeals G.R. No. L-47822 Facts: Herein respondent Ernesto Cendana was engaged in buying up used bottles and scrap metal in Pangasinan. Normally, after collection respondent would bring such material to Manila for resale. He utilized (2) two six-wheelers trucks which he owned for the purpose. Upon returning to Pangasinan, he would load his vehicle with cargo belonging to different merchants to different establishments in Pangasisnan which respondents charged a freight fee for. Sometime in November 1970, herein petitioner Pedro de Guzman, a merchant and dealer of General Milk Company Inc. in Pangasinan contracted with respondent for hauling 750 cartons of milk. Unfortunately, only 150 cartons made it, as the other 600 cartons were intercepted by hijackers along Marcos Highway. Hence, petitioners commenced an action against private respondent. In his defense, respondent argued that he cannot be held liable due to force majuere, and that he is not a common carrier and hence is not required to exercise extraordinary diligence. Issues: 1. Whether or not respondent can be held liable for loss of the cartons of milk due to force majeure. 2. Whether or not respondent is a common carrier. Held: 1. The court ruled the affirmative. The circumstances do not fall under the exemption from liability as enumerated in Article 1734 of the Civil Code. The general rule is established by the article 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 disasters; b. Act of the public enemy, whether international or civil; c. Act or omission of the shipper or owner of the goods; d. Character of the goods or defects in the packing; e. Order or act of competent public authority. 2. The court ruled the affirmative. Article 1732 of the New Civil Code avoids any distinction between one whose principal business activity is the carrying of persons or goods or both and one who does such carrying only as an ancillary activity. It also avoids a distinction between a person or enterprise offering transportation services on a

regular or scheduled basis and one offering such services on an occasional, episodic, and unscheduled basis. First Philippine Industrial Corp. v. Court of Appeals G.R. No. 125948 Facts: Herein petitioner applied for a mayor’s permit to operate its pipeline concession. Before such permit was issued, the City treasurer required petitioner to pay local tax. In order not to hamper its operations, petitioner paid the tax under protest. Then the petitioner filed a letter protest addressed to the treasurer claiming exemption from payment of the tax because according to the Local Government Code of 1991, transportation contractors are not included in the enumeration of contractors which are liable to pay taxes. The city treasurer denied the protest. The petitioner filed a case before the trial court for tax refund, however it was subsequently dismissed. Hence, this petition. Issue: Whether or not the petitioner is a common carrier as contemplated to be exempted under the law. Held: The court rules the affirmative. The court enunciated the (4) tests in determining whether the carrier is that of a common carrier: a. must be engaged int eh business of carrying goods for other as a public employment and must hold itself out as ready to engage in the transportation of goods generally as a business and not a casual occupation b. it must undertake to carry goods of the kind which its business is confined; c. it must undertake the method by which his business is conducted and over its established roads; d. the transportation must be for hire. In the case at bar, the court categorically ruled that the transporting of oil through pipelines is still considered to be an activity of a common carrier. The petitioner is a common carrier because it is engaged in the business of transporting passengers or goods; like petroleum. It undertakes to carry for all persons indifferently. The fact that the petitioner has limited clientele does not exclude it from the definition of common carrier. Under the petroleum act of the Philippines, the petitioner is considered a common carrier even if it is a pipeline concessionaire. And even as regards the petroleum operation, it is of public utility. Specifically, the Bureau of Internal Revenue considers petitioners as common carrier not subject to withholding tax.

FGU INSURANCE CORP. VS. G.P. SARMIENTO TRUCKING CORP. G.R. No. 141910. August 6, 2002 Facts: GPS is an exclusive contractor and hauler of Concepcion Industries, Inc. One day, it was to deliver certain goods of Concepcion Industries, Inc. aboard one of its

trucks. On its way, the truck collided with an unidentified truck, resulting in damage to the cargoes. FGU, insurer of the shipment paid to Concepcion Industries, Inc. the amount of the damage and filed a suit against GPS. GPS filed a motion to dismiss for failure to prove that it was a common carrier. Issue: Whether or not GPS falls under the category of a common carrier. Held: Note that GPS is an exclusive contractor and hauler of Concepcion Industries, Inc. offering its service to no other individual or entity. A common carrier is one which offers its services whether to the public in general or to a limited clientele in particular but never on an exclusive basis. Therefore, GPS does not fit the category of a common carrier although it is not freed from its liability based on culpa contractual. DANTE CRUZ and LEONORA CRUZ vs. SUN HOLIDAYS, INC. G.R. No. 186312 June 29, 2010 Facts: Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on January 25,2001 against Sun Holidays, Inc. (respondent) with the Regional Trial Court (RTC) of PasigCity for damages arising from the death of their son Ruelito C. Cruz (Ruelito) who perished with his wife on September 11, 2000 on board the boat M/B Coco Beach III that capsized enroute to Batangas from Puerto Galera, Oriental Mindoro where the couple had stayed at Coco Beach Island Resort (Resort) owned and operated by respondent .On September 11, 2000, as it was still windy, Matute and 25 other Resort guests including petitioners’ son and his wife trekked to the other side of the Coco Beach mountain that was sheltered from the wind where they boarded M/B Coco Beach III, which was to ferry them to Batangas. Shortly after the boat sailed, it started to rain. As it moved farther away from Puerto Galera and into the open seas, the rain and wind got stronger, causing the boat to tilt from side to side and the captain to step forward to the front, leaving the wheel to one of the crew members. The waves got more unwieldy. After getting hit by two big waves which came one after the other, M/B Coco Beach III capsized putting all passengers underwater. The passengers, who had put on their life jackets, struggled to get out of the boat. Upon seeing the captain, Matute and the other passengers who reached the surface asked him what they could do to save the people who were still trapped under the boat. The captain replied “Iligtas niyo na lang ang sarili niyo" (Just save yourselves).Help came after about 45 minutes when two boats owned by Asia Divers in Sabang,Puerto Galera passed by the capsized M/B Coco Beach III. Boarded on those two boats were 22 persons, consisting of 18 passengers and four crew members, who were brought to Pisa Island. Eight passengers, including petitioners’ son and his wife, died during the incident. Issue: Whether or not respondent is a common carrier. Held: The Civil Code defines "common carriers" in the following terms: Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air for compensation, offering their services to the public.

The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (in local idiom, as "a sideline"). Article 1732 also carefully avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the "general public," i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. We think that Article 1733 deliberately refrained from making such distinctions. Indeed, respondent is a common carrier. Its ferry services are so intertwined with its main business as to be properly considered ancillary thereto. The constancy of respondent’s ferry services in its resort operations is underscored by its having its own Coco Beach boats. And the tour packages it offers, which include the ferry services, may be availed of by anyone who can afford to pay the same. These services are thus available to the public. That respondent does not charge a separate fee or fare for its ferry services is of no moment. It would be imprudent to suppose that it provides said services at a loss. The Court is aware of the practice of beach resort operators offering tour packages to factor the transportation fee in arriving at the tour package price. That guests who opt not to avail of respondent’s ferry services pay the same amount is likewise inconsequential. These guests may only be deemed to have overpaid. LIM vs. COURT OF APPEALS and PEOPLE G.R. No. 102784 February 28, 1996 Facts: On October 8, 1987, Rosa Lim who had come from Cebu received from private respondent Victoria Suarez the following two pieces of jewelry; one 3.35 carat diamond ring worth P169K and one bracelet worth P170K, to be sold on commission basis. The agreement was reflected in a receipt. On December 15, 1987, Lim returned the bracelet to Suarez, but failed to return the diamond ring or to turn over the proceeds thereof if sold. As a result, private complainant, aside from making verbal demands, wrote a demand letter to petitioner asking for the return of said ring or the proceeds of the sale thereof. Lim’s contention: She was not an agent of Suarez. In fact, she was a prospective buyer of the pieces of jewelry. She told Mrs. Suarez that she would consider buying the pieces of jewelry for her own use and that she would inform the private complainant of such decision before she goes back to Cebu. She cannot be liable for estafa since she never received the jewelries in trust or on commission basis from Vicky Suarez. The real agreement between her and the private respondent was a sale on credit with Mrs. Suarez as the owner-seller and petitioner as the buyer, as indicated by the bet that petitioner did not sign on the blank space provided for the signature of the person receiving the jewelry but at the upper portion thereof immediately below the description of the items taken.

Issue: Whether or not the real transaction between Lim and Suarez was that of sale or that of contract of agency to sell. Held: Contract of agency. Receipt contains the following provisions: XXX I received from Vicky Suarez the following jewelries XXX XXX if I could not sell, I shall return all the jewelry within the period mentioned above; if I would be able to sell, I shall immediately deliver and account the whole proceeds of sale thereof to the owner of the jewelries at his/her residence XXX Materiality of the location of Lim’s signature: Rosa Lim’s signature indeed appears on the upper portion of the receipt immediately below the description of the items taken. This does not have the effect of altering the terms of the transaction from a contract of agency to sell on commission basis to a contract of sale. Contracts shall be obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present. There are some provisions of the law which require certain formalities for particular contracts. It is required for the validity of the contract; to make the contract effective as against third parties and; for the purpose of proving the existence of the contract. A contract of agency to sell on commission basis does not belong to any of these three categories, hence it is valid and enforceable in whatever form it may be entered into. FYI: There is only one type of legal instrument where the law strictly prescribes the location of the signature – which is in notarial wills found in Article 805 NCC. In the case before us, the parties did not execute a notarial will but a simple contract of agency to sell on commission basis, thus making the position of petitioner’s signature thereto immaterial. Contention of Lim that Suarez authorized Nadera to receive the ring: Suarez testified that Aurelia Nadera is highly indebted to her, so if she gave authority for Nadera to get possession of it she will be exposing herself to a high risk Lita Enterprises, Inc. v. IAC G.R. No. L-64693 Facts: Spouse Ocampo purchased 5 toyota standard cars from delta motors in installments to be used as taxi cabs. However, since they do not have any franchise to operate a taxicabs, they entered in an agreement with lita enterprises for the use of the latter’s certificate of public convenience, commonly known as Kabit system. Later on, the taxi collided into a motorcycle resulting to the death of the driver of the motorcycle Emeterio Martin. Lita enterprises were adjudged liable and two of the taxicabs were levied upon and sold at a public auction. Thereafter the spouses ocampo decided to register the taxicabs in their own name and ask Lita enterprise to return the papers but the latter refused. Hence, this petition.

Issue: Whether or not the agreement between the parties is valid. Held: The Court held that the agreement between the parties is not valid. Under the arrangement of kabit system, whereby a person who has been granted a certificate of convenience allows another person who owns motor vehicles to operate under such for a fee. The Kabit System has been identifies as one of the root causes of prevalence of graft and corruption in the government transportation offices. It is void being contrary to public policy. And the parties have no right of action against each other because they are in pari delicto, the court will leave them both where it finds them. Teja Marketing vs. IAC 148 SCRA 347 Facts: Respondent purchased from petitioner a tiyajle. Such tiyalje amounted to a total value of P800. Respondent was able to pay the purchase price but however left a balance of P1, 700. Subsequently, a chattel mortgage was executed over the said balance. It was found by the court that the defendant purchased the motorcycle for the purpose of engaging and using the same for transportation business. To be able to use the vehicle, the tricycle was attached to the plaintiff’s transportation line, which had the franchise. In effect, the registration certificate is under petitioner’s name. It appeared that they agreed that the petitioner would undertake the yearly registration of the unit in the Land Transportation Commission. Issue: Whether or not relief may be granted to any of the parties. Held: The Supreme Court held that neither of the two parties are entitled for relief. Both parties have entered into an illegal contract, thus no action arises out from any illicit transaction. The parties operated under an agreement known as the “Kabit System”. Such system operates when a person who has been granted a certificate of public convenience allows another person who owns a motor vehicle to operate under such franchise for a fee. A certificate of public convenience is a special privilege which cannot be countenanced. This illegitimate arrangement has been recognized as one of the root causes of the frequency of graft and corruption in the government transportation affairs. It is declared void it being against public policy. It is a fundamental principle that the court will not aid either party to enforce an illegal contract and will leave both where it finds them. The defects of the contract are permanent and cannot be ratified. Thus, both parties are culpable of their illicit indenture. Santos v. Sibug G.R. No. L-26815 Facts: Santos, who owns a jeep, entered into an arrangement with Vivad that the latter will fictitiously purchase the jeep so that Santos may use the Certificate of Public Convenience (CPC) of Vivad. Subsequently, the Sibug was bumped by the said jeep. Damages was then awarded to Sibug against Vivad and his driver. The Sheriff of Manila

then levied the jeep and sold it in a public auction. Santos then files of the third-party claim with the Sheriff stating that he owns the jeep and such sale is null and void because the property levied is not owned by Vivad. Issue: Whether or not the levy and auction sale made on the jeep is null and void. Held: The Court held that the agreement entered into by Santos and Vivad is a “Kabit System,” which is prohibited by law. Such system was not approved by the Public Service Commission (PSC) therefore Vivad is the owner of the jeep in legal contemplation. Since Vivad is the owner of the jeep according to law, then it cannot be said that the Sheriff seized the property belonging to a stranger. The auction sale is still valid according to the Court. F.C. Fisher v. Yangco Steamship Company G.R. No. L-8095 Facts: On June 10, 1912, the directors of Yangco Steamship Company which is duly licensed to engage in the coastwise trade in the Philippines, adopted a resolution which was thereafter ratified and affirmed by the shareholders of the company expressly declaring and providing that the classes of merchandise to be carried by the company in its business as a common carrier to include dynamite, power or other explosives and other expressly prohibiting the officers, agents, and servants of the company from offering to carry or accepting to carry said articles. In view of the resolution passed the collector of customs suspended the issuance of clearances for the vessels unless they allow the carriage of such articles. Hence, herein petitioner a major stockholder filed a petition for prohibition. Issue: Whether or not the resolution of Yanco is justified. Held: The court rules the negative. Common carrier in the jurisdiction cannot lawfully decline to accept a particular class of goods, unless it appears that for some sufficient reason the discrimination is reasonable and necessary. Yangco Steamships Company has not met those conditions. The nature of the business of a common carrier as a public employment is such that it is within the power of the state to impose such just regulation in the interest of the public as the legislators may deem proper. Sarkies Tours Philipines, Inc. vs. CA G.R. No. 108897 Facts: Fatima Fortades was a passenger of one of the buses of petitioner Sarkies Tours bound for Legazpi City. She had onboard luggage which contained important documents and personal belongings. Her belongings were kept in the baggage compartment of the bus, but during a stopover at Daet, it was discovered that only one

bag remained in the open compartment. The others, including Fatima's things, were missing and might have dropped along the way. Despite the suggestion of the passengers to retrace its route in order to recover their luggage, the driver nevertheless neglected them and continued driving. Consequently, respondents filed a case to recover the value of the remaining lost items, as well as moral and exemplary damages, attorney's fees and expenses of litigation. They claimed that the loss was due to petitioner's failure to observe extraordinary diligence in the care of Fatima's luggage and that petitioner dealt with them in bad faith from the start. Petitioner, on the other hand, disowned any liability for the loss on the ground that Fatima allegedly did not declare any excess baggage upon boarding its bus. Issue: Whether or not Sarkies is liable for damages for lost property of its passengers. Held: The Supreme Court held that Sarkies is liable for the loss. The cause of the loss was petitioner's negligence in not ensuring that the doors of the baggage compartment of its bus were securely fastened. As a result of this lack of care, almost the entire luggage was lost, to the prejudice of the paying passengers. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods transported by them. This liability lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the person who has a right to receive them. The awarding of actual damages to respondents is just because their efforts in recovering the lost items must be well compensated. Moral and exemplary damages must also be awarded in the presence of bad faith and negligence on the part of the common carrier.

Eastern Shipping Lines vs. IAC 150 SCRA 463 Facts: In GR 69044, the M/S ASIATICA, a vessel operated by Eastern Shipping Lines loaded at Kobe, Japan for Manila: (1) 5,000 pieces of calorized lance pipes in 28 packages valued at P256,039.00 consigned to Philippine Blooming Mills Co., Inc., (2) 7 cases of spare parts valued at P92,361.75, consigned to Central Textile Mills, Inc. Both sets of goods were insured for their value with Development Insurance and Surety Corporation. In GR 71478, the same vessel took on board : 1. 128 cartons of garment fabrics and accessories, in 2 containers, consigned to Mariveles Apparel Corporation 2. two cases of surveying instruments consigned to Aman Enterprises and General Merchandise.

The 128 cartons were insured for their value by Nisshin Fire & Marine Insurance Co., for US$46,583.00. The 2 cases by Dowa Fire & Marine Insurance Co., Ltd., for US$11,385.00. Enroute for Kobe, Japan, to Manila, the vessel caught fire and sank, resulting in the total loss of ship and cargo. The respective Insurers paid the corresponding marine insurance values to the consignees concerned and were thus subrogated unto the rights of the latter as the insured. Eastern Shipping denied liability mainly on the ground that the loss was due to an extraordinary fortuitous event; hence, it is not liable under the law. 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. Eastern Shipping took an appeal to the then Court of Appeals which, on 14 August 1984, affirmed the decision of the trial court. Eastern Shipping filed a petition for review on certiorari. Nisshin, and Dowa, as subrogees of the insured, filed suit against Eastern Shipping for the recovery of the insured value of the cargo lost imputing unseaworthiness of the ship and non-observance of extraordinary diligence by Eastern Shipping. Eastern Shipping denied liability on the principal grounds that the fire which caused the sinking of the ship is an exempting circumstance under Section 4(2) (b) of the Carriage of Goods by Sea Act (COGSA); and that when the loss of fire is established; the burden of proving negligence of the vessel is shifted to the cargo shipper. Trial Court rendered judgment in favor of Nisshin and Dowa. CA affirmed decision. Hence, this petition on certiorari. Issue: Whether or not the carrier exercised extraordinary diligence.

Held: Eastern Shipping shall pay the Development Insurance the amount of P256,039 for the 28 packages of calorized lance pipes, and P71,540 for the 7 cases of spare parts, with interest at the legal rate from the date of the filing of the Complaint on 13 June 1978, plus P5,000 as attorney’s fees, and the costs. The Court, on the other hand, in GR 71478, affirmed the judgment. The evidence of the defendant did not show that extraordinary diligence was observed by the vessel to prevent the occurrence of fire at hatches nos. 2 and 3. Defendant’s evidence did not likewise show the amount of diligence made by the crew, on orders, in the care of the cargoes. What appears is that after the cargoes were stored in the hatches, no regular inspection was made as to their condition during the voyage. The complete defense afforded by the COGSA when loss results from fire is unavailing to Eastern Shipping. The Carriage of Goods by Sea Act (COGSA), a special law, is merely suppletory to the provisions of the Civil Code The fire may not be considered a natural disaster or calamity, as it arises almost invariably from some act of man or by human means. It does not fall within the category of an act of God unless caused by lightning or by other natural disaster or calamity. It may even be caused by the actual fault or privity of the carrier.

Bascos v. CA Facts:Rodolfo Cipriano, representing CIPTRADE, entered into a hauling contract with Jibfair Shipping Agency Corporation whereby the former bound itself to haul the latter’s 2000m/tons of soya bean meal from Manila to Calamba. CIPTRADE subcontracted with petitioner Estrellita Bascos to transport and deliver the 400 sacks of soya beans. Petitioner failed to deliver the cargo, and as a consequence, Cipriano paid Jibfair the amount of goods lost in accordance with their contract. Cipriano demanded reimbursement from petitioner but the latter refused to pay. Cipriano filed a complaint for breach of contract of carriage. Petitioner denied that there was no contract of carriage since CIPTRADE leased her cargo truck, and that the hijacking was a force majeure. The trial court ruled against petitioner. Issues: (1) Was petitioner a common carrier? (2) Was the hijacking referred to a force majeure? Held: (1) Article 1732 of the Civil Code defines a common carrier as "(a) person, corporation or firm, or association engaged in the business of carrying or transporting passengers or goods or both, by land, water or air, for compensation, offering their services to the public." The test to determine a common carrier is "whether the given undertaking is a part of the business engaged in by the carrier which he has held out to the general public as his occupation rather than the quantity or extent of the business transacted." In this case, petitioner herself has made the admission that she was in the trucking business, offering her trucks to those with cargo to move. Judicial admissions are conclusive and no evidence is required to prove the same. (2) 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. There are very few instances when the presumption of negligence does not attach and these instances are enumerated in Article 1734. In those cases where the presumption is applied, the common carrier must prove that it exercised extraordinary diligence in order to overcome the presumption. The presumption of negligence was raised against petitioner. It was petitioner's burden to overcome it. Thus, contrary to her assertion, private respondent need not introduce any evidence to prove her negligence. Her own failure to adduce sufficient proof of extraordinary diligence made the presumption conclusive against her. Ganzon v. Court of Appeals 161 SCRA 646

Facts: Ganzon, petitioner herein, was hired by Tumambing to haul 305 tons of scrap iron. The contract was for the petitioner to transport the scrap iron to Manila from Bataan. Tumambing delivered the scrap iron to Niza, captain of the lighter LCT “Batman”, to board it on the same. The crew of the Batman started to load the iron, and when they were about halfway through, Mayor Advincula arrived and demanded P5,000 from Tumambing. The latter resisted and a heated argument started. Mayor Advincula drew his gun and fired at Tumambing. He was brought to the hospital for treatment, lucky for him the wound was not fatal. A few days after this incident, the loading of the scrap metal was resumed. However, the acting Mayor this time went to the port where the Batman was docked. He was accompanied by 3 policemen and he ordered Captain Niza to dump the scrap iron where the lighter was docked. What was left or the iron was confiscated by the Acting Mayor and brought to NASSCO. A receipt was issued showing that the municipality had taken custody of the scraps or iron. Tumambing filed a case in order to recover damages for the loss that he sustained. The lower court rendered a decision in favor of Ganzon. However, on appeal the Court of Appeals reversed the decision ordering Ganzon to pay Tumambing P5,895 as actual damages, P5,000 for exemplary damages and attorney’s fees as well. Hence this petition by Ganzon. Issue: Whether or not Ganzon is liable for the loss that Tumambing sustained. Held: The Court held that Ganzon is liable for the loss of Tumambing. The defense that the scraps of iron were not unconditionally placed in his custody and control is untenable. Petitioner herein admits that the scraps of iron were delivered to Captain Niza by Tumambing in order to load the same on the lighter Batman. The employees of Ganzon received the scraps of iron on his behalf, therefore the scraps of metal were placed in his custody and control. Upon the receipt of the scraps by the carrier in order transport the same, the contract of carriage was perfected. Upon perfection of the contract, the exercise of extraordinary diligence in caring for the goods shall also commence to begin. Article 1738 of the NCC provides that the exercise of extraordinary diligence shall cease only upon delivery to the consignee or to the person who has the right to receive the same. In this case, there was no delivery made to the consignee, therefore the carrier should have exercised extraordinary diligence in taking care of the scraps of iron. It is irrelevant that the scraps of iron were only partially loaded on the lighter. The scraps of iron were already under the custody and control of the carrier, therefore he shall be liable for its loss. Macam v. Court of Appeals 313 SCRA 77

Facts: Petitioner Macam exported watermelons and mangoes to Hong Kong, Great Prospect Company is the consignee. The bill of lading stated that one of the bill must be presented by the Pakistan Bank as consignee and GPC as the notify party. Upon arrival in Hong Kong, the shipment was delivered by the carrier directly to GPC and not to Pakistan Bank and without surrendering the bill of lading. Issue: Whether or not there was a valid delivery. Held: The extraordinary responsibility of common carriers last until actual or constructive delivery of the cargo to the consignee or his agent. Pakistan was indicted as consignee and GPC was the notify party. However, in the export invoice, GPC was clearly named as buyer or importer. Petitioner referred to GPC as such in his demand letter to respondent and his complaint before the court. This premise brings into conclusion that the deliveries of the cargo to GPC as buyer or importer is in conformity with Art. 1736 of the Civil Code. Therefore, there was a valid delivery. Saludo, Jr. v. Court of Appeals 207 SCRA 498 Facts: Plaintiff herein together with Pomierski and Son Funeral Home of Chicago brought the remains of plaintiff’s mother to Continental Mortuary Air Services which booked the shipment of the remains from Chicago to San Francisco by Trans World Airways (TWA) and from San Francisco to Mania with Philippine Airlines (PAL). The remains were taken to the Chicago Airport, but it turned out that there were 2 bodies in the said airport. Somehow the 2 bodies were switched, and the remains of plaintiff’s mother was shipped to Mexico instead. The shipment was immediately loaded on another PAL flight and it arrived the day after the expected arrival. Plaintiff filed a claim for damages in court. The lower court absolved both airlines and upon appeal it was affirmed by the court. Issue: Whether or not the 2 airlines should be held liable for damages. Held: Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of the common carrier begins from the time the goods are delivered to the carrier. This responsibility remains in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner exercises the right of stoppage in transitu, and terminates only after the lapse of a reasonable time for the acceptance, of the goods by the consignee or such other person entitled to receive them. And, there is delivery to the carrier when the goods are ready for and have been placed in the exclusive possession, custody and control of the carrier for the purpose of their immediate transportation and the carrier has accepted them. Where such a delivery has thus been accepted by the carrier, the liability of the common carrier commences eo instanti. Hence, while we agree with petitioners that the extraordinary diligence statutorily required to be observed by the carrier instantaneously commences upon delivery of the goods thereto, for such duty to commence there must in fact have been delivery of the cargo subject of the contract of carriage. Only when such fact of

delivery has been unequivocally established can the liability for loss, destruction or deterioration of goods in the custody of the carrier, absent the excepting causes under Article 1734, attach and the presumption of fault of the carrier under Article 1735 be invoked. As already demonstrated, the facts in the case at bar belie the averment that there was delivery of the cargo to the carrier on October 26, 1976. Rather, as earlier explained, the body intended to be shipped as agreed upon was really placed in the possession and control of PAL on October 28, 1976 and it was from that date that private respondents became responsible for the agreed cargo under their undertakings in PAL Airway Bill No. 079-01180454. Consequently, for the switching of caskets prior thereto which was not caused by them, and subsequent events caused thereby, private respondents cannot be held liable Aboitiz Shipping Corporation vs. Court of Appeals 188 SCRA 387 Facts: Anacleto Viana was a passenger of M/V Antonia bound for Manila which was owned by defendant Aboitiz. After the said vessel has landed, the Pioneer Stevedoring Corp., as the arrastre operator, took over the exclusive control of the cargoes loaded on it. One hour after the passengers had disembarked, Pioneer Stevedoring started operation by unloading the cargoes using its crane. Viana who had already disembarked remembered that some of his cargoes were still inside the vessel. While pointing to the crew of the vessel the place where his cargoes were, the crane hit him, pinning him between the side of the vessel and the crane which resulted to his death. Viana’s wife filed a complaint for damages against Aboitiz for breach of contract f carriage. Aboitiz, however filed a third party complaint against Pioneer since it had control completely over the vessel during the incident. Furthermore, petitioner contends that one hour has already elapsed from the time Viana disembarked, thus he has already ceased to be a passenger. Issue: Whether or not Aboitiz is liable for the death of Viana. Held: The Supreme Court held that the failure of Aboitiz to exercise extraordinary diligence for the safety of its passengers makes Aboitiz liable. It has been recognized as a rule that the relation of the carrier and passenger does not cease the moment the passenger alights from the carrier’s vehicle, but continues until the passenger has had a reasonable time or a reasonable opportunity to leave the carrier’s premises. A reasonable time or a reasonable delay within this rule is to be determined from all the circumstances. The primary factor to be considered is the existence of a reasonable cause as will justify the presence of the victim on or near the petitioner’s vessel. In the case at bar, such justifiable cause exists because he had to come back for his cargo. Aboitiz has failed to safeguard its passenger with extraordinary diligence in requiring or seeing to it that precautionary measures were strictly and actually enforced to subserve their purpose of preventing entry into a forbidden area.

La Mallorca v. Court of Appeals 17 SCRA 739 Facts: Plaintiffs husband and wife, together with their minor children, boarded a La Mallorca bus. Upon arrival at their destination, plaintiffs and their children alighted from the bus and the father led them to a shaded spot about 5 meters from the vehicle. The father returned to the bus to get a piece of baggage which was not unloaded. He was followed by her daughter Raquel. While the father was still on the running board waiting for the conductor to give his baggage, the bus started to run so that the father had to jump. Raquel, who was near the bus, was run over and killed. Lower court rendered judgment for the plaintiff which was affirmed by CA, holding La Mallorca liable for quasi-delict and ordering it to pay P6,000 plus P400. La Mallorco contended that when the child was killed, she was no longer a passenger and therefore the contract of carriage terminated. Issue: Whether or not the contractual obligation between the parties ceases the moment the passenger alighted form the vehicle. Held: On the question whether the liability of the carrier, as to the child who was already led a place 5 meters from the bus under the contract of carrier, still persists, we rule in the affirmative. It is a recognized rule that the relation between carrier and passengers does not cease at the moment the passenger alights from the carrier’s premises, to be determined from the circumstances. In this case, there was no utmost diligence.• Firstly, the driver, although stopping the bus, did not put off the engine. Secondly, he started to run the bus even before the bus conductor gave him the signal and while the latter was unloading cargo. Here, the presence of said passenger near the bus was not unreasonable and the duration of responsibility still exists. Averment of quasi-delict is permissible under the Rules of Court, although incompatible with the contract of carriage. The Rules of Court allows the plaintiffs to allege causes of action in the alternative, be they compatible with each other or not (Sec. 2, Rule 1). Even assuming arguendo that the contract of carriage has already terminated, herein petitioner can be held liable for the negligence of its driver pursuant to Art. 2180 of NCC. Decision MODIFIED. Only question raised in the briefs can be passed upon, and as plaintiffs did not appeals the award of P3,000.00 the increase by the CA of the award to P6,000.00 cannot be sustained. Japan Airlines v. Court of Appeals GR. No. 118864 Facts: Private respondents were passengers of Japan Airlines from California bound for Manila. The flights were to make an overnight stopover at Nairita, Japan as an incentive for traveling. However, due to the eruption of Mt. Pinatubo which rendered the NAIA inaccessible, respondent’s flight from Japan to Manila was indefinitely. JAL assumed the hotel expenses for their unexpected overnight stay on June 15, 1991. However, JAL no longer settled their hotel and accommodation expenses during stay at Nauta, Japan.

Since NAIA was only reopened for airline’s traffic on June 22, 1991, private respondent were forced to pay for their accommodations and meal expenses from their personal funds from June 16 to June 21, 1991. Hence, they commenced an action for damages against JAL for failing to provide care and comfort to its stranded passengers when it refused to pay for their hotel and accommodation expenses from June 16 to June 21, 1991. Issue: Whether or not JAL was liable for the hotel and meal expenses defrayed by private respondents while pending destination. Held: The Supreme Court held that JAL cannot be held liable. In the case at bar, there was absence of bad faith and negligence on the part of Japan Airlines. Such occurrence of the eruption of Mt. Pinatubo amounts to a force majeure. When a party is unable to fulfill his obligation because of force majeure, the general rule is that he cannot be held liable for damages for non-performance. Common carriers are not insurer of all risks. Airline passengers must take such risks incident to the mode of travel. However, JAL is not completely absolved from liability. It has the obligation to make the necessary arrangements to transport private respondents on its first available flight to Manila. Philippine Airlines vs. Court of Appeals 185 SCRA 110 Facts: The Stralight Flight of Philippine Airlines (PAL) with 33 passengers took off from Iloilo bound for Manila. An hour and fifteen after it crashed in Mindoro. The plane was manufacture 1942 and was acquired by the airline 1948. It has been certified as airworthy by the Civil Aeronautics Administration. Passenger Nicanor Padilla is 29 years old, single and dead. His only legal heir is his mother Natividad Padilla who filed for damages. She demanded Php600,000 as actual and compensatory damages, exemplary damages and Php60,000 attorney’s fees.

Issue: How are damages computed? Held: The award of damages for death is computed on the life expectancy of the deceased and not of the beneficiary. Artcle 1764 of the Civil Code provides that article 2206 shall also apply to death of passenger caused by the breach of contract by the common carrier. The manner of computing damages is taken from Davila vs. CA. Net yearly income multiplied by the Life Expectancy of the deceased. The Life Expectancy is based on the American Expectancy Table of Mortality formula (2/3x[80-30]) cited from Villa Rey Transit Inc. vs. CA.

The income and salary of Nicanor Padilla is evidenced by witnesses, the auditor and manager of Allied Overseas Trading, pay rolls of the companies and his income tax returns. The trial court determined the deceased gross annual income to be Php23,100 from his yearly salary from Padilla shipping Company and Allied Overseas Trading Company. The court considered that he is single and thus deducted Php9, 200 as yearly living expenses. His NET INCOME is thus, 13,900 with a life expectancy of 30 years. (Net income x Life Expectancy) is Php417, 000. This is the amount of indemnity his mother is to receive. This includes a legal rate of interest of 6% annum from date of judgment on 31August1973 until fully paid. Necesito v. Paras 104 PHIL 75 Facts: A mother and her son boarded a passenger auto-truck of the Philippine Rabbit Bus Line. While entering a wooden bridge, its front wheels swerved to the right, the driver lost control and the truck fell into a breast-deep creek. The mother drowned and the son sustained injuries. These cases involve action ex contractu against the owner of PRBL filed by the son and heirs of the mother. Lower Court dismissed the actions, holding that the accident was a fortuitous event. Issue: Whether or not the accident was considered a fortuitous event. Held: While the carrier is not an insurer of the safety of the passenger, it should nevertheless be held to answer for the flaws of its equipment it such defects were discoverable. In this connection, the manufacturer of the defective appliance is considered in law the agent of the carrier, and the good repute of the manufacturer will not relieve the carrier from liability. The rationale of the carrier’s liability is the fact that the passenger has no privity with the manufacturer of the defective equipment; hence he has no remedy against him, while the carrier has. We find that the defect could be detected. The periodical, usual inspection of the steering knuckle did not measure up to the utmost diligence of a very cautious person as far as human care and foresight can provide and therefore the knuckle’s failure cannot be considered a fortuitous event that exempts the carrier from responsibility. Judgment REVERSED, PRBL to pay indemnity. Maranan v. Perez 20 SCRA 412 Facts: Rogelio Carachea was a passenger in a taxicab operated by Pascual perez when he was stabbed and killed by the driver, who was found guilty of homicide in the CFI. While an appeal at the CA, Antonia Maranan, Rogelio’s mother, filed an action to

recover damages for the death of her son. The CFI awarded her P3000 as damages against Perez dismissing the claim against the driver. Issue: Whether or not the carrier is liable for the assaults of its employee upon the passengers. Held: Under Art. 1739 of the Civil Code, “a common carrier are liable for the death of or injuries to passengers through the negligence or willful acts of the former’s employees, although such employees may have ached beyond the scope of their authority or in violation of the order of the common carrier. It is the carrier’s strict obligation to select its drivers and similar employees with due regard not only to technical competence but also to this total personality, their behavior and thus moral fiber. The dismissal of the claim against the driver is correct. Plaintiff’s action was predicated in breach of contract of carriage and the cab driver was not a part thereto. His civil liability is covered on the criminal case. De Gillaco v. Manila Railroad Co. G.R. No. L-8034 Facts: Lt. Tomas Gillaco, husband of Cornelia A. de Gillaco, was a passenger in the early morning train of the Manila Railroad Company (MRC) from Calamba, Laguna to Manila. When the train reached the Paco Railroad station, Emilio Devesa, a train guard of MRC assigned in the Manila-San Fernando, La Union Line, happened to be in said station waiting for the same train which would take him to Tutuban Station, where he was going to report for duty. Devesa had a long standing personal grudge against Tomas Gillaco dating back during the Japanese occupation. And because of this personal grudge, Devesa shot Gillaco upon seeing him inside the train. The carbine furnished by the MRC for his use as train guard. Tomas Gillaco died as a result of the wound sustained from the shot. Devesa was convicted of homicide by final judgment of the Court of Appeals. Wife of deceased petitioner, filed an action against the MRC at CFI Laguna. The trial court sentenced the respondents to pay P4,000 damages to the petitioners. Thus, this appeal. Issue: Whether or not the carrier should be held liable. Held: While the passenger is entitled to protection from personal violence by the carrier or its agents or employees, the responsibility of the carrier extends to those acts that the carrier could foresee or avoid through the exercise of the degree of care or diligence required of it. The Old Civil Code did not impose upon the carrier absolute liability for assaults of their employees upon the passenger. In the present case, the act of Devesa is shooting the passenger was entirely unforeseeable by MRC. They had no means to

ascertain or anticipate that the two would meet, or could it reasonably foresee every personal career that might exist between each of its may employee and any one of the thousands of passengers riding in its train. The shooting was therefore, a caso fortuito, both being unforeseeable and inevitable, under the circumstances. The resulting breach of Manila Railroad’s contract of safe carriage with the late Tomas Gillaco was excused thereby. Furthermore, when the crime took place, the guard Devesa had no duties to discharge in connection with the transportation of the deceased from Calamba to Manila. The stipulation of facts is clear that when Devesa shot and killed Gillaco, Devesa was assigned to guard the Manila-San Fernando (La Union) trains, and he was at Paco Station awaiting transportation to Tutuban. SC reversed the judgment appealed from, and dismissed the complaint, without costs. Marchan vs. Mendoza G.R. No. L-24471 Facts: A passenger bus of the Philippine Rabbit Bus Lines, driven by Silverio Marchan, fell into a ditch while travelling on its way to Manila. As a result of which respondents Arsenio Mendoza, his wife and child, passengers of the said bus were thrown out to the ground resulting in their multiple injuries. It was proven that the bus was traveling at high speed without due regard to the safety of its passengers and that passengers complained and asked Machan, the driver to slow down. On the contrary, Marchan increased its speed while approaching a truck which was then parked, apparently to avoid collision with the incoming vehicle from the opposite direction. The rear tires of the bus skidded because of its high speed which caused the bus to fall into a ditch. Subsequently, Marchan was convicted for physical injuries through reckless imprudence. Issue: Whether or not Marchan and Philippine Rabbit Bus Lines are liable for the injuries suffered by its passengers. Held: The Supreme Court held that the proximate cause of the accident was the gross negligence of Marchan who when driving is expected to have employed the highest degree of care. He should have been assiduously prudent in handling his vehicle to insure the safety of his passengers. There is no reason why he shouldn’t stop the vehicle upon noticing a parked truck in front of him. He must have taken precautionary measures in securing the safety of his passengers. Philippine Rabbit is also liable because common carriers cannot escape liability for the death or injuries to passengers through the negligence and willful acts of the former's employees, although such employees may have acted beyond the scope of their authority or in violation of the orders. The awarding of compensatory damages is reasonable because Arsenio Mendoza had suffered paralysis on the lower extremities, which will incapacitate him to engage in his customary occupation throughout the remaining years of his life. The awarding of exemplary damages likewise is found just although the plaintiffs did not specify such claim. The court is called upon the exercise and can use its discretion in

the imposition of punitive or exemplary damages even though not expressly prayed or pleaded in the plaintiffs' complaint. Bachelor Express, Inc. v. Court of Appeals G.R. No. 85691 Facts: Ornominio Beter and Narcisa Rautraut were passengers of a bus belonging to petitioner Bachelor Express, Inc. While the bus was on its way to Cagayan de Oro, a passenger at the rear portion suddenly stabbed another passenger. The stabbing cause commotion and panic amount the passengers such that the passengers started running to the sole exit shoving each other resulting in the falling off the bus by passengers Beter and Rautraut causing them fatal injuries. The heirs of the deceased sued the bus company Evidence adduced showed that the bus driver did not immediately stop the bus at the height of the commotion; the bus was speeding from a full stop; and the victims fell from the bus door when it was opened or gave way while the bus was still running. Petitioner denied liability on the ground that the death of its two passengers was caused by a force majeure as it was due to the act of a third person who was beyond its control and supervision. In line with this, petitioner also argued that it is not an insurer of its passengers. Issue: 1. Whether or not the case at bar is within the context of force majeure. 2. Whether or not the petitioner should be absolved from liability for the death of its passengers. Held: The sudden act of the passenger who stabbed another passenger in the bus is within the context of force majeure. However, in order that a common carrier may be absolved from liability in case of force majeure, it is not enough that the accident was caused by force majeure. The common carrier must still proves that it was not negligent in causing the injuries resulting from such accident. Considering the factual findings in this case, it is clear that petitioner has failed to overcome the presumption of fault and negligence found in the law governing common carriers. The argument that the petitioners are not insurers of their passengers deserves no merit in view of the failure of the petitioners to observe extraordinary diligence in transporting safely the passengers to their destination as warranted by law. Fortune Express vs. Court of Appeals 305 SCRA 14 Facts: A bus of petitioner Fortune Express, Inc. figured an accident with a jeepney in Lanao del Norte which resulted to the death of several passengers of the jeepney including two Maranaos. A Constabulary agent investigated that the jeepney was owned by a Maranao and certain Maranaos were planning to take revenge on petitioner by burning some of its buses. Subsequently, the Operations Manager of Fortune Express

was advised to take precautionary measures. Four days after the accident, three armed Maranaos pretended to be passengers of a bus of petitioner. They seized such bus and set it on fire. The passengers of the bus were asked to get off, but one passenger, Atty. Talib Caorong went back to retrieve something. He was shot and killed during the incident. Petitioner contends that the seizure by the armed assailants was a fortuitous event thus it cannot be held liable. Issue: Whether or not Fortune Express is liable for the death of Atty. Caorong. Held: The Supreme Court held that the seizure of the bus by the armed Maranaos cannot be assailed as a fortuitous event. The requisite of unforseeability to be considered forced majeure is lacking. Fortune Express knew that Maranaos were planning to burn some of its passenger buses and yet petitioner did nothing to protect the safety of its passengers. Petitioner’s employees failed to prevent the attack on one of its passengers because they did not exercise the diligence of a good father of a family. Hence, petitioner should be held liable for the death of Atty. Caorong. Art. 1763 of the New Civil Code provides that the common carrier is responsible for injuries suffered by a passenger on account of willful acts of other passengers, if the employees of the common carrier could have prevented the act through proper diligence. Because of Fortune Express’s negligence, the seizure of the bus by the armed Maranaos was made possible.