First Philippine Industrial Corp. vs.

CA

Facts:

Petitioner is a grantee of a pipeline concession under Republic Act No. 387. Sometime in January 1995,
petitioner applied for mayor’s permit in Batangas. However, the Treasurer required petitioner to pay a
local tax based on gross receipts amounting to P956,076.04. In order not to hamper its operations,
petitioner paid the taxes for the first quarter of 1993 amounting to P239,019.01 under protest. On
January 20, 1994, petitioner filed a letter-protest to the City Treasurer, claiming that it is exempt from
local tax since it is engaged in transportation business. The respondent City Treasurer denied the
protest, thus, petitioner filed a complaint before the Regional Trial Court of Batangas for tax refund.
Respondents assert that pipelines are not included in the term “common carrier” which refers solely to
ordinary carriers or motor vehicles. The trial court dismissed the complaint, and such was affirmed by
the Court of Appeals.

Issue:

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

Held:

Article 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firm or
association engaged in the business of carrying or transporting passengers or goods or both, by land,
water, or air, for compensation, offering their services to the public."

The test for determining whether a party is a common carrier of goods is:

(1) He must be engaged in the business of carrying goods for others as a public employment, and must
hold himself out as ready to engage in the transportation of goods for person generally as a business
and not as a casual occupation;

(2) He must undertake to carry goods of the kind to which his business is confined;

(3) He must undertake to carry by the method by which his business is conducted and over his
established roads; and

(4) The transportation must be for hire.

Based on the above definitions and requirements, there is no doubt that petitioner is a common carrier.
It is engaged in the business of transporting or carrying goods, i.e. petroleum products, for hire as a
public employment. It undertakes to carry for all persons indifferently, that is, to all persons who choose
to employ its services, and transports the goods by land and for compensation. The fact that petitioner
has a limited clientele does not exclude it from the definition of a common carrier.
De Guzman Vs CA

FACTS:

Respondent Ernesto Cendana, a junk dealer, owned two trucks for hauling scrap
materials to Manila. The trucks, on their return trip, were loaded with cargoes contracted
with various merchants  to be delivered to different establishments in Pangasinan.
Respondent charged freight rates which were commonly lower than regular commercial
rates. He was contracted by petitioner, an authorized dealer of General Milk Company
to haul 750 cartons of milk from its warehouse in Makati. 150 cartons were loaded on a
truck driven by respondent himself, while 600 cartons were placed on the other truck
respondent’s driver and employee. However, 600 boxes of milk were not delivered
because the truck, while on its way to Pangasinan, was held up by armed men and the
driver and his helper were kidnapped.

RTC’s finding: Respondent a common carrier.

CA’s decision: Respondent was not liable for the value of the undelivered cargo. The
transport of return loads of freight is “a casual occupation — a sideline to his scrap iron
business” and was not engaged as a common carrier. The hijacking of respondent’s
truck was force majeure

ISSUES:

1. Is the owner of the truck a common carrier?

2. Is he liable for the undelivered goods?

RULING:
SC affirmed the decision of the CA that the truck owner, although found to be a
common carrier, is not liable for the value of the undelivered merchandise which was
lost because the robbery is attended by grave or irresistible threat, violence or force and
he had complied with the rigorous standard of extraordinary diligence.

Article 1732 of the Civil Code defines “common carriers” as 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. This 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 or as a mere “sideline”. It makes no 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 it
distinguishes 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.

If the goods are lost, destroyed or deteriorated, and the cause was not one of those
enumerated in Article 1734, the respondent is presumed to have been at fault or to have
acted negligently but this presumption may be overthrown by proof of extraordinary
diligence on the part of private respondent. He must proved that he observed
extraordinary diligence as required by the nature of their business and for reasons of
public policy.
Under Article 1745 (6) a stipulation that the common carrier’s liability for acts committed
by thieves, or of robbers who do not act with grave or irresistible threat, violence or
force, is dispensed with or diminished is considered unreasonable, unjust and contrary
to public policy.

NOTES:

Article 1734. Common carriers may be exempted from liability under the following
causes only:

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

(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character-of the goods or defects in the packing or-in the containers; and
(5) Order or act of competent public authority.
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Sps. Perene vs. Sps Nicolas
FACTS:
 Spouses Teodoro and Nanette Peres (Peres) were engaged in the business of
transporting students from their respective residences in Paraque City to Don Bosco in Pasong
Tamo, Makati City, and back. They employed Clemente Alfaro (Alfaro) as driver of the van.
Spouses Nicolas and Teresita Zarate (Zarates) contracted the Peres to transport their son
Aaron to and from Don Bosco.

Considering that the students were due at Don Bosco by 7:15 a.m., and that they were
already running late because of the heavy vehicular traffic on the South Superhighway, Alfaro
took the van to an alternate route at about 6:45 a.m. by traversing the narrow path underneath
the Magallanes Interchange. The railroad crossing in the narrow path had no railroad warning
signs, or watchmen, or other responsible persons manning the crossing. In fact, the bamboo
barandilla was up, leaving the railroad crossing open to traversing motorists.
At about the time the van was to traverse the railroad crossing, PNR Commuter No. 302
(train), was in the vicinity of the Magallanes Interchange travelling northbound. As the train
neared the railroad crossing, Alfaro drove the van eastward across the railroad tracks, closely
tailing a large passenger bus. His view of the oncoming train was blocked because he overtook
the passenger bus on its left side. The train blew its horn to warn motorists of its approach. The
passenger bus successfully crossed the railroad tracks, but the van driven by Alfaro did not. The
impact threw nine of the 12 students in the rear, including Aaron, out of the van. Aaron landed in
the path of the train, which dragged his body and severed his head, instantaneously killing him.
Thus, the Zarates sued the Peres for breach of contract of carriage and the PNR for
quasi-delict. The RTC ruled in favor of the Zarates. On appeal, the CA affirmed the findings of
the RTC.

ISSUE:
Whether or not the Peres are liable for breach of contract of carriage?

HELD: 
The petition has no merit. A common carrier is a person, corporation, firm or association
engaged in the business of carrying or transporting passengers or goods or both, by land,
water, or air, for compensation, offering such services to the public. Contracts of common
carriage are governed by the provisions on common carriers of the Civil Code, the Public
Service Act, and other special laws relating to transportation. A common carrier is required to
observe extraordinary diligence, and is presumed to be at fault or to have acted negligently in
case of the loss of the effects of passengers, or the death or injuries to passengers. The true
test for a common carrier is not the quantity or extent of the business actually transacted, or the
number and character of the conveyances used in the activity, but whether the undertaking is a
part of the activity engaged in by the carrier that he has held out to the general public as his
business or occupation.
Applying these considerations to the case before us, there is no question that the Peres
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 clientele, the Peres 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.
Article 1755 of the Civil Code specifies that the common carrier should "carry the
passengers safely as far as human care and foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the circumstances." To successfully fend off
liability in an action upon the death or injury to a passenger, the common carrier must prove his
or its observance of that extraordinary diligence; otherwise, the legal presumption that he or it
was at fault or acted negligently would stand.
According to Article 1759 of the Civil Code, their liability as a common carrier did not
cease upon proof that they exercised all the diligence of a good father of a family in the
selection and supervision of their employee. The Peres were liable for the death of Aaron
despite the fact that their driver might have acted beyond the scope of his authority or even in
violation of the orders of the common carrier. DENIED.