UNITED STATES vs.

TAN PIACO, VENTURA

ESTUYA, PEDRO HOMERES, MAXIMINO GALSA
and EMILIO LEOPANDO
March 10, 1920
JOHNSON, J.:
FACTS: The defendants were charged with a violation of the
Public Utility Law (Act No. 2307 as amended by Acts Nos. 2362
and 2694), in that they were operating a public utility without
permission from the Public Utility Commissioner. After hearing
the evidence the judge found that the evidence was insufficient
to support the charges against the defendants and absolved them
from all liability under the complaint except for Tan Piaco. The
lower court found the Tan Piaco was guilty of the crime charged
in the complaint and sentence him to pay a fine of P100, and, in
case of insolvency, to suffer subsidiary imprisonment, and to pay
one-fifth part of the costs. From that sentence Tan Piaco
appealed to Supreme Court.
Tan Piaco rented two automobile trucks and was using them
upon the highways of the Province of Leyte for the purpose of
carrying some passengers and freight; that he carried passengers
and freight under a special contract in each case; that he had not
held himself out to carry all passengers and all freight for all
persons who might offer passengers and freight.
ISSUE: WON Tan Piaco was a public utility under the Public
Utility Act and was therefore subject to the control and
regulation of the Public Utility Commission.
HELD: The court held that Tan Piaco was not operating a public
utility, for public use, and was not, therefore, subject to the
jurisdiction of the Public Utility Commission. The sentence of the
lower court was revoked.
RATIO: Section 14 of Act No. 2307, as amended by section 9 of
Act No. 2694, provides that: "The Public Utility Commission or
Commissioners shall have general supervision and regulation of,
jurisdiction and control over, all public utilities. . . . The term
'public utility' is hereby defined to include every individual,
copartnership, association, corporation or joint stock company,
etc., etc., that now or hereafter may own, operate, managed, or
control any common carrier, railroad, street railway, etc., etc.,
engaged in the transportation of passengers, cargo, etc., etc.,for
public use."
Under the provisions of said section, two things are necessary:
(a) The individual, copartnership, etc., etc., must be a public
utility; and (b) the business in which such individual,
copartnership, etc. etc., is engaged must be for public use. So
long as the individual or copartnership, etc., etc., is engaged
in a purely private enterprise, without attempting to render
service to all who may apply, he can in no sense be
considered a public utility, for public use.
"Public use" means the same as "use by the public." The
essential feature of the public use is that it is not confined to
privilege individuals, but is open to the indefinite public. It
is this indefinite or unrestricted quality that gives it its
public character. In determining whether a use is public, we
must look not only the character of the business to be done, but
also to the proposed mode of doing it. If the use is merely
optional with the owners, or the public benefit is merely
incidental, it is not a public use, authorizing the exercise of the
jurisdiction of the public utility commission. There must be, in
general, a right which the law compels the power to give to the
general public. It is not enough that the general prosperity of the
public is promoted. Public use is not synonymous with public
interest. The true criterion by which to judge of the character of
the use is whether the public may enjoy it by right or only by
permission.

Home Insurance v. American Steamship
April 4, 1968
J. Bengzon
Carlos Hernandez Jr.

FACTS:
1. "Consorcio Pesquero del Peru of South America" shipped
21,740 jute bags of Peruvian fish meal freight pre-paid at
Chimbate, Peru, through SS Crowborough. It was covered
by clean bills of lading Numbers 1 and 2.
2. The cargo was consigned to San Miguel Brewery, Inc.,
now San Miguel Corporation. It was insured by Home
Insurance Company.
3. The cargo arrived in Manila and was discharged into the
lighters of Luzon Stevedoring Company.
4. When the cargo was delivered to consignee San Miguel
Corp., it was found to have shortages amounting to
P12,033.85.
5. San Miguel Brewery, Inc. claimed against Luzon
Stevedoring Corporation, Home Insurance Company and
the American Steamship Agencies, owner and operator of
SS Crowborough.
6. Luzon Stevedoring and Armerican Steamship Agencies
denied liability. Home Insurance was left with no choice
but to pay San Miguel Corp. P14,870.71, the insurance
value of the loss.
7. As a subrogee to San Miguel Corp., Home Insurance filed
a complaint for recovery of P14,870.71 against Luzon
Stevedoring and American Steamship Agencies.
DEFENSES:
Luzon Stevedoring : It delivered with due diligence the goods in
the same quantity and quality that it had received the same from
the carrier. Claim had prescribed: claim must be made within 24
hours from receipt of the cargo.
American Steamship Agencies : Under the provisions of the
Charter party referred to in the bills of lading, the charterer,
not the shipowner, was responsible for any loss or damage
of the cargo. Furthermore, it claimed to have exercised due
diligence in stowing the goods and that as a mere forwarding
agent, it was not responsible for losses or damages to the cargo.
8. CFI absolved Luzon Stevedoring Corp as it was found it to
have merely delivered what it received from the carrier
(American Steamship) in the same condition and quality.
American Steamship was ordered to pay Home
Insurance.
CFIs main justifications: (a) The non-liability claim of American
Steamship Agencies under the charter party contract is not
tenable because Article 587 of the Code of Commerce makes the
ship agent also civilly liable for damages in favor of third persons
due to the conduct of the captain of the carrier;
(b) The stipulation in the charter party contract exempting the
owner from liability is against public policy under Article 1744 of
the Civil Code;
ISSUE: Whether or not the stipulation in the charter party of the
owners non-liability valid so as to absolve American Steamship
Agencies from liability for loss
HELD: Yes. The stipulation is valid. American Steamship is not
liable.
RATIO:
1. American steamship became a private carrier when it
undertook to carry a special cargo or chartered to a
special person only. As a private carrier, a stipulation
exempting the owner from liability for the negligence of
its agent (captain or crew or some other person
employed by the owner on board) is not against public
policy and is deemed valid.
2. The Civil Code provisions (ART 1744) on common
carriers should not be applied where the carrier is not
acting as such but as a private carrier.
3. The stipulation in the charter party absolving the owner
from liability for loss due to the negligence of its agent
would be void only if the strict public policy governing
common carriers is applied. Such policy has no force
where the public at large is not involved, as in the case of
a ship totally chartered for the use of a single party.
4. Recovery cannot be had for loss or damage to the cargo,
against the shipowners, unless the same is due to
personal acts or negligence of said owner or its manager,
as distinguished from its other agents or employees. In
this case, no such personal act or negligence has been
proved.
PEDRO DE GUZMAN v. COURT OF APPEALS and
ERNESTO CENDANA
December 22, 1988 | FELICIANO, J.
Facts:
Respondent Ernesto Cendana, a junk dealer, was engaged
in the business of buying and selling used bottles and
scrap metals. He would buy them in Pangasinan and later
resell them in Manila. He used 2 six-wheeler trucks he
owned to haul them; and on the return trip to
Pangasinan, Cendana would allow other merchants to
load cargo onto his trucks for delivery in various
establishments in Pangasinan. Respondent would just
charge them freight rates which were lower than regular
commercial rates.
Petitioner Pedro De Guzman, on the other hand, is a
merchant and an authorized dealer of General Milk
Company, Inc. He contracted respondent for the hauling
of 750 cartons of milk from a warehouse in Makati to the
formers establishment in Urdaneta, Pangasinan. 150
cartons were loaded on a truck driven by respondent
himself, while 600 cartons were placed on board the
other truck driven by respondents driver and employee.
Only the first truck reached its destination. The truck
carrying 600 cartons was hijacked by armed men
somewhere in Paniqui, Tarlac. The armed men took with
them the truck, its driver, his helper, and the cargo.
De Guzman filed a suit against Cendana demanding
payment of P22,150.00, the claimed value of the
merchandise, plus damages and attorneys fees. De
Guzman argued that Cendana should have observed
extraordinary diligence, being a common carrier.
Cendana denied he was a common carrier and that such
loss was due to force majeure.
CFI found Cendana to be a common carrier and held him
liable. However, CA reversed the ruling and held that
Cendana had been engaged in transporting return loads
of freight as a casual occupation a sideline to his scrap
iron business and not as a common carrier.
Hence, this appeal.
Issue:
WON Cendana is a common carrier. YES.
WON Cendana is liable for the loss of the goods. NO
Ratio:
As to whether Cendana is a common carrier or not
Article 1732 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-cited article does not make a distinction
between one whose principal business activity is the
carrying of person or goods and one who does such
carrying only as ancillary activity (or sideline). Neither
does it make a distinction between one offering such
carrying service on a regular or schedules basis and one
who offers it on an occasional and episodic basis, nor a
distinction between one offering it to the general public
and one offering to a specific population.

More so, the Court used the definition of public service
under the Public Service Act to examine the concept of
common carrier. The Court said that respondent is
properly characterized as a common carrier even though
he merely back-hauled goods for other merchants and
that it was done on a periodic basis and that his principal
business was not that of back-hauling. There is no
dispute that respondent also charged its customers a fee.

The fact that respondent held no certificate of public
convenience does not lead to the conclusion that it is not
a common carrier. To exempt him from the liabilities of a
common carrier because of his failure to secure the
necessary certificate would be tantamount to rewarding
him for precisely failing to comply with statutory
requirements and would be offensive to sound public
policy.

As to Cendanas liability as a common carrier
Under Article 1734, the general rule is that common
carriers are responsible for the loss, destruction, or
deterioration of goods which they carry, unless the same
is due to any of the following circumstances 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.

It is important to point out that robbery or hijacking is
not one of those mentioned in the list. Article 1735 then
provides that in all cases other than those mentioned in
Art. 1734, common carriers shall be presumed negligent
unless they prove that they observed extraordinary
diligence.

Under Article 1745 (6), a common carrier is held
responsible even for acts of strangers like thieves or
robbers, except where such thieves or robbers in fact
acted with grave or irresistible threat, violence, or force,
which what in fact happened in the case as substantiated
by a criminal information filed in the CFI of Tarlac with
respect to the robbery and kidnapping incident.

The Court held that the loss must be regarded as force
majeure and beyond the control of the common carrier,
brushing off petitioners argument that respondent could
have observed extraordinary diligence by hiring a
security guard to ride with the truck (Court said that this
is not extraordinary diligence given the special
circumstances).
First Philippine Industrial Corp. v. CA
Martinez | Dec. 29, 1998 | 2nd

FPIC is a grantee of a pipeline concession under RA 387 to and
operate oil pipelines. It applied for a permit with mayor's office
in Batangas City. Respondent city treasurer required FPIC to pay
a local tax based on its gross receipts pursuant to the Local
Government Code. FPIC paid under protest. FPIC filed a letter-
protest addressed to the treasurer, which was denied. FPIC's
complaint in RTC was dismissed. CA affirmed.

WON FPIC is a common carrier

YES

1. NCC 1732

2. The test for determining whether a party is a common carrier
of goods is:
a. 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;
b. He must undertake to carry goods of the kind to which his
business is confined;
c. He must undertake to carry by the method by which his
business is conducted and over his established roads; and
d. The transportation must be for hire.
Based on the above definitions and requirements, there is no
doubt that petitioner is a common carrier.

3. The concept of 'common carrier' under NCC 1732 may be seen
to coincide neatly with the notion of 'public service,' under the
Public Service Act.

4. Respondent's argument that the term "common carrier" as
used in Section 133 (j) of the Local Government Code refers only
to common carriers transporting goods and passengers through
moving vehicles or vessels either by land, sea or water, is
erroneous. The definition of "common carriers" in the Civil Code
makes no distinction as to the means of transporting, as long as it
is by land, water or air. It does not provide that the
transportation of the passengers or goods should be by motor
vehicle.

5. Under the Petroleum Act of the Philippines, petitioner is
considered a "common carrier." Thus, Article 86 thereof
provides that: "Art. 86. Pipe line concessionaire as a common
carrier."

6. The BIR likewise considers the petitioner a "common carrier."
In BIR Ruling No. 069-83, it declared: "x x x since [petitioner] is a
pipeline concessionaire that is engaged only in transporting
petroleum products, it is considered a common carrier under
Republic Act No. 387 x x x."

7. Petitioner is exempt from the business tax as provided for in
Section 133 (j), of the Local Government Code.

8. The deliberations conducted in the House of Representatives
on the Local Government Code of 1991 show that the legislative
intent in excluding from the taxing power of the local
government unit the imposition of business tax against common
carriers is to prevent a duplication of the so-called "common
carrier's tax."

Asia Lighterage and Shipping, Inc. v. CA, and
Prudential Guarantee and Assurance, Inc.
Namingit
19 August 2003
J. Puno

Facts:
Parties:
Shipper - Marubeni American Corporation of
Portland, Oregon
Consignee - General Milling Corporation
Insurer - Prudential Guarantee and Assurance, Inc.
Carrier of the cargo (Manila to consignees wharf) -
Asia Lighterage and Shipping, Inc.
Shipper shipped 3, 150 tons of wheat for delivery to
Consignee. Shipment was insured against loss or damage
by Insurer. Shipment arrived in Manila and transferred to
the custody of the carrier. 900 metric tons was loaded to
Carriers barge for delivery to consignee. The cargo did
not reach its destination. The barge sank completely
while in the Sta. Mesa spillways resulting in the total loss
of the remaining cargo (some were transferred before
the sinking). Insurer indemnified Consignee (P4, 104,
654.22). Insurer as subrogee sought recovery from
Carrier to no avail. Thus, it filed a complaint for recovery
of the amount of indemnity, attorneys fees and cost of
suit.
Issues:
1. W/N Asia Lighterage and Shipping, Inc. is a common
carrier
2. Assuming Asia Lighterage and Shipping, Inc. is a common
carrier, W/N it exercised extraordinary diligence in its
care and custody of the consignees cargo.

Held:
1. YES.

Asia Lighterage and Shipping, Inc.s contention: it is a
private carrier because it has no fixed and publicly
known route, maintains no terminals, issues no tickets,
not obliged to carry indiscriminately for any person, and
it is not bound to carry goods unless it consents. Thus, it
does not hold out its services to the general public.

Art. 1732 (NCC) defines a common carrier 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. The definition makes no distinction between (De Guzman
v. CA):
1. one whose principal business activity is the carrying of
persons or goods or both, and one who does such
carrying only as ancillary activity,
2. 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,
3. a carrier offering its services to the general public and
one who offers services or solicits business only from a
narrow segment of the general population

Asia Lighterage and Shipping, Inc. is a common carrier. A
common carrier need not have fixed and publicly known routes.
Neither does it have to maintain terminals or issue tickets.

(Bascos v. CA) Test of a common carrier: 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 quality or extent of the business. In the case, Asia
Lighterage and Shipping, Inc. admitted that it is engaged in the
business of shipping and lightergae, offering its barges to the
public, despite its limited clientele for carrying or transporting
goods by water for compensation.

2. NO.

Asia Lighterage and Shipping, Inc.s contention: The
sinking of the barge resulting to the loss of the cargo was
because of the typhoon.

Common carriers are bound to exercise extraordinary diligence
in the vigilance over the goods transported by them (NCC Art.
1733). They are presumed to have been at fault or to have acted
negligently if the goods are lost, destroyed or deteriorated.
Exceptions to this rule are:
1. Occurrence of a natural disaster/calamity (must have
been the proximate and only cause of the loss and
common carrier must exercise due diligence to prevent
or minimize the loss before, during, and after the
occurrence. Art. 1739)
2. Act of public enemy in war
3. Act or omission of the sipper or owner of the goods
4. Character of the goods or defects in packing or in the
containers
5. Order or act of competent public authority

Asia Lighterage and Shipping, Inc. failed to prove that the
typhoon was the proximate and only cause of the loss and that it
exercised due diligence to prevent or minimize the loss before,
during, and after the typhoon. Evidence showed that before the
towing bits broke, it already previously sustained damage. The
barge developed a list because of a hole it sustained after hitting
an unseen protuberance underneath the water while docked at
the Engineering Island. The hole was patched with clay and
cement, a provisional remedy not enough for the barge to sail
safely. Thus, when Asia Lighterage and Shipping, Inc. persisted to
proceed with the voyage it recklessly exposed the cargo to
further damage.

Further, Asia Lighterage and Shipping, Inc. still headed to the
Consignees wharf despite the knowledge of an incoming typhoon.
Surely, meeting a typhoon head-on falls short of due diligence
required from a common carrier.

Common Carriers >A) In General >I) Definitions; essential
elements; Art 1732

Crisostomo v CA 409 SCRA 528 August 25,
2003 YNARES-SANTIAGO, J.

Facts:
Petitioner Estela L. Crisostomo contracted the services
of respondent Caravan Travel and Tours
International, Inc. to arrange and facilitate her booking,
ticketing and accommodation in a tour dubbed Jewels of
Europe
Respondent companys ticketing manager (also
petitioners niece), Meriam Menor went to petitioners
residence on June 12, 1991, to deliver petitioners travel
documents and plane tickets. Petitioner gave Menor the
full payment for the package tour. Menor then told her to
be at the airport on Saturday.
Without checking her travel documents, petitioner went to
the airport on Saturday, June 15, 1991, to take the flight
for the first leg of her journey. Petitioner learned that her
plane ticket was for the flight scheduled on June 14,
1991. She thus called up Menor to complain.
Subsequently, Menor prevailed upon petitioner to take
another tour the British Pageant. For this tour
package, petitioner was asked to pay another amount.
She gave respondent partial payment and commenced
the trip in July 1991.
Upon petitioners return, she demanded from respondent
a reimbursement representing the difference between
the sum she paid for Jewels of Europe and the amount
she owed for the British Pageant tour. When
respondent company refused, petitioner filed a complaint
for breach of contract of carriage and damages alleging
that her failure to join Jewels of Europe was due to
respondents fault since it did not clearly indicate the
departure date on the plane ticket and was also negligent
in informing her of the wrong flight schedule through its
employee, Menor.
Trial court decided for petitioner (but declared that
petitioner is guilty of contributory negligence and
deducted 10% from the amount being claimed as
refund). Respondent appealed to the CA, which reversed
lower courts decision and held that petitioner is more
negligent than respondent, because as a lawyer and well-
traveled person, she should have known better than to
simply rely on what was told to her. Petitioners MR was
denied, hence this petition.

Issue/Held: W/N respondent is a common carrier required
by law to exercise extraordinary diligence in the fulfillment
of its obligation. NO. Petitioners contention that respondent
did not observe the standard of care required of a common
carrier when it informed her wrongly of the flight schedule, has
no merit. Petition denied.

Ratio: By definition, a contract of carriage or transportation is
one whereby a certain person or association of persons obligate
themselves to transport persons, things, or news from one place
to another for a fixed price. Such person or association of
persons are regarded as carriers and are classified as private or
special carriers and common or public carriers. A common
carrier is defined under Article 1732 of the Civil Code 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.

For reasons of public policy, a common carrier in a contract of
carriage is bound by law to carry passengers as far as human
care and foresight can provide using the utmost diligence of very
cautious persons and with due regard for all the circumstances.
However, respondent is not a common carrier but a travel
agency. Respondent is thus not bound under the law to
observe extraordinary diligence in the performance of its
obligation, as petitioner claims.

Since the contract between the parties is an ordinary one for
services, the standard of care required of respondent is that of a
good father of a family under Article 1173 of the Civil Code. In
the case at bar, the Court found that respondent company
performed its duty diligently and did not commit any contractual
breach (The date and time of departure was legibly written on
the plane ticket and the travel papers were delivered two days in
advance so that petitioner could prepare for the trip). Also had
petitioner exercised due diligence in the conduct of her affairs,
there would have been no reason for her to miss the flight.
Hence, petitioner cannot recover and must bear her own
damage.
April 22, 2005
SCHMITZ TRANSPORT AND BROKERAGE
CORPORATION vs. TRANSPORT VENTURE

FACTS:
Schmitz Transport was engaged by Little Giant Steel Pipe
Corporation to:
secure clearances
receive 545 hot rolled steel sheets shipped from
Russia by SYTCO and
to deliver said cargoes to Little Giants
warehouse.
Schmitz in turn engaged the services of Transport
Venture Incorporation (TVI) to send a barge and tugboat
at the shipside.
37 of the 545 coils were unloaded to the barge. No
tugboat pulled the barge back to the pier, however.
Due to the inclement weather, the barge pitched and
rolled with the waves and eventually capsized, washing
the 37 coils into the sea.

Eventually, a tugboat finally
arrived to pull the already empty and damaged barge
back to the pier.
Little Giant filed a formal claim against Industrial
Insurance (the insurer of the cargoes) which paid it the
amount of P5,246,113.11.
Industrial Insurance later on filed a complaint against
Schmitz Transport, TVI, and Black Sea through its
representative Inchcape (the defendants) before the RTC
of Manila, for the recovery of the amount it paid to Little
Giant.
Industrial Insurance faulted the defendants for
undertaking the unloading of the cargoes while typhoon
signal No. 1 was raised in Metro Manila.

ISSUE/S:
W/N petitioner Schmitz is a common carrier (YES)
W/N petitioner Schmitz is liable for the loss of the cargoes (YES,
solidarily liable with TVI)

RATIO:

PETITIONER SCHMITZ IS A COMMON CARRIER.
It undertook to transport the cargoes to the consignees
warehouse at Cainta, Rizal.
As the appellate court put it, as long as a person or
corporation holds itself to the public for the purpose of
transporting goods as a business, it is already considered
a common carrier regardless if it owns the vehicle to be
used or has to hire one.
The testimonies of petitioners VP and General Manager
attest to this:
Well, I oversee the entire operation of the
brokerage and transport business of the
company.
We are also in-charge of the delivery of the
goods to their warehouses.
We handled the unloading of the cargo[es] from
vessel to lighter and then the delivery of the
cargoes from lighter to BASECO then to the truck
and to the warehouse, Sir.
Actually, we used the barges for the ship side
operations, this unloading [from] vessel to
lighter, and on this we hired or we sub-
contracted with Transport Ventures, Inc. which
[was] in-charge of the barges.
A.F. Sanchez Brokerage, Inc. v. The Honorable Court of
Appeals:
Art. 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.
Article 1732 does not distinguish between one whose
principal business activity is the carrying of goods and
one who does such carrying only as an ancillary activity.
It suffices that petitioner undertakes to deliver the goods
for pecuniary consideration.

PETITIONER SCHMITZ IS SOLIDARILY LIABLE WITH TVI

On TVIs liability:
While TVI acted as a private carrier for which it was
under no duty to observe extraordinary diligence, it was
still required to observe ordinary diligence to ensure the
proper and careful handling, care and discharge of the
carried goods.
TVIs failure to promptly provide a tugboat did not only
increase the risk that might have been reasonably
anticipated during the shipside operation, but was the
proximate cause of the loss. A man of ordinary prudence
would not leave a heavily loaded barge floating for a
considerable number of hours, at such a precarious time,
and in the open sea, knowing that the barge does not
have any power of its own and is totally defenseless from
the ravages of the sea

On Schmitzs liability:
For petitioner to be relieved of liability, it should,
following Article 1739

of the Civil Code, prove that it
exercised due diligence to prevent or minimize the loss,
before, during and after the occurrence of the storm in
order that it may be exempted from liability for the loss
of the goods.
While petitioner sent checkers and a supervisor

on board
the vessel to counter-check the operations of TVI, it failed
to take all available and reasonable precautions to avoid
the loss. After noting that TVI failed to arrange for the
prompt towage of the barge despite the deteriorating sea
conditions, it should have summoned the same or
another tugboat to extend help, but it did not.

THUS: SC holds that petitioner and TVI are solidarily liable for
the loss of the cargoes.
CRUZ VS. SUN HOLIDAYS
Facts:
The newly wed Ruelito Cruz and his wife, petitioners son
and daughter in law, stayed at the Coco Beach Island Resort,
owned and operated by respondent, from September 9 to
11, 2000 by virtue of a tour package-contract with
respondent that included transportation to and from the
Resort and the point of departure in Batangas.
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. 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.
At the time of Ruelitos death, he was 28 years old and
employed as a contractual worker for Mitsui Engineering &
Shipbuilding Arabia, Ltd. in Saudi Arabia, with a basic
monthly salary of $900.
3

Petitioners demanded indemnification from respondent for
the death of their son in the amount of at least P4,000,000.
Respondent denied any responsibility for the incident which
it considered to be a fortuitous event. It nevertheless offered,
as an act of commiseration, the amount of P10,000 to
petitioners upon their signing of a waiver.
As petitioners declined respondents offer, they filed the
Complaint, as earlier reflected, alleging that respondent, as a
common carrier, was guilty of negligence in allowing M/B
Coco Beach III to sail notwithstanding storm warning
bulletins issued by PAGASA.
Respondent denied being a common carrier, alleging that its
boats are not available to the general public as they only
ferry Resort guests and crew members. Nonetheless, it
claimed that it exercised the utmost diligence in ensuring the
safety of its passengers; contrary to petitioners allegation,
there was no storm on September 11, 2000 as the Coast
Guard in fact cleared the voyage; and M/B Coco Beach III was
not filled to capacity and had sufficient life jackets for its
passengers.
Issue:
1. w/n Sun Holidays is a common carrier
2. w/n Sun Holidays is indemnify the petitioners for the
death of the son

Held:
1. Yes respondent is a common carrier.
2. Yes.
Ratio:
1. 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 respondents 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 respondents ferry
services pay the same amount is likewise
inconsequential. These guests may only be deemed to
have overpaid.
Article 1732 of the Civil Code defining "common carriers"
has deliberately refrained from making distinctions on
whether the carrying of persons or goods is the carriers
principal business, whether it is offered on a regular
basis, or whether it is offered to the general public. The
intent of the law is thus to not consider such distinctions.
2. Under the Civil Code, common carriers, from the nature
of their business and for reasons of public policy, are
bound to observe extraordinary diligence for the safety
of the passengers transported by them, according to all
the circumstances of each case. They are bound to carry
the passengers safely as far as human care and foresight
can provide, using the utmost diligence of very cautious
persons, with due regard for all the circumstances.
When a passenger dies or is injured in the discharge of a
contract of carriage, it is presumed that the common
carrier is at fault or negligent. In fact, there is even no
need for the court to make an express finding of fault or
negligence on the part of the common carrier. This
statutory presumption may only be overcome by
evidence that the carrier exercised extraordinary
diligence.
To fully free a common carrier from liability, the
fortuitous event must have been the proximate and only
causeof the loss. And it should have exercised due
diligence to prevent or minimize the loss before, during
and after the occurrence of the fortuitous event
Since respondent failed to prove that it exercised the
extraordinary diligence required of common carriers, it is
presumed to have acted recklessly, thus warranting the
award too of exemplary damages, which are granted in
contractual obligations if the defendant acted in a
wanton, fraudulent, reckless, oppressive or malevolent
manner.
37


Cangco v Manila Railroad
October 14, 1918
Fisher, J.
Facts:
1. Cangco is a clerk of Manila Railroad. He goes to work by
riding the companys train.
2. On the side of the train where passengers alight, there is
a cement platform which begins to rise with a moderate
gradient.
3. Cangco, about to alight the coach he was riding, took his
position upon its steps. As the train slowed down,
another passenger got off the same coach, alighting
safely.
4. When the train proceeded a little farther, Cangco stepped
off but one or both of his feet came in contact with a sack
of watermelons. He fell on the platform.
5. His body rolled from the platform and was drawn under
the moving car, where his right arm was badly crushed
and lacerated.
6. The accident occurred between 7-8:00 on a dark night,
and as the station was lighted dimly by a single light,
objects on the platform where the accident occurred
were difficult to discern.
7. The explanation of the presence of a sack of melons is
found in the fact that it was the customary season for
harvesting these melons.

Issues/Held:
1. WON the company is primarily liable. YES
2. WON recovery by Cangco is barred by his own
contributory negligence. NO

Ratio:
1. The foundation of the legal liability of the defendant
is the contract of carriage, and the obligation to
respond for the damage which Cangco has suffered arises
from the breach of contract by reason of the company to
exercise due care in its performance. Its liability is
direct and immediate (culpa contractual), differing
essentially from that presumptive responsibility for the
negligence of its servants (culpa aquiliana).
2. The train was barely moving when Cangco alighted.
Thousands of person alight from trains under these
conditions every day, and sustain no injury where the
company has kept its platform free from dangerous
obstructions. The place was perfectly familiar to
Cangco as it was his daily custom to get on and off the
train at that station. There could therefore be no
uncertainty in his mind with regard either to the length
of the step which he was required to take or the
character of the platform where he was alighting. The
conduct of Cangco in undertaking to alight while the
train was slightly under was not characterized by
imprudence.
YNCHAUSTI STEAMSHIP CO. v. DEXTER
J. STREET yo
GR. L-15652, December 14, 1920

TOPIC: Liability and presumption of negligence

FACTS: The Government of the PH Islands, through its
Purchasing Agent, consigned 30 cases of White Rose mineral oil
and 96 cases of Cock mineral oil to petitioner to be brought
aboard from Manila to Aparri, Cagayan. The parties executed a
bill of lading where Ynchausti attested it received the supplies in
good condition. Said consignment was for P82.79. Upon delivery,
a case each of Cock and White Rose were declared empty.
Ynchausti said shortages in Cock and White Rose were of causes
unknown to it and neither was it caused by negligence on their
part. The Insular Auditor threatened a deduction in the invoice
value of the goods after an investigation pointed to Ynchaustis
negligence as the cause of leakages for the cases of mineral oil.
The Insular Audito refused to disburse the full amount, hence a
petition for mandamus to be paid the full amount for Ynchaustis
services.

ISSUE: Whether Ynchausti was entitled to the full invoice value
of the goods despite the arrival of goods in bad condition
RESOLUTION: Petitions DISMISSED, costs against petitioner
A. COMMON CARRIERS; Duties of the Consignee; Under
Sec. 646 of the Administrative Code, when Government
property is transmitted from one place to another by
carrier, it shall be upon proper bill of lading, or receipt
from such carrier, and it shall be the duty of the
consignee, or his representative, to make full notation of
any evidence of loss, shortage, or damage, upon the bill of
lading or receipt, before accomplishing it.
B. COMMON CARRIERS; Presumption of liability of
common carrier; The notation of losses by the
consignee is competent evidence that the shortage in fact
existed. As the petitioner states that the oil received by it
for carriage inasmuch as the fact of loss is proved in the
manner stated, it results that there is a presumption that
petitioner was to blame for the loss and it was incumbent
upon petitioner in order to entitle it to relief to rebut that
presumption by proving the loss was not due to its fault
or negligence. Mere proof of delivery of goods in good
order to a carrier, and of their arrival at the place of
destination in bad order makes for a prima facie case
against the carrier, so that if no explanation is given as to
how the injury occurred, the carrier must be held
responsible. It is incumbent upon the carrier to prove the
loss was due to accident or some other circumstance
inconsistent with its liability.