PRECILLANO NECESITO, ETC. vs. NATIVIDAD PARAS, ET AL.

G.R. No. L-10605, June 30, 1958)

FACTS:
A mother and her son boarded a passenger auto-truck of the Philippine Rabbit Bus Lines.
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 actions ex contractu against the owners of PRBL filed by the
son and the heirs of the mother. Lower Court dismissed the actions, holding that the
accident was a fortuitous event.
ISSUE:
Whether or not the carrier is liable for the manufacturing defect of the steering knuckle, and
whether the evidence discloses that in regard thereto the carrier exercised the diligence
required by law (Art. 1755, new Civil Code)
HELD:
Yes.
While the carrier is not an insurer of the safety of the passengers, 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 carriers liability is
the fact that the passengers 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 knuckles failure cannot be considered a fortuitous
event that exempts the carrier from responsibility.

Calalas v. CA
Facts:
Private respondent Eliza Jujeurche G. Sunga took a passenger jeepney owned and operated
by petitioner Vicente Calalas. As the jeepney was already full, Calalas gave Sunga an stool at
the back of the door at the rear end of the vehicle. Along the way, the jeepney stopped to let
a passenger off. Sunga stepped down to give way when an Isuzu truck owned by Francisco
Salva and driven by Iglecerio Verena bumped the jeepney. As a result, Sunga was injured.
Sunga filed a complaint against Calalas for violation of contract of carriage. Calalas filed a
third party complaint against Salva. The trial court held Salva liable and absolved Calalas,
taking cognisance of another civil case for quasi-delict wherein Salva and Verena were held
liable to Calalas. The Court of Appeals reversed the decision and found Calalas liable to
Sunga for violation of contract of carriage.
Issues:
(1) Whether the decision in the case for quasi delict between Calalas on one hand and Salva
and Verena on the other hand, is res judicata to the issue in this case

(2) Whether Calalas exercised the extraordinary diligence required in the contract of carriage
(3) Whether moral damages should be awarded
Held:
(1) The argument that Sunga is bound by the ruling in Civil Case No. 3490 finding the driver
and the owner of the truck liable for quasi-delict ignores the fact that she was never a party
to that case and, therefore, the principle of res judicata does not apply. Nor are the issues in
Civil Case No. 3490 and in the present case the same. The issue in Civil Case No. 3490 was
whether Salva and his driver Verena were liable for quasi-delict for the damage caused to
petitioner's jeepney. On the other hand, the issue in this case is whether petitioner is liable
on his contract of carriage. The first, quasi-delict, also known as culpa aquiliana or culpa
extra contractual, has as its source the negligence of the tortfeasor. Thesecond, breach of
contract or culpa contractual, is premised upon the negligence in the performance of a
contractual obligation. Consequently, in quasi-delict, the negligence or fault should be
clearly established because it is the basis of the action, whereas in breach of contract, the
action can be prosecuted merely by proving the existence of the contract and the fact that
the obligor, in this case the common carrier, failed to transport his passenger safely to his
destination. In case of death or injuries to passengers, Art. 1756 of the Civil Code provides
that common carriers are presumed to have been at fault or to have acted negligently
unless they prove that they observed extraordinary diligence as defined in Arts. 1733 and
1755 of the Code. This provision necessarily shifts to the common carrier the burden of
proof. It is immaterial that the proximate cause of the collision between the jeepney and the
truck was the negligence of the truck driver. The doctrine of proximate cause is applicable
only in actions for quasi-delict, not in actions involving breach of contract. The doctrine is a
device for imputing liability to a person where there is no relation between him and another
party. In such a case, the obligation is created by law itself. But, where there is a pre-existing
contractual relation between the parties, it is the parties themselves who create the
obligation, and the function of the law is merely to regulate the relation thus created.
(2) We do not think so. First, the jeepney was not properly parked, its rear portion being
exposed about two meters from the broad shoulders of the highway, and facing the middle
of the highway in a diagonal angle. Second, it is undisputed that petitioner's driver took in
more passengers than the allowed seating capacity of the jeepney. The fact that Sunga was
seated in an "extension seat" placed her in a peril greater than that to which the other
passengers were exposed. Therefore, not only was petitioner unable to overcome the
presumption of negligence imposed on him for the injury sustained by Sunga, but also, the
evidence shows he was actually negligent in transporting passengers. We find it hard to give
serious thought to petitioner's contention that Sunga's taking an "extension seat" amounted
to an implied assumption of risk. It is akin to arguing that the injuries to the many victims of
the tragedies in our seas should not be compensated merely because those passengers
assumed a greater risk of drowning by boarding an overloaded ferry. This is also true of
petitioner's contention that the jeepney being bumped while it was improperly parked
constitutes caso fortuito. A caso fortuito is an event which could not be foreseen, or which,
though foreseen, was inevitable. This requires that the following requirements be present:
(a) the cause of the breach is independent of the debtor's will; (b) the event is unforeseeable
or unavoidable; (c) the event is such as to render it impossible for the debtor to fulfill his
obligation in a normal manner, and (d) the debtor did not take part in causing the injury to
the creditor. Petitioner should have foreseen the danger of parking his jeepney with its body
protruding two meters into the highway.
(3) As a general rule, moral damages are not recoverable in actions for damages predicated
on a breach of contract for it is not one of the items enumerated under Art. 2219 of the Civil

Code. As an exception, such damages are recoverable: (1) in cases in which the mishap
results in the death of a passenger, as provided in Art. 1764, in relation to Art. 2206(3) of the
Civil Code; and (2) in the cases in which the carrier is guilty of fraud or bad faith, as provided
in Art. 2220. In this case, there is no legal basis for awarding moral damages since there was
no factual finding by the appellate court that petitioner acted in bad faith in the performance
of the contract of carriage.
Tiu vs. Arriesgado
G.R. No. 138060, September 1, 2004
Facts: At about 10:00 p.m. of March 15, 1987, the cargo truck marked "Condor Hollow
Blocks and General Merchandise" bearing plate number GBP-675 was loaded with firewood
in Bogo, Cebu and left for Cebu City. Upon reaching Sitio Aggies, Poblacion, Compostela,
Cebu, just as the truck passed over a bridge, one of its rear tires exploded. The driver,
Sergio Pedrano, then parked along the right side of the national highway and removed the
damaged tire to have it vulcanized at a nearby shop, about 700 meters away. Pedrano left
his helper, Jose Mitante, Jr. to keep watch over the stalled vehicle, and instructed the latter
to place a spare tire six fathoms away behind the stalled truck to serve as a warning for
oncoming vehicles. The trucks tail lights were also left on. It was about 12:00 a.m., March
16, 1987.
At about 4:45 a.m., D Rough Riders passenger bus with plate number PBP-724 driven by
Virgilio Te Laspias was cruising along the national highway of Sitio Aggies, Poblacion,
Compostela, Cebu. The passenger bus was also bound for Cebu City, and had come from
Maya, Daanbantayan, Cebu. Among its passengers were the Spouses Pedro A. Arriesgado
and Felisa Pepito Arriesgado, who were seated at the right side of the bus, about three (3) or
four (4) places from the front seat.
As the bus was approaching the bridge, Laspias saw the stalled truck, which was then
about 25 meters away. He applied the breaks and tried to swerve to the left to avoid hitting
the truck. But it was too late; the bus rammed into the trucks left rear. The impact damaged
the right side of the bus and left several passengers injured. Pedro Arriesgado lost
consciousness and suffered a fracture in his right colles. His wife, Felisa, was brought to the
Danao City Hospital. She was later transferred to the Southern Island Medical Center where
she died shortly thereafter.
Respondent Pedro A. Arriesgado then filed a complaint for breach of contract of carriage,
damages and attorneys fees before the Regional Trial Court of Cebu City, Branch 20, against
the petitioners, D Rough Riders bus operator William Tiu and his driver, Virgilio Te Laspias
on May 27, 1987. The respondent alleged that the passenger bus in question was cruising at
a fast and high speed along the national road, and that petitioner Laspias did not take
precautionary measures to avoid the accident.
The petitioners, for their part, filed a Third-Party Complaint against the following: respondent
Philippine Phoenix Surety and Insurance, Inc. (PPSII), petitioner Tius insurer; respondent
Benjamin Condor, the registered owner of the cargo truck; and respondent Sergio Pedrano,
the driver of the truck. They alleged that petitioner Laspias was negotiating the uphill climb
along the national highway of Sitio Aggies, Poblacion, Compostela, in a moderate and normal
speed. It was further alleged that the truck was parked in a slanted manner, its rear portion
almost in the middle of the highway, and that no early warning device was displayed.
Petitioner Laspias promptly applied the brakes and swerved to the left to avoid hitting the
truck head-on, but despite his efforts to avoid damage to property and physical injuries on
the passengers, the right side portion of the bus hit the cargo trucks left rear.

HELD: The rules which common carriers should observe as to the safety of their passengers
are set forth in the Civil Code, Articles 1733, 1755and 1756. It is undisputed that the
respondent and his wife were not safely transported to the destination agreed upon. In
actions for breach of contract, only the existence of such contract, and the fact that the
obligor, in this case the common carrier, failed to transport his passenger safely to his
destination are the matters that need to be proved. This is because under the said contract
of carriage, the petitioners assumed the express obligation to transport the respondent and
his wife to their destination safely and to observe extraordinary diligence with due regard for
all circumstances. Any injury suffered by the passengers in the course thereof is immediately
attributable to the negligence of the carrier. Upon the happening of the accident, the
presumption of negligence at once arises, and it becomes the duty of a common carrier to
prove that he observed extraordinary diligence in the care of his passengers. It must be
stressed that in requiring the highest possible degree of diligence from common carriers and
in creating a presumption of negligence against them, the law compels them to curb the
recklessness of their drivers. While evidence may be submitted to overcome such
presumption of negligence, it must be shown that the carrier observed the required
extraordinary diligence, which means that the carrier must show the utmost diligence of
very cautious persons as far as human care and foresight can provide, or that the accident
was caused by fortuitous event. As correctly found by the trial court, petitioner Tiu failed to
conclusively rebut such presumption. The negligence of petitioner Laspias as driver of the
passenger bus is, thus, binding against petitioner Tiu, as the owner of the passenger bus
engaged as a common carrier.
PHILIPPINE CHARTER INSURANCE CORPORATION vs. UNKNOWN OWNER OF THE VESSEL M/V
NATIONAL HONOR, NATIONAL SHIPPING CORPORATION OF THE PHILIPPINES and
INTERNATIONAL
CONTAINER
SERVICES,
INC.
[G.R.
No.
161833.
July
8,
2005]
FACTS:
Petitioner Philippine Charter Insurance Corporation (PCIC) is the insurer of a shipment on
board the vessel M/V National Honor, represented in the Philippines by its agent, National
Shipping
Corporation
of
the
Philippines
(NSCP).
The M/V National Honor arrived at the Manila International Container Terminal (MICT). The
International Container Terminal Services, Incorporated (ICTSI) was furnished with a copy of
the crate cargo list and bill of lading, and it knew the contents of the crate. The following
day, the vessel started discharging its cargoes using its winch crane. The crane was
operated by Olegario Balsa, a winchman from the ICTSI, exclusive arrastre operator of MICT.
Denasto Dauz, Jr., the checker-inspector of the NSCP, along with the crew and the surveyor
of the ICTSI, conducted an inspection of the cargo. They inspected the hatches, checked the
cargo and found it in apparent good condition. Claudio Cansino, the stevedore of the ICTSI,
placed two sling cables on each end of Crate No. 1. No sling cable was fastened on the midportion of the crate. In Dauzs experience, this was a normal procedure. As the crate was
being hoisted from the vessels hatch, the mid-portion of the wooden flooring suddenly
snapped in the air, about five feet high from the vessels twin deck, sending all its contents
crashing
down
hard,
resulting
in
extensive
damage
to
the
shipment.
PCIC paid the damage, and as subrogee, filed a case against M/V National Honor, NSCP and
ICTSI.
Both
RTC
and
CA
dismissed
the
complaint.
ISSUE:
Whether or not the presumption of negligence is applicable in the instant case.
HELD:
No.

We agree with the contention of the petitioner that common carriers, from the nature of their
business and for reasons of public policy, are mandated to observe extraordinary diligence
in the vigilance over the goods and for the safety of the passengers transported by them,
according to all the circumstances of each case. he Court has defined extraordinary
diligence
in
the
vigilance
over
the
goods
as
follows:
The extraordinary diligence in the vigilance over the goods tendered for shipment requires
the common carrier to know and to follow the required precaution for avoiding damage to, or
destruction of the goods entrusted to it for sale, carriage and delivery. It requires common
carriers to render service with the greatest skill and foresight and to use all reasonable
means to ascertain the nature and characteristic of goods tendered for shipment, and to
exercise due care in the handling and stowage, including such methods as their nature
requires.
The common carriers duty to observe the requisite diligence in the shipment of goods lasts
from the time the articles are surrendered to or unconditionally placed in the possession of,
and received by, the carrier for transportation until delivered to, or until the lapse of a
reasonable time for their acceptance, by the person entitled to receive them.] >When the
goods shipped are either lost or arrive in damaged condition, a presumption arises against
the carrier of its failure to observe that diligence, and there need not be an express finding
of negligence to hold it liable. To overcome the presumption of negligence in the case of
loss, destruction or deterioration of the goods, the common carrier must prove that it
exercised
extraordinary
diligence.
However, under Article 1734 of the New Civil Code, the presumption of negligence does not
apply
to
any
of
the
following
causes:
1. Flood, storm, earthquake, lightning or other natural disaster or calamity;
2.
Act
of
the
public
enemy
in
war,
whether
international
or
civil;
3.
Act
or
omission
of
the
shipper
or
owner
of
the
goods;
4. The character of the goods or defects in the packing or in the containers;
5.
Order
or
act
of
competent
public
authority.
It bears stressing that the enumeration in Article 1734 of the New Civil Code which exempts
the common carrier for the loss or damage to the cargo is a closed list. To exculpate itself
from liability for the loss/damage to the cargo under any of the causes, the common carrier
is burdened to prove any of the aforecited causes claimed by it by a preponderance of
evidence. If the carrier succeeds, the burden of evidence is shifted to the shipper to prove
that
the
carrier
is
negligent.
Defect is the want or absence of something necessary for completeness or perfection; a
lack or absence of something essential to completeness; a deficiency in something essential
to the proper use for the purpose for which a thing is to be used. On the other hand, inferior
means of poor quality, mediocre, or second rate. A thing may be of inferior quality but not
necessarily defective. In other words, defectiveness is not synonymous with inferiority.
x

In the present case, the trial court declared that based on the record, the loss of the
shipment was caused by the negligence of the petitioner as the shipper:
The same may be said with respect to defendant ICTSI. The breakage and collapse of Crate
No. 1 and the total destruction of its contents were not imputable to any fault or negligence
on the part of said defendant in handling the unloading of the cargoes from the carrying
vessel, but was due solely to the inherent defect and weakness of the materials used in the

fabrication

of

said

crate.

The crate should have three solid and strong wooden batten placed side by side underneath
or on the flooring of the crate to support the weight of its contents. Eastern Shipping
Lines Inc. VS. Intermediate Appellate Court
(150 SCRA 463)
Facts: Sometime in or prior to June 1977, the M/S Asiatica, a vessel operated by petitioner
Eastern Shipping Lines Inc., loaded at Kobe, Japan for transportation to Manila loaded 5,000
pieces of calorized pipes valued at P256,039.00 which was consigned to Philippine Blooming
Mills Co, Inc. and 7 cases of spare parts valued at P92, 361.75 consigned to Central Textile
Mills. Both sets of goods were inured against marine risk for their stated value with
respondent Development Insurance and Surety Corp.
In the same vessel, 2 containers of garment fabrics were also loaded which was consigned
to Mariveles Apparel Corp worth $46,583. The said cargoes were consigned to Nisshin Fire
and Marine Insurance. Another cargo loaded to the vessel was the surveying instruments
consigned to Aman Enterprises and General Merchandise and insured against respondent
Dowa Fire & Marine Insurance for $1,385.00.
On the way to Manila, M/S Asiatica caught fire and sank. This resulted to the loss of the ship
and its cargoes. The respective Insurers paid the corresponding marine insurance values and
were thus subrogated to the rights of the insured.
The insurers filed a suit against the petitioner carrier for recovery of the amounts paid to the
insured. However, petitioner contends that it is not liable on the ground that the loss was
due to an extraordinary fortuitous event.
Issue: Whether the Civil Code provisions on Common Carriers or the Carriage of the Goods
by Sea Act will govern the case at bar?
Held: The law of the country to which the goods are to be transported governs the liability
of common carrier in case of their loss, destruction or deterioration. The liability of petitioner
is governed primarily by the Civil Code however, in all matters not regulated by the Civil
Code, the Code of Commerce and Special Laws will govern with respect to the rights and
obligations of the carrier. Therefore COGSA is suppletory to the provisions of the Civil Code.
THE PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC., petitioner, vs. MGG
MARINE SERVICES, INC. and DOROTEO GAERLAN, respondents.
DECISION
KAPUNAN, J.:
This petition for review seeks the reversal of the Decision, dated September 23, 1998, of
the Court of Appeals in CA-G.R. CV No. 43915, [1] which absolved private respondents MCG
Marine Services, Inc. and Doroteo Gaerlan of any liability regarding the loss of the cargo
belonging to San Miguel Corporation due to the sinking of the M/V Peatheray Patrick-G
owned by Gaerlan with MCG Marine Services, Inc. as agent.
On March 1, 1987, San Miguel Corporation insured several beer bottle cases with an
aggregate value of P5,836,222.80 with petitioner Philippine American General Insurance

Company.[2] The cargo were loaded on board the M/V Peatheray Patrick-G to be transported
from Mandaue City to Bislig, Surigao del Sur.
After having been cleared by the Coast Guard Station in Cebu the previous day, the
vessel left the port of Mandaue City for Bislig, Surigao del Sur on March 2, 1987. The
weather was calm when the vessel started its voyage.
The following day, March 3, 1987, M/V Peatheray Patrick-G listed and subsequently sunk
off Cawit Point, Cortes, Surigao del Sur. As a consequence thereof, the cargo belonging to
San Miguel Corporation was lost.
Subsequently, San Miguel Corporation claimed the amount of its loss from petitioner.
Upon petitioners request, on March 18, 1987, Mr. Eduardo Sayo, a surveyor from the
Manila Adjusters and Surveyors Co., went to Taganauan Island, Cortes, Surigao del Sur where
the vessel was cast ashore, to investigate the circumstances surrounding the loss of the
cargo. In his report, Mr. Sayo stated that the vessel was structurally sound and that he did
not see any damage or crack thereon. He concluded that the proximate cause of the listing
and subsequent sinking of the vessel was the shifting of ballast water from starboard to
portside. The said shifting of ballast water allegedly affected the stability of the M/V
Peatheray Patrick-G.
Thereafter, petitioner paid San Miguel Corporation the full amount of P5,836,222.80
pursuant to the terms of their insurance contract.
On November 3, 1987, petitioner as subrogee of San Miguel Corporation filed with the
Regional Trial Court (RTC) of Makati City a case for collection against private respondents to
recover the amount it paid to San Miguel Corporation for the loss of the latters cargo.
Meanwhile, the Board of Marine Inquiry conducted its own investigation of the sinking of
the M/V Peatheray Patrick-G to determine whether or not the captain and crew of the vessel
should be held responsible for the incident. [3] On May 11, 1989, the Board rendered its
decision exonerating the captain and crew of the ill-fated vessel for any administrative
liability. It found that the cause of the sinking of the vessel was the existence of strong
winds and enormous waves in Surigao del Sur, a fortuitous event that could not have been
forseen at the time the M/V Peatheray Patrick-G left the port of Mandaue City. It was further
held by the Board that said fortuitous event was the proximate and only cause of the
vessels sinking.
On April 15, 1993, the RTC of Makati City, Branch 134, promulgated its Decision finding
private respondents solidarily liable for the loss of San Miguel Corporations cargo and
ordering them to pay petitioner the full amount of the lost cargo plus legal interest,
attorneys fees and costs of suit.[4]
Private respondents appealed the trial courts decision to the Court of Appeals. On
September 23, 1998, the appellate court issued the assailed Decision, which reversed the
ruling of the RTC. It held that private respondents could not be held liable for the loss
of San Miguel Corporations cargo because said loss occurred as a consequence of a

fortuitous event, and that such fortuitous event was the proximate and only cause of the
loss.[5]
Petitioner thus filed the present petition, contending that:
(A)
IN REVERSING AND SETTING ASIDE THE DECISION OF RTC BR. 134 OF MAKATI CITY
ON THE BASIS OF THE FINDINGS OF THE BOARD OF MARINE INQUIRY, APPELLATE
COURT DECIDED THE CASE AT BAR NOT IN ACCORD WITH LAW OR WITH THE
APPLICABLE DECISIONS OF THE HONORABLE COURT;
(B)
IN REVERSING THE TRIAL COURTS DECISION, THE APPELLATE COURT GRAVELY
ERRED IN CONTRADICTING AND IN DISTURBING THE FINDINGS OF THE FORMER;
(C)
THE APPELLATE COURT GRAVELY ERRED IN REVERSING THE DECISION OF THE TRIAL
COURT AND IN DISMISSING THE COMPLAINT.[6]
Common carriers, from the nature of their business and for reasons of public policy, are
mandated to observe extraordinary diligence in the vigilance over the goods and for the
safety of the passengers transported by them. [7] Owing to this high degree of diligence
required of them, common carriers, as a general rule, are presumed to have been at fault or
negligent if the goods transported by them are lost, destroyed or if the same deteriorated. [8]
However, this presumption of fault or negligence does not arise in the cases
enumerated under Article 1734 of the Civil Code:
Common carriers are responsible for the loss, destruction, or deterioration of the goods,
unless the same is due to any of 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;

(5)

Order or act of competent public authority.

In order that a common carrier may be absolved from liability where the loss,
destruction or deterioration of the goods is due to a natural disaster or calamity, it must
further be shown that the such natural disaster or calamity was the proximate

and only cause of the loss;[9] there must be an entire exclusion of human agency from the
cause of the injury of the loss.[10]
Moreover, even in cases where a natural disaster is the proximate and only cause of the
loss, a common carrier is still required to exercise due diligence to prevent or minimize loss
before, during and after the occurrence of the natural disaster, for it to be exempt from
liability under the law for the loss of the goods. [11] If a common carrier fails to exercise due
diligence--or that ordinary care which the circumstances of the particular case demand [12] -to preserve and protect the goods carried by it on the occasion of a natural disaster, it will
be deemed to have been negligent, and the loss will not be considered as having been due
to a natural disaster under Article 1734 (1).
In the case at bar, the issues may be narrowed down to whether the loss of the cargo
was due to the occurrence of a natural disaster, and if so, whether such natural disaster was
the sole and proximate cause of the loss or whether private respondents were partly to
blame for failing to exercise due diligence to prevent the loss of the cargo.
The parties do not dispute that on the day the M/V Peatheray Patrick-G sunk, said vessel
encountered strong winds and huge waves ranging from six to ten feet in height. The vessel
listed at the port side and eventually sunk at Cawit Point, Cortes, Surigao del Sur.
The Court of Appeals, citing the decision of the Board of Marine Inquiry in the
administrative case against the vessels crew (BMI--646-87), found that the loss of the cargo
was due solely to the existence of a fortuitous event, particularly the presence of strong
winds and huge waves at Cortes, Surigao del Sur on March 3, 1987:
xxx
III.

WHAT WAS THE PROXIMATE CAUSE OF SINKING?

Evidence shows that when "LCT Peatheray Patrick-G" left the port of Mandawe, Cebu for
Bislig, Surigao del Sur on March 2, 1987 the Captain had observed the fair atmospheric
condition of the area of the pier and confirmed this good weather condition with the Coast
Guard Detachment of Mandawe City. However, on March 3, 1987 at about 10:00 o'clock in
the evening, when the vessel had already passed Surigao Strait. the vessel started to
experience waves as high as 6 to 7 feet and that the Northeasterly wind was blowing at
about five (5) knot velocity. At about 11:00 o'clock P.M. when the vessel was already about
4.5 miles off Cawit Point, Cortes, Surigao del Sur, the vessel was discovered to be listing 15
degrees to port side and that the strength of the wind had increased to 15 knots and the
waves were about ten (10) feet high [Ramilo TSN 10-27-87 p. 32). Immediately thereafter,
emergency measures were taken by the crew. The officers had suspected that a leak or
crack might had developed at the bottom hull particularly below one or two of the empty
wing tanks at port side serving as buoyancy tanks resulting in ingress of sea water in the
tanks was confirmed when the Captain ordered to use the cargo pump. The suction valves
to the said tanks of port side were opened in order to suck or draw out any amount of water
that entered into the tanks. The suction pressure of the pump had drawn out sea water in
large quantity indicating therefore, that a leak or crack had developed in the hull as the
vessel was continuously batted and pounded by the huge waves. Bailing out of the water

through the pump was done continuously in an effort of the crew to prevent the vessel from
sinking. but then efforts were in vain. The vessel still continued to list even more despite
the continuous pumping and discharging of sea water from the wing tanks indicating that
the amount of the ingress of sea water was greater in volume that that was being
discharged by the pump. Considering therefore, the location of the suspected source of the
ingress of sea water which was a crack or hole at the bottom hull below the buoyancy tank's
port side which was not acessible (sic) for the crew to check or control the flow of sea water
into the said tank. The accumulation of sea water aggravated by the continuous pounding,
rolling and pitching of the vessel against huge waves and strong northeasterly wind, the
Captain then had no other recourse except to order abandonship to save their lives. [13]
The presence of a crack in the ill-fated vessel through which water seeped in was
confirmed by the Greutzman Divers who were commissioned by the private respondents to
conduct an underwater survey and inspection of the vessel to determine the cause and
circumstances of its sinking. In its report, Greutzman Divers stated that along the port side
platings, a small hole and two separate cracks were found at about midship. [14]
The findings of the Board of Marine Inquiry indicate that the attendance of strong winds
and huge waves while the M/V Peatheray Patrick-G was sailing through Cortes, Surigao del
Norte on March 3, 1987 was indeed fortuitous. A fortuitous event has been defined as one
which could not be foreseen, or which though foreseen, is inevitable. [15] An event is
considered fortuitous if the following elements concur:
xxx (a) the cause of the unforeseen and unexpected occurrence, or the failure of the debtor
to comply with his obligations, must be independent of human will; (b) it must be impossible
to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must be
impossible to avoid; (c) the occurrence must be such as to render it impossible for the
debtor to fulfill his obligation in a normal manner; and (d) the obligor must be free from any
participation in the aggravation of the injury resulting to the creditor. xxx [16]
In the case at bar, it was adequately shown that before the M/V Peatheray Patrick-G left
the port of Mandaue City, the Captain confirmed with the Coast Guard that the weather
condition would permit the safe travel of the vessel to Bislig, Surigao del Sur. Thus, he could
not be expected to have foreseen the unfavorable weather condition that awaited the vessel
in Cortes, Surigao del Sur. It was the presence of the strong winds and enormous waves
which caused the vessel to list, keel over, and consequently lose the cargo contained
therein. The appellate court likewise found that there was no negligence on the part of the
crew of the M/V Peatheray Patrick-G, citing the following portion of the decision of the Board
of Marine Inquiry:
I. WAS LCT PEATHERAY PATRICK-G SEAWORTHY WHEN SHE LEFT THE PORT OF MANDAWE,
CEBU AND AT THE TIME OF SINKING?
Evidence clearly shows that the vessel was propelled with three (3) diesel engines of 250
BHP each or a total of 750 BHP. It had three (3) propellers which were operating
satisfactorily from the time the vessel left the port of Mandawe up to the time when the hull
on the double bottom tank was heavily floaded (sic) by uncontrollable entry of sea water
resulting in the stoppage of engines. The vessel was also equipped with operating generator

pumps for emergency cases. This equipment was also operating satisfactorily up to the
time when the engine room was heavily floaded (sic) with sea water. Further, the vessel had
undergone emergency drydocking and repair before the accident occurred (sic) on
November 9, 1986 at Trigon Shipyard, San Fernando, Cebu as shown by the billing for the
Drydocking and Repair and certificate of Inspection No. 2588-86 issued by the Philippine
coast Guard on December 5, 1986 which expired on November 8, 1987.
LCT Peatheray Patrick-G was skippered by Mr. Manuel P. Ramilo, competent and experienced
licensed Major Patron who had been in command of the vessel for more than three (3) years
from July 1984 up to the time of sinking March 3, 1987. His Chief Mate Mr. Mariano Alalin
also a licensed Major Patron had been the Chief Mate of " LCT Peatheray Patrick-G" for one
year and three months at the time of the accident. Further Chief Mate Alalin had
commanded a tanker vessel named M/T Mercedes of MGM Corporation for almost two (2)
years from 1983-1985 (Alalin TSN-4-13-88 pp. 32-33).
That the vessel was granted SOLAS clearance by the Philippine Coast Guard on March 1,
1987 to depart from Mandawe City for Bislig, Surigao del Sur as evidenced by a certification
issued to D.C. Gaerlan Oil Products by Coast Guard Station Cebu dated December 23, 1987.
Based on the foregoing circumstances, "LCT Peatheray Patrick-G" should be considered
seaworthy vessel at the time she undertook that fateful voyage on March 2, 1987.
To be seaworthy, a vessel must not only be staunch and fit in the hull for the voyage to be
undertaken but also must be properly equipped and for that purpose there is a duty upon
the owner to provide a competent master and a crew adequate in number and competent
for their duty and equals in disposition and seamanship to the ordinary in that calling.
(Ralph 299 F-52, 1924 AMC 942). American President 2td v. Ren Fen Fed 629. AMC 1723 LCA
9 CAL 1924).[17]
Overloading was also eliminated as a possible cause of the sinking of the vessel, as the
evidence showed that its freeboard clearance was substantially greater than the authorized
freeboard clearance.[18]
Although the Board of Marine Inquiry ruled only on the administrative liability of the
captain and crew of the M/V Peatheray Patrick-G, it had to conduct a thorough investigation
of the circumstances surrounding the sinking of the vessel and the loss of its cargo in order
to determine their responsibility, if any. The results of its investigation as embodied in its
decision on the administrative case clearly indicate that the loss of the cargo was due solely
to the attendance of strong winds and huge waves which caused the vessel accumulate
water, tilt to the port side and to eventually keel over. There was thus no error on the part
of the Court of Appeals in relying on the factual findings of the Board of Marine Inquiry, for
such factual findings, being supported by substantial evidence are persuasive, considering
that said administrative body is an expert in matters concerning marine casualties. [19]
Since the presence of strong winds and enormous waves at Cortes, Surigao del Sur on
March 3, 1987 was shown to be the proximate and only cause of the sinking of the M/V
Peatheray Patrick-G and the loss of the cargo belonging to San Miguel Corporation, private
respondents cannot be held liable for the said loss.

WHEREFORE, the assailed Decision of the Court of Appeals is hereby AFFIRMED and
the petition is hereby DENIED.
SO ORDERED.
De Guzman v. CA
Facts:
Respondent Ernesto Cendana was a junk dealer. He buys scrap materials and brings those
that he gathered to Manila for resale using 2 six-wheeler trucks. On the return trip to
Pangasinan, respondent would load his vehicle with cargo which various merchants wanted
delivered, charging fee lower than the commercial rates. Sometime in November 1970,
petitioner Pedro de Guzman contracted with respondent for the delivery of 750 cartons of
Liberty Milk. On December 1, 1970, respondent loaded the cargo. Only 150 boxes were
delivered to petitioner because the truck carrying the boxes was hijacked along the way.
Petitioner commenced an action claiming the value of the lost merchandise. Petitioner
argues that respondent, being a common carrier, is bound to exercise extraordinary
diligence, which it failed to do. Private respondent denied that he was a common carrier, and
so he could not be held liable for force majeure. The trial court ruled against the respondent,
but such was reversed by the Court of Appeals.
Issues:
(1) Whether or not private respondent is a common carrier
(2) Whether private respondent is liable for the loss of the goods
Held:
(1) Article 1732 makes no distinction between one whose principal business activity is the
carrying of persons or goods or both, and one who does such carrying only as an ancillary
activity. Article 1732 also carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and one offering
such service on an occasional, episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the "general public," i.e., the general
community or population, and one who offers services or solicits business only from a
narrow segment of the general population. It appears to the Court that private respondent is
properly characterized as a common carrier even though he merely "back-hauled" goods for
other merchants from Manila to Pangasinan, although such backhauling was done on a
periodic or occasional rather than regular or scheduled manner, and even though private
respondent's principal occupation was not the carriage of goods for others. There is no
dispute that private respondent charged his customers a fee for hauling their goods; that fee
frequently fell below commercial freight rates is not relevant here. A certificate of public
convenience is not a requisite for the incurring of liability under the Civil Code provisions
governing common carriers.
(2) Article 1734 establishes the general rule that common carriers are responsible for the
loss, destruction or deterioration of the goods which they carry, "unless the same is due to
any of the following causes only:
a. Flood, storm, earthquake, lightning, or other natural disaster or calamity;

b. Act of the public enemy in war, whether international or civil;

c. Act or omission of the shipper or owner of the goods;
d. The character of the goods or defects in the packing or in the containers; and
e. Order or act of competent public authority."
The hijacking of the carrier's truck - does not fall within any of the five (5) categories of
exempting causes listed in Article 1734. Private respondent as common carrier is presumed
to have been at fault or to have acted negligently. This presumption, however, may be
overthrown by proof of extraordinary diligence on the part of private respondent. We believe
and so hold that the limits of the duty of extraordinary diligence in the vigilance over the
goods carried are reached where the goods are lost as a result of a robbery which is
attended by "grave or irresistible threat, violence or force." we hold that the occurrence of
the loss must reasonably be regarded as quite beyond the control of the common carrier and
properly regarded as a fortuitous event. It is necessary to recall that even common carriers
are not made absolute insurers against all risks of travel and of transport of goods, and are
not held liable for acts or events which cannot be foreseen or are inevitable, provided that
they shall have complied with the rigorous standard of extraordinary diligence.
Juntilla vs Fontanar
(136 SCRA 624)
Facts: Herein plaintiff was a passenger of the public utility jeepney on course from Danao
City to Cebu City. The jeepney was driven by driven by defendant Berfol Camoro and
registered under the franchise of Clemente Fontanar. When the jeepney reached Mandaue
City, the right rear tire exploded causing the vehicle to turn turtle. In the process, the
plaintiff who was sitting at the front seat was thrown out of the vehicle. Plaintiff suffered a
lacerated wound on his right palm aside from the injuries he suffered on his left arm, right
thigh, and on his back.
Plaintiff filed a case for breach of contract with damages before the City Court of Cebu City.
Defendants, in their answer, alleged that the tire blow out was beyond their control, taking
into account that the tire that exploded was newly bought and was only slightly used at the
time it blew up.
Issue: Whether or not the tire blow-out is a fortuitous event?
Held: No. In the case at bar, the cause of the unforeseen and unexpected occurrence was
not independent of the human will. The accident was caused either through the negligence
of the driver or because of mechanical defects in the tire. Common carriers should teach
drivers not to overload their vehicles, not to exceed safe and legal speed limits, and to know
the correct measures to take when a tire blows up thus insuring the safety of passengers at
all tines.
Fortune v CA G.R. No. 115278 May 23, 1995
J. Davide Jr.
Facts:
Producers Banks money was stolen while it was being transported from Pasay to Makati.
The people guarding the money were charged with the theft. The bank filed a claim for the
amount of Php 725,000, and such was refused by the insurance corporation due to the
stipulation:
GENERAL EXCEPTIONS

The company shall not be liable under this policy in report of

(b) any loss caused by any dishonest, fraudulent or criminal act of the insured or any officer,
employee, partner, director, trustee or authorized representative of the Insured whether
acting alone or in conjunction with others. . . .
In the trial court, the bank claimed that the suspects were not any of the above mentioned.
They won the case. The appellate court affirmed on the basis that the bank had no power to
hire or dismiss the guard and could only ask for replacements from the security agency.
Issue: Did the guards fall under the general exceptions clause of the insurance policy and
thus absolved the insurance company from liability?
Held: Yes to both. Petition granted.
Ratio:
The insurance agency contended that the guards automatically became the authorized
representatives of the bank when they cited International Timber Corp. vs. NLRC where a
contractor is a "labor-only" contractor in the sense that there is an employer-employee
relationship between the owner of the project and the employees of the "labor-only"
contractor.
They cited Art. 106. Of the Labor Code which said:
Contractor or subcontractor. There is "labor-only" contracting where the person supplying
workers to an employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers recruited and
placed by such persons are performing activities which are directly related to the principal
business of such employer. In such cases, the person or intermediary shall be considered
merely as an agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.
The bank asserted that the guards were not its employees since it had nothing to do with
their selection and engagement, the payment of their wages, their dismissal, and the control
of their conduct.
They cited a case where an employee-employer relationship was governed by (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employee's conduct.
The case was governed by Article 174 of the Insurance Code where it stated that casualty
insurance awarded an amount to loss cause by accident or mishap.
The term "employee," should be read as a person who qualifies as such as generally and
universally understood, or jurisprudentially established in the light of the four standards in
the determination of the employer-employee relationship, or as statutorily declared even in
a limited sense as in the case of Article 106 of the Labor Code which considers the
employees under a "labor-only" contract as employees of the party employing them and not
of the party who supplied them to the employer.
But even if the contracts were not labor-only, the bank entrusted the suspects with the duty
to safely transfer the money to its head office, thus, they were representatives. According to
the court, a representative is defined as one who represents or stands in the place of
another; one who represents others or another in a special capacity, as an agent, and is
interchangeable with agent.
GACAL vs. PAL
G.R. No. L-55300 March 15, 1990
Facts:
Plaintiffs Franklin G. Gacal and his wife, Corazon M. Gacal along with three others were then
passengers boarding defendants BAC 1-11 at Davao Airport for a flight to Manila, not

knowing that on the same flight were members of the MNLF armed with grenades and
pistols.
Ten minutes after takeoff, the MNLF announced the hijacking of the aircraft and directed its
pilot to fly to Libya. With the pilot explaining to them of the fuel limitations of the plane, the
hijackers directed the pilot to fly to Sabah. So they landed in Zamboanga Airport to refuel.
At the Zamboanga Airport, there ensued hostilities between the military and the hijackers.
As a result of such faceoff, the wives of Gacal and Anislag suffered injuries. Several
Now, plaintiffs are claiming for damages averring that PAL exercised negligence, finding
basis on its breach of contract of carriage. There was a failure to frisk the passengers
adequately in order to discover hidden weapons in the bodies of the hijackers. Despite the
prevalence of skyjacking, PAL did not use a metal detector which is the most effective means
of discovering potential skyjackers among the passengers.
PAL invokes the defense of force majeure or caso fortuito.
Issue:
WON PAL can invoke caso fortuito to exculpate itself from paying damages to herein
plaintiffs? YES
Held:
The existence of force majeure has been established exempting respondent PAL from the
payment of damages to its passengers who suffered death or injuries in their persons and
for loss of their baggages.
The source of a common carriers legal liability is the contract of carriage, and by entering
into said contract, it binds itself to carry the passengers safely as far as human care and
foresight can provide. There is breach of this obligation if it fails to exert extraordinary
diligence according to all the circumstances of the case in exercise of the utmost diligence of
a very cautious person.
The failure to transport petitioners safely from Davao to Manila was due to the skyjacking
incident, all members of the MNLF, without any connection with private respondent, hence,
independent of the will of either the PAL or of its passengers.
Under normal circumstances, PAL might have foreseen the skyjacking incident which could
have been avoided had there been a more thorough frisking of passengers and inspection of
baggages as authorized by R.A. No. 6235. But the incident in question occurred during
Martial Law where there was a military take-over of airport security including the frisking of
passengers and the inspection of their luggage preparatory to boarding domestic and
international flights.
The security checks and measures and surveillance precautions in all flights, including the
inspection of baggages and cargo and frisking of passengers at the Davao Airport were
performed and rendered solely by military personnel who under appropriate authority had

assumed exclusive jurisdiction over the same in all airports in the Philippines. Otherwise
stated, these events rendered it impossible for PAL to perform its obligations in a nominal
manner and obviously it cannot be faulted with negligence in the performance of duty taken
over by the Armed Forces of the Philippines to the exclusion of the former.
GANZON VS CA
G.R. No. 93252 August 5 1991
FACTS:
Ganzon, after having been issued three successive 60-day of suspension order by Secretary
of Local Government, filed a petition for prohibition with the CA to bar Secretary Santos from
implementing the said orders. Ganzon was faced with 10 administrative complaints on
various charges on abuse of authority and grave misconduct.
ISSUE:
Whether or not the Secretary of Local Government (as the alter ego of the President) has the
authority to suspend and remove local officials.
RULING:
The Constitution did nothing more, and insofar as existing legislation authorizes the
President (through the Secretary of Local Government) to proceed against local officials
administratively, the Constitution contains no prohibition. The Chief Executive is not banned
from exercising acts of disciplinary authority because she did not exercise control powers,
but because no law allowed her to exercise disciplinary authority.
In those case that this Court denied the President the power (to suspend/remove) it was not
because that the President cannot exercise it on account of his limited power, but because
the law lodged the power elsewhere. But in those cases in which the law gave him the
power, the Court, as in Ganzon v. Kayanan, found little difficulty in sustaining him.
We reiterate that we are not precluding the President, through the Secretary of Interior from
exercising a legal power, yet we are of the opinion that the Secretary of interior is exercising
that power oppressively, and needless to say, with a grave abuse of discretion.
As we observed earlier, imposing 600 days of suspension which is not a remote possibility
Mayor Ganzon is to all intents and purposes, to make him spend the rest of his term in
inactivity. It is also to make, to all intents and purposes, his suspension permanent.