1 Erlanger & Galinger vs. Swedish East Asiatic Co., Ltd.

ISSUES
No. 10051. March 9, 1916.  Was the ship abandoned? – YES.
 Was the salvage conducted with skill, diligence, and efficiency? – YES.
FACTS  Was the award justified? – YES.
 The steamship Nippon loaded with copra and with some other general merchandise
sailed from Manila on bound for Singapore. It went aground on Scarborough Reef. The  In general, salvage may be defined as a service which one person renders to the owner
chief officer, Weston, and nine members of the crew left the Nippon and succeeded in of a ship or goods, by his own labor, preserving the goods or the ship which the owner
reaching the coast of Luzon at Santa Cruz, Zambales. The chief officer sent a telegram to or those entrusted with the care of them have either abandoned in distress at sea, or
Helm, the Director of the Bureau of Navigation, at Manila, which was as follows: are unable to protect and secure.
o Nippon stranded on Scarborough Reef, wants immediate assistance for saving  Salvage is founded on the equity of remunerating private and individual services
crew—boats gone. performed in saving, in whole or in part, a ship or its cargo from impending peril, or
 On the same day, the Government of the Philippine Islands ordered the coast guard recovering them after actual loss. A claim for salvage rests on the principle that, unless
cutter Mindoro with life-saving appliances to the scene of the wreck of the Nippon. The the property be in fact saved by those who claim the compensation, it cannot be
steamship Manchuria sailed from Manila for Hongkong was requested to pass by allowed, however benevolent their intention and however heroic their conduct.
Scarborough Reef. It arrived some time before the Mindoro and took on board the  Three elements are necessary to a valid salvage claim:
captain and the remainder of the crew. The Manchuria was still near Scarborough Reef (1) A marine peril.
when the Mindoro arrived. The captain of the Manchuria informed the captain of the (2) Service voluntarily rendered when not required as an existing duty or
Mindoro that the captain and crew of the Nippon were on board the Manchuria and from a special contract.
were proceeding to Hongkong. The captain of the Mindoro offered to render assistance (3) Success, in whole or in part, or that the service rendered contributed to
to the captain and crew of the Nippon, which assistance was declined. The Mindoro such success."
proceeded to the Nippon and removed the balance of the baggage of the officers and  The question whether or not a particular ship and her cargo is a fit object of salvage
crew, which was found upon the deck. The Mindoro proceeded to Santa Cruz, Zambales, depends upon her condition at the time the salvage services are performed. In the
where the chief officer, Weston, and the nine members of the crew were taken on present case the Erlanger & Galinger claims that the Nippon was a derelict or quasi-
board and brought to Manila. Dixon, captain of the Manchuria sent the following derelict.
message:  A derelict is defined as "A ship or her cargo which is abandoned and deserted at sea by
o All rescued from the Nippon. Stranded on extreme north end of shoal. Vessel those who were in charge of it, without any hope of recovering it, or without any
stranded May 9. She is full of water fore and aft and is badly ashore. Ship intention of returning to it. If those in charge left with the intention of returning, or of
abandoned. Proceed Hongkong. procuring assistance, the property is not derelict, but if they quitted the property with
 The captain of the Nippon saw the message before it was sent. Erlanger & Galinger the intention of finally leaving it, it is derelict, and a change of their intention and an
applied to charter the Mindoro for the purpose of proceeding to "the stranded and attempt to return will not change its nature.
abandoned steamer Nippon." Erlanger & Galinger took possession of the Nippon and
continued in possession until the last of the cargo was shipped to Manila. The Nippon Excerpt from transcript to show the Captain left with little hope to return
was floated and towed to Olongapo, where temporary repairs were made, and then  Basically, the Captain left the ship taking with him the ship’s articles and register.
brought to Manila. The Manchuria arrived at Hongkong. When the captain and crew left According to him, it was to go on shore and try to get his ship off the ground.
the Nippon and went on board the Manchuria, they took with them the chronometer, However, he also testified that he wouldn’t take those articles with him every time
the ship's register, the ship's articles, the ship's log, and as much of the crew's baggage he left the ship, only when it was stranded. He also said that he had little hope for
as a small boat could carry. The balance of the baggage of the crew was packed and left saving the ship, that is why he left no crew on board.
on the deck of the Nippon and was later removed to the Mindoro, without protest on  Captain Eggert did not make any determined effort to arrange for the salvage of the
the part of the captain of the Nippon. The cargo was brought to the port of Manila. Nippon. After arriving in Hong Kong, Capt. Eggert had over two days in which to arrange
 The ship was valued at P250,000. Erlanger & Galinger’s claim against the ship was for salvage operations and he did nothing, while the plaintiffs, who were strangers and
settled for £15,000 or about P145,800. had no interest, sent out a salvage expedition in twenty-four hours after they discovered
 Erlanger & Galinger brought the present action against the insurance companies and that the ship was wrecked.
underwriters, who represented the cargo salved from the Nippon, to have the amount  The evidence proves that the Nippon was in peril; that the captain left in order to
of salvage. protect his life and the lives of the crew; that the animo revertendi was slight. The
 LC: found that Erlanger & Galinger were "entitled to recover one-half of the net argument of the defendant-appellant to the effect that the ship was in no danger is a bit
proceeds from the property salved and sold, and one-half the value of the property out of place in view of the statement of the captain that she would sink with the first
delivered to the claimants." gale, coupled with the fact that a typhoon was the cause of her stranding.
Doctrine In view of all of the foregoing, it is hereby ordered and decreed that the judgment of the
 When a vessel is found at sea, deserted, and has been abandoned by the master and lower court be modified, and that a judgment be entered against the defendant-
crew without the intention of returning and resuming the possession, she is, in the appellants and in favor of the plaintiff-appellant.
sense of the law, derelict, and the finder who takes the possession with the intention of
saving her, gains a right of possession, which he can maintain against the true owner.
 The owner does not, indeed, renounce his right of property. But the owner does
abandon temporarily his right of possession, which is transferred to the finder, who
becomes bound to preserve the property with good faith, and bring it to a place of
safety for the owner's use; and he acquires a right to be paid for his services a
reasonable and proper compensation, out of the property itself. He is not bound to part
with the possession until this is paid.
 But when the owner, or the master and crew who represent him, leave a vessel
temporarily, without any intention of a final abandonment, but with the intent to return
and resume the possession, she is not considered as a legal derelict, nor is the right of
possession lost by such temporary absence for the purpose of obtaining assistance,
although no individual may be remaining on board for the purpose of retaining the
possession.
 Property is not, in the sense of the law, derelict and the possession left vacant for the
finder, until the spes recuperandi (hope of recovery) is gone, and the animus
revertendi (intent to return) is finally given up. But when a man finds property thus
temporarily left to the mercy of the elements, whether from necessity or any other
cause, though not finally abandoned and legally derelict, and he takes possession of it
with the bona fide intention of saving it for the owner, he will not be treated as a
trespasser. On the contrary, if by his exertions he contributes materially to the
preservation of the property, he will entitle himself to a remuneration according to the
merits of his service as a salvor.

Salvage was done with skill

 Some of the witnesses contended that other methods 'should have been used in saving
the copra. They testified that "grabs" or "clam shells" would have brought better results,
but none of these witnesses had had any experience in unloading wet copra. The copra
was in three layers. The top layer was dry, the middle layer was submerged every time
the tide rose, and the lower layer was submerged all of the time. It was manifestly
impossible to keep these layers separate by using "grabs" or "clam shells."

Was the award justified?

 Compensation as salvage is not viewed by the admiralty courts merely as pay on the
principle of quantum meruit but as a reward given for perilous services, voluntarily
rendered, and as an inducement to mariners to embark in such dangerous enterprises
to save life and property.
 The expenses incurred by the plaintiffs must be borne by them. It is true that the award
should be liberal enough to cover the expenses and give an extra amount as a reward
for the services rendered but the expenses are used in no other way as a basis f or the
final award. A part of the risk that the plaintiffs incurred was that the goods salved
would not pay them for the amount expended in salving them. The plaintiffs knew this
risk and they should not have spent more money than their reasonable share of the
proceeds would amount to under any circumstances.
2 HONORIO M. BARRIOS vs. CARLOS A. GO THONG & COMPANY  Second, the ship was not a derelict/quasi-derelict. All that the vessel's crew members
could not do was to move the vessel on its own power. That did not make the vessel a
1. Barrios was the captain and/or master of the MV Henry I of the William Lines quasi-derelict, considering that even before Barrios extended the help to the distressed
Incorporated ship, a sister vessel was known to be on its way to help it.
2. Barrios received an S.O.S. or distress signal by blinkers from the MV Don Alfredo (owned  However, in this case, there was TOWAGE. A quasi-contract was created when the
and/or operated by Carlos A. Go Thong & Company). shipowner of the DON ALFREDO consented to the towage of the ship by the ship
3. Acting on such call, Barrios altered the course of his vessel, steered and headed towards manned by Barrios. In the particular instance of towage however, only the shipowner
the beckoning MV Don Alfredo, which he found to be in trouble, due to engine failure can collect. Barrios lost.
and the loss of her propeller.
4. MV Henry I, under the command of Barrios, succeeded in getting near the MV Don NOTE:
Alfredo.  The pertinent provision of the Salvage Law (Act No. 2616), provides:
5. With the consent and knowledge of the captain and/or master of the MV Don Alfredo, o “SECTION 1. When in case of shipwreck, the vessel or its cargo shall be
Barrios caused the latter vessel to be tied to MV Henry I. beyond the control of the crew, or shall have been abandoned by them, and
6. 5AM the next day: A sister ship of the MV Don Alfredo reached the two vessels. picked up and conveyed to a safe place by other persons, the latter shall be
Thereupon, Barrios caused the tow lines to be released, thereby also releasing the MV entitled to a reward for the salvage.
Don Alfredo. o “Those who, not being included in the above paragraph, assist in saving a
7. Barrios is now claiming a reward for salvage. vessel or its cargo from shipwreck, shall be entitled to a like reward.”
8. Go Thong claims that what happened was a mere towage from which Barrios cannot  According to this provision, those who assist in saving a vessel or its cargo from
claim any compensation or remuneration independently of the shipping company that shipwreck, shall be entitled to a reward (salvage).
owned the vessel commanded by him. (AA: Why? If it’s towage, only the owner can  “Salvage”: The compensation allowed to persons by whose assistance a ship or her
claim compensation) cargo has been saved, in whole or in part, from impending peril on the sea, or in
9. TC: dismissed the case, stating: recovering such property from actual loss, as in case of shipwreck, derelict, or recapture
o “Plaintiff bases his claim upon the provisions of the Salvage Law: A ship which  Erlanger & Galinger case: Three elements are necessary to a valid salvage claim, namely,
is lost or abandoned at sea is considered a derelict and, therefore, proper (1) a marine peril, (2) service voluntarily rendered when not required as an existing duty
subject of salvage. A ship in a desperate condition… is a quasi-derelict and or from a special contract, and (3) success in whole or in part, or that the service
may, likewise, be the proper subject of salvage/ rendered contributed to such success.
o MV Don Alfredo was not a lost ship, nor was it abandoned.  The distinction between salvage and towage is of importance to the crew of the
 The engine failed and the ship already lost power. Although it was salvaging ship, for the following reasons:
helpless, in the sense that it could not move, it did not drift too far o If the contract is in fact towage, then the crew does not have any interest or
from the place where it was, at the time it had an engine failure. rights in the remuneration pursuant to the contract.
There was no danger of the vessel capsizing, in view of the fairness o But if the owners of the respective vessels are of a salvage nature, the crew of
of the sea, and the condition of the weather. the salvaging ship is entitled to salvage, and can look to the salvaged vessel for
 Captain Loresto of the MV Don Alfredo, did not authorize the radio its share.
operator of the aforesaid ship to send an S.O.S. or distress signal, for
the ship was never in distress, nor was it exposed to a great
imminent peril of the sea.

ISSUE: Whether the service rendered by Barrios constituted “salvage” or “towage.” IT WAS
TOWAGE. BARRIOS LOST.

 Barrios was not entitled to salvage. This is because there was no marine peril. Though
the ship was at a helpless condition due to engine failure, it did not drift too far from
the place where it was. Moreover, the weather was fair, clear, and good. The waves
were small and too slight, so much so, that there were only ripples on the sea, which
was quite smooth. During the towing of the vessel on the same night, there was
moonlight. Although said vessel was drifting towards the open sea, there was no danger
of it floundering or being stranded
3 Alhambra Cigar v. La Granja, 40 OG 11th Supp 252 3. HOWEVER, no one is liable. Loss was due to force majeure
a. First, the rope used to connect the vessels was actually only 2 years old and was
1. In the morning of October 4, 1934, the barangay "Nuestra Senora de la Nieva" loaded barely used at that.
with 350 bales of tobacco and 25,000 pieces of split rattan was anchored along the i. The reason why it snapped can be reasonably attributed to the strong
Cagayan River. It was feared that there would be flood and a strong current in the river currents of the river.
due to a typhoon that passed south of Aparri eight days before and another on that day. b. Second, Nieva was not overloaded as in fact it could still carry 4.6 more tons of
2. The owner of the barangay and its pilot hired La Granja's launch, "Triton", to tow the cargoes.
Nieva downstream to the town of Aparri. c. Third, a bigger launch could not have been used to salvage Nieva because it was at
a. The rope that connected both broke off and the Nieva drifted away from the the time traversing shallow waters
launch which at once changed its course to rescue the Nieva. d. Finally, the crew of both vessels were shown to have exercised due diligence.
b. The launch overtook the barangay, as it began to be swept away by the strong i. In fact, the captain of Nieva stayed with it even when it drifted to the open
current and a rope was thrown to the crew of the latter, who immediately fastened sea in an attempt to save the cargo, which left him drifting for three days and
the stern, but again the rope broke. nights without any food and water.
c. The Nieva broke its rudder when it hit a rocky part of the river. ii. the course taken by vessels was the proper course in navigating the Cagayan
d. The current sent the Nieva to the turbulent, open sea where it disappeared River.
together with the cargo (total loss).
3. Alhambra Cigar sued the owners of the barangay and the launch to recover damages –
that there was negligence on the part of the crew of both vessels.
a. While Nieva blamed the disaster to La Granja, the latter denied responsibility for
the damages saying that the same has been caused by force majeure.
4. The lower court ruled against La Granja and declared it negligent

ISSUES:
1. What was the nature of the contract between Nieva and the launch of La Granja?
SALVAGE
2. Is anyone liable for the loss? NONE, THE LOSS WAS SOLELY AND PRIMARILY DUE TO
FORCE MAJEURE.

1. Towing of a vessel may or may not be a salvage service.

a. Mere towage service is confined to vessels that have received no injury or damage,
and mere towage reward is payable only where the vessel receiving the service is in
the same condition she would ordinarily be in without having encountered any
damage or accident.
b. If the vessel towed is by this means aided in escaping from a present or prospective
danger, the service will be one of salvage and towage as merely incidental.
c. If the vessel assisted is not encompassed by any actual or probable danger, and the
employment is simply for the purpose of expediting the voyage, such service is
towage and not salvage.
2. Here, the services rendered by the launch Triton are more in the nature of salvage
rather than towage.
a. A vessel, though not abandoned, may be the subject of salvage if at the time the
services were rendered, there was a probable, threatening danger of the vessel or
its cargo being damaged.
b. at the time the contract was entered into there was an imminent danger to Nieva
and to its cargoes due to the impending flood.
c. The barangay needed assistance in her trip downstream to Aparri.
d. Lim, the barangay's owner, realized the gravity of the situation when he requested
the help of the launch
4. Limpangco Sons vs. Yangco Steamship Co. cascos were at the time the elements began to drive them toward the shoals. That fact
G.R. No. 10283. July 25, 1916 does not furnish a legal excuse.
o He came for the purpose of towing the cascos to Manila; he knew that it was
FACTS: the season when the southwest monsoon or other winds could be expected to
1. Limpangco employed Yangco Steamship to tow from Guagua to Manila 2 cascos loaded blow at any moment; he knew that two heavily loaded cascos with nothing to
with 2,041.80 piculs of sugar propel them but bamboo poles in the hands of their crews and nothing to
2. The cascos left Guagua towed by the launches (Tahimic and Matulin) belonging to the maintain their position in the water except anchors so small as to be of little
Yangco. avail even in a moderate sea, would be at the mercy of wind and wave, if
3. When the launches arrived off the Malabon River, the patron of the launch Matulin, there should be any, the moment they emerged from the mouth of the river.
decided to leave the cascos in the Malabon River. o He must have known, if he had any reasonable conception of his duty, that the
a. The launch Tahimic towed the cascos into the Malabon River and the cascos, propelled simply by bamboo poles, could make no headway against
launch Matulin continued the trip to Manila. wind and sea
b. The reason why this was done, according to the testimony of the patron of  A vessel which undertakes a towage service is liable for reasonable care of the tow,
the Matulin, was that, at that time, the weather was threatening, and that and that reasonable care is measured by the dangers and hazards to which the tow is
there was such a sea on as to make it dangerous for the cascos, heavily loaded or may be exposed, which it is the duty of the master of the tug to know and to guard
as they were, to continue the voyage to Manila. against not only by giving proper instructions for the management of the tow, but by
4. The patron of Matulin talked to the men in charge of the cascos and told them that, at watching her when in a dangerous locality, to see that his directions are obeyed.
daybreak the following day, Matulin would be waiting for them at the mouth of  The duty of the tug to a tow is a continuous one from the time service commences until
Malabon river. it is completed. Its responsibility includes not only the proper and safe navigation of the
a. It was agreed between the patron of the Matulin and the patrones of the tug on the journey, but to furnish safe, sound and reasonable appliances and
cascos that the latter should move out of the river by means of their tikines or instrumentalities for the service to be performed, as well as the giving of proper
bamboo poles and proceed to the place where the launch Matulin was to be instructions as to the management of the tow; and if the locality in which the tow finds
waiting for them. itself at any given time is more than ordinarily dangerous, the tug Is held to a
b. In accordance with the agreement with the patron of the Matulin and under proportionately higher degree of care and skill.
his instructions, the crews poled their cascos out of the river following the  In the case at bar the defendant failed to meet any of these requirements; it neglected
channel. When they passed the shallow water they were met with high seas to furnish suitable appliances and instrumentalities; for the tug itself, as is demonstrated
and strong winds. by the facts in this case, was unsuitable for the purpose in hand.
c. The bamboo poles were unavailing, and, finding themselves in danger of being  For, although the immediate or proximate cause of the loss in any given instance may
washed ashore and destroyed, they claim they called to the Matulin, which have been what is termed an act of God, yet, if the tug unnecessarily exposed the two to
was in plain sight, for help. such accident by any culpable act or omission of its own, it is not excused.
d. The patron of the Matulin, they allege, made no effort to assist them and, by
reason of the high seas and strong winds, they were driven ashore or on the
shoals and their cargoes lost.
5. The patron of the Matulin testified that he was unable to render assistance to the cascos
by reason of the shallow water in which they were at the time they were caught by the
winds and waves and washed ashore.

ISSUE: Whether the respondent should be held liable for the loss of the cargo. YES

 We have no doubt, however, from the facts and circumstances related that the crews of
the cascos did call for help when they saw the dangerous position in which they had
been placed by the orders of the captain of the launch.
 It was evident to the captain of the Matulin that the cascos were in distress, in the open
bay with winds and waves driving them ashore; and if he had had anything like a proper
conception of his duty he would have gone to their assistance.
 Nor does the argument avail that he could not do so because his launch was of such
draft that it would have been impossible to navigate the shallow water in which the
5 Vda. De Medina v. Cresencia 6 MYC-AGRO-INDUSTRIA v. VDA. DE CALDO
No. L-8194. Jul. 11, 1956, Reyes, J.B.L
1. About 4:30 PM, a Toyota truck owned by MYC and operated by Arevalo hit the right
FACTS: center side of a jeepney owned by Rodolfo.
1. The passenger jeepney of Cresencia smashed into a Meralco post resulting to the death 2. There were 15 passengers.
of Medina. At that time, the jeepney was driven by Brigido. 3. The jeepney, at the time of the impact, was parked.
2. A criminal case was filed against Brigido, wherein Brigido pleaded guilty. a. As a consequence, it turned turtle and pushed to a cemented fence pinning
3. The heirs filed a separate action for damages against Cresencia and Brigido. Pakingan, Caldo, Camaclang, and Binifacio to death.
4. Cresencia denied liability on the ground that he had sold the jeepney to one Cudiamat b. 3 other passengers died because of injuries.
before the accident, and that the jeepney had been repeatedly sold from one buyer c. Others sustained injuries.
after another. 4. The jeepney and the wall fence were damaged.
5. During trial, Cresencia admitted that the he was still the registered operator of the 5. Reyes, owner of the fence, the victims and their heirs filed a complaint for damages
jeepney in the records of the Motor Vehicles Office and Public Service Commission. against MYC, the driver, and the general manager of MYC (Katigbak).
While Avorque was the owner thereof at the time of the accident. 6. MYC admitted ownership of the truck but alleged that it was leased to Jaguar
6. The Lower Court held that as far as the public is concerned, Cresencia, in the eyes of the Transporation and that the driver and GM were not its employees.
law, continued to be the legal owner of the jeepney. Avorque was absolved from a. It then filed a third party complaint against Jaguar.
liability. 7. Jaguar pleads that its liability is only secondary. Secured by an insurance under Federal
Insurance. It filed a 4th party cimplaint.
ISSUE: Whether Cresencia is liable- YES 8. Federal Insurance: No cause of action against it. MYC is the party in interest.
9. Arevalo (driver) was named a defendant in a criminal case for multiple homicide,
HELD: physical injuries and damage to property thru reckless imprudence to which he pleaded
 The sale of franchise, or any privilege pertaining thereto, without the approval of the guilty.
Public Service Commission, is not binding against the public or the Service Commission; 10. TC and CA: MYC and Arevalo liable. Jaguar was a mere conduit of MYC.
and in contemplation of law, the grantee of record continues to be responsible under 11. MYC: CA erred in holding that Jaguar was a mere dummy of MYC. It should be
the franchise in relation to the Commission and to the public. considered as the true owner of the vehicle.
 Since a franchise is personal in nature any transfer or lease thereof sliould be notified to
the Public Service Commission so that the latter may take proper safeguards to protect ISSUE: Whether MYC is liable. YES.
the interest of the public. In fact, the law requires that, before the approval is granted,
there should be a public hearing, with notice to all interested parties, in order that the  Finally, it is undisputed that the registered owner of the Toyota truck is MYC.
Commission may determine if there are good and reasonable grounds justifying the  The registered owner/operator of a passenger vehicle is jointly and severally liable with
transfer or lease of the property covered by the franchise, or if the sale or lease is the driver for damages incurred by passengers or third persons as a consequence of
detrimental to public interest. injuries (or death) sustained in the operation of said vehicles.
 As the sale of the jeepney here in question was admittedly without the approval of the  Regardless of who the actual owner of a vehicle is, the operator of record continues to
Public Service Commission, appellant herein, Guillermo Cresencia, who is the registered be the operator of the vehicles as regards the public and third persons, and as such is
owner and operator thereof, continued to be liable to the Commission and the public directly and primarily responsible for the consequences incident to its operation, so
for the consequences incident to its operation. that, in contemplation of law, such owner/operator of record is the employer of the
driver, the actual operator and employer being considered merely as his agent.
DOCTRINE: If the franchise, or any privilege pertaining thereto, was sold without the
approval of the Public Service Commission, the grantee of record continues to be responsible DOCTRINE: The registered owner or operator of record is the one liable for damages caused
to the Commission and to the public. by a vehicle regardless of any alleged sale or lease made thereon.
7 Benedicto v IAC
1. Greenhills Wood Industries bound itself to sell and deliver to Blue Star Mahogany, Inc.
100,000 board feet of sawn lumber.
2. Greenhills resident manager in Maddela, Dominador Cruz, contracted Virgilio Licuden,
the driver of a cargo truck, to transport its sawn lumber to the consignee Blue Star in
Valenzuela, Bulacan; this cargo truck was registered in the name of Ma. Luisa Benedicto,
the proprietor of Macoven Trucking, a business enterprise engaged in hauling freight.
3. The Manager of Blue Star called up Greenhills’ president informing him that the sawn
lumber on board the subject cargo truck had not yet arrived in Valenzuela, Bulacan;
because of the delay in deliver,y Blue Star was constrained to look for other suppliers.
4. Greenhill’s filed criminal case against driver Licuden for estafa; and a civil case for
recovery of the value of the lost sawn lumber plus damages against Benedicto
5. Benedicto denied liability as she was a complete stranger to the contract of carriage, the
subject truck having been earlier sold by her to Benjamin Tee; but the truck had
remained registered in her name because Tee had not yet fully paid the amount of the
truck; be that as it may, Tee had been operating the said truck in Central Luzon from
then and Licuden was Tee’s employee and not hers.

ISSUE: WON Benedicto, being the registered owner of the carrier, should be held liable for
the value of the undelivered or lost sawn lumber.- YES

 The registered owner is liable for consequences flowing from the operations of the
carrier, even though the specific vehicle involved may already have been transferred to
another person.
 This doctrine rests upon the principle that in dealing with vehicles registered under the
Public Service Law, the public has the right to assume that the registered owner is the
actual or lawful owner thereof.
 It would be very difficult and often impossible as a practical matter, for members of the
general public to enforce the rights of action that they may have for injuries inflicted by
the vehicles being negligently operated if they should be required to prove who the
actual owner is.
 Greenhills is not required to go beyond the vehicle’s certificate of registration to
ascertain the owner of the carrier.
8 FIRST MALAYAN LEASING AND FINANCE CORPORATION v. CA, Were the registered owner allowed to evade responsibility by proving who the supposed
transferee or owner is, it would be easy for him by collusion with others or otherwise, to
CRISOSTOMO VITUG and ESTATE OF VICENTE TRINIDAD (1992) escape said responsibility and transfer the same to an indefinite person, or to one who
possesses no property with which to respond financially for the damage or injury done.
FACTS:
1. Vitug filed a case against First Malayan Leasing and Finance Corp (Malayan), to recover The registered owner or operator of record is the one liable for damages caused by a vehicle
damages for physical injuries, loss of personal effects, and the wreck of his car as a regardless of any alleged sale or lease made thereon.
result of a three-vehicle collision, involving his car, another car, and an Isuzu cargo truck
registered in the name of Malayan and driven by Sicat. In order for a transfer of ownership of a motor vehicle to be valid against third persons, it
2. While Vitug's car was at a full stop at the intersection of New York St. and EDSA in must be recorded in the Land Transportation Office. For, although valid between the
Cubao, northward-bound, the on-coming Isuzu cargo truck bumped a Ford Granada car parties, the sale cannot affect third persons who rely on the public registration of the
behind him with such force that the Ford car was thrown on top of Vitug's car crushing motor vehicle as conclusive evidence of ownership.
its roof.  In law, Malayan was the owner and operator of the Isuzu cargo truck, hence, fully liable
3. The cargo truck struck Vitug's car in the rear causing the gas tank to explode and setting to third parties injured by its operation due to the fault or negligence of the driver.
the car ablaze.
4. Vitug was fortunately extricated from his car by solicitous bystanders before the vehicle
exploded. However, 2 of his passengers were burned to death. (omg huhu) Vitug's car,
valued at P70k, was a total loss.
5. When he regained consciousness in the hospital, Vitug discovered that he had lost
personal articles valued at P48,950 – necklace w/ a diamond pendant, GP watch,
Christian Dior eyeglasses, gold Cross pen and a pair of Bally shoes.
6. Vitug also suffered injuries producing recurring pains in his neck and back. He received
further medical treatment in the US (USD2,373 for his first trip and US$5,596 for the
second).
7. At the time of the accident, the Isuzu cargo truck was registered in the name of
Malayan. However, Malayan denied any liability, alleging that it was not the owner of
the truck, neither the employer of Sicat, because it sold the truck to Vicente Trinidad 3
yrs before the accident.
8. Malayan filed a third-party complaint against Trinidad.
9. Estate of Trinidad admitted that the truck was operated by the deceased during his
lifetime. Nevertheless, it raised the defense that the estate was no longer existing
because it had long been settled & partitioned extrajudicially.
10. RTC Malayan to pay Vitug P134k. Malayan appealed.
11. CA modified by ordering Estate of Trinidad to indemnify Malayan, for whatever amount
the latter may pay Vitug.
12. SC dismissed the petition for insufficiency in form and substance. MR granted hence,
petition reinstated.

ISSUE: Who is liable?

RULING: The registered owner, Malayan.

Regardless of who the actual owner of a motor vehicle might be, the registered owner is
the operator of the same with respect to the public and third persons, and as such,
DIRECTLY AND PRIMARILY RESPONSIBLE for the consequences of its operation.

In contemplation of law, the owner/operator of record is the employer of the driver, the
actual operator and employer being considered merely as his AGENT.
9 BA Finance Corporation vs. Court of Appeals
G.R. No. 98275.November 13, 1992.

FACTS
 An accident occurred involving BA Finance’s Izusu 10 wheeler truck driven by Villar
resulting in triple homicide with multiple physical injuries with damage to property. The
truck at that time was leased to Rock component Philippines. Respondents filed a case
for damages against BA Finance.
 RTC: BA Finance is liable. Rock Component was ordered to reimburse BA Finance as
expressly stipulated in the contract of lease between Rock and BA.
 CA: affirmed.

ISSUE: Whether BA Finance should be held liable. – YES.

 BA Finance avers that it should not have been ordered to respond for the damage
because it was not the employer of the negligent driver, apart from the fact that the
Isuzu truck was in the physical possession of Rock Component Philippines by virtue of
the lease agreement.
 The registered owner of a certificate of public convenience is liable to the public for the
injuries or damages suffered by passengers or third persons caused by the operation of
said vehicle, even though the same had been transferred to a third person. The principle
upon which this doctrine is based is that in dealing with vehicles registered under the
Public Service Law, the public has the right to assume or presume that the registered
owner is the actual owner thereof, for it would be difficult for the public to enforce the
actions that they may have for injuries caused to them by the vehicles being negligently
operated if the public should be required to prove who the actual owner is.
 The Revised Motor Vehicles Law (Act No. 3992, as amended) provides that no vehicle
may be used or operated upon any public highway unless the same is properly
registered. The main aim of motor vehicle registration is to identify the owner so that if
any accident happens, or that any damage or injury is caused by the vehicle on the
public highways, responsibility therefor can be fixed on a definite individual, the
registered owner.
Should not the registered owner be allowed at the trial to prove who the actual and real
owner is, and in accordance with such proof escape or evade responsibility? NO.
 A victim of recklessness on the public highways is usually without means to
discover or identify the person actually causing the injury or damage. He has no
means other than by a recourse to the registration in the Motor Vehicles Office to
determine who is the owner. The protection that the law aims to extend to him
would become illusory were the registered owner given the opportunity to escape
liability by disproving his ownership.
 In synthesis, the registered owner, is primarily responsible for the damage caused but
he has a right to be indemnified by the real or actual owner of the amount that he may
be required to pay as damage for the injury caused.
WHEREFORE, the petition is hereby DISMISSED and decision under review AFFIRMED.
10 Lita Enterprises Inc. v. IAC o When the fault, is on the part of both contracting parties, neither may recover
what he has given by virtue of the contract, or demand the performance of
1. Sometime in 1966, the spouses Nicasio M. Ocampo and Francisca Garcia, herein private the other's undertaking.
respondents, purchased in installment from the Delta Motor Sales Corporation five (5)  Having entered into an illegal contract, neither can seek relief from the courts, and each
Toyota Corona Standard cars to be used as taxicabs. Since they had no franchise to must bear the consequences of his acts.
operate taxicabs, they contracted with petitioner Lita Enterprises, Inc., through its  The defect of inexistence of a contract is permanent and incurable, and cannot be cured
representative, Manuel Concordia, for the use of the latter's certificate of public by ratification or by prescription. As this Court said in Eugenio v. Perdido, "the mere
convenience in consideration of an initial payment of P1,000.00 and a monthly rental of lapse of time cannot give efficacy to contracts that are null void."
P200.00 per taxicab unit. To effectuate Id agreement, the aforesaid cars were registered  The principle of in pari delicto is well known not only in this jurisdiction but also in the
in the name of petitioner Lita Enterprises, Inc, Possession, however, remained with tile United States where common law prevails. Under American jurisdiction, the doctrine is
spouses Ocampo who operated and maintained the same under the name Acme Taxi, stated thus: "The proposition is universal that no action arises, in equity or at law, from
petitioner's trade name. an illegal contract; no suit can be maintained for its specific performance, or to recover
2. About a year later one of said taxicabs driven by their employee, Emeterio Martin, the property agreed to be sold or delivered, or damages for its property agreed to be
collided with a motorcycle whose driver, one Florante Galvez, died from the head sold or delivered, or damages for its violation. The rule has sometimes been laid down
injuries sustained therefrom. A criminal case was eventually filed against the driver as though it was equally universal, that where the parties are in pari delicto, no
Emeterio Martin, while a civil case for damages was instituted by Rosita Sebastian Vda. affirmative relief of any kind will be given to one against the other." Although certain
de Galvez, heir of the victim, against Lita Enterprises, Inc., as registered owner of the exceptions to the rule are provided by law, We see no cogent reason why the full force
taxicab in the latter case. Petitioner Lita Enterprises, Inc. was adjudged liable for of the rule should not be applied in the instant case.
damages by the CFI.
3. This decision having become final, a writ of execution was issued. Two of the vehicles of
respondent spouses were levied upon and sold at public auction.
4. Thereafter, Nicasio Ocampo decided to register his taxicabs in his name. He requested
the manager of petitioner Lita Enterprises, Inc. to turn over the registration papers to
him, but the latter allegedly refused. Hence, he and his wife filed a complaint against
Lita Enterprises, Inc., Mrs. de Galvez and the Sheriff of Manila for reconveyance of
motor vehicles with damages.

ISSUE: Whether or not petitioner has a cause of action against defendants. NO.

 Unquestionably, the parties herein operated under an arrangement, commonly known

as the "kabit system", whereby a person who has been granted a certificate of
convenience allows another person who owns motors vehicles to operate under such
franchise for a fee. A certificate of public convenience is a special privilege conferred by
the government . Abuse of this privilege by the grantees thereof cannot be
countenanced. The "kabit system" has been Identified as one of the root causes of the
prevalence of graft and corruption in the government transportation offices. In the
words of Chief Justice Makalintal, "this is a pernicious system that cannot be too
severely condemned. It constitutes an imposition upon the good faith of the
government.
 Although not outrightly penalized as a criminal offense, the "kabit system" is invariably
recognized as being contrary to public policy and, therefore, void and inexistent under
Article 1409 of the Civil Code, It is a fundamental principle that the court will not aid
either party to enforce an illegal contract, but will leave them both where it finds them.
Upon this premise, it was flagrant error on the part of both the trial and appellate courts
to have accorded the parties relief from their predicament. Article 1412 of the Civil Code
denies them such aid. It provides:
 ART. 1412. if the act in which the unlawful or forbidden cause consists does not
constitute a criminal offense, the following rules shall be observed:
11 Lim vs CA (daming hugot ng kasong ‘to about sa kabit)
1. Gonzales bought an Isuzu jeepney from Vallarta (who holds a certificate of public
convenience)
a. He continued to offer the jeepney for public transport but he still used Vallarta’s
certificate
b. His route is from Monumento to Bulacan
2. The jeep collided with a 10-wheeler truck owned by Lim
a. Driver of the truck said he lost his brakes and then swerved to the left where he hit
the jeep of Gonzales
3. Gonzales filed a complaint against Lim for damages and rejected Lim’s offer of P40K
(because he wanted a new jeep)
a. TC: in favor of Gonzales
b. CA: affirmed
4. Lim was arguing that Gonzales is merely an operator under the kabit system, thus, he
has no legal personality to sue
a. Kabit system – when a jeepney is covered by a certificate of public convenience,
and then sold to a person, the buyer continues to use the same certificate of public
convenience under the name of another person (usually the seller)

ISSUE: WON Gonzales may sue despite merely being an operator under the kabit system. YES

1. The kabit system is void.

a. It is contrary to public policy.
b. Thus, the holder of the certificate of public convenience is still the one liable.
c. If a registered owner is allowed to escape liability by proving who the supposed
owner of the vehicle is, it would be easy for him to transfer the subject vehicle to
another who possesses no property with which to respond financially for the
damage done.
d. Thus, for the safety of passengers and the public who may have been wronged and
deceived through the baneful kabit system, the registered owner of the vehicle is
not allowed to prove that another person has become the owner so that he may be
thereby relieved of responsibility.
2. In this case, the evil sought to be prevented by the kabit system does not exist
a. Neither the operator nor the owner of the vehicle are being sued, in fact, they are
the ones suing
b. The case arose because of the negligence of the truck driver, and not the operator
under the kabit system
c. the riding public was not bothered nor inconvenienced at the very least by the
illegal arrangement
3. Thus, Gonzales may sue Lim; SC awarded Gonzales P236K for a brand new jeepney
12. Tamayo vs. Aquino, et al. made responsible, i. e., for the death of the passenger, may not be considered as arising
G.R. Nos. L-12634 and L-12720. May 29, 1959 from a quasi-delict.
o As the registered owner Tamayo and his transferee Rayos may not be held
FACTS: guilty of tort or a quasi-delict; their responsibility is not solidary as held by the
1. Inocencio Aquino and his children brought this action against Jose G. Tamayo, holder of Court of Appeals.
a certificate of public convenience to operate two trucks for damages for the death of  As Tamayo is the registered owner of the truck, his responsibility to the public or to any
Inocencio's wife, Epifania Gonzales, while riding aboard Tamayo's truck. passenger riding in the vehicle or truck must be direct, for the reasons given above.
2. It is alleged that while Aquino’s wife was making a trip aboard a truck, it bumped against o But as the transferee, who operated the vehicle when the passenger died, is
a culvert on the side of the road the one directly responsible for the accident and death he should in turn be
a. as a consequence of this accident Gonzales was thrown away from the vehicle made responsible to the registered owner for what the latter may have been
and two pieces of wood embedded in her skull as a result of which she died; adjudged to pay.
b. that the impact of the truck against the culvert was so violent that the roof of o In operating the truck without transfer thereof having been approved by the
the vehicle was ripped off from its body, one fender was smashed and the Public Service Commission, the transferee acted merely as agent of the
engine damaged beyond repair. registered owner and should be responsible to him (the registered owner), for
3. Tamayo answered alleging that the truck is owned by Silvestre Rayos, so he filed a third- any damages that he may cause the latter by his negligence.
party complaint against the latter, alleging that he no longer had any interest  Inspite of the fact that the agreement between Tamayo and Rayos was for Rayos to use
whatsoever in the said truck. the truck in carrying of gasoline, the latter used the same in transporting passengers
4. CFI (affirmed by CA): found that the truck was one of the trucks of Tamayo under a outside the route covered by the franchise of Tamayo. For this additional reason, the
certificate of public convenience issued to him; that he had sold it to Rayos agent or Rayos must be held responsible to the registered owner, to the extent that the
a. ordered the defendant Tamayo and the third-party defendant Rayos to pay latter may suffer damage by reason of the death caused during the accident.
plaintiffs jointly and damages  The responsibility of a registered owner of a public vehicle to the public or to any
5. TAMAYO: claims exemption from liability, arguing that the owner and operator of the passenger riding in the vehicle is direct. However, the transferee, who operated the
truck at the time the accident was not he but Rayos vehicle when the accident took place, and who is directly responsible therefor, should
in turn be made responsible to the registered owner for what the latter may have
ISSUE: Who should be held liable for damages in the case. RAYOS ONLY been adjudged to pay. The remedy of the registered owner is by third-party
complaint.
GENERALLY, REGISTERED OWNER OF THE VEHICLE MUST BE HELD LIABLE
 SC has constantly held that the registered owner of a public service vehicle is
responsible for damages that may be caused to any of the passengers therein, even if
the said vehicle had already been sold, leased or transferred to another person who
was, at the time of the accident, actually operating the vehicle.
o REASON: A victim of recklessness on the public highways is usually without
means to discover or identify the person actually causing the injury or
damage.
o He has no means other than by a recourse to the registration in the Motor
Vehicles Office to determine who is the owner.
o The protection that the law aims to extend to him would become illusory were
the registered owner given the opportunity to escape liability by disproving his
ownership.
o If the policy of the law is to be enforced and carried out, the registered owner
should not be allowed to prove the contrary to the prejudice of the person
injured, that is, to prove that a third person or another has become the owner,
so that he may thereby be relieved of the responsibility to the injured.

THIS DOES NOT APPLY WHEN THE ACTION IS BREACH OF CONTRACT OF CARRIAGE
 The action instituted in the case at bar is one for breach of contract, for failure of the
defendant to carry safety the deceased to her destination. The liability for which he is
13 Perez v. Gutierrez 14 JEREOS v. CA and RODRIGUEZ ET AL
L-30115. Sept. 28, 1973. Castro, J.
1. Pardorla is the holder of a certificate of public convenience for the operation of a
FACTS: jeepney line in Iloilo.
1. A passenger jeepney, registered under the name of Gutierrez, met an accident. 2. One of his jeepneys, driven by Jaravilla, hit Judge Rodriguez and his wife while they were
2. Perez was a passenger of the jeepney. She got injured and was hospitalized. (She was crossing causing injuries and the death of Judge Rodriguez.
with her 9 co-teacher at the time of the accident) 3. Jaravilla was prosecuted and on his plea of guilty, was convicted of the crime of
3. Perez filed a complaint against Gutierrez. homicide and physical injuries through reckless imprudence.
4. Gutierrez denied liability, averred that since she sold the jeepney to Alajar, Alajar should 4. The wife and children of Rodriguez file an action for damages against Jaravilla, Pardorla,
be liable. Since, he was the actual owner of the jeepney at the time of the accident. and Jereos, the actual owner of the jeepney.
5. Gutierrez filed a 3rd party complaint against Alajar. Attached to the 3rd party complaint 5. Jereos denied ownership.
was a deed of sale which states that: “. . . Alajar assumes responsibility for all actions, 6. Pardorla claimed that he was only the franchise owner and has nothing to do with the
claims, demands, and rights of action as a consequence of the operation of the actual operation of the jeepney in question.
operation of the jeepney x x x” a. It was under Jereos’ supervision, who operates under the kabit system.
6. In his answer, Alajar denied liability, alleging that: 7. CFI: Jaravilla and Pardorla to pay solidarily. Jereos was exonerated because there was
 the sale was null and void since it’s not yet registered to the Public Service not enough evidence to support his liability.
Commisiion; 8. CA: Jereos is also liable.
 Gutierrez remained in control of the jeepney; a. Jereos contends: It is the registered owner of a passenger vehicle who is
 by express agreement, the title will remain with Gutierrez pending the jointly and severally liable with the driver for damages incurred by passengers
approval of the sale by the commission. or third persons as a consequence of injuries or death sustained in the
7. The Trial Court found that Alajar owned and operated the jeepney, in fact, he even operation of said motor vehicle.
asasumed hospitalization responsibility. Alajar was ordered to pay Perez. b. CA: Cannot be applied in this case since the sale of the jeepney by Jereos to his
8. On appeal, Perez questioned the decision of the trial court and argues that the own sister-in-law, Tanoy, and its registration in the name of Pardorla, Jr., were
registered owner should be responsible for damages resulting to breach of contract of simulated, fictitious transactions, parts and parcel of a strategem, to place
carriage. Angel Jereos beyond the reach of his creditors past or future.

9. Jereos: It is the registered owner of the vehicle, rather than the actual owner, who must
ISSUE: Whether Gutierrez, as registered owner, should be held liable- YES, but Alajar, as be jointly and severally liable with the driver of the passenger vehicle for damages
transferee is liable to pay Gutierrez. incurred by third persons as a consequence of injuries or death sustained in the
operation of said vehicle.
 Under the Public Service Law, the registered owner of the common carrier will be liable
for damages if the franchise or any privileges thereto was leased or transferred without ISSUE: Whether Jereos is liable. YES.
obtaining the required approval of the Public Service Commission.
 In dealing with vehicles registered under the Public Service Law, the public has the right  While the Court in another case ruled that the registered owner or operator of a
to assume or presume that the registered owner is the actual owner thereof, for it passenger vehicle is jointly and severally liable with the driver of the said vehicle for
would be difficult for the public to enforce the actions that they may have for injuries damages incurred by passengers or third persons as a consequence of injuries or death
caused to them by the vehicles being negligently operated if the public should be sustained in the operation of the said vehicle, the Court did so to correct the erroneous
required to prove who the actual owner is. findings of the Court of Appeals that the liability of the registered owner or operator of a
 ln Tamayo vs. Aquino, the Court described the nature of the liability of the actual passenger vehicle is merely subsidiary, as contemplated in Art. 103 of the Revised Penal
transferee of a vehicle the negligent operation of which gives rise to injuries to its Code.
passengers “x x x As Tamayo is the registered owner of the truck, his responsibility to  In no case did the Court exempt the actual owner of the passenger vehicle from liability.
the public or to any passenger riding in the vehicle or truck must be direct, x x x But as  On the contrary, it adhered to the rule followed in the cases of Erezo vs. Jepte, Tamayo
the transferee, who operated the vehicle when the passenger died, is the one directly vs. Aquino, and De Peralta vs. Mangusang, among others, that the registered owner or
responsible for the accident and death, he should in turn be made responsible to the operator has the right to be indemnified by the real or actual owner of the amount
registered owner for what the latter may have been adjudged to pay. that he may be required to pay as damage for the injury caused.
 The right to be indemnified being recognized, recovery by the registered owner or
operator may be made in any form, either by a cross-claim, third-party complaint, or an
independent action. The result is the same.
15 Juaniza v Jose
1. Eugenio Jose is the registered owner of a jeepney involved in a collision with a freight
train of the PNR. The incident resulted in the death of 7 and injury of 5 passengers.
2. That time, Eugenio was married to Socorro Ramos but had been cohabiting with Rosalia
Arroyo for 16 years as husband and wife.
3. TC: Eugenio and Rosalia are solidarily liable to pay damages to Victor Juaniza, heir of the
deceased.

ISSUE: WON Eugenio and Rosalia are co-owners of the jeepney and are solidarily liable for
the injury caused.- NO

 The co-ownership provided in Article 144 applied only when the parties are not
incapacitated to marry.
 In this case, the jeepney belongs to the conjugal partnership of Eugenio and Socorro.
 The common-law wife, not being the registered owner of the public service vehicle,
cannot be held liable for the damage caused by its operation.
 There is therefore no basis for her liability in the damages arising from the death and
physical injuries suffered by the passengers.
16 Martires Ereno v. Public Service Commission  Public necessity dictates that an ice plant also be established in Casiguran. Moreover,
Juban, Magallanes and Irosin are nearer to Casiguran.
DOCTRINE: The “prior operator” and “protection of investment” rules cannot prevail over
the convenience of the public. Said “protection of investment” is not absolute, for nobody Even in the case where an outside manufacturer has an ice depository in the locality, the
has exclusive right to secure a franchise or a certificate of public convenience. court has found and held that it is always more advantageous to have an ice plant in the
same locality.
FACTS:
1. Martires Ereno Co. is a general co-partnership between Pedro Martires and Jose Ereno, The "prior operator" and "protection of investment" rules cannot prevail over the
organized under PH laws, and registered with SEC. convenience of the public.
2. It applied for a certificate of public convenience to install, operate and maintain a 10-ton  At present, there is no ice plant in any of the municipalities of Casiguran, Juban,
ice plant in Casiguran, Sorsogon and to sell the ice produced in Casiguran, and in the Magallanes and Irosin, where a great demand for ice exists.
neighboring municipalities of Juban, Magallanes and Irosin.
3. Velasco & Co opposed, claiming that public convenience and necessity do not demand Said "protection of investment" rule is NOT absolute, for nobody has exclusive right to
the operation of an ice plant in Casiguran, since the need of ice in the aforementioned secure a franchise or a certificate of public convenience. It cannot be applied unqualifiedly
municipalities is duly and efficiently served by it. for that would encourage violation or disregard of the terms and conditions of the certificate
4. The PSC denied Martires’ application, stating that Martires has not proven that there is and the Commission's directives and regulations, and would close the door to other
a need to establish an ice plant in the said vicinity, and that Velasco & Co has not been applicants who could establish, operate and provide adequate, efficient and satisfactory
remiss in its obligation to serve the municipality. Also, Ereno railed to prove his Filipino service for the benefit and convenience of the inhabitants.
citizenship.
 Nor could an unfair or ruinous competition result from the authorization of the ice plant
ISSUE: W/N a certificate of public convenience should be granted. applied for.

RULING: YES In order that the opposition based on ruinous competition may prosper, it must be shown
that the oppositor would be deprived of fair profits on the capital invested in its business.
In the granting of certificates of public convenience, the principle that overrides all others The mere possibility of reduction in the earnings of a business is not sufficient to prove
is that public interest, necessity and convenience should be the first and paramount ruinous competition. It must be shown that the business would not have sufficient gains to
consideration. The number of persons to be benefited by the proposed service is pay a fair rate of interest on its capital, w/c Velasco failed to show.
immaterial.
 On the contrary the resulting competition will undoubtedly benefit the people of these
The inhabitants of Casiguran, Juban, Magallanes And Irosin municipalities procure their ice municipalities through improvement in the service and reduction in retail price. This
requirements from the Velasco Ice Plant in Sorsogon City or from the Bulan Ice Plant in Bulan, should be allowed, because it tends to promote satisfaction and efficiency, rather than a
through the Alatco or Ammen Transportation by sending money and empty sacks, because monopoly.
Velasco & Co has no delivery truck.

Distance from Distance from Distance from Bulan

Casiguran Sorsogon (Velasco)
CASIGURAN 21km 45km
Juban 4km N/A N/A
Magallanes 18km 47km 50km
Irosin 24km 15km 21km

 Casiguran’s residents are engaged in fishing and they preserve their catch with ice. The
same is true as to Juban and Magallanes. Irosin has 180 business establishments, such as
restaurants, carinderias, ice cream manufacturers, and fish and meat vendors.
 The mere fact that the ice plants at Sorsogon and Bulan supply and sell ice in these
municipalities is no impediment to the subsequent authorization of an applicant in these
localities.
17 San Pablo vs. Pantranco South Express, Inc. sea such as bay or lake which does not involve too great a distance or too
Nos. L-61461 & 61501. August 21, 1987. long a time to navigate.
o But where the line or service involves crossing the open sea, then it is more
FACTS reasonable to regard said line or service as more properly belonging to
 PANTRANCO is a domestic corporation engaged in the land transportation business with interisland or coastwise trade.
various certificates for public conveniences (CPC) to operate passenger buses.  This Court takes judicial notice of the fact, and as shown by an examination of the map
PANTRANCO through its counsel wrote to Maritime Industry Authority (MARINA) of the Philippines, that Matnog which is on the southern tip of the island of Luzon and
requesting authority to lease/purchase a vessel named M/V "Black Double" "to be used within the province of Sorsogon and Allen which is on the northeastern tip of the island
for its project to operate a ferryboat service.” MARINA denied the request. of Samar, is traversed by the San Bernardino Strait which leads towards the Pacific
 PANTRANCO nevertheless acquired the vessel M/V "Black Double.” It wrote the Ocean. As the San Bernardino Strait which separates Matnog and Allen leads to the
Chairman of the Board of Transportation (BOT) through its counsel, that it proposes to ocean it must at times be choppy and rough so that it will not be safe to navigate the
operate a ferry service to carry its passenger buses and freight trucks between Allen and same by small boats or barges but only by such steamboats or vessels as the M/V "Black
Matnog in connection with its trips to Tacloban City. PANTRANCO claims that it can Double.
operate a ferry service in connection with its franchise for bus operation in the highway  Considering the environmental circumstances of the case, the conveyance of
from Pasay City to Tacloban City "for the purpose of continuing the highway, which is passengers, trucks and cargo from Matnog to Allen is certainly not a ferryboat service
interrupted by a small body of water, the said proposed ferry operation is merely a but a coastwise or interisland shipping service.
necessary and incidental service to its main service and obligation of transporting its  Under no circumstance can the sea between Matnog and Allen be con sidered a
passengers from Pasay City to Tacloban City. Such being the case x x x there is no need x continuation of the highway. While a ferryboat service has been considered as a
x x to obtain a separate certificate for public convenience to operate a ferry service continuation of the highway when crossing rivers or even lakes, which are small body of
between Allen and Matnog to cater exclusively to its passenger buses and freight trucks. waters separating the land, however, when as in this case the two terminals, Matnog
 Without awaiting action on its request PANTRANCO started to operate said ferry and Allen are separated by an open sea it can not be considered as a continuation of the
service. Epitacio San Pablo (now represented by his heirs) and Cardinal Shipping highway. Respondent PANTRANCO should secure a separate CPC for the operation of an
Corporation who are franchise holders of the ferry service in this area interposed their interisland or coastwise shipping service in accordance with the provisions of law.
opposition. They claim they adequately service the PANTRANCO by ferrying its buses, WHEREFORE, the petitions are hereby GRANTED. Respondent PANTRANCO is hereby
trucks and passengers. Then Minister of Justice Ricardo Puno rendered an opinion to the permanently enjoined from operating the ferryboat service and/or coastwise/interisland
effect that there is no need for bus operators to secure a separate CPC to operate a services.
ferryboat service holding.
 BOT: ferryboat service is part of its CPC to operate from Pasay to Samar/Leyte by
amending PANTRANCO's CPC so as to reflect the same.

ISSUE: Whether a land transportation company can be authorized to operate a ferry service
or coastwise or interisland shipping service along its authorized route as an incident to its
franchise without the need of filing a separate application for the same. – NO.

 The term 'ferry' is often employed to denote the right or franchise granted by the state
or its authorized mandatories to continue by means of boats, an interrupted land
highway over the interrupting waters and to charge toll for the use thereof by the
public. In this sense it has also been defined as a privilege, a liberty, to take tolls for
transporting passengers and goods across a lake or stream, or some other body of
water, with no essential difference from a bridge franchise except as to the mode of
transportation.
 In Javellana, the Court made clear distinction between a ferry service and coastwise or
interisland service by holding that:
Legislature intended ferry to mean the service either by barges or rafts,
even by motor or steam vessels, between the banks of a river or stream
to continue the highway which is interrupted by the body of water, or in
some cases, to connect two points on opposite shores of an arm of the
18 STA. CLARA SHIPPING CORPORATION V. EUGENIA T. SAN PABLO experience and expertise to determine the technical and intricate factual
matters relating to the new CPC of Sta. Clara.
1. Sta. Clara filed an application with Maritime Industry Authority (MARINA) for a CPC to
operate MV King Frederick along the route Matnog, Sorsogon-Allen, Northern Samar DOCTRINE: MARINA has sound administrative discretion in applying its special knowledge,
and vice versa. experience and expertise to determine the technical and intricate factual matters relating to
2. The application was opposed by the pioneering operators Bicolandia Lines, Inc. and the issuance/revocation of the CPC.
Eugenia T. San Pablo/E Tabinas Enterprises (San Pablo) on the ground that, with five
vessels already plying the route, the entry of a sixth vessel would cause grievous
problems in berthing space and time schedule.
3. Upon petition in the CA by San Pablo, one of the oppositors, the CPC was revoked.
4. Meanwhile, RA 9295 was passed and it required existing operators to apply for NEW
CPCs.
5. STA. CLARA applied for a CPC and obtained one.
6. Sta. Clara filed a motion for reconsideration of the CA decision without disclosing that it
had obtained a new CPC for MV King Frederick.
7. It was San Pablo who reported this development to the CA when she filed a motion to
hold Sta. Clara in contempt of court and to cancel its new CPC.
8. The CA issued two resolutions, one denying Sta. Clara's motion for reconsideration, and
another granting the motion of San Pablo to cancel the new CPC issued to Sta. Clara by
the LMRO

ISSUE: Should the NEW CPC be revoked also? 


 The passage of RA 9295 and the filing by Sta. Clara of an application for a new CPC
under the new law supervened and rendered the January 26, 2004 MARINA decision
and old CPC of no consequence.
 There was no more justiciable controversy for the CA to decide, no remedy to grant or
deny. The petition before the CA had become purely hypothetical, there being nothing
left to act upon.
 Although Sta. Clara filed with the CA a motion for reconsideration of its May 31, 2005
decision without disclosing the foregoing developments, by the time the CA resolved the
motion for reconsideration, it was already aware of the changes in the situation of the
parties: specifically, that Sta. Clara had filed a new application under RA 9295 and that
the LMRO had issued Sta. Clara a new CPC. More significantly, the new CPC issued to
Sta. Clara was now subject to the rules implementing RA 9295.
o Under Rule XV, Sec. 1 thereof, a peculiar process of administrative remedy
provides that the MARINA Administrator, and not the CA, is vested with
primary jurisdiction over matters relating to the issuance of a CPC.
 Under the altered state of facts, the CA should have refrained from resolving the
pending motions before it and should have declared the case mooted by supervening
events.
 Besides, questions on the validity of the new CPC are cognizable by the MARINA
Administrator and, consonant with the doctrine of primary administrative jurisdiction,
the CA should have referred San Pablo to MARINA for the resolution of her challenge to
the validity of the new CPC of Sta. Clara.
o The CA ought to have given due deference to the exercise by MARINA of its
sound administrative discretion in applying its special knowledge,