2023 Commercial Law, Q11

Hari and Reyna booked a honeymoon package at Anya Resort (AR) in Palawan which included transportation from Batangas to Palawan, and vice versa, via M/B Prinsesa owned and operated by AR. Despite PAGASA storm warning bulletins, M/B Prinsesa proceeded to ferry Hari and Reyna from the port of Batangas to Palawan. While in open seas, the boat was hit by big waves and eventually capsized, drowning Hari and Reyna. When sued by the heirs of the couple, AR denied liability on the ground that it is not a common carrier, as M/B Prinsesa is not available to the general public or other tourists, and exclusively ferries resort guests and crew members. AR further argued that they did not charge Hari and Reyna separate fees to board M/B Prinsesa. Are the arguments of AR correct? Discuss your answer.

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Under Article 1732 of the Civil Code, what defines a common carrier in Philippine law?

In Cruz versus Sun Holidays, Incorporated, what was held regarding resort operators providing guest transport?

Is a separate fee or fare required for a resort operator's transportation service to be deemed a common carrier?

What degree of diligence is required of common carriers transporting passengers under Article 1733?

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What is the legal effect when a sea carrier proceeds to sail despite official storm warning bulletins?

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1. Common Carrier Definition
Under Article 1732 of the Civil Code, common carriers are persons, corporations, firms, or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public. The statutory definition makes no distinction between a person or entity engaged in transportation as a principal corporate activity or as an ancillary business activity. Furthermore, whether transportation services are offered to the general public or restricted to a limited client group does not alter its legal characterization as a common carrier under Philippine transportation law.

2. Ancillary Transportation Services
In Cruz versus Sun Holidays, Incorporated, the Supreme Court held that resort operators providing water transportation services for guests act as common carriers even if transportation is merely ancillary to their primary resort operations. Offering inclusive travel packages to tourists demonstrates that transportation services are available to the public. The absence of a separate fare or ticket charge is legally immaterial because the cost of transport is integrated into the overall package price. Resort operators carrying guests across open seas remain common carriers subject to the statutory presumption of negligence in passenger loss or death cases.

3. Extraordinary Diligence Standard
Common carriers are bound from the nature of their business and for reasons of public policy to observe extraordinary diligence in the vigilance over goods and for the safety of passengers transported according to all circumstances. Under Article 1733 of the Civil Code, this extraordinary degree of diligence requires common carriers to carry passengers safely as far as human care and foresight can provide. Proceeding with sea travel despite official storm warning bulletins issued by weather authorities constitutes gross negligence, rendering the resort carrier liable for damages for passenger deaths caused by capsizing.

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