MODULE 2 1.
The limited liability clause in the Bill of Lading
Concepts in Transportation Laws
Everett Steamship Corp. v. CA
G.R. No.122494 | October 8, 1998
Facts: Hernandez Trading Co., Inc. imported 3
creates MARCO C/No. 12, MARCo C/No. 13 and
MARCO C/No. 14 of bus spare parts, from Maruman
Trading Company, LTC.
The crates were covered by the Bill of Lading No.
NGO53MN were shipped on board a vessel owned by
Everett Orient Lines. When it arrived in the port of
Manila, it was discovered that the crate marked
MARCO C/No.14 was missing. Hernandez claimed for
Y1,552,500.00 (Yen), as shown in Invoice No. MTM-
941, dated November 14, 1991. Everett Streamship
Corp. was only willing to pay Y100,000.00 which is the
maximum amount agreed in Clause 18 of the covering
bill of lading. Hernandez rejected the offer and
thereafter instituted a suit for collection.
Petitioner’s Argument/s: Considering that the
shipper did not declare for a higher valuation, it had
itself to blame for not complying with the stipulations
of the bill of lading. (EVERETT- WON)
Respondent’s Arguments: It could not have “fairly
and freely” agreed to the limited liability clause in the
bill of lading because the said conditions were printed
in small letters, which makes the bill of lading invalid.
(EVERETT-LOST)
Ruling of the lower court: The Trial Court decided
the case in favour of Hernandez; CA Affirmed.
Issue:
1. Whether or not the limited liability clause in
the Bill of Lading is valid? YES
2. Whether or not Hernandez as consignee, who
is not a signatory to the bill of lading is bound
by the stipulations thereof? YES
Rule: Article 1749 (Civil Code). A stipulation that the
common carrier’s liability is limited to the value of the
goods appearing in the bill of lading, unless the
shipper or owner declared a greater value, is binding.
Article 1750. A contract fixing the sum that may be
covered by the owner or the shipper for the loss,
destruction, or deterioration of the goods is valid, if it
is reasonable and just under the circumstances, and
has been freely and fairly agreed upon.
Application:
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is valid. A stipulation in the bill of lading
limiting the common carrier’s liability for loss
or destruction of a cargo to a certain sum,
unless the shipper or owner declares a
greater value, is sanctioned by law,
particularly Articles 1749 and 1750 of the
Civil Code
Contracts of adhesion are valid and binding.
Greater vigilance, however, is required of the
courts when dealing with the contracts of
adhesion in that the sad contracts must be
carefully scrutinized “in order to shield the
unwary (or weaker party) from deceptive
scheme contained in ready-made covenant.
Article 24 of the Civil Code which mandates
that “(i)n all contractual, property or other
relations, when one of the parties is at a
disadvantage on account of his moral
dependence, ignorance, indigence, mental
weakness, tender age or other handicap, the
courts must be vigilant for his protection
Maruman Trading, we assume, has been
extensively engaged in the trading business.
It cannot be said to be ignorant of the
business transactions it entered into
involving the shipment of its goods to its
customers. The shipper could not have
known, or should know the stipulations in the
bill of lading and there it should have
declared a higher valuation of the goods
shipped. Moreover, Maruman Trading has
not been heard to complain that it has been
deceived or rushed into agreeing to ship the
cargo in petitioner’s vessel. In fact, it was not
even impleaded in this case.
2. Hernandez as consignee, who is not a
signatory to the bill of lading is bound by the
stipulations thereof.
The right of a party in the same situation as
Hernandez, to recover for loss of a shipment
consigned to him under a bill of lading drawn
up only by and between the shipper and the
carrier, springs from either a relation of
agency that may exist between him and the
shipper or consignor, or his status as
stranger in whose favor some stipulation is
made in said contract, and who becomes a
party thereto when he demands fulfillment of
that stipulation, in this case the delivery of
the goods or cargo shipped.
 When Hernandez formally claimed
reimbursement for the missing goods from
Everett and subsequently filed a case against
it, it based on the very same bill of lading, it
accepted the provisions of the contract and
thereby made itself a party thereto or at least
has come to court to enforce it.
MOF Co., Inc. v. Shin Yang Brokerage
Corporation
G.R. No. 172822 | December 18, 2009
Facts:
● Halla Trading Co., a company based in Korea,
shipped to Manila secondhand cars and other
articles on board the vessel Hanjin Busan
0238W.
● The bill of lading covering the shipment
which was prepared by the carrier Hanjin,
named respondent Shin Yang as the
consignee and indicated that payment was
on a "Freight Collect" basis, i.e., that the
consignee/receiver of the goods would be the
one to pay for the freight and other charges
in the total amount of P57,646.00.
● When the shipment arrived, MOF , Hanjin's
exclusive general agent in the Philippines,
repeatedly demanded the payment of ocean
freight, documentation fee and terminal
handling charges from Shin Yang but the
latter failed and refused to pay contending
that it did not cause the importation of the
goods, that it is only the Consolidator of the
said shipment, that the ultimate consignee
did not endorse in its favor the original bill of
lading and that the bill of lading was
prepared without
Petitioner’s Argument/s: (LOST)
● MOF argued that Shin Yang, as the named
consignee in the bill of lading, entered itself
as a party to the contract and bound itself to
the "Freight Collect" arrangement
● The bill of lading, which expressly stated Shin
Yang as the consignee, is the best evidence
of the latter's actual participation in the
transportation of the goods. Such document,
validly entered, stands as the law among the
shipper, carrier and the consignee, who are
all bound by the terms stated therein.
● MOF claims that even if Shin Yang never gave
its consent, it cannot avoid its obligation to
pay, because it never objected to being
named as the consignee in the bill of lading
and that it only protested when the shipment
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arrived in the Philippines, presumably due to
a botched transaction between it and Halla
Trading Co.
Respondent’s Arguments: (WON)
● Shin Yang denied any involvement in
shipping the goods or in promising to
shoulder the freightage. It asserted that it
never authorized Halla Trading Co. to ship
the articles or to have its name included in
the bill of lading.
● Shin Yang also alleged that MOF failed to
present supporting documents to prove that
it was Shin Yang that caused the importation
or the one that assured payment of the
shipping charges upon arrival of the goods in
Manila
● A bill of lading is essentially a contract
between the shipper and the carrier and
ordinarily, the shipper is the one liable for the
freight charges. A consignee, on the other
hand, is initially a stranger to the bill of lading
and can be liable only when the bill of lading
species that the charges are to be paid by the
consignee
Ruling of the lower court:
● MeTC ruled in favor of Petitioner MOF.
RTC affirmed MeTC decision in toto
● CA ruled in favor of respondent Shin
Yang.
Issue:
● WON a consignee, who is not a signatory to
the bill of lading, is bound by the stipulations
thereof
● WON respondent who was not an agent of
the shipper and who did not make any
demand for the fulfillment of the stipulations
of the bill of lading drawn in its favor is liable
to pay the corresponding freight and
handling charges.
Rule:
● A consignee, although not a signatory to the
contract of carriage between the shipper and
the carrier, becomes a party to the contract
by reason of either
○ a) the relationship of agency
between the consignee and the
shipper/consignor;
○ b) the unequivocal acceptance of
the bill of lading delivered to the
 consignee, with full knowledge of its
contents or
○ c) availment of the stipulation pour
autrui, i.e., when the consignee, a
third person, demands before the
carrier the fulfillment of the
stipulation made by the
consignor/shipper in the
consignee's favor, specifically the
delivery of the goods/cargoes
shipped
Application:
● Shin Yang consistently denied in all of its
pleadings that it authorized Halla Trading,
Co. to ship the goods on its behalf; or that it
got hold of the bill of lading covering the
shipment or that it demanded the release of
the cargo.
● MOF has the burden to controvert all these
denials, it being insistent that Shin Yang
asserted itself as the consignee and the one
that caused the shipment of the goods to the
Philippines
● Other than presenting the bill of lading,
which, at most, proves that the carrier
acknowledged receipt of the subject cargo
from the shipper and that the consignee
named is to shoulder the freightage, MOF has
not adduced any other credible evidence to
strengthen its cause of action
● MOF also did not present any witness in
support of its allegation that it was Shin
Yang which furnished all the details
indicated in the bill of lading and that
Shin Yang consented to shoulder the
shipment costs.
● There was also nothing in the records which
would indicate that Shin Yang was an agent
of Halla Trading Co. or that it exercised any
act that would bind it as a named consignee.
Dangwa Transportation Co. v. CA
G.R. No. 95582 | October 7, 1991
Facts:
● This is a complaint for damages filed against
the petitioners for the death of Pedrito
Cudiamat as a result of a vehicular accident
which occurred on March 25, 1985 in
Benguet allegedly caused by the reckless
imprudence of Dangwa Transportation’s bus
driver Theodore Lardizabal.
● RTC ruled in favor of Dangwa but CA
reversed its decision holding Dangwa liable.
Petitioner’s Arguments: DANGWA (LOST)
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● They alleged that they had observed and
continued to observe the extraordinary
diligence required in the operation of the
transportation company and the supervision
of the employees.
● They also contended that it was the victim’s
own carelessness and negligence which
caused his own death.
● They prayed for the dismissal of the
complaint and award for damages which the
RTC granted on July 29, 1988 ruling that
Pedrito was negligent and such negligence
was the proximate cause of his death.
● The driver and conductor had no knowledge
that the victim would ride on the bus since
the victim had supposedly not manifested his
intention to board.
Respondent’s Arguments: CA, CUDIAMAT (WON)
● They claimed that the bus driver was reckless
and imprudent with its driving and without
due regard to traffic rules and regulations
and safety which caused the bus to run over
Pedrito.
● They further claimed that instead of bringing
him immediately to the nearest hospital, the
driver, without regard to the welfare of the
victim, first brought his other passengers and
cargo to their respective destinations before
bringing Pedrito to the Lepanto hospital
where he eventually died.
Ruling of the lower court:
Trial Court ruled that Pedrito was negligent:
● Negligence in trying to board a moving
vehicle especially with one of his hands
holding an umbrella without giving the driver
or conductor any indication that he wished to
board the bus.
● The victim did not indicate his intention to
board the bus as claimed by a witness,
Abenoja, since Pedrito was still closing his
umbrella at the bus platform and then made
a sudden jerk movement as the driver
commenced to accelerate the bus.
CA reversed the RTC decision based on the following
grounds:
● Driver was grossly negligent when he
prematurely stepped on the accelerator and
in not waiting for the passenger to first
secure his seat since at that time, the
platform was slippery and wet because of a
drizzle.
● The bus was at full stop between Bunkhouses
53 and 54 when the victim was trying to
board and eventually fell to the platform of
the vehicle when the bus suddenly
 accelerated forward and run over Pedrito by
the rear right tires of the vehicle.
● They failed to observe their duty and
obligation as common carrier that they
should observe extraordinary diligence in the
vigilance over the goods and for the safety of
the passengers transported by them (Art.
1733, NCC)
● It also awarded the following to the private
respondent the following:
○ P30,000 for indemnity of death
○ P20,000 for moral damages
○ P288,000 for actual and
compensatory damages
○ Costs of suit
Issue:
● WON the petitioners are negligent and liable
for the damages claimed for the death of
Pedro Cudiamat. YES
Rule:
● Common carriers, from the nature of their
business and for reasons of public policy, are
bound to observe extraordinary diligence for
the safety of the passengers transported by
them, according to all the circumstances of
each case.
● A common carrier is bound to carry the
passengers safely as far as human care and
foresight can provide, using the utmost
diligence of very cautious persons, with a due
regard for all the circumstances.
● In an action based on a contract of carriage,
the court need not make an express finding
of fault or negligence on the part of the
carrier in order to hold it responsible to pay
the damages sought by the passenger.
● By the contract of carriage, the carrier
assumes the express obligation to transport
the passenger to his destination safely and to
observe extraordinary diligence with a due
regard for all the circumstances, and any
injury that might be suffered by the
passenger is right away attributable to the
fault or negligence of the carrier.
● This is an exception to the general rule that
negligence must be proved, and it is
therefore incumbent upon the carrier to
prove that it has exercised extraordinary
diligence as prescribed in Articles 1733 and
1755 of the Civil Code.
Application:
● When the bus is not in motion there is no
necessity for a person who wants to ride the
same to signal his intention to board. A public
utility bus, once it stops, is in effect making
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a continuous offer to bus riders. Hence, it
becomes the duty of the driver and the
conductor, every time the bus stops, to do
no act that would have the effect of
increasing the peril to a passenger while he
was attempting to board the same. The
premature acceleration of the bus in this case
was a breach of such duty.
● It is the duty of common carriers of
passengers, including common carriers by
railroad train, streetcar, or motorbus, to stop
their conveyances a reasonable length of
time in order to afford passengers an
opportunity to board and enter, and they are
liable for injuries suffered by boarding
passengers resulting from the sudden
starting up or jerking of their conveyances
while they are doing so.
● It is not negligence per se, or as a matter of
law, for one to attempt to board a train or
streetcar which is moving slowly. An
ordinarily prudent person would have made
the attempt to board the moving conveyance
under the same or similar circumstances.
The fact that passengers board and alight
from a slowly moving vehicle is a matter of
common experience and both the driver and
conductor in this case could not have been
unaware of such an ordinary practice.
● The victim, by stepping and standing on the
platform of the bus, is already considered a
passenger and is entitled to all the rights and
protection pertaining to such a contractual
relation. Hence, it has been held that the
duty which the carrier of passengers owes to
its patrons extends to persons boarding the
cars as well as to those alighting therefrom.
Korean Airlines Co. v. CA
G.R. No. 114061 | Aug. 3, 1994
Facts: Juanito Lapuz (Private respondent) was on his
way to Saudi (hired as an automobile electrician). He
was to leave the country via Korean Airlines (KAL). He
and another contractual worker (Perico) were “wait-
listed” which meant they will be accommodated in the
flight if a confirmed passenger failed to show up. Two
passengers did not appear hence Lapuz and Perico
were both allowed to check-in, passed through
customs and immigration and cleared for departure.
When Lapuz was about to board the plane, he was
stopped by a KAL officer. He later asked for another
booking but he was turned down and his ticket
cancelled. He was unable to go to Saudi and his
employment was terminated for failure to report to
Saudi.
Petitioner’s Argument (KAL-LOST): KAL argues
that the entry of the name of a passenger in the
manifest nor clearance from the customs and
immigration are merely means of facilitating the
“chance” passenger.
Respondent’s Argument (LAPUZ - WON): The
contract of marriage between him and KAL had
already been perfected since he had indeed checked
in at the departure counter, passed through customs
and immigration, boarded the shuttle bus and
proceeded to the ramp of KALs aircraft.
Ruling of the lower court: (RTC ruled in favor of
Lapuz Finding KAL liable for damages and breach of
contract of carriage. Both parties filed MRs to the CA.
Hence, consolidated.) CA modified the damages in
favor of Lapuz.
Issue: WON the factual findings indicate a breach of
contract of carriage by KAL . (YES)
Rule: A contract to transport passengers is different
in kind and degree from any other contractual
relation. The business of the carrier is mainly with the
traveling public. It invites people to avail themselves
of the comforts and advantages it offers. The contract
of air carriage generates a relation attended with a
public duty. Passengers have the right to be treated
by the carrier's employees with kindness, respect,
courtesy and due consideration. They are entitled to
be protected against personal misconduct, injurious
language, indignities and abuses from such
employees. So it is that any discourteous conduct on
the part of these employees toward a passenger gives
the latter an action for damages against the carrier.
Application: The status of Lapuz as standby
passenger was changed to that of a confirmed
passenger when his name was entered in the
passenger manifest for the flight. His clearance
through immigration and customs clearly shows that
he had indeed been confirmed as a passenger. The
contract of carriage between him and KAL had already
been perfected when he was summarily and insolently
prevented from boarding the aircraft. The breach of
contract was aggravated in this case when, instead of
courteously informing Lapuz of his being a "wait-
listed" passenger, a KAL officer rudely shouted "Down!
Down!" while pointing at him, thus causing him
embarrassment and public humiliation.
Cathay Pacific Airways v. Reyes
G.R. No. 185891 | June 26, 2013
Facts: Wilfredo Reyes (Respondent) filed a case for
damages against Cathay Pacific and Sampaguita
Travel. Reyes made a travel reservation (for his family
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of four) bound for Australia with Sampaguita. They
were to travel MNL-HK-ADELAIDE and vice versa.
Reyes paid for 4 round-trip tickets for said flights via
Cathay. A week before returning to MNL, Reyes
reconfirmed their booking with Cathay office in
Adelaide. They were advised it was” still okay as
scheduled.” Upon reaching the airport counter, they
were informed by Cathay staff that 3 out of 4 of their
bookings were NOT. confirmed reservations. They
were still allowed to board the flight to HK. But upon
reaching HK, only one member was allowed to board
the flight to MNL since the flight was fully-booked. The
rest of the family flew to MNL the following day.
Petitioner’s Argument/s (Cathay and Sampaguita
- LOST): Cathay alleged that 2 of the tickets were
cancelled because the petitioner had arranged several
bookings with two travel agencies which created
confusion (the other one was Rajah Travel). The other
ticket had no valid ticket number inputted within a
prescribed period (error attributed to the travel agent)
which meant no ticket was “sold”. Cathay then
cancelled the bookings based on these findings.
Sampaguita asserted that it made the necessary
reservation with Cathay. They were given by Cathay
confirmed bookings with corresponding “PNR”
numbers. They only issued the tickets after Cathay
confirmed the bookings they made.
Respondent’s Arguments (Reyes - WON): His
family had relied on the tickets being confirmed since
it was issued to them by Sampaguita and they were
able to fly to Adelaide without problem. Before
returning to MNL, he also made the necessary follow
up by calling with Cathay to confirm their bookings
and they were advised it was okay.
Ruling of the lower court: The RTC found that
respondents were in possession of valid tickets but did
not have confirmed reservations for their return trip
to Manila.No basis to establish liability on the part of
either Cathay or Sampaguita considering that the
cancellation was not without any justified reason. CA
Ordered Cathay to pay 25k as nominal damages.
Issue: WON the facts hold the basis for making
Cathay liable for nominal damages for its breach of
contract with respondents. (YES and SC later made
Samaguita a joint tortfeasor).
Rule: A contract of carriage is defined as one whereby
a certain person or association of persons obligate
themselves to transport persons, things, or news from
one place to another for a fixed price. Under Article
1732 of the Civil Code, this "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" is called a common carrier.
Application: The determination of whether or not the
award of damages is correct depends on the nature of
the respondents' contractual relations with Cathay
and Sampaguita. It is beyond dispute that
respondents were holders of Cathay airplane tickets
and they made the booking through Sampaguita
Travel.
As far as respondents are concerned, they were
holding valid and confirmed airplane tickets. The
ticket in itself is a valid written contract of carriage
whereby for a consideration, Cathay undertook to
carry respondents in its airplane for a round-trip flight
from Manila to Adelaide, Australia and then back to
Manila. In fact, Wilfredo called the Cathay office in
Adelaide one week before his return flight to re-
confirm his booking. He was even assured by a staff
of Cathay Paci c that he does not need to re-confirm
his booking.
There was also failure on the part of Sampaguita
Travel to exercise due diligence in performing its
obligations under the contract of services. It was
established by Cathay through the generation of the
PNRs, that Sampaguita failed to input the correct
ticket number for Wilfredo's ticket.
LRTA v. Navidad
G.R. No. 145804|Feb. 6, 2003
Facts:
Navidad, then drunk, entered the EDSA LRT station
after purchasing a "token" (representing payment of
the fare). While Navidad was standing on the platform
near the LRT tracks, Escartin, the security guard
assigned to the area approached Navidad. A
misunderstanding or an altercation between the two
apparently ensued that led to a fist fight.
At the exact moment that Navidad fell, an LRT train,
operated by petitioner Rodolfo Roman, was coming in.
Navidad was struck by the moving train, and he was
killed instantaneously.
The widow of Nicanor filed a complaint for damages
against Escartin, Rodolfo Roman (operator), the LRTA,
the Metro Transit, and Prudent for the death of her
husband.
LRTA and Roman filed a counterclaim against Navidad
and a cross-claim against Escartin and Prudent.
Prudent, in its answer, denied liability and averred
that it had exercised due diligence in the selection and
supervision of its security guards.
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Petitioner’s Argument/s:
1. Escartin’s assault upon Navidad, which caused the
latter to fall on the tracks, was an act of a stranger
that could not have been foreseen or prevented.
(Lost)
2. CA’s conclusion on the existence of an employer-
employee relationship between Roman and LRTA
lacked basis (because Roman himself had testified
being an employee of Metro Transit and not of the
LRTA). (WON)
Respondent’s Arguments:
1. A contract of carriage was deemed created from the
moment Navidad paid the fare at the LRT station and
entered the premises of the latter, entitling Navidad
to all the rights and protection under a contractual
relation. (WON)
2. CA had correctly held LRTA and Roman liable for
the death of Navidad in failing to exercise
extraordinary diligence imposed upon a common
carrier. (MODIFIED, Roman is not liable)
Ruling of the lower court:
Judgment was rendered in favor of the plaintiffs and
against the defendants Prudent Security and Escartin
ordering the latter to pay jointly and severally the
plaintiffs.
On appeal to the CA, Prudent was exonerated from
any liability for the death of Nicanor Navidad and,
instead, held the LRTA and Roman jointly and
severally liable. CA explained that while the deceased
might not have then as yet boarded the train, a
contract of carriage theretofore had already existed
when the victim entered the place where passengers
were supposed to be after paying the fare and getting
the corresponding token therefor. In exempting
Prudent from liability, it said that there was nothing to
link the security agency to the death of Navidad. Also,
Navidad failed to show that Escartin inflicted fist blows
upon the victim and the evidence merely established
the fact of death of Navidad by reason of his having
been hit by the train owned and managed by the LRTA
and operated at the time by Roman.
Issue:
1. WON LRTA and Roman are jointly and severally
liable. (NO)
2. WON Prudent is likewise liable. (NO)
Rule:
Articles 1755, 1756, 1759, 1763, 2176, 2180 of the
NCC
The Civil Code, governing the liability of a common
carrier for death of or injury to its passengers,
provides:
"Article 1755. A common carrier is bound to carry the
passengers safely as far as human care and foresight
can provide, using the utmost diligence of very
cautious persons, with a due regard for all the
circumstances.
"Article 1756. In case of death of or injuries to
passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence as
prescribed in articles 1733 and 1755."
"Article 1759. Common carriers are liable for the
death of or injuries to passengers through the
negligence or willful acts of the former’s employees,
although such employees may have acted beyond the
scope of their authority or in violation of the orders of
the common carriers.
"This liability of the common carriers does not cease
upon proof that they exercised all the diligence of a
good father of a family in the selection and supervision
of their employees."
"Article 1763. A common carrier is responsible for
injuries suffered by a passenger on account of the
willful acts or negligence of other passengers or of
strangers, if the common carrier’s employees through
the exercise of the diligence of a good father of a
family could have prevented or stopped the act or
omission."
Application:
LRTA and Roman ARE NOT jointly and severally
liable.
The foundation of LRTA’s liability is the contract of
carriage and its obligation to indemnify the victim
arises from the breach of that contract by reason of
its failure to exercise the high diligence required of the
common carrier.
The law requires common carriers to carry passengers
safely using the utmost diligence of very cautious
persons with due regard for all circumstances not only
during the course of the trip but for so long as the
passengers are within its premises and where they
ought to be in pursuance to the contract of carriage.
Under applicable laws, a common carrier is liable for
death of or injury to passengers (a) through the
negligence or wilful acts of its employees or b) on
account of wilful acts or negligence of other
passengers or of strangers if the common carrier’s
employees through the exercise of due diligence could
have prevented or stopped the act or omission. In
case of such death or injury, a carrier is presumed to
have been at fault or been negligent, and by simple
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proof of injury, the passenger is relieved of the duty
to still establish the fault or negligence of the carrier
or of its employees and the burden shifts upon the
carrier to prove that the injury is due to an unforeseen
event or to force majeure. In the absence of
satisfactory explanation by the carrier on how the
accident occurred, which petitioners, according to the
CA, have failed to show, the presumption would be
that it has been at fault, an exception from the general
rule that negligence must be proved.
For ROMAN- There is no showing that HE is guilty of
any culpable act or omission; hence, he is absolved
from liability. The contractual tie between the LRT and
Navidad is not itself a juridical relation between the
latter and Roman; thus, Roman can be made liable
only for his own fault or negligence.
PRUDENT cannot be made solidarily liable with LRTA.
The liability is only for tort under the provisions
of Article 2176 and related provisions, in
conjunction with Article 2180, of the Civil Code.
The premise for the employer’s liability is negligence
or fault on the part of the employee. Once such fault
is established, the employer can then be made liable
on the basis of the presumption juris tantum that the
employer failed to exercise diligentissimi patris
families in the selection and supervision of its
employees. The liability is primary and can only be
negated by showing due diligence in the selection and
supervision of the employee, a factual matter that has
not been shown. Absent such a showing, one might
ask further, how then must the liability of the common
carrier, on the one hand, and an independent
contractor, on the other hand, be described? It would
be solidary. A contractual obligation can be breached
by tort and when the same act or omission causes the
injury, one resulting in culpa contractual and the other
in culpa aquiliana, Article 2194 of the Civil Code can
well apply. In fine, a liability for tort may arise even
under a contract, where tort is that which breaches
the contract. Stated differently, when an act which
constitutes a breach of contract would have itself
constituted the source of a quasi-delictual liability had
no contract existed between the parties, the contract
can be said to have been breached by tort, thereby
allowing the rules on tort to apply.
Regrettably for LRT, as well as perhaps the surviving
spouse and heirs of the late Navidad, "there is nothing
to link (Prudent) to the death of Nicanor (Navidad),
for the reason that the negligence of its employee,
Escartin, has not been duly proven x x x."
Ramos et. al v. China Southern Airlines Co. Ltd.
G.R. No. 213418 | Date: September 22, 2008
Facts: Petitioners purchased five China Southern
Airlines round trip plane tickets from Active Travel
Agency. Nothing eventful happened during their flight
going to Xiamen. However, on their way back to
Manila, they were prevented from taking their
designated flight. According to the airline agent, they
were merely chance passengers but they may be
allowed to join the flight of they are willing pay an
additional amount.
Since they have business commitments in Manila,
they were constrained to rent a car that took them to
Chio Station where they boarded the train to HK. They
purchased new tickets from PAL that flew them back
to Manila.
Petitioner’s Argument/s:They had an unfortunate
fate with China Southern Airlines. They initiated an
action before the RTC against China Southern Airlines
and Active Travel for actual, moral, and exemplary
damages. (WON)
Respondent’s Arguments: : Petitioners were not
confirmed passengers of the airlines but were merely
chance passengers. It was provided in the issued
tickets that petitioners are required to re-confirm all
their bookings at least 72 hours before their scheduled
time of departure but they failed to do so which
resulted in the automatic cancellation of their
bookings
Ruling of the lower court: The RTC ordered China
Southern Airlines to pay for damages.
CA, in its decision, deleted the award of moral and
exemplary damages
Issues:
1. WON the CA Committed Grave and Serious
Error When it deleted the awards of moral and
exemplary damages, a departure from established
doctrines that passengers who are bummed-off are
entitled to moral and exemplary damages. (YES)
2. WON the CA Committed Grave and Serious
Error when it declared that bumping off of the
petitioners was not attended by bad faith and malice
contrary to the findings of the lower court. (YES)
3. WON the CA committed grave and serious
error when it held that the legal interest commences
only from the finality of the decision instead of from
the date of extra-judicial demand (YES)
Rule: Article 1755 of the NCC provides: A common
carrier is bound to carry passengers safely as far as
human care and foresight can provided, using the
utmost diligence of very cautious persons, with due
regard for all the circumstances.
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In action based on a breach of contract of carriage,
the aggrieved party does not have to prove that the
common carrier was at fault or was negligent. All that
he has to prove is the existence of contract and the
fact of its non-performance by the carrier through the
latter’s failure to carry the passenger to its destination
With respect to moral damages, the following
provision of the New Civil Code is instructive:
Article 2220. Willful injury to property may be a legal
ground for awarding moral damages if the court
should and that, under the circumstances, such
damages are justly due. The same rule applies to
breaches of contrac where the defendant acted
fraudulently or in bad faith.
Bad faith does not simply connote bad judgment or
negligence. It imports dishonest purpose or some
moral obliquity and conscious doing of a wrong. It
means breach of a known duty through some motive,
interest or ill will that partakes the nature of fraud.
Bad faith is in essence a question of intention.
Application:
1. In the case at bar, petitioners had an existing
contract of air carriage with China as evidenced by the
airplane tickets issued by Air Travel. There is no doubt
that petitioners are entitled to actual or compensatory
damages. Both the RTC and the CA uniformly held that
there was a breach of contract committed by China
Southern Airlines when it failed to deliver petitioners
to their intended destination, a factual finding that we
do not intend to depart from in the absence of showing
that it is unsupported by evidence. As the aggrieved
parties, petitioners had satisfactorily proven the
existence of the contract and the fact of its non-
performance by China Southern Airlines; the
concurrence of these elements called for the
imposition of actual or compensatory damages.
China Southern Airlines is also liable for exemplary
damages as it acted in a wantonly oppressive manner
as succinctly discussed above against the petitioners.
Exemplary damages which are awarded by way of
example or correction for the public good, may be
recovered in contractual obligations, as in this case, if
the defendant acted in wanton, fraudulent, reckless
oppressive or malevolent manner.
2. The airline company acted in bad faith in
insolently bumping petitioners off the flight after they
had completed all the pre-departure routine. Bad faith
is evident when the ground personnel of the airline
company unjustly and unreasonably refused to board
petitioners to the plane which compelled them to rent
a car and take the train to the nearest airport where
they bought new sets of plane tickets from another
airline that could fly them home.
3. 6% rate of interest per annum shall be
reckoned from the date of their extrajudicial demand
on 18 August 2003 until the date of finality of this
judgment. The total amount shall thereafter earn
interest at the rate of six percent (6%) per annum
from such finality of judgment until its satisfaction.
Sps. Fernando v. Northwest Airlines, Inc.
G.R. No. | Date
Facts:
Spouses Jesus and Elizabeth S. Fernando are frequent
flyers of Northwest Airlines, Inc. and are holders of
Elite Platinum World Perks Card, the highest category
given to frequent flyers of the carrier.
First Incident
When Jesus Fernando presented his documents at the
immigration counter, he was asked by the
Immigration Officer to have his return ticket verified
and validated since the date reflected thereon is
August 2001. So he approached a Northwest
personnel who was later identified as Linda
Puntawongdaycha, but the latter merely glanced at
his ticket without checking its status with the
computer and peremptorily said that the ticket has
been used and could not be considered as valid. He
then explained to the personnel that he was about to
use the said ticket on August 20 or 21, 2001 on his
way back to Manila from LA but he could not book any
seat because of some ticket restrictions so he,
instead, purchased a new business class ticket on the
said date. Hence, the ticket remains unused and
perfectly valid.
To avoid further arguments, Jesus Fernando gave the
personnel the number of his Elite Platinum World
Perks Card for the latter to access the ticket control
record with the airline's computer and for her to see
that the ticket is still valid. But Linda
Puntawongdaycha refused to check the validity of the
ticket in the computer but instead informed the
Immigration Officer that the ticket is not valid because
it had been used.
The Immigration Officer brought Jesus Fernando to
the interrogation room of the Immigration and
Naturalization Services where he was asked
humiliating questions for more than two hours. When
he was finally cleared by the Immigration Officer, he
was granted only a twelve-day stay in the United
States instead of the usual six months.
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Second Incident
They have confirmed bookings on Northwest Airlines
NW Flight No. 001 for Narita, Japan and NW 029 for
Manila. They checked in with their luggage at LA
Airport and were given their respective boarding
passes for business class seats and claim stubs for six
pieces of luggage. With boarding passes and
electronic tickets, they were allowed entry to the
departure area. However, in the presence of the other
passengers, Northwest personnel Linda Tang pulled
the Fernandos out of the queue and asked for paper
tickets (coupon type). Elizabeth Fernando explained
to Linda Tang that the matter could be sorted out by
simply verifying their electronic tickets in her
computer and all she had to do was click and punch in
their Elite Platinum World Perks Card number. Again,
the Northwest personnel refused to do so; she,
instead, told them to pay for new tickets so they could
board the plane. Hence, the Fernandos rushed to the
Northwest Airline Ticket counter to clarify the matter.
They were assisted by Northwest personnel Jeanne
Meyer who retrieved their control number from her
computer and was able to ascertain that the
Fernandos' electronic tickets were valid, and they
were confirmed passengers on both NW Flight No. 001
for Narita Japan and NW 029 for Manila on that day.
The personnel who assisted the Fernandos printed
coupon tickets for them and advised them to rush
back to the boarding gates since the plane was about
to depart. But when the Fernandos reached the
boarding gate, the plane had already departed.
Petitioner’s Argument/s:
Northwest explained that its personnel were only
following Northwest standard boarding procedures
when she asked the Fernandos for their tickets even
if they had boarding passes. Thus, the conduct cannot
be construed as bad faith.
Northwest averred that the award of moral damages
and attorney's fees were exorbitant because such
must be proportionate to the suffering inflicted.
Furthermore, it is not obliged to give any "special
treatment" to the Fernandos just because they are
good clients of Northwest, because the supposed
obligation does not appear in the contract of carriage.
Respondent’s Arguments:
Fernandos contended that it was the personal
misconduct, gross negligence and the rude and
abusive attitude of Northwest employees which
subjected them to indignities, humiliation and
embarrassment. Attitude of the aforesaid employees
was wanton and malevolent allegedly amounting to
fraud and bad faith.
The wrong information given by Linda
Puntawongdaycha aroused doubts and suspicions on
Jesus Fernando's travel plans. The latter was then
subjected to two (2) hours of questioning which
allegedly humiliated him
Ruling of the lower court:
It ruled in favor of the Fernandos and ordered
NorthWest to pay for damages.
Issue:
WON there was breach of contract of carriage
Whether it was done in a wanton, malevolent or
reckless manner amounting to bad faith
Rule:
Under Article 1732 of the Civil Code, this "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" is
called a common carrier.
Article 1733 of the New Civil Code provides that
common carriers, from the nature of their business
and for reasons of public policy, are bound 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.
Article 1755 of the same Code states that a common
carrier is bound to carry the passengers safely as far
as human care and foresight can provide, using the
utmost diligence of very cautious persons, with due
regard for all the circumstances.
Application:
A contract of carriage existed between Northwest and
the Fernandos. They voluntarily and freely gave their
consent to an agreement whose object was the
transportation of the Fernandos from LA to Manila,
and whose cause or consideration was the fare paid
by the Fernandos to Northwest.
Northwest committed a breach of contract "in failing
to provide the spouses with the proper assistance to
avoid any inconvenience" and that the actuations of
Northwest in both subject incidents "fall short of the
utmost diligence of a very cautious person expected
of it."
Fernandos are not just ordinary passengers but, in
fact, frequent flier of Northwest, the latter should have
been more courteous and accommodating to their
needs so that the delay and inconveniences they
suffered could have been avoided. Northwest was
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remiss in its duty to provide the proper and adequate
assistance to them.
Passengers do not contract merely for transportation.
They have a right to be treated by the carrier's
employees with kindness, respect, courtesy and due
consideration. They are entitled to be protected
against personal misconduct, injurious language,
indignities and abuses from such employees. So it is,
that any rule or discourteous conduct on the part of
employees towards a passenger gives the latter an
action for damages against the carrier.
As to the first incident, in ignoring Jesus Fernando's
pleas to check the validity of the tickets in the
computer, the Northwest personnel exhibited an
indifferent attitude without due regard for the
inconvenience and anxiety Jesus Fernando might have
experienced. As to the second incident, there was
likewise fraud or bad faith on the part of Northwest
when it did not allow the Fernandos to board their
flight for Manila on January 29, 2002, in spite of
confirmed tickets.
Thus, Northwest committed a breach of contract "in
failing to provide the spouses with the proper
assistance to avoid any inconvenience" and that the
actuations of Northwest in both subject incidents "fall
short of the utmost diligence of a very cautious person
expected of it".
Air France v. Zani
G.R. No. 199767 | March 13, 2019
Facts:
● Petitioner Air France and Respondent Zani
executed a credit agreement allowing Zani to
purchase airline tickets on credit and at a fixed
price from Air France. Zani bought several airline
tickets.
● On May 2000, he had an outstanding balance of
P1,738,180, prompting Air France to send a
demand letter.
● On July 14, 2004, Air France, through its counsel,
wrote respondent informing him that he will be
refused carriage on any of Air France’s flights
until he settles his balance.
● Due to Zani’s failure to pay, Air France filed a
collection case. Both RTC & CA ruled in favor of
Air France.
● Thereafter, on July 2000, Zani purchased and
booked flights through ANSCOR Travel Corp, a
travel agency. The trips were for July 12-24,
2000, and involved several airlines including Air
France.
● For Zani’s July 16 flight from Mahe Island to Paris,
he was refused boarding.
● Petitioner's manager in Mahe Island executed a
written document which detailed the supposed
reason for the refusal of embarkation. The letter
reads, in part: “This refusal is linked to Article 7,
of the general terms and condition of
transportation — passengers and luggage —
stating: The airline carrier may, at any boarding
gate, and/or at any connection gate, refuse the
boarding of a passenger or the loading of a
luggage, if he has previously informed the
passenger in writing that he does not want to
carry him/her anymore or if any of the following
cases has happened:
○ the applicable air-fare or all due
expenses or taxes have not been paid,
or
○ credit arrangements have not been
made between the air-carrier and the
passenger (or the person who buys the
ticket).
● Aggrieved, Zani filed a complaint for damages.
Petitioner’s Argument/s: (LOST)
Air France argued that at the time of the incident,
respondent was indebted to it, which is a clear
violation of their credit arrangement; hence, when Air
France refused carriage to respondent, it was merely
enforcing its rights under Art. VII (1)(G) of their
General Conditions.
Respondent’s Arguments: (WON)
Zani claims that petitioner's refusal was a breach of
the contract of carriage between him, petitioner, and
SAL, which caused him actual and moral damages.
Ruling of the lower court:
● RTC ruled in favor of Zani on the ground that both
parties had a perfected contract when Air France
confirmed Zani’s tickets twice, and that Air
France’s refusal to let respondent on board was a
breach of such contract, notwithstanding Zani’s
pending obligation.
● CA affirmed decision in toto.
Issue:
Whether Air France committed a breach of contract by
refusing carriage to respondent. (Yes, but SC modified
the award of damages)
Rule:
When an airline issues a ticket to a passenger,
confirmed for a particular flight on a certain
date, a contract of carriage arises. The passenger
has every right to expect that he be transported on
that flight and on that date, and it becomes the
1
PAL v. CA.
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airline's obligation to carry him and his luggage safely
to the agreed destination without delay. If the
passenger is not so transported or if in the process of
transporting, he dies or is injured, the carrier may be
held liable for a breach of contract of carriage.1
Application:
Undoubtedly, a contract of carriage existed between
Air France and Zani. He carried confirmed tickets
covering several flights with petitioner. Further, to
their contract, respondent had the right to expect that
he would fly from Mahe Island to Paris on July 16.
Since petitioner refused to transport him, petitioner
evidently breached their contract of carriage and
respondent had every right to sue for this breach.
On Air France’s argument on Zani’s previous unpaid
purchases, Article 7 of its General Conditions is
unclear if it applies to prior ticket purchases or if it is
limited to the July 16 flight to Paris. SC held that
petitioner can only refuse carriage due to non-
payment of the fare or credit arrangement for that
particular ticket/flight. In this case, respondent’s
unpaid obligation to petitioner did not include the
flight where he was refused.
Furthermore, the ambiguities in the contract, being
one of adhesion, should be construed against the
party that caused its preparation – in this case,
petitioner.
Common Carriers
De Guzman v. CA
G.R. No. L-47822 | December 22, 1988
Facts:
Respondent Ernesto Cendana, a junk dealer, was
engaged in buying up used bottles and scrap metal in
Pangasinan. As a sideline business, he would engage
in backhauling services of different merchandise and
in turn would charge his clients a much lower freight
rates than the usual.
On November 1970, petitioner Pedro de Guzman, a
merchant and authorized dealer of General Milk
contracted with respondent for the hauling of 750
cartons of Liberty filled milk from a warehouse of
General Milk in Makati, Rizal, to petitioner's
establishment in Urdaneta on or before 4 December
1970. Accordingly, on 1 December 1970, respondent
loaded in Makati the merchandise on to his trucks:
150 cartons were loaded on a truck driven by
respondent himself, while 600 cartons were placed on
board the other truck which was driven by Manuel
Estrada, respondent's driver and employee.
Only 150 boxes of Liberty filled milk were delivered to
petitioner. The other 600 boxes never reached
petitioner, since the truck which carried these boxes
was hijacked somewhere along the MacArthur
Highway in Paniqui, Tarlac, by armed men who took
with them the truck, its driver, his helper and the
cargo.
With that, petitioner commenced action against
private respondent in demanding payment of P
22,150.00, the claimed value of the lost merchandise,
plus damages and attorney's fees.
Petitioner’s Argument/s: (LOST)
Petitioner alleged that private respondent, being a
common carrier, and having failed to exercise the
extraordinary diligence required of him by the law,
should be held liable for the value of the undelivered
goods.
Respondent’s Arguments: (WON)
In his Answer, private respondent denied that he was
a common carrier and argued that he could not be
held responsible for the value of the lost goods, such
loss having been due to force majeure.
Ruling of the lower court:
The trial court rendered a Decision' finding private
respondent to be a common carrier and holding him
liable for the value of the undelivered goods
(P22,150.00) as well as for P4,000.00 as damages
and P2,000.00 as attorney's fees.
The CA reversed the judgment and held that
respondent had been engaged in transporting return
loads of freight "as a casual occupation — a sideline
to his scrap iron business" and not as a common
carrier.
Issue:
1. Whether or not private respondent is a common
carrier (YES)
2. Whether private respondent is liable for the loss of
the goods (NO)
Rule:
Article 1732. Common carriers are persons,
corporations, firms or associations engaged in the
business of carrying or transporting passengers or
goods or both, by land, water, or air for compensation,
offering their services to the public.
Article 1734 establishes the general rule that common
carriers are responsible for the loss, destruction or
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deterioration of the goods which they carry, "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; and
(5) Order or act of competent public authority.
Application:
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. 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. 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 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.
Planters Products, Inc. v. CA
GR No. 101503 | September 15, 1993
Facts:
Planters Products purchased from Mitsubishi
International Corp. 9.3K metric tons of Urea
(fertilizer), 46% of which the latter shipped in bulk
aboard the cargo vessel M/V “Sun Plum” owned by
Kyosei Kisen Kabushiki Kaisha (KKKK). Prior to its
voyage, a time-charter party on the vessel M/V “Sun
Plum” pursuant to the Uniform General Charter was
entered into between Mitsubishi as shipper/charter
and KKKK as ship owner.
Before loading the fertilizer aboard the vessel they
were inspected by the charterer’s representative and
found fit for loading. After the Urea fertilizer was
loaded in bulk by stevedores (somebody whose job is
to load and unload ships) hired by and under the
supervision of the shipper, the steel hatches were
closed with heavy iron lids, covered with 3 layers of
tarpaulin, then tied with steel bonds. The hatches
remained closed and tightly sealed throughout the
entire voyage.
The port area was windy, certain portions of the route
to the warehouse were sandy and the weather was
variable, raining occasionally while the discharge was
in progress. Survey report revealed a shortage in the
cargo and that a portion of the Urea fertilizer was
contaminated with sand, rust and dirt. Planters
Products sent a claim letter to Soriamont Steamship
Agencies, the resident agent of the carrier, for
damages.
Petitioner’s Argument/s: (LOST)
Since the possession and control of the vessel remain
with the shipowner, absent any stipulation to the
contrary, such shipowner should be made liable for
the negligence of the captain and crew.
Respondent’s Arguments: (WON)
The strict public policy governing common carriers
does not apply to them because they have become
private carriers by reason of the provisions of the
charter-party.
Ruling of the lower court:
The CFI Manila sustained the petitioner’s claim, but
such decision was reversed by the appellate court,
which absolved the carrier from liability.
Issue:
WON a charter-party between a shipowner and a
charterer transform a common carrier into a private
one as to negate the civil law presumption of
negligence in case of loss or damage to its cargo?
(NO)
Rule:
A "charter-party" is defined as a contract by which an
entire ship, or some principal part thereof, is let by
the owner to another person for a specified time or
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use; Charter parties are of two types: (a) contract of
affreightment which involves the use of shipping
space on vessels leased by the owner in part or as a
whole, to carry goods for others; and, (b) charter by
demise or bareboat charter, by the terms of which the
whole vessel is let to the charterer with a transfer to
him of its entire command and possession and
consequent control over its navigation, including the
master and the crew, who are his servants. Contract
of affreightment may either be time charter, wherein
the vessel is leased to the charterer for a fixed period
of time, or voyage charter, wherein the ship is leased
for a single voyage.
Application:
When petitioner chartered the vessel, the ship
captain, its officers and compliment were under the
employ of the shipowner and therefore continued to
be under its direct supervision and control. Hardly
then can we charge the charterer, a stranger to the
crew and to the ship, with the duty of caring for his
cargo when the charterer did not have any control of
the means in doing so. This is evident in the present
case considering that the steering of the ship, the
manning of the decks, the determination of the course
of the voyage and other technical incidents of
maritime navigation were all consigned to the officers
and crew who were screened, chosen and hired by the
shipowner.
It is therefore imperative that a public carrier shall
remain as such, notwithstanding the charter of the
whole or portion of a vessel by one or more persons,
provided the charter is limited to the ship only, as in
the case of a time-charter or voyage-charter. It is only
when the charter includes both the vessel and its
crew, as in a bareboat or demise that a common
carrier becomes private, at least insofar as the
particular voyage covering the charter-party is
concerned. Indubitably, a shipowner in a time or
voyage charter retains possession and control of the
ship, although her holds may, for the moment, be the
property of the charterer.
Common carriers are not responsible for the loss,
destruction or deterioration of the goods if caused by
the character of the goods or defects in the packaging
or in the containers. The probability of the cargo being
damaged or getting mixed or contaminated with
foreign particles was made greater by the fact that the
fertilizer was transported in "bulk," thereby exposing
it to the inimical effects of the elements and the grimy
condition of the various pieces of equipment used in
transporting and hauling it.
Bascos v. CA
G.R. No. | Date
Facts
● Cipriano Trading Enterprise (CIPTRADE) was
hired by Jibfair Shipping Agency to deliver
sacks of Soya Beans for Manila to Laguna
● CIPTRADE then subcontracted Bascos’ to
deliver 400 Sacks from Manila to Laguna. On
its way to laguna the truck of Bascos was
hijacked and the sacks of Soya Beans never
reached Laguna
● As per the contract of CIPTRADE with Jibfair,
CIPTRADE paid the damages amounting to
156,000
● A criminal case of robbery and carnapping
was filed against the alleged hijackers
● CIPTRADE then filed an action for damages
for breach of the contract of carriage against
Bascos
Petitioner’s Argument/s:
● Bascos claims that the contract between her
and CIPTRADE was a contract of lease and
not a contract of carriage
● She claims that her business is leasing trucks
to those who have cargo to move
● Granting arguendo, that it was a contract of
carriage, she cannot be held liable as the
hijacking was force majeure
Respondent’s Arguments:
● Basco is a common carrier as its business
name is A.M. Bascos Trucking and that she
has held out this name in public
● Basco failed to overcome the presumption of
negligence on her part
Ruling of the lower court:
● RTC ruled in favor of CIPTRADE
● CA affirmed in toto RTC’s ruling
Issue:
1. Whether Bascos is a common carrier (Yes)
2. Whether the hijacking was can referred to as
force majeure (No)
Rule:
1.
● Article 1732 defines common carriers as “a
person, corporation or firm, or association
engaged in the business of carrying or
transporting passengers or goods or both, by
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land, water or air, for compensation, offering
their services to the public”
● SC said that even Bascos admitted that she
is in the business of offering her trucks to
persons who has cargoes to move.
● It said that Article 1732 does not distinguish
from a person doing the business of carrying
goods was your principal or ancillary.
2.
● Article 1735 provides that if goods are lost or
destroyed common carriers are presumed to
be negligent. To overcome such
presumption, they must show that the
hijackers acted with grave or irresistible
threat, violence or force.
● SC went on to say that it is the duty of the
carrier to prove that they exerted
extraordinary diligence.
● In this case the petitioner failed to prove that
they exercised such diligence, CIPTRADE
need not even introduce evidence of
negligence as it was Petitioner’s burden to
prove.
● The filing of the criminal case cannot also be
given weight as such case has not yet been
determined.
Application:
● The test to determine a common carrier is
"whether the given undertaking is a part of
the business engaged in by the carrier which
he has held out to the general public as his
occupation rather than the quantity or extent
of the business transacted.
● it is the duty of the carrier to prove that they
exerted extraordinary diligence.
Fabre, Jr. v. CA
G.R. No. 111127 | Date July 26, 1996
Facts:
Petitioners Engracio Fabre, Jr. and his wife were
owners of a 1982 model Mazda minibus which is
principally used as a bus service for school children in
Manila. The couple had a driver, Porfirio J. Cabil. His
job was to take school children to and from the St.
Scholastica's College in Malate, Manila.
On November 2, 1984 private respondent Word for
the World Christian Fellowship Inc. (WWCF) arranged
with petitioners for the transportation of 33 members
of its Young Adults Ministry from Manila to La Union
and back in consideration of P3,000.00.
The group was scheduled to leave on November 2,
1984, at 5:00 o'clock in the afternoon. However, as
several members of the party were late, the bus did
not leave yet until 8:00 o'clock in the evening.
Petitioner Porfirio Cabil drove the minibus.
The usual route to Caba, La Union was through
Carmen, Pangasinan. However, the bridge at Carmen
was under repair, so that petitioner Cabil, who was
unfamiliar with the area (it being his first trip to La
Union), was forced to take a detour. Petitioner Cabil
came upon a sharp curve on the highway. The road
was slippery because it was raining, causing the bus,
which was running at the speed of 50 kilometers per
hour, to skid to the left road shoulder. The bus hit the
left traffic steel brace and sign along the road and
rammed the fence of one Jesus Escano, then turned
over and landed on its left side, coming to a full stop
only after a series of impacts. The bus came to rest
off the road. A coconut tree which it had hit fell on it
and smashed its front portion. Several passengers
were injured.
Petitioner’s Argument/s:
Petitioner Cabil, claimed he did not see the curve until
it was too late. He said he was not familiar with the
area and he could not have seen the curve despite the
care he took in driving the bus, because it was dark
and there was no sign on the road. He said that he
saw the curve when he was already within 15 to 30
meters of it. He allegedly slowed down to 30
kilometers per hour, but it was too late.
Respondent’s Arguments: WON
Amyline Antonio, who was seriously injured, brought
this case in the RTC of Makati, Metro Manila. As a
result of the accident, she is now suffering from
paraplegia and is permanently paralyzed from the
waist down. During the trial she described the
operations she underwent and adduced evidence
regarding the cost of her treatment and therapy.
Ruling of the lower court:
RTC RULING:
In its decision dated April 17, 1989, the trial court
found that:
No convincing evidence was shown that the minibus
was properly checked for travel to a long distance trip
and that the driver was properly screened and tested
before being admitted for employment. Indeed, all the
evidence presented have shown the negligent act of
the defendants which ultimately resulted to the
accident subject of this case.
CA RULING:
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The Court of Appeals sustained the trial court's finding
that petitioner Cabil failed to exercise due care and
precaution in the operation of his vehicle considering
the time and the place of the accident. The Court of
Appeals held that the Fabres were themselves
presumptively negligent.
Issues:
1. Whether or not petitioners were negligent.
2. Whether or not petitioners were liable for the
injuries suffered by private respondents.
3. Whether or not damages can be awarded and in the
positive, up to what extent.
Rule:
ART. 2176. Whoever by act or omission causes
damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict
and is governed by the provisions of this Chapter
ART. 2180. The obligation imposed by article 2176 is
demandable not only for one's own acts or omissions,
but also for those of persons for whom — one is
responsible. The father and, in case of his death or
incapacity, the mother, are responsible for the
damages caused by the minor children who live in
their company
ART. 1732. Common carriers are persons,
corporations, firms or associations engaged in the
business of carrying or transporting passengers or
goods or both, by land, water, or air, for
compensation, offering their services to the public
Application:
With the exception of the award of damages, this
petition is devoid of merit.
The finding that Cabil drove his bus negligently, while
his employer, the Fabres, who owned the bus, failed
to exercise the diligence of a good father of the family
in the selection and supervision of their employee is
fully supported by the evidence on record.
In the case at bar, the Fabres, in allowing Cabil to
drive the bus to La Union, apparently did not consider
the fact that Cabil had been driving for school children
only, from their homes to the St. Scholastica's College
in Metro Manila. They had hired him only after a two-
week apprenticeship.
As already stated, this case actually involves a
contract of carriage. Petitioners, the Fabres, did not
have to be engaged in the business of public
transportation for the provisions of the Civil Code on
common carriers to apply to them.
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 (in local idiom, as "a sideline").
As common carriers, the Fabres were bound to
exercise extraordinary diligence for the safe
transportation of the passengers to their destination.
This duty of care is not excused by proof that they
exercised the diligence of a good father of the family
in the selection and supervision of their employee.
First Phil. Industrial Corp. v. CA
G.R. No. 125948 | Date: Dec 29, 1998
Facts:
● Petitioner is a grantee of a pipeline
concession under RA 387, as amended, to
contract, install and operate oil pipelines.
● In 1995, petitioner applied for a mayor’s
permit with the Office of the Mayor of
Batangas City. However, before the mayor’s
permit could be issued, respondent City
Treasurer required the petitioner to pay a
local tax based on its gross receipts for the
fiscal year 1993 pursuant to LGC.
● The petitioner paid the local tax assessed
under protest, arguing among others, that
“transportation contractors are not included
in the enumeration of contractors under
Section 131(h) of the LGC.”
● The respondent City Treasurer denied the
protest contending that petitioner cannot be
considered engaged in transportation
business, thus it cannot claim exemption
under section 133(j) of the LGC.
● Petitioner then filed with the RTC Batangas
City a complaint for tax refund with prayer
for writ of preliminary injunction against
respondents City of Batangas and Adoracion
Arellano in her capacity as City Treasurer.
Petitioner’s Argument/s: WIN
1. The imposition and collection of the business
tax on its gross receipts violates section 133
of the LGC
2. The authority of cities to impose and collect
a tax on the gross receipts of contractors and
independent contractors under section
141(e) and 151 does not include the
authority to collect such taxes on
transportation contractors for, as defined
under section 131(h), the term “contractors”
excludes transportation contractors;
3. The City Treasurer illegally and erroneously
imposed and collected the said tax, thus
meriting the immediate refund of the tax
paid.
Respondent’s Arguments: LOSS
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● Petitioner cannot be exempt from taxes
under section 133(j) of the LGC as said
exemption applies only to transportation
contractors and persons engaged in the
transportation by hire and common carriers
by air, land and water.”
● Respondent asserts that pipelines are not
included in the term “common carrier” which
refers solely to ordinary carriers such as
trucks, trains, ships and the like.
● Respondent posits that the term “common
carrier” under the said code pertains to the
mode or manner by which a product is
delivered.
Ruling of the lower court:
Dismissed the complaint of the petitioner. It argued
that the rule on tax exemptions are to be strictly
construed against the taxpayer. Exemption may
therefore be granted only by clear and unequivocal
provisions of law. In this case, the claim of tax
exemption by the plaintiff has become unclear, hence,
it should be denied.
CA affirmed the decision of the lower court.
Issue:
1. Whether or not the petitioner is a common
carrier.
Rule: YES. The petitioner is a common carrier.
A "common carrier" may be defined, broadly, as one
who holds himself out to the public as engaged in the
business of transporting persons or property from
place to place, for compensation, offering his services
to the public generally.
Article 1732 of the Civil Code defines a “common
carrier” as “any person, corporation, or association
engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air,
for compensation, offering their services to the
public."
The test for determining whether a party is a common
carrier of goods is:
1. He must be engaged in the business of carrying
goods for others as a public employment, and must
hold himself out as ready to engage in the
transportation of goods for a person generally as a
business and not as a casual occupation; 2. He must
undertake to carry goods of the kind to which his
business is confined; 3. He must undertake to carry
by the method by which his business is conducted and
over his established roads; and 4. The transportation
must be for hire.

Application:
Based on the above definitions and requirements,
there is no doubt that petitioner is a common carrier.
It is engaged in the business of transporting or
carrying goods, i.e. petroleum products, for hire as a
public employment. It undertakes to carry for all
persons indifferently, that is, to all persons who
choose to employ its services, and transports the
goods by land and for compensation. The fact that
petitioner has a limited clientele does not exclude it
from the de:nition of a common carrier.
Loadstar Shipping Co. v. CA
G.R. No. 131621 | September 28, 1999
Facts: LOADSTAR goods for shipment amounting to
over P6 million which were insured for the same
amount with MIC against various risks including total
loss by total loss of the vessel. The vessel was insured
by Prudential Guarantee & Assurance, Inc. (hereafter
PGAI) for P4 million.
On its way to Manila from Agusan del Norte, the
vessel, along with its cargo, sank off Limasawa Island
due to a typhoon. As a result, the consignee made a
claim with LOADSTAR which ignored the same. As the
insurer, MIC paid P6,075,000 to the insured in full
settlement of its claim, and the latter executed a
subrogation receipt for it.
MIC filed a complaint against LOADSTAR and PGAI,
alleging that the sinking of the vessel was due to the
fault and negligence of LOADSTAR and its employees.
It also prayed that PGAI be ordered to pay the
insurance proceeds from the loss of the vessel directly
to MIC, said amount to be deducted from MIC's claim
from LOADSTAR.
LOADSTAR denied any liability for the loss of the
shipper's goods and claimed that sinking of its vessel
was due to force majeure.
Petitioner’s Argument/s: (LOST) LOADSTAR
submits that the vessel was a private carrier because
it was not issued a certificate of public convenience, it
did not have a regular trip or schedule nor a fixed
route, and there was only "one shipper, one consignee
for a special cargo." As a private carrier, it cannot be
presumed to have been negligent, and the burden of
proving otherwise devolved upon MIC.
LOADSTAR also maintains that the vessel was
seaworthy. Before sinking, the vessel was allegedly
duly inspected by the maritime safety engineers of the
Philippine Coast Guard who certified that the ship was
fit to undertake a voyage. Its crew at the time was
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experienced, licensed and unquestionably competent.
With all these precautions, there could be no other
conclusion except that LOADSTAR exercised the
diligence of a good father of a family in ensuring the
vessel's seaworthiness.
LOADSTAR further claims that it was not responsible
for the loss of the cargo, such loss being due to force
majeure. It points out that when the vessel left
Agusan del Norte the weather was fine until the next
day when the vessel sank due to strong waves.
LOADSTAR goes on to argue that, being a private
carrier, any agreement limiting its liability, such as
what transpired in this case, is valid. Since the cargo
was being shipped at "owner's risk," LOADSTAR was
not liable for any loss or damage to the same.
Respondent’s Arguments: (WON) MIC argues that
the issue as to the classification of the vessel was not
timely raised and barred by estoppel. While it is true
that the vessel had on board only the cargo of wood
products for delivery to one consignee, it was also
carrying passengers as part of its regular business.
Moreover, the bills of lading in this case made no
mention of any charter party but only a statement that
the vessel was a "general cargo carrier." Neither was
there any "special arrangement" between LOADSTAR
and the shipper regarding the shipment of the cargo.
The singular fact that the vessel was carrying a
particular type of cargo for one shipper is not sufficient
to convert the vessel into a private carrier.
MIC further claims that LOADSTAR was liable,
notwithstanding that the loss of the cargo was due to
force majeure, because the same concurred with
LOADSTAR's fault or negligence. The " limited liability
" theory is not applicable in the case at bar because
LOADSTAR was at fault or negligent, and because it
failed to maintain a seaworthy vessel. Authorizing the
voyage notwithstanding its knowledge of a typhoon is
tantamount to negligence.
Ruling of the lower court: The court a quo rendered
judgment in favor of MIC, prompting LOADSTAR to
elevate the matter to the court of Appeals, which,
however, agreed with the trial court and affirmed its
decision in toto.
Issue:
(1) Is the M/V "Cherokee" a private or a
common carrier?
(2) Did LOADSTAR observe due and/or ordinary
diligence in these premises.
Rule:
ISSUE 1 private carrier, especially where, as in this case, it was
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.
There is 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
ancillary activity.
There is also no distinction between one offering
transportation service on a regular or scheduled basis
and one offering such service on an occasional,
episodic or unscheduled basis.
Neither is there a distinction between a carrier offering
its services to the general public and one who offers
services or solicits business only from a narrow
segment of the general population.
Moreover, a certificate of public convenience is not a
requisite for the incurring of liability. That liability
arises the moment a person or firm acts as a common
carrier, without regard to whether or not such carrier
has also complied with the requirements of the
applicable regulatory statute and implementing
regulations and has been granted a certificate of
public convenience or other franchise.
ISSUE 2
For a vessel to be seaworthy, it must be adequately
equipped for the voyage and manned with a sufficient
number of competent officers and crew. The failure of
a common carrier to maintain in seaworthy condition
its vessel involved in a contract of carriage is a clear
breach of its duty prescribed in Article 1755 of the Civil
Code. Furthermore, The doctrine of limited liability
does not apply where there was negligence on the part
of the vessel owner or agent.
Application:
ISSUE 1
The vessel is a common carrier. The records do not
disclose that the vessel undertook to carry a special
cargo or was chartered to a special person only. There
was no charter party. The bills of lading failed to show
any special arrangement, but only a general provision
to the effect that the vessel was a general cargo
carrier. Further, the bare fact that the vessel was
carrying a particular type of cargo for one shipper,
which appears to be purely coincidental, is not reason
enough to convert the vessel from a common to a
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shown that the vessel was also carrying passengers.
ISSUE 2
LOADSTAR was at fault or negligent in not maintaining
a seaworthy vessel and in having allowed its vessel to
sail despite knowledge of an approaching typhoon. In
any event, it did not sink because of any storm that
may be deemed as force majeure, inasmuch as the
wind condition in the performance of its duties,
LOADSTAR cannot hide behind the "limited liability"
doctrine to escape responsibility for the loss of the
vessel and its cargo.
Virgines Calvo (doing business under the name
and style Transorient Container Terminal
Services, Inc. v. UCPB General Insurance Co.,
Inc. (formerly Allied Guarantee Ins. Co., Inc.)
G.R. No. 148496 | March 19, 2002
Facts:
At the time material to this case, Transorient
Container Terminal Services, Inc. (TCTSI) owned by
Virgines Calvo entered into a contract with San Miguel
Corporation (SMC) for the transfer of 114 reels of
semi-chemical fluting paper and 124 reels of kraft
liner board from the Port Area in Manila to SMC's
warehouse at the Tabacalera Compound, Romualdez
St., Ermita, Manila. The cargo was insured by
respondent UCPB General Insurance Co., Inc.
On July 14, 1990, the shipment in question containing
30 metal vans, arrived in Manila on board "M/V
Hayakawa Maru" and later on unloaded from the
vessel to the custody of the arrastre operator, Manila
Port Services, Inc. From July 23 to July 25, 1990,
Calvo, pursuant to her contract with SMC, withdrew
the cargo from the arrastre operator and delivered it
to SMC's warehouse in Ermita, Manila. On July 25,
1990, goods were inspected by Marine Cargo
Surveyors, who found that 15 reels of the semi-
chemical fluting paper were "wet/stained/torn" and 3
reels of kraft liner board were likewise torn.
SMC collected payment from UCPB the total damage
of P93,112 under its insurance contract. UCPB
brought suit against Calvo as subrogee of SMC.
Petitioner’s Argument/s: (LOST)
Petitioner contends that contrary to the findings of the
trial court and the Court of Appeals, she is not a
common carrier but a private carrier because, as a
customs broker and warehouseman, she does not
indiscriminately hold her services out to the public but
only offers the same to select parties with whom she
may contract in the conduct of her business.
Petitioner denies liability for the damage to the cargo,
saying “spoilage or wettage" took place while the
goods were in the custody of either the carrying vessel
"M/V Hayakawa Maru," which transported the cargo
to Manila, or the arrastre operator, to whom the goods
were unloaded and who allegedly kept them in open
air for 9 days notwithstanding the fact that some of
the containers were deformed, cracked, or otherwise
damaged.
In addition, petitioner claims that Marine Cargo
Surveyor Ernesto Tolentino testified that he has no
personal knowledge on whether the container vans
were first stored in petitioner’s warehouse prior to
their delivery to the consignee. She likewise claims
that after withdrawing the container vans from the
arrastre operator, her driver, Ricardo Nazarro,
immediately delivered the cargo to SMC’s warehouse
in Ermita, Manila, which is a mere thirty-minute drive
from the Port Area where the cargo came from. Thus,
the damage to the cargo could not have taken place
while these were in her custody.
Respondent’s Arguments: (WON)
Contrary to petitioner's assertion, the Survey Report
of the Marine Cargo Surveyors indicates that when the
shipper transferred the cargo in question to the
arrastre operator, these were covered by clean
Equipment Interchange Report (EIR) and, when
petitioner's employees withdrew the cargo from the
arrastre operator, they did so without exception or
protest either with regard to the condition of container
vans or their contents.
Ruling of the lower court:
The trial court cannot deny that the subject cargoes
sustained damage while in the custody of defendants
(TCTSI). Evidence such as the Warehouse Entry Slip;
the Damage Report which the claims processor, Ms.
Agrifina De Luna, claimed to be tearrage at the end
and tearrage at the middle of the subject damaged
cargoes respectively, coupled with the Marine Cargo
Survey Report confirms the fact of the damaged
condition of the subject cargoes.
The surveyors' report in particular, which provides
among others that: " . . . we opine that damages
sustained by shipment is attributable to improper
handling in transit presumably whilst in the custody of
the broker . . . ." is a finding which cannot be
traversed and overturned.
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The evidence adduced by TCTSI is not enough to
sustain their defense that they are not liable. TCTSI,
by reason of the nature of business should have
devised ways and means in order to prevent the
damage to the cargoes which it is under obligation to
take custody of and to forthwith deliver to the
consignee. TCTSI did not present any evidence on
what precaution they performed to prevent said
incident, hence the presumption is that the moment
the TCTSI accepts the cargo, it shall perform such
extraordinary diligence because of the nature of the
cargo.
CA affirmed the decision on appeal. Hence this petition
for certiorari.
Issue:
1. WoN a customs broker or warehouseman
who offers services to select clients a
common carrier? (YES)
2. WoN Calvo is liable for the damage of the
goods? (YES)
Rule:
1. Article 1732 defines “common carriers” as
persons, corporations, firms, or associations
engaged in the business of carrying or
transporting passengers, or goods, or both,
by land, water, or air for compensation,
offering their services to the public.
2. Article 1735 provides that in all cases other
than those mentioned in Article 1734, if the
goods are lost, destroyed or deteriorated,
common carriers are presumed to have been
at fault or to have acted negligently, unless
they prove that they observed extraordinary
diligence as required in Article 1733.
Application:
1. Pursuant to Article 1732, petitioner is a
common carrier as transportation of goods is
an integral part of her business. This article
makes no distinction between one whose
principal business activity is the carrying of
persons or goods or both, and one who does
such carrying only as an ancillary activity.
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.
2. Petitioner is liable because she failed to prove
that she exercised extraordinary diligence in
the carriage of goods, the presumption of
negligence as provided under Article 1735
applies. The burden of the plaintiff is to prove
merely that the goods he transported have
been lost, destroyed, or deteriorated.
Thereafter, the burden is shifted to the
carrier to prove that there is an exercise of
extraordinary diligence required by law.
Thus, it has been held that the mere proof of
delivery of goods in good order to the carrier,
and of their arrival at the place of destination
in bad order, makes out a prima facie case
against the carrier, so that if no explanation
is given as to how the injury occured, the
carrier must be held liable.
Asia Lighterage and Shipping, Inc. v. CA
G.R. No. 147246 | August 19, 2003
Facts:
Petitioner was contracted as a carrier by a corporation
from Portland, Oregon to deliver cargo to the
consignee’s warehouse in Pasig. The transport of the
cargo was suspended due to an incoming typhoon.
The barge sustained a hole after hitting a
protuberance under the water. The hole was patched
with clay and cement. To avoid the complete sinking
of the barge, a portion of the goods was transferred
to three other barges. While the boat was traversing,
the towing bits of the barge broke. It sank completely,
resulting in the total loss of the remaining cargo.
Petitioner’s Argument/s:
(1) That it is not a common carrier because it has no
fixed and publicly known route, maintains no
terminals, issues no tickets, and it does not hold out
its services to the general public as it does not carry
indiscriminately for any person.
(2) That it exercised due diligence in the care and
custody of the of the consignee’s cargo
(LOST)
Respondent’s Arguments:
(1) Petitioner is a common carrier and it is liable to
pay indemnity for the damage on the goods for its
failure to exercise due diligence
(WON)
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Ruling of the lower court:
Both the RTC and CA ruled in favor of the respondent
Issue:
(1) WON petitioner is a common carrier
(2) WON it exercised extraordinary diligence
Rule:
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.
Art. 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.
Application:
(1) Yes. Petitioner is a common carrier within the
definition in Art. 1732 of the Civil Code. The
said Article does not distinguish between a
carrier offering its services to the general
public, and one who offers services or solicits
business only from a narrow segment. The
test to determine a common carrier is
whether the given undertaking is a part of
the business engaged in by the carrier which
he has held out to the general public as his
occupation rather than the quantity or extent
of the business transacted. In the case at
bar, the principal business of the petitioner is
lighterage and drayage and it offers its
barges to the public for carrying or
transporting goods by water for
compensation, despite its limited clientele.
Thus, it is a common carrier.
(2) No. Petitioner failed to exercise extraordinary
diligence in its care and custody of the
consignee’s goods. Common carriers are
bound to observe extraordinary diligence in
the vigilance over the goods transported by
them. To overcome the presumption of
 negligence in case of loss, destruction or
deterioration of goods, the common carrier
must prove that it exercised extraordinary
diligence. In the case at bar, the petitioner
failed to prove that the typhoon is the
proximate and only cause of the loss of the
goods, and that it has exercised due
diligence before, during and after the
typhoon to prevent or minimize the loss. The
barge already sustained a hole and it was
patched only with clay and cement. The
patch work was merely a provisional remedy,
not enough for the barge to sail safely.
Hence, when the petitioner persisted to
proceed with the voyage, it recklessly
exposed the cargo to further damage.
A.F. Sanchez Brokerage v. CA
G.R. No. 147079 | December 21, 2004
Facts:
Wyeth-Pharma GMBH shipped a total of 204 cartons
of contraceptives from Dusseldorf, with Hizon
Laboratories as the final destination. Wyeth-Suaco
insured the shipment with FGU Insurance.
The boxes were stored in Philippine Skylanders, Inc.
(PSI) and Sanchez Brokerage, a customs broker, was
engaged to secure the release of the cargoes.
The release was witnessed by Elite Adjusters and
Surveyors, Inc., a marine cargo surveyor and
insurance claim adjusters firm engaged by Wyeth-
Suaco on behalf of FGU Insurance.
Upon arrival at Hizon, however, 44 boxes were found
to be damaged. Wyeth-Suaco demanded payment
from Sanchez for its loss. When Sanchez refused,
Wyeth-Suaco filed an insurance claim against FGU,
which paid. FGU now seeks damages from Sanchez,
who disclaims liability.
Petitioner’s Argument/s:
FGU Insurance (insurer of Wyeth-Suaco) alleged that
Sanchez must reimburse them for the payment they
made to Wyeth for failure to exercise extraordinary
diligence required of a common carrier - WON
Respondent’s Arguments:
Sanchez argued that it is not a common carrier for its
primary line of business is customs brokerage, and
that transportation of goods to their clients is merely
incidental to their line of work. - LOST
Ruling of the lower court:
While the RTC dismissed the complaint, the CA ruled
in favor of FGU and stated that Sanchez Brokerage is
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 2 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 21
a common carrier under Art. 1732 of the Civil Code
and is thus presumed negligent, with the burden of
proving it has exercised extraordinary diligence.
Issue: W/N Sanchez is a common carrier – YES
Rule:
Civil Code Art. 1732.
Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or
transporting passengers or goods or both, by land,
water, or air, for compensation, offering their services
to the public.
Application:
While Sanchez argues that it is a customs broker, with
the principal of preparing correct customs declaration
and proper shipping documents, the Court ruled that
Art. 1732 does not distinguish between one whose
principal activity is carrying goods and one who does
it only as an ancillary activity. It is enough that
Sanchez undertakes to deliver the goods for pecuniary
consideration. Thus, Sanchez is mandated to observe
extraordinary diligence in the vigilance over the goods
it transports. In the event that the goods are lost,
destroyed or deteriorated, the carrier is presumed to
have been at fault or to have acted negligently, unless
it proves that it observed extraordinary diligence.
Sanchez failed to discharge the burden of proving that
it had exercised extraordinary diligence. Their
arguments that the boxes were already damaged
upon pick-up, that it was not raining on delivery, and
that a Wyeth-Suaco import-export assistant advised
them to pursue the delivery were not sufficiently
proven.
Thus, Sanchez Brokerage is liable.
Schmitz Transport and Brokerage Corp. v. CA
G.R. No. | Date
Facts:
SYTCO Pte Ltd. Singapore shipped from the port of
Russia on board M/V Alexander Saveliev (a vessel of
Russian registry and owned by Black Sea) 545 hot
rolled steel sheets.
The cargoes, which were to be discharged at the port
of Manila in favor of the consignee, Little Giant Steel
Pipe Corporation (Little Giant), were insured against
all risks with Industrial Insurance Company Ltd.
(Industrial Insurance).
Schmitz Transport, whose services the consignee
engaged to secure the requisite clearances, to receive
the cargoes from the shipside, and to deliver them to
its (the consignees) warehouse in turn engaged the
services of TVI to send a barge and tugboat at
shipside.
By 7:00 p.m. also of October 26, 1991, the tugboat,
after positioning the barge alongside the vessel, left
and returned to the port terminal. At 9:00 p.m.,
arrastre operator commenced to unload 37 of the 545
coils from the vessel unto the barge. By 12:30 a.m. of
October 27, 1991 during which the weather condition
had become inclement due to an approaching storm,
the unloading unto the barge of the 37 coils was
accomplished. however, No tugboat pulled the barge
back to the pier. At around 5:30 a.m. of October 27,
1991, due to strong waves, the crew of the barge
abandoned it and transferred to the vessel. The barge
pitched and rolled with the waves and eventually
capsized, washing the 37 coils into the sea. At 7:00
a.m., a tugboat finally arrived to pull the already
empty and damaged barge back to the pier. Earnest
efforts on the part of both the consignee Little Giant
and Industrial Insurance to recover the lost cargoes
proved futile.
Little Giant thus filed a formal claim against Industrial
Insurance. Industrial Insurance later filed a complaint
against Schmitz Transport, TVI, and Black Sea
through for the recovery of the amount it paid to Little
Giant. Industrial Insurance faulted the defendants for
undertaking the unloading of the cargoes while
typhoon signal No. 1 was raised in Metro Manila.
Petitioner’s Argument/s:
Schmitz Transport (petitioner): asserts that in
chartering the barge and tugboat of TVI, it was acting
for its principal, consignee Little Giant, hence, the
transportation contract was by and between Little
Giant and TVI.
Respondent’s Arguments:
Black Sea: argued that the cargoes were received by
the consignee through petitioner in good order, hence,
it cannot be faulted, it having had no control and
supervision
TVI: maintained that it acted as a passive party as it
merely received the cargoes and transferred them
unto the barge upon the instruction of petitioner.
Ruling of the lower court:
Issue:
1. Whether the loss of the cargoes was due to
a fortuitous event, independent of any act of
negligence on the part of petitioner Black Sea
and TVI. (NO)
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2. If there was negligence, whether liability for the
loss may attach to Black Sea, petitioner and TVI. (Yes)
Rule:
1. That no tugboat towed back the barge to the
pier after the cargoes were completely
loaded by 12:30 in the morning is a material
fact which the appellate court failed to
properly consider and appreciate the
proximate cause of the loss of the cargoes.
Had the barge been towed back promptly to
the pier, the deteriorating sea conditions
notwithstanding, the loss could have been
avoided. But the barge was left floating in
open sea until big waves set in at 5:30 a.m.,
causing it to sink along with the cargoes.
2. Petitioner is a common carrier. For it
undertook to transport the cargoes from the
shipside of M/V Alexander Saveliev to the
consignees warehouse. As long as a person
or corporation holds itself to the public for
the purpose of transporting goods as a
business, it is already considered a common
carrier regardless if it owns the vehicle to be
used or has to hire one. That petitioner is a
common carrier, the testimony of its own
Vice-President and General Manager that
part of the services it offers to its clients as a
brokerage firm includes the transportation of
cargoes reflects so.
It is settled that under a given set of facts, a customs
broker may be regarded as a common carrier. Article
1732 does not distinguish between one whose
principal business activity is the carrying of goods and
one who does such carrying only as an ancillary
activity. The contention, therefore, of petitioner that
it is not a common carrier but a customs broker whose
principal function is to prepare the correct customs
declaration and proper shipping documents as
required by law is bereft of merit. It suffices that
petitioner undertakes to deliver the goods for
pecuniary consideration.
This Court held that as the transportation of goods is
an integral part of a customs broker, the customs
broker is also a common carrier. For to declare
otherwise would be to deprive those with whom it
contracts the protection which the law affords them
notwithstanding the fact that the obligation to carry
goods for its customers, is part and parcel of
petitioner’s business.
Application:
In the case of TVI, while it acted as a private carrier
for which it was under no duty to observe
extraordinary diligence, it was still required to observe
ordinary diligence to ensure the proper and careful
handling, care and discharge of the carried goods as
so provided by Article 1770 and 1773 of the Civil
Code. If the law or contract does not state the
diligence which is to be observed in the performance,
that which is expected of a good father of a family
shall be required.
Reasonable care and caution which an ordinarily
prudent person would have used in the same situation
was NOT exercised by TVI. TVIs failure to promptly
provide a tugboat did not only increase the risk that
might have been reasonably anticipated during the
shipside operation, but was the proximate cause of
the loss. A man of ordinary prudence would not leave
a heavily loaded barge floating for a considerable
number of hours, at such a precarious time, and in the
open sea, knowing that the barge does not have any
power of its own and is totally defenseless from the
ravages of the sea. That it was nighttime and,
therefore, the members of the crew of a tugboat
would be charging overtime pay did not excuse TVI
from calling for one such tugboat.
As for petitioner, for it to be relieved of liability, it
should prove that it exercised due diligence to prevent
or minimize the loss, before, during and after the
occurrence of the storm in order that it may be
exempted from liability for the loss of the goods. While
petitioner sent checkers and a supervisor on board the
vessel to counter- check the operations of TVI, it failed
to take all available and reasonable precautions to
avoid the loss. After noting that TVI failed to arrange
for the prompt towage of the barge despite the
deteriorating sea conditions, it should have
summoned the same or another tugboat to extend
help, but it did not.
As for Black Sea, its duty as a common carrier
extended only from the time the goods were
surrendered or unconditionally placed in its
possession and received for transportation until they
were delivered actually or constructively to consignee
Little Giant.
Parties to a contract of carriage may, however, agree
upon a definition of delivery that extends the services
rendered by the carrier. In the case at bar, Bill of
Lading No. 2 covering the shipment provides that
delivery be made to the port of discharge or so near
thereto as she may safely get, always afloat. The
delivery of the goods to the consignee was not from
pier to pier but from the shipside of M/V Alexander
Saveliev and into barges, for which reason the
consignee contracted the services of petitioner. Since
Black Sea had constructively delivered the cargoes to
Little Giant, through petitioner, it had discharged its
duty.
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 2 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 23
Phil. Charter v. M/V “National Honor”
G.R. No. 161833 | July 8, 2005
Facts: J. Trading CO. of KOREA represented by its
Philippine agent National Shipping Corp (NSCP)
loaded a shipment of parts and accessories on board
vessel M/V National Honor bound for MNL. The
ultimate consignee was Blue Mono Intl Co. (BMICI).
NSCP issued a bill of lading in the name of the freight
forwarder. (The ff are important facts) The
shipment was enclosed in two wooden crates. There
were no markings on the crates. On the flooring of the
wooden crates were wooden battens placed side by
side to support the weight of the cargo. The cargo was
insured for 2.5Mpesos with Philippine Charter
Insurance Corp (PCIC). In MNL, the cargo was
received at the port and the International Container
terminal Services Inc. (ICTSI) was furnished with a
copy of the crate cargo list and bill of lading. The next
day, the cargo was to be discharged using a crane by
the arrastre operator of ICTSI. After inspecting the
hatches and the cargo (found to be in good condition),
they started lifting the crate until it was 5 feet off the
air. Then the wooden flooring of the cargo snapped
and its contents crashed down hard resulting in
damages. BMICI filed a claim for damages against
NSCP and ICTSI. PCIC as insurer, paid BMICI, and was
subrogated as consignee.
Petitioner’s Argument (PCIC - LOST): The
petitioner avers that the shipment was sufficiently
packed in wooden boxes, as shown by the fact that it
was accepted on board the vessel and arrived in
Manila safely. That the respondents did not contest
the contents of the bill of lading, and that the
respondents knew that the manner and condition of
the packing of the cargo was normal and barren of
defects.
Respondent’s Arguments (ICTSI - WON): Claims
that the loss/damage of the shipment was caused
exclusively by the defective material of the wooden
battens of the shipment, insufficient packing or acts
of the shipper. He concluded that the loss/damage
was caused by the failure of the shipper or its packer
to place wooden battens of strong materials under the
flooring of the crate, and to place a sign in its mid-
term section where the sling cables would be placed
once hoisted for transport.
Ruling of the lower court: RTC and CA dismissed
the complaint. RTC: the damages to the cargo was
due to the internal defect and weakness of the
materials used in the fabrication of the crates. CA: it
blamed the shipper for its failure to use materials of
stronger quality to support the heavy machines and
to indicate an arrow in the middle portion of the cargo
where additional slings should be attached. The CA
concluded that common carriers are not
absolute insurers against all risks in the
transport of the goods.
Issue: Who is to blame for the damages sustained by
the cargo? (THE SHIPPER and PCIC as the insurer, will
bear the loss).
Rule: 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, Art 1734 of the New Civil Code, the
presumption of negligence does not apply to any of
the following causes:
xxx
4. The character of the goods or defects in the packing
or in the containers;
xxx
To exculpate the carrier 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 (under ART 1734) 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.
Application: In the present case, based on the
record, the loss of the shipment was caused by the
negligence of the petitioner as the shipper. The crate
was provided by the shipper of the machineries in
Seoul, Korea. There is nothing in the record which
would indicate that defendant ICTSI had any role in
the choice of the materials used in fabricating this
crate.
The case at bar falls under one of the exceptions
mentioned in Article 1734 of the Civil Code,
particularly number (4) thereof, i.e., the character of
the goods or defects in the packing or in the
containers. The lower court found that the breakage
of the crate was not due to the fault or negligence of
ICTSI, but to the inherent defect and weakness of the
materials used in the fabrication of the said crate.
Petitioner’s allegation that since the cargo arrived
safely in MNL without defect, the fault should be
attributed to the arrastre operator who mishandled
the cargo; is without merit. The cargo fell while it was
being carried only at about 5 feet high above the
ground. It would not have so easily collapsed had the
cargo been properly packed. The shipper should have
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used materials of stronger quality to support the
heavy machines. Not only did the shipper fail to
properly pack the cargo, it also failed to indicate an
arrow in the middle portion of the cargo where
additional slings should be attached. At any rate, the
issue of negligence is factual in nature and in this
regard, it is settled that factual findings of the lower
courts are entitled to great weight and respect on
appeal, and, in fact, accorded finality when supported
by substantial evidence.
Lea Mer Industries Inc. v. Malayan Insurance
G.R. No. 161745 | Sept. 30, 2005
Facts:
This is a petition for Review under Rule 45 of RoC.
Ilian Silica Mining entered into a contract of carriage
with lea Mer Industries, Inc., for the shipment of 900
metric tons of silica sand valued at P565,000. It was
consigned to Vulcan Industrial and mining Corporation
and the cargo was to be transported from Palawan to
Manila. The Silica sand was placed on board Judy VII,
a barge leased by Lea Mer. This vessel sank which
resulted in the loss of the cargo.
The respondent, as insurer, paid Vulcan the value of
the lost cargo. In order to recover such amount and
exercise its right of subrogation, the respondent
demanded reimbursement from the petitioner, but the
latter refused to comply. Respondent then instituted
a complaint with the RTC of Manila for the collection
of P565,000 representing the amount that they had
paid to Vulcan.
Petitioner’s Argument/s:
Lea Mer claimed that the loss of the cargo was due to
the bad weather condition brought about by Typhoon
Trining. Evidence was presented to show that
petitioner had not been informed of the incoming
typhoon, and that the Philippine Coast Guard had
given it clearance to begin the voyage. LOST
Respondent’s Arguments:
---
Ruling of the lower court:
The RTC dismissed the complaint and found that the
cause of the loss was a fortuitous event. It further
noted that the vessel had sunk because of the bad
weather condition brought about by Typhoon Trining.
It ruled that petitioner had no advance knowledge of
the incoming typhoon and the vessel was cleared by
the Philippine Coast Guard to travel from Palawan to
Manila.
CA held that the vessel was not seaworthy when it
sailed for Manila and that the loss of the cargo was
occasioned by petitioner’s fault, not by a fortuitous
event.
Issue:
1. WON the petitioner is liable for the loss of the
cargo. YES
2. WON the survey report of Jesus Cortez is
admissible in evidence. NO
Rule:
Common carriers - persons, corporations, firms or
associations engaged in the business of carrying or
transporting passengers or goods, or both - by land,
water, or air - when this service is offered to the public
for compensation.
Charter parties are classified as contracts of:
1. demise/bareboat charter - charterer will be
considered as owner for the vorage or service
stipulated, it mans the vessel with his own
people and becomes the owner pro hac vice,
subject to liability to others for damages
caused by negligence-- indicates a business
undertaking that is private in character
2. affreightment charter - anything short of
such a complete transfer
Presumption: Common carriers are at fault or to have
acted negligently for loss or damage to the goods that
they have transported. Such can only be rebutted only
by proof that they observed extraordinary diligence,
or that the loss or damage was occasion by any of the
following causes:
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;
e) Order or act of competent public authority."
Article 1174 of the Civil Code provides that "no person
shall be responsible for a fortuitous event which could
not be foreseen, or which, though foreseen, was
inevitable." Thus, if the loss or damage was due to
such an event, a common carrier is exempted from
liability.
Elements of a "fortuitous event" as follows: (a) the
cause of the unforeseen and unexpected occurrence,
or the failure of the debtors to comply with their
obligations, must have been independent of human
will; (b) the event that constituted the caso fortuito
must have been impossible to foresee or, if
foreseeable, impossible to avoid; (c) the occurrence
must have been such as to render it impossible for the
debtors to fulDll their obligation in a normal manner;
and (d) the obligor must have been free from any
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 2 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 25
participation in the aggravation of the resulting injury
to the creditor
Application:
Petitioner is a common carrier as it offers to the public
its business of transporting goods through its vessels.
SC corrected the trial court’s finding that petitioner
became a private carrier when Vulcan chartered it.
The Contract was one of affreightment, shown by the
fact that it was the petitioner's crew that manned the
tugboat M/V Ayalit and controlled the barge Judy VII.
Petitioner herein was a common carrier.
Common carriers are bound to observe extraordinary
diligence in their vigilance over the goods and the
safety of the passengers they transport. Such requires
them to render service with the greatest skill and
foresight to avoid damage and destruction to the
goods entrusted for carriage and delivery.
The evidence presented by Lea Mer in support of its
defense of fortuitous event was sorely insufficient. It
was not enough for the common carrier to show that
there was an unforeseen or unexpected occurrence.
No evidence was presented to show that it had
attempted to minimize or prevent the loss before,
during or after the alleged fortuitous event. Joey
Draper (witness) testified that he could no longer
remember whether anything had been done to
minimize the loss.
The alleged fortuitous event was not the sole and
proximate cause of the loss as respondent was able to
prove that there were holes in the hull of the barge
that might have caused or aggravated the sinking.
The petitioner was not able to rebut the existence of
the holes. Domingo Luna (witness) testified that he
had not personally inspected it when it left Palawan.
The submission of the Philippine Coast Guard's
CertiDcate of Inspection of Judy VII, dated July 31,
1991, did not conclusively prove that the barge was
seaworthy.
On the admissibility of the Survey report, such should
have been admitted in evidence as Jesus Cortez
(cargo surveyor) did not testify during the trial,
making the report that he had prepared as hearsay
and tehrefore inadmissible for the purpose of proving
the truth of its contents. Even without the survey
report, petitioner already failed to overcome the
presumption of fault that applies to common carriers.
Loadstar Shipping v. Pioneer Asia
G.R. No. | Date
Facts:
Petitioner’s Argument/s:
Respondent’s Arguments:
Ruling of the lower court:
Issue:
Rule:
Application:
Cebu Salvage Corp. v. Phil. Home Assurance
Corp.
G.R. No.150403 | January 25, 2007
Facts:
On November 12, 1984, petitioner Cebu
Salvage Corporation (as carrier) and Maria Cristina
Chemicals Industries, Inc. [MCCII] (as charterer)
entered into a voyage charter wherein petitioner was
to load 800 to 1,100 metric tons of silica quartz on
board the M/T Espiritu Santo at Ayungon, Negros
Occidental for transport to and discharge at Tagoloan,
Misamis Oriental to consignee Ferrochrome Phils.,
Inc.||
Pursuant to the contract, petitioner received
and loaded 1,100 metric tons of silica quartz on board
the M/T Espiritu Santo but the shipment never
reached its destination, because the M/T Espiritu
Santo sank, resulting in the total loss of the cargo.
MCCII filed a claim for the loss of the
shipment with its insurer, respondent Philippine Home
Assurance Corporation. Respondent paid the claim in
the amount of P211,500 and was subrogated to the
rights of MCCII and thereafter filed a case against
petitioner for reimbursement of the amount it paid
MCCII.
Petitioner’s Argument/s:
Petitioner and MCCII entered into a "voyage charter”,
under which, the shipowner retains the possession,
command and navigation of the ship, the charterer or
freighter merely having use of the space in the vessel
in return for his payment of freight.
An owner who retains possession of the ship remains
liable as carrier and must answer for loss or non-
delivery of the goods received for transportation.|||
The agreement was merely a contract of hire wherein
MCCII hired the vessel from its owner, ALS Timber
Enterprises (ALS). Not being the owner of the M/T
Espiritu Santo, petitioner did not have control and
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 2 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 26
supervision over the vessel, its master and crew.
Thus, it could not be held liable for the loss of the
shipment caused by the sinking of a ship it did not
own.|||
Respondent’s Arguments:
Ruling of the lower court:
RTC rendered judgment in favor of respondent and
was affirmed by the CA
Issue:
Whether a carrier is liable for the loss of cargo
resulting from the sinking of a ship it does not own -
YES
Rule:
From the nature of their business and for reasons of
public policy, common carriers are bound to observe
extraordinary diligence over the goods they transport
according to the circumstances of each case. In the
event of loss of the goods, common carriers are
responsible, unless they can prove that this was
brought about by the causes specified in Article 1734
of the Civil Code. In all other cases, common carriers
are presumed to be at fault or to have acted
negligently, unless they prove that they observed
extraordinary diligence
Application:
Petitioner was the one which contracted with
MCCII for the transport of the cargo. It had
control over what vessel it would use. All
throughout its dealings with MCCII, it
represented itself as a common carrier. The
fact that it did not own the vessel it decided
to use to consummate the contract of
carriage did not negate its character and
duties as a common carrier. The MCCII
(respondent's subrogor) could not be
reasonably expected to inquire about the
ownership of the vessels which petitioner
carrier offered to utilize.
As a practical matter, it is very difficult and
often impossible for the general public to
enforce its rights of action under a contract
of carriage if it should be required to know
who the actual owner of the vessel is. In
fact, in this case, the voyage charter itself
denominated petitioner as the
"owner/operator" of the vessel.
To summarize, a contract of carriage of
goods was shown to exist; the cargo was
loaded on board the vessel; loss or non-
delivery of the cargo was proven; and
petitioner failed to prove that it exercised
 extraordinary diligence to prevent such loss
or that it was due to some casualty or force
majeure.The voyage charter here being a
contract of affreightment, the carrier was
answerable for the loss of the goods received
for transportation.
Sps. Cruz v. Sun Holidays, Inc.
G.R. No. 186312 | June 29, 2010
Facts:
Spouses Cruz lodged a complaint for damages arising
from the death of their son Ruelito C. Cruz (Ruelito)
who perished with his wife on September 11, 2000 on
board the boat M/B Coco Beach III that capsized en
route to Batangas from Puerto Galera, Oriental
Mindoro where the couple had stayed at Coco Beach
Island Resort (Resort) owned and operated by
respondent.
The parents of the deceased, petitioners in this case,
demanded 4 Million as indemnification.
Resort denied any responsibility for the incident which
it considered to be a fortuitous event.
As petitioners declined respondent’s offer, they filed
the Complaint, as earlier reflected, alleging that
respondent, as a common carrier, was guilty of
negligence in allowing M/B Coco Beach III to sail
notwithstanding storm warning bulletins issued by
PAGASA as early as 5:00 a.m. of September 11, 2000.
Petitioner’s Argument/s: (WON)
Petitioners maintain the position they took before the
trial court, adding that respondent is a common
carrier since by its tour package, the transporting of
its guests is an integral part of its resort business.
Respondent’s Arguments: (LOST)
In its Answer, respondent denied being a common
carrier, alleging that its boats are not available to the
general public as they only ferry Resort guests and
crew members. Nonetheless, it claimed that it
exercised the utmost diligence in ensuring the safety
of its passengers.
Respondent contends that petitioners failed to present
evidence to prove that it is a common carrier; that the
Resort’s ferry services for guests cannot be
considered as ancillary to its business as no income is
derived therefrom
Ruling of the lower court:
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 2 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 27
RTC and CA both ruled that respondent is a private
carrier which is only required to observe ordinary
diligence
Issue:
Whether Coco Beach Resort was a common carrier?
YES.
Rule:
Article 1732. Common carriers are persons,
corporations, firms or associations engaged in the
business of carrying or transporting passengers or
goods or both, by land, water, or air for compensation,
offering their services to the public.
Application:
The above article makes no distinction between one
whose principal business activity is the carrying of
persons or goods or both, and one who does such
carrying only as an ancillary activity (in local idiom, as
"a sideline"). 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. We think that
Article 1733 deliberately refrained from making such
distinctions.
Indeed, respondent is a common carrier. Its ferry
services are so intertwined with its main business as
to be properly considered ancillary thereto. The
constancy of respondent’s ferry services in its resort
operations is underscored by its having its own Coco
Beach boats. And the tour packages it offers, which
include the ferry services, may be availed of by
anyone who can afford to pay the same. These
services are thus available to the public.
As De Guzman instructs, Article 1732 of the Civil Code
defining "common carriers" has deliberately refrained
from making distinctions on whether the carrying of
persons or goods is the carrier’s principal business,
whether it is offered on a regular basis, or whether it
is offered to the general public. The intent of the law
is thus to not consider such distinctions. Otherwise,
there is no telling how many other distinctions may be
concocted by unscrupulous businessmen engaged in
the carrying of persons or goods in order to avoid the
legal obligations and liabilities of common carriers.
Under the Civil Code, common carriers, from the
nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence
for the safety of the passengers transported by them,
according to all the circumstances of each case.19
They are bound to carry the passengers safely as far
as human care and foresight can provide, using the
utmost diligence of very cautious persons, with due
regard for all the circumstances.
Unsworth Transport International (Phils.), Inc.
v. CA
G.R. No. 166250 | Date July 6 2010
Facts:
The shipper Sylvex Purchasing Corporation delivered
to UTI a shipment of 27 drums of various raw
materials for pharmaceutical manufacturing, cargo
was insured by private respondent Pioneer Insurance
and Surety Corporation in favor of Unilab against all
risks.
UTI issued a bill of lading in favor of Unilab.
As stated in the bill of lading, the subject shipment
was received by UTI in apparent good order and
condition in New York, United States of America.
The OCMSC Survey Report stated that one steel drum
STC Vitamin B Complex Extract was discovered to be
with a cut/hole on the side, with approximate spilling
of 1%.
Though Gate Pass No. 7614, issued by Jardine
(arrastre), noted that the subject shipment was in
good order and condition, it was specifically stated
that there were 22 (should be 27 drums per Bill of
Lading No. C320/C15991-2) drums of raw materials
for pharmaceutical manufacturing.
J.G. Bernas' Survey Report stated that "1-s/drum was
punctured and retaped on the bottom side and the
content was lacking, and there was a short delivery of
5-drums."
Unilab filed a claim for the damage against the private
respondent and UTI.
Petitioner’s Argument/s: (PARTIALLY GRANTED
/ STILL LOST IN THIS CASE)
Petitioner admits that it is a forwarder but disagrees
with the CA's conclusion that it is a common carrier.
It also questions the appellate court's findings that it
failed to establish that it exercised extraordinary or
ordinary diligence in the vigilance over the subject
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shipment. As to the damages allegedly suffered by
private respondent, petitioner counters that they were
not sufficiently proven. Lastly, it insists that its
liability, in any event, should be limited to $500
pursuant to the package limitation rule.
Respondent’s Arguments: (WON)
Private respondent claimed that it paid the claimed
amount on March 23, 1993. By virtue of the Loss and
Subrogation Receipt issued by Unilab in favor of
private respondent, the latter filed a complaint for
Damages against APL, UTI and petitioner.
Ruling of the lower court:
The RTC decided in favor of private respondent and
against APL, UTI and petitioner the RTC decided in
favor of private respondent and against APL, UTI and
petitioner.
The CA affirmed the RTC decision. The CA rejected
UTI's defense that it was merely a forwarder,
declaring instead that it was a common carrier. The
appellate court added that by issuing the Bill of
Lading, UTI acknowledged receipt of the goods and
agreed to transport and deliver them at a specific
place to a person named or his order. The court
further concluded that upon the delivery of the subject
shipment to petitioner's warehouse, its liability
became similar to that of a depositary. As such, it
ought to have exercised ordinary diligence in the care
of the goods. And as found by the RTC, the CA agreed
that petitioner failed to exercise the required
diligence. The CA also rejected petitioner's claim that
its liability should be limited to $500 per package
pursuant to the Carriage of Goods by Sea Act
(COGSA) considering that the value of the shipment
was declared pursuant to the letter of credit and the
pro forma invoice. As to APL, the court considered it
as a common carrier notwithstanding the non-
issuance of a bill of lading inasmuch as a bill of lading
is not indispensable for the execution of a contract of
carriage.
Issue:
● Whether or not petitioner UTI is a common carrier? (YES)
Rule:
Common carriers, as a general rule, are presumed to
have been at fault or negligent if the goods they
transported deteriorated or got lost or destroyed. That
is, unless they prove that they exercised
extraordinary diligence in transporting the goods.
Application:
Petitioner is a common carrier
Petitioner is a freight forwarder.
A freight forwarder's liability is limited to damages
arising from its own negligence, including negligence
in choosing the carrier; however, where the forwarder
contracts to deliver goods to their destination instead
of merely arranging for their transportation, it
becomes liable as a common carrier for loss or
damage to goods. A freight forwarder assumes the
responsibility of a carrier, which actually executes the
transport, even though the forwarder does not carry
the merchandise itself.
UTI issued a bill of lading in favor of Unilab. Pursuant
thereto, petitioner undertook to transport, ship, and
deliver the 27 drums of raw materials for
pharmaceutical manufacturing to the consignee.
Petitioner failed to rebut the prima facie presumption
of negligence in the carriage of the subject shipment
(refer to the summation stated in the facts)
All these conclusively prove the fact of shipment in
good order and condition, and the consequent
damage to one steel drum of Vitamin B Complex
Extract while in the possession of petitioner which
failed to explain the reason for the damage.
Applicability of the Package Limitation Rule under the
COGSA
It is to be noted that the Civil Code does not limit the
liability of the common carrier to a fixed amount per
package.
In all matters not regulated by the Civil Code, the
rights and obligations of common carriers are
governed by the Code of Commerce and special laws.
Thus, the COGSA supplements the Civil Code by
establishing a provision limiting the carrier's liability
in the absence of a shipper's declaration of a higher
value in the bill of lading.
In the present case, the shipper did not declare a
higher valuation of the goods to be shipped. Contrary
to the CA's conclusion, the insertion of the words "L/C
No. LC No. 1-187-008394/ NY 69867 covering
shipment of raw materials for pharmaceutical Mfg. . .
." cannot be the basis of petitioner's liability.
Furthermore, the insertion of an invoice number does
not in itself sufficiently and convincingly show that
petitioner had knowledge of the value of the cargo
Petitioner's liability should be limited to $500 per steel
drum.
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In this case, as there was only one drum lost, private
respondent is entitled to receive only $500 as
damages for the loss.
Sps. Pereña v. Sps. Zarate
G.R. No.157917 | August 29, 2012
Facts:
Perenas were engaged in the business of transporting
students to Don Bosco. The Zarates engaged Perenas
services to transport their son, Aaron, to school.
While on the way to school, the van’s air-conditioned
unit was turned on and the stereo playing loudly. The
driver took a detour because they were running late
due to the traffic in SLEX. The detour was through a
narrow path underneath the Magallanes Interchange
used as a shortcut into Makati. When the van was to
traverse the PNR railroad crossing, the van was tailing
a large passenger bus so the driver’s view of the
oncoming train was blocked. The train hit the van at
the rear end and the impact threw 9 students
including Aaron out of the van. Aaron landed in the
path of the train which dragged his body and severed
his head, instantaneously killing him.
The Zarates filed for damages against Alfaro, Perenas,
PNR, and the train driver. The cause of action against
Perena was for contract of carriage while for PNR,
quasi delict. Perena posited the defense of diligence of
a good father in the selection and supervision of their
driver.
Petitioner’s Argument/s:
In their defense, the Pereñas adduced evidence to
show that they had exercised the diligence of a good
father of the family in the selection and supervision of
Alfaro, by making sure that Alfaro had been issued a
driver’s license and had not been involved in any
vehicular accident prior to the collision; that their own
son had taken the van daily; and that Teodoro Pereña
had sometimes accompanied Alfaro in the van’s trips
transporting the students to school.
Respondent’s Arguments:
Devastated by the early and unexpected death of
Aaron, the Zarates commenced this action for
damages against Alfaro, the Pereñas, PNR and Alano.
The Zarates’ claim against the Pereñas was upon
breach of the contract of carriage for the safe
transport of Aaron; but that against PNR was based
on quasi-delict under Article 2176, Civil Code.
Ruling of the lower court:
RTC:
The RTC denied the Pereñas’ motion for
reconsideration,reiterating that the cooperative gross
negligence of the Pereñas and PNR had caused the
collision that led to the death of Aaron; and that the
damages awarded to the Zarates were not excessive,
but based on the established circumstances.
CA:
The CA promulgated its decision, affirming the
findings of the RTC, but limited the moral damages to
₱ 2,500,000.00; and deleted the attorney’s fees
because the RTC did not state the factual and legal
bases.
The CA upheld the award for the loss of Aaron’s
earning capacity, taking cognizance of the ruling in
Cariaga v. Laguna Tayabas Bus Company and Manila
Railroad Company, wherein the Court gave the heirs
of Cariaga a sum representing the loss of the
deceased’s earning capacity despite Cariaga being
only a medical student at the time of the fatal incident.
On April 4, 2003, the CA denied the Pereñas’ motion
for reconsideration.
Issue:
Were Perenas and PNR jointly and severally liable for
damages? (YES) Is the petitioner a common carrier?
(YES)
Rule:
Article 1732. Common carriers are persons,
corporations, firms or associations engaged in the
business of carrying or transporting passengers or
goods or both, by land, water, or air, for
compensation, offering their services to the public.
Article 1755. A common carrier is bound to carry the
passengers safely as far as human care and foresight
can provide, using the utmost diligence of very
cautious persons, with a due regard for all the
circumstances.
Article 1759. Common carriers are liable for the
death of or injuries to passengers through the
negligence or willful acts of the former’s employees,
although such employees may have acted beyond the
scope of their authority or in violation of the orders of
the common carriers.
ART. 2176. Whoever by act or omission causes
damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or
negligence, if there is so pre-existing contractual
relation between the parties, is called a quasi-delict
and is governed by the provisions of this Chapter.
Application:
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The diligence required of a private carrier is only
ordinary, that is, the diligence of a good father of the
family. In contrast, a common carrier is a person,
corporation, firm or association engaged in the
business of carrying or transporting passengers or
goods or both, by land, water, or air, for
compensation, offering such services to the public.
Contracts of common carriage are governed by the
provisions on common carriers of the Civil Code, the
Public Service Act, and other special laws relating to
transportation. A common carrier is required to
observe extraordinary diligence, and is presumed to
be at fault or to have acted negligently in case of the
loss of the effects of passengers, or the death or
injuries to passengers.
The common carrier’s standard of care and vigilance
as to the safety of the passengers is defined by law.
Given the nature of the business and for reasons of
public policy, the common carrier is bound "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." Article 1755 of the Civil Code specifies that the
common carrier should "carry the passengers safely
as far as human care and foresight can provide, using
the utmost diligence of very cautious persons, with a
due regard for all the circumstances." To successfully
fend off liability in an action upon the death or injury
to a passenger, the common carrier must prove his or
its observance of that extraordinary diligence;
otherwise, the legal presumption that he or it was at
fault or acted negligently would stand. No device,
whether by stipulation, posting of notices, statements
on tickets, or otherwise, may dispense with or lessen
the responsibility of the common carrier as defined
under Article 1755 of the Civil Code.
Westwind Shipping Corporation v. UCPB
General Insurance Co., Inc., et. al.
G.R. No. 200289 | November 25, 2013
Facts: San Miguel Corporation had a shipment
incoming from Kobe, Japan consisting of 197 metal
containers of tin - free steel which was covered by a
Bill of Lading. SMC insured the cargos with UCPB
General Insurance. Westwind Shipping delivered the
goods to Manila, Philippines. While they were
unloading the goods into the custody of the arrastre
operator, ATI, six containers were damaged in the
process. Ocean Freight International OFII, the
customs broker withdrew the goods from ATI and
delivered the same to the warehouse of SMC. Upon
receipt, it was found that there were additional 9
containers that were damaged. SMC filed a claim with
UCPB wherein the latter compensated the claims of
the former. UCPB was subrogated into the rights of
SMC and then filed a case against Westwind Shipping damage occurred, there is no reason to imply that
and ATI as well as OFII the customs broker. there was already delivery, actual or constructive, of
the cargoes to ATI. Hence, it is liable for the damages
Petitioner’s Arguments (LOST): When the case on the goods during the unloading.
reached the Supreme Court, Westwind argued that it
no longer had actual or constructive custody of the Contention of OFII is also untenable. A customs
containers/skids at the time they were damaged by broker has been regarded as a common carrier
ATI's forklift operator during the unloading because transportation of goods is an integral part of
operations. In accordance with the stipulation of the its business.
bill of lading, which allegedly conforms to Article 1736
That OFII is a common carrier is buttressed by the
of the NCC, it contends that its responsibility already
testimony of its own witness, that part of the services
ceased from the moment the cargoes were delivered
it offers to clients is cargo forwarding, which includes
to ATI, which is reckoned from the moment the goods
the delivery of the shipment to the consignee. Thus,
were taken into the latter's custody.
for undertaking the transport of cargoes from ATI to
SMC's warehouse in Calamba, Laguna, OFII is
OFII argued that it is not a common carrier, but only
considered a common carrier. As long as a person or
a customs broker whose participation is limited to
corporation holds itself to the public for the purpose
facilitating withdrawal of the shipment in the custody
of transporting goods as a business, it is already
of ATI by overseeing and documenting the turnover
considered a common carrier regardless of whether it
and counterchecking if the quantity of the shipments
owns the vehicle to be used or has to actually hire
were in tally with the shipping documents at hand, but
one.
without participating in the physical withdrawal and
loading of the shipments into the delivery trucks of
In the case at bar, it was established that, except for
JBL.
the six containers/skids already damaged, OFII
received the cargoes from ATI in good order and
Ruling of the lower court: RTC ruled in favor of
condition; and that upon its delivery to SMC,
petitioner and dismissed UCPB’s
additional nine containers/skids were found to be in
complaint. CA affirmed RTC decision that claim
bad order, as noted in the Delivery Receipts issued by
against ATI already prescribed but reversed the
OFII and as indicated in the Report of Cares Marine &
decision of RTC involving Westwind and OFII.
Cargo Surveyors. Instead of merely excusing itself
from liability by putting the blame to ATI and SMC, it
Issue: Whether Westwind and OFII are liable (YES)
is incumbent upon OFII to prove that it actively took
care of the goods by exercising extraordinary
Rule: As a common carrier, OFII is mandated to
diligence in the carriage thereof. It failed to do so.
observe, under Article 1733 of the Civil Code,
extraordinary diligence in the vigilance over the goods Federal Phoenix Assurance Co., Ltd. v. Fortune
it transports according to the peculiar circumstances Sea Carrier, Inc
of each case. In the event that the goods are lost, G.R. No. | Date
destroyed or deteriorated, it is presumed to have been
at fault or to have acted negligently, unless it proves Facts:
that it observed extraordinary diligence.
On March 9, 1994, Fortune Sea agreed to lease its
Application: Westwind’s contention is untenable. vessel M/V Ricky Rey to Northern Mindanao Transport
Cargoes, while being unloaded, generally remain Co., Inc. (Northern Transport). The Time Charter
under the custody of the carrier. Party agreement executed by the parties provides
that the vessel shall be leased to Northern Transport
What Westwind failed to realize is that the
for 90 days to carry bags of cement to different ports
extraordinary responsibility of the common carrier
of destination. Later on, the parties extended the
lasts until the time the goods are actually or
period of lease for another 90 days. Sometime in June
constructively delivered by the carrier to the
1994, Northern Transport ordered 2,069 bales of
consignee or to the person who has a right to receive
abaca fibers to be shipped on board M/V Ricky Rey by
them. There is actual delivery in contracts for the
shipper Manila Hemp Trading Corporation, for delivery
transport of goods when possession has been turned
to consignee Newtech Pulp Inc. (Newtech) in Iligan
over to the consignee or to his duly authorized agent
City.
and a reasonable time is given him to remove the
goods. In this case, since the discharging of the
The shipment was covered by Bill of Lading No. 1 and
containers/skids, which were covered by only one bill
was insured by petitioner Federal Phoenix Assurance
of lading, had not yet been completed at the time the

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Co.,. Ltd. (Federal Phoenix). Upon arrival of M/V Ricky
Rey at the Iligan City port on June 16, 1994, the
stevedores started to discharge the abaca shipment
the following clay. At about 3:00 p.m., however, on
June 18, 1994, the stevedores noticed smoke coming
out of the cargo haul where the bales of abaca where
located, it was discovered that 60 bales of abaca were
damaged. As a result of the losses, Newtech filed an
insurance claim for P260,000.00 with Federal Phoenix.
After evaluation, Federal Phoenix paid Newtech
P162,419.25 for the losses it incurred due to the
damaged and undelivered bales of abaca. Upon
payment. Federal Phoenix was subrogated to the
rights of Newtech and pursued its claim against
Fortune Sea. Despite several demands to Fortune
Sea, however. Federal Phoenix's claims were not
settled. As a result, Federal Phoenix filed a Complaint
for Sum of Money against Fortune Sea before the RTC
of Makati.
Petitioner’s Argument/s:
Respondent’s Arguments: (WON)
For its defense, Fortune Sea insisted that it was acting
as a private carrier at the time the incident occurred.
It alleged that the Time Charter Party agreement
executed by the parties expressly provided that M/V
Ricky Rey shall be under the orders and complete
control of Northern Transport.
Ruling of the lower court:
The RTC rendered a Decision in favor of Federal
Phoenix and ordered Fortune Sea to pay the amount
of P260,000.00 as actual damages, attorney's fees
and cost of suit.
The CA issued a Decision reversing and setting aside
the Decision dated May 4, 2006 of the RTC and
ordered the dismissal of the complaint for sum of
money filed by Federal Phoenix against Fortune Sea
for lack of merit.
Issue:
Whether or not the CA erred in declaring that Fortune
Sea was converted into a private carrier by virtue of
the charter party agreement it entered into with
Northern Transport.
Rule:
Application:
No, SC affirmed the decision of the CA.
Time and again, this Court have ruled that "[i]n
determining the nature of a contract, courts are not
bound by the title or name given by the parties. The
decisive factor in evaluating an agreement is the
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 2 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 32
intention of the parties, as shown, not necessarily by
the terminology used in the contract but by their
conduct, words, actions and deeds prior to, during and
immediately alter executing the agreement.
As correctly observed by the CA, the Time Charter
Party agreement executed by Fortune Sea and
Northern Transport clearly shows that the charter
includes both the vessel and its crew thereby making
Northern Transport the owner pro hac vice of M/V
Ricky Rey during the whole period of the voyage. M/V
Ricky Rey was converted into a private carrier
notwithstanding the existence of the Time Charter
Party agreement with Northern Transport since the
said agreement was not limited to the ship only but
extends even to the control of its crew. Despite the
denomination as Time Charter by the parties, their
agreement undoubtedly reflected that their intention
was to enter into a Bareboat Charter Agreement.
Torres-Madrid Brokerage, Inc. v. FEB Mitsui
Marine Insurance Co., Inc., et. al.
G.R. No. 194121 | Date July 11, 2016
Facts:
A shipment of various electronic goods from Thailand
and Malaysia arrived at the Port of Manila for Sony
Philippines, Inc. (Sony). Sony engaged Torres-Madrid
Brokerage Inc (TMBI) in facilitating, processing,
withdrawing and delivering the shipment to its
warehouse in Binan, Laguna. TMBI subcontracted
BMT Trucking services since it did not own any
delivery truck which Sony did not object to the
arrangement.
There were 4 BMT trucks picked up by the shipment
but only 3 trucks arrived at Sony’s warehouse. One
truck was found abandoned. Both the driver Rufo
Reynaldo Lapesura and the shipment were missing.
TMBI filed a complaint for “hijacking”.
After being notified, Sony filed an insurance claim with
Mitsui, the insurer of the goods. Mitsue paid
PHP7,293,386.23. After being subrogated to Sony’s
rights, Mitsui sent a demand letter to TMBI for
payment of the lost goods.
TMBI impleaded BMT as it was due to BMT’s
negligence as the proximate cause of the loss. Also, it
added that in the event it is held liable to Mitsui for
the loss, it should be reimbursed by BMT.
Petitioner’s Argument/s:(LOST)
TMBI denies being a common carrier because it does
not own a single truck to transport its shipment and it
does not offer transport services to the public for
compensation. Like the petitioner, BMT maintains that
the hijacking was a fortuitous event — a force majeure
— that exonerates it from liability.
Respondent’s Arguments:(WON)
Mitsui adopts the CA's reasons to conclude that TMBI
is a common carrier. It also points out Victor Torres'
admission during the trial that TMBI's brokerage
service includes the eventual delivery of the cargo to
the consignee. Mitsui invokes as well the legal
presumption of negligence against TMBI, pointing out
that TMBI simply entrusted the cargo to BMT without
adopting any security measures
Ruling of the lower court:
RTC found TMBI and Benjamin Manalastas jointly and
solidarily liable to pay Mitsui the CA affirmed the RTC's
decision but reduced the award of attorney's fees to
PHP200,000.
Issue:
Whether TMBI who provides a brokerage service a
common carrier -YES
Rule:
A brokerage may be considered a common carrier if it
also undertakes to deliver the goods for its customers
Application:
Common carriers are persons, corporations, firms or
associations engaged in the business of transporting
passengers or goods or both, by land, water, or air,
for compensation, offering their services to the public.
They are bound to observe extraordinary diligence in
the vigilance over the goods and in the safety of their
passengers.
The law does not distinguish between ne whose
principal business activity is the carrying of goods and
one who undertakes this task is only as an ancillary
activity. Despite TMBI’s denial, we find the delivery of
the goods is an integral, albeit ancillary, part of its
brokerage service. It admitted that it was contracted
to facilitate, process, and clear the shipments from the
customs authorities, withdraw them from the pier,
then transport and deliver them to Sony’s warehouse
in Laguna. That TMBI does now own the truck and has
to subcontract the delivery of its clients’ goods is
immaterial. Further, a robbery attended by “grave or
irresistible force” is a fortuitous event that absolves
the common carrier from liability. However, TMBI
failed to successfully establish that it had acted with
extraordinary diligence.
(not anymore part of the issue but if you want to know
the extent of liability of TMBI and BMT you can
continue reading)
TMBI and BMT cannot be solidarily liable as TMBI’s
liability did not stem from a quasi-delict but from its
breach of contract or culpa contractual while Mitsui’s
action against BMT could only rise from quasi-delict or
culpa aquiliana. In this case, TMBI entered another
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 2 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 33
contract of carriage with BMT which failed to prove
that it observed extraordinary diligence in the
performance of its obligation to TMBI. So, TMBI is
liable to Mitsui. In turn, TMBI is entitled to
reimbursement from BMT due to the latter’s own
breach of contract with TMBI.
Private Carriage
Home Insurance Co. v. American Steamship
Agencies, Inc.
G.R. No. L-25599 | April 4, 1968
Facts:
"Consorcio Pesquero del Peru of South America"
shipped freight pre-paid at Chimbate, Peru, 21,740
jute bags of Peruvian fish meal through SS
Crowborough (owned and operated by American
Steamship).
The cargo was consigned to San Miguel corporation
and insured by Home Insurance Company for $202,
505. It arrived in Manila on March of 1963 and was
charged into the lighters of Luzon Stevedoring
Company.
When the cargo was delivered to consignee San
Miguel Brewery, Inc., there were shortages
amounting to P12,033.85, causing the latter to lay
claims against Luzon Stevedoring Corporation, Home
Insurance Company and the American Steamship
Agencies.
Home Insurance Company paid the consignee
P14,870.71 — the insurance value of the loss, since
the others denied liability. Having been refused
reimbursement by both the Luzon Stevedoring
Corporation and American Steamship Agencies, Home
Insurance Company, as subrogee to the consignee,
filed against them before the Court of First Instance
of Manila a complaint for recovery of the amount
representing the insurance value.
Petitioner’s Argument/s: No specific arguments
Respondent’s Arguments:
Luzon Stevedoring Corporation- alleged that it
delivered with due diligence the goods in the same
quantity and quality that it had received the same
from the carrier. It also claimed that the plaintiff's
claim had prescribed under Article 366 of the Code of
Commerce stating that the claim must be made within
24 hours from receipt of the cargo.
American Steamship- denied liability arguing that
under the provisions of the Charter party referred to
in the bills of lading, the charterer, not the owner, was
responsible for any loss or damage of the cargo.
It claimed to have exercised due diligence in stowing
the goods and that as a mere forwarding agent, it was
not responsible for losses or damages to the cargo.
Ruling of the lower court:
The Court of First Instance absolved respondent Luzon
Corp. reasoning that the same merely delivered what
it received from the carrier in the same condition and
quality.
CFI also ordered respondent American Steamship to
pay the petitioner Home Insurance the amount of
P14,870.71 with legal interest plus P1,000 attorneys
fees. According to the lower court, American
Steamship is liable since stipulation in the charter
party contract exempting the owner from liability is
against public policy under Article 1744 of the Civil
Code.
Issue:
WON the stipulation in the charter party of the owner's
non-liability valid so as to absolve the American
Steamship Agencies from liability for loss? (YES)
Rule:
The provisions of our Civil Code on common carriers
were taken from Anglo- American law. Under
American jurisprudence, a common carrier
undertaking to carry a special cargo or chartered to a
special person only, becomes a private carrier. As a
private carrier, a stipulation exempting the owner
from liability for the negligence of its agent is not
against public policy, and is deemed valid.
Application:
In this case, the Civil Code provisions on common
carriers should not be applied since the carrier is not
acting as such but as a private carrier. The stipulation
in the charter party absolving the owner from liability
for loss due to the negligence of its agent would be
void only if the strict public policy governing common
carriers is applied. Such policy has no force where the
public at large is not involved, as in the case of a ship
totally chartered for the use of a single party.
National Steel Corporation v. CA
G.R. No. 112287 | December 12, 1997|
Facts:
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National Steel Corporation as Charterer and defendant
Vlasons Shipping, Inc. as Owner, entered into a
Contract of Voyage Charter Hire whereby NSC hired
VSI's vessel, the MV 'VLASONS I' to make one (1)
voyage to load steel products at Iligan City and
discharge them at North Harbor, Manila.
In accordance with the Contract of Voyage Charter
Hire, the MV 'VLASONS I' loaded at plaintiffs pier at
Iligan City, the NSC's shipment of 1,677 skids of tin
plates and 92 packages of hot rolled sheets or a total
of 1,769 packages with a total weight of about
2,481.19 metric tons for carriage to Manila.
The vessel arrived with the cargo at Pier 12, North
Harbor, Manila, on August 12, 1974. The following
day, August 13, 1974, when the vessel's three (3)
hatches containing the shipment were opened by
plaintiff's agents, nearly all the skids of tin plates and
hot rolled sheets were allegedly found to be wet and
rusty. The cargo was discharged and unloaded by
stevedores hired by the Charterer. Unloading was
completed only on August 24, 1974 after incurring a
delay of eleven (11) days due to the heavy rain which
interrupted the unloading operations.
To determine the nature and extent of the wetting and
rusting, NSC called for a survey of the shipment by
the Manila Adjusters and Surveyors Company
(MASCO). MASCO reported that it found wetting and
rusting of the packages of hot rolled sheets and metal
covers of the tin plates; that tarpaulin hatch covers
were noted torn at various extents; that
container/metal casings of the skids were rusting all
over. MASCO ventured the opinion that 'rusting of the
tin plates was caused by contact with SEA WATER
sustained while still on board the vessel as a
consequence of the heavy weather and rough seas
encountered while en route to destination. It was also
reported that MASCO's surveyors drew at random
samples of bad order packing materials of the tin
plates and delivered the same to the M.I.T. Testing
Laboratories for analysis. The M.I.T. Testing
Laboratories issued Report No. 1770 which in part,
states, 'The analysis of bad order samples of packing
materials . . . shows that wetting was caused by
contact with SEA WATER'.
On the basis of the aforesaid Report No. 1770, plaintiff
filed with the defendant its claim for damages suffered
due to the downgrading of the damaged tin plates in
the amount of P941,145.18.
Petitioner’s Argument/s: LOST
Plaintiff claimed that it sustained losses in the
aforesaid amount was a result of the act, neglect and
default of the master and crew in the management of
the vessel as well as the want of due diligence on the
part of the defendant to make the vessel seaworthy
and to make the holds and all other parts of the vessel
in which the cargo was carried, fit and safe for its
reception, carriage and preservation — all in violation
of defendant's undertaking under their Contract of
Voyage Charter Hire.
Respondent’s Arguments: WIN:
VSI denied liability for the alleged damage claiming
that the MV 'VLASONS I' was seaworthy in all respects
for the carriage of plaintiff's cargo; that said vessel
was not a 'common carrier' inasmuch as she was
under voyage charter contract with the plaintiff as
charterer under the charter party; that in the course
of the voyage from Iligan City to Manila, the MV
'VLASONS I' encountered very rough seas, strong
winds and adverse weather condition, causing
seawater to overflow on its deck and hatch covers;
that under the Contract of Voyage Charter Hire,
defendant shall not be responsible for losses/damages
except on proven willful negligence of the officers of
the vessel, that the officers of said MV 'VLASONS I'
exercised due diligence and proper seamanship and
were not willfully negligent; and that the cargo was
exposed to rain and seawater spray while on the pier
or in transit from the pier to plaintiff's warehouse after
discharge from the vessel; Finally, defendant claimed
that it had complied with all its duties and obligations
under the Voyage Charter Hire Contract and had no
responsibility whatsoever to plaintiff.
Ruling of the lower court:
RTC ruled in favor of Vlassons Shipping ordering the
National Steel Corporation, said decision was later
affirmed on appeal by the CA.
Issue:
Whether the MV Vlasons is a common carrier or a
private carrier? Private Carrier
Rule:
Article 1732 of the Civil Code defines a common
carrier as "persons, corporations, firms or associations
engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air,
for compensation, offering their services to the
public."
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TEST: Does it carry passengers or goods, or provides
space, for all who opt to avail themselves of its
transportation service for a fee.
Private Carrier: A carrier which does not qualify under
the above test is deemed a private carrier. A private
carriage is undertaken by special agreement and the
carrier does not hold himself out to carry goods for
the general public.
Application:
VSI did not offer its services to the general public. It
carried passengers or goods only for those it chose
under a "special contract of charter party." MV Vlasons
I "was not a common but a private carrier." MV
Vlasons I is a vessel which renders tramping service
and does not transport cargo or shipment for the
general public. Its services are available only to
specific persons who enter into a special contract of
charter party with its owner. It is undisputed that the
ship is a private carrier. And it is in this capacity that
its owner, Vlasons Shipping, Inc., entered into a
contract of affreightment or contract of voyage
charter hire with National Steel Corporation.
Therefore, the rights and obligations of VSI and NSC,
including their respective liability for damage to the
cargo, are determined primarily by stipulations in
their contract of private carriage or charter party.
Valenzuela Hardwood and Industrial Supply
Inc. v. CA et.al.
G.R. No. 102316| Date: June 30, 1997
Facts:
The plaintiff entered into an agreement with the
defendant whereby the latter undertook to load on
board its vessel the former’s 940 lauan round logs at
Maconacon, Isabela. These logs were insured with
South Sea Surety and Insurance Co., Inc. for P2
million.
On January 25, 1984, the vessel sank resulting in the
loss of the plaintiff’s logs.
Plaintiff demanded for payment from the defendant
and the surety company but both denied liability.
Petitioner’s Argument/s: LOST
The stipulation (owners shall not be responsible for
loss, split, short-landing, breakages and any kind of
damages to the cargo) is void because it is contrary
to the provisions of the Code of Commerce and that
the said stipulation gives no duty or obligation to the
private respondent to observe the diligence of a good
father of a family in the custody and transportation of
the cargo.
Respondent’s Arguments: WON
The stipulation is valid because the provisions of the
Civil Code on common carriers are inapplicable where
the carrier is not acting as such but as a private
carrier. Thus, a stipulation exempting the owner from
liability even for negligence of its agent is valid
pursuant to ruling in Home Insurance, Inc. vs.
American Steamship Agencies.
Ruling of the lower court:
The trial court ruled in favor of the plaintiff. However,
the CA modified the former’s judgment by ruling that
the stipulation was valid.
Issue:
Whether or not CA committed a reversible error in
upholding the validity of the stipulation in the charter
party executed between the petitioner and the private
respondent exempting the latter from liability for the
loss of petitioner’s logs arising from the negligence of
the defendant ship’s captain. NO
Rule:
In a contract of private carriage, the parties may
validly stipulate that responsibility for the cargo rests
solely on the charterer, exempting the shipowner from
liability for loss of or damage to the cargo caused even
by the negligence of the ship captain. Pursuant to
Article 1306 17 of the Civil Code, such stipulation is
valid because it is freely entered into by the parties
and the same is not contrary to law, morals, good
customs, public order, or public policy. Indeed, their
contract of private carriage is not even a contract of
adhesion.
Application:
The CA was correct. In a contract of private carriage,
the parties may freely stipulate their duties and
obligations which perforce would be binding on them.
Unlike in a contract involving a common carrier,
private carriage does not involve the general public.
Hence, the stringent provisions of the Civil Code on
common carriers protecting the general public cannot
justifiably be applied to a ship transporting
commercial goods as a private carrier. Consequently,
the public policy embodied therein is not contravened
by stipulations in a charter party that lessen or
remove the protection given by law in contracts
involving common carriers.
Furthermore, the ruling in Home Insurance is
applicable in the case at bar because it specifically
dealt with "the liability of the shipowner for acts or
negligence of its captain and crew" and a charter party
stipulation which "exempts the owner of the vessel
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from any loss or damage or delay arising from any
other source, even from the neglect or fault of the
captain or crew or some other person employed by
the owner on board, for whose acts the owner would
ordinarily be liable except for said paragraph."
FGU Insurance Corp. v. G.P. Sarmiento Trucking
Corp.
G.R. No. 141910 | 2002-08-06
FACTS:
G.P. Sarmiento Trucking Corporation
(GPS) undertook to deliver on 18 June
1994 thirty (30) units of Condura S.D.
white refrigerators aboard one of its Isuzu
truck, driven by Lambert Eroles. The units
were owned by Concepcion Industries,
Inc. While it was delivering the units it
collided with an unidentified truck, causing
it to fall into a deep canal, resulting in...
damage to the units.
FGU Insurance Corporation (FGU), an
insurer of the shipment, paid to
Concepcion Industries, Inc., the value of
the covered cargoes in the sum of
P204,450.00.
FGU then sought reimbursement for GPS,
but GPS did not pay. Thus FGU file an
action with the RTC for damages and
breach of contract of carriage against GPS
and its driver Lambert Eroles.
PETITIONERS CONTENTION (WON/LOST)
FGU contended that GSP is a common
carrier. Thus negligence and fault is
already presumed. Thus they should be
made liable for damages caused without
having to prove the negligence because if
they are already a common carrier and
there is an accident then there is a
presumption of negligence.
RESPONDENTS CONTENTION (WON/LOST)
GSP contended that they are not a
common carrier for the reason that they
do not hold them selves to offer
transportation or carrying services to the
public. GSP states that it operates
exclusively for Concepcion Industries,
Inc., as it does not render of offer its
services to anyone else.
RULING OF THE LOWER COURTS:
 RTC- dismissed that case because GSP is
not a common carrier. FGU was no able to
prove that they were common carriers.
Thus, fault or negligence needs to be
proven because it is not presumed.
CA- Affirmed the RTC’s decision and
denied the appeal.
ISSUE :
WHETHER RESPONDENT GPS MAY BE
CONSIDERED AS A COMMON CARRIER AS
DEFINED UNDER THE LAW AND EXISTING
JURISPRUDENCE.
RULE :
The true test of a common carrier is the
carriage of passengers or goods, providing
space for those who opt to avail
themselves of its transportation service for
a fee.
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 hire or
compensation, offering their services to
the public,[8] whether to the public in
general or to a limited clientele in
particular, but never on an exclusive basis.
APPLICATION:
GPS, being an exclusive contractor and
hauler of Concepcion Industries, Inc.,
rendering or offering its services to no
other individual or entity, cannot be...
considered a common carrier because
people cannot opt to avail of their services
as they only operate for Concepcion
Industries, Inc.,
Distinction from towage, arrestre, stevedoring,
and contract of services
Marina Port Services, Inc. (MPSI) v. American
Home Assurance Corp. (AHAC)
G.R. No. 201822 | Date: August 12, 2015
Facts:
● MSC Distributor (MSC) was sent, on
consignment, 10 container vans of soft
wheat flour from Singapore which was
insured by AHAC against all risks.
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● Upon arrival, the shipment was discharged in
good and complete order condition and with
safety seals in place to the custody of the
arrastre operator, MPSI.
● The Bureau of Customs officially broke the
seals, and examined the contents of the
container vans for tax evaluation in the
presence of MSC's broker and checker.
Thereafter, the customs inspector closed the
container vans and refastened them with
safety wire seals while MSC's broker
padlocked the same. Prior to their pick-up,
the shipment were watched over by the
security guards of MPSI and of the Philippine
Ports Authority.
● As their representative, AD's Customs
Services (ACS), took out the container vans
for delivery to MS in batches over several
days. Upon each exit, MPSI issued to ACS the
corresponding gate passes for the vans
indicating its turn-over of the subject
shipment to MSC. However, on each instance
of delivery, MSC discovered substantial
shortages in the bags of flour delivered.
Hence, it filed several formal claims for the
losses with MPSI, the total value of which
came to ₱257,083 for 1,650 bags of flour.
● MSC sought insurance indemnity for the
entire amount, which AHAC paid. In turn,
MSC issued a subrogation receipt in favor of
AHAC. Thereafter, AHAC filed a complaint for
damages against MPSI.
Petitioner’s Argument/s (LOST):
● AHAC avers that the loss was due to the fault
or negligence of MPSI since it happened while
the shipment was still in MPSI's custody.
Respondent’s Arguments (WON):
● MPSI presented 10 gate passes (one for each
container van) which served as an
acknowledgment from MSC, through its
representatives, that the consigned goods
were delivered to and received by Consignee,
MSC, of the goods as described above in
good order and condition.
● MPSI likewise countered that the failure of
MSC to request for a bad order survey belied
the latter's claim for loss.
Ruling of the lower court:
● RTC - Dismissed AHAC’s complaint because
their evidence failed to clearly show that the
loss happened while the subject shipment
was still under MPSI's responsibility.
● CA - Reversed TC’s decision and ruled that
MPSI failed to discharge its burden of proving
 compliance with the obligation to deliver the
goods to the appropriate party.
Issue: WON MPSI is liable for the loss. (NOPE.)
Rule:
● The relationship between an arrastre
operator and a consignee is similar to that
between a warehouseman and a depositor,
or to that between a common carrier and the
consignee and/or the owner of the shipped
goods. Thus, an arrastre operator should
adhere to the same degree of diligence as
that legally expected of a warehouseman or
a common carrier as set forth in Sec. 3(b) of
the Warehouse Receipts Act and Art. 1733 of
the Civil Code.
● As custodian of the shipment discharged
from the vessel, the arrastre operator must
take good care of the same and turn it over
to the party entitled to its possession. In case
of claim for loss filed by a consignee or the
insurer as subrogee, it is the arrastre
operator that carries the burden of proving
compliance with the obligation to deliver the
goods to the appropriate party.
● As held in International Container Terminal
Services, Inc. v. Prudential Guarantee &
Assurance Co., Inc., the signature of the
consignee’s representative, on the gate pass
is evidence of receipt of the shipment in good
order and condition.
Application: MPSI successfully discharged its burden
of proof.
● In this case the gate passes they issued,
which were signed by MSC’s representatives,
corroborates the testimonies of MPSI’s
witnesses to that the shipment was delivered
in good and complete condition and with
locks and seals intact. Furthermore, MPSI's
other witness, their Chief Claims Officer,
testified that the broker, as MSC’s
representative, neither registered any
complaints nor requested for an inspection of
the shipment.
● In contrast, ASC (MSC’s representative)
alleged, but presented no proof of the rule,
that the stripping of container vans in the
pier area is not allowed, making it impossible
to discover the loss. For another, even if such
rule existed, it is hard to believe that MSC or
its representative ACS has no precautionary
measures to protect itself from any
eventuality of loss or pilferage.
● To recall, ACS's representative signed the
gate passes without any qualifications. This
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is despite the fact that such signature serves
as an acknowledgment of ACS's receipt of
the goods in good order and condition. If
MSC was keen enough in protecting its
interest, it (through ACS) should have at
least qualified the receipt of the goods as
subject to inspection, and thereafter arrange
for such an inspection in an area where the
same is allowed to be done.
● Indeed, the presumption of fault on the part
of the arrastre operator does not apply in this
case considering that it was not sufficiently
shown that the container vans were re-
opened or that their locks and seals were
broken for the second time.
Asian Terminals, Inc. v. Allied Guarantee
Insurance Co., Inc.
G.R. No. 182208 | October 14, 2015
Facts:
Marina Port Services, Inc. (Marina), the predecessor
of Asian Terminals, Inc. (ATI), is an arrastre operator
based in South Harbor, Port Area, Manila.
In 1989, a shipment of kraft linear board was loaded
and received from USA, for transport and delivery to
Manila.
When the vehicle used and operated by Transocean
arrived in Manila, the subject shipment was offloaded
from the vessel to the arrastre Marina which was
assessed that a total of 158 rolls of the goods were
"damaged" during shipping.
Upon the goods' withdrawal from the arrastre and
their delivery, first, to San Miguel's customs broker,
Dynamic, and, eventually, to the consignee San
Miguel, another 54 rolls were found to have been
damaged, for a total of 212 rolls of damaged
shipment.
Respondent, Allied Guarantee Insurance was the
insurer of the shipment which paid San Miguel and
was subrogated in the latter’s rights.
Petitioner’s Argument/s (LOST):
ATI argued that the Requests for Bad Order Survey
was allegedly signed by Dynamic's representative
stating that only 158 rolls were damaged as of the
goods' transfer from ATI to Dynamic.
Respondent’s Arguments (WON):
It alleged that the shipment was loaded from the ports
of origin "in good and complete order condition," and
all losses were due to the fault of the defendants.
Ruling of the lower court:
RTC – found all defendants including Marina and
Dynamic solidarily liable for the additional 54 rolls of
goods.
CTA – affirmed RTC’s decision stating that ATI failed
to present the Turn Over Inspector and Bad Order
Inspector as witnesses who could have testified that
no additional goods were damaged during its custody.
Issue: Whether petitioner (ATI) is liable for the
additional 54 rolls of damaged goods to respondent.
YES.
Rule:
Philippines First Insurance Co., Inc. v. Wallem Phils.
Shiping, Inc.:
The arrastre operator's principal work is that of
handling cargo, so that its drivers/operators or
employees should observe the standards and
measures necessary to prevent losses and damage to
shipments under its custody.
Being the custodian of the goods discharged from a
vessel, an arrastre operator's duty is to take good care
of the goods and to turn them over to the party
entitled to their possession. With such a responsibility,
the arrastre operator must prove that the losses were
not due to its negligence or to that of its employees.
Since the relationship of an arrastre operator and a
consignee is akin to that between a warehouseman
and a depositor, then, in instances when the
consignee claims any loss, the burden of proof is on
the arrastre operator to show that it complied with the
obligation to deliver the goods and that the losses
were not due to its negligence or that of its
employees.
Application:
Jurisprudence states that the signature by a customs
broker's representative of "receipt in good order" does
not foreclose the consignee's or its subrogee's right or
remedy to prove that additional loss or damage to the
subject shipment occurred while the same was under
the custody, control and possession of the arrastre
operator.
Since the relationship of an arrastre operator and a
consignee is akin to that between a warehouseman
and a depositor, then, in instances when the
consignee claims any loss, the burden of proof is on
the arrastre operator to show that it complied with
the obligation to deliver the goods and that the losses
were not due to its negligence or that of its employees
which however, ATI failed to do so, in this case.
The Bad Order Cargo Receipts, the Turn Over Survey
of Bad Order Cargoes as well as the Request for Bad
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Order Survey did not establish that the additional 54
rolls were in good condition while in the custody of the
arrastre but such documents proved only that indeed
the 158 rolls were already damaged when they were
discharged to the arrastre operator and when it was
subsequently withdrawn from the arrastre operator by
the customs broker.
Thus, Marina, the arrastre operator, was not able to
overcome the presumption of negligence.
Crisostomo v. CA
G.R. No. 138334 | Date: August 25, 2003
Facts:
Petitioner contracted the services of respondent
Caravan Travel and Tours International, Inc. to
arrange and facilitate her booking, ticketing and
accommodation in a tour dubbed Jewels of Europe.
Pursuant to said contract, the travel documents and
plane tickets were delivered to the petitioner who in
turn gave the full payment for the package tour on
June 12, 1991. Without checking her travel
documents, petitioner went to NAIA on Saturday, June
15, 1991, to take the flight for the first leg of her
journey from Manila to Hongkong. To petitioner’s
dismay, she discovered that the flight she was
supposed to take had already departed the previous
day. She learned that her plane ticket was for the
flight scheduled on June 14, 1991. She thus called up
Menor to complain. Subsequently, Menor prevailed
upon petitioner to take another tour- the British
Pageant. Upon petitioner’s return from Europe, she
demanded from respondent the reimbursement of the
difference between the sum she paid for Jewels of
Europe and the amount she owed respondent for the
British Pageant tour.
Petitioner’s Argument/s:(LOST)
Petitioner filed a complaint against respondent for
breach of contract of carriage and damages alleging
that her failure to join Jewels of Europe was due to
respondent’s fault since it did not clearly indicate the
departure date on the plane, failing to observe the
standard of care required of a common carrier when
it informed her wrongly of the flight schedule.
Respondent’s Arguments:(WON) Respondent
denied responsibility for petitioner’s failure to join the
first tour, insisting that petitioner was informed of the
correct departure date, which was clearly and legibly
printed on the plane ticket. The travel documents
were given to the petitioner two days ahead of the
scheduled trip. Respondent further contended that
petitioner had only herself to blame for missing the
flight, as she did not bother to read or confirm her
flight schedule as printed on the ticket.
Ruling of the lower court:
The trial court held that respondent was negligent in
erroneously advising petitioner of her departure date
through its employee, Menor, who was not presented
as witness to rebut petitioner’s testimony. However,
the petitioner should have verified the exact date and
time of departure by looking at her ticket and should
have simply not relied on Menor’s verbal
representation. The trial court thus declared that
petitioner was guilty of contributory negligence and
accordingly, deducted 10% from the amount being
claimed as refund.
The Court of Appeals, which likewise found both
parties to be at fault. However, the appellate court
held that petitioner is more negligent than respondent
because as a lawyer and well-traveled person, she
should have known better than to simply rely on what
was told to her. This being so, she is not entitled to
any form of damages. Petitioner also forfeited her
right to the "Jewels of Europe '' tour and must
therefore pay respondent the balance of the price for
the "British Pageant" tour. The dispositive portion of
the judgment appealed from reads as follows:
Issue:
Whether or not Caravan Travel & Tours International
Inc. is negligent in the fulfilment of its obligation to
petitioner Crisostomo thus granting the petitioner the
consequential damages due her as a result of breach
of contract of carriage.(NO)
Rule and Application:
Contention of the petitioner has no merit. A
contract of carriage or transportation is one whereby
a certain person or association of persons obligates
themselves to transport persons, things, or news from
one place to another for a fixed price. Such a person
or association of persons are regarded as carriers and
are classified as private or special carriers and
common or public carriers. Respondent is not an
entity engaged in the business of transporting either
passengers or goods and is therefore, neither a
private nor a common carrier. Respondent did not
undertake to transport the petitioner from one place
to another since its covenant with its customers is
simply to make travel arrangements on their behalf.
Respondent’s services as a travel agency include
procuring tickets and facilitating travel permits or
visas as well as booking customers for tours.
The object of petitioner’s contractual relation
with respondent is the service of arranging and
facilitating petitioners booking, ticketing and
accommodation in the package tour. In contrast, the
object of a contract of carriage is the transportation of
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 2 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 40
passengers or goods. It is in this sense that the
contract between the parties in this case was an
ordinary one for services and not one of carriage.
Since the contract between the parties is an ordinary
one for services, the standard of care required of the
respondent is that of a good father of a family under
Article 1173 of the Civil Code. The evidence on record
shows that respondent exercised due diligence in
performing its obligations under the contract and
followed standard procedure in rendering its services
to the petitioner. As correctly observed by the lower
court, the plane ticket issued to petitioner clearly
reflected the departure date and time, contrary to
petitioner’s contention. The travel documents,
consisting of the tour itinerary, vouchers and
instructions, were likewise delivered to the petitioner
two days prior to the trip. Respondents also properly
booked petitioners for the tour, prepared the
necessary documents and procured the plane tickets.
It arranged petitioner’s hotel accommodation as well
as food, land transfers and sightseeing excursions, in
accordance with its avowed undertaking. The
evidence on record shows that the respondent
company performed its duty diligently and did not
commit any contractual breach. Hence, the petitioner
cannot recover and must bear her own damage.
Registered owner rule, Kabit System and
Boundary System
Lim et. al. v. CA
G.R. No. 125817| January 15, 2002
Facts:
Respondent Gonzales bought an Isuzu Jeepney from
Vallarta holder of certificate of public convenience
(CPC) for the PUV. Respondent did not transfer the
registration of the jeepney in his name nor did he
secure for himself a CPC but continued the public
transport services. On record, Vallarta remains as
registered owner and operator.
The jeepney collided with a truck owned by petitioner
Lim and driven by co-petitioner Gunnaban. The
petitioners owned responsibility and shouldered the
cost of hospitalization of wounded victims and offered
to repair the jeepney. Private respondent instead
demanded a brand new jeep or P236K. Negotiations
failed and Respondent filed a complaint for damages
against the petitioners.
Petitioner’s Argument/s (LOST): Respondent is
engaged in Kabit system hence it is Vallarta, the
registered owner who is the real party in interest; He
can repair the jeepney for P20K
Respondent’s Arguments (WON): estimate of the
repair shop is P236K to repair his jeepney
Ruling of the lower court: The Trial Court ruled in
favor of respondents and awarded damages; CA
upheld the Trial Court and ruled that the case should
be an exception to the rule on the kabit system
Issue: WON respondent Gonzales is the real party in
interest when the registered owner and operator is
Vallarta and if yes, whether it is contrary to public
policy against the kabit system
Rule:Respondent WON. Gonzales has the right to
proceed against petitioners for the damage caused on
his jeepney. The thrust of the law in enjoining the
kabit system is not to penalize the parties but to
identify the responsible party in case of accidents and
to protect the riding public. The registered owner is
not allowed to prove that another person has become
the owner and thus be relieved of responsibility.
In the case at hand however, the evil sought to be
prevented in enjoining the kabit system does not
exist. 1st – none of the parties under the kabit system
is being held liable, 2nd – the case arose from the
negligence of another vehicle, not the PUV, 3rd - the
riding public was not inconvenienced by the illegal
arrangement between respondent and Vallarta
Application: Art. 1409 of the civil code – kabit
system is recognized as being contrary to public policy
therefore void and inexistent but was not applied in
this case since it is another party who is responsible
for damages and not the parties engaged in the kabit
system.
Hernandez v. Dolor
G.R. No. 160286 | Date: July 30, 2004
FACTS
Boyet was driving an owner-type jeepney owned by
Margarita (his mother).
As Boyet was traversing the road at Barangay Anilao
East, Mabini, Batangas, his vehicle collided with a
passenger jeepney driven by petitioner Gonzales and
owned by his co-petitioner Hernandez.
Boyet and his passenger died as a result of the
collision. The other passengers of the owner-type jeep
also suffered physical injuries.
The collision also damaged the passenger jeepney of
petitioner Hernandez and caused physical injuries to
its passengers.
Petitioner’s Contention – LOST
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Petitioner Hernandez argued that the proximate cause
of death of Boyet and his passenger, and the injuries
sustained by the other passengers of both vehicles
was the recklessness of Boyet, who was driving in a
zig-zag manner under the influence of alcohol.
Petitioner Hernandez argued further that driver-
petitioner Gonzales was not their employee as the
former only leased the jeepney on a daily basis. They
maintained that driver-petitioner Gonzales is not their
employee since their relationship relative to the use
of the jeepney is that of a lessor and a lessee.
Petitioner Hernandez further claimed that even if an
employer-employee relationship is found to exist
between them, they cannot be held liable because as
employers they exercised due care in the selection
and supervision of their employee.
Petitioner Hernandez argues that since they were not
inside the jeepney at the time of the collision, the
provisions of Article 2180 of the Civil Code, which does
not provide for solidary liability between employers
and employees, should be applied.
Respondent’s Contention – WON
Respondents (family of Boyet) filed an action for
damages against petitioners, alleging that driver-
petitioner Gonzales was guilty of negligence and lack
of care and that petitioner Hernandez was guilty of
negligence in the selection and supervision of their
employees.
RULING OF LOWER COURT
RTC: The court rendered judgment in favor of
respondents, and decided that petitioner-Hernandez
and its driver to be jointly and severally liable.
CA: Affirmed judgment of RTC.
ISSUE:
(1) Whether Owner-Petitioner Hernandez is
solidarily liable? YES
(2) Whether Driver-Petitioner is the employee of
owner-petitioner Hernandez? YES
RULE & APPLICATION
Re solidary liability of petitioner
While the invoked provisions of petitioner law do not
expressly provide for solidary liability, the same can
be inferred from the wordings of the first paragraph
of Article 2180 which states that the obligation
imposed by article 2176 is demandable not only
for one's own acts or omissions, but also for
those of persons for whom one is responsible.
Moreover, Article 2180 should be read with Article
2194, which categorically states that the responsibility
of two or more persons who are liable for quasi-delict
is solidary.
In other words, the liability of joint tortfeasors is
solidary. Verily, under Article 2180, an employer may
be held solidarily liable for the negligent act of his
employee.
Thus, the solidary liability of employers with their
employees for quasi-delicts having been established
Re: Employer-employee relationship
In essence, petitioner Hernandez is practicing the
"boundary system" of jeepney operation albeit
disguised as a lease agreement between them for the
use of the jeepney.
Indeed to exempt from liability the owner of a public
vehicle who operates it under the "boundary system"
on the ground that he is a mere lessor would be not
only to abet flagrant violations of the Public Service
Law, but also to place the riding public at the mercy
of reckless and irresponsible drivers — reckless
because the measure of their earnings depends
largely upon the number of trips they make and,
hence, the speed at which they drive; and
irresponsible because most if not all of them are in no
position to pay the damages they might cause.
FEB Leasing and Finance Corp. v. Sps. Baylon,
et.al.
G.R. No. 181398 | June 29,2011
Facts: ·
● An Isuzu oil tanker running along Quezon City
hit Loretta Baylon (Loretta), daughter of herein
respondents Sps. Baylon, who was crossing the
street. She was brought for treatment to the
Chinese General Hospital where she remained in
coma until her death.
● At the time of the accident, the oil tanker was
registered in the name of the petitioner. The oil
tanker was leased to BG Hauler, Inc. (BG
Hauler) and was driven by the latter’s driver.
The oil tanker was insured by FGU Insurance
Corp. (FGU Insurance).
● Sps. Baylon filed with RTC of Gapan City a
complaint for damages against petitioner, BG
Hauler, its driver, and FGU Insurance.
● BG Hauler, for its part, alleged that it is not liable
to Sps. Baylon since the oil tanker was not
registered in its name. It further contended that
the victim was guilty of contributory negligence
in crossing the street. It claimed that even if its
driver was at fault, BG Hauler exercised due
diligence of a good father of a family in the
selection of its driver.
Petitioner’s Argument/s (LOST):
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● Sps. Baylon had no cause of action against it
because the lease contract between BG Hauler
and petitioner specifically provides that BG
Hauler shall be liable for any loss, damage, or
injury the leased oil tanker may cause even if
petitioner is the registered owner of the said oil
tanker.
Respondent’s Arguments (WON):
● The lease contract between petitioner and BG
Hauler cannot bind third parties like them. The
existence of the lease contract does not relieve
the petitioner of direct responsibility as the
registered owner of the oil tanker that caused
the death of their daughter.
Ruling of the lower court:
● RTC: Death of Loretta was due to the negligent
act of the driver. It held that BG Hauler, as the
employer, was solidarily liable with the driver. It
further held that petitioner, as the registered
owner of the oil tanker, was also solidarily liable.
OTOH, FGU Insurance was released as it has
satisfactorily fulfilled its obligation as the
insurer.
● CTA: Affirmed with RTC with modification that
the award of the attorney’s fee be deleted for
being speculative. Petitioner, BG Hauler and its
driver are solidarily liable arising from Loretta’s
death. Petitioner’s liability arose from the fact
that it was the registered owner of the oil tanker
while BG Hauler’s liability emanated from a
provision in the lease contract providing that the
lessee shall be liable in case of any loss,
damage, injury the leased oil tanker may cause.
Issue:
WON herein petitioner, the registered owner of a
financially leased vehicle, remains liable for loss,
damage, or injury caused by the vehicle
notwithstanding an exemption provision in the
financial lease contract? (YES)
Rule:
● Section 5 of Republic Act No. 4136, as amended,
all motor vehicles used or operated on or upon any
highway of the Philippines must be registered with
the Bureau of Land Transportation (now Land
Transportation Office) for the current
year.Furthermore, any encumbrances of motor
vehicles must be recorded with the Land
Transportation Office in order to be valid against
third parties.
● In accordance with the law on compulsory motor
vehicle registration, with respect to the public and
third persons, the registered owner of a motor
vehicle is directly and primarily responsible for the
consequences of its operation regardless of who the
actual vehicle owner might be.
Application:
● Well-settled is the rule that the registered owner
of the vehicle is liable for quasi-delicts resulting
from its use. Thus, even if the vehicle has already
been sold, leased, or transferred to another
person at the time the vehicle figured in an
accident involving the vehicle. The compulsory
motor vehicle registration underscores the
importance of registering the vehicle in the name
of the actual owner.
● Case in Point: PCI Leasing and Finance, Inc. v.
UCPB General Insurance Co., Inc. The Court held
liable PCI Leasing and Finance, Inc., the
registered owner of an 18-wheeler Fuso Tanker
Truck leased to Superior Gas & Equitable Co., Inc.
(SUGECO) and being driven by the latter's driver,
for damages arising from a collision. This despite
an express provision in the lease contract to the
effect that the lessee, SUGECO, shall indemnify
and hold the registered owner free from any
liabilities, damages, suits, claims, or judgments
arising from SUGECO's use of the leased motor
vehicle.
● The registered owner can be reimbursed by the
actual owner, lessee or transferee who is known
to him. Unlike the registered owner, the innocent
victim is not privy to the lease, sale, transfer or
encumbrance of the vehicle. Hence, the victim
should not be prejudiced by the failure to register
such transaction or encumbrance.
● ITCAB, petitioner did not file a cross-claim
against BG Hauler, hence, this Court cannot
require BG Hauler to reimburse petitioner for the
latter's liability to the spouses Baylon.
NOTE: In the landmark case of Erezo v. Jepte, the
court laid down the public policy behind the rule:
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
therefore can be fixed on a definite individual, the
registered owner.
Filcar Transport Services v. Espinas
G.R. No. 174156 |June 20, 2012
Facts:
While Espinas was driving his car to cross the
intersection in Manila, another car suddenly hit and
bumped his car. As a result of the impact, Espinas' car
turned clockwise. The other car escaped from the
scene of the incident, but Espinas was able to get its
plate number. He learned that the car is owned by
Filcar.
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Espinas sent several demand letters to Filcar and to
its President and General Manager for the damages
sustained by his car. Thereafter, he filed a complaint
for damages against them before the MeTC of Manila
demanding for actual damages sustained by his car.
Petitioner’s Argument/s: (lost) Filcar argued that
while it is the registered owner of the car that hit and
bumped Espinas' car, the car was assigned to its
Corporate Secretary, Attorney Flor. It denied any
liability to Espinas and claimed that the incident was
not due to its fault or negligence because the driver of
its vehicle at the time of the accident, Floresca, is not
its employee but that of its Corporate Secretary, Atty.
Flor.
Respondent’s Arguments:
Ruling of the lower court: The MeTC ruled in favor
of Espinas, and ordered Filcar and Carmen Flor, jointly
and severally, to pay the damages, interest, and other
fees. It states that as the registered owner of the
vehicle, is primarily responsible for damages resulting
from the vehicle's operation. It was later on affirmed
by the RTC and states that the registered owner of a
vehicle is directly and primarily liable for the damages
sustained by third persons as a consequence of the
negligent or careless operation of a vehicle registered
in its name. However, CA modified the decision that
only Filcar is liable for damages, and there had been
no employer-employee relationship between Filcar
and the driver of the vehicle, the former can be held
liable under the registered owner rule.
Issue: WON Filcar, as registered owner of the motor
vehicle which figured in an accident, may be held
liable for the damages caused to Espinas although it
was driven by its Corporate Secretary’s personal
driver.
Rule:
Yes. Filcar, as registered owner, is deemed the
employer of the driver, Floresca, and is thus
vicariously liable under Article 2176 in relation with
Article 2180 of the Civil Code.
Under Article 2176, in relation with Article 2180, of
the Civil Code, an action predicated on an employee's
act or omission may be instituted against the
employer who is held liable for the negligent act or
omission committed by his employee.
Although the employer is not the actual tortfeasor, the
law makes him vicariously liable on the basis of the
civil law principle of pater familias for failure to
exercise due care and vigilance over the acts of one's
subordinates to prevent damage to another. In the
last paragraph of Article 2180 of the Civil Code, the
employer may invoke the defense that he observed all
the diligence of a good father of a family to prevent
damage.
It is well settled that in case of motor vehicle
mishaps, the registered owner of the motor
vehicle is considered as the employer of the
tortfeasor-driver, and is made primarily liable for the
tort committed by the latter under Article 2176, in
relation with Article 2180, of the Civil Code.
In Equitable Leasing Corporation v. Suyom, SC ruled
that insofar as third persons are concerned, the
registered owner of the motor vehicle is the
employer of the negligent driver, and the actual
employer is considered merely as an agent of such
owner.
Whether there is an employer-employee relationship
between the registered owner and the driver is
irrelevant in determining the liability of the registered
owner who the law holds primarily and directly
responsible for any accident, injury or death caused
by the operation of the vehicle in the streets and
highways.
Application:
Thus, it is clear that for the purpose of holding the
registered owner of the motor vehicle primarily and
directly liable for damages under Article 2176, in
relation with Article 2180, of the Civil Code, the
existence of an employer-employee relationship, as it
is understood in labor relations law, is not required. It
is sufficient to establish that Filcar is the registered
owner of the motor vehicle causing damage in order
that it may be held vicariously liable under Article
2180 of the Civil Code.
Metro Manila Transit Corp. v. Cuevas et. al.
G.R. No. 167797 | Date: June 15, 2015
Facts:
Metro Manila Transit Corp. (MMTC) entered into an
“agreement to sell” with Mina’s Transit Corp (Mina)
wherein Mina bought several bus units from MMTC at
a stipulated price. In the said agreement, it was
stipulated that MMTC would retain the ownership of
the buses until certain conditions were met, but Mina
is allowed to operate the buses in the meantime.
On 14 Oct. 1994, one of the buses that was subject of
the agreement to sell, hit and damaged a Honda
Motorcycle owned by Reynaldo and driven by Junnel.
Thus, Reynaldo and Junnel sued both MMTC and
Mina for damages in the RTC of Cavite.
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Petitioner’s Argument/s (LOST):
● MMTC denied liability. It used the
“registered owner rule” in order to gain
absolution from liability. It contended that
although it retained ownership of the bus,
the actual operator of the bus driver was
Mina.
● For it to be held liable for the acts of the bus
driver, the existence of an employer-
employee relationship between them must
be established. So, since the bus driver
was not its employee, it was not liable
for his negligent act.
● MMTC also filed a cross-claim against Mina.
In support of such cross-claim, MMTC
emphasized one of the provisions in the
agreement to sell, wherein it stated that:
Mina’s Transportation will hold MMTC
free from liability arising from the use
and operation of the bus units.
Mina’s Arguments:
● Mina likewise denied liability stating that: a)
it exercised due diligence in the selection &
supervision of its employees; b) its bus
driver exercised due diligence; and c) it was
Junnel’s negligence that was the cause of the
accident.
● Mina filed a 3rd party complaint against
Perla, its insurer. It seeks reimbursement
should it be adjudged liable pursuant to the
insurance policy.
Respondent’s Arguments (WON):
● The accident was caused by the bus driver’s
negligence. Hence, its employers are liable
for the damages. MMTC/Mina’s Transit
Passenger Bus recklessly and carelessly
attempted to overtake Plaintiff’s Motorcycle
on the right of the lane, in the course of
which the bus accelerated its speed and side
swept Junnel and his companion.
Ruling of the lower court: RTC ruled in favor of
the respondents. It ordered MMTC and its co-
defendant Mina to pay damages in favor of Reynaldo
Ceuvas and Junnel Cuevas. It held that the petitioners
are solidarily liable for the payment of the plaintiffs.
● RTC concluded that the proximate cause of
the mishap was the negligence of the bus
driver. Following Art. 2180 of the Civil Code,
his employers should be solidarily liable.
MMTC & Mina being the joint owners of the
bus were liable. RTC dismissed the 3rd-party
complaint of Mina for lack of evidence.
CA affirmed RTC’s decision.
Issue: W/N MMTC is liable for the injuries sustained
by the respondents despite the provision in the
agreement to sell that shielded it from liability. (YES
- Liable)

Rule: The registered owner of the vehicle is the

one liable in case of accidents. The registered
owner of the motor vehicle is considered as the
employer of the tortfeasor-driver, and is made
primarily liable for the tort committed. But the
registered owner should be allowed to recover
reimbursement from the actual and present owner by
way of its cross-claim.

Application:
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 therefore can be
fixed on a definite individual, the registered owner.

The court reiterated the registered-owner rule in the

case of Filcar Transport Services v. Espina wherein it
ruled that: "regardless of sales made of a motor
vehicle, the registered owner is the lawful operator
insofar as the public and third persons are concerned;
consequently, it is directly and primarily responsible
for the consequences of its operation." The Court
further stated that " [i]n contemplation of law, the
owner/operator of record is the employer of the
driver, the actual operator and employer being
considered as merely its agent. "

Thus, MMTC could not evade liability by passing the

buck to Mina. The stipulation in the agreement to sell
did not bind third parties like the Cuevasses, who were
expected to simply rely on the date constrained in the
registration certificate of the erring bus. However,
MMTC could still recover from Mina, the actual
employer of the negligent driver, under the
principle of unjust enrichment, by means of a cross-
claim seeking for reimbursement of all amounts that
it could be required to pay as damages arising from
the driver’s negligence.

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