THE UNITED STATES, plaintiff-appellee, vs.
TAN PIACO, VENTURA ESTUYA, PEDRO The true criterion by which to judge of the character of the use is whether the public may
HOMERES, MAXIMINO GALSA and EMILIO LEOPANDO, defendants. TAN PIACO,
appellant. G.R. No. L-15122 March 10, 1920
Facts:
Piaco rented two automobile trucks and was using them upon the highways of the Province of
Leyte for the purpose of carrying some passengers and freight. He carried passengers and
freight under a special contract in each case. He had not held himself out to carry all
passengers and all freight for all persons who might offer passengers and freight. Said
defendants were charged with a violation of the Public Utility Law (Act No. 2307 as amended
by Acts Nos. 2362 and 2694), in that they were operating a public utility without permission
from the Public Utility Commissioner.
Issue:
Whether the appellant was a public utility under the foregoing definitions, and was therefore
subject to the control and regulation of the Public Utility Commission.
Held:
No. In support of the conclusion of the Attorney-General, he cites the case of Terminal
Taxicab Co. vs. Kutz (241 U. S.. 252). Section 14 of Act No. 2307, as amended by section 9
of Act No. 2694, provides that: "The Public Utility Commission or Commissioners shall have
general supervision and regulation of, jurisdiction and control over, all public utilities. . . The
term 'public utility' is hereby defined to include every individual, copartnership, association,
corporation or joint stock company, etc., etc., that now or hereafter may own, operate,
managed, or control any common carrier, railroad, street railway, etc., etc., engaged in the
transportation of passengers, cargo, etc.,etc., for public use."
Under the provisions of said section, two things are necessary: (a) The individual,
copartnership, etc., etc., must be a public utility; and (b) the business in which such individual,
copartnership, etc. etc., is engaged must be for public use. So long as the individual or
copartnership, etc., etc., is engaged in a purely private enterprise, without attempting to
render service to all who may apply, he can in no sense be considered a public utility, for
public use.
"Public use" means the same as "use by the public." The essential feature of the public use is
that it is not confined to privilege individuals, but is open to the indefinite public. It is this
indefinite or unrestricted quality that gives it its public character. In determining whether a use
is public, we must look not only the character of the business to be done, but also to the
proposed mode of doing it. If the use is merely optional with the owners, or the public benefit
is merely incidental, it is not a public use, authorizing the exercise of the jurisdiction of the
public utility commission. There must be, in general, a right which the law compels the power
to give to the general public.
It is not enough that the general prosperity of the public is promoted. Public use is not
synonymous with public interest.
enjoy it by right or only by permission. For all of the foregoing reasons, the appellant was not
operating a public utility, for public use, and was not, therefore, subject to the jurisdiction of
the Public Utility Commission.
UNITRANS INTERNATIONAL FORWARDERS v. INSURANCE COMPANY OF NORTH
AMERICA, GR No. 203865, 2019-03-13
Facts:
ICNA filed an Amended Complaint[5] for collection of sum of money (Complaint) arising from
marine insurance coverage on two (2) musical instruments imported from Melbourne
Australia... instituted against South East Asia Container Line (SEACOL) and the unknown
owner/charterer of the vessel M/S Buxcrown, both doing business in the Philippines through
its local ship agent Unitrans, and against the unknown charterer of M/S Doris Wullf, doing
business in the Philippines through its local ship agent TSA,... SEACOL... solicited and
received shipment of pieces of STC musical instruments from the shipper Dominant Musical
Instrument for transportation to and delivery at the port of Manila, complete and in good
condition
EACOL then loaded the insured shipment on board M/S Buxcrown for transportation from
Melbourne Australia to Singapore. In Singapore, the shipment was transferred from M/S
Buxcrown to M/S Doris Wullf for final transportation to the port of Manila.
shipment was insured with ICNA against all risk... in favor of the consignee, San Miguel
Foundation
M/S Doris Wullf arrived and docked at the Manila... and upon stripping the contents thereof, it
was found that two of the cartons containing the musical instruments were in bad order
condition
Unitrans then delivered the subject shipment to the consignee.
it was found out that two units of musical instruments were damaged and could no longer be
used for their intended purpose, hence were declared a total loss
Obviously, the damages sustained by the insured cargo were caused by the fault and
negligence of the [therein] defendants
In its Answer with Counterclaim
Unitrans' obligation was limited to paying on behalf of San Miguel the necessary duties and
kindred fees, file with the Bureau of Customs (BOC) the Import Entry Internal Revenue
Declaration together with other pertinent documents, as well as to pick up the shipment and
then transport and deliver the said shipment to the consignee's premises in good condition.
RTC granted the Complaint and held Unitrans liable to ICNA
Unitrans is a common carrier. Under Article 1742 of the New Civil Code, it states: 'Even if the
loss, destruction, or deterioration of the goods should be caused by the character of the
goods, or [the] faulty nature of the packing or of the containers, the common carrier must
exercise due diligence to forestall or lessen the loss.' It appears that Unitrans, as common
carrier, did not observe this requirement of the law."
CA denied Unitrans' appeal for lack of merit.
Issues:
whether the CA was correct in rendering the assailed Decision, which affirmed the RTC's
Decision holding Unitrans liable to ICNA.
The instant Petition is bereft of merit.
Ruling:
whether the CA was correct in rendering the assailed Decision, which affirmed the RTC's
Decision holding Unitrans liable to ICNA.
Upon careful review of the records of the instant case, the Court finds no cogent reason to
reverse the RTC's and CA's factual findings and their appreciation of the evidence on record.
Unitrans is liable to ICNA with respect to the damaged musical instruments is amply
supported by the evidence on record.
Unitrans' own witness, Mr. Gerardo Estanislao Del Rosario (Del Rosario) himself testified in
open court that Unitrans, as a freight forwarding entity and an accredited non-vessel
operating common carrier, was the one engaged by BTI Logistics as its delivery agent in
Manila.
Unitrans engaged itself "to handle the cargo and to make sure that it was delivered to the
consignee from the port of Manila to the consignee.
Moreover, to reiterate, in its Answer with Counterclaim, Unitrans had already expressly
admitted that San Miguel also engaged its services as customs broker for the subject
shipment; one of its obligations was to pick up the shipment and then transport and deliver
the same to the consignee's premises in good condition.
Having been placed with the obligation to deliver the subject shipment from the port of Manila
to San Miguel's premises in good condition,... it was admitted by Unitrans that "[t]he subject
shipment was delivered by [petitioner] Unitrans.
Yet, it is not disputed by any party that the subject shipment, i.e., musical instruments, were
severely damaged beyond use and did not arrive in good condition at the premises of the
consignee, San Miguel. It is indubitably clear that Unitrans failed to fulfill its obligation to
deliver the subject shipment in good condition.
nitrans was acting as a freight forwarding entity and an accredited non-vessel operating
common carrier.
Article 1735 of the Civil Code states that 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.
n turn, Article 1733 states 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.
In the instant case, considering that it is undisputed that the subject goods were severely
damaged, the presumption of negligence on the part of the common carrier, i.e., Unitrans,
arose. Hence, it had to discharge the burden, by way of adequate proof, that it exercised
extraordinary diligence over the goods; it is not enough to show that some other party might
have been responsible for the damage. Unitrans failed to discharge this burden. Hence, it
cannot escape liability.
WHEREFORE, premised considered, the instant Petition is hereby DENIED. The Decision
dated October 27, 2011 and Resolution dated October 12, 2012 rendered by the Court of
Appeals in CA-G.R. CV No. 95367 are AFFIRMED with MODIFICATION. The total of the
amount adjudged against petitioner and the 6% interest thereon computed by the RTC from
its Decision until finality shall earn interest at 6% per annum from finality of this Decision until
fully paid plus cost of suit. SO ORDERED.
UNSWORTH TRANSPORT INTERNATIONAL (PHILS.), INC., Petitioner vs COURT OF
APPEALS and PIONEER INSURANCE AND SURETY CORPORATION, Respondents
G.R. No. 166250 July 26, 2010
FACTS:
Shipper Sylvex Purchasing Corporation delivered to Unsworth Trans Int’l (UTI) a shipment of
27 drums of various raw materials for pharmaceuticalcmanufacturing. A bill of lading was
issued. The shipment was loaded on American President Lines (APL) for delivery. M/V Pres
Jackson then transshipped(transferred) to M/V Pres Taft. Consignee is Unilab. UTI received
the shipment (upon arrival in the Port of Manila) and placed it in its warehouse. UTI stamped
the Permit to Deliver Imported Goods procured by Champs (customs broker).
Three days after, Oceanica Cargo Marine Surveyors Corp. (OCMSC) conducted a stripping
survey of the shipment, the results showed that 1 steel drum which contained Vitamin B
Complex had a hole on the side with approx. spilling of 1%. Nonetheless, the arrastre Jardine
Davies Transport Services (Jardine) issued Gate Pass which noted that the shipment was
complete and in good order. Upon arrival at Unilab’s warehouse, J.G. Bernas Adjusters and
Surveyors (J.G. Bernas) surveyed the shipment. The report stated that 1 bag had a tearon
the side, the contents partly spilled, 1 drum was punctured and retaped on the bottom side
whose content was lacking and that there were 5 drums lacking. The final inspection yielded
the same results.
Afterwhich, Unilab’s quality control representative rejected one paper bag containing dried
yeast and one steeldrum of Vit. B Complex for being unfit for the intended purpose. Unilab
filed a formal claim for damages against Private Respondent Pioneer Insurance and Surety
Corp. (PISC) and UTI. UTI denied liability on the basis of the gate pass issued by Jardine that
the goods were in complete and in good condition. PISC paid the claimed amount by virtue of
the Loss and Subrogation Receipt, PISC filed against UTI a complaint for Damages.
RTC ruled in favor of PISC and against APL and CA affirmed the same.
ISSUE: Whether or not petitioner is liable as a common carrier.
HELD: YES
Petitioner is a freight forwarder. The term freight forwarder" refers to a firm holding itself out
to the general public (other than as a pipeline, rail, motor, or water carrier) to provide
transportation of property for compensation and, in the ordinary course of its business, (1) to
assemble and consolidate, or to provide for assembling and consolidating, shipments, and to
perform or provide for break-bulk and distribution operations of the shipments; (2) to assume
responsibility for the transportation of goods from the place of receipt to the place of
destination; and (3) to use for any part of the transportation a carrier subject to the federal law
pertaining to common carriers.
A freight forwarders 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 insteadof 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.
It is undisputed that 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.
A bill of lading is a written acknowledgement of the receipt of goods and an agreement to
transport and to deliver them at a specified place to a person named or on his or her order.
It operates both as a receipt and as a contract. It is a receipt for the goods shipped and a
contract to transport and deliver the same as therein stipulated. As a receipt, it recites the
date and place of shipment, describes the goods as to quantity, weight, dimensions,
identification marks, condition, quality, and value. As a contract, it names the contracting
parties, which include the consignee; fixes the route, destination, and freight rate or charges;
and stipulates the rights and obligations assumed by the parties.
Undoubtedly, UTI is liable as a common carrier. 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. In order to avoid responsibility for any loss or damage, therefore, they
have the burden of proving that they observed such diligence.
REGIONAL CONTAINER LINES (RCL) OF SINGAPORE vs. THE
NETHERLANDS INSURANCE CO. (PHILIPPINES), INC.
G.R. No. 168151; September 4, 2009
RCL is a foreign corporation based in Singapore. It does business in the
Philippines through its agent, EDSA Shipping, a domestic corporation
organized and existing under Philippine laws.
Respondent Netherlands Insurance Company (Philippines), Inc. (Netherlands
Insurance) is likewise a domestic corporation engaged in the marine
underwriting business.
FACTS: 405 cartons of Epoxy molding compound were consigned to be shipped from
Singapore to Manila for TEMIC. U-Freight Singapore contracted Pacific Eagle to transport
cargo. It was stored in its refrigerated container as cargo is highly presihable. The
temperature was 0º Celsius. Pacific Eagle loaded it to M/V Piya Bhum owned by RCL which
the former had a slot charter agreement with. RCL issued Bill of Lading in favor of Pacific
Eagle.
Netherlands Insurance issued a Marine Open Policy to insure cargo in favor of Temic to
cover loss/damages. Upon arrival at Manila, the cargoes were surveyed and it was found to
be at the constant required temperature for several ldays. But later on, it was found out that
the temperature changed when the cargo had already been unloaded, to 33º Celsius.
Surveyor believed the fluctuation was caused by the burnt condenser fan motor of the
refrigerated container. Temic received the shipment and found it to be damaged. Temic filed
a claim for cargo loss against Netherlands Insurance, with supporting claims documents. The
Netherlands Insurance paid Temic the sum ofP1,036,497.00 under the terms of the Marine
Open Policy. Temic then executed a loss and subrogation receipt in favor of Netherlands
Insurance.
Seven months from delivery of the cargo - Netherlands Insurance filed a complaint for
subrogation of insurance settlement with the Regional Trial Court, RCL and TMS Ship
Agencies (TMS) thought to be the local agent of M/V Piya, EDSA Shipping, Eagle Liner
Shipping Agencies, U-Freight Singapore, and U-Ocean (Phils.), Inc. (U-Ocean). RCL and
EDSA Shipping filed motion to dismiss based on demurer to evidence. They attributed
negligence to their co-defendants, that fluctuation of temperature occurred after cargo has
been discharged from vessel but in the reefer van and that Netherlands is not party in interest
hence has no cause of action. RTC found RCL and EDSA Shipping not liable but this was
reversed by CA and barred them from presenting evidence since they filed for demurer.
Defense of RCL and EDSA Shipping:
1. They attributed any negligence that may have caused the loss of the
shipment to their co- defendants.
a. They contend that the cause of the damage to the cargo was the “fluctuation of the
temperature in the reefer van,” which fluctuation occurred after the cargo had already been
discharged from the vessel; no fluctuation, they point out, arose when the cargo was still on
board M/V Piya Bhum.
b. As the cause of the damage to the cargo occurred after the same was already discharged
from the vessel and was under the custody of the arrastre operator (International Container
Terminal Services, Inc. or ICTSI), RCL and EDSA Shipping posit that the presumption of
negligence provided in Article 1735 of the Civil Code should not apply.
What applies in this case is Article 1734, particularly paragraphs 3 and 4 thereof, which
exempts the carrier from liability for loss or damage to the cargo when it is caused either by
an act or omission of the shipper or by the character of the goods or defects in the packing or
in the containers.
2. They likewise asserted that no valid subrogation exists, as the payment made by
Netherlands Insurance to the consignee was invalid.
3. That the Netherland Insurance has no cause of action, and is not the real party-in-interest,
4. The claim is barred by laches/prescription. RCL and EDSA Shipping, in their motion to
dismiss based on demurrer to evidence:
1. Netherlands Insurance had failed to prove any valid subrogation,
2. Netherlands Insurance had failed to establish that any negligence on their part or that the
loss was sustained while the cargo was in their custody.
RTC ruled:
1. There was valid subrogation.
2. The defendants could not be held liable for the loss or damage, as their respective
liabilities ended at the time of the discharge of the cargo from the ship at the Port of Manila.
Netherlands Insurance seasonably appealed the order of dismissal to the CA.
CA ruled:
1. Against EDSA Shipping Agency and RCL. They were held liable for the damages/
reimbursement.
2. The CA dismissed Netherland Insurances complaint against the otherdefendants after
finding that the claim had already been barred by prescription
3. They are deemed to have waived their right to present evidence, and the presumption of
negligence must stand.
ISSUE: Whether the CA correctly held RCL and EDSA Shipping liable as common carriers
under the theory of presumption of negligence.
RULING: Yes CA is correct. RCL and EDSA Shipping failed to satisfy this standard of
evidence and in fact offered no evidence at all on this point; a reversal of a dismissal based
on a demurrer to evidence bars the defendant from presenting evidence supporting its
allegations. The CA correctly ruled that they are deemed to have waived their right to present
evidence, and the presumption of negligence must stand. It is for
this reason as well that the court finds RCL and EDSA Shipping’s claim that the loss or
damage to the cargo was caused by a defect in the packing or in the containers.
The present case is governed by the following provisions of the Civil Code:
ART. 1733. 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.
Such extraordinary diligence in the vigilance over the goods is further expressed in articles
1734, 1735, and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the
passengers is further set forth in articles1755 and 1756.
ART. 1734. 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 of 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.
ART. 1735. In all cases other that those mentioned in Nos. 1, 2, 3, 4 and 5 of the preceding
article, 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 by article 1733.
ART. 1736. The extraordinary responsibility of the common carrier lasts from the time the
goods are unconditionally placed in the possession of, and received by the carrier for
transportation until the sane are delivered, actually or constructively, by the carrier to the
consignee, or to the person who has a right to receive them, without prejudice to the
provisions of articles 1738.
ART. 1738. The extraordinary liability of the common carrier continues to be operative even
during the time the goods are stored in a warehouse of the carrier at the place of destination,
until the consignee has been advised of the arrival of the goods and has had reasonable
opportunity thereafter to remove them or otherwise dispose of
them.
ART. 1742. Even if the loss, destruction, or deterioration of the goods should be caused by
the character of the goods, or the faulty nature of the packing or of the containers, the
common carrier must exercise due diligence to forestall or lessen
the loss.
Rules for the liability of a common carrier for lost or damaged cargo as
follows: (Central Shipping Company, Inc. v. Insurance Company of North
America)
(1) Common carriers are bound to observe extraordinary diligence over the goods they
transport, according to all the circumstances of each case;
(2) In the event of loss, destruction, or deterioration of the insured goods, common carriers
are responsible, unless they can prove that such loss,destruction, or deterioration was
brought about by,among others, flood, storm, earthquake, lightning, or other natural disaster
or calamity; and
(3) In all other cases not specified under Article 1734 of the Civil Code, common carriers are
presumed to have been at fault or to have acted negligently, unless they observed
extraordinary diligence.
Arguments of RCL and EDSA Shipping are not meritorious. A common carrier is presumed to
have been negligent if it fails to prove that it exercised extraordinary vigilance over the goods
it transported. When the goods shipped are either lost or arrived 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, the common carrier must establish by
adequate proof that it exercised extraordinary diligence over the goods. It must do
more than merely show that some other party could be responsible for the damage.
In the present case, RCL and EDSA Shipping failed to prove that they did exercise that
degree of diligence required by law over the goods they transported. Indeed, there is
sufficient evidence showing that the fluctuation of the temperature in the refrigerated
container van, as recorded in the temperature chart, occurred after the cargo had been
discharged from the vessel and was already under the custody of the arrastre operator,
ICTSI. This evidence, however, does not disprove that
the condenser fan – which caused the fluctuation of the temperature in the refrigerated
container – was not damaged while the cargo was being unloaded from the ship. It is settled
in maritime law jurisprudence that cargoes while being unloaded generally remain under
the custody of the carrier;
RCL and EDSAShipping failed to dispute this.
RCL and EDSA Shipping could have offered evidence before the trial court to show that the
damage to the condenser fan did not occur: (1) while the cargo was in transit; (2) while they
were in the act of discharging it from the vessel; or (3) while they were delivering it actually or
constructively to the consignee. They could have presented proof to show that they exercised
extraordinary care and diligence in the handling of the goods, but they opted to file a
demurrer to evidence. As the order granting their
demurrer was reversed on appeal, the CA correctly ruled that they are deemed to have
waived their right to present evidence, and the presumption of negligence must stand.
It is for this reason as well that we find RCL and EDSA Shipping’s claim that the loss
or damage to the cargo was caused by a defect in the packing or in the containers.
To exculpate itself from liability for the loss/damage to the cargo under any of the causes, the
common carrier is burdened to prove any of the causes in Article 1734 of
the Civil Code 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. RCL and
EDSA Shipping, however, failed to satisfy this standard of evidence and in fact offered no
evidence at all on this point; a reversal of a dismissal based on a demurrer to evidence bars
the defendant from presenting evidence supporting its allegations.
Planters Products Inc. vs CA
Facts:
Planters Products, Inc. (PPI) purchased from Mitsubishi International Corporation (Mitsubishi)
9, 329. 7069 metric tons of Urea 46% fertilizer which the latter shipped in bulk aboard the
cargo vessel M/V “Sun Plum” owned by Kyosei Kisen Kabushiki Kaisha (KKK) from Alaska,
USA to San Fernando, La Union, Philippines.
Prior to its voyage, a time charter-party on the vessel pursuant to the Uniform General
Charter was entered into between Mitsubishi as shipper/charter and KKKK as shipowner.
Before landing the fertilizer aboard the vessel, four of her holds were presumably inspected
by the charterer’s representative and found fit to take a load of urea in bulk pursuant to par.
16 of the charter-party.
After the Urea fertilizer was loaded in bulk by the stevedores hired by and under the
supervision of the shipper, the steel hatches were closed with heavy in lids, covered with
three layers of tarpaulin, then tied with steel bonds. The hatches remained closed and tightly
sealed through the entire voyage.
Upon the arrival of the vessel at her port of call, the steel pontoon were opened with the use
of the vessel’s boom.
Petitioner unloaded the cargo from the holds into its steelbodied dump trucks which were
parked alongside the berth, using metal scoops attached to the ship, pursuant to the terms
and conditions of the charter-partly (which provided for an F.I.O.S. clause).
The hatches remained open throughout the duration of the discharge. Each time a dump
truck was filled up, its load of Urea was covered with tarpaulin before it
was transported to the consignee's warehouse located some fifty (50) meters from the wharf.
Midway to the warehouse, the trucks were made to pass through a weighing scale where
they were individually weighed for the purpose of ascertaining
the net weight of the cargo. 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. The petitioner's warehouse was made of corrugated galvanized
iron (GI) sheets, with an opening at the front where the dump trucks entered and unloaded
the fertilizer on the warehouse floor. Tarpaulins and GI sheets
were placed in-between and alongside the trucks to contain spillages of the fertilizer. It
actually took 11 days for PPI to unload the cargo.

According to the report of the private marine and cargo surveyor (Cargo Superintendents
Company Inc. (CSCI) hired by PPI, there is shortage in the cargo of 106. 726 M/T and that a
portion of the Urea fertilizer approximating 18 M/T were
rendered unfit for commerce, having been polluted with sand, rust and dirt. PPI then sent a
claim letter to Soriamont Steamship Agencies (SSA), the resident agent of the carrier KKK for
245, 969. 31 php representing the cost of the alleged shortage in the goods shipped and the
diminution in value of that portion said to have been contaminated with dirt. SSA did not
respond to the claim for payment because according to them, what they received was just a
request for shortlanded certificate and not a formal claim which was denied because “they
had nothing to do with the discharge of the shipment”
RTC: It was incumbent upon the SSA to prove that the shortage of contamination sustained
by the cargo is attributable to the fault or negligence on the part of the shipper (PPI) in the
loading, stowing, trimming and discharge of the cargo. SSA failed to destroy the presumption
of negligence against them, thus, they are liable.
CA: Reversed the ruling of the lower court. It is an old and well settled rule that if the plaintiff
(PPI), upon whom rests the burden of proving his cause of action, fails to show in satisfactory
manner the facts upon which he bases his claim, the defendant (SSA) is under no obligation
to prove his defense. PPI failed to prove the basis of its cause of action
ISSUE:
Whether or not a time charter between a ship owner and a charterer transforms 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
HELD:
No, petition is dismissed.
Points:
• When the petitioner chartered the vessel M/V “Sun Plum”, 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 we can charge the charterer, a stranger to the
crew and to the ship with the duty of caring his cargo wen 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 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 time charter or
voyage charter.
• It has been proven that the respondent carrier has sufficiently overcome, by clear and
convincing proof, the prima facie presumption of negligence. The hatches remained close
and tightly sealed while the ship was in transit as the weight of the steel covers made it
impossible for a person to open without the use of the ship’s boom.
• The Supreme Court agreed with respondent carrier that bulk shipment of highly soluble
goods like fertilizer carries with it the risk of loss or damage. More so, with a variable weather
condition prevalent during its unloading, as was thecase at bar. This is a risk the shipper or
the owner of the goods has to face. Clearly, respondent carrier has sufficiently proved the
inherent character of the goods which makes it
highly vulnerable to deterioration; as well as the inadequacy of its packaging which further
contributed to the loss. On the other hand, no proof was adduced by the petitioner showing
that the carrier was remise in the exercise of due diligence in
order to minimize the loss or damage to the goods it carried.
G.R. No. 165647, March 26, 2009
Philippines First Insurance Co., Inc. vs Wallem Phils. Shipping, Inc.
Ponente: Tinga
Facts:
October 1995, Anhui Chemicals Import and Export Corp. loaded on board M/S Offshore
Master a shipment consisting of sodium sulphate anhydrous, complete and in good order for
transportation to and delivery at the port of Manila for consignee, covered by a clean bill of
lading.
On October 16, 1995, the shipment arrived in port of manila and was discharged which
caused various degrees of spillage and losses as evidence by the turn over survey of the
arrastre operator. Asia Star Freight delivered the shipments from pier to the consignees in
Quezon City, during the unloading, it was found by the consignee that the shipment was
damaged and in bad condition.
April 29, 1996, the consignee filed a claim with Wallem for the value of the damaged
shipment, to no avail. Since the shipment was insured with Phil. First Insurance against all
risks in the amount of P2,470,213.50. The consignee filed a claim against the First Insurance.
First insurance after examining the turn-over survey, the bad order certificate and other
documents paid the consignee but later on sent a demand letter to Wallem for the recovery of
the amount paid to the consignee (in exercise of its right of subrogation). Wallem did not
respond to the claim.
First Insurance then instituted an action before RTC for damages against Wallem. RTC held
the shipping company and the arrastre operator solidarily liable since both are charged with
the obligation to deliver the goods in good order condition.
The CA reversed and set aside the RTC's decision. CA says that there is no solidary liability
between the carrier and the arrastre because it was clearly established that the damage and
losses of the shipment were attributed to the mishandling by the arrastre operator in the
discharge of the shipment.
Issues:
1. Whether or not the Court of Appeals erred in not holding that as a common carrier, the
carriers duties extend to the obligation to safely discharge the cargo from the vessel;
2. Whether or not the carrier should be held liable for the cost of the damaged shipment;
3. Whether or not Wallems failure to answer the extra judicial demand by petitioner for the
cost of the lost/damaged shipment is an implied admission of the formers liability for said
goods;
4. Whether or not the courts below erred in giving credence to the testimony of Mr. Talens.
Ruling:
(1) Yes, the vessel is a common carrier, and thus the determination of the existence or
absence of liability will be gauged on the degree of diligence required of a common carrier.
(2) The first and second issue will be resolved concurrently.
(3) The damage of the shipment was documented by the turn0over survey and request for
bad order survey, with these documents, petitioner insist that the shipment incurred damages
while still in the care and responsibility of Wallem before it was turned over to the arrastre
operator. However, RTC found the testimony of Mr. Talens (cargo surveyor) that the loss
was caused by the mishandling of the arrastre operator. This mishandling was affirmed by the
CA which was the basis for declaring the arrastre operator solely liable for the damage.
It is established that damage or losses were incurred by the shipment during the unloading.
As common carrier, they are bound to observe extraordinary diligence in the vigilance over
the goods transported by them. Subject to certain exceptions enumerated under Article 1734
of the Civil Code, common carriers are responsible for the loss, destruction, or deterioration
of the goods. The extraordinary responsibility of the common carrier lasts from the time the
goods are unconditionally placed in the possession of, and received by the carrier for
transportation until the same are delivered, actually or constructively, by the carrier to the
consignee, or to the person who has a right to receive them.
For marine vessels, Article 619 of the Code of Commerce provides that the ship captain is
liable for the cargo from the time it is turned over to him at the dock or afloat alongside the
vessel at the port of loading, until he delivers it on the shore or on the discharging wharf at
the port of unloading, unless agreed otherwise.
COGSA provides that under every contract of carriage of goods by sea, the carrier in relation
to the loading, handling, stowage, carriage, custody, care, and discharge of such goods, shall
be subject to the responsibilities and liabilities and entitled to the rights and immunities set
forth in the Act. Section 3 (2) thereof then states that among the carriers responsibilities are
to properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods
carried.
On the other hand, the functions of an arrastre operator involve the handling of cargo
deposited on the wharf or between the establishment of the consignee or shipper and the
ship's tackle. 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.
Handling cargo is mainly the arrastre operator's principal work so its drivers/operators or
employees should observe the standards and measures necessary to prevent losses and
damage to shipments under its custody. Thus, in this case the appellate court is correct
insofar as it ruled that an arrastre operator and a carrier may not be held solidarily liable at all
times. But the precise question is which entity had custody of the shipment during its
unloading from the vessel?
The records are replete with evidence which show that the damage to the bags happened
before and after their discharge and it was caused by the stevedores of the arrastre operator
who were then under the supervision of Wallem.
It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain
under the custody of the carrier. In the instant case, the damage or losses were incurred
during the discharge of the shipment while under the supervision of the carrier. Consequently,
the carrier is liable for the damage or losses caused to the shipment. As the cost of the actual
damage to the subject shipment has long been settled, the trial courts finding of actual
damages in the amount of P397,879.69 has to be sustained.
(4) Mr Talens credibility must be respected.
CA's decision is set aside. Wallem is liable.
G.R. No. 157917 : August 29, 2012 | SPOUSES TEODORO and NANETTE PERENA,
Petitioners, v. SPOUSES NICOLAS and TERESITA L. ZARATE, PHILIPPINE NATIONAL
RAILWAYS, and the COURT OF APPEALS, Respondents. BERSAMIN, J.:
FACTS: Spouses Teodoro and Nanette Peres (Peres) were engaged in the business of
transporting students from their respective residences in Paraque City to Don Bosco in
Pasong Tamo, Makati City, and back. They employed Clemente Alfaro (Alfaro) as driver of
the van. Spouses Nicolas and Teresita Zarate (Zarates) contracted the Peres to transport
their son Aaron to and from Don Bosco.
Considering that the students were due at Don Bosco by 7:15 a.m., and that they were
already running late because of the heavy vehicular traffic on the South Superhighway, Alfaro
took the van to an alternate route at about 6:45 a.m. by traversing the narrow path
underneath the Magallanes Interchange. The railroad crossing in the narrow path had no
railroad warning signs, or watchmen, or other responsible persons manning the crossing. In
fact, the bamboo barandilla was up, leaving the railroad crossing open to traversing motorists.
At about the time the van was to traverse the railroad crossing, PNR Commuter No. 302
(train), was in the vicinity of the Magallanes Interchange travelling northbound. As the train
neared the railroad crossing, Alfaro drove the van eastward across the railroad tracks, closely
tailing a large passenger bus. His view of the oncoming train was blocked because he
overtook the passenger bus on its left side. The train blew its horn to warn motorists of its
approach. The passenger bus successfully crossed the railroad tracks, but the van driven by
Alfaro did not. The impact threw nine of the 12 students in the rear, 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.
Thus, the Zarates sued the Peres for breach of contract of carriage and the PNR for quasi-
delict. The RTC ruled in favor of the Zarates. On appeal, the CA affirmed the findings of the
RTC.
ISSUE: Whether or not the Peres are liable for breach of contract of carriage?
HELD: The petition has no merit. 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 true test for a common carrier is not the quantity or extent of the business
actually transacted, or the number and character of the conveyances used in the activity, but
whether the undertaking is a part of the activity engaged in by the carrier that he has held out
to the general public as his business or occupation.
Applying these considerations to the case before us, there is no question that the Peres as
the operators of a school bus service were: (a) engaged in transporting passengers generally
as a business, not just as a casual occupation; (b) undertaking to carry passengers over
established roads by the method by which the business was conducted; and (c) transporting
students for a fee. Despite catering to a limited clientele, the Peres operated as a common
carrier because they held themselves out as a ready transportation indiscriminately to the
students of a particular school living within or near where they operated the service and for a
fee.
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.
According to Article 1759 of the Civil Code, their liability as a common carrier did not cease
upon proof that they exercised all the diligence of a good father of a family in the selection
and supervision of their employee. The Peres were liable for the death of Aaron despite the
fact that their driver might have acted beyond the scope of his authority or even in violation of
the orders of the common carrier. DENIED.
MARINA PORT SERVICES, INC. vs. AMERICAN HOME ASSURANCE CORPORATION
G.R. No. 201822 August 12, 2015
FACTS
Countercorp Trading shipped from SG to PH 10 container vans of soft wheat flour
with seals intact. The shipment was insured by AHAC and consigned to MSC. Upon arrival,
the shipment was discharged in good and complete order condition and with safety seals in
place to the custody of the herein petitioner arrastre operator, MPSI. After unloading and prior
to hauling, agents of the Bureau of Customs officially broke the seals and examined the
shipment 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. MSC’s representative, AD’s Customs Services (ACS),
took the five container vans for delivery to MSC. Upon receipt at its warehouse, MSC
discovered substantial shortages in the number of bags of flour delivered. Hence, it filed a
formal claim for loss with MPSI. MPSI denied both claims of MSC. As a result, MSC sought
insurance indemnity for the lost cargoes from AHAC. AHAC paid MSC the value of the
missing bags of flour, in turn, MSC issued a subrogation receipt in favor of AHAC.
RTC dismissed the complaint. It held that while there was indeed a shortage of 1,650
sacks of soft wheat flour, AHAC’s evidence failed to clearly show that the loss happened
while the subject shipment was still under MPSI’s responsibility.
CA stressed that in a claim for loss filed by a consignee, the burden of proof to show
due compliance with the obligation to deliver the goods to the appropriate party devolves
upon the arrastre operator. In consonance with this, a presumption of fault or negligence for
the loss of the goods arises against the arrastre operator pursuant to Articles 1265 and 1981
of the Civil Code. In this case, the CA found that MPSI failed to discharge such burden and to
rebut the aforementioned presumption. Thus, it was held liable to AHAC for the value of the
missing bags of flour.
ISSUE: Whether MPSI is liable for the loss of the bags of flour
HELD: No. MPSI was able to prove delivery of the shipment to MSC in good and complete
condition and with locks and seals intact.
MPSI, in order to prove that it properly delivered the subject shipment consigned to MSC,
presented 10 gate passes. Each of these gate passes bore the duly identified signature of
MSC’s representative which serves, among others, as an acknowledgement that:
Issuance of Gate Pass constitutes delivery to and receipt by consignee of the goods as
described above in good order and condition, unless an accompanying B.O. certificate duly
issued and noted on the face of Gate Pass appears. The signature of the consignee’s
representative on the gate pass is evidence of receipt of the shipment in good order and
condition.
Also, that MPSI delivered the subject shipment to MSC’s representative in good and
complete condition and with lock and seals intact is established by the testimonies of MPSFs
employees who were directly involved in the processing of the subject shipment. Verily, the
testimonies of the aforementioned employees of MPSI confirm that the container vans,
together with their padlocks and wirings, were in order at the time the gate passes were
issued up to the time the said container vans were turned over to ACS.
Even in the light of Article 1981, no presumption of fault on the part of MPSI arises since it
was not sufficiently shown that the container vans were re-opened or that their locks and
seals were broken for the second time.
Indeed, Article 1981 of the Civil Code also mandates a presumption of fault on the
part of the arrastre operator. However, no such presumption arises 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. As may be recalled, the container vans were
opened by a customs official for examination of the subject shipment and were thereafter
resealed with safety wires. While this fact is not disputed by both parties, AHAC alleges that
the container vans were re-opened and this gave way to the alleged pilferage.
The Court notes, however, that AHAC based such allegation solely on the survey report of
the Manila Adjuster & Surveyors Company (MASCO). However, the person who prepared the
said report was not presented in court to testify on the same. Thus, the said survey report has
no probative value for being hearsay. “It is a basic rule that evidence, whether oral or
documentary, is hearsay, if its probative value is not based on the personal knowledge of the
witness but on the knowledge of another person who is not on the witness stand.” Moreover,
“an unverified and unidentified private document cannot be accorded probative value. It is
precluded because the party against whom it is presented is deprived of the right and
opportunity to cross-examine the person to whom the statements or writings are attributed. Its
executor or author should be presented as a witness to provide the other party to the litigation
the opportunity to question its contents. Being mere hearsay evidence, failure to present the
author of the letter renders its contents suspect and of no probative value.”
There being no other competent evidence that the container vans were reopened or that their
locks and seals were broken for the second time, MPSI cannot be held liable for damages
due to the alleged loss of the bags of flour pursuant to Article 1981 of the Civil Code.
Cangco v. MRR, 38 Phil. 767
FACTS:
 January 20, 1915 around 7 to 8 p.m.: Jose Cangco arose from his seat in the 2nd
class-car where he was riding and, making, his exit through the door, took his position
upon the steps of the coach, seizing the upright guardrail with his right hand for support
 As the train slowed down another passenger and also an employee of the railroad
company Emilio Zuñiga got off the same car alighting safely at the point where the
platform begins to rise from the level of the ground.
 When the train had proceeded a little farther Cangco stepped off but 1 or both of his
feet came in contact with a sack of watermelons so his feet slipped from under him and
he fell violently on the platform. 
 His body rolled from the platform and was drawn under the moving car,
where his right arm was badly crushed and lacerated. 
 the car moved forward possibly 6 meters before it came to a full stop
 He was bought to the hospital in the city of Manila where an examination was made
and his arm was amputated
 operation was unsatisfactory so he had second operation at another hospital
was performed and the member was again amputated higher up near the
shoulder expending a total of P790.25 
 It is customary season for harvesting these melons and a large lot had been brought
to the station for the shipment to the market
 CFI: favored Manila Railroad Co. (MRR)- Cangco had failed to use due caution in
alighting from the coach and was therefore precluded form recovering
ISSUE: W/N MRR should be held liable.
HELD: YES. lower court is reversed, and judgment is hereby rendered plaintiff for the sum of
P3,290.25
 It can not be doubted that the employees of the railroad company were guilty of
negligence. It necessarily follows that the defendant company is liable for the damage
thereby occasioned unless recovery is barred by the plaintiff's own contributory
negligence. 
 In resolving this problem it is necessary that each of these conceptions of liability, to-
wit, the primary responsibility of the defendant company and the contributory negligence
of the plaintiff should be separately examined
 Article 1903 of the Civil Code is not applicable to obligations arising ex contractu, but
only to extra-contractual obligations — or to use the technical form of expression, that
article relates only to culpa aquiliana and not to culpa contractual
 article 1903 of the Civil Code is not applicable to acts of negligence which
constitute the breach of a contract
 two things are apparent: (1) That when an injury is caused by the negligence of a
servant or employee there instantly arises a presumption of law that there was
negligence on the part of the master or employer either in selection of the servant or
employee, or in supervision over him after the selection, or both; and (2) that that
presumption is juris tantum and not juris et de jure, and consequently, may be rebutted. It
follows necessarily that if the employer shows to the satisfaction of the court that in
selection and supervision he has exercised the care and diligence of a good father of a
family, the presumption is overcome and he is relieved from liability.
 As a general rule . . . it is logical that in case of extra-contractual culpa, a suing
creditor should assume the burden of proof of its existence, as the only fact upon which
his action is based; while on the contrary, in a case of negligence which presupposes the
existence of a contractual obligation, if the creditor shows that it exists and that it has
been broken, it is not necessary for him to prove negligence.
 The test by which to determine whether the passenger has been guilty of negligence
in attempting to alight from a moving railway train, is that of ordinary or reasonable care.
It is to be considered whether an ordinarily prudent person, of the age, sex and condition
of the passenger, would have acted as the passenger acted under the circumstances
disclosed by the evidence. This care has been defined to be, not the care which may or
should be used by the prudent man generally, but the care which a man of ordinary
prudence would use under similar circumstances, to avoid injury.
 Women, it has been observed, as a general rule are less capable than men
of alighting with safety under such conditions, as the nature of their wearing apparel
obstructs the free movement of the limbs. Again, it may be noted that the place was
perfectly familiar to the plaintiff as it was his daily custom to get on and of the train at this
station. There could, therefore, be no uncertainty in his mind with regard either to the
length of the step which he was required to take or the character of the platform where he
was alighting. Our conclusion is that the conduct of the plaintiff in undertaking to alight
while the train was yet slightly under way was not characterized by imprudence and that
therefore he was not guilty of contributory negligence.
 at the time of the accident, was earning P25 a month as a copyist clerk, and that the
injuries he has suffered have permanently disabled him from continuing that
employment. Defendant has not shown that any other gainful occupation is open to
plaintiff. His expectancy of life, according to the standard mortality tables, is
approximately thirty-three years. We are of the opinion that a fair compensation for the
damage suffered by him for his permanent disability is the sum of P2,500, and that he is
also entitled to recover of defendant the additional sum of P790.25 for medical attention,
hospital services, and other incidental expenditures connected with the treatment of his
injuries.
Designer Baskets v. Air Sea Transport Inc. and Asia Cargo Container Lines Inc.
FACTS:
DBI is a domestic corporation engaged in the production of housewares and handicrafts
items for export. Ambiente, a foreign based company ordered from DBI 223 cartons of
assorted wooden items. Ambiente designated Asia Cargo Container Lines, Inc. (ACCLI) to
ship out its order from the Philippines to United States. ACCLI is a domestic corporation
acting as an agent of Air Sea Transport, Inc. (ASTI), a US based corporation engaged in
carrier transport business in the Philippines.
DBI delivered the shipment to ACCLI to transport from Manila to Ambiente. To acknowledge
receipt and to serve as the contract of sea carriage, ACCLI issued to BPI triplicate copies of
Bill of Lading of ASTI. DBI retained possession of the originals of the bills pending the
payment of the goods by Ambiente. The bill of lading does not contain a provision requiring
the carrier to release or deliver the shipment to the consignee only upon the surrender of the
original bill of lading.
Meanwhile, Ambiente and ASTI entered into an Indemnity Agreement where the former
obligated the latter to deliver the shipment without the surrender of the bill of lading and in
return the buyer agreed to indemnify the carrier free from any liability as a result of the
release of the shipment.
DBI made several demands to Ambiente for the payment of the shipment, but failed to pay
DBI. Consequently, the latter filed a complaint against ASTI, ACCLI, Ambiente and ACCLFs
incorporators-stockholders for the payment of the shipment.
ISSUE: Whether or not the common carrier is liable on the release of the goods to a
consignee even without the surrender of the bill of lading.
A common carrier may release the goods to the consignee even without the surrender of the
bill of lading. Although the general rule is that upon receipt of the goods, the consignee
surrenders the bill of lading, Article 353 of the Code of Commerce provides two exceptions:
When the bill of lading gets lost or for other cause. In either case, the consignee must provide
a receipt to the carrier for the goods delivered.
The DBI’s retention of the bill coupled with the indemnity agreement entered into by the buyer
and the carrier resulted in substantial compliance with Article 353 of the Code of Commerce.
The Supreme Court further held that Art. 1733, 1734 & 1735 of the NCC, which speaks of the
carrier’s liability for the loss, destruction, or deterioration of the goods and the presumption of
negligence do not apply. The responsibility of the carrier under these provisions lasts from the
time the goods are unconditionally placed in possession of, and received by the carrier for
transportation, until the goods are delivered by the carrier to the consignee. In this case it is
undisputed that the goods were timely delivered to the proper consignee.
Finally, the SC said that the carrier cannot be held liable for the unpaid value of the goods, as
it is not a party to the contract of sale. Hence, ASTI and its agent ACCLI were not liable to
DBI. Only Ambiente, as the buyer of the goods, has the obligation to pay the value of
shipment.