I.
COURSE INTRODUCTION
II. GENERAL CONSIDERATIONS
1. DEFINITION OF CONTRACT OF
TRANSPORTATION
person obligates himself to
transport persons or property from
one place to another for
consideration.
A person who obligates
himself to transport goods or
passengers may be a common
carrier or a private carrier.
2. PARTIES
2 KINDS:
1. Carriage of Passengers
2. Carriage of Goods
CARRIAGE OF PASSENGERS
Parties: common carrier &
passenger (carried
gratuitously or not)
Passenger – one who travels
in a public conveyance by
virtue of contract, express or
implied, with the carrier as to
the payment of fare or that
which is accepted as an
equivalent thereof.
3. PERFECTION
Time of Perfection:
2 types of contracts of
carriage of PASSENGERS:
 Contract to carry
(agreement to carry the
passenger at some future
date) – consensual contract
and perfected by mere
consent
* AIRCRAFT – perfected even
without issuance of
ticket as long as there
a was already meeting of
minds with respect to the subject matter and
consideration. If a passenger is carried gratuitously
or under a reduced fare, he is still considered as a
passenger. However, a stipulation limiting the
common carrier’s liability for negligence is valid.
 Contract of Carriage – real contract; not until
the facilities of the carrier are actually used
can the carrier be said to have assumed the
obligation of the carrier; perfected by actual
use.
* AIRCRAFT – perfected if it was established that
the
passenger had checked in at the departure counter,
passed through customs and immigration, boarded
the shuttle bus and proceeded to the ramp of the
aircraft and baggage already loaded to the aircraft.
* Public Utility Bus or Jeepneys or Street Cars –
once it stops it is in effect making a continuous
offer to riders; perfected when passenger is already
attempting to board the vehicle
* TRAINS – perfected when a person:
a. purchased a ticket/ possess sufficient fare with
which to pay for his passage
b. presented himself at the proper place and in a
proper manner to be transported
c. has a bona fide intention to use facilities of the
carrier
4. CONCEPT OF COMMON CARRIER
Common carriers (CC) (1732)
– 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.
(NOT the means of
transportation)
– one that holds itself out as ready to
engage in the transportation of goods
for hire as a public employment and
not as a casual occupation.
- Tests for determining WON a party
is a common carrier of goods:
o 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
persons generally as a business
and not as a casual occupation.
o He must undertake to carry
good of the kind to which his
business is confined.
o He must undertake to carry by
the method by which his
business is conducted and over
his established roads.
o Transportation must be for hire.
(Case: First Philippine
Industrial Corp. vs. CA)
- True Tests of Common Carrier.
→ Is the carriage of passengers or
goods, provided it
has space, for all who opt to avail
themselves of its
transportation service for a fee.
(Case: National Steel v. CA)
→ Is not the quantity or extent of the business
actually transacted, or the number or the
number or character of 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. If the
undertaking is a single transaction, not part of
the general business or occupation engaged in
, as advertised or held out to the general
public, he individual or entity is private, not
acommon carrier. (Case: Sps. Perena v. Sps.
Nicolas)
Characteristics of Common carriers (CC):
- No distinction between one whose
principal business is the
transportation of persons/goods and
one who does such as an ancillary
business (sideline)
- No distinction between regular or
scheduled basis and one offering such
service on an occasional, episodic or
unscheduled business
- Still a CC even if services offered to a
limited
5. CASES
i. Steamship vs CA, G.R No. 122494, Aug 8,
1998
Doctrine: Contracting Parties (Transportation)
FACTS:
Hernandez Trading Co., Inc. (Hernandez)
imported 3 crates of bus spare parts (MARCO
C/No. 12, MARCO C/No. 13 and MARCO C/No.
14), from Maruman Trading Company, Ltd.
(Maruman), a foreign corporation based in Japan.
The crates (covered by Bill of Lading No.
NGO53MN) were shipped on board
“ADELFAEVERETTE,” a vessel owned by Everett
Orient Lines
Upon arrival at the port of Manila, it was
discovered that the crate marked MARCO C/No. 14
was missing
Hernandez made a formal claim for Y1,552,500.00,
as shown in an Invoice No. MTM-941, dated
November 14, 1991
Everett Streamship Corp. offered to pay only
Y100,000.00 the maximum amount stipulated under
Clause 18 of the covering bill of lading
Hernandez rejected the offer and thereafter
instituted a suit for collection
Trial Court: in favor of Hernandez
CA: Affirmed but deleted the award of
attorney’s fees
ISSUE:
 W/N the limited liability clause in the Bill of
Lading is valid
 W/N Hernandez as consignee, who is not a
signatory to the bill of lading is bound by the
stipulations thereof
HELD:
1. YES.
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
which provide:
ART. 1749. 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 declares a greater value, is binding.
ART. 1750. A contract fixing the sum that may be
recovered by the owner or 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.
Maruman Trading, had the option to declare a
higher valuation if the value of its cargo was higher
than the limited liability of the carrier. Considering
that the shipper did not declare a higher valuation,
it had itself to blame for not complying with the
stipulations.
The trial court’s ratiocination that private
respondent 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 does not make the bill of lading invalid.
contracts of adhesion are valid and binding
Greater vigilance, however, is required of the
courts when dealing with contracts of adhesion in
that the said contracts must be carefully scrutinized
“in order to shield the unwary (or weaker party)
from deceptive schemes 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 ii. Dangwa Transpo vs CA (22 SCRA 574)
bill of lading and there it should have declared a
Doctrine: Actionable Document (Transportation)
higher valuation of the goods shipped. Moreover,
Laws Applicable: Art. 1733, Art. 1755
Maruman Trading has not been heard to complain
that it has been deceived or rushed into agreeing to
FACTS:
ship the cargo in petitioner’s vessel. In fact, it was
May 13, 1985: Theodore M. Lardizabal was driving
not even impleaded in this case.
a passenger bus belonging to Dangwa
Transportation Co. Inc. (Dangwa)
2. YES.
The bus was at full stop bet. Bunkhouses 53
the right of a party in the same situation as
and 54 when Pedro alighted. Pedro Cudiamat fell
Hernandez, to recover for loss of a shipment
from the platform of the bus when it suddenly
consigned to him under a bill of lading drawn up
accelerated forward. Pedro was ran over by the rear
only by and between the shipper and the carrier,
right tires of the vehicle.
springs from either a relation of agency that may
Theodore first brought his other passengers
exist between him and the shipper or consignor, or
and cargo to their respective destinations before
his status as stranger in whose favor some
bringing Pedro to Lepanto Hospital where he
stipulation is made in said contract, and who
expired
becomes a party thereto when he demands
Private respondents filed a complaint for damages
fulfillment of that stipulation, in this case the
against Dangwa for the death of Pedro Cudiamat
delivery of the goods or cargo shipped
Dangwa: observed and continued to observe
When Hernandez formally claimed
the extraordinary diligence required in the
reimbursement for the missing goods from Everett
operation of the co. and the supervision of the
and subsequently filed a case against the it based on
employees even as they are not absolute insurers of
the very same bill of lading, it accepted the
the public at large
provisions of the contract and thereby made itself a
RTC: in favour of Dangwa holding Pedrito as
party thereto, or at least has come to court to enforce
negligent and his negligence was the cause of his
it.[
death but still ordered to pay in equity P 10,000 to
The commercial Invoice No. MTM-941 does
the heirs of Pedrito
not in itself sufficiently and convincingly show that
CA: reversed and ordered to pay Pedrito
Everett has knowledge of the value of the cargo as
indemnity, moral damages, actual and
contended by Hernandez.
compensatory damages and cost of the suit

ISSUE: W/N Dangwa should be held liable for the

negligence of its driver Theodore
HELD: YES. CA affirmed. iii. Korean Airlines vs CA, (234 SCRA 717)
A public utility once it stops, is in effect
Facts:
making a continuous offer to bus riders (EVEN
Juanito Lapuz was contracted for
when moving as long as it is still slow in motion)
employment in Saudi Arabia through Pan Pacific
Duty of the driver: do NOT make acts that
Recruiting Services, Inc. He was supposed to leave
would have the effect of increasing peril to a
via Korean Airlines, but was initially listed as a
passenger while he is attempting to board the same
“chance passenger”. According to Lapuz, he was
Premature acceleration of the bus in this case
allowed to check in and was cleared for departure.
= breach of duty
When he was on the stairs going to the airplane, a
Stepping and standing on the platform of the
KAL officer pointed at him and shouted, “Down!
bus is already considered a passenger and is entitled
Down!” and he was barred from taking the flight.
all the rights and protection pertaining to such a
When he asked for another booking, his ticket was
contractual relation
cancelled. He was unable to report for work and so
Duty extends to boarding and alighting
he lost his employment. KAL alleged that the agent
of Pan Pacific was informed that there are 2 seats
GR: By contract of carriage, the carrier
possibly available. He gave priority to Perico, while
assumes the express obligation to transport the
the other seat was won by Lapuz through lottery.
passenger to his destination safely and observe
But because only 1 seat became available, it was
extraordinary diligence with a due regard for all the
given to Perico. The trial court adjudged KAL liable
circumstances, and any injury that might be suffered
for damages. The decision was affirmed by the
by the passenger is right away attributable to the
Court of Appeals, with modification on the damages
fault or negligence of the carrier
awarded.
EX: carrier to prove that it has exercised
extraordinary diligence as prescribed in Art. 1733
Issues:
and 1755 of the Civil Code
(1) Whether there is already a contract of carriage
Failure to immediately bring Pedrito to the
between KAL and Lapuz to hold KAL liable for
hospital despite his serious condition = patent and
breach of contract
incontrovertible proof of their negligence
(2) Whether moral and exemplary damages should
Hospital was in Bunk 56; 1st proceeded to
be awarded, and to what extent
Bunk 70 to allow a passenger (who later called the
family of Pedrito on his own will) to alight and
Held:
deliver a refrigerator
(1) The status of Lapuz as standby passenger
In tort, actual damages is based on net
was changed to that of a confirmed passenger when
earnings
his name was entered in the passenger manifest of
KAL for its Flight No. KE 903. His clearance through
immigration and customs clearly shows that he had
indeed been confirmed as a passenger of KAL in that
flight. KAL thus committed a breach of the contract
of carriage between them when it failed to bring
Lapuz to his destination. 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. 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. The
evidence presented by Lapuz shows that he had
indeed checked in at the departure counter, passed
through customs and immigration, boarded the
shuttle bus and proceeded to the ramp of KAL's
aircraft. In fact, his baggage had already been loaded
in KAL's aircraft, to be flown with him to Jeddah.
The contract of carriage between him and KAL had
already been perfected when he was summarily and
insolently prevented from boarding the aircraft.
(2) The Court of Appeals granted moral and
exemplary damages because:
a. The findings of the court a quo that the
defendant-appellant has committed breach of
contract of carriage in bad faith and in wanton,
disregard of plaintiff-appellant's rights as passenger
laid the basis and justification of an award for moral
damages.
b. In the instant case, we find that defendant-
appellant Korean Air Lines acted in a wanton,
fraudulent, reckless, oppressive or malevolent
manner when it "bumped off" plaintiff-appellant on
November 8, 1980, and in addition treated him
rudely and arrogantly as a "patay gutom na contract
worker fighting Korean Air Lines," which clearly
shows malice and bad faith, thus entitling plaintiff-
appellant to moral damages.
c. Considering that the plaintiff-appellant's
entitlement to moral damages has been fully
established by oral and documentary evidence,
exemplary damages may be awarded. In fact,
exemplary damages may be awarded, even though
not so expressly pleaded in the complaint. By the
same token, to provide an example for the public
good, an award of exemplary damages is also
proper.
A review of the record of this case shows that
the injury suffered by Lapuz is not so serious or
extensive as to warrant an award of P1.5 million. The
assessment of P100,000 as moral and exemplary
damages in his favor is, in our view, reasonable and
realistic.
 iv. Cathay Pacific Airways vs Philippine luggage safely to their destination, which includes
Airlines G.R No. 185891, June 26, 2013 the duty not to delay their transportation. It was not

FACTS: even aware that the luggage was left behind until its

Respondent Alcantara was a first class attention was called by the Hongkong Customs

passenger of a Cathay Pacific flight to Jakarta to authorities. It also refused to deliver the luggage at

attend a business conference with the Director his hotel and required him to pick it up with an

General of Trade of Indonesia. Upon his arrival in official of the Philippine Embassy The Cathay

Jakarta, he discovered that his luggage was missing. employees were also discourteous, rude, and

He was informed that his luggage was left behind in insulting. He was simply advised to buy anything he

Hongkong and was offered $20.00 as "inconvenience wanted with only $20.00 which was certainly not

money" to buy his immediate personal needs. He enough to purchase comfortable clothing

had to seek postponement of his pre-arranged appropriate for an executive conference. Cathay’s

conference. And when his luggage finally reached agents only replied, "What can we do, the baggage

Jakarta after a day, it was required to be picked up is missing. I cannot do anything . . . Anyhow, you

by an official of the Philippine Embassy. The trial can buy anything you need, charged to Cathay

court ordered Cathay to pay. The CA affirmed but Pacific." Moral and exemplary damages are proper

increased the award of damages. SC affirmed but where in breaching the contract of carriage bad faith

modified the award of damages. Cathay argues that or fraud is shown. In the absence of fraud or bad

the one day delay was not made in bad faith because faith, liability is limited to the natural and probable

it had a mechanical trouble wherein all pieces of consequences of the breach of obligation which the

luggage on board the first aircraft bound for Jakarta parties had foreseen or could have reasonably

were unloaded and transferred to the second aircraft foreseen. Further, Cathay contends that the extent of

which departed an hour and a half later. Cathay also its liability should be limited absolutely to that set

argues that he was not treated rudely and arrogantly forth in the Warsaw Convention. The said treaty

by its employees. Also, that the CA erred in failing does not operate as an exclusive enumeration of the

to apply the Warsaw Convention on the liability of a instances for declaring a carrier liable for breach of

carrier to its passengers. contract of carriage or as an absolute limit of the

extent of that liability. The Warsaw Convention

ISSUE: Whether or not Cathay breached its contract declares the carrier liable for damages in the

of carriage with Alcantara and acted in bad faith? enumerated cases and under certain limitations.
However, it must not be construed to preclude the

HELD: operation of the Civil Code and other pertinent laws.

YES. Cathay failed to deliver his luggage at the It does not regulate, much less exempt, the carrier
designated place and time, it being the obligation of from liability for damages for violating the rights of
a common carrier to carry its passengers and their its passengers under the contract of carriage,
especially if wilfull misconduct on the part of the
carrier's employees is found or established, as in this
case.
v. Spouses Fernando vs Northwest, G.R No.
212038; February 8, 2017
Facts:
Spouses Jesus and Elizabeth Fernando,
owners of JB Music and JB Sports, are frequent flyers
of Northwest Airlines, Inc. and are holder of its elite
card. Petitioners initiated the filing of the instant
case which arose from this incident:
Jesus arrived at the LAX via Northwest
airlines to join his family for Christmas, however
upon arrival at the airport, he found that his
documents reflect his return ticket as Aug 2001. So
he approached Northwest personnel named Linda.
The latter merely glanced at his ticket without
checking its status and peremptorily said that the
ticket has been used and invalid. He then averred
that such ticket was unused because of some ticket
restrictions. Hence, ticket remains unused. He was
then brought to the Immigration’s interrogation
room and was asked humiliating question for two
hours. After that, he was granted only a 12-day stay
in the US, instead of usual 6 months
Issue:
Whether or not there was breach of contract of
carriage
Held:
YES. Undoubtedly, a contract of carriage
existed between Northwest and the Fernandos.
They 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. In Alitalia Airways v. CA, we held that
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 then has
every right to expect that he would fly on that flight
and on that date. If he does not, then the carrier
opens itself to a suit for breach of contract of
carriage.
When Northwest confirmed the
reservations of the Fernandos, it bound itself to
transport the Fernandos on their flight on 29
January 2002. In an 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 the contract and the fact of its
non-performance by the carrier. As the
aggrieved party, the Fernandos only had to
prove the existence of the contract and the fact
of its non-performance by Northwest, as carrier,
in order to be awarded compensatory and
actual damages.
 of P 22,150.00, the claimed value of the lost
III. COMMON CARRIERS merchandise, plus damages and attorney's fees.

1. CASES Petitioner alleged that private respondent, being a

common carrier, and having failed to exercise the
i. De Guzman vs CA; G.R No, L-47822
extraordinary diligence required of him by the law,
FACTS: should be held liable for the value of the undelivered
Respondent Ernesto Cendana, a junk dealer,
goods.
was engaged in buying up used bottles and scrap
In his Answer, private respondent denied
metal in Pangasinan. As a sideline business, he
that he was a common carrier and argued that he
would engage in backhauling services of different
could not be held responsible for the value of the lost
merchandise and in turn would charge his clients a
goods, such loss having been due to force majeure.
much lower freight rates than the usual.
On November 1970, petitioner Pedro de
ii. Planters Products Inc vs CA; 226 SCRA 476
Guzman, a merchant and authorized dealer of
General Milk contracted with respondent for the Doctrine: Charter Party (Transportation)

hauling of 750 cartons of Liberty filled milk from a FACTS:

warehouse of General Milk in Makati, Rizal,  June 16 1974: Mitsubishi International

to petitioner's establishment in Urdaneta on or Corporation (Mitsubishi) of New York, U.S.A.,

before 4 December 1970. 9,329.7069 M/T of Urea 46% fertilizer bought

Accordingly, on 1 December 1970, by Planters Products, Inc. (PPI) on aboard the

respondent loaded in Makati the merchandise on to cargo vessel M/V "Sun Plum" owned by private

his trucks: 150 cartons were loaded on a truck driven Kyosei Kisen Kabushiki Kaisha (KKKK) from

by respondent himself, while 600 cartons were Kenai, Alaska, U.S.A., to Poro Point, San

placed on board the other truck which was driven Fernando, La Union, Philippines, as evidenced

by Manuel Estrada, respondent's driver and by Bill of Lading

employee.  May 17 1974: a time charter-party on the vessel

Only 150 boxes of Liberty filled milk were M/V "Sun Plum" pursuant to the Uniform

delivered to petitioner. The other 600 boxes never General Charter was entered into between

reached petitioner, since the truck which carried Mitsubishi as shipper/charterer and KKKK as

these boxes was hijacked somewhere along the shipowner, in Tokyo, Japan

MacArthur Highway in Paniqui, Tarlac, by armed  Before loading the fertilizer aboard the vessel, 4

men who took with them the truck, its driver, his of her holds were all presumably inspected by

helper and the cargo. the charterer's representative and found fit

With that, petitioner commenced action  The hatches remained closed and tightly sealed

against private respondent in demanding payment throughout the entire voyage

 July 3, 1974: PPI 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
 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 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.
 Tarpaulins and GI sheets were placed in-
between and alongside the trucks to contain
spillages of the ferilizer
 It took 11 days for PPI to unload the cargo
 Cargo Superintendents Company Inc.
(CSCI), private marine and cargo surveyor, was
hired by PPI to determine the "outturn" of the
cargo shipped, by taking draft readings of the
vessel prior to and after discharge
 shortage in the cargo of 106.726 M/T and that a
portion of the Urea fertilizer approximating 18
M/T was contaminated with dirt
 Certificate of Shortage/Damaged
Cargo prepared by PPI
 short of 94.839 M/T and about 23 M/T were
rendered unfit for commerce, having been
polluted with sand, rust and dirt
 PPI sent a claim letter 1974 to Soriamont
Steamship Agencies (SSA), the resident agent of
the carrier, KKKK, for P245,969.31 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: what they received was just a request for
shortlanded certificate and not a formal claim,
and that they "had nothing to do with the
discharge of the shipment
 RTC: failure to destroy the presumption of
negligence against them, SSA are liable
 CA: REVERSED - failed to prove the basis of its
cause of action
ISSUE: W/N a time charter between a shipowner
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
 When PPI 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 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
 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.
 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
 This is a risk the shipper or the owner of the
goods has to face. Clearly, KKKK 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.
iii. Bascos vs CA; April 7, 1993
FACTS:
Rodolfo A. Cipriano representing Cipriano
Trading Enterprise (CIPTRADE for short) entered
into a hauling contract with Jibfair Shipping Agency
Corp whereby the former bound itself to haul the
latter’s 2,000 m/tons of soya bean meal to the
warehouse in Calamba, Laguna. To carry out its
obligation, CIPTRADE, through Cipriano,
subcontracted with Bascos to transport and to
deliver 400 sacks of soya bean meal from the Manila
Port Area to Calamba, Laguna. Petitioner failed to
deliver the said cargo. As a consequence of that
failure, Cipriano paid Jibfair Shipping Agency the
amount of the lost goods in accordance with their
contract.
Cipriano demanded reimbursement from
petitioner but the latter refused to pay. Eventually,
Cipriano filed a complaint for a sum of money and
damages with writ of preliminary attachment for
breach of a contract of carriage.
The trial court granted the writ of
preliminary attachment.In her answer, petitioner
interposed the defense that there was no contract of
carriage since CIPTRADE leased her cargo truck to
load the cargo from Manila Port Area to Laguna and
that the truck carrying the cargo was hijacked and
being a force majeure, exculpated petitioner from
any liability
After trial, the trial court rendered a decision
in favor of Cipriano and against Bascos ordering the
latter to pay the former for actual damages for
attorney’s fees and cost of suit.
The “Urgent Motion To Dissolve/Lift
preliminary Attachment” Bascos is DENIED for
being moot and academic.
Petitioner appealed to the Court of Appeals
but respondent Court affirmed the trial court’s
judgment.
Hence this petition for review on certiorari
ISSUE:
(1) WON petitioner a common carrier
(2) WON the hijacking referred to a force majeure
HELD: The petition is DISMISSED and the decision
of the Court of Appeals is hereby AFFIRMED.
1. YES
In disputing the conclusion of the trial and
appellate courts that petitioner was a common
carrier, she alleged in this petition that the contract
between her and Cipriano was lease of the truck. She
also stated that: she was not catering to the general
public. Thus, in her answer to the amended
complaint, she said that she does business under the
same style of A.M. Bascos Trucking, offering her
trucks for lease to those who have cargo to move, not
to the general public but to a few customers only in
view of the fact that it is only a small business.
We agree with the respondent Court in its
finding that petitioner is a common carrier.
Article 1732 of the Civil Code defines a
common carrier as “(a) person, corporation or firm,
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 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.” 12 In this case, petitioner
herself has made the admission that she was in the
trucking business, offering her trucks to those with
cargo to move. Judicial admissions are conclusive
and no evidence is required to prove the same. 13
But petitioner argues that there was only a contract
of lease because they offer their services only to a
select group of people. Regarding the first
contention, the holding of the Court in De Guzman
vs. Court of Appeals 14 is instructive. In referring to
Article 1732 of the Civil Code, it held thus:
“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 1732 deliberately refrained from making
such distinctions.”
2. NO
Likewise, We affirm the holding of the
respondent court that the loss of the goods was not
due to force majeure.
Common carriers are obliged to observe
extraordinary diligence in the vigilance over the
goods transported by them. Accordingly, they are
presumed to have been at fault or to have acted
negligently if the goods are lost, destroyed or
deteriorated. There are very few instances when the
presumption of negligence does not attach and these
instances are enumerated in Article 1734. 19 In those
cases where the presumption is applied, the
common carrier must prove that it exercised
extraordinary diligence in order to overcome the
presumption.
In this case, petitioner alleged that hijacking
constituted force majeure which exculpated her
from liability for the loss of the cargo. In De Guzman
vs. Court of Appeals, the Court held that hijacking,
not being included in the provisions of Article 1734,
must be dealt with under the provisions of Article
1735 and thus, the common carrier is presumed to
have been at fault or negligent. To exculpate the
carrier from liability arising from hijacking, he must
prove that the robbers or the hijackers acted with
grave or irresistible threat, violence, or force. This is
in accordance with Article 1745 of the Civil Code
which provides:
“Art. 1745. Any of the following or similar
stipulations shall be considered unreasonable,
unjust and contrary to public policy; xx
(6) That the common carrier’s liability for acts
committed by thieves, or of robbers who do not act
with grave or irresistible threat, violences or force, is
dispensed with or diminished;” xx
NOTES:
1. She cited as evidence certain affidavits which
referred to the contract as “lease”. These affidavits
were made by Jesus Bascos and by petitioner herself
and Cipriano and CIPTRADE did not object to the
presentation of affidavits by petitioner where the
transaction was referred to as a lease contract. Both
the trial and appellate courts have dismissed them
as self-serving and petitioner contests the
conclusion. We are bound by the appellate court’s
factual conclusions. Yet, granting that the said
evidence were not self-serving, the same were not
sufficient to prove that the contract was one of lease.
It must be understood that a contract is what the law
defines it to be and not what it is called by the
contracting parties. Furthermore, petitioner
presented no other proof of the existence of the
contract of lease. He who alleges a fact has the
burden of proving it.
2. Having affirmed the findings of the respondent
Court on the substantial issues involved, We find no
reason to disturb the conclusion that the motion to
lift/dissolve the writ of preliminary attachment has
been rendered moot and academic by the decision
on the merits
iv. First Phil Industrial Corp vs CA; 300 SCRA
66 (1998)
Facts:
Petitioner is a grantee of a pipeline
concession under Republic Act No. 387.
Sometime in January 1995, petitioner applied
for mayor’s permit in Batangas. However, the
Treasurer required petitioner to pay a local tax
based on gross receipts amounting to
P956,076.04. In order not to hamper its
operations, petitioner paid the taxes for the first
quarter of 1993 amounting to P239,019.01 under
protest. On January 20, 1994, petitioner filed a
letter-protest to the City Treasurer, claiming
that it is exempt from local tax since it is
engaged in transportation business. The
respondent City Treasurer denied the protest,
thus, petitioner filed a complaint before the
Regional Trial Court of Batangas for tax refund.
Respondents assert that pipelines are not
included in the term “common carrier” which
refers solely to ordinary carriers or motor
vehicles. The trial court dismissed the
complaint, and such was affirmed by the Court
of Appeals.
Issue:
Whether or not a pipeline business is included
in the term “common carrier” so as to entitle the
petitioner to the exemption
Held:
Article 1732 of the Civil Code defines a
"common carrier" as "any 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 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 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.
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 definition of a common
carrier.
v. National Steel Corp vs CA; 283 SCRA 45;
Dec 12, 1997
Doctrine:
The stringent provisions of the Civil Code on
common carriers protecting the general public
cannot justifiably be applied to a private carrier.
Facts:
Plaintiff National Steel Corporation (NSC) as
Charterer and defendant Vlasons Shipping, Inc.
(VSI) as Owner, entered into a Contract of Voyage
Charter Hire whereby NSC hired VSI’s vessel, the
MV Vlasons I to make one voyage to load steel
products at Iligan City and discharge them at North
Harbor, Manila. The handling, loading and
unloading of the cargoes were the responsibility of
the Charterer.
The skids of tinplates and hot rolled sheets shipped
were allegedly found to be wet and rusty. Plaintiff,
alleging negligence, filed a claim for damages
against the defendant who denied liability 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
its voyage, the vessel encountered very rough seas.
Issue:
Whether or not the provisions of the Civil Code on
common carriers pursuant to which there exists a
presumption of negligence against the common
carrier in case of loss or damage to the cargo are
applicable to a private carrier.
Held:
No. 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.
It has been held that the true test of a common carrier
is the carriage of passengers or goods, provided it
has space, for all who opt to avail themselves of its
transportation service for a fee [Mendoza vs.
Philippine Airlines, Inc., 90 Phil. 836, 842-843 (1952)].
A carrier which does not qualify under the above
test is deemed a private carrier. “Generally, private
carriage is undertaken by special agreement and the
carrier does not hold himself out to carry goods for
the general public.
Because the MV Vlasons I was a private carrier, the
ship owner’s obligations are governed by the
foregoing provisions of the Code of Commerce and
not by the Civil Code which, as a general rule, places
the prima facie presumption of negligence on a
common carrier.
vi. Westwind Shipping Corp vs UCPB; Nov, 25,
2013
FACTS:
Kinsho-Mataichi Corporation shipped from the port
of Kobe, Japan 197 metal containers/skids of tin-free
steel for delivery to consignee, San Miguel
Corporation (SMC). The shipment was loaded and
received clean on board M/V Golden Harvest
Voyage No. 66, a vessel owned and operated by
Westwind Shipping Corporation (Westwind).
SMC insured the cargoes against all risks
with UCPB General Insurance Co. The shipment
arrived in Manila and was discharged in the custody
of the arrastre operator, Asian Terminals, Inc. (ATI).
During the unloading operation, 6 containers/skids
sustained dents and punctures from the forklift used
by the stevedore of Ocean Terminal Services, Inc.
(OTSI) in centering and shuttling the
containers/skids.
 Orient Freight International, Inc. (OFII), the
customs broker of SMC, withdrew from ATI the 197
containers/skids, including the 6 in damaged
condition and delivered the same at SMC’s
warehouse. It was discovered upon discharge that
additional 9 containers/skids were also damages
due to the forklift operations, making the total
number of 15 containers/skids in bad order.
SMC filed a claim against UCPB, Westwind,
ATI, and OFII to recover the amount corresponding
to the damaged containers/skids. UCPB paid the
total sum; SMC signed the subrogation receipt.
UCPB instituted a complaint for damages against
Westwind, ATI and OFII.
RTC – dismissed UCPB’s complaint
CA – reversed RTC’s decision
Westwind’s Contentions:
It no longer had actual or constructive custody of
the containers/skids at the time they were damaged
by ATI's forklift operator during the unloading
operations.
Its responsibility already ceased from the moment
the cargoes were delivered to ATI, which is
reckoned from the moment the goods were taken
into the latter's custody.
ATI had full control over its employees and
stevedores as well as the manner and procedure of
the discharging operations.
OFII’s Contentions:
It is not a common carrier, but only a customs
broker whose participation is limited to facilitating
withdrawal of the shipment in the custody of ATI by
overseeing and documenting the turnover and
counterchecking if the quantity of the shipments
were in tally with the shipping documents at hand,
but without participating in the physical withdrawal
and loading of the shipments into the delivery
trucks of JBL.
The loading to the trucks were made by way of
forklifts owned and operated by ATI and the
unloading from the trucks at the SMC warehouse
was done by way of forklifts owned and operated by
SMC employees.
Neither the undertaking to deliver nor the
acknowledgment by the consignee of the fact of
delivery makes a person or entity a common carrier,
since delivery alone is not the controlling factor in
order to be considered as such.
ISSUE: Whether or not Westwind, ATI and OFII are
liable.
HELD:
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 transported by them. 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.
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.
The legal relationship between the consignee
and the arrastre operator is akin to that of a
depositor and warehouseman. The relationship
between the consignee and the common carrier is
similar to that of the consignee and the arrastre
operator. Since it is the duty of the ARRASTRE to
take good care of the goods that are in its custody
and to deliver them in good condition to the
consignee, such responsibility also devolves upon
the CARRIER. Both the ARRASTRE and the
CARRIER are therefore charged with and obligated
to deliver the goods in good condition to the
consignee.
What Westwind failed to realize is that the
extraordinary responsibility of the common carrier
lasts until the time the goods are actually or
constructively delivered by the carrier to the
consignee or to the person who has a right to receive
them. There is actual delivery in contracts for the
transport of goods when possession has been turned
over to the consignee or to his duly authorized agent
and a reasonable time is given him to remove the
goods.
In this case, since the discharging of the
containers/skids, which were covered by only one
bill of lading, had not yet been completed at the time
the damage occurred, there is no reason to imply
that there was already delivery, actual or
constructive, of the cargoes to ATI.
The contention of OFII is likewise untenable.
A customs broker has been regarded as a common
carrier because transportation of goods is an integral
part of its business. 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. OFII is considered a
common carrier. 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 of whether
it owns the vehicle to be used or has to actually hire
one.
As a common carrier, OFII is mandated to
observe, under Article 1733 of the Civil Code,
extraordinary diligence in the vigilance over the
goods 24 it transports according to the peculiar
circumstances of each case. In the event that the
goods are lost, destroyed or deteriorated, it is
presumed to have been at fault or to have acted
negligently, unless it proves that it observed
extraordinary diligence.
It is incumbent upon OFII to prove that it
actively took care of the goods by exercising
extraordinary diligence in the carriage thereof. It
failed to do so.
Hence, its presumed negligence under
Article 1735 of the Civil Code remains unrebutted.
vii. Sps. Cruz vs Sun Holidays; G.R No. 186312;
June 29, 2010
Facts:
Spouses Dante and Leonora Cruz
(petitioners) lodged a Complaint on January 25, 2001
against Sun Holidays, Inc. (respondent) with the
Regional Trial Court (RTC) of Pasig City 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 boatM/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 stay of the newly wed Ruelito and his
wife at the Resort from September 9 to 11, 2000 was
by virtue of a tour package-contract with respondent
that included transportation to and from the Resort
and the point of departure in Batangas. Miguel C.
Matute (Matute), a scuba diving instructor and one
of the survivors, gave his account of the incident that
led to the filing of the complaint as follows:
Matute stayed at the Resort from September
8 to 11, 2000. He was originally scheduled to leave
the Resort in the afternoon of September 10, 2000,
but was advised to stay for another night because of
strong winds and heavy rains.On September 11,
2000, as it was still windy, Matute and 25 other
Resort guests including petitioners' son and his wife
trekked to the other side of the Coco Beach mountain
that was sheltered from the wind where they
boarded M/B Coco Beach III, which was to ferry
them to Batangas.Shortly after the boat sailed, it
started to rain. As it moved farther away from
Puerto Galera and into the open seas, the rain and
wind got stronger, causing the boat to tilt from side
to side and the captain to step forward to the front,
leaving the wheel to one of the crew members. The
waves got more unwieldy. After getting hit by two
big waves which came one after the other, M/B
Coco Beach III capsized putting all passengers
underwater. The passengers, who had put on their
life jackets, struggled to get out of the boat. Upon
seeing the captain, Matute and the other passengers
who reached the surface asked him what they could
do to save the people who were still trapped under
the boat. The captain replied "Iligtas niyo na lang
ang sarili niyo" (Just save yourselves). AcCTaD
Help came after about 45 minutes when two boats
owned by Asia Divers in Sabang, Puerto Galera
passed by the capsized M/B Coco Beach III.
Boarded on those two boats were 22 persons,
consisting of 18 passengers and four crew members,
who were brought to Pisa Island. Eight passengers,
including petitioners' son and his wife, died during
the incident. At the time of Ruelito's death, he was
28 years old and employed as a contractual worker
for Mitsui Engineering & Shipbuilding Arabia, Ltd.
in Saudi Arabia, with a basic monthly salary of $900.
Petitioners, by letter of October 26, 2000, demanded
indemnification from respondent for the death of
their son in the amount of at least P4,000,000.
Respondent denied any responsibility for the
incident which it considered to be a fortuitous event.
It nevertheless offered, as an act of commiseration,
the amount of P10,000 to petitioners upon their
signing of a waiver. Petitioners declined, they filed
the Complaint, 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
the Philippine Atmospheric, Geophysical and
Astronomical Services Administration (PAGASA)
as early as 5:00 a.m. of September 11, 2000.
Carlos Bonquin, captain of M/B Coco Beach
III, averred that the Resort customarily requires four
conditions to be met before a boat is allowed to sail,
to wit: (1) the sea is calm, (2) there is clearance from
the Coast Guard, (3) there is clearance from the
captain and (4) there is clearance from the Resort's
assistant manager. He added that M/B Coco Beach
III met all four conditions on September 11, 2000,
but a subasco or squall, characterized by strong
winds and big waves, suddenly occurred, causing
the boat to capsize. By Decision of February 16, 2005,
Branch 267 of the Pasig RTC dismissed petitioners'
Complaint and respondent's Counterclaim
Petitioners' Motion for Reconsideration having been
denied by Order dated September 2, 2005,they
appealed to the Court of Appeals.By Decision of
August 19, 2008,the appellate court denied
petitioners' appeal, holding, among other things,
that the trial court correctly ruled that respondent is
a private carrier which is only required to observe
ordinary diligence; that respondent in fact observed
extraordinary diligence in transporting its guests on
boardM/B Coco Beach III; and that the proximate
cause of the incident was a squall, a fortuitous event.
Petitioners' Motion for Reconsideration having been
denied by Resolution dated January 16, 2009,they
filed the present Petition for Review
ISSUE:
1.WON respondent is a common carrier
2.WON respondent is guilty of negligence in
allowing M/B Coco Beach III sail notwithstanding
storm warning bulletins issued by PAGASA.
HELD:
1.YES.Petitioners correctly rely on De Guzman v.
Court of Appeals in characterizing respondent as a
common carrier. The Civil Code defines "common
carriers" in the following terms: Article
1732.Common carriers are persons, corporations,
firms or associations engaged in the business of
carrying or transporting passengers orgoods or
both, by land, water, or air for compensation,
offering their services to the public. 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
anancillary 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. So understood, the concept of
"common carrier" under Article 1732 may be seen to
coincide neatly with the notion of "public service,"
under the Public Service Act (Commonwealth Act
No. 1416, as amended) which at least partially
supplements the law on common carriers set forth in
the Civil Code. 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.
That respondent does not charge a separate fee or
fare for its ferry services is of no moment. It would
be imprudent to suppose that it provides said
services at a loss. The Court is aware of the practice
of beach resort operators offering tour packages to
factor the transportation fee in arriving at the tour
package price. That guests who opt not to avail of
respondent's ferry services pay the same amount is
likewise inconsequential. These guests may only be
deemed to have overpaid.
2.YES.
A very cautious person exercising the utmost
diligence would thus not brave such stormy weather
and put other people's lives at risk. The
extraordinary diligence required of common
carriers demands that they take care of the goods or
lives entrusted to their hands as if they were their
own. This respondent failed to do. Respondent cites
the squall that occurred during the voyage as the
fortuitous event that overturnedM/B Coco Beach
III.As reflected above, however, the occurrence of
squalls was expected under the weather condition of
September 11, 2000. Moreover, evidence shows
thatM/B Coco Beach III suffered engine trouble
before it capsized and sank. The incident was,
therefore, not completely free from human
intervention. The Court need not belabor how
respondent's evidence likewise fails to demonstrate
that it exercised due diligence to prevent or
minimize the loss before, during and after the
occurrence of the squall.AsDe Guzmaninstructs,
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. The evidence shows that PAGASA issued
24-hour public weather forecasts and tropical
cyclone warnings for shipping on September 10 and
11, 2000 advising of tropical depressions in Northern
Luzon which would also affect the province of
Mindoro. By the testimony of Dr. Frisco Nilo,
supervising weather specialist of PAGASA, squalls
are to be expected under such weather condition.
Respondent's insistence that the incident was caused
by a fortuitous event does not impress either. The
elements of a "fortuitous event" are: (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 fulfill their obligation in a normal
manner; and (d) the obligor must have been free
from any participation in the aggravation of the
resulting injury to the creditor. To fully free a
common carrier from any liability, the fortuitous
event must have been the proximate and only cause
of the loss. And it should have exercised due
diligence to prevent or minimize the loss before,
during and after the occurrence of the fortuitous
event. Article 1764vis-à-visArticle 2206of the Civil
Code holds the common carrier in breach of its
contract of carriage that results in the death of a
passenger liable to pay the following: (1) indemnity
for death, (2) indemnity for loss of earning capacity
and (3) moral damages. Petitioners are entitled to
indemnity for the death of Ruelito which is fixed at
P50,000.As for damages representing unearned
income, the formula for its computation is: Net
Earning Capacity=life expectancy x (gross annual
income -reasonable and necessary living
expenses).Life expectancy is determined in
accordance with the formula:2/3 x [80 —age of
deceased at the time of death]Applying the above
guidelines, the Court determines Ruelito's life
expectancy as follows:Life expectancy = 2/3 x [80 —
age of deceased at the time of death]2/3 x [80 -
28]2/3 x [52]
Life expectancy = 35Documentary evidence shows
that Ruelito was earning a basic monthly salary of
$900which, when converted to Philippine peso
applying the annual average exchange rate of $1 =
P44 in 2000,amounts to P39,600. Ruelito's net
earning capacity is thus computed as follows: Net
Earning Capacity = life expectancy x (gross
annual income -reasonable and necessary living
expenses).= 35 x (P475,200 -P237,600)= 35 x
(P237,600)Net Earning Capacity =
P8,316,000Respecting the award of moral damages,
since respondent common carrier's breach of
contract of carriage resulted in the death of
petitioners' son, following Article 1764vis-à-
visArticle 2206 of the Civil Code, petitioners are
entitled to moral damages. DAETH Since
respondent failed to prove that it exercised the
extraordinary diligence required of common
carriers, it is presumed to have acted recklessly, thus
warranting the award too of exemplary damages,
which are granted in contractual obligations if the
defendant acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner. Under the
circumstances, it is reasonable to award petitioners
the amount of P100,000 as moral damages and
P100,000 as exemplary damages. THE Court of
Appeals Decision of August 19, 2008 is REVERSED
and SET ASIDE. Judgment is rendered in favor of
petitioners ordering respondent to pay petitioners
the following: (1) P50,000 as indemnity for the death
of Ruelito Cruz; (2) P8,316,000 as indemnity for
Ruelito's loss of earning capacity; (3) P100,000 as
moral damages; (4) P100,000 as exemplary damages;
(5) 10% of the total amount adjudged against
respondent as attorneys fees; and (6) the costs of suit.
The total amount adjudged against respondent shall
earn interest at the rate of 12% per annum computed
from the finality of this decision until full payment.
viii. Sps. Perena vs Sps. Zarate; Aug 29, 2012. was imminent. The passenger bus successfully
crossed the railroad tracks, but the van driven by
FACTS:
Alfaro did not. The train hit the rear end of the van,
The Pereñas were engaged in the business of
and the impact threw nine of the 12 students in the
transporting students from their respective
rear, including Aaron, out of the van. Aaron landed
residences in Parañaque City to Don Bosco in
in the path of the train, which dragged his body and
Pasong Tamo, Makati City, and back. In their
severed his head, instantaneously killing him. Alano
business, the Pereñas used a KIA Ceres Van (van)
fled the scene on board the train, and did not wait
with Plate No. PYA 896, which had the capacity to
for the police investigator to arrive.
transport 14 students at a time, two of whom would
Devastated by the early and unexpected
be seated in the front beside the driver, and the
death of Aaron, the Zarates commenced this action
others in the rear, with six students on either side.
for damages against Alfaro, the Pereñas, PNR and
They employed Clemente Alfaro (Alfaro) as driver
Alano.
of the van.
RTC: The court decreed them to pay jointly
Considering that the students were due at
and severally liable with Philippine National
Don Bosco by 7:15 a.m., and that they were already
Railways (PNR), their co-defendant. It denied the
running late because of the heavy vehicular traffic
Pereñas' motion for reconsideration, 4 reiterating
on the South Superhighway, Alfaro took the van to
that the cooperative gross negligence of the Pereñas
an alternate route at about 6:45 a.m. by traversing
and PNR had caused the collision that led to the
the narrow path underneath the Magallanes
death of Aaron; and that the damages awarded to
Interchange that was then commonly used by
the Zarates were not excessive, but based on the
Makati-bound vehicles as a short cut into Makati.
established circumstances.
At about the time the van was to traverse the
CA: CA affirmed the findings of the RTC, but
railroad crossing, PNR Commuter No. 302 (train),
limited the moral damages to P2,500,000.00; and
operated by Jhonny Alano (Alano), was in the
deleted the attorney's fees because the RTC did not
vicinity of the Magallanes Interchange travelling
state the factual and legal bases. CA upheld the
northbound. As the train neared the railroad
award for the loss of Aaron's earning capacity.
crossing, Alfaro drove the van eastward across the
railroad tracks, closely tailing a large passenger bus.
ISSUE:
His view of the oncoming train was blocked because
Whether or not CA erred in affirming the trial
he overtook the passenger bus on its left side. The
court's decision holding the petitioners jointly and
train blew its horn to warn motorists of its approach.
severally liable to pay damages with Philippine
When the train was about 50 meters away
National Railways and dismissing their cross-claim
from the passenger bus and the van, Alano applied
against the latter.
the ordinary brakes of the train. He applied the
emergency brakes only when he saw that a collision
HELD:
The petition has no merit. The Zarates
brought this action for recovery of damages against
both the Pereñas and the PNR, basing their claim
against the Pereñas on breach of contract of carriage
and against the PNR on quasidelict. There is no
question that the Pereñas 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 clientèle, the Pereñas 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.
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.
At any rate, the lower courts correctly held
both the Pereñas and the PNR "jointly and severally"
liable for damages arising from the death of Aaron.
They had been impleaded in the same complaint as
defendants against whom the Zarates had the right
to relief, whether jointly, severally, or in the
alternative, in respect to or arising out of the
accident, and questions of fact and of law were
common as to the Zarates. Although the basis of the
right to relief of the Zarates (i.e., breach of contract
of carriage) against the Pereñas was distinct from the
basis of the Zarates' right to relief against the PNR
(i.e., quasi-delict under Article 2176, Civil Code),
they nonetheless could be held jointly and severally
liable by virtue of their respective negligence
combining to cause the death of Aaron.
Ponente: The operator of a school bus service
is a common carrier in the eyes of the law. He is
bound to observe extraordinary diligence in the
conduct of his business. He is presumed to be
negligent when death occurs to a passenger. His
liability may include indemnity for loss of earning
capacity even if the deceased passenger may only be
an unemployed high school student at the time of
the accident.
 ix. LRTA vs Navidad
Lessons Applicable: Actionable Document
(transportation)
Laws Cited: Art. 1755,Art. 1756,Art. 1759,Art. 1763
FACTS:
October 14, 1993, 7:30 p.m. : Drunk Nicanor Navidad
(Nicanor) entered the EDSA LRT station after
purchasing a “token”.
While Nicanor was standing at the platform near the
LRT tracks, the guard Junelito Escartin approached
him.
Due to misunderstanding, they had a fist
fight
Nicanor fell on the tracks and killed instantaneously
upon being hit by a moving train operated by
Rodolfo Roman
December 8, 1994: The widow of Nicanor,
along with her children, filed a complaint for
damages against Escartin, Roman, LRTA, Metro
Transit Org. Inc. and Prudent (agency of security
guards) for the death of her husband.
LRTA and Roman filed a counter-claim against
Nicanor and a cross-claim against Escartin and
Prudent
Prudent: denied liability – averred that it had
exercised due diligence in the selection and
surpervision of its security guards LRTA and
Roman: presented evidence
Prudent and Escartin: demurrer contending
that Navidad had failed to prove that Escartin was
negligent in his assigned task
RTC: In favour of widow and against
Prudent and Escartin, complaint against LRT and
Roman were dismissed for lack of merit
CA: reversed by exonerating Prudent and
held LRTA and Roman liable
ISSUE: W/N LRTA and Roman should be liable
according to the contract of carriage
HELD: NO. Affirmed with Modification: (a)
nominal damages is DELETED (CANNOT co-exist
w/ compensatory damages) (b) Roman is absolved.
Law and jurisprudence dictate that a common
carrier, both from the nature of its business and for
reasons of public policy, is burdened with the duty
off exercising utmost diligence in ensuring the safety
of passengers
Civil Code:
Art. 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
Art. 1756. In case of death 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
Art. 1759. Common carriers are liable for the
death of or injuries to passengers through the
negligence or wilful 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
Art. 1763. A common carrier is responsible
for injuries suffered by a passenger on account of the
wilful 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.
Carriers presumed to be at fault or been
negligent and by simple proof of injury, the
passenger is relieaved 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
Where it hires its own employees or avail itself of the
services of an outsider or an independent firm to
undertake the task, the common carrier is NOT
relieved of its responsibilities under the contract of
carriage
GR: Prudent can be liable only for tort under
Art. 2176 and related provisions in conjunction with
Art. 2180 of the Civil Code. (Tort may arise even
under a contract, where tort [quasi-delict liability] is
that which breaches the contract)
EX: if employer’s liability is negligence or
fault on the part of the employee, employer can 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.
EX to the EX: Upon showing due diligence in the
selection and supervision of the employee
Factual finding of the CA: NO link bet.
Prudent and the death of Nicanor for the reason that
the negligence of Escartin was NOT proven
NO showing that Roman himself is guilty of
any culpable act or omission, he must also be
absolved from liability
Contractual tie bet. LRT and Nicanor is NOT
itself a juridical relation bet. Nicanor and Roman
Roman can be liable only for his own fault or
negligence
x. MOF vs Chin Yang Brokerage
Facts:
Halla shipped to Manila secondhand cars and
other articles on board the vessel Hanjin Busan.
The bill of lading was prepared by the carrier
Hanjin where Shin Yang was named as the
consignee and indicated that payment was on a
"Freight Collect" basis (meaning the
consignee/receiver of the goods would be the one to
pay for the freight and other charges).
When the shipment arrived in Manila MOF,
Hanjin’s exclusive general agent in the Philippines,
demanded the payment from Shin Yang.
Shin Yang refused to pay the freight and other
charges. Shin Yang is saying that it is not the
ultimate consignee but merely the
consolidator/forwarder.
Shin Yang contends that the fact that its name was
mentioned as the consignee of the cargoes did not
make it automatically liable for the freightage the relationship of agency between the consignee
because it never benefited from the shipment. and the shipper/ consignor; b) the unequivocal

It never claimed or accepted the goods, it was not acceptance of the bill of lading delivered to the
consignee, with full knowledge of its contents or c)
the shipper’s agent, it was not aware of its
availment of the stipulation
designation as consignee and the original bill of
pour autrui
lading was never endorsed to it.
,
Issue:
i.e.
 Whether a consignee, who is not a signatory
, when the consignee, a third person, demands
to the bill of lading, is bound by the
before the carrier the fulfillment of the stipulation
stipulations thereof? - Yes
made by the
 Whether Shin Yang, who was not an agent of
consignor/shipper in the consignee’s favor,
the shipper and who did not make any
specifically the delivery of the
demand for the fulfillment of the stipulations
goods/cargoes shipped. In the instant case, Shin
of the bill of lading drawn in its favor, is
Yang consistently denied in all of its pleadings that
liable to pay the corresponding freight and
it authorized Halla Trading, Co. to ship the goods on
handling charges? – No
its behalf; or that it got hold of the bill of lading
covering the shipment or that it demanded the
Held: While it is true that a bill of lading serves two
release of the cargo. Basic is the rule in evidence that
(2) functions: first, it is a receipt for the goods
the burden of proof lies upon him who asserts it, not
shipped; second, it is a contract by which three
upon him who denies, since, by the nature of things,
parties, namely, the shipper, the carrier and the
he who denies a fact cannot produce any proof of it.
consignee who undertake specific responsibilities
Thus, MOF has the burden to controvert all these
and assume stipulated obligations. The bill of lading
denials, it being insistent that Shin Yang asserted
is oftentimes drawn up by the shipper/consignor
itself as the consignee and the one that caused the
and the carrier without the intervention of the
shipment of the goods to the Philippines. In civil
consignee.
cases, the party having the burden of proof must
However, the latter can be bound by the
establish his case by preponderance of evidence,
stipulations of the bill of lading when a) there is a
which means evidence which is of greater weight, or
relation of agency between the shipper or consignor
more convincing than that which is offered in
and the consignee or b) when the consignee
opposition to it. Here, MOF failed to meet the
demands fulfillment of the stipulation of the bill of
required quantum of proof. Other than presenting
lading which was drawn up in its favor. In sum, a
the bill of lading, which, at most, proves that the
consignee, although not a signatory to the contract
carrier acknowledged receipt of the subject cargo
of carriage between the shipper and the carrier,
from the shipper and that the consignee named is to
becomes a party to the contract by reason of either a)
 shoulder the freightage, MOF has not adduced any
other credible evidence to strengthen its cause of
action. It did not even 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 is 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. Thus, the CA
correctly dismissed the suit for failure of petitioner
to establish its cause against respondent
IV. PRIVATE CARRIAGE
i. Home Insurance CO. vs American
Steamship Agencies (23 SCRA 24)
FACTS:
“Consorcio Pesquero del Peru of South
America” shipped freight pre-paid at Peru, jute bags
of Peruvian fish meal through SS Crowborough,
covered by clean bills of lading. The cargo,
consigned to San Miguel Brewery, Inc., now San
Miguel Corporation, and insured by Home
Insurance Company arrived in Manila and was
discharged into the lighters of Luzon Stevedoring
Company. When the cargo was delivered to
consignee San Miguel Brewery Inc., there were
shortages causing the latter to lay claims against
Luzon Stevedoring Corporation, Home Insurance
Company and the American Steamship Agencies
(shipowner), owner and operator of
Crowborough.
Because the others denied liability, Home
Insurance Company paid SMBI the insurance value
of the loss, as full settlement of the claim. 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 CFI of
Manila a complaint for recovery of the payment paid
with legal interest, plus attorney’s fees.
In answer, 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.
The CFI, after trial, absolved Luzon
Stevedoring Corporation, having found the latter to
have merely delivered what it received from the
carrier in the same condition and quality, and
ordered American Steamship Agencies to pay Home
Insurance Company the amount demanded with
legal interest plus attorney’s fees.
Disagreeing with such judgment, American
Steamship Agencies appealed directly to Us.
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?
HELD:
The judgment appealed from is
hereby reversed and appellant is absolved from
liability to plaintiff.
SS
YES. The bills of lading, covering the shipment of
Peruvian fish meal provide at the back thereof that
the bills of lading shall be governed by and subject
to the terms and conditions of the charter party, if
any, otherwise, the bills of lading prevail over all the
agreements. On the bills are stamped “Freight
prepaid as per charter party. Subject to all terms,
conditions and exceptions of charter party dated
London, Dec. 13, 1962.”
Section 2, paragraph 2 of the charter party,
provides that the owner is liable for loss or damage
to the goods caused by personal want of due
diligence on its part or its manager to make the
vessel in all respects seaworthy and to secure that
she be properly manned, equipped and supplied or
by the personal act or default of the owner or its
manager. Said paragraph, however, exempts the
owner of the vessel 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..
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.
Such doctrine We find reasonable. The Civil
Code provisions on common carriers should not be
applied where 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.
And furthermore, in a charter of the entire
vessel, the bill of lading issued by the master to the
charterer, as shipper, is in fact and legal
contemplation merely a receipt and a document of
title not a contract, for the contract is the charter
party. The consignee may not claim ignorance of
said charter party because the bills of lading
expressly referred to the same. Accordingly, the
consignees under the bills of lading must likewise
abide by the terms of the charter party. And as
stated, recovery cannot be had thereunder, for loss
or damage to the cargo, against the shipowners,
unless the same is due to personal acts or negligence
of said owner or its manager, as distinguished from
its other agents or employees. In this case, no such
personal act or negligence has been proved.
ii. National Steel Corp vs CA (283 SCRA
45) REPEATED CASE
iii. Valenzuela Hardwood and Industrial
Supply vs CA (274 SCRA 642)
Facts:
Plaintiff shipped at Maconcon Port, Isabela
940 round logs on board M/V Seven Ambassador, a
vessel owned by defendant Seven Brothers Shipping
Corporation. Plaintiff insured the logs against loss
and/or damage with defendant South Sea Surety
and Insurance Co., Inc. for P2M and the latter issued
its Marine Cargo Insurance Policy on said date. In
the meantime, the M/V Seven Ambassador sank
resulting in the loss of the plaintiff’s insured logs.
Plaintiff demanded from defendant South Sea
Surety and Insurance Co., Inc. the payment of the
proceeds of the policy but the latter denied liability
under the policy. Plaintiff likewise filed a formal
claim with defendant Seven Brothers Shipping
Corporation for the value of the lost logs but the
latter denied the claim.
Court of Appeals affirmed in part the RTC
judgment by sustaining the liability of South Sea
Surety and Insurance Company (“South Sea”), but
modified it by holding that Seven Brothers Shipping
Corporation (“Seven Brothers”) was not liable for
the lost cargo.
ISSUE:
Whether defendants shipping corporation and the
surety company are liable to the plaintiff for the
latter’s lost logs.
HELD:
The charter party between the petitioner and
private respondent stipulated that the “(o)wners
shall not be responsible for loss, split, short-landing,
breakages and any kind of damages to the cargo” –
VALID
There is no dispute between the parties that
the proximate cause of the sinking of M/V Seven
Ambassadors resulting in the loss of its cargo was
the “snapping of the iron chains and the subsequent
rolling of the logs to the portside due to the
negligence of the captain in stowing and securing
the logs on board the vessel and not due to
fortuitous event.” Likewise undisputed is the status
of Private Respondent Seven Brothers as a private
carrier when it contracted to transport the cargo of
Petitioner Valenzuela. Even the latter admits this in
its petition.
Private respondent had acted as a private
carrier in transporting petitioner’s lauan logs. Thus,
Article 1745 and other Civil Code provisions on
common carriers which were cited by petitioner
may not be applied unless expressly stipulated by
the parties in their charter party.
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 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. We stress that in a
contract of private carriage, the parties may freely
stipulate their duties and obligations which perforce
would be binding on them. Unlike in 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.
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. Such
doctrine We find reasonable. The Civil Code
provisions on common carriers should not be
applied where 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 this case of a ship totally
chartered for the use of a single party. (Home
Insurance Co. vs. American Steamship Agencies
Inc., 23 SCRA 24, April 4, 1968)
iv. FGU Insurance vs GP Sarmiento
Trucking; G.R No. 141910, Aug 6, 2002
FACTS OF THE CASE:
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. While the
truck was traversing the north diversion road along
McArthur highway in Barangay Anupol, Bamban,
Tarlac, it collided with an unidentified truck,
causing it to fall into a deep canal, resulting in
damage to the cargoes.
FGU Insurance Corporation (FGU), an insurer of the
shipment, paid to Concepcion Industries, Inc., the
value of the covered cargoes: P204, 450.00. FGU, in
turn, being the subrogee of the rights and interests
of the insured sought reimbursement of the amount,
from GPS. Since GPS failed to heed the claim, FGU
filed a complaint for damages and breach of contract
of carriage against GPS and its driver with the
Regional Trial Court, Branch 66, of Makati City. In
its answer, respondents asserted that GPS was the
exclusive hauler only of Concepcion Industries, Inc.,
since 1988, and it was not so engaged in business as
a common carrier. Respondents further claimed that
the cause of damage was purely accidental. GPS,
instead of submitting its evidence, filed with leave
of court a motion to dismiss the complaint by way of
demurrer to evidence on the ground that petitioner
had failed to prove that it was a common carrier. The
RTC and CA both ruled in favor of the Respondent.
ISSUES OF THE CASE:
WHETHER RESPONDENT GPS, EITHER AS A
COMMON CARRIER OR A PRIVATE CARRIER,
MAY BE PRESUMED TO HAVE BEEN
NEGLIGENT WHEN THE GOODS IT
UNDERTOOK TO TRANSPORT SAFELY WERE
SUBSEQUENTLY DAMAGED WHILE IN ITS
PROTECTIVE CUSTODY AND POSSESSION.
- In culpa contractual, upon which the action of
petitioner rests as being the subrogee of Concepcion
Industries, Inc., the mere proof of the existence of the
contract and the failure of its compliance justify,
prima facie, a corresponding right of relief. Thus,
FGU has a claim for the amount paid out.
- The law, recognizing the obligatory force of
contracts, will not permit a party to be set free from
liability for any kind of misperformance of the
contractual undertaking or a contravention of the
tenor thereof
- GPS recognizes the existence of a contract of
carriage between it and petitioner’s assured, and
admits that the cargoes it has assumed to deliver
have been lost or damaged while in its custody. In
such a situation, a default on, or failure of
compliance with, the obligation in this case, the
delivery of the goods in its custody to the place of
destination - gives rise to a presumption of lack of
care and corresponding liability on the part of the
contractual obligor the burden being on him to
establish otherwise. GPS has failed to do so.
HELD:
The decision of the lower courts insofar as Lambert
M. Eroles is concerned is affirmed but assailed
decision with regard to GPS trucking is reversed. It,
is hereby ordered to pay FGU Insurance
Corporation the value of the damaged and lost
cargoes in the amount of P204, 450.00
Obligations and Contracts Terms:
• expectation interest- the interest in having the
benefit of his bargain by being put in as good a
position as he would have been in had the contract
been performed
• reliance interest- the interest in being reimbursed
for loss caused by reliance on the contract by being
put in as good a position as he would have been in
had the contract not been made
• Restitution interest- which is his interest in having
restored to him any benefit that he has conferred on
the other party.
• Subrogee- the person or entity that assumes the
legal right to attempt to collect a claim of another
(subrogor) in return for paying the other's expenses
or debts which the other claims against a third party.
A subrogee is usually the insurance company which
has insured the party whose expenses were paid.
V. SERVICES
i. Crisostomo vs CA
Doctrine: Contract between the travel agency and its
client is one for services and not one of carriage
FACTS:
In May 1991, petitioner Estela L. Crisostomo
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”. The package
tour included the countries of England, Holland,
Germany, Austria, Liechstenstein, Switzerland and
France at a total cost of P74,322.70. Pursuant to said
contract, Menor, respondent Company’s ticketing
manager, went to her aunt’s residence on June 12,
1991 – Wednesday – to deliver petitioner’s travel
documents and plane tickets. Menor then told her to
be at the Ninoy Aquino International Airport
(NAIA) on Saturday, two hours before her flight on
board British Airways.
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
Hong Kong. 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” which
included England, Scotland and Wales in its
itinerary. For this tour package, petitioner was asked
anew to pay US$785.00 or P20,881.00.
She gave respondent US$300 or P7,980.00 as partial
payment and commenced the trip in July 1991. Upon
petitioner’s return from Europe, she demanded
from respondent the reimbursement of P61,421.70,
representing the difference between the sum she
paid for “Jewels of Europe” and the amount she
owed respondent for the “British Pageant” tour.
Despite several demands, respondent company
refused to reimburse the amount, contending that
the same was non-refundable. Petitioner was thus
constrained to file a complaint against respondent
for breach of contract of carriage and damages at
Regional Trial Court of Makati City.
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, 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. Respondent appealed to
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.
ISSUE:
Is the contract a Contract of Carriage?
HELD:
No. By definition, a contract of carriage or
transportation is 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.9 Such person or association
of persons are regarded as carriers and are classified
as private or special carriers and common or public
carriers. A common carrier is defined under Article
1732 of the Civil Code 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, VI. DISTINCTIONS FROM ARRASTRE,
offering their services to the public. TOWAGE AND STEVEDORING
It is obvious from the above definition that
respondent is not an entity engaged in the business
i. Marina Port Services, Inc. vs American Home
of transporting either passengers or goods and is
Insurance; Aug 12, 2015
therefore, neither a private nor a common carrier.
Respondent did not undertake to transport
petitioner from one place to another since its
covenant with its customers is simply to make travel
arrangements in 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.

While petitioner concededly bought her plane ticket

through the efforts of respondent company, this
does not mean that the latter ipso facto is a common
carrier. At most, respondent acted merely as an
agent of the airline, with whom petitioner ultimately
contracted for her carriage to Europe. Respondent’s
obligation to petitioner in this regard was simply to
see to it that petitioner was properly booked with
the airline for the appointed date and time. Her
transport to the place of destination, meanwhile,
pertained directly to the airline.
The object of petitioner’s contractual relation with
respondent is the latter’s service of arranging and
facilitating petitioner’s booking, ticketing and
accommodation in the package tour. In contrast, the
object of a contract of carriage is the transportation
of 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.
Petitioner’s submission is premised on a wrong
assumption.
 ii. Asian Terminals vs Allied Guarantee
Insurance; G.R No. 182208, Oct. 14, 2015
FACTS: Marina, the predecessor of Asian Terminals
Inc., is an arrastre operator based on Manila. On
February 5, 1989, a shipment of kraft linear board
was loaded and received from the ports of Lake
Charles, LA, and Mobile, Al, USA for transport and
delivery to San Miguel. Upon offloading, it was
assessed that a total of 158 rolls were damaged
during shipping. Further, upon the goods'
withdrawal from arrastre and their delivery to the
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 worth P755,666.84.
Allied Insurance was the insurer of the shipment.
Thus, it paid San Miguel P755,666.84 and was
subrogated in the latter's right. Allied filed a
Complaint against Transocean, Philippine
Transmarine, Dynamic and Marina seeking to be
indemnified for the P755,666.84 it lost paying San
Miguel.
ISSUES: Whether or not petitioner has been proven
liable for the additional 54 rolls of damaged goods
to respondent
RULING: Yes. Marina, the arrastre operator, from
the above evidence, was not able to overcome the
presumption of negligence. The Bad Order Cargo
Receipts, the Turn Over Survey of Bad Order
Cargoes as well as the Request for Bad Order
Survey did not establish that the additional 54 rolls
were in good condition while in the custody of the
arrastre. Said 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. Further, the Turn
Over Inspector and the Bad Order Inspector who
conducted the inspections and who signed the
Turn Over Survey of Bad [Order] Cargoes and the
Request for Bad Order Survey, respectively, were
not presented by Marina as witnesses to verify the
correctness of the document and to testify that
only 158 rolls was reported and no others sustained
damage while the shipment was in its possession.
On the other hand, defendant Dynamic (which) in
its capacity as broker, withdrew the 357 rolls of kraft
linear board from the custody of defendant Marina
and delivered the same to the consignee, San Miguel
Corporation's warehouse in Tabacalera at United
Nations, Manila, is considered a common carrier.
It is noteworthy to mention that "in general, the
nature of the work of an arrastre operator covers the
handling of cargoes at piers and wharves,"
"To carry out its duties, the arrastre is required to
provide cargo handling equipment which includes,
among others, trailer, chassis for containers."
Hence, the "legal relationship betw.een the
consignee and the arrastre operator is akin to that of
a depositor and the warehouseman. The
relationship between the consignee and the common
carrier is similar to that of the consignee and the
arrastre operator. Since it is the duty of the arrastre
to take good care of the goods that are in its custody
and to deliver them in good condition to the
consignee, such responsibility also develops upon
the carrier. Both the arrastre and the carrier are,
therefore, charged with and obligated to deliver the
goods in good condition to the consignee."
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.
the broker, Dynamic, cannot alone be held liable for
the additional 54 rolls of damaged goods since such
damage occurred during the following
instances: (1) while the goods were in the custody
of the arrastre ATI; (2) when they were in transition
from ATI's custody to that of Dynamic (i.e., during
loading to Dynamic's trucks); and (3) during
Dynamic's custody.
While the trial court could not determine with
pinpoint accuracy who among the two caused which
particular damage and in what proportion or
quantity, it was clear that both ATI and Dynamic
failed to discharge the burden of proving that
damage on the 54 rolls did not occur during their
custody. As for petitioner ATI, in particular, what
worked against it was the testimony, as cited above,
that its employees' use of the wrong lifting
equipment while loading the goods onto Dynamic's
trucks had a role in causing the damage. Such is a
finding of fact made by the trial court which this
Court, without a justifiable ground, will not
disturb,
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.
In the performance of its obligations, an arrastre
operator should observe the same degree of
diligence as that required of a common carrier and a
warehouseman.
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. And to prove the exercise of diligence
in handling the subject cargoes, petitioner must do
more than merely show the possibility that some
other party could be responsible for the loss or the
damage. It must prove that it exercised due care in
the handling thereof.
a mere sign-off from the customs broker's
representative that he had received the subject
shipment "in good order and condition without
exception" would not absolve the arrastre from
liability, simply because the representative's
 signature merely signifies that said person thereby
frees the arrastre from any liability for loss or
damage to the cargo so withdrawn while the same
was in the custody of such representative to whom
the cargo was released, but it does not foreclose the
remedy or right of the consignee (or its subrogee) to
prove that any loss or damage to the subject
shipment occurred while the same was under the
custody, control and possession of the arrastre
operator.
As it is now established that there was negligence in
both petitioner ATI's and Dynamic's performance of
their duties in the handling, storage and delivery of
the subject shipment to San Miguel, resulting in the
loss of 54 rolls of kraft linear board, both shall be
solidarily liable for such loss.
VII. REGISTERED OWNER RULE AND
KABIT SYSTEM
i. Erezo vs Jepte; Sept 30, 1957
FACTS:
Aguedo Jepte is the registered owner of a six by six
truck. The actual owner is Port Brokerage
Corporation(PBC) which registered in Jepte’s name
the trucks as a convenient arrangement so as to
enable the corporation to pay the registration fee
with his backpay as a pre-war government
employee.
While the truck was being driven by Rodolfo
Espino, employee of PBC it collided with a taxicab
resulting to the untimely death of Ernesto Erezo.
The driver was found guilty of homicide through
reckless negligence and was sentenced to pay the
heirs of Erezo. As the amount of the judgment could
not be enforced Espino, Gaudioso Erezo, father of
Ernesto, sued Jepte to collect the amount of
judgment.
Jepte denies liability for payment of said amount by
claiming that he was not the actual owner at the time
of the accident.
ISSUE: Whether the registered owner of a motor
vehicle is liable for injuries sustained by a third
person even if it was the employee of the actual
owner who actually caused such injury?
RULING:
YES. The registered owner of a certificate of public
convenience is liable to the public for the injuries or
damages suffered by passengers or third persons
caused by the operation of said vehicle, even though
the same had been transferred to a third person.
The registered owner of any vehicle, even if not used
for a public service, should primarily be responsible
to the public or to third persons for injuries caused
the latter while the vehicle is being driven on the
highways or streets.
The law does not relieve him directly of the
responsibility that the law fixes and places upon him
as an incident or consequence of registration.
 ii. Filcar Transport Services vs Espinas; laid down in Article 2176 of the Civil Code, which

June 20, 2012 provides to wit:

Article 2176. Whoever by act or omission

FACTS: causes damage to another, there being fault

Respondent Jose A. Espinas was driving his or negligence, is obliged to pay for the

car along Leon Guinto Street in Manila when he was damage done. Such fault or negligence, if

suddenly hit by another car. Upon verifying with there is no pre-existing contractual relation

the LTO, Espinas learned that the owner of the other between the parties, is called a quasi-delict

car is Filcar. This car was assigned to Filcar's and is governed by the provisions of this

Corporate Secretary Atty. Candido Flor and, at the Chapter.

time of the incident, was driven by Atty. Flor's Based on the above-cited article, the

personal driver, Timoteo Floresca. obligation to indemnify another for damage caused

Espinas sued Filcar for damages. Filcar by one's act or omission is imposed upon the

denied liability, claiming that the incident was not tortfeasor himself, i.e., the person who committed

due to its fault or negligence since Floresca was not the negligent act or omission. The law, however,

its employee but that of Atty. Flor. provides for exceptions when it makes certain
persons liable for the act or omission of another.

ISSUE: Whether or not Filcar, as registered owner of One exception is an employer who is made

the motor vehicle which figured in an accident, may vicariously liable for the tort committed by his

be held liable for the damages caused to the Espinas employee. Article 2180 of the Civil Code states:
Article 2180. The obligation imposed by

HELD: Article 2176 is demandable not only for one's own

Filcar, as registered owner, is deemed the acts or omissions, but also for those of persons for

employer of the driver, Floresca, and is thus whom one is responsible.

vicariously liable under Article 2176 in relation with Employers shall be liable for the damages

Article 2180 of the Civil Code caused by their employees and household helpers

It is undisputed that Filcar is the registered acting within the scope of their assigned tasks, even

owner of the motor vehicle which hit and caused though the former are not engaged in any business

damage to Espinas' car. It is on this basis that Filcar or industry.

is primarily and directly liable to Espinas for The responsibility treated of in this article

damages. shall cease when the persons herein mentioned

As a general rule, one is only responsible for prove that they observed all the diligence of a good

his own act or omission. Thus, a person will father of a family to prevent damage.

generally be held liable only for the torts committed Under Article 2176, in relation with Article

by himself and not by another. This general rule is 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 so far 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.
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.
iii. Duavit vs CA. G.R No. 82318; May 18,
1989
FACTS:
Gualberto Duavit is the actual and registered owner
of a jeep.
Oscar Sabiniano took the jeep from the
garage of defendant Duavit without the consent or
authority of the latter.
As Sabiniano was driving the same, the
jeepney hit and bumped another jeepney in which
Antonio Sarmiento, Sr. and Virgilio Catuar were on
board. These passengers sustained physical injuries.
Catuar and Sarmiento, Sr. sued both against
Sabiniano and Duavit. In defense, Duavit insists that
he is not liable because Sabiniano never was his
employee.
ISSUE: Whether the registered and actual owner of
a vehicle, which figured in an accident, may be held
liable, when the said vehicle was taken and driven
by another person without the consent or
knowledge of the owner thereof?
RULING:
No. An owner of a vehicle cannot be held
liable for an accident involving the said vehicle if the
same was driven without his consent or knowledge
and by a person not employed by him.
The jeep was virtually stolen from the
petitioner's garage. To hold, therefore, the petitioner
liable for the accident caused by the negligence of
Sabiniano who was neither his driver nor employee
would be absurd as it would be like holding liable
the owner of a stolen vehicle for an accident caused
by the person who stole such vehicle.
 iv. Lita Enterprise vs IAC, G.R No. 64693; damages wherein petitioner is ordered to transfer

April 27, 1984 the registration certificate of the three Toyota cars

FACTS: not levied upon.

Sometime in 1966, spouses Nicasio M. Ocampo and On appeal, the IAC modified the decision.

Francisca Garcia, herein private respondents, Petitioner, then, came to this Court praying that the

purchased in installment from the Delta Motor Sales decision of lower court be amended and that

Corporation five (5) Toyota Corona Standard cars to Spouses Ocampo be liable to Rosita Galvez.

be used as taxicabs. Since they had no franchise to

operate taxicabs, they contracted with petitioner ISSUE:

through its representative, Manuel Concordia, for Whether or not the petition holds merit.

the use of the latter's certificate of public

convenience in consideration of an initial payment RULING:

of P1,000.00 and a monthly rental of P200.00 per No. Unquestionably, the parties herein operated

taxicab unit. The aforesaid cars were registered in under an arrangement, commonly known as the

the name of petitioner. Possession, however, "kabit system", whereby a person who has been

remained with spouses Ocampo who operated and granted a certificate of public convenience allows

maintained the same under the petitioner's trade another person who owns motors vehicles to

name, Acme Taxi. operate under such franchise for a fee. A certificate

About a year later, one of the taxicabs driven by their of public convenience is a special privilege conferred

employee, Emeterio Martin, collided with a by the government. Abuse of this privilege by the

motorcycle causing the death of its driver, Florante grantees thereof cannot be countenanced. Although

Galvez. A criminal case was filed against Martin, not outrightly penalized as a criminal offense, the

while a civil case for damages was instituted by "kabit system" is invariably recognized as being

Rosita Sebastian Vda. de Galvez, heir of the victim, contrary to public policy and, therefore, void and

against petitioner as registered owner of the taxicab. inexistent under Article 1409 of the Civil Code.

Petitioner was adjudged liable for damages in the Further, it was a flagrant error on the part of both the

amount of P25,000.00 and P7,000.00 for attorney's trial and appellate courts to have accorded the

fees. parties relief in pursuant to Article 1412 of the Civil

Meanwhile, two (2) other taxicabs were levied upon Code.

and sold at public auction. Thereafter, respondent "Ex pacto illicito non oritur actio" [No action arises

Nicasio Ocampo decided to register his taxicabs in out of an illicit bargain] is the tune-honored maxim

his name. He requested the manager of petitioner to that must be applied to the parties in the case at bar.

turn over the registration papers to him, but the Having entered into an illegal contract, neither can

latter allegedly refused. Hence, he and his wife filed seek relief from the courts, and each must bear the

a complaint for reconveyance of motor vehicles with consequences of his acts.

 VIII. OBLIGATIONS OF THE PARTIES

AND DEFENSES FINAL DESTINATION: Boston.

Early hours of October 30: LCT No. 1025
Common Carrier
sank, resulting in the damage or loss of 1,162 bales
i. Compania Maritima vs Insurance
of hemp loaded therein
Company of North America (12 SCRA
Macleod promptly notified the carrier's main
213)
office in Manila and its branch in Davao advising it
FACTS:
of its liability
October, 1952: Macleod and Company of the
The damaged hemp was brought to Odell
Philippines (Macleod) contracted by telephone the
Plantation in Madaum, Davao, for cleaning,
services of the Compañia Maritima (CM), a shipping
washing, reconditioning, and redrying total loss
corporation, for: shipment of 2,645 bales of hemp
adds up to P60,421.02
from the Macleod's Sasa private pier at Davao City
All abaca shipments of Macleod were
to Manila subsequent transhipment to Boston,
insured with the Insurance Company of North
Massachusetts, U.S.A. on board the S.S. Steel
America against all losses and damages
Navigator.
Macleod filed a claim for the loss it suffered
This oral contract was later on confirmed by
with the insurance company and was paid
a formal and written booking issued by Macleod's
P64,018.55 subrogation agreement between Macleod
branch office in Sasa and handcarried to CM's
and the insurance company wherein the Macleod
branch office in Davao in compliance with which the
assigned its rights over the insured and damaged
CM sent to Macleod's private wharf LCT Nos. 1023
cargo October 28, 1953.: failing to recover from the
and 1025 on which the loading of the hemp was
carrier P60,421.02 (amount supported by receipts),
completed on October 29, 1952.
the insurance company instituted the present action
The 2 lighters were manned each by a patron
CA affirmed RTC: ordering CM to pay the insurance
and an assistant patron.
co.
The patrons of both barges issued the
corresponding carrier's receipts and that issued by
ISSUE: W/N there was a contract of carriage bet. CM
the patron of Barge No. 1025 reads in part:
(carrier) and Macleod (shipper)
Received in behalf of S.S. Bowline Knot in
good order and condition from MACLEOD AND
HELD:
COMPANY OF PHILIPPINES, Sasa Davao, for
YES. Affirmed
transhipment at Manila onto S.S. Steel Navigator.
Receipt of goods by the carrier has been said
to lie at the foundation of the contract to carry and
deliver, and if actually no goods are received there
can be no such contract
 The liability and responsibility of the carrier
under a contract for the carriage of goods commence
on their actual delivery to, or receipt by, the carrier
or an authorized agent. ... and delivery to a lighter in
charge of a vessel for shipment on the vessel, where
it is the custom to deliver in that way
Whenever the control and possession of
goods passes to the carrier and nothing remains to
be done by the shipper, then it can be said with
certainty that the relation of shipper and carrier has
been established
As regards the form of the contract of
carriage it can be said that provided that there is a
meeting of the minds and from such meeting arise
rights and obligations, there should be no
limitations as to form
The bill of lading is not essential
Even where it is provided by statute that
liability commences with the issuance of the bill of
lading, actual delivery and acceptance are sufficient
to bind the carrier marine surveyors, attributes the
sinking of LCT No. 1025 to the 'non-water-tight
conditions of various buoyancy compartments
ii. Servando vs Philippine Steam Navigation
(177 SCRA 832)
Lessons Applicable: Contract of Adhesion
(Transportation)
Laws Applicable: Article 1736, Article 1174
FACTS:
Clara Uy Bico (1,528 cavans of rice worth
P40,907.50) and Amparo Servando (44 cartons of
colored paper toys and general merchandise worth
P1,070.50) loaded on board Philippine Steam
Navigation Co.'s vessel, FS-176 for carriage from
Manila to Pulupandan, Negros Occidental
Bill of Lading:
Clause 14. Carrier shall not be responsible for loss
or damage to shipments billed 'owner's risk' unless
such loss or damage is due to negligence of carrier.
Nor shall carrier be responsible for loss or damage
caused by force majeure, dangers or accidents of the
sea or other waters; war; public enemies; . . . fire . ...
Upon arrival of the vessel at Pulupandan, in the
morning of November 18, 1963, the cargoes were
discharged, complete and in good order, unto the
warehouse of the Bureau of Customs 2 pm:
warehouse was razed by fire, Before the fire, 907
cavans of rice were delivered by Uy Bico. Uy Bico
and Servando filed a claim for the value but was
rejected by Philippine Steam
CFI: favored UY Bico and Sercando delivery
of the shipment in question to the warehouse of the
Bureau of Customs is not the delivery contemplated
by Article 1736
ISSUE: W/N Philippine Steam should not be liable
because of the stipulation in the bill of lading
exempting it from fortuitous event
HELD: YES. set aside
Agreement was in iteration of Article 1174. Except
in cases expressly specified by the law, or when it is
otherwise declared by stipulation, or when the
nature of the obligation requires the assumption of
risk, no person shall be responsible for those events
which could not be foreseen, or which, though
foreseen, were inevitable.
'caso fortuito' presents the following essential
characteristics: (1) the cause of the unforeseen and
unexpected occurrence, or of the failure of the
debtor to comply with his obligation, must be
independent of the human will; (2) it must be
impossible to foresee the event which constitutes the
'caso fortuito', or if it can be foreseen, it must be
impossible to avoid; (3) the occurrence must be such
as to render it impossible for the debtor to fulfill his
obligation in a normal manner; and (4) the obligor
must be free from any participation in the
aggravation of the injury resulting to the creditor."
In the case at bar, the burning of the customs
warehouse was an extraordinary event which
happened independently of the will of the appellant.
The latter could not have foreseen the event.
Nothing in the record to show that appellant carrier,
incurred in delay in the performance of its
obligation.
iii. Delsan Transport Kines vs American
Home Assurance Corp., G.R No. 149019,
Aug 15, 2006
FACTS:
Carrier – Delsan Transport Lines Inc.
Shipper – Caltex Philippines
Insurer – American Home Assurance Corporation
Delsan Transport was hired by Caltex to
transport its cargo of diesel oil from Bataan Refinery
Corporation to the bulk depot in Bacolod City
through a Contract of Affreightment. Upon the
arrival of MT Larusan which carried the cargo in its
destination, unloading operations commenced.
Thereafter the discharging had to be stopped on
account of the discovery that the port bow mooring
of the vessel was intentionally cut or stolen by
unknown persons. Because there was nothing
holding it, the vessel drifted westward, dragged and
stretched the flexible rubber hose attached to the
riser, broke the elbow into pieces, severed
completely the rubber hose connected to the tanker
from the main delivery line at sea bed level and
ultimately caused the diesel oil to spill into the sea.
Unaware of what happened, the shore tender,
thinking that the vessel would, at any time, resume
pumping, did not shut the storage tank gate valve.
As all the gate valves remained open, the diesel oil
that was earlier discharged from the vessel into the
shore tank backflowed. In short, there was spillage
and backflow of the diesel cargo. As a result of
spillage and backflow of diesel oil, Caltex sought
recovery of the loss from Delsan, but the latter
refused to pay. As insurer, AHAC paid Caltex the
sum of P479,262.57 for spillage, pursuant to Marine
Risk Note No. 34-5093-6, and P1,939,575.37 for
backflow of the diesel oil pursuant to Inland Floater
Policy No. AH-1F64-1011549P. AHiAC as subrogee
asked Delsan to compensate it for the amount paid,
but to no avail, AHAc instituted an action against
Delsan.
RTC – ruled in favor of AHAC nad held Delsan
liable for the loss of the cargo due to its negligence
as a common carrier
CA – affirmed RTC - Delsan failed to exercise the
extraordinary diligence of a good father of a family
in the handling of its cargo. Applying Article 1736 of
the Civil Code, the CA ruled that since the
discharging of the diesel oil into Caltex bulk depot
had not been completed at the time the losses
occurred, there was no reason to imply that there
was actual delivery of the cargo to Caltex, the
consignee
ISSUE:
W/N petitioner should be held liable for both
spillage and backflow that caused the loss of the
cargo.
HELD:
YES. Common carriers are bound to observe
extraordinary diligence in the vigilance over the
goods transported by them. They are presumed to
have been at fault or to have acted negligently if the
goods are lost, destroyed or deteriorated.
To overcome the presumption of negligence
in case of loss, destruction or deterioration of the
goods, the common carrier must prove that it
exercised extraordinary diligence. There are,
however, exceptions to this rule found in Article
1734 of the NCC. In the case at bar, it had been
established that the proximate cause of the spillage
and backflow of the diesel oil was due to the
severance of the port bow mooring line of the vessel
and the failure of the shore tender to close the
storage tank gate valve even as a check on the drain
cock showed that there was still a product on the
pipeline. The crew of the vessel should have
promptly informed the shore tender that the port
mooring line was cut off. However, Delsan did not
do so on the lame excuse that there was no available
banca.
The crew of the vessel should have exerted
utmost effort to immediately inform the shore
tender that the port bow mooring line was severed.
To be sure, Delsan, as the owner of the vessel, was
obliged to prove that the loss was caused by one of
the excepted causes if it were to seek exemption
from responsibility.
Unfortunately, it miserably failed to
discharge this burden by the required quantum of
proof.
Delsan’s argument that it should not be held
liable for the loss of diesel oil due to backflow
because the same had already been actually and
legally delivered to Caltex at the time it entered the
shore tank holds no water. It had been settled that
the subject cargo was still in the custody of Delsan
because the discharging thereof has not yet been
finished when the backflow occurred. Since the
discharging of the cargo into the depot has not yet
been completed at the time of the spillage when the
backflow occurred, there is no reason to imply that
there was actual delivery of the cargo to the
consignee. Delsan is straining the issue by insisting
that when the diesel oil entered into the tank of
Caltex on shore, there was legally, at that moment, a
complete delivery thereof to Caltex. To be sure, the
extraordinary responsibility of 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 a person who has the right to receive them.
The discharging of oil products to Caltex
Bulk Depot has not yet been finished, Delsan still has
the duty to guard and to preserve the cargo. The
carrier still has in it the responsibility to guard and
preserve the goods, a duty incident to its having the
goods transported. Hence, having not overturned
the presumption of negligence, it is but right and
proper to held petitioner liable for the loss of the
cargo.
iv. Westwind Shipping vs UCPB; G.R No.
200289, Nov 25, 2013

Doctrine:
Common carriers, from the nature of their business
and for reasons of public policy,are bound to
observe extraordinary diligence in vigilance over the
goods and for thesafety of the passengers
transported by them, according to all the
circumstances of each case

v. Nedlloyd Linen B.V. Rotterdam vs Glow

Laks Enterproses; G.R No. 156330, Nov
19, 2014