Transportation Law Case Digests

TRANSPORTATION LAW CASE DIGESTS
I.

CONTRACT OF TRANSPORTATION
A. CONCEPT, PARTIES AND PERFECTION
DANGWA TRANSPORTATION vs. COURT OF
APPEALS

FACTS:
Private respondents filed a complaint for damages
against petitioners for the death of Pedrito Cudiamat as
a result of a vehicular accident which occurred on
March 25, 1985 at Marivic, Sapid, Mankayan, Benguet.
Petitioner Theodore M. Lardizabal was driving a
passenger bus belonging to petitioner corporation in a
reckless and imprudent manner and without due
regard to traffic rules and regulations and safety to
persons and property, it ran over its passenger, Pedrito
Cudiamat. Petitioners alleged that they had observed
and continued to observe the extraordinary diligence
and that it was the victim's own carelessness and
negligence which gave rise to the subject incident.
RTC pronounced that Pedrito Cudiamat was negligent,
which negligence was the proximate cause of his
death.
However, Court of Appeals set aside the
decision of the lower court, and ordered petitioners to
pay private respondents damages due to negligence.
ISSUE:
WON the CA erred in reversing the decision of the trial
court and in finding petitioners negligent and liable for
the damages claimed.
HELD: CA Decision AFFIRMED
The testimonies of the witnesses show that that the
bus was at full stop when the victim boarded the same.
They further confirm the conclusion that the victim fell
from the platform of the bus when it suddenly
accelerated forward and was run over by the rear right
tires of the vehicle. Under such circumstances, it
cannot be said that the deceased was guilty of
negligence.
It is not negligence per se, or as a matter of law, for
one attempt to board a train or streetcar which is
moving slowly. An ordinarily prudent person would
have made the attempt board the moving conveyance
under the same or similar circumstances. The fact that
passengers board and alight from slowly moving
vehicle is a matter of common experience both the
driver and conductor in this case could not have been
unaware of such an ordinary practice.
Common carriers, from the nature of their business and
reasons of public policy, are bound to observe
extraordinary diligence for the safety of the passengers
transported by the according to all the circumstances
of each case. A common carrier is bound to carry the
passengers safely as far as human care and foresight
can provide, using the utmost diligence very cautious
persons, with a due regard for all the circumstances.
It has also been repeatedly held that in an action based
on a contract of carriage, the court need not make an
express finding of fault or negligence on the part of the
carrier in order to hold it responsible to pay the

EH 405

damages sought by the passenger. By contract of
carriage, the carrier assumes the express obligation to
transport the passenger to his destination safely and
observe extraordinary diligence with a due regard for
all the circumstances, and any injury that might be
suffered by the passenger is right away attributable to
the fault or negligence of the carrier. This is an
exception to the general rule that negligence must be
proved, and it is therefore incumbent upon the carrier
to prove that it has exercised extraordinary diligence
as prescribed in Articles 1733 and 1755 of the Civil
Code.
KOREAN AIRLINES CO. v. CA
LIGHT RAIL TRANSIT AUTHORITY & RODOLFO
ROMAN, versus
MARJORIE NAVIDAD, Heirs of the Late NICANOR
NAVIDAD & PRUDENT SECURITY AGENCY
FACTS:
Nicanor Navidad, then drunk, entered the EDSA LRT
station after purchasing a "token" (representing
payment of the fare). While Navidad was standing on
the platform near the LRT tracks, Junelito Escartin, the
security guard assigned to the area approached him. A
misunderstanding or an altercation between the two
apparently ensued that led to a fist fight. No evidence,
however, was adduced to indicate how the fight started
or who, between the two, delivered the first blow or
how Navidad later fell on the LRT tracks. At the exact
moment that Navidad fell, an LRT train, operated by
petitioner Rodolfo Roman, was coming in. Navidad was
struck by the moving train, and he was killed
instantaneously. The widow of Nicanor, Marjorie
Navidad, along with her children, filed a complaint for
damages against Junelito Escartin, Rodolfo Roman, the
LRTA, the Metro Transit Organization, Inc. (Metro
Transit), and Prudent for the death of her husband. Trial
court ruled in favor Navidad’s wife and against the
defendants Prudent Security and Junelito Escartin .
LRTA and Rodolfo Roman were dismissed for lack of
merit. CA held LRTA and Roman liable, hence the
petition.
ISSUE:
Whether or not there was a perfected contract of
carriage between Navidad and LRTA
HELD:
AFFIRMED with MODIFICATION but only in that (a) the
award of nominal damages is DELETED and (b)
petitioner Rodolfo Roman is absolved from liability
Contract of carriage was deemed created from the
moment Navidad paid the fare at the LRT station and
entered the premises of the latter, entitling Navidad to
all the rights and protection under a contractual
relation. The appellate court had correctly held LRTA
and Roman liable for the death of Navidad in failing to
exercise extraordinary diligence imposed upon a
common carrier. While the deceased might not have
then as yet boarded the train, a contract of carriage

Page 1

TRANSPORTATION LAW CASE DIGESTS
theretofore had already existed when the victim
entered the place where passengers were supposed to
be after paying the fare and getting the corresponding
token therefor.

could not be held responsible for the value of the lost
goods, such loss having been due to force majeure.

The law requires common carriers to carry passengers
safely using the utmost diligence of very cautious
persons with due regard for all circumstances. Such
duty of a common carrier to provide safety to its
passengers so obligates it not only during the course of
the trip but for so long as the passengers are within its
premises and where they ought to be in pursuance to
the contract of carriage. The statutory provisions
render a common carrier liable for death of or injury to
passengers (a) through the negligence or willful acts of
its employees or b) on account of willful acts or
negligence of other passengers or of strangers if the
common carrier’s employees through the exercise of
due diligence could have prevented or stopped the act
or omission.

Whether or not Ernesto Cendana may, under the facts
earlier set forth, be properly characterized as a
common carrier?

In case of such death or injury, a carrier is presumed to
have been at fault or been negligent, and by simple
proof of injury, the passenger is relieved of the duty to
still establish the fault or negligence of the carrier or of
its employees and the burden shifts upon the carrier to
prove that the injury is due to an unforeseen event or
to force majeure. The liability of the common carrier
and that of the independent contractor is solidary.
B. COMMON CARRIERS (Arts. 1731 to 1766
NCC)
1. Definitions of “domestic shipping” under
R.A. No. 9295 and of “public service”
under Commonwealth Act No. 146
2. Common Carriage
PEDRO DE GUZMAN vs.COURT OF APPEALS and
ERNESTO CENDANA
FACTS:
Ernesto Cendana, a junk dealer, was engaged in buying
up used bottles and scrap metal in Pangasinan, and
bring such material to Manila for resale. He utilized two
(2) six-wheeler trucks which he owned for hauling the
material to Manila. He charged freight rates which were
commonly lower than regular commercial rates for the
cargo loaded in his vehicle.
Pedro de Guzman a merchant and authorized dealer of
General Milk Company contracted with Cendana for the
hauling of 750 cartons of Liberty filled milk from a
warehouse of General Milk in Makati, Rizal.
150
cartons were loaded on a truck driven by Cendana
himself, while 600 cartons were placed on board the
other truck which was driven by Manuel Estrada,
Cendana’s driver and employee. The other 600 boxes
never reached de Guzman, since the truck which
carried these boxes was hijacked somewhere along the
MacArthur Highway in Paniqui, Tarlac, by armed men
who took with them the truck, its driver, his helper and
the cargo. Having failed to exercise the extraordinary
diligence required of him by the law, he is held liable
for the value of the undelivered goods. Cendana denied
that he was a common carrier and argued that he

EH 405

ISSUE:

Whether or not high jacking with robbery can be
properly regarded as a fortuitous event that can
exempt the carrier?
HELD:
The trial court rendered a Decision finding private
respondent to be a common carrier and holding him
liable for the value of the undelivered goods
as
damages and as attorney's fees. The Court of Appeals
reversed the judgment of the trial court and held that
respondent had been engaged in transporting return
loads of freight "as a casual occupation — a sideline to
his scrap iron business" and not as a common carrier.
Liability arises the moment a person or firm acts as a
common carrier, without regard to whether or not such
carrier has also complied with the requirements of the
applicable regulatory statute and implementing
regulations and has been granted a certificate of public
convenience or other franchise. To exempt private
respondent from the liabilities of a common carrier
because he has not secured the necessary certificate
of public convenience, would be offensive to sound
public policy; that would be to reward private
respondent precisely for failing to comply with
applicable statutory requirements.
Common carriers, "by the nature of their business and
for reasons of public policy" 2 are held to a very high
degree of care and diligence ("extraordinary diligence")
in the carriage of goods as well as of passengers.
Article 1734 establishes the general rule that common
carriers are responsible for the loss, destruction or
deterioration of the goods which they carry, "unless the
same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning or other natural
disaster or calamity;
(2) Act of the public enemy in war, whether
international or civil;
(3) Act or omission of the shipper or owner of the
goods;
(4) The character-of the goods or defects in the
packing or-in the containers; and
(5) Order or act of competent public authority.
The above list of causes of loss, destruction or
deterioration which exempt the common carrier for
responsibility therefor, is a closed list. Causes falling
outside the foregoing list, even if they appear to
constitute a species of force majeure fall within the
scope of Article 1735, which provides as follows:
In all cases other than those mentioned in numbers 1,
2, 3, 4 and 5 of the preceding article, if the goods are
lost, destroyed or deteriorated, common carriers are
presumed to have been at fault or to have acted
negligently, unless they prove that they observed
extraordinary diligence as required in Article 1733.
(Emphasis supplied)

Page 2

TRANSPORTATION LAW CASE DIGESTS
The limits of the duty of extraordinary diligence in the
vigilance over the goods carried are reached where the
goods are lost as a result of a robbery which is
attended by "grave or irresistible threat, violence or
force." In the instant case, armed men held up the
second truck owned by private respondent which
carried petitioner's cargo.
The occurrence of the loss must reasonably be
regarded as quite beyond the control of the common
carrier and properly regarded as a fortuitous event. It is
necessary to recall that even common carriers are not
made absolute insurers against all risks of travel and of
transport of goods, and are not held liable for acts or
events which cannot be foreseen or are inevitable,
provided that they shall have complied with the
rigorous standard of extraordinary diligence.
Cendana is not liable for the value of the undelivered
merchandise which was lost because of an event
entirely beyond private respondent's control. Petition
for Review on certiorari is hereby DENIED and the
Decision of the Court of Appeals dated 3 August 1977
is AFFIRMED. No pronouncement as to costs.
PLANTERS PRODUCTS, INC. VS. COURT OF
APPEALS,
SORIAMONT STEAMSHIP AGENCIES AND KYOSEI
KISEN KABUSHIKI KAISHA
G.R. No. 101503 September 15, 1993
FACTS:
Planters Products, Inc. (PPI), purchased from Mitsubishi
International Corporation (MITSUBISHI) of New York,
U.S.A., 9,329.7069 metric tons (M/T) of Urea 46%
fertilizer which the latter shipped in bulk on 16 June
1974 aboard the cargo vessel M/V "Sun Plum" owned
by private respondent Kyosei Kisen Kabushiki Kaisha
(KKKK) from Kenai, Alaska, U.S.A., to Poro Point, San
Fernando, La Union, Philippines, as evidenced by Bill of
Lading No. KP-1 signed by the master of the vessel and
issued on the date of departure.
Prior to its voyage, a time charter-party on the vessel
M/V "Sun Plum" pursuant to the Uniform General
Charter was entered into between Mitsubishi as
shipper/charterer and KKKK as shipowner, in Tokyo,
Japan.
Before loading the fertilizer aboard the vessel, four (4)
of her holds were all presumably inspected by the
charterer's representative and found fit to take a load
of urea in bulk pursuant to par. 16 of the charter-party .
After the Urea fertilizer was loaded in bulk by
stevedores hired by and under the supervision of the
shipper, the steel hatches were closed with heavy iron
lids, covered with three (3) layers of tarpaulin, then
tied with steel bonds. The hatches remained closed
and tightly sealed throughout the entire voyage.
Petitioner unloaded the cargo from the holds into its
steelbodied dump trucks which were parked alongside
the berth, using metal scoops attached to the ship,
pursuant to the terms and conditions of the charterpartly (which provided for an F.I.O.S. clause). However,

EH 405

the hatches remained open throughout the duration of
the discharge. Each time a dump truck was filled up, its
load of Urea was covered with tarpaulin. 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.
It took eleven (11) days for PPI to unload the cargo. A
private
marine
and
cargo
surveyor,
Cargo
Superintendents Company Inc. (CSCI), was hired by PPI
to determine the "outturn" of the cargo shipped, by
taking draft readings of the vessel prior to and after
discharge. The survey report submitted by CSCI to the
consignee (PPI) revealed a 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,
sand and rust and rendered unfit for commerce.
Consequently, PPI sent a claim letter to Soriamont
Steamship Agencies (SSA), the resident agent of the
carrier, KKKK, 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. Respondent SSA was not able to respond to
this consignee’s claim for payment because according
to them, they only received a request for shortlanded
certificate and not a formal claim.
Hence, PPI filed an action for damages with the Court
of First Instance of Manila. The defendant carrier
argued that the strict public policy governing common
carriers does not apply to them because they have
become private carriers by reason of the provisions of
the charter-party. The court a quo however sustained
the claim of the plaintiff against the defendant carrier
for the value of the goods lost or damaged.
On appeal, respondent Court of Appeals reversed the
lower court and absolved the carrier from liability for
the value of the cargo that was lost or
damaged. Relying on the 1968 case of Home Insurance
Co.v. American Steamship Agencies, Inc., the appellate
court ruled that the cargo vessel M/V "Sun Plum"
owned by private respondent KKKK was a private
carrier and not a common carrier by reason of the time
charterer-party. Accordingly, the Civil Code provisions
on common carriers which set forth a presumption of
negligence do not find application in the case at bar.
ISSUE: Whether a common carrier becomes a private
carrier by reason of a charter-party.
HELD: The assailed decision of the Court of Appeals,
which reversed the trial court, is affirmed.
A "charter-party" is defined as a contract by which an
entire ship, or some principal part thereof, is let by the
owner to another person for a specified time or use; a
contract of affreightment by which the owner of a ship
or other vessel lets the whole or a part of her to a
merchant or other person for the conveyance of goods,
on a particular voyage, in consideration of the payment
of freight; Charter parties are of two types: (a) contract
of affreightment which involves the use of shipping
space on vessels leased by the owner in part or as a
whole, to carry goods for others; and, (b) charter by

Page 3

TRANSPORTATION LAW CASE DIGESTS
demise or bareboat charter, by the terms of which the
whole vessel is let to the charterer with a transfer to
him of its entire command and possession and
consequent control over its navigation, including the
master and the crew, who are his servants. Contract of
affreightment may either be time charter, wherein the
vessel is leased to the charterer for a fixed period of
time, or voyage charter, wherein the ship is leased for
a single voyage. In both cases, the charter-party
provides for the hire of vessel only, either for a
determinate period of time or for a single or
consecutive voyage, the shipowner to supply the ship's
stores, pay for the wages of the master and the crew,
and defray the expenses for the maintenance of the
ship.
Upon the other hand, the term "common or public
carrier" is defined in Art. 1732 of the Civil Code. The
definition extends to carriers either by land, air or
water which hold themselves out as ready to engage in
carrying goods or transporting passengers or both for
compensation as a public employment and not as a
casual occupation. The distinction between a "common
or public carrier" and a "private or special carrier" lies
in the character of the business, such that if the
undertaking is a single transaction, not a part of the
general business or occupation, although involving the
carriage of goods for a fee, the person or corporation
offering such service is a private carrier.
It is not disputed that respondent carrier, in the
ordinary course of business, operates as a common
carrier, transporting goods indiscriminately for all
persons. When petitioner chartered the vessel M/V
"Sun Plum", the ship captain, its officers and
compliment were under the employ of the shipowner
and therefore continued to be under its direct
supervision and control. Hardly then can we charge the
charterer, a stranger to the crew and to the ship, with
the duty of caring for his cargo when the charterer did
not have any control of the means in doing so. This is
evident in the present case considering that the
steering of the ship, the manning of the decks, the
determination of the course of the voyage and other
technical incidents of maritime navigation were all
consigned to the officers and crew who were screened,
chosen and hired by the shipowner.
It is therefore imperative that a public carrier shall
remain as such, notwithstanding the charter of the
whole or portion of a vessel by one or more persons,
provided the charter is limited to the ship only, as in
the case of a time-charter or voyage-charter. It is only
when the charter includes both the vessel and its crew,
as in a bareboat or demise that a common carrier
becomes private, at least insofar as the particular
voyage covering the charter-party is concerned.
Indubitably, a shipowner in a time or voyage charter
retains possession and control of the ship, although her
holds may, for the moment, be the property of the
charterer.
Respondent carrier's heavy reliance on the case
of Home
Insurance
Co. v. American
Steamship
Agencies, supra, is misplaced for the reason that the
meat of the controversy therein was the validity of a
stipulation in the charter-party exempting the
shipowners from liability for loss due to the negligence
of its agent, and not the effects of a special charter on

EH 405

common carriers. At any rate, the rule in the United
States that a ship chartered by a single shipper to
carry special cargo is not a common carrier, does not
find application in our jurisdiction, for we have
observed that the growing concern for safety in the
transportation of passengers and /or carriage of goods
by sea requires a more exacting interpretation of
admiralty laws, more particularly, the rules governing
common carriers.
In an action for recovery of damages against a
common carrier on the goods shipped, the shipper or
consignee should first prove the fact of shipment and
its consequent loss or damage while the same was in
the possession, actual or constructive, of the carrier.
Thereafter, the burden of proof shifts to respondent to
prove that he has exercised extraordinary diligence
required by law or that the loss, damage or
deterioration of the cargo was due to fortuitous event,
or some other circumstances inconsistent with its
liability.
To our mind, respondent carrier has
sufficiently overcome, by clear and convincing proof,
the prima facie presumption of negligence. Verily, the
presumption of negligence on the part of the
respondent carrier has been efficaciously overcome by
the showing of extraordinary zeal and assiduity
exercised by the carrier in the care of the cargo. The
period during which private respondent was to observe
the degree of diligence required of it as a public carrier
began from the time the cargo was unconditionally
placed in its charge after the vessel's holds were duly
inspected and passed scrutiny by the shipper, up to
and until the vessel reached its destination and its hull
was reexamined by the consignee, but prior to
unloading.
Article 1734 of the New Civil Code provides that
common carriers are not responsible for the loss,
destruction or deterioration of the goods if caused by
the charterer of the goods or defects in the packaging
or in the containers. The Code of Commerce also
provides that all losses and deterioration which the
goods may suffer during the transportation by reason
of fortuitous event, force majeure, or the inherent
defect of the goods, shall be for the account and risk of
the shipper, and that proof of these accidents is
incumbent upon the carrier. The carrier, nonetheless,
shall be liable for the loss and damage resulting from
the preceding causes if it is proved, as against him,
that they arose through his negligence or by reason of
his having failed to take the precautions which usage
has established among careful persons.
Thus, the petition is dismissed.
ESTRELLITA M. BASCOS vs. COURT OF
APPEALS and RODOLFO A. CIPRIANO
G.R.
No. 101089. April 7, 1993.
FACTS:
Rodolfo A. Cipriano representing Cipriano Trading
Enterprise (CIPTRADE) 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 from Magallanes Drive, Del Pan, Manila to
the warehouse of Purefoods Corporation in Calamba,
Laguna. To carry out its obligation, CIPTRADE, through

Page 4

TRANSPORTATION LAW CASE DIGESTS
Rodolfo Cipriano, subcontracted with Estrellita Bascos
to transport and to deliver 400 sacks of soya bean
meal from the Manila Port Area to Calamba, Laguna at
the rate. But, Bascos failed to deliver the said cargo. As
a consequence, Cipriano paid Jibfair Shipping Agency
the amount of the lost goods in accordance with the
contract. Cipriano demanded reimbursement from
Bascos 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
and rendered a decision, ordering Bascos to pay for
actual damages with legal interest, attorney’s fees and
the costs of the suit. The court further denied the
“Urgent
Motion
To
Dissolve/Lift
preliminary
Attachment” filed by Bascos for being moot and
academic.
Bascos appealed to the CA but the appellate court
affirmed the trial court’s judgment. Hence, the petition
for review on certiorari. Petitioner, Bascos interposed
the following defenses: that there was no contract of
carriage since CIPTRADE leased her cargo truck to load
the cargo from Manila Port Area to Laguna; that
CIPTRADE was liable to petitioner for loading the cargo;
that the truck carrying the cargo was hijacked along
Paco, Manila; that the hijacking was immediately
reported to CIPTRADE and that petitioner and the
police exerted all efforts to locate the hijacked
properties; and that hijacking, being a force majeure,
exculpated petitioner from any liability to CIPTRADE
ISSUE:
WON petitioner was a common carrier.
WON the hijacking referred to a force majeure.
HELD:
The Supreme Court dismissed the petition and affirmed
the decision of the Court of Appeals.
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." 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.
Moreover, in referring to Article 1732 of the Civil Code,
it held in De Guzman vs. Court of Appeals that “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

EH 405

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.
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. In those cases where the presumption is
applied, the common carrier must prove that it
exercised extraordinary diligence in order to overcome
the presumption.
As to the second issue, 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. UArticle 1745 of the Civil
Code provides that a common carrier is held
responsible; and will not be allowed to divest or to
diminish such responsibility even for acts of strangers
like thieves or robbers except where such thieves or
robbers in fact acted with grave or irresistible threat,
violence or force.
Affidavits were not enough to
overcome the presumption. (1) Bascos’s affidavit about
the hijacking was based on what had been told her by
Juanito Morden. It was not a first-hand account. While it
had been admitted in court for lack of objection on the
part of Cipriano, the lower court had discretion in
assigning weight to such evidence. (2) The affidavit of
Jesus Bascos did not dwell on how the hijacking took
place. (3) While the affidavit of Juanito Morden, the
truck helper in the hijacked truck, was presented as
evidence in court, he himself was a witness as could be
gleaned from the contents of the petition.
Mr. & Mrs. Engracio Fabre, Jr. vs. CA, et al.
259 SCRA 426
Facts:
Petitioners Fabre and his wife were owners of a minibus
which they used principally in connection with a bus
service for school children which they operated. The
couple had a driver, Porfirio Cabil, whom they hired
after trying him out for two weeks. His job was to take
school children to and from the St. Scholastica’s
College.
On November 2, 1984, private respondent Word for the
World Christian Fellowship Inc. arranged with
petitioners for the transportation of 33 members from
Manila to La Union and back in consideration of which
they paid P3,000 to petitioners.
The group left at 8:00 in the evening, petitioner Cabil
drove the minibus. The usual route to Caba, La Union
was through Carmen, Pangasinan. However, the bridge
at Carmen was under repair, so that petitioner Cabil,
who was unfamiliar with the area (it being his first trip

Page 5

TRANSPORTATION LAW CASE DIGESTS
to La Union), was forced to take a detour through the
town of Ba-ay in Lingayen, Pangasinan. At 11:30 that
night, petitioner Cabil came upon a sharp curve on the
highway, running on a south to east direction. The road
was slippery because it was raining, causing the bus,
which was running at the speed of 50 kilometers per
hour, to skid to the left road shoulder. The bus hit the
left traffic steel brace and sign along the road and
rammed the fence of one Jesus Escano, then turned
over and landed on its left side, coming to a full stop
only after a series of impacts. The bus came to rest off
the road. A coconut tree which it had hit fell on it and
smashed its front portion.
Several passengers were injured. Private respondent
Amyline Antonio was thrown on the floor of the bus and
pinned down by a wooden seat which came off after
being unscrewed. It took three persons to safely
remove her from this position. She was in great pain
and could not move.
A case was filed by the respondents against Fabre and
Cabil. Amyline Antonio was found to be suffering from
paraplegia and is permanently paralyzed from the
waist down. The RTC ruled in favor of respondents. Mr.
& Mrs. Fabre and Cabil were ordered to pay jointly and
severally actual, moral and exemplary damages, and
as well as amount of loss of earning capacity of Antonio
and attorney’s fees. The Court of Appeals affirmed the
decision of the trial court with modification on the
award of damages.
Issues:
1. Whether or not petitioners were negligent.
2. Whether or not petitioners were liable for the
injuries suffered by private respondents.
3. Whether or not damages can be awarded and
in the positive, up to what extent.
Held:
SC affirmed the decision of the CA but reverted
the amount of the award of damages to that ordered
by the RTC.
1.

The finding that Cabil drove his bus negligently,
while his employer, the Fabres, who owned the bus,
failed to exercise the diligence of a good father of
the family in the selection and supervision of their
employee is fully supported by the evidence on
record. Indeed, it was admitted by Cabil that on the
night in question, it was raining, and, as a
consequence, the road was slippery, and it was
dark. However, it is undisputed that Cabil drove his
bus at the speed of 50 kilometers per hour and
only slowed down when he noticed the curve some
15 to 30 meters ahead. Given the conditions of the
road and considering that the trip was Cabil’s first
one outside of Manila, Cabil should have driven his
vehicle at a moderate speed. There is testimony
that the vehicles passing on that portion of the
road should only be running 20 kilometers per
hour, so that at 50 kilometers per hour, Cabil was
running at a very high speed. Cabil was grossly
negligent and should be held liable for the injuries
suffered by private respondent Amyline Antonio.
Pursuant to Arts. 2176 and 2180 of the Civil Code
his negligence gave rise to the presumption that

EH 405

his employers, the Fabres, were themselves
negligent in the selection and supervision of their
employee. Due diligence in selection of employees
is not satisfied by finding that the applicant
possessed a professional driver’s license. The
employer should also examine the applicant for his
qualifications, experience and record of service. In
the case at bar, the Fabres, in allowing Cabil to
drive the bus to La Union, apparently did not
consider the fact that Cabil had been driving for
school children only, from their homes to the St.
Scholastica’s College in Metro Manila. They had
hired him only after a two-week apprenticeship.
2.

This case involves a contract of carriage.
Petitioners, the Fabres, did not have to be engaged
in the business of public transportation for the
provisions of the Civil Code on common carriers to
apply to them.
Art.
1732. Common
carriers
are
persons,
corporations, firms or associations engaged in the
business of carrying or transporting passengers or
goods or both, by land, water, or air for
compensation, offering their services to the public.
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.
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.
As common carriers, the Fabres were bound to
exercise “extraordinary diligence” for the safe
transportation of the passengers to their
destination. This duty of care is not excused by
proof that they exercised the diligence of a good
father of the family in the selection and supervision
of their employee.
As Art. 1759 of the Code provides:
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.

First Philippine Industrial Corporation vs. Court
of Appeals
G.R. No. 125948 December 29, 1998
Facts:
Petitioner, First Phil. Industrial Corporation (FirstPhil for
brevity) is a grantee of a pipeline concession under
Republic Act No. 387, as amended, to contract, install
and operate oil pipelines. FirstPhil applied for a mayor's
permit, but before the mayor's permit could be issued,
the respondent City Treasurer required petitioner to
pay a local tax pursuant to the Local Government
Code. Petitioner filed a letter-protest addressed to the
respondent City Treasurer, but the latter denied the
same contending that petitioner cannot be considered
engaged in transportation business, thus it cannot

Page 6

TRANSPORTATION LAW CASE DIGESTS
claim exemption under Section 133 (j) of the Local
Government Code.
FirstPhil filed with the RTC Batangas a complaint for tax
refund with prayer for writ of preliminary injunction
against respondents, contending that the imposition of
tax upon them violates Sec 133 of the Local
Government Code. On the other hand, respondents
assert that pipelines are not included in the term
"common carrier" which refers solely to ordinary
carriers such as trucks, trains, ships and the like.
Respondents further posit that the term "common
carrier" under the said code pertains to the mode or
manner by which a product is delivered to its
destination.
RTC dismissed the complaint, ruling that exemption
granted under Sec. 133 (j) encompasses only "common
carriers" so as not to overburden the riding public or
commuters with taxes. And that petitioner is not a
common carrier, but a special carrier extending its
services and facilities to a single specific or "special
customer" under a "special contract."
The case was elevated by the petitioner to the CA, but
CA affirmed the decision of the RTC. Hence this
petition.
Issue:
WON the petitioner is a "common carrier" and,
therefore, exempt from the business taxc
Held: Petition was granted.
REVERSED and SET ASIDE.

CA

decision

was

SC ruled in this case that petitioner is a common
carrier and thus, exempt from business tax.
A "common carrier" may be defined, broadly, as one
who holds himself out to the public as engaged in the
business of transporting persons or property from place
to place, for compensation, offering his services to the
public generally. Art. 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

EH 405

and for compensation. The fact that petitioner has a
limited clientele does not exclude it from the definition
of a common carrier.
The definition of "common carriers" in the Civil Code
makes no distinction as to the means of transporting,
as long as it is by land, water or air. It does not provide
that the transportation of the passengers or goods
should be by motor vehicle. In fact, in the United
States, oil pipe line operators are considered common
carriers.
Under the Petroleum Act of the Philippines (Republic
Act 387), petitioner is considered a "common carrier.",
and at the same time, said act also regards petroleum
operation as a public utility. BIR likewise considers the
petitioner a "common carrier." In so ruling, it held that,
since petitioner is a pipeline concessionaire that is
engaged only in transporting petroleum products, it is
considered a common carrier under Republic Act No.
387. Such being the case, it is not subject to
withholding tax prescribed by Revenue Regulations No.
13-78, as amended.
Section 133 (j), of the Local Government Code,
provides:
Sec. 133. Common Limitations on the Taxing Powers of
Local Government Units. — Unless otherwise provided
herein, the exercise of the taxing powers of provinces,
cities, municipalities, and barangays shall not extend
to the levy of the following:
(j) Taxes on the gross receipts of transportation
contractors and persons engaged in the transportation
of passengers or freight by hire and common carriers
by air, land or water, except as provided in this Code.
SC held that the legislative intent in excluding from the
taxing power of the local government unit the
imposition of business tax against common carriers is
to prevent a duplication of the so-called "common
carrier's tax."

LOADSTAR SHIPPING CO., INC., vs.
COURT OF APPEALS
Facts:
On 19 November 1984, LOADSTAR received on board
a) 705 bales of lawanit hardwood; b) 27 boxes and
crates of tilewood assemblies and the others ;and c) 49
bundles of mouldings R & W (3) Apitong Bolidenized.
On its way to Manila from the port of Nasipit, Agusan
del Norte, the vessel, along with its cargo, sank off
Limasawa Island. As a result of the total loss of its
shipment, the consignee made a claim with LOADSTAR
which, however, ignored the same. MIC filed a
complaint against LOADSTAR and PGAI, alleging that
the sinking of the vessel was due to the fault and
negligence of LOADSTAR and its employees. LOADSTAR
denied any liability for the loss of the shipper's goods
and claimed that sinking of its vessel was due to force
majeure. LOADSTAR submits that the vessel was a
private carrier because it was not issued certificate of
public convenience, it did not have a regular trip or

Page 7

TRANSPORTATION LAW CASE DIGESTS
schedule nor a fixed route, and there was only "one
shipper, one consignee for a special cargo.
Issues:
(1) Is the M/V "Cherokee" a private or a common
carrier?
(2) Did LOADSTAR observe due and/or ordinary
diligence in these premises.
Held: Petition is dismissed:
SC hold that LOADSTAR is a common carrier. It is not
necessary that the carrier be issued a certificate of
public convenience, and this public character is not
altered by the fact that the carriage of the goods in
question was periodic, occasional, episodic or
unscheduled. The bills of lading failed to show any
special arrangement, but only a general provision to
the effect that the M/V"Cherokee" was a "general cargo
carrier." 14 Further, the bare fact that the vessel was
carrying a particular type of cargo for one shipper,
which appears to be purely coincidental, is not reason
enough to convert the vessel from a common to a
private carrier, especially where, as in this case, it was
shown that the vessel was also carrying passengers.
Under Article 1732 of the Civil Code the Civil Code
defines "common carriers" in the following terms:
Art. 1732. Common carriers are persons,
corporations, firms or associations engaged in the
business of carrying or transporting passengers or
goods or both, by land, water, or air for compensation,
offering their services to the public.
On to the second assigned error, we find that the M/V
"Cherokee" was not seaworthy when it embarked on its
voyage on 19 November 1984. The vessel was not
even sufficiently manned at the time. "For a vessel to
be seaworthy, it must be adequately equipped for the
voyage and manned with a sufficient number of
competent officers and crew. The failure of a common
carrier to maintain in seaworthy condition its vessel
involved in a contract of carriage is a clear breach of its
duty.
CALVO VS. UCPB GENERAL INSURANCE TERMINAL
SERVICE, INC.
Facts:
A contract was entered into between Calvo and San
Miguel Corporation (SMC) for the transfer of certain
cargoes from the port area in Manila to the warehouse
of SMC. The cargo was insured by UCPB General
Insurance Co., Inc. When the shipment arrived and
unloaded from the vessel, Calvo withdrew the cargo
from the arrastre operator and delivered the same to
SMC’s warehouse. When it was inspected, it was found
out that some of the goods were torn. UCPB, being the
insurer, paid for the amount of the damages and as
subrogee thereafter, filed a suit against Calvo.
Petitioner, on the other hand, contends that it is a
private carrier not required to observe such
extraordinary diligence in the vigilance over the goods.
As customs broker, she does not indiscriminately hold
her services out to the public but only to selected
parties.

EH 405

Issue:
Whether or not Calvo is a common carrier liable for the
damages for failure to observe extraordinary diligence
in the vigilance over the goods.
Held:
The contention has no merit. In De Guzman v. Court of
Appeals, the Court dismissed a similar contention and
held the party to be a common carrier, thus 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 or
goods or both, by land, water, or air for compensation,
offering their services to the public."
The law makes no distinction between a carrier offering
its services to the general community or solicits
business only from a narrow segment of the general
population. Note that the transportation of goods holds
an integral part of Calvo’s business, it cannot indeed
be
doubted
that
it
is
a
common
carrier.
Asia Lighterage and Shipping Inc. v. CA
Gr, No. 147246, August 19, 2003
FACTS:
Petitioner was contracted as carrier by a corporation
from Portland, Oregon to deliver a cargo to the
consignee's warehouse at Pasig City. The cargo,
however, never reached the consignee as the barge
that carried the cargo sank completely, resulting in
damage to the cargo. Private respondent, as insurer,
indemnified the consignee for the lost cargo and thus,
as subrogee, sought recovery from petitioner. Both the
trial court and the appellate court ruled in favor of
private respondent.
The Court ruled in favor of private respondent.
Whether or not petitioner is a common carrier, the
Court ruled in the affirmative. The principal business of
petitioner is that of lighterage and drayage, offering its
barges to the public, although for limited clientele, for
carrying or transporting goods by water for
compensation. Whether or not petitioner failed to
exercise extraordinary diligence in its care and custody
of the consignee's goods, the Court also ruled in the
affirmative. The barge completely sank after its towing
bits broke, resulting in the loss of the cargo. Petitioner
failed to prove that the typhoon was the proximate and
only cause of the loss and that it has exercised due
diligence before, during and after the occurrence.
HCISED
ISSUE:
Whether or Not the petitioner is a common carrier.
RULING: YES.
Petitioner is a common carrier whether its carrying of
goods is done on an irregular rather than scheduled

Page 8

TRANSPORTATION LAW CASE DIGESTS
manner, and with an only limited clientele. A common
carrier need not have fixed and publicly known routes.
Neither does it have to maintain terminals or issue
tickets. To be sure, petitioner fits the test of a common
carrier as laid down in Bascos vs. Court of Appeals. The
test to determine a common carrier is "whether the
given undertaking is a part of the business engaged in
by the carrier which he has held out to the general
public as his occupation rather than the quantity or
extent of the business transacted." In the case at bar,
the petitioner admitted that it is engaged in the
business of shipping and lighterage, offering its barges
to the public, despite its limited clientele for carrying or
transporting goods by water for compensation.
Article 1732 of the Civil Code defines common carriers
as persons, corporations, firms or associations engaged
in the business of carrying or transporting passengers
or goods or both, by land, water, or air, for
compensation..offering their services to the public.
Petitioner contends that it is not a common carrier but
a private carrier. Allegedly, it has no fixed and publicly
known route, maintains no terminals, and issues no
tickets. It points out that it is not obliged to carry
indiscriminately for any person. It is not bound to carry
goods unless it consents. In short, it does not hold out
its services to the general public. In De Guzman vs.
Court of Appeals, we held that the definition of
common carriers in Article 1732 of the Civil Code
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. We also did not distinguish 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. Further, we ruled that Article 1732 does not
distinguish between a carrier offering its services to
the general public, and one who offers services or
solicits business only from a narrow segment of the
general population.
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 the case of loss, destruction or
deterioration of the goods, deterioration of the goods,
the common carrier must prove that it exercised
extraordinary
diligence.
There
are,
however,
exceptions to this rule. Article 1734 of the Civil Code
enumerates the instances when the presumption of
negligence does not attach: Art. 1734. Common
carriers are responsible for the loss, destruction, or
deterioration of the goods, unless the same is due to
any of the following causes only: (1) Flood, storm,
earthquake, lightning, or other natural disaster or
calamity; (2) Act of the public enemy in war, whether
international or civil; (3) Act or omission of the shipper
or owner of the goods; (4) The character of the goods
or defects in the packing or in the containers; (5) Order
or act of competent public authority.
In the case at bar, the barge completely sank after its
towing bits broke, resulting in the total loss of its cargo.
Petitioner claims that this was caused by a typhoon,
hence, it should not be held liable for the loss of the
cargo. However, petitioner failed to prove that the

EH 405

typhoon is the proximate and only cause of the loss of
the goods, and that it has exercised due diligence
before, during and after the occurrence of the typhoon
to prevent or minimize the loss. The evidence show
that, even before the towing bits of the barge broke, it
had already previously sustained damage when it hit a
sunken object while docked at the Engineering Island.
It even suffered a hole. Clearly, this could not be solely
attributed to the typhoon. The partly-submerged vessel
was refloated but its hole was patched with only clay
and cement. The patch work was merely a provisional
remedy, not enough for the barge to sail safely. Thus,
when petitioner persisted to proceed with the voyage,
it recklessly exposed the cargo to further damage.
AF Sanchez Brokerage vs CA
(Dec 21, 2004)
Facts:
AF Sanchez is engaged in a broker business wherein its
main job is to calculate customs duty, fees and charges
as well as storage fees for the cargoes. Part also of the
services being given by AF Sanchez is the delivery of
the shipment to the consignee upon the instruction of
the
shipper.
Wyett engaged the services of AF Sanchez where the
latter delivered the shipment to Hizon Laboratories
upon instruction of Wyett. Upon inspection, it was
found out that at least 44 cartons containing
contraceptives were in bad condition. Wyett claimed
insurance from FGU. FGU exercising its right of
subrogation claims damages against AF Sanchez who
delivered the damaged goods. AF Sanchez contended
that it is not a common carrier but a brokerage firm.
Issue:
Held:

Is

AF

Sanchez

a

common

carrier?

SC held that Art 1732 of the Civil Code in defining
common carrier does not distinguish whether the
activity is undertaken as a principal activity or merely
as an ancillary activity. In this case, while it is true that
AF Sanchez is principally engaged as a broker, it
cannot be denied from the evidence presented that
part of the services it offers to its customers is the
delivery of the goods to their respective consignees.
Note:
AF Sanchez claimed that the proximate cause of the
damage is improper packing. Under the CC, improper
packing of the goods is an exonerating circumstance.
But in this case, the SC held that though the goods
were improperly packed, since AF Sanchez knew of the
condition and yet it accepted the shipment without
protest or reservation, the defense is deemed waived.
Schmitz Transport and Brokerage Corp v Transort
Venture Inc., GR 150255 April 22,2005
Facts:
On September 25, 1991, SYTCO Pte Ltd. Singapore
shipped from the port of Ilyichevsk, Russia on board

Page 9

TRANSPORTATION LAW CASE DIGESTS
M/V “Alexander Saveliev” 545 hot rolled steel sheets in
coil weighing 6,992,450 metric tons. The cargoes,
which were to be discharged at the port of Manila in
favor of the consignee, Little Giant Steel Pipe
Corporation (Little Giant), were insured against all risks
with Industrial Insurance Company Ltd. (Industrial
Insurance) under Marine Policy No. M-91-3747-TIS.
The vessel arrived at the port of Manila and the
Philippine Ports Authority (PPA) assigned it a place of
berth at the outside breakwater at the Manila South
Harbor.
Schmitz Transport, whose services the consignee
engaged to secure the requisite clearances, to receive
the cargoes from the shipside, and to deliver them to
its (the consignee’s) warehouse at Cainta, Rizal, in turn
engaged the services of TVI to send a barge and
tugboat at shipside. TVI’s tugboat “Lailani” towed the
barge “Erika V” to shipside.
The tugboat, after
positioning the barge alongside the vessel, left and
returned to the port terminal. Arrastre operator Ocean
Terminal Services Inc. commenced to unload 37 of the
545 coils from the vessel unto the barge. By 12:30
a.m. of October 27, 1991 during which the weather
condition had become inclement due to an
approaching storm, the unloading unto the barge of the
37 coils was accomplished. No tugboat pulled the
barge back to the pier, however. At around 5:30 a.m.
of October 27, 1991, due to strong waves, the crew of
the barge abandoned it and transferred to the vessel.
The barge pitched and rolled with the waves and
eventually capsized, washing the 37 coils into the sea.
Little Giant thus filed a formal claim against Industrial
Insurance which paid it the amount of P5,246,113.11.
Little Giant thereupon executed a subrogation receipt
in favor of Industrial Insurance. Industrial Insurance
later filed a complaint against Schmitz Transport,
TVI, and Black Sea through its representative
Inchcape (the defendants) before the RTC of
Manila, they faulted the defendants for
undertaking the unloading of the cargoes while
typhoon signal No. 1 was raised. The RTC held all
the defendants negligent. Defendants Schmitz
Transport and TVI filed a joint motion for
reconsideration assailing the finding that they
are common carriers. RTC denied the motion for
reconsideration. CA affirmed the RTC decision in
toto, finding that all the defendants were common
carriers — Black Sea and TVI for engaging in the
transport of goods and cargoes over the seas as a
regular business and not as an isolated transaction,
and Schmitz Transport for entering into a contract with
Little Giant to transport the cargoes from ship to port
for a fee.
Issue:
Whether or not Black Sea and TVI are common carriers
Held :
Contrary to petitioner’s insistence, this Court, as did
the appellate court, finds that petitioner is a common
carrier. For it undertook to transport the cargoes from
the shipside of “M/V Alexander Saveliev” to the
consignee’s warehouse at Cainta, Rizal. As the
appellate court put it, “as long as a person or

EH 405

corporation holds [itself] to the public for the
purpose of transporting goods as [a] business,
[it] is already considered a common carrier
regardless if [it] owns the vehicle to be used or
has to hire one.” That petitioner is a common carrier,
the testimony of its own Vice-President and General
Manager Noel Aro that part of the services it offers to
its clients as a brokerage firm includes the
transportation of cargoes reflects so.
It is settled that under a given set of facts, a customs
broker may be regarded as a common carrier. Thus,
this Court, in A.F. Sanchez Brokerage, Inc. v. The
Honorable Court of Appeals,[44] held:
The appellate court did not err in finding
petitioner, a customs broker, to be also a
common carrier, as defined under Article 1732
of the Civil Code, to wit,
Art. 1732. Common carriers are persons,
corporations,
firms
or
associations
engaged in the business of carrying or
transporting passengers or goods or
both, by land, water, or air, for
compensation, offering their services to
the public.
xxx
Article 1732 does not distinguish between one whose
principal business activity is the carrying of goods and
one who does such carrying only as an ancillary
activity. The contention, therefore, of petitioner that it
is not a common carrier but a customs broker whose
principal function is to prepare the correct customs
declaration and proper shipping documents as required
by law is bereft of merit. It suffices that petitioner
undertakes to deliver the goods for pecuniary
consideration.
And in Calvo v. UCPB General Insurance Co. Inc.,[46]
this Court held that as the transportation of goods
is an integral part of a customs broker, the
customs broker is also a common carrier. For to
declare otherwise “would be to deprive those with
whom [it] contracts the protection which the law
affords them notwithstanding the fact that the
obligation to carry goods for [its] customers, is part
and parcel of petitioner’s business.”
PHIL CHARTER vs. M/V "NATIONAL HONOR,"
[G.R. No. 161833. July 8, 2005.]
FACTS:
On November 5, 1995, J. Trading Co. Ltd. of Seoul,
Korea, loaded a shipment of four units of parts and
accessories on board the vessel M/V "National Honor,"
represented in the Philippines by its agent, National
Shipping Corporation of the Philippines (NSCP). The
shipment was contained in two wooden crates, namely,
Crate No. 1 and Crate No. 2, complete and in good
order condition. Crate No. 1 contained the following
articles: one (1) unit Lathe Machine complete with
parts and accessories; one (1) unit Surface Grinder
complete with parts and accessories; and one (1) unit
Milling Machine complete with parts and accessories.
On the flooring of the wooden crates were three
wooden battens placed side by side to support the
weight of the cargo. It was insured for P2,547,270.00

Page 10

TRANSPORTATION LAW CASE DIGESTS
with the Philippine Charter Insurance Corporation
(PCIC).
The M/V "National Honor" arrived at the Manila
International
Container
Terminal
(MICT).
The
International Container Terminal Services, Incorporated
(ICTSI) was the exclusive arrastre operator of MICT and
was charged with discharging the cargoes from the
vessel. Claudio Cansino, the stevedore of the ICTSI,
placed two sling cables on each end of Crate No. 1. No
sling cable was fastened on the mid-portion of the
crate. As the crate was being hoisted from the vessel's
hatch, the mid-portion of the wooden flooring suddenly
snapped in the air, about five feet high from the
vessel's twin deck, sending all its contents crashing
down hard, resulting in extensive damage to the
shipment.
Blue Mono International Company, Incorporated
(BMICI) subsequently filed separate claims against the
NSCP, the ICTSI, and its insurer, the PCIC, for
US$61,500.00. When the other companies denied
liability, PCIC paid the claim and was issued a
Subrogation Receipt for P1,740,634.50. On March 22,
1995, PCIC, as subrogee, filed with the RTC of Manila a
Complaint for Damages against the "Unknown owner of
the vessel M/V National Honor," NSCP and ICTSI, as
defendants. ICTSI, for its part, filed its Answer with
Counterclaim and Cross-claim against its co-defendant
NSCP, claiming that the loss/damage of the shipment
was caused exclusively by the defective material of the
wooden battens of the shipment, insufficient packing
or acts of the shipper.
The trial court rendered judgment for PCIC and ordered
the complaint dismissed. According to the trial court,
the loss of the shipment contained in Crate No. 1 was
due to the internal defect and weakness of the
materials used in the fabrication of the crates. The CA
affirmed in TOTO the decision of the RTC.
ISSUE:
WHETHER OR NOT THE COMMON CARRIER IS LIABLE
FOR THE DAMAGE SUSTAINED BY THE SHIPMENT IN
THE HANDS OF THE ARRASTRE OPERATOR.
HELD: THE RULING OF THE RTC AND CA WAS
UPHELD.
The petitioner posits that the loss/damage was caused
by the mishandling of the shipment by therein
respondent ICTSI, the arrastre operator, and not by its
negligence. The petition has no merit.
We agree with the contention of the petitioner that
common carriers, from the nature of their business and
for reasons of public policy, are mandated to observe
extraordinary diligence in the vigilance over the goods
according to all the circumstances of each case. The
extraordinary diligence in the vigilance over the
goods requires common carriers to render service with
the greatest skill and foresight and "to use all
reasonable means to ascertain the nature and
characteristic of goods tendered for shipment, and to
exercise due care in the handling and stowage,
including such methods as their nature requires." When
the goods shipped are either lost or arrive in damaged

EH 405

condition, a presumption arises against the carrier of
its failure to observe that diligence, and there need not
be an express finding of negligence to hold it liable.
However, under Article 1734 of the New Civil Code,
the presumption of negligence does not apply to any of
the following causes:
1.
Flood, storm, earthquake, lightning or
other natural disaster or calamity;
2.
Act of the public enemy in war, whether
international or civil;
3.
Act or omission of the shipper or owner of
the goods;
4.
The character of the goods or defects in
the packing or in the containers;
5.
Order or act of competent public
authority.
It bears stressing that the enumeration in Article 1734
of the New Civil Code which exempts the common
carrier for the loss or damage to the cargo is a closed
list. Crate No. 1 was provided by the shipper of the
machineries in Seoul, Korea. There is nothing in the
record which would indicate that defendant ICTSI had
any role in the choice of the materials used in
fabricating this crate. Said defendant, therefore, cannot
be held as blame worthy for the loss of the machineries
contained in Crate No. 1.
The CA affirmed the ruling of the RTC, thus:
“The case at bar falls under one of the exceptions
mentioned in Article 1734 of the Civil Code, particularly
number (4) thereof, i.e., the character of the goods or
defects in the packing or in the containers. The trial
court found that the breakage of the crate was not due
to the fault or negligence of ICTSI, but to the inherent
defect and weakness of the materials used in the
fabrication of the said crate.”
Upon examination of the records, We find no
compelling reason to depart from the factual findings
of the trial court. It appears that the wooden batten
used as support for the flooring was not made of good
materials, which caused the middle portion thereof to
give way when it was lifted. The shipper also failed to
indicate signs to notify the stevedores that extra care
should be employed in handling the shipment.
Appellant's allegation that since the cargo arrived
safely from the port of [P]usan, Korea without defect,
the fault should be attributed to the arrastre operator
who mishandled the cargo; is without merit. The cargo
fell while it was being carried only at about five (5) feet
high above the ground. It would not have so easily
collapsed had the cargo been properly packed. The
shipper should have used materials of stronger quality
to support the heavy machines. Not only did the
shipper fail to properly pack the cargo, it also failed to
indicate an arrow in the middle portion of the cargo
where additional slings should be attached.
While it is true that the crate contained machineries
and spare parts, it cannot thereby be concluded that
the respondents knew or should have known that the
middle wooden batten had a hole, or that it was not
strong enough to bear the weight of the shipment. The
statement in the Bill of Lading, that the shipment was
in apparent good condition, is sufficient to sustain a
finding of absence of defects in the merchandise. Case
law has it that such statement will create a prima facie

Page 11

TRANSPORTATION LAW CASE DIGESTS
presumption only as to the external condition and not
to that not open to inspection.
LEA MER INDUSTRIES INC VS MALAYAN
INSURANCE CO, INC.
GR No. 161745, SEPTEMBER 30, 2005
FACTS:
Ilian Silica Mining entered into a contract of carriage
with the petitioner, Lea Mer Industries Inc. for the
shipment of 900 metric tons of silica sand worth
P565,000. The cargo was consigned to Vulcan
Industrial and Mining Corporation and was to be
shipped from Palawan to Manila. The silica sand was
boarded to Judy VII, the vessel leased by Lea Mer.
However, during the course of its voyage, the vessel
sank which led to the loss of the cargo.
Consequently, the respondent, as the insurer, paid
Vulcan the value of the lost cargo. Malayan Insurance
Co., Inc. then collected from the petitioner the amount
it paid to Vulcan as reimbursement and as its exercise
on the right of subrogation. Lea Mer refused to pay
which led Malayan to institute a complaint with the
RTC. The RTC dismissed the complaint stating that the
loss was due to a fortuitous event, Typhoon Trining.
Petitioner did not know that a typhoon was coming and
that it has been cleared by the Philippine Coast Guard
to travel from Palawan to Manila. The CA reversed the
ruling of the trial court for the reason that said vessel
was not seaworthy when it sailed to Manila.
ISSUE:
Whether or not the petitioner is liable for the loss of the
cargo.
HELD:
CA
reversed.
Common
carriers
are
persons,
corporations, firms or associations engaged in the
business of carrying or transporting passengers or
goods, or both — by land, water, or air — when this
service is offered to the public for compensation.
Petitioner is clearly a common carrier, because it offers
to the public its business of transporting goods through
its vessels. Thus, the Court corrects the trial court's
finding that petitioner became a private carrier when
Vulcan chartered it. Charter parties are classified as
contracts of demise (or bareboat) and affreightment,
which are distinguished as follows:
"Under the demise or bareboat charter of the vessel,
the charterer will generally be considered as owner for
the voyage or service stipulated. The charterer mans
the vessel with his own people and becomes, in effect,
the owner pro hac vice, subject to liability to others for
damages caused by negligence. To create a demise,
the owner of a vessel must completely and exclusively
relinquish possession, command and navigation
thereof to the charterer; anything short of such a
complete transfer is a contract of affreightment (time
or voyage charter party) or not a charter party at all."
The distinction is significant, because a demise or
bareboat charter indicates a business undertaking that
is private in character. Consequently, the rights and

EH 405

obligations of the parties to a contract of private
carriage are governed principally by their stipulations,
not by the law on common carriers. The Contract in the
present case was one of affreightment, as shown by
the fact that it was petitioner's crew that manned the
tugboat M/V Ayalit and controlled the barge Judy VII.
Common carriers are bound to observe extraordinary
diligence in their vigilance over the goods and the
safety of the passengers they transport, as required by
the nature of their business and for reasons of public
policy. Extraordinary diligence requires rendering
service with the greatest skill and foresight to avoid
damage and destruction to the goods entrusted for
carriage and delivery.
Common carriers are presumed to have been at fault
or to have acted negligently for loss or damage to the
goods that they have transported. This presumption
can be rebutted only by proof that they observed
extraordinary diligence, or that the loss or damage was
occasioned by any of the following causes:
"(1)
Flood, storm, earthquake, lightning, or other
natural disaster or calamity;
"(2)
Act of the public enemy in war, whether
international or civil;
"(3)
Act or omission of the shipper or owner of the
goods;
"(4)
The character of the goods or defects in the
packing or in the containers;
"(5)
Order or act of competent public authority."
Jurisprudence defines the elements of a "fortuitous
event" as follows: (a) the cause of the unforeseen and
unexpected occurrence, or the failure of the debtors to
comply with their obligations, must have been
independent of human will; (b) the event that
constituted the caso fortuito must have been
impossible to foresee or, if foreseeable, impossible to
avoid; (c) the occurrence must have been such as to
render it impossible for the debtors to 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
excuse the common carrier fully of any liability, the
fortuitous event must have been the proximate and
only cause of the loss. Moreover, it should have
exercised due diligence to prevent or minimize the loss
before, during and after the occurrence of the
fortuitous event. As required by the pertinent law, it
was not enough for the common carrier to show that
there was an unforeseen or unexpected occurrence. It
had to show that it was free from any fault — a fact it
miserably failed to prove.
LOADSTAR SHIPPING CO., INC., v. CA
Facts:
On 19 November 1984, LOADSTAR received on board
a) 705 bales of lawanit hardwood; b) 27 boxes and
crates of tilewood assemblies and the others ;and c) 49
bundles of mouldings R & W (3) Apitong Bolidenized.
On its way to Manila from the port of Nasipit, Agusan
del Norte, the vessel, along with its cargo, sank off
Limasawa Island. As a result of the total loss of its
shipment, the consignee made a claim with LOADSTAR

Page 12

TRANSPORTATION LAW CASE DIGESTS
which, however, ignored the same. MIC filed a
complaint against LOADSTAR and PGAI, alleging that
the sinking of the vessel was due to the fault and
negligence of LOADSTAR and its employees. LOADSTAR
denied any liability for the loss of the shipper's goods
and claimed that sinking of its vessel was due to force
majeure. LOADSTAR submits that the vessel was a
private carrier because it was not issued certificate of
public convenience, it did not have a regular trip or
schedule nor a fixed route, and there was only "one
shipper, one consignee for a special cargo.
Issues:
(1) Is the M/V "Cherokee" a private or a common
carrier?
(2) Did LOADSTAR observe due and/or ordinary
diligence in these premises.

The cargo, consigned to San Miguel Brewery, Inc., now
San Miguel Corporation, and insured by Home
Insurance Company for $202,505, 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
amounting to P12,033.85, causing the latter to lay
claims against Luzon Stevedoring Corporation, Home
Insurance Company and the American Steamship
Agencies, owner and operator of SS Crowborough.
Because the others denied liability, Home Insurance
Company paid the consignee P14,870.71. Having been
refused reimbursement by both the Luzon Stevedoring
Corporation and American Steamship Agencies, Home
Insurance Company, as subrogee to the consignee,
filed against them before the Court of First Instance a
complaint for recovery of P14,870.71 with legal
interest, plus attorney's fees.

Held: Petition is dismissed:
SC hold that LOADSTAR is a common carrier. It is not
necessary that the carrier be issued a certificate of
public convenience, and this public character is not
altered by the fact that the carriage of the goods in
question was periodic, occasional, episodic or
unscheduled. The bills of lading failed to show any
special arrangement, but only a general provision to
the effect that the M/V"Cherokee" was a "general cargo
carrier." 14 Further, the bare fact that the vessel was
carrying a particular type of cargo for one shipper,
which appears to be purely coincidental, is not reason
enough to convert the vessel from a common to a
private carrier, especially where, as in this case, it was
shown that the vessel was also carrying passengers.
Under Article 1732 of the Civil Code the Civil Code
defines "common carriers" in the following terms:
Art. 1732. Common carriers are persons,
corporations, firms or associations engaged in the
business of carrying or transporting passengers or
goods or both, by land, water, or air for compensation,
offering their services to the public.
On to the second assigned error, we find that the M/V
"Cherokee" was not seaworthy when it embarked on its
voyage on 19 November 1984. The vessel was not
even sufficiently manned at the time. "For a vessel to
be seaworthy, it must be adequately equipped for the
voyage and manned with a sufficient number of
competent officers and crew. The failure of a common
carrier to maintain in seaworthy condition its vessel
involved in a contract of carriage is a clear breach of its
duty.
CEBU SALVAGE CORP. v. PHIL HOME ASSURANCE
3. Private Carriage
Home Insurance Co. v. American Steamship
Agencies
23 SCRA 24
FACTS:
"Consorcio Pesquero del Peru of South America"
shipped freight pre-paid at Chimbate, Peru, 21,740 jute
bags of Peruvian fish meal through SS Crowborough.

EH 405

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. It also claimed that plaintiff's claim had
prescribed under Article 366 of the Code of Commerce
stating that the claim must be made within 24 hours
from receipt of the cargo.
American Steamship Agencies denied liability by
alleging that under the provisions of the Charter party
referred to in the bills of lading, the charterer, not the
shipowner, was responsible for any loss or damage of
the cargo. Furthermore, it claimed to have exercised
due diligence in stowing the goods and that as a mere
forwarding agent, it was not responsible for losses or
damages to the cargo.
The Court of First Instance absolved the Luzon
Stevedoring Corporation from any liability and ordered
the American Steamship Agencies to pay the sum.
Hence, this petition.
ISSUE:
Is 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?
RULING:
Judgment was reversed and American Steamship
Agencies was absolved liability.

The bills of lading provided 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.
o

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

Page 13

TRANSPORTATION LAW CASE DIGESTS
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 Court of First Instance declared the contract as
contrary to Article 587 of the Code of Commerce
making the ship agent civilly liable for indemnities
suffered by third persons arising from acts or
omissions of the captain in the care of the goods
and Article 1744 of the Civil Code under which a
stipulation between the common carrier and the
shipper or owner limiting the liability of the former
for loss or destruction of the goods to a degree less
than extraordinary diligence is valid provided it be
reasonable, just and not contrary to public policy.
The release from liability in this case was held
unreasonable and contrary to the public policy on
common carriers.
o

o



City and discharge them at North Harbor, Manila. On
arrival and upon opening the three hatches containing
the shipment, nearly all the skids of tinplates and hot
rolled sheets were allegedly found to be wet and rusty.
NSC filed a complaint for damages but RTC dismissed
the complaint
Issues:
1. whether VSI contracted with NSC as a common
carrier or as a private carrier
2. Whether or not the provisions of the Civil Code
of the Philippines on common carriers pursuant
to which there exist[s] a presumption of
negligence against the common carrier in case
of loss or damage to the cargo are applicable
to a private carrier.
Held:
1.

Under American jurisprudence, a common
carrier undertaking to carry a special cargo or
chartered to a special person only, becomes a
private carrier.8 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
he 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.
NATIONAL STEEL CORPORATION vs. COURT OF
APPEALS (1997)

Facts:
NSC hired MV Vlasons I, a private vessel owned by VSI.
They entered into a contract of voyage charter hire
wherein the contract states that NSC hired VSI's vessel
to make one voyage to load steel products at Iligan

EH 405

VSI was not a common carrier but a private
carrier. It is undisputed that VSI did not offer its
services to the general public. The extent of
VSI's responsibility and liability over NSC's
cargo are determined primarily by the
stipulations in the contract of carriage or
charter party and the Code of Commerce. The
burden of proof lies on the part of NSC and not
the VSI.
Article 1732 of the Civil Code defines a
common carrier as "persons, corporations,
firms or associations engaged in the business
of carrying or transporting passengers or goods
or both, by land, water or air, for
compensation, offering their services to the
public." 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. 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. . . ."

2.

Because the MV Vlason I was a private carrier,
the shipowner's obligations are governed by
the 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.
IN A CONTRACT OF PRIVATE CARRIAGE, THE
BURDEN OF PROOF IN CASE OF ACCIDENT IS
ON THE CARRIER but the court exempts VSI
due to force majeure.
NSC must prove that the damage to its
shipment was caused by VSI's willful
negligence or failure to exercise due diligence
in making MV Vlason I seaworthy and fit for
holding, carrying and safekeeping the cargo.
The burden of proof was placed on NSC by the
parties' agreement.

Page 14

TRANSPORTATION LAW CASE DIGESTS
VALENZUELA HARDWOOD AND INDUSTRIAL
SUPPLY v. CA
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:

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)

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

EH 405

FGU INSURANCE v. G.P. SARMIENTO
Crisostomo vs. CA
G.R. No. 138334 August 25, 2003
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.Petitioner was given a 5% discount on the
amount, which included airfare, and the booking fee
was also waived because petitioner’s niece, Meriam
Menor, was respondent company’s ticketing manager.
Pursuant to said contract, Menor went to her aunt’s
residence on June 12, 1991 – a Wednesday – to deliver
petitioner’s
travel
documents
and
plane
tickets.Petitioner, in turn, gave Menor the full payment
for the package tour.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
Hongkong. To petitioner’s dismay, she discovered that

Page 15

TRANSPORTATION LAW CASE DIGESTS
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 (at the then prevailing
exchange rate of P26.60). 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, which was docketed as Civil
Case No. 92-133 and raffled to Branch 59 of the
Regional Trial Court of Makati City.
After due proceedings, the trial court rendered a
decision in favor of Estela Crisostomo.
But it was reversed by the Court of Appeals. Hence,
this petition.

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.It is thus not bound under the law to
observe extraordinary diligence in the performance of
its obligation, as petitioner claims.
Since the contract between the parties is an ordinary
one for services, the standard of care required of
respondent is that of a good father of a family under
Article 1173 of the Civil Code.This connotes reasonable
care consistent with that which an ordinarily prudent
person would have observed when confronted with a
similar situation. The test to determine whether
negligence attended the performance of an obligation
is: did the defendant in doing the alleged negligent act
use that reasonable care and caution which an
ordinarily prudent person would have used in the same
situation?If not, then he is guilty of negligence.

ISSUE:
Is the Caravan Travel and
reimbursement and damages?

Tours

liable

for

HELD: Petition DENIED.
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.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,
offering their services to the public.
It is obvious from the above definition that respondent
is not an entity engaged in the business of transporting
either passengers or goods and is therefore, neither a
private nor a common carrier. Respondent did not
undertake to transport 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

EH 405

we

do not agree with the finding of the lower court
that Menor’s negligence concurred with the negligence
of petitioner and resultantly caused damage to the
latter. Contrary to petitioner’s claim, the evidence on
record shows that respondent exercised due diligence
in performing its obligations under the contract and
followed standard procedure in rendering its services to
petitioner. As correctly observed by the lower court, the
plane ticket. issued to petitioner clearly reflected the
departure date and time, contrary to petitioner’s
contention. The travel documents, consisting of the
tour itinerary, vouchers and instructions, were likewise
delivered to petitioner two days prior to the trip.
Respondent also properly booked petitioner for the
tour, prepared the necessary documents and procured
the plane tickets. It arranged petitioner’s hotel
accommodation as well as food, land transfers and
sightseeing excursions, in accordance with its avowed
undertaking. Therefore, it is clear that respondent
performed its prestation under the contract as well as
everything else that was essential to book petitioner
for the tour.
Hence, petitioner cannot recover and must bear her
own damage.

4. Distinction from towage, arrester and
stevedoring
5. Governing Laws
6. Registered Owner Rule and Kabit System
C. OBLIGATIONS OF PARTIES AND DEFENSES
1. Duties of Common Carrier

Page 16

TRANSPORTATION LAW CASE DIGESTS
COMPAÑIA MARITIMA v. INSURANCE COMPANY OF
NORTH AMERICA
G.R. No. L-18965 October 30, 1964
FACTS:
Macleod and Company of the Philippines contracted
the services of the Compañia Maritima, a shipping
corporation, for the shipment of 2,645 bales of hemp
from the former's Sasa private pier at Davao City to
Manila and for their subsequent transhipment to
Boston, Massachusetts, U.S.A. on board the S.S. Steel
Navigator. This oral contract was later on confirmed by
a formal and written booking issued by Macleod's
branch office in Sasa and handcarried to Compañia
Maritima's branch office in Davao in compliance with
which the latter sent to Macleod's private wharf on
which the loading of the hemp was completed on
October 29, 1952. These two lighters were manned
each by a patron and an assistant patron. The patrons
of both barges issued the corresponding carrier's
receipts.
During the night of October 29, 1952, or at the early
hours of October 30, LCT No. 1025 sank, resulting in
the damage or loss of 1,162 bales of hemp loaded
therein. The total damages totaled to P60,421.02.
Since Macleod’s products were insured by Insurance
Company of North America, it executed a subrogation
contract where Macleod assigned all rights to the
Insurance Company of North America to the damaged
and insured cargo. Unable to collect from Compania
Maritima, Company of North America filed this case in
court. The trial court ordered Compania Maritima to
pay Macleod the damages it incurred due to its sinking.
The CA affirmed the decision of the lower court
prompting the petitioner to elevate the case to the
Supreme Court.
ISSUE:
(1) Was there a contract of carriage between the
carrier and the shipper even if the loss occurred when
the hemp was loaded on a barge owned by the carrier
which was loaded free of charge and was not actually
loaded on the S.S. Bowline Knot which would carry the
hemp to Manila and no bill of lading was issued
therefore?
HELD:
1. This issue should be answered in the affirmative. The
oral contract was later confirmed by a formal and
written booking issued by the shipper's branch office,
Davao City, in virtue of which the carrier sent two of its
lighters to undertake the service. It also appears that
the patrons of said lighters were employees of the
carrier with due authority to undertake the
transportation and to sign the documents that may be
necessary therefor.
The fact that the carrier sent its lighters free of charge
to take the hemp from Macleod's wharf at Sasa
preparatory to its loading onto the ship Bowline Knot
does not in any way impair the contract of carriage
already entered into between the carrier and the
shipper, for that preparatory step is but part and parcel
of said contract of carriage. In other words, here we

EH 405

have
a
complete
contract
of
carriage
the
consummation of which has already begun: the shipper
delivering the cargo to the carrier, and the latter taking
possession thereof by placing it on a lighter manned by
its authorized employees, under which Macleod
became entitled to the privilege secured to him by law
for its safe transportation and delivery, and the carrier
to the full payment of its freight upon completion of the
voyage.
The 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, is a good
delivery and binds the vessel receiving the freight, the
liability commencing at the time of delivery to the
lighter. ... and, similarly, where there is a contract to
carry goods from one port to another, and they cannot
be loaded directly on the vessel and lighters are sent
by the vessel to bring the goods to it, the lighters are
for the time its substitutes, so that the bill of landing is
applicable to the goods as soon as they are placed on
the lighters. (80 C.J.S., p. 901, emphasis supplied)
The liability of the carrier as common carrier begins
with the actual delivery of the goods for transportation,
and not merely with the formal execution of a receipt
or bill of lading; the issuance of a bill of lading is not
necessary to complete delivery and acceptance. 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.
SERVANDO vs. PHILIPPINE STEAM NAVIGATION
CO.
FACTS:
On November 6, 1963, appellees Clara Uy Bico and
Amparo Servando loaded on board the appellant's
vessel, FS-176, for carriage from Manila to Pulupandan,
Negros Occidental. In the bills of lading issued for the
cargoes in question, the parties agreed to limit the
responsibility of the carrier for the loss or damage that
may be caused to the shipment by inserting therein
the following stipulation:
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. At about 2:00 in
the afternoon of the same day, said warehouse was
razed by a fire of unknown origin, destroying appellees'
cargoes. Before the fire, however, appellee Uy Bico was
able to take delivery of 907 cavans of rice 2 Appellees'

Page 17

TRANSPORTATION LAW CASE DIGESTS
claims for the value of said goods were rejected by the
appellant
SC RULING
We sustain the validity of the above stipulation; there
is nothing therein that is contrary to law, morals or
public policy.
Besides, the agreement contained in the above quoted
Clause 14 is a mere iteration of the basic principle of
law written in Article 1 1 7 4 of the Civil Code:
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.
Thus, where fortuitous event or force majeure is the
immediate and proximate cause of the loss, the obligor
is exempt from liability for non-performance. The
Partidas, 4 the antecedent of Article 1174 of the Civil
Code, defines 'caso fortuito' as 'an event that takes
place by accident and could not have been foreseen.
Examples of this are destruction of houses, unexpected
fire, shipwreck, violence of robbers.'
In its dissertation of the phrase 'caso fortuito' the
Enciclopedia Juridicada Espanola 5 says: "In a legal
sense and, consequently, also in relation to contracts,
a '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.
There is nothing in the record to show that appellant
carrier ,incurred in delay in the performance of its
obligation. It appears that appellant had not only
notified appellees of the arrival of their shipment, but
had demanded that the same be withdrawn. In fact,
pursuant to such demand, appellee Uy Bico had taken
delivery of 907 cavans of rice before the burning of the
warehouse.
Nor can the appellant or its employees be charged with
negligence. The storage of the goods in the Customs
warehouse pending withdrawal thereof by the
appellees was undoubtedly made with their knowledge
and consent. Since the warehouse belonged to and was
maintained by the government, it would be unfair to
impute negligence to the appellant, the latter having
no control whatsoever over the same.
The lower court in its decision relied on the ruling laid
down in Yu Biao Sontua vs. Ossorio 6, where this Court
held the defendant liable for damages arising from a

EH 405

fire caused by the negligence of the defendant's
employees while loading cases of gasoline and
petroleon products. But unlike in the said case, there is
not a shred of proof in the present case that the cause
of the fire that broke out in the Custom's warehouse
was in any way attributable to the negligence of the
appellant or its employees. Under the circumstances,
the appellant is plainly not responsible
MAERSK LINE vs. CA
FACTS:
Petitioner Maersk Line is engaged in the transportation
of goods by sea, doing business in the Philippines
through its general agent Compania General de
Tabacos de Filipinas while private respondent Efren
Castillo, on the other hand, is the proprietor of Ethegal
Laboratories, a firm engaged in the manutacture of
pharmaceutical products.
Private respondent ordered from Eli Lilly. Inc. (ELI) of
Puerto Rico through its agent in the Philippines, Elanco
Products, 600,000 empty gelatin capsules for the
manufacture of his pharmaceutical products. The
shipper ELI advised Castillo as consignee that the
gelatin capsules contained in 6 drums were already
shipped on board MV "Anders Maerskline for shipment
to the Philippines via Oakland, California, which
according to the memo sent, was to arrive on April 3,
1977.
For reasons unknown, the cargo of capsules were
mishipped and diverted to Richmond, Virginia, USA and
then transported back Oakland, Califorilia causing it to
arrive 2 months after it was specified in the memo.
Castillo refused to receive the delivery of the goods
due to the delay. Castillo filed before the rescission of
the contract and damages against ELI.
ELI’s argument was that it the subject shipment was
transported in accordance with the provisions of the
covering bill of lading and that its liability under the
law on transportation of good attaches only in case of
loss, destruction or deterioration of the goods as
provided for in Article 1734 of Civil Code and ELI filed a
croos-claim against Maerskline. issues having been
joined, private respondent moved for the dismissal of
the complaint against Eli Lilly, Inc.on the ground that
the evidence on record shows that the delay in the
delivery of the shipment was attributable solely to
petitioner.
RTC: ruled in favor of Castillo on the ground that breach
in the performance of their obligation consisting of
their negligence to deliver the goods on time.
CA: Affirmed the Decision of the RTC.
ISSUE:
W/N maerskline may be held liable for the delay
Ruling:
The SC, in their ruling made reference to the
stipulations in the bill of lading. A provision in said bill
of lading states that “The Carrier does not undertake

Page 18

TRANSPORTATION LAW CASE DIGESTS
that the goods shall arive at the port of discharge or
the place of delivery at any particular time or to meet
any particular market or use and save as is provided in
clause 4 the Carrier shall in no circumstances be liable
for any direct, indirect or consequential loss or damage
caused by delay”. According to the SC, the aforequoted
provision at the back of the bill of lading, in fine print,
is a contract of adhesion. Generally, contracts of
adhesion are considered void since almost all the
provisions of these types of contracts are prepared and
drafted only by one party, usually the carrier.
Nonetheless, settled is the rule that bills of lading are
contracts not entirely prohibited. The questioned
provision in the subject bill of lading has the effect of
practically leaving the date of arrival of the subject
shipment on the sole determination and will of the
carrier.
While it is true that common carriers are not obligated
by law to carry and to deliver merchandise, and
persons are not vested with the right to prompt
delivery, unless such common carriers previously
assume the obligation to deliver at a given date or time
(Mendoza v. Philippine Air Lines, Inc., 90 Phil. 836
[1952]), delivery of shipment or cargo should at least
be made within a reasonable time.
In the case before us, we find that a delay in the
delivery of the goods spanning a period of two (2)
months and seven (7) days falls was beyond the realm
of reasonableness. It was due to petitioner’s
negligence that the goods were mishipped to
Richmond, Virginia.

MACAM vs. CA
[G.R. No. 125524. August 25, 1999]
FACTS:
On 4 April 1989 petitioner Macam shipped on board the
vessel Nen Jiang, owned and operated by respondent
China Ocean Shipping Co., through local agent
respondent WALLEM, 3,500 boxes of watermelons and
1,611 boxes of fresh mangoes; the two sets of fruits
were covered by two bills of lading and were exported
through their respective Letters of Credit both issued
by Pakistan Bank. The shipment was bound for
Hongkong with PAKISTAN BANK as consignee and Great
Prospect Company of Kowloon, Hongkong (GPC) as
notify party. On 6 April 1989, per letter of credit
requirement, copies of the bills of lading and
commercial invoices were submitted to petitioner's
depository bank, Consolidated Banking Corporation
(SOLIDBANK), which paid petitioner in advance the
total value of the shipment of US$20,223.46.
Upon arrival in Hongkong, the shipment was (1)
delivered by respondent WALLEM directly to GPC (the
buyer-importer), not to PAKISTAN BANK, (2) and
without the required bill of lading having been
surrendered.
Subsequently, GPC failed to pay
PAKISTAN BANK such that the latter, still in possession
of the original bills of lading, refused to pay petitioner
through SOLIDBANK. Since SOLIDBANK already prepaid petitioner the value of the shipment, it demanded
payment from respondent WALLEM through five (5)
letters but was refused. Petitioner was thus allegedly

EH 405

constrained to return the amount involved to
SOLIDBANK; petitioner then demanded payment from
respondent WALLEM in writing but to no avail.
On 25 September 1991 petitioner sought collection of
the value of the shipment of US$20,223.46 or its
equivalent of P546,033.42 from respondents before the
Regional Trial Court of Manila, based on delivery of the
shipment to GPC without presentation of the bills of
lading and bank guarantee.
On 14 May 1993, the trial court favored Pet, ordering
China Ocean Shipping and Wallem to pay, jointly and
severally. The Court of Appeals appreciated the
evidence in a different manner; it set aside the
decision of the trial court and dismissed the complaint
together with the counterclaims. Hence, the petition for
review.
ISSUES:
(1) Duration and extent of a common carrier’s
extraordinary responsibility. WON delivery to
GPC was proper.
(2) WON respondents are liable to petitioner for
releasing the goods to GPC without the bills of
lading or bank guarantee.
RULING:
1.) YES.
Art. 1736 of the NCC. The extraordinary
responsibility of the common carriers 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, without
prejudice to the provisions of article 1738.
We emphasize that the extraordinary responsibility of
the common carriers lasts until actual or constructive
delivery of the cargoes to the consignee or to the
person who has a right to receive them. PAKISTAN
BANK was indicated in the bills of lading as consignee
whereas GPC was the notify party. However, in the
export invoices GPC was clearly named as
buyer/importer. Petitioner also referred to GPC as such
in his demand letter to respondent WALLEM and in his
complaint before the trial court.
This premise draws us to conclude that the
delivery of the cargoes to GPC as buyer/importer
which, conformably with Art. 1736 had, other than the
consignee, the right to receive them was proper.
2.) NO.
Contrary to petitioner’s claims, the Court
agrees with respondents that it was his (Macam’s)
practice to ask the shipping lines to immediately
release shipment of perishable goods through
telephone calls by himself or his “people.” He no
longer required presentation of a bill of lading nor of a
bank guarantee as a condition to releasing the goods
in case he was already fully paid. Thus, taking into
account that subject shipment consisted of perishable
goods and SOLIDBANK pre-paid the full amount of the
value thereof, it is not hard to believe the claim of
respondent WALLEM that petitioner indeed requested

Page 19

TRANSPORTATION LAW CASE DIGESTS
the release of the goods to GPC without presentation of
the bills of lading and bank guarantee.
Respondents submitted in evidence a telex dated 5
April 1989 as basis for delivering the cargoes to GPC
without the bills of lading and bank guarantee. The
telex instructed delivery of various shipments to the
respective consignees without need of presenting the
bill of lading and bank guarantee per the respective
shipper’s request since “for prepaid shipt ofrt charges
already fully paid” (sic).
It has been the practice of petitioner to request the
shipping lines to immediately release perishable
cargoes such as watermelons and fresh mangoes
through telephone calls by himself or his “people.” In
transactions covered by a letter of credit, bank
guarantee is normally required by the shipping lines
prior to releasing the goods. But for buyers using
telegraphic transfers, petitioner dispenses with the
bank guarantee because the goods are already fully
paid. In his several years of business relationship with
GPC and respondents, there was not a single instance
when the bill of lading was first presented before the
release of the cargoes.
In view of petitioner’s utter failure to establish the
liability of respondents over the cargoes, no reversible
error was committed by respondent court in ruling
against him.
WHEREFORE, the petition is DENIED.

DELSAN TRANSPORT LINES, INC vs. AMERICAN
HOME ASSURANCE CORPORATION
G.R. No. 149019, August 15, 2006
FACTS:
Delsan is a domestic corporation which owns and
operates the vessel MT Larusan. On the other hand,
respondent American Home Assurance Corporation
(AHAC for brevity) is a foreign insurance company duly.
It is engaged, among others, in insuring cargoes for
transportation within the Philippines.

W.O.N. Delsan is liable based on Article 1734 of the
NCC and W.O.N. the rule on contributory negligence
should be applied against Caltex.
HELD:
Petition is DENIED. CA is affirmed.
Art. 1734. Common carriers are responsible for the
loss, destruction, or deterioration of the goods, unless
the same is due to any of the following causes only:
1) Flood storm, earthquake, lightning, or other natural
disaster or calamity;
2) Act of the public enemy in war, whether
international or civil;
3) Act or omission of the shipper or owner of the goods;
4) The character of the goods or defects in the packing
or in the containers;
5) Order or act of competent public authority.
Delsan failed to prove its claim that there was a
contributory negligence on the part of the owner of the
goods – Caltex. Dlesan, 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. 7 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.
2. Defenses of Common Carrier
 Fire as Cause
DSR-SENATOR LINES AND C.F. SHARP AND
COMPANY, INC. vs. FEDERAL PHOENIX
ASSURANCE CO., INC.
G.R. No. 135377. October 7, 2003

Unloading operations commenced, discharging of the
diesel oil. 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, ultimately caused the diesel
oil to spill into the sea.

Facts:

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. AHAC, as
Caltex’s subrogee, instituted Civil Case against Delsan.
caused by the spillage. It likewise prayed that it be
indemnified for damages suffered

Federal Phoenix Assurance Company, Inc. (Federal
Phoenix Assurance) insured the cargo against all risks
in the amount of P941,429.61.

Delsan insists that the rule on contributory negligence
against Caltex, the shipper-owner of the cargo, and the
diesel oil was already completely delivered to Caltex.

Berde Plants, Inc. (Berde Plants) delivered 632 units of
artificial trees to C.F. Sharp and Company, Inc. (C.F.
Sharp, for transportation and delivery to the
consignee. The cargo was loaded in M/S "Arabian
Senator."

M/S "Arabian Senator" left the Manila South Harbor for
Saudi Arabia with the cargo on board. When the vessel
arrived in Khor Fakkan Port, the cargo was reloaded on
board DSR-Senator Lines' feeder vessel, bound for Port
Dammam, Saudi Arabia. However, while in transit, the
vessel and all its cargo caught fire.

ISSUE:

EH 405

Page 20

TRANSPORTATION LAW CASE DIGESTS
Consequently, Federal Phoenix Assurance paid Berde
Plants P941,429.61 corresponding to the amount of
insurance for the cargo. In turn Berde Plants executed
in its favor a "Subrogation Receipt" Thus, Federal
Phoenix Assurance filed a complaint for damages
against DSR-Senator Lines and C.F. Sharp
RTC rendered a Decision in favor of Federal Phoenix
Assurance
On appeal, the Court of Appeals rendered a Decision
affirming the RTC Decision
Issue:
WON the liability was extinguished when the vessel
carrying the cargo was gutted by fire
Ruling:
Article 1734 of the Civil Code provides:
"Art. 1734.
Common carriers are responsible for
the loss, destruction, or deterioration of the goods,
unless the same is due to any of the following causes
only:
(1)
Flood, storm, earthquake, lightning, or other
natural disaster or calamity;
(2)
Act of the public enemy in war, whether
international or civil;
(3)
Act or omission of the shipper or owner of the
goods;
(4)
The character of the goods or defects in the
packing or in the containers;
(5)
Order or act of competent public authority."
Fire is not one of those enumerated under the above
provision which exempts a carrier from liability for loss
or destruction of the cargo.
Even if fire were to be considered a natural disaster
within the purview of Article 1734, it is required under
Article 1739
of the same Code that the natural
disaster must have been the proximate and only cause
of the loss, and that the carrier has exercised due
diligence to prevent or minimize the loss before, during
or after the occurrence of the disaster.
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 1739. In those cases where the presumption is
applied, the common carrier must prove that it
exercised extraordinary diligence in order to overcome
the presumption.
Respondent Federal Phoenix Assurance raised the
presumption of negligence against petitioners.
However, they failed to overcome it by sufficient proof
of extraordinary diligence.
Petition is DENIED


EH 405

Shore Pass Requirement

JAPAN AIRLINES vs. ASUNCION
FACTS:
Respondents Michael and Jeanette Asuncion left Manila
on board Japan Airlines (JAL) bound for LA. Their
itinerary included a stop-over in Narita and an
overnight stay at Hotel Nikko Narita. Upon arrival at
Narita, JAL endorsed their applications for shore pass
and directed them to the Japanese immigration official.
A shore pass is required of a foreigner aboard a vessel
or aircraft who desires to stay in the neighborhood of
the port of call for not more than 72 hours.
During their interview, the Japanese immigration
official noted that Michael appeared shorter than his
height as indicated in his passport. Because of this
inconsistency, respondents were denied shore pass
entries and were brought instead to the Narita Airport
Rest House where they were billeted overnight.
Respondents were charged US$400.00 each for their
accommodation, security service and meals.
Respondents filed a complaint for damages claiming
that JAL did not fully apprise them of their travel
requirements and that they were rudely and forcibly
detained at Narita Airport.
JAL denied the allegations of respondents.
It
maintained that the refusal of the Japanese
immigration authorities to issue shore passes to
respondents is an act of state which JAL cannot
interfere with or prevail upon. Consequently, it cannot
impose upon the immigration authorities that
respondents be billeted at Hotel Nikko instead of the
airport resthouse.
ISSUE:
WON JAL is guilty of breach of contract.
HELD:
Under Article 1755 of the Civil Code, a common carrier
such as JAL is bound to carry its passengers safely as
far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with due
regard for all the circumstances. When an airline
issues a ticket to a passenger, confirmed for a
particular flight on a certain date, a contract of
carriage arises. The passenger has every right to
expect that he be transported on that flight and on that
date and it becomes the carrier’s obligation to carry
him and his luggage safely to the agreed destination. If
the passenger is not so transported or if in the process
of transporting he dies or is injured, the carrier may be
held liable for a breach of contract of carriage.
We find that JAL did not breach its contract of carriage
with respondents. It may be true that JAL has the duty
to inspect whether its passengers have the necessary
travel documents, however, such duty does not extend
to checking the veracity of every entry in these
documents. JAL could not vouch for the authenticity of
a passport and the correctness of the entries therein.
The power to admit or not an alien into the country is a

Page 21

TRANSPORTATION LAW CASE DIGESTS
sovereign act which cannot be interfered with even by
JAL. This is not within the ambit of the contract of
carriage entered into by JAL and herein respondents.
As such, JAL should not be faulted for the denial of
respondents’ shore pass applications.


Exercise of Extraordinary Diligence,
Inherent Character of Goods and
Inadequacy of Packaging

PLANTERS PRODUCTS, INC. VS. COURT OF
APPEALS,
SORIAMONT STEAMSHIP AGENCIES AND KYOSEI
KISEN KABUSHIKI KAISHA
G.R. No. 101503 September 15, 1993
FACTS:
Planters Products, Inc. (PPI), purchased from Mitsubishi
International Corporation (MITSUBISHI) of New York,
U.S.A., 9,329.7069 metric tons (M/T) of Urea 46%
fertilizer which the latter shipped in bulk on 16 June
1974 aboard the cargo vessel M/V "Sun Plum" owned
by private respondent Kyosei Kisen Kabushiki Kaisha
(KKKK) from Kenai, Alaska, U.S.A., to Poro Point, San
Fernando, La Union, Philippines, as evidenced by Bill of
Lading No. KP-1 signed by the master of the vessel and
issued on the date of departure.
Prior to its voyage, a time charter-party on the vessel
M/V "Sun Plum" pursuant to the Uniform General
Charter was entered into between Mitsubishi as
shipper/charterer and KKKK as shipowner, in Tokyo,
Japan.
Before loading the fertilizer aboard the vessel, four (4)
of her holds were all presumably inspected by the
charterer's representative and found fit to take a load
of urea in bulk pursuant to par. 16 of the charter-party .
After the Urea fertilizer was loaded in bulk by
stevedores hired by and under the supervision of the
shipper, the steel hatches were closed with heavy iron
lids, covered with three (3) layers of tarpaulin, then
tied with steel bonds. The hatches remained closed
and tightly sealed throughout the entire voyage.
Petitioner unloaded the cargo from the holds into its
steelbodied dump trucks which were parked alongside
the berth, using metal scoops attached to the ship,
pursuant to the terms and conditions of the charterpartly (which provided for an F.I.O.S. clause). However,
the hatches remained open throughout the duration of
the discharge. Each time a dump truck was filled up, its
load of Urea was covered with tarpaulin. 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.
It took eleven (11) days for PPI to unload the cargo. A
private
marine
and
cargo
surveyor,
Cargo
Superintendents Company Inc. (CSCI), was hired by PPI
to determine the "outturn" of the cargo shipped, by
taking draft readings of the vessel prior to and after
discharge. The survey report submitted by CSCI to the
consignee (PPI) revealed a shortage in the cargo of
106.726 M/T and that a portion of the Urea fertilizer

EH 405

approximating 18 M/T was contaminated with dirt,
sand and rust and rendered unfit for commerce.
Consequently, PPI sent a claim letter to Soriamont
Steamship Agencies (SSA), the resident agent of the
carrier, KKKK, 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. Respondent SSA was not able to respond to
this consignee’s claim for payment because according
to them, they only received a request for shortlanded
certificate and not a formal claim.
Hence, PPI filed an action for damages with the Court
of First Instance of Manila. The defendant carrier
argued that the strict public policy governing common
carriers does not apply to them because they have
become private carriers by reason of the provisions of
the charter-party. The court a quo however sustained
the claim of the plaintiff against the defendant carrier
for the value of the goods lost or damaged.
On appeal, respondent Court of Appeals reversed the
lower court and absolved the carrier from liability for
the value of the cargo that was lost or
damaged. Relying on the 1968 case of Home Insurance
Co.v. American Steamship Agencies, Inc., the appellate
court ruled that the cargo vessel M/V "Sun Plum"
owned by private respondent KKKK was a private
carrier and not a common carrier by reason of the time
charterer-party. Accordingly, the Civil Code provisions
on common carriers which set forth a presumption of
negligence do not find application in the case at bar.
ISSUE: Whether a common carrier becomes a private
carrier by reason of a charter-party.
HELD: The assailed decision of the Court of Appeals,
which reversed the trial court, is affirmed.
A "charter-party" is defined as a contract by which an
entire ship, or some principal part thereof, is let by the
owner to another person for a specified time or use; a
contract of affreightment by which the owner of a ship
or other vessel lets the whole or a part of her to a
merchant or other person for the conveyance of goods,
on a particular voyage, in consideration of the payment
of freight; Charter parties are of two types: (a) contract
of affreightment which involves the use of shipping
space on vessels leased by the owner in part or as a
whole, to carry goods for others; and, (b) charter by
demise or bareboat charter, by the terms of which the
whole vessel is let to the charterer with a transfer to
him of its entire command and possession and
consequent control over its navigation, including the
master and the crew, who are his servants. Contract of
affreightment may either be time charter, wherein the
vessel is leased to the charterer for a fixed period of
time, or voyage charter, wherein the ship is leased for
a single voyage. In both cases, the charter-party
provides for the hire of vessel only, either for a
determinate period of time or for a single or
consecutive voyage, the shipowner to supply the ship's
stores, pay for the wages of the master and the crew,
and defray the expenses for the maintenance of the
ship.

Page 22

TRANSPORTATION LAW CASE DIGESTS
Upon the other hand, the term "common or public
carrier" is defined in Art. 1732 of the Civil Code. The
definition extends to carriers either by land, air or
water which hold themselves out as ready to engage in
carrying goods or transporting passengers or both for
compensation as a public employment and not as a
casual occupation. The distinction between a "common
or public carrier" and a "private or special carrier" lies
in the character of the business, such that if the
undertaking is a single transaction, not a part of the
general business or occupation, although involving the
carriage of goods for a fee, the person or corporation
offering such service is a private carrier.
It is not disputed that respondent carrier, in the
ordinary course of business, operates as a common
carrier, transporting goods indiscriminately for all
persons. When petitioner chartered the vessel M/V
"Sun Plum", the ship captain, its officers and
compliment were under the employ of the shipowner
and therefore continued to be under its direct
supervision and control. Hardly then can we charge the
charterer, a stranger to the crew and to the ship, with
the duty of caring for his cargo when the charterer did
not have any control of the means in doing so. This is
evident in the present case considering that the
steering of the ship, the manning of the decks, the
determination of the course of the voyage and other
technical incidents of maritime navigation were all
consigned to the officers and crew who were screened,
chosen and hired by the shipowner.
It is therefore imperative that a public carrier shall
remain as such, notwithstanding the charter of the
whole or portion of a vessel by one or more persons,
provided the charter is limited to the ship only, as in
the case of a time-charter or voyage-charter. It is only
when the charter includes both the vessel and its crew,
as in a bareboat or demise that a common carrier
becomes private, at least insofar as the particular
voyage covering the charter-party is concerned.
Indubitably, a shipowner in a time or voyage charter
retains possession and control of the ship, although her
holds may, for the moment, be the property of the
charterer.

Thereafter, the burden of proof shifts to respondent to
prove that he has exercised extraordinary diligence
required by law or that the loss, damage or
deterioration of the cargo was due to fortuitous event,
or some other circumstances inconsistent with its
liability.
To our mind, respondent carrier has
sufficiently overcome, by clear and convincing proof,
the prima facie presumption of negligence. Verily, the
presumption of negligence on the part of the
respondent carrier has been efficaciously overcome by
the showing of extraordinary zeal and assiduity
exercised by the carrier in the care of the cargo. The
period during which private respondent was to observe
the degree of diligence required of it as a public carrier
began from the time the cargo was unconditionally
placed in its charge after the vessel's holds were duly
inspected and passed scrutiny by the shipper, up to
and until the vessel reached its destination and its hull
was reexamined by the consignee, but prior to
unloading.
Article 1734 of the New Civil Code provides that
common carriers are not responsible for the loss,
destruction or deterioration of the goods if caused by
the charterer of the goods or defects in the packaging
or in the containers. The Code of Commerce also
provides that all losses and deterioration which the
goods may suffer during the transportation by reason
of fortuitous event, force majeure, or the inherent
defect of the goods, shall be for the account and risk of
the shipper, and that proof of these accidents is
incumbent upon the carrier. The carrier, nonetheless,
shall be liable for the loss and damage resulting from
the preceding causes if it is proved, as against him,
that they arose through his negligence or by reason of
his having failed to take the precautions which usage
has established among careful persons.
Thus, the petition is dismissed.



Exercise of Extraordinary Diligence and
Doctrine of Last Clear Chance
Fortuitous Event

Respondent carrier's heavy reliance on the case
of Home
Insurance
Co. v. American
Steamship
Agencies, supra, is misplaced for the reason that the
meat of the controversy therein was the validity of a
stipulation in the charter-party exempting the
shipowners from liability for loss due to the negligence
of its agent, and not the effects of a special charter on
common carriers. At any rate, the rule in the United
States that a ship chartered by a single shipper to
carry special cargo is not a common carrier, does not
find application in our jurisdiction, for we have
observed that the growing concern for safety in the
transportation of passengers and /or carriage of goods
by sea requires a more exacting interpretation of
admiralty laws, more particularly, the rules governing
common carriers.
In an action for recovery of damages against a
common carrier on the goods shipped, the shipper or
consignee should first prove the fact of shipment and
its consequent loss or damage while the same was in
the possession, actual or constructive, of the carrier.

EH 405

Page 23