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I.

COURSE INTRODUCTION and perfected by mere


II. GENERAL CONSIDERATIONS consent
1. DEFINITION OF CONTRACT OF
* AIRCRAFT – perfected even
TRANSPORTATION
person obligates himself to without issuance of

transport persons or property from ticket as long as there

one place to another for a was already meeting of

consideration. minds with respect to the subject matter and

A person who obligates consideration. If a passenger is carried gratuitously

himself to transport goods or or under a reduced fare, he is still considered as a

passengers may be a common passenger. However, a stipulation limiting the

carrier or a private carrier. common carrier’s liability for negligence is valid.

2. PARTIES  Contract of Carriage – real contract; not until


2 KINDS: the facilities of the carrier are actually used
1. Carriage of Passengers can the carrier be said to have assumed the
2. Carriage of Goods obligation of the carrier; perfected by actual
CARRIAGE OF PASSENGERS use.
Parties: common carrier & * AIRCRAFT – perfected if it was established that
passenger (carried the
gratuitously or not) passenger had checked in at the departure counter,
Passenger – one who travels passed through customs and immigration, boarded
in a public conveyance by the shuttle bus and proceeded to the ramp of the
virtue of contract, express or aircraft and baggage already loaded to the aircraft.
implied, with the carrier as to * Public Utility Bus or Jeepneys or Street Cars –
the payment of fare or that once it stops it is in effect making a continuous
which is accepted as an offer to riders; perfected when passenger is already
equivalent thereof. attempting to board the vehicle
3. PERFECTION * TRAINS – perfected when a person:
Time of Perfection: a. purchased a ticket/ possess sufficient fare with
2 types of contracts of which to pay for his passage
carriage of PASSENGERS: b. presented himself at the proper place and in a
 Contract to carry proper manner to be transported
(agreement to carry the c. has a bona fide intention to use facilities of the
passenger at some future carrier
date) – consensual contract
4. CONCEPT OF COMMON CARRIER carrier that he has held out to the general
public as his business or occupation. If the
Common carriers (CC) (1732) undertaking is a single transaction, not part of
– persons, corporations, firms or the general business or occupation engaged in
associations engaged in the business , as advertised or held out to the general
of carrying or transporting public, he individual or entity is private, not
passengers or goods or both, by land, acommon carrier. (Case: Sps. Perena v. Sps.
water, or air, for compensation, Nicolas)
offering their services to the public.
(NOT the means of Characteristics of Common carriers (CC):
transportation) - No distinction between one whose
– one that holds itself out as ready to principal business is the
engage in the transportation of goods transportation of persons/goods and
for hire as a public employment and one who does such as an ancillary
not as a casual occupation. business (sideline)
- Tests for determining WON a party - No distinction between regular or
is a common carrier of goods: scheduled basis and one offering such
o He must be engaged in the service on an occasional, episodic or
business of carrying goods for unscheduled business
others as a public employment, - Still a CC even if services offered to a
and must hold himself out as limited
ready to engage in the
transportation of goods for 5. CASES
persons generally as a business
and not as a casual occupation. i. Steamship vs CA, G.R No. 122494, Aug 8,
o He must undertake to carry 1998
good of the kind to which his
business is confined. Doctrine: Contracting Parties (Transportation)
o He must undertake to carry by
FACTS:
the method by which his
business is conducted and over
his established roads. Hernandez Trading Co., Inc. (Hernandez)
o Transportation must be for hire.
(Case: First Philippine imported 3 crates of bus spare parts (MARCO
Industrial Corp. vs. CA) C/No. 12, MARCO C/No. 13 and MARCO C/No.
- True Tests of Common Carrier.
14), from Maruman Trading Company, Ltd.
→ Is the carriage of passengers or
goods, provided it (Maruman), a foreign corporation based in Japan.
has space, for all who opt to avail The crates (covered by Bill of Lading No.
themselves of its
NGO53MN) were shipped on board
transportation service for a fee.
(Case: National Steel v. CA) “ADELFAEVERETTE,” a vessel owned by Everett
→ Is not the quantity or extent of the business Orient Lines
actually transacted, or the number or the
number or character of conveyances used in Upon arrival at the port of Manila, it was
the activity, but whether the undertaking is a discovered that the crate marked MARCO C/No. 14
part of the activity engaged in by the
was missing
Hernandez made a formal claim for Y1,552,500.00, ART. 1750. A contract fixing the sum that may be
as shown in an Invoice No. MTM-941, dated recovered by the owner or shipper for the loss,
November 14, 1991 destruction, or deterioration of the goods is valid, if
Everett Streamship Corp. offered to pay only it is reasonable and just under the circumstances,
Y100,000.00 the maximum amount stipulated under and has been freely and fairly agreed upon.
Clause 18 of the covering bill of lading Maruman Trading, had the option to declare a
Hernandez rejected the offer and thereafter higher valuation if the value of its cargo was higher
instituted a suit for collection than the limited liability of the carrier. Considering
Trial Court: in favor of Hernandez that the shipper did not declare a higher valuation,
CA: Affirmed but deleted the award of it had itself to blame for not complying with the
attorney’s fees stipulations.
The trial court’s ratiocination that private
ISSUE: respondent could not have “fairly and freely”
 W/N the limited liability clause in the Bill of agreed to the limited liability clause in the bill of
Lading is valid lading because the said conditions were printed in
 W/N Hernandez as consignee, who is not a small letters does not make the bill of lading invalid.
signatory to the bill of lading is bound by the contracts of adhesion are valid and binding
stipulations thereof Greater vigilance, however, is required of the
courts when dealing with contracts of adhesion in
HELD: that the said contracts must be carefully scrutinized
“in order to shield the unwary (or weaker party)
1. YES. from deceptive schemes contained in ready-made
A stipulation in the bill of lading limiting the covenant
common carrier’s liability for loss or destruction of a Article 24 of the Civil Code which mandates that
cargo to a certain sum, unless the shipper or owner “(i)n all contractual, property or other relations,
declares a greater value, is sanctioned by law, when one of the parties is at a disadvantage on
particularly Articles 1749 and 1750 of the Civil Code account of his moral dependence, ignorance,
which provide: indigence, mental weakness, tender age or other
handicap, the courts must be vigilant for his
ART. 1749. A stipulation that the common carrier’s protection
liability is limited to the value of the goods Maruman Trading, we assume, has been
appearing in the bill of lading, unless the shipper or extensively engaged in the trading business. It
owner declares a greater value, is binding. cannot be said to be ignorant of the business
transactions it entered into involving the shipment
of its goods to its customers. The shipper could not
have known or should know the stipulations in the ii. Dangwa Transpo vs CA (22 SCRA 574)
bill of lading and there it should have declared a
Doctrine: Actionable Document (Transportation)
higher valuation of the goods shipped. Moreover,
Laws Applicable: Art. 1733, Art. 1755
Maruman Trading has not been heard to complain
that it has been deceived or rushed into agreeing to
FACTS:
ship the cargo in petitioner’s vessel. In fact, it was
May 13, 1985: Theodore M. Lardizabal was driving
not even impleaded in this case.
a passenger bus belonging to Dangwa
Transportation Co. Inc. (Dangwa)
2. YES.
The bus was at full stop bet. Bunkhouses 53
the right of a party in the same situation as
and 54 when Pedro alighted. Pedro Cudiamat fell
Hernandez, to recover for loss of a shipment
from the platform of the bus when it suddenly
consigned to him under a bill of lading drawn up
accelerated forward. Pedro was ran over by the rear
only by and between the shipper and the carrier,
right tires of the vehicle.
springs from either a relation of agency that may
Theodore first brought his other passengers
exist between him and the shipper or consignor, or
and cargo to their respective destinations before
his status as stranger in whose favor some
bringing Pedro to Lepanto Hospital where he
stipulation is made in said contract, and who
expired
becomes a party thereto when he demands
Private respondents filed a complaint for damages
fulfillment of that stipulation, in this case the
against Dangwa for the death of Pedro Cudiamat
delivery of the goods or cargo shipped
Dangwa: observed and continued to observe
When Hernandez formally claimed
the extraordinary diligence required in the
reimbursement for the missing goods from Everett
operation of the co. and the supervision of the
and subsequently filed a case against the it based on
employees even as they are not absolute insurers of
the very same bill of lading, it accepted the
the public at large
provisions of the contract and thereby made itself a
RTC: in favour of Dangwa holding Pedrito as
party thereto, or at least has come to court to enforce
negligent and his negligence was the cause of his
it.[
death but still ordered to pay in equity P 10,000 to
The commercial Invoice No. MTM-941 does
the heirs of Pedrito
not in itself sufficiently and convincingly show that
CA: reversed and ordered to pay Pedrito
Everett has knowledge of the value of the cargo as
indemnity, moral damages, actual and
contended by Hernandez.
compensatory damages and cost of the suit

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


extent of that liability. The Warsaw Convention

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

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

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


YES. Cathay failed to deliver his luggage at the It does not regulate, much less exempt, the carrier
designated place and time, it being the obligation of from liability for damages for violating the rights of
a common carrier to carry its passengers and their its passengers under the contract of carriage,
especially if wilfull misconduct on the part of the They freely gave their consent to an agreement
carrier's employees is found or established, as in this whose object was the transportation of the
case. Fernandos from LA to Manila, and whose cause or
consideration was the fare paid by the Fernandos to
v. Spouses Fernando vs Northwest, G.R No. Northwest. In Alitalia Airways v. CA, we held that

212038; February 8, 2017 when an airline issues a ticket to a passenger


confirmed for a particular flight on a certain date, a

Facts: contract of carriage arises. The passenger then has

Spouses Jesus and Elizabeth Fernando, every right to expect that he would fly on that flight

owners of JB Music and JB Sports, are frequent flyers and on that date. If he does not, then the carrier
of Northwest Airlines, Inc. and are holder of its elite opens itself to a suit for breach of contract of
card. Petitioners initiated the filing of the instant carriage.
case which arose from this incident: When Northwest confirmed the
Jesus arrived at the LAX via Northwest reservations of the Fernandos, it bound itself to
transport the Fernandos on their flight on 29
airlines to join his family for Christmas, however
January 2002. In an action based on a breach of
upon arrival at the airport, he found that his contract of carriage, the aggrieved party does
documents reflect his return ticket as Aug 2001. So not have to prove that the common carrier was
at fault or was negligent. All that he has to prove
he approached Northwest personnel named Linda.
is the existence of the contract and the fact of its
The latter merely glanced at his ticket without non-performance by the carrier. As the
checking its status and peremptorily said that the aggrieved party, the Fernandos only had to
prove the existence of the contract and the fact
ticket has been used and invalid. He then averred of its non-performance by Northwest, as carrier,
that such ticket was unused because of some ticket in order to be awarded compensatory and
actual damages.
restrictions. Hence, ticket remains unused. He was
then brought to the Immigration’s interrogation
room and was asked humiliating question for two
hours. After that, he was granted only a 12-day stay
in the US, instead of usual 6 months

Issue:
Whether or not there was breach of contract of
carriage

Held:
YES. Undoubtedly, a contract of carriage
existed between Northwest and the Fernandos.
of P 22,150.00, the claimed value of the lost
III. COMMON CARRIERS merchandise, plus damages and attorney's fees.

1. CASES Petitioner alleged that private respondent, being a


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

against private respondent in demanding payment throughout the entire voyage


 July 3, 1974: PPI unloaded the cargo from the  short of 94.839 M/T and about 23 M/T were
holds into its steelbodied dump trucks which rendered unfit for commerce, having been
were parked alongside the berth, using metal polluted with sand, rust and dirt
scoops attached to the ship, pursuant to the  PPI sent a claim letter 1974 to Soriamont
terms and conditions of the charter-partly Steamship Agencies (SSA), the resident agent of
 hatches remained open throughout the duration the carrier, KKKK, for P245,969.31 representing
of the discharge the cost of the alleged shortage in the goods
 Each time a dump truck was filled up, its load of shipped and the diminution in value of that
Urea was covered with tarpaulin before it was portion said to have been contaminated with
transported to the consignee's warehouse dirt
located some 50 meters from the wharf  SSA: what they received was just a request for
 Midway to the warehouse, the trucks were made shortlanded certificate and not a formal claim,
to pass through a weighing scale where they and that they "had nothing to do with the
were individually weighed for the purpose of discharge of the shipment
ascertaining the net weight of the cargo.  RTC: failure to destroy the presumption of
 The port area was windy, certain portions of the negligence against them, SSA are liable
route to the warehouse were sandy and the  CA: REVERSED - failed to prove the basis of its
weather was variable, raining occasionally while cause of action
the discharge was in progress.
 Tarpaulins and GI sheets were placed in- ISSUE: W/N a time charter between a shipowner
between and alongside the trucks to contain and a charterer transforms a common carrier into a
spillages of the ferilizer private one as to negate the civil law presumption of
 It took 11 days for PPI to unload the cargo negligence in case of loss or damage to its cargo
 Cargo Superintendents Company Inc.
(CSCI), private marine and cargo surveyor, was HELD: NO. petition is DISMISSED
hired by PPI to determine the "outturn" of the  When PPI chartered the vessel M/V "Sun Plum",
cargo shipped, by taking draft readings of the the ship captain, its officers and compliment
vessel prior to and after discharge were under the employ of the shipowner and
 shortage in the cargo of 106.726 M/T and that a therefore continued to be under its direct
portion of the Urea fertilizer approximating 18 supervision and control. Hardly then can we
M/T was contaminated with dirt charge the charterer, a stranger to the crew and
 Certificate of Shortage/Damaged to the ship, with the duty of caring for his cargo
Cargo prepared by PPI when the charterer did not have any control of
the means in doing so
 carrier has sufficiently overcome, by clear and deliver the said cargo. As a consequence of that
convincing proof, the prima facie presumption of failure, Cipriano paid Jibfair Shipping Agency the
negligence. The hatches remained close and amount of the lost goods in accordance with their
tightly sealed while the ship was in transit as the contract.
weight of the steel covers made it impossible for Cipriano demanded reimbursement from
a person to open without the use of the ship's petitioner but the latter refused to pay. Eventually,
boom. Cipriano filed a complaint for a sum of money and
 bulk shipment of highly soluble goods like damages with writ of preliminary attachment for
fertilizer carries with it the risk of loss or breach of a contract of carriage.
damage. More so, with a variable weather The trial court granted the writ of
condition prevalent during its unloading preliminary attachment.In her answer, petitioner
 This is a risk the shipper or the owner of the interposed the defense that there was no contract of
goods has to face. Clearly, KKKK has sufficiently carriage since CIPTRADE leased her cargo truck to
proved the inherent character of the goods load the cargo from Manila Port Area to Laguna and
which makes it highly vulnerable to that the truck carrying the cargo was hijacked and
deterioration; as well as the inadequacy of its being a force majeure, exculpated petitioner from
packaging which further contributed to the loss. any liability
 On the other hand, no proof was adduced by the After trial, the trial court rendered a decision
petitioner showing that the carrier was remise in in favor of Cipriano and against Bascos ordering the
the exercise of due diligence in order to latter to pay the former for actual damages for
minimize the loss or damage to the goods it attorney’s fees and cost of suit.
carried. The “Urgent Motion To Dissolve/Lift
preliminary Attachment” Bascos is DENIED for
iii. Bascos vs CA; April 7, 1993 being moot and academic.

FACTS: Petitioner appealed to the Court of Appeals

Rodolfo A. Cipriano representing Cipriano but respondent Court affirmed the trial court’s

Trading Enterprise (CIPTRADE for short) entered judgment.

into a hauling contract with Jibfair Shipping Agency Hence this petition for review on certiorari

Corp whereby the former bound itself to haul the


latter’s 2,000 m/tons of soya bean meal to the ISSUE:

warehouse in Calamba, Laguna. To carry out its (1) WON petitioner a common carrier

obligation, CIPTRADE, through Cipriano, (2) WON the hijacking referred to a force majeure

subcontracted with Bascos to transport and to


deliver 400 sacks of soya bean meal from the Manila HELD: The petition is DISMISSED and the decision

Port Area to Calamba, Laguna. Petitioner failed to of the Court of Appeals is hereby AFFIRMED.
1. YES “The above article makes no distinction between one
In disputing the conclusion of the trial and whose principal business activity is the carrying of
appellate courts that petitioner was a common persons or goods or both, and one who does such
carrier, she alleged in this petition that the contract carrying only as an ancillary activity (in local idiom,
between her and Cipriano was lease of the truck. She as a “sideline”). Article 1732 also carefully avoids
also stated that: she was not catering to the general making any distinction between a person or
public. Thus, in her answer to the amended enterprise offering transportation service on a
complaint, she said that she does business under the regular or scheduled basis and one offering such
same style of A.M. Bascos Trucking, offering her service on an occasional, episodic or unscheduled
trucks for lease to those who have cargo to move, not basis. Neither does Article 1732 distinguish between
to the general public but to a few customers only in a carrier offering its services to the “general public,”
view of the fact that it is only a small business. i.e., the general community or population, and one
We agree with the respondent Court in its who offers services or solicits business only from a
finding that petitioner is a common carrier. narrow segment of the general population. We think
Article 1732 of the Civil Code defines a that Article 1732 deliberately refrained from making
common carrier as “(a) person, corporation or firm, such distinctions.”
or association engaged in the business of carrying or
transporting passengers or goods or both, by land, 2. NO
water or air, for compensation, offering their Likewise, We affirm the holding of the
services to the public.” The test to determine a respondent court that the loss of the goods was not
common carrier is “whether the given undertaking due to force majeure.
is a part of the business engaged in by the carrier Common carriers are obliged to observe
which he has held out to the general public as his extraordinary diligence in the vigilance over the
occupation rather than the quantity or extent of the goods transported by them. Accordingly, they are
business transacted.” 12 In this case, petitioner presumed to have been at fault or to have acted
herself has made the admission that she was in the negligently if the goods are lost, destroyed or
trucking business, offering her trucks to those with deteriorated. There are very few instances when the
cargo to move. Judicial admissions are conclusive presumption of negligence does not attach and these
and no evidence is required to prove the same. 13 instances are enumerated in Article 1734. 19 In those
But petitioner argues that there was only a contract cases where the presumption is applied, the
of lease because they offer their services only to a common carrier must prove that it exercised
select group of people. Regarding the first extraordinary diligence in order to overcome the
contention, the holding of the Court in De Guzman presumption.
vs. Court of Appeals 14 is instructive. In referring to In this case, petitioner alleged that hijacking
Article 1732 of the Civil Code, it held thus: constituted force majeure which exculpated her
from liability for the loss of the cargo. In De Guzman presented no other proof of the existence of the
vs. Court of Appeals, the Court held that hijacking, contract of lease. He who alleges a fact has the
not being included in the provisions of Article 1734, burden of proving it.
must be dealt with under the provisions of Article
1735 and thus, the common carrier is presumed to 2. Having affirmed the findings of the respondent
have been at fault or negligent. To exculpate the Court on the substantial issues involved, We find no
carrier from liability arising from hijacking, he must reason to disturb the conclusion that the motion to
prove that the robbers or the hijackers acted with lift/dissolve the writ of preliminary attachment has
grave or irresistible threat, violence, or force. This is been rendered moot and academic by the decision
in accordance with Article 1745 of the Civil Code on the merits
which provides:
“Art. 1745. Any of the following or similar
stipulations shall be considered unreasonable, iv. First Phil Industrial Corp vs CA; 300 SCRA
66 (1998)
unjust and contrary to public policy; xx
(6) That the common carrier’s liability for acts Facts:
committed by thieves, or of robbers who do not act Petitioner is a grantee of a pipeline
with grave or irresistible threat, violences or force, is concession under Republic Act No. 387.
dispensed with or diminished;” xx Sometime in January 1995, petitioner applied
for mayor’s permit in Batangas. However, the
NOTES:
Treasurer required petitioner to pay a local tax
1. She cited as evidence certain affidavits which
based on gross receipts amounting to
referred to the contract as “lease”. These affidavits
P956,076.04. In order not to hamper its
were made by Jesus Bascos and by petitioner herself
operations, petitioner paid the taxes for the first
and Cipriano and CIPTRADE did not object to the
quarter of 1993 amounting to P239,019.01 under
presentation of affidavits by petitioner where the
transaction was referred to as a lease contract. Both protest. On January 20, 1994, petitioner filed a

the trial and appellate courts have dismissed them letter-protest to the City Treasurer, claiming
as self-serving and petitioner contests the that it is exempt from local tax since it is
conclusion. We are bound by the appellate court’s engaged in transportation business. The
factual conclusions. Yet, granting that the said respondent City Treasurer denied the protest,
evidence were not self-serving, the same were not thus, petitioner filed a complaint before the
sufficient to prove that the contract was one of lease.
Regional Trial Court of Batangas for tax refund.
It must be understood that a contract is what the law
Respondents assert that pipelines are not
defines it to be and not what it is called by the
included in the term “common carrier” which
contracting parties. Furthermore, petitioner
refers solely to ordinary carriers or motor (3) He must undertake to carry by the method
vehicles. The trial court dismissed the by which his business is conducted and over his
complaint, and such was affirmed by the Court established roads; and
of Appeals.
(4) The transportation must be for hire.
Issue:
Whether or not a pipeline business is included Based on the above definitions and
in the term “common carrier” so as to entitle the requirements, there is no doubt that petitioner
petitioner to the exemption is a common carrier. It is engaged in the
business of transporting or carrying goods, i.e.
Held: petroleum products, for hire as a public
Article 1732 of the Civil Code defines a employment. It undertakes to carry for all
"common carrier" as "any person, corporation, persons indifferently, that is, to all persons who
firm or association engaged in the business of choose to employ its services, and transports the
carrying or transporting passengers or goods or goods by land and for compensation. The fact
both, by land, water, or air, for compensation, that petitioner has a limited clientele does not
offering their services to the public." exclude it from the definition of a common
The test for determining whether a party carrier.
is a common carrier of goods is:
(1) He must be engaged in the v. National Steel Corp vs CA; 283 SCRA 45;
Dec 12, 1997
business of carrying goods for others as a
public employment, and must hold Doctrine:

himself out as ready to engage in the The stringent provisions of the Civil Code on
common carriers protecting the general public
transportation of goods for person
cannot justifiably be applied to a private carrier.
generally as a business and not as a
casual occupation;
Facts:
Plaintiff National Steel Corporation (NSC) as
(2) He must undertake to carry
Charterer and defendant Vlasons Shipping, Inc.
goods of the kind to which his business (VSI) as Owner, entered into a Contract of Voyage
is confined; Charter Hire whereby NSC hired VSI’s vessel, the
MV Vlasons I to make one voyage to load steel
products at Iligan City and discharge them at North
Harbor, Manila. The handling, loading and has space, for all who opt to avail themselves of its
unloading of the cargoes were the responsibility of transportation service for a fee [Mendoza vs.
the Charterer. Philippine Airlines, Inc., 90 Phil. 836, 842-843 (1952)].
A carrier which does not qualify under the above
The skids of tinplates and hot rolled sheets shipped test is deemed a private carrier. “Generally, private
were allegedly found to be wet and rusty. Plaintiff, carriage is undertaken by special agreement and the
alleging negligence, filed a claim for damages carrier does not hold himself out to carry goods for
against the defendant who denied liability claiming the general public.
that the MV Vlasons I was seaworthy in all respects
for the carriage of plaintiff’s cargo; that said vessel Because the MV Vlasons I was a private carrier, the
was not a “common carrier” inasmuch as she was ship owner’s obligations are governed by the
under voyage charter contract with the plaintiff as foregoing provisions of the Code of Commerce and
charterer under the charter party; that in the course not by the Civil Code which, as a general rule, places
its voyage, the vessel encountered very rough seas. the prima facie presumption of negligence on a
common carrier.
Issue:
Whether or not the provisions of the Civil Code on vi. Westwind Shipping Corp vs UCPB; Nov, 25,
common carriers pursuant to which there exists a 2013
presumption of negligence against the common FACTS:
carrier in case of loss or damage to the cargo are Kinsho-Mataichi Corporation shipped from the port
applicable to a private carrier. of Kobe, Japan 197 metal containers/skids of tin-free
steel for delivery to consignee, San Miguel
Held: Corporation (SMC). The shipment was loaded and
No. In a contract of private carriage, the parties may received clean on board M/V Golden Harvest
freely stipulate their duties and obligations which Voyage No. 66, a vessel owned and operated by
perforce would be binding on them. Unlike in a Westwind Shipping Corporation (Westwind).
contract involving a common carrier, private SMC insured the cargoes against all risks
carriage does not involve the general public. Hence, with UCPB General Insurance Co. The shipment
the stringent provisions of the Civil Code on arrived in Manila and was discharged in the custody
common carriers protecting the general public of the arrastre operator, Asian Terminals, Inc. (ATI).
cannot justifiably be applied to a ship transporting During the unloading operation, 6 containers/skids
commercial goods as a private carrier. sustained dents and punctures from the forklift used
by the stevedore of Ocean Terminal Services, Inc.
It has been held that the true test of a common carrier (OTSI) in centering and shuttling the
is the carriage of passengers or goods, provided it containers/skids.
Orient Freight International, Inc. (OFII), the were in tally with the shipping documents at hand,
customs broker of SMC, withdrew from ATI the 197 but without participating in the physical withdrawal
containers/skids, including the 6 in damaged and loading of the shipments into the delivery
condition and delivered the same at SMC’s trucks of JBL.
warehouse. It was discovered upon discharge that The loading to the trucks were made by way of
additional 9 containers/skids were also damages forklifts owned and operated by ATI and the
due to the forklift operations, making the total unloading from the trucks at the SMC warehouse
number of 15 containers/skids in bad order. was done by way of forklifts owned and operated by
SMC filed a claim against UCPB, Westwind, SMC employees.
ATI, and OFII to recover the amount corresponding Neither the undertaking to deliver nor the
to the damaged containers/skids. UCPB paid the acknowledgment by the consignee of the fact of
total sum; SMC signed the subrogation receipt. delivery makes a person or entity a common carrier,
UCPB instituted a complaint for damages against since delivery alone is not the controlling factor in
Westwind, ATI and OFII. order to be considered as such.
RTC – dismissed UCPB’s complaint
CA – reversed RTC’s decision ISSUE: Whether or not Westwind, ATI and OFII are
Westwind’s Contentions: liable.
It no longer had actual or constructive custody of
the containers/skids at the time they were damaged HELD:
by ATI's forklift operator during the unloading Common carriers, from the nature of their business
operations. and for reasons of public policy, are bound to
Its responsibility already ceased from the moment observe extraordinary diligence in the vigilance over
the cargoes were delivered to ATI, which is the goods transported by them. Common carriers
reckoned from the moment the goods were taken are responsible for the loss, destruction, or
into the latter's custody. deterioration of the goods. The extraordinary
ATI had full control over its employees and responsibility of the common carrier lasts from the
stevedores as well as the manner and procedure of time the goods are unconditionally placed in the
the discharging operations. possession of, and received by the carrier for
transportation until the same are delivered, actually
OFII’s Contentions: or constructively, by the carrier to the consignee, or
It is not a common carrier, but only a customs to the person who has a right to receive them.
broker whose participation is limited to facilitating The functions of an arrastre operator involve
withdrawal of the shipment in the custody of ATI by the handling of cargo deposited on the wharf or
overseeing and documenting the turnover and between the establishment of the consignee or
counterchecking if the quantity of the shipments shipper and the ship's tackle. Being the custodian of
the goods discharged from a vessel, an arrastre The contention of OFII is likewise untenable.
operator's duty is to take good care of the goods and A customs broker has been regarded as a common
to turn them over to the party entitled to their carrier because transportation of goods is an integral
possession. part of its business. Article 1732 does not distinguish
The legal relationship between the consignee between one whose principal business activity is the
and the arrastre operator is akin to that of a carrying of goods and one who does such carrying
depositor and warehouseman. The relationship only as an ancillary activity. OFII is considered a
between the consignee and the common carrier is common carrier. As long as a person or corporation
similar to that of the consignee and the arrastre holds itself to the public for the purpose of
operator. Since it is the duty of the ARRASTRE to transporting goods as a business, it is already
take good care of the goods that are in its custody considered a common carrier regardless of whether
and to deliver them in good condition to the it owns the vehicle to be used or has to actually hire
consignee, such responsibility also devolves upon one.
the CARRIER. Both the ARRASTRE and the As a common carrier, OFII is mandated to
CARRIER are therefore charged with and obligated observe, under Article 1733 of the Civil Code,
to deliver the goods in good condition to the extraordinary diligence in the vigilance over the
consignee. goods 24 it transports according to the peculiar
What Westwind failed to realize is that the circumstances of each case. In the event that the
extraordinary responsibility of the common carrier goods are lost, destroyed or deteriorated, it is
lasts until the time the goods are actually or presumed to have been at fault or to have acted
constructively delivered by the carrier to the negligently, unless it proves that it observed
consignee or to the person who has a right to receive extraordinary diligence.
them. There is actual delivery in contracts for the It is incumbent upon OFII to prove that it
transport of goods when possession has been turned actively took care of the goods by exercising
over to the consignee or to his duly authorized agent extraordinary diligence in the carriage thereof. It
and a reasonable time is given him to remove the failed to do so.
goods. Hence, its presumed negligence under
In this case, since the discharging of the Article 1735 of the Civil Code remains unrebutted.
containers/skids, which were covered by only one
bill of lading, had not yet been completed at the time
the damage occurred, there is no reason to imply
that there was already delivery, actual or
constructive, of the cargoes to ATI.
vii. Sps. Cruz vs Sun Holidays; G.R No. 186312; wind got stronger, causing the boat to tilt from side
June 29, 2010 to side and the captain to step forward to the front,
Facts:
leaving the wheel to one of the crew members. The
Spouses Dante and Leonora Cruz waves got more unwieldy. After getting hit by two
(petitioners) lodged a Complaint on January 25, 2001 big waves which came one after the other, M/B
against Sun Holidays, Inc. (respondent) with the Coco Beach III capsized putting all passengers
Regional Trial Court (RTC) of Pasig City for underwater. The passengers, who had put on their
damages arising from the death of their son Ruelito life jackets, struggled to get out of the boat. Upon
C. Cruz (Ruelito) who perished with his wife on seeing the captain, Matute and the other passengers
September 11, 2000 on board the boatM/B Coco who reached the surface asked him what they could
Beach III that capsized en route to Batangas from do to save the people who were still trapped under
Puerto Galera, Oriental Mindoro where the couple the boat. The captain replied "Iligtas niyo na lang
had stayed at Coco Beach Island Resort (Resort) ang sarili niyo" (Just save yourselves). AcCTaD
owned and operated by respondent. Help came after about 45 minutes when two boats
The stay of the newly wed Ruelito and his owned by Asia Divers in Sabang, Puerto Galera
wife at the Resort from September 9 to 11, 2000 was passed by the capsized M/B Coco Beach III.
by virtue of a tour package-contract with respondent Boarded on those two boats were 22 persons,
that included transportation to and from the Resort consisting of 18 passengers and four crew members,
and the point of departure in Batangas. Miguel C. who were brought to Pisa Island. Eight passengers,
Matute (Matute), a scuba diving instructor and one including petitioners' son and his wife, died during
of the survivors, gave his account of the incident that the incident. At the time of Ruelito's death, he was
led to the filing of the complaint as follows: 28 years old and employed as a contractual worker
Matute stayed at the Resort from September for Mitsui Engineering & Shipbuilding Arabia, Ltd.
8 to 11, 2000. He was originally scheduled to leave in Saudi Arabia, with a basic monthly salary of $900.
the Resort in the afternoon of September 10, 2000, Petitioners, by letter of October 26, 2000, demanded
but was advised to stay for another night because of indemnification from respondent for the death of
strong winds and heavy rains.On September 11, their son in the amount of at least P4,000,000.
2000, as it was still windy, Matute and 25 other Respondent denied any responsibility for the
Resort guests including petitioners' son and his wife incident which it considered to be a fortuitous event.
trekked to the other side of the Coco Beach mountain It nevertheless offered, as an act of commiseration,
that was sheltered from the wind where they the amount of P10,000 to petitioners upon their
boarded M/B Coco Beach III, which was to ferry signing of a waiver. Petitioners declined, they filed
them to Batangas.Shortly after the boat sailed, it the Complaint, alleging that respondent, as a
started to rain. As it moved farther away from common carrier, was guilty of negligence in
Puerto Galera and into the open seas, the rain and allowing M/B Coco Beach III to sail
notwithstanding storm warning bulletins issued by 2.WON respondent is guilty of negligence in
the Philippine Atmospheric, Geophysical and allowing M/B Coco Beach III sail notwithstanding
Astronomical Services Administration (PAGASA) storm warning bulletins issued by PAGASA.
as early as 5:00 a.m. of September 11, 2000.
Carlos Bonquin, captain of M/B Coco Beach HELD:
III, averred that the Resort customarily requires four 1.YES.Petitioners correctly rely on De Guzman v.
conditions to be met before a boat is allowed to sail, Court of Appeals in characterizing respondent as a
to wit: (1) the sea is calm, (2) there is clearance from common carrier. The Civil Code defines "common
the Coast Guard, (3) there is clearance from the carriers" in the following terms: Article
captain and (4) there is clearance from the Resort's 1732.Common carriers are persons, corporations,
assistant manager. He added that M/B Coco Beach firms or associations engaged in the business of
III met all four conditions on September 11, 2000, carrying or transporting passengers orgoods or
but a subasco or squall, characterized by strong both, by land, water, or air for compensation,
winds and big waves, suddenly occurred, causing offering their services to the public. The above article
the boat to capsize. By Decision of February 16, 2005, makes no distinction between one whose principal
Branch 267 of the Pasig RTC dismissed petitioners' business activity is the carrying of persons or goods
Complaint and respondent's Counterclaim or both, and one who does such carrying only as
Petitioners' Motion for Reconsideration having been anancillary activity(in local idiom, as "a
denied by Order dated September 2, 2005,they sideline").Article 1732 also carefully avoids making
appealed to the Court of Appeals.By Decision of any distinction between a person or enterprise
August 19, 2008,the appellate court denied offering transportation service on a regular or
petitioners' appeal, holding, among other things, scheduled basis and one offering such service on an
that the trial court correctly ruled that respondent is occasional, episodic or unscheduled basis. Neither
a private carrier which is only required to observe does Article 1732 distinguish between a carrier
ordinary diligence; that respondent in fact observed offering its services to the "general public," i.e.,the
extraordinary diligence in transporting its guests on general community or population, and one who
boardM/B Coco Beach III; and that the proximate offers services or solicits business only from a
cause of the incident was a squall, a fortuitous event. narrow segment of the general population. We think
Petitioners' Motion for Reconsideration having been that Article 1733 deliberately refrained from making
denied by Resolution dated January 16, 2009,they such distinctions. So understood, the concept of
filed the present Petition for Review "common carrier" under Article 1732 may be seen to
coincide neatly with the notion of "public service,"
ISSUE: under the Public Service Act (Commonwealth Act
1.WON respondent is a common carrier No. 1416, as amended) which at least partially
supplements the law on common carriers set forth in
the Civil Code. Indeed, respondent is a common therefore, not completely free from human
carrier. Its ferry services are so intertwined with its intervention. The Court need not belabor how
main business as to be properly considered ancillary respondent's evidence likewise fails to demonstrate
thereto. The constancy of respondent's ferry services that it exercised due diligence to prevent or
in its resort operations is underscored by its having minimize the loss before, during and after the
its own Coco Beach boats. And the tour packages it occurrence of the squall.AsDe Guzmaninstructs,
offers, which include the ferry services, may be Article 1732 of the Civil Code defining "common
availed of by anyone who can afford to pay the carriers" has deliberately refrained from making
same. These services are thus available to the public. distinctions on whether the carrying of persons or
That respondent does not charge a separate fee or goods is the carrier's principal business, whether it
fare for its ferry services is of no moment. It would is offered on a regular basis, or whether it is offered
be imprudent to suppose that it provides said to the general public. The intent of the law is thus to
services at a loss. The Court is aware of the practice not consider such distinctions. Otherwise, there is no
of beach resort operators offering tour packages to telling how many other distinctions may be
factor the transportation fee in arriving at the tour concocted by unscrupulous businessmen engaged
package price. That guests who opt not to avail of in the carrying of persons or goods in order to avoid
respondent's ferry services pay the same amount is the legal obligations and liabilities of common
likewise inconsequential. These guests may only be carriers. The evidence shows that PAGASA issued
deemed to have overpaid. 24-hour public weather forecasts and tropical
cyclone warnings for shipping on September 10 and
2.YES. 11, 2000 advising of tropical depressions in Northern
A very cautious person exercising the utmost Luzon which would also affect the province of
diligence would thus not brave such stormy weather Mindoro. By the testimony of Dr. Frisco Nilo,
and put other people's lives at risk. The supervising weather specialist of PAGASA, squalls
extraordinary diligence required of common are to be expected under such weather condition.
carriers demands that they take care of the goods or Respondent's insistence that the incident was caused
lives entrusted to their hands as if they were their by a fortuitous event does not impress either. The
own. This respondent failed to do. Respondent cites elements of a "fortuitous event" are: (a) the cause of
the squall that occurred during the voyage as the the unforeseen and unexpected occurrence, or the
fortuitous event that overturnedM/B Coco Beach failure of the debtors to comply with their
III.As reflected above, however, the occurrence of obligations, must have been independent of human
squalls was expected under the weather condition of will; (b) the event that constituted the caso fortuito
September 11, 2000. Moreover, evidence shows must have been impossible to foresee or, if
thatM/B Coco Beach III suffered engine trouble foreseeable, impossible to avoid; (c) the occurrence
before it capsized and sank. The incident was, must have been such as to render it impossible for
the debtors to fulfill their obligation in a normal expenses).= 35 x (P475,200 -P237,600)= 35 x
manner; and (d) the obligor must have been free (P237,600)Net Earning Capacity =
from any participation in the aggravation of the P8,316,000Respecting the award of moral damages,
resulting injury to the creditor. To fully free a since respondent common carrier's breach of
common carrier from any liability, the fortuitous contract of carriage resulted in the death of
event must have been the proximate and only cause petitioners' son, following Article 1764vis-à-
of the loss. And it should have exercised due visArticle 2206 of the Civil Code, petitioners are
diligence to prevent or minimize the loss before, entitled to moral damages. DAETH Since
during and after the occurrence of the fortuitous respondent failed to prove that it exercised the
event. Article 1764vis-à-visArticle 2206of the Civil extraordinary diligence required of common
Code holds the common carrier in breach of its carriers, it is presumed to have acted recklessly, thus
contract of carriage that results in the death of a warranting the award too of exemplary damages,
passenger liable to pay the following: (1) indemnity which are granted in contractual obligations if the
for death, (2) indemnity for loss of earning capacity defendant acted in a wanton, fraudulent, reckless,
and (3) moral damages. Petitioners are entitled to oppressive or malevolent manner. Under the
indemnity for the death of Ruelito which is fixed at circumstances, it is reasonable to award petitioners
P50,000.As for damages representing unearned the amount of P100,000 as moral damages and
income, the formula for its computation is: Net P100,000 as exemplary damages. THE Court of
Earning Capacity=life expectancy x (gross annual Appeals Decision of August 19, 2008 is REVERSED
income -reasonable and necessary living and SET ASIDE. Judgment is rendered in favor of
expenses).Life expectancy is determined in petitioners ordering respondent to pay petitioners
accordance with the formula:2/3 x [80 —age of the following: (1) P50,000 as indemnity for the death
deceased at the time of death]Applying the above of Ruelito Cruz; (2) P8,316,000 as indemnity for
guidelines, the Court determines Ruelito's life Ruelito's loss of earning capacity; (3) P100,000 as
expectancy as follows:Life expectancy = 2/3 x [80 — moral damages; (4) P100,000 as exemplary damages;
age of deceased at the time of death]2/3 x [80 - (5) 10% of the total amount adjudged against
28]2/3 x [52] respondent as attorneys fees; and (6) the costs of suit.
Life expectancy = 35Documentary evidence shows The total amount adjudged against respondent shall
that Ruelito was earning a basic monthly salary of earn interest at the rate of 12% per annum computed
$900which, when converted to Philippine peso from the finality of this decision until full payment.
applying the annual average exchange rate of $1 =
P44 in 2000,amounts to P39,600. Ruelito's net
earning capacity is thus computed as follows: Net
Earning Capacity = life expectancy x (gross
annual income -reasonable and necessary living
viii. Sps. Perena vs Sps. Zarate; Aug 29, 2012. was imminent. The passenger bus successfully
crossed the railroad tracks, but the van driven by
FACTS:
Alfaro did not. The train hit the rear end of the van,
The Pereñas were engaged in the business of
and the impact threw nine of the 12 students in the
transporting students from their respective
rear, including Aaron, out of the van. Aaron landed
residences in Parañaque City to Don Bosco in
in the path of the train, which dragged his body and
Pasong Tamo, Makati City, and back. In their
severed his head, instantaneously killing him. Alano
business, the Pereñas used a KIA Ceres Van (van)
fled the scene on board the train, and did not wait
with Plate No. PYA 896, which had the capacity to
for the police investigator to arrive.
transport 14 students at a time, two of whom would
Devastated by the early and unexpected
be seated in the front beside the driver, and the
death of Aaron, the Zarates commenced this action
others in the rear, with six students on either side.
for damages against Alfaro, the Pereñas, PNR and
They employed Clemente Alfaro (Alfaro) as driver
Alano.
of the van.
RTC: The court decreed them to pay jointly
Considering that the students were due at
and severally liable with Philippine National
Don Bosco by 7:15 a.m., and that they were already
Railways (PNR), their co-defendant. It denied the
running late because of the heavy vehicular traffic
Pereñas' motion for reconsideration, 4 reiterating
on the South Superhighway, Alfaro took the van to
that the cooperative gross negligence of the Pereñas
an alternate route at about 6:45 a.m. by traversing
and PNR had caused the collision that led to the
the narrow path underneath the Magallanes
death of Aaron; and that the damages awarded to
Interchange that was then commonly used by
the Zarates were not excessive, but based on the
Makati-bound vehicles as a short cut into Makati.
established circumstances.
At about the time the van was to traverse the
CA: CA affirmed the findings of the RTC, but
railroad crossing, PNR Commuter No. 302 (train),
limited the moral damages to P2,500,000.00; and
operated by Jhonny Alano (Alano), was in the
deleted the attorney's fees because the RTC did not
vicinity of the Magallanes Interchange travelling
state the factual and legal bases. CA upheld the
northbound. As the train neared the railroad
award for the loss of Aaron's earning capacity.
crossing, Alfaro drove the van eastward across the
railroad tracks, closely tailing a large passenger bus.
ISSUE:
His view of the oncoming train was blocked because
Whether or not CA erred in affirming the trial
he overtook the passenger bus on its left side. The
court's decision holding the petitioners jointly and
train blew its horn to warn motorists of its approach.
severally liable to pay damages with Philippine
When the train was about 50 meters away
National Railways and dismissing their cross-claim
from the passenger bus and the van, Alano applied
against the latter.
the ordinary brakes of the train. He applied the
emergency brakes only when he saw that a collision
HELD: presumption that he or it was at fault or acted
The petition has no merit. The Zarates negligently would stand. No device, whether by
brought this action for recovery of damages against stipulation, posting of notices, statements on tickets,
both the Pereñas and the PNR, basing their claim or otherwise, may dispense with or lessen the
against the Pereñas on breach of contract of carriage responsibility of the common carrier as defined
and against the PNR on quasidelict. There is no under Article 1755 of the Civil Code.
question that the Pereñas as the operators of a school At any rate, the lower courts correctly held
bus service were: (a) engaged in transporting both the Pereñas and the PNR "jointly and severally"
passengers generally as a business, not just as a liable for damages arising from the death of Aaron.
casual occupation; (b) undertaking to carry They had been impleaded in the same complaint as
passengers over established roads by the method by defendants against whom the Zarates had the right
which the business was conducted; and (c) to relief, whether jointly, severally, or in the
transporting students for a fee. Despite catering to a alternative, in respect to or arising out of the
limited clientèle, the Pereñas operated as a common accident, and questions of fact and of law were
carrier because they held themselves out as a ready common as to the Zarates. Although the basis of the
transportation indiscriminately to the students of a right to relief of the Zarates (i.e., breach of contract
particular school living within or near where they of carriage) against the Pereñas was distinct from the
operated the service and for a fee. basis of the Zarates' right to relief against the PNR
The common carrier's standard of care and (i.e., quasi-delict under Article 2176, Civil Code),
vigilance as to the safety of the passengers is defined they nonetheless could be held jointly and severally
by law. Given the nature of the business and for liable by virtue of their respective negligence
reasons of public policy, the common carrier is combining to cause the death of Aaron.
bound "to observe extraordinary diligence in the
vigilance over the goods and for the safety of the Ponente: The operator of a school bus service
passengers transported by them, according to all the is a common carrier in the eyes of the law. He is
circumstances of each case.” bound to observe extraordinary diligence in the
Article 1755 of the Civil Code specifies that conduct of his business. He is presumed to be
the common carrier should "carry the passengers negligent when death occurs to a passenger. His
safely as far as human care and foresight can liability may include indemnity for loss of earning
provide, using the utmost diligence of very cautious capacity even if the deceased passenger may only be
persons, with a due regard for all the an unemployed high school student at the time of
circumstances." To successfully fend off liability in the accident.
an action upon the death or injury to a passenger,
the common carrier must prove his or its observance
of that extraordinary diligence; otherwise, the legal
ix. LRTA vs Navidad RTC: In favour of widow and against
Prudent and Escartin, complaint against LRT and
Lessons Applicable: Actionable Document Roman were dismissed for lack of merit
(transportation) CA: reversed by exonerating Prudent and
Laws Cited: Art. 1755,Art. 1756,Art. 1759,Art. 1763 held LRTA and Roman liable

FACTS: ISSUE: W/N LRTA and Roman should be liable


October 14, 1993, 7:30 p.m. : Drunk Nicanor Navidad according to the contract of carriage
(Nicanor) entered the EDSA LRT station after
purchasing a “token”. HELD: NO. Affirmed with Modification: (a)
While Nicanor was standing at the platform near the nominal damages is DELETED (CANNOT co-exist
LRT tracks, the guard Junelito Escartin approached w/ compensatory damages) (b) Roman is absolved.
him. Law and jurisprudence dictate that a common
Due to misunderstanding, they had a fist carrier, both from the nature of its business and for
fight reasons of public policy, is burdened with the duty
Nicanor fell on the tracks and killed instantaneously off exercising utmost diligence in ensuring the safety
upon being hit by a moving train operated by of passengers
Rodolfo Roman Civil Code:
December 8, 1994: The widow of Nicanor, Art. 1755. A common carrier is bound to
along with her children, filed a complaint for carry the passengers safely as far as human care and
damages against Escartin, Roman, LRTA, Metro foresight can provide, using the utmost diligence of
Transit Org. Inc. and Prudent (agency of security very cautious persons, with a due regard for all the
guards) for the death of her husband. circumstances
LRTA and Roman filed a counter-claim against Art. 1756. In case of death or injuries to
Nicanor and a cross-claim against Escartin and passengers, common carriers are presumed to have
Prudent been at fault or to have acted negligently, unless
Prudent: denied liability – averred that it had they prove that they observed extraordinary
exercised due diligence in the selection and diligence as prescribed in articles 1733 and 1755
surpervision of its security guards LRTA and Art. 1759. Common carriers are liable for the
Roman: presented evidence death of or injuries to passengers through the
Prudent and Escartin: demurrer contending negligence or wilful acts of the former’s employees,
that Navidad had failed to prove that Escartin was although such employees may have acted beyond
negligent in his assigned task the scope of their authority or in violation of the
orders of the common carriers
This liability of the common carriers does NOT cease EX to the EX: Upon showing due diligence in the
upon proof that they Exercised all the diligence of a selection and supervision of the employee
good father of a family in the selection and Factual finding of the CA: NO link bet.
supervision of their employees Prudent and the death of Nicanor for the reason that
Art. 1763. A common carrier is responsible the negligence of Escartin was NOT proven
for injuries suffered by a passenger on account of the NO showing that Roman himself is guilty of
wilful acts or negligence of other passengers or of any culpable act or omission, he must also be
strangers, if the common carrier’s employees absolved from liability
through the exercise of the diligence of a good father Contractual tie bet. LRT and Nicanor is NOT
of a family could have prevented or stopped the act itself a juridical relation bet. Nicanor and Roman
or omission. Roman can be liable only for his own fault or
Carriers presumed to be at fault or been negligence
negligent and by simple proof of injury, the
passenger is relieaved of the duty to still establish x. MOF vs Chin Yang Brokerage
the fault or negligence of the carrier or of its
employees and the burden shifts upon the carrier to Facts:
prove that the injury is due to an unforeseen event Halla shipped to Manila secondhand cars and
or to force majeure
other articles on board the vessel Hanjin Busan.
Where it hires its own employees or avail itself of the
The bill of lading was prepared by the carrier
services of an outsider or an independent firm to
undertake the task, the common carrier is NOT Hanjin where Shin Yang was named as the

relieved of its responsibilities under the contract of consignee and indicated that payment was on a

carriage "Freight Collect" basis (meaning the

GR: Prudent can be liable only for tort under consignee/receiver of the goods would be the one to

Art. 2176 and related provisions in conjunction with pay for the freight and other charges).

Art. 2180 of the Civil Code. (Tort may arise even When the shipment arrived in Manila MOF,
under a contract, where tort [quasi-delict liability] is Hanjin’s exclusive general agent in the Philippines,
that which breaches the contract) demanded the payment from Shin Yang.
EX: if employer’s liability is negligence or
Shin Yang refused to pay the freight and other
fault on the part of the employee, employer can be
charges. Shin Yang is saying that it is not the
made liable on the basis of the presumption juris
ultimate consignee but merely the
tantum that the employer failed to exercise
consolidator/forwarder.
diligentissimi patris families in the selection and
supervision of its employees. Shin Yang contends that the fact that its name was

mentioned as the consignee of the cargoes did not


make it automatically liable for the freightage the relationship of agency between the consignee
because it never benefited from the shipment. and the shipper/ consignor; b) the unequivocal

It never claimed or accepted the goods, it was not acceptance of the bill of lading delivered to the
consignee, with full knowledge of its contents or c)
the shipper’s agent, it was not aware of its
availment of the stipulation
designation as consignee and the original bill of
pour autrui
lading was never endorsed to it.
,
Issue:
i.e.
 Whether a consignee, who is not a signatory
, when the consignee, a third person, demands
to the bill of lading, is bound by the
before the carrier the fulfillment of the stipulation
stipulations thereof? - Yes
made by the
 Whether Shin Yang, who was not an agent of
consignor/shipper in the consignee’s favor,
the shipper and who did not make any
specifically the delivery of the
demand for the fulfillment of the stipulations
goods/cargoes shipped. In the instant case, Shin
of the bill of lading drawn in its favor, is
Yang consistently denied in all of its pleadings that
liable to pay the corresponding freight and
it authorized Halla Trading, Co. to ship the goods on
handling charges? – No
its behalf; or that it got hold of the bill of lading
covering the shipment or that it demanded the
Held: While it is true that a bill of lading serves two
release of the cargo. Basic is the rule in evidence that
(2) functions: first, it is a receipt for the goods
the burden of proof lies upon him who asserts it, not
shipped; second, it is a contract by which three
upon him who denies, since, by the nature of things,
parties, namely, the shipper, the carrier and the
he who denies a fact cannot produce any proof of it.
consignee who undertake specific responsibilities
Thus, MOF has the burden to controvert all these
and assume stipulated obligations. The bill of lading
denials, it being insistent that Shin Yang asserted
is oftentimes drawn up by the shipper/consignor
itself as the consignee and the one that caused the
and the carrier without the intervention of the
shipment of the goods to the Philippines. In civil
consignee.
cases, the party having the burden of proof must
However, the latter can be bound by the
establish his case by preponderance of evidence,
stipulations of the bill of lading when a) there is a
which means evidence which is of greater weight, or
relation of agency between the shipper or consignor
more convincing than that which is offered in
and the consignee or b) when the consignee
opposition to it. Here, MOF failed to meet the
demands fulfillment of the stipulation of the bill of
required quantum of proof. Other than presenting
lading which was drawn up in its favor. In sum, a
the bill of lading, which, at most, proves that the
consignee, although not a signatory to the contract
carrier acknowledged receipt of the subject cargo
of carriage between the shipper and the carrier,
from the shipper and that the consignee named is to
becomes a party to the contract by reason of either a)
shoulder the freightage, MOF has not adduced any Because the others denied liability, Home
other credible evidence to strengthen its cause of Insurance Company paid SMBI the insurance value
action. It did not even present any witness in of the loss, as full settlement of the claim. Having
support of its allegation that it was Shin Yang which been refused reimbursement by both the Luzon
furnished all the details indicated in the bill of lading Stevedoring Corporation and American Steamship
and that Shin Yang consented to shoulder the Agencies, Home Insurance Company, as subrogee
shipment costs. There is also nothing in the records to the consignee, filed against them before the CFI of
which would indicate that Shin Yang was an agent Manila a complaint for recovery of the payment paid
of Halla Trading Co. or that it exercised any act that with legal interest, plus attorney’s fees.
would bind it as a named consignee. Thus, the CA In answer, Luzon Stevedoring Corporation
correctly dismissed the suit for failure of petitioner alleged that it delivered with due diligence the
to establish its cause against respondent goods in the same quantity and quality that it had
received the same from the carrier.

IV. PRIVATE CARRIAGE The CFI, after trial, absolved Luzon


Stevedoring Corporation, having found the latter to
i. Home Insurance CO. vs American
have merely delivered what it received from the
Steamship Agencies (23 SCRA 24)
carrier in the same condition and quality, and
ordered American Steamship Agencies to pay Home
FACTS:
Insurance Company the amount demanded with
“Consorcio Pesquero del Peru of South
legal interest plus attorney’s fees.
America” shipped freight pre-paid at Peru, jute bags
Disagreeing with such judgment, American
of Peruvian fish meal through SS Crowborough,
Steamship Agencies appealed directly to Us.
covered by clean bills of lading. The cargo,
consigned to San Miguel Brewery, Inc., now San
ISSUE:
Miguel Corporation, and insured by Home
WON the stipulation in the charter party of
Insurance Company arrived in Manila and was
the owner’s non-liability valid so as to absolve the
discharged into the lighters of Luzon Stevedoring
American Steamship Agencies from liability for
Company. When the cargo was delivered to
loss?
consignee San Miguel Brewery Inc., there were
HELD:
shortages causing the latter to lay claims against
The judgment appealed from is
Luzon Stevedoring Corporation, Home Insurance
hereby reversed and appellant is absolved from
Company and the American Steamship Agencies
liability to plaintiff.
(shipowner), owner and operator of SS
Crowborough.
YES. The bills of lading, covering the shipment of
Peruvian fish meal provide at the back thereof that
the bills of lading shall be governed by and subject strict public policy governing common carriers is
to the terms and conditions of the charter party, if applied. Such policy has no force where the public
any, otherwise, the bills of lading prevail over all the at large is not involved, as in the case of a ship totally
agreements. On the bills are stamped “Freight chartered for the use of a single party.
prepaid as per charter party. Subject to all terms, And furthermore, in a charter of the entire
conditions and exceptions of charter party dated vessel, the bill of lading issued by the master to the
London, Dec. 13, 1962.” charterer, as shipper, is in fact and legal
Section 2, paragraph 2 of the charter party, contemplation merely a receipt and a document of
provides that the owner is liable for loss or damage title not a contract, for the contract is the charter
to the goods caused by personal want of due party. The consignee may not claim ignorance of
diligence on its part or its manager to make the said charter party because the bills of lading
vessel in all respects seaworthy and to secure that expressly referred to the same. Accordingly, the
she be properly manned, equipped and supplied or consignees under the bills of lading must likewise
by the personal act or default of the owner or its abide by the terms of the charter party. And as
manager. Said paragraph, however, exempts the stated, recovery cannot be had thereunder, for loss
owner of the vessel from any loss or damage or or damage to the cargo, against the shipowners,
delay arising from any other source, even from the unless the same is due to personal acts or negligence
neglect or fault of the captain or crew or some other of said owner or its manager, as distinguished from
person employed by the owner on board, for whose its other agents or employees. In this case, no such
acts the owner would ordinarily be liable except for personal act or negligence has been proved.
said paragraph..
The provisions of our Civil Code on common
carriers were taken from Anglo-American law. ii. National Steel Corp vs CA (283 SCRA
Under American jurisprudence, a common carrier 45) REPEATED CASE
undertaking to carry a special cargo or chartered to
a special person only, becomes a private carrier. As iii. Valenzuela Hardwood and Industrial
a private carrier, a stipulation exempting the owner
Supply vs CA (274 SCRA 642)
from liability for the negligence of its agent is not
Facts:
against public policy, and is deemed valid.
Plaintiff shipped at Maconcon Port, Isabela
Such doctrine We find reasonable. The Civil
940 round logs on board M/V Seven Ambassador, a
Code provisions on common carriers should not be
vessel owned by defendant Seven Brothers Shipping
applied where the carrier is not acting as such but as
Corporation. Plaintiff insured the logs against loss
a private carrier. The stipulation in the charter party
and/or damage with defendant South Sea Surety
absolving the owner from liability for loss due to the
and Insurance Co., Inc. for P2M and the latter issued
negligence of its agent would be void only if the
its Marine Cargo Insurance Policy on said date. In
the meantime, the M/V Seven Ambassador sank negligence of the captain in stowing and securing
resulting in the loss of the plaintiff’s insured logs. the logs on board the vessel and not due to
fortuitous event.” Likewise undisputed is the status
Plaintiff demanded from defendant South Sea of Private Respondent Seven Brothers as a private
Surety and Insurance Co., Inc. the payment of the carrier when it contracted to transport the cargo of
proceeds of the policy but the latter denied liability Petitioner Valenzuela. Even the latter admits this in
under the policy. Plaintiff likewise filed a formal its petition.
claim with defendant Seven Brothers Shipping Private respondent had acted as a private
Corporation for the value of the lost logs but the carrier in transporting petitioner’s lauan logs. Thus,
latter denied the claim. Article 1745 and other Civil Code provisions on
Court of Appeals affirmed in part the RTC common carriers which were cited by petitioner
judgment by sustaining the liability of South Sea may not be applied unless expressly stipulated by
Surety and Insurance Company (“South Sea”), but the parties in their charter party.
modified it by holding that Seven Brothers Shipping In a contract of private carriage, the parties
Corporation (“Seven Brothers”) was not liable for may validly stipulate that responsibility for the
the lost cargo. cargo rests solely on the charterer, exempting the
shipowner from liability for loss of or damage to the
ISSUE: cargo caused even by the negligence of the ship
captain. Pursuant to Article 1306 of the Civil Code,
Whether defendants shipping corporation and the such stipulation is valid because it is freely entered
surety company are liable to the plaintiff for the into by the parties and the same is not contrary to
latter’s lost logs. law, morals, good customs, public order, or public
policy. Indeed, their contract of private carriage is
HELD: not even a contract of adhesion. We stress that in a
contract of private carriage, the parties may freely
The charter party between the petitioner and stipulate their duties and obligations which perforce
private respondent stipulated that the “(o)wners would be binding on them. Unlike in contract
shall not be responsible for loss, split, short-landing, involving a common carrier, private carriage does
breakages and any kind of damages to the cargo” – not involve the general public. Hence, the stringent
VALID provisions of the Civil Code on common carriers
There is no dispute between the parties that protecting the general public cannot justifiably be
the proximate cause of the sinking of M/V Seven applied to a ship transporting commercial goods as
Ambassadors resulting in the loss of its cargo was a private carrier. Consequently, the public policy
the “snapping of the iron chains and the subsequent embodied therein is not contravened by stipulations
rolling of the logs to the portside due to the in a charter party that lessen or remove the
protection given by law in contracts involving Tarlac, it collided with an unidentified truck,
common carriers. causing it to fall into a deep canal, resulting in
damage to the cargoes.
The provisions of our Civil Code on common FGU Insurance Corporation (FGU), an insurer of the
carriers were taken from Anglo-American law. shipment, paid to Concepcion Industries, Inc., the
Under American jurisprudence, a common carrier value of the covered cargoes: P204, 450.00. FGU, in
undertaking to carry a special cargo or chartered to turn, being the subrogee of the rights and interests
a special person only, becomes a private carrier. As of the insured sought reimbursement of the amount,
a private carrier a stipulation exempting the owner from GPS. Since GPS failed to heed the claim, FGU
from liability for the negligence of its agent is not filed a complaint for damages and breach of contract
against public policy and is deemed valid. Such of carriage against GPS and its driver with the
doctrine We find reasonable. The Civil Code Regional Trial Court, Branch 66, of Makati City. In
provisions on common carriers should not be its answer, respondents asserted that GPS was the
applied where the carrier is not acting as such but as exclusive hauler only of Concepcion Industries, Inc.,
a private carrier. The stipulation in the charter party since 1988, and it was not so engaged in business as
absolving the owner from liability for loss due to the a common carrier. Respondents further claimed that
negligence of its agent would be void only if the the cause of damage was purely accidental. GPS,
strict public policy governing common carriers is instead of submitting its evidence, filed with leave
applied. Such policy has no force where the public of court a motion to dismiss the complaint by way of
at large is not involved as in this case of a ship totally demurrer to evidence on the ground that petitioner
chartered for the use of a single party. (Home had failed to prove that it was a common carrier. The
Insurance Co. vs. American Steamship Agencies RTC and CA both ruled in favor of the Respondent.
Inc., 23 SCRA 24, April 4, 1968)
ISSUES OF THE CASE:

iv. FGU Insurance vs GP Sarmiento WHETHER RESPONDENT GPS, EITHER AS A

Trucking; G.R No. 141910, Aug 6, 2002 COMMON CARRIER OR A PRIVATE CARRIER,
MAY BE PRESUMED TO HAVE BEEN

FACTS OF THE CASE: NEGLIGENT WHEN THE GOODS IT

G.P. Sarmiento Trucking Corporation (GPS) UNDERTOOK TO TRANSPORT SAFELY WERE

undertook to deliver on 18 June 1994 thirty (30) units SUBSEQUENTLY DAMAGED WHILE IN ITS

of Condura S.D. white refrigerators aboard one of its PROTECTIVE CUSTODY AND POSSESSION.

Isuzu truck, driven by Lambert Eroles. While the


truck was traversing the north diversion road along - In culpa contractual, upon which the action of

McArthur highway in Barangay Anupol, Bamban, petitioner rests as being the subrogee of Concepcion
Industries, Inc., the mere proof of the existence of the • reliance interest- the interest in being reimbursed
contract and the failure of its compliance justify, for loss caused by reliance on the contract by being
prima facie, a corresponding right of relief. Thus, put in as good a position as he would have been in
FGU has a claim for the amount paid out. had the contract not been made
- The law, recognizing the obligatory force of • Restitution interest- which is his interest in having
contracts, will not permit a party to be set free from restored to him any benefit that he has conferred on
liability for any kind of misperformance of the the other party.
contractual undertaking or a contravention of the • Subrogee- the person or entity that assumes the
tenor thereof legal right to attempt to collect a claim of another
- GPS recognizes the existence of a contract of (subrogor) in return for paying the other's expenses
carriage between it and petitioner’s assured, and or debts which the other claims against a third party.
admits that the cargoes it has assumed to deliver A subrogee is usually the insurance company which
have been lost or damaged while in its custody. In has insured the party whose expenses were paid.
such a situation, a default on, or failure of
compliance with, the obligation in this case, the V. SERVICES
delivery of the goods in its custody to the place of
destination - gives rise to a presumption of lack of
i. Crisostomo vs CA
care and corresponding liability on the part of the
contractual obligor the burden being on him to
Doctrine: Contract between the travel agency and its
establish otherwise. GPS has failed to do so.
client is one for services and not one of carriage

HELD:
FACTS:
The decision of the lower courts insofar as Lambert
In May 1991, petitioner Estela L. Crisostomo
M. Eroles is concerned is affirmed but assailed
contracted the services of respondent Caravan
decision with regard to GPS trucking is reversed. It,
Travel and Tours International, Inc. to arrange and
is hereby ordered to pay FGU Insurance
facilitate her booking, ticketing and accommodation
Corporation the value of the damaged and lost
in a tour dubbed “Jewels of Europe”. The package
cargoes in the amount of P204, 450.00
tour included the countries of England, Holland,
Germany, Austria, Liechstenstein, Switzerland and
Obligations and Contracts Terms:
France at a total cost of P74,322.70. Pursuant to said
contract, Menor, respondent Company’s ticketing
• expectation interest- the interest in having the
manager, went to her aunt’s residence on June 12,
benefit of his bargain by being put in as good a
1991 – Wednesday – to deliver petitioner’s travel
position as he would have been in had the contract
documents and plane tickets. Menor then told her to
been performed
be at the Ninoy Aquino International Airport
(NAIA) on Saturday, two hours before her flight on However, petitioner should have verified the exact
board British Airways. date and time of departure by looking at her ticket
and should have simply not relied on Menor’s
Without checking her travel documents, petitioner verbal representation. The trial court thus declared
went to NAIA on Saturday, June 15, 1991, to take the that petitioner was guilty of contributory negligence
flight for the first leg of her journey from Manila to and accordingly, deducted 10% from the amount
Hong Kong. To petitioner’s dismay, she discovered being claimed as refund. Respondent appealed to
that the flight she was supposed to take had already the Court of Appeals, which likewise found both
departed the previous day. She learned that her parties to be at fault. However, the appellate court
plane ticket was for the flight scheduled on June 14, held that petitioner is more negligent than
1991. She thus called up Menor to complain. respondent because as a lawyer and well-traveled
Subsequently, Menor prevailed upon petitioner to person, she should have known better than to
take another tour the “British Pageant” which simply rely on what was told to her. This being so,
included England, Scotland and Wales in its she is not entitled to any form of damages. Petitioner
itinerary. For this tour package, petitioner was asked also forfeited her right to the “Jewels of Europe” tour
anew to pay US$785.00 or P20,881.00. and must therefore pay respondent the balance of
the price for the “British Pageant” tour.
She gave respondent US$300 or P7,980.00 as partial
payment and commenced the trip in July 1991. Upon ISSUE:
petitioner’s return from Europe, she demanded
from respondent the reimbursement of P61,421.70, Is the contract a Contract of Carriage?
representing the difference between the sum she
paid for “Jewels of Europe” and the amount she HELD:
owed respondent for the “British Pageant” tour.
Despite several demands, respondent company No. By definition, a contract of carriage or
refused to reimburse the amount, contending that transportation is one whereby a certain person or
the same was non-refundable. Petitioner was thus association of persons obligate themselves to
constrained to file a complaint against respondent transport persons, things, or news from one place to
for breach of contract of carriage and damages at another for a fixed price.9 Such person or association
Regional Trial Court of Makati City. of persons are regarded as carriers and are classified
as private or special carriers and common or public
The trial court held that respondent was negligent in carriers. A common carrier is defined under Article
erroneously advising petitioner of her departure 1732 of the Civil Code as persons, corporations,
date through its employee, Menor, who was not firms or associations engaged in the business of
presented as witness to rebut petitioner’s testimony. carrying or transporting passengers or goods or
both, by land, water or air, for compensation, VI. DISTINCTIONS FROM ARRASTRE,
offering their services to the public. TOWAGE AND STEVEDORING
It is obvious from the above definition that
respondent is not an entity engaged in the business
i. Marina Port Services, Inc. vs American Home
of transporting either passengers or goods and is
Insurance; Aug 12, 2015
therefore, neither a private nor a common carrier.
Respondent did not undertake to transport
petitioner from one place to another since its
covenant with its customers is simply to make travel
arrangements in their behalf. Respondent’s services
as a travel agency include procuring tickets and
facilitating travel permits or visas as well as booking
customers for tours.

While petitioner concededly bought her plane ticket


through the efforts of respondent company, this
does not mean that the latter ipso facto is a common
carrier. At most, respondent acted merely as an
agent of the airline, with whom petitioner ultimately
contracted for her carriage to Europe. Respondent’s
obligation to petitioner in this regard was simply to
see to it that petitioner was properly booked with
the airline for the appointed date and time. Her
transport to the place of destination, meanwhile,
pertained directly to the airline.
The object of petitioner’s contractual relation with
respondent is the latter’s service of arranging and
facilitating petitioner’s booking, ticketing and
accommodation in the package tour. In contrast, the
object of a contract of carriage is the transportation
of passengers or goods. It is in this sense that the
contract between the parties in this case was an
ordinary one for services and not one of carriage.
Petitioner’s submission is premised on a wrong
assumption.
ii. Asian Terminals vs Allied Guarantee were in good condition while in the custody of the
Insurance; G.R No. 182208, Oct. 14, 2015 arrastre. Said documents proved only that indeed
the 158 rolls were already damaged when they were
FACTS: Marina, the predecessor of Asian Terminals discharged to the arrastre operator and when it
Inc., is an arrastre operator based on Manila. On was subsequently withdrawn from the arrastre
February 5, 1989, a shipment of kraft linear board operator by [the] customs broker. Further, the Turn
was loaded and received from the ports of Lake Over Inspector and the Bad Order Inspector who
Charles, LA, and Mobile, Al, USA for transport and conducted the inspections and who signed the
delivery to San Miguel. Upon offloading, it was Turn Over Survey of Bad [Order] Cargoes and the
assessed that a total of 158 rolls were damaged Request for Bad Order Survey, respectively, were
during shipping. Further, upon the goods' not presented by Marina as witnesses to verify the
withdrawal from arrastre and their delivery to the correctness of the document and to testify that
customs broker, Dynamic and eventually to the only 158 rolls was reported and no others sustained
consignee San Miguel, another 54 rolls were found damage while the shipment was in its possession.
to have been damaged, for a total of 212 rolls of
damaged shipment worth P755,666.84. On the other hand, defendant Dynamic (which) in
its capacity as broker, withdrew the 357 rolls of kraft
Allied Insurance was the insurer of the shipment. linear board from the custody of defendant Marina
Thus, it paid San Miguel P755,666.84 and was and delivered the same to the consignee, San Miguel
subrogated in the latter's right. Allied filed a Corporation's warehouse in Tabacalera at United
Complaint against Transocean, Philippine Nations, Manila, is considered a common carrier.
Transmarine, Dynamic and Marina seeking to be
indemnified for the P755,666.84 it lost paying San It is noteworthy to mention that "in general, the
Miguel. nature of the work of an arrastre operator covers the
handling of cargoes at piers and wharves,"
ISSUES: Whether or not petitioner has been proven
liable for the additional 54 rolls of damaged goods "To carry out its duties, the arrastre is required to
to respondent provide cargo handling equipment which includes,
among others, trailer, chassis for containers."
RULING: Yes. Marina, the arrastre operator, from
the above evidence, was not able to overcome the Hence, the "legal relationship betw.een the
presumption of negligence. The Bad Order Cargo consignee and the arrastre operator is akin to that of
Receipts, the Turn Over Survey of Bad Order a depositor and the warehouseman. The
Cargoes as well as the Request for Bad Order relationship between the consignee and the common
Survey did not establish that the additional 54 rolls carrier is similar to that of the consignee and the
arrastre operator. Since it is the duty of the arrastre equipment while loading the goods onto Dynamic's
to take good care of the goods that are in its custody trucks had a role in causing the damage. Such is a
and to deliver them in good condition to the finding of fact made by the trial court which this
consignee, such responsibility also develops upon Court, without a justifiable ground, will not
the carrier. Both the arrastre and the carrier are, disturb,
therefore, charged with and obligated to deliver the
goods in good condition to the consignee." The arrastre operator's principal work is that of
handling cargo, so that its drivers/operators or
Since the relationship of an arrastre operator and a employees should observe the standards and
consignee is akin to that between a warehouseman measures necessary to prevent losses and damage to
and a depositor, then, in instances when the shipments under its custody.
consignee claims any loss, the burden of proof is on
the arrastre operator to show that it complied with In the performance of its obligations, an arrastre
the obligation to deliver the goods and that the operator should observe the same degree of
losses were not due to its negligence or that of its diligence as that required of a common carrier and a
employees. warehouseman.

the broker, Dynamic, cannot alone be held liable for Being the custodian of the goods discharged from a
the additional 54 rolls of damaged goods since such vessel, an arrastre operator's duty is to take good
damage occurred during the following care of the goods and to turn them over to the party
instances: (1) while the goods were in the custody entitled to their possession. With such a
of the arrastre ATI; (2) when they were in transition responsibility, the arrastre operator must prove that
from ATI's custody to that of Dynamic (i.e., during the losses were not due to its negligence or to that of
loading to Dynamic's trucks); and (3) during its employees. And to prove the exercise of diligence
Dynamic's custody. in handling the subject cargoes, petitioner must do
more than merely show the possibility that some
While the trial court could not determine with other party could be responsible for the loss or the
pinpoint accuracy who among the two caused which damage. It must prove that it exercised due care in
particular damage and in what proportion or the handling thereof.
quantity, it was clear that both ATI and Dynamic
failed to discharge the burden of proving that a mere sign-off from the customs broker's
damage on the 54 rolls did not occur during their representative that he had received the subject
custody. As for petitioner ATI, in particular, what shipment "in good order and condition without
worked against it was the testimony, as cited above, exception" would not absolve the arrastre from
that its employees' use of the wrong lifting liability, simply because the representative's
signature merely signifies that said person thereby
frees the arrastre from any liability for loss or The driver was found guilty of homicide through
damage to the cargo so withdrawn while the same reckless negligence and was sentenced to pay the
was in the custody of such representative to whom heirs of Erezo. As the amount of the judgment could
the cargo was released, but it does not foreclose the not be enforced Espino, Gaudioso Erezo, father of
remedy or right of the consignee (or its subrogee) to Ernesto, sued Jepte to collect the amount of
prove that any loss or damage to the subject judgment.
shipment occurred while the same was under the
custody, control and possession of the arrastre Jepte denies liability for payment of said amount by
operator. claiming that he was not the actual owner at the time
of the accident.
As it is now established that there was negligence in
both petitioner ATI's and Dynamic's performance of ISSUE: Whether the registered owner of a motor
their duties in the handling, storage and delivery of vehicle is liable for injuries sustained by a third
the subject shipment to San Miguel, resulting in the person even if it was the employee of the actual
loss of 54 rolls of kraft linear board, both shall be owner who actually caused such injury?
solidarily liable for such loss.
RULING:

VII. REGISTERED OWNER RULE AND YES. The registered owner of a certificate of public
convenience is liable to the public for the injuries or
KABIT SYSTEM
damages suffered by passengers or third persons
i. Erezo vs Jepte; Sept 30, 1957
caused by the operation of said vehicle, even though
the same had been transferred to a third person.
FACTS:
Aguedo Jepte is the registered owner of a six by six
The registered owner of any vehicle, even if not used
truck. The actual owner is Port Brokerage
for a public service, should primarily be responsible
Corporation(PBC) which registered in Jepte’s name
to the public or to third persons for injuries caused
the trucks as a convenient arrangement so as to
the latter while the vehicle is being driven on the
enable the corporation to pay the registration fee
highways or streets.
with his backpay as a pre-war government
employee.
The law does not relieve him directly of the
responsibility that the law fixes and places upon him
While the truck was being driven by Rodolfo
as an incident or consequence of registration.
Espino, employee of PBC it collided with a taxicab
resulting to the untimely death of Ernesto Erezo.
ii. Filcar Transport Services vs Espinas; laid down in Article 2176 of the Civil Code, which

June 20, 2012 provides to wit:


Article 2176. Whoever by act or omission

FACTS: causes damage to another, there being fault

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

damages. shall cease when the persons herein mentioned

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

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

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

by himself and not by another. This general rule is 2180, of the Civil Code, an action predicated on an
employee's act or omission may be instituted against iii. Duavit vs CA. G.R No. 82318; May 18,
the employer who is held liable for the negligent act 1989
or omission committed by his employee. FACTS:
Although the employer is not the actual Gualberto Duavit is the actual and registered owner
tortfeasor, the law makes him vicariously liable on of a jeep.
the basis of the civil law principle of pater familias Oscar Sabiniano took the jeep from the
for failure to exercise due care and vigilance over the garage of defendant Duavit without the consent or
acts of one's subordinates to prevent damage to authority of the latter.
another. In the last paragraph of Article 2180 of the As Sabiniano was driving the same, the
Civil Code, the employer may invoke the defense jeepney hit and bumped another jeepney in which
that he observed all the diligence of a good father of Antonio Sarmiento, Sr. and Virgilio Catuar were on
a family to prevent damage. board. These passengers sustained physical injuries.
It is well settled that in case of motor vehicle Catuar and Sarmiento, Sr. sued both against
mishaps, the registered owner of the motor vehicle Sabiniano and Duavit. In defense, Duavit insists that
is considered as the employer of the tortfeasor- he is not liable because Sabiniano never was his
driver, and is made primarily liable for the tort employee.
committed by the latter under Article 2176, in
relation with Article 2180, of the Civil Code. ISSUE: Whether the registered and actual owner of
In so far as third persons are concerned, the a vehicle, which figured in an accident, may be held
registered owner of the motor vehicle is the liable, when the said vehicle was taken and driven
employer of the negligent driver, and the actual by another person without the consent or
employer is considered merely as an agent of such knowledge of the owner thereof?
owner.
Thus, it is clear that for the purpose of RULING:
holding the registered owner of the motor vehicle No. An owner of a vehicle cannot be held
primarily and directly liable for damages under liable for an accident involving the said vehicle if the
Article 2176, in relation with Article 2180, of the Civil same was driven without his consent or knowledge
Code, the existence of an employer-employee and by a person not employed by him.
relationship, as it is understood in labor relations The jeep was virtually stolen from the
law, is not required. It is sufficient to establish that petitioner's garage. To hold, therefore, the petitioner
Filcar is the registered owner of the motor vehicle liable for the accident caused by the negligence of
causing damage in order that it may be held Sabiniano who was neither his driver nor employee
vicariously liable under Article 2180 of the Civil would be absurd as it would be like holding liable
Code. the owner of a stolen vehicle for an accident caused
by the person who stole such vehicle.
iv. Lita Enterprise vs IAC, G.R No. 64693; damages wherein petitioner is ordered to transfer

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

FACTS: not levied upon.

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

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

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

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

be used as taxicabs. Since they had no franchise to


operate taxicabs, they contracted with petitioner ISSUE:

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

the use of the latter's certificate of public


convenience in consideration of an initial payment RULING:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


VIII. OBLIGATIONS OF THE PARTIES

AND DEFENSES FINAL DESTINATION: Boston.


Early hours of October 30: LCT No. 1025
Common Carrier
sank, resulting in the damage or loss of 1,162 bales
i. Compania Maritima vs Insurance
of hemp loaded therein
Company of North America (12 SCRA
Macleod promptly notified the carrier's main
213)
office in Manila and its branch in Davao advising it
FACTS:
of its liability
October, 1952: Macleod and Company of the
The damaged hemp was brought to Odell
Philippines (Macleod) contracted by telephone the
Plantation in Madaum, Davao, for cleaning,
services of the Compañia Maritima (CM), a shipping
washing, reconditioning, and redrying total loss
corporation, for: shipment of 2,645 bales of hemp
adds up to P60,421.02
from the Macleod's Sasa private pier at Davao City
All abaca shipments of Macleod were
to Manila subsequent transhipment to Boston,
insured with the Insurance Company of North
Massachusetts, U.S.A. on board the S.S. Steel
America against all losses and damages
Navigator.
Macleod filed a claim for the loss it suffered
This oral contract was later on confirmed by
with the insurance company and was paid
a formal and written booking issued by Macleod's
P64,018.55 subrogation agreement between Macleod
branch office in Sasa and handcarried to CM's
and the insurance company wherein the Macleod
branch office in Davao in compliance with which the
assigned its rights over the insured and damaged
CM sent to Macleod's private wharf LCT Nos. 1023
cargo October 28, 1953.: failing to recover from the
and 1025 on which the loading of the hemp was
carrier P60,421.02 (amount supported by receipts),
completed on October 29, 1952.
the insurance company instituted the present action
The 2 lighters were manned each by a patron
CA affirmed RTC: ordering CM to pay the insurance
and an assistant patron.
co.
The patrons of both barges issued the
corresponding carrier's receipts and that issued by
ISSUE: W/N there was a contract of carriage bet. CM
the patron of Barge No. 1025 reads in part:
(carrier) and Macleod (shipper)
Received in behalf of S.S. Bowline Knot in
good order and condition from MACLEOD AND
HELD:
COMPANY OF PHILIPPINES, Sasa Davao, for
YES. Affirmed
transhipment at Manila onto S.S. Steel Navigator.
Receipt of goods by the carrier has been said
to lie at the foundation of the contract to carry and
deliver, and if actually no goods are received there
can be no such contract
The liability and responsibility of the carrier Navigation Co.'s vessel, FS-176 for carriage from
under a contract for the carriage of goods commence Manila to Pulupandan, Negros Occidental
on their actual delivery to, or receipt by, the carrier Bill of Lading:
or an authorized agent. ... and delivery to a lighter in Clause 14. Carrier shall not be responsible for loss
charge of a vessel for shipment on the vessel, where or damage to shipments billed 'owner's risk' unless
it is the custom to deliver in that way such loss or damage is due to negligence of carrier.
Whenever the control and possession of Nor shall carrier be responsible for loss or damage
goods passes to the carrier and nothing remains to caused by force majeure, dangers or accidents of the
be done by the shipper, then it can be said with sea or other waters; war; public enemies; . . . fire . ...
certainty that the relation of shipper and carrier has Upon arrival of the vessel at Pulupandan, in the
been established morning of November 18, 1963, the cargoes were
As regards the form of the contract of discharged, complete and in good order, unto the
carriage it can be said that provided that there is a warehouse of the Bureau of Customs 2 pm:
meeting of the minds and from such meeting arise warehouse was razed by fire, Before the fire, 907
rights and obligations, there should be no cavans of rice were delivered by Uy Bico. Uy Bico
limitations as to form and Servando filed a claim for the value but was
The bill of lading is not essential rejected by Philippine Steam
Even where it is provided by statute that CFI: favored UY Bico and Sercando delivery
liability commences with the issuance of the bill of of the shipment in question to the warehouse of the
lading, actual delivery and acceptance are sufficient Bureau of Customs is not the delivery contemplated
to bind the carrier marine surveyors, attributes the by Article 1736
sinking of LCT No. 1025 to the 'non-water-tight ISSUE: W/N Philippine Steam should not be liable
conditions of various buoyancy compartments because of the stipulation in the bill of lading
exempting it from fortuitous event

ii. Servando vs Philippine Steam Navigation


(177 SCRA 832) HELD: YES. set aside
Agreement was in iteration of Article 1174. Except

Lessons Applicable: Contract of Adhesion in cases expressly specified by the law, or when it is

(Transportation) otherwise declared by stipulation, or when the

Laws Applicable: Article 1736, Article 1174 nature of the obligation requires the assumption of

FACTS: risk, no person shall be responsible for those events

Clara Uy Bico (1,528 cavans of rice worth which could not be foreseen, or which, though

P40,907.50) and Amparo Servando (44 cartons of foreseen, were inevitable.

colored paper toys and general merchandise worth 'caso fortuito' presents the following essential

P1,070.50) loaded on board Philippine Steam characteristics: (1) the cause of the unforeseen and
unexpected occurrence, or of the failure of the holding it, the vessel drifted westward, dragged and
debtor to comply with his obligation, must be stretched the flexible rubber hose attached to the
independent of the human will; (2) it must be riser, broke the elbow into pieces, severed
impossible to foresee the event which constitutes the completely the rubber hose connected to the tanker
'caso fortuito', or if it can be foreseen, it must be from the main delivery line at sea bed level and
impossible to avoid; (3) the occurrence must be such ultimately caused the diesel oil to spill into the sea.
as to render it impossible for the debtor to fulfill his Unaware of what happened, the shore tender,
obligation in a normal manner; and (4) the obligor thinking that the vessel would, at any time, resume
must be free from any participation in the pumping, did not shut the storage tank gate valve.
aggravation of the injury resulting to the creditor." As all the gate valves remained open, the diesel oil
In the case at bar, the burning of the customs that was earlier discharged from the vessel into the
warehouse was an extraordinary event which shore tank backflowed. In short, there was spillage
happened independently of the will of the appellant. and backflow of the diesel cargo. As a result of
The latter could not have foreseen the event. spillage and backflow of diesel oil, Caltex sought
Nothing in the record to show that appellant carrier, recovery of the loss from Delsan, but the latter
incurred in delay in the performance of its refused to pay. As insurer, AHAC paid Caltex the
obligation. sum of P479,262.57 for spillage, pursuant to Marine
Risk Note No. 34-5093-6, and P1,939,575.37 for
iii. Delsan Transport Kines vs American backflow of the diesel oil pursuant to Inland Floater

Home Assurance Corp., G.R No. 149019, Policy No. AH-1F64-1011549P. AHiAC as subrogee

Aug 15, 2006 asked Delsan to compensate it for the amount paid,

FACTS: but to no avail, AHAc instituted an action against

Carrier – Delsan Transport Lines Inc. Delsan.

Shipper – Caltex Philippines RTC – ruled in favor of AHAC nad held Delsan
Insurer – American Home Assurance Corporation liable for the loss of the cargo due to its negligence
Delsan Transport was hired by Caltex to as a common carrier
transport its cargo of diesel oil from Bataan Refinery
CA – affirmed RTC - Delsan failed to exercise the
Corporation to the bulk depot in Bacolod City
extraordinary diligence of a good father of a family
through a Contract of Affreightment. Upon the
in the handling of its cargo. Applying Article 1736 of
arrival of MT Larusan which carried the cargo in its
the Civil Code, the CA ruled that since the
destination, unloading operations commenced.
discharging of the diesel oil into Caltex bulk depot
Thereafter the discharging had to be stopped on
had not been completed at the time the losses
account of the discovery that the port bow mooring
occurred, there was no reason to imply that there
of the vessel was intentionally cut or stolen by
unknown persons. Because there was nothing
was actual delivery of the cargo to Caltex, the the excepted causes if it were to seek exemption
consignee from responsibility.
ISSUE: Unfortunately, it miserably failed to
W/N petitioner should be held liable for both discharge this burden by the required quantum of
spillage and backflow that caused the loss of the proof.
cargo. Delsan’s argument that it should not be held
liable for the loss of diesel oil due to backflow
HELD: because the same had already been actually and
YES. Common carriers are bound to observe legally delivered to Caltex at the time it entered the
extraordinary diligence in the vigilance over the shore tank holds no water. It had been settled that
goods transported by them. They are presumed to the subject cargo was still in the custody of Delsan
have been at fault or to have acted negligently if the because the discharging thereof has not yet been
goods are lost, destroyed or deteriorated. finished when the backflow occurred. Since the
To overcome the presumption of negligence discharging of the cargo into the depot has not yet
in case of loss, destruction or deterioration of the been completed at the time of the spillage when the
goods, the common carrier must prove that it backflow occurred, there is no reason to imply that
exercised extraordinary diligence. There are, there was actual delivery of the cargo to the
however, exceptions to this rule found in Article consignee. Delsan is straining the issue by insisting
1734 of the NCC. In the case at bar, it had been that when the diesel oil entered into the tank of
established that the proximate cause of the spillage Caltex on shore, there was legally, at that moment, a
and backflow of the diesel oil was due to the complete delivery thereof to Caltex. To be sure, the
severance of the port bow mooring line of the vessel extraordinary responsibility of common carrier lasts
and the failure of the shore tender to close the from the time the goods are unconditionally placed
storage tank gate valve even as a check on the drain in the possession of, and received by, the carrier for
cock showed that there was still a product on the transportation until the same are delivered, actually
pipeline. The crew of the vessel should have or constructively, by the carrier to the consignee, or
promptly informed the shore tender that the port to a person who has the right to receive them.
mooring line was cut off. However, Delsan did not The discharging of oil products to Caltex
do so on the lame excuse that there was no available Bulk Depot has not yet been finished, Delsan still has
banca. the duty to guard and to preserve the cargo. The
The crew of the vessel should have exerted carrier still has in it the responsibility to guard and
utmost effort to immediately inform the shore preserve the goods, a duty incident to its having the
tender that the port bow mooring line was severed. goods transported. Hence, having not overturned
To be sure, Delsan, as the owner of the vessel, was the presumption of negligence, it is but right and
obliged to prove that the loss was caused by one of
proper to held petitioner liable for the loss of the
cargo.
iv. Westwind Shipping vs UCPB; G.R No.
200289, Nov 25, 2013

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

v. Nedlloyd Linen B.V. Rotterdam vs Glow


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