TRANSPORTATION LAW

1.

Topic: Concept of Common Carrier

CASE DIGEST

SPOUSES TEODORO1 and NANETTE PEREÑA, petitioners, vs. SPOUSES NICOLAS and
TERESITA L. ZARATE, PHILIPPINE NATIONAL RAILWAYS, and the COURT OF APPEALS,
respondents

G.R. No. 157917. August 29, 2012

FACTS
The Pereñas were engaged in the business of transporting students from their respective residences in
Parañaque City to Don Bosco in Pasong Tamo, Makati City, and back. They employed Clemente Alfaro
(Alfaro) as driver of the van. The Zarates contracted the Pereñas to transport Aaron to and from Don
Bosco. The students were due at Don Bosco by 7:15 a.m., and that they were already running late
because of the heavy vehicular traffic on the South Superhighway, Alfaro took the van to an alternate
route by traversing the narrow path underneath the Magallanes Interchange.

At about the time the van was to traverse the railroad crossing, PNR Commuter No. 302 (train), operated
by Jhonny Alano, was in the vicinity of the Magallanes Interchange travelling northrespondents

he train neared the railroad crossing, Alfaro drove the van eastward across the railroad tracks, closely
tailing a large passenger bus. The passenger bus successfully crossed the railroad tracks, but the van
driven by Alfaro did not. The train hit the rear end of the van, and the impact threw nine of the 12
students in the rear, including Aaron, out of the van. Aaron landed in the path of the train, which
dragged his body and severed his head, instantaneously killing him. Alano fled the scene on board the
train, and did not wait for the police investigator to arrive.

Devastated by the early and unexpected death of Aaron, the Zarates commenced this action for damages
against Alfaro, the Pereñas, PNR and Alano.

ISSUE
WON the Pereñas’ school bus is a common carrier?

RULING
YES. A common carrier is a person, corporation, firm or association engaged in the business of carrying
or transporting passengers or goods or both, by land, water, or air, for compensation, offering such
services to the public. Contracts of common carriage are governed by the provisions on common carriers
of the Civil Code, the Public Service Act, and other special laws relating to transportation. A common
carrier is required to observe extraordinary diligence, and is presumed to be at fault or to have acted
negligently in case of the loss of the effects of passengers, or the death or injuries to passengers.

The true test for a common carrier is whether the undertaking is part of the activity engaged in by the
carrier that he has held out to the general public as his business or occupation. If the undertaking is a
single transaction, not a part of the general business or occupation engaged in, as advertised and held
out to the general public, the individual or the entity rendering such service is a private, not a common,
carrier. The question must be determined by the character of the business actually carried on by the
carrier.

Applying these considerations to the case before us, there is no question that the Pereñas as the
operators of a school bus service were: (a) engaged in transporting passengers generally as a business,
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not just as a casual occupation; (b) undertaking to carry passengers over established roads by the
method by which the business was conducted; and (c) transporting students for a fee. Despite catering
to a limited clientèle, the Pereñas operated as a common carrier because they held themselves out as a
ready transportation indiscriminately to the students of a particular school living within or near where
they operated the service and for a fee.

2.

TOPIC: CONCEPT OF COMMON CARRIER

G.R. No. 186312. June 29, 2010.*
SPOUSES DANTE CRUZ and LEONORA CRUZ, petitioners, vs. SUN HOLIDAYS, INC.,
respondent.

FACTS:

Spouses Dante and Leonora Cruz filed a complaint against Sun Holidays before RTC Pasig City for
damages arising from the death of their son Ruelito Cruz who died together with his wife while they were
on board the boat M/B Coco Beach III which overturned on its way back to Batangas. The deceased
couple stayed at Coco Beach Island resort which was owned by respondent. Their stay was by a virtue of
a tour package contract with the respondent that included transportation to and from the resort and the
point of departure in Batangas.

Sun Holidays denied any responsibility and put in the defense of fortuitous event considering that the
capsizing of the boat was due to heavy rains and it being hit by big waves.

The petitioners contented that as a common carrier, Sun Holidays was guilty of negligence in allowing
M/B Coco Beach III to sail notwithstanding the storm warning bulletin issued by PAGASA. The
respondents in their answer, denied being a common carrier saying that their boats are not available to
the general public as they only cater to resort guests and crew members. They also claimed to have
exercised the utmost diligence in assuring safety of their passengers.

The RTC dismissed the complaint of the petitioners as well as the counterclaim of the respondents. CA
affirmed the decision of RTC which considers the respondent as a private carrier and not a common
carrier

ISSUE: WON Sun Holidays is a common carrier

HELD:

Yes. Respondent is a common carrier. Article 1732 makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one who does such carrying only as an
ancillary activity. Article 1732 also carefully avoids making any distinction between a person or enterprise
TRANSPORTATION LAW

offering transportation service on a regular or scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis.

The intent of the law is not to consider such distinctions. Otherwise, there is no telling how many
distinctions may be concocted by unscrupulous businessmen engaged in carrying of persons or goods
just to avoid legal obligations and liabilities of common carriers.

Article 1732 may be seen to coincide with the notion of “public service”. In the case at bar, the
respondent’s ferry services are so intertwined with its main business as to be properly considered
ancillary thereto. The constancy of respondent’s ferry services in its resort operations is underscored by
its having its own Coco Beach boats as well as including ferry services in their tour packages which can
be availed by anyone who can afford to pay such package, which makes their services available to the
general public.

Under the civil code, common carriers are bound to observe extraordinary diligence for safety of its
passengers. When a passenger dies or is injured, it is presumed that the common carrier is negligent or
is at fault. In this case, the evidence shows that PAGASA issued 24 hour public weather forecast and
tropical cyclone warning on the date of the incident. SC states that a very cautious person exercising
utmost diligence would not have brave such a stormy weather and put other people’s lives at risk which
the respondent failed to do so.

3.

ESTELA L. CRISOSTOMO, petitioner, vs. THE COURT OF APPEALS and CARAVAN TRAVEL &
TOURS INTERNATIONAL, INC., respondents
(Travel agency, not a common carrier)

FACTS: Petitioner Estela L. Crisostomo contracted the services of respondent Caravan Travel and Tours
International, Inc. to arrange and facilitate her booking, ticketing and accommodation in a tour dubbed
“Jewels of Europe”. On her scheduled flight Saturday, June 15, 1991, petitioner went to NAIA to take the
flight for the first leg of her journey from Manila to Hong Kong. To petitioner’s dismay, she discovered
that the flight she was supposed to take had already departed the previous day. Subsequently, Menor
prevailed upon petitioner to take another tour—the “British Pageant”. For this tour package, petitioner
was asked anew to pay US$785.00 or P20,881.00. Upon petitioner’s return from Europe, she demanded
from respondent the reimbursement of P61,421.70, representing the difference between the sum she
paid for “Jewels of Europe” and the amount she owed respondent for the “British Pageant” tour. Despite
several demands, respondent company refused to reimburse the amount, contending that the same was
non-refundable.

Petitioner was thus constrained to file a complaint against respondent for breach of contract of carriage
and damages. Petitioner alleged that her failure to join “Jewels of Europe” was due to respondent’s fault
since it did not clearly indicate the departure date on the plane ticket. For its part, respondent company,
denied responsibility for petitioner’s failure to join the first tour. It insisted that petitioner was informed of
the correct departure date, which was clearly and legibly printed on the plane ticket. The travel
documents were given to petitioner two days ahead of the scheduled trip.
TRANSPORTATION LAW

After due proceedings, the trial court held that respondent was negligent in erroneously advising
petitioner of her departure date through its employee. The trial court also declared that petitioner was
guilty of contributory negligence. Respondent appealed to the Court of Appeals which the latter held that
petitioner is more negligent than respondent because as a lawyer and well-traveled person, she should
have known better than to simply rely on what was told to her. This being so, she is not entitled to any
form of damages. On her petition to SC, the petitioner contends that respondent did not observe the
standard of care required of a common carrier when it informed her wrongly of the flight schedule. She
could not be deemed more negligent than respondent since the latter is required by law to exercise
extraordinary diligence in the fulfillment of its obligation.

ISSUE: Whether or not a travel agency is a common carrier and is therefore required to exercise
extraordinary diligence.

HELD: No, since the private respondent is a travel agency and not a common carrier. By definition, a
contract of carriage or transportation is one whereby a certain person or association of persons obligate
themselves to transport persons, things, or news from one place to another for a fixed price. Such person
or association of persons are regarded as carriers and are classified as private or special carriers and
common or public carriers. A common carrier is defined under Article 1732 of the Civil Code as persons,
corporations, firms or associations engaged in the business of carrying or transporting passengers or
goods or both, by lane, water or air, for compensation, offering their services to the public.

It is obvious from the above definition that respondent is not an entity engaged in the business of
transporting either passengers or goods and is therefore, neither, a private nor a common carrier.
Respondent did not undertake to transport petitioner from one place to another since its covenant with
its customers is simply to make travel arrangements in their behalf. Respondent’s services as a travel
agency include procuring tickets and facilitating travel permits or visas as well as booking customers for
tours. As earlier stated, respondent is not a common carrier but a travel agency. It is thus not bound
under the law to observe extraordinary diligence in the performance of its obligation, as petitioner claims.

4.

FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner, vs. COURT OF APPEALS, HONORABLE

PATERNO V. TAC-AN, BATANGAS CITY and ADORACION C. ARELLANO, in her official capacity as City
Treasurer of Batangas, respondents

G.R. No. 125948. December 29, 1998

TOPIC: CONCEPT OF COMMON CARRIER

FACTS:

Petitioner is a grantee of a pipeline concession, to contract, install and operate oil pipelines.

Sometime in 1995, Petitioner then applied for mayor’s permit. However, before the mayor’s permit
could be issued, the respondent City Treasurer required petitioner to pay a local tax based on its gross
receipts for the fiscal year 1993 pursuant to the Local Government Code. With this, Petitioner filed a
letter-protest addressed to the respondent City Treasurer, the pertinent portion of which reads:
TRANSPORTATION LAW

“Please note that our Company (FPIC) is a pipeline operator with a government concession granted
under the Petroleum Act. It is engaged in the business of transporting petroleum products from the
Batangas refineries, via pipeline, to Sucat and JTF Pandacan Terminals. As such, our Company is exempt
from paying tax on gross receipts under Section 133 of the Local Government Code of 1991 x x x x

“Moreover, Transportation contractors are not included in the enumeration of contractors under
Section 131, Paragraph (h) of the Local Government Code. Therefore, the authority to impose tax ‘on
contractors and other independent contractors’ under Section 143, Paragraph (e) of the Local
Government Code does not include the power to levy on transportation contractors.”

Respondent City Treasurer denied the protest contending that petitioner cannot be considered engaged
in transportation business, thus it cannot claim exemption under Section 133 (j) of the Local
Government Code.

ISSUE: Whether or not Petitioner, a pipeline operator, is a common carrier.

HELD: YES. Petitioner is considered a common carrier. The Court explained that:

A “common carrier” may be defined, broadly, as one who holds himself out to the public as engaged in
the business of transporting persons or property from place to place, for compensation, offering his
services to the public generally.

Article 1732 of the Civil Code defines a “common carrier” as “any person, corporation, firm or
association engaged in the business of carrying or transporting passengers or goods or both, by land,
water, or air, for compensation, offering their services to the public.”

The test for determining whether a party is a common carrier of goods is:

1. He must be engaged in the business of carrying goods for others as a public employment, and must
hold himself out as ready to engage in the transportation of goods for person generally as a business
and not as a casual occupation;

2. He must undertake to carry goods of the kind to which his business is confined;

3. He must undertake to carry by the method by which his business is conducted and over his
established roads; and

4. The transportation must be for hire.

Based on the above definitions and requirements, there is no doubt that petitioner is a common carrier.
It is engaged in the business of transporting or carrying goods, i.e. petroleum products, for hire as a
public employment. It undertakes to carry for all persons indifferently, that is, to all persons who choose
to employ its services, and transports the goods by land and for compensation. The fact that petitioner
has a limited clientele does not exclude it from the definition of a common carrier. As correctly pointed
out by petitioner, the definition of “common carriers” in the Civil Code makes no distinction as to the
means of transporting, as long as it is by land, water or air. It does not provide that the transportation of
the passengers or goods should be by motor vehicle. ###
TRANSPORTATION LAW

5 and 19

Loadmasters Customs Services, Inc. vs. Glodel Brokerage Corporation and R&B Insurance Corporation

Facts

Columbia tasked Glodel Brokerage to transport its cargo of 132 bundles of electric copper cathodes
(cargo which earlier was insured with an all risk policy by R&B Insurance) from the vessel Richard Rey to
its plants in Valenzuela and Bulacan. Glodel in turn hired Loadmaster’s trucks to transport the same.
While the 6 trucks bound for Valenzuela made it safely, only 5 of the 6 trucks bound for Bulacan made it
to the warehouse therein. After payment on the all risk insurance policy was made to Columbia, R&B
Insurance sued both Glodel and Loadmasters before the Manila RTC for reimbursement upon the
principle of subrogation.

Issue(s)

1. (Case #5) Are Glodel and Loadmasters considered common or private carriers?

2. (Case #19) Who among Glodel and Loadmasters is liable to reimburse the insurance amount
paid for the loss?

Ruling

1. Under Article 1732 of the Civil Code, common carriers are persons, corporations, firms, or
associations engaged in the business of carrying or transporting passenger or goods, or both by
land, water or air for compensation, offering their services to the public. Based on the aforecited
definition, Loadmasters is a common carrier because it is engaged in the business of
transporting goods by land, through its trucking service. It is a common carrier as distinguished
from a private carrier wherein the carriage is generally undertaken by special agreement and it
does not hold itself out to carry goods for the general public. In the same vein, Glodel is also
considered a common carrier within the context of Article 1732.

2. Loadmasters and Glodel, being both common carriers, are mandated from the nature of their
business and for reasons of public policy, to observe the extraordinary diligence in the vigilance
over the goods transported by them according to all the circumstances of such case, as required
by Article 1733 of the Civil Code. When the Court speaks of extraordinary diligence, it is that
extreme measure of care and caution which persons of unusual prudence and circumspection
observe for securing and preserving their own property or rights. Thus, in case of loss of the
goods, the common carrier is presumed to have been at fault or to have acted negligently.
TRANSPORTATION LAW

Premises considered, the Court is of the view that both Loadmasters and Glodel are jointly and
severally liable to R & B Insurance for the loss of the subject cargo.

6.

LOADSTAR SHIPPING CO., INC., petitioner, vs. PIONEER ASIA INSURANCE CORP., respondent

G.R. No. 157481. January 24, 2006

Facts:

Loadstar Shipping Co., Inc. is the owner and operator of M/V Weasel.

On June 6, 1984, Loadstar enter into a voyage-charter with Northern Mindanao Transport
Company, Inc. for the carriage of 65,000 bags of cement from Iligan City to Manila. The shipper was
Iligan Cement Corporation, while the consignee was Market Developers, Inc. The shipment of cement
was insured with Pioneer Asia Insurance Corporation for Php 1,400,000 covering all shipments made on
or after September 30, 1980.

M/V Weasel left Manila in good weather. But Captain Montera, a master of the ship, ordered
the vessel to be forced aground. Consequently, the entire shipment of cement was good as gone due to
exposure to sea water.

The consignee demanded full reimbursement of the cost of the shipment. However Loadstar
refused despite repeated demands. Nonetheless Pioneer paid the consignee plus the additional amount
of Php 500,000, the value of the lost shipment. In return, the consignee executed a Loss and
Subrogation Receipt in favor Pioneer for their subrogation rights against the Petitioner.

Loadstar contends that at the time of the voyage the carrier’s voyage-charter agreement with
the shipper converted it into a private carrier. Thus, the presumption of negligence against common
carriers could not apply.

Issue: Whether or not the voyage-charter agreement converted Loadstar into a private carrier.

Held:

NO.
TRANSPORTATION LAW

The voyage-charter agreement between petitioner and Northern Mindanao Transport Company, Inc. did
not in any way convert the common carrier into a private carrier. We have already resolved this issue
with finality in Planters Products, Inc. v. Court of Appeals where we ruled that: It is therefore imperative
that a public carrier shall remain as such, notwithstanding the charter of the whole or portion of a vessel
by one or more persons, provided the charter is limited to the ship only, as in the case of a time-charter
or voyage-charter. It is only when the charter includes both the vessel and its crew, as in a bareboat or
demise that a common carrier becomes private, at least insofar as the particular voyage covering the
charter-party is concerned. Indubitably, a ship owner in a time or voyage charter retains possession and
control of the ship, although her holds may, for the moment, be the property of the charterer.

7. PHILAMGEN vs. PKS Shipping Co. (401 SCRA 222 [2003]) MIGUEL

_____________________________________________________________________________________

8. Planters Products vs. CA (226 SCRA 476 [1993]) RED

PLANTERS PRODUCTS, INC. VS. COURT OF APPEALS,

SORIAMONT STEAMSHIP AGENCIES AND KYOSEI KISEN KABUSHIKI KAISHA
G.R. No. 101503 September 15, 1993

FACTS:

On June 16, 1964, Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation
(MITSUBISHI) of New York 9,329.7069 metric tons (M/T) of Urea 46% fertilizer which the latter shipped
in bulk on aboard the cargo vessel M/V "Sun Plum" owned by private respondent Kyosei Kisen Kabushiki
Kaisha (KKKK) from Kenai, Alaska, to Poro Point, San Fernando, La Union, Philippines, as evidenced by
Bill of Lading.

Prior to its voyage, a time charter-party on the vessel M/V "Sun Plum" pursuant to the Uniform General
Charter was entered into between Mitsubishi as shipper/charterer and KKKK as shipowner, in Tokyo,
Japan.

Before loading the fertilizer aboard the vessel, four (4) of her holds were all presumably inspected by
the charterer's representative and found fit to take a load of urea in bulk pursuant to par. 16 of the
charter-party. After the Urea fertilizer was loaded in bulk by stevedores hired by and under the
supervision of the shipper, the steel hatches were closed with heavy iron lids, covered with three (3)
layers of tarpaulin, then tied with steel bonds. The hatches remained closed and tightly sealed
throughout the entire voyage.
TRANSPORTATION LAW

Petitioner unloaded the cargo from the holds into its steelbodied dump trucks which were parked
alongside the berth, using metal scoops attached to the ship, pursuant to the terms and conditions of
the charter-partly (which provided for an F.I.O.S. clause). However, the hatches remained open
throughout the duration of the discharge. Each time a dump truck was filled up, its load of Urea was
covered with tarpaulin. The port area was windy, certain portions of the route to the warehouse were
sandy and the weather was variable, raining occasionally while the discharge was in progress.

It took eleven (11) days for PPI to unload the cargo. A private marine and cargo surveyor, Cargo
Superintendents Company Inc. (CSCI), was hired by PPI to determine the "outturn" of the cargo shipped,
by taking draft readings of the vessel prior to and after discharge. The survey report submitted by CSCI
to the consignee (PPI) revealed a shortage in the cargo of 106.726 M/T and that a portion of the Urea
fertilizer approximating 18 M/T was contaminated with dirt, sand and rust and rendered unfit for
commerce.

Consequently, PPI sent a claim letter to Soriamont Steamship Agencies (SSA), the resident agent of the
carrier, KKKK, representing the cost of the alleged shortage in the goods shipped and the diminution in
value of that portion said to have been contaminated with dirt. Respondent SSA was not able to respond
to this consignee’s claim for payment because according to them, they only received a request for
shortlanded certificate and not a formal claim.

Hence, PPI filed an action for damages with the Court of First Instance of Manila. The defendant carrier
argued that the strict public policy governing common carriers does not apply to them because they
have become private carriers by reason of the provisions of the charter-party.

ISSUE:

Whether a common carrier becomes a private carrier by reason of a charter-party.

HELD:

YES.

A "charter-party" is defined as a contract by which an entire ship, or some principal part thereof, is let
by the owner to another person for a specified time or use; a contract of affreightment by which the
owner of a ship or other vessel lets the whole or a part of her to a merchant or other person for the
conveyance of goods, on a particular voyage, in consideration of the payment of freight; Charter parties
are of two types: (a) contract of affreightment which involves the use of shipping space on vessels
leased by the owner in part or as a whole, to carry goods for others; and, (b) charter by demise or
bareboat charter, by the terms of which the whole vessel is let to the charterer with a transfer to him of
its entire command and possession and consequent control over its navigation, including the master and
the crew, who are his servants. Contract of affreightment may either be time charter, wherein the vessel
is leased to the charterer for a fixed period of time, or voyage charter, wherein the ship is leased for a
single voyage. In both cases, the charter-party provides for the hire of vessel only, either for a
determinate period of time or for a single or consecutive voyage, the ship owner to supply the ship's
stores, pay for the wages of the master and the crew, and defray the expenses for the maintenance of
the ship.
TRANSPORTATION LAW

On other hand, the term "common or public carrier" is defined in Art. 1732 of the Civil Code. The
definition extends to carriers either by land, air or water which hold themselves out as ready to engage
in carrying goods or transporting passengers or both for compensation as a public employment and not
as a casual occupation. The distinction between a "common or public carrier" and a "private or special
carrier" lies in the character of the business, such that if the undertaking is a single transaction, not a
part of the general business or occupation, although involving the carriage of goods for a fee, the person
or corporation offering such service is a private carrier.

It is not disputed that respondent carrier, in the ordinary course of business, operates as a common
carrier, transporting goods indiscriminately for all persons. When petitioner chartered the vessel M/V
"Sun Plum", the ship captain, its officers and compliment were under the employ of the shipowner and
therefore continued to be under its direct supervision and control. Hardly then can we charge the
charterer, a stranger to the crew and to the ship, with the duty of caring for his cargo when the
charterer did not have any control of the means in doing so. This is evident in the present case
considering that the steering of the ship, the manning of the decks, the determination of the course of
the voyage and other technical incidents of maritime navigation were all consigned to the officers and
crew who were screened, chosen and hired by the shipowner.

It is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the
whole or portion of a vessel by one or more persons, provided the charter is limited to the ship only, as
in the case of a time-charter or voyage-charter. It is only when the charter includes both the vessel and
its crew, as in a bareboat or demise that a common carrier becomes private, at least insofar as the
particular voyage covering the charter-party is concerned. Indubitably, a shipowner in a time or voyage
charter retains possession and control of the ship, although her holds may, for the moment, be the
property of the charterer.

_____________________________________________________________________________________

9.

Pedro de Guzman v. Court of Appeals

G.R. No. L-47822, December 22, 1988

BRIEF STATEMENT OF THE CASE:

Breach of the contract to carry Extraordinary diligence needed over common carriers

FACTS:
Ernesto Cendana was engaged in buying up used bottles and scrap metal in Pangasinan. Upon gathering
sufficient quantities of such scrap material, respondent would bring such material to Manila for resale.
TRANSPORTATION LAW

He utilized (2) two six-wheeler trucks which he owned for the purpose. Upon returning to Pangasinan,
he would load his vehicle with cargo belonging to different merchants to different establishments in
Pangasisnan which respondents charged a freight fee for. Sometime in November 1970,herein
petitioner Pedro de Guzman, a merchant and dealer of General Milk Company Inc. in Pangasinan
contracted with respondent for hauling 750 cartons of milk. Unfortunately, only 150 cartons made it, as
the other 600 cartons were intercepted by hijackers along Marcos Highway. Hence, petitioners
commenced an action against private respondent. In his defense, respondent argued that he cannot be
held liable due to force majuere, and that he is not a common carrier and hence is not required to
exercise extraordinary diligence. On appeal before the Court of Appeals, Cendana urged that the trial
court had erred in considering him a common carrier; in finding that he had habitually offered trucking
services to the public; in not exempting him from liability on the ground of force majeure; and in
ordering him to pay damages and attorney’s fees. The Court of Appeals reversed the judgment of the
trial court and held that Cendana had been engaged in transporting return loads of freight as a casual
occupation a sideline to his scrap iron business and not as a common carrier. De Guzman came to the
Supreme Court by way of a Petition for Review.

ISSUES:
1. Is respondent a common carrier?
2. Is the respondent liable for the loss of the cartons of milk due to force majeure?

HELD:
Respondent is not liable for the value of the undelivered merchandise. Article 1734 of the Civil Code-
The general rule is established by the article that common carriers are responsible for the loss,
destruction or deterioration of the goods which they carry, unless the same is due to any of the
following causes only:
a. Flood, storm, earthquake, lightning or other natural disasters;
b. Act of the public enemy, whether international or civil;
c. Act or omission of the shipper or owner of the goods;
d. Character of the goods or defects in the packing;
e. Order or act of competent public authority.

Applying the above article, we note firstly that the specific cause alleged in the instant case the hijacking
of the carrier's truck does not fall within any of the five (5) categories of exempting causes listed in
Article 1734. It would follow; therefore, that the hijacking of the carrier's vehicle must be dealt with
under the provisions of Article 1735, in other words, the private respondent as common carrier is
presumed to have been at fault or to have acted negligently. This presumption, however, may be overt
thrown by proof of extraordinary diligence on the part of private respondent. Article 1745: Any of the
following or similar stipulations shall be considered unreasonable, unjust and contrary to public policy:
(5) that the common carrier shall not be responsible for the acts or omissions of his or its employees; (6)
that the common carrier's liability for acts committed by thieves, or of robbers who do not act with
grave or irresistible threat, violence or force, is dispensed with or diminished; and (7) that the common
carrier shall not responsible for the loss, destruction or deterioration of goods on account of the
defective condition of the car vehicle, ship, airplane or other equipment used in the contract of carriage.
(Emphasis supplied)
Under Article 1745 (6) above, a common carrier is held responsible and will not be allowed to divest or
to diminish such responsibility even for acts of strangers like thieves or robbers, except where such
thieves or robbers in fact acted "with grave or irresistible threat, violence or force." We believe and so
hold that the limits of the duty of extraordinary diligence in the vigilance over the goods carried are
TRANSPORTATION LAW

reached where the goods are lost as a result of a robbery which is attended by "grave or irresistible
threat, violence or force." The decision of the trial court shows that the armed men who held up the
second truck owned by private respondent acted with grave, if not irresistible, threat, violence or force,
which is an exception of the general rule of Article 1745 (6).

Wherefore, the Petition for Review on certiorari is hereby DENIED and the Decision of the Court of
Appeals dated 3 August 1977 is AFFIRMED. The occurrence of the loss must reasonably be regarded as
quite beyond the control of the common carrier and properly regarded as a fortuitous event. It is
necessary to recall that even common carriers are not made absolute insurers against all risks of travel
and of transport of goods, and are not held liable for acts or events which cannot be foreseen or are
inevitable, provided that they shall have complied with the rigorous standard of extraordinary diligence.
We, therefore, agree with the result reached by the Court of Appeals that private respondent Cendana
is not liable for the value of the undelivered merchandise which was lost because of an event entirely
beyond private respondent's control.

_____________________________________________________________________________________

10.

CASE DIGEST

MALAYAN INSURANCE CO., INC., petitioner, vs. PHILIPPINES FIRST INSURANCE CO., INC.
and REPUTABLE FORWARDER SERVICES, INC., respondents

G.R. No. 184300. July 11, 2012

FACTS

Wyeth Philippines, Inc. (Wyeth) and respondent Reputable Forwarder Services, Inc. (Reputable) had
been annually executing a contract of carriage, whereby the latter undertook to transport and deliver the
former’s products to its customers, dealers or salesmen. In 1990, Wyeth executed its annual contract of
carriage with Reputable. It turned out, however, that the contract was not signed by Wyeth’s
representative/s. Nevertheless, it was admittedly signed by Reputable’s representatives, the terms
thereof faithfully observed by the parties and, as previously stated, the same contract of carriage had
been annually executed by the parties every year since 1989.

Under the contract, Reputable undertook to answer for “all risks with respect to the goods and shall be
liable to the COMPANY (Wyeth), for the loss, destruction, or damage of the goods/products due to any
and all causes whatsoever, including theft, robbery, flood, storm, earthquakes, lightning, and other force
majeure while the goods/products are in transit and until actual delivery to the customers, salesmen, and
dealers of the COMPANY.” The contract also required Reputable to secure an insurance policy on Wyeth’s
goods. Thus, Reputable signed a Special Risk Insurance Policy (SR Policy) with petitioner Malayan for the
amount of P1M.
TRANSPORTATION LAW

During the effectivity of the Marine Policy and SR Policy, Reputable received from Wyeth 1,000 boxes of
Promil infant formula worth P2,357,582.70 to be delivered by Reputable to Mercury Drug Corporation.
Unfortunately, the truck carrying Wyeth’s products was hijacked by about 10 armed men. They
threatened to kill the truck driver and two of his helpers should they refuse to turn over the truck and its
contents to the said highway robbers. The hijacked truck was recovered two weeks later without its
cargo.

ISSUE

1. Whether Reputable is a private carrier?

2. Whether Reputable is bound by the terms of the contract of carriage?

RULING

1. The Court agrees with the RTC and CA that Reputable is a private carrier. In this case, the
conclusion derived by both the RTC and the CA that Reputable is a private carrier finds sufficient
basis, not only from the facts on record, but also from prevailing law and jurisprudence. The
finding of the RTC and CA that Reputable is a special or private carrier is warranted by the
evidence on record, primarily, the unrebutted testimony of Reputable’s Vice President and
General Manager, Mr. William Ang Lian Suan, who expressly stated in open court that Reputable
serves only one customer, Wyeth. Moreover, Reputable stated in paragraph 2 of its third-party
complaint that it is “a private carrier engaged in the carriage of goods.” Such allegation was, in
turn, admitted by Malayan in paragraph 2 of its answer to the third-party complaint.

Under Article 1732 of the Civil Code, common carriers are persons, corporations, firms, or
associations engaged in the business of carrying or transporting passenger or goods, or both by
land, water or air for compensation, offering their services to the public. On the other hand, a
private carrier isone wherein the carriage is generally undertaken by special agreement and it
does not hold itself out to carry goods for the general public.A common carrier becomes a private
carrier when it undertakes to carry a special cargo or chartered to a special person only. For all
intents and purposes, therefore, Reputable operated as a private/special carrier with regard to its
contract of carriage with Wyeth.

2. No. The extent of a private carrier’s obligation is dictated by the stipulations of a contract it
entered into, provided its stipulations, clauses, terms and conditions are not contrary to law,
morals, good customs, public order, or public policy. “The Civil Code provisions on common
carriers should not be applied where the carrier is not acting as such but as a private carrier.
Public policy governing common carriers has no force where the public at large is not involved.”

Thus, being a private carrier, the extent of Reputable’s liability is fully governed by the
stipulations of the contract of carriage, one of which is that it shall be liable to Wyeth for the loss
of the goods/products due to any and all causes whatsoever, including theft, robbery and other
force majeure while the goods/products are in transit and until actual delivery to Wyeth’s
customers, salesmen and dealers.

_____________________________________________________________________________________
TRANSPORTATION LAW

11.

TOPIC: CONCEPT OF COMMON CARRIER

G.R. No. 162467. May 8, 2009.*

MINDANAO TERMINAL AND BROKERAGE SERVICE, INC., petitioner, vs. PHOENIX

ASSURANCE COMPANY OF NEW YORK/MCGEE & CO., INC., respondent.

Common Carriers; Contracts; Damages.—As it is clear that Mindanao Terminal had duly exercised the
required degree of diligence in loading and stowing the cargoes, which is the ordinary diligence of a good
father of a family, the grant of the petition is in order.

FACTS:

Del Monte Philippines contracted Mindanao Terminal and Brokerage Services, a stevedoring company, to
load and stow a shipment of fresh green Philippine bananas and fresh pineapples belonging to Del Monte
Produce into the cargo hold of the vessel M/V Mistrau. The goods are to be transported to Korea. Del
Monte produce insured the shipment under an “open cargo policy” with Phoenix Assurance and McGee
and Co.

Upon discharge of the cargo, it was discovered that some of it were in bad condition and they no longer
had commercial value. Del Monte Produce filed a claim under the open cargo policy for the damages of
its shipment. Phoenix and Mcgee instituted an action for damages against Mindanao Terminal before
RTC. RTC dismissed the complaint and granted the counterclaim of Mindanao Terminal. RTC, in its
decision stated that the only participation of Mindanao Terminal was to load the cargoes on board the
vessel under the supervision of the ship’s officer, who would not have accepted the cargoes on board
unless they were properly arranged and secured. The court also stated that both respondents had no
cause of action against the petitioner considering that the contract entered into was between Del Monte
Philippines and Mindanao Terminal.

CA reversed the decision of RTC. It imposed on Mindanao Terminal, as the stevedore of the cargo, the
duty to exercise extraordinary diligence in loading and stowing the cargo. It further held that even in the
absence of contractual relationship between Mindanao Terminal and Del Monte Produce, the cause of
action of the respondents is based on quasi delict.

ISSUE: WON Mindanao Terminal as a stevedoring company, is under obligation to observe the same
extraordinary degree of diligence as required of common carriers

HELD:

Mindanao Terminal, a stevedoring company which was charged with the loading and stowing of the cargo
had acted merely as a labor provider in this case. There is no specific provision of the law that imposes a
higher degree of diligence than ordinary diligence for a stevedoring company or one who is charged only
TRANSPORTATION LAW

with loading and stowing or cargoes. As stated in Article 1173 of Civil Code, if the law or contract does
not state the degree of diligence which is to be observed in the performance of an obligation, then that
which is expected of a good father of the family or ordinary diligence shall be required. In the case at
bar, both respondents failed to prove or allege that Mindanao Terminal is bound by contractual obligation
to observe a higher degree of diligence that than of a good father of a family.

A stevedore is not a common carrier for it does not transport goods or passengers. It is not the same as
a warehouseman for it does not store goods for profit. The public policy considerations in legally
imposing upon a common carrier or a warehouseman a higher degree of diligence is not present in a
stevedoring outfit which mainly provides labor in loading and stowing of cargoes for its clients.

_____________________________________________________________________________________

12.

SCHMITZ TRANSPORT & BROKERAGE CORPORATION, petitioner, vs. TRANSPORT VENTURE,

INC., INDUSTRIAL INSURANCE COMPANY, LTD., and BLACK SEA SHIPPING AND DODWELL
now INCHCAPE SHIPPING SERVICES, respondents

FACTS: SYTCO Pte Ltd. Singapore shipped from the port of Russia on board M/V “Alexander Saveliev”
545 hot rolled steel sheets. The cargoes were to be discharged at the port of Manila in favor of the
consignee, Little Giant Steel Pipe Corporation. Schmitz Transport, whose services the consignee engaged
to secure the requisite clearances, to receive the cargoes from the shipside, and to deliver them to its
(the consignee’s) warehouse at Cainta, Rizal, in turn engaged the services of TVI to send a barge and
tugboat at shipside.
On October 26, 1991, around 4:30 p.m., TVI’s tugboat “Lailani” towed the barge “Erika V” to shipside.

Subsequently, the arrastre operator Ocean Terminal Services Inc. commenced to unload 37 of the 545
coils from the vessel unto the barge. By 12:30 a.m. of October 27, 1991 during which the weather
condition had become inclement due to an approaching storm, the unloading unto the barge of the 37
coils was accomplished. No tugboat pulled the barge back to the pier, however. At around 5:30 a.m. of
October 27, 1991, due to strong waves, the crew of the barge abandoned it and transferred to the
vessel. The barge pitched and rolled with the waves and eventually capsized, washing the 37 coils into
the sea. At 7:00 a.m., a tugboat finally arrived to pull the already empty and damaged barge back to the
pier.

Industrial Insurance later filed a complaint against Schmitz Transport, TVI, and Black Sea through its
representative Inchcape (the defendants) before the RTC of Manila, for the recovery of the amount it
paid to Little Giant plus adjustment fees, attorney’s fees, and litigation expenses. After due proceedings,
the of the RTC held all the defendants negligent for unloading the cargoes outside of the breakwater
notwithstanding the storm signal. Defendants Schmitz Transport and TVI filed a joint motion for
reconsideration assailing the finding that they are common carriers and the award of excessive attorney’s
fees which the court denied the same. On appeal, the CA affirmed in toto the decision of the trial court, it
finding that all the defendants were common carriers and holding all the defendants solidarily liable.
Hence, this petition.

ISSUE: Whether or not the herein petitioner is considered as common carrier.

HELD: The SC said that it is settled that under a given set of facts, a customs broker may be regarded as
a common carrier. Thus, this Court, in A.F. Sanchez Brokerage, Inc. v. The Honorable Court of Appeals,
TRANSPORTATION LAW

held: The appellate court did not err in finding petitioner, a customs broker, to be also a common carrier,
as defined under Article 1732 of the Civil Code, to wit, Art. 1732. Common carriers are persons,
corporations, firms or associations engaged in the business of carrying or transporting passengers or
goods or both, by land, water, or air, for compensation, offering their services to the public. Article 1732
does not distinguish between one whose principal business activity is the carrying of goods and one who
does such carrying only as an ancillary activity. The contention, therefore, of petitioner that it is not a
common carrier but a custom broker whose principal function is to prepare the correct customs
declaration and proper shipping documents as required by law is bereft of merit. It suffices that petitioner
undertakes to deliver the goods for pecuniary consideration. And in Calvo v. UCPB General Insurance Co.,
Inc., this Court held that as the transportation of goods is an integral part of a customs broker, the
customs broker is also a common carrier. For to declare otherwise “would be to deprive those with whom
it contracts the protection which the law affords them notwithstanding the fact that the obligation to
carry goods for its customers, is part and parcel of petitioner’s business.”

_____________________________________________________________________________________

13.

VIRGINES CALVO doing business under the name and style TRANSORIENT CONTAINER
TERMINAL SERVICES, INC., petitioner, vs. UCPB GENERAL INSURANCE CO., INC. (formerly
Allied Guarantee Ins. Co, Inc.), respondent

G.R. No. 148496. March 19, 2002

TOPIC: CUSTOMS BROKER IS A COMMON CARRIER

FACTS:

Petitioner is the owner of Transorient Container Terminal Services, Inc. (TCTSI), a sole proprietorship
customs broker. At the time material to this case, petitioner entered into a contract with San Miguel
Corporation (SMC) for the transfer of 114 reels of semi-chemical fluting paper and 124 reels of kraft liner
board from the Port Area in Manila to SMC’s warehouse. The cargo was insured by respondent UCPB
General Insurance Co., Inc.

The shipment in question, contained in 30 metal vans, arrived in Manila and, after 24 hours, were
unloaded from the vessel to the custody of the arrastre operator, Manila Port Services, Inc. Then,
petitioner, pursuant to her contract with SMC, withdrew the cargo from the arrastre operator and
delivered it to SMC’s warehouse. The goods were then inspected by Marine Cargo Surveyors, who found
that 15 reels of the semi-chemical fluting paper were “wet/stained/torn” and 3 reels of kraft liner board
were likewise torn. T

SMC collected payment from respondent UCPB under its insurance contract for the aforementioned
amount. In turn, respondent, as subrogee of SMC, brought suit against petitioner in the Regional Trial
Court which rendered judgment finding petitioner liable to respondent for the damage to the shipment.
The RTC held:

“Defendant, being a customs broker, warehouseman and at the same time a common carrier is supposed
[to] exercise [the] extraordinary diligence required by law, hence the extraordinary responsibility lasts
from the time the goods are unconditionally placed in the possession of and received by the carrier for
TRANSPORTATION LAW

transportation until the same are delivered actually or constructively by the carrier to the consignee or to
the person who has the right to receive the same.”

Now, Petitioner contends that contrary to the findings of the trial court and the Court of Appeals, she is
not a common carrier but a private carrier because, as a customs broker and warehouseman, she does
not indiscriminately hold her services out to the public but only offers the same to select parties with
whom she may contract in the conduct of her business.

ISSUE: Whether or not Petitioner, a customs broker, is a common carrier thus supposed to exercise
extraordinary diligence as required by law.

HELD: YES. Petitioner is a common carrier.

In De Guzman v. Court of Appeals, the Court dismissed a similar contention and held the party to be a
common carrier, thus—

The Civil Code defines “common carriers” in the following terms:

“Article 1732. Common carriers are persons, corporations, firms or associations engaged in the business
of carrying or transporting passengers or goods or both, by land, water, or air for compensation, offering
their services to the public.”

The above article makes no distinction between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only as an ancillary activity . . . Article 1732
also carefully avoids making any distinction between a person or enterprise offering transportation
service on a regular or scheduled basis and one offering such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the
“general public,” i.e., the general community or population, and one who offers services or solicits
business only from a narrow segment of the general population. We think that Article 1732 deliberately
refrained from making such distinctions. Common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and
for the safety of the passengers transported by them, according to all the circumstances of each case.
###

_____________________________________________________________________________________

14.

Loadstar Shipping Corporation, Inc. vs. Court of Appeals and The Manila Insurance Co.

Facts

Petitioner Loadstar owned the M/V Cherokee vessel, which had certain cargo including lawanit hardwood,
tilewood, and bundles of mouldings, all of which are insured with an all risk policy, when it sank just off
Limasawa Island on November 1984, on its way to Manila. The MIC sued Loadstar, claiming that the ship
sank due to herein petitioner’s own negligence. One of the defenses posed by Loadstar was that it was a
private carrier, seeing as it was not issued a certificate of public convenience, it did not have a regular
trip or schedule nor a fixed route, and there was only one shipper, one consignee for a special cargo.
Furthermore, it argued that the limited liability doctrine be applied to it.
TRANSPORTATION LAW

Issue(s)

1. Is Loadstar a private carrier?

2. Is the limited liability doctrine applicable in this case?

Ruling

1. No. While it is true that the vessel had on board only the cargo of wood products for delivery to
one consignee, it was also carrying passengers as part of its regular business. Moreover, the bills
of lading in this case made no mention of any charter party but only a statement that the vessel
was a general cargo carrier. Neither was there any special arrangement between LOADSTAR and
the shipper regarding the shipment of the cargo. The singular fact that the vessel was carrying a
particular type of cargo for one shipper is not sufficient to convert the vessel into a carrier. Article
1732 makes no distinction between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only as an ancillary activity (in local
idiom, as a sideline. Article 1732 also carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and one offering such
service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish
between a carrier offering its services to the general public, i.e., the general community or
population, and one who offers services or solicits business only from a narrow segment of the
general population.

2. The doctrine of limited liability does not apply where there was negligence on the part of the
vessel owner or agent. LOADSTAR was at fault or negligent in not maintaining a seaworthy
vessel and in having allowed its vessel to sail despite knowledge of an approaching typhoon. In
any event, it did not sink because of any storm that may be deemed as force majeure, inasmuch
as the wind condition in the area where it sank was determined to be moderate. Since it was
remiss in the performance of its duties, LOADSTAR cannot hide behind the limited liability
doctrine to escape responsibility for the loss of the vessel and its cargo.

_____________________________________________________________________________________

15.

NOSTRADAMUS VILLANUEVA, petitioner, vs. PRISCILLA R. DOMINGO and LEANDRO LUIS R.

DOMINGO, respondents

G.R. No. 144274. September 20, 2004

Facts:
TRANSPORTATION LAW

Priscilla R. Domingo is the registered owner of a silver Mitsubishi Lancer Car, with Leandro Luis
R. Domingo as authorized driver. Nostradamus Villanueva was then the registered “owner” of a green
Mitsubishi Lancer. In the evening of October 22, 1991, following a green traffic light, Priscilla Domingo’s
silver Lancer then driven by Leonardo Domingo was cruising along the middle lane of South
Superhighway at moderate speed from north to south. Suddenly, a green Mitsubishi Lancer driven by
Renato Dela Cruz Ocfemia darted from Vito Cruz Street towards the South Superhighway directly into
their path thereby hitting and bumping its left front portion. As a result of the impact, Domingo’s car hit
two (2) parked vehicles at the roadside, the second hitting another parked car in front of it. Per Traffic
Accident Report, Renato dela Cruz Ocfemia was driving with expired license and positive for alcoholic
breath.

Nostradamus Villanueva claimed that he was no longer the owner of the car at the time of the
mishap because it was swapped with a Pajero owned by Albert Jaucian/Auto Palace Car Exchange. On
the other hand, Auto Palace Car Exchange represented by Albert Jaucian claimed that he was not the
registered owner of the car. Moreover, it could not be held subsidiary liable as employer of Ocfemia
because the latter was off-duty as utility employee at the time of the incident. Neither was Ocfemia
performing a duty related to his employment.

Issue: 1. Whether or not Villianueva is liable.

2. Whether or not the authority of the driver is relevant in determining the liability of the
registered owner.

Held:

1. YES. We have consistently ruled that the registered owner of any vehicle is directly and primarily
responsible to the public and third persons while it is being operated. The rationale behind such
doctrine was explained way back in 1957 in Erezo vs. Jepte:

The principle upon which this doctrine is based is that in dealing with vehicles registered under the
Public Service Law, the public has the right to assume or presume that the registered owner is the actual
owner thereof, for it would be difficult for the public to enforce the actions that they may have for
injuries caused to them by the vehicles being negligently operated if the public should be required to
prove who the actual owner is. How would the public or third persons know against whom to enforce
their rights in case of subsequent transfers of the vehicles?

Under the same principle the registered owner of any vehicle, even if not used for a public service,
should primarily be responsible to the public or to third persons for injuries caused the latter while the
vehicle is being driven on the highways or streets. The members of the Court are in agreement that the
defendant-appellant should be held liable to plaintiff-appellee for the injuries occasioned to the latter
because of the negligence of the driver, even if the defendant-appellant was no longer the owner of the
vehicle at the time of the damage because he had previously sold it to another.

2. NO. Whether the driver is authorized or not by the actual owner is irrelevant to determining the
liability of the registered owner who the law holds primarily and directly responsible for any accident,
TRANSPORTATION LAW

injury or death caused by the operation of the vehicle in the streets and highways. To require the driver
of the vehicle to be authorized by the actual owner before the registered owner can be held
accountable is to defeat the very purpose why motor vehicle legislations are enacted in the first place.
The main purpose of vehicle registration is the easy identification of the owner who can be held
responsible for any accident, damage or injury caused by the vehicle

_____________________________________________________________________________________

16. Equitable Leasing Corp. vs. Suyong (388 SCRA 445 [2002]) MIGUEL

_____________________________________________________________________________________

17. Singapore Airlines Ltd. vs. Fernandez (417 SCRA 474 [2003]) RED

SINGAPORE AIRLINES LIMITED, petitioner, vs. ANDION FERNANDEZ, respondent.

G.R. No. 142305. December 10, 2003

FACTS:

Andion Fernandez, an acclaimed soprano in the Philippines and abroad was invited to sing before the
King and Queen of Malaysia on February 3 and 4, 1991. For this singing engagement, she purchased
airline ticket from petitioner Singapore Airlines. She was issued a ticket for Flight No. SQ 27, leaving
Frankfurt, Germany on January 27, 1991 bound for Singapore with onward connections from Singapore
to Manila. On January 27, 1991, Flight No. SQ 27 left Frankfurt but arrived in Singapore two hours late or
at about 11:00 in the morning of January 28, 1991. By then, the aircraft bound for Manila had left as
scheduled, leaving the respondent and about 25 other passengers stranded in the Changi Airport in
Singapore. It was necessary for the respondent to pass by Manila in order to gather her wardrobe; and
to rehearse and coordinate with her pianist her repertoire for the aforesaid performance.

The respondent never made it to Manila and was forced to take a direct flight from Singapore to
Malaysia on January 29, 1991, through the efforts of her mother and travel agency in Manila. Her
mother also had to travel to Malaysia bringing with her respondent’s wardrobe and personal things
needed for the performance that caused them to incur an expense of about P50,000.

As a result of this incident, the respondent’s performance before the Royal Family of Malaysia was
below par. Because of the rude and unkind treatment that she received from the petitioner’s personnel
in Singapore, the respondent was engulfed with fear, anxiety, humiliation and embarrassment causing
her to suffer mental fatigue and skin rashes. She was thereby compelled to seek immediate medical
attention upon her return to Manila for acute urticaria.
TRANSPORTATION LAW

ISSUE:

Whether or not Singapore Airlines Limited failed to exercise extraordinary diligence required as a
common carrier

HELD:

YES.

When an airline issues a ticket to a passenger, confirmed for a particular flight on a certain date, a
contract of carriage arises. The passenger then has every right to expect that he be transported on that
flight and on that date. If he does not, then the carrier opens itself to a suit for a breach of contract of
carriage
The contract of air carriage is a peculiar one. Imbued with public interest, the law requires common
carriers to carry the passengers safely as far as human care and foresight can provide, using the utmost
diligence of very cautious persons with due regard for all the circumstances. In an action for breach of
contract of carriage, the aggrieved party does not have to prove that the common carrier was at fault or
was negligent. All that is necessary to prove is the existence of the contract and the fact of its non-
performance by the carrier

In the case at bar, it is undisputed that the respondent carried a confirmed ticket for the two-legged trip
from Frankfurt to Manila: 1) Frankfurt-Singapore; and 2) Singapore-Manila. In her contract of carriage
with the petitioner, the respondent certainly expected that she would fly to Manila on Flight No. SQ 72
on January 28, 1991. Since the petitioner did not transport the respondent as covenanted by it on said
terms, the petitioner clearly breached its contract of carriage with the respondent. The respondent had
every right to sue the petitioner for this breach.

_____________________________________________________________________________________

18.

VICTORY LINER, INC. vs. GAMMAD

G.R. No. 159636 | November 25, 2004

FACTS:
TRANSPORTATION LAW

Marie Grace Gammad was a passenger of petitioners bus when it fell on a ravine, which resulted to her
death. Hence, heirs of the deceased Marie Grace filed a case for damages against Victory Liner, Inc. for
breach of contract of carriage. Rosalito Gammad, husband of deceased, completed his testimony and
was scheduled for cross-examination. However, counsel of petitioner failed to appear even after a
reschedule, and thus the court deemed the petitioner to have waived cross-examination. The
petitioner’s counsel also failed to appear at the presentation of evidence. The court already deemed the
case submitted for resolution when it received belatedly the telegram of petitioner’s counsel requesting
for postponement.

ISSUE:
Is the petitioner liable for breach of contract of carriage?

RULING:
Petitioner was correctly found liable for breach of contract of carriage. A common carrier is bound to
carry its passengers safely as far as human care and foresight can provide, using the utmost diligence of
very cautious persons, with due regard to all the circumstances. In a contract of carriage, it is presumed
that the common carrier was at fault or was negligent when a passenger dies or is injured. Unless the
presumption is rebutted, the court need not even make an express finding of fault or negligence on
the part of the common carrier. This statutory presumption may only be overcome by evidence that the
carrier exercised extraordinary diligence.

_____________________________________________________________________________________

19 (Same with 5)

_____________________________________________________________________________________

20. Lea Mer Industries, Inc. vs. Malayan Insurance Co., Inc. (supra.)

Facts

Ilian Silica Mining entered into a contract of carriage with Lea Mer Industries, Inc., for the
shipment of 900 metric tons of silica sand. Consigned to Vulcan Industrial and Mining
Corporation, the cargo was to be transported from Palawan to Manila. As it was being
transported in the vessel Judy VII, the vessel sank, resulting in the loss of the cargo. After having
paid the consignee for the value of the cargo, Malayan Insurance demanded reimbursement from
Lea Mar, but the latter refused to comply. The RTC found for herein petitioner, ruling that the
sinking was due to a fortuitous event, as the vessel was ravaged by typhoon Trining. The CA
however, reversed the ruling of the RTC, ruling that because the vessel was found to be not
seaworthy when it began its voyage, fault should be justly placed on the petitioners.
TRANSPORTATION LAW

Issue(s)
Is the CA correct in reversing the RTC’s decision?

Ruling

Yes, the CA did not err when it reversed the ruling of the lower court. Primarily, carriers are
presumed to have been at fault or to have acted negligently for loss or damage to the goods that
they have transported, and this presumption can only be defeated when certain circumstances are
present, to wit:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.
To excuse the common carrier fully of any liability, the fortuitous event must have been the
proximate and only cause of the loss. Moreover, it should have exercised due diligence to
prevent or minimize the loss before, during and after the occurrence of the fortuitous event. In
the present case however, while Lea Mer presented evidence showing that it had not been
informed of the coming typhoon, the Court ruled this evidence as insufficient. As required by the
pertinent law, it was not enough for the common carrier to show that there was an unforeseen or
unexpected occurrence. It had to show that it was free from any fault -- a fact it miserably failed
to prove. First, petitioner presented no evidence that it had attempted to minimize or prevent the
loss before, during or after the alleged fortuitous event. Second, the alleged fortuitous event was
not the sole and proximate cause of the loss. There is a preponderance of evidence that the barge
was not seaworthy when it sailed for Manila. Respondent was able to prove that, in the hull of
the barge, there were holes that might have caused or aggravated the sinking. Because the
presumption of negligence or fault applied to petitioner, it was incumbent upon it to show that
there were no holes; or, if there were, that they did not aggravate the sinking.

###