Page 1 of 6
DELSAN TRANSPORT LINES, INC., petitioner, vs. AMERICAN HOME
ASSURANCE CORPORATION, respondent
Facts: Delsan is a domestic corporation which owns and
operates the vessel MT Larusan. On the other hand, respondent
American Home Assurance Corporation (AHAC for brevity) is a
foreign insurance company duly licensed to do business in the
Philippines through its agent, the American-International
Underwriters, Inc. (Phils.). It is engaged, among others, in insuring
cargoes for transportation within the Philippines.
On August 5, 1984, Delsan received on board MT Larusan a
shipment consisting of 1,986.627 k/l Automotive Diesel Oil (diesel
oil) at the Bataan Refinery Corporation for transportation and
delivery to the bulk depot in Bacolod City of Caltex Phils., Inc.
(Caltex), pursuant to a Contract of Afreightment. The shipment
was insured by respondent AHAC against all risks under Inland
Floater Policy No. AH-IF64-1011549P and Marine Risk Note No. 34-
5093-6.
On August 7, 1984, the shipment arrived in Bacolod City.
Immediately thereafter, unloading operations commenced. The
discharging of the diesel oil started at about 1:30 PM of the same
day. However, at about 10:30 PM, the discharging had to be
stopped on account of the discovery that the port bow mooring
of the vessel was intentionally cut or stolen by unknown persons.
Because there was nothing holding it, the vessel drifted
westward, dragged and stretched the flexible rubber hose
attached to the riser, broke the elbow into pieces, severed
completely the rubber hose connected to the tanker from the
main delivery line at sea bed level and ultimately caused the
diesel oil to spill into the sea. To avoid further spillage, the vessels
crew tried water flushing to clear the line of the diesel oil but to
no avail. In the meantime, the shore tender, who was waiting for
the completion of the water flushing, was surprised when the
tanker signaled a red light which meant stop pumping. Unaware
of what happened, the shore tender, thinking that the vessel
would, at any time, resume pumping, did not shut the storage
tank gate valve. As all the gate valves remained open, the
diesel oil that was earlier discharged from the vessel into the
shore tank backflowed. Due to non-availability of a pump boat,
the vessel could not send somebody ashore to inform the people
at the depot about what happened.
As a result of spillage and backflow of diesel oil, Caltex sought
recovery of the loss from Delsan, but the latter refused to pay. As
insurer, AHAC paid Caltex the sum of P479,262.57 for spillage,
pursuant to Marine Risk Note No. 34-5093-6, and P1,939,575.37 for
backflow of the diesel oil pursuant to Inland Floater Policy No.
AH-1F64-1011549P. On August 31, 1989, the trial court rendered its
decision[2] in favor of AHAC holding Delsan liable for the loss of
the cargo for its negligence in its duty as a common carrier.
Delsan appealed to the CA whereat its recourse was docketed
as CA-G.R. CV No. 40951. In the herein challenged decision,[3]
the CA affirmed the findings of the trial court
Issue:
SARKIES TOURS v CA
Facts:
On August 31, 1984, Fatima boarded petitioner’s bus from Manila
to Legazpi. Her belongings consisting of 3 bags were kept at the
baggage compartment of the bus, but during the stopover in
Daet, it was discovered that only one remained. The others
might have dropped along the way. Other passengers
suggested having the route traced, but the driver ignored it.
Fatima immediately told the incident to her mother, who went to
petitioner’s office in Legazpi and later in Manila. Petitioner
offered P1,000 for each bag, but she turned it down.
Disapointed, she sought help from Philtranco bus drivers and
radio stations. One of the bags was recovered. She was told by
petitioner that a team is looking for the lost luggage. After nine
months of fruitless waiting, respondents filed a case to recover
the lost items, as well as moral and exemplary damages,
attorney’s fees and expenses of litigation. The trial court ruled in
favor of respondents, which decision was affirmed with
modification by the Court of Appeals, deleting moral and
exemplary damages.
Issues:
(1) Whether petitioner is liable for the loss of the luggage
(2) Whether the damages sought should be recovered
Held:
(1) The cause of the loss in the case at bar was petitioner's
negligence in not ensuring that the doors of the baggage
compartment of its bus were securely fastened. As a result of this
lack of care, almost all of the luggage was lost, to the prejudice
of the paying passengers.
(2) There is no dispute that of the three pieces of luggage of
Fatima, only one was recovered. Respondents had to shuttle
between Bicol and Manila in their efforts to be compensated for
the loss. During the trial, Fatima and Marisol had to travel from
the United States just to be able to testify. Expenses were also
incurred in reconstituting their lost documents. Under these
circumstances, the Court agrees with the Court of Appeals in
awarding P30,000.00 for the lost items and P30,000.00 for the
transportation expenses, but disagrees with the deletion of the
award of moral and exemplary damages which, in view of the
foregoing proven facts, with negligence and bad faith on the
fault of petitioner having been duly established, should be
granted to respondents in the amount of P20,000.00 and
P5,000.00, respectively.
TABACALERA INSURANCE CO., PRUDENTIAL GUARANTEE
& ASSURANCE, INC., and NEW ZEALAND INSURANCE CO., LTD.,
vs.NORTH FRONT SHIPPING SERVICES, INC., and COURT OF
APPEALS,
G.R. No. 119197. May 16, 1997
Facts:
Sacks of grains were loaded on board a vessel owned by North
Front Shipping (common carrier); the consignee: Republic Floor
Mills. The vessel was inspected by representatives of the shipper
prior to the transport and was found fitting to carry the cargo; it
was also issued a Permit to Sail. The goods were successfully
delivered but it was not immediately unloaded by the
consignee. There were a shortage of 23.666 metric tons and
some of the merchandise was already moldy and deteriorating.
Hence, the consignee rejected all the cargo and demanded
payment of damages from the common carrier. Upon refusal,
the insurance companies (petitioners) were obliged to pay.
Petitioners now allege that there was negligence on the part of
the carrier. The trial court ruled that only ordinary diligence was
required since the charter-party agreement converted North
Front Shipping into a private carrier.
Issues:
WON North Front Shipping is a common carrier. If indeed, did it
fail to exercise the required diligence and thus should be held
liable?
Held:
North Front Shipping is a common carrier. Thus, it has the burden
of proving that it observed extraordinary diligence in order to
avoid responsibility for the lost cargo.
The charter-party agreement between North Front Shipping
Services, Inc., and Republic Flour Mills Corporation did not in any
way convert the common carrier into a private carrier. 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 usex x x
Having been in the service since 1968, the master of the vessel
would have known at the outset that corn grains that were farm
wet and not properly dried would eventually deteriorate when
stored in sealed and hot compartments as in hatches of a ship.
Equipped with this knowledge, the master of the vessel and his
crew should have undertaken precautionary measures to avoid
or lessen the cargo’s possible deterioration as they were
presumed knowledgeable about the nature of such cargo.
But none of such measures was taken.
It did not even endeavor to establish that the loss, destruction or
deterioration of the goods was due to the following: (a) flood,
storm, earthquake, lightning, or other natural disaster or calamity;
(b) act of the public enemy in war, whether international or civil;
© act or omission of the shipper or owner of the goods; (d) the
character of the goods or defects in the packing or in the
containers; (e) order or act of competent public authority. This is
a closed list. If the cause of destruction, loss or deterioration is
other than the enumerated circumstances, then the carrier is
rightly liable therefor.

However, the destruction, loss or deterioration of the cargo
cannot be attributed solely to the carrier. The consignee
Republic Flour Mills Corporation is guilty of contributory
negligence. It was seasonably notified of the arrival of the barge
but did not immediately start the unloading operations.
MACAM vs. COURT OF APPEALS GR No. 125524; August 25, 1999
Facts: Benito Macam, doing business under name Ben-Mac
Enterprises, shipped on board vessel Nen-Jiang, owned and
operated by respondent China Ocean Shipping Co. through
local agent Wallem Philippines Shipping Inc., 3,500 boxes of
watermelon covered by Bill of Lading No. HKG 99012, and 1,611
boxes of fresh mangoes covered by Bill of Lading No. HKG 99013.
The shipment was bound for Hongkong with PAKISTAN BANK as
consignee and Great Prospect Company of Rowloon (GPC) as
notify party.
Upon arrival in Hongkong, shipment was delivered by
respondent WALLEM directly to GPC, not to PAKISTAN BANK and
without the required bill of lading having been surrendered.
Subsequently, GPC failed to pay PAKISTAN BANK, such that the
latter, still in possession of original bill of lading, refused to pay
petitioner thru SOLIDBANK. Since SOLIDBANK already pre-paid
the value of shipment, it demanded payment from respondent
WALLEM but was refused. MACAM constrained to return the
amount paid by SOLIDBANK and demanded payment from
WALLEM but to no avail.
WALLEM submitted in evidence a telex dated 5 April 1989 as
basis for delivering the cargoes to GPC without the bills of lading
and bank guarantee. The telex instructed delivery of various
shipments to the respective consignees without need of
presenting the bill of lading and bank guarantee per the
respective shipper’s request since “for prepaid shipt ofrt charges
already fully paid.” MACAM, however, argued that, assuming
there was such an instruction, the consignee referred to was
PAKISTAN BANK and not GPC.
The RTC ruled for MACAM and ordered value of shipment. CA
reversed RTC’s decision.
Issue: Are the respondents liable to the petitioner for releasing
the goods to GPC without the bills of lading or bank guarantee?
Held: It is a standard maritime practice when immediate delivery
is of the essence, for shipper to request or instruct the carrier to
deliver the goods to the buyer upon arrival at the port of
destination without requiring presentation of bill of lading as that
usually takes time. Thus, taking intoaccount that subject
shipment consisted of perishable goods and SOLIDBANK pre-
paid the full amount of value thereof, it is not hard to believe the
claim of respondent WALLEM that petitioner indeed requested
the release of the goods to GPC without presentation of the bills
of lading and bank guarantee.
To implement the said telex instruction, the delivery of the
shipment must be to GPC, the notify party or real importer/buyer
of the goods and not the PAKISTANI BANK since the latter can
very well present the original Bills of Lading in its possession.
Likewise, if it were the PAKISTANI BANK to whom the cargoes
were to be strictly delivered, it will no longer be proper to require
a bank guarantee as a substitute for the Bill of Lading. To
construe otherwise will render meaningless the telex instruction.
After all, the cargoes consist of perishable fresh fruits and
immediate delivery thereof the buyer/importer is essentially a
factor to reckon with.
We emphasize that the extraordinary responsibility of the
common carriers lasts until actual or constructive delivery of the
cargoes to the consignee or to the person who has a right
to receive them. PAKISTAN BANK was indicated in the bills of
lading as consignee whereas GPC was the notify party.
However, in the export invoices GPC was clearly named as
buyer/importer. Petitioner also referred to GPC as such in
his demand letter to respondent WALLEM and in his complaint
before the trial court. This premise draws us to conclude that the
delivery of the cargoes to GPC as buyer/importer which,
conformably with Art. 1736 had, other than the consignee, the
right to receive them was proper.
Page 2 of 6
Samar Mining Co., Inc. vs. Nordeutscher Lloyd
(132 SCRA 529)
Facts: Samar Mining imported 1 crate optima welded wire
(amounting to around USD 424 or PhP 1,700) from Germany,
which was shipped on a vessel owned by Nordeutscher Lloyd
(M/S Schwabenstein). The shipment was unloaded in Manila into
a barge for transshipment to Davao and temporarily stored in a
bonded warehouse owned by AMCYL. The goods never
reached Davao and were never delivered to or received by the
consignee, Samar Mining Co.
CFI ruled in favor of Samar Mining holding Nordeutscher Lloyd
liable. However, defendants may recoup whatever they may
pay Samar Mining by enforcing the judgment against third party
defendant AMCYL.
Issue: Whether Nordeustscher Lloyd is liable for the loss of the
goods as common carrier?
Held: No. At the time of the loss of the goods, the character of
possession of Nordeutscher Lloyd shifted from common carrier to
agent of Samar Mining Co.
The Bill of Lading is serves both as a receipt of goods and is
likewise the contract to transport and deliver the same as
stipulated. It is a contract and is therefore the law between the
parties. The Bill of Lading in question stipulated that Nordeutscher
Lloyd only undertook to transport the goods in its vessel only up
to the port of discharge from ship, which is Manila. The Bill of
Lading further stipulated that the goods were to be transshipped
by the carrier from Manila to the port of destination – Davao. By
unloading the shipment in Manila and delivering the goods to
the warehouse of AMCYL, the appellant was acting within the
contractual stipulations contained in the Bill of Lading.
Article 1736 of the Civil Code relives the carrier of responsibility
over the shipment as soon as the carrier makes actual or
constructive delivery of the goods to the consignee or to the
person who has a right to receive them.
Under the Civil Code provisions governing Agency, an agent
can only be held liable in cases where his acts are attended by
fraud, negligence, deceit or if there is a conflict of interest
between him and the principal. Under the same law an agent is
likewise liable if he appoints a substitute when he was not given
the power to appoint one or otherwise appoints one that is
notoriously incompetent or insolvent. These facts were not
proven in the record.
SERVANDO v PHILIPPINE STEAM NAVIGATION
Facts:
1. Clara UyBico and AmparoServando loaded on board a
vessel of Philippine Steam Navigation Co. for carriage from
Manila to Negros Occidental 1,528 cavans of rice and 44 cartons
of colored paper, toys and general merchandise.
2. The contract of carriage of cargo was evidenced by a Bill of
Lading (B/L). There was a stipulation limiting the responsibility of
the carrier for loss or damage that may be caused to the
shipment
a. “carrier shall not be responsible for loss or damage to
shipments billed ‘owner’s risk’ unless such loss or damage is due
to the negligence of the carrier. Nor shall the carrier be
responsible for loss or damage caused by force majeure,
dangers or accidents of the sea, war, public enemies, fire”.
3. Upon arrival of the vessel at its destination, the cargoes were
discharged in good condition and placed inside the warehouse
of the Bureau of Customs.
4. UyBico was able to take delivery of 907 cavans of rice.
5. Unfortunately, the warehouse was razed by fire of unknown
origin later that same day destroying the remaining cargoes.
6. UyBico and Servando filed a claim for the value of the goods
against the carrier.
7. The lower court ruled in their favor. It held that the delivery of
the shipment to the warehouse is not the delivery contemplated
by Art. 1736 of the CC. And since the burning of the warehouse
occurred prior to the actual or constructive delivery of the
goods, the loss is chargeable against the vessel.
Issue:Whether or not the carrier is liable for the loss of the goods.
Held:No.
1. Article 1736 of the CC imposes upon common carriers the

duty to observe extraordinary diligence from the moment the
goods are unconditionally placed in their possession "until the
same are delivered, actually or constructively, by the carrier to
the consignee or to the person who has a right to receive them,
without prejudice to the provisions of Article 1738.” The court a
quo held that the delivery of the shipment in question to the
warehouse of the Bureau of Customs is not the delivery
contemplated by Article 1736; and since the burning of the
warehouse occurred before actual or constructive delivery of
the goods to the appellees, the loss is chargeable against the
appellant.
2. It should be pointed out, however, that in the bills of lading
issued for the cargoes in question, the parties agreed to limit the
responsibility of the carrier. The stipulation is valid not being
contrary to law, morals or public policy.
3. The petitioners however, contend that the stipulation does
not bind them since it was printed at the back of the B/L and
that they did not sign the same. However, as the Court held in
OngYiu vs. CA, while it may be true that a passenger had not
signed the plane ticket, he is nevertheless bound by the
provisions thereof. Such provisions have been held to be a part
of the contract of carriage, and valid and binding upon the
passenger regardless of the latter's lack of knowledge or assent
to the regulation.
4. Also, where fortuitous event is the immediate and proximate
cause of the loss, the obligor is exempt from liability for non-
performance.In the case at bar, the burning of the customs
warehouse was an extraordinary event which happened
independently of the will of the appellant. The latter could not
have foreseen the event.
5. There is nothing in the record to show that the carrier
incurred in delay in the performance of its obligation. It appears
that it had not only notified UyBico and Servando of the arrival of
their shipment, but had demanded that the same be withdrawn.
In fact, pursuant to such demand, UyBico had taken delivery of
907 cavans of rice before the burning of the warehouse.
6. Nor can the carrier or its employees be charged with
negligence. The storage of the goods in the Customs warehouse
pending withdrawal thereof by UyBico and Servando was
undoubtedly made with their knowledge and consent. Since the
warehouse belonged to and was maintained by the
government, it would be unfair to impute negligence to the
carrier, the latter having no control whatsoever over the same.
Eastern Shipping Lines Inc. v. IAC, 150 SCRA 463
Doctrine:
When a carrier fails to establish any caso fortuito, the
presumption by law of fault or negligence on the part of the
carrier applies.
FACTS:
Carrier – Eastern Shipping Lines Inc
Shipper/Consignee –Stresstek Post Tensioning Philippines Inc
Insurer - First Nationwide Assurance Corporation
Arrastre Operator – E. Razon Inc. (not significant)
FACTS:
Eastern Shipping Lines Inc shipped uncoated 7-wire
stress relieved wire strand for prestressed concretewere shipped
on board the vessel "Japri Venture,". Upon arrival at the port of
Manila, it discharged thecargo to the custody of the defendant
E. Razon, Inc. from whom the consignee's customs
brokerreceived it for delivery to the consignee's warehouse. First
Nationwide Assurance, indemnified theconsignee in the amount
of P171,923.00 for damage and loss to the insured cargo,
whereupon theformer was subrogated for the latter. The insurer
now seeks to recover from the defendants what ithas
indemnified the consignee. The petitioner protested alleging that
it should not be held liable toanswer for damages for the event
that caused the rusting of the goods was due to the
“encounteredvery rough seas and stormy weather” classified as
force majeure, hence relieving them of any liability.
Aggrieved, respondent filed a case against petitioner.
RTC– dismissed the case
CA –set aside RTC’s decision and ordered petitioner to pay
respondent
Page 3 of 6
ISSUE:
W/N petitioner was negligent and should be held liable for the
payment of damages.
HELD:
YES. Plainly, the heavy seas and rains referred to in the
master's report were notcaso fortuito, but normal occurrences
that an ocean-going vessel, particularly in the month of
September which, in our area, is a month of rains and heavy
seas would encounter as a matter of routine. They are not
unforeseen nor unforeseeable. These are conditions that ocean-
going vessels would encounter and provide for, in the ordinary
course of a voyage. That rain water (not sea water) found its
way into the holds of the Jupri Venture is a clear indication that
care and foresight did not attend the closing of the ship's
hatches so that rainwater would not find its way into the cargo
holds of the ship.
Moreover, under Article 1733 of the Civil Code, common
carriers are bound to observe "extra-ordinary vigilance over
goods . . . .according to all circumstances of each case," and
Article 1735 of the same Code states, to wit:
Art. 1735. In all cases other than those mentioned in Nos.
1, 2, 3, 4, and 5 of the preceding article, if the goods are lost,
destroyed or deteriorated, common carriers are presumed to
have been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence as required in
article 1733.
Since the carrier has failed to establish any caso fortuito,
the presumption by law of fault or negligence on the part of the
carrier applies; and the carrier must present evidence that it has
observed the extraordinary diligence required by Article 1733 of
the Civil Code in order to escape liability for damage or
destruction to the goods that it had admittedly carried in this
case. No such evidence exists of record. Thus, the carrier cannot
escape liability.
The presumption, therefore, that the cargo was in
apparent good condition when it was delivered by the vessel to
the arrastre operator by the clean tally sheets has been
overturned and traversed. The evidence is clear to the
effect that the damage to the cargo was suffered while aboard
petitioner's vessel
BASCOS vs. COURT OF APPEALS and RODOLFO A. CIPRIANO
G.R. No. 101089
FACTS: Rodolfo A. Cipriano representing Cipriano Trading
Enterprise (CIPTRADE for short) entered into a hauling contract
with Jibfair Shipping Agency Corp whereby the former bound
itself to haul the latter’s 2,000 m/tons of soya bean meal to the
warehouse in Calamba, Laguna. To carry out its obligation,
CIPTRADE, through Cipriano, subcontracted with Bascos to
transport and to deliver 400 sacks of soya bean meal from the
Manila Port Area to Calamba, Laguna. Petitioner failed to deliver
the said cargo. As a consequence of that failure, Cipriano paid
Jibfair Shipping Agency the amount of the lost goods in
accordance with their contract.
Cipriano demanded reimbursement from petitioner but the latter
refused to pay. Eventually, Cipriano filed a complaint for a sum
of money and damages with writ of preliminary attachment for
breach of a contract of carriage. The trial court granted the writ
of preliminary attachment.
In her answer, petitioner interposed the defense that there was
no contract of carriage since CIPTRADE leased her cargo truck
to load the cargo from Manila Port Area to Laguna and that the
truck carrying the cargo was hijacked and being a force
majeure, exculpated petitioner from any liability
After trial, the trial court rendered a decision in favor of Cipriano
and against Bascos ordering the latter to pay the former for
actual damages for attorney’s fees and cost of suit.
The “Urgent Motion To Dissolve/Lift preliminary Attachment”
Bascos is DENIED for being moot and academic.
Petitioner appealed to the Court of Appeals but respondent
Court affirmed the trial court’s judgment.
Hence this petition for review on certiorari
ISSUE:
(1) WON petitioner a common carrier
(2) WON the hijacking referred to a force majeure

HELD: The petition is DISMISSED and the decision of the Court of
Appeals is hereby AFFIRMED.
1. YES
In disputing the conclusion of the trial and appellate courts that
petitioner was a common carrier, she alleged in this petition that
the contract between her and Cipriano was lease of the truck.
She also stated that: she was not catering to the general public.
Thus, in her answer to the amended complaint, she said that she
does business under the same style of A.M. Bascos Trucking,
offering her trucks for lease to those who have cargo to move,
not to the general public but to a few customers only in view of
the fact that it is only a small business.
We agree with the respondent Court in its finding that petitioner
is a common carrier.
Article 1732 of the Civil Code defines a common carrier as “(a)
person, corporation or firm, or association engaged in the
business of carrying or transporting passengers or goods or both,
by land, water or air, for compensation, offering their services to
the public.” The test to determine a common carrier is “whether
the given undertaking is a part of the business engaged in by the
carrier which he has held out to the general public as his
occupation rather than the quantity or extent of the business
transacted.” 12 In this case, petitioner herself has made the
admission that she was in the trucking business, offering her
trucks to those with cargo to move. Judicial admissions are
conclusive and no evidence is required to prove the same. 13
But petitioner argues that there was only a contract of lease
because they offer their services only to a select group of
people. Regarding the first contention, the holding of the Court
in De Guzman vs. Court of Appeals 14 is instructive. In referring to
Article 1732 of the Civil Code, it held thus:
“The above article makes no distinction between one whose
principal business activity is the carrying of persons or goods or
both, and one who does such carrying only as an ancillary
activity (in local idiom, as a “sideline”). Article 1732 also carefully
avoids making any distinction between a person or enterprise
offering transportation service on a regular or scheduled basis
and one offering such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732 distinguish between
a carrier offering its services to the “general public,” i.e., the
general community or population, and one who offers services
or solicits business only from a narrow segment of the general
population. We think that Article 1732 deliberately refrained from
making such distinctions.”
2. NO
Likewise, We affirm the holding of the respondent court that the
loss of the goods was not due to force majeure.
Common carriers are obliged to observe extraordinary diligence
in the vigilance over the goods transported by them.
Accordingly, they are presumed to have been at fault or to
have acted negligently if the goods are lost, destroyed or
deteriorated. There are very few instances when the
presumption of negligence does not attach and these instances
are enumerated in Article 1734. 19 In those cases where the
presumption is applied, the common carrier must prove that it
exercised extraordinary diligence in order to overcome the
presumption.
In this case, petitioner alleged that hijacking constituted force
majeure which exculpated her from liability for the loss of the
cargo. In De Guzman vs. Court of Appeals, the Court held that
hijacking, not being included in the provisions of Article 1734,
must be dealt with under the provisions of Article 1735 and thus,
the common carrier is presumed to have been at fault or
negligent. To exculpate the carrier from liability arising from
hijacking, he must prove that the robbers or the hijackers acted
with grave or irresistible threat, violence, or force. This is in
accordance with Article 1745 of the Civil Code which provides:
“Art. 1745. Any of the following or similar stipulations shall be
considered unreasonable, unjust and contrary to public policy;
xx
(6) That the common carrier’s liability for acts committed by
thieves, or of robbers who do not act with grave or irresistible
threat, violences or force, is dispensed with or diminished;” xx
GANZON V. CA (G.R. NO. L-48757)
Facts:
Private respondent Tumambing contracted the services of
petitioner Ganzon to haul 305 tons of scrap iron from Bataan to
the port of Manila on board the lighter LCT “Batman.” Petitioner
sent his lighter with its Captain Filomeno to dock at Mariveles,
where respondent Tumambing delivered the scrap irons for
loading which also begun on the same day. Mayor Advincula
arrived at the port and demanded P 5,000 shakedown from
respondent. The two ended up in a heated argument where
Page 4 of 6
respondent had to be taken to a hospital to be treated of a
gunshot wound. After sometime, the loading of the scrap iron
was resumed. But now, the Acting Mayor together with 3
policemen ordered Captain Filomeno to dump the scrap iron
where the lighter was docked and the rest to be brought to
NASSCO compound. Later, the Acting Mayor issued a receipt
stating that the Municipality had taken custody of the scrap iron.
Respondent instituted an action for damages against petitioner.
Respondent Court found in favor for Tumambing.
Issue:
Whether or not petitioner Ganzon, a common carrier, can be
exempt from liability by invoking order of competent authority.
Ruling: NO.
The petitioner has failed to show that the loss of the scraps was
due to any of the following causes enumerated in Article 1734 of
the Civil Code.
Before the appellee Ganzon could be absolved from
responsibility on the ground that he was ordered by competent
public authority to unload the scrap iron, it must be shown that
Acting Mayor Basilio Rub had the power to issue the disputed
order, or that it was lawful, or that it was issued under legal
process of authority. The appellee failed to establish this. Indeed,
no authority or power of the acting mayor to issue such an order
was given in evidence. Neither has it been shown that the cargo
of scrap iron belonged to the Municipality of Mariveles. The fact
remains that the order given by the acting mayor to dump the
scrap iron into the sea was part of the pressure applied by Mayor
Jose Advincula to shakedown the appellant for P5,000.00. The
order of the acting mayor did not constitute valid authority for
appellee Mauro Ganzon and his representatives to carry out. The
petitioner was not duty bound to obey the illegal order to dump
into the sea the scrap iron.
Transportation Case Digest: Phil Am Gen Insurance Co, Et Al. V.
PKS Shipping Co (2003)
FACTS:
 Davao Union Marketing Corporation (DUMC)
contracted the services of PKS Shipping Company (PKS
Shipping) for the shipment to Tacloban City of 75,000
bags of cement worth P3,375,000.
 DUMC insured the goods for its full value with Philippine
American General Insurance Company (Philamgen).
 The goods were loaded aboard the dumb barge Limar
I belonging to PKS Shipping.
 December 22, 1988 9 pm: While Limar I was being
towed by PKS’ tugboat MT Iron Eagle, the barge sank a
couple of miles off the coast of Dumagasa Point, in
Zamboanga del Sur, bringing down with it the entire
cargo of 75,000 bags of cement.
 DUMC filed a formal claim with Philamgen for the full
amount of the insurance. Philamgen promptly made
payment; it then sought reimbursement from PKS
Shipping of the sum paid to DUMC but the shipping
company refused to pay so Philamgen to file suit
against PKS Shipping
 RTC: dismissed the complaint - fortuitous event
 CA:Affirmed - not a common carrier but a casual
occupation
ISSUE: W/N PKS Shipping is NOT liable since it was NOT a common
carrier
HELD: NO. Petition is DENIED
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
 Complementary is Section 13, paragraph (b), of the
Public Service Act
public service" to be –
"x x x every person that now or hereafter may own, operate,
manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general
business purposes, any common carrier, railroad, street railway,
subway motor vehicle, either for freight or passenger, or both,
with or without fixed route and whatever may be its
classification, freight or carrier service of any class, express
service, steamboat, or steamship, or steamship line, pontines,
ferries and water craft, engaged in the transportation of

passengers or freight or both, shipyard, marine repair shop, wharf
or dock, ice plant, ice refrigeration plant, canal, irrigation system,
gas, electric light, heat and power, water supply and power
petroleum, sewerage system, wire or wireless communication
systems, wire or wireless broadcasting stations and other similar
public services
 So understood, the concept of `common carrier’ under
Article 1732 may be seen to coincide neatly with the
notion of `public service,’ under the Public Service Act
 distinction between:
 common or public carrier
 private or special carrier - character of the
business, such that if the undertaking is an
isolated transaction , not a part of the business
or occupation, and the carrier does not hold
itself out to carry the goods for the general
public or to a limited clientele, although
involving the carriage of goods for a fee
 EX: charter party which includes
both the vessel and its crew, such as
in a bareboat or demise, where the
charterer obtains the use and service
of all or some part of a ship for a
period of time or a voyage or
voyages and gets the control of the
vessel and its crew.
 The regularity of its activities in this area indicates more
than just a casual activity on its part
 The appellate court ruled, gathered from the
testimonies and sworn marine protests of the respective
vessel masters ofLimar I and MT Iron Eagle, that there
was no way by which the barge’s or the tugboat’s
crew could have prevented the sinking of Limar I. The
vessel was suddenly tossed by waves of extraordinary
height of 6 to 8 feet and buffeted by strong winds of 1.5
knots resulting in the entry of water into the barge’s
hatches. The official Certificate of Inspection of the
barge issued by the Philippine Coastguard and the
Coastwise Load Line Certificate would attest to the
seaworthiness of Limar I and should strengthen the
factual findings of the appellate court.
 Findings of fact of the Court of Appeals generally
conclude this Court; none of the recognized
exceptions from the rule - (1) when the factual findings
of the Court of Appeals and the trial court are
contradictory; (2) when the conclusion is a finding
grounded entirely on speculation, surmises, or
conjectures; (3) when the inference made by the Court
of Appeals from its findings of fact is manifestly
mistaken, absurd, or impossible; (4) when there is a
grave abuse of discretion in the appreciation of facts;
(5) when the appellate court, in making its findings,
went beyond the issues of the case and such findings
are contrary to the admissions of both appellant and
appellee; (6) when the judgment of the Court of
Appeals is premised on a misapprehension of facts; (7)
when the Court of Appeals failed to notice certain
relevant facts which, if properly considered, would
justify a different conclusion; (8) when the findings of
fact are themselves conflicting; (9) when the findings of
fact are conclusions without citation of the specific
evidence on which they are based; and (10) when the
findings of fact of the Court of Appeals are premised
on the absence of evidence but such findings are
contradicted by the evidence on record – would
appear to be clearly extant in this instance.
Calvo v. UCPB General Insurance
G.R. No. 148496 March 19, 2002
Facts: Petitioner Virgines Calvo, owner of Transorient Container
Terminal Services, Inc. (TCTSI), and a custom broker, 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 to the Tabacalera Compound,
Ermita, Manila. The cargo was insured by respondent UCPB
General Insurance Co., Inc.
On July 14, 1990, contained in 30 metal vans, arrived in Manila
on board “M/V Hayakawa Maru”. After 24 hours, they were
unloaded from vessel to the custody of the arrastre operator,
Manila Port Services, Inc. From July 23 to 25, 1990, petitioner,
pursuant to her contract with SMC, withdrew the cargo from the
arrastre operator and delivered it to SMC’s warehouse in Manila.
Page 5 of 6
On July 25, the goods were inspected by Marine Cargo
Surveyors, reported that 15 reels of the semi-chemical fluting
paper were “wet/stained/torn” and 3 reels of kraft liner board
were also torn. The damages cost P93,112.00.
SMC collected the said amount from respondent UCPB under its
insurance contract. Respondent on the other hand, as a
subrogee of SMC, brought a suit against petitioner in RTC, Makati
City. On December 20, 1995, the RTC rendered judgment finding
petitioner liable for the damage to the shipment. The decision
was affirmed by the CA.
Issue: Whether or not Calvo is a common carrier?
Held: In this case the contention of the petitioner, that he is not a
common carrier but a private carrier, has no merit.
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 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 1733
deliberately refrained from making such distinction. (De Guzman
v. CA, 68 SCRA 612)
Te concept of “common carrier” under Article 1732 coincide
with the notion of “public service”, under the Public Service Act
which partially supplements the law on common carrier. Under
Section 13, paragraph (b) of the Public Service Act, it includes:
“ x x x every person that now or hereafter may own, operate,
manage, or control in the Philippines, for hire or compensation,
with general or limited clientele, whether permanent, occasional
or accidental, and done for general business purposes, any
common carrier, railroad, street railway, traction railway, subway
motor vehicle, either for freight or passenger, or both, with or
without fixed route and whatever may be its classification, freight
or carrier service of any class, express service, steamboat, or
steamship line, pontines, ferries and water craft, engaged in the
transportation of passengers or freight or both, shipyard, marine
repair shop, wharf or dock, ice plant, ice-refrigeration plant,
canal, irrigation system, gas, electric light, heat and power,
water supply and power petroleum, sewerage system, wire or
wireless communications systems, wire or wireless broadcasting
stations and other similar public services. x x x”
[G.R. No. 143133. June 5, 2002]
BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and
JARDINE DAVIES TRANSPORT SERVICES, INC., petitioners, vs.
PHILIPPINE FIRST INSURANCE CO., INC., respondent.
DECISION
PANGANIBAN, J.:
Facts:
CMC Trading A.G. shipped on board the MN ‘Anangel Sky’ at
Hamburg, Germany 242 coils of various Prime Cold Rolled Steel
sheets for transportation to Manila consigned to the Philippine
Steel Trading Corporation. On July 28, 1990, MN Anangel Sky
arrived at the port of Manila and, within the subsequent days,
discharged the subject cargo. Four (4) coils were found to be in
bad order B.O. Tally sheet No. 154974. Finding the four (4) coils in
their damaged state to be unfit for the intended purpose, the
consignee Philippine Steel Trading Corporation declared the
same as total loss.
Despite receipt of a formal demand, Phil. First insurance refused
to submit to the consignee’s claim. Consequently, Belgian
Overseas paid the consignee P506,086.50, and was subrogated
to the latter’s rights and causes of action against defendants-
appellees. Subsequently, plaintiff-appellant instituted this
complaint for recovery of the amount paid by them, to the
consignee as insured.
Impugning the propriety of the suit against them, defendants-
appellees imputed that the damage and/or loss was due to pre-
shipment damage, to the inherent nature, vice or defect of the
goods, or to perils, danger and accidents of the sea, or to
insufficiency of packing thereof, or to the act or omission of the
shipper of the goods or their representatives. In addition thereto,
defendants-appellees argued that their liability, if there be any,
 Page 6 of 6

should not exceed the limitations of liability provided for in the bill
of lading and other pertinent laws. Finally, defendants-appellees
averred that, in any event, they exercised due diligence and
foresight required by law to prevent any damage/loss to said
shipment.”
Issue: Whether or not petitioners have overcome the
presumption of negligence of a common carrier
Held:
No.
Petitioners contend that the presumption of fault imposed on
common carriers should not be applied on the basis of the lone
testimony offered by private respondent. The contention is
untenable.
Well-settled is the rule that common carriers, from the nature of
their business and for reasons of public policy, are bound to
observe extraordinary diligence and vigilance with respect to
the safety of the goods and the passengers they transport. Thus,
common carriers are required to render service with the greatest
skill and foresight and “to use all reasonable means to ascertain
the nature and characteristics of the goods tendered for
shipment, and to exercise due care in the handling and
stowage, including such methods as their nature requires.” The
extraordinary responsibility lasts from the time the goods are
unconditionally placed in the possession of and received for
transportation by the carrier until they are delivered, actually or
constructively, to the consignee or to the person who has a right
to receive them.
Owing to this high degree of diligence required of them,
common carriers, as a general rule, are presumed to have been
at fault or negligent if the goods they transported deteriorated or
got lost or destroyed. That is, unless they prove that they
exercised extraordinary diligence in transporting the goods. In
order to avoid responsibility for any loss or damage, therefore,
they have the burden of proving that they observed such
diligence.
However, the presumption of fault or negligence will not arise if
the loss is due to any of the following causes: (1) flood, storm,
earthquake, lightning, or other natural disaster or calamity; (2) an
act of the public enemy in war, whether international or civil; (3)
an act or omission of the shipper or owner of the goods; (4) the
character of the goods or defects in the packing or the
container; or (5) an order or act of competent public authority.
This is a closed list. If the cause of destruction, loss or deterioration
is other than the enumerated circumstances, then the carrier is
liable therefor.
Corollary to the foregoing, mere proof of delivery of the goods in
good order to a common carrier and of their arrival in bad order
at their destination constitutes a prima facie case of fault or
negligence against the carrier. If no adequate explanation is
given as to how the deterioration, the loss or the destruction of
the goods happened, the transporter shall be held responsible.
That petitioners failed to rebut the prima facie presumption of
negligence is revealed in the case at bar by a review of the
records and more so by the evidence adduced by respondent