Transportation Case Digest

1. Asia Lighterage and Shipping, Inc vs CA

G.R. No. 147246. August 19, 2003

FACTS:
Asia Lighterage and Shipping, Inc was contracted as carrier to deliver 3,150 metric tons of Better
Western White Wheat in bulk, (US$423,192.35) to the consignee‘s (General Milling Corporation)
warehouse at Bo. Ugong, Pasig City insured by Prudential Guarantee and Assurance, Inc. against
loss/damage for P14,621,771.75.

It appears that on August 17, 1990, the transport of said cargo was suspended due to a warning
of an incoming typhoon. PSTSI III was tied down to other barges which arrived ahead of it while
weathering out the storm that night. A few days after, the barge developed a list because of a
hole it sustained after hitting an unseen protuberance underneath the water. It filed a Marine
Protest on August 28, 1990 and also secured the services of Gaspar Salvaging Corporation to
refloat the barge.

The barge was then towed to ISLOFF terminal before it finally headed towards the consignee’s
wharf on September 5, 1990. Upon reaching the Sta. Mesa spillways, the barge again ran aground
due to strong current.7 days later, a bidding was conducted to dispose of the damaged wheat
retrieved & loaded on the3 other barges. The total proceeds from the sale of the salvaged cargo
was P201,379.75.

ISSUES:
1. Whether petitioner is a common carrier.
2. Assuming petitioner is a common carrier, whether it exercised extraordinary care and diligence
in its care and custody of the consignee’s cargo.

HELD:
1. Petitioner is a common carrier.

Article 1732 of the Civil Code defines common carriers as persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or both, by land, water, or
air, for compensation, offering their services to the public.

In De Guzman vs. CA it was held that the definition of common carriers in Article 1732 of the Civil
Code makes no distinction between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only as an ancillary activity. There is
also no distinction between a person or enterprise offering transportation service on
a regular/scheduled basis and one offering such service on an occasional, episodic or unscheduled
basis.]
The test to determine a common carrier is “whether the given undertaking is a part of the business
engaged in by the carrier which he has held out to the general public as his occupation rather
than the quantity or extent of the business transacted.” In the case at bar, the petitioner admitted
that itis engaged in the business of shipping, lighterage and drayage, offering its barges to the
public, despite its limited clientele for carrying/transporting goods by water for compensation.

2. The findings of the lower courts should be upheld. Petitioner failed to exercise extraordinary
diligence in its care and custody of the consignee’s goods.
Common carriers are bound to observe extraordinary diligence in the vigilance over the goods
transported by them. They are presumed to have been at fault or to have acted negligently if the
goods are lost, destroyed or deteriorated. To overcome the presumption of negligence in the case
of loss, destruction or deterioration of the goods, the common carrier must prove that it exercised
extraordinary diligence. There are, however, exceptions

Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods,
unless the same is due to any of the following causes only:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

In the case at bar, the barge completely sank after its towing bits broke, resulting in the total loss
of its cargo. Petitioner claims that this was caused by a typhoon, hence, it should not be held liable
for the loss of the cargo. However, petitioner failed to prove that the typhoon is the proximate
and only cause of the loss of the goods, and that it has exercised due diligence before, during and
after the occurrence of the typhoon to prevent/minimize the loss. The evidence show that, even
before the towing bits of the barge broke, it had already previously sustained damage when it hit
a sunken object while docked at the Engineering Island. It even suffered a hole. Clearly, this could
not be solely attributed to the typhoon. Thus, when petitioner persisted to proceed with the
voyage, it recklessly exposed the cargo to further damage.

Moreover, petitioner still headed to the consignee’s wharf despite knowledge of an incoming
typhoon. During the time that the barge was heading towards the consignee’s wharf on
September5, 1990, typhoon “Loleng” has already entered the Philippine area of responsibility.

2. Asian Terminals, Inc. v Allied Guarantee Insurance, Co. Inc. (2015)

GR No. 182208, October 14, 2015
Peralta, J.:

Commercial Law; Transportation Law; Arrastre operator. The arrastre operator's principal work is
that of handling cargo, so that its drivers/operators or employees should observe the standards and
measures necessary to prevent losses and damage to shipments under its custody. In the
performance of its obligations, an arrastre operator should observe the same degree of diligence as
that required of a common carrier and a warehouseman. Being the custodian of the goods
discharged from a vessel, an arrastre operator's duty is to take good care of the goods and to tum
them over to the party entitled to their possession.
Same; same; same. In instances when the consignee claims any loss, the burden of proof is on the
arrastre operator to show that it complied with the obligation to deliver the goods and thatthe losses
were not due to its negligence or that of its employees.

FACTS:
The petitioner is an arrastre operator. A shipment of kraft linear board from US to be delivered to
San Miguel Corp in Manila, was made on board M/V Nicole owned by the Transocean, a foreign
corporation whose Philippine representative is Philippine Transmarine. Upon arrival and shortly
thereafter, the said linear boards were offloaded from the vessel to the arrastre petitioner.
However, upon assessment, 158 rolls of the goods were reported to be damaged during shipping.
Further, upon withdrawal to the arrastre to be delivered first to San Miguel’s broker Dynamic and
later on to consignee San Miguel, another 54 rolls of board were reported to be damaged. The
respondent Allied, being the insurer of the goods, paid San Miguel of the damage and later on
seek reimbursement against Transocean, Philippine Transmarine, Dynamic and petitioner for the
lost suffered in paying the consignee San Miguel by filing a Complaint in RTC Makati. It alleged
that from the port of origin, the goods were in good condition and it was merely damaged due
to the negligence of the abovementioned defendants. However, petitioner denied the allegations
contending that the goods are already in bad condition when they deliver it to the broker and
consignee and assailed exercise of due diligence in the taking care of the said goods. The RTC
however ruled in favor of Allied and found all the defendants liable for losses. Upon appeal, the
CA affirmed the decision of the RTC. Hence, this appeal made only by the petitioner. Petitioner
claims that the CA erroneously failed to note the so-called Tum Over Survey of Bad Order Cargoes
and the Requests for Bad Order Survey which supposedly could release it from liability for the
damaged shipment. The reports were apparently made prior to the shipment's turnover from
petitioner to Dynamic and they purportedly show that no additional loss or damage happened
while the shipment was in petitioner's custody as the reports only mention the 158 rolls that were
damaged during shipping or prior to petitioner’s possession hence not liable to the additional 54
damaged rolls.

ISSUE: Whether or not the petitioner shall be held liable for the losses sustained by respondent.

HELD: AFFIRMATIVE.
The petitioner wanted the Court to reexamine the decisions and evidences presented before the
RTC and CA who have the same ruling which is not allowed by law, except upon the existence of
exceptions allowed. However, none of those exists in this case.

There is no misapprehension of facts nor the evidences presented by the petitioner such as the
Tum Over Survey of Bad Order Cargoes and the Requests for Bad Order Survey. The trial court
correctly gave little credence to the said reports since between the arrastre operator and the
consignee exist a relationship similar to that of a warehouseman and a depositor.
The relationship between the consignee and the common carrier is similar to that of the consignee
and the arrastre operator. Both the arrastre and the carrier are, therefore, charged with and
responsible to deliver the goods in good condition to the consignee.
The RTC correctly held that the broker, Dynamic, cannot alone be held liable for the additional 54
rolls of damaged goods since such damage happened (a) while the goods were in the custody of
the arrastre petitioner; (b) when they were in transition from petitioner's custody to that of
Dynamic; and (c) during Dynamic's custody. While the RTC could not conclude with pinpoint
accuracy who among the ATI and Dynamic caused which particular damage and in what
proportion or quantity, it was unblemished that both ATI and Dynamic failed to discharge the
burden of proving that damage on the 54 rolls did not occur during their custody. It was proven
that during petitioner’s custody and while it will transfer the goods to the broker, there was a use
of wrong lifting equipment thereby deliberating the cause of such damage. It is a finding of fact
of the lower court which the SC will not disturb.

In its operations, the arrastre operator must observe the same degree of diligence of that required
of a common carrier and a warehouseman. And it must prove more than a fact that other parties
might be liable for the losses but it must prove that it itself exercised due care in handling thereof,
that it complied with the obligation to deliver the goods and that the losses were not due to its
negligence or that of its employees.
As established, there was negligence in both petitioner and Dynamic's performance of their duties
in the handling; storage and delivery of the subject shipment to San Miguel thereby resulting in
the loss of 54 rolls of kraft linear board, solidary liability for such loss shall be imposed.

3. Cebu Salvage Corporation vs Philippine Home Assurance Corp.

G.R. No. 150403. January 25, 2007
Corona, J.

NATURE
Petition for review on certiorari to review CA’s decision

FACTS
 Petitioner Cebu Salvage Corp. (as carrier) and Maria Cristina Chemicals Industries, Inc.
[MCCII] (as charterer) entered into a voyage charter where petitioner was to load 800-
1,100 metric tons of silica quartz on board M/T Espiritu Santo for transport and discharge
from Negros Occidental to Misamis Oriental, to consignee Ferrochrome Phils., Inc.
 However, the shipment never reached its destination because the vessel sank resulting in
the total loss of the cargo.
 MCII filed a claim for the loss of the shipment with its insurer, respondent Philippine Home
Assurance Corp.
 Respondent paid the claim and was subrogated to the rights of MCCII, after which it filed
a case against petitioner for reimbursement of the amount it paid MCCII.
 TC and CA: ordered petitioner to pay respondent

ISSUES & ARGUMENTS

 WoN a carrier may be held liable for the loss of cargo resulting from the sinking of a ship
it doesn’t own? YES
Petitioner argues the agreement was just a contract of hire where MCCII hired the vessel from its
owner, ALS Timber. Since it wasn’t the owner of the vessel, it didn’t have control and supervision
over it and its crew. Thus, it shouldn’t be held liable.

RATIONALE
1. Petitioner and MCCII entered into a “voyage charter,” a.k.a contract of affreightment where
the ship was leased for a single voyage for the conveyance of the goods, in consideration
of the payment of freight. Under a voyage charter, the shipowner retains possession,
command and navigation of the ship, the charterer/freighter just has the use of the space
in the vessel in return for his payment of freight. An owner who retains possession of
the ship remains liable as carrier and must answer for loss or non-delivery of the
goods received for transportation.
2. The agreement parties signed was a contract of carriage under which the petitioner was
a common carrier. From the nature of their business and reasons of public policy,
common carriers are bound to observe extraordinary diligence over the goods they
transport according to the circumstances of each case. In case of loss of the goods, the
common carriers are responsible, unless they can prove the causes under Art. 1734 CC or
that they observed extraordinary diligence.
3. In this case, Petitioner was the one which contracted with MCCII for the transport of the
cargo. It had control over what vessel it would use. The fact that it did not own the
vessel it decided to use to consummate the contract of carriage didn’t negate its
character and duties as a common carrier.

The bill of lading issued by ALS was just a receipt to evidence the fact that the goods have
been received for transportation. It is true that a bill of lading may serve as the contract
of carriage between the parties but it cannot prevail over the express provision of
the voyage charter.

The voyage charter stipulated that cargo insurance was for the charterer’s account,
accdg. to petitioner. This just means that the charterer would have the goods
insured. It couldn’t exculpate the carrier from liability for the breach of its contract
of carriage.

MCCII never dealt with ALS and yet petitioner insists that MCCII should sue ALS for
reimbursement for its loss. To permit a common carrier to escape its responsibility for
the goods it agreed to transport would derogate from the carrier’s duty of
extraordinary diligence.
4. MINDANAO TERMINAL AND BROKERAGESERVICE, INC. vs. PHOENIX ASSURANCE
COMPANY OF NEWYORK/MCGEE & CO., INC
G.R. No. 162467 May 8, 2009
Tinga, J.

FACTS:
Del Monte Philippines, Inc. contracted petitioner Mindanao Terminal and Brokerage Service, Inc.,
a stevedoring company, to load and stow a shipment of 146,288 cartons of fresh green Philippine
bananas and 15,202cartons of fresh pineapples belonging to Del Monte Fresh Produce
International, Inc. into the cargo hold of the vessel M/V Mistrau. The vessel was docked at the port
of Davao City and the goods were to be transported by it to the port of Inchon, Korea in favor of
consignee Taegu Industries, Inc. Del Monte Produce insured the shipment under an "open cargo
policy" with private respondent Phoenix Assurance Company of New York , a non-life insurance
company, and private respondent McGee & Co. Inc. (McGee), the underwriting manager/agent of
Phoenix. The vessel set sail from the port of Davao City and arrived at the port of Inchon, Korea.
It was then discovered upon discharge that some of the cargo was in bad condition. The Marine
Cargo Damage Surveyor of Incok Loss and Average Adjuster of Korea, through its representative
Byeong Yong Ahn (Byeong), surveyed the extent of the damage of the shipment. In a survey
report, it was stated that16,069 cartons of the banana shipment and2,185 cartons of the pineapple
shipment were so damaged that they no longer had commercial value. Mindanao Terminal loaded
and stowed the cargoes aboard the M/V Mistrau. The vessel set sail from the port of Davao City
and arrived at the port of Inchon, Korea. It was then discovered upon discharge that some of the
cargo was in bad condition. Del Monte Produce filed a claim under the open cargo policy for the
damages to its shipment. McGee’s Marine Claims Insurance Adjuster evaluated the claim and
recommended that payment in the amount of $210,266.43 be made. Phoenix and McGee
instituted an action for damages against Mindanao Terminal After trial, the RTC held that the only
participation of Mindanao Terminal was to loathe cargoes on board the M/V Mistrau under the
direction and supervision of the ship’s officers, who would not have accepted the cargoes on
board the vessel and signed the foreman’s report unless they were properly arranged and tightly
secured to withstand voyage across the open seas. Accordingly, Mindanao Terminal cannot be
held liable for whatever happened to the cargoes after it had loaded and stowed them. Moreover,
citing the survey report, it was found by the RTC that the cargoes were damaged on account of a
typhoon which M/V Mistrau had encountered during the voyage. It was further held that Phoenix
and McGee had no cause of action against Mindanao Terminal because the latter, whose services
were contracted by Del Monte, a distinct corporation from Del Monte Produce, had no contract
with the assured Del Monte Produce. The RTC dismissed the complaint and awarded the
counterclaim of Mindanao Terminal in the amount of P83,945.80 as actual damages and
P100,000.00 as attorney’s fees.

ISSUE: Whether or not Phoenix and McGee have a cause of action and whether Mindanao
Terminalis liable for not having exercised extraordinary diligence in the transport and storage of
the cargo.
RULING:
No, in the present case, Mindanao Terminal, as a stevedore, was only charged with the loading
and stowing of the cargoes from the pier to the ship’s cargo hold; it was never the custodian of
the shipment of Del Monte Produce. A stevedore is not a common carrier for it does not transport
goods or passengers; it is not akin to a warehouseman for it does not store goods for profit.
**Phoenix and McGee appealed to the Court of Appeals. The appellate court reversed and set
aside the decision The same court ordered Mindanao Terminal to pay Phoenix and McGee “the
total amount of $210,265.45 plus legal interest from the filing of the complaint until fully paid and
attorney’s fees of 20% of the claim." It sustained Phoenix’s and McGee’s argument that the
damage in the cargoes was the result of improper stowage by Mindanao Terminal.

** Mindanao Terminal filed a motion for reconsideration, which the Court of Appeals denied in its
26 February 2004 resolution. Hence, the present petition for review.

5. Aboitiz Shipping v. CA
GR No. 84458. November 6, 1989

Facts:
Anacleto Viana boarded the vessel M/V Antonia owned by petitioner Aboitiz Shipping Corp at the
port at San Jose, Occidental Mindoro, bound for Manila. The vessel arrived at Pier 4, North Harbor,
Manila and was taken over by Pioneer Stevedoring for the latter to unload the cargoes from the
said vessel pursuant to their Memorandum of Agreement. An hour after the passengers and Viana
had disembarked the vessel the crane operator began its unloading operation. While the crane
was being operated, Viana who had already disembarked the vessel remembered that some of
his cargoes were still loaded there. He went back and while he was pointing to the crew where his
cargoes were, the crane hit him pinning him between the side of the vessel and the crane resulting
to his death. A complaint for damages was filed against petitioner for breach of contract of
carriage. Petitioner contends that Viana ceased to be a passenger when he disembarked the vessel
and that consequently his presence there was no longer reasonable. CA affirmed the trial court’s
order holding Aboitiz liable. Hence the petition.

Issue: Whether or not petitioner is still responsible as a carrier to Viana after the latter had already
disembarked the vessel.

Ruling: YES.
The rule is that the relation of carrier and passenger continues until the passenger has been landed
at the port of destination and has left the vessel owner’s dock or premises. Once created, the
relationship will not ordinarily terminate until the passenger has, after reaching his destination,
safely alighted from the carrier’s conveyance or had a reasonable opportunity to leave the carrier’s
premises. All persons who remain on the premises a reasonable time after leaving the conveyance
are to be deemed passengers, and what is a reasonable time or a reasonable delay within this rule
is to be determined from all the circumstances and includes a reasonable time to see after his
baggage and prepare for his departure. The carrier-passenger relationship is not terminated
merely by the fact that the person transported has been carried to his destination if, for example,
such person remains in the carrier’s premises to claim his baggage.

The primary factor to be considered is the existence of a reasonable cause as will justify the
presence of the victim on or near the petitioner’s vessel. We believe there exists such a justifiable
cause. When the accident occurred, the victim was in the act of unloading his cargoes, which he
had every right to do, from petitioner’s vessel. As earlier stated, a carrier is duty bound not only
to bring its passengers safely to their destination but also to afford them a reasonable time to
claim their baggage.

Consequently, under the foregoing circumstances, the victim Anacleto Viana is still deemed a
passenger of said carrier at the time of his tragic death.