Module 3 complete contract of carriage the consummation of
which had already begun.
Obligations of common carrier
Basic Obligations
Compania Maritama v. Insurance Co. of North
America
G.R. No. L-18965| Date October 30, 1964
Facts:
• Macleod and Company of the Philippines contracted
via telephone the services of Compañia Maritima for
the shipment of bales of hemp from Davao to Manila
and then to Boston. This contract was later formally
confirmed and written. After the 2 loaded barges left
the wharf and moored at the government’s marginal
wharf, one of it sank resulting in the damage or loss
of the bales of hemp loaded therein. Macleod incurred
losses for the cleaning, washing, reconditioning, and
redrying of the hemp.
• All abaca shipments were insured with the Insurance
Company of North America against all losses and
damages. Macleod filed a claim for the losses and was
eventually paid P64,018.55. A receipt and subrogation
agreement was issued wherein Macleod assigned to
the insurance company its rights over the insured and
damaged cargo.
Petitioner’s Argument/s (LOST): Compaña
Maritima (shipper) contends that there was no
contract of carriage because the shipment was carried
by a barge owned by (the carrier) Macleod and not on
S.S. Bowline Knot, which was supposed to carry it.
Respondent’s Arguments (WON): There was a
complete contract of carriage even if the shipment
was carried by the carrier’s own barge.
Ruling of the lower court: Trial court ordered the
carrier to pay the insurance company the sum of P60,
421 plus interest and costs. CA affirmed the same.
Issue: Was there a contract of carriage between the
carrier and the shipper even if the loss occurred when
the hemp was loaded on a barge owned by the carrier
which was loaned free of charge and was not actually
loaded on the S.S. Bowline Knot which would carry the
hemp to Manila and no bill of lading was issued
therefor?
-YES, there is a complete contract of carriage.
Rule: Where the shipper delivered the cargo to the
carrier and the latter took possession thereof by
placing it on a lighter or barge manned by its
authorized employees, it is held that there existed a
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Application:
• The receipt signed by the patron of the lighter that
carried the hemp stated that he was receiving the
cargo "in behalf of S.S. Bowline Knot in good order
and condition”. This does not in any way impair the
contract of carriage already entered into between the
Carrier and the shipper, for those preparatory steps is
but a part and parcel of said contract of carriage. The
lighters were merely employed as the first step of the
voyage, but once that step was taken and the hemp
delivered to the carrier's employees, the rights and
obligations of the parties attached thereby
subjecting them to the principles and usages of
the maritime law.
• We have a complete contract of carriage the
consummation of which has already begun: the
shipper delivering the cargo to the carrier, and the
latter taking possession thereof by placing it on a
lighter manned by its authorized employees, under
which Macleod became entitled to the privilege
secured to him by law for its safe transportation and
delivery, and the carrier to the full payment of its
freight upon completion of the voyage.
• The liability and responsibility of the carrier under a
contract for the carriage of goods commence on their
actual delivery to, or receipt by, the carrier or an
authorized agent. . . . and delivery to a lighter in
charge of a vessel for shipment on the vessel, where
it is the custom to deliver in that way, is a good
delivery and binds the vessel receiving the freight, the
liability commencing at the time of delivery to the
lighter. . . and, similarly, where there is a contract to
carry goods from one port to another, and they cannot
be loaded directly on the vessel, and lighters are sent
by the vessel to bring the goods to it, the lighters are
for the time its substitutes, so that the bill of lading is
applicable to the goods as soon as they are placed on
the lighters."
Servando v. Phil. Steam Navigation Co.
G.R. Nos. L-36481-2 | October 23, 1982
Facts:
Clara Uy Bico and Amparo Servando (plaintiff-
appellees) loaded their cargoes on Philippine Steam
Navigation Co.’s (defendant-appellant) vessel for
carriage from Manila to Negros Occidental. On the
same day the cargoes arrived at the destination, they
were discharged at the warehouse of the Bureau of
Customs. Appellant notified appellees of the arrival of
their shipment and demanded that the same be
withdrawn from the warehouse. Uy Bico was able to
make partial withdrawal of the cargoes (907 cavans
of rice). However, on the very same day, the
warehouse was razed by fire of unknown origin.
Appellees filed their claims against appellant for
recovery of the value of the goods destroyed by the
fire.
Petitioner’s Argument/s (LOST):
● Appellant is liable for the loss because
common carriers must exercise
extraordinary diligence in the performance of
their obligations.
● A stipulation in the bill of lading (which
provides that the carrier shall not be
responsible for loss or damage caused by
force majeure) does not bind them because
it was printed in fine letters on the back of
the bills of lading and that they did not sign
the same.
Respondent’s Arguments (WON):
● Appellants did not incur in delay in the
performance of its obligation. They notified
the appellees of the arrival of their shipment
and even demanded that the cargoes be
withdrawn from the Bureau of Customs.
● It should also be pointed out that in the bills
of lading issued for the cargoes in question,
the parties agreed to limit the responsibility
of the carrier for the loss or damage that may
be caused to the shipment.
Ruling of the lower court: The court a quo held that
the delivery of the shipment to the warehouse is not
the delivery contemplated by Article 1736 (see
below). Therefore, appellants are chargeable for the
loss.
Issue: Whether the loss is chargeable against
appellant (NO)
Rule:
● Contract of adhesion - wherein one party
imposes a ready-made form of contract on
the other, as the bill of lading in the case at
bar, are contracts not entirely prohibited.
The one who adheres to the contract is in
reality free to reject it entirely; if he adheres,
he gives his consent.
● Art. 1736, CC which imposes upon common
carrier 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.”
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● Under Article 1738 of the Civil Code "the
extraordinary liability of the common carrier
continues to be operative even during the
time the goods are stored in the warehouse
of the carrier at the place of destination, until
the consignee has been advised of the arrival
of the goods and has had reasonable
opportunity thereafter to remove them or
otherwise dispose of them.''
● Article 1174. Except in cases expressly
specified by the law, or when it is otherwise
declared by stipulation, or when the nature
of the obligation requires the assumption of
risk, no person shall be responsible for those
events which could not be foreseen, or
which, though foreseen, were inevitable.
Application: The SC held that appellant is exempt
from liability for non-performance because the
burning of the warehouse containing appellant’s
goods, which is the immediate and proximate cause
of the loss, is a fortuitous event or force majeure
which could not have been foreseen by appellant.
Amparo C. Servando and Clara Uy Bico, the
consignees, had reasonable opportunity to remove
the goods. Clara had removed more than one-half of
the rice consigned to her. Moreover, the shipping
company had no more control and responsibility over
the goods after they were deposited in the customs
warehouse by the arrastre and stevedoring operator.
As to the clause in the bill of lading, while it may be
true that petitioner had not signed the bill of lading,
they are nevertheless bound by the provisions
thereof. 'Such provisions have been held to be a part
of the contract of carriage, and valid and binding
regardless of the petitioner’s lack of knowledge or
assent to the regulation'.
Maerskline v. CA
G.R. No. 94761 | Date May 17, 1993
Facts:
Petitioner Maersk Line is engaged in the
transportation of goods by sea, doing business in the
Philippines through its general agent Compania
General de Tabacos de Filipinas.
Private respondent Efren Castillo, on the other hand,
is the proprietor of Ethegal Laboratories, a firm
engaged in the manufacture of pharmaceutical
products.
PR ordered from Eli Lilly, Inc. Of Puerto Rico through
the latter’s agent in the PH, 600,000 empty gelatin
capsules for the manufacture of his pharmaceutical
products. Through a Memorandum of Shipment, the
shipper Eli Lilly, Inc. Of Puerto Rico advised PR as
consignee that the 600,000 empty gelatin capsules in
six (6) drums of 100,000 capsules each valued at USD
1,668.71, were already shipped on board MV "Anders
Maerskline" under Voyage No. 7703 for shipment to
the Philippines via Oakland, California. In said
Memorandum, shipper Eli Lilly, Inc. specified the date
of arrival to be April 3, 1977.
For reasons unknown, said cargo of capsules were
mishipped and diverted to Richmond, Virginia, USA
and then transported back to Oakland, California. The
goods finally arrived in the Philippines on June 10,
1977 or after two (2) months from the date specified
in the memorandum.
As a consequence, private respondent as consignee
refused to take delivery of the goods on account of its
failure to arrive on time.
Petitioner’s Argument/s: (LOST)
Petitioner denied that it committed breach of contract,
it alleged in its answer that the subject shipment was
transported in accordance with the provisions of the
covering bill of lading and that its liability under the
law on transportation of goods attaches only in case
of loss, destruction or deterioration of the goods as
provided for in Article 1734 of the Civil Code
Petitioner maintains that it cannot be held liable for
damages for the alleged delay in the delivery of the
600,000 empty gelatin capsules since it acted in good
faith and there was no special contract under which
the carrier undertook to deliver the shipment on or
before a specific date
Respondent’s Arguments (WON)
Private respondent alleged that petitioner committed
gross negligence and undue delay in the delivery of
the goods. PR filed an action before the court a quo
for rescission of contract with damages against
petitioner and Eli Lilly, Inc. as defendants.
Ruling of the lower court:
Lower Court believe and so hold that there
was a breach in the performance of their obligation by
the defendant Maersk Line consisting of their
negligence to ship the 6 drums of empty Gelatin
Capsules which under their own memorandum
shipment would arrive in the Philippines on April 3,
1977 which under Art. 1170 of the New Civil Code,
they stood liable for damages.
Issue: WON petitioner can be held liable for the delay
in the delivery of the goods. YES
Rule:
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It is not disputed that the aforequoted provision at the
back of the bill of lading, in fine print, is a contract of
adhesion. Generally, contracts of adhesion are
considered void since almost all the provisions of
these types of contracts are prepared and drafted only
by one party, usually the carrier.
Nonetheless, settled is the rule that bills of lading are
contracts not entirely prohibited. One who adheres to
the contract is in reality free to reject it in its entirety;
if he adheres, he gives his consent.
In Magellan Manufacturing Marketing Corporation vs.
Court of Appeals, the court ruled that: “It is a long
standing jurisprudential rule that a bill of lading
operates both as a receipt and as a contract. It is a
receipt for the goods shipped and a contract to
transport and deliver the same as therein stipulated.
As a contract, it names the parties, which includes the
consignee, fixes the route, destination, and freight
rates or charges, and stipulates the rights and
obligations assumed by the parties. Being a contract,
it is the law between the parties who are bound by its
terms and conditions provided that these are not
contrary to law, morals, good customs, public order
and public policy. A bill of lading usually becomes
effective upon its delivery to and acceptance by the
shipper. It is presumed that the stipulations of the bill
were, in the absence of fraud, concealment or
improper conduct, known to the shipper, and he is
generally bound by his acceptance whether he reads
the bill or not.”
However, the aforequoted ruling applies only if such
contracts will not create an absurd situation as in the
case at bar. The questioned provision in the subject
bill of lading has the effect of practically leaving the
date of arrival of the subject shipment on the sole
determination and will of the carrier.
While it is true that common carriers are not obligated
by law to carry and to deliver merchandise, and
persons are not vested with the right to prompt
delivery, unless such common carriers previously
assume the obligation to deliver at a given date or
time , delivery of shipment or cargo should at least be
made within a reasonable time.
The oft-repeated rule regarding a carrier's liability for
delay is that in the absence of a special contract, a
carrier is not an insurer against delay in transportation
of goods. When a common carrier undertakes to
convey goods, the law implies a contract that they
shall be delivered at destination within a reasonable
time, in the absence, of any agreement as to the time
of delivery. But where a carrier has made an express
contract to transport and deliver property within a
specified time, it is bound to fulfill its contract and is
liable for any delay, no matter from what cause it may
have arisen.
An examination of the subject bill of lading shows that
the subject shipment was estimated to arrive in Manila
on April 3, 1977. While there was no special contract
entered into by the parties indicating the date of
arrival of the subject shipment, petitioner
nevertheless, was very well aware of the specific date
when the goods were expected to arrive as indicated
in the bill of lading itself.
Application:
In the case before us, we find that a delay in the
delivery of the goods spanning a period of two (2)
months and seven (7) days falls way beyond the
realm of reasonableness. Described as gelatin
capsules for use in pharmaceutical products, subject
shipment was delivered to, and left in, the possession
and custody of petitioner-carrier for transport to
Manila via Oakland, California. But through
petitioner's negligence was mishipped to Richmond,
Virginia. Petitioner's insistence that it cannot be held
liable for the delay finds no merit.
Macam v. CA
313 SCRA 77 | 1999
Facts: Benito Macam shipped on board the vessel Nen
Jiang, owned and operated by respondent China
Ocean Shipping Co., through local agent respondent
Wallem Philippines Shipping, Inc. (hereinafter
WALLEM), watermelons covered by Bill of Lading and
exported through Letter of Credit issued by National
Bank of Pakistan, Hongkong (hereinafter PAKISTAN
BANK) and fresh mangoes covered by Bill of Lading
and exported through Letter of Credit also issued by
PAKISTAN BANK. The Bills of Lading contained the
following pertinent provision: "One of the Bills of
Lading must be surrendered duly endorsed in
exchange for the goods or delivery order."The
shipment was bound for Hongkong with PAKISTAN
BANK as consignee and Great Prospect Company of
Kowloon, Hongkong (hereinafter GPC) as notify party.
Per letter of credit requirement, copies of the bills of
lading and commercial invoices were submitted to
petitioner's depository bank, SOLIDBANK, which paid
petitioner in advance the total value of the shipment
of US$20,223.46
Upon arrival in Hongkong, the shipment was delivered
by respondent WALLEM directly to GPC, not to
PAKISTAN BANK, and without the required bill of
lading having been surrendered.
Petitioner sought collection of the value of the
shipment from respondents before the Regional Trial
Court of Manila, based on delivery of the shipment to
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GPC without presentation of the bills of lading and
bank guarantee.
Petitioner’s Argument/s:
The fact that the shipment was not delivered to the
consignee as stated in the bill of lading or to a party
designated or named by the consignee constitutes a
misdelivery thereof. Moreover, from the text of the
telex, assuming there was such an instruction, the
delivery of the shipment without the required bill of
lading or bank guarantee should be made only to the
designated consignee, referring to PAKISTAN BANK.
(LOST)
Respondent’s Arguments:
Respondents contended that the shipment was
delivered to GPC without presentation of the bills of
lading and bank guarantee per request of petitioner
himself because the shipment consisted of perishable
goods. The telex dated 5 April 1989 conveying such
request read -
AS PER SHPRS REQUEST KINDLY ARRANGE DELIVERY
OF A/M SHIPT TO RESPECTIVE CNEES WITHOUT
PRESENTATION OF OB/L[2] and bank guarantee since
for prepaid shipt fort charges already fully paid our
end x xxx
Respondents explained that it is a standard maritime
practice, when immediate delivery is of the essence,
for the 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 the bill
of lading as that usually takes time. As proof thereof,
respondents apprised the trial court that for the
duration of their two-year business relationship with
petitioner concerning similar shipments to GPC
deliveries were effected without presentation of the
bills of lading. Respondents advanced next that the
refusal of PAKISTAN BANK to pay the letters of credit
to SOLIDBANK was due to the latter's failure to submit
a Certificate of Quantity and Quality. (WON)
Ruling of the lower court:
RTC:
Respondents breached the provision in the
bill of lading requiring that "one of the Bills of Lading
must be surrendered duly endorsed in exchange for
the goods or delivery order," when they released the
shipment to GPC without presentation of the bills of
lading and the bank guarantee that should have been
issued by PAKISTAN BANK in lieu of the bills of lading.
The shipment should not have been released to GPC
at all since the instruction contained in the telex was
to arrange delivery to the respective consignees and
not to any party. The only role of GPC in the
transaction as notify party was precisely to be notified
of the arrival of the cargoes in Hongkong so it could
in turn duly advise the consignee.
CA:
As established by previous similar transactions
between the parties, shipped cargoes were sometimes
actually delivered not to the consignee but to notify
party GPC without need of the bills of lading or bank
guarantee. Moreover, the bills of lading were viewed
by respondent court to have been properly
superseded by the telex instruction and to implement
the instruction, the delivery of the shipment must be
to GPC, the real importer/buyer of the goods as shown
by the export invoices, and not to PAKISTAN BANK
since the latter could very well present the bills of
lading in its possession; likewise, if it were the
PAKISTAN BANK to which the cargoes were to be
strictly delivered it would no longer be proper to
require a bank guarantee.
Issue:
1. Whether or not GPC has the right to receive
the goods? YES.
2. Whether or not respondents are liable to
petitioner for releasing the goods to GPC
without the bills of lading or bank guarantee?
NO.
Rule:
Article 1736. The extraordinary responsibility of the
common carriers lasts from the time the goods are
unconditionally placed in the possession of, and
received by the carrier for transportation until the
same are delivered, actually or constructively, by the
carrier to the consignee, or to the person who has a
right to receive them, without prejudice to the
provisions of article 1738.
Application:
1. The submission of petitioner that the fact
that the shipment was not delivered to the
consignee as stated in the Bill of Lading or to
a party designated or named by the
consignee constitutes a misdelivery thereof
is a deviation from his cause of action before
the trial court. It is clear from the allegation
in his complaint that it does not deal with
misdelivery of the cargoes but of delivery to
GPC without the required bills of lading and
bank guarantee -
6. The goods arrived in Hongkong
and were released by the defendant
Wallem directly to the buyer/notify
party, Great Prospect Company and
not to the consignee, the National
Bank of Pakistan, Hongkong,
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without the required bills of lading
and bank guarantee for the release
of the shipment issued by the
consignee of the goods x x x x
Even going back to an event that transpired
prior to the filing of the present case or when
petitioner wrote respondent WALLEM
demanding payment of the value of the
cargoes, misdelivery of the cargoes did not
come into the picture.
At any rate, we shall dwell on petitioner’s
submission only as a prelude to our
discussion on the imputed liability of
respondents concerning the shipped goods.
Article 1736 of the Civil Code.
The SC emphasized 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 the court to conclude that the delivery
of the cargoes to GPC as buyer/importer
which, conformably with Art. 1736 had, other
than the consignee, the right to receive them
was proper.
2. 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
shippers request since for prepaid shipt ofrt
charges already fully paid. Petitioner was
named therein as shipper and GPC as
consignee with respect to Bill of Lading.
From the testimony of petitioner, we gather
that he has been transacting with GPC as
buyer/importer for around two (2) or three
(3) years already.When mangoes and
watermelons are in season, his shipment to
GPC using the facilities of respondents is
twice or thrice a week. The goods are
released to GPC. It has been the practice of
petitioner to request the shipping lines to
immediately release perishable cargoes such
as watermelons and fresh mangoes through
telephone calls by himself or his people. In
 transactions covered by a letter of credit,
bank guarantee is normally required by the
shipping lines prior to releasing the goods.
But for buyers using telegraphic transfers,
petitioner dispenses with the bank guarantee
because the goods are already fully paid. In
his several years of business relationship
with GPC and respondents, there was not a
single instance when the bill of lading was
first presented before the release of the
cargoes. He admitted the existence of the
telex of 3 July 1989 containing his request to
deliver the shipment to the consignee
without presentation of the bill of lading but
not the telex of 5 April 1989 because he could
not remember having made such request.
Against petitioners' claim of not
remembering having made a request for
delivery of subject cargoes to GPC without
presentation of the bills of lading and bank
guarantee as reflected in the telex of 5 April
1989 are damaging disclosures in his
testimony. He declared that it was his
practice to ask the shipping lines to
immediately release shipment of perishable
goods through telephone calls by himself or
his people. He no longer required
presentation of a bill of lading nor of a bank
guarantee as a condition to releasing the
goods in case he was already fully paid. Thus,
taking into account that subject shipment
consisted of perishable goods and
SOLIDBANK pre-paid the full amount of the
value thereof, it is not hard to believe the
claim of respondent WALLEM that petitioner
indeed requested the release of the goods to
GPC without presentation of the bills of
lading and bank guarantee.
Delsan Transport Lines, Inc. v. American Home
Assurance Corp.
G.R. No. 149019| AUgust 15, 2006
Facts:
● Delsan is a domestic corporation which owns
and operates the vessel MT Larusan. On the
other hand, respondent American Home
Assurance Corporation (AHAC) 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.
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● Delsan received shipment of diesel oil for
transportation and delivery to the bulk depot
in Bacolod City of Caltex Phils. (Caltex). The
shipment was insured by AHAC against all
risks.
● Unloading operations commenced when it
arrived in Bacolod City. However, 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.
● 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.
● Caltex sought recovery of the loss from
Delsan, but the latter refused to pay.
Petitioner’s Argument/s: (LOST)
● The loss through spillage was partly due to
the contributory negligence of Caltex;
● The loss through backflow should not be
borne by Delsan because it was already
delivered to Caltex's shore tank.
Respondent’s Arguments: (WON)
● As insurer, AHAC paid Caltex for the spillage
and backflow pursuant to the two
aforementioned insurances, respectively.
● AHAC, as Caltex's subrogee, instituted two
civil cases against Delsan for loss caused by
the spillage and backflow
● The case did not delve deeper into
respondent’s claims
Ruling of the lower court:
● RTC decided in favor of AHAC and held
Delsan liable for the loss of the cargo for its
negligence in its duty as a common carrier
● CA affirmed the findings of the RTC
Issue:
 1. WON Delsan observed extraordinary
diligence in the delivery of goods (NO)
2. WON Caltex is guilty of contributory
negligence (NO)
Rule:
● Common carriers, from the nature of their
business and for reasons of public policy, are
bound to observe extraordinary diligence in
vigilance over the goods and for the safety of
the passengers transported by them,
according to all the circumstances of each
case. So that the delivery of goods in bad
order, make out a prima facie case against
the carrier, so that if no explanation is given
as to how the injury occurred, the carrier
must be held responsible.
To overcome the presumption of negligence, the
common carrier must prove that it exercised
extraordinary diligence. However, the Civil Code
enumerates the instances when the presumption of
negligence does not attach:
Art. 1734. Common carriers are responsible for the
loss, destruction, or deterioration of the goods, unless
the same is due to any of the following causes only:
1. Flood storm, earthquake, lightning, or other natural
disaster or calamity;
2. Act of the public enemy in war, whether
international or civil;
3. Act or omission of the shipper or owner of the
goods;
4. The character of the goods or defects in the packing
or in the containers;
5. Order or act of competent public authority
● Extraordinary responsibility of common
carrier lasts from the time the goods are
unconditionally placed in the possession of,
and received by, the carrier for
transportation until the same are delivered,
actually or constructively, by the carrier to
the consignee, or to a person who has the
right to receive them
Application:
1. Delsan, as the owner of the vessel, was
obliged to prove that the loss was caused by
one of the excepted causes if it were to seek
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exemption from responsibility.
Unfortunately, it miserably failed to
discharge this burden by the required
quantum of proof.
The discharging of oil products to Caltex Bulk Depot
has not yet been finished, Delsan still has the duty to
guard and to preserve the cargo. The carrier still has
in it the responsibility to guard and preserve the
goods, a duty incident to its having the goods
transported.
Since the discharging of the cargo into the depot has
not yet been completed at the time of the spillage
when the backflow occurred, there is no reason to
imply that there was actual delivery of the cargo to
the consignee.
2. As aptly pointed out by the CA, it had been
established that the proximate cause of the
spillage and backflow of the diesel oil was
due to the severance of the port bow mooring
line of the vessel and the failure of the shore
tender to close the storage tank gate valve
even as a check on the drain cock showed
that there was still a product on the pipeline.
The crew of the vessel should have promptly informed
the shore tender that the port mooring line was cut
off. However, Delsan did not do so on the lame excuse
that there was no available banca. As it is, Delsan's
personnel signaled a "red light" which was not a
sufficient warning because such signal only meant
that the pumping of diesel oil had been finished.
Neither did the blowing of whistle suffice considering
the distance of more than 2 kilometers between the
vessel and the Caltex Bulk Depot, aside from the fact
that it was not the agreed signal. Had the gauger and
the escort surveyor from Caltex Bulk Depot not gone
aboard the vessel to make inquiries, the shore tender
would have not known what really happened. The
crew of the vessel should have exerted utmost effort
to immediately inform the shore tender that the port
bow mooring line was severed.
Westwind Shipping Corporation v. UCPB
General Insurance Cp., Inc.
G.R. Nos. 200289 and 200314 | Nov. 25, 2013
Facts:
● This is a consolidated case from 2 cases by
way of petition for certiorari under Rule 45 of
the 1997 Rules of Civil Procedure of the CA
decision reversing the RTC decision.
● Kinsho-Mataichi Corporation shipped from
the port of Kobe, Japan, 197 metal
 containers/skids of tin-free steel for delivery
to the consignee, San Miguel Corporation
(SMC). The shipment, covered by a Bill of
Lading, was loaded and received clean on
board M/V Golden Harvest Voyage, a vessel
owned and operated by Westwind Shipping
Corporation (Westwind).
● SMC insured the cargoes against all risks
with UCPB General Insurance (UCPB) for
USD 184,798.97 which was equivalent to
P6,209,245.28.
● The shipment arrived in Manila and was
discharged in the custody of the arrastre
operator, Asian Terminals, Inc. (ATI).
● During the unloading, six (6)
containers/skids worth P117,093.12
sustained dents and punctures from the
forklift used by the stevedores (person who
does the unloading of cargo shipments) of
Ocean Terminals Services (OTSI) in
centering and shuttling the containers/skids.
This led to the issuance of two Bad Order
Cargo Receipts by the local ship agent of the
vessel, Baliwag Shipping Agency Inc.
● Orient Freight International, Inc. (OFII), the
customs broker of SMC withdrew from ATI
the 197 containers/skids including the 6
damaged skids and delivered the same to
SMC’s warehouse in Laguna. It was
discovered upon the discharge that an
additional nine (9) more skids have been
damaged due to forklift operations
amounting to 175,639.58 and making the
total number of 15 skids in bad order.
● SMC filed a claim against UCPB, Westwind,
ATI and OFII to recover the amount
corresponding to the damaged 15 skids.
UCPB paid the total sum of P292,732.80
evidenced by a subrogation receipt signed by
SMC.
● UCPB then instituted a complaint for
damages against Westwind, ATI and OFII.
Petitioners Arguments: Westwind & OFII (LOST)
Westwind:
● It no longer had actual or constructive
custody of the containers/skids at the time
they were damaged by ATI’s forklift operator
during the unloading operations.
● It alleged that its responsibility already
ceased from the moment the cargoes were
delivered to ATI which was reckoned from
the moment the goods were taken into the
latter’s custody. It argued that ATi be held
liable since it was an independent entity
which had full control over its employees and
stevedores as well as the discharging
operations.
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OFII:
● It is not a common carrier but only a customs
broker whose participation is limited to
facilitating withdrawal of the shipment in the
custody of ATI by overseeing and
documenting the turnover and counter
checking if the quantity of the shipments
were in tally with the shipping documents but
without participating in the physical
withdrawal and loading of the shipments into
the delivery trucks.
● It argued that the damages to the skids were
caused by the forklift blades and that there
was no evidence presented to show that it
was one of the owners of the forklifts.
● Finally, it averred that neither the
undertaking to deliver nor the
acknowledgement by the consignee of the
fact of delivery makes a person or entity a
common carrier since delivery alone is not
the controlling factor in order to be
considered such.
Respondent’s Arguments: UCPB (WON)
● Westwind, not ATI, is responsible for the six
damaged skids at the time of its unloading.
It is the common carrier not the arrastre
operator, who is responsible during the
unloading of the cargoes from the vessel and
that it is not relieved from liability and is still
bound to exercise extraordinary diligence at
the time in order to see to it that the cargoes
under its possession remain in good order
and condition.
● OFII was also liable for the additional nine
damaged skids ruling that it was a common
carrier bound to observe extraordinary
diligence and is presumed to be at fault or
have acted negligently for such damage.
● Art. 1732 of the NCC did not distinguish
between one whose principal business
activity is the carrying of persons or goods or
both and one who does so as an ancillary
activity. JBL was merely engaged by OFII to
supply the trucks necessary to delivery
shipment, and thus was under its
supervision.
Ruling of the lower court:
RTC dismissed UCPB’s complaint and the
counterclaims of Westwind, ATI and OFII:
● On ATI Claims: It alleged that the right
already prescribed based on jurisprudence
that a claim for reimbursement for damaged
goods must be filed within 5 days from the
date of consignee’s knowledge.
 ● On Westwind Claim: Section 3(6) of the
Carriage of Goods by Sea Act (COGSA) and
jurisprudences, Westwind is not liable since
the discharging of the cargoes were done by
ATI personnel using forklifts and that there
was no allegation that the Westwind had a
had in the conduct of the stevedoring
operations.
● On OFII Claim: No liability since it never
undertook the operation of forklifts which
caused the dents and punctures and that it
merely facilitated the release and delivery of
the shipment as the customs broker and
representative of SMC.
CA reversed RTC decision ordering the parties to pay
UCPB with the following:
● Westwind: P117,093.12
● OFII: P175,639.68
● ATI: Sustained the claim based on
prescription
Issues:
● As to Westwind: WON it still had actual or
constructive custody of the container/skids
at the time they were damaged by ATI’s
forklift operator during the unloading
operations. YES
● As to OFII: WON it was a common carrier and
not merely a customs broker. YES
Rule:
For Westwind:
Philippine First Insurance Co v. Wallem Phils. Shipping
Inc.
● 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 transported by
them. Subject to certain exceptions
enumerated under Article 1734 of the Civil
Code, common carriers are responsible for
the loss, destruction, or deterioration of the
goods.
● The extraordinary responsibility of the
common carrier lasts from the time the
goods are unconditionally placed in the
possession of, and received by the carrier for
transportation until the same are delivered,
actually or constructively, by the carrier to
the consignee, or to the person who has a
right to receive them.
● Section 2 of the COGSA provides that under
every contract of carriage of goods by sea,
the carrier in relation to the loading,
handling, stowage, carriage, custody, care,
and discharge of such goods, shall be subject
to the responsibilities and liabilities and
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 3 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 9
entitled to the rights and immunities set forth
in the Act. Section 3 (2) thereof then states
that among the carriers' responsibilities are
to properly and carefully load, handle, stow,
carry, keep, care for, and discharge the
goods carried.
Fireman’s Fund Insurance v. Metro Port Service
● The legal relationship between the consignee
and the arrastre operator is akin to that of a
depositor and warehouseman. The
relationship between the consignee and the
common carrier is similar to that of the
consignee and the arrastre operator. Since it
is the duty of the ARRASTRE to take good
care of the goods that are in its custody and
to deliver them in good condition to the
consignee, such responsibility also devolves
upon the CARRIER. Both the ARRASTRE and
the CARRIER are therefore charged with and
obligated to deliver the goods in good
condition to the consignee.
For OFII:
Article 1732, Civil Code
● 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.
Calvo v. UCPB General Insurance
● 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 the
petitioner's business."
Application:
For Westwind:
● It is settled in maritime law jurisprudence
that cargoes while being unloaded generally
remain under the custody of the carrier –
cargoes, while being unloaded, generally
remain under the custody of the carrier.
● What Westwind failed to realize is that the
extraordinary responsibility of the common
carrier lasts until the time the goods are
actually or constructively delivered by the
 carrier to the consignee or to the person who
has a right to receive them. There is actual
delivery in contracts for the transport of
goods when possession has been turned over
to the consignee or to his duly authorized
agent and a reasonable time is given him to
remove the goods.
● Since the discharging of the
containers/skids, which were covered by only
one bill of lading, had not yet been completed
at the time the damage occurred, there is no
reason to imply that there was already
delivery, actual or constructive, of the
cargoes to ATI.
● Common carriers, from the nature of their
business and for reasons of public policy, are
bound to observe extraordinary diligence in
vigilance over the goods and for the safety of
the passengers transported by them,
according to all the circumstances of each
case.
● The mere proof of delivery of goods in good
order to the carrier, and their arrival in the
place of destination in bad order, make out a
prima facie case against the carrier, so that
if no explanation is given as to how the injury
occurred, the carrier must be held
responsible. It is incumbent upon the carrier
to prove that the loss was due to accident or
some other circumstances inconsistent with
its liability.
For OFII:
● A customs broker has been regarded as a
common carrier because transportation of
goods is an integral part of its business.
● That OFII is a common carrier is buttressed
by the testimony of its own witness, Mr.
Loveric Panganiban Cueto, that part of the
services it offers to clients is cargo
forwarding, which includes the delivery of the
shipment to the consignee. Thus, for
undertaking the transport of cargoes from
ATI to SMC's warehouse in Calamba, Laguna,
OFII is considered a common carrier.
● As long as a person or corporation holds itself
to the public for the purpose of transporting
goods as a business, it is already considered
a common carrier regardless of whether it
owns the vehicle to be used or has to actually
hire one.
● As a common carrier, OFII is mandated to
observe, under Article 1733 of the Civil Code,
extraordinary diligence in the vigilance over
the goods it transports according to the
peculiar circumstances of each case. In the
event that the goods are lost, destroyed or
deteriorated, it is presumed to have been at
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 3 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 10
fault or to have acted negligently, unless it
proves that it observed extraordinary
diligence.
● It was established that, except for the six
containers/skids already damaged, OFII
received the cargoes from ATI in good order
and condition; and that upon its delivery to
SMC, additional nine containers/skids were
found to be in bad order, as noted in the
Delivery Receipts issued by OFII and as
indicated in the Report of Cares Marine &
Cargo Surveyors.
● Instead of merely excusing itself from
liability by putting the blame to ATI and SMC,
it is incumbent upon OFII to prove that it
actively took care of the goods by exercising
extraordinary diligence in the carriage
thereof. It failed to do so. Hence, its
presumed negligence under Article 1735 of
the Civil Code remains unrebutted.
Nedlloyd Lijnen B.V. Rotterdam v. Glow Laks
Enterprises, Ltd.
G.R. No.156330 | Nov. 19, 2014
Facts: Glow Laks (Respondent - foreign corp) loaded
on board a ship owned by Nedllyod (petitioner -
foreign corp; engaged in carrying goods by sea; doing
business in the Phils thru local agency, East Asiatic)
343 cartoons of garments for pre-carriage to the port
HK and final carriage to the port of PANAMA. Goods
were to be released to the consignee upon
presentation of original copies of the bills of lading.
When the goods reached the port of Colon (Panama),
Nedlloyd informed the consignee of the arrival of the
shipments and custody of the same was turned over
to the national port authority in accordance with law
and practice of trade in Panama. The goods were
claimed by unauthorized persons who forged/falsified
the bills of lading. Glow Laks filed a claim for
misdelivery of goods with the RTC.
Petitioner’s Argument (Nedllyod and East Asiatic -
LOST): They cannot be faulted for the release of the
goods to unauthorized persons, their extraordinary
responsibility as a common carrier having ceased at
the time the possession of the goods were turned over
to the possession of the port authorities, as is the
practice in trade and the law in effect in Panama. Their
extraordinary responsibility having ceased at the time
the goods were discharged into the custody of the
customs arrastre operator, who in turn took complete
responsibility over the care, storage and delivery of
the cargoes.
Respondent’s Arguments (Glow Laks - WON): The
fact that the shipments were not delivered to the
consignee as stated in the bill of lading or to the party
designated or named by the consignee, constitutes
misdelivery and under Philippine laws it is presumed
that the common carrier is at fault or negligent if the
goods they transported, as in this case, fell into the
hands of persons who have no right to receive them.
Ruling of the lower court: CA reversed the RTC
decision. “For failure to prove the foreign law and
custom, it is presumed that foreign laws are the same
as our local or domestic or internal law under the
doctrine of processual presumption. Under the New
Civil Code, the discharge of the goods into the custody
of the ports authority therefore does not relieve the
common carrier from liability because 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 the
right to receive them. Absent any proof that the notify
party or the consignee was informed of the arrival of
the goods, the extraordinary responsibility of common
carriers remains.
Issue: When does extraordinary responsibility of a
common carrier begin and cease? (SC confirmed CA
ruling)
Rule: Article 1736 and 1738 of the NCC.
Application: Under the New Civil Code, common
carriers, from the nature of their business and for
reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over goods,
according to the circumstances of each case. Common
carriers are responsible for loss, destruction or
deterioration of the goods unless the same is due to
flood, storm, earthquake or other natural disaster or
calamity. When the goods shipped are either lost or
arrived in damaged condition, a presumption arises
against the carrier of its failure to observe that
diligence, and there need not be an express finding of
negligence to hold it liable.
Petitioners failed to prove that they did exercise the
degree of diligence required by law over the goods
they transported. Aside from their disavowal of
liability by conveniently asserting that their
extraordinary responsibility is terminated upon
release of the goods to the Panamanian Ports
Authority, petitioners failed to adduce sufficient
evidence they exercised extraordinary care to prevent
unauthorized withdrawal of the shipments. Nothing in
the New Civil Code suggests that the common carriers'
responsibility over the goods ceased upon delivery
thereof to the custom authorities.
Duty to exercise Extraordinary Diligence
Rationale
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Kapalaran Bus Lines v. Coronado et.al.
G.R. No. 203081 | January 17, 2018
Facts:
There was a collision between one of petitioner's
buses and a jeepney owned by respondent Coronado,
driven by respondent Grajera and in which jeepney
respondent Shinyo was a passenger on the National
Highway at 10:30 A.M.
The jeepney driven by Grajera was on its way towards
the direction of Sta. Cruz, traversing the old highway.
As it reached the intersection where there is a traffic
sign 'yield,' it stopped and cautiously treated the
intersection as a "Thru Stop' street, which it is not.
The KBL bus was on its way from Sta. Cruz, Laguna,
driven by its regular driver Virgilio Llamoso, on its way
towards Manila. The regular itinerary of the KBL bus
is through the town proper of Pila, Laguna, but at
times it avoids this if a bus is already fully loaded with
passengers and can no longer accommodate
additional passengers. As the KBL bus neared the
intersection, Llamoso inquired from his conductor if
they could still accommodate passengers and learning
that they were already full, he decided to bypass Pila
and instead, to proceed along the national highway.
He admitted that there was another motor vehicle
ahead of him.
Manicad, who was driving a Mustang car coming from
the direction of Sta. Cruz and proceeding towards the
direction of Manila, stopped at the intersection to give
way to the jeepney driven by Grajera. Behind Manicad
were two vehicles, a car of his client and another car.
A Laguna Transit bus had just entered the town of Pila
ahead of Atty. Manicad.
The jeepney had already traversed the intersection
when it met the KBL bus head-on. The point of impact
was on the right lane of the highway which is the lane
properly belonging to the jeepney. KBL bus ignored
the stopped vehicles of Atty. Manicad and the other
vehicles behind Atty. Manicad and overtook both
vehicles at the intersection, therefore, causing the
accident.
KBL bus found the stopped vehicles at the intersection
with the jeepney trying to cross the intersection. It
had no more room within which to stop without
slamming into the rear of the vehicle behind the car
of Atty. Manicad. The KBL driver chose to gamble on
proceeding on its way, unfortunately, the jeepney
driven by Grajera, which had the right-of-way, was
about to cross the center of the highway and was
directly on the path of the KBL bus which did not pay
off. The impact indicates that the KBL bus was
travelling at a fast rate of speed because, after the
collision, it did not stop; it travelled for another 50
meters and stopped only when it hit an electric post
Kapalaran filed a complaint for damage to property
and physical injuries through reckless imprudence
against respondents Angel Coronado and Lope
Grajera.
Respondents answered with their own claims
(counter-claims) for damages. A third-party complaint
and/or a complaint for intervention was also filed in
the same case against Kapalaran by jeepney
passenger Dionisio Shinyo.
Petitioner’s Argument/s:
0. Kapalaran assails the findings of fact of the
Regional Trial Court and of the Court of Appeals, and
insists before this Court that respondent Grajera,
driver of the jeepney, was at fault and not the driver
of Kapalaran's bus. (LOST. SC not a trier of facts
absent compelling reasons. Findings of lower courts
are supported by evidence.)
1. The jeepney should have stopped before entering
the "Y-intersection" because of the possibility that
another vehicle behind the cars which had stopped
might not similarly stop and might swerve to the left
to proceed to the highway en route to Manila. (LOST)
2. It assails the award of moral damages against itself,
upon the ground that its own bus driver, third-party
defendant, was apparently not held liable by the trial
court; hence, there was no justification for holding it,
the employer, liable for damages, considering that
such liability was premised upon the bus driver's
negligence and that petitioner "as mere employer"
was not guilty of such negligence or imprudence.
(PARTIALLY CORRECT, but it was unable to rebut the
presumption of negligence on its own part.)
Ruling of the lower court:
RTC rendered a judgment in favor of private
respondents and ordering Kapalaran to pay Coronado
compensation for the totally wrecked jeepney, and
Shinyo for the expenses incurred by said intervenor
for his treatment including his car-hire, expenses for
his second operation to remove the intramedulary nail
from his femur, the moral damages for the pain and
suffering inflicted on said defendant, plus exemplary
damages, and attorney's fees and litigation expenses.
Kapalaran appealed to the CA assailing RTC’s findings
on the issue of fault and the award of damages.
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CA affirmed the decision of the RTC but modified the
award of damages by setting aside the grant of
exemplary damages, attomey's fee, and litigation
expenses made to Dionisio Shinyo
Issue:
WON Kapalaran’s contentions (1 and 2) are correct.
Rule:
Sec. 35. Restriction as to speed. — (a)
Any person driving a motor vehicle on
a highway shall drive the same at a
careful and prudent speed, not greater
nor less than is reasonable and
proper, having due regard for the
traffic, the width of the highway, and
or any other condition then and there
existing; and no person shall drive any
motor vehicle upon a highway at such
a speed as to endanger the life, limb
and property of any person, nor at a
speed greater than will permit him to
bring the vehicle to a stop within the
assured clear distance ahead.
xxx xxx xxx
Sec. 41. Restrictions on overtaking
and passing. _1 (a) The driver of a
vehicle shall not drive to the left side
of the center line of a highway in
overtaking or passing another vehicle,
proceeding in the same direction,
unless such left side is clearly visible,
and is free of oncoming traffic for a
sufficient distance ahead to permit
such overtaking or passing to be made
in safety.
xxx xxx xxx
(c) The driver of a vehicle shall not
overtake or pass any other vehicle
proceeding in the same direction, at
any railway grade crossing, or at any
intersection of highways, unless such
intersection or crossing is controlled
by traffic signal, or unless permitted
to do so by a watchman or a peace
officer, except on a highway having
two or more lanes for movement of
traffic in one direction where the
driver of a vehicle may overtake or
pass another vehicle on the right.
Nothing in this section shall be
construed to prohibit a driver
overtaking or passing, upon the right,
 another vehicle which is making or
about to make a left turn.
xxx xxx xxx
Article 2231 of the Civil Code
Application:
1. On WON respondent Grajera, driver of the jeepney,
was at fault and not the driver of Kapalaran's bus.
A legal presumption arose that the bus driver was
negligent, a presumption Kapalaran was unable to
overthrow.
Kapalaran's driver had become aware that some
vehicles ahead of the bus and travelling in the same
direction had already stopped at the intersection
obviously to give way either to pedestrians or to
another vehicle about to enter the intersection. The
bus driver, who was driving at a speed too high to be
safe and proper at or near an intersection on the
highway, and in any case too high to be able to slow
down and stop behind the cars which had preceded it
and which had stopped at the intersection, chose to
swerve to the left lane and overtake such preceding
vehicles, entered the intersection and directly
smashed into the jeepney within the intersection.
Immediately before the collision, the bus driver was
actually violating traffic rules and regulations, among
others, in the Land Transportation and Traffic Code,
Republic Act No. 4136, as amended, with respect to
Restriction as to speed, Restrictions on overtaking and
passing.
2. The jeepney should have stopped before entering
the "Y-intersection.
This is a familiar litigation tactic of shifting blame from
one's own shoulders to those of the other party. But
the jeepney driver, seeing the cars closest to the
intersection on the opposite side of the highway come
to a stop to give way to him, had the right to assume
that other vehicles further away and behind the
stopped cars would similarly come to a stop and not
seek illegally to overtake the stopped vehicles and
come careening into the intersection at an unsafe
speed. Petitioner's bus was still relatively far away
from the intersection when the jeepney entered the
same; the bus collided head on into the jeepney
because the bus had been going at an excessively high
velocity immediately before and at the time of
overtaking the stopped cars, and so caught the
jeepney within the intersection. It was also the
responsibility of the bus driver to see to it, when it
overtook the two (2) cars ahead which had stopped at
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 3 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 13
the intersection, that the left lane of the road within
the intersection and beyond was clear. The point of
impact was on the left side of the intersection (the
light lane so far as concerns the jeepney coming from
the opposite side), which was precisely the lane or
side on which the jeepney had a right to be.
3. On award of moral damages against it…
The patent and gross negligence on the part of the
Kapalaran's driver raised the legal presumption that
Kapalaran as employer was guilty of negligence either
in the selection or in the supervision of its bus driver.
Where the employer is held liable for damages, it has
a right of recourse against its own negligent
employee.
If petitioner Kapalaran was interested in maintaining
its right of recourse against or reimbursement from its
own driver, it should have appealled from that portion
of the trial court's decision which had failed to hold the
bus driver is not "merely subsidiary," and is not
limited to cases where the employee "cannot pay his
liability" nor are private respondents compelled first
to proceed against the bus driver. The liability of the
employer under Article 2180 of the Civil Code is
direct and immediate; it is not conditioned upon
prior recourse against the negligent employee
and a prior showing of the insolvency of such
employee. So far as the record shows, Kapalaran
was unable to rebut the presumption of
negligence on its own part. The award of moral
damages against petitioner Kapalaran is not only
entirely in order.
There is no question that petitioner's bus driver was
grossly and very probably criminally negligent in his
reckless disregard of the rights of other vehicles and
their passengers and of pedestrian as well.
The law requires petitioner as common carrier
to exercise extraordinary diligence in carrying
and transporting their passenger safely "as far
as human care and foresight can proved, using
the utmost diligence of very cautious persons,
with due regard for all circumstances."
In requiring the highest possible degree of diligence
from common carriers and creating a presumption of
negligence against them, the law compels them to
curb the recklessness of their drivers. While the
immediate beneficiaries of the standard of
extraordinary diligence are, of course, the passengers
and owners of cargo carried by a common carrier,
they are not only persons that the law seeks to
benefit. For if common carriers carefully observed the
statutory standard of extraordinary diligence in
respect of their own passengers, they cannot help but
simultaneously benefit pedestrians and the owners
and passengers of other vehicles who are equally
entitled to the safe and convenient use of our roads
and highways.
The law seeks to stop and prevent the slaughter and
maiming of people (whether passengers or not) and
the destruction of property (whether freight or not) on
highways by buses, the very size and power of which
seem often to inflame the minds of their drivers.
Article 2231 of the Civil Code explicitly authorizes
the imposition of exemplary damages in cases of
quasi-delicts "if the defendant acted with gross
negligence." Thus, the award of exemplary damages
by the RTC was quite proper. Although, Shinyo did not
file a separate petition for review to set aside that
portion of the CA’s decision which deleted the grant
by the RTC of exemplary damages, it is not only the
demands of substantial justice but also the
compelling considerations of public policy noted
above, which impel us to the conclusion that the trial
court's award of exemplary damages was erroneously
deleted and must be restored and brought more
nearly to the level which public policy and substantial
justice require.
How duty is complied
Juntilla v. Funtanar
G.R. No. L-456737| Date May 31, 1985
Facts: Plaintiff was a passenger of the public utility
jeepney, which was on the course of the trip from
Danao to Cebu City. When the jeepney reached
Mandaue City, the right tire exploded causing the
vehicle to turn turtle.
The plaintiff who was sitting at the front seat was
thrown out of the vehicle. Upon landing on the ground,
the plaintiff momentarily lost consciousness. He
sustained lacerated wounds on his right palm and
suffered injuries on his left arm, right thigh and on his
back.
He also discovered that his "Omega" wrist watch was
lost.
Petitioner’s Argument/s: Upon arrival in Danao
City, he immediately entered the Danao City Hospital
to attend his injuries and requested his father-in-law
to look for his watch.
Respondent’s Arguments: The accident that caused
losses to the petitioner was beyond the control of the
respondents taking into account that the tire exploded
was newly bought and was not slightly used at the
time it blew up.
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Ruling of the lower court:
The carrier is absolved from liability. The accident is a
fortuitous event.
Issue: WON the carrier is absolved from any liability
(NO)
Rule/Application: There are specific acts of
negligence on the part of the respondents. The
records show that the passenger jeepney was running
at a very fast speed before the accident. A public
utility that is running at regular and safe speed will
not jump into a ditch when its right rear tire blows up.
There is also evidence to show that the passenger
jeepney overload at the time of the accident.
The cause of the unforeseen and unexpected
occurrence was not independent of the human will.
The accident was caused either through the
negligence of the driver or because of mechanical
defects in the tire.
The source of a common carrier's legal liability is the
contract of carriage, and by entering into the said
contract, it binds itself to carry the passengers safely
as fast as human care and foresight can provide, using
the utmost diligence of a very cautious person, with a
due regard for all the circumstances. The records
show that this obligation was not met by the
respondents.
Eastern Shipping Lines v. IAC
G.R. No. 150 SCRA 463 | Date
Facts:
[GR No. 69044] Sometime in June 1977, M/S
ASIATICA, bound for Manila, loaded 5000 pieces of
calorized lance pipes in 28 packages valued at Php
256, 039 and 7 cases of spare parts valued at
P92,361.75. Both sets of goods were insured against
marine risk for their stated value by respondent
Development Insurance and Surety Corporation.
[GR No. 71478] Another transaction of the same
nature was entered into by the petitioner, Eastern
Shipping Lines, wherein it took in 128 cartons of
garment fabrics and accessories in 2 containers and 2
cases of surveying instruments. The cartons of fabric
were insured for their stated value by respondent
Nishin Fire & Marine Insurance Co., for US$46,583.00,
and the 2 cases by respondent Dowa Fire & Marine
Insurance Co., Ltd., for US$11,385.00.
While the vessel was enroute for Japan to Manila,
the vessel caught fire and sank. The respective
respondent insurers paid the corresponding marine
insurance to the consignees and was then subrogated
unto the rights of the latter as the insured. 2 cases for
recovery of the value of cargo insurance were then
instituted against Eastern Shipping Lines.
Petitioner’s Argument/s: LOST
Petitioner denied liability on the principal grounds that
the fire which caused the sinking of the ship is an
exempting circumstance under Section 4(2) (b) of the
Carriage of Goods by Sea Act (COGSA); and that when
the loss of fire is established, the burden of proving
negligence of the vessel is shifted to the cargo
shipper.
Respondent’s Arguments: ———
Ruling of the lower court:
Ruled in favor of the respondent. Hence, this petition
Issue:
Which law should govern — the Civil Code provisions
on Common carriers or the Carriage of Goods by Sea
Act —? Civil Code as supplemented by Carriage of
Goods by Sea Act
Who has the burden of proof to show negligence of
the carrier?
Rule:
Under the Civil Code, common carriers, from the
nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence
in the vigilance over goods, according to all the
circumstances of each case. 8 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;
Article 1733. Common carriers are bound to observe
extraordinary diligence in the vigilance over the
goods.
Section 4(5) of the COGSA-. "(5) Neither the carrier
nor the ship shall in any event be or become liable for
any loss or damage to or in connection with the
transportation of goods in an amount exceeding $500
per package lawful money of the United States, or in
case of goods not shipped in packages, per customary
freight unit, or the equivalent of that sum in other
currency, unless the nature and value of such goods
have been declared by the shipper before shipment
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and inserted in bill of lading. This declaration if
embodied in the bill of lading shall be prima facie
evidence, but all be conclusive on the carrier.
Art. 1749. A stipulation that the common carrier's
liability is limited to the value of the goods appearing
in the bill of lading, unless the shipper or owner
declares a greater value, is binding.
Application:
ON THE LAW APPLICABLE
The NCC as supplemented by the COGSA will
govern the liability of the petitioner.
The law of the country to which the goods are to
be transported governs the liability of the common
carrier in case of their loss, destruction, or
deterioration. As the good were to be transported here
in the Philippines, the liability of the petitioner carrier
is governed by the Civil Code. However, in all matters
not regulated by said Code, the rights and obligations
of common carrier shall be governed by the Code of
Commerce and by special laws. Thus, the Carriage of
Goods by Sea Act, a special law, is suppletory to the
provisions of the Civil Code.
BURDEN OF PROOF
The burden of proof is with the common carrier.
Contrary to the claims of the petitioners that the
loss of the vessel by fire is an exempting circumstance
such is not true as fire is not to be considered solely
an act of God which. The court stated that fire arises
invariably from some act of man. Unless caused by
lighting, fire cannot be considered as a natural
disaster or calamity.
As the fire that caused the sinking of the ship in
this case cannot be considered as an exempting
circumstance, the NCC provides that in all other cases
the common carrier shall be presumed to have been
at fault or gave acted negligently unless it proves it
has exercised extraordinary diligence required by law.
The article in the NCC which considers fire as an
extraordinary fortuitous event pertains to fire which
happens in rural lands. This would then permit the
reduction of rent. This provision of law is empowered
by the protective policy towards agriculture.
PETITIONER FAILED TO PROVE THAT IT EXERCISED
EXTRAORDINARY DILIGENCE
The Court found that the petitioner has an actual
fault in that it has shown lack of diligence in dealing
with the goods of the respondents. This was shown in
the following instances: (1) when the smoke was
discovered, the fire was already big; (2) after the
cargoes were stored, no regular inspections were
made as to check the conditions of the goods during
the voyage. The court finds these instances sufficient
to prove that the carrier and its crew were indeed
negligent.
LIABILITY OF THE PETITIONER
Liability of the petitioner is only limited to 500 USD
per package as provided for by COGSA
The NCC does not in itself limit the liability of the
common carrier to a fixed amount per package
although the Code expressly permits the a stipulation
to such effect. In which case, COGSA steps in and
supplements the NCC by establishing a statutory
provision limiting the carrier’s liability and in the
absence of declaration of higher value in the bill of
lading.
For the liability of the petitioner to Development
Insurance and Surety Corporation such were reduced
by the court as there is no stipulation in the bill of
lading limiting the liability of the carrier nor a
declaration of a higher value of goods. It being such,
the liability of the petitioner as to the 28 packages of
calorized lance pipes is limited to the amount declared
by the respondent, 256K. This is despite the fact that
when the 28 packages are multiplied with 500USD
(Exchange Rate: 20.44) it would result in 286K.
However, such is not the case with the 7 cases of
spare parts which was valued by the respondent at
92K. Because when 500USD is multiplied with 7 such
would merely result in ~71K. The 71K should be the
amount paid to the respondent in accordance to the
500USD per package limitation.
In respect to the 128 cartons of garment fabrics
the SC ruled that CA committed a reversible error in
computing the liability of the petitioner instead of
correctly considering the 128 cartons, only the 2
container declaration was appreciated.
The SC explained that individual crates or cartons
prepared by the shipper containing his goods can
rightly be considered as packages. They do not
suddenly lose that character upon being showed in the
carrier’s container. They simply serve to divide the
ship’s overall cargo stowage space into smaller more
serviceable loci. Following the Mitsui test.
Republic of the Philippines v. Lorenzo Shipping
Corp.
G.R. No. 153563 | February 07, 2005
NOTE: Case is also under Module 5 – Bill of Lading.
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Facts:
● The Republic, through DOH and Cooperative for
American Relief Everywhere, Inc (CARE), signed
an agreement wherein CARE would acquire from
the US Government donations of non-fat dried
milk and other food products for a certain period.
In turn, PH would transport and distribute the
donated commodities to the intended
beneficiaries in the country.
● Hence, the government entered into a contract of
carriage of goods with petitioner, National
Trucking and Forwarding Corporation (NTFC),
which shipped 4,868 bags of non-fat dried milk
through herein respondent Lorenzo Shipping
Corporation (LSC). The consignee named in the
bills of lading was Abdurahman Jama, petitioner’s
branch supervisor in Zamboanga City.
● Upon reaching the port of Zamboanga City, LSC’s
agent unloaded the goods and delivered them to
petitioner’s warehouse. Before each delivery, the
agent’s checkers requested Abdurahman to
surrender the original Bill of Lading, but the latter
merely presented certified true copies.
● Upon completion of each delivery, the checkers
asked Abdurahman to sign the delivery receipts.
However, at times when Abdurahman had to
attend to other business before a delivery was
completed, he instructed his subordinates to sign
the delivery receipts for him.
● Notwithstanding the precautions taken, the
petitioner allegedly did not receive the subject
goods. Thus, petitioner filed a formal claim for
non-delivery of the goods shipped.
● Respondent explained that the cargo had already
been delivered, and when petitioner decided to
investigate the loss, Abudrahman resigned as
branch supervisor.
● Nonetheless, the government through DOH,
CARE, and NTFC filed an action for breach of
contract of carriage against respondents.
Petitioner’s Argument/s: (LOST)
Petitioner argued that
● respondent is presumed negligent and liable for
failure to abide by the terms and conditions of the
bills of lading;
● Abdurahman's failure to testify should not be held
against them; and
● the checker’s testimonies, as employees of
respondent’s agent, were biased and could not
overturn the legal presumption of respondent's
fault or negligence.
Respondent’s Arguments: (WON)
Respondent averred that it observed extraordinary
diligence in the delivery of the goods. Prior to
releasing the goods to Abdurahman, the checkers
required the surrender of the original bills of lading,
and in their absence, the certified true copies showing
that Abdurahman was indeed the consignee of the
goods. They also required Abdurahman or his
designated subordinates to sign the delivery receipts
upon completion of each delivery.
Ruling of the lower court:
● RTC ruled in favor of respondent and dismissed
plaintiff’s complaint.
● CA affirmed the decision in toto.
Issue:
Whether respondent exercised extraordinary
diligence? (Yes)
Rule:
This exacting standard of extraordinary diligence
imposed on common carriers in a contract of carriage
of goods is intended to tilt the scales in favor of the
shipper who is at the mercy of the common carrier
once the goods have been lodged for shipment.
Hence, in case of loss of goods in transit, the common
carrier is presumed under the law to have been at
fault or negligent. However, the presumption of
fault or negligence, may be overturned by
competent evidence showing that the common
carrier has observed extraordinary diligence
over the goods.
Application:
The respondent adequately proved that it exercised
extraordinary diligence. Although the original bills of
lading remained with petitioner, respondent's agents
demanded from Abdurahman the certified true copies
of the bills of lading. They also asked the latter and in
his absence, his designated subordinates, to sign the
cargo delivery receipts. Such practice finds support in
Art. 3531 of the Code of Commerce (will be discussed
in detail under Module 5).
If surrender of the original bill of lading is not possible,
acknowledgment of the delivery by signing the
delivery receipt suffices. This is what respondent did.
Furthermore, the delivery checkers testified that
Abdurahman was always present at the initial phase
of each delivery, and when he was not around, he
authorized his subordinates to sign the delivery
receipts for him. SC held that this is sufficient and
substantial compliance.
Victory Liner v. Race
G.R. No. 164820 | March 28, 2007
1 its loss or of any other cause, he must give the latter a receipt
In case the consignee, upon receiving the goods, cannot
return the bill of lading subscribed by the carrier, because of
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Facts:
In June 1993, petitioner Victory Liner employed
respondent Pablo Race as a bus driver. On the night
of August 24, 1994, respondent drove his assigned
bus from Alaminos, Pangasinan, destined to Cubao,
Quezon City. While traversing Moncada, Tarlac, the
bus he was driving was bumped by a Dagupan-bound
bus. As a consequence thereof, respondent suffered a
fractured left leg and was rushed to the Country
Medical and Trauma Center in Tarlac City where he
was operated on and confined from August 24, 1994
up to 10 October 1994. One month after his release
from the said hospital, the respondent was confined
again for further treatment of his fractured left leg at
the Specialist Group Hospital in Dagupan City. His
confinement therein lasted a month. Petitioner
shouldered the doctor‘s professional fee and the
operation, medication and hospital expenses of the
respondent in the aforestated hospitals.
In January 1998, the respondent, still limping heavily,
went to the petitioner‘s office to report for work. He
was, however, informed by the petitioner that he was
considered resigned from his job.
Respondent’s Argument/s: (LOST)
Respondent, through his counsel, sent a letter to the
petitioner demanding employment-related money
claims. And later on filed before the Labor Arbiter a
complaint for (1) unfair labor practice; (2) illegal
dismissal; (3) underpayment of wages; (4)
nonpayment of overtime and holiday premium,
service incentive leave pay, vacation and sick leave
benefits, 13th month pay; (5) excessive deduction of
withholding tax and SSS premium; and (6) moral and
exemplary damages and attorney's fees.
Ruling of the lower court:
Labor Arbiter rendered his Decision dismissing the
complaint of respondent for lack of merit. He stated
that the prescriptive period for filing an illegal
dismissal case is four years from the dismissal of the
employee concerned.
NLRC reversed the decision of the LA and ordered
Victory Liner to reinstate complainant-appellant to his
former position without loss of seniority rights and
other privileges and benefits with full backwages
computed from the time of his illegal dismissal on
January 1988 up to his actual reinstatement.
Petitioner’s Arguments: (WON)
Petitioner filed with SC and argued that the order for
the reinstatement was contrary to law; that as a
common carrier, it is obliged under the law to observe
for the goods delivered, this receipt producing the same
effects as the return of the bill of lading.
extra-ordinary diligence in the conduct of its business;
that it will violate such obligation if it will reinstate the
respondent as bus driver; that to allow the respondent
to drive a bus, despite the fact that the latter
sustained a fractured left leg and was still limping,
would imperil the lives of the passengers and the
property of the petitioner; and that the award of
backwages to the respondent was unjustified.
Issue:
Whether or not respondent is entitled to
reinstatement. (NO)
Rule:
ART. 1733. 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.
Application:
Petitioner neglected to observe the substantial and
procedural due process in terminating the
employment of respondent, hence the latter was
illegally dismissed from work by the petitioner.
However, in his complaint for illegal dismissal against
petitioner, it can be concluded that respondent was
not seeking for reinstatement. And even assuming
that respondent is willing to be reinstated as
petitioner‘s bus driver, the reinstatement is still
unwarranted. There is a serious doubt as to whether
the respondent is physically capable of driving a bus
based on the following undisputed facts: (1)
respondent was operated on and confined twice in two
different hospitals for a fractured left leg; (2) steel
plates were attached to his fractured leg;(3) each
confinement lasted for a month; (4) after his
discharge from the second confinement, respondent
was still limping heavily; (5) when respondent had
reported for work to the petitioner in January 1998,
he was also limping; and (6) respondent does not
have a medical certificate which guarantees that his
leg injury has already healed and that he is now
physically capable of driving a bus.
It should be stressed that petitioner is a common
carrier and, as such, is obliged to exercise extra-
ordinary diligence in transporting its passengers
safely. To allow the respondent to drive the
petitioner‘s bus under such uncertain condition would,
undoubtedly, expose to danger the lives of the
passengers and the property of the petitioner. This
would place the petitioner in jeopardy of violating its
extra-ordinary diligence obligation and, thus, may be
subjected to numerous complaints and court suits. It
is clear therefore that the reinstatement of respondent
not only would be deleterious to the riding public but
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would also put unreasonable burden on the business
and interest of the petitioner. In this regard, it should
be remembered that an employer might not be
compelled to continue to employ such persons whose
continuance in the service will patently be inimical to
his interests.
Based on the foregoing facts and circumstances, the
reinstatement of the respondent is no longer feasible.
Thus, in lieu of reinstatement, payment to respondent
of separation pay equivalent to one-month pay for
every year of service is in order.
Victory Liner, Inc. v. Race (2008 Case)
G.R. No. 164820 | Dec. 2008
Facts: (This is an MR of the decision of the SC of the
case above.) Petitioner Victory Liner, Inc. fied the
present Motion for Reconsideration seeking
modification of our Decision dated 28 March 2007. In
the said Decision, SC found that respondent Pablo
Race, employed as one of petitioner's bus drivers, was
illegally dismissed by petitioner since petitioner failed
to comply with both substantive and procedural due
process in terminating respondent's employment.
However, considering the leg injury sustained by
respondent in an accident which already rendered him
incapable of driving a bus, we ordered payment of his
separation pay instead of his reinstatement.
Petitioners’s Arguments (Victory Liner):
Petitioner impugns the Decision on the award of full
backwages inclusive of allowances and other benefits
or their monetary equivalent to respondent is not
warranted. petitioner is asserting that it should be
deemed to have acted in good faith when it considered
respondent as resigned from work because the Court
itself stated in the Decision that respondent's
reinstatement is no longer feasible due to his leg
injury, and that to allow the respondent to drive
petitioner's bus in his present physical condition would
place petitioner in jeopardy of violating its obligation
as a common carrier to always exercise extra-ordinary
diligence.
Issue: Decision of the SC on the award of full
backwages inclusive of allowances and other benefits
or their monetary equivalent.
Application: petitioner is a common carrier and, as
such, is obliged to exercise extra-ordinary diligence in
transporting its passengers safely. 14
Understandably, petitioner feared that it would be
exposing to danger the lives of its passengers if it
allowed the respondent to drive its bus despite the
fact that his leg was injured.
Although the SC cannot depart from the original ruling
that respondent was illegally dismissed since
petitioner was, at the beginning, unable to identify
with certitude its basis for respondent's termination,
as well as the date of effectivity thereof, we are now
convinced, taking into account the foregoing
circumstances, that petitioner acted without malice
and in good faith when it formally informed
respondent in 1998 that he was deemed resigned
from work.
The employer cannot be compelled to continuously
pay an employee who can no longer perform the tasks
for which he was hired. Seeing as petitioner continued
to pay respondent his salaries and medical expenses
for four years following the accident which caused his
leg injury, despite the fact that respondent was unable
to render actual service to petitioner, it would be the
height of injustice to still require petitioner to pay
respondent full backwages from the time of his
termination in 1998 until the finality of this Decision.
Reasons of fairness and equity, as well as the
particular factual circumstances attendant in this
case, dictate us to modify our Decision by ordering
petitioner to pay respondent limited backwages
(inclusive of allowances and other benefits or their
monetary equivalent) in addition to the separation pay
of one month for every year of service awarded in lieu
of reinstatement.
To whom duty is owed
PAL v. CA
G.R. No. L-46558 | July 31, 1981
Facts:
Jesus V. Samson, private respondent, averred that on
January 8, 1951, he flew as co-pilot on a regular flight
from Manila to Legaspi with stops at Daet, Camarines
Norte and Pili, Camarines Sur, with Captain Delfin
Bustamante as commanding pilot of a C-47 plane
belonging to PAL; that on attempting to land the plane
at Daet airport, Captain Delfin Bustamante due to his
very slow reaction and poor judgment overshot the
airfield and as a result, notwithstanding the diligent
efforts of the Samson co-pilot to avert an accident,
the airplane crashlanded beyond the runway; that the
jolt caused the head of the Samson to hit and break
through the thick front windshield of the airplane
causing him severe brain concussion, wounds and
abrasions on the forehead with intense pain and
suffering.
Petitioner’s Argument/s/ (LOST):
PAL denied the substantial averments in the
complaint, alleging among others, that the accident
was due solely and exclusively to inevitable
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unforeseen circumstances whereby Samson sustained
only superficial wounds and minor injuries which were
promptly treated by PAL's medical personnel; that
Samson did not sustain brain injury or cerebral
concussion from the accident since he passed the
annual physical and medical examination given
thereafter; that the headaches and dizziness
experienced by Samson were due to emotional
disturbance over his inability to pass the required up-
grading or promotional course given by PAL company,
and that, as confirmed by an expert neuro-surgeon,
Samson was suffering-from neurosis and in view of
this unfitness and disqualification from continuing as
a pilot, PAL had to terminate Samson's employment.
Further, PAL alleged that by the very nature of its
business as a common carrier, it is bound to employ
only pilots who are proficient and in good mental,
emotional and physical condition; that the pilot,
Captain Delfin Bustamante, was a competent and
proficient pilot, and although he was already afflicted
with a tumor of the nasopharynx even before the
accident, the Civil Aeronautics Administration, in
passing upon the fitness of pilots, gave Capt.
Bustamante a waiver of physical standards to enable
him to retain his first class airman certificate since the
affliction had not in the least affected him.
Respondent’s Arguments: (WON)
Samson further alleged that instead of giving him an
expert and proper medical treatment called for by the
nature and severity of his injuries, PAL simply referred
him to a company physician, a general medical
practitioner, who limited the treatment to the exterior
injuries without examining the severe brain
concussion of Samson; that several days after the
accident, PAL called back Samson to active duty as
co-pilot, and in spite of the latter's repeated request
for expert medical assistance, PAL had not given him
any; that as a consequence of the brain injury
sustained by him from the crash, he had been having
periodic dizzy spells and had been suffering from
general debility and nervousness; that PAL instead of
submitting him to expert medical treatment,
discharged the latter from its employ on grounds of
physical disability, thereby causing him not only to
lose his job but to become physically unfit to continue
as aviator due to PAL's negligence in not giving him
the proper medical attention.
Ruling of the lower court: Lower Court ruled in
favor of JESUS V. SAMSON.
Issue: WON PAL, as a common carrier, has the duty
to exercise utmost diligence, even to its crew
members. YES.
Rule: The dizzy spells, headache and general debility
of Samson was an after-effect of the crash-landing
and that such holding is supported by substantial
evidence. Even the doctors presented by PAL admit
vital facts about Samson’s brain injury. Dr. Bernardo
admits that due to the incident, Samson continuously
complained of his fainting spells, dizziness and
headache everytime he flew as a co-pilot and
everytime he went to PAL's clinic no less than 25
times, that he complained of the same to Dr. Reyes;
that he promised to help send Samson to the United
States for expert medical assistance provided that
whatever finding there should not be attributed to the
crash-landing incident to which Samson did not agree
and that Samson was completely ignored by PAL in his
plea for expert medical assistance. They admitted that
they could not determine the cause of the fainting
spells, dizziness and headache, which justifies the
demand for expert medical assistance.
There was gross negligence by PAL for having allowed
Capt. Delfin Bustamante to fly on that fateful day of
the accident. The pilot was sick and he admittedly had
a tumor of the nasopharynx (nose). He is now in the
Great Beyond. No one will certify the fitness to fly a
plane of one suffering from the disease. Even
assuming that the pilot was not sick or that the tumor
did not affect the pilot in managing the plane, the
evidence shows that the overshooting of the runway
and crash-landing at the mangrove was caused by the
pilot for which acts the PAL must answer for damages
caused thereby. And for this negligence of PAL's
employee, it is liable. At least, the law presumes the
employer negligent imposing upon it the burden of
proving that it exercised the diligence of a good father
of a family in the supervision of its employees.
Petitioner is a common carrier engaged in the
business of carrying or transporting passengers or
goods or both, by land, water, or air, for
compensation, offering their services to the public.
The law is clear in requiring a common carrier to
exercise the highest degree of care in the discharge of
its duty and business of carriage and transportation.
In case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to have
acted negligently, unless they prove that they
observed extraordinary diligence.
The duty to exercise the utmost diligence on the part
of common carriers is for the safety of passengers as
well as for the members of the crew or the
complement operating the carrier, the airplane in the
case at bar. And this must be so for any omission,
lapse or neglect thereof will certainly result in
damage, prejudice, injuries and even death to all
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aboard the plane, passengers and crew members
alike.
Application:
The duty to exercise the utmost diligence on the part
of common carriers is for the safety of passengers as
well as for the members of the crew.
Cangco v. Manila Railroad Co.
G.R. No. 12191 | Date Oct 14, 1918
Facts:
● Jose Canco was an employee (clerk) of
Manila Railroad Company. He lived in the
pueblo of San Mateo, in the province of Rizal,
which is located upon the line of the
defendant railroad company; and in coming
daily by train to the company's oEce in the
city of Manila where he worked, he used a
pass, supplied by the company, which
entitled him to ride upon the company's
trains free of charge.
● On January 20,1915, the plaintiff was
returning home by rail from his daily labors.
When the train arrived in the station of San
Mateo, Cangco arose from his seat but only
stepped off when the train proceeded a little
farther. While alighting therefrom, Cangco’s
feet came in contact with a sack of
watermelons with the result that his feet
slipped from under him and he fell violently
on the platform. His body at once rolled from
the platform and was drawn under the
moving car, where his right arm was badly
crushed and lacerated. It appears that after
the plaintiff alighted from the train the car
moved forward possibly 6 meters before it
came to a full stop.
● Cangco instituted this proceeding in the CFI
of Manila to recover damages of the
defendant company, founding his action
upon the negligence of the servants and
employees of the defendant in placing the
sacks of melons upon the platform and in
leaving them so placed as to be a menace to
the security of passenger alighting from the
company’s train.
Petitioner’s Argument/s:
(not mentioned in the facts of the case)
Respondent’s Arguments: LOSS
● The proximate cause of the injury suffered by
the plaintiff was his own contributory
negligence in failing to wait until the train
had come to complete stop before alighting.

Ruling of the lower court:
RTC: Ruled in favor of the defendant arguing that
while negligence was attributable to the defendant by
reason of the fact that the sacks of melons were so
placed as to obstruct passengers passing to and from
the cars, nevertheless, the plaintiff himself had failed
to use due caution in alighting from the coach and was
therefore precluded from recovering.
Issue:
1. WON Cangco is guilty of contributory
negligence.
2. WON the doctrine of contributory negligence
applied in this case.
Rule: Both NO.
The contract of defendant to transport plaintiff carried
with it, by implication, the duty to carry him in safety
and to provide safety means of entering and leaving
its trains(CC, Article 1258). That duty, being
contractual, was direct and immediate, and its non-
performance could not be excused by proof that the
fault was morally imputable to the defendant's
servants.
Under the doctrine of comparative negligence
announced in the Rakes case (supra), if the accident
was caused by plaintiff's own negligence, no liability
is imposed upon defendant, whereas if the accident
was caused by defendant's negligence and plaintiff's
negligence merely contributed to his injury, the
damages should be apportioned. BUT in this case, SC
refused to subscribe to this doctrine in its absolute
form.
SC rather opt to adopt the ruling in the case of Picart
v Snith, wherein they enunciated the test whether of
contributory negligence: Was there anything in the
circumstances surrounding the plaintiff at the time he
alighted from the train which would have admonished
a person of average prudence that to get off the train
under the conditions then existing was dangerous ? If
so, the plaintiff should have desisted from alighting;
and his failure so to desist was contributory
negligence.
Application:
The only fact from which a conclusion can be drawn to
the effect that the plaintiff was guilty of contributory
negligence is that he stepped off the car without being
able to discern clearly the condition of the platform
and while the train was yet slowly moving. In
considering the situation thus presented, it should not
be overlooked that the plaintiff was, as we Lnd,
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 3 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 21
ignorant of the fact that the obstruction which was
caused by the sacks of melons piled on the platform
existed; and as the defendant was bound by reason
of its duty as a public carrier to afford to its
passengers facilities for safe egress from its trains, the
plaintiff had a right to assume, in the absence of some
circumstance to warn him to the contrary, that the
platform was clear. Therefore, the conduct of the
plaintiff in undertaking to alight while the train was
yet slightly under way was not characterized by
imprudence and that he was not guilty of contributory
negligence.
Imbued with public interest
Solidbank Corp. v. Sps. Tan
G.R. No. | Date
(TN: Not a Transportation Law Case)
Facts:
● Spouses Tan through their representative
deposited 10 checks amounting to P455,962
with Solidbank
● Solidbank received and verified 2 copies of
deposit slips (one original and one duplicate).
It then returned the duplicate to Spouses Tan
● Spouse Tan later on found out that one check
amounting to P250,000 was not posted on
their account.
● Spouses Tan went back to Solidbank asking
why on the duplicate copy of the deposit slip
it only showed 9 checks were deposited and
that it was stamped by Teller 7 when in fact
it was teller 8 who stamped the deposit slip
The spouses then filed for an action for
collection of a sum of money against
Solidbank.
Petitioner’s Argument/s: (LOST)
● Solidbank claims that the duplicate copy of
the deposit slip that the spouses presented is
spurious
● Solidbank insisted that they only deposited 9
checks and not 10
● Solidbank also claims that the RTC erred
when it applied the provisions of common
carriers to the instant case
Respondent’s Arguments:
● The spouses claims that Solidbank acted in
bad faith as it did not present the original
copy of the deposit slip
Ruling of the lower court:
● RTC ruled in favor of the Spouses stating that
Solidbank was negligent as it failed to
exercise the diligence which is required by
the nature of its obligation
 ● RTC also ruled that it failed to exercise the
observance of extraordinary diligence as
provided by Article 1733 and 1735 of the Civil
Code
Issue:
● Whether the RTC erred when it applied 1733
and 1735 in the case when Solidbank is not
a common carrier (No)
Rule:
● A cursory reading of its decision reveals that
it anchored its conclusion that petitioner was
negligent on Article 1173 of the Civil Code.
● The trial court merely made reference to the
kind of diligence Solidbank should have
performed.
Application:
● Like a common carrier whose business is also
imbued with public interest, Solidbank
should have exercised extraordinary
diligence to negate its liability to
respondents.
● application of the provisions on common
carriers to this case if only to emphasize the
fact that banking institutions (like petitioner)
have the duty to exercise the highest degree
of diligence when transacting with the public.
By the nature of their business, they are
required to observe the highest standards of
integrity and performance, and utmost
assiduousness as well.
In carriage by sea
Seaworthiness
Warranty
Caltex Philippines v. Sulpicio Lines
G.R. No.131166 | September 30, 1999
Facts:
In December of 1987, MV Doña Paz, a passenger boat
collided with MT Vector. MT Vector was chartered by
Caltex Phil. to carry their oil products via a contract of
affreightment. Because of the collision many
passengers of MV Doña Paz died. Two of those that
died were Sebastian Cañezal and his 11 year old
daughter. The mother and wife of Mr. Cañezal filed
with the RTC Manila for “Damages arising from Breach
of Contract of Carriage” against Sulpicio Lines. In turn
Sulpicio Lines filed a third party complaint against
Francisco Soriano, Vector Shipping and Caltex
Philippines for when Caltex charted MT Vector there
was gross and evident bad faith by knowing fully well
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that MT Vector was improperly manned, ill-equipped,
unseaworthy and a hazard to safe navigation.
Petitioner’s Argument/s: WON
Caltex Phils. and Vector entered into a contract of
affreightment also known as voyage charter. In a
voyage charter, the charter party provides for the hire
of the vessel only, the ship owner to supply the ship’s
store, pay for the wages of the master of the crew,
and defray the expenses for the maintenance of the
ship. If the charter is a contract of affreightment,
which leaves the general owner in possession of the
ship as owner of the voyage, the rights and the
responsibilities of ownership rest on the owner. The
Charterer is free from liability to third persons in
respect of the ship
Respondent’s Arguments:
In filing a third-party complaint, Sulpicio Lines filed a
third-party complaint against Soriano, Vector, and
Caltex Phils. It alleged that Caltex chartered MT
Vector with gross and evident bad faith knowing fully
well that MT Vector was improperly manned, ill-
equipped, unseaworthy and a hazard to safe
navigation; as a result, it rammed against MV Dona
Paz in the open sea setting MT Vector’s highly
flammable cargo ablaze.
Ruling of the lower court:
RTC: Ruled in favor of the plaintiffs, awarding them
the damages but dismissed the third-party complaint
for want of substantiation.
CA: Modified the order by making Caltex Philippines
and Vector Shipping as one of those liable for
damages.
Caltex Philippines appealed the case. Vector Shipping
didn’t. Hence the petition.
Issue:
1. WON Caltex Philippines was liable for the
damages
2. WON MT Vector is a common carrier
Rule:
Section 3. (1)The carrier shall be bound before and at
the beginning of the voyage to exercise due diligence
to:
a)Make the ship seaworthy
b)Properly man, equip and supply the ship
Application:
1. No. Caltex Philippines being a charterer is not liable
for damages. If the charter is a contract of
affreightment, which leaves the general owner in
possession of the ship as owner of the voyage, the
rights and responsibilities of ownership rest on the
owner. The charterer is free from liability to third
persons in respect to the ship.
2. Yes. The MT Vector is a common carrier. The
charter agreement did not convert the common
carrier into a private carrier. The parties entered into
a voyage charter, which retains the character of the
vessel as a common carrier. Under the Carriage of
Goods by Sea Act Section 3.
Thus, the carriers are deemed to impliedly warrant the
seaworthiness of the ship. For a vessel to be
seaworthy, it must be adequately equipped for the
voyage and manned with a sufficient number of
competent officers and crew.
Sufficient Evidence
Delsan Transport v. CA
G.R. No. 127897 | Date Nov 15, 2001
Facts:
Caltex Philippines entered into a contract of
affreightment with the petitioner, Delsan Transport
Lines, Inc., whereby the said common carrier agreed
to transport Caltex's industrial fuel oil from the
Batangas-Bataan Refinery to different parts of the
country. The shipment was insured with the private
respondent, American Home Assurance Corporation.
On August 14, 1986, petitioner's vessel, the MT
Maysun, set sail from Batangas for Zamboanga City.
Unfortunately, the vessel sank in the early morning of
August 16, 1986 near Panay Gulf in the Visayas taking
with it the entire cargo of fuel oil. Private respondent
paid Caltex the sum of Five Million Ninety-Six
Thousand Six Hundred Thirty-Five Pesos and Fifty-
Seven Centavos (P5,096,635.57) representing the
insured value of the lost cargo. Exercising its right of
subrogation under Article 2207 of the New Civil Code,
the private respondent demanded of the petitioner the
same amount it paid to Caltex. Due to its failure to
collect from the petitioner despite prior demand, the
private respondent filed a complaint with the Regional
Trial Court of Makati City, Branch 137, for collection
of a sum of money.
Petitioner’s Argument/s: LOSS
Petitioner argued that the private respondent, for
unknown reason, presented evidence during the trial
of the instant case the subject marine cargo insurance
policy it entered into with Caltex.
Respondent’s Arguments:
(not mentioned in the case)
Ruling of the lower court:
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The trial court rendered a decision dismissing the
complaint against herein petitioner without
pronouncement as to cost. The trial court found that
the vessel, MT Maysun, was seaworthy to undertake
the voyage as determined by the Philippine Coast
Guard per Survey Certificate Report No. M5-016-MH
upon inspection during its annual dry-docking and
that the incident was caused by unexpected inclement
weather condition or force majeure, thus exempting
petitioner from liability for the loss of its cargo.
CA RULING: reversed the trial courts ruling.
The appellate court gave credence to the weather
report issued by the Philippine Atmospheric,
Geophysical and Astronomical Services Administration
(PAGASA ). In the absence of any explanation as to
what may have caused the sinking of the vessel
coupled with the finding that the same was improperly
manned, the appellate court ruled that the petitioner
is liable on its obligation as common carrier to herein
private respondent insurance company as subrogee of
Caltex.
Issue: WON the subrogation receipt is sufficient
evidence in order for a private respondent to recover
from the common carrier the insured value of the lost
cargo. (YES)
Rule:
The presentation in evidence of the marine insurance
policy is not indispensable in this case before the
insurer may recover from the common carrier the
insured value of the lost cargo in the exercise of its
subrogatory right.
Application:
In this case, it is clear that the private respondent paid
Caltex the insured value of the lost cargo. Exercising
its subrogatory rights, SC ruled that the subrogation
receipt, by itself, is sufficient to establish not only the
relationship of herein private respondent as insurer
and Caltex, as the assured shipper of the lost cargo of
industrial fuel oil, but also the amount paid to settle
the insurance claim. The right of subrogation accrues
simply upon payment by the insurance company of
the insurance claim.
The doctrine laid down in the case of Home Insurance
Corporation v CA which declares that “failure of the
private respondent to present the insurance policy in
evidence is allegedly fatal to its claim inasmuch as
there is no way to determine the rights of the parties
thereto.” is not applicable in this case because in the
Home Insurance Corporation v CA the shipment
passed through several stages with different parties
involved in each stage. In contrast, there is no doubt
that the cargo of industrial fuel oil belonging to Caltex,
in the case at bar, was lost while on board petitioner’s
vessel, which sank while in transit in the vicinity of
Panay Gulf and Cuyo East Pass in the early morning
of August 16, 1986.
National Steel Corp. v. CA
G.R. No. | Date
Facts:
NSC hired MV Vlasons I, a private vessel owned by
VSI. They entered into a contract of affreightment or
contract of voyage charter hire wherein the contract
states that NSC hired VSI's vessel to make one voyage
to load steel products at Iligan City and discharge
them at North Harbor, Manila.
Thereafter, in accordance with the voyage charter
hire, NSC's shipment of tin plates and packages of hot
rolled sheets were loaded to MV Vlasons I for carriage
to Manila. The vessel arrived safely at North Harbor,
Manila but upon opening the three hatches containing
the shipment, nearly all the skids of tin plates and hot
rolled sheets were allegedly found to be wet and rusty.
The cargo was discharged and unloaded by stevedores
hired by the plaintiff.
On the basis of this incident, NSC filed a complaint
against VSI for damages due to the downgrading of
the damaged tin plates.
Petitioner’s Argument/s (LOST): Plaintiff claimed
that it sustained losses 18 as a result of the act,
neglect and default of the master and crew in the
management of the vessel as well as the want of due
diligence on the part of the defendant to make the
vessel seaworthy and to make the holds and all other
parts of the vessel in which the cargo was carried, fit
and safe for its reception, carriage and preservation
— all in violation of defendant's undertaking under
their Contract of Voyage Charter Hire.
Respondent’s Arguments (WON): Defendant
denied liability for the alleged damage claiming that
the MV "VLASONS I" was seaworthy in all respects for
the carriage of plaintiff's cargo;
that said vessel was not a "common carrier" inasmuch
as she was under voyage charter contract with the
plaintiff as charterer under the charter party;
that in the course of the voyage from Iligan City to
Manila, the MV "VLASONS I" encountered very rough
seas, strong winds and adverse weather condition,
causing strong winds and big waves to continuously
pound against the vessel and seawater to overflow on
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its deck and hatch covers, that under the Contract of
Voyage Charter Hire, defendant shall not be
responsible for losses/damages except on proven
willful negligence of the officers of the vessel, that the
officers of said MV "VLASONS I" exercised due
diligence and proper seamanship and were not
willfully negligent;
that furthermore the Voyage Charter Party provides
that loading and discharging of the cargo was on
FIOST terms which means that the vessel was free of
risk and expense in connection with the loading and
discharging of the cargo; that the damage, if any, was
due to the inherent defect, quality or vice of the cargo
or to the insufficient packing thereof or to latent defect
of the cargo not discoverable by due diligence or to
any other cause arising without the actual fault or
privity of defendant and without the fault of the agents
or servants of defendant;
consequently, defendant is not liable; that the
stevedores of plaintiff who discharged the cargo in
Manila were negligent and did not exercise due care
in the discharge of the cargo; land that the cargo was
exposed to rain and seawater spray while on the pier
or in transit from the pier to plaintiff's warehouse after
discharge from the vessel;
and that plaintiff's claim was highly speculative and
grossly exaggerated and that the small stain marks or
sweat marks on the edges of the tin plates were
magnified and considered total loss of the cargo.
Finally, the defendant claimed that it had complied
with all its duties and obligations under the Voyage
Charter Hire Contract and had no responsibility
whatsoever to the plaintiff.
Ruling of the lower court: Trial court dismissed the
complaint and ordering NSC to pay VSI on the
counterclaim prayed for by the latter. NSC appealed
and CA modified the appealed decision hence this
petition
Issue: Who has the burden of proof? (In a contract of
private carriage, the burden of proof in case of
accident is on the carrier.)
Rule: Article 1732 of the Civil Code defines a common
carrier as "persons, corporations, firms or associations
engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air,for
compensation, offering their services to the public." It
has been held that the true test of a common carrier
is the carriage of passengers or goods, provided it has
space, for all who opt to avail themselves of its
transportation service for a fee.
A carrier which does not qualify under the above test
is deemed a private carrier.
Generally, private carriage is undertaken by special
agreement and the carrier does not hold himself out
to carry goods for the general public. The most typical,
although not the only form of private carriage,is the
charter party, a maritime contract by which the
charterer, a party other than the shipowner, obtains
the use and service of all or some part of a ship for a
period of time or a voyage or voyages.
Application: In the instant case, it is undisputed that
VSI did not offer its services to the general public. As
found by the Regional Trial Court, it carried
passengers or goods only for those it chose under a
"special contract of charter party." MV Vlasons I "was
not a common but a private carrier."
Consequently, the rights and obligations of VSI and
NSC, including their respective liability for damage to
the cargo, are determined primarily by stipulations in
their contract of private carriage or charter party.
It is a hornbook doctrine that: "In an action against a
private carrier for loss of, or injury to, cargo, the
burden is on the plaintiff to prove that the carrier was
negligent or unseaworthy, and the fact that the goods
were lost or damaged while in the carrier's custo
In view of the contractual stipulations, NSC must
prove that the damage to its shipment was caused by
VSI's willful negligence or failure to exercise due
diligence in making MV Vlasons I seaworthy and fit for
holding, carrying and safekeeping the cargo.
Ineluctably, the burden of proof was placed on NSC
by the parties' agreement.
Because the MV Vlasons I was a private carrier, the
shipowner's obligations are governed by the foregoing
provisions of the Code of Commerce and not by the
Civil Code which, as a general rule, places the prima
facie presumption of negligence on a common carrier.
Loadstar Shipping v. CA
G.R. No.131621 | Sept. 28, 1999
Facts: (previously assigned under module 2) Loadstar
received on board its M/V Cherokee (vessel) shipment
was insured by MNL Insurance Co. (MIC) and
Prudential guarantee and assurance inc (PGAI). When
the vessel sanked and resulted in the toal loss of the
shipment, the consignee made a claim with Loadstar.
MIC paid the consignee (now subrogated) filed a claim
against Laodstar and PGAI.
Petitioner’s Arguments (Loadstar – LOST):
LOADSTAR denied any liability for the loss of the
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shipper's goods and claimed that the sinking of its
vessel was due to force majeure. LOADSTAR argues
that as a private carrier, it cannot be presumed to
have been negligent, and the burden of proving
otherwise devolved upon MIC. LOADSTAR also
maintains that the vessel was seaworthy. Before the
fateful voyage. The vessel was allegedly dry docked
at Keppel Philippines Shipyard and was duly inspected
by the maritime safety engineers of the Philippine
Coast Guard, who certified that the ship was to to
undertake a voyage. Its crew at the time was
experienced, licensed and unquestionably competent.
With all these precautions, there could be no other
conclusion except that LOADSTAR exercised the
diligence of a good father of a family in ensuring the
vessel's seaworthiness.
Ruling of the lower court: RTC and CA decided
against LOADSTAR.
Issue: (1) whether M/V "Cherokee" is a public carrier
and (2) whether LOADSTAR observed due
diligence in the premises. (under this module issue
2 is the focus).
Rule: Article 1755 of the NCC. (SC only affirmed CA
ruling on this issue).
Application: On the second issue, the Court found
M/V "Cherokee" not seaworthy as it was not even
sufficiently manned at the time. The failure of a
common carrier to maintain in seaworthy condition its
vessel involved in a contract of carriage is a clear
breach of its duty prescribed in Article 1755 of the Civil
Code.
Decisions of the appellate court: (affirmed by the SC)
The vessel was not seaworthy because it was
undermanned on the day of the voyage. If it had been
seaworthy, it could have withstood the "natural and
inevitable action of the sea" on when the condition of
the sea was moderate. The vessel sank, not because
of force majeure, but because it was not seaworthy.
LOADSTAR'S allegation that the sinking was probably
due to the "convergence of the winds," as stated by a
PAGASA expert, was not duly proven at the trial. The
"limited liability" rule, therefore, is not applicable
considering that, in this case, there was an actual
finding of negligence on the part of the carrier.
Proper Manning
Coastwise Lighterage Corp. v. CA and Philippine
General Insurance Company
G.R. No. 114167 | July 12, 1995
245 SCRA 796
Facts:
Pag-asa Sales Inc entered into a contract to transport
molasses from Negros to Manila with Coastwise, using
the latter’s dumb barges. The barges were towed in
tandem by the tugboat Mt Marica, which is likewise
owned by Coastwise.
When it reached Manila Bay, one of the barges struck
an unknown sunken object. It was damaged and
water gushed in through a hole (2 inches wide and 22
inches long). Because of this, the molasses at the
cargo tanks were contaminated and rendered unfit for
the use it was intended. The consignee, Pag-asa
Sales, rejected the shipment. Then it filed a formal
claim with the insurer of its lost cargo, respondent
Philippine General Insurance Company and against
the carrier, petitioner Coastwise. Coastwise denied
the claim and it was PhilGen which paid the consignee
P700k which is the value of the damaged cargo of
molasses.
PhilGen then filed an action against Coastwise to
recover the amount paid to Pag-asa. This escalated to
SC as a petition for review of a Decision rendered by
the CA, affirming RTC, Manila in holding that
Coastwise is liable to private respondent.
Petitioner’s Argument/s: (LOST)
Petitioner stresses the fact that it contracted with Pag-
asa Sales to transport the shipment of molasses and
refers to this contract as a “charter agreement”. It
cited Home Insurance Compan vs American
Steamship Agencies where the Court held that “a
common carrier undertaking to carry a special cargo
or chartered to a special person only becomes a
private carrier”.
The records show that the damage to the barge which
carried the cargo of molasses was caused by its hitting
an unknown sunken object as it was heading for Pier
18. The object turned out to be a submerged derelict
vessel. Petitioner contends that this navigational
hazard was the efficient cause of the accident. Further
it asserts that the fact that the Philippine Coastguard
"has not exerted any effort to prepare a chart to
indicate the location of sunken derelicts within Manila
North Harbor to avoid navigational accidents"
effectively contributed to the happening of this
mishap. Thus, being unaware of the hidden danger
that lies in its path, it became impossible for the
petitioner to avoid the same. Nothing could have
prevented the event, making it beyond the pale of
even the exercise of extraordinary diligence.
Respondent’s Arguments: (WON)
The petitioner's assertion is belied by the evidence on
record where it appeared that far from having
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rendered service with the greatest skill and utmost
foresight, and being free from fault, the carrier was
culpably remiss in the observance of its duties.
Ruling of the lower court:
The RTC awarded the amount prayed for by PhilGen.
On Coastwise Lighterage's appeal to the Court of
Appeals, the award was affirmed. Hence, this petition.
Issue: (NO)
Whether or not petitioner Coastwise Lighterage was
transformed into a private carrier, by virtue of the
contract of affreightment which it entered into with
the consignee, Pag-asa Sales, Inc. Corollarily, if it
were in fact transformed into a private carrier, did it
exercise the ordinary diligence to which a private
carrier is in turn bound?
Rules:
1. Article 1732 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.
2. Article 1735 provides that in all cases other
than those mentioned in Article 1734, 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.
3. Art. 609. — Captains, masters, or patrons of
vessels must be Filipinos, have legal capacity
to contract in accordance with this code, and
prove the skill capacity and qualifications
necessary to command and direct the vessel,
as established by marine and navigation
laws, ordinances or regulations, and must
not be disqualified according to the same for
the discharge of the duties of the position.
Application:
Rules 1 and 2
Petitioner's reliance on the aforementioned case is
misplaced. In its entirety, the conclusions of the court
are as follows:
Accordingly, the charter party contract is one of
affreightment over the whole vessel, rather than a
demise. As such, the liability of the shipowner for acts
or negligence of its captain and crew, would remain in
the absence of stipulation.
The distinction between the two kinds of charter
parties (i.e. bareboat or demise and contract of
affreightment) is more clearly set out in the case of
Puromines, Inc. vs. Court of Appeals, wherein we
ruled:
Under the demise or bareboat charter of the vessel,
the charterer will generally be regarded as the owner
for the voyage or service stipulated. The charterer
mans the vessel with his own people and becomes the
owner pro hac vice, subject to liability to others for
damages caused by negligence. To create a demise,
the owner of a vessel must completely and exclusively
relinquish possession, command and navigation
thereof to the charterer, anything short of such a
complete transfer is a contract of affreightment (time
or voyage charter party) or not a charter party at all.
On the other hand a contract of affreightment is one
in which the owner of the vessel leases part or all of
its space to haul goods for others. It is a contract for
special service to be rendered by the owner of the
vessel and under such contract the general owner
retains the possession, command and navigation of
the ship, the charterer or freighter merely having use
of the space in the vessel in return for his payment of
the charter hire. An owner who retains possession of
the ship though the hold is the property of the
charterer, remains liable as carrier and must answer
for any breach of duty as to the care, loading and
unloading of the cargo.
Although a charter party may transform a common
carrier into a private one, the same however is not
true in a contract of affreightment on account of the
aforementioned distinctions between the two.
Petitioner admits that the contract it entered into with
the consignee was one of affreightment. We agree.
Pag-asa Sales, Inc. only leased three of the
petitioner's vessels, in order to carry cargo from one
point to another, but the possession, command and
navigation of the vessels remained with petitioner
Coastwise Lighterage.
Pursuant therefore to the ruling in the aforecited
Puromines case, Coastwise Lighterage, by the
contract of affreightment, was not converted into a
private carrier, but remained a common carrier and
was still liable as such. The law and jurisprudence on
common carriers both hold that the mere proof of
delivery of goods in good order to a carrier and the
subsequent arrival of the same goods at the place of
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destination in bad order makes for a prima facie case
against the carrier.
It follows then that the presumption of negligence that
attaches to common carriers, once the goods it
transports are lost, destroyed or deteriorated, applies
to the petitioner. This presumption, which is overcome
only by proof of the exercise of extraordinary
diligence, remained unrebutted in this case.
Rule 3
Jesus R. Constantino, the patron of the vessel
"Coastwise 9" admitted that he was not licensed. The
Code of Commerce, which subsidiarily governs
common carriers (which are primarily governed by the
provisions of the Civil Code) provides:
Art. 609. — Captains, masters, or patrons of vessels
must be Filipinos, have legal capacity to contract in
accordance with this code, and prove the skill
capacity and qualifications necessary to command
and direct the vessel, as established by marine and
navigation laws, ordinances or regulations, and must
not be disqualified according to the same for the
discharge of the duties of the position. . . .
Clearly, petitioner Coastwise Lighterage's embarking
on a voyage with an unlicensed patron violates this
rule. It cannot safely claim to have exercised
extraordinary diligence, by placing a person whose
navigational skills are questionable, at the helm of the
vessel which eventually met the fateful accident. It
may also logically follow that a person without license
to navigate, lacks not just the skill to do so, but also
the utmost familiarity with the usual and safe routes
taken by seasoned and legally authorized ones. Had
the patron been licensed, he could be presumed to
have both the skill and the knowledge that would have
prevented the vessel's hitting the sunken derelict ship
that lay on their way to Pier 18.
As a common carrier, petitioner is liable for breach of
the contract of carriage, having failed to overcome the
presumption of negligence with the loss and
destruction of goods it transported, by proof of its
exercise of extraordinary diligence. (Article 1735)
Manila Steamship v. Abdulhaman
G.R. No. L-9534 | September 29, 1956
Facts
The five children of the respondent died as a result of
a maritime collision between two vessels bound for
Zamboanga. There was a storm on the eve of the
accident and visibility was not good. 9 passengers
were dead and missing and all cargoes carried on the
boat were also lost.
Petitioner’s Argument/s:
Pleads that it is exempt from any liability to the
plaintiff under Art. 1903 of the Civil Code because it
exercised the diligence of a good father of a family in
the selection of its employees.
(LOST)
Respondent’s Arguments:
Seeks to recover damages for the death of his children
and loss of personal property.
(WON)
Ruling of the lower court:
Court of Appeals affirmed the findings of the Board of
Marine Inquiry, that the commanding officer of the
colliding vessels had both been negligent in operating
their respective vessels
Issue:
WON petitioner is liable to pay damages
Rule:
Article 827, Code of Commerce
In case of collision between two vessels imputable to
both of them, each vessel shall suffer her own damage
and both shall be solidarily liable for the damages
occasioned to their cargoes.
Application:
Yes. While it is true that plaintiff’s action against
petitioner is based on a tort, the tort in question is not
a civil tort but a maritime tort resulting in a collision
at sea, governed by the Code of Commerce. Art. 827
clearly provides that the shipowner is directly and
primarily responsible for tort resulting in a collision at
sea, and it may not escape liability on the ground that
it exercised due diligence in the selection and
supervision of the vessel's officer and crew. If such
defense were to be admitted, shipowners would easily
escape liability in every case as vigilance can hardly
be exercised over officers and crew of vessels at sea.
To compel the parties prejudiced to look to the crew
for indemnity and redress would be an illusory remedy
for almost always its members, from captains down,
are mere wage earners.
Proper Loading
Negros Navigation v. CA
G.R. No. 110398 | November 7, 1997
Facts:
Ramon Miranda purchased from the Negros
Navigation Co., Inc. 4 special cabin tickets for his wife,
daughter, son and niece. The tickets were for the M/V
Don Juan, leaving Manila.
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The evening of the sale, the Don Juan collided off the
Tablas Strait in Mindoro, with the M/T Tacloban City,
an oil tanker owned by the Philippine National Oil
Company (PNOC) and the PNOC Shipping and
Transport Corporation (PNOC/STC). As a result, the
M/V Don Juan sank.
The bondies of Miranda and his family were never
found.
Private respondents filed a complaint in the RTC,
against the Negros Navigation, PNOC, and the
PNOC/STC, seeking damages for the death of their
relatives.
Petitioner’s Argument/s:
Neros Navigation argues that the Mecenas Case does
not apply to the case and if it did, the damages
awarded by the CA are excessive - LOST
Respondent’s Arguments:
CA argues that the Mecenas case applies under the
principle of stare decisis and that damages awarded
are proper and has legal and factual bases - WON
Ruling of the lower court:
The RTC awarded damages to private respondents for
the death of their four relatives. The decision of the
Court of Appeals affirmed with the modification as to
the amount of damages.
Issue:
1. W/N the ruling in Mecenas vs. CA is binding
in this case - YES
2. W/N the damages awarded by the appellate
court are excessive - NO
Rule:
No specific provision of law cited
Application:
On the application of the Mecenas Case
Adherence to the Mecenas case is dictated by "stare
decisis et non quieta movere" (Follow past precedents
and do not disturb what has
been settled.) Where the same questions relating to
the same event have been put forward by parties
similarly situated as in a previous case litigated and
decided by a competent court, the rule of stare decisis
is a bar to any attempt to relitigate the same issue
However, the doctrine of stare decisis works as a bar
only against issues litigated in the previous case.
Where the issue involved was not raised in the
previous case, the decision in the previous case as to
that issue is not stare decisis of the question presently
presented.

Thus the award for damages in the Mecenas case
should not be made basis for the awarding of damages
in this case. This is because the award for damages in
Mecenas relates to damages suffered solely by the
claimants in that case.
On the damages awarded by the CA
The award of actual damages was determined by the
CA on the basis of receipts submitted by private
respondents. This amount is reasonable
considering the expenses incurred in organizing 3
search teams to look for his family, transportation,
long distance calls, erecting a monument for the four
victims, obituaries in the Bulletin Today and for food,
masses and novenas.
Indemnity for death is given to compensate for
violation of the rights of the deceased, i.e., his right
to life and physical integrity.
On the other hand, damages incidental to or arising
out of such death are for pecuniary losses of the
beneficiaries of the deceased
The award of exemplary damages was also found to
be proper. Exemplary damages are designed by our
civil law to permit the courts to reshape behavior that
is socially deleterious in its consequence by creating
negative incentives or deterrents against such
behaviour
Proper Storage
Phil. Home Assurance Corp. v. CA
G.R. No. 106999 | June 20, 1996
Facts: Eastern Shipping Lines Inc (Private respondent
- ESLI) loaded on board SS Eastern Explorer
shipments consigned to different owners. (Not really
important what was the cargo and to whom
consigned). On its way to MNL, off the shore of
Okinawa, the vessel exploded because an acetylene
cylinder, located near the ENGINE ROOM, caught fire
and exploded. Crew and captain had to abandon ship
(there were fatalities and injuries) and several hours
later a tugboat under the control of Fukuda Salvage
Co. arrived to tow the vessel and collect the cargoes.
All cargoes were salvaged and were loaded to another
vessel for delivery to the original destination. ESLI
then charged all consignees additional freight and
salvage charges. Phil. Home Assurance Corp
(petitioner - PHAC) under protest, paid the charges,
on behalf of the consignees. PHAC now subrogated the
consignees, filed a complaint against ESLI to recover
the sum paid.
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Petitioner’s Arguments (PHAC - WON): PHAC, as
subrogee of the consignees,filled a complaint against
ESLI to recover the sum paid under protest on the
ground that the same were actually damages directly
brought about by the fault, negligence, illegal act
and/or breach of contract of ESLI.
Respondent’s Arguments (ESLI - LOST): ESLI
contended that it exercised the diligence required by
law in the handling, custody and carriage of the
shipment; that the fire was caused by an unforeseen
event; that the additional freight charges are due and
demandable pursuant to the Bill of Lading and that
salvage charges are properly collectible under Act No.
2616, known as the Salvage Law.
Ruling of the lower court: RTC and CA decided in
favor of ESLI. The salvage operations conducted by
Fukuda Salvage Company was perfectly a legal
operation and charges made on the goods recovered
were legitimate charges under Sec.1 of Act No. 2616
of the Salvage Law and It is but legal and equitable
for the defendant therefore, to demand additional
freight from the consignees for forwarding the goods
on board another vessel. This finds support under
Article 844 of the Code of Commerce
Issue: who, among the carrier, consignee or insurer
of the goods, is liable for the additional charges or
expenses incurred by the owner of the ship in the
salvage operations and in the transshipment of the
goods via a different carrier. (Carrier)
Rule: In absolving the respondent carrier of any
liability, there must be a finding that the fire that
gutted the ship was a natural disaster or calamity. In
our jurisprudence, fire may not be considered a
natural disaster or calamity since it almost always
arises from some act of man or by human means. It
cannot be an act of God unless caused by lightning or
a natural disaster or casualty not attributable to
human agency.
Application: In the case at bar, it is not disputed that
a small flame was detected on the acetylene cylinder
and that by reason thereof, the same exploded
despite efforts to extinguish the re. Neither is there
any doubt that the acetylene cylinder, obviously fully
loaded, was stored in the accommodation area near
the engine room and not in a storage area
considerably far, and in a safe distance, from the
engine room. On the contrary, there is strong
evidence indicating that the acetylene cylinder caught
fire because of the fault and negligence of respondent
ESLI, its captain and its crew.
Phil. American Gen. Insurance v. CA
G.R. No. 116940 | June 11, 1997

Facts:
Coca-Cola Bottlers Philippines, Inc., loaded on board
"MV Asilda," a vessel owned and operated by
respondent Felman Shipping Lines, 7,500 cases of 1-
liter Coca-Cola softdrink bottles to be transported
from Zamboanga City to Cebu City for consignee
Coca-Cola Bottlers Philippines, Inc., Cebu. Shipment
was insured with petitioner Philippine American
General Insurance Co., Inc. (PHILAMGEN)
"MV Asilda" left the port of Zamboanga in Ine weather
at eight o'clock in the evening of the same day. At
around eight forty-Ive the following morning, 7 July
1983, the vessel sank in the waters of Zamboanga del
Norte bringing down her entire cargo with her
including the subject 7,500 cases of 1-liter Coca-Cola
softdrink bottles
July 15, 1983: Coca-Cola Bottlers Philippines, Inc.,
Cebu plant, filed a claim with respondent FELMAN for
recovery of damages it sustained as a result of the
loss of its softdrink bottles that sank with "MV Asilda."
Respondent denied the claim thus prompting the
consignee to Ile an insurance claim with PHILAMGEN
which paid its claim of P755,250.00.
PHILAMGEN sought recourse against respondent
FELMAN which disclaimed any liability for the loss.
Then PHILAMGEN sued the shipowner for a sum of
money and damages.
Petitioner’s Argument/s:
PHILAMGEN alleged that the sinking and total loss of
"MV Asilda" and its cargo were due to the vessel's
unseaworthiness as she was put to sea in an unstable
condition. It further alleged that the vessel was
improperly manned and that its officers were grossly
negligent in failing to take appropriate measures to
proceed to a nearby port or beach after the vessel
started to list.
Respondent’s Arguments:
FELMAN filed a motion to dismiss based on the
aLrmative defense that no right of subrogation in
favor of PHILAMGEN was transmitted by the shipper,
and that, in any event, FELMAN had abandoned all its
rights, interests and ownership over "MV Asilda"
together with her freight and appurtenances for the
purpose of limiting and extinguishing its liability under
Art. 587 of the Code of Commerce.
Ruling of the lower court:
● The trial court dismissed the complaint of
PHILAMGEN. On appeal the Court of Appeals
set aside the dismissal and remanded the
case to the lower court for trial on the merits.
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FELMAN filed a petition for certiorari with this
Court but it was subsequently denied on 13
February 1989.
● Trial court rendered judgment in favor of
FELMAN ruled that the carrier was seaworthy
when it left the port of Zamboanga as
confirmed by certificates issued by Philippine
Coast Guard and the shipowner’s surveyor
attesting to its seaworthiness and that the
loss of the vessel and its entire shipment
could only be attributed to either a fortuitous
event, in which case, no liability should
attach unless there was a stipulation to the
contrary, or to the negligence of the captain
and his crew, in which case, Art. 587 of the
Code of Commerce should apply.
● PHILAMGEN appealed the decision to the CA
which rendered judgment finding "MV Asilda"
unseaworthy for being top-heavy as 2,500
cases of Coca-Cola softdrink bottles were
improperly stowed on deck.
Issue:
1. WON "MV Asilda" was seaworthy when it left
the port of Zamboanga. NO
2. WON the limited liability under Art. 587 of
the Code of Commerce should apply. NO
3. WON PHILAMGEN was properly subrogated
to the rights and legal actions which the
shipper had against FELMAN, the shipowner.
YES
Rule:
The ship agent is liable for the negligent acts of the
captain in the care of goods loaded on the vessel. This
liability however can be limited through abandonment
of the vessel, its equipment and freightage as
provided in Art. 587.
Art. 1733 of the Civil Code, "(c)ommon 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 . . ." In the event of
loss of goods, common carriers are presumed to have
acted negligently. FELMAN, the shipowner, was not
able to rebut this presumption.
Generally held that in every marine insurance policy
the assured impliedly warrants to the assurer that the
vessel is seaworthy and such warranty is as much a
term of the contract as if expressly written on the face
of the policy.
Sec. 113 of the Insurance Code provides that "(i)n
every marine insurance upon a ship or freight, or
freightage, or upon anything which is the subject of
marine insurance, a warranty is implied that the ship
is seaworthy."
Sec. 114, a ship is "seaworthy when reasonably fit to
perform the service, and to encounter the ordinary
perils of the voyage, contemplated by the parties to
the policy."
Art. 2207 of the Civil Code provides that “if the
plaintiff's property has been insured, and he has
received indemnity from the insurance company for
the injury or loss arising out of the wrong or breach of
contract complained of, the insurance company shall
be subrogated to the rights of the insured against the
wrongdoer or the person who has violated the
contract. If the amount paid by the insurance
company does not fully cover the injury or loss, the
aggrieved party shall be entitled to recover the
deficiency from the person causing the loss or injury.”
Application:
1. MV Asilda was unseaworthy when it left the
port of Zamboanga and that the proximate
cause of its sinking was its being top-heavy
(which is to say that while the vessel may not
have been overloaded, yet the distribution or
stowage of the cargo on board was done in
such a manner that the vessel was in top-
heavy condition at the time of her departure
and which condition rendered her unstable
and unseaworthy for that particular voyage).
It was established that "MV Asilda" was not
designed to carry substantial amount of
cargo on deck. The inordinate loading of
cargo deck resulted in the decrease of the
vessel's metacentric height 7 thus making it
unstable. The strong winds and waves
encountered by the vessel are but the
ordinary vicissitudes of a sea voyage and as
such merely contributed to its already
unstable and unseaworthy condition.
2. Art. 587 of the Code of Commerce is not
applicable to the case at bar. Art. 587 speaks
only of situations where the fault or
negligence is committed solely by the
captain. Where the shipowner is likewise to
be blamed, Art. 587 will not apply, and such
a situation will be covered by the provisions
of the Civil Code on common carrier. FELMAN
was equally negligent. It cannot therefore
escape liability through the expedient of
filing a notice of abandonment of the vessel
by virtue of Art. 587 of the Code of
Commerce.
3. The payment made by PHILAMGEN to Coca-
Cola Bottlers Philippines, Inc., gave the
former the right to bring an action as
subrogee against FELMAN. Having failed to
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rebut the presumption of fault, the liability of
FELMAN for the loss of the 7,500 cases of 1-
liter CocaCola softdrink bottles is inevitable.
Belgian Overseas v. Phil. First Insurance
G.R. No. | Date
“Proof of the delivery of goods in good order to a
common carrier and of their arrival in bad order at
their destination constitutes prima facie fault or
negligence on the part of the carrier. If no adequate
explanation is given as to how the loss, the
destruction or the deterioration of the goods
happened, the carrier shall be held liable therefor.”
Facts:
On June 13, 1990, 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, Belgian Overseas
Chartering and Shipping N.V. refused to submit to the
consignees claim. Consequently, Phil. First Insurance
paid Phil. Steel Trading Corporation P506,086.50 and
was subrogated to the latter’s rights and causes of
action against Belgian Overseas. Subsequently, Phil.
First Insurance instituted this complaint for recovery
of the amount paid by them, to Phil. Steel Trading
Corp as insured.
Petitioner’s Argument/s:
1 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
2 Their liability, if there be any, should not exceed the
limitations of liability provided for in the bill of lading
and other pertinent laws.
3 They exercised due diligence and foresight required
by law to prevent any damage/loss to said shipment.
Ruling of the lower court:
RTC ruled in favor of Belgian Overseas. However, on
appeal, the CA reversed RTC’s decision and ruled in
favor Phil. First Insurance.
Issue:
Whether Belgian Overseas have overcome the
presumption of negligence of a common carrier
Rule:
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
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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.
First, as stated in the Bill of Lading, petitioners
received the subject shipment in good order and
condition in Hamburg, Germany. Second, prior to the
unloading of the cargo, an Inspection Report prepared
and signed by representatives of both parties showed
the steel bands broken, the metal envelopes rust-
stained and heavily buckled, and the contents thereof
exposed and rusty. Third, Bad Order Tally Sheet No.
154979 issued by Jardine Davies Transport Services,
Inc., stated that the four coils were in bad order and
condition. Normally, a request for a bad order survey
is made in case there is an apparent or a presumed
loss or damage. Fourth, the Certificate of Analysis
stated that, based on the sample submitted and
tested, the steel sheets found in bad order were wet
with fresh water. Fifth, petitioners -- in a letter
addressed to the Philippine Steel Coating Corporation
and dated October 12, 1990 -- admitted that they
were aware of the condition of the four coils found in
bad order and condition.
These facts were confirmed by Ruperto Esmerio, head
checker of BM Santos Checkers Agency. Pertinent
portions of his testimony are reproduce hereunder:
Q. Based on your inspection since you were also
present at that time, will you inform this Honorable
Court the condition or the appearance of the bad order
cargoes that were unloaded from the MV/ANANGEL
SKY?
A. The scrap of the cargoes is broken already and the
rope is loosen and the cargoes are dent on the sides.
All these conclusively prove the fact of shipment in
good order and condition and the consequent damage
to the four coils while in the possession of petitioner,
who notably failed to explain why.
Having been in the service for several years, the
master of the vessel should have known at the outset
that metal envelopes in the said state would
eventually deteriorate when not properly stored while
in transit. Equipped with the proper knowledge of the
nature of steel sheets in coils and of the proper way
of transporting them, the master of the vessel and his
crew should have undertaken precautionary measures
to avoid possible deterioration of the cargo. But none
of these measures was taken. Having failed to
discharge the burden of proving that they have
exercised the extraordinary diligence required by law,
petitioners cannot escape liability for the damage to
the four coils.
In their attempt to escape liability, petitioners further
contend that they are exempted from liability under
Article 1734(4) of the Civil Code. They cite the
notation metal envelopes rust stained and slightly
dented printed on the Bill of Lading as evidence that
the character of the goods or defect in the packing or
the containers was the proximate cause of the
damage. However, the aforecited exception refers to
cases when goods are lost or damaged while in transit
as a result of the natural decay of perishable goods or
the fermentation or evaporation of substances liable
therefor, the necessary and natural wear of goods in
transport, defects in packages in which they are
shipped, or the natural propensities of animals. None
of these is present in the instant case.
Further, even if the fact of improper packing was
known to the carrier or its crew or was apparent upon
ordinary observation, it is not relieved of liability for
loss or injury resulting therefrom, once it accepts the
goods notwithstanding such condition. Thus,
petitioners have not successfully proven the
application of any of the aforecited exceptions in the
present case.
Competence of captain and crew
Valenzuela Hardwood and Industrial Supply v.
CA
G.R. No. 102316 | June 30, 1997
Facts:
On 16 January 1984, plaintiff (Valenzuela Hardwood
and Industrial Supply, Inc.) entered into an
agreement with the defendant Seven Brothers
(Shipping Corporation) whereby the latter undertook
to load on board its vessel M/V Seven Ambassador the
former's lauan round logs numbering 940 at the port
of Maconacon, Isabela for shipment to Manila.
Plaintiff insured the logs against loss and/or damage
with defendant South Sea Surety and Insurance Co.,
Inc. for P2,000,000.00
On 24 January 1984, the plaintiff gave the check in
payment of the premium on the insurance policy to
Mr. Victorio Chua.
In the meantime, the said vessel M/V Seven
Ambassador sank resulting in the loss of the plaintiff's
insured logs.
On 30 January 1984, a check for P5,625.00 to cover
payment of the premium and documentary stamps
due on the policy was tendered due to the insurer but
was not accepted. Instead, the South Sea Surety and
Insurance Co., Inc. cancelled the insurance policy it
issued as of the date of the inception for non-payment
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of the premium due in accordance with Section 77 of
the Insurance Code.
Plaintiff demanded from defendant South Sea Surety
and Insurance Co., Inc. the payment of the proceeds
of the policy but the latter denied liability under the
policy.
Plaintiff likewise filed a formal claim with defendant
Seven Brothers Shipping Corporation for the value of
the lost logs but the latter denied the claim.
The trial court rendered judgment in favor of plaintiff
and against defendants. Both defendants shipping
corporation and the surety company appealed.
Petitioner’s Argument/s(LOST):
> stipulation is void for being contrary to Articles 586
and 587 of the Code of Commerce and Articles 1170
and 1173 of the Civil Code. Citing Article 1306 and
paragraph 1, Article 1409 of the Civil Code
> stipulation "gives no duty or obligation to the
private respondent to observe the diligence of a good
father of a family in the custody and transportation of
the cargo
Ruling of the lower court:
CA affirmed in part the RTC judgment by sustaining
the liability of South Sea Surety and Insurance
Company ("South Sea"), but modified it by holding
that Seven Brothers Shipping Corporation ("Seven
Brothers") was not liable for the lost cargo,
ratiocinating:
>There is a stipulation in the charter party
that the ship owner would be exempted from liability
in case of loss.
>The provisions on common carriers should
not be applied where the carrier is not acting as such
but as a private carrier.
>Under American jurisprudence, a common
carrier undertaking to carry a special cargo or
chartered to a special person only, becomes a private
carrier.
>As a private carrier, a stipulation exempting
the owner from liability even for the negligence of its
agent is valid
Issue:
Whether Court (of Appeals) committed a reversible
error in upholding the validity of the stipulation in the
charter party executed between the petitioner and the
private respondent exempting the latter from liability
for the loss of petitioner's logs arising from the
negligence of its of its (Seven Brothers') captain. NO|.
||
Rule:

The Civil Code provisions on common carriers should
not be applied where the carrier is not acting as such
but as a private carrier. The stipulation in the charter
party absolving the owner from liability for loss due to
the negligence of its agent would be void only if the
strict public policy governing common carriers is
applied. Such policy has no force where the public at
large is not involved, as in this case of a ship totally
chartered for the use of a single party
Application:
It is undisputed that private respondent had acted as
a private carrier in transporting petitioner's lauan
logs. Thus, Article 1745 and other Civil Code
provisions on common carriers which were cited by
petitioner may not be applied unless expressly
stipulated by the parties in their charter party
In a contract of private carriage, the parties may
validly stipulate that responsibility for the cargo rests
solely on the charterer, exempting the shipowner from
liability for loss of or damage to the cargo caused even
by the negligence of the ship captain. Pursuant to
Article 1306 of the Civil Code, such stipulation is valid
because it is freely entered into by the parties and the
same is not contrary to law, morals, good customs,
public order, or public policy. Indeed, their contract of
private carriage is not even a contract of adhesion.
We stress that in a contract of private carriage, the
parties may freely stipulate their duties and
obligations which perforce would be binding on them.
Unlike in a contract involving a common carrier,
private carriage does not involve the general public.
Hence, the stringent provisions of the Civil Code on
common carriers protecting the general public cannot
justifiably be applied to a ship transporting
commercial goods as a private carrier. Consequently,
the public policy embodied therein is not contravened
by stipulations in a charter party that lessen or
remove the protection given by law in contracts
involving common carriers
In carriage by land
Duty to inspect
Nocum v. Laguna Tayabas Bus Company
G.R. No. | Date
Facts:
Herminio Nocum was a passenger in Laguna Tayabas
Bus No. 120 then making a trip within the barrio of
Dita, Municipality of Bay, Laguna, was injured as a
consequence of the explosion of firecrackers,
contained in a box, loaded in said bus and declared to
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 3 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 34
its conductor as containing clothes and miscellaneous
items by a co-passenger.
It is undisputed that before the box containing the
firecrackers were allowed to be loaded in the bus by
the conductor, inquiry was made with the passenger
carrying the same as to what was in it, since its
"opening ... was folded and tied with abaca."
Petitioner’s Argument/s: (LOST)
The Petitioner in this case argues that the Bus
Company did not exercise extraordinary diligence
because it should have demanded the passenger to
open his bag. If such was done, the explosives would
have been discovered.
Respondent’s Arguments: (WON)
According to Laguna Tayabas Bus, lower court erred
as a matter of law in not absolving appellant from
liability resulting from the explosion of firecrackers
contained in a package, the contents of which were
misrepresented by a passenger.
Ruling of the lower court:
CFI ordered the bus company to pay Herminio Nocum
the sum of P1,351.00 for actual damages and P500.00
as attorney's fees.
The main basis of the trial court's decision is that
Laguna Tayabas Bus did not observe the
extraordinary or utmost diligence of a very cautious
person required by the the Civil Code.
Issue:
Did Laguna Tayabas Exercise Extraordinary Diligence?
Yes.
Rule:
ART. 1733. 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.
Such extraordinary diligence in the vigilance over the
goods is further expressed in articles 1734, 1735, and
1745, Nos. 5, 6, and 7, while the extraordinary
diligence for the safety of the passengers is further set
forth in articles 1755 and 1756.
ART. 1755. A common carrier is bound to carry
the passengers safely as far as human care and
foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the
circumstances.
ART 1756. In case of death of or injuries to
passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence as
prescribed in articles 1733 and 1755.
Application:
Article 1733 is not as unbending as held, for it
reasonably qualifies the extraordinary diligence
required of common carriers for the safety of the
passengers transported by them to be "according to
all the circumstances of each case." In fact, Article
1755 repeats this same qualification: "A common
carrier is bound 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 this particular case, it must be considered that
while it is true the passengers of appellant's bus
should not be made to suffer for something over which
they had no control, fairness demands that in
measuring a common carrier's duty towards its
passengers, allowance must be given to the reliance
that should be reposed on the sense of responsibility
of all the passengers in regard to their common
safety.
It is to be presumed that a passenger will not take
with him anything dangerous to the lives and limbs of
his co-passengers, not to speak of his own. Not to be
lightly considered must be the right to privacy to
which each passenger is entitled. He cannot be
subjected to any unusual search, when he protests the
innocuousness of his baggage and nothing appears to
indicate the contrary, as in the case at bar.
In other words, inquiry may be verbally made as to
the nature of a passenger's baggage when such is not
outwardly perceptible, but beyond this, constitutional
boundaries are already in danger of being
transgressed.
Calling a policeman to his aid, as suggested by the
service manual invoked by the trial judge, in
compelling the passenger to submit to more rigid
inspection, after the passenger had already declared
that the box contained mere clothes and other
miscellaneous, could not have justified invasion of a
constitutionally protected domain. Police officers
acting without judicial authority secured in the
manner provided by law are not beyond the pale of
constitutional inhibitions designed to protect
individual human rights and liberties. Withal, what
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 3 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 35
must be importantly considered here is not so much
the infringement of the fundamental sacred rights of
the particular passenger herein involved, but the
constant threat any contrary ruling would pose on the
right of privacy of all passengers of all common
carriers, considering how easily the duty to inspect
can be made an excuse for mischief and abuse.
The SC holds that appellant has succeeded in
rebutting the presumption of negligence by showing
that it has exercised extraordinary diligence for the
safety of its passengers, "according to the
circumstances of the each case”
Skill and Expertise and Expertise of Driver;
Condition of Vehicle; Proof of lack of Prudence
Baritua, et. al. v. Nimfa Divina Mercader in her
capacity and as guardian of Darwin, Giovanni,
Rodel and Dennis, all surnamed Mercader, et.
al.
G.R. No. 136048 | Date January 23, 2001
Facts:
Dominador Mercader, a businessman
engaged in the buy and sell of dry goods in Laoang,
Northern Samar, boarded petitioners' Bus No. 142
with Plate No. 484 EU in Pasay City on March 16, 1983
for Brgy. Rawis, Laoang, Northern Samar. However,
Dominador Mercader was not able to reach his
destination because the bus fell into a river while
traversing the Bugko Bailey Bridge. Although
Dominador survived the fall, he later died of asphyxia
secondary to drowning.
Petitioner’s Argument/s: LOST
This argument is one of the contentions by
the Petitioner that I could find relevant to the subject
matter:
Petitioners (Baritua and his driver) have no
causative connection with the alleged death of
Dominador Mercader who, according to a reliable
source, was already seriously suffering from a
lingering illness even prior to his alleged demise.
Baritua also learned lately, and so it is herein alleged
that Dominador Mercader contributed considerably,
to, and/or provided the proximate and direct cause of
his own death, hence, he himself is to be blamed for
whatever may have happened to him or for whatever
may have been sustained by his supposed heirs, vis-
a-vis the suit against the wrong party.
Respondent’s Arguments: WON
The accident happened because Petitioners’
driver negligently and recklessly operated the bus at
a fast speed in wanton disregard of traffic rules and
regulations and the prevailing conditions then existing
that caused the bus to fall into the river.

Ruling of the lower court:
The Regional Trial Court of Laoang, Northern
Samar, after due trial, rendered a decision in favor of
respondents and against petitioners, ordering the
latter to pay compensatory, actual, moral and
exemplary damages, loss of earnings of the late
Dominador Mercader, and attorney's fees.
On appeal, the Court of Appeals affirmed all
the monetary damages granted by the trial court with
modification reducing the amount of the deceased's
lost earnings. In its decision, the appellate court held
that petitioners failed to rebut the presumption that in
the event a passenger died or was injured, the carrier
had acted negligently. It added that petitioners
presented no sufficient proof that they had exercised
extraordinary diligence.
Issue:
WON petitioners observed its duty to exercise
extraordinary diligence? NO.
Rule:
Articles 1733, 1755 and 1756 of the Civil Code provide
that common carriers must observe extraordinary
diligence. Specifically, these articles respectively
read:
"ART. 1733. 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.
xxx xxx xxx
"ART. 1755. A common carrier is bound to
carry the passengers safely as far as human care and
foresight of very cautious persons, with a due regard
for all the circumstances.
"ART. 1756. In case of death of or injuries to
passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they
prove that they observed extraordinary diligence as
prescribed in articles 1733 and 1755."
Application:
The Supreme Court sustained the ruling of
the CA that petitioners failed to prove that they had
observed extraordinary diligence. First, petitioners did
not present evidence on the skill or expertise of the
driver of Bus No. 142 or the condition of that vehicle
at the time of the incident. Second, the bus was
overloaded at the time. In fact, several individuals
were standing when the incident occurred. Third, the
bus was overspeeding. Its conductor testified that it
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 3 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 36
had overtaken several buses before it reached the
Bugko Bailey Bridge. Moreover, prior to crossing the
bridge, it had accelerated and maintained its speed
towards the bridge. We therefore believe that there is
no reason to overturn the assailed CA Decision, which
affirmed that of the RTC. It is a well settled rule that
the trial court's factual findings, when affirmed by the
appellate court, are conclusive and binding, if they are
not tainted with arbitrariness or oversight of some fact
or circumstance of significance and influence. As
clearly discussed above, petitioners have not
presented sufficient ground to warrant a deviation
from this rule.
Court agreed with the findings of both courts
that petitioners failed to observe extraordinary
diligence that fateful morning. It must be noted that
a common carrier, by the nature of its business and
for reasons of public policy, is bound to carry
passengers safely as far as human care and foresight
can provide. It is supposed to do so by using the
utmost diligence of very cautious persons, with due
regard for all the circumstances. In case of death or
injuries to passengers, it is presumed to have been at
fault or to have acted negligently, unless it proves that
it observed extraordinary diligence as prescribed in
Articles 1733 and 1755 of the Civil Code.
Sanico, et. al. v. Colipano
G.R. No. 209969 | September 27, 2017
Facts:
At 4:00 P.M. more or less of December 25, 1993,
Christmas Day, she and her daughter were; paying
passengers in the jeepney operated by Sanico, which
was driven by Castro. Colipano claimed she was made
to sit on an empty beer case at the edge of the rear
entrance/exit of the jeepney with her sleeping child on
her lap.6 And, at an uphill incline in the road to
Natimao-an, Carmen, Cebu, the jeepney slid
backwards because it did not have the power to reach
the top. Colipano pushed both her feet against the
step board to prevent herself and her child from being
thrown out of the exit, but because the step board was
wet, her left foot slipped and got crushed between the
step board and a coconut tree which the jeepney
bumped, causing the jeepney to stop its backward
movement. Colipano's leg was badly injured and was
eventually amputated.
Petitioner’s Argument/s: (LOST)
Sanico and Castro admitted that Colipano's leg was
crushed and amputated but claimed that it was
Colipano's fault that her leg was crushed.They
admitted that the jeepney slid backwards because the
jeepney lost power.The conductor then instructed
everyone not to panic but Colipano tried to disembark
and her foot got caught in between the step board and
the coconut tree. Sanico claimed that he paid for all
the hospital and medical expenses of Colipano, and
that Colipano eventually freely and voluntarily
executed an Affidavit of Desistance and Release of
Claim.
Respondent’s Arguments: (WON)
Colipano contended that his injury was due to the fault
of petitioner. Colipano prayed for actual damages, loss
of income, moral damages, exemplary damages, and
attorney's fees.
Ruling of the lower court:
RTC: Found that Sanico and Castro breached the
contract of carriage between them and Colipano but
only awarded actual and compensatory damages in
favor of Colipano.
CA: Affirmed with modification the RTC Decision
reducing the award for compensatory damages for
loss of income to P200,000.
Issue:
Whether the CA erred in finding that Sanico and
Castro breached the contract of carriage with
Colipano. (NO)
Rule:
Art. 1733. 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.
Art. 1755. A common carrier is bound to carry the
passengers safely as far as human care and foresight
can provide,
using the utmost diligence of very cautious persons,
with a due regard for all the circumstances.
Art. 1756. In case of death of or injuries to
passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless the
prove that the observed extraordinary diligence as
prescribed in Articles 1733 and 1755.
Application:
Only Sanico breached the contract of carriage. Since
the cause of action is based on a breach of a contract
of carriage, the liability of Sanico is direct as the
contract is between him and Colipano. Castro, being
merely the driver of Sanico's jeepney, cannot be made
liable as he is not a party to the contract of carriage.
Although he was driving the jeepney, he was a mere
employee of Sanico, who was the operator and owner
of the jeepney. The obligation to carry Colipano safely
to her destination was with Sanico. In fact, the
elements of a contract of carriage existed between
Colipano and Sanico: consent, as shown when Castro,
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 3 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 37
as employee of Sanico, accepted Colipano as a
passenger when he allowed Colipano to board the
jeepney, and as to Colipano, when she boarded the
jeepney; cause or consideration, when Colipano, for
her part, paid her fare; and, object, the transportation
of Colipano from the place of departure to the place of
destination.
Specific to a contract of carriage, Art.1733 of the Civil
Code requires common carriers to observe
extraordinary diligence in safely transporting their
passengers. Such extraordinary diligence in the
vigilance over the safety of the passengers is further
set forth in Articles 1755 and 1756.
This extraordinary diligence, following Article 1755 of
the Civil Code, means that common carriers have the
obligation to carry 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 case of death of or injury to their passengers,
Article 1756 of the Civil Code provides that common
carriers are presumed to have been at fault or
negligent, and this presumption can be overcome only
by proof of the extraordinary diligence exercised to
ensure the safety of the passengers.
Being an operator and owner of a common carrier,
Sanico was required to observe extraordinary
diligence in safely transporting Colipano. When
Colipano's leg was injured while she was a passenger
in Sanico's jeepney, the presumption of fault or
negligence on Sanico's part arose and he had the
burden to prove that he exercised the extraordinary
diligence required of him. He failed to do this.
Sanico's attempt to evade liability by arguing that he
exercised extraordinary diligence when he hired;
Castro, who was allegedly an experienced and time-
tested driver, whom he had even accompanied on a
test-drive and in whom he was personally convinced
of the driving skills, are not enough to exonerate him
from liability - because the liability of common carriers
does not cease upon p!roof that they exercised all the
diligence of a good father of a family irii the selection.
and supervision of their employees.
As the CA correctly held: For the driver, Vicente
Castro, to allow a seat extension made of an empty
case of beer clearly indicates lack of prudence.
Permitting Colipano to occupy an improvised seat in
the rear portion of the jeepney, with a child on her lap
to boot, exposed her and her child in a peril greater
than that to which the other passengers were
exposed.
"[P]ublic policy refers to the aims of the state to
promote the social and general well-being of the
inhabitants." The Civil Code requires extraordinary
diligence from common carriers because the nature of
their business requires the public to put their safety
and lives in the hands of these common carriers. The
State imposes this extraordinary diligence to promote
the well-being of the public who avail themselves of
the services of common carriers. Thus, in instances of
injury or death, a waiver of the right to claim damages
is strictly construed against the common carrier so as
not to dilute or weaken the public policy behind the
required standard of extraordinary diligence.
Proof of extraordinary diligence
Mariano, Jr. v. Callejas, et.al.
G.R. No. 166640 | July 31, 2009
Facts: Dr. Frelinda Mariano was a passenger of a
Celyrosa Express Bus. The Bus came to a halt to
unload passengers when an Isuzu Truck lost its
brakes, swerved and then collided with the bus
causing the death of Dr. Mariano.
Her heirs filed a complaint against Celyrosa Express
and its driver at the time, de Borja.
PO3 de Villa prepared a sketch of the incident and a
police report detailing that the bus was at a stop and
that indeed the breaks of the truck failed.
Issue: WoN the bus company was negligent (NO)
Rule: Failure of transporting the passenger to his
destination gives rise to the presumption of
negligence of the carrier. To overcome the
presumption, respondents have to show that they
observed extraordinary diligence in the discharge of
their duty, or that the accident was caused by a
fortuitous event.
Application: The presumption of negligence in this
case was overcome. The death of petitioner’s spouse
was caused by the reckless negligence of the driver of
the Isuzu trailer truck which lost its brakes and
bumped the Celyrosa Express bus. The sketch drawn
by the investigating officer as well as his police report
and testimony all indicate that the driver of the bus
was not negligent since he was in his proper lane
cruising. He was not expected to know that the Isuzu’s
brakes had failed since the latter swerved at the last
minute. The bus company is not liable for the death of
Dr. Mariano.
In carriage by sea
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 3 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 38
Precautionary Measures; Knowledgeable of
nature of cargo
Tabacalera Insurance Co., et.al. v. North Front
Shipping Services, Inc. et. al.
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.
Petitioner’s Argument/s: Petitioners now allege
that there was negligence on the part of the carrier.
Respondent’s Arguments: (LOST) Respondent
argued that it could not be made culpable for the loss
and deterioration of the cargo as it was never
negligent. Captain Villanueva, master of the vessel,
reiterated that the barge was inspected prior to the
actual loading and was found adequate and
seaworthy. Further, they were issued a permit to sail
by the Coast Guard. The tarpaulins were doubled and
brand new and the hatches were properly sealed.
They did not encounter big waves hence it was not
possible for water to seep in. He further averred that
the corn grains were farm wet and not properly dried
when loaded.
Ruling of the lower court: The trial court ruled that
only ordinary diligence was required since the charter-
party agreement converted North Front Shipping into
a private carrier.
The Court of Appeals ruled that as a common carrier
required to observe a higher degree of diligence North
Front 777 satisfactorily complied with all the
requirements hence was issued a Permit to Sail after
proper inspection.
Issue: WON North Front Shipping is a common
carrier. If indeed, did it fail to exercise the required
diligence and thus should be held liable.
Rule:
Application:
Yes, North Front Shipping is a common carrier and
thus, SC find that the carrier failed to observe the
required extraordinary diligence in the vigilance over
the goods placed in its care.
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 lent by
the owner to another person for a specified time or
use.
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.
Knowing and following the required precaution
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 3 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 39
Sulpicio Lines, Inc. v. First Lepanto-Taisho
Insurance Corp.
G.R. No.140349 | Date June 29, 2005
Facts:
Taiyo Yuden Philippines (owner of the goods) and
Delbros Inc. (shipper) entered into a contract for
Delbros Inc to transport a shipment of goods
consisting of 3 wooden crates containing 136 cartons
of inductors from Cebu City to Singapore in favor of
the consignee Taiyo Yuden Singapore Pte. Ltd.
For the carriage of the said shipment from Cebu to
Manila, Delbros engaged the services of M/V Philippine
Princess, owned and operated by Sulpicio Lines
(carrier). When the vessel arrived in Manila, during
the unloading of the shipment, one crate containing
42 cartons dropped from the cargo hatch to the pier
apron. Upon examination, the contents therein were
no longer usable for their intended purpose, they were
rejected as a total loss and returned to Cebu City.
First Lepanto-Taisho Insurance Corporation, upon
payment of the insurance claim to the owner of the
goods, subrogated its rights and filed claims for
reimbursement from Delbros Inc and Sulpicio Lines —
- which were denied. The insurer filed suit for
damages. Sulpicio contends that its liability, if any, is
only to the extent of the cargo damage or loss and
should not include the lack of fitness of the shipment
for transport to Singapore due to the damaged
packing and that damage to the packaging is not
tantamount to damage to the cargo.
Sulpicio contends that its liability, if any, is only to the
extent of the cargo damage or loss and should not
include the lack of fitness of the shipment for
transport to Singapore due to the damaged packing
and that damage to the packaging is not tantamount
to damage to the cargo.
Petitioner’s Argument/s:
That it was only the external packaging that was
damaged, and that there was no actual damage to the
goods such that would make them liable to the
shipper. Thus its liability, if any, is only to the extent
of the cargo damage or loss and should not include
the lack of fitness of the shipment for transport to
Singapore due to the damaged packing.
Respondent’s Arguments:
That they are entitled to be subrogated pro tanto to
any right of action which the insured may have against
the common carrier whose negligence or wrongful act
caused the loss
Ruling of the lower court:
RTC dismissed the claims for failure to prove its case
with preponderance of evidence. CA reversed the RTC
decision.
Issue:
WoN Sulpicio Lines observed extraordinary diligence
in the handling, storage and general care of the
shipment - No
Rule:
A common carrier is bound to transport its cargo and
its passengers safely "as far as human care and
foresight can provide, using the utmost diligence of a
very cautious person, with due regard to all
circumstances."
Application:
The falling of the crate during the unloading is
evidence of petitioner- carriers negligence in handling
the cargo. As a common carrier, it is expected to
observe extraordinary diligence in the handling of
goods placed in its possession for transport. The
standard of extraordinary diligence imposed upon
common carriers is considerably more demanding
than the standard of ordinary diligence, i.e., the
diligence of a good paterfamilias established in
respect of the ordinary relations between members of
society.
The extraordinary diligence in the vigilance over the
goods tendered for shipment requires the common
carrier to know and to follow the required precaution
for avoiding the damage to, or destruction of, the
goods entrusted to it for safe carriage and delivery.
It requires common carriers to render service with the
greatest skill and foresight and "to use all reasonable
means to ascertain the nature and characteristic of
goods tendered for shipment, and to exercise due care
in the handling and stowage, including such methods
as their nature requires." Thus, when the shipment
suffered damages as it was being unloaded,
petitioner-carrier is presumed to have been negligent
in the handling of the damaged cargo.
Under Articles 1735 and 1752 of the Civil Code,
common carriers are presumed to have been at fault
or to have acted negligently in case the goods
transported by them are lost, destroyed or had
deteriorated. To overcome the presumption of liability
for loss, destruction or deterioration of goods under
Article 1735, the common carrier must prove that they
observed extraordinary diligence as required in Article
1733 of the Civil Code.
No proof of repairs
Vector Shipping Corp., et. al. v. Macasa, et. al.
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 3 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 40
G.R. No. 160219 | July 21, 2008
Facts: Spouses Cornelio and Anacleta Macasa,
together with their grandchild Ritchie Macasa, were
among the passenger casualties when MV Doña Paz
sank as a result of a collision with MT Vector.
Respondents Adelfo, Emilia, Timoteo, and Cornelio,
Jr., all surnamed Macasa, are the children of Cornelio
and Anacleta. On the other hand, Timoteo and his
wife, respondent Rosario Macasa, are the parents of
Ritchie.
Some of the respondents went to the North Harbor in
Manila to await the arrival of the passenger Macasas.
When they heard the news that MV Doña Paz was
rammed at sea by another vessel, bewildered, the
Macasas went to the office of Sulpicio Lines to check
on the veracity of the news, but the latter denied that
such an incident occurred.
According to the Macasas, Sulpicio Lines was
uncooperative and was reluctant to entertain their
inquiries. Later, they were forced to rely on their own
efforts to search for the bodies of their loved ones, but
to no avail.
Macasas then filed a Complaint for Damages arising
out of breach of contract of carriage against Sulpicio
Lines before the RTC. The latter on the other hand,
filed a third-party complaint against Vector Shipping,
Soriano and Caltex Philippines.
Petitioner’s Argument/s:
Petitioner Vector Shipping contended that the collision
was solely due to the fault of MV Doña Paz as it was
guilty of navigational fault and negligence; that due to
the absence of the ship captain and other competent
officers who were not at the bridge at the time of
collision, and running at a speed of 16.5 knots, it was
the MV Doña Paz which rammed MT Vector.
Moreover, petitioner opined that it was improbable for
a slower vessel like MT Vector which, at the time, was
running at a speed of merely 4.5 knots to ram a much
faster vessel like the MV Doña Paz.
Vector shipping was essentially arguing that
Sulpicio Lines should be solely liable.
Respondent’s Arguments:
Macasas manifest that they are basically concerned
with their claims against Sulpicio Lines for breach of
contract of carriage. The Macasas opine that the
arguments raised by Sulpicio Lines in its attempt to
avoid liability to the Macasas are without basis in fact
and in law because the RTC's Decision is supported by
applicable provisions of law and settled jurisprudence
on contract of carriage.
Ruling of the lower court:
The lower court held petitioner and Sulpicio Lines to
be jointly and severally liable to the victims.
Moreover, MT Vector Shipping Corporation and/or
Francisco Soriano was also held to be liable against
Sulpicio Lines for reimbursement, subrogation and
indemnity on all amounts, defendant Sulpicio Lines
was ordered liable against plaintiffs. This was affirmed
by the CA except that the amount for actual damages
was deleted.
Issue:
WON it is proper to hold MT VECTOR as the vessel
solely at fault and responsible for the collision, absent
clear, convincing, solid and concrete proof? (YES)
Rule:
Carriers are deemed to warrant impliedly the
seaworthiness of the ship. For a vessel to be
seaworthy, it must be adequately equipped for the
voyage and manned with a sufficient number of
competent officers and crew. The failure of a common
carrier to maintain in seaworthy condition the vessel
involved in its contract of carriage is a clear breach of
its duty prescribed in Article 1755 of the Civil Code
(Caltex Phil. Inc. v. Sulpicio Lines, Inc.)
Application:
In Caltex Philippines Inc. v. Sulpicio Lines, the
Supreme Court ruled that MT Vector fits the definition
of a common carrier under Article 1732.
In this case, the Supreme Court ruled that all
evidence points to the fact that it was MT Vector's
negligent officers and crew which caused it to ram into
MV Doña Paz. More so, MT Vector was found to be
carrying expired coastwise license and permits and
was not properly manned. As the records would also
disclose, there is a defect in the ignition system of the
vessel, and it was not convincingly shown whether the
necessitated repairs were in fact undertaken before
the said ship had set to sea. In short, MT Vector was
unseaworthy at the time of the mishap. The fact that
MT Vector was allowed to set sail when it was, to
everyone in the group’s knowledge, not fit to do so
translates into rashness and imprudence.
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 3 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 41
Use of all reasonable means
Aboitiz Shipping Corp. v. Insurance Co. of North
America
G.R. No. 168402 | August 6, 2008
Facts:
MSAS Cargo International Limited and/or Associated
and/or Subsidiary Companies (MSAS) procured a
marine insurance policy from respondent ICNA UK
Limited of London. The insurance was for a
transshipment of certain wooden work tools and
workbenches purchased for the consignee Science
Teaching Improvement Project (STIP). ICNA issued an
"all-risk" open marine policy.
· The cargo, packed inside one container
van, was shipped from Hamburg, German.
· The container van was then off-loaded at
Singapore and transshipped onto another ship.
· The ship arrived and docked at the Manila
International Container Port.
· The cargo was received by petitioner Aboitiz
Shipping Corporation through its booking
representative, Aboitiz Transport System. The bill
of lading issued by Aboitiz contained the notation
"grounded outside warehouse".
· The container van was stripped and
transferred to another crate/container van
without any notation on the condition of the cargo
on the Stuffing/Stripping Report.
· The container van was loaded on board
petitioner's vessel and left Manila en route to
Cebu City.
· The shipment arrived in Cebu City and
discharged onto a receiving apron of the Cebu
International Port.
· It was then brought to the Cebu Bonded
Warehousing Corporation pending clearance from
the Customs authorities. In the Stripping Report,
petitioner's checker noted that the crates were
slightly broken or cracked at the bottom.
· The cargo was withdrawn by the
representative of the consignee STIP and
delivered to Don Bosco Technical High School,
Punta Princesa, Cebu City. It was received by Mr.
Bernhard Willig.
[Germany – Singapore – Manila Port – Aboitiz
(grounded outside warehouse) – Cebu Port – Cebu
Warehouse (report that crates were broken) – STIP –
Don Bosco Technical School]
Thereafter, Willig telephones Perez informing him that
the cargo sustained water damage. Perez, upon
receiving the call, immediately went to the bonded
warehouse and checked the condition of the container
and other cargoes stuffed in the same container. He
found that the container van and other cargoes stuffed
there were completely dry and showed no sign of
wetness.
Perez found that except for the bottom of the crate
which was slightly broken, the crate itself appeared to
be completely dry and had no water marks. But he
confirmed that the tools which were stored inside the
crate were already corroded. He further explained that
the "grounded outside warehouse" notation in the bill
of lading referred only to the container van bearing
the cargo. Willig informed Aboitiz of the damage
noticed upon opening of the cargo. apparently, the
damage was caused by water entering through the
broken parts of the crate.
STIP contacted the Philippine office of ICNA for
insurance claims. The Claimsmen Adjustment
Corporation (CAC) conducted an ocular inspection and
survey of the damage. CAC reported to ICNA that the
goods sustained water damage, molds, and corrosion
which were discovered upon delivery to consignee. In
a Supplemental Report CAC reported to ICNA that
based on official weather report from the Philippine
Atmospheric, Geophysical and Astronomical Services
Administration, it would appear that heavy rains on
July 28 and 29, 1993 caused water damage to the
shipment. CAC noted that the shipment was placed
outside the warehouse of Pier No. 4, North Harbor,
Manila when it was delivered. The shipment was
placed outside the warehouse as can be gleaned from
the bill of lading issued by Aboitiz which contained the
notation "grounded outside warehouse”.
The consignee filed a formal claim with Aboitiz in the
amount of P276,540.00 for the damaged condition of
the goods.
Aboitiz refused to settle the claim. ICNA paid the
amount of P280,176.92 to the consignee. A
subrogation receipt was duly signed by Willig. ICNA
formally advised Aboitiz of the claim and subrogation
receipt executed in its favor. Despite follow-ups,
however, no reply was received from Aboitiz.
Petitioner’s Argument/s:
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Aboitiz disavowed any liability and asserted that ICNA
had no personality to institute the suit, the cause of
action was barred, and the suit was premature there
being no claim made upon Aboitiz.|||
Respondent’s Arguments:
ICNA alleged that the damage sustained by the
shipment was exclusively and solely brought about by
the fault and negligence of Aboitiz when the shipment
was left grounded outside its warehouse prior to
delivery.|||
Ruling of the lower court:
RTC Disposition (Petitioner Won)
ICNA failed to prove that it is the real party-in-interest
to pursue the claim against Aboitiz.
The Marine Policy No. 87GB 4475 was issued by ICNA
UK Limited with address at London. However,
complainant ICNA Phils. did not present any evidence
to show that ICNA UK is its predecessor-in-interest, or
that ICNA UK assigned the insurance policy to ICNA
Phils. Subrogation of rights by STIP thru a Subjugation
Form allegedly signed by a representative of Science
Teaching Improvement Project was not presented on
the witness stand, hence, the Subrogation Form is
self-serving and has no probative value.
CA Disposition (Petitioner Lost)
As subrogee, ICNA is entitled to reimbursement from
Aboitiz, even assuming that it is an unlicensed foreign
corporation. Such circumstance will not bar it from
claiming reimbursement from the defendant carrier by
virtue of subrogation under the contract of insurance.
Further, the presumption that the carrier was at fault
or that it acted negligently was not overcome by any
countervailing evidence. Hence, Aboitiz is liable for
the loss or damage sustained by the subject cargo.
Issue:
Whether Aboitiz is liable on the claim for damages?
Yes.
Rule:
The rule as stated in Article 1735 of the Civil Code is
that in cases where 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
required by law. Extraordinary diligence is that
extreme measure of care and caution which persons
of unusual prudence and circumspection use for
securing and preserving their own property rights.
Here, petitioner failed to overturn this presumption.
The bill of lading issued by petitioner contains the
notation "grounded outside warehouse", suggesting
that from July 26 to 31, the goods were kept outside
the warehouse. And since evidence showed that rain
fell over Manila during the same period, We can
conclude that this was when the shipment sustained
water damage.
Aside from denying that the "grounded outside
warehouse" notation referred not to the crate for
shipment but only to the carrier van, petitioner failed
to mention where exactly the goods were stored
during the period in question. It failed to show that
the crate was properly stored indoors during the time
when it exercised custody before shipment to Cebu.
Appellee's witness, Mr. Mayo tried to disavow any
responsibility for causing "wettage" to the subject
goods by claiming that the notation "GROUNDED
OUTSIDE WHSE". actually refers to the container and
not the contents thereof or the cargoes. And yet it
presented no evidence to explain where did they place
or store the subject goods from the time it accepted
the same for shipment on July 26, 1993 up to the time
the goods were stripped or transferred from the
container van to another container and and left Manila
for Cebu Cit. If the subject cargo was not grounded
outside prior to shipment to Cebu City, appellee
provided no explanation as to where said cargo was
stored from July 26, 1993 to July 31, 1993.
To prove the exercise of extraordinary diligence,
petitioner must do more than merely show the
possibility that some other party could be responsible
for the damage. It must prove that it used "all
reasonable means to ascertain the nature and
characteristic of the goods tendered for transport and
that it exercised due care in handling them.
Extraordinary diligence must include safeguarding the
shipment from damage coming from natural elements
such as rainfall.
Petitioner is thus liable for the water damage
sustained by the goods due to its failure to
satisfactorily prove that it exercised the extraordinary
diligence required of common carriers.
Application:
In cases where the goods are lost, destroyed or
deteriorated, common carriers are presumed to have
been at fault or to have acted negligently, unless they
TRANSPORTATION LAWS | ATTY. CAPANAS | MODULE 3 CASE DIGEST COMPILATION | EH405 2020-2021 | PAGE | 43
prove that they observed extraordinary diligence
required by law.
Extraordinary diligence is that extreme measure of
care and caution which persons of unusual prudence
and circumspection use for securing and preserving
their own property rights.
Prompt notification
Nedlloyd Lijnen B.V. Rotterdam v. Glow Laks
Enterprises, Ltd. (see the digest above for the
facts and arguments)
Application: Petitioners could have offered evidence
before the trial court to show that they exercised the
highest degree of care and caution even after the
goods was turned over to the custom authorities, by
promptly notifying the consignee of its arrival at
the Port in order to afford them ample opportunity to
remove the cargoes from the port of discharge. The
facts and evidence adduce that neither the consignee
nor the notify party was informed by the petitioners
of the arrival of the goods, a crucial fact indicative of
petitioners' failure to observe extraordinary diligence
in handling the goods entrusted to their custody for
transport.
In carriage by air
Inspection
Saludo et. al. v. CA, et. al.
G.R. No. | Date
Facts:
Crispina Saludo died in Chicago, Illinois. Her body was
arranged to be transported from Chicago to San
Francisco( via Trans World Airlines (TWA)) to MNL to
Cebu ( via PAL)
A Funeral Home in Chicago made arrangements for
the shipment, while (Continental Mortuary Air
Services) CMAS made the arrangements for the flights
and transfers.
Before the remains were brought to the airport, the
Philippine Vice Consul of Chicago sealed the shipping
case containing a hermetically sealed casket that is
airtight and waterproof. When in the airport a PAL
Airway Bill was issued in connection to this.
The problem arose when TWA, mistaking sent the
body to Mexico instead of San Francisco because the
switched the remains of Saludo with another person’s
remains. Then later sent it to San Francisco after
arriving in Mexico. This caused a delay in the receipt
of the Saludo family of the body.
Thus, the Saludo family filed a complaint against TWA
and PAL arguing that as common carriers, they failed
to exercise extraordinary diligence when they
misdelivered the remains to Mexico.
Petitioner’s Argument/s (LOST)
PAL and TWA received the casketed remains, as
evidenced by the issuance of PAL Air Way-bill.
Thus from this date They were charged with the
responsibility to exercise extraordinary diligence ,
and should be made liable for alleged switching of
the caskets/ remains.
Respondent’s Arguments (WON)
PAL and TWA stated that we cannot be made liable
because we never even received the cargo because
what was delivered to us was the wrong remains of a
person. Since we never received it the time in which
we should have exercised extrarodianry diligence did
not start yet.
Ruling of the lower court:
RTC- the CFI absolved TWA and PAL for liability.
CA- affirmed the CFI’s decision.
Issue:
WON the delay in the delivery of the casketed remains
of petitioners' mother was due to the fault of
respondent airline companies and can they be made
liable for not exercising extraordinary diligence in the
handling of the cargo. - NO
Rule:
Article 1736 of the Civil Code states that the
extraordinary responsibility of the common carrier
begins from the time the goods are delivered to the
carrier.
However, for such duty to commence there must in
fact have been delivery of the cargo subject of the
contract of carriage. Only when such fact of delivery
has been unequivocally established can the liability for
loss, destruction or deterioration of goods in the
custody of the carrier, absent the excepting causes
under Article 1734, attach and the presumption of
fault of the carrier under Article 1735 be invoked.
Application:
The SC ruled that PAL and TWA were NOT responsible
for the misdelivery. First, as to the PAL Airway Bill
issued, such was not as evidence of receipt of delivery
of the cargo, but merely as a confirmation of the
booking made for the San Francisco-Manila flight.
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Hence, while we agree with petitioners that the
extraordinary diligence statutorily required to be
observed by the carrier instantaneously commences
upon delivery of the goods thereto, for such duty to
commence there must in fact have been delivery of
the cargo subject of the contract of carriage and since
there was wrongful delivery they never actually
received the cargo. In this case, it was discovered
later the casketed human remains which was issued
PAL Airway Bill was not the remains of Crispina
Saludo. The fault is with the party that delivered the
body to the air port. The fault is with CMAS.
Reasonableness of weight standards
Yrasuegui v. Philippine Airlines, Inc.
G.R. No. | Date
Facts:
Petitioner Armando G. Yrasuegui was a former
international flight steward of Philippine Airlines, Inc.
(PAL). He stands five feet and eight inches with a large
body frame. The proper weight for a man of his height
and body structure is from 147 to 166 pounds, the
ideal weight being 166 pounds, as mandated by the
Cabin and Crew Administration Manual of PAL.
However, he was unable to maintain the required
weight. For 4 years, petitioner was removed from fight
duty in order to meet the weight standards, and was
even offered the services of the company physician.
Petitioner underwent another weight check, but it was
discovered that he gained instead of losing weight.
Despite the leniency, petitioner still failed to comply
with the company policy. Hence, respondent was
terminated for the violation of company standards on
weight requirements.
Petitioner’s Argument/s:
Petitioner then filed a case in court asking for leniency
from the company
In his answer, petitioner said that the company
discriminated against him and that the weight
standards has nothing to do with airworthiness of
respondents airlines. (Lost)
Respondent’s Arguments:
PAL relied solely on the Cabin and Crew
Administration Manual (Won)
Ruling of the lower court:
Labor Arbiter (LA) ruled that petitioner was illegally
dismissed. National Labor Relations Commission
(NLRC) – affirmed the ruling. However, the CA set
aside the ruling of NLRC, and held that the failure to
adhere to the weight standards is an analogous case
for the dismissal of an employee under Art. 282(e) of
the Labor Code in relation to Art. 282(a).
Furthermore, weight standards are a bona fide
occupational qualification (BFOQ), and if violated
“justifies an employee’s separation from the service.”
Issue:
Whether obesity is a valid ground for dismissing the
petitioner? YES
Rule:
A reading of the manual would show that the weight
is a continued qualification for a cabin crew to
maintain his/her position. Evidence on record
militates against petitioners claims that obesity is a
disease must fail for the fact that he was able to
reduce his weight from 1984 to 1992. The court also
did not consider petitioner’s claim that losing weight
can be very expensive because he failed to avail of the
services offered by PAL. Weight requirement may be
imposed by a company, so long as it can be proven
that there is a connection with the reasonable
operation of the job involved. As a common carrier,
respondent is bound to observe extraordinary
diligence for the safety of its passengers.
Application:
The primary objective of PAL in the imposition of the
weight standards for cabin crew is flight safety. It
cannot be gainsaid that cabin attendants must
maintain agility at all times in order to inspire
passenger confidence on their ability to care for the
passengers. The riding public, expect no less than that
airline companies transport their passengers to their
respective destinations safely and soundly.
The most important activity of the cabin crew is to
care for the safety of passengers and the evacuation
of the aircraft when an emergency occurs. Passenger
safety goes to the core of the job of a cabin attendant.
Truly, airlines need cabin attendants who have the
necessary strength to open emergency doors, the
agility to attend to passengers in cramped working
conditions, and the stamina to withstand grueling
flight schedules.
Aircrafts have constricted cabin space, and narrow
aisles and exit doors. Thus, the arguments that
whether the airlines flight attendants are overweight
or not has no direct relation to its mission of
transporting passengers to their destination; and that
the weight standards has nothing to do with
airworthiness of respondents airlines, must fail. Being
overweight necessarily impedes mobility. Indeed, in
an emergency situation, seconds are what cabin
attendants are dealing with, not minutes. Three lost
seconds can translate into three lost lives.
Obligations of Shipper and Passenger
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Manay, Jr., et. al. v. Cebu Air, Inc.
G.R. No. 210621 | April 4, 2016
Facts:
On June 13, 2008, Jose, purchased 20 Cebu Pacific
roundtrip tickets from Manila to Palawan at Cebu
Pacific's branch office in Robinsons Galleria. He
alleged that after paying for the tickets, Alou (Cebu
Pacific ticketing agent) printed the tickets, which
consisted of three (3) pages, and recapped only the
first page to him. He no longer read the other pages
of the flight information.
Petitioners were able to board their flight to Palawan,
but on their flight back to Manila, they were informed
that nine of them could not be admitted because their
tickets were for the 1005 am flight earlier that day.
Upon checking the tickets, they learned that only the
first two pages had the schedule Jose specified. They
were left with no other option but to rebook their
tickets which cost more expensive than the promo
tickets. Jose and his companions were frustrated and
annoyed by Cebu Pacific’s handling of the incident so
they sent the airline demand letters.
Petitioner’s Argument/s:(LOST)
Petitioners argue that Cebu Pacific is a common
carrier obligated to exercise extraordinary diligence to
carry Jose, et al. to their destination at the time clearly
instructed to its ticketing agent. They argue that they
have the decision to choose flight schedules and that
Cebu Pacific should not choose it for them. They insist
that they have made their intended flight schedule
clear to the ticketing agent and it would have been
within normal human behavior for them to expect that
their entire group would all be on the same flight.
They argue that they should not have to ask for a full
recap of the tickets since they are under no obligation,
as passengers, to remind Cebu Pacific's ticketing
agent of her duties. Jose, et al. further pray that they
be awarded actual damages
Respondent’s Arguments:
Respondent sent letter explaining that ticketing
agents, like Alou, recap flight details to the purchaser
to avoid erroneous bookings. The recap is given one
other time by the cashier. Cebu Pacific stated that
according to its records, Jose was given a full recap
and was made aware of the flight restriction of promo
tickets, “which included [the] promo fare being
nonrefundable.”
Ruling of the lower court:MTC: ordered Cebu
Pacific to pay petitioners ₱41,044.50 in actual
damages and ₱20,000.00 in attorney’s fees with costs the contract of carriage, respondent’s obligation as a
of suit. common carrier was to transport nine (9) of the
RTC: affirmed the findings of the MTC but deleted the petitioners safely on the 10:05 a.m. flight of July 22,
award of attorney’s fees. 2008.

CA: granted the appeal and reversed the Decisions of
the MTC and RTC. According to the CA, the
extraordinary diligence expected of common carriers
only applies to the carriage of passengers and not to
the act of encoding the requested flight schedule. It
was incumbent upon the passenger to exercise
ordinary care in reviewing flight details and checking
schedules. Cebu Pacific’s counterclaim, however, was
denied since there was no evidence that Jose and his
companions filed their Complaint in bad faith and with
malice.
Issue:
Whether or not respondent Cebu Air, Inc. is liable to
petitioners for damages for the issuance of a plane
ticket with an allegedly erroneous flight schedule. NO
Rule:
Petitioners, in failing to exercise the necessary care in
the conduct of their affairs, were without a doubt
negligent. Thus, they are not entitled to damages.
Once a plane ticket is issued, the common carrier
binds itself to deliver the passenger safely on the date
and time stated in the ticket. The contractual
obligation of the common carrier to the passenger is
governed principally by what is written on the contract
of carriage. Respondent, as one of the four domestic
airlines in the country, is a common carrier required
by law to exercise extraordinary diligence.
The common carrier’s obligation to exercise
extraordinary diligence in the issuance of the contract
of carriage is fulfilled by requiring a full review of the
flight schedules to be given to a prospective
passenger before payment. Based on the information
stated on the contract of carriage, all three (3) pages
were recapped to petitioner Jose.
The only evidence petitioners have in order to prove
their true intent of having the entire group on the 4:15
p.m. flight is petitioner Jose’s self-serving testimony
that the airline failed to recap the last page of the
tickets to him. They have neither shown nor
introduced any other evidence before the Court.
Application:
Purchase of the contract of carriage binds the
passenger and imposes reciprocal obligations on both
the airline and the passenger. The Air Passenger Bill
of Rights mandates that the airline must inform the
passenger in writing of all the conditions and
restrictions in the contract of carriage and must
exercise extraordinary diligence in the fulfilment of
the terms and conditions of the contract of carriage.
The passenger, however, has the correlative
obligation to exercise ordinary diligence in the conduct
of his or her affairs.

Extraordinary diligence requires that the common

carrier must transport goods and passengers “safely
as far as human care and foresight can provide,” and
it must exercise the “utmost diligence of very cautious
persons . . . with due regard for all the
circumstances.”

When a common carrier, through its ticketing agent,

has not yet issued a ticket to the prospective
passenger, the transaction between them is still that
of a seller and a buyer. The obligation of the airline to
exercise extraordinary diligence commences upon the
issuance of the contract of carriage. Ticketing, as the
act of issuing the contract of carriage, is necessarily
included in the exercise of extraordinary diligence.

In this case, both parties stipulated that the flight

schedule stated on the nine (9) disputed tickets was
the 10:05 a.m. flight of July 22, 2008. According to

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