Notes 

 
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3. Please include the name, gr no. date of the case, who made the digest and number of your digest 
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4. Follow the syllabus structure, for example below 
 
Transportations in General 
a. Relationship to a Public Utility (​ABUYUAN) 
b. Nature of a Franchise (​BERNARDO​) 
 
Raymundo v Luneta 
Cogeo-Cubao Operator and Driver’s Association v CA 
 
And so forth… 
 
God Bless and Good Luck!  

---- ​START HERE​ ---- 

 
 
 
 
 
 
I Common Carriers 
a. In General 
i. Definitions, essential elements; Art. 1732 
a. Old Regime 
#1 U.S. v Tan Piaco (RAMORAN) 
FACTS: Piaco  ​rented  two  automobile  trucks  and  was  using  them  upon  the  highways of the 
Province  of  Leyte  ​for  the  purpose  of  carrying  some  passengers  and  freight.  He  carried 
passengers  and  freight  under  a  ​special  contract  in  each  case​.  ​Piaco  had  not  held  himself out to 
carry  all  passengers  and  all  freight  for  all  persons  who  might  offer  passengers  and  freight. 
Said  defendants  were  c​harged  with  a  violation  of  the  Public  Utility  Law  (Act  No.  2307  as 
amended  by  Acts  No.  2362  and  2694),  in  that  they  were  o​perating  a  public  utility  without 
permission from th 
e Public Utility Commissioner. 
 
ISSUE:Whether  or  not  the  appellant  was  a  public  utility  under  the  foregoing  definitions,  and  was 
therefore ​subject to the control and regulation of the Public Utility Commission. 
 
RULING: NO​.  Public  use  means  the same as “use by the public.” ​The essential feature of the 
public  use  is  that  it is not confined to privilege individuals, but is open to the indefinite public​. 
It  is  this  indefinite  or  unrestricted  quality  that  gives  it  its  public  character.  In  determining 
whether  a  use  is  public,  we  must  look  not only the character of the business to be done, but also to 
the  proposed  mode  of  doing  it.  ​If  the  use  is  merely  optional  with  the  owners,  or  the  public 
benefit  is  merely  incidental,  it  is  not  a  public use, authorizing the exercise of the jurisdiction 
of  the  public  utility  commission​.  There  must  be,  in  general,  a  right  which  the  law  compels  the 
power  to  give  to  the  general  public.  It  is  not  enough  that  the  general  prosperity  of  the  public  is 
promoted.  Public  use  is  not  synonymous  with  public  interest.  ​The true criterion by which to judge 
of the character of the use is whether the public may enjoy it by right or only by permission. 
For  all  of  the  foregoing  reasons,  the  appellant  was  not operating a public utility, for public use, and 
was not, therefore, subject to the jurisdiction of the Public Utility Commission. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
#2 Home Insurance Co. v. American Steamship, G.R. No. L-25599, 04 April 1968 (REY) 
  
Facts: The  ​marine  vessel  SS  Crowborough  shipped  freight  ​prepaid  (21,740  jute  bags  of 
Peruvian  fish  meal)  at  Chimbate,  Peru,  covered  by  clean  bills  of  lading  Numbers  1  and  2  on 
January  17,  1963.  ​The  cargo, ​consigned to San Miguel Brewery, Inc. and insured by petitioner 
Home  Insurance  Company  for  $202,505,  arrived  in  Manila  on  March  7,  1963  and  was  discharged 
into  the  lighters  of  the  Luzon  Stevedoring  Company.  When  the  cargo  was  delivered  to  consignee 
San  Miguel  Brewery  Inc.,  there  were  shortages  amounting to P12,033.85​, causing the latter to 
lay  claims  against  the  petitioner,  respondents  Luzon  Stevedoring  Corporation  and  American 
Steamship Agencies, owner and operator of the abovementioned vessel. 
  
  Petitioner  paid  P14,870.71  to  the  consignee  and  filed  a  complaint  for  recovery  of  said 
amount  against  the  respondents  when  the  latter  refused  to  pay  the  liability.  Luzon  Stevedoring 
Corp.  alleged  that  it  delivered  the  goods  with  due  diligence  and  it  also  claimed  that  petitioner's 
claim  was  prescribed  under  Article  366  of  the  Code  of  Commerce  stating  that  the  claim  must  be 
made  within  24  hours  from  receipt  of  the  cargo.  American  Steamship  Agencies  denied  liability  by 
alleging  that  under  the  provisions  of  the  Charter  party  referred  to  in  the  bills  of  lading,  the 
charterer,  not  the  ship  owner, was responsible for any loss or damage of the cargo. Furthermore, it 
claimed  to  have  exercised  due  diligence  in  stowing  the  goods  and  that  as  a mere forwarding agent, 
it was not responsible for losses or damages to the cargo. 
  
  The  trial  court  ruled  against  American  Steamship  Agencies  but  absolved  the  liability  of 
Luzon Stevedoring Corp. 
  
Issue: Whether  or  not  the  ​stipulation  in  the  charter  party  of  the  owner's  non-liability 
is valid. 
  
Ruling: Yes.  A  perusal  of  the  ​charter  party  referred  to  shows  that  while  the  possession 
and  control  of  the ship were not entirely transferred to the charterer, the vessel was chartered to 
its  full  and  complete  capacity.  Furthermore,  the  charter  had  the  option  to  go  north  or  south  or 
vice-versa,  loading,  stowing  and  discharging  at its risk and expense. Accordingly, ​the charter party 
contract  is  one  of  affreightment  over  the  whole  vessel  rather  than  a  demise.  ​As  such,  the 
liability  of  the  ship  owner  for  acts  or  negligence  of  its  captain  and  crew,  would  remain  in  the 
absence of stipulation. 
  
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  for the negligence of its agent is not against public policy, and is 
deemed  valid.  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 the case of a ship totally chartered for the use of a single party. 
 
  
 
b. Liberal Approach 
#3 DE GUZMAN vs CA (Santos) 
G.R. No. L-47822; December 22, 1988 
 
FACTS: 
Pedro  de  ​Guzman a merchant and authorized dealer of General Milk Company contracted 
with  respondent  for  the  hauling  of  750  ​cartons of Liberty filled milk from a warehouse in Makati 
to  petitioner's  establishment  in  Urdaneta  on  or  before  4  December  1970.  ​Only  150  boxes  of 
Liberty  filled  milk  ​were  delivered  to  petitioner  since  the  truck  which  carried  these  boxes  was 
hijacked  somewhere  along  the  MacArthur  Highway  in  Paniqui,  Tarlac,  by  armed  men  who  took  with 
them the truck, its driver, his helper and the cargo. 
Petitioner commenced action against private respondent in the CFI of Pangasinan, demanding 
payment  of  the  lost  goods,  arguing  that  the  latter  failed  to  exercise  extraordinary  diligence 
required  of  him  by  the  law.  Respondent  denied  that  he  was  a  common  carrier  and  argued  that  he 
could  not  be  held  responsible  for  the  value  of  the  lost  goods,  such  loss  having  been  due  to  force 
majeure.  
ISSUE: 
Whether  private  respondent  Ernesto  Cendana  may,  under  the  facts  earlier  set  forth,  be 
properly characterized as a common carrier. 
HELD:   
Yes.  Private  respondent  is  a  common  carrier.  However,  he  could  not  be held liable for 
the lost goods. 
Article  1732  of  the  Civil  Code  makes  no  distinction  between  one  whose  principal  business 
activity  is  the  carrying  of  persons  or  goods  or  both,  and  one  who  does  such  carrying  only  as  an 
ancillary  activity.  Article  1732  also  carefully  avoids  making  any  distinction  between  a  person  or 
enterprise  offering  transportation  service  on  a  regular  or  scheduled  basis  and  one  offering  such 
service  on  an  ​occasional,  episodic  or  unscheduled  basis.  Neither  does  Article  1732  distinguish 
between  a  carrier  offering  its  services  to  the  "general  public”  and  one  who  offers  services  or 
solicits business only from a narrow segment of the general population.  
Under  Article  1745  (6),  a  common  carrier  is  held  responsible  —  and  will  not  be  allowed  to 
divest  or  to  diminish  such  responsibility  —  even  for  acts  of  strangers  like  thieves  or  robbers, 
except  where  such  thieves  or robbers in fact acted "with grave or irresistible threat, violence 
or force." 
We believe and so hold that the limits of the duty of extraordinary diligence in the vigilance 
over  the  goods  carried  are  reached  where  the  goods  are  lost  as  a  result  of  a  robbery  which  is 
attended by "grave or irresistible threat, violence or force."  
 
 
 
 
 
 
 
#4 Bascos v CA (TULIAO) 
GR No. 101089  April 7, 1993 

Facts 
Cipriano  subcontracted  with  Bascos  to  transport  sacks  of  soya  beans.  Bascos  failed  to 
deliver  said  cargo  due  to  hijacking.  As  a  consequence,  Cipriano  paid  the  owner  of  the  soya 
beans.  The  latter  then  asked  for  reimbursement  from  Bascos  but  the  latter  refused  to  pay. 
Eventually,  Cipriano  filed  a  complaint  for  a  sum  of  money  and  damages.  The  trial  court  ruled 
in  favor  of  Cipriano.  On  appeal  to  the  CA,  the  trial  court’s  ruling  was  affirmed.  Hence  this 
case.  Bascos  contend  that  the  contractual  relationship  between  him  and  Cipriano  is  the  lease 
of  cargo  truck  and  not  a  carriage  of  goods  because  they  offer their services only to a select 
group of people. 
  
Issue 
  
Whether or not there is a contract of carriage between the parties. 
  
Ruling 
  
Yes.  Art.  1732  of  the  Civil  Code  defines  a  common  carrier  as  a  person,  corporation  or 
firm  or  association  engaged  in  the  business  of  carrying or transporting passengers or goods or 
both,  by  land,  water  or  air,  for  compensation,  offering  their services to the public. The test 
to  determine  a  common  carrier  is  whether  the  given  undertaking  is  a  part  of  the  business 
engaged  in  by  the  carrier  which  he has held out to the general public as his occupation rather 
than the quantity or extent of the business transacted. 
  
In  this  case,  Bascos  admitted  that  she  was  in  the  trucking  business,  offering  her  trucks 
to those with cargo to move. 
  
For  the  argument  that  the  services  were  only  offered  to  a  select  group  of  people,  the 
court held that Art. 1732 makes no distinction between one whose principal business activity is 
the  carrying  of  persons  or  goods  or  both,  and  one  who does such carrying only as an ancillary 
activity  or  sideline.  It  also  avoids  making  any  distinction  between  an  occasional,  episodic  or 
unscheduled  basis.  Neither  does  it  distinguish  between  a  carrier  offering  its  services  to  the 
general  public,  and  one  who  offers  services or solicits business only from a narrow segment of 
the general population. 
 
 
 
 
 
 
 
#5 Planters Products Inc. v. Court of Appeals, 226 SCRA 476 (USON) 
G.R. No. 101503 September 15, 1993 
FACTS: 
Planters  Products,  Inc.  (PPI),  purchased  from  Mitsubishi  International  Corporation 
9,329.7069  metric  tons  of  Urea  46%  fertilizer  which  the  latter  shipped  in  bulk  aboard  the  cargo 
vessel  M/V  "Sun  Plum"  owned  by  private  respondent  Kyosei  Kisen  Kabushiki  Kaisha.  Prior  to  its 
voyage,  a  time  charter-party  on  the  vessel  M/V  "Sun  Plum"  pursuant  to  the  Uniform  General 
Charter was entered into between Mitsubishi as shipper/charterer and KKKK as shipowner.  
Upon  arrival  of  the  vessel,  it  took  eleven  (11)  days for petitioner PPI to unload the cargo. A 
private  marine  and cargo surveyor, Cargo Superintendents Company Inc. (CSCI), was hired by PPI to 
determine  the  "outturn"  of  the  cargo  shipped,  by  taking  draft  readings  of  the  vessel  prior  to  and 
after  discharge.  CSCI  reported  a  shortage  in  the  cargo  of  106.726  M/T  and  that  a  portion  of the 
Urea  fertilizer  approximating  18  M/T  was  contaminated  with  dirt.  Consequently,  PPI  sent  a  claim 
letter  Soriamont  Steamship  Agencies  (SSA),  the  resident  agent  of  the  carrier,  KKKK,  for 
P245,969.31  representing  the  cost  of  the  alleged  shortage  in  the goods shipped and the diminution 
in value of that portion said to have been contaminated with dirt. 
Respondent  SSA  explained  that  they  were  not  able  to  respond  to the consignee's claim for 
payment  because,  according  to  them,  what  they  received  was  just  a  request  for  shortlanded 
certificate  and  not  a  formal  claim,  and  that  this  "request"  was  denied  by  them  because  they  "had 
nothing  to  do  with  the  discharge  of  the  shipment." Hence, PPI filed an action for damages with the 
Court of First Instance of Manila. 
The  lower  court  sustained  the  petitioner’s  claim,  but  such  decision  was  reversed  by  the 
appellate  court,  which  absolved  the carrier from liability for the value of the cargo that was lost or 
damaged.  The  appellate  court  ruled  that  the  cargo  vessel  M/V  "Sun  Plum"  owned  by  private 
respondent  KKKK  was  a  private  carrier  and  not  a  common  carrier  by  reason  of  the  time 
charterer-party. 
ISSUE: 
Whether or not a common carrier becomes a private carrier by reason of a charter-party. 
RULING: 
No.  ​A  "charter-party"  is  defined  as  a  contract  by  which  an  entire  ship,  or  some 
principal  part  thereof,  is  let  by  the  owner  to  another  person  for  a  specified  time  or  use. 
Charter  parties  are  of  two  types:  (a)  ​contract  of affreightment which involves the use of shipping 
space  on  vessels  leased  by  the  owner  in  part  or  as  a  whole,  to  carry  goods  for  others;  and,  (b) 
charter  by  demise  or  bareboat  charter​,  by  the  terms  of  which  the  whole  vessel  is  let  to  the 
charterer  with  a  transfer  to  him  of  its entire command and possession and consequent control over 
its  navigation,  including  the  master  and  the  crew,  who  are  his  servants.  Contract  of  affreightment 
may  either  be  ​time  charter​,  wherein  the  vessel  is  leased  to  the  charterer  ​for  a  fixed  period  of 
time​, or ​voyage charter​, wherein the ship is leased ​for a single voyage. 
In  this  case,  when  petitioner  chartered  the  vessel  M/V  "Sun  Plum",  the  ship  captain,  its 
officers  and  compliment  were  under  the  employ  of  the  shipowner  and  therefore  continued  to  be 
under  its direct supervision and control. Hardly then can we charge the charterer, a stranger to the 
crew  and  to  the  ship,  with  the  duty  of  caring  for  his  cargo  when  the  charterer  did  not  have  any 
control of the means in doing so. 
Hence, ​it is only when the charter includes both the vessel and its crew, as in a 
bareboat or demise that a common carrier becomes private, at least insofar as the particular 
voyage covering the charter-party is concerned.
#6 Fabre v. Court of Appeals, 259 SCRA 426 (VALENZUELA) 
FACTS: 
Spouses Fabre were owners​ of a 1982 model ​Mazda minibus.​ They used the bus as a ​school 
bus for children in St. Scholastica’s College​ – Manila. They hired Cabil as the driver after trying 
him out for two weeks. Subsequently, ​Word for the World Christian Fellowship, Inc​. (WWCF) 
arranged with petitioners the transportation of its 33 member​s from ​Manila to La Union and 
back ​in consideration of the amount of P3,000.00. Agreed meeting time: 5pm but left the meeting 
place by 8pm. Meeting place: Tropical Hut – Ortigas Ave cor. EDSA 
The bus detoured from Carmen, Pangasinan to Lingayen, Pangasinan due to a bridge in 
Carmen that was under construction. ​That night, it was raining when they came upon a ​sharp 
curve called “siete”​. The bus was running at 50KM/H, ​causing the bus to skid to the road 
shoulder​. The ​bus hit the traffic steel brac​e, rammed the fence of a resident nearby and hit a 
coconut tree.​ Several passengers were injured. 
One Amyline Antonio​ brought the case for ​being paralyzed from the waist down.​ The RTC 
rendered a decision a​gainst Spouses Fabre and Cabil saying that no convincing evidence was 
shown that the minibus was properly checked for travel to a long-distanc​e trip and that the 
driver was properly screened and tested before being admitted for employment. CA affirmed this 
ruling. 
Upon appeal, one of petitioner’s contention is that under the contract, the WWCF was 
directly ​responsible for the conduct of the trip. 
 
ISSUE: Whether or not, this case involves a contract of carriage. 
 
RULING: 
As already stated, this case actually involves a contract of carriage. The Fabres, did not 
have to be engaged in the business of public transportation for the provisions of the Civil Code on 
common carriers to apply to them. As this Court has held: 
Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the 
business of carrying or transporting passengers or goods or both, by land, water, or air for 
compensation, offering their services to the public. 
 
The above article ​makes no distinction between one whose principal business activity​ is 
the carrying of persons or goods or both, and one who does such carrying only as an ancillary 
activity (in local idiom, as “a sideline”). Article 1732 also carefully avoids making any distinction 
between a person or enterprise offering transportation service on a regular or scheduled basis and 
one offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732 
distinguish between a carrier offering its services to the “general public,” i.e., the general 
community or population, and one who offers services or solicits business only from a narrow 
segment of the general population. We think that Article 1732 deliberately refrained from making 
such distinctions. 

 
 
 
#7 Loadstar Shipping Co., Inc. v. Court of Appeals, 315 SCRA 339 (GR 131621; 9/28/99 
(owner’s risk)) (ABUYUAN) 
G.R. No. 131621. September 28, 1999 
Facts: 
On November 19, 1984, LOADSTAR received on board its ​M/V “Cherokee” ​(hereafter, the vessel) 
the following goods for shipment: 
a) 705 bales of lawanit hardwood; 
b) 27 boxes and crates of tilewood assemblies and others; and 
c) 49 bundles of moulding R & W (3) Apitong Bolidenized. 
The goods, ​amounting to P6,067,178​ were in​sured for the same amount with MIC ​against various 
risks including “TOTAL LOSS BY TOTAL LOSS OF THE VESSEL.” The vessel, in turn, ​was insured 
by Prudential Guarantee & Assurance, Inc. (​hereafter PGAI) for P4 million. On November 20, 
1984, o​n its way to Manila from the port of Nasipit, Agusan del Norte​, the ​vessel, along with 
its cargo, sank off Limasawa Island​. As a result of the total loss of its shipment, the consignee 
made a claim with LOADSTAR, which, however, ignored the same. As the insurer, ​MIC paid 
P6,075,000 to the insured in full settlemen​t of its claim and the latter ​executed a subrogation 
receipt therefore. 
On February 4, 1985, ​MIC filed a complaint ​against LOADSTAR and PGAI, alleging that the sinking 
of the ​vessel was due to the fault and negligence of LOADSTAR and its employees.​ It also 
prayed that PGAI be ordered to pay the insurance proceeds from the loss of the vessel directly to 
MIC, said amount to be deducted from MIC’s claim from LOADSTAR. 
In its answer, ​LOADSTAR denied any liability ​for the loss of the shipper’s goods and 
claimed that ​the sinking of its vessel was due to force majeure.​ T​ he court a quo rendered 
judgment in favor of MIC, prompting loadstar to elevate the matter to the Court of Appeals, which 
however, agreed with the trial court and affirmed its decision in toto. ​On appeal, loadstar 
maintained that the vessel was a private carrier because it was not issued a Certificate of 
Public Convenience, it did not have a regular trip or schedule nor a fixed route, and there was 
only “one shipper, one consignee for a special cargo”. 
 
Issue: 
Whether  or not M/V Cherokee was a private carrier so as to exempt it from the provisions covering 
Common Carrier? 

Ruling: 
Yes. The Court ruled that Loadstar is a common carrier. 
 
The  Court  held  that  LOADSTAR  is a common carrier. It is not necessary that the carrier be issued 
a  certificate  of  public  convenience,  and  this  public  character  is  not  altered  by  the  fact  that  the 
carriage  of  the  goods  in  question  was  periodic,  occasional,  episodic  or  unscheduled.  Further,  the 
bare  fact  that  the  vessel  was  carrying  a  particular  type  of cargo for one shipper, which appears to 
be  purely  coincidental;  it  is  no  reason  enough  to  convert  the  vessel  from  a  common  to  a  private 
carrier, especially where, as in this case, it was shown that the vessel was also carrying passengers. 

Article  1732  also  carefully  avoids  making  any  distinction  between  a  person  or  enterprise  offering 
transportation  service  on  a  regular  or  scheduled  basis  and  one  offering  such  service  on  an 
occasional,  episodic  or  unscheduled  basis.  Neither  does  Article  1732  distinguish  between  a  carrier 
offering  its  services  to  the  “general  public,”  i.e.,  the  general  community  or  population,  and  one who 
offers services or solicits business only from a narrow segment of the general population. 

Also,  the  stipulation  in  the  case  at  bar  effectively  reduces  the  common  carriers  liability  for 
the  loss  or  destruction  of  the  goods  to  a  degree  less  than  extraordinary  (Articles  1744  and 
1745),  that  is,the  carrier  is  not  liable  for  any  loss  or  damage  to shipments made at “owner’s 
risk.” Such stipulation is obviously null and void for being contrary to public policy. 

 
 
c. Uncommon carriers 
#8 First Philippine Industrial Corporation v. Court of Appeals, 300 SRA 661, GR 125948, 
12/29/98 (AGUILAR) 
FACTS: 
Petitioner is a grantee of a pipeline concession under Republic Act No. 387. Sometime in January 
1995, petitioner applied for mayor’s permit in Batangas. However, the Treasurer required petitioner 
to pay a local tax based on gross receipts amounting to P956,076.04 pursuant to the Local 
Government Code. In order not to hamper its operations, petitioner paid the taxes for the first 
quarter of 1993 amounting to P239,019.01 under protest. 
On January 20, 1994, petitioner filed a letter-protest to the City Treasurer, claiming that it is 
exempt from local tax since it is engaged in transportation business. The respondent City Treasurer 
denied the protest, thus, petitioner filed a complaint before the Regional Trial Court of Batangas on 
June 15, 1994 for tax refund. Respondents assert that pipelines are not included in the term 
“common carrier” which refers solely to ordinary carriers or motor vehicles. The trial court 
dismissed the complaint, and such was affirmed by the Court of Appeals. 
ISSUE: 
Whether  a  pipeline  business  is  included in the term “common carrier” so as to entitle the petitioner 
to the exemption 
HELD: 
Article 1732 of the Civil Code defines a “common carrier” as “any person, corporation, firm or 
association engaged in the business of carrying or transporting passengers or goods or both, by 
land, water, or air, for compensation, offering their services to the public.” 
The test for determining whether a party is a common carrier of goods is: 
(1) He must be engaged in the business of carrying goods for others as a public employment, 
and must hold himself out as ready to engage in the transportation of goods for person 
generally as a business and not as a casual occupation; 
(2) He must undertake to carry goods of the kind to which his business is confined; 
(3) He must undertake to carry by the method by which his business is conducted and over his 
established roads; and 
(4) The transportation must be for hire. 
Based on the above definitions and requirements, there is no doubt that petitioner is a common 
carrier. It is engaged in the business of transporting or carrying goods, i.e. petroleum products, for 
hire as a public employment. It undertakes to carry for all persons indifferently, that is, to all 
persons who choose to employ its services, and transports the goods by land and for compensation. 
The fact that petitioner has a limited clientele does not exclude it from the definition of a common 
carrier. 
 
 
 
 
 
 
 
 
 
#9 Asia Lighterage and Shipping v CA, 409 SCRA 340 (ALCANTARA) 
G.R. No. 147246 August 19, 2003 
ASIA LIGHTERAGE AND SHIPPING, INC., ​petitioner, 
vs. 
COURT OF APPEALS and PRUDENTIAL GUARANTEE AND ASSURANCE, INC., ​respondents. 
FACTS: 
Wheat  in  bulk,  was  shipped  by  ​Marubeni  American  Corporation  of  Portland,  Oregon on board the 
vessel  ​M/V  NEO  for  delivery  to  the  consignee,  ​General  Milling  Corporation  ​in  Manila.  T​he 
shipment  was  insured  by  the  private  respondent  ​Prudential  Guarantee  and  Assurance,  Inc. 
against  loss  or  damage.  The  carrying  vessel  arrived  in  Manila  and  t​he  cargo  was  transferred  to 
the  custody  of  the  petitioner  ​Asia  Lighterage and Shipping, Inc. ​The petitioner was contracted 
by  the  consignee  as  carrier  to  deliver  the cargo to consignee's warehouse at Ugong, Pasig City. ​900 
metric  tons  of  the  shipment  was  loaded  on  barge  PSTSI  III  for  delivery  to  consignee.  The 
cargo did not reach its destination. 
It  appears  that  ​the  transport  of  said  cargo  was  suspended  due  to  a  warning  of  an  incoming 
typhoon. ​The petitioner proceeded to pull the barge to Engineering Island off Baseco to seek  
shelter  from  the  approaching  typhoon.  A  few  days  after,  the  barge  developed  a  list  because  of  a 
hole  it  sustained  after  hitting  an  unseen  protuberance  underneath  the  water.  The  barge  was  then 
towed  to  ISLOFF  terminal  before  it  finally  headed  towards  the  consignee's  wharf.  Upon reaching 
the  Sta.  Mesa  spillways,  the  barge  again  ran  aground  due  to  strong  current.  To  avoid  the 
complete sinking of the barge, a portion of the goods was transferred to three other barges. 
The  next  day,  the  towing  bits  of the barge broke. I​t sank completely, resulting in the total loss 
of  the  remaining  cargo.  Private  respondent  indemnified  the  consignee.  ​Thereafter,  as  subrogee,  it 
sought recovery of said amount from the petitioner, but to no avail. 
The  private  respondent  filed  a  complaint  against  the  petitioner for recovery of the amount of 
indemnity, attorney's fees and cost of suit. 
The Regional Trial Court ruled in favor of the private respondent. 
Petitioner  appealed  to  the  Court  of  Appeals  insisting  that  it  is  not  a  common  carrier.  ​It 
contends  that  it is not a common carrier but a private carrier. Allegedly, it has no fixed and publicly 
known  route,  maintains  no  terminals,  and  issues  no  tickets.  It  points  out  that  it  is  not  obliged  to 
carry  indiscriminately  for  any  person.  It  is  not  bound  to carry goods unless it consents. In short, it 
does  not  hold  out  its  services  to  the  general  public. ​The appellate court affirmed the decision of 
the trial court  
Issues: 
(1) Whether the petitioner is a common carrier; and, 
(2)  Assuming  the  petitioner  is a common carrier, whether it exercised extraordinary diligence in its 
care and custody of the consignee's cargo. 
RULING: 
(1) Petitioner is a common carrier.  
Article  1732  of  the  Civil  Code  defines  c ​ ommon  carriers  as  persons,  corporations,  firms  or 
associations  engaged  in  the  business  of  carrying  or  transporting  passengers  or  goods  or  both,  by 
land, water, or air, for compensation, offering their services to the public. 
In  ​De  Guzman  vs.  Court  of  Appeals​,  the  Court  held  that  the  definition  of  ​common  carriers  in 
Article  1732  of  the  Civil Code ​makes no distinction between one whose principal business activity 
is  the  carrying  of  persons  or  goods  or  both,  and  one  who  does  such  carrying  only  as  an 
ancillary  activity.  ​It  also  did  not  distinguish  between  a  person  or  enterprise  offering 
transportation  service  on  a  regular  or  scheduled  basis  and  one  offering  such  service  on  an 
occasional,  episodic  or  unscheduled  basis.  Further,  the  Court  ruled  that  Article  1732  does  not 
distinguish  between  a  carrier  offering  its  services  to  the  g ​ eneral  public​,  and  one  who  offers 
services or solicits business only from a narrow segment of the general population. 
In  the  case  at  bar,  the  principal  business  of  the  petitioner  is that of lighterage and drayage and it 
offers  its  barges  to  the  public  for  carrying  or  transporting  goods  by  water  for  compensation. 
Petitioner is clearly a common carrier.  
Petitioner,  therefore,  is  a  common  carrier  whether  its  carrying  of  goods  is  done  on  an 
irregular  rather  than  scheduled  manner,  and  with  an  only  limited  clientele.  A  common  carrier 
need  not  have  fixed  and  publicly  known  routes.  Neither  does  it  have  to  maintain  terminals  or issue 
tickets. 
To  be  sure,  petitioner  fits  the  ​test  of  a  common  carrier  as  laid  down  in  ​Bascos  vs.  Court  of 
Appeals​.  ​The  test  to  determine  a  common  carrier  is  ​"whether  the  given  undertaking  is  a  part  of 
the  business  engaged  in  by  the  carrier  which  he  has  held  out  to  the  general  public  as  his 
occupation  rather  than  the  quantity  or  extent  of  the  business  transacted."  In the case at bar, 
the  petitioner  admitted  that  it  is  engaged  in  the  business  of  shipping  and  lighterage,  ​offering  its 
barges  to  the  public,  despite  its  limited  clientele  for  carrying  or  transporting  goods  by  water  for 
compensation. 
(2) Petitioner  failed  to  exercise  extraordinary  diligence  in  its  care  and  custody  of  the 
consignee's goods. 
Common  carriers  are  bound  to  observe  extraordinary  diligence  in  the  vigilance  over  the  goods 
transported  by  them.  ​They  are  presumed  to  have  been  at fault or to have acted negligently if the 
goods  are  lost,  destroyed  or  deteriorated.  To  overcome  the  presumption  of  negligence  in  the  case 
of  loss,  destruction  or  deterioration of the goods, the common carrier must prove that it exercised 
extraordinary  diligence.  There  are,  however,  exceptions  to  this  d  that  it  has  exercised  due 
diligence  before,  during  and  after  the  occurrence  of  the  typhoon  to  prevent  or  minimize  the  loss. 
The  evidence  show  that,  even  before  the  towing  bits  of  the  barge  broke,  it  had already previously 
sustained  damage  when  it  hit  a  sunken  object  while  docked  at  the  Engineering  Island.  It  even 
suffered  a  hole.  Clearly,  this  could  not  be  solely  attributed  to  the  typhoon.  The  partly-submerged 
vessel  was  refloated but its hole was patched with only clay and cement. The patch work was merely 
a  provisional  remedy,  not  enough  for  the  barge  to  sail  safely.  Thus,  when  petitioner  persisted  to 
proceed  with  the  voyage,  it  recklessly  exposed  the  cargo  to  further  damage.  This  is  not  all. 
Petitioner still headed to the consignee's wharf despite knowledge of an incoming typhoon. 
Accordingly,  ​the  petitioner  cannot  invoke  the  occurrence  of  the  typhoon  as  force  majeure  to 
escape  liability  for  the  loss  sustained  by  the  private  respondent.  ​Surely,  meeting  a  typhoon 
head-on  falls  short  of  due  diligence  required  from  a  common  carrier.  More  importantly,  the 
officers/employees  themselves  of  petitioner  admitted  that  when  the  towing  bits  of  the  vessel 
broke  that  caused  its sinking and the total loss of the cargo upon reaching the Pasig River, it was no 
longer  affected  by  the  typhoon.  The  typhoon  then  is  not  the  proximate  cause  of  the  loss  of  the 
cargo; a human factor, ​i.e.​, negligence had intervened. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
#10 Sps. Cruz v. Sun Holidays, Inc. (BERNARDO) 
G.R. No. 186312, June 29, 2010 
Facts: 
Petitioners,  Sps.  Cruz  filed  a  complaint  against  Sun  Holidays,  Inc.  for  damages  arising  from  the 
death  of  their  son  Ruelito  Cruz  who  died  on  board  M/B  Coco  Beach  III  that  capsized  en  route  to 
Batangas from Puerto Galera. 
The  petitioners  demanded  indemnification  in  the  amount  of  at  least  ​₱​4,000,000.  However,  the 
respondent  denied  any responsibility, claiming that the incident was due to a fortuitous event. As an 
act  of  commiseration,  respondent  offered  the  amount  of  ​₱​10,000  to  petitioners  upon  their  signing 
of a waiver which the petitioners declined. 
The  petitioner  then  filed  the  complaint  as  earlier  stated,  it  alleged  that  respondent,  as  a  common 
carrier,  was  guilty  of  negligence  in  allowing  M/B  Coco  Beach  III  to  sail  despite  storm  warnings.  In 
its  Answer,  respondent  denied  being  a  common  carrier,  alleging  that  its  boats  are  not  available  to 
the  general  public  as they only ferry Resort guests and crew members. Nonetheless, it claimed that 
it  exercised  the  utmost  diligence  in  ensuring  the  safety  of  its  passengers. ​By way of Counterclaim, 
respondent alleged that it is entitled to an award for attorney’s fees and litigation expenses. 
The  ​Regional  Trial  Court  dismissed  the  petitioners’  Complaint  and  respondent’s  Counterclaim,  and 
the subsequent ​Motion for Reconsideration of petitioners were denied​. 
The  ​appellate  court  likewise  denied  petitioners’  appeal​,  holding that the RTC correctly ruled that 
respondent  is a private carrier which is only required to observe ordinary diligence, that respondent 
in  fact  observed  extraordinary  diligence  in  transporting  its  guests  on  board  M/B  Coco  Beach  III 
and that the proximate cause of the incident was a fortuitous event. 
The ​petitioners filed a Motion for Reconsideration but was denied​. Thus, the present Petition for 
Review. 
Issues: 
1) Whether  or  not  M/B  Coco  Beach  III  is  a  common  carrier  required  to  exercise 
extraordinary diligence. 
2) Whether or not the incident was caused by a fortuitous event. 
Held: 
1) Yes. M/B Coco Beach III is a common carrier required to exercise extraordinary diligence. 
The  Civil  Code  defines  "common  carriers"  in  ​Article  1732  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.” 
The  article  makes  no  distinction  between  one  whose  principal  business  activity  is  the  carrying 
of  persons  or  goods  or  both,  and  one  who  does  such  carrying  only  as  an  ancillary  activity.  It 
also  carefully  avoids  making  any  distinction  between  a  person or enterprise offering transportation 
service  on  a  regular  or  scheduled  basis  and  one  offering  such  service  on  an  occasional,  episodic  or 
unscheduled  basis.  Neither  does  it  distinguish  between  a  carrier  offering  its  services  to  the 
"general public.” 
With  the  foregoing​,  respondent  can  be  thus  considered  a  common  carrier  required to exercise 
extraordinary  diligence.  ​Its  ferry  services  are  so  intertwined  with  its  main  business  as  to  be 
properly  considered  ancillary  thereto.  The  constancy  of  respondent’s  ferry  services  in  its  resort 
operations is underscored by its having its own Coco Beach boats. Furthermore, the tour packages it 
offers,  which  include  the  ferry  services,  may  be  availed  of  by  anyone  who  can  afford  to  pay  the 
same. These services are thus available to the public. 

2) NO. The incident was not caused by a fortuitous event. 

The  elements  of  a  "fortuitous  event"  are:  (a)  the  cause  of  the  unforeseen  and  unexpected 
occurrence,  or  the  failure  of  the  debtors  to  comply  with  their  obligations,  must  have  been 
independent  of  human  will;  (b)  the  event  that  constituted the caso fortuito must have been 
impossible  to  foresee  or,  if  foreseeable,  impossible  to  avoid;  (c)  the  occurrence  must  have 
been  such  as  to  render  it  impossible  for  the  debtors  to  fulfill  their  obligation  in  a  normal 
manner;  and (d) the obligor must have been free from any participation in the aggravation of 
the resulting injury to the creditor. 

In  this  case,  the  occurrence  of  squalls  was  expected  under  the  weather  condition  and  it 
appears  that  M/B  Coco  Beach  III  experienced  engine  trouble  before  it  capsized  and  sank. 
Therefore, the incident was not free from human intervention. 

 
 
 
#11 Schmitz Transport & Brokerage Corporation v Transport Venture, Inc., G.R. No. 
150225, 22 April 2005 (BUENCONSEJO) 
 
G.R. No. 150255. April 22, 2005 
SCHMITZ TRANSPORT & BROKERAGE CORPORATION vs. TRANSPORT VENTURE, INC., 
INDUSTRIAL INSURANCE COMPANY, LTD., and BLACK SEA SHIPPING AND DODWELL 
now INCHCAPE SHIPPING SERVICES 

  

FACTS: 

SYTCO Pte Ltd. Singapore shipped from the port of Ilyichevsk, Russia on board 
M/V "Alexander Saveliev" (a vessel of Russian registry and owned by Black Sea) 545 hot 
rolled steel sheets in coil.  

The cargoes, which were to be discharged at the port of Manila in favor of the 
consignee, Little Giant Steel Pipe Corporation (Little Giant), were insured with Industrial 
Insurance Company Ltd. (Industrial Insurance).  

The vessel arrived at the port of Manila on October 24, 1991 wherein it was 
assigned a place of berth at the outside breakwater at the Manila South Harbor.  

Schmitz Transport, whose services the consignee (Little Giant) engaged to secure 
the requisite clearances, to receive the cargoes from the shipside, and to deliver them to 
Little Giant’s warehouse at Cainta, Rizal, in turn engaged the services of TVI to send a 
barge and tugboat at shipside. 

On October 26, 1991, around 4:30 p.m., TVI’s tugboat towed the barge "Erika V" to 
shipside. By 7:00 p.m., the tugboat, after positioning the barge alongside the vessel, left 
and returned to the port terminal. At 9:00 p.m., unloading of 37 of the 545 coils from the 
vessel unto the barge has commenced. 

By 12:30 a.m. of October 27, 1991 during which the weather condition had become 
inclement due to an approaching storm, the unloading unto the barge of the 37 coils was 
accomplished. No tugboat pulled the barge back to the pier, however. 

At around 5:30 a.m. of October 27, 1991, due to strong waves, the crew of the 
barge abandoned it and transferred to the vessel. The barge pitched and eventually 
capsized, washing the 37 coils into the sea. At 7:00 a.m., a tugboat finally arrived to pull 
the already empty and damaged barge back to the pier.  

Little Giant thus was by paid Industrial Insurance. Industrial Insurance later filed 
a complaint against Schmitz Transport, TVI, and Black Sea through its representative 
Inchcape (the defendants) before the RTC of Manila, for the recovery of the amount it 
paid to Little Giant. 

By Decision of the RTC, it held all the defendants negligent. On appeal, the CA 
affirmed RTC decision and ruled that all the defendants were common carriers — Black 
Sea and TVI for engaging in the transport of goods and cargoes over the seas as a regular 
business and not as an isolated transactions​ ​and Schmitz Transport for entering into a 
contract with Little Giant to transport the cargoes from ship to port for a fee. Thus, this 
appeal by petitioner against the respondents. 

  

ISSUE: 

Whether or not petitioner Schmitz Transport, a customs broker in the instant 

case, is considered a common carrier. 

  

RULING: 

YES. Contrary to petitioner’s insistence, this Court, as did the appellate court, 
finds that petitioner is a common carrier. For it undertook to transport the cargoes from 
the shipside of "M/V Alexander Saveliev" to the consignee’s warehouse at Cainta, Rizal. As 
the appellate court put it, ​"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 if it owns the vehicle to be used or has to hire one." ​That 
petitioner is a common carrier, the testimony of its own Vice-President and General 
Manager that part of the services it offers to its clients ​as a brokerage firm includes 
the transportation of cargoes reflects so. 

It is settled that under a given set of facts, a customs broker may be regarded as 
a common carrier. Thus, this Court, in A
​ .F. Sanchez Brokerage, Inc. v. The Honorable Court 
of Appeals​, ​ held: 
​

The appellate court did not err in finding petitioner, a customs broker, to be also a 
common carrier, as defined under Article 1732 of the Civil Code, to wit, 

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

Article 1732 does not distinguish between one whose principal business activity is 
the carrying of goods and one who does such carrying only as an ancillary activity. The 
contention, therefore, of the petitioner that it is not a common carrier but a customs 
broker whose principal function is to prepare the correct customs declaration and proper 
shipping documents as required by law is bereft of merit. ​It suffices that petitioner 
undertakes to deliver the goods for pecuniary consideration 

And in C​ alvo v. UCPB General Insurance Co. Inc, ​ ​this Court held that as the 
transportation of goods is an integral part of a customs broker, the customs broker is 
also a common carrier.​ For to declare otherwise "would be to deprive those with whom it 
contracts the protection which the law affords them notwithstanding the fact that the 
obligation to carry goods for its customers, is part and parcel of the petitioner's 
business.”  

 
 
 
 
#12 Crisostomo v. Court of Appeals, 409 SCRA 528 (GR 138334; 8/25/03) (CANENCIA) 
FACTS: 
 
Petitioner contracted the services of respondent Caravan Travel and Tours International, Inc. to 
arrange and facilitate her booking, ticketing and accommodation in a tour dubbed Jewels of Europe. 
Pursuant to said contract, the travel documents and plane tickets were delivered to the petitioner 
who in turn gave the full payment for the package tour on June 12, 1991. Without checking her 
travel documents, petitioner went to NAIA on Saturday, June 15, 1991, to take the flight for the 
first leg of her journey from Manila to Hongkong. To petitioner’s dismay, she discovered that the 
flight she was supposed to take had already departed the previous day. She learned that her plane 
ticket was for the flight scheduled on June 14, 1991. She thus called up Menor to complain. 
Subsequently, Menor prevailed upon petitioner to take another tour- the British Pageant. Upon 
petitioner’s return from Europe, she demanded from respondent the reimbursement of the 
difference between the sum she paid for Jewels of Europe and the amount she owed respondent 
for the British Pageant tour. 
 
Petitioner filed a complaint against respondent for breach of contract of carriage and damages 
alleging that her failure to join Jewels of Europe was due to respondent’s fault since it did not 
clearly indicate the departure date on the plane, failing to observe the standard of care required of 
a common carrier when it informed her wrongly of the flight schedule. For its part, respondent 
company, denied responsibility for petitioner’s failure to join the first tour, insisting that petitioner 
was informed of the correct departure date, which was clearly and legibly printed on the plane 
ticket. The travel documents were given to petitioner two days ahead of the scheduled trip. 
Respondent further contend that petitioner had only herself to blame for missing the flight, as she 
did not bother to read or confirm her flight schedule as printed on the ticket. 
ISSUE: 
Whether or not Caravan Travel & Tours International Inc. is a common carrier, making it liable for 
the damages in their negligent in the fulfilment of its obligation to petitioner Crisostomo 
RULING: 
Caravan Travel and Tours International Inc. is not a private nor common carrier. 
A contract of carriage or transportation is one whereby a certain person or association of persons 
obligate themselves to transport persons, things, or news from one place to another for a fixed 
price. Such person or association of persons are regarded as carriers and are classified as private 
or special carriers and common or public carriers. Respondent is not an entity engaged in the 
business of transporting either passengers or goods and is therefore, neither a private nor a 
common carrier. Respondent did not undertake to transport petitioner from one place to another 
since its covenant with its customers is simply to make travel arrangements in their behalf. 
Respondent’s services as a travel agency include procuring tickets and facilitating travel permits or 
visas as well as booking customers for tours. 
 
The object of petitioner’s contractual relation with respondent is the service of arranging and 
facilitating petitioners booking, ticketing and accommodation in the package tour. In contrast, the 
object of a contract of carriage is the transportation of passengers or goods. It is in this sense 
that the contract between the parties in this case was an ordinary one for services and not one of 
carriage. Since the contract between the parties is an ordinary one for services, the standard of 
care required of respondent is that of a good father of a family under Article 1173 of the Civil 
Code. The evidence on record shows that respondent exercised due diligence in performing its 
obligations under the contract and followed standard procedure in rendering its services to 
petitioner. As correctly observed by the lower court, the plane ticket issued to petitioner clearly 
reflected the departure date and time, contrary to petitioner’s contention. The travel documents, 
consisting of the tour itinerary, vouchers and instructions, were likewise delivered to petitioner two 
days prior to the trip. Respondent also properly booked petitioner for the tour, prepared the 
necessary documents and procured the plane tickets. It arranged petitioner’s hotel accommodation 
as well as food, land transfers and sightseeing excursions, in accordance with its avowed 
undertaking. The evidence on record shows that respondent company performed its duty diligently 
and did not commit any contractual breach. Hence, petitioner cannot recover and must bear her own 
damage. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13. TORRES-MADRID BROKERAGE INC. (TMBI) VS. FEB MITSUI INSURANCE & 
BENJAMIN MANALASTAS (BMT) (DATAN) 
FACTS: 
A shipment of electronic goods from Thailand and Malaysia arrived at the port of Mnila for 
Sony PH. Sony has engaged TMBI to facilitate, process, withdraw and deliver the shipment from 
the port to its warehouse in Biñan Laguna. 
TMBI did not own any delivery trucks, it then subcontracted Manalastas’ trucking company. 
Four (4) BMTI trucks picked up the shipment, but could not immediately deliver because of the 
truck ban and that the following day is a Sunday. 
  On the reschedule date, the 4 trucks left but only 3 trucks arrived at the Sony 
warehouse. The missing truck driven by Laperusa, was found abandoned in Muntinlupa with the 
shipment missing. 
ISSUE:  TMBI a common carrier? 
HELD: YES. 
-​ ​A brokerage is considered a common carrier if it also undertakes to deliver the 
goods for its customer. 
 -​ ​The law does not distinguish between one whose principal business activity is the 
carrying of goods and one who undertakes this task only as an ancillary. 
-​ ​That TMBI does not own trucks and has to subcontract the delivery of its clients’ 
goods is ​IMMATERIAL.​ ​As long as an entity holds itself to the public for the 
transport of goods as a business, it is considered a common carrier regardless 
of whether it owns the vehicle used or has actually hire one. 
-​ ​The only exception from liability for common carrier: 

1.​ ​Flood, storm, earthquake, lightning, or other natural disaster. 

2.​ ​Act of the public enemy in war 
3.​ ​Act of omission of the shipper or owner of the goods. 
4.​ ​Order of competent authority 
-​ ​For cases of theft and robbery, a common carrier is presumed to have at fault or 

acted negligently, unless it proves that it observed extraordinary diligence. (Theft 

or robbery of goods is not considered a fortuitous event or force majeure) 
-​ ​The cargo disappeared during transit while under the custody of BMT driver did 
not terminate TMBI responsibility. ART. 1736 NCC – a common carriers’ 
extraordinary responsibility over the shipper’s goods lasts from the time these 
goods are unconditionally placed in the possession of, and received by, or until 
actually delivered by the carrier to the consignee. 
 
 
 
 
 
 
 
 
 
 
 
ii. Nature and Basis of Liability 
Art. 1733, CC 
  
JOSE CANGCO vs. MANILA RAILROAD CO. (DIMAUKOM) 
G.R. No. L-12191 October 14, 1918 
FACTS 
Jose  Cangco  was  an  employee  of  Manila  Railroad  Company  as  clerk.  He  lived  in  San  Mateo  which  is 
located  upon  the  line  of  the  defendant  railroad  company.  He  used  to  travel  by  train  to  the  office 
located in Manila for free. 
On  January  21,  1915,  he  was  on  his  way  home  by  rail  and  when  the  train  drew  up  to  the  station  in 
San  Mateo,  he  rose  from  his seat, making his exit through the door. When he stepped off from the 
train,  one  or  both  of  his  feet  came  in  contact  with  a  sack  of  watermelons  causing  him  to  slip  off 
from  under  him  and  he  fell violently on the platform. He rolled and was drawn under the moving car. 
He was badly crushed and lacerated. He was hospitalized which resulted in amputation of his hand. 
He  later  filed  a  civil  suit  for  damages  against  defendant  in  CFI  of  Manila  founding  his  action  upon 
the  negligence  of  the  employees  of  defendant  in  placing  the  watermelons  upon  the  platform  and in 
leaving  them so placed as to be a menace to the security of passengers alighting from the train. The 
trial  court  after  having  found  negligence  on  the  part  of  the  defendant,  adjudged  saying  that 
plaintiff  failed  to  use  due  caution  in  alighting  from  the  coach  and  was  therefore  precluded  from 
recovering, hence this appeal. 
ISSUE 
Is  the  negligence  of  the  employees  attributable  to  their  employer whether the negligence is based 
on contractual obligation or on torts? 
HELD 
YES.  It  cannot  be  doubted  that  the  employees  of  the  defendant  were  guilty  of negligence in piling 
these  sacks  on  the  platform  in  the  manner  stated.  It  necessarily  follows  that  the  defendant 
company  is  liable  for  the  damage  thereby  occasioned  unless  recovery  is  barred  by  the  plaintiff’s 
own contributory negligence. 
It  is  to  note  that  the  foundation  of  the  legal  liability  is  the  contract  of  carriage.  However  Art. 
1903  relates  only to culpa aquiliana and not to culpa contractual. It is not accurate to say that proof 
of  diligence  and  care  in  the  selection  and  control  of  the  servant  relieves  the  master  from  liability 
from  the  latter’s  act.  The  fundamental  distinction  between  obligation  of  this  character  and  those 
which  arise  from  contract,  rest  upon  the  fact  that  in  cases  of  non-contractual  obligations it is the 
wrongful  or negligent act or omission itself which creates the vinculum juris (legal tie or legal bond), 
whereas  in  contractual  relations  the  vinculum  exists  independently  of  the  breach  of  the  voluntary 
duty assumed by the parties when entering into the contractual relation. 
When  the  source  of  obligation  upon  which  the  plaintiff's  cause  of action depends is a negligent act 
or  omission,  the  burden  of  proof  rests  upon  the plaintiff to prove negligence. On the other hand, in 
contractual  undertaking,  proof  of  the  contract  and  of  its  nonperformance  is  sufficient prima facie 
to  warrant  recovery.  The  negligence  of an employee cannot be invoked to relieve the employer from 
liability  as  it  will  make  juridical  persons  completely  immune  from  damages  arising  from  breach  of 
their  contracts.  Defendant  was  therefore  liable  for  the  injury  suffered  by  plaintiff,  whether  the 
breach  of  the  duty  were  to  be  regarded  as  constituting  culpa  aquiliana  or  contractual.  As Manresa 
discussed,  whether  negligence  occurs  as  an  incident  in  the  course  of  the  performance  of  a 
contractual  undertaking  or  is  itself  the  source  of  an  extra-contractual  obligation,  its  essential 
characteristics  are  identical.  There  is  always  an  act  or  omission  productive  of  damage  due  to 
carelessness  or  inattention  on  the  part  of  the  defendant.  The  contract  of  defendant  to  transport 
plaintiff carried with it, by implication, the duty to carry him in safety and to provide safe means of 
entering and leaving its trains. 
Contributory  negligence  on  the  part  of  petitioner  as  invoked  by  defendant  is  untenable.  In 
determining  the  question  of  contributory negligence in performing such act- that is to say, whether 
the  passenger  acted  prudently  or  recklessly-  age,  sex,  and  physical  condition  of  the  passenger  are 
circumstances  necessarily  affecting  the  safety  of the passenger, and should be considered. It is to 
be noted that the place was perfectly familiar to the plaintiff as it was his daily routine. 
The decision of the trial court is REVERSED. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
#15 Isaac v. A.L. Ammen, 101 Phil 1046 (DYSANGCO) 
FACTS: 
  
On May 31, 1959, Isaac boarded a bus, operated by A. L. Ammen, as a passenger paying the required 
fare from Ligao, Albay bound for Pili, Camarines Sur. Before reaching the destination, the bus 
collided with a pick-up car coming from the opposite direction. The pick-up car was at full speed and 
was running outside of its proper lane. The driver of the b s, upon seeing the manner in which the 
pick-up was then running, swerved the bus to the very extreme right of the road until its front and 
rear wheels have gone over the pile of stones or gravel situated on the rampart of the road. Said 
driver could not move the bus farther right and run over a greater portion of the pile, the peak of 
which was about 3 feet high, without endangering the safety of his passengers. And 
notwithstanding all these efforts, the rear left side of the bus was hit by the pick-up car. As a 
result, plaintiff's left arm was completely severed and the severed portion fell inside the bus. 
  
Consequently, Isaac filed an action against A. L. Ammen for damages alleging that the collision which 
resulted in the loss of his left arm was mainly due to the gross incompetence and recklessness of 
the driver of the bus and that A. L. Ammen incurred in culpa contractual arising from its 
non-compliance with its obligation to transport plaintiff safely to his destination.  
  
The court after trial found that the collision occurred due to the negligence of the driver of the 
pick-up car. 
  
ISSUE: 
  
1. Whether or not the defendant shall be held liable. 
  
2. Whether or not Isaac is guilty of contributory negligence. 
  
RULING: 
  
1. No.  
 
The following are the principles governing the liability of a common carrier:  
(1) the liability of a carrier is contractual and arises upon breach of its obligation. There is a breach 
if it fails to exert extraordinary diligence according to all the circumstances of each case;  
(2) a carrier is obliged to carry its passenger with the utmost diligence of a very cautious person, 
having due regard for all circumstances;  
(3) a carrier is presumed to be at fault or to have acted negligently in case of death of, or injury to, 
passengers, it being its duty to prove that it exercised extraordinary diligence; and  
(4) the carrier is not an insurer against all risks of travel. 
  
However, where a carrier's employee is confronted with a sudden emergency, the fact that he is 
obliged to act quickly and without a chance for deliberation must be taken into account, and he is 
not held to the same degree of care that he would otherwise be required to exercise in the absence 
of such emergency but must exercise only such care as any ordinary prudent person would exercise 
under like circumstances and conditions, and the failure on his part to exercise the best judgment 
the case renders possible does not establish lack of care and skill on his part which renders the 
company, liable.  
  
The court concluded that the driver of the bus has done what a prudent man could have done to 
avoid the collision and this relieves A.L. Ammen from liability under our law. 
  
2. Yes. A circumstance which militates against the stand of appellant is the fact borne out by the 
evidence that when he boarded the bus in question, he seated himself on the left side thereof 
resting his left arm on the window sill but with his left elbow outside the window, this being his 
position in the bus when the collision took place. It is for this reason that the collision resulted in 
the severance of said left arm from the body of appellant thus doing him a great damage. It is 
therefore apparent that appellant is guilty of contributory negligence. 
  
It is true that such contributory negligence cannot relieve appellee of its liability but will only 
entitle it to a reduction of the amount of damage caused (Article 1762, new Civil Code), but this is a 
circumstance which further militates against the position taken by appellant in this case. 
 
 
#16 Fores v. Miranda, 105 Phil 266 (FULLEROS) 
 
Facts: 

Respondent was one of the passengers of a jeepney driven by Eugenio Luga. While the vehicle was 
descending the Sta. Mesa bridge at an excessive speed, the driver lost control, and the jeepney 
swerved to the bridge wall. Serious injuries were suffered by the defendant. The driver was 
charged with serious physical injuries through reckless imprudence, and upon interposing a plea of 
guilty was sentenced accordingly. Petitioner denies liability for breach of contract of carriage, 
contending that a day before the accident, the jeepney was sold to a certain Carmen Sackerman. 

 
Issue: 

Is the approval of the Public Service Commission necessary for the sale of a public service vehicle 
even without conveying therewith the authority to operate the same? 

Ruling: 

Assuming the dubious sale to be a fact, the court of Appeals answered the query in the affirmative. 
The ruling should be upheld. The provisions of the statute are clear and prohibit the sale, alienation, 
lease, or encumbrance of the property, franchise, certificate, privileges or rights, or any part 
thereof of the owner or operator of the public service Commission. The law was designed primarily 
for the protection of the public interest; and until the approval of the public Service Commission is 
obtained the vehicle is, in contemplation of law, still under the service of the owner or operator 
standing in the records of the Commission which the public has a right to rely upon. 

 
 
 
 
#17 Phil. Rabbit v. IAC, 189 SCRA 159 (GALLEGO)
FACTS: 
On  December  24,  1966,passengers  boarded the jeepney owned by spouses Isidro Mangune and 
Guillerma  Carreon  and  driven  by  Tranquilino  Manalo  at  Pampanga  bound  for  Pangasinan  for 
P24.00.  Upon  reaching  Tarlac,  the  right  rear wheel of the jeepney detached causing it to run 
in  an  unbalanced  position.  Driver  Manalo  stepped  on the brake, causing the jeepney to make a 
U-turn,  invading  and  eventually  stopping  on  the  opposite  lane  of  the  road  (the  jeepney’sfront 
faced  the  south  (from  where  it  came)  and  its  rear  faced  the  north  (towards  where  it  was 
going).The  jeepney  occupied  and  blocked  the greater portion of the western lane, which is the 
right of way of vehicles coming from the north.  
Petitioner  Phil.  Rabbit  Bus  Lines  claims  that  almost  immediately  after  the  sudden  U-turn  the 
busbumped  the  right  rear  portion  of  the  jeep.  Defendants,  on the other hand, claim that the 
bus  stoppeda  few  minutes  before  hitting  the  jeepney.  Either way, as a result of the collision, 
three  passengers  of  the  jeepney  (Catalina  Pascua,  Erlinda  Meriales and Adelaida Estomo) died 
while  the  other  jeepneypassengers  sustained  physical  injuries.A  criminal  complaint  was  filed 
against  the  two  drivers  for  Multiple  Homicide.  The  case  against  delosReyes  (driver  of  Phil. 
Rabbit)  was  dismissed  for  insufficieny  of  evidence.  Manalo  (jeepney  driver)  was convicted and 
sentenced to suffer imprisonment. 
Three  complaints  for  recovery  of  damages  were  then  filed  before  the  CFI  of  Pangasinan:  (1) 
SpousesCasiano  Pascua  and Juana Valdez sued as heirs of Catalina Pascua while Caridad Pascua 
sued  in  her  behalf;  (2)  Spouses  Manuel  Millares  and  Fidencia  Arcica  sued  as  heirs  of  Erlinda 
Meriales;  and  (3)  spouses  Mariano  Estomo  and  Dionisia  Sarmiento  sued  as  heirs  of  Adelaida 
Estomo.  All  three  cases  impleaded  spouses  Mangune  and  Carreon,  Manalo  (jeepney  owners), 
Rabbit  and  delos  Reyes as defendants. Plaintiffs anchored their suits against spouses Mangune 
andCarreon  and  Manalo  on  their  contractual  liability.  As  against  Rabbit  and  delos  Reyes, 
plaintiffs based their suits on their culpability for a quasi-delict. 
The  respondent  court  applied  primarily  (1)  the  doctrine  of  last  clear  chance,  (2)  the 
presumption  that  drivers  who  bump  the  rear  of  another  vehicle  guilty  and  the  cause  of  the 
accident  unless  contradicted  by  other  evidence,  and  (3)  the  substantial  factor  test  concluded 
that delos Reyes was negligent. 
ISSUE: 
Whether or not the doctrine of last clear chance is applicable in this case. 
RULING: 
No. The doctrine is not applicable. 
The  principle  about  “the  last  clear”  chance,  would  call  for  application  in  a  suit  between  the 
owners  and  drivers  of  the  two  colliding vehicles. It does not arise where a passenger demands 
responsibility  from  the  carrier  to  enforce  its  contractual  obligations.  For  it  would  be 
inequitable  to  exempt  the  negligent  driver  of  the  jeepney  and  its  owners  on  the  ground  that 
the  other  driver  was  likewise  guilty  of  negligence.”  This  was  the  ruling  in  ​Anuran,  et  al.  v. 
Buño  et  al.,  G.R.  Nos.  L-21353  and  L-21354,  May  20,  1966,  17  SCRA  224.  Thus,  the 
respondent court erred in applying said doctrine. 
On  the  presumption  that  drivers who bump the rear of another vehicle guilty and the cause of 
the accident, unless contradicted by other evidence, the respondent court said: 
.  .  .  the  jeepney  had  already  executed  a  complete  turnabout  and  at  the  time  of  impact  was 
already  facing  the  western  side  of  the road. Thus the jeepney assumed a new frontal position 
vis  a  vis,  the  bus,  and  the  bus assumed a new role of defensive driving. The spirit behind the 
presumption  of  guilt  on  one  who  bumps  the  rear  end  of  another  vehicle  is  for  the  driver 
following  a  vehicle  to  be  at  all times prepared of a pending accident should the driver in front 
suddenly  come  to  a  full  stop,  or  change its course either through change of mind of the front 
driver,  mechanical  trouble,  or to avoid an accident. The rear vehicle is given the responsibility 
of  avoiding  a  collision  with  the  front  vehicle  for  it  is  the  rear  vehicle  who  has  full  control of 
the situation as it is in a position to observe the vehicle in front of it. 
The  above  discussion  would  have  been  correct  were  it  not  for  the  undisputed  fact  that  the 
U-turn  made  by  the jeepney was abrupt.The jeepney, which was then traveling on the eastern 
shoulder,  making  a  straight,  skid  mark  of  approximately  35  meters,  crossed  the  eastern lane 
at  a  sharp  angle,  making  a  skid  mark  of  approximately  15  meters  from  the  eastern  shoulder 
to  the  point  of  impact (Exhibit “K” Pascua). Hence, delos Reyes could not have anticipated the 
sudden  U-turn executed by Manalo. The respondent court did not realize that the presumption 
was rebutted by this piece of evidence​. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
#18 LRTA v. Navidad, 397 SCRA 75 (GR 145804; 2/6/03) (LEONOR)  
 
FACTS:  
October  14,  1993,  7:30  p.m.  :  Drunk  Nicanor  Navidad  (Nicanor)  entered  the  EDSA  LRT 
station after purchasing a “token”. While Nicanor was standing at the platform near the LRT tracks, 
the guard Junelito Escartin approached him. Due to misunderstanding, they had a fist fight. Nicanor 
fell  on  the  tracks  and  was  killed  instantaneously  upon  being  hit  by  a  moving  train  operated  by 
Rodolfo  Roman  December  8,  1994:  The  widow  of  Nicanor,  along  with  her  children, filed a complaint 
for  damages  against  Escartin,  Roman,  LRTA,  Metro  Transit  Org.  Inc.  and  Prudent  (agency  of 
security  guards)  for  the  death  of  her  husband.  LRTA  and  Roman  filed  a  counter-claim  against 
Nicanor  and  a  cross-claim  against  Escartin  and  Prudent.  Prudent:  denied  liability  –  averred  that  it 
had  exercised  due  diligence  in  the  selection  and  surpervision  of  its  security  guards.  LRTA  and 
Roman:  presented  evidence.  Prudent  and  Escartin:  demurrer  contending  that  Navidad  had  failed to 
prove  that  Escartin  was  negligent  in  his  assigned  task.  RTC  in  favour  of  widow  and  against Prudent 
and  Escartin,  complaint  against  LRT  and  Roman  were  dismissed  for  lack  of  merit.  CA:  reversed  by 
exonerating Prudent and held LRTA and Roman liable.  
ISSUE:  
W/N LRTA and Roman should be liable according to the contract of carriage.  
HELD:  
NO.  Affirmed  with  Modification:  (a)  nominal  damages  is  DELETED  (CANNOT  co-exist  w/ 
compensatory  damages)  (b)  Roman  is  absolved.  ​Law  and  jurisprudence  dictate  that  a  common 
carrier,  both  from  the  nature  of  its  business  and  for  reasons  of  public  policy,  is  burdened 
with the duty of exercising utmost diligence in ensuring the safety of passengers.  
■ Civil Code: 
■ 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  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 
■ Art. 1759.  Common carriers are liable for the death of or injuries to passengers 
through  the  negligence  or  wilful  acts  of  the  former’s  employees,  although  such 
employees  may  have  acted  beyond  the  scope  of their authority or in violation of 
the orders of the common carriers 
 
This  liability  of  the  common  carriers  does  NOT  cease  upon  proof  that  they  exercised  all  the 
diligence of a good father of a family in the selection and supervision of their employees. 
■ Art.  1763.  A  common  carrier  is  responsible for injuries suffered by a passenger 
on  account  of  the  wilful  acts  or  negligence  of other passengers or of strangers, 
if  the  common  carrier’s  employees  through  the  exercise  of  the  diligence  of  a 
good father of a family could have prevented or stopped the act or omission. 
Carriers  presumed  to  be  at  fault  or  been  negligent  and  by  simple  proof  of  injury,  the  passenger is 
relieved  of  the  duty  to  still  establish  the  fault or negligence of the carrier or of its employees and 
the  burden  shifts  upon  the  carrier  to  prove  that  the  injury  is  due  to  an  unforeseen  event  or  to 
force  majeure.  Where  it  hires  its  own  employees  or avail itself of the services of an outsider or an 
independent  firm  to  undertake  the  task,  the  common  carrier is NOT relieved of its responsibilities 
under the contract of carriage 
GR:  Prudent  can  be  liable  only  for  tort  under  Art.  2176  and  related  provisions  in  conjunction 
with  Art.  2180  of  the  Civil  Code.  (Tort  may  arise  even  under  a  contract,  where  tort 
[quasi-delict liability] is that which breaches the contract) 
EX:  if  employer’s  liability  is  negligence  or  fault  on  the  part  of  the  employee,  the  employer 
can  be  made  liable  on  the  basis  of  the  presumption  juris  tantum  that  the  employer  failed  to 
exercise diligentissimi patris families in the selection and supervision of its employees.  
EX to the EX: Upon showing due diligence in the selection and supervision of the employee. 
Factual  finding  of  the  CA:  NO  link  bet.  Prudent  and  the  death  of  Nicanor  for  the  reason  that  the 
negligence  of Escartin was NOT proven. NO showing that Roman himself is guilty of any culpable act 
or  omission,  he  must  also  be  absolved  from  liability.  Contractual  tie  between  LRT  and  Nicanor  is 
NOT  itself  a  juridical  relation  bet. Nicanor and Roman. Roman can be liable only for his own fault or 
negligence 
 
 
 
  
iii. Classes of common carriers 
Art. 1732, 1733, 1755 
  
#19 Vlasons Shipping, Inc., CA and National Steel Corporation, G.R. No. L0112350, 
December 12, 1997 (Test of a CC) (MACAPAAR)>>>>​Start here (11/02/2020) ​For review 
 

Facts: 

National  Steel  Corporation  (NSC)  as  Charterer  and  Vlasons  Shipping,  Inc. (VSI) as Owner, entered 
into  a  Contract  of  Voyage  Charter  Hire  (Affreightment)  whereby  NSC  hired  VSI‟s vessel, the MV 
„VLASONS  I‟  to  make  one  (1)  voyage  to  load  steel  products  at  Iligan  Cityand  discharge  them  at 
North  Harbor,  Manila.  VSI  carried  passengers  or  goods  only  for  those  it  chose  under  a  “special 
contract  of  charter  party.”The  vessel arrived with the cargo in Manila, but when the vessel‟s three 
(3)  hatches  containing  the  shipment  were  opened,  nearly  all  the  skids  oftin  plates  and  hot  rolled 
sheets  were  allegedly  found  to  be  wet  and  rusty.  NSC  filed its complaint against defendant before 
the CFI wherein it claimed that it sustained losses 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  …--  all  in  violation  of  defendant‟s  undertaking  under 
their Contract of Voyage Charter Hire.” 

In its answer, 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. The trial court ruled in favor of VSI; it was affirmed by the CA 
on appeal. 

ISSUE:  Whether  or  not  Vlazons  is  a  private  carrier  so  that  it  is  free  from  liabilities  re  the 
damages incurred by NSC with respect to its cargoes. 

RULING: 

YES  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 itchose under a 
“special contract of charter party.” As correctly concluded by the Court of Appeals, the 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. Recently, in Valenzuela Hardwood 
and  Industrial  Supply,  Inc.,  vs.  Court  of  Appeals  and  Seven  Brothers  Shipping  Corporation,  the 
Court ruled: 
 
“  x  x  x  [I]n  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.” 
   
#20 Valenzuela Hardwood and Industrial Supply, Inc., v CA and Seven Brothers Shipping 
Corp, G.R. No. 102316, June 30, 1997 (MONCADA) 
 
FACTS: Valenzuela Hardwood and Industrial Supply, Inc. (VHIS) entered into an agreement with 
the Seven Brothers 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. VHIS insured the logs against loss and/or damage with South Sea Surety and 
Insurance Co. 
 
The said vessel sank resulting in the loss of VHIS’ insured logs. VHIS demanded from South Sea 
Surety the payment of the proceeds of the policy but the latter denied liability under the policy 
for non-payment of premium. VHIS likewise filed a formal claim with Seven Brothers for the value 
of the lost logs but the latter denied the claim. 
 
The RTC ruled in favor of the petitioner.Both Seven Brothers and South Sea Surety appealed. The 
Court of Appeals affirmed the judgment except as to the liability of Seven Brothers.South Sea 
Surety and VHIS filed separate petitions for review before the Supreme Court. In a Resolution 
dated 2 June 1995, the Supreme Court denied the petition of South Sea Surety. The present 
decision concerns itself to the petition for review filed by VHIS. 
 
ISSUE: Whether or not a stipulation in the charter party that the “owners shall not be responsible 
for loss, split, short-landing, breakages and any kind of damages to the cargo” valid. 
 
HELD: Yes. It is undisputed that the 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. 
 
The general public enters into a contract of transportation with common carriers without a hand or 
a voice in the preparation thereof. The riding public merely adheres to the contract; even if the 
public wants to, it cannot submit its own stipulations for the approval of the common carrier. Thus, 
the law on common carriers extends its protective mantle against one-sided stipulations inserted in 
tickets, invoices or other documents over which the riding public has no understanding or, worse, no 
choice. Compared to the general public, a charterer in a contract of private carriage is not similarly 
situated. It can -- and in fact it usually does -- enter into a free and voluntary agreement. In 
practice, the parties in a contract of private carriage can stipulate the carrier’s obligations and 
liabilities over the shipment which, in turn, determine the price or consideration of the charter. 
Thus, a charterer, in exchange for convenience and economy, may opt to set aside the protection of 
the law on common carriers. When the charterer decides to exercise this option, he takes a normal 
business risk. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
iv.. Law applicable 
Arts. 1766, 1753 
  
#21 National Development Co. v. Court of Appeals, 164 SCRA 593 (GR L-49407; 8/19/88) 
(PELAYO) 

Facts: 
In  September  1962​,  defendants  National  Development  Co.  (NDC)  and  ​Maritime Co. of the Phil. 
(MCP)  entered  into  a  memorandum  agreement  where  NDC  as  the  first  preferred  mortgagee  of 
three  ocean  going  vessels  including  one  with  the  name  ​'Dona  Nati' appointed defendant MCP as its 
agent to manage and operate said vessel for and in its behalf and account. 
  
En  route  to  Manila  the vessel ‘​Dona Nati’ figured in a collision at ​Ise Bay, Japan ​with a ​Japanese 
vessel  'SS  Yasushima  Maru'  as  a  result  of  which  550  bales  of  aforesaid  cargo  of  American  raw 
cotton  were  lost  and/or  destroyed,  of  which  535  bales  as  damaged  were  landed  and  sold  on  the 
authority  of  the  General  Average  Surveyor  for  Yen  6,045,500  and  15  bales  were  not  landed  and 
deemed lost. 
  
Because  of  the  incident,  Development  Insurance  and  Surety  Corporation  (DISC)  filed  before  the 
then  Court  of  First  Instance  of  Manila  an action for the recovery of the sum of P364,915.86 which 
is  the  amount  DISC  had  paid  as  insurer  the total amount of P364,915.86 to the consignees or their 
successors-in-interest, for the said lost or damaged cargoes. 
  
The  trial  court  rendered  a  decision  ordering  the  defendants  MCP  and  NDC  to  pay  jointly  and 
solidarity to DISC. CA affirmed the decision of the trial court in toto. 
  
NDC  contended  that  the  Carriage  ​of  Goods  by Sea Act should apply to the case at bar and ​NOT 
the  Civil  Code  or  the  Code  of  Commerce​.  Under  Section  4  (2)  of  said  Act,  the  carrier  is  not 
responsible  for  the  loss  or  damage  resulting  from  the  "​act,  neglect  or  default  of  the  master, 
mariner,  pilot  or  the  servants  of  the  carrier  in  the  navigation  or  in  the  management  of  the 
ship​." 
  
Issue: 
Whether  or  not  the  Goods  by  Sea  Act  govern  the  loss  or  destruction  of  goods  due  to  collision  of 
vessel outside the Philippine waters. 
  
Ruling: 
No. This issue has already been laid to rest by this Court of Eastern Shipping Lines Inc. v. IAC (1 50 
SCRA  469-470  [1987])  where  it  was  held  under similar circumstance "​that 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​"  (Article  1753,  Civil  Code).  Thus,  the  rule  was 
specifically  laid  down  that  for  cargoes  transported  from  Japan  to  the  Philippines,  the  liability  of 
the  carrier  is governed primarily by the Civil Code and 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  laws 
(Article  1766,  Civil  Code).  Hence,  ​the  Carriage  of  Goods  by  Sea  Act,  a  special  law,  is  merely 
suppletory to the provision of the Civil Code​. 
  
In  the  case  at  bar,  it  has  been  established  that  the  goods  in  question  are  transported  from  San 
Francisco,  California  and  Tokyo,  Japan  to  the  Philippines  and  that  ​they  were  lost  or  due  to  a 
collision  which  was  found  to  have  been  caused  by  the  negligence  or  fault  of  both  captains  of 
the  colliding vessels. Under the above ruling, it is evident that the laws of the Philippines will apply, 
and it is immaterial that the collision actually occurred in foreign waters, such as Ise Bay, Japan. 
  
Laws applicable: 
Civil Code 
Article  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 circumstances of each case. 
  
Article  1735  of  the  same  Code,  in  all  other  than  those  mentioned  is  Article  1734  thereof,  the 
common carrier shall be presumed to have been at fault or to have acted negigently, unless it proves 
that it has observed the extraordinary diligence required by law. 
  
Code of Commerce 
Article 826 provides that where collision is imputable to the personnel of a vessel, the owner of the 
vessel at fault, shall indemnify the losses and damages incurred after an expert appraisal 
Article  827  provides  that  if  the  collision is imputable to both vessels, each one shall suffer its own 
damages  and  both  shall  be  solidarily  responsible  for  the  losses  and  damages  suffered  by  their 
cargoes. 
 
 
#22 Easter Shipping v. IAC, 150 SCRA 463; G.R. No. L-69044, May 29, 1987 (​ RAMORAN) 
 
FACTS: En  route  from  Kobe,  Japan  to  Manila,  M/S  Asiatica,  the  vessel  owned  by petitioner 
carrier,  Eastern  Shipping  Lines  caught  fire  and  sank,  resulting  in  the  total  loss  of  ship  and  cargo. 
The  crew  did  not  know  what caused the fire. When they noticed the smoke, there was already a big 
fire  which  might  have  started  twenty-four  (24)  hours  before  they  became  aware  of  it.  The 
respective  respondent  Insurers  paid  the  corresponding  marine  insurance  values  to  the  consignees 
concerned and were thus subrogated unto the rights of the latter as the insured. 
 
ISSUE:Whether or not the loss caused by fire exempt the carrier from liability. 
 
RULING: No.  Fire  may  not  be  considered a natural disaster or calamity like those enumerated 
in  ​Article  1734  as  it  arises  almost  invariably  from  some  act  of  man  or  by  human  means.  It 
does  not  fall  within  the  category  of  an  act  of  God  unless  caused  by  lightning  or  by  other 
natural disaster or calamity. 
If  fire  were  to  be  considered  a  “natural  disaster”  within  the  meaning  of  Article  1734  of  the  Civil 
Code,  ​it  is  required  under  Article  1739  that  the  “natural  disaster”  must  have  been  the 
proximate  and  only  cause  of  the  loss,  and  that  the  carrier  has  exercised  due  diligence  to 
prevent or minimize the loss before, during or after the occurrence of the disaster. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
#23Nedlloyd Lijnen v Glow Laks Enterprises, G.R. No. 156330, November 19, 2014 (REY) 
  
Facts​:  Petitioners  Nedlloyd  Lijnen  B.V.  Rotterdam  and  its  local  agent  The  East Asiatic Co., 
Ltd.  shipped  several  cartons  of  garment  from  the  Port  of  Manila  to the Port of Hong Kong, then to 
the  final  destination  in  the  Port  of  Colon  in  Panama.  Upon arrival of the vessel at the Port of Colon, 
petitioners  purportedly  notified  the  consignee  of  the  arrival  of  the  shipments, and its custody was 
turned  over  to  the  National  Ports  Authority  in  accordance  with  the  laws,  customs  regulations  and 
practice  of  trade  in  Panama.  However,  unauthorized  persons  managed  to forge the covering bills of 
lading and on the basis of the falsified documents, the ports authority released the goods. 
  
  Respondent  Glow  Laks  Enterprises,  the  owner  of  the  lost  goods,  filed  a  formal  claim  with 
Nedlloyd  for  the  recovery  of  the  amount  of  US$53,640.00  representing  the  invoice  value  of  the 
shipment  but  to  no  avail.  Claiming  that  petitioners  are  liable  for  the  misdelivery  of  the  goods, 
respondent  initiated  a  civil  case  before  the  Manila  Regional  Trial  Court  (RTC),  seeking  for  the 
recovery  of  the  amount  of  US$53,640.00,  including  the  legal  interest  from  the  date  of  the  first 
demand. 
  
In  disclaiming  liability  for  the  misdelivery  of  the  shipments,  petitioners  asserted  in  their 
Answer  that  they  were  never  remiss  in  their  obligation  as  a  common  carrier  and  the  goods  were 
discharged  in  good  order  and  condition  into  the  custody  of  the National Ports Authority of Panama 
in  accordance  with the Panamanian law. They averred that 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  was  turned  over  to  the  possession  of  the  port 
authorities. 
  
The  RTC  ordered  the  dismissal  of  the complaint but granted the petitioners’ counterclaims. 
But  the  Court  of  Appeals  (CA)  reversed  the  lower  court’s  decision  and  held  that foreign laws were 
not  proven  and  therefore,  it  cannot  be  given  full  faith  and  credit.  For  failure  to  prove  the foreign 
law  and  custom,  it  is  presumed  that  foreign  laws  are  the  same  as  our  local  laws under the doctrine 
of processual presumption. 
  
Issue​:  Whether  or  not  the  petitioners  are  not  liable  for  the  misdelivery  of  goods  due  to 
recognition of the foreign laws. 
  
Ruling​:  No, the petitioners are liable. 
  
  It  is  well  settled  that  foreign  laws  do  not  prove  themselves  in  our  jurisdiction  and  our 
courts  are  not  authorized  to  take  judicial  notice of them. Like any other fact, they must be alleged 
and  proven.  While  the  foreign  law  was  properly  pleaded  in  the  case  at  bar,  it  was, however, proven 
not  in  the  manner  provided  by  Section  24,  Rule  132  of  the  Revised  Rules  of  Court.  Due  to  such, 
Philippine laws should apply to the case. 
  
  Under  Article  1736  of  the  Civil  Code,  explicit  is  the  rule  that  the  extraordinary 
responsibility  of  the  common  carrier  begins  from  the  time  the  goods  are  delivered  to  the 
carrier.  This  responsibility  remains  in  full  force  and  effect  even  when  they  are  temporarily 
unloaded  or  stored  in  transit,  unless  the  shipper  or  owner  exercises  the  right  of  stoppage  in 
transit,  and  terminates  only  after  the  lapse  of  a  reasonable  time  for  the  acceptance, of the 
goods  by  the  consignee  or  such  other  person  entitled  to  receive  them​.  In  this  case,  the 
petitioners  failed  to  prove  that  they  exercised  the  degree  of  diligence  required  by  law  over  the 
goods  they  transported.  Aside  from  their  persistent  statement  that  their  extraordinary 
responsibility  is  terminated  upon  release  of  the  goods  to  the  Panamanian  Ports  Authority, 
petitioners  failed  to  adduce  sufficient  evidence  that  they exercised extraordinary care to prevent 
unauthorized  withdrawal  of  the  shipments.  Nothing  in  the  Civil  Code,  however,  suggests  that  the 
common  carriers’  responsibility  over  the  goods  ceased  upon  delivery  thereof  to  the  custom 
authorities. 
  
  Hence, the petition is ​DENIED​. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional readings: 
Convention for International Civil Aviation (“Chicago Convention”) 
1978 International Convention on Standards of Training, Certification and Watchkeeping for 
Seafarers (with 2010 Manila Amendments) 
1974 International Convention for the Safety of Life at Sea (SOLAS) 
1972 Convention on the International Regulations for Preventing Collisions at Sea (COLREGs) 
Werbach, Kevin, Is Uber a Common Carrier? 12ISJLP 135 (2015) 
b. Common Carriage of Goods 
i. Liability and presumption of negligence 
Arts. 1733, 1734, 1735 
  
 
 
24. YNCHAUSTI STEAMSHIP, CO. vs DEXTER (Santos) 
41 Phil 289; December 14, 1920 
  
FACTS: 
  On  September  18,  1918,  the  Government  of  the  Philippine  Islands employed the services of 
petitioner,  Ynchausti  Steamship  Co.,  a  common  carrier,  for  the  transportation  on  board  the 
steamship  Venus,  from  Manila  to  Aparri,  Cagayan,  of  ninety-six  cases  of  "Cock"  Brand  mineral  oil, 
ten gallons to the case. 
  
  The  goods  were  delivered  by  the  shipper  to  the  carrier,  which  accordingly  received  them, 
and  to  evidence  the  contract  of  transportation,  the  parties  duly  executed  and  delivered  what  is 
popularly  called  the  Government  bill  of  lading.  It  was  stipulated  that  the  carrier,  the  petitioner 
Ynchausti  &  Co.,  received  the  above-mentioned  supplies  in apparent good condition, obligating itself 
to carry said supplies to the place agreed upon. 
  
  Upon  the  delivery  of  the  above  stated  products  the  consignee  claimed  that  one  case  each 
was  delivered  empty,  and  noted  said  claims  upon  the  bill  of  lading.  Acting Insular Purchasing Agent 
of  the  Philippine  Islands  notified  the  petitioners  herein  that  after  due  investigation  the  Insular 
Auditor  found  and  decided  that  the  leakages  of the two whole cases were due to its negligence and 
that the deduction of the sum of P22.53. 
  
  Petitioner  thereupon  protested  against  the  threatened  deduction,  and  demanded that it be 
paid  the  full  amount  due  for  the  transportation  of  the  two  said  shipments  of  merchandise.  The 
Insular  Auditor,  in  conformity  with  his  ruling,  declined  and  tendered to it a warrant for the sum of 
P60.26, which the petitioner has refused to accept. 
  
ISSUE: 
  Whether  the  leakages  of  the  two  whole  cases  were  due  to  its  negligence  of  Ynchausti 
Steamship. 
  
HELD: 
  Yes.  ​The  mere  proof  of  delivery  of  goods  in  good  order  to  a  carrier,  and  of  their 
arrival  at  the  place  of  destination  in  bad  order,  makes  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 admitted by the petitioner in the agreed statement of facts that the consignee, at the 
time  the oil was delivered, noted the loss in the present case upon the two respective bills of lading. 
The  notation  of  these  losses  by  the  consignee,  in  obedience  to  the  precept  of  section  646  of  the 
Administrative  Code,  is  competent  evidence  to  show  that  the  shortage  in  fact  existed.  As  the 
petitioner  admits  that  the  oil  was  received  by  it  for  carriage  and  inasmuch  as  the  fact  of  loss  is 
proved  in  the  manner  just  stated,  it  results  that  there  is  a  presumption that the petitioner was to 
blame  for  the  loss;  and  it  was  incumbent  upon  the  petitioner  in  order  to  entitle  it  to  relief  in  the 
case  to  rebut  that  presumption  by proving, as is alleged in the petition, that the loss was not due to 
any fault or negligence of the petitioner. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
#25 Mirasol v. Dollar, 53 Phil 125 (TULIAO) 
GR No. L-29721 March 27, 1929 
 
Facts 
  
Plaintiff  is  the  consignee  of  two  cases  of  books  which  was  shipped  in  good  order  and 
condition  from  New  York,  USA  on  board  defendant’s  steamship  (President  Garfield),  for 
transport  and  delivery  to  the  plaintiff  in  Manila.  The  two  cases  arrived  in  bad  order  and 
damaged  condition.  Plaintiff  filed  a  claim  for  damages  which  was  refused  and  neglected  by 
defendant  alleging  that  the  steamship  was  seaworthy  and  properly  manned,  equipped  and 
supplied  and  fit  for  voyage,  and  the  damage  was  not  caused  through  the  negligence  of  the 
vessel,  its  master,  agent,  officers,  crew,  tackle  or  appurtenances,  nor  by  reason  of  the 
vessel  being  unseaworthy  or  improperly  manned,  but  such  damage,  was  caused  by  sea  water 
and  that  the  bill  of lading agreed to by the parties provides that the defendant should not be 
held for any loss of, or damage to, any of the merchandise resulting from any of the following 
causes,  to  wit:  Acts  of  God,  perils  of  the  sea  or  other  waters.  The  damage  to  the 
merchandise  was  caused  by  Acts  of  God  or  perils  of  the  sea,  which  was  alleged  by  the 
defendant  as  sea  water  and  this  was  a  shipper’s  risk.  The  trial  court  ruled  in  favor  of  the 
plaintiff. Hence this case. 
  
Issue 
  
Whether or not the defendant can be held liable for the damage. 
  
Ruling 
  
Yes.  The  fact  that  the  cases  were  damaged  by  sea  water,  standing  alone  and  within 
itself,  is  not  evidence  that  they  were  damaged  by  force  majeure  or  for  a  cause  beyond  the 
defendant’s  control.  The  words  perils  of  the  sea,  as  stated in defendant’s answer apply to all 
kinds of marine casualties, such as shipwreck, foundering, stranding and among other things, it 
is  said:  Tempest,  rocks,  shoals,  icebergs  and  other  obstacles  are  within  the  expression,  and 
where  the  peril  is  the  proximate  cause  of  the  loss,  the  shipowner  is  excused.  Something 
fortuitous and out of the ordinary course is involved in both words “peril” or “accident. 
  
The  defendant  having  received  the  two  boxes  in  good  condition,  its  legal  duty  was  to 
deliver  them  to  the  plaintiff  in  the  same  condition.  Shippers  who  are  forced  to ship goods on 
an  ocean  liner  have  some  legal  rights,  and  when  goods  are  delivered  on  board  in  good  order 
and  condition,  and  the  it  was  delivered  in  bad  order  and  condition,  the  shipowner  must  prove 
that  the  goods  were damaged by reason of some fact which legally exempts him from liability. 
Defendant  alleges  that  the goods were damaged by sea water but he did not attempt to prove 
that  the  goods  were  wet  with  sea  water  by  fictitious  event,  force  majeure  or  nature  and 
defect  of  the  things  themselves.  Consequently,  it  must  be  presumed  that  it  was  by  causes 
entirely distinct and in no manner imputable to the plaintiff.  
 
 
#26 De Guzman v. CA, 168 SCRA 612 (USON) 
G.R. No. L-47822 December 22, 1988 
FACTS: 
Petitioner  Pedro  de  Guzman,  a  merchant  and  authorized  dealer  of  General  Milk  Company, 
Inc.,  contracted  with  respondent  Ernesto  Cendana  for  the  hauling  of  750  cartons  of  Liberty filled 
milk  from  a  warehouse  of  General  Milk  in  Makati,  Rizal,  to  petitioner's  establishment  in  Urdaneta, 
Pangasinan.  Respondent  loaded  in  Makati  the merchandise on to his trucks: 150 cartons were loaded 
on  a  truck  driven  by  respondent  himself,  while  600  cartons  were  placed  on  board  the  other  truck 
which was driven by Manuel Estrada, respondent's driver and employee. 
Only  150  boxes  of  Liberty  filled  milk  were  delivered  to  petitioner.  The  other  600  boxes 
never  reached  petitioner,  since  the  truck  which  carried these boxes was hijacked somewhere along 
the  MacArthur  Highway  in  Paniqui,  Tarlac,  by  armed  men  who  took  with  them  the truck, its driver, 
his  helper  and  the  cargo.  Petitioner  then  commenced  an  action  against  private  respondent  in  the 
Court of First Instance of Pangasinan. 
The  trial  court  rendered  a  Decision  finding  private  respondent  to  be  a  common  carrier and 
holding  him  liable  for  the  value  of  the  undelivered  goods  (P  22,150.00)  as  well as for P 4,000.00 as 
damages  and  P  2,000.00  as  attorney's  fees.  The  Court  of  Appeals  reversed  the  judgment  of  the 
trial  court  and  held  that  respondent  had  been engaged in transporting return loads of freight "as a 
casual occupation — a sideline to his scrap iron business" and not as a common carrier. 
ISSUES: 
Whether or not respondent is liable for the value of the undelivered cargo. 
RULING: 
No.  Article  1734  establishes  the  general  rule  that  common  carriers are responsible for the 
loss,  destruction  or  deterioration  of  the  goods  which  they  carry,  "unless  the  same  is due to any of 
the following causes only: 
(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; and 
(5) Order or act of competent public authority. 
 
In  this  case,  the  hijacking  of  the  carrier's  truck  does  not  fall  within  any  of  the  five  (5) 
categories  of  exempting  causes  listed  in  Article  1734.  However,  the  limits  of  the  duty  of 
extraordinary  diligence  in  the  vigilance  over  the  goods  carried  are  reached  where  the  goods  are 
lost  as  a  result  of  a  robbery  which  is  attended  by  "grave  or  irresistible  threat,  violence or force." 
The  occurrence  of the loss must reasonably be regarded as quite beyond the control of the common 
carrier and properly regarded as a fortuitous event. 
 
Hence,  the  respondent  is  not  held  liable  for acts or events which cannot be foreseen or are 
inevitable,  provided  that  they  shall  have  complied  with  the  rigorous  standard  of  extraordinary 
diligence. 
 
 
#27 Sarkies Tours Phils, Inc. vs C.A. and Dr. Elino G. Foratels et. al., G.R. No. 108897, 
October 2, 1997 (VALENZUELA) 
FACTS: 
Fatima boarded the petitioner's De Luxe Bus in Manila going to Legazpi City. She has 
three pieces of luggage containing all of her optometry review books, materials and equipment, 
trial lenses, trial contact lenses, passport and visa, as well as her mother Marisol’s U.S. 
immigration (green) card, among other important documents and personal belongings. Her 
belongings were kept in the baggage compartment of the bus, but during a stopover at Daet, 
it was discovered that only one bag remained in the open compartment. The others, including 
Fatima’s things, were missing and might have dropped along the way. Some of the passengers 
suggested retracing the route of the bus to try to recover the lost items, but the driver 
ignored them and proceeded to Legazpi City. 
For said loss of things, Fatima’s mother went to Sarkies’ office in Legazpi and in 
Manila. Sarkies merely offered her P1,000.00 for each piece of luggage lost, which she 
turned down. Marisol and Fatima asked assistance from the radio stations and even from 
Philtranco bus drivers who plied the same route on the same date. One of Fatima’s bags was 
recovered. Subsequently, they formally demanded satisfaction of their complaint from 
petitioner. Sarkies apologized through a letter and said that there is already a team they 
sent out to recover the things or to get full details of the incident. After 9 months of 
waiting, they finally filed a case against Sarkies. RTC and CA ruled against Sarkies. 
Sarkies on the other hand, claims that Fatima did not bring any piece of luggage with 
her, and even if she did, none was declared at the start of the trip. 
 
ISSUE: W/N, Sarkies should be held liable for the loss of said luggages? 
 
RULING: 
Petitioner’s receipt of Fatima’s personal luggage having been thus established, it must 
now be determined if, as a common carrier, it is responsible for their loss. 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 the goods x x x transported 
by them,” and this liability “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 x x x the person who has a right to receive 
them,” unless the loss is due to any of the excepted causes under Article 1734 thereof. 
 
 
 
 
 
 
 
 
 
 
 
#28 Coastwise Lighterage Corp. vs. CA and Phil. General Insurance Comp (ABUYUAN) 
G.R. No. 114167, July 12, 1995  
Facts: 
Pag-asa Sales, Inc. entered into a contract to transport molasses from the province of Negros to 
Manila with Coastwise Lighterage Corporation (Coastwise for brevity), using the latter’s dump 
barges. The barges were towed in tandem by the tugboat MT Marica, which is likewise owned by 
Coastwise. 
Upon reaching Manila Bay, while approaching Pier 18, one of the barges, “Coastwise 9,” struck an 
unknown sunken object. The forward buoyancy compartment was damaged, and water gushed in 
through a hole “two inches wide and twenty-two inches long.” As a consequence, the molasses at the 
cargo tanks were contaminated and rendered unfit for the use it was intended. This prompted the 
consignee, Pag-asa Sales, Inc., to reject the shipment of molasses as a total loss. Thereafter, 
Pag-asa Sales, Inc., filed a formal claim with the insurer of its lost cargo, herein private 
respondent, Philippine General Insurance Company (PhilGen) and against the carrier, herein 
petitioner, Coastwise Lighterage. Coastwise Lighterage denied the claim and it was PhilGen which 
paid the consignee, Pag-asa Sales, Inc., the amount of P700,000 representing the value of the 
damaged cargo of molasses. 
In turn, PhilGen then filed an action against Coastwise Lighterage before the Regional Trial Court 
of Manila, seeking to recover the amount of P700,000 which it paid to Pag-asa Sales, Inc., for the 
latter’s lost cargo. PhilGen now claims to be subrogated to all the contractual rights and claims, 
which the consignee may have against the carrier, which is presumed to have violated the contract 
of carriage. 
The RTC awarded the amount prayed for by PhilGen. On Coastwise Lighterage appeal to the Court 
of Appeals, the award was affirmed. 
Issue: 
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. 
Ruling: 
No. The Court ruled that Coastwise Lighterage was not transformed into a private carrier. 
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 distinctions between the two. 
Petitioner admits that the contract it entered into with the consignee was one of affreightment. 
The Court agrees. Pag-asa Sales, Inc., only leased three of 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 carrier and the subsequent arrival of the same goods at the place of 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. 
 
 
#29 Asian Terminals, Inc. vs. Simon Enterprises, Inc., G.R. No. 177116 February 27, 2013 
(AGUILAR) 
​Facts: 
On October 25, 1995, Contiquincybunge Export Company loaded 6,843.700 metric tons of U.S. 
Soybean Meal in Bulk on board the vessel M/V "Sea Dream" at the Port of Darrow, Louisiana, U.S.A., 
for delivery to the Port of Manila to respondent Simon Enterprises, Inc., as consignee. 
When the vessel arrived at the South Harbor in Manila, the shipment was discharged to the 
receiving barges of petitioner Asian Terminals, Inc. (ATI), the arrastre operator. Respondent later 
received the shipment but claimed having received only 6,825.144 metric tons of U.S. 
Soybean Meal, or short by 18.556 metric tons, which is estimated to be worth US$7,100.16 or 
P186,743.20.[3] 
On November 25, 1995, Contiquincybunge Export Company made another shipment to respondent 
and allegedly loaded on board the vessel M/V "Tern" at the Port of Darrow, Louisiana, U.S.A. 
3,300.000 metric tons of U.S. Soybean Meal in Bulk for delivery to respondent at the Port of 
Manila. The carrier issued its clean Berth Term Grain Bill of Lading.[4] 
On January 25, 1996, the carrier docked at the inner Anchorage, South Harbor, Manila. The 
subject shipment was discharged to the receiving barges of petitioner ATI and received by 
respondent which, however, reported receiving only 3,100.137 metric tons instead of the 
manifested 
 
3,300.000 metric tons of shipment. Respondent filed against petitioner ATI and the carrier a claim 
for the shortage of 199.863 metric tons, estimated to be worth US$79,848.86 or P2,100,025.00, 
but its claim was denied. 
 
Thus, on December 3, 1996, respondent filed with the Regional Trial Court (RTC) of Manila an action 
for damages[5] against the unknown owner of the vessels M/V "Sea Dream" and M/V "Tern," its 
local agent Inter-Asia Marine Transport, Inc., and petitioner ATI... alleging that it suffered the 
losses through the fault or negligence of the said defendants. 
 
In their Answer,[7] the unknown owner of the vessel M/V "Tern" and its local agent Inter-Asia 
Marine Transport, Inc., prayed for the dismissal of the complaint essentially alleging lack of cause 
of action and prescription. They alleged as affirmative... defenses the following: that the complaint 
does not state a cause of action; that plaintiff and/or defendants are not the real 
parties-in-interest; that the cause of action had already prescribed or laches had set in; that the 
claim should have been filed within three days from... receipt of the cargo pursuant to the 
provisions of the Code of Commerce; that the defendant could no longer check the veracity of 
plaintiff's claim considering that the claim was filed eight months after the cargo was discharged 
from the vessel; that plaintiff hired its... own barges to receive the cargo and hence, any damages 
or losses during the discharging operations were for plaintiff's account and responsibility; that the 
statement of facts bears no remarks on any short-landed cargo; that the draft survey report 
indicates that the cargo... discharged was more than the figures appearing in the bill of lading; that 
because the bill of lading states that the goods are carried on a "shipper's weight, quantity and 
quality unknown" terms and on "all terms, conditions and exceptions as per charter party dated 
October 15,... 1995," the vessel had no way of knowing the actual weight, quantity, and quality of the 
bulk cargo when loaded at the port of origin and the vessel had to rely on the shipper for such 
information; that the subject shipment was discharged in Manila in the same condition and... 
quantity as when loaded at the port of loading; that defendants' responsibility ceased upon 
discharge from the ship's tackle; that the damage or loss was due to the inherent vice or defect of 
the goods or to the insufficiency of packing thereof or perils or dangers or accidents... of the sea, 
pre-shipment damage or to improper handling of the goods by plaintiff or its representatives after 
discharge from the vessel, for which defendants cannot be made liable; that damage/loss occurred 
while the cargo was in the possession, custody or control of plaintiff... or its representative, or due 
to plaintiff's own negligence and careless actuations in the handling of the cargo; that the loss is 
less than 0.75% of the entire cargo and assuming arguendo that the shortage exists, the figure is 
well within the accepted parameters when loading... this type of bulk cargo; that defendants 
exercised the required diligence under the law in the performance of their duties; that the vessel 
was seaworthy in all respects; that the vessel went straight from the port of loading to Manila, 
without passing through any intermediate... ports so there was no chance for any loss of the cargo; 
the plaintiff's claim is excessive, grossly overstated, unreasonable and a mere paper loss and is 
certainly unsubstantiated and without any basis; the terms and conditions of the relevant bill of 
lading and the charter... party, as well as the provisions of the Carriage of Goods by Sea Act and 
existing laws, absolve the defendants from any liability; that the subject shipment was received in 
bulk and thus defendant carrier has no knowledge of the condition, quality and quantity of the... 
cargo at the time of loading; that the complaint was not referred to the arbitrators pursuant to the 
bill of lading; that liability, if any, should not exceed the CIF value of the lost cargo, or the limits of 
liability set forth in the bill of lading and the charter party. 
Petitioner ATI argues that: 
1. Respondent failed to prove that the subject shipment suffered actual loss/shortage as 
there was no competent evidence to prove that it actually weighed 3,300 metric tons at 
the port of origin. 
2. Stipulations in the bill of lading that the cargo was carried on a "shipper's weight, 
quantity and quality unknown" is not contrary to public policy. Thus, herein petitioner 
cannot be bound by the quantity or weight of the cargo stated in the bill of lading. 
3. Shortage/loss, if any, may have been due to the inherent nature of the shipment and its 
insufficient packing considering that the subject cargo was shipped in bulk and had a 
moisture content of 12.5%. 
4. Respondent failed to substantiate its claim for damages as no competent evidence was 
presented to prove the same. 
5. Respondent has not presented any scintilla of evidence showing any fault/negligence on 
the part of herein petitioner. 
 
Issues: 
whether the appellate court erred in affirming the decision of the trial court holding petitioner 
ATI solidarily liable with its co-defendants for the shortage incurred in the... shipment of the 
goods to respondent 
 
Ruling: 
In this case, respondent failed to prove that the subject shipment suffered shortage, for it was 
not able to establish that the subject shipment was weighed at the port of origin at Darrow, 
Louisiana, U.S.A. and that the actual weight of the said shipment was 3,300 metric... tons. 
the weight of the shipment as indicated in the bill of lading is not conclusive as to the actual weight 
of the goods. Consequently, the respondent must still prove the actual weight of the subject 
shipment at the time it... was loaded at the port of origin so that a conclusion may be made as to 
whether there was indeed a shortage for which petitioner must be liable. This, the respondent 
failed to do. 
Principles: 
Though it is true that common carriers are presumed to have been at fault or to have acted 
negligently if the goods transported by them are lost, destroyed, or deteriorated, and that 
the common carrier must prove that it exercised extraordinary diligence in order to overcome 
the... presumption,[21] the plaintiff must still, before the burden is shifted to the 
defendant, prove that the subject shipment suffered actual shortage. This can only be done if 
the weight of the shipment at the port of origin and its subsequent weight at the... port of 
arrival have been proven by a preponderance of evidence, and it can be seen that the former 
weight is considerably greater than the latter weight, taking into consideration the exceptions 
provided in Article 1734[22] of the Civil Code. 
 
     
ii. Exemption from liability ( 
1. Natural Disaster 
Arts, 1734(1), 1739, 1740; Art. 361, Code of Commerce 
#30 Tan Chiong Sian v. Inchausti, 22 Phil 153 (ALCANTARA) 
TAN CHIONG SIAN, ​Plaintiff-Appellee​, v. INCHAUSTI & Co., ​Defendant-Appellant​. 
[G.R. No. 6092. March 8, 1912. ] 
FACTS: 
On  25  November  1908,  Inchausti  &  Co.  received  in  Manila  from  the  Chinaman,  Ong  Bieng  Sip,  205 
bundles,  bales  or  cases  of  goods  to  be  conveyed  by  the  steamer  Sorsogon  to  the  port  of  Gubat, 
Province  of  Sorsogon,  where  they  were  to  be transshipped to another vessel belonging to Inchausti 
and  by  the  latter  transported  to the pueblo of Catarman, Island of Samar, there to be delivered to 
the  Chinese  shipper  with  whom  Inchausti  made  the  shipping  contract.  To  this  end  3  bills  of  lading 
were  executed  (38,  39,  and  76).  The  steamer  Sorsogon,  which  carried  the  goods,  arrived  at  the 
port  of  Gubat  on  28  November  1908  and  as  the  lorcha  Pilar,  to  which  the  merchandise  was  to  be 
transshipped  for  its  transportation  to  Catarman,  was  not  yet  there,  the  cargo  was  unloaded  and 
stored  in  the  defendant  company’s  warehouses  at  that  port.  Several  days  later,  the  lorcha  Pilar 
arrived  at  Gubat  and,  after  the  cargo  it  carried  had  been  unloaded,  the  merchandise  belonging  to 
the Chinaman, Ong Bieng Sip, together with other goods owned by Inchausti & Co., was taken aboard 
to  be  transported  to  Catarman.  On  5  December  1908,  however,  before  the Pilar could leave for its 
destination,  towed by the launch Texas, there arose a storm, which, coming from the Pacific, p​assed 
over  Gubat  and,  as  a  result  of  the  strong  wind  and  heavy  sea​, the lorcha was driven upon the shore 
and  wrecked,  and  its cargo, including the Chinese shipper’s ​205 packages of goods, scattered on the 
beach​.  Laborers  or  workmen  of  Inchausti,  by  its  order,  then  proceeded  to  gather  up  Tan  Chiong 
Sian’s  merchandise  and,  as  it  was  impossible  to  preserve  it  after  it  was  salved  from  the  wreck  of 
the lorcha, it was sold at public auction before a notary for the sum of P1,693.67.  
On  11  January  1909,  the  Chinaman,  Tan  Chiong  Sian  or  Tan  Chinto,  filed  a  written complaint, which 
was  amended  on  28  January  1909,  and  again  on  27  October  1909  against  Inchausti  &  Co.  alleging 
that  Inchausti  neither  carried  nor  delivered  his  merchandise  to  Ong  Bieng  Sip,  in  Catarman,  but 
unjustly and negligently failed to do so, with the result that the said merchandise was almost totally 
lost,  and  thus  claimed  the value of the merchandise which was P20,000, legal interest thereon from 
25  November  1908,  and  the  cost  of  the  suit. After the hearing of the case and the introduction of 
testimony  by  the  parties,  judgment  was  rendered,  on  18 March 1910, in favor of Tan Chiong Sian or 
Tan  Chinto,  against  Inchausti  &  Co.,  for  the  sum of P14,642.63, with interest at the rate of 6% per 
annum  from  11  January  1909,  and  for  the  costs  of  the  trial.  Inchausti  &  Co.  appealed  from  the 
judgment.  
The  Supreme  Court  reversed  the  judgment  appealed  from,  and  absolved  Inchausti  &  Co.,  without 
special  finding  as  to  costs;  holding  that Inchausti is not liable for the loss and damage of the goods 
shipped  on  the  lorcha  Pilar  by  the  Chinaman,  Ong  Bieng Sip, inasmuch as such loss and damage were 
the  result  of  a  fortuitous  event  or  force  majeure,  and  there  was  no  negligence  or  lack of care and 
diligence on the part of Inchausti or its agents.  
ISSUE:  Whether  the  defendant,  Inchausti  &  Co.,  is liable for the loss of the merchandise and for 
failure to deliver the same at the place of destination. 
RULING: ​NO​,  Inchausti  &  Co  is  not  liable  for  the  loss  and  damage  since  it  was  due  to  a 
fortuitous  event  and  there  was  no  negligence/  lack  of  care  or  diligence  on  the  part  of  the 
Company and its agents. 
From  the  moment  that  it  is  held  that  the  loss  of  the  said  lorcha  was  due  to  force  majeure,  a 
fortuitous  event,  with  no  conclusive  proof  of  negligence  or  of  the  failure  to  take  the  precautions 
such  as  diligent  and  careful  persons  usually  adopt  to  avoid  the  loss  of  the  boat  and  its  cargo,  it  is 
neither  just  nor  proper  to  attribute  the  loss  or  damage  of  the  goods  in  question  to  any  fault, 
carelessness, or negligence on the part of Inchausti and its agents and, especially, the patron of the 
lorcha Pilar. 
 Inchausti took all measures for the salvage of goods recoverable after the accident. Subsequent to 
the  wreck,  Inchausti’s  agent  took all the requisite measures for the salvage of such of the goods as 
could  be  recovered  after  the  accident,  which  he  did  with  the  knowledge  of  the  shipper, Ong Bieng 
Sip,  and,  in  effecting  their  sale,  he  endeavored  to  secure  all  possible  advantage  to  the  Chinese 
shipper; in all these proceedings, he acted in obedience to the law. 
Article  1601  of  the  Civil  Code  prescribes  that  “Carriers  of  goods  by  land  or  by  water  shall  be 
subject  with  regard  to  the  keeping  and  preservation  of  the  things  entrusted  to  them, to the same 
obligations  as  determined  for  innkeepers  by  articles  1783  and  1784.  The  provisions  of  this  article 
shall  be  understood  without  prejudice  to  what  is  prescribed  by  the  Code of Commerce with regard 
to transportation by sea and land.” 
The  general  rule  established  in  ​Article  840  of  the  Code  of  Commerce  is  that  ​the  loss  of  the 
vessel  and  of  its  cargo,  as  the  result  of  shipwreck,  shall  fall  upon  the  respective  owners 
thereof,  ​save  for  the  exceptions  specified  in  Article  841  of  the same Code. These legal provisions 
are  in  harmony  with  those  of  articles  361  and  362  of  the  Code  of  Commerce,  and  are  applicable 
whenever  it  is  proved  that  the loss of, or damage to, the goods was the result of a fortuitous event 
or  of  force  majeure;  but  the  carrier  shall  be  liable  for  the  loss  or  the  damage  arising  from  the 
causes  aforementioned,  if  it  shall  have  been  proven  that  they  occurred  through  his  own  fault  or 
negligence  or  by  his  failure  to  take  the  same  precautions  usually  adopted  by  diligent  and  careful 
persons. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
#31 Martini v. Macondray (BERNARDO) 
G.R. No. 13972, July 28, 1919 
Facts: 
G.  Martini,  Ltd.  arranged  4with  the  Eastern and Australian Steamship Company for the shipment of 
219  cases or packages of chemical products from Manila, Philippines to Kobe, Japan. The goods were 
carried  on  the  deck  of  the  ship.  Upon  arrival  at  the  destination  it  was  found  that  the  chemicals 
suffered  damage  due  to  fresh  and  saltwater.  Martini  filed  a complaint for damages. Its contention 
being  that  it  was  the  duty  of  the  ship’s  company  to  stow  the  cargo  in  the  hold  and  not  in the open 
deck. 
In  defense,  the company argued that by the contract of affreightment the cargo in question was to 
be  carried  on  deck  at  the  shipper’s  risk.  In  fact,  ​the  bill  of  lading  was  clearly  stamped  with  a 
rubber  stencil  in  conspicuous  letters  “on  deck  at  shipper’s  risk.”  ​In  this  connection  the 
Defendant  relies  upon  paragraph  19  of  the  several  bills  of  lading  issued  for  transportation  of  this 
cargo, which reads as follows: 
“19.  Goods signed for on this bill of lading as carried on deck are entirely at shipper’s risk, 
whether  carried  on  deck  or  under  hatches,  and  the  steamer  is  not  liable  for  any  loss  or 
damage from any cause whatever.” 
Issue: 
Whether  or  not  Macondray  should  be  held  liable  for  the  damage  on  the  goods  of  Martini  shipped 
through its steamer. 
Held: 
No. Macondray could not be held liable. 
Where  cargo  is,  with  the  owner’s  consent, transported on the deck of a sea-going vessel upon 
a  bill of lading exempting the ship’s company from liability for damage, the risk of any damage 
resulting  from carriage on deck, such as damage caused by rain or the splashing aboard of sea 
water,  must  be  borne  by  the  owner.  However,  the  ship  may  still  be  liable  if  negligence  has 
been alleged and proved to have caused the damage. 
In  this  case,  it  is  apparent  that  the  damage  was  caused  by rain and sea water—the risk of which is 
inherently  incident  to  carriage  on  deck.  ​It  is  not  permissible  for  the  court,  in  the  absence  of 
any  allegation  or  proof  of  negligence,  to  attribute  negligence  to  the  ship’s  employees  in  the 
matter of protecting the goods from rains and storms. 
The  complaint  in  this  case  alleges  that  the  damage  done  was  due  to  the  mere  fact  of  carriage  on 
deck  and  not  due  to  the  fault  or  delinquency  of  anybody.  Therefore,  Macondray  could  not  be  held 
liable. 
 
 
 
 
 
 
#32 Eastern Shipping v. IAC, 150 SCRA 463 (BUENCONSEJO) 
 
EASTERN SHIPPING LINES, INC. vs. IAC and DEVELOPMENT INSURANCE & 
SURETY CORPORATION 
G.R. No. L-69044 May 29, 1987 
  
  
EASTERN SHIPPING LINES, INC. vs. THE NISSHIN FIRE AND MARINE INSURANCE 
CO., and DOWA FIRE & MARINE INSURANCE CO., LTD. 
No. 71478 May 29, 1987 
  
  
FACTS: 
In ​G.R. No. 69044​, sometime in June, 1977, the M/S ASIATICA, a vessel operated 
by petitioner Eastern Shipping Lines, Inc., loaded at Kobe, Japan for transportation to 
Manila, 5,000 pieces of calorized lance pipes consigned to Philippine Blooming Mills Co., 
Inc., and 7 cases of spare parts valued, consigned to Central Textile Mills, Inc. Both sets 
of goods were insured with respondent Development Insurance and Surety Corporation.  
In ​G.R. No. 71478,​ during the same period, the same vessel took on board 128 
cartons of garment fabrics and accessories, consigned to Mariveles Apparel Corporation, 
and two cases of surveying instruments consigned to Aman Enterprises and General 
Merchandise. The 128 cartons were insured by respondent Nisshin Fire & Marine 
Insurance Co., and the 2 cases by respondent Dowa Fire & Marine Insurance Co., Ltd. 
Enroute for Kobe, Japan, to Manila, the vessel caught fire and sank, resulting in the 
total loss of ship and cargo. The respective respondent Insurers paid the corresponding 
marine insurance values to the consignees.  
Hence, respondent insurers having been subrogated unto the rights of the insured 
companies, filed a suit against petitioner for the recovery of amounts it had paid. 
Petitioner Carrier 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). 
The Trial Court rendered judgment in favor of the Insurance Companies. Hence, 
this Petition for Review on Certiorari. 
ISSUES: 
1.​ ​Which law should govern – the Civil Code provision on Common Carriers or the 
Carriage of Goods by Sea Act? 
2.​ ​Whether or not the petitioner is exempted from liability. 
  
RULING: 
1. 
   
The l​aw 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. A​s 
the cargoes in question were transported from Japan to the Philippines, the liability of 
Petitioner Carrier is governed primarily 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.  
  
2.  
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.​ 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;  
xxx xxx xxx  
P​etitioner Carrier claims that the loss of the vessel by fire exempts it from 
liability under the phrase "natural disaster or calamity​. " However, the Court opined 
that fire may not be considered a natural disaster or calamity. This must be so as it arises 
almost invariably from some act of man or by human means. It does not fall within the 
category of an act of God unless caused by lightning or by other natural disaster or 
calamity. It may even be caused by the actual fault or privity of the carrier.  
Article 1680 of the Civil Code, which considers fire as an extraordinary fortuitous 
event refers to leases of rural lands where a reduction of the rent is allowed when more 
than one-half of the fruits have been lost due to such event, considering that the law 
adopts a protection policy towards agriculture.  
As the peril of the fire is not comprehended within the exception in Article 1734, 
Article 1735 of the Civil Code provides that all cases than those mention in Article 1734, 
the common carrier shall be presumed to have been at fault or to have acted negligently, 
unless it proves that it has observed the extraordinary deligence required by law. 
In this case, the respective Insurers. as subrogees of the cargo shippers, have 
proven that the transported goods have been lost. Petitioner Carrier has also proved that 
the loss was caused by fire. The burden then is upon Petitioner Carrier to proved that it 
has exercised the extraordinary diligence required by law. 
  
Nor may Petitioner Carrier seek refuge from liability under the Carriage of Goods 
by Sea Act, It is provided therein that:  
Sec. 4(2). Neither the carrier nor the ship shall be responsible for loss 
or damage arising or resulting from  
(b) Fire, unless caused by the actual fault or privity of the carrier.  
xxx xxx xxx 
In this case, both the Trial Court and the Appellate Court, in effect, found, as a 
fact, that ​there was "actual fault" of the carrier shown by "lack of diligence" ​in that 
"when the smoke was noticed, the fire was already big; that the fire must have started 
twenty-four (24) hours before the same was noticed; " and that "after the cargoes were 
stored in the hatches, no regular inspection was made as to their condition during the 
voyage." The foregoing suffices to show that the circumstances under which the fire 
originated and spread are such as to show that Petitioner Carrier or its servants were 
negligent in connection therewith. Consequently, the complete defense afforded by the 
COGSA when loss results from fire is unavailing to Petitioner Carrier.  
Decision of the trial court and CA is affirmed. 
 
 
 
 
 
#33 Eastern Shippings Lines, Inc. v The Nisshin Fire and Marine Insurance Co., and Dowa 
Fire G.R. Nos. L-71478, May 29, 1987 (CANENCIA) 
UNDER EXEMPTION FROM LIABILITY 
1. Facts: Sometime in or prior to June, 1977, the M/S ASIATICA, a vessel operated by 
petitioner Eastern Shipping Lines, Inc., took on board 128 cartons of garment fabrics and 
accessories, in two (2) containers, consigned to Mariveles Apparel Corporation, and two cases 
of surveying instruments consigned to Aman Enterprises and General Merchandise. The 128 
cartons were insured for their stated value by respondent Nisshin 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. 
Enroute for Kobe, Japan, to Manila, the vessel caught fire and sank, resulting in the total 
loss of ship and cargo. The respective respondent Insurers paid the corresponding marine 
insurance values to the consignees concerned and were thus subrogated unto the rights of the 
latter as the insured.  
Issue: Whether or not the loss caused by fire exempt the carrier from liability 
Ruling: No. Fire may not be considered a natural disaster or calamity like those enumerated in 
Article 1734 as it arises almost invariably from some act of man or by human means. It does 
not fall within the category of an act of God unless caused by lightning or by other natural 
disaster or calamity. 
If fire were to be considered a “natural disaster” within the meaning of Article 1734 of the 
Civil Code, it is required under Article 1739 that the “natural disater” must have been the 
proximate and only cause of the loss, and that the carrier has exercised due diligence to 
prevent or minimize the loss before, during or after the occurrence of the disaster. 
 
 
#34 Asia Lighterage v. Court of Appeals, 409 SCRA 340 (DATAN) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
#35 TRANSIMEX CO. vs MAFRE ASIAN INSURANCE CORP. (DIMAUKOM) 
G.R. No. 190271, September 14, 2016 
FACTS: 
On  21  May  1996,M/V  Meryem  Ana  received  a  shipment  consisting  of  21,857  metric  tons  of  Prilled 
Urea  Fertilizer  from  Helm  Duengemittel  GMBH  at  Odessa,  Ukraine.  The  shipment  was  covered  by 
two  separate  bills  of  lading  and  consigned  to  Fertiphil  for  delivery  to  two ports - one in Poro Point, 
San  Fernando,  La  Union;  and the other in Tabaco, Albay. Fertiphil insured the cargo against all risks 
under  Marine  Risk  Note  Nos.  MN-MAR-HO-0001341  and  MN-MAR-HO-0001347  issued  by 
respondent.  M/V  Meryem  Ana  arrived  at  Poro  Point,  La  Union,  and  discharged  14,339.507  metric 
tons  of  fertilizer  under  the  first  bill  of  lading.  The  ship  sailed  on  to  Tabaco,  Albay,  to  unload  the 
remainder  of  the  cargo.  The  fertilizer  unloaded  at  Albay  appeared to have a gross weight of 7,700 
metric tons. The present controversy involves only this second delivery​. 
As  soon  as  the  vessel  docked  at  the  Tabaco  port,  the  fertilizer  was  bagged  and  stored  inside  a 
warehouse.  When  the  cargo  was  subsequently  weighed,  it  was discovered that only 7,350.35 metric 
tons  of  fertilizer had been delivered. The present controversy involves the second delivery because 
of  the  alleged  shortage  of  349.65  metric  tons.  Fertiphil  filed  a  claim  with  respondent  for 
P1,617,527.37.  After  payment,  respondent  MAFRE  Asian  Insurance  demanded reimbursement from 
petitioner  on  the  basis  of  the  right  of  subrogation.  The  claim  was denied, prompting respondent to 
file  a  Complaint with the RTC and ordered petitioner to pay the claim ofP1,617,527.37 was affirmed 
by the CA and denied petitioner’s appeal. Hence, this Petition for Review on Certiorari. 
ISSUES: 
1.  Whether  the transaction is governed by the provisions of the Civil Code on common carriers or by 
the provisions of COGSA (Carriage of Goods by Sea Act); and 
2.  Whether  the  petitioner  is  liable  for  the  loss  or  damage  sustained  by  the  cargo  because  of  bad 
weather. 
HELD: 
1.  The  Court  upholds  the  ruling  of  the  CA  with  respect to the applicable law. As expressly provided 
in Article 1753 of the Civil Code, "[t]he law of the country to which the goods are to be transported 
shall  govern  the  liability  of  the  common  carrier  for  their  loss,  destruction  or deterioration." Since 
the  cargo  in  this  case  was  transported  from  Odessa,  Ukraine,  to  Tabaco,  Albay,  the  liability  of 
petitioner  for  the  alleged  shortage  must  be  determined  in  accordance  with  the  provisions  of  the 
Civil  Code  on  common  carriers.  The  Code  takes  precedence  as  the  primary  law  over  the  rights  and 
obligations of common carriers with the Code of Commerce and COGSA applying suppletorily. 
  2.  ​Petitioner  is  liable  for  the  shortage  incurred  by  the  shipment​.  It  must  be emphasized that not 
all  instances  of  bad  weather  may  be  categorized  as  "storms"  or  "perils  of  the  sea"  within  the 
meaning  of  the  provisions  of  the  Civil  Code  and  COGSA  on  common  carriers.  To  be  considered 
absolutory  causes  under  either  statute,  bad  weather  conditions  must  reach  a  certain  threshold  of 
severity.  ​Petitioner  failed to prove the existence of a storm or a peril of the sea within the context 
of  Article  1734(1)  of  the  Civil  Code  or  Section  4(2)(c)  of  COGSA.  Furthermore,  there  was  no 
sufficient  proof  that  the  damage  to  the  shipment  was  solely  and  proximately  caused  by  bad 
weather. 
 
 
 
 
#36 Edgar Cokaliong Shipping Lines, Inc. v UCPB Gen Ins. G.R. No. 146018, June 25, 2003 
(DYSANGCO) 
  
FACTS: 
When  the  Edgar  Cokaliong  Shipping  Lines,  Inc.  left  port,  it  had  thirty-four  (34)  passengers  and 
assorted  cargo  on  board,  including  the  goods  of  Legaspi.  After  the  vessel  had  passed  by  the 
Mandaue-Mactan  Bridge,  ​fire  ensued  in  the  engine  room,  and,  despite  earnest  efforts  of  the 
officers  and  crew  of  the  vessel,  the  fire  engulfed  and  destroyed  the  entire  vessel resulting in the 
loss of the vessel and the cargoes therein​. The Captain filed the required Marine Protest. 
The  subject  bill  of  lading  no.  58  and  59  were  valued  in  the  amount  of  P6,500.00  and  P14,000.00, 
respectively.  Both  were  insured  with  UCPB  and  a  total  amount  of  P148,500.00  were  paid  by  UCPB 
for  the  insurance  claims.  Hence,  UCPB  filed  a  complaint  for  the  collection  of  the  said  amount  plus 
interest for the loss of the cargo and attorney’s fee. 
Petitioner  argues  that  the  cause  of  the  loss  of  the  goods, subject of this case, was force majeure. 
It  adds  that  its  exercise  of  due  diligence  was  adequately  proven  by  the  findings  of  the  Philippine 
Coast Guard.  
The  uncontroverted  findings  of  the  Philippine Coast Guard show that the M/V Tandag sank due to a 
fire,  which  resulted  from  a  crack  in  the  auxiliary  engine  fuel  oil  service  tank.  Fuel  spurted  out  of 
the crack and dripped to the heating exhaust manifold, causing the ship to burst into flames.  
ISSUES: 
1.​ ​Whether or not petitioner liable for the loss of the goods 
2.​ ​Whether or not the petitioner shall pay P148,500.00 plus interest. 
RULING: 
1. ​Yes.  Having  originated  from  an  unchecked  crack  in  the  fuel  oil service tank, the fire could not 
have  been  caused  by  force  majeure.  Broadly  speaking,  force  majeure  generally  applies  to  a 
natural  accident,  such  as that caused by a lightning, an earthquake, a tempest or a public enemy. 
Hence, fire is not considered a natural disaster or calamity. 
  
2. ​No.  In  ​Aboitiz  Shipping  Corporation  v.  Court  of  Appeals​,  the  description  of the nature and the 
value  of  the  goods  shipped  were  declared  and  reflected  in  the  bill of lading, like in the present 
case.  The  Court  therein  considered  this  declaration  as  the  basis  of  the  carrier’s  liability  and 
ordered payment based on such amount. Following this ruling, petitioner should not be held liable 
for  more  than  what  was  declared  by  the  shippers/consignees  as  the  value  of  the  goods  in  the 
bills of lading. 
  
  
 
 
 
 
 
 
 
 
 
#37 The Philippine American General Insurance Co., Inc. vs CA and Felman Shipping Lines, 
G.R. No. 116940, June 11, 1997 (FULLEROS) 
  
Facts: 

July 6, 1983 Coca-cola loaded on board MV Asilda, owned and operated by Felman, 7,500 cases of 
1-liter Coca-Cola soft drink bottles to be transported to Zamboanga City to Cebu. The shipment was 
insured with Philamgen. 

July 7, the vessel sank in Zamboanga del Norte. July 15, Coca Cola filed a claim with respondent 
Felman for recovery of damages. Felman denied thus prompted Coca-Cola to file an insurance claim 
with Philamgen. Philamgen later on claimed its right of subrogation against Felman which disclaimed 
any liability for the loss. 

Philamgen alleged that the sinking and loss were due to the vessel's unseaworthiness, that the 
vessel was improperly manned and its officers were grossly negligent. Felman filed a motion to 
dismiss saying that there is no right of subrogation in favor of Philamgen was transmitted by the 
shipper. 

RTC dismissed the complaint of Philamgen. CA set aside the dismissal and remanded the case to the 
lower court for trial on the merits. Felman filed a petition for certiorari but was denied. 

RTC rendered judgment in favor of Felman. it ruled that the vessel was seaworthy when it left the 
port of Zamboanga as evidenced by the certificate issued by the Phil. Coast Guard and the ship 
owner’s surveyor. Thus, the loss is due to a fortuitous event, in which, no liability should attach 
unless there is stipulation or negligence. 

On appeal, CA rendered judgment finding the vessel unseaworthy for the cargo for being top-heavy 
and the Coca-Cola bottles were also improperly stored on deck. Nonetheless, the CA denied the 
claim of Philamgen, saying that Philamgen was not properly subrogated to the rights and interests 
of the shipper plus the filing of notice of abandonment had absolved the ship owner from liability 
under the limited liability rule. 

Issue: 

(a) Whether the vessel was seaworthy, and that (b) whether limited liability rule should apply 

 
Ruling: 
 

(a) The vessel was unseaworthy. The proximate cause thru the findings of the Elite Adjusters, 
Inc., is the vessel's being top-heavy. Evidence shows that days after the sinking coca-cola 
bottles were found near the vicinity of the sinking which would mean that the bottles were 
in fact stowed on deck which the vessel 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 thus making it unstable. 
(b) Art. 587 of the Code of Commerce is not applicable, the agent is liable for the negligent 
acts of the captain in the care of the goods. The international rule is that the right of 
abandonment of vessels, as legal limitation of liability, does not apply to cases where the 
injury was occasioned by the fault of the ship owner.​ Felman was negligent, it cannot 
therefore escape liability. 
 
 
2. Acts of public enemy – Art. 1734(2), 1739 
3. Act or omission of shipper – Art. 1734(3), 1741 
Contributory Negligence 
#38 Tabacalera Insurance Co., et. al., vs North Front Shipping Servise and CA, G.R. No. 
119197, May 16, 1997 (GALLEGO) 
​FACTS:  
Parties 
Respondent Carrier​ – North Front Shipping Services, Inc. 
Consignee​ – Republic Flour Mills Corporation 
Petitioner Insurers​ – Tabacalera Insurance Co., Prudential Guarantee & Assurance, Inc., and New 
Zealand Insurance Co., Ltd. 
 
On  2  August  1990,  20,234  sacks  of  corn  grains  were  shipped  on  board  a  vessel  owned  by  the 
carrier.  The  vessel  was  inspected  prior  to  actual  loading  by representatives of the shipper and was 
found fit to carry the merchandise. 
The  unloading  operations  took  twenty  (20)  days  after  the  arrival  of  the  barge  at the wharf of the 
consignee  in  Manila.  There  was  also  a  shortage  of 26.333 metric tons and the remaining cargo were 
deteriorating. 
The corn grains were examined and the laboratory analysis certificate revealed that the corn grains 
were  contaminated  with  salt  water  but  the  mold  growth  could  be  stopped  by  drying  and  would still 
fit  for  consumption.  However,  the  consignee  rejected  the  entire  cargo  and  demanded  for  payment 
for damages which were settled by the insurers. 
The  insurance  companies  hired  Marine  Cargo  Adjusters  to  conduct  a  survey  and  the  latter  found 
cracks  in  the  bodega  of  the  barge  and  heavy  concentration  of  molds  on  the  tarpaulins  and  wooden 
boards.  The  tarpaulins  were  not  brand new as there were patches on them, contrary to the claim of 
North  Front  Shipping  Services,  Inc.,  thus  making  it  possible  for  water  to  seep  in.  They  also 
discovered that the bulkhead of the barge was rusty and no seals in the hatches. 
ISSUES: 
1.  Whether  or  not  the  carrier  observed  extraordinary  diligence  in  their  vigilance  over  the  cargo 
they transported. 
2.  Whether  or  not  the  carrier  was  the  sole  responsible  for  the  loss  destruction,  loss  or 
deterioration of the cargo. 
RULING: 
1.  No.  The  carrier  failed  to  observe  the  required  extraordinary  diligence  in  the  vigilance  over  the 
goods  placed  in  its  care.  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 
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  characteristics of goods tendered for shipment, and to exercise 
due care in the handling and stowage, including such methods as their nature requires​.’ 
In  this  case  the  master  of  the  vessel  and  his  crew  failed  to  undertake  precautionary  measures  to 
avoid  or  lessen  the  cargo’s  possible  deterioration  as  they  were  presumed  knowledgeable  about  the 
nature of the cargo having been in the service for almost three decades. 
2. No. The Court also found that the consignee was guilty of contributory negligence. No explanation 
was  given  by  the  consignee  why  there  was  a  delay  of  six  (6)  days  in  unloading  the  cargo.  The  loss 
could  have  been  avoided  or  minimized  if  they  commenced  the  unloading  immediately. The consignee 
should share at least 40% of the loss for its contributory negligence. 
NOTES: 
Mere  proof  of  delivery  of  the  goods  in  good  order  to  a  common  carrier,  and of their arrival at the 
place  of  destination  in  bad order, makes out p ​ rima facie case against the common carrier, so that if 
no  explanation  is  given  as  to  how  the  loss,  deterioration  or  destruction  of  the  goods  occurred, the 
common  carrier  must  be  held  responsible.  Otherwise  stated,  it  is  incumbent  upon  the  common 
carrier  to  prove  that  the  loss,  deterioration  or  destruction  was  due  to  accident  or  some  other 
circumstances inconsistent with its liability. (​Compania Maritima v. Court of Appeals​) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4. Character of goods, etc. 
  
Arts. 1734(4), 1742 
Art. 366, Code of Commerce 
 
 
#39 Government v. Ynchausti, 40 Phil 219 (LEONOR)  
FACTS:  
Plaintiff  shipped  cargo  of  roofing  tiles  from  Manila  to  Iloilo  on  a  vessel  belonging  to  the 
defendant.  The  tiles  were  delivered  by  the  defendant  to  the  consignee  of  the  plaintiff.  Upon 
delivery  it  was  found  that  some  of  the  tiles  had  been  damaged. Plaintiff moved to recover the sum 
amount  equivalent  to  the  damages  but  the  lower court rendered judgment against it and in favor of 
the defendant absolving the latter from all liability. 
ISSUE:  
Whether or not defendant may be held liable.  
HELD:  
NO. 
Finding  as  we  do  that  the  tiles  in  question  were  shipped  at  the  owner’s  risk,  under  the  law  in  this 
jurisdiction,  ​the  carrier  is  only  liable  where  the  evidence  shows  that  he  was  guilty  of  some 
negligence  and  that  the damages claimed were the result of such negligence. As was said above, 
the plaintiff offered no proof whatever to show negligence on the part of the defendant. 
The  defendant herein proved, and the plaintiff did not attempt to dispute, that the tiles in question 
were  of  a  brittle  and  fragile  nature  and  that they were delivered by the plaintiff to the defendant 
without  any  packing  or  protective  covering.  The  defendant  also  offered  proof  to  show  that  there 
was  no  negligence  on  its  part,  by  showing  that  the  tiles  were  loaded,  stowed,  and  discharged  in  a 
careful  and  diligent manner. In this jurisdiction ​there is no presumption of negligence on the part 
of  the  carriers  in  case  like  the  present.  The  plaintiff,  not  having  proved  negligence on the part of 
the defendant, is not entitled to recover damages. 
 
 
 
#40 Southern Lines v. CA, 4 SCRA 258 ​G.R. No. L-16629​ (MACAPAAR) ​For review 
 
Facts: 
The  City  of  Iloilo  requisitioned  for  rice  from  the  National  Rice  and  Corn  Corporation  (NARIC)  in 
Manila.  NARIC,  pursuant  to  the  order, shipped 1,726 sacks of rice consigned to the City of Iloilo on 
board the SS “General Wright” belonging to the Southern Lines, Inc. 

The  City  of  Iloilo  received  the  shipment  and  paid  the  total  charged  amount.  However,  it  was 
discovered  in  the  bill  of  lading  that  there  was  shortage  equivalent  to  41  sacks  of  rice.  The City of 
Iloilo  filed  a  complaint  against  NARIC  and  the  Southern Lines, Inc. for the recovery of the amount 
representing  the  value  of  the  shortage  of  the  shipment  of  rice.  The  lower  court  absolved  NARIC, 
but  held  Southern  Lines,  Inc.  liable  to  pay  the  shortage.  CA  affirmed  the  trial  court’s  decision, 
hence, this petition. 

Issues: 

(1) W/N Southern Lines is liable for the loss or shortage of the rice shipped; 

(2) W/N the action was filed on time. 

Ruling: 

(1)  YES.  Under  the  provisions  of  Article  361,  the  defendant-carrier  in  order  to  free  itself  from 
liability  was  only  obliged  to  prove  that  the  damages  suffered  by  the  goods  were  “by  virtue  of  the 
nature  or  defect  of  the  articles.”  Under  the  provisions  of  Article  362,  the  plaintiff,  in  order  to 
hold  the  defendant  liable,  was  obliged  to  prove  that  the  damages  to  the  goods  by  virtue  of  their 
nature,  occurred  on  account  of  its negligence or because the defendant did not take the precaution 
adopted by careful persons. 

The  contention  is  untenable,  for,  if  the  fact  of  improper  packing  is  known  to  the  carrier  or  his 
servants,  or  apparent  upon  ordinary  observation,  but  it  accepts  the  goods  notwithstanding  such 
condition,  it  is  not  relieved  of  liability  for  loss  or  injury  resulting  therefrom.  Petitioner  itself 
frankly  admitted  that  the  strings  that  tied  the  bags  of  rice  were  broken;  some  bags  were  with 
holes  and  plenty  of  rice  were  spilled  inside  the  hull of the boat, and that the personnel of the boat 
collected  no  less  than  26  sacks  of  rice  which  they  had  distributed  among themselves. This finding, 
which  is  binding  upon  this  Court,  shows  that  the  shortage  resulted  from  the  negligence  of 
petitioner. 

(2)  YES.  Respondent  filed  the  present  action,  within  a  reasonable  time  after  the  short  delivery  in 
the  shipment  of  the  rice  was  made.  It  should  be  recalled  that  the  present  action  is  one  for  the 
refund  of  the  amount  paid  in  excess,  and  not  for  damages  or  the  recovery  of  the  shortage;  for 
admittedly  the  respondent  had  paid  the  entire  value  of  the  1726  sacks  of  rice,  subject  to 
subsequent adjustment, as to shortages or losses. The bill of lading does not at all limit the time for 
filing an action for the refund of money paid in excess. 
 
5. Order of competent authority 
Arts. 1734(5), 1743 
 
 
#41 Ganzon v. Court of Appeals, 161 SCRA 646, G.R. No. L-48757, 5/30/88 

FACTS: On November 28, 1956, Gelacio Tumambing contracted the services of Mauro B. Ganzon to haul
305 tons of scrap iron from Mariveles, Bataan, to the port of Manila on board the lighter LCT "Batman.
Pursuant to that agreement, Mauro B. Ganzon sent his lighter "Batman" to Mariveles where it docked in
three feet of water. Gelacio Tumambing delivered the scrap iron to defendant Filomeno Niza, captain of
the lighter, for loading which was actually begun on the same date by the crew of the lighter under the
captain's supervision. When about half of the scrap iron was already loaded, Mayor Jose Advincula of
Mariveles, Bataan, arrived and demanded P5,000.00 from Gelacio Tumambing. The latter resisted the
shakedown and after a heated argument between them, Mayor Jose Advincula drew his gun and fired at
Gelacio Tumambing who sustained injuries.

After some time, the loading of the scrap iron was resumed. But on December 4, 1956, Acting Mayor
Basilio Rub, accompanied by three policemen, ordered captain Filomeno Niza and his crew to dump the
scrap iron where the lighter was docked. The rest was brought to the compound of NASSCO. Later on
Acting Mayor Rub issued a receipt stating that the Municipality of Mariveles had taken custody of the
scrap iron.

Tumabing sued Ganzon; the latter alleged that the goods have not been unconditionally placed under his
custody and control to make him liable. The trial court dismissed the case but on appeal, respondent
Court rendered a decision reversing the decision of the trial court and ordering Ganzon to pay damages.

ISSUE: Whether or not a contract of carriage has been perfected.

HELD: Yes. By the said act of delivery, the scraps were unconditionally placed in the possession and
control of the common carrier, and upon their receipt by the carrier for transportation, the contract of
carriage was deemed perfected. Consequently, the petitioner-carrier's extraordinary responsibility for the
loss, destruction or deterioration of the goods commenced. Pursuant to Art. 1736, such extraordinary
responsibility would cease only upon the delivery, actual or constructive, by the carrier to the consignee,
or to the person who has a right to receive them. The fact that part of the shipment had not been loaded
on board the lighter did not impair the said contract of transportation as the goods remained in the
custody and control of the carrier, albeit still unloaded.

Before Ganzon could be absolved from responsibility on the ground that he was ordered by competent
public authority to unload the scrap iron, it must be shown that Acting Mayor Basilio Rub had the power to
issue the disputed order, or that it was lawful, or that it was issued under legal process of authority. The
appellee failed to establish this. Indeed, no authority or power of the acting mayor to issue such an order
was given in evidence. Neither has it been shown that the cargo of scrap iron belonged to the Municipality
of Mariveles. What we have in the record is the stipulation of the parties that the cargo of scrap iron was
accumulated by the appellant through separate purchases here and there from private individuals. The
fact remains that the order given by the acting mayor to dump the scrap iron into the sea was part of the
pressure applied by Mayor Jose Advincula to shakedown Tumambing for P5,000.00. The order of the
acting mayor did not constitute valid authority for Ganzon and his representatives to carry out.