Transpo Valencia From Kimwel

The Fraternal Order of St.
Thomas More
Transportation Law – Atty. Jocelyn A. Valencia
TABLE OF CONTENTS
Part I
Chapter I. Common Carrier in General 1
Chapter II. Common Carrier of Goods 8
Chapter III. Common Carrier of Passengers 20
Chapter IV. Damages Recoverable from Common Carriers 29
Part II
Chapter I. Maritime and Admiralty Laws Code of Commerce 35
Chapter II. Charter Party 44
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―The King‘s Good Servant, But God‘s First‖

The Fraternal Order of St. Thomas More 1
Transportation Law – Atty. Josephine Valencia
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TRANSPORTATION LAW
PART I
CIVIL CODE PROVISIONS ON COMMON CARRIERS
CHAPTER I
COMMON CARRIERS IN GENERAL
LAWS GOVERNING CONTRACTS OF TRANSPORTATION BY LAND, SEA, OR AIR WITHIN THE

PHILIPPINES (1966 & 1969 BAR EXAMS)
1. Transportation by Land
A. Overland Transportation
a. Civil Code – primary law
b. Code of Commerce – suppletory law
B. Coomercial Transportation (object is merchandise)

2. Transportation by Sea
A. Coastwise
c. COGSA
Note: COGSA is not applicable even if the parties expressly provide for it.
B. Foreign Ports to Philippines Ports – The law of the Philippines still applies even if the
collision actually takes place in foreign waters.
c. COGSA
C. Philippine Ports to Foreign Ports – The laws of the country to which the goods are to
be transported (Eastern Shipping vs. IAC, 150 SCRA 463)
3. Air Transportation
A. Domestic – Civil Code

B. International – Warsaw Convention
C. Special laws also govern particular cases such as:
1. The Public Service Act;
2. The land Transportation and Traffic Code;
3. Tariff & Customs Code;
4. The Civil Aeronautics Act.
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2005 Edition: Jeneath Kingco

2007 Edition: Sol Marie Andoy
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1. TERMS CONNECTED WITH THE LAW ON TRANSPORTATION
Transportation is one whereby a certain person or association of persons obligate themselves to

transport persons, things, or news form one place to another for a fixed price.
KINDS OF TRANSPORTATION
A. According to its Object

1. things
2. persons
3. news
B. According to place of travel

1. Land
2. Water
a. Navigable canals
b. Lakes or rivers
c. Sea
3. Air
PARTIES TO A CONTRACT OF TRANSPORTATION

1. Shipper
2. Carrier or conductor
Transportation of Passengers
1. Shipper – who himself is the person to be transported
2. Carrier
Transportation of Things
1. Shipper
2. Carrier
3. Consigner
Transportation of News
1. Remitter
2. Carrier
3. Consignee
Shipper or consignor – One who gives rise to the contract of transportation by agreeing to deliver the
things or news to be transported, or to present his own person or those of other or others in the case of
the transportation of passengers
Carrier or conductor – One who binds himself to transport persons, things, or news as the case may
be, or one employed in or engaged in the business of carrying goods for others for hire. Carriers are
either common or private.
Consignee – The party to whom the carrier is to deliver the things to be transported or one to whom
the carrier may lawfully make delivery in accordance with its contract of carriage. The shipper and the
consignee may be merged in one person.
Freight – The term has been defined as:

1. The price or compensation paid for the transportation of goods by a carrier, at sea, from port to
port;
2. The hire paid for the carriage of goods on land from place to place, or inland streams or lakes;
3. The goods or merchandise transported at sea, on land or inland streams or lakes.
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Private Carriers – Those who transport or undertake to transport in a particular instance for hire or
reward.
Common Carrier – One who holds itself out as ready to engage in the transportation of goods for hire
as a public employment and not as a casual occupation
DE GUZMAN V. CA
168 SCRA 612, December 22, 1988
Art. 1732 in defining common carrier 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 occasional, episodic or unscheduled basis. Neither does Art 1732
distinguish between a carrier offering its services to the general public, i.e., the general community
of population, and one who offers services or solicits business only from a narrow segment of the
general population. We think that Art 1732 deliberately refrained from making such distinctions.
Notwithstanding that a carrier has no certificate of public convenience, it is still a common

carrier. It is a palpable error to conclude that a person holds no certificate of public convenience is
not a common carrier. A certificate of public convenience is not a requisite for incurring a liability
under the Civil Code provisions governing common carriers. The liability arises the moment a
person or firm acts as a common carrier, without regard to whether or not such carrier has
complied with the requirements of the applicable regulatory statute and implementing regulations
and franchise. To exempt private respondent form liabilities of a common carrier because he has
not secured the necessary certificate of public convenience would be offensive to sound public
policy. That would be to reward private respondent precisely for failing to comply with applicable
statutory requirements.
TATAD vs. GARCIA, JR.

243 SCRA 436
In 1989, DOTC planned to construct a light railway transit line along EDSA. Only
private respondent EDSA LRT Consortium met the requirements and qualified for the financing
and implementation of the project.
Private Respondents shall undertake and finance the entire project required for a complete
operational light railway transit system. Upon full or partial completion and viability thereof,
shall operate the same. As agreed upon, private respondent‘s shall deliver the use and possession
of the competed portion to DOTC, which rentals to be paid by the DOTC on a monthly basis,
which basis, which, in turn shall come from the earnings of the EDSA LRT III.
Petitioners Senators Tatad, Orbos and Biazon as taxpayers questioned the constitutionality of
the agreement contending that based on Article XII Section II of the constitution, the ―operation
of a public utility‖ is limited to Filipinos or Filipino Corporations (60% of whose capital is owned
by Filipinos) and that private respondents is admitted a foreign corporation which cannot own and
operate the EDSA LRT III.
ISSUE: WON EDSA LRT Consortium (EDSA LRT Corp. LTD.) can own a public utility?
HELD: What private respondent owns are the rail tracks, rolling stocks power plant and not the
public utility. While a franchise is needed to operate these facilities, they do not by themselves
constitute public utility.
There is difference between ―operation of a public utility‖ and ―ownership of the facilities
and equipment‖ used to serve the public. Only the latter is what the PR exercises. Hence, PR can
own EDSA LRT II.
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General Rule: The Law Prohibits Unreasonable Discrimination by Common

Carriers
The law requires common carriers to carry for all persons, either passengers or property, for
exactly the same charge for a like or contemporaneous service in the transportation of like kind of
traffic under substantially similar circumstances or conditions. The law prohibits common carriers
from subjecting any person, etc., or locality, or any particular kind of traffic, to any undue or
unreasonable prejudice or discrimination whatsoever.
Exception: When the actual cost of handling and transporting the same is different.
The law did not intend to require common carriers to carry the same kind of merchandise,
even at the same price, under different and unlike conditions where the actual cost is different.
Determination of Justifiable Refusal
A common carrier may refuse to carry certain products which subject any persons, locality or
the traffic in such products to an unnecessary, undue, or unreasonable prejudice or discrimination
which involves a consideration of :
1. The sustainability of the vessels of the company for the transportation of such products;
1. The reasonable possibility of danger or disaster, resulting from their transportation in the form
and under the conditions in which they are offered for carriages;
2. The general nature of the business done by the carrier; and
3. All the attendant circumstances which might affect the question of reasonable necessity by the
carrier to undertake the transportation of this class of merchandise.
F.C FISHER vs. YANGCO STEAMSHIP COMPANY

31 PHIL 1
Plaintiff is stockholder in the Yangco Steamship Company, the owner of a large number of
steam vessels, duly licensed to engage in the coastwise trade of the Philippine Islands.
The directors of the company adopted a resolution which was thereafter ratified and
affirmed by the shareholders of the company, ―expressly declaring and providing that the classes of
merchandise to be carried by the company in its business as a common carrier do not include
dynamite, powder or other explosives, and expressly prohibiting the officers, agents and servants of
the company from offering to carry, accepting for carriage or carrying said dynamite, powder or
other explosives‖
Respondent Acting Collector of Customs demanded and required of the company the
acceptance and carriage of such explosives; that he has refused and suspended the issuance of the
necessary clearance documents of the vessels of the company unless and until the company
consents to accept such explosives for carriage;
Plaintiff is advised and believes that should the company decline to accept such explosives
for carriage, the respondent Attorney-General of the Philippine Islands and the respondent
prosecuting attorney of the city of Manila intend to institute proceedings under the penal provisions
of sections 4, 5,and 6 of Act No. 98 of the Philippine Commission against the company, its
mangers, agents and servants, to enforce the requirements of the Acting Collector of Customs as to
the acceptance of such explosives for carriage.
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ISSUES: 1. WON the refusal of the owners and officers of a steam vessel to accept for carriage
―dynamite, powder or other explosives‖ can be held to be a lawful act as to the conditions under
which such explosives are offered for carriage, or as to the suitableness of the vessel for the
transportation of such explosives?
2. Whether or not the possibility that the refusal to accept such articles of commerce in a particular
case may have the effect of subjecting any person or locality or the traffic in such explosives to an
undue, unreasonable or unnecessary prejudice or discrimination.
HELD: A refusal to carry explosives involves an unnecessary or reasonable preference or

advantage to any person, locality or particular kind of traffic or subjects any person, locality or
particular kind of traffic to an undue or unreasonable prejudice or discrimination is by no means
―self-evident‖, and that it is a question of fact to be determined by the particular circumstances
of each case.
Whatever may have been the rule at common law, common carriers in this jurisdiction
cannot lawfully decline to accept a particular class of goods for carriage to the prejudice of the
traffic in those goods unless it appears that for some sufficient reason the discrimination against the
traffic in such goods is reasonable and necessary. Mere prejudice or whim will not suffice. The
grounds of the discrimination must be substantial ones, such as will justify the courts in holding the
discrimination to have been reasonable and necessary under all the circumstances of the case.
It cannot be doubted that the refusal of a ―steamship company, the owner of a large number
of vessels‖ engaged in the coastwise trade of the Philippine Islands as a common carrier of
merchandise, to accept explosives for carriage on any of its vessels subjects the traffic in such
explosives to a manifest prejudice and discrimination, and in each case it is a question of fact
whether such prejudice or discrimination is undue, unnecessary or unreasonable.
PANTRANCO VS. PSC

70 PHIL. 221
The petitioner has been in the business of transportation passengers in the provinces of
Pangasinan and Tarlac by means of motor vehicles. Petitioner‘s application for authorization to
operate ten additional Brockway trucks was granted.However, he did not agree to the new
conditions imposed on the new certificate that the service can be required by the government upon
payment of the cost price less than depreciation, and, that the certificate shall be valid for a definite
period of time.
Petitioner assails the constitutionality of CA 454 authorizing the imposition of such condition
and prayed to declare the provisions thereof not applicable to valid and subsisting certificates issued
prior to June 8, 1939.
ISSUE: Whether or not it applies to valid and subsisting certificates. YES.
HELD: Under the 4th paragraph of section 15 of CA 146, the power of the PSC to prescribe the
conditions ―that the service can be acquired by the Commonwealth of the Phil. Or by the
instrumentality thereof upon payment of the cost price of its useful equipment, less reasonable
depreciation‖, and ―that the certificate shall be valid only for a definite period of time‖ is expressly
made applicable ―to any extension or amendment of certificates actually in force‖ and to
authorizations to renew and increase equipment and properties. Upon review these conditions were
purposely made applicable to existing certificates of public convenience.
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5. COMMON CARRIER DEFINITION & CHARACTERISTICS
DEFINITION
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.
Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound
to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers
transported by them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, 1735,
and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set
forth in Articles 1755 and 1756.
CHARACTERISTICS OF A COMMON CARRIER
In the case of Latimoso vs. Doliente CAR 769, the CA discussed the distinctive
characteristics of common carriers and emphasized that not all carriers qualify as and are subject to the
stringent responsibilities of common carriers also enumerated in the First Philippine Industrial Pipeline
v. CA 300 SCRA 661, which are:
1. He must be engaged in the business of carrying for others as a public employment, and
must hold himself out as ready to engage in the transportation of goods for persons
generally as a business, and not as 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 methods by which business is conducted and over his
established roads and
4. the transportation must be for hire
DISTINCTIONS: COMMON CARRIER V. PRIVATE CARRIER
COMMON CARRIER PRIVATE CARRIER

1. Holds itself out to the public indiscriminately; 1. Contracts with particular individuals or groups only;
2. Extraordinary diligence is required; 2. Ordinary diligence is requires;
3. Subject to state regulations; 3. Not subject to state regulation;
4. Parties may not agree on limiting the carrier‘s 4. Parties may limit the carriers liability provide it is not
liability except when provided by law; contrary to law, morals, or good customs;
6. Exempting circumstances: 5. General exempting circumstance:
- Article 1733 of the New Civil Code: Prove - Article 1174 of the New Civil Code: Case Fortuito;
extraordinary diligence; and
- Article 1734 of the New Civil Code:
a. Flood, Storm. Earthquake, lightning,
or other natural disaster or calamity;
b. Act of the public enemy in war,
whether international or civil;
c. Act or omission of the shipper or
owner of goods;
d. The character of the goods or
defects in the packing or in the
containers;
e. Order or act of competent public
authority;
6. There is presumption of fault or negligence. 6. No presumption of fault or negligence.
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IMPORTANCE OF DISTINCTION
It is important to distinguish between common and private carriers because distinct and
different laws govern the rights and obligations of common and private carriers. The degree of
diligence set by law to be observed by common and private carriers in the carriage of goods or
passengers is not the same and the validity of the contracts and the stipulations therein are subject to
separate sets of public and legal restrictions.
CALTEX PHILS. INC vs. SULPICIO LINES

(G.R. No. 131166, September 30, 1999)
Charterer: Caltex
Ship: MT Vector
Owner of the Ship: Vector Shipping Corp.
Defendant: Sulpicio Lines
A motor tanker owned and operated by Vector Shipping Corp, engaged in the business of
transporting products such as gasoline, kerosse, diesel and crude oil. During a particular voyage it
carried fuel owned by Caltex by virtue of a charter contract between them, MV Doña is a passenger
and cargo vessel owned and operated by Sulpicio Lines, Inc is also plying the waters headed for
Manila. The two vessels collided in the open sea. All crew of Doña Paz died while 2 survived from
MT Vector. Out of the 4,000 passengers, only 24 survived from MV Doña Paz
The board of marine inquiry after an investigation found the MT Vector‘s registered operator,
Francisco Soriano and its owner and actual operator Vector Shipping Corp were responsible for its
collision with Doña Paz.
Teresita Canezal and her mother-in-law, widow and mother of a deceased due to the accident
filed a complaint for Damages arising from Breach of Contract of Carriage against Sulpicio Lines.
Sulpicio in the other hand filed a 3rd party complaint against Francisco Soriano, Vector Shipping
and Caltex alleging that Caltex chartered MT Vector with gross and evident bad faith despite its
being unseaworthy.
The trial court rendered a decision dismissing the third party complaint against the petitioner
favoring the complainants of the suit for damage. But on appeal to the CA interposed by Sulpicio,
the CA modified the TC‘s ruling and included petitioner as one of those liable for damages. Hence,
this petition.
ISSUE: Whether or not Caltex, the charterer of a sea vessel, is liable for damages resulting from a
collision between the chartered vessel and the passenger ship? NO.
HELD: The charterer has no liability for damages under the Philippine Maritime Laws. The
respective rights and duties of the shipper and the carrier depends not on whether the carrier is a
public or private carrier but on whether the contract of carriage is a bill of lading, or equivalent
shipping document on one hand or a chartered party or similar contract on the other . Petitioner and
Vector entered into a contract of affreightment also known as voyage charter.
Charter party – contract by which the entire ship or principal part is lent by the owner to another
person for a specified time or use.
Contract of Affreightment – is wherein the owner of the ship or other vessel lets the whole or part
of her to a merchant or other person for the conveyance of goods, on a particular voyage in
consideration of payment of freight. It leaves the general owner in possession of the ship as owner
of the voyage, the rights and responsibilities of ownership rest on the owner. The charterer is free
from liability to third persons in respect of the ship.
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The charterer of the vessel has no obligation before transporting its cargo to ensure that the
vessel it chartered complied with all legal requirements. The duty rests upon the common carrier for
being engaged in public service. The Civil Code demands diligence which is required by the nature
of the obligation between Caltex and MT Vector, liability found by CA is without basis.
The relationship between the parties in case is governed by special laws because of the
implied warranty of seaworthiness. Shippers of goods, when transacting with common carriers are
not expected to inquire upon the vessel‘s seaworthiness, genuineness of its licenses and compliance
with all maritime laws. To demand more form the shippers and hold them liable in case of failure
exhibits nothing but the futility of our maritime laws insofar as the protection of the public general
is concerned. Thus the nature of the obligation of Caltex demands ordinary diligence like any other
shipper in shipping his cargoes.
UNITED STATES vs. TAN PIACO

40 PHIL 853
Said defendants were charged with a violation of the Public Utility Law in that they were
operating utility without permission from the Public Utility Commissioner. The lower court found
Tan Piaco guilty of the crime charged.
Apparently, Tan Paico 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 under a special
contract in each case. He had not held himself out to carry all passengers and all freight for all
persons who might offer passengers and freight.
ISSUE: WON the appellant was a public utility? NO.
HELD: As the Attorney-General said, the trucks furnished service under special agreement to carry
particular persons and property. These passengers, or the owners of the freight, may have controlled
the whole vehicle both as to content, direction and time of use. Which facts, under all circumstances
of the case would take away the defendants business from the provisions of the Public Utility Act.
Public Utility is hereby define to include individual, co partnership association corporation or

joint stock company, that nor or hereafter may own, operate, manage or control any common
carrier, railroad, street railway, engaged in the transportation of passengers, cargo for public use.
Public use means the same as use by the public. The essential feature of public use is that it is
not confined to privilege individuals, but is open to the indefinite public. There must be in general,
a right that the law compels the power to give the general public. It is not enough that the general
prosperity of the public is promoted. 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.
UNITED STATES vs. QUINAJON

31 PHIL 189
Defendants Pascual Quinajon and Eugenio Quitoriano were charge violation of Act 98 of the
Civil Commission. It allege that the accused did willfully, unlawfully, and criminally demand and
collect from Provincial Treasurer, for the unloading of each one of the 5, 986 saks of rice, 10
centavos from it regular charge of 6 centavos.
ISSUE: WON defendants violated Act 98? YES.
HELD: Art. 98 of the Civil Commission in portion states that ―No common carrier shall xxx collect
or receive from any persons a greater or less compensation for any services rendered in the
transportation of passengers or property xxx under substantially similar conditions and
circumstances.‖
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In this present case there is no pretense that it actually cost more to handle the rice for the
province than it did for the merchants with whom the special contracts were made. From the
evidence, it would seem that there was a clear discrimination is the thing, which is specifically
prohibited and punished under the law.
BASCOS v. CA
221 SCRA 318
Rodolfo Cipriano representing Cipriano Trading Enterprise entered into a hauling contract
with JBFAIR Shipping Agency Corp., whereby the former bound to haul the latter‘s 2,000 m/tons
of soya beans meal from Magallanes Drive, del Pan, Manila to the warehouse of Purefoods Corp.,
in Calamba Laguna. To carry out its obligation, CipTrade, through R Cipriano subcontracted
Estrellita Bascos to transport and to deliver 400 sacks of soya bean mea worth P156,404 from the
Manila Port Area to Calamba, Laguna at the rate of P50,000 per metric ton.
Petitioner failed to deliver the cargo. As a consequence Cipriano paid JIBFAIR for the
amount of lost goods in accordance with the contract they have agreed and that in cases of loss due
to theft, hijacking and of non-delivery or damages to the cargo CIPTRADE shall be held liable.
CIPRIANO demanded reimbursement from petitioner but the latter refused. So a complaint
was filed for a sum of money & damages with writ of preliminary attatchment for breach of
contract of carriage.
Petitioner interposes the ff defenses:

1. That there was no contract of carrage since CIPTRADE leased her cargo truck ;
2. That Ciptrade liable to the petitioner of P11 for loading the cargo;
3. That on the night of Oct. 21, 1988 the truck carrying the cargo was hijacked and that the
event was immediately reported to Ciptrade; petitioner and the police exerted all efforts to
locate the hijacked properties;
4. The hijacking being a force majeure, exculpated petitioner from any liability.
ISSUE: 1. WON petitioner is a common carrier? YES.

2. WON hijacking is a force majeure? NO.
HELD: Petitioner is a common carrier as defined in Art. 1732 of the Civil Code. The test to
determine a common carrier is to whether the given undertaking is 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 the extent of his business transacted. In this case, the petitioner herself has made the admission
that she was in trucking business, offering her trucks to those with cargo to move. Judicial
admissions are conclusive and no evidence is required to prove the same.
Hijacking does not constitute force majeure which will exculpate her from liability for the
loss of goods. To exculpate the carrier from liability arising from hijacking , he must prove that the
robbers and or the hijackers acted with grave or irresistible threat, violence or force in accordance
with Art. 1745 of the Civil Code. In the instant case, petitioner was not able to overcome the said
presumption. The accusatory affidavits which she presented were not enough to overcome the
same.
DE GUZMAN vs. CA
168 SCRA 612
Back-hauler of goods: Common carrier
Article 1732 makes no distinction between one whose principal business activity is the
carrying of persons or goods or both, and one who does such carrying only as an an cillary activity,
nor does it make distinctions between one who offers the service to the general public population.
Therefore, a party who ―back-hauled‖ goods for other merchants from Manila to Pangasinan, even
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when such activity was only periodical or occasional and was not its principal line of business, or
that the rate it charges is below the commercial rate or toes not possess a CPC are subject to the
responsibilities and obligations of a common carrier an the lack of a CPC is not a requisite for
incurring liability under the Civil Code provisions on COMMON CARRIER.
FIRST PHILIPPINE PIPELINE CORP. VS, CA

300 SCRA 661
Pipeline Operator: Common carrier
A grantee of a pipeline concession applied for a Mayor‘s permit with the Office of the Mayor
of Batangas City. It was transporting petroleum products through its pipelines. However, before the
permit could be issued, the City Treasurer required FPIC to pay a local tax on its gross receipts for
1993. FPIC protested the payment of the tax and argued that it was a pipeline operator engaged in
business of transporting petroleum products from the Batangas refineries, and as such, exempted
from paying the gross receipt tax being a common carrier. The Treasurer denied the protest and
claimed that FPIC cannot be considered a COMMON CARRIER engaged in the Transportation
business, and thus cannot claim exemption from the payment of tax onits gross receipts. The issue
here is whether or not FPIC is a COMMON CARRIER?
The SC ruled that FPIC is a Common carrier. A Common carrier may be defined broadly as
one who holds himself out to the public as engaged in the business of transporting person or
property from place to place, for compensation, offering his services to the public generally. The
definition of COMMON CARRIER in Article 1732 of the civil code makes no distinction as to the
means of transporting, as long as it is by land, water or air. FPIC is engaged in the business of
transporting or carrying, petroleum product for hire as a public employment.
TRANS ORIENT CONTAINER TERMINAL SERVICES vs. CA

MARCH 19, 2002
Trans Orient is a sole proprietorship customs broker while UCPB is the insurer of SMC
UCPB brought as suit as SMC‘s subrogee against petitioner. Trans Oreint contends that it could not
be held liable as it is not a common carrier rather a private one because a s a customs broker and
warehouseman, she does not discriminately hold her services out to the public but only offers the
same to select parties with whom she may contract in the conduct of her business.
ISSUE: WON petitioner is a common carrier? YES.
HELD: Article 1732 makes no distinctions between those whose principal business activity is the
carriage of persons or goods or both from one who does such carrying only as an ancillary activity.
It also avoids making distinctions between a person or enterprise offering transportation services in
a regular or scheduled basis and one offering such service on an occasional basis.
There is a greater reason for holding petitioner to be a common carrier because the
transportation of goods is an integral part of her business. To uphold Trans Orient contention would
be to deprive those with whom she contracts the protection that the law affords them
notwithstanding the fact that he obligation to carry goods for her customers is part and parcel of
petitioner‘s business.
FIRST MALAYAN LEASING VS CA

209 SCRA 661
Crisostomo Vitug filed a case against the defendant, FMLFC to recover damages for physical
injuries, loss of personal effects, and the wreck of his car as a result of a collision, involving his car,
another car and an Isuzu cargo truck registered in the name of FMLFC and driven by one Crispin
Sicat. FMLFC denied any liability alleging that it was not the owner of the truck because it had sold
the same to Vicente Trinidad.
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ISSUE: WON FMLFC should be held liable. YES.
HELD: The court has consistently ruled that regardless of ho the actual owner of a motor vehicle
might be, the registered owner is the operator of the same with respect to the public and third
persons, and as such directly and primarily responsible for the consequence of its operation. In
contemplation of law, the owner/operator of record is the employer of the driver, the actual operator
and employer being considered merely as agent.
HOME INSURANCE CO. VS. AMERICAN STEAMSHIP AGENCIES, INC.

23 SCRA 24
Home Insurance a Peruvian firm shipped fishmeal through the SS Crow borough consigned
to San Miguel Brewery, which was insured by the Home Insurance Co. The cargo arrived with
shortages, SMB demanded and Home Insurance Co. paid P14, 000 in settlement for SMB‘s claim.
HIC filed for recovery of P 14, 000 from Luzon Stevedoring and American Steamship agencies.
The court absolved Luzon but ordered American Steamship to reimburse the P14, 000.00 to HIC,
declaring that Art. 587 of the code of commerce makes the ship agent civilly liable for damages in
favor of 3rd persons due to the conduct of carriers captain and that the stipulation in the charter
owner from liability is against public policy under Art 1744 of the New Civil Code. On appeal, the
SC held that the provisions on COMMON CARRIER should not apply where the common 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 of strict public
policy governing COMMON CARRIER ids applied. Such policy has no force where the public at
large is not involved, as the case of a ship totally chartered for the use of a single party. (Asked in
the 1980, 1981, 1984, 1985, 1987, 1991 BAR)
LOADSTAR SHIPPING CO. INC, VS, CA

G.R. No. 131621, September 28, 1999
Even without certificate of pubic convenience: Common carrier
A certificate of public convenience is not a requisite for the incurring of liability under the
Civil Code provisions governing common carriers. That liability arises the moment a person or firm
acts as a common carrier, without regard to whether or not such carrier has also complied with the
requirements of the applicable regulatory statute and implementing regulations has been granted a
certificate of public convenience or other franchise.
The concept of COMMON CARRIER coincides well with the notion of ―public service‖
under the Public Service Act (CA 1416, as a amended), which at least partially supplements the law
on COMMON CARRIER as set forth in the Civil Code. Under Section 13, par. (b) of the PSA,
―public service‖ includes every person that nor or hereafter may own, operate, manger, or control in
the Philippines , for hire or compensation, with general or limited clientele, whether permanent,
occasional or accidental, and done for general business purposes, etc.
LASTIMOSO VS. DOLIENTE

1 SCRA 769
In the case of Doliente M/V Doliente was not held liable for the death of Pablo Lastimoso
when a fire occurred because there was no evidence that Doliente was previously engaged in the
business of transporting passengers, as the ill-fated trip was merely a trial run. Hence, it was not
required to exercise Extraordinary Diligence in the vigilance of goods and safety of the passengers
aboard the Doliente, nor was it was bound to carry the passengers safely as far as human foresight
can provide, using the utmost diligence of a very cautious person.
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CHAPTER II
COMMON CARIER OF GOODS
RESPONSIBILITY/VIGILANCE OVER GOODS

Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless
the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act of omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.
Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the
goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have
acted negligently, unless they prove that they observed extraordinary diligence as required in Article
1733.
NATURAL DISASTER/FORTUITOUS EVENT
A fortuitous event covers not only acts of God (lightning, earthquake, shipwreck, etc.) but also
act of man (war, Strikes, homicide, recklessness of other drivers, latent mechanical defect etc.) A
common carrier liability does not extend to damages caused by a fortuitous event as expressed in
Article 1174 that ―except in cases expressly specified by law, or otherwise declared by stipulation, or
when the nature of the obligation required the assumption of risk, no person shall be responsible for
events which could not be foreseen, or which, though foreseen, were inevitable‖. After all, the carrier
is not an insurer against all risks of travel. If a common carrier would be an insurer of the passenger‘s
safety, it ought not be liable in case of death of, or injuries to, passengers, although not negligent. But
the common carrier‘s liability rests upon negligence, its failure to exercise the utmost diligence that
the law requires.
Art. 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are
unconditionally placed in the possession of, and received by the carrier for transportation until the same
are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right
to receive them, without prejudice to the provisions of Article 1738.
Art. 1737. The common carrier's duty to observe extraordinary diligence over the goods remains in full
force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner
has made use of the right of stoppage in transitu.
Art. 1738. The extraordinary liability of the common carrier continues to be operative even during the
time the goods are stored in a warehouse of the carrier at the place of destination, until the consignee has
been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or
otherwise dispose of them.
2. LIABILITY FOR LOSS; PRESUMPTION OF NEGLIGENCE
PLANTERS PRODUCRS, INC VS CA

226 SCRA 476
The SC held that ―what a carrier in the ordinary course of business transports goods as a
common carrier and thereby bound by law to observe extraordinary diligence, the entering into a
charter party, where the ship captain, its officers and compliments are under the employ of the
shipowner and therefore continue to be under its direct supervision and control, does not transform
the carrier into a private carrier for a such purpose. This is because the charterer, a stranger the crew
and the ship, cannot be charged with the duty to care for his cargo when the charterer does not have
any control of the means of doing so. A common or public carrier shall remain as such,
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notwithstanding the charter of the whole or portion of a vessel, provided the charter is limited to
the ship only, as in the case of time charter or voyage charter. It is only when the charter includes
both the vessel and its crew, as in the case of time charter or voyage charter. It is only when the
charter includes both the vessel and its crew, as in a bareboat or demise charter, that a common
carrier becomes private, at least insofar as the particular voyage covering the charter party is
concerned.
COMPARISON AND CONTRASTS: CARRIAGE OF CARGO & CARRIAGE OF PASSENGERS
CARRIAGE OF CARGO CARRIAGE OF PASSENGERS

1. In case of loss, destruction and deterioration 1. The same presumption applies
of the goods, common carriers are presumed to
be at fault or have acted negligently, unless they
prove that they exercise extraordinary diligence.
2. Mere proof of delivery of goods in good 2. As long as it is shown that there exists a relationship
order and the subsequent arrival of the same between the passenger and the common carrier and
good at the place of destination makes for a that injury or death took place during the existence of
prima facie case against the carrier (Coastwise the contract, the courts need not make an express
Lighterage Corp. vs. CA, 245 SVRA 796). finding of fault or negligence of common carriers. The
law imposes upon common carriers strict liability.
Reason for the presumption: As to when and
how the goods wete damaged in transit is a Reason for the presumption: the contract between the
matter peculiarly within the knowledge of the passenger and the carrier imposes on the latter the duty
carrier and its employees (Mirasol vs Dillar, 53 to transport the passenger safely; hence, the burden of
Phil 124). explaining should fall on the carrier. The doctrine of
res ipsa loquitor applies.
3. The cause of action is negligence, particularly 3. Same cause of action.
culpa contractual.
Article 1752 of the New Civil Code applies, wherein the law of the country to which
the goods are to be transported governs the liability in case of their loss, destruction or
deterioration.
BANKERS AND MANUFACTURERS ASSURANCE CORP. V. CA

214 SCRA 433
108 cases of copper tubings were imported by Ali trading Company. The tubings insured by
petitioner and arrived in Manila on board the vessel s/s ―Oriental Ambassador‖ on November 4,
1978, and turned over to private respondent E. Razon, the manila arrastre operator upon discharge
at the waterfront. The carrying vessel is represented in the Philippines by its agent, F. E. Zuelig and
Co. Inc. Upon inspection by the importer, the shipment allegedly, found to have sustained loses by
way of theft and pilferage for which petitioner, as insurer, compensated the importer in the amount
of P31, 014.00.
Petitioner, in subrogation of the importer-consignee and on he basis of what it asserts had

been already established-that a portion of the shipment was lost through theft and pilferage.-
forthwith concludes that the burden of proof of proving a case of non-liability shifted to private
respondents, one of whom, the carrier, being obligated to exercise extraordinary diligence in the
transport and care of the shipment. He implication of petitioner‘s statement is that private
respondents have not shown why they are not liable.
ISSUE: WON the carrier is liable?
HELD: It must be underscored that the shipment involved in the case at the bar was
―containerized‖. The goods under this arrangement are stuffed, packed, and loaded by the shipper at
a place of its choice, usually his own warehouse, in the absence of the carrier. Consequently, the
recital of the bill of lading for goods thus transported ordinary would declare ―Said to Contain‖,
shippers Load and Count‖, full container Load‖, and the amount or quantity of goods in the
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container in a particular package is only prima facie evidence of the amount or quantity which may
be overthrown by parol evidence.
It logically follows that the case at bar presents no occasion for the necessity of discussing the
diligence required of a carrier or the theory of prima facie liability of the carrier, for from all
indications, the shipment did not suffer loss or damage while it was under the care, or of the arrastre
operator, it must be added.
BELGIAN OVERSEAS CHARTERING & SHIPPING N.V. vs. PHIL. FIRST

INSURANCE CO. INC.
(383 SCRA 23)
On June 13, 1990 CMC Trading shipped on board the M/V Anangel Sky at Humburg,
Germany, 242 coils of various Prime Cold rolled steel sheets to be transported to Manila consigned
to Philippine Steel Trading Corporation.
On July 28, 1990, M/V Anangel Sky arrived at the port of Manila, and within subsequent
days, discharged the subject cargo. Four (4) coils were found to be in the bad order. Finding the 4
coils in their damage state to be unfit for the intended purpose.
Despite receipt of a formal demand, defendants appellees refused to submit for the
consignee‘s claim. Consequently, plaintiff appellant paid the consignee P506, 086.50 and was
subrogated to the latter‘s rights and causes of action against defendants-appellees.
In impugning the property of the suit against them, defendants appellees imputed that the
damage &/or loss was due to reshipment damage, to the inherent nature, vice or defect of the goods
or to perils, danger & accidents of the sea, or to insufficiency of packing thereof, or to the act of
omission of the shipper of the goods or their representatives.
In addition thereto, defendants also argued that their liability, if there be any, should not
exceed the limitations of liability provided for in the bill of lading and other pertinent laws. They
likewise averred that, in any event, they exercised due diligence and foresight require by the law to
prevent any damage/loss to the said shipment.
RTC dismissed the complaint because they had failed to overcome the presumption of
negligence imposed on carriers.
ISSUE: WON petitioners have overcome the presumption of negligence of common carrier? NO.
HELD: Petitioners contend the common carriers should not be applied on the basis of the loan
testimony offered by private respondents. This is UNTENABLE. Well settled is the rule that
common carriers, from the nature of their business and for reasons of public policy, bounded to
observe extraordinary diligence and vigilance with respect to the safety of the goods and the
passengers they transport.
Thus, common carriers are required to render service with greatest skill and foresight and to
use al reasonable means to ascertain the nature and characteristics of the goods tendered for
shipment, and to exercise due care in the handling and stowage, including such methods as their
nature requires.
The extraordinary responsibility lasts from the time the goods are unconditionally placed in
the possession of and received for transportation by the carrier until they are delivered, actually and
constructively, to the consignee or to the person who has right to receive them. This strict
requirement is justified by the fact that, the riding public enters into a contract of transportation
with common carriers without a hand or a voice in the preparation such contract.
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Owing to his high degree of diligence required of them, common carriers, as a general rule,
are presume to have been at fault or negligent if the goods they transported deteriorated or got lost
or destroyed. That is, unless they prove that the exercised extraordinary diligence in transporting
the goods. In order to avoid responsibility for any loss or damage therefore, they have the burden of
proving that they observe such diligence.
Mere proof of delivery of the goods in good order to a common carrier and of their arrival in
bad order at their destination constitutes a prima facie case of fault or negligence against the carrier.
If no adequate explanation is given as to how the deterioration, loss or destruction of the goods
happened, the transported shall be held responsible.
In the case, the petitioner failed to rebut the prima facie presumption of negligence. Although
the words ―metal envelopes rust stained and slightly dented‖ were noted on the bill of lading, there
is no showing that petitioners exercised due diligence to forestall or lessen the loss.
Having been in the service for several years, the master of the vessel should have known at
the outset that metal envelopes in said state would eventually deteriorate when not properly stored
while in transit. Equipped with the proper knowledge of the nature steel sheets in coils and of the
proper way of transporting them, the master of the vessel and his crew should have undertaken
precautionary measures to avoid possible deterioration of the cargo. But NONE of these measures
were taken.
Petitioners contend that they are exempted from the liability under Art. 1734 (4) of the Civil
Code in that character of the goods or defect in the packing or the containers was the proximate
cause of the damage. The aforesaid exception only refers to cases when goods are lost or damaged
while in transit as a result of natural decay of perishable goods or the fermentation or evaporation of
substances liable therefore. None of these is presented in this case.
Further even if the fact of improper packing was known to the carrier or its crew or was
apparent upon ordinary observation, it is NOT relieved of liability for loses or injury resulting there
from, one it accepts the goods notwithstanding such condition.
Thus, petitioners have NOT successfully proven the application of any of the mentioned
exemption in this case.
3. EXEMPTION FROM LIABILITY/DEFENSE OF COMMON CARRIER
Art. 1739. In order that the common carrier may be exempted from responsibility, the natural disaster
must have been the proximate and only cause of the loss. However, the common carrier must exercise due
diligence to prevent or minimize loss before, during and after the occurrence of flood, storm or other
natural disaster in order that the common carrier may be exempted from liability for the loss, destruction,
or deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act of
the public enemy referred to in Article 1734, No. 2.
CHARACTERISTICS OF A FORTUITOUS EVENT
If a fortuitous event is proved, the carrier is absolved from liability. But the fortuitous event
must not concur with negligence; otherwise, it is no longer a defense. In other words, the fortuitous
even must be the sole element relied upon as held in Batangas Co. v. Caguimbal). In the case of
Yobido v. CA, the SC described the characteristics of a fortuitous event as:
1. The cause of the unforeseen and unexpected occurrence, or failure of the debtor of comply
with his obligations, must be in dependent of human will;
2. It must be impossible to foresee the event, which constitutes the caso fortuito;
3. The occurrence must be such as to render it impossible for the debtor to fulfill his
obligation in a normal manner; and
4. The obligor must be free from any participation in the aggravation of the injury
resulting to the creditor.
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Based on these pronouncements, a bus company cannot be exempted from liability from a tire
blow-out (as discussed earlier) which cannot be classified simply as a fortuitous event, in the absence
of showing that it has exercise the EOD required of common carrier under the law.
Article 1739 provides that while the defenses under Article 1734 are available to common
carrier in order that the common carrier may be exempted from responsibility, the natural disaster
must have been the proximate and only cause of the loss. However, the common carrier must exercise
due diligence to prevent or minimize loss before, during and after the occurrence of the flood, storm,
or other natural disaster in order that the common carrier may be exempted from liability for the Loss
or deterioration of the goods. It need not, however, be the immediate cause, it is sufficient if the
immediate cause or the final act was set in motion by the natural calamity or disaster & followed it in
natural continuous sequence, unbroken by any efficient intervening cause.
COMMON CARRIER IS STILL LIABLE FOR A LOSS CAUSE BY A NATURAL DISASTER IN THE
FOLLOWING INSTANCES (1957, 1987, & 1998 BAR):
1) When the natural disaster is not the proximate and only cause of the loss;
2) When the common carrier failed to exercise due diligence to prevent or minimize the loss
before, during and after the occurrence of the natural disaster; and
3) When the common carrier negligently incurs in delay in transporting the goods.
Art. 1740. If the common carrier negligently incurs in delay in transporting the goods, a natural disaster
shall not free such carrier from responsibility.
Art. 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the goods,
the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in
damages, which however, shall be equitably reduced.
Art. 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character of
the goods, or the faulty nature of the packing or of the containers, the common carrier must exercise due
diligence to forestall or lessen the loss.
Art. 1743. If through the order of public authority the goods are seized or destroyed, the common carrier
is not responsible, provided said public authority had power to issue the order.
Art. 1744. A stipulation between the common carrier and the shipper or owner limiting the liability of the
former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence
shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;

(2) Supported by a valuable consideration other than the service rendered by the common carrier; and
(3) Reasonable, just and not contrary to public policy.
Art. 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and
contrary to public policy:
(1) That the goods are transported at the risk of the owner or shipper;
(2) That the common carrier will not be liable for any loss, destruction, or deterioration of the goods;
(3) That the common carrier need not observe any diligence in the custody of the goods;
(4) That the common carrier shall exercise a degree of diligence less than that of a good father of a
family, or of a man of ordinary prudence in the vigilance over the movables transported;
(5) That the common carrier shall not be responsible for the acts or omission of his or its employees;
(6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act with
grave or irresistible threat, violence or force, is dispensed with or diminished;
(7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods on
account of the defective condition of the car, vehicle, ship, airplane or other equipment used in the
contract of carriage.
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THE PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC. VS MGG

MARINE SERVICES, INC.
G.R. NO. 135645, March 8, 2002
San Miguel Corporation insured several bottle cases with an aggregate value of
P5,836,222.80 with Philippine American General Insurance Company (PHILAMGEN). The cargo
was loaded aboard the M/V Peatheray Patrick G to be transported from Mandaue City to Bislig,
Surigao del Sur. The weather was said to be clam by the start of the voyage. The following day,
the said vessel subsequently sunk off Cawit point, Cortes, Surigao del Sur. As a consequence, the
cargo belonging to San Miguel was lost.
San Miguel claimed the amount of lost from PHILAMGEN. Upon request by
aforementioned company, Mr. Sayo, a surveyor from Manila went to pace of sinking to investigate
circumstances of loss of cargo. He stated that the vessel was structurally sound and concluded that
the proximate cause of the listing and subsequent sinking of the vessel was the shifting of ballast
water from starboard to portside. This affected the stability of the vessel.
Petitioner paid San Miguel the full amount stated in the insurance contract. As subrogee of
San Miguel, it filed a collection case against MCG Marine Service s to recover amount it paid to
San Miguel.
Meanwhile, The Board of Marine Inquiry conducted its own investigation of the sinking of
the M/V Peartheray Patrick G. the Board rendered a decision exonerating the captain and its crew
from any administrative liability. It found that the cause of sinking was the existence of strong
winds and enormous waves a fortuitous event that could not have been foreseen. It was further held
that it is this fortuitous event that was the proximate cause of sinking.
The RTC of Makati promulgated a decision finding respondent solidary liable for the loss of
San Miguel Corporation‘s cargo and ordering them to pay petitioner the full amount for the lost
cargo plus legal interest, attorney‘s fees and cost of suit. MCG Marine appealed to CA, it reversed
ruling of RTC.
ISSUE: WON MCG Marine services should be liable for the loss of San Miguel‘s cargo?
HELD: NO, MCG Marine Services could not be held liable for the loss of the cargo occurred, as a
consequence of a fortuitous event and such event was the proximate and only cause of the loss.
Common carriers, from the nature of their business and for reasons of public policy are
mandated to observe extraordinary diligence in the vigilance over the goods and for the safety of
the passengers transported by them. Due to this, common carriers as a general rule are presumed to
have been at fault or negligent if the goods transported by them are lost, destroyed or if the same
deteriorated.
The presumption of fault or negligence does not arise in the cases enumerated under Art.
1734 of the Civil Code. Common carriers are responsible for the loss, destruction or deterioration
of goods unless the same is due to any of the following causes only:
a. Flood, storm, earthquake, lightning or other natural disaster or calamity
b. On of the public enemy whether international or civil.
c. Act or omission of the shipper or owner of the goods
d. Character of the goods or defects in the packing or in the containers.
e. Order or act of competent authority.
In order that a common carrier is absolved from liability due to natural disaster, it must be
further shown that such natural disaster or calamity was the proximate and only cause of loss, there
must be an entire exclusion of human agency from the cause of injury or less.
The Board or Marine Inquiry found out that the loss of cargo was due solely to the
existence of a fortuitous event, particularly the strong winds and huge waves.
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An event is said to be fortuitous if the following elements concur:
a. Cause of the unforeseen and unexpected occurrence, or the failure of the debtor to comply
with his obligations, must be independent of human will.
b. Must be impossible to foresee the event, or it can be foreseen but impossible to avoid.
c. Occurrence must be such as to render it impossible for the debtor to fulfill his obligation
in a normal manner.
d. The obligor must be free from any participation in the aggravation of the injury resulting
to the creditor.
YOBIDO vs. COURT OF APPEALS

October 17, 1997
Tito and Leny Tumboy, together with their minor children boarded a Yobido bus operated by
herein petitioner in Mangagoy, Surigao del Sur. Leny Tumboy alleged that the bus was overloaded,
and the driver was driving at a very high speed, so she cautioned him to slow down. However, he
paid attention until the front left tire of the bus blew out, causing the bus to fall into a ravine where
it stuck into a tree. The incident caused the death of Tito Tumboy. Other passengers of the bus
were injured.
Leny Tumboy filed a complaint for breach of contract of carriage against Yobido. Yobido
contends that she is not liable because the tire blow-out was a fortuitous event which exempts the
carrier from liability. Her witnesses testified that the tire was installed five days before the
incident, and that it was of good quality.
ISSUE: WON the tire blow-out is a fortuitous event as would exempt Yobido from liability
arising form the contract of carriage? NO.
HELD: The tire blow-put may not be a fortuitous event. Human factors are involved. The fact
that the tire was new did not imply that it is entirely free from manufacturing defects or that it
was properly mounted on the vehicle. Accidents caused either by defects of the automobile or
through the negligence of the driver is not a fortuitous event.
A common carrier may not be absolved from liability in case of force majeure alone.
The common carrier must still prove that it was not negligent in causing the death or injury
resulting from an accident. In the case at bar, while it may be true that the tire that blew-up was
still good because the grooves of the tire were still visible, this fact alone does not make the
explosion of the tire a fortuitous event. No evidence was presented to show that the accident
was due to adverse road conditions or that precautions were taken by the jeepney driver to
compensate for any conditions liable to cause accidents. The sudden blowing-up, therefore,
could have been caused by too much air pressure injected into the fire coupled by the fact that
the jeepney was overloaded and speeding at the time of the accident.
TAN CHIONG SIAN v. INCHAUSTI & CO.

22 Phil 152
The defendant received in Manila from Ong Bieng Siap, bundles and cases of goods to be
conveyed by the steamer Sorsogon to Gubat, Sorsogon where they were to be transshipped to
another vessel of the defendant for transportation to Catarman, Samar, then to be delivered to a
Chinese shipper, Tan Chiong Sian, with whom the defendant made a shipping contract. The
steamer Sorsogon arrived at Gubat with goods, and as the lorcha Pilar was not yet there, the goods
were unloaded and stored in the defendant‘s warehouse.
Several days later, the lorcha Pilar arrived and the goods were taken aboard. Before Pilar
could leave for its destination, a storm arose from the Pacific passing Gubar and driving Pilar and
its cargo upon the shore and wrecked it. The laborers of the defendant proceeded to gather up the
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merchandise of the plaintiff, and as it was impossible to preserve it, it was sold at public aution for
P1,693.37. Plaintiff filed an action for damages in the amount of P20,000.00. Lower decided that
the plaintiff was entitled only to P14,642.63. Defendant appealed.
ISSUE: WON defendant Inchausti is held liable for damages? NO.
HELD: It is a fact not disputed, and admitted by the plaintiff that Pilar was stranded and wrecked
on the coast of Gubat as a result of a violent storm from the Pacific, and it is a proven fact that the
loss or damage of the goods was due to force majeure which caused the wreckage of said craft.
According to Art. 361 of the Code of Commerce ―merchandise shall be transported at the risk and
venture of the shipper, unless the contrary be expressly stipulated.‖ No such stipulation appears on
record, therefore, all damages and impairment suffered by the goods by reason of accident, force
majeure or by virtue of the nature or defect of articles are for the account and risk of the shipper.
Defendant, therefore, is not liable for the damage occasioned as a result of the stranding of Pilar
because of the hurricane that overtook it.
The record bears no proof that said loss caused by the destruction of Pilar occurred through
the carelessness or negligence of the defendant, its agents or patron of the lorcha. The defendant as
well as its agents and patron had a natural interest in preserving the craft – an interest equal to that
of the plaintiff. The record disclose that Pilar was manned by an experienced patron and a
sufficient n umber of crewmen plus the fact that it was fully equipped. The crewmen took all the
precautions that any diligent man should have taken whose duty it was to save the boat and its
cargo, and by the instinct of self-preservation, of their lives. Considering, therefore, the conduct of
the men of the defendant in Pilar and of its agents during the disaster, the defendant has not
incurred any liability whatsoever for the loss of the goods, inasmuch as such loss was the result of a
fortuitous event or force majeure, and there was no negligence or lack of care or diligence on the
part of the defendant or its agent.
EASTERN SHIPPING LINES, INC. v. IAC

150 SCRA 463
These two cases, both for the recovery of the value of the cargo insurance, arose from the
same incident, the sinking of the M/S ASIATIC when it caught fire, resulting in the total loss of
ship and cargo.
In G.R. No. 69044, the M/s ASISTIC, a vessel operated by petitioner, loaded at Kobe, Japan
for transportation to Manila, 5,000 pieces of colorized lance pipes in 28 packages valued at
P256.039 consigned to Phil. Blooming Mills Co., Inc. and 7 cases of spare parts valued at
P92,361.75 consigned to Central Textiles Mills, Inc. Both set of goods were insured against
marine risk for their stated value with respondent Development Insurance and Surety Corporation.
In G.R. No. 71478, the same vessel took on board 128 cartons of garment fabrics and
accessories, in 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 by respondent Nisshin Fire & Marine Insurance Co., and 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 concerned and were thus subrogated unto the rights of the latter as the
insured.
ISSUES: 1. Which law should govern – the Civil provisions on Common carriers or the Carriage of
Goods Sea Act (COGSA)?
2. Who has the burden of proof to show negligence on the carrier?
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HELD: The law of the country to which the goods are to be transported governs the liability of the
common carrier in case of their loss, destruction or deterioration. As the cargoes in question were
transported from Japan to the PhiL, the liability of the petitioner 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 COGSA, a
special law is suppletory to the provisions of the Civil Code.
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 less, destruction, or
deterioration of the goods unless the same is due to any of the following causes only (Art. 1734,
NCC):
―(1) Flood, storm, earthquake, lightning or other natural disaster or calamity; xxx‖
The carrier claims that the loss of the vessel by fire exempts it from liability under the
phrase ―natural disaster or calamity.‖ However, fire many not be considered a natural disaster or
calamity. It does not fall within the category of an act of God unless caused by lightning or by
natural; disaster or calamity. Thus, under Art. 1735, the carrier shall be presumed to have been at
fault or have acted negligently, unless it proves that it has observed the extraordinary diligence
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 proven that the loss was caused by
fire. The burden then is upon Petitioner Carrier to prove that it has exercised the extraordinary
diligence required by law. Having failed to discharge the burden of proving that it had exercised the
extraordinary diligence required by law, petitioner cannot escape liability for the loss of the cargo.
MAURO GANZON vs. COURT OF APPEALS

May 30, 1988
The private respondent instituted in the Court of First Instance an action against the petitioner
for damages based on culpa contractual.
Gelacio Tumambin contracted the services of Maruo B. Ganzon to haul 305 tons of scrap
iron from Mariveles, Bataa, to the port of Manila on board the lighter LCT ―Batman.‖ Gelacio
Tumambing delivered the scrap iron to defendant Filomeno Niza, captain of the lighter. 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 however refused which
resulted to a heated argument between them.
On a subsequent date, 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.
Later on Acting Mayor Rub issued a receipt stating that the Municipality of Mariveles had taken
custody of the scrap iron.
The respondent court rendered a decision ordering the petitioner to pay damages to herein
respondent for the loss of the scrap.
ISSUE: WON petitioner is liable for the loss of the scrap? YES.
HELD: The petitioner has failed to show that the loss of the scraps was due to any of the following
causes enumerated in Article 1734 of the Civil Code.
By reason of this presumption, the court is not even required to make an express finding of
fault or negligence before it could hold the petitioner answerable for the breach of the contract of
carriage.
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Petitioner‘s defense: Te loss of the scraps was due to an ―order or act of competent public
authority‖
SC said: Before the appellee Ganzon could be absolved from responsibility on the ground
that he was ordered by competent public authority to unload the scarp iron, it must be shown that
Acting Mayor Basilio Rub had the power to issue the disputed order, or that it was lawful, or that it
was issued under legal process of authority. The appellee failed to establish this.
Indeed, no authority or power of the acting mayor to issue such an order was given in
evidence. Neither has it been shown that the cargo of scrap iron belonged to the Municipality of
Mariveles. The order of the acting mayor did not constitute valid authority for appelle Mauro
Ganson and his representatives to carry out.
Now the petitioner is changing his theory to caso fortuito. Such a change of theory on appeal
we cannot, however, allow. In any case, the intervention of the municipal officials was not of a
character that would render impossible the fulfillment by the carrier of its obligation. The
petitioner was not duty bound to obey the illegal order to dump into the sea the scrap iron.
ARADA vs. CA
G.R. No. 98243. July 1, 1992.
Alejandro Arada, herein petitioner, is the proprietor and operator of the firm South Negros
Enterprises which has been organized and established for more than 10 years. It is engaged in the
business of small scale shipping as a common carrier, servicing the hauling of cargoes of different
corporations and companies with the 5 vessels it was operating.
On March 24, 1982, petitioner entered into a contract with PR San Miguel Corp., to safely
transport as a common carrier, cargoes of the latter from San Carlos City, Negro Occidental to
Mandaue City using one of petitioner‘s vessels, M/L Maya. PR‘s cargoes consisted of 9,824 cases
of beer empties valued at P176,824.80.
On March 24, 1982, petitioner thru its crew master, Mr. Vivencio Babao, applied for a
clearance with the Philippine Coast guard for M/L Maya to leave the port of San Carlos City, but
due to a typhoon, it was denied clearance by San Carlos City Coast Guard Detachment.
On March 25, 1982 M/L Maya was given clearance as there was no storm and the sea was
calm. Hence, said vessel left for Mandue City. While it was navigating towards Cebu, a typhoon
developed and said vessel was buffeted on all its sides by big waves. Its rudder was destroyed and
it drifted for sixteen (16) hours although its engine was running.
On March 27, 1982 at about 4:00 a.m., the vessel sank with whatever was left of its cargoes.
The crew rescued by a passing pump boat and was brought to Calanggaman Island. Later in the
afternoon, they were brought to Palompon, Leyte, where Vivencion Babao file a marine protest.
On the basis of such marine protest, the Board of Marine Inquiry conducted a hearing of the
sinking of M/L Maya and recommended that the owner/operator, officers and crew of M/L Maya be
exonerated or absolved from any administration liability on account of this incident.‖
The Board‘s report containing its findings and recommendation was then forwarded to the
Philippine Coast Guard where the Commandant affirmed the Board‘s recommendation. On March
25, 1983, PR filed a complaint for the recovery of the value of the cargoes anchored on breach of
contract of carriage. The trial court dismissed the petition. CA reversed and ordered petitioner to
pay PR, with interest thereon at the legal rate from date the filing of the complaint on March 25,
1983, until fully paid, and the costs.‖
ISSUE: WON petitioner is liable for the value of the lost cargoes of SMC? YES.
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HELD: There is no doubt that petitioner was exercising its function as a common carrier when it
entered into a contract with PR to carry and transport the latter‘s cargoes. In the instance case, the
appellate court was correct in finding that petitioner failed to observe the extraordinary diligence
over the cargo in question and he or the master in his employ was negligent previous to the sinking
of the carrying vessel.
It will be noted that Vivencion Babao knew of the impending typhoon on March 24, 1982
when the Philippine Coast guard denied M/L Maya the issuance of a clearance to sail. Less than 24
hours elapsed since the time of the denial of said clearance and the time and clearance to sail was
finally issued on March 25, 1982. Records will show that Babao did not ascertain where the
typhoon was headed by the use of his vessel‘s barometer and radio. Neither did the captain of the
vessel monitor and record the weather conditions everyday as required by Art. 612 of the Code of
Commerce. Had he done so while navigating for 31 hours, he could have anticipated the strong
winds and big waves and taken shelter.
A common carrier is obliged to observe extraordinary diligence and the failure of Babao to
ascertain the direction of the storm and the weather condition of the path they would be traversing,
constitute lack of foresight and minimum vigilance over its cargoes taking into account the
surrounding circumstances of the case. While the goods are in the possession of the carrier, it is but
fair that it exercises extraordinary diligence in protecting them from loss or damage, and if loss
occurs, the law presumes that it was due to the carrier‘s fault or negligence; that is necessary to
protect the interest of the shipper which is at the mercy of the carrier (Art. 1756, Civil Code).
Furthermore, the records show that the crew of M/L Maya did not have the required
qualifications provided for in P.D. No. 97 or the Philippine Merchant Marine Officers Law, all of
whom were unlicensed. While it its true that they were given special permit to man the vessel, such
permit was issued at the risk and responsibility of the owner.
PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, INC. VS CA

222 scra 155
On September 14, 1985, the Davao Union Marketing Corp. of Davao City shipped on board
the vessel M/V ―Crazy Horse‖ operated by the Transpacific Towage, Inc. cargo consisting of 9,570
sheets oh unuion brand Gl sheets with a declared value of P1,086,750.00 and 86,860 bags of union
Pozzolan and union Portland Cement with a declared value of P4,300,000. The cargo was
consigned to the Bicol Union Center of Pasacao, Camarines Sur, with a certain Pedro Olivan as the
―Notify-Party.‖
The vessel arrived on September 7, 1985. Upon arrival the shipmaster notified the
consignee‘s ―notify-party‖ that the vessel was already to discharge the cargo. The discharging
could not be done immediately and continuously because of certain reasons. First, the buoys were
installed only 9/11/85; second, the discharged permit was secured only on 9/13 by the consignee;
third, a wooden catwalk had to be installed and the extension of the wharf has to be made, which
was completed only on 9/26; fourth, the discharging was not continuous because there were
intermittent rains and the stevedores supplied by the consignee deed not work during the town
fiesta.
The discharging of the cargo has to be suspended at 11;40 AM on 10/17 due to the heavy
downpour, strong winds and turbulent sea due to the typhoon SALING. The shipmaster ordered the
vessel to be moved a bout 300 meters seaward in order that it would not hit the catwalk or the
wooden bridge or the wharf, or the rocks. Consequently, the vessel cannot be maneuvered on
account of the strong winds and rough seas. The vessel‘s lines snapped causing her to be dragged
against the rocks and the anchor stopper gave way. The vessel sustained a hole and water filled the
engine room and at 6:15 am the engine broke down and water filled the engine room.
The shipmaster had no choice but to order the ship to be abandoned. He told the crew to
secure the vessel while he went to see the mayor to seek for police assistance to prevent pilferage of
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the vessel and its cargo. He was, however, unable to get any assistance. When he returned to the
vessel he found that it was being continuously pounded by the strong sea waves against the rocks.
This caused the vessels to break into two parts and to sick partially. In spite the presence of 3 coast
guards, nothing could be done about the pilferage on the vessel and its cargo. As a result of the
incident the cargo of cement was damage while the GI sheets where looted and nothing was left of
the undischarged pieces.
Because the cargo was insured by the Philippine American General Insurance Co., Inc. paid
the shipper Davao Union Marketing Corporation the sum of P1,511,210.00. Thereafter, the said
insurer made demands upon the Transpacific Towage, Inc. for the payment of said amount as
subrogee of the insured, claiming that the loss of the cargo was directly and exclusively brought
about by the negligence of the shipmaster and the crew of M/V ―Crazy Horse‖. Because the latter
refused to pay the amount demanded, the Philippine American General Insurance Co., Inc filed the
present complaint.
ISSUE: WON Transpacific Towage, Inc should be held liable? NO.
HELD: The cargo having been lost due to the typhoon ―SALING‖, and the delay incurred in its
unloading not being due to negligence, private respondent is exempt from liability for the loss of
the cargo, pursuant to Article 1740 of the Civil Code.
The records show that before, during and after the occurrence of typhoon Saling, private
respondent exercised due diligence to prevent or minimize the loss of the cargo, as shown by the
following facts:
1. At 5:20 am of October 18, 1985, as typhoon Saling continued to batter the Pasacao
area, the shipmaster tried to maneuver the vessel amidst strong winds and rough seas.
2. When water started to enter the engine room and later the engine broke down, the
shipmaster ordered ship abandoned, but he sough police assistance to prevent
pilferage of the vessel and its cargo.
3. After the vessel broke into two parts and sank partially, the shipmaster reported the
incident to the Philippine Coast guard, but nothing could be done to stop the pilferage.
The diligence exercised by the shipmaster further support the exemption of private
respondent from liability for the loss of the cargo, in accordance with Article 1739 of the Civil
Code.
SWEET LINES INC. VS CA

121 SCRA 769
Private Respondents purchased first class tickets from petitioner at the latter‘s office in Cebu
City. They were to board petitioner‘s vessel, M/V Sweet Grace, bound for Catbalogan, Western
Samar. Instead of departing at the scheduled hour of about midnight on July 8, 1972, the vessel set
sail at 3 am of July 9 only to be towed back to Cebu due to engine trouble,. The vessel lifted anchor
again on July 10 after having accomplished the repairs.
Instead of docking in the first of call at Catbalogan, the vessel proceeded direct to Tacloban.
Private Respondent had no recourse but to disembark and board a ferryboat to Catbalogan. Hence,
this suit for damages for breach of contract of carriage.
ISSUES: 1. WON mechanical defects in a common carrier are considered fortuitous events? NO.
2. WON Sweet Lines should be held liable? YES.
HELD: As found by the courts, there was no fortuitous event or force majeure which prevented
the vessel from fulfilling its undertaking of taking private respondents to Catbalogan. In the first
place, mechanical defects in the carrier are not considered as caso fortuito.
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The terms and conditions stated in the passage ticket, as to right of shipping company to refund
the ticket if voyage cannot be completed for any reason cannot prevail over Arts. 614 and 698 of
the Code of Commerce.
The owner of a vessel shall be civilly liable for damages arising from the act of its captain in
by passing a pre-scheduled port of call.
ACT OF PUBLIC ENEMY IN WAR WHETHER INTERNATIONAL OR CIVIL
The act must be the proximate and only cause of the loss and that the carrier must exercise
due diligence to prevent or minimize the loss before, during or after the act causing the loss,
deterioration or destruction of the goods.
ACT OR OMISSION OF SHIPPER OR OWNER OF THE GOODS
If the shipper or owner merely contributed to the loss, destruction or deterioration of the
goods, the proximate cause thereof being the negligence of the carrier, the carrier shall still be liable
for damages, but such shall be equitably reduced.
CHARACTER OF THE GOODS OR DEFECTS IN PACKING
Even if the damage should be caused by the inherent defect/character of the goods, the
common carrier must exercise due diligence to forestall or lessen the loss.
TRANS ORIENT, supra
For this provision to apply, the rule is that if the improper packing or, in this case, the defect/s
in the container, is are known to the carrier or his employee or apparent upon ordinary observation, but
he nevertheless accepts the same without protest or exception notwithstanding such condition, he is
not relieved of liability for damage resulting thereform. In this case, petitioner accepted the cargo
without exception despite the apparent defects in some of the container vans. Hence, for failure of
petitioner to prove that she exercised extraordinary diligence in the carriage of goods in this case or
that she is exempt from liability the presumption of negligence as provided under Art. 1735 holds.
4. DURATION OF LIABILITY & WHEN TERMINATED
SERVANDO ET. AL. US. PHIL, STEAM NAVIGATION

117 SCRA 832
Appellees Clara Uy Bico and Amparo Servando loaded on board the appelant‘s vessel for
carriage from Manila to Pulupandan, Negros Occidental, cargoes valued at P40,907.50 and
P1,070.50 respectively. The cargoes were complete and in good order upon discharge unto the
warehouse of the Bureau of Customs. That same day, a fire of unknown origin, destroying
appellees cargoes, razed the warehouse. However, Uy Bico was able to take delivery of 907 cavans
of rice before the fire. Appellant rejected appellees claims for the value of said goods.
ISSUE: WON the stipulation in the Bills of Lading limiting the responsibility of the carrier for the
loss or damage that may be caused to the shipment is valid? YES.
HELD: In this Bills of Lading issued for the cargoes in question, the parties agreed to limit the
responsibility of the carrier for the loss or damage that may be caused the shipment. There is
nothing therein that is contrary to law, morals or public policy.
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Appellee‘s contention that the stipulation does not bind them because they did not sign the
same is untenable. While it may be true that petitioner had not signed the plane ticket, the
provisions thereof nevertheless bind him such provisions have been held to be part of the
knowledge or assent to the regulation. It is what is known as a ―Contract of Adhesion‖ wherein
one party imposes a ready-made form of contract on the other, are contracts not entirely prohibited.
The one who adheres to the contracts is in reality free it entirely; if he adheres he gives his consent.
COMPANIA MARITIMA VS. INSURANCE COMPANY OF NORTH AMERIC

12SCRA 213
Macleod and Company of the Philippines contracted the services of Compania maritime, a
shipping corporation, for the shipment of 2. 645 of hemp from the former‘s Sasa private U.S.A on
board the S.S. Steel Navigator. This contract was confimed by a formal and written booking in
compliance with which, Compania Maritima sent to Macleod‘s private wharl LCT Nos. 1023 and
1025.
LCT No. 1025 sank, resulting in the damage or loss of 1.162 bales of hemp loaded therein.
Said bales were insured with Insurance Co. of North America against all losses and damages.
Macleod filed a claim for the loss it suffered. The sum of P64, 018.55 was paid with a subrogation
agreement wherein the former assigned to the latter its rights over the insured and damaged cargo.
Having failed to recover from the carrier, the insurance company instituted the present action.
ISSUE: WON a Contract of Carriage existed between the carrier and the shipper even if the loss
occurred when the hemp was lo added on barge owned by the carrier free of charge? YES.
HELD: The fact that the carrier sent its lighter free of charge to take the hemp from Macleod‘s
wharf to its loading onto the ship does not in any way impair the contract of carriage already
entered into a between the carrier and the shipper, for that preparatory step is but part and parcel of
said contract of carriage.
In other words, here we have a complete contract of carriage the consumption of which has
already begun; the shipper delivering the cargo to the carrier, and the latter taking possession
thereof by placing it on a lighter manned by its authorized employees, under which Macleod
became entitled to the private secured to him by law for its safe transportation and delivery, and the
carrier to the full payment of its freight upon completion of the voyage.
LU DO v. BINAMIRA
101 Phil. 120, April 22, 1957
Delta Company of New York shipped six cases of films and photographic supplies consigned
to Binamira. The ship arrived in Cebu and discharged her cargo, placing it in the possession and
custody of the arrastre operator appointed by the bureau of customs. The cargo was checked both
the stevedoring company as wells as by the arrastre operator of then port and was found in good. In
the contract of carriage, however, it was stipulated that the carrier is no longer liable for the cargo
upon its delivery to the hands of the customs authorities. The cargo was later delivered to Binamira
and a marine surveyor found that some were missing valued at P324.63. Lower court held the
carrier liable.
HELD: While delivery of the cargo to the customs authorities is not delivery to the consignee or
the person who has a right to receive them as contemplated in Art. 1735, NCC because in such case
the goods are still in the hands of the government and the owner cannot exercise dominion over
them, however, the parties may agree to limit the liability of the carrier considering that the goods
have still to go through the inspection of the customs authorities before they are actually turned over
to the consignee. These stipulations limiting liability is not contrary to morals or public policy. This
is a situation where the carrier loses control of the goods because of a custom regulation and it is
unfair that it be made responsible for any loss or damage that may be caused to the goods during the
interregnum.
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SAMAR MINING CO., INC. v. NORDEUTSCHER LLOYD

132 SCRA 535, October 23, 1984
Common Carrier: M/S SCHWABENSTEIN a vessel owned by defendant-appellant

NORDUETSCHER LLYOD, (represented in the Philippines by its agent, C.F. SHARP &
CO., INC.)
Consignee: SAMAR MINING COMPANY, INC.
Goods: one (1) crate Optima welded wedge wire sieves
Destination: port of loading: Bremen, Germany
Port of discharge: Davao
Port of discharge from ship: Manila
The case arose from an importation SAMAR MINING COMPANY, INC., of 1 crate
Optima welded wedge wire sieves through the M/S SCHWABENSTEIN which shipment is
covered by Bill of Lading No. 18 duly issued to consignee SMAR MINING COMPANY, INC.
Upon arrival of the aforesaid vessel at the port of Manila, the aforementioned importation was
unloaded and delivered in good order and condition to the bonded warehouse of AMCYL. The
goods were however never delivered to, nor received by, the consignee at the port of destination –
Davao.
The extent of appellant carrier‘s responsibility and/or liability in the transshipment of the
goods in question are spelled out and delineated under Section 1, paragraph 3 of Bill of Lading No.
18, to wit:
―The carrier shall not be liable in any capacity whatsoever for any delay, loss or damage
occurring before the goods enter ship‘s tackle to be loaded or after the goods leave ship‘s tackle
to discharged, transshipped or forwarded.‖
Section 11 of the same bill, provides:
―This carrier, in making arrangements for any transshipping or forwarding vessels or means of
transportation not operated by this carrier shall be considered solely the forwarding agent of the
shipping and without any other responsibility whatsoever even though the freight for the whole
transport has been collected by him….‖
ISSUE: WON Mr. Lloyd and C.F. Sharp & Company, Inc. may be held liable for the loss of the
subject goods? NO.
HELD: Being able to discharge the goods in full and good condition unto the custody of AMCYL
at the port of discharge of the ship – Manila, their responsibility of the cargo has ceased. The
validity of stipulations in bills of lading exempting the carrier from liability for loss or damage to
the goods when the same are not in its actual custody has been upheld.
Art. 1738 finds no applicability to the instant case. The said article contemplates a situation
where the goods had already reached their place of destination and are stored in the warehouse of
the carrier. The subject goods were still awaiting transshipment to their port of destination, and
were stored in the warehouse of a third party when last seen and/or heard of.
However, Article 1736 is applicable to the instant suit. Under said article, the carrier may be
relieved of the responsibility for loss or damage to the goods upon actual or constructive deliver of
the same by the carrier to the consignee, or to the person who has a right to receive them.
It becomes necessary at this point to dissect the complex relationship that had developed
between appellant and appelle in the course of the transactions that gave birth to the present suit.
Two undertaking appeared embodied and/or provided for in the bill of Lading 19 in question. The
first is for the transport of goods from Bremen, Germany to Manila. The second, the transshipment
of the same goods from Manila to Davao, with appellant acting as agent of the consignee. At the
hiatus between these two undertakings of appellant which is the moment when the subject goods
are discharged in Manila, its personality changes from that of carrier to that of agent of the
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consignee. Thus, the character of appellant‘s possession also changes, from possession in its own
name as carrier, into possession in the name of consignee as the latter‘s agent. Such being the case,
there was, in effect, actual delivery of the goods from appellant as carrier to the same appellant as
agent of the consignee.
SARKIES TOURS PHILS. INC. VS CA

280 SCRA 58
Fatima, one of the private respondents, boarded petitioner‘s bus on her way to Legazpi City.
Petitioner‘s employee helped Fatima and her brother load the luggage‘s in the bus compartment.
However during a top over, it was discovered that Fatima‘s thing were missing. Some of the
passengers suggested retracting the route of the bus to try to recover the lost items, but the driver
ignored them.
Private respondents filed the instant case to recover the value of the remaining lost items. The
claimed that the loss was due to petitioner‘s failure to observe extraordinary diligence in the care of
Fatima‘s luggage. Petitioner disowned liability on the ground that Fatima did not declare any excess
baggage upon boarding its bus.
ISSUE: WON petitioner should be held liable? YES.
HELD: 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 xxx transported by them, ― and this liability ―lasts from the time the goods are
unconditionally placed in the possession pf, and received by the carrier for transportation until
the same are delivered, actually or constructively, by the carrier to xxx the person who has a
right to receive them, ―unless the loss is due to any of the excepted under Art. 1734 thereof.
Where the common carrier accepted its passenger‘s baggage for transportation and even
had it placed in the vehicle by its own employee, its failure to collect the freight charge is the
common carrier‘s own look out.
The cause of the loss in the case at bar was petitioner‘s negligence in not ensuring that the
doors of the baggage compartment were securely fastened. As a result of this lack of care,
almost the entire luggage was lost to the prejudice of the paying passengers.
5. AGREEMENT TO LIMIT LIABILITY/DILIGENCE REQUIRED/ AMOUNT OF LIABILITY/

FACTORS AFFECTING AGREEMENT/PRESUMPTION OF NEGLIGENCE/ PASSENGER’S
BAGGAGE
Art. 1746. An agreement limiting the common carrier's liability may be annulled by the shipper or owner
if the common carrier refused to carry the goods unless the former agreed to such stipulation.
Art. 1747. If the common carrier, without just cause, delays the transportation of the goods or changes the
stipulated or usual route, the contract limiting the common carrier's liability cannot be availed of in case
of the loss, destruction, or deterioration of the goods.
Art. 1748. An agreement limiting the common carrier's liability for delay on account of strikes or riots is
valid.
Art. 1749. A stipulation that the common carrier's liability is limited to the value of the goods appearing in
the bill of lading, unless the shipper or owner declares a greater value, is binding.
Art. 1750. A contract fixing the sum that may be recovered by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it is reasonable and just under the circumstances, and
has been fairly and freely agreed upon.
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Art. 1751. The fact that the common carrier has no competitor along the line or route, or a part thereof, to
which the contract refers shall be taken into consideration on the question of whether or not a stipulation
limiting the common carrier's liability is reasonable, just and in consonance with public policy.
Art. 1752. Even when there is an agreement limiting the liability of the common carrier in the vigilance
over the goods, the common carrier is disputably presumed to have been negligent in case of their loss,
destruction or deterioration.
Art. 1753. The 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.
Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger's baggage which is not in
his personal custody or in that of his employee. As to other baggage, the rules in Articles 1998 and 2000 to
2003 concerning the responsibility of hotel-keepers shall be applicable.
LIMITATION OF LIABILITY IN THE CARRIAGE OF GOODS
Article 1744 of the civil code allows the parties to a contract of goods to agree to limit liability
for the loss destruction or deterioration of the goods to a degree less than EOD provided it is
reasonable, just and not contrary to public policy (1744, 1750).
For example, if the Bill of Lading provides that the common carrier shall be liable to a
maximum liability of only US$500 unless a higher valuation has been declared, the liability of the
common carrier shall not exceed said amount because the stipulation is valid.
It must however be stressed, that since the agreement is premised on freedom of choice or
voluntaries, the validity and enforceability of stipulations limiting the carrier‘s liability to an agreed
valuation (Arts. 1749 & 1750) is anchored on the free and unhampered exercise of the shipper‘s will
in consenting thereto.
If a carrier enjoys a monopoly over a certain line or route or a part thereof, the law enjoins that
such factor must be taken into consideration in determining whether the stipulation is reasonable, just
and conformably with public policy. The fact of whether the stipulation is reasonable, just and
conformably with public policy. The fact of monopoly over a certain line or route or a party thereof,
the law enjoins that such factor must be taken into consideration in determining whether the
stipulation is reasonable, just and conformably with public policy. The fact of monopoly tends to
naturally deprive the shipper of a reasonable freedom of choice as required under Art. 1746 that
rendered the agreement voidable as the said agreement may be annulled by the shipper if the common
carrier refused to carry the goods unless the common carrier agreed to such stipulation.
Similarly, the package limitation in Section 4 (5) of the COGSA (which is reproduced in some
Bill of Lading) are held valid and applicable in the Philippines by the SC in the case of:
SEA-LAND SERVICE VS. IAC

153 SCRA 552, (1987)
On or about January 8, 1981, Sea-Land, a foreign shipping and forwarding company

licensed to do business in the Philippines, received from Seaborne Trading Company in Oakland,
California a shipment consigned to Sen Hiap Hing, the business name, used by Paulino Cue in the
wholesale and retail trade which he operated.
The shipper not having declared the value of the shipment, no value was indicated in the
bill of loading. The bill described the shipment only as ―8 CTNS on 2 SKIDS-FILES.‖ Based on
on volume measurements Sea-land charged the shipper the total amount of US$209.28 for
freightage and other charges. The shipment was loaded on board the MS Patriot, a vessel owned
and operated by Sea-Land, for discharged at the Port of Cebu.
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The shipment arrived in Manila on February 12, 1981, and discharged in Container No.
310996 into the custody of the arrastre contractor and the customs and port authorities. Sometimes
between February 13 and 16, 1981, after the shipment had been transferred, along with other
cargoes to Container No. 40158 near warehouse 2 at Pier 3 in South Harbor, Manila; awaiting
trans-shipment to Cebu, it was stolen by pilferers and has never been recovered.
On March 10, 1981, Paulino Cue, the consignee, made formal claim upon Sea-Land for the
value of the lost shipment allegedly amounting to P179,643.48. Sea-Land offered to settle for
US$4,000.00, or its then Philippine peso equivalent of P30,600.00. Asserting that said amount
represented its maximum liability for the loss of the shipment under the package limitation clause in
the covering bill of lading.
Cue rejected the offer and thereafter brought suit for damages against Sea-Land in the then
CFI of CEBU. Said Court rendered judgment in favor of cue, sentencing Sea-Land to pay him
P186,048.00 representing the Philippine currency value of the lost cargo, P55,814.00 for unrealized
profit with 1% monthly interest from the filling of the complaint until fully paid, P25,000.00 for
attorney‘s fees and P2,000.00 as litigation expenses.
HELD: WON the consignee of seaborne freight is bound by stipulations in the covering bill of
lading limiting to a fixed amount the liability of the carrier for loss or damage to the cargo where its
value is not declared in the bill?
HELD: Since the liability of a common carrier for loss of or damage to goods transported by its
under a contract of carriage is governed by the laws of the country of destinatio0n and the goods in
question were shipped from the United States to the Philippines, the liability of petitioner Sea-Land
to the respondent consignee is governed primarily by the Civil Code, and suppletorily by the Code
of Commerce and special laws. One of these suppletory special laws is the Carriage of Goods by
Sea Act, U.S. Public Act No. 521 which was made applicable to all contracts for the carriage of
goods by sea to and from Philippine ports in foreign trade by Commonwealth Act No. 65, approved
on October 22, 1936. Sec. 4(5) of said Act in part reads:
Neither the carrier nor the ship shall in any event be or become liable for any loss or
damage to or in connection with the transportation of goods in an amount exceeding $500 per
package lawful money of the United States, or in case of goods not shipped in package, per
customary freight unit, or the equivalent of that sum in other currency, unless the nature and value
of such goods have been declared by the shipper before shipment and inserted in the bill of lading.
This declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be
conclusive on the carrier.
Clause 22, first paragraph, of the long-form bill of lading customarily issued by Sea-Land
to its shipping clients is a virtual copy of the first paragraph of the foregoing provision.
It seems clear that even it said section 4(5) of the Carriage of Goods by Sea Act did not
exist, the validity and binding effect of the liability limitation clause in the bill of lading here are
nevertheless fully sustainable on the basis alone of the cited Civil Code provisions. That said
stipulation is just and reasonable is arguable form the fact that it echoes Art. 1750 itself in
providing a limit to liability only if a greater value is not declared for the shipment in the bill of
loading. The just and reasonable character of such stipulation is implicit in it giving the shipper or
owner the option of avoiding accrual of liability limitation by the simple and surely far from
onerous expedient of declaring the nature and value of the shipment ion the bill of loading. And
since the shipper here has not been heard to complaint of having been ―rushed‖ imposed upon ort
deceived in any significant way into agreeing to ship the cargo under a bill of lading carrying such a
stipulation, there is simply no ground for assuming that its agreement thereto was not as the law
would require, freely and fairly sough and given.
The issue of alleged deviation is also settled by Clause 13 of the bill of lading which
expressly authorizes transshipment of the goods of any point in the voyage. The carrier or master,
in the exercise of its or his discretion and although transshipment or forwarding of the goods may
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not have been contemplated or provided for herein, may at port of discharge or any other place
whatsoever transship or forward the goods or any part thereof by any means at the risk route,
whether within or outside the scope of the voyage or beyond the part of discharge or destination of
the goods and without notice to the shipper nor consignee. The carrier or master may delay such
transshipping or forwarding for any reason, including but not limited a vessel or other means of
transportation whether by the carrier or others.‖
Applying the package limitation of US$500/package, Sealand was held liable in the amount
of US$4, 000 for 8 cartons or packages since the shipper did not declare the value of the shipment
in the bill of lading.
However, in the case of:
AMERICAN HOME ASSURANCE CO v. CA

(208 SCRA 343)
The SC, citing National Development Co., v CA 164 SCRA 593 (1988) and Eastern Shipping
v. IAC 150 469, (1987), held that COMMON CARRIER cannot limit their liability for injury or
loss of goods where such injury or loss was caused by its own negligence. In American Home
Insurance Company, National Maritime Corporation was deemed to have hypothetically admitted
the allegation in the complaint that the loss or damage to 122 bales was due its fault or negligence
when it did not present proof of exercise of EOD but instead filed a Motion to Dismiss. In National
Development Co., NDC and its agent Maritime Co. of the Phils. Were held jointly and severally
liable for the value of lost/damages cargo (consisting of 550 bales of raw cotton and 200 cartons of
sodium lauryl sufate and 10 cases aluminum foil) due to collision of the ―Doña Nati‖ with Japanese
vessel SS ―Yashusima Maru‖ at ISE, Bay, Japan/Both vessels were at fault for not changing their
excessive speed despite the thick fog obstructing visibility.
BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V.

SUPRA
Similarly in this case, defendants-appellees argued that their liability, if there be any should
not exceed the limitations of liability provided for in the bill of lading and other pertinent laws.
ISSUE: Whether the package limitation of liability is applicable
HELD: It is to be noted that the Civil Code does not limit the liability of the common carrier to a
fixed amount per package. In all matters not regulated by the Civil Code, the right and the
obligations of common carriers shall be governed by the Code of Commerce and special laws.
Thus, the COGSA, which is suppletory to the provisions of the /civil Code, supplements the latter
by establishing a statutory provision limiting carriers liability in the absence of a shipper‘s
declaration of a higher value in the bill of lading. The provisions on limited liability are as much a
part of the bill of lading as though as physically it and as though placed there by agreement of the
parties.
In the case at bar, there was no stipulation in the Bill lading limiting the carrier‘s liability.
Neither did the shipper declare a higher valuation of the goods to be shipped. The fact
notwithstanding, the insertion of the words ―L/C No. 90/02447/cannot be the basis for petitioner‘s
liability.
First, a notation in the Bill of lading which indicated the amount of the Letter of Credit
obtained by the shipper for the importation steel sheets did not effect a declaration of the value of
the goods as required by the bill. That notation was made only for the convenience of the shipper
and the bank processing the Letter of Credit.
Second, in Keng Hua paper Products v. Court of Appeals, the SC held that a bill of lading
was separate from the Other Letter of Credit arrangements. Thus:
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―(T)he contract of carriage, as stipulated in the bill of lading in the present case, must be
treated independently of the contract of sale between the seller and the buyer, and contract of
issuance of a letter of credit between the amount of goods described in the commercial invoice
in the contract of sale and the amount allowed in the letter of credit will not affect the validity
and enforceability of the contract of carriage as embodied in the bill of lading. As the bank
cannot be expected to look beyond the documents presented to it by the seller pursuant to the
letter of credit, neither can the carrier be expected to go beyond the representations of the
shipper in the bill of lading and to verify their accuracy vis-à-vis the commercial invoice and
the letter credit. Thus, the discrepancy between the amount of goods indicated in the invoice
and the amount in the bill of lading cannot negate petitioner‘s obligation to private respondent
arising from the contract of transportation.‖
In the light of the foregoing petitioner‘s liability should be computed based on US$$500 per
package an d not the per metric ton price declared in the Letter of Credit. In Eastern Shipping
Lines, Inc. v. Intermediate Appellate Court the SC explained the meaning of package:
―When what would ordinary be considered packages are shipped in a container supplied
by the carried and the number of such units is disclosed in the shipping documents, each of
those units and not the container constitutes the ―package‖ to in the liability limitation
provision of Carriage of Goods by Sea Act.
Lading clearly disclosed the contents of the containers. The number of units, as well as the
nature of the steel sheets, the four damaged coils should be considered as the shipping unit subject
to the US$500 limitation.
EASTERN SHIPPING LINES, supra
Eastern Shipping was held liable for the loss of goods due to fire and sinking of the ship M/S
―Asiatica (while en route to Kove, Japan to Manila) because the fire (which was not notice only 24
hours after it started.
On the basis of the ruling in this case, fault or negligence therefore, need not be intentional or
reckless act. It can be a failure to act with prudence and reasonableness under given circumstances.
Be reminded that the existence of such an agreement limiting the carrier‘s liability do not change in
case of L, D & D (1735). Under these circumstances, the carrier, in order to escape liability must
still affirmatively prove that it had exercised the diligence agreed upon. The COMMON CARRIER
must exercise (Art. 1739) even if the loss/damages is due to the character of the goods or its faulty
packing (Art. 1742). And also, the COMMON CARRIER cannot also limit its liability if without
just cause, it has uncured delay in the transportation of the goods or changes in the stipulation or
usual route (Art. 1747)
PAN AMERICAN WORLD AIRWAYS, INC. vs IAC

August 11, 1998
This is a petition filed by Pan American World Airways seeking to limit its liability for lost
baggage containing promotional and advertising materials for films to be exhibited in Guam and the
US, clutch bags, barong tagalong and personal belongings of Rene Pangan to the amount specified
in the airline ticket absent a declaration of a higher valuation and the payment of additional charges.
On April 25, 1978, Rene Pangan, president and general manager of Sotang Bastos and Archer
Productions entered into an agreement with Prime Films for the exhibition of his films in the US
and Guam. It was further agree that the would provide the necessary promotional and advertising
materials for his films.
On May 27, 1978, Pangan checked in his 2 luggage containing the promotional and
advertising materials at the ticket counter of Pan Ann in Manila for his flight to Guam. However
his name was not found in the manifest for the economy class thus be bough a first class ticket in
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order for him to reach Guam on time. When he arrived in Guam, his luggage did not arrive thus he
filled a written complaint with Pan Am.
Due to the failure of Pan am to communicate their actions with Pangan, Pangan instituted a
complaint with the court. The trial court ruled in favor of Pangan and awarded him actual damages
in the amount of P83,000 plus interest. This decision was affirmed by the CA.
Petitioner appealed to the SC contending that it is only liable for the amount set forth in the
contract of carriage. On the basis of certain stipulations printed at the back of the ticket, petitioner
said that its liability for the lost baggage of Pangan is limited to #600 ($20 x 30 kgs) only as the
latter did not declare not declare a higher value for his baggage and pay the corresponding
additional charges.
ISSUE: WON Pan American is liable only to the amount specified in the plane ticket absent a
declaration of higher valuation and payment of additional charges? YES.
HELD: SC ruled the petitioner‘s liability for the lost baggage is limited to $20 per kilo or $600
only as stipulated at the back of the ticket. The Ong Yiu decision, where the Court sustained the
validity of a printed stipulated at the back of an airline ticket limiting the liability of the carrier for
lost baggage to a specified amount of P100 per baggage and ruled that the carrier‘s liability was
limited to said amount since the passenger did not declared a higher value, much less pay additional
charges, is squarely applicable in the case at bar.
The ruling in Shewaran vs PAL where the court limited the carrier‘s liability to a specified
amount because the conditions printed at the back of the ticket were so small and hard to read that
they would not warrants the presumption that the passenger was aware of the conditions and had
freely entered thereto is not applicable in this case because similar fact s that would make the case
fall under the exception have nor been alleged or shown to exist.
This is the stipulation at the back of the airline ticket:
NOTICE OF BAGGAGE LIABILITTY LIMITATIONS

Liability for loss, delay or damage to baggage is limited as follows unless a higher values is declared in
advance and additional charges are paid: (1) for most international travel to approximately $9.70 per
pound ($20/kilo) for checked baggage and #400 per passenger for unchecked baggage.
PHILIPPINE AIRLINES v. CA
207 SCRA 100
Destination: California, USA-Manila, Phil.

Carrier: PAL flight # 107
Thing involved: Luggage‘s (Samsonite suitcase)
Plaintiff Isidro Co, accompanied his wife and son, arrived at Manila International Airport
aboard PAL flight No. 107 from California, US.A. Plaintiff, upon proceeding to the baggage
retrieval area, was able to claim 8 luggage‘s, but despite diligent search, he failed to locate his ninth
luggage.
The plaintiff‘s lost luggage was Samsonite suitcase worth about US%200.00 and
containing various personal effects to be worth US$1,243.01, in addition to the presents entrusted to
them by their friends amounting from US$500.00 to US$600. It appeared, however, that plaintiff
surrendered all the nine claim checks corresponding to the nine baggage‘s, including the one that as
missing, to the PAL officer.
Co sued the airline for damages. Trial court found PAL liable. Such decision was affirmed
by the Court of Appeals.
ISSUE: WON PAL is liable for damages? YES.

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HELD: In Alitalia vs. IAC, the Warsaw Convention limiting the carrier‘s liability was applied
because of a simple loss of baggage without any improper conduct on the part of the officials or
employees of the airline, or other special injury situated by the passengers. The petitioners
therein did not declare a higher value for his luggage, much less did he pay an additional
transportation charge.
Petitioner contends that under the Warsaw convention, its liability, if any, cannot exceed US
$20.00 based on weight as private respondent Co did not declare the contents of his baggage nor
pay additional charges before the flight.
We find no merit in that contention. In Samar Mining Company, Inc v. Mordeutscher,

this court ruled: ―The liability of the common carrier for the loss, destruction, or5 deterioration of
goods transported from a foreign country to the Philippines is governed primarily by the New Civil
Code. In all matters not regulated by said Code, the rights and obligations of common carriers shall
be governed by the Code of Commerce and by Special Laws.‖
The provisions of the new Civil Code on Common Carriers are Articles 1733,1735 and 1753.
Since the passenger‘s destination in this cased was the Philippines, Philippine law governs the
liability of the carrier for the loss of the passenger‘s luggage.
In this case, the petitioner failed to overcome, not only the presumption, but more
importantly, the private respondent‘s evidence, proving that the carrier‘s negligence was the
proximate cause of the loss of his baggage. Furthermore, petitioner acted in bad faith in faking a
retrieval receipt to bail itself out of having to pay Co‘s claim.
EVERETT STEAMSHIP CORPORATION v. CA

297 SCRA 296 (1998)
The supplier from Japan to Manila on board a vessel owned by Everett Orient Lines shipped
crates of bus spare parts. Upon arrival in Manila it was discovered that tone of the crates maximum
amount as stipulated under Clause 18 of the B/L which limits the missing goods from the common
carrier and subsequently filed a case against the latter on the vary same B/L, he accepts the value.
Contract of adhesion wherein one party imposes a ready-made form of contract on the other
are contracts, which are not entirely prohibited. The one who adheres to the contract is in reality
free to reject it even entirely; but it he adheres, he gives his consent thereto and shall be bound by
such contract.
The package limitation clause under Section 4(5) of the COGSA (limiting carriers liability
not to exceed US$500/package, or if goods are nit shipped in packages, per customary freight unit,
unless the nature and value of such good have been declared by shipper and inserted in the bill
lading), did not define ―package: Different courts in different jurisdictions give different
interpretation of the term package, in one ruling, it was held that a container with 34) cartons of
stereo equipment in side is a package, which was reversed, in subsequent ruling that each of the
cartons inside the container is a package.
In the Philippine case Eastern Shipping, each of the 28 packages containing 5, 000 pieces of
calorized lance pipes, 7 cases of spare parts, 2 cases of surveying instruments and 128 cartons of
garment in two (2) containers were considered packages. The 2 containers were not considered
packages.
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ONG YIU vs. CA

GR No. L-40597, June 29, 1979
Petitioner sued private respondent PAL for breach of contract of transportation.

Petitioner‘s luggage was overcarried to Manila instead of to Butuan City. And when it
was brought to him by one Emilio Lagoño, a driver of a colorum car, petitioner claimed
that important documents necessary for his hearing (as he was a lawyer-businessman) and
certain gift items for his parent-in-law were missing. RTC found PAL to have acted in
bad faith with malice and declared petitioner entitled to P80,000 moral pay petitioner,
only P100.00 – the baggage liability assumed by it under the condition of carriage printed
at the back of the ticket.
Issue: Whether or not, CA correctly concluded that PAL was not grossly negligent and
that it had not acted fraudulently or in bad faith as to entitle petitioner to an ward of moral
& exemplary damages?
Held: Yes
PAL had not acted in bad faith. Bad faith means a breach of a known duty
through some motive of interest or ill will. It was the duty of PAL to look for petitioner‘s
luggage which had been miscarried. PAL exerted due diligence in complying with such
duty.
In the absence of a wrongful act or omission or of fraud or bad faith, petitioner is not
entitled to moral damages.
Neither is he entitled to exemplary damages (ED). In contracts, as provided in

Article 2232 of Civil Code, ED can be granted if defendant acted in wanton, fraudulent,
reckless, oppressive, or malevolent manner which has not been proven in this case.
Since petitioner had failed to declare a higher value for his baggage, he cannot be
permitted a recovery in excess P100.00. Besides, passengers are advised not to place
valuable items inside their baggage but ―to avail of our V-Cargo service‖. (Furthermore)
There is nothing in the evidence to show the actual value of the goods allegedly lost by
petitioner. There is no dispute that petitioner did not declare any higher value for his
luggage, much less did he pay any additional transportation charge.
While it may be true that petitioner had not signed the plane ticket, he is
nevertheless bound by the provisions thereof. ―Such provisions have been held to be a
part of the contract of carriage and valid & binding upon the passenger regardless of the
latter‘s lack of knowledge or assent to the regulation.‖It is what is known as ―contract of
adhesion‖, in regards which, it has been said that—contracts of adhesion wherein one
party imposes a ready made form of contract on the other, as the plane ticket in the case at
bar – are contracts not entirely prohibited.The one who adheres to the contract is in reality
free to reject it entirely – if he adheres he gives his consent.
―A contract limiting liability upon an agreed valuation does not offend against the
policy of the law forbidding one from contracting against his own negligence.‖
CATHY PACIFIC AIRWAYS VS CA

219 SCRA 520
Respondent Tomas L. Alcantara was a first class passenger of petitioner Cathay

on its flight from Manila to Honkong and onward from Honking to Jakarta.
Upon his arrival in Jakarta, he discovered the luggage was missing. He was told
that his luggage was left behind in Honkong. For this, he was offered $20 as
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inconvenience e money to buy his immediate personal needs until the luggage could be
delivered to him.
Upon the arrival to Jakarta of his luggage, the latter was not delivered to his hotel
but he was required by petitioner to pick up his luggage together with an official of the
Philippine Embassy.
Respondent filed with the CFI (nor RTC) of Lanao del Norte a complaint against
petitioner praying for temperate, moral and exemplary damages, plus attorneys fees.
TC rendered its decision ordering Cathay to pay plaintiff P20,000 for moral
damages, P5,000.00 for temperate damages, P10,000 for exemplary damages, and 25,000
for attorney‘s fees, and the costs.
Both parties appealed to CA.CA decided to affirm the decision of the trail court
with modification increasing the moral damages to P80,000, exemplary damages to
P20,000 and temperate or moderate damages to P10,000. The award of P25,000 for
attorney‘s fees was maintained.
Issue: W/N the CA erred in holding petitioner liable to respondent Alcantara for moral,
exemplary and temperate damages as well as attorney‘s fees.
Held: CA‘s decision is affirmed with the exception of the award of temperate damages
which is deleted, while the award of moral damages is reduced to P30,000.
Luggage at the designated place and time, it being the obligation of a common
carrier to carry its passengers and their luggage safely to their destination, which includes
the duty not to delay their Petitioner breached its contract of carriage with private
respondent when it failed to deliver his transportation, and evidence shows that petitioner
acted fraudulently or in bad faith.
Moral damages predicated upon a breach of contract of carriage may only be

recoverable in instances where the mishap results in death of a passenger or where the
carrier is guilty of fraud or bad faith.
The Cathay representative was also rude and insulting in dealing with private
respondent when the latter asked him about his missing luggage.
To compound matters, Cathay refused to have the luggage of Alcantara delivered

to him at his hotel. Under the circumstances, it is evident that petitioner was remiss in its
duty to provide proper and adequate assistance to a paying passenger, more so one with
first class accommodation.
MAERK LINE VS CA
222 SCRA 108
The Supreme Court held Maersk Line liable delay in the delivery of goods. An
examination of the subject bill of lading that the subject shipment was estimated to arrive
in Manila on April 3, 1977. while there was no special contract entered into by the parties
indicating the date of arrival, petitioner nevertheless, was very well aware of the specific
date when the goods expected to arrives as indicated in the bill lading.
There was delay in the delivery of the goods, spanning a period of 2 mos. And 7 days falls
way beyond the realm of reasonableness.
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Petitioner never even bothered to explain the cause for delay of more than 2 mos. in the
delivery of the goods. The court held petitioner liable for breach of contract carriage
amounting to bad faith.
ARTICLES 1998 TO 2003 OF THE NEW CIVIL CODE

Art. 1998. The deposit of effects made by the travellers in hotels or inns shall also be regarded as necessary. The
keepers of hotels or inns shall be responsible for them as depositaries, provided that notice was given to them, or
to their employees, of the effects brought by the guests and that, on the part of the latter, they take the
precautions which said hotel-keepers or their substitutes advised relative to the care and vigilance of their effects.
(1783)
Art. 1999. The hotel-keeper is liable for the vehicles, animals and articles which have been introduced or placed
in the annexes of the hotel. (n)
Art. 2000. The responsibility referred to in the two preceding articles shall include the loss of, or injury to the
personal property of the guests caused by the servants or employees of the keepers of hotels or inns as well as
strangers; but not that which may proceed from any force majeure. The fact that travellers are constrained to rely
on the vigilance of the keeper of the hotels or inns shall be considered in determining the degree of care required
of him. (1784a)
Art. 2001. The act of a thief or robber, who has entered the hotel is not deemed force majeure, unless it is done
with the use of arms or through an irresistible force. (n)
Art. 2002. The hotel-keeper is not liable for compensation if the loss is due to the acts of the guest, his family,
servants or visitors, or if the loss arises from the character of the things brought into the hotel. (n)
Art. 2003. The hotel-keeper cannot free himself from responsibility by posting notices to the effect that he is not
liable for the articles brought by the guest. Any stipulation between the hotel-keeper and the guest whereby the
responsibility of the former as set forth in articles 1998 to 2001 is suppressed or diminished shall be void. (n)
Art. 2004. The hotel-keeper has a right to retain the things brought into the hotel by the guest, as a security
for credits on account of lodging, and supplies usually furnished to hotel guests. (n)
6. LAWS GOVERNING CONTRACTS OF TRANSPORTATION OF GOODS

Art. 1753. The 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.
Art. 1766. In all matters not regulated by this Code, the rights and obligations of common carriers shall be
governed by the Code of Commerce and by special laws.
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CHAPTER III
COMMON CARRIER OF PASSENGERS
Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight
can provide, using the utmost diligence of very cautious persons, with a due regard for all the
circumstances.
Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at
fault or to have acted negligently, unless they prove that they observed extraordinary diligence as
prescribed in Articles 1733 and 1755.
Art. 1757. The responsibility of a common carrier for the safety of passengers as required in Articles 1733
and 1755 cannot be dispensed with or lessened by stipulation, by the posting of notices, by statements on
tickets, or otherwise.
Art. 1758. When a passenger is carried gratuitously, a stipulation limiting the common carrier's liability
for negligence is valid, but not for willful acts or gross negligence.
The reduction of fare does not justify any limitation of the common carrier's liability.
Art. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or
willful 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. 1760. The common carrier's responsibility prescribed in the preceding article cannot be eliminated or
limited by stipulation, by the posting of notices, by statements on the tickets or otherwise.
Art. 1761. The passenger must observe the diligence of a good father of a family to avoid injury to himself.
Art. 1762. The contributory negligence of the passenger does not bar recovery of damages for his death or
injuries, if the proximate cause thereof is the negligence of the common carrier, but the amount of
damages shall be equitably reduced.
Art. 1763. A common carrier is responsible for injuries suffered by a passenger on account of the willful
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.
CARRIAGE OF PASSENGERS
A stipulation limiting the carrier‘s liability can only be executed with respect to
carriage of goods but not for contracts of carriage of passengers.
CLASSES OF BAGGAGE OF PASSENGERS

1. Baggage in the custody of the passengers or their employees
2. Baggage in the custody of the carrier
BAGGAGE OF PASSENGERS
With respect to the liability of the COMMON CARRIER to the baggage of passengers
which is in their personal custody, the COMMON CARRIER shall be responsible merely as
depositaries, provided that notice was given to them, or to their employees, of the
effects/baggage brought in by passengers and that on the part of the passenger, have taken the
precautions which said COMMON CARRIER advised relative tot eh care and vigilance of
their baggage‘s ( Art. 1998 and asked in the 1997 BAR.)
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PERSONS OF PASSENGERS
With respect to passengers, COMMON CARRIER are bound to carry the passengers
safely as far as human care and foresight can provide, using the utmost diligence of very
cautious persons, with due regard for all the circumstances (1755)
PRESUMPTION OF NEGLIGENCE
Under Art.1756, in case of death or injuries to the passengers, common carriers are
presumed to have been at fault or to have acted negligently
LAST CLEAR CHANCE RULE NOT APPLICABLE TO CONTRACTS OF CARRIAGE
The principle of last clear chance applies in a suit between the owners and driver of
two colliding vehicles. It does not apply where a passenger demands responsibility from the
carrier to enforce its contractual obligation. It would be iniquitous to exempt the driver and hi
employer on the ground that the other driver was also negligent.
CASES
CALALAS v. CA
G.R. No. 122039, May 31, 2000
Eliza Jujeurche G. Sunga, a college freshman majoring in Physical Education at

the Siliman University, took a passenger jeepney which was owned and operated by
petitioner Vicente Calalas and, as the jeepney was filled to capacity of about 24
passengers, Sunga was given by the conductor an extension seat‖.
One the way to Poblacion Sibulan, Negros Occidental, the jeepney stopped to let a
passenger off. As Eliza was seated at the rear of the vehicle, she gave way to the outgoing
passenger. Just as she was doing so, an Isuzu truck which was driven by Iglecerio Verena
and owned by Francisco Salva bumped the left rear portion of the jeepney. As a result,
Sunga was injured.
Sunga filed a complaint for damages against Calalas, alleging violation of the
contract of carriage by the former in failing to exercise the diligence required of him as a
common carrier.
Issues:
1. Whether or not Eliza is bound by the court ruling in the said third party complaint
filed by Calalas finding the driver and the owner of the truck liable for quasi-delict.
2. Whether or not the common carrier in this case observed extraordinary diligence for
the safety of passengers.
Held:
1. No, for the following reasons:
i. Eliza was never a party to the qausi-delict case
ii. The issues in the third party complaint and in the present case are not
same.
The issue in third party compliant was whether Salva and his driver Verena were
liable for quasi-delict for the damage caused to petitioner‘s jeepney. On the other hand,
the issue in this case is whether petitioner is liable on his contract of carriage. The first,
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quasi-delicit, also known as culpa aquiline or culpa extra contractual, is premised upon the
negligence in the performance of a contractual obligation.
In the third party complaint (quasi-delict), the negligence or fault should be

clearly established because it is the basis of the action, whereas in the present case (breach
of contract), the action can be prosecuted merely by proving the existence of the contract
and the fact that the obligor, in this case the common carrier, failed to transport his
passenger safely to his destination.
Thus, is immaterial that the proximate cause of the collision between the jeepney
and the truck was the negligence of the truck driver. The doctrine of proximate cause is
applicable only in action for quasi-delict, not in actions involving breach of contract. The
doctrine is a device for imputing liability to a person where theis no relation between him
and another party. In such a case, the obligation is created by law itself. But, where there
is a preexisting contractual relation between the parties, it is the parties themselves who
create the obligation, and the function of the law is merely to regulate the relation thus
created. Insofar as contracts of carriage are concerned, some aspects regulated by the
Civil Code are those respecting the diligence required of common carriers with regard to
the safety of passengers as well as the presumption of negligence in cases of death or
injury to passengers.
2. No, for the following reasons:
First, as found by the Court of Appeals, the jeepney was not properly parked, its
rear portion being exposed about two meters from the broad shoulders of the highway, and
facing the middle of the highway in a diagonal angel. This is a violation of the R.A. No.
4136, as amended, or the Land Transportation and Traffic Code.
Second, it is undisputed that petitioner‘s driver took in more passengers than the
allowed seating capacity of the jeepney, a violation of S32 (2) of the same law. The fact
that Sunga was seated in an ―extension seat‖ placed her in a peril greater than that to
which the other passengers were exposed.
FORTUNE EXPRESS INC VS. CA

305 SC RA 14, March 18, 1999.
On November 18, 1989, a bus of the petitioner met an accident with a jeepney in
Kauswagan, Lanao del Norte resulting to the death of several passengers, including 2
Maranaos.
Crisanto Generalao, a volunteer agent of the Constabulary Region Security Unit.

No X conducted an investigation of the accident. He found out that several maranaos were
going to take revenge by burning some of the petioner‘s buses.
Generalao reported this to St. Batasa of the Philippine constabulary and in turn
reported this to Diosdado Bravo, operations manager of the company. Bravo assured
Batasa that he would take the necessary precautions.
On November 22, 1989, 3 armed maranaos pretending to be passengers seized the

bus at Limanon, Lanao del Norte whilte on its way to Iligan CITY. Among the passengers
was Atty. Caorang.
Bashier Mananggolo, leader of the armed men, ordered to stop the bus on the side
of the highways then shot Cabatuan, the driver, in the arm. Thereafter ordered the
passengers to get off the bus and started to pour gasoline inside the bus. Then the
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passengers stepped out away from the bus, however Atty. Caorong returned inside to
retrieve something.
While inside, Caorong pleaded for the life of the driver, who eventually crawled
out the bus, in that series of event gunshots were fired, Atty. Caorong was hit. Then the
bus was set on fire. Some of the passengers were able to pull Caorong out of the burning
bus and rushed him to the hospital, but died while undergoing operation.
Then the private respondent brought a suit for breach of contract of carriage in the
RTC, Branch VI, Iligan City.
Then trial court subsequently dismissed the action declaring it was without merit.
On appeal, the CA reversed the decision of the trail court, awarding damages and atty‘s
fees. Hence the appeal, alleging that the CA erred in reversing the decision, that the acts of
the outlaws as to be regarded as caso fortuito, and that they observed due diligence as a
common carrier.
Issue: WON the common carrier is liable for damages?
Held: Yes, petitioner Bus Company is liable for damages arising from the death of Atty.
Caorong.
The acts of the outlaws cannot be constituted as a fortuitous event as it could have
been prevented if only the petitioner observed the extra ordinary diligence required for the
present circumstances. The common carrier failed to observe the diligence required
despite the reports of armed malefactors were planning to set some of its buses on fire.It
failed to take the necessary precautions needed and was supposed to have been assured by
the operations manager.
The court held that frisking of passengers would have been justifiable, and the
failure of the conductor to notice the gallons of gasoline is inexcusable.
SANTOS III vs NORTHWEST AIRLINES

210 SCRA 256
This case involves the correct interpretation of Article 28(1) of the Warsaw Convention, Art.
28 – An action must be brought at the option of the plaintiff, in the territory of one the High
Contracting Parties, either before the court of the domicile of the carrier or of his principal place
of business, or when he has a place of business through which the contract has been made or
before the court at the fix place of destination.
a. Court of domicile of the Carrier (register)

b. Principal place for business (operate)
c. Place of business where contract was made (sale)
d. Court at the place of destination (San Francisco)
Facts: Petitioner who is a minor and a resident of the Philippines purchased from
Northwest Orient Airlines (NOA), a foreign corporation, a round trip ticket in San
Francisco, USA for his flight from San Francisco to Manila via Tokyo and back. No date
was specified to for his return to San Francisco.
On the date of his departure, he was wait listed since according to the airline there
was no reservation made for his flight from Tokyo to Manila. Subsequently after the
incident, represented by his father, he sued NAO for damages before the RTC Makati.
NOA filed for dismissal on the ground that the court has no jurisdiction citing Art 28(1) of
Warsaw Convention. Hence, the complaint was dismissed. The CA affirmed the decision.
Hence this appeal,
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Issue: 1. Whether or not Article 28 of Warsaw is Constitutional.
2. Whether or not the Philippines has jurisdiction over the case.
Held: 1. Yes, it is constitutional
The RP is a party to the Convention for the Unification of Certain Rules Relating
to International Transportation by Air or the Warsaw Convention. The Convention is
treaty which is voluntarily assumed by the Phil. Government and such has a force and
effect of law in this country. The issue to be resolved involves a question of law, and it is
a well settled rule that courts only assume jurisdiction over a constitutional question only
if it is shown that the essential requisites of a judicial inquiry are first satisfied. This is
because of the separation of powers doctrine. Further, the treaty is a joint legislative
executive act. The presumption is that it was carefully studied and determined to be
constitutional before it was adopted and given force of law in this country.
2. No, it has no jurisdiction to hear and try the case.
Article 28(1) of the Warsaw Convention is jurisdictional. It is not mere

specification of venue. The following reasons support the characterization of the Article as
jurisdictional and not as a mere venue provision:
a. The wording of Article 32 of the same treaty, indicates the places where the action for
damages ―must‖ be brought, underscores the mandatory nature of article 28(1).
b. The characterization is consistent with one of the objectives of the Convention which
is to regulate in a uniform manner the conditions of international transportation by air.
c. The Convention does contain any provision prescribing rules of jurisdiction other than
in Article 28(1), which means that the phrase ―rules as to jurisdiction‖ used in Article
28(1).
In other words, where the matter is governed by the Warsaw Convention, jurisdiction
takes on a dual concept
JAPAN AIRLINES V. CA
294 SCRA 19
‗CASO FORTUITO‘ Contract of transport of passenger – relationship imbued with public

interest.
Facts: On June 13, 1991, Private Respondents Jose Miranda, Enrique Agana, and Adelia
Francisco herefor Manila via Japan Airlines flight no. 061. As an incentive for traveling
on the said Airlines, both flights were to make an overnight stop cover at Narita, Japan, at
the Airlines expense, thereafter proceeding to Manila the following day.
Upon arrival at Narita, Japan, private were billeted at Hotel Nikko for the flight.
The next day, private respondents on the final leg of their journey, went to the airport to
take their flight to Manila. However due to the Mt. Pinatubo eruption unrelenting as
blanketed Ninoy Aquino International Airport. Hence the trip was cancelled indefinitely.
Japan airlines rebooked all the Manila bound passengers on flight no. 741 due to
depart on June 16, 1991 and also paid for the hotel expenses for their unexpected
overnight stay> On June 16, then flight to Manila was again cancelled due to NAIA‘s
closure.
Private respondents were forced to pay for their accommodations and meal
expenses. Private respondents filed an action for damages before RTC of Quezon City
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against JAL contending that JAL failed to live up to its duty to provide care and comfort
to its stranded passengers RTC found JAL liable for damages on appeal, the CA affirmed
the decision of the RTC but lowered the damages awarded. W/N JAL, as common carrier
has the obligation to shoulder the hotel and meal expenses of its stranded passenger until
they have reached their final destination, even if the delay were caused by force majeure.
Issue: Whether or not Japan Airlines is liable for damages.
Nominal damages – awarded in order that a night of a plaintiff which has been violence or
needed by the defendant, maybe vindicated or recognized.
Held: JAL may be held only for nominal damages but not for moral and exemplary
damages Nominal damages are adjudicated in order that a right of a plaintiff, which has
been violated or invaded by the defendant, may be vindicated or recognized and not for
the purpose of indemnifying any loss suffered by him.
There is no question that when a party is unable to fulfill his obligation because of
force majeure, the general rule is that he, can not be held liable for damages for non-
performance. The hotel and meal expenses cannot be charged to JAL. Yet is it undeniable
that JAL assigned the hotel expenses of respondents. Passenger must take such risk
incident to the mode of travel. After all, common carriers are not the insurer of all risks.
Common carriers are not absolutely responsible for all injuries or damaged even if
the same were caused by a fortuitous.
There is no question that when a party is unable to fulfill his obligation because of
force majeure, the general rule is that he cannot be held liable for damages for non-
performance.
If the fortuitous event was accompanied by neglect and malfeusanice by the

carriers employee, an action for damaged against the carrier is permissible.
PAN AMERICAL WORLD AIRWAYS INC. vs JOSE RAPADAS & CA

(209 SCRA 67)
Private respondent Rapadas was en route from Guam to Manila. While standing
on the line to board the flight at the Guam airport, he was ordered by Pan Am‘s handcarry
control agent to check-in his Samsonite attaché case. Rapadas protested pointing to the
fact that other passengers were permitted to handcarry bulkier baggages.
He stepped out of the line only to go back at the end of it to try if he can get
through without having to register his baggage. However, the same handcarry control
agent ordered him to register his baggage. For fear that he would miss the plane, he
acceded to checking it in but without declaring its contents or the value of its contents. He
was given a baggage claim tag.
Upon arriving in Manila, Rapadas claimed all his checked-in baggages except the
attaché case. His son, Jorge, requested for the search of the missing luggage.
PanAm requested Rapadas to put the request in writing. Rapadas filled in a

Baggage Claim Blank Form. Thereafter, Rapadas personally followed up his claim.
Rapadas received a letter from the PanAm‘s counsel offering to settle the claim
for the sum of $160, representing the petitioner‘s alleged agreed limit of liability for loss
or damage to a passenger‘s personal property under the contract of carriage.
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Refusing to accept this kind of settlement, Rapadas filed an action for damages
and alleged that PanAm discriminated or singled him out in ordering that his luggage be
checked in. He also alleged that PanAm neglected its duty in the handling and safekeeping
of his attaché case from the point of embarkation in Guam to his destination in Manila.
According to him, the loss resulted in his failure to pay certain monetary obligations.
PanAm, in its answer, acknowledged responsibility for the loss of the attaché case
but asserted that the claim was subject to the ―Notice of Baggage Liability Limitations‖
allegedly attached to and forming part of the passenger ticket. The same notice was
alleged posted conspicuously in its officers for guidance of the passengers.
At the trial, it was shown that the attaché case contained his vacation pay money
$4,750, other money consisting of $1,400 given by his son, $3,000 payment for taxes,
$300 bdat present, including contracts, records, letters, drafts of manuscripts, clippings,
memorabilia, autographs, commemorative coins and stamps and an architect‘s plan. (the
total amount of the claim was $42,403.90)
The lower court ruled in favor of Rapadas after finding no stipulation giving
notice to the baggage liability limitation but the trial court found for only $5228.90 and
100 paengs. On appeal, the Court of Appeals affirmed the TC‘s decision.
Rapadas presented the following as proofs:

1. passenger ticket and baggage check w/c contains the Notice & Conditions of
Contract and the advice to international passengers on limitation of liability
2. Xerox copies of flight coupon no.3 showing the fares paid for trips to prove his
obligations w/c remained unpaid because of the loss of money allegedly placed
inside the missing attaché case
PanAm offered as evidence the following:

1. page 2 of the passenger ticked to proved the notice & conditions of the contract of
carriage
2. Xerox copy of a Notice of Baggage Liability Limitations
Issue: W/N a passenger is bound by the terms of a passenger ticket declaring that the
limitations of liability set forth in the Warsaw Convention as amended by the Hague
Protocol, shall apply in the case of loss, damage or destruction to a registered luggage of a
passenger.
The Notice and the Conditions of Contract should be sufficient notice showing the
applicability of the Warsaw limitations. The Warsaw Convention, as amended,
specifically provides that it is applicable to international carriage defined under Art. 1, and
par.2.
Nowhere in the Warsaw Convention, as amended, is such a detailed notice of

baggage liability limitations required. Nevertheless, it should become a common, safe and
practical custom among air carriers to indicate beforehand the precise sums equivalent to
those fixed by Art 22(2) of the Convention.
The SC cited Ong Yiu vs CA and PanAm vs IAC where it held that:
A plane ticket is what is known as a contract of adhesion, in regard w/c it has
been said that contracts of adhesion wherein one party imposes a ready made form of
contact on the other, as the plane ticket in the case at bar. These are not entirely
prohibited. The one who adheres to the contract is in reality free to reject it entirely, if he
adheres, he gives his consent. While contracts of adhesion are NOT entirely prohibited,
neither is a blind reliance on them encouraged.
The court finds the provisions in the plane ticket sufficient to govern the
limitations of liabilities of the airline for loss of luggage. The passenger, upon contracting
with the airline and receiving the plane ticket, was expected to be vigilant insofar as his
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luggage is concerned. If the passenger fails to adduce evidence to overcome the
stipulations, he cannot avoid the application of the liability limitations.
The facts show that Rapadas actually refused to register his attaché case despite
having been ordered by the PanAm agent to check it in. in attempting to avoid registering
the luggage by going back to the line, he manifested a disregard of airline rules. Prudence
of a reasonably careful person also dictates that cash and jewelry should be removed from
checked-in luggage and placed in one‘s pockets or in a hand-carried bag or envelope.
The Court does not suggest that passengers are always bound to the stipulated
amounts printed on a ticket, found in a contract of adhesion. The court simply recognizes
the fact that the reasons behind the stipulations on liability limitations arise from the
difficulty, if not, impossibly, of establishing with a clear preponderance of evidence, the
contents of a lost suitcase.
Unless the contents are declared, it will always be the work of the passenger
against that of the airline. If the loss of life or property is caused by the gross negligence
or arbitrary acts of the airline or the contents of the lost luggage are proved by satisfactory
evidence other than the self-serving declarations of one party, the Court will not hesitate
to disregard the fine print in the contract of adhesion.
The lost luggage was declared as weighing around 18 lbs or about 8kg. At $20 per
kg, the petitioner offered to pay $160 as a higher value was not declared in advance and
additional charges were not paid. The amount of $400 per passenger is allowed for
unchecked luggage.
Since the checking in of the luggage was against the will of Rapadas, the Court
treats the lost bag as partaking of involuntary and hurriedly checked-in luggage and
continuing its early status as unchecked luggage.
Petitioner PanAm was ordered by the SC to pay Rapadas damages in the amount
of $400 or its equivalent in Phil currency.
FABRE V. CA
July 26, 1996
Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model Mazda
minibus. They used the bus principally in connection with a bus service for school
children, which they operated in Manila. The couple had a driver, Porfirio J. Cabil, whom
the hired in 1981, after trying him out for two weeks. His job was to take school children
to and from the St. Scholastica‘s College in Malate, Manila.
On November 2, 1984 private respondent Word for the World Christian

Fellowship Inc. (WWFC) arranged with petitioners for the transportation of 33 members
of its Young Adults Ministry from Manila to La Union and back in consideration of which
private respondent paid petitioners the amount of P3,000.00
The bus left Metro Manila at 8:00 pm. At 11:30 that night, petitioner Cabil upon a
sharp curve on the highway. The road was slippery because it was raining, causing the
bus, which was running at the speed of 50 kilometers per hour, to skid to the left road
shoulder. The bus hit the left traffic steel brace and sign along the road and rammed the
fence of one Jesus Escano, then turned over and landed on its left side, coming to a full
stop only after a series of impacts. Several passengers were injured including Amyline
Antonio who was paralyzed from the waist down.
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The Lingayen police investigated the incident the next day, November 3, 1984.
On the basis of their finding they filed a criminal complaint against the driver, POrfirio
Cabil. The case was later filed with the LIngayen Regional Trial Court.
The trial court found that no convincing evidence was shown that the minibus was
properly checked for travel to a long distance trip and that the driver was properly
screened and tested before being admitted for employment. Indeed, all the evidence
presented have shown the negligent act of the defendants which ultimately resulted to the
accident subject of the case. The trial court and the CA awarded damages to private
respondents which the petitioners challenge in the case at bar.
Issue: Whether or not petitioners are negligent
Held: Yes
The finding that Cabil drove his bus negligently, while his employer, the Fabres,
who owned the bus, failed to exercise the diligence of a good father of the family in the
selection and supervision of their employee is fully supported by the evidence on record.
These factual findings of the two courts we regard as final and conclusive, supported as
they are by the evidence. The fact that it was raining and the road was slippery, that it was
dark, that he drove his bus at 50 kilometers an hour when even on a good day the normal
speed was only 20 kilometers an hour, and that he was unfamiliar with the terrain, Cabil
was grossly negligent and should be held liable for the injuries suffered by private
respondent Amyline Antonio.
Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to the
presumption that his employers, the Fabres, were themselves negligent in the selection and
supervisions of their employee. Due diligence in selection of employees is not satisfied by
finding that the applicant possessed a professional driver‘s license. The employer should
also examine the applicant for his qualifications, experience and record of service. Due
diligence in supervision, on the other hand, requires the formulation of rules and
regulations for the guidance of employees and issuance of proper instructions as well as
actual implementation and monitoring of consistent compliance with the rules. This case
actually involves a contract of carriage. Petitioners, 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 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 award of damages was also proper but since private respondents did not
question the award of the trial court as inadequate, the CA should not increase it. The
award of P500,000 compensatory damages to Amyline Antonio made by the trial court is
sustained.
BALIWAG TRANSIT, INC. v. CA

256 SCRA 747
On July 31, 1980, Leticia Garcia and her five year old son, Allan Garcia boarded
Baliwag Transit Bus. No. 2036 Bound for Cabanatuan City Driven by Jaime Santiago.
They took the seat behind the driver.
At bout 7:30 on the eve, in Malimba Gapan Nueva Ecija, the bus passengers as a
cargo truck parked at the shoulder of the National Highway. Its left rear portion jutted to
the outer lane, as the shoulder of the road was too narrow to accommodate the whole
truck. Kerosene lamp appeared at the edge of the road obviously to serve as a warning
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device. The truck driver, Julio Reconstitute and his helper Arturo Escala, were then
replacing a flat tire. The truck is owned by respondent A & J Trading.
Bus driver Santiago was driving at a coordinately fast speed and failed to notice
the truck and the kerosene lamp at the edge of the road. Santiago‘s passengers urged him
to slow down but the road Santiago‘s passengers urged him at to slow down but he paid
them no Heed Santiago even carried animated conversation with his c o-employees while
driving when the danger of collision became imminent, the bus passengers shouted
Babanga Tayo! Santiago stepped on the brake, but it was too late his Bus Rammed into
the stalled Cargo truck. It caused the instant death of Santiago and Escala, and injury to
several otehra Leticia and Allan Garcia were among the injured passengers.
Leticia suffered a fracture in her pelvis and right leg Allan, on the other hand,
broke a leg spouses Antonio and Leticia Garcia issued Baliwag transit, Inc. A&J Trading
and Julio Recontique for damages in the RTC of Bulacan. Leticia sued as an injured
passengers of Baliwag and as mother of Allan at the time of the complaint, Allan a minor,
hence the suit initiated by his parents in this his favor.
Baliwag A & J trading and reconstitutes disclaimed responsibility or the mishap.

Baliwag alleged that the accident was caused or the Mishap. Baliwag alleged that the
accident was caused solely by the fault and negligence of A & J trading and its Driver,
Recontique. Baliwag charged that Recontique failed to place an early warning device at
the corner of the disabled cargo truck to warn on coming vehicles. N the other hand, A&J
trading and Recontique alleged that the accident was the result of the negligence and
reckless driving of Santiago; Bus Driver of Baliwag. The TC found all the dependants
liable. On appeal, the CA modified reducing the award of Atty‘s fees to P10, 000 and loss
of earnings to P 300, 000.00 and P 25, 000 for hospitalization and medication.
Issues: Whether or not Baliwag solely liable for the injuries suffered by Leticia and Allan
Garcia in the Accident?
Held: As a common carrier, Baliwag breached its contract of carriages when it failed to
deliver its passengers, Leticia and Allan Garcia to their Destination safe and sound. In a
Contract of carriage, it is presumed that the common carrier was at fault or was negligent
when a passenger dies or is injured. Unless the presumption is rebutted, the court need not
even make an express finding of fault or negligence on the part of the cc.
Common carriers are liable for the death of or injured
LARA vs VALENCIA
104 PHIL 65
The deceased (Lara)was an inspector of the Bureau of Forestry in Davao who

went to classify logs of defendant in his Cotabato concession. The work of Lara lasted for
six days during which he contracted malaria fever.
In the morning of Jan. 9, 1954, Lara, who was then in a hurry to Davao, asked
defendant if he could take him in his pick-up as there was no other means of
transportation, to which defendant agreed, and in that same morning the pick-up left
Parang bound for Davao taking along six passengers, including Lara.
Lara sat at the back of the vehicle on a bag. Lara, accidentally fell from the pick-
up and as a result he suffered serious injuries. He, however, subsequently died.
CFI rendered judgment ordering defendant to pay damages.
Issue: W/N defendant is liable for damages.

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Held: No
The deceased, as well as his companions who rode in the pick-up of defendant,
were merely accommodation passengers who paid nothing for the service and so they can
be considered as invited guests within the meaning of the law. As accommodation
passengers or invited guests, defendant as owner and driver of the pick-up owes to them
merely the duty to exercise reasonable care so that they may be transported safely to their
destination.
Thus, the rule is established by the weight of authority that the owner or operator
of an automobile owes the duty to an invited guest to exercise reasonable care in its
operation, and not unreasonably to expose him to danger and injury by increasing the
hazards of travels. The rule is that an owner of an automobile owes a guest the duty to
exercise ordinary or reasonable care to avoid injuring him.
Since one riding in an automobile owes because he asked for the privilege of
doing so, the same obligation of care is imposed upon the driver as in case of one
expressly invited to ride. The extraordinary diligence imposed on common carriers is not
required.
In the case at bar, deceased himself chose the place where he would sit and he was
half-asleep when the accident took place so that the incident is attribute to his lack of care
considering that the pick-up was open and he was then in a crouching position. On the
other hand, there is no showing that the defendant has failed to take the precaution
necessary to conduct his passengers safely to their place of destination. Defendant
therefore is not liable for damages.
―A passenger must observe the diligence of a father of a father of a family to

avoid injury to himself‖ (Article 1761, new Civil Code) which means that if the injury to
the passenger has been the proximately caused by his own negligence, the carrier cannot
be held liable.
BRIÑAS v. PEOPLE
125 SCRA 687
In the afternoon of January 6, 1957, Juanito Gesmundo bought a train ticket at the
railroad station in Tagkawayan, Quezon for his 55-year-old mother Martina Bool and his
3-year-old daughter Emelita Gesmund, who were bound for Barrio Lusacan, Tiaong, same
province.
Upon approaching Barrio Lagalag in Tiaong at about 8:00 pm at that same night,
the train slowed down and the conductor shouted ―Lusacan‖. Thereupon, the old woman
walked toward the left front door facing the direction of Tiaong, carrying the child one
hand and holding her baggage with the other.
When Martina and Emelita were near the door, the train suddenly picked up
speed. As a result, the old woman and the child stumbled and they were seen no more. It
took three minutes more before the train stopped at the next barrio. Lusacan, and the
victims were not among the passengers who disembarked thereat.
Next morning, the Tiaong police received a report that two corpses were found
along the railroad tracks at Barrio Lagalag. Referring to the scene to investigate, they
found the lifeless body of a female child. The investigators also found the corpse of an old
woman. Blood, pieces of scattered brain and pieces of clothes were at the scene. Later, the
bodies were identified as those of Martina Bool and Emelita Gesmundo.
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The CFI of Quezon affirmed by CA convicted defendant appellant Clement

Briñas for double homicide thru reckless imprudence but acquitted Hermogenes
Buencamino and Victor Millan.
Issue: The proximate cause of the death of the victims
Held: It is a matter of common knowledge and experience about common carriers like
trains and buses that before reaching a station or flagstop they slow down and that the
conductor announce the name of the place. It is also a matter of common experience that
as the train or bus slackens its speed, some passengers usually stand and proceed to the
nearest exit, ready to disembark as the train or bus comes to a full stop. This is especially
true of a train because passengers feel that if the train resumes its run before they are able
to disembark, there is no way to stop it as a bus may be stopped.
It was negligence on the conductor‘s part to announce the next flag stop when said
stop was still a full three minutes ahead. As the CA observed, ―the appellant‘s
announcement was premature and erroneous‖
The proximate cause of the death of the victims was the premature and erroneous
announcement of petitioner-appellant Briñas. This announcement prompted the two
victims to stand and proceed to the nearest exit. Without said announcement, the victims
would have been safely seated in their respected seats when the train jerked as it picked up
speed. The connection between the premature and erroneous announcement of petitioner-
appellant and the deaths of the victims is direct and natural, unbroken by any intervening
efficient causes.
Petitioner-appellant also argues that it was negligence per se for Martina Bool to
go to the door of the coach while the train was still in motion and that it was this
negligence that was the proximate cause of their deaths.
We have carefully examined the records and we agree with the respondent court
that the negligence of petitioner-appellant in prematurely and erroneously announcing the
next flag stop was the proximate cause of the deaths of Martina Bool and Emelita
Gesmundo. Any negligence of the victims was at most contributory and does not
exculpate the accused from criminal liability
Judgment affirmed with modification
SINGSON VS COURT OF APPEALS

282 SCRA 149
On May 24, 1988 CARLOS SINGSON and his cousin Crescentio Tioingson
bought from Cathay Pacific Airways, LTD, at its Metro Manila ticket outlet two open
dated, identically routed round trip tickets for the purpose of spending their vacation in the
United States. Each ticket consisted of 6 flight coupons corresponding to this itinerary:
1. Flight coupon 1 – Manila to Hongkong

2. Flight coupon 2 – Hongkong to San Francisco
3. Flight coupon 3 – San Francisco to Los Angeles
4. Flight coupon 4 – Los Angeles to San Francisco
5. Flight coupon 5 – San Francisco to Hongkong
6. Flight coupon 6 – Hongkong to Manila
The procedure was that at the start of each leg of the trip a flight coupon
corresponding to the particular sector of the travel would be removed form the ticket
booklet so that at the end of the trip no more coupons would be left in the ticket booklet.
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On June 6, 1988 SINGSON and his cousin manila on board CATHAY‘S Flight
No. 902. They arried safety in Los Angeles and after staying there for about three weeks
they decided to return to the Philippines. On June 30, 1988 they arranged for their return
flight at Cathay‘s Los Angeles office and chose fully 1, 1988, a FRIDAY, for their
departure. While Tiongson easily got a booking for the flight, Singson was not as lucky. It
was discovered that his ticket booklet did not have coupon number 5 corresponding to the
San Francisco – Hongkong leg of the trip. Instead, what was in his booklet was coupon
no. 3, which was supposed to have been used and removed from the ticket booklet. It was
not until 6, 1988 that CATHAY was finally able to arrange for his return flight to Manila.
Singson commenced an action for damages against CATHAY claiming that he

insisted on CATHAY‘s confirmation of his return flight but CATHAY allegedly shrugged
off his protestations and arrogantly directed him to go to San Francisco himself and do
some investigation on the matter or purchase a new ticket subject to refund CATHAY,
allegedly in scornful insolence, simply dismissed him like an impertinent ―brown pest‖.
CATHAY denied these allegations and averred that since petitioner was holding
an ―open-dated‖ ticket, there was no contract of carriage yet existing such that
CATHAY‘s refusal to immediately book him could not be construes as breach of contract
of carriage.
ISSUE:
1. Whether or not a breath of contract was committed by CATHAY when it failed
to confirm the booking of petitioner
2. Whether or not the carrier was liable not only foe actual damages but also for
moral and exemplary damages.
RULING:
To hold that no contractual breach was committed by CATHAY and totally
absolve it from any liability would in effect put a premium on the negligence of its agents,
contrary to the policy of the law requiring common carriers to exercise extraordinary
diligence.
The loss of the coupon was attributable to the negligence of the Cathay‘s agents
and was the proximate cause of the non-confirmation of the petitioner‘s return flight on
July 1, 1988. It virtually prevented petitioner form demanding the fulfillment of the
carrier‘s obligation under the contract. Had Cathy‘s agents been diligent in double
checking the coupons they were supposed to detach from the passenger‘s tickets, there
would have been no reason for CATHAY not to confirm petitioner‘s booking.
Where in breaching the contract of carriage the defendant airline is shown to have
acted fraudulently, with malice or in bad faith, the award of moral and exemplary danger,
in addition to actual damages is proper.
The circumstances reflect the carrier‘s lack of care and sensitivity to the needs of
its passengers, clearlyu constitutive of gross negligence, recklessness and wanton
disregard to the right of the latter, acts evidently indistinguishable or no different form
fraud, malice and bad faith.
NOCUM V. LTD
30 SCRA 69 (1969)
The scheduled flights of JAL from Narita, Japan to Manila were cancelled
indefinitely due to the eruption of Mt. Pinatubo, which rendered NAIA inaccessible to
airline traffic. To accommodate all the needs of the passengers, JAL rebooked all manila
bound passengers and paid their hotel expenses for their unexpected overnight stay. The
anticipated flights were again cancelled to NAIA‘s indefinite closure. JAL informed its
passengers that it would no longer passengers defray their hotel and accommodation
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expenses during their extended stay in Japan. The passengers were then forced to use their
personal funds to pay their accommodation during the said extended stay. Issue: Was JAL
liable for the expenses incurred by the passengers for their extended stay in Japan.
Held: It was ruled that JAL was not liable. Common carrier is not absolutely responsible
for all injuries or damages sustained by its passengers caused by a fortuitous event. Airline
all injuries or damages sustained by its passengers when caused by fortuitous event.
Airline passengers must take such risk incident tot eh mode of travel. In this regard,
adverse weather consequence of which the passenger assume or expect.
DEFENSES AVAILABLE IN CULPA AQUILIANA
Due Diligence in the selection of employees
In Culpa acquilina, due diligence in selection of employees is not satisfied by a finding

that the applicant possessed a professional driver‘s license. The employer should also examine
the applicant for this qualifications, experience and record of service. Due diligence in
supervision, on the other hand, requires the formulation of rules and regulations for the
guidance of employees and issuance of proper instructions as well as actual implementation
and monitoring of consistent compliance with the rules.
VICTORY LINER, INC. VS. HEIRS OF ANDRES MALECDAN

G.R. No. 154278, December 27, 2002
Andres Malecdan was a 75 year-old farmer. On July 15, 1994, at around 7:00
p.m., while Andres was crossing the National Highway on his way home from the farm, a
Dalm Liner bus on the southbound lane stopped to allow him an dhis way home from the
farm, a Dalin Liner bus on crossing the highway, a bus of petitioner Victory Liner, driven
by Ricardo C. Joson Jr., by passed crossing the highway, a bus of petitioner Victory
Liner, driven by Ricardo C. Joson, Jr., by passed the Dalin bus. In so doing, respondent
hit the old man and the carabao on which he was riding. As a result, Andres Malecdan
was thrown off the carabao, while the beast toppled over. The Victory Liner sped past the
old man, while the Dalin bus proceeded to its destination without helping him.
Malecdan sustained a wound on his left shoulder, from which bone fragments
protruded.
He was taken by Lorena and another person to the Cagayan District Hospital where he
died a few hours after arrival. The carabao also died soon afterwards.
Victory Liner, Inc. no longer questions the finding of the Regional Trial Court
that Andres Malecdan was injured as a result of the gross negligence of this driver,
Ricardo Joson, Jr. What petitioner now questions is the finding that it (petitioner)failed
to exercise the diligence of a good father of the family in the selection and supervision of
its employee.
Held: The contention has no merit. Article 2176 provides:
Whoever by act or omission causes damage to another, there being fault or

negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no
pre-existing contractual relation between the parties, is called a quasi-delict and is
governed by the provisions of this Chapter.
Article 2180 provides for the solidary liability of an employer for the quasi-delict
committed by an employee. The responsibility of employers for the negligence of their
employers for the negligence of their employees in the performance of their duties is
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primary and therefore, the injured party may recover from the employers directly,
regardless of the solvency of their employees. The rationale for the on vicarious liability
has been explained thus:
What has emerged as the modern justification for vicarious liability is a rule of
policy, a deliberate allocation of a risk. The losses caused by the torts of employees,
which as a practical matter are sure to occur in the conduct of the employer‘s enterprise,
are placed upon that enterprise itself, as a required cost of doing business. They are
placed upon the employer harm to others through the tort of employees, and sought to
profit by it, it is just that he rather than the innocent injured plaintiff, should bear them;
and because he is better able to absorb them and to distribute them, through prices rates
or liability insurance, to the public, and so to shift them to society, to the community at
large. Added to this is the make weight argument that an employer who is held strictly
liable in under the greatest incentive to be careful in the selection, instruction and
supervision of his servants, and to take every precaution to see that the enterprise is
conducted safely.
Employers may be relieved of responsibility for the negligent acts of their

employees acting within the scope of their assigned task only if they can show that ―they
observed all the diligence of a good father of a family to prevent damage. For this
purpose, they have the burden of proving that they have indeed exercised such diligence,
both in the selection of the employee and in the supervision of the performance of his
duties.
In the selection of prospective employees are required to examine them as to

their qualification, experience and services records. With respect to the supervision of
employees, employers must formulate standard operating procedures, monitor their
implementation and impose disciplinary measures for breaches thereof. These facts must
be shown by concrete proof. Including documentary evidence.
In the instant case, petitioner presented the results of Joson, Jr.‘s written
examination actual driving tests, x-ray examination, psychological examination, NBI
clearance, physical examination, hematology examination, urinalysis. Student driver
training, shop training, birth certificate, high school diploma and reports from the General
Maintenance Manager and the Personnel Manager showing that he had passed all the
tests and training sessions and was ready to work as a professional driver. However, as
the trial court noted, petitioner did not present proof that Joson, Jr. had nine years driving
experience.
Petitioner also presented testimonial evidence that drivers of the company were
given seminars on driving safety at least twice a year, again, however, s the trial court
noted there is no record of Joson, Jr. ever attending such a seminar. Petitioner likewise
failed to establish the speed of its buses during its daily trips or to submit in evidence the
trip tickets, speed meters and reports of field inspectors. The finding of the trial court that
petitioner‘s bus was running at a very fast speed when it overtook the Dalin bus and hit
deceased was not disputed by negligent in the supervision of its driver Joson, Jr.
DEFENSES AVAILABLE IN CULPA CONTRACTUAL
(a) Proof of Negligence – under Art. 1756 in ease of death of or injuries to passengers
common carriers are presumed to have been at fault or to have acted negligently
unless they prove that they observed extraordinary diligence (Asked in 1986 & 1997
BAR)
(b) In Bacarro v. Castro, it was held that if a passenger is injured or dies, there
immediately arises the presumption that the COMMON CARRIER is negligent. This
means that the injured passenger or the heirs of the dead passenger do not have to
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prove the carrier‘s negligence; all they have to prove is the fact of injury or death in
the course of the passenger‘s carriage, and the law automatically raises the
presumption of negligence.
(c) The carrier must rebut this presumption; otherwise, it will be liable for damages. In the
rebuttal of the presumption, the SC held that this presumption may be rebutted by
evidence on any one of two points:
(i) Fortuitous event; or

(ii) Contributory of the passenger, under Art. 1762 and 2179
FORTUNE EXPRESS, SUPRA
Was Atty. Caorong guilty of contributorynegligence?
Held: No, the incident was not caso fortutito. Despite the report of the PC that the
Maramaos were going to attack the buses, Fortune took no steps to safeguard the lives
and properties of its passengers. Thus, assuming that the acts of the Maranaos were
indeed grave, irresistible, violent, and forceful, the seizure of the bus was foreseeable
and, therefore, was not a fortuitous event that would exempt Fortune from liability.
Atty. Caorong was not guilty of contributory negligence because he did not act
recklessly.atty. Caorong was playing the role of the Good Samaritan. Certainly, this
cannot be considered an act of negligence, let alone recklessness.
SABENA BELGIAN WORLD AIRLINES VS, CA

255 SCRA 38
The carrier refused to accept liability on the ground that the loss of the luggage
was due to the passenger‘s contributory negligence by failing to declare the valuables and
not heeding the warning to all passengers not to place valuable in their luggage, and not
retrieving her undeclared have valuable luggage at the Brussels Airport since her flight
from Brussels to Manila would still have to be confirmed. The SC held that the airline
company is liable. The doctrine of proximate cause as its defense cannot in this particular
sequence, unbroken by any efficient intervening cause, produces injury and without the
result would not have occurred.
It remains undisputed that the passenger‘s luggage was lost in the custody of the
airline company. The facts showed that when the luggage was first reported missing, it
was subsequently company. The facts showed that when the luggage was first reported
missing, it was subsequently found and again lost in the custody of the airline company.
The loss of said luggage not only once but twice underscores the wanton company
foreclosed whatever right it might have had to the possible limitation of liabilities
enjoyed by international air carriers under the Warsaw convention.
Contributory Negligence of Passengers – is governed by Art. 1762 which

provides that it does not bar recovery damages for a passengers death or injury if the
proximate thereof is the negligence of the common carrier, but the amount of damage
shall be equitably reduced (Asked in the 1983 BAR)
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WARSAW CONVENTION
With respect to international transportation the Warsaw Convention may apply. What
then is the Warsaw Convention – the complete title of Warsaw Convention is ―Warsaw
Convention for Unification of Certain Rules Relating to International Carriage by Air‖. It has
the force and effect of law in the Philippines, being a treaty commitment assumed by the
Philippine government as held in Cathay Pacific Airways Ltd. v. CA 219 SCRA 520 and
Santos III v. Northwest Orient Airlines 210 SCRA 256 (1993 Bar).
In the case of PAL v. CA 257 33 and Northwest Airlines v. CA 284 SCRA 408
however, it was ruled that the WARSAW convention does not operate as an exclusive
enumeration of the instances for declaring a carrier liable for breach of contract of carriage or
as an absolute limit of the extends of the liability. Even the WC declares the carrier liable for
damages in the said cases and under certain conditions.
CASE
NORTHWEST VS. CA
284 SCRA 408
A certain Torres took Northwest Airline flight from Chicago to Manila and before
boarding he presented for inspection two identical luggage, one of which contained firearms
he purchased for the Philippine Senate. Upon arrival in Manila, Torres was not able to claim
the baggage containing the firearms as it was recalled by Nortwest for US Customs
verification. The NW personnel in Tokyo where the place had a top-over just guessed which
baggage contained the firearms so Torres sued for damages after NW argued that WC and the
contract of carriage limited its liability to US$9.07 pound, or a total of $640 as the box
contained 70 pounds. The court ruled that NW‘s liability only to those cases where the cause
of the death or injury to person, or attended by any willful misconduct. Bad faith, recklessness,
or otherwise improper conduct on the part of any official or employee for which the carrier is
responsible, and there is regulate or exlude liability for other breaches of contract by the
carrier.
TWO CATEGORIES OF INTERNATIONAL TRANSPORTATION BY AIR
Under the WC, there are two (2) categories of international transportation by air‖ to
wit:
1. That where the place of departure and the place of destination are situated within the
territories of two high contracting parties (those who are signatories to the WC and
those which subsequently adhere to it) regardless of whether or not there be a break in
the transportation or a transshipment; and
2. That where the place of departure and place of destination are within the territory of a
single contracting party if there is an agreed stopping place within the territory subject
of the sovereignty, mandate or authority of another power, even though the power is
not a party to the convention (Mapa v. CA 275 SCRA 286).
SANTOS III v. NOA

210 SCRA 256
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Issue: Where should an action for violation of a contact of international transportation by
air be brought?
Held: Article 28 (1) of the WC provides that ―an action for damage must be brought at
the option of the plaintiff,
1. In the territory of one of the HCP, either before the court of the domicide of the
carrier or of his principal of business; or
2. Where he has a place of business through which the contact has been made, or
3. Before the court at the place of destination.
In this case, Santos III purchased a round trip ticket from NW in San Francisco
USA for his fight from SF to Manila via Tokyo and back SF, NW is a foreign corporation
with principal office in Minnesota, USA and licensed to do business in the Philippines. The
date back to SF was open. Despite previous confirmation and re-confirmation, Santos III
was informed that he had no reservations for his flight from Tokyo to Manila and had to be
wait-listed. So upon arrival in Manila, Santos sued NW in Makati. NW moved to dismiss
the complaint for lack of jurisdiction based on Article 28 (1) of the WC contending that the
Philippines was not its domicile, nor its principal place of business, neither was the ticket of
Santos issued in the Philippine s nor was it his ultimate destination as Manila should only
be considered as an agreed stopping place. (explain why based on facts). The court
dismissed the case and further held that a citizen does not necessarily have the right to sue
in his own courts simply because the defendant has a place of business in his country. The
right is limited by the provisions of the WC.
MAPA V. CA
275 SCRA 286
Mapa purchased from TWA 2 airline tickets in Bangkok, Thailand for Los Angeles-
New York-Boston St. Louis –Chicago, all of the USA. The domicide carrier TWA was
Kansas City, Missouri USA, where its principal place of business was likewise located.
The place of business of TWO where the contract was made was in Bangkok, Thailand.
The destination was Chicago, USA. The Mapas left Manila on board PAL for LA, they left
checked in 7 pieces of luggage‘s at the TWA counter at the JFK airport but failed to board
the plane because they went to the wrong gate. They were however, allowed to take a later
TWA plane to Boston which was delayed because of a thunderstorm. Upon arrival at
Boston, they were able to retrieve only 3 of delayed because of a thunderstorm. Upon
arrival at Boston, they were able to retrieve only 3 of the 7 luggage‘s which loss was
immediately reported to TWA with a total value of $2, 560.00 as constituting full
satisfaction of their claim which the Mapas accepted as partial payment for the actual loss
of their baggage‘s. thereafter, Mapa filed a case against TWA in the Philippines and a
similar to the case of Santos III, TWA moved to dismiss for lack of jurisdiction based on
Section 28 (1) of the WC contending that the complaint should have been brought either in
Bangkok where the contract was entered into, or in Boston which was the place of
destination or in Kansas City which was the carrier‘s domicile and principal place of
business. The Mapa‘s claimed that the WC was not applicable because the contract is not
an international transportation as contemplated under the provisions of the WC. The court
dismissed the case for lack of jurisdiction that was reversed by the SC.
The SC ruled that the WC was not applicable because the contracts did not involve
an ―international transportation‖ based on the two categories (read categories), The TWA
ticketsissued to the plaintiffs in Bangkok, Thailand, show that their itinerary was LA-NY-
BOSTON-ST. LOUIS-CHICAGO. Clearly, the place of departure was LA and the
destination Chicago are both within the territory of the United States, or single contracting
party and there was not agreed stopping place within or under another sovereignty or power
neither can the transaction come within the purview of the first category of international
transportation.
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ZALAMEA V CA
228 SCRA 23
It was ruled that even where overbooking of passengers is allowed as commercial

practice, the airline company would still be quality of bad faith and still be liable for
damages if it did not inform the passengers that it could breach the contract of carriage
even they were confirmer passenger.
LUFTHANSA GERMAN AIRLINES V CA

238 SCRA 290
The airline company which issued a confirmed ticket to a passenger covering a

five-leg trip aboard different airlines is the principal airline company which can be held
liable for damages occasioned by the bumping off by one of the airlines contracted to carry
him to a particular designation of the 5 leg trip.
PAL V CA
255 SCRA 48
The SC held that while the Warsaw Convention has the force and effect of law in
the Philippines, it does not operate as an exclusive enumeration of the extent of liability nor
does it preclude the operation of the civil code or other pertinent laws.
KABIT SYSTEM
In the law on transportation we have what we call kabit system. In the case of
Abelardo Lim and Esmadito Gunnaban v. CA & Donato H. Gonzales, January 16, 2002,
the court defined the kabit system as an arrangement whereby a person who has been granted
a certificate of public convenience allows other persons who own motor vehicles to operate
them under his license, sometimes for a free or percentage of the earnings. Although the
parties to such an agreement are not outright penalized by law , the kabit system is invariably
recognized as being contrary to public and therefore void and inexistent under Art. 1409 of
the civil code. In this case the SC explained that one of the primary reason for the grant
accidents caused to the riding public may be duly compensated. The kabit system renders
illusory such purpose and worse, may still be availed of by the grantee to escape liability
caused by a negligence use of a vehicle owned by another and operated under his license. If
the registered owner is allowed to escape liability by proving who the supposed owner of the
vehicle is, it would be easy for him to transfer the subject vehicle to another who possesses no
property with which to respond financially for the damage done. Thus for the safety of
passengers and the public who may have been wronged and deceived through the kabit
system, the registered owner of the vehicle is not allowed to prove and deceived through the
kabit system, the registered owner of the vehicle is not allowed to prove that another person
has become the owner so that he may thereby relieved of responsibility.
For example, a person with certificate of public convenience for 5 jeepneys has only 4
units. A friend attaches his jeepney to the certificate holder. In case of injury to passengers of
a bus a jeepney so attached, the rule is that the person in whose name the CPC was issued is
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the unless they are considered in pari delicto in which case, there is no right of recovery as
held in Lita Enterprises v. IAC 129 SCRA 79 and Benedicto v. IC 187 SCRA 547 (1990).
In the case of first Malayan leasing and finance Corp. v. CA 209 SCRA 660 (1990), the SC
ruled that regardless of who is the actual owner of a motor vehicle, the registered, the
registered owner is the operator of the same with respect tot eh public and 3 rd persons, and s
such directly and primarily responsible for the consequences of its operation. Legally, the
owner/operator of record the employer of the driver, the actual operator an employer being
considered as his agent. Although the registered owner is always liable, the operator can be
held solidarily liable with the owner
LIM AND GUNNABAN VS. CA

G.R. NO. 125817. January 16, 2002
When a passenger jeepney covered by a certificate of public convenience is sold

to another who continues to operate it under the same certificate of public convenience
under the so called kabit system, and in the course thereof the vehicle meets an accidents
through the fault of another vehicle, may the new owner sue for damages against the
erring vehicle? Otherwise stated, does the new owner have any legal personality to bring
the action, or is he the real party in interest in the suit, despite the fact that he is not eh
registered owner under the certificate of public convenience?
Yes. In the early case of Dizon v. Octavio the Court explained that one of the
primary factors considered in the granting of a certificate of public convenience for the
business of public transportation is the financial capacity of the holder of the licensees, so
that liabilities arising from accidents may be duly compensated. The kabit system renders
illusory such purpose and, worse, may still be availed of by the grantee to escape civil
liability caused by negligent use of a vehicle owned by another and operated under his
license. If a registered owner is allowed to escape liability by proving the supposed
owner of the vehicles it, it would be easy for him to transfer the subject vehicle to another
who possesses no property with which to respond financially for the damage done.
Thus, for the safety of passengers and the public who may have been wronged and
deceived through the baneful kabit suytem, the registered owner of the vehicle is not
allowed to prove that another pwrson has become the owner so that he may be thereby
relived of responsibility. Subsequent cases affirm such basic doctrine.
It would seem then that the thrust of the law in enjoining the kabit system is not
so much as to penalize the parties but to identify the person upon whom responsibility
may be fixed in case of an accident with the end view of protecting the riding public. The
policy therefore loss its force if the public large is not deceived, much less involved.
In the present case it is at once apparent that the evil sought to be prevented in
enjoining the kabit system does not exist. First, neither of the parties to the pernicious
kabit system is being held liable for damages. Second, the case arose from the negligence
of another vehicle in using the public road to whom no representation, or
misrepresentation, as regards the ownership and operation of the passengers jeepney
were in estoppel for leading the public to believe that the jeepney belonged to the
registered owner. Third, the riding public was not bothered nor inconvenience at the very
least by the illegal arrangement. On the contrary, it was the new owner himself who had
been wronged and was seeking compensation for the damage done to him. Certainly, it
would be the height of inequity to deny him his right. Thus, the new owner has the right
to proceed against petitioners for the damage caused on his passengers jeepneys as well
as on his business.
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CHAPTER IV
DAMAGES RECOVERABLE FROM COMMON CARRIERS
Art. 2197. Damages may be:

(1) Actual or compensatory;
(2) Moral;
(3) Nominal;
(4) Temperate or moderate;
(5) Liquidated; or
(6) Exemplary or corrective.
Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only
for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual
or compensatory damages.
Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three
thousand pesos (at present: Php 50,000), even though there may have been mitigating circumstances. In
addition:
(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the
indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed
and awarded by the court, unless the deceased on account of permanent physical disability not
caused by the defendant, had no earning capacity at the time of his death;
(2) If the deceased was obliged to give support according to the provisions of Article 291, the
recipient who is not an heir called to the decedent's inheritance by the law of testate or intestate
succession, may demand support from the person causing the death, for a period not exceeding
five years, the exact duration to be fixed by the court;
(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may
demand moral damages for mental anguish by reason of the death of the deceased.
MORAL DAMAGES
Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of
pecuniary computation, moral damages may be recovered if they are the proximate result of the
defendant's wrongful act for omission.
Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court
should find that, under the circumstances, such damages are justly due. The same rule applies to breaches
of contract where the defendant acted fraudulently or in bad faith.
NOMINAL DAMAGES
Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated
or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying
the plaintiff for any loss suffered by him.
TEMPERATE DAMAGES
Art. 2224. Temperate or moderate damages, which are more than nominal but less than compensatory
damages, may be recovered when the court finds that some pecuniary loss has been suffered but its
amount can not, from the nature of the case, be provided with certainty.
LIQUIDATED DAMAGES
Art. 2226. Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of
breach thereof.
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EXEMPLARY DAMAGES
Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the public
good, in addition to the moral, temperate, liquidated or compensatory damages.
DAMAGES RECOVERABLE (SUBJECT TO LIMITATION OF LIABILITY CLAUSE)
Damages that may be awarded against a common carrier shall be in accordance with
the Civil Code provisions on Damages (Article 1764) which may be MENTAL, moral,
exemplary, nominal temperature, actual or compensatory and liquidated.
IN CASES OF DEATH
When death occurs, the following items of damages may be recovered:
1. Indemnity for the death of the victim;

2. An indemnity for loss of earning capacity of the deceased:
3. Moral damages;
4. Attorney‘s fees and expenses of litigation; and
5. Interest in proper cases (Brinas v. People 125 SCRA 687)
ATTORNEY’S FEES AND LITIGATION EXPENSES

Under Article 2208, in the absence of stipulations, attorney‘s fees and expenses of
litigation, other than judicial costs, cannot be recovered, except:
1. When exemplary damages are awarded;

2. When the defendant‘s act or omission compelled the plaintiff to litigate with
3rd persons or to incure expenses to protect his interest;
3. When the defendant acted in gross or evident bad faith in refusing to satisfy the
paintiff‘s plainly valid, just amd demandable claim;
4. In a separate civil action to recover civil liability arising from crimes;
5. When at least double judicial costs are awarded:
6. In any other case where the court deems it just and equitable that attorney‘s
fees and expenses of litigation should be recovered.
In all cases, the attorney‘s fees and expenses for litigation must be reasonable. When
the award is considered reasonable? Depending on the circumstances of each case.
AMOUNT OF INDEMNITY & FACTORS TO BE CONSIDERED IN AWARDING IT

Article 2206 applies in case of death caused by breach of contract by the common
carrier (Article 1764) which fixes the minimum indemnity for death at P 3, 000 that the courts
may increase according to the circumstances. In Pp v. Flores 237 SCRA 653, it fixed the
death indemnity at P50, 000.00. It is in fixing a greater amount of indemnity that courts may
consider the financial capacity of the cc, along with such other factors as:
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(1) The life expectancy of the diseased or of the beneficiary, whichever is shorter,
(2) Pecuniary loss to the plaintiff or beneficiary
(3) Loss of support,
(4) Loss of service;
(5) Loss of society;
(6) Mental suffering of beneficiaries ‗and
(7) Medical and funeral expenses
DAVILA v. PAL
49 SCRA 497
PAL was held liable for the death of Davila when the plane crash because the
pilot did not follow the route. When the Court granted Davila‘s heirs compensatory
damages the amount of P 6, 000 PAL appealed. The SC held that since Davila was shown
to be earning P7, 000 at the time of his death and a life expectancy of 25 more years, the
SC increased the compensatory damages from P6, 000 to P175, 000 by multiplying the
deceased‘s yearly income with his life expectancy based on the mortality tables of life
insurance companies in the Philippines.
(a) Moral Damages – as general rule, moral damages are not recoverable in damage actions
predicated on a breach of contract of transportation in view of the provisions of Article 2219
and 2220 of the new civil code. The said provisions limited the award of moral damages to
and 2220 specifically provided for the damages that are caused by contractual breach, but
also because the definition of quasi-delict in Article 2175 expressly excludes the cases where
there is a pre-existing contractual relation between the parties.
Moral damages may however be recovered in an action for breach of contract in the
following cases
i. Where the mishap resulted in the death of a passenger (Art. 2206. Civil Code)
ii. When the carrier was guilty of fraud or bad faith, even if death did not result (Art.
2220, Civil Code; as held in Sabena Belgian World Airlines v. CA 171 SCRA
620)
LOPEZ VS. PAN-AM

16 SCRA 431
Vice – President Lopez with his wife & children were transferees to the economy
seats instead of the first class seats. The Lopezes were awarded moral damages of P300,
000 and attorney‘s fees of P150, 000.00 in view of the person awarded for the harsh
Zulueta v. PanAm 43 SCRA 297, moral damages of P500, 000 was also awardes for the
harsh treatment accorder by the employees of P500, 000 of Pan-Am by calling him
brown monkey In PAL v. Miano 242 SCRA 235, the SC deleted the moral damages
granted by the lower Court although there was no evidence found that PAL‘s actuation
was attended by bad faith.
SULPICIO LINES, Inc. v. CA

246 SCRA 376
Tito Tabuquilde and his daughter were passengers of the M/V Doña Marilyn that
sank in Smar. The daughter died and Tabuguilde lost his belonging. A claim for damages
including P27, 580.00 for the lost belongings was filed with the Court. Judgment was
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rendered in favor of T, including for said lost belonging. The SC reversed the award of
actual damages and made the following pronouncements (1) generally, the findings of
fact of the trial court are entitled to great weight and not disturbed except for cogent
reasons. One of the accepted reasons is when the weight and not disturbed except for
cogent reasons. One of the accepted reasons is when the evidence does not support the
findings of fact. Corollary to this is the rule that actual; compensatory damages, to be
recovered, must be proved; otherwise, if the proof is flimsy, no damages will be
awarded. In this case the trail court merely mentioned the fact of the loss and the value of
the contents of the pieces of baggage without starting the evidence on which it based its
findings. There was no showing that the values of the items were based on the B/K or
was previously declared by T before he boarded the ship. Hence, there can be no basis to
award actual damages in the amunt of P27, 580.00
BRITISH AIRWAYS VS. CA

285 SCRA 450
Mahtani purchase through his travel agent a plane ticket to India and purchased a ticket
from BA. Since BA had not direct flights from Manila to Bombay, he had to take a flight
to Hongkong via PAL and upon arrival I the HK, took the connecting flight to Bambay
via BA. The baggage‘s that M checked with PAL in Manila was however lost. Damages
was however awarded but for purpose of emphasis, the court ruled that BA and Pal are
members of the International Air Transport Association wherein member airlines are
regarded as agents of each other in the issuance of the tickets and other matter pertaining
tot heir relationship. Therefore. Pal was considered an agent BA. The rule that carriage
by plane although performed by successive carriers is regarded an agent of BA. The rule
that carriage by plane although performed by successive considered an agent of BA. The
rule that carriage by plane although performed by successive carriers is regarded as a
single contract and that carrier issuing the passenger‘s ticket is considered the principal
party and the other carrier merely subcontracts or agents are a settled issue. Therefore, if
the agent or subcontractor was negligent in the performance of its functions, it shall be
liable for the damages that its principal may suffer by reasons of the negligent act. The
court here ruled against BA but stated that PAL could be made liable to BA for the
former‘s negligent acts.
TAN VS NORTHWEST AIRLINES

324 SCRA 263
Priscilla and Connie Tan boarded Nothwes Airlines flight 29 in Chicago, USA
bound for the Philippines, with a stop over at Detroit, USA. Upon their arrival at NAIA
on June 1, 1994, petitioner and her companion found that their baggage‘s were missing.
They were informed that their baggage‘s and discovered thjat some of itd contents were
destroyed and soiled. They demanded from Northwest Airlines for the damages they
suffered, Respondent Northwest Airlines did not deny that the baggages of petitioners
were not loaded on Northwest flight 29 because of the wieht and balance restrictions.
However, the baggages were loaded in another Northwest Airlines flight which arrived in
the evening of June 2, 1994.
Issue: Whether or not respondent is liable for moral and exemplary damages for willful
misconduct and breach of the contract of air carriage.
Held: No.
Respondent was not guilty of willful misconduct. For willful misconduct to exist,
there must be a showing that the acts complained of were impelled by an intention to
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violate the law, or were in persistent disregard of one‘s rights. It must be evidence by a
flagrantly or shamefully wrong or improper conduct.
Where in breaching the contract of carriage the defendant airline is not shown to
have acted fraudulently or in bad faith, liability for damages is limited tot eh natural and
probable acted fraudulently or in bad faith, liability for damages is limited to the natural
and probable consequences of the breach of obligation, which the parties had foreseen or
could have reasonably foreseen. In that case, such liability does not include moral and
exemplary damages.
SPOUSES YU ENG CHO AND FRANCISCO TAO YU VS. PAN AMERICAN

WORLD AIRWYAS, INC.
(G.R. No. 123560. March 27, 2000)
Plaintiff You Eng Cho is the owner of Young Hardware Co. and Achilles
Marketing. In connection with (this) business, he travels from time to time to Malaysia,
Taipei and Hongkong. On July 10, 1976, plaintiffs bought plane tickets from defendat
Caludia Tagunicar who represented herself to be an agent of defendant Tourist World
Services, Inc. (TWSI). The destination(s) are Hongkong, Tokyo, San Francisco, U.S.A,
for the amount of P25, 000.00 per computation of said defendant Caludia Tagunicar
(Exhs. C & C-1). The purpose of this trip is to go to Fairfield Jersey U.S.A to buy two(2)
lines of infared system processing textured plastic article.
A complaint for damages was filed by petitioners against private respondents Pan
American World Airwyas, Inc. (Pan Am), Tourist World Services, Inc. (TWSI), Julieta
Canilao (Canilao) and Claudia Tagunicar (Tagunicar) for expenses allegedly incurred
such as costs of tickets and hotel accommodations when petitioners were compelled to
stay in Honkong and then in Tokyo by reason of the non-confirmation of their booking
with Pan-Am.
The petitioners are not entitled to damages. This meritles suit against Pan Am
becomes more glaring with petitioners inaction after they were bumped of in Tokyo. If
petitioners were of the honest belief that Pan Am was responsible for the misfortune
which beset them, there is no evidence to show that they lodged a protest with Pan Am‘s
Tokyo office immediately after they were refused passage for the flight to San Francisco,
or even upon their arrival in Manila.
It grinds against the grain of human experience that petitioners did not insist that
they be allowed to board, considering that was then doubly difficult to get seats because
of the ongoing Northwest Airlines strike. It is also perplexing that petitioners accepted
whatever the Tokyo office had no to offer as an alternative. Inexplicably too, no demand
was sent to respondents TWSI. Nor was a demand letter sent to respondent Pan Am. To
say the least, the motive of petitioners is suing Pan Am is suspect.
It is not sufficient to prove that Pan Am did not allow petitioners to board to
justify petitioners claim for damages. Mere refusal to accede to the passenger‘s wishes
does not necessarily translate into damages in the absence of bad faith. The settled rule is
that the law presumes good faith such as that any person who seeks to be awarded
damages due to acts of another has the burden of proving that the latter acted in bad faith
or with ill motive. In the case at bar, we find the evidence presented by petitioners
insufficient to overcome the presumption of good faith. They have failed to show any
wanton, malevolent or reckless misconduct imputable to good faith. They have failed to
show any wanton, malevolent or reckless misconduct imputable to good faith. They have
failed to show any wanton, malevolent or reckless misconduct imputable to respondent
Pan Am in its refusal to accommodate petitioners in its refusal to accommodate
petitioners in its Tokyo-San Francisco flight Pan Am could not have acted in bad faith
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because petitioners did not have confirmed tickets and more importantly, they were not in
the passenger manifest.
In the case at bar, petitioners ticket were on ―RQ‖ status. They were not
confirmed passenger and their names were not listed in the passengers manifest. In other
words, this is not a case where Pan Am bound itself to transport petitioners and thereafter
renegade on its obligation. Hence, respondents airline cannot be held liable for damages.
PACIFIC AIRWAYS CORPORATION VS TONDA

(G.R. NO. 138478, November 26, 2002)
On January 11, 1991, plaintiff (Respondent) Joaquin Tonda, purchased from

defendant Pacific Airways Corporation through its travel agent Valderama Travel and
Tours, Inc. a package tour for a party of nine consisting of round trip airfares to, transfers
to and from defendant corporations through its travel agent Valderama Travel and Tours,
Inc. a package corporation‘s airstrip at Caticlan, Malay, Aklan and accommodation and
breakfast at Boracay, Malay, Aklan Two receipts were issued which the travel agency
advised would entitle the members of the receipts, plaintiffs, his wife, 3 kids a nanny, two
brothers-in-law, and stayed in Boracay up to January 21, 1991. In the morning of January
21, 1991, plaintiff and party, long with other guests, left Boracay on board bancas
provided tricycles that look them to defendant corporation‘s airstrip at nearby Caticlan.
After plaintiff and his party arrived at the airship and while their luggages were
being unloaded from the tricycles, passengers informed them that they should weigh
themselves. While plaintiff‘s wife Mrs. Tonda was weighing herself, Mameng, Defendant
Corporation‘s employee, unloading luggage‘s from the tricycles. Plaintif later asked his
wife what transpired inside the hut and she related weight, and that she replied by saying
please when talk to me, talk to me in a never manner. Later, as plaintiff and his party
were about to board the 19-seater aircraft that would carry 16 paasengers, defendant
Maming approached Mrs, Tonda and asked for their tickets. Mrs. Tonda obliged by
giving him the receipts issued by the travel agency, but defendant maming shouted at her,
telling her that those were not tickets when they left Manila. Plaintiff then butted in and
told Maming‖you don‘t have to talk to my wife like that. Maming who seemed to be very
nervous, pushed plaintiff, telling him You don‘t have bulls (sie) do you? Employee and
also one of the defendants herein, who was behind plaintiff‘s right side and punched him
at the right eye causing it to bleed. Maming who was in front of plaintiff then slashed
plaintiff‘s left shoulder with a sharp pointed instrument which could been a ball pen
causing it to bleed and leave a scar measuring 4 inches by 12 centimeters and plaintiff to
fall down. The other passengers who then intervened took Maming and Tolentino away.
Plaintiff immediately aired a verbal complaint at Defendant Corporation‘s office but he
was not extended any although he was advised to file a formal complaint so it could be
investigated. Plaintiff thus sought medical attendance at the Ayala Village Association
Clinic.
PACO is liable for the negligence of its employee‘s co-petitioners Maming and
Tolentino, pursuant to Article 2180, in connection to Article 2176 of the Civil Code, In
fact, the finding of mere negligence on the part of petitioners employees is too kind to
accurately describe what really happened on January 21, 1999 to respondent and his
family. The treatment accorded respondent and his wife by petitioner PACO‘s employees
was characterized by a certain viciousness and meanness which the businessman did not
deserve.; this kind of bad conduct, not viciousness and meanness which the businessman
did not deserve. This kind of bad conduct, not to mention petitioner PACO‖S utter lack
of interest in or concern for what happened, respondents medical condition and
extrajudicial demand for reimbursement and damages, reflects the terrible kind of service
philosophy or orientation subscribed to by petitioners. Any liability arising from such
substandard service orientation must therefore be borne by them.
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In view of the foregoing, we affirm the award by the courts a quo of P100, 000 as
normal damages, in the light of the injuries; humiliation and harrowing experiences of
respondents. No customers, specialty a businessman like respondent, deserves to be
screamed at, pushed and slashed with a ball pen by the company‘s employees, especially
those of service-oriented vacation for its customers. Because of the particular
obnoxiousness of petitioners behavior exemplary damages are increase to P100, 000.
NEGROS NAVIGATION CO, INC. VS CA
Private respondent Ramon Miranda purchased from the Negros Navigation four
special cabin ticket for his wife, daughter, son an dice who we going to Bacolod to attend
a family reunion. The tickets were for voyage of the M/V Don Juan, leaving Manila at
1:00 p.m. on April 22, 1980. the ship sailed from the port of Manila on schedule. The
same day, Don Juan collided with M/T Tacloban City, an oil tanker owned by PNOC. As
a result day, Don Juan collided with the M/T Tacloban City, an oil tanker owned by
PNOC. As result, M/V Don Juan sank. The four member of private respondent‘s families
were never found.
Private respondents filed a complaint against Negros Navigation, and the PNOC
seeking damages for the death his family members.
Court rendered judgment in favor of plaintiffs, ordering all the defendants to pay
jointly and severally, damages as follows.
 Actual damages
 Compensatory damages
 Moral damages
 Exemplary damages
 Attorney‘s fees
Issue: Whether the damages awarded by the appellate court are excessive,
unreasonable and warranted.
Held: In the case of victim Ardita Miranda whose age at the time of the accident was 48
years, her life expectancy was computed to be 21.33 years, and therefore, she could have
lived up to almost 70 years old. Her gross earnings for 21.33 years based on P10, 224.00
per annum, would be P218, 077.92. Deductingtherefrom 30% as her living expenses her
net earnings would be P152, 654.55, to which plaintiff Ramon Miranda is entitled to
compensatory damages for the loss of earning capacity of his wife. In considering 30% as
the living expenses of Ardita Miranda, the Court takes into account the fact that plaintiff
and his wife were supporting their daughter and son who were both college students
taking Medicine and Law respectively.
The accepted formula for determining life expectancy is 2/3 multiplied by (80
minus the age of the deceased). It may be that in the Philippines the age of retirements
generally is 65 but, in calculating the life expectancy of individuals for the purpose of
determining loss of earning s
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Part II
MARITIME & ADMIRALTY LAWS CODE OF COMMERCE
CHAPTER I
VESSELS IN GENERAL
B. MARITIME COMMERCE (ARTS. 573-869)
1. Vessels - are special kind of personal property because of their value and
registration requirements. As held in
ROBISCO VS. RIVERA

37 PHILS. 72
The SC characterized maritime transactions as having a real nature in so far as

these transactions are similar to transactions over real property with respect to effectively
against 3rd persons, which is done through registration. In this case defendant Rivera
acquired by purchase the pilot boat Valentina on a date prior to that of the purchase and
adjudication at public auction by plaintiff Robisco. But the sale at public auction to
Robisco was reduced in the office of the collector of customers on Jan. 27, 1915 and in
the commercial registry on March 17, 1915. the lower court decided for Robisco, hence,
Rivera appealed. As ruled, the requisite of registration in the registry of the purchase of a
vessel is necessary and indispensable in order that the purchaser‘s rights may be
maintained against a claim filed by a 3rd person. Such registration is required under Art.
573 of the Code of Commerce.
CHARACTERISTICS OF VESSELS:
1) Real
2) Hypothecary
Registration of Vessels – vessels of more than tons gross used in Philippines Water, not
being a transient of foreign registry, must be registered with eh Philippines Coast Guard.
Under E.O. No. a25 Reorganization Act as amended, the function of registering vessels under
the Philippine Flag has been transferred to the MARINA. However, the PCG has not actually
relinquished its registration functions. A similar registration of vessels of 3 tons or less is
optional (Tariff and Customs Code)
Vessels of more than 15 tons of domestics ownership; (owned by Philippines citizens

or domestic corporations or associations at least 75% of whose capital stock is owned by
Philippine citizens, or 60% if the vessel is for its exclusive use, pursuant to P.D 761 shall
upon registration be issued a certificate of Philippine register instead of a certificate of
ownership issued to registered vessels of more than 5 tons gross. Vessel 15 tons gross or less
may obtain a certificate of Philippine register at the owner‘s option.
Mode of acquisitions of vessels – any means recognized by law, purchase and sale,
prescription, construction, capture, donation, succession and barter, which must be in writing
and registered in order to affect third persons.
It can be acquired by possession in good faith for 3 years, with a good title duly
recorded. In the absence of these, requisites, continuous possession for 10 years shall be
necessary in order to acquire ownership. Captain cannot acquire ownership by prescription.
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3) Hypothecary – under Art. 587, in case of maritime transaction, the

liability of the owner is limited to the value of the vessel
itself. So if the vessel sinks, generally, the liability of the
owner is extinguished although he may have other
properties. This is the essence of the hypothecary nature of
maritime commerce. Even if the vessel does not sink, the
owner may question pertaining to the meaning of limited
liability of the SO in maritime transaction has been asked
several times in the BAR, 1964, 1982, 1994, 1997, 1999
& 2000.
Exceptions to the hypothecary nature of maritime transactions:
a) Will not apply if the Ship-owner is at fault.
HEIRS OF AMPARO DE LOS SANTOS v. CA & CA & COMPANIA MARITIMA
M/V Mindoro sailed from Pier North Harvor, Manila on November 2, 1967 at
about 2 pm bound for New Washinton, Aklan with many passengers aboard. It appears
that said vessel met typhoon Welming on the Sibuyan Sea Aklan at about 5 am of officers
and crew were negligent in operating the vessel and imposed upon them a suspension and
or revocation of their license certificates.
The CA however ruled that Maritma couldn‘t be held; liable in damages base
once the principle of limited of the ship-owners or ship agent under Art. 587 of the Code
of Commerce.
Issue:
Whether or not Art. 587 is applicable.
Held: No, under this provision, a ship-owner or agent has the right of amendment and by
necessary solely by the captain. In cases where the ship-owners is likewise to be blamed,
Art. 587 does not apply case, Maritime was held negligent.
PHILAM GEN v. CA
G.R. 116940 June 11, 1997
The SC held that although the SA is liable for the negligent act of the captain in the care
of goods leaded on the vessel, this liability can limited through amendment of the vessel,
its equipment and freightage as provided in Art. 587. None the less there a exceptional
circumstances wherein the SA could still be held answerable despite the abound meant,
as where the loss or injury was due to the fault of the SO and the captain Art. 587 is
applicable only if however, in
GOVERNMENT v. INSULAR MARTIIME CO.

45 PHIL. 805
It was held that the limited liability rule does not apply in caser where the
liability was for repair on the vessel has wads completed before he loss.
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b) Insurance
If the vessel at fault dunks but is insured the insurance takes the place of the vessel;
hence liability subsists, but only to the extent of the insurance proceeds , the excess is still
hypothecary.
PEDRO VASQUEZ v. CA
When the inters land vessel MV Pioneer Cebu left the port of Msanila in the
early morning of May 15, 1966 bound forCcebu, it had on board the spouses Alfonso
Vaequez and Filipinas Bagaipa and a four year old boy, Mario Marlon Vasquez, among
her [passengers. The M/V Pioneer Cebu encountered typhoon ―Klaring‖ and
subsequently sunk. The aforementioned passengers were unheard firm sine then.
Plaintiffs are the immediate families of the victims, seeing for the recovery of
damages.
Defendant alleged that the sinking of the vessel was caused by force majeure,
and that the defendant‘s liability been extinguished by the total loss of the vessel.
Issue: Whether or not the liability of defendant had been extinguished by the total loss
of the vessel.
Held: Article 587 of the Code of Commerce states that eh liability of a ship-owners is
limited to the value of the vessel or the the insurgence thereon.
Despite the total loss of the vessel therefore, its insurance answers for the
damages that an ship-owner or agent may be held liable by reason OF THE DEATH OF
ITS PASSENGERS.
c) Liability under Labor Code – the SC in Abueg v. San Diego 77 Phil‘s. 32 held, that
the workmen‘s compensation is an exception to the hypnotherapy nature of maritime
transactions considering that the WC was enacted subsequent to the Code of
Commerce. Hence, in case considering that the WC law was enacted subsequent the
Code of Commerce. Hence, in case of conflict the later law will prevail as it would
deemed an amendment to a prior law and considering that WC Law is a sacrifice law
while the Code of Commerce is a general law.
d) Chattel Mortgage of Ship - Sec. 2 of PD 1521 (Ship Mortgage Decree) authorize for
purposes of financing the construction, acquitting purchase of vessel or initial
operations of equipment with any bank or other financing institution. In order to be
valid the mortgage must be register with the PCG (Sec. 3 the mortgaged lien on the
vessel shall have priority over all claims excepts expenses and fees allowed and costs
taxed by the court and taxes due to the government, crews wages, general average,
salvage, maritime liens arising out of tort and preferred mortgage registered prior in
time Sec. 17 expressly provides that if the proceeds of the sale should not be sufficient
to pay all creditors, the unpaid portion shall be ―enforceable by personal action
against the debtor.
e) In case the voyage is not maritime but only river, bay or gulf
f) Expenses for equipping repairing or provisions of the vessel competed before its loss
(2000 BAR)
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g) Vessel is a private carrier
h) In case the vessel totally sunk become a total loss to the fault of the Ship owner.
2. Person who take part in maritime commerce.
a. Ship-owners and Ship Agents – SO and SA are liable or acts done or

contracts made by the captain (1) when duly authorized or (2) even when
unauthorized, for ship repairs or for equipping or provisioning the vessel, when
actually invested therein, as well as for indemnities in favor of third persons
which arise from the conduct of the captain in case the goods which the vessel
carries, subject to the rules of abandonment (Arts. 556-587).
A ship agent is a person particularly entrusted with the provisioning of the vessel, or
who represents her in the port where she happens to be (Art. 586); represents the
ownership of the vessel, and he may, in the capacity and in his own name take judicial
and extra-judicial measures in all that relates to commerce (Art. 595); is solidarity
liable with his principal for any loss or damage to the cargo for which the vessel is
responsible without prejudice to his rights against the SO to the extend of the value of
the vessel, its equipment and the freight (National Dev. Co. v CA)
b. Captain and Masters of Vessels, officers and crew of the vessel,

supercargo (in charge of administrative matters), engineers.
3. Special Contracts in Maritime Commerce
CASES
YU ENG CHO VS PAN AMERICAN AIRWAYS, supra
Pan Am and TWSI should not held liable as principals. It is a settled rule that
persons dealing with an assumed agent are bound at their peril. If they would hold the
principal liable to ascertain not only the fact of agency but also the nature and extent of
authority, and in case either is controverter, the burden of proof is upon them to establish
it.
In the case at bar, petitioners rely on the affidavit of respondent Tagunicar. Said
affidavit haw week probative value in light of respondent Tagunicar‘s testimony in court
to the contrary.
INTER-ORIENT MARITIME ENTERPRISES VS. NLRC
Private respondent Rizalino Tayong, a licensed master mariner with experience

in commanding ocean-going vessels, was employed on July 6, 1989 by petitioners Trenda
World Shipping and Sea Horse Ship through petitioner Inter-Orient as master of the
vessel M/V Oceanic Mindoro, for a period of one year, as evidence by an employement
contract.
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Captain Tayong instituted a complaint for illegal dismissal before the POEA,
claiming his unpaid salary for the unexpired of the written employment contract, plus
attorney‘s fees.
Issue: Whether or not the dismissal was valid:
Held: No, it is well settled in this jurisdiction that confidential and managerial employees
cannot be arbitrary dismissed at any time, and without cause as reasonably established in
an appropriate investigation.
The captain of a vessel is a confidential and managerial employees within the

meaning of the above doctrine. A master or captain, for purposes of maritime commerce,
is one who has command of a vessel.
A captain commonly performs three (3) distinct roles:

(1) he is a general agent of the shipowner;
(2) he is also commander and technical director of the vessel; and
(3) he is a representative of the country under whose flag he navigates.
C. CONTRACT OF CARRIAGE OF CARGO UNDER THE CODE OF COMMERCE
Overland and coastwise Transportation (Art. 349-379)
1. Bill of Lading
In general, the best evidence of the contract of carriage of cargo is the bill of
lading, or in the case of an airplane, waybill, but cargo can be transported even
without it. Under Article 1736, from the time cargo is unconditionally delivered to
the carrier and received by the carrier for transportation, the liability of the carrier
arises.
WHAT ARE THE FUNCTIONS OF THE BILL LADING

Under Article 350 and 706 of the code of commerce, there are three important roles that a
bill of lading plays:
a) the best evidence of the existence of the contract of carriage of cargo;

b) the importance of the role it plays as a commercial document whereof, if negotiable,
ownership may be transferred by negotiation. Under Article 1636 of the civil code the
bill of lading is mentioned as a documents of title;
c) receipt of the cargo (per COGSA)
A BILL OF LADING is both and a contract. As a contract, its terms and conditions are
conclusive on the parties, including the consignee, as the route, destination, freight rates or
charges; and stipulates the rights and obligations assumed by the parties (Telengtan
Brothers & Sons, Inc. CA 236 SCRA 617).
In Saludo Jr. v. CA 207 SCRA 498, it is also a written acknowledgement of the

receipt of the goods and an agreement to transport and deliver them at a specific place
to a person named or on his order; acceptance thereof without dissent them at a
specific place to a person named or on his order, acceptance thereof without dissent
raises the resumption that all terms therein were brought to the knowledge of the
shipper and agreed to by him and stops him thereafter from denying the same.
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The carrier may refuse to accept goods unfit for transportation and may, for
well-founded suspicious on the correctness of the declaration over the contents of the
package, examine the same in the presence of the shipper or the consignee or a notary
if the former does not appear. If the carrier accepts improperly packed goods, which
are apparent upon inspection, the carrier can be held liable. (Southern Lines, Inc. CA 4
SCRA 258)
CALTEX (PHILIPPINE), INC. vs. SULPICIO LINES,. INC.

G.R. No. 131166, September 30, 1999
Caltex entered into a contract of affreightment, particularly a voyage charter,

with MT Vector, a common carrier, In the course of the voyage, MT Vector collided with
Sulpicio Line‘s passenger ship MV Doña Paz
Issue: Is the chartener (Caltex) of a sea vessel liable for damages third persons resulting
from a collision between the chartered vessel (MT Vector) a passenger ship (MV Doña
Paz)?
Held: The charter has no liability for damages under Philippine Maritime laws. The
respective rights and duties of a shipper and the carrier depends not on whther the carrier
is public or private, but on whether the contract of carriage is a bill of lading or
equivalent shipping public or private, but on whether the contract of carriage is bill of
lading or equivalent shipping documents on the one hand, or a charter party or similar
contract on the other. Caltex and Vector entered into s contract of affreightment, also
known as a voyage charter. In this kind of contract, the general owner is left in possession
of the ship a owner for the voyage, the rights and responsibilities of ownership rest on the
owner. The charter is free from liability to third persons in respect of the ship.
WHEN DOES THE CONTRACT OF CARRIAGE OF GOODS END?
SAMAR MINING CO VS. NORDEUTSCHER LLYOD

132 SCRA 529
The bill lading covering the goods transported provided that it was effective only
for the transport of the goods from Germany to Manila. From Manila, the goods were to
be further transported to Davao. The carriers had unloaded and delivered the goods in the
bonded warehouse in Manila. They never reached Davao. The issue was whether or not
the carrier was liable for the loss of the goods? The SC ruled that when the carrier under
the terms of the bill of lading had delivered the goods at the port of destination, at the
point, he merely becomes the agent of the consignee and cases to be liable as carrier for
loss or damage of the goods transported proved cannot sustain a claim for damage against
the carriage.
2. Shipment – the carrier ship the goods at the time and manner stipulated or on the
first available shipment.
3. Claims – A claim for damage or average against the carrier be made immediately
if the damage or average is apparent, and within 24 hours if it is latent (Art. 366);
otherwise the claim is barred. This rule is inapplicable to misdelivery or
conversion where the ordinary perspective periods would apply or when the right
to the periods is waved.
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A request by the consignee of goods for a bad order examination tolls the period for
the filing of a formal claim and when formal claim is filed, it shall have the effect of
retroacting to the date of the request for a bad order examination. (New Zealand
Insurance Co., Inc. v. IAC 131 SCRA 482)
In case of successive carriers by agreement for combined services, the carriers

delivering the goods assumes the obligations of the preceding carrier reserving its own
course of action against the defaulting carrier (Art. 373)
4. Delivery – the delivery shall be made within a reasonable time. It the consignee
refuses to accept or to pay the due compensation or cannot be located the carrier
may make consignation, any of the parties who defaults can held liable for
damages (Art. 368-372)
If the carrier delays delivery, the consignee cannot refuse delivery ; his remedy is to
seek damages, but if the delay is unreasonable, abandonment or conversion is proper (Art.
371)
TABACALERA INSURANCE VS NORTH FRONT SHIPPING
The damage to the goods without proper explanation on the part of the carrier
would necessarily lead to the conclusion that the carrier has not complied with its
obligation to observe extraordinary diligence. Nevertheless, the consignee would be
guilty of contributory negligence, when it is shown that it was seasonably notified of the
arrival of the barge but did not immediately start the unloading operations, and without
proper explanation of the delays in unloading. The fact show that the loss could have
been completely avoided or at least minimized had unloading been commenced
immediately. For its contributory negligence, the consignee should share at least 40 % of
the loss.
Other cases:
1. Liability of the owner of a vessel for injuries suffered by a non-passenger
SMITH BELL DODWELL SHIPPING AGENCY COPORATION VS, BORJA

(G.R. No. 14308, June 10, 2002)
On September 23, 1987, Smith Bell (herein petitioner) filed a written request
with the Bureau of Custoims for the attendance of the latter‘s inspection team on vessel
M/T King Family which was due to arrive at the port of Manila on September 24, 1987.
the said vessel contained 750 metric tons lkyl benzene and methyl methacrylate
monomer. On the same day, Supervising Customs Inspector Manuel Ma. D. Nalgan
instructed (Respondent Catalino Borja to board said vessel and perform his duties as
inspector upon the vessel‘s arrival until its departure.
At about 11 o‘clock in the morning on September 24, 1987, while M/t King
Family was unloading chemicals unto two (2) barges owned (Resondent) ITTC, a sudden
explosion occurred setting the vessel afire. Upon hearing the explosion, (Borja), who was
at that time inside the cabin preparing reports, ran reports, ran outside to check what
happended. Again, another explosion was heard.
Seeing the fire and fearing for his life, (Borja) hurriedly jumped over to save
himself. However, the (water) (was) likewise on fire due mainly to the spilled chemicals.
Despite the tremendous heat, (Borja) swam his way for one (1) hour until he was rescued
by the people living in the squatters area and sent to San Juan De Dios Hospital.
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After week of intyernsive care at the hospitals, his attending physician diagnosed
(Borja) to be permanently disabled due to the incident. (Borja) made demands against
Smith Bell and ITTC for the damages caused by the explosion. However, both denied
liabilities and attributed to each other negligence.
Issue: Whether petitioner should be held liable for the injuries of Respondent Catalino
Borja.
Held: Yes because the petitioner was negligent.
Negligence is conduct that creates undue risk of harm to another. It is the failure
to observe that degree of care, precaution and vigilance that the circumstances justly
demand, whereby that other person suffers injury. Petitioners vessel carrying chemical
cargo—alkyl benzene and methyl metharcylate monomer. While knoweing that their
vessel was carrying dangerous inflambLE chemicals, its offcers and crew failed to take
all necessary precautions to prevent an accident. Petitioners was, before, negligent.
The owner or the person in possession and control of a vessel is liable for
all natural and proximate damages caused to persons and property by reason of
negligence in its management or account the net income of the victim at the time death—
of the incident in this case and that persons probale life expectancy.
2. Doctrine of Proximate Cause: Not Applicable
CALALAS VS, CA
G.R. No. 122039, May 31, 200
Facts: a jeep owned by Calalas was bumped by a truck driven by Verena and owned by
Salva. Sunga a passenger of the jeep, sustained injurties by a reason of the mishap.
Consequently,. Civil code Case No, 3490 was filed by Calalas against Verana and Salva
to recover indemnity for damages caused to the jeep. In the said civil case, it was ruled th
the negligence of Verena was the proximate cause of the accident. Verena, the truck
driver and Salva, the truck owner, were found liable for quasi-deklict. Accordingly,
Calalas contended that Sunga is bound by the ruling in the said civil case in as much as
the proximate cause of the collision between the jeepney and the truck was the negligence
of the truck driver. Calalasd further cont ended that the bumping of th jeep by the truck
was a caso fortuito, hence he is not liable to Sunga, the passenger of his jeep.
Issue:
Whether or not the doctrine of proximate cause is applicable in actions involving
breach of contract.
It is applicable only in actions for quasi-delict. The doctrine is a device for

imouting liability to a person where there is no relation between and another party. In
such a case, law itself creates the obligation, but, where there is a pre-existing contractual
relation between the parties, it is the parties themselves who create the obligation, and the
function of the law is merely to regulate the relation thus created. Insofar as contracts of
carriage are concerned, some aspects regulated by the Civil Code are those respecting the
diligence required of common carriers with regard to the safety of passengers as well as
the presumption of death or injury to passengers. In the case at bar, upon the happening
of the accident, the presumption of negligence at once arose, and it become the duty of
Calalas to prove that he had to observe extraordinary diligence in the care of his
passengers.
3. Applicability of the Doctrine of Res Ipsa Loquitur

______________________________________________________________________________________________________________

_______________________________________________________________________________________________________
LUDO AND LUYM CORPORATION v. CA

G.R. No. 125483, February 1, 201
Petitioner Ludo & Luym Corporation is a domestic corporation engaged in copra

processing with plant and business offices in Cebu City. Private Respondent Gabisan
Shipping Lines was the registered owner and operator of the motor vessel MV Miguela,
while tohe other private used by vessels for loading and unloading of copra and other
processed products. Among its wharf‘s facilities are fender pile clusters for docking and
mooring.
On May 21, 1990 at around 1:30 P.M, while MV Miguela was docking at
petitioner‘s wharf, it rammed and destroyed a fender pile cluster. Petitioner demanded
damages from private respondents. The latter refused. Hence, petitioner filed a complaint
for damages.
Petitioners evidence during trial showed that on May 21, 1990, at 1:30 P.M. MV
Miguela came to dock at petitioner wharf. Ireneo naval, Petitioner‘s employee, guided the
vessel to its docking place. After the guide (small rope) was thrown from the vessel and
while the petitioner‘s security guard was pulling the big rope to be tied to the bolar, MV
Miguela did not slow down. The crew did not release the vessel already rammed the pile
cluster. The impact disinclined the pile cluster and deformed the cable wire wound
around it. Naval immediately informed the vessel‘s captain and its chief mate of the
incident was reported to Atty. Du, petitioners vice-presidents for legal was supported
while tow others were loosened and that the pile cluster was learning shoreward. Degamo
hired skin diver Marvin Alferez, who found that one post was broken at about 7 inches
from the seabed and two other posts rose and cracked at the bottom. Based on these
findings, Degamo concluded that the two raised were also broken under the seabed and
estimated the cost of repair and replacement at P95, 000.00.
Is the doctrine of res ipsa loquitur applicable to this case?
Petitioner argues that the Court of Appeals erred when it reversed the trial court
for the latter‘s heavy reliance on Nava‘s Testimony. The appellate court over looked the
fact that aside from Naval‘s testimony, the trial court also relied on the principle of res
ipsa loquitur to establish private respondents‘ negligence.
The doctrine of res ipsa loquitur was explained in Batiquin vs. Court of Appeals,
258 SCRA 334 (1996) , thus:
Where the thing which causes injury is shown to be under the management of the
defendant, and the accident is such as in the ordinary course of things does not happen if those
who have the managementuse proper care, it affords reasonable evidence, in the absence of an
explanation by the defendant, that the accident from want of care.
The doctrine recognize that parties may establish prima facie negligence without direct
proof and allows the principle to substitute for specific proof of negligence. This is invoked
when under the circumstances; direct evidence is absent and not readily available.
In our view, all the requisites for resources to this doctrine exist, First, MV Miguela
was under the exclusive control of its officers and crew. Petitioner did not have direct
evidence on what transpired within as the officers and crew maneuvered the vessel to its
berthing place. We note the Court of Appeals finding that Naval and Espina were not
______________________________________________________________________________________________________________

_______________________________________________________________________________________________________
knowledgeable on the vessel‘s maneuvering, and could not testify on the negligence of the
officers and crew. Second, aside from the testimony that MV Miguela rammed the cluster
pile, private respondent did not show persuasively other possible causes of the damamge.
Applying now the above, there exists a presumption of negligence against private
respondent, which we opine the latter failed to overcome. Additionally, petitioner presented
tangible proof that demonstrated private respondents negligence. As testified by Capt.
Olasiman, from command of ―slow ahead to stop engine: when the vessel was only 50 meters
from pier. Further, he testified that before the vessel is put to slow astern, the engine has to be
restarted, however, Olasiman can not estimate how long it takes before the engine goes to
slow astern after the engine is restarted . from these declarations, the concusion is that it was
already too late when the captain ordered reverse. By then, the vessel was nly 4 meters from
the pier, and thus rammed it.
Respondent company‘s negligence consists incompetent crew to man its vessel. As

shown also by petitioner, both Captain Olasiman and Chief Mate Gabisan did not have a
formal training in marine navigation. The former was a mere elementary graduate while the
latter is a high school, graduate. Their experience in navigation only as a watchman and a
quartermaster, respectively.
______________________________________________________________________________________________________________

_______________________________________________________________________________________________________
CHAPTER II
CHARTER PARTY
VALENZUELA HARDWOOD VS. CA

(G.R. NO. 102316 June 1997)
A stipulation in a charter party that the ―owners shall not be resaponsible for the
loss split short leading breakges and any kind damage to the cargo is not invalid as being
contrary to public policy as expressed in Art. 1745 of the civil code, when it is clear from
the arrangement that the carrier acted as a private carrier under the terms of the charter
paerty. In a contract of private carriage, the parties may validly stipulate from llaiblity for
loss of or damamges to the cargo caused evenby the negligence of the ship captain.
A private carrier has been less regulated, leaving the partiesd more freedom to
work out their arragemenents in their individual contract. As we have earlier discussed,
the provisions of the civil code and COGSA do not apply exproprio Vigore. In case of
dispute arising out of such agreement, which like any contractual terms, call our for
judicial interpretation, the provisions of the civil code or CGSA do not apply for their
own force but are incorporated into a maritime contract by refernce, they do not have a
―statue rank‖ but are considered merely part of the contract like any other contractual
arrangements.
COASTWISE LIGHTERAGE V. CA
245 SCRA 796
The SC made a distinction a contract of affreightment and a bareboat or demise

charter in determining the liability of the carrier. In this case, a contract was entered for
the transportation of molasses, which was damaged. The carrier refused to acknowledged
liability on the ground that the contract transformed the carrier into a private carrier, and
for which it has exercised ordinary diligence to avoid liability. It was held that under the
demise or bareboat charter of the vessel, the charterer is generally regarded as the owner
for the voyage or services stipulated; the chatterer mans the vessel with his own people
and becomes the owner pro hac vice, subject to liability to others for damages caused by
negligence. To create demise, the owner of a vessel must completely and exclusively
relinquish possession, command and navigation thereof to the charterer, anything short of
such a complete transfer is a contract of affreightment or time or voyage charter.
NATIONAL FOOD AUTHORITY VS CA

G.R. No. 96453, August 4, 1999
Deadfrieght cargo not loaded is considered as deadfreight. It is the amount paid by or

recoverable from a charterer of a ship for the portion of the ship‘s capacity the latter
contracted but failed to occupy. Explicit and succinct is the law that the liability for dead
freight is on the charterer.
Q: Is the chartered (NFA) who contracted to transport 200, 000 bags, more or less, of corn
grains liable for deadfreight when only 166, 798 bags were actually unloaded?
A: Yes, The words ―more of less‖ when used in relation to quantity or distance are word of
safety and caution, intended to cover some slight or unimportant inaccuracy. It allows an
adjustment to the demands of circumstances, which do not weaken or destroy the statements
______________________________________________________________________________________________________________

_______________________________________________________________________________________________________
of distance and quantity when no other guides are available. The law in point is Article 680 of
the Code of Commerce that provides.
Art 680. a chartered who does not complete the full cargo he bound to ship shall
pay the freightage of the amount he fails to ship, if the captain does not take other
freight to complete the load of the vessel, in which case the first charterer shall pay the
difference, should there be any.”
Demurrage the sum fixed by the contract of carriage which is allowed, as remuneration to the
owner of the ship for the detention of his vessel beyond the number of days allowed by the
charter party for loading or unloading or for sailing. Liability for demurrage using the word
in its strict technical sense exist only when expressly stipulated in the contract. The law in
point its Article 656 of the code of Commerce that provides.
Article 656. If in the charter party the time in which the loading or unloading
are take place is not stated, the usages of the port where these acts are to take place shall
be observed. After the stipulated customary period has passed, and there is no express to
demand demurrage for the lay days and extra lay days which may have elapsed in
loading and unloading.
Q: When the contract of affreightment contains a provisions ―Demurrage/Dispatch: NONE‖ is

the charterer (NFA) liable
A: No. The provision Demurrage/Dispatch. NONE can be interpreted as a waiver by the

charterer (Hongfil) of the right to claim for demurrages. As Hongfil freely entered subject
charter party, it cannot escape the inevitable consequence of its inability to collect demurrage.
Well-settled is the doctrine that a contract between parties which is not contrary to law,
morals, good customs, public order or public policy is the law binding on both of them.
Moreover, delay in loading or unloading to be deemed as a demurrage, runs against

the charterer as soon as the vessel is detained for an unreasonable length of time from the
arrival of the vessel because no available berthing space was provided for the vessel due to
the negligence of the charterer or by reason of circumstances caused by the default of the
charterer. In the case of NFA, the delay sued upon was still within a reasonable time; hence,
NFA could not be held liable for demurrage.
CALTEX (PHILIPPINES), INC. v. SULPICIO LINES, INC.

(G.R. No. 131166, September 30, 1999)
Caltex entered into a contract of affreightment, particularly a voyage charter,

with MT Vector, a common carrier. In the course of the voyage. MT Vector collided with
Sulpicio Lines passenger‘s ship MV Doña Paz.
Issues: Is the charterer (Caltex) of a sea vessel liable for damages to third persons resulting from
a collision between the chartered vessel (MT Vector) and a passenger ship (MV Doña
Paz)?
Is Caltex liable for damages under the Civil Code by reason of its failures to inquire into
the seaworthiness of MT Vector?
Ruling: No.
______________________________________________________________________________________________________________

_______________________________________________________________________________________________________
Under the Carriage of Goods by Sea Act:
Sea 3 (1) The carrier shall be bound before and at the beginning of the voyage to
exercise due diligence to
(a) Make the ship seaworthy;

(b) Properly man, equip, and supply the ship;
Thus, the carriers are deemed to warrant impliedly the seaworthiness of the ship. For a
vessel. To be seaworthy, it must be adequately equipped for the voyage and manned with
a seaworthy condition the vessel involved in its contract of carriage is a clear breach of its
duty prescribed in Article 1755 of the Civil Code.
Special laws in this case govern the relationship between the parties . because of
the implied warranty of seaworthiness, shippers of goods, when transacting with common
carriers, are not expected to inquire into the vessel‘s seaworthiness, genuiness of its
licenses and compliance with all maritime laws. To demand more from shippers and hold
them liable in case of failure exhibits nothing laws. To demand more for shippers and
hold them liable in case of failure exhibits nothing but the futility of our maritime laws in
so far as the protection of the public in general is concerned. Such a practice would be an
absurdity in a business where time is always of the essence. Considering the nurse of the
transportation business, passengers in its operation. Thus, the nature of the obligation of
Caltex demands ordinary diligence like any other shipper in shipping his cargoes.
Caltex and Vector Shipping doing business for about 2 years before the tragic incident
occurred. Past services rendered showed no reason for Caltex had the right to presume
that the ship was sea worthy as even the Philippines Coast Guard itself was convinced of
its seaworthiness.
TABACALERA INSURANCE CO. VS NORTH FRONT SHIPPING, supra
Supreme Court held that respondent shipping company could be held liable. The
charter party agreement between North Front Shipping and Republic Flour Mills
Corporation did not in any way convert the common carrier into a private carrier.
A charter party is defined as a contract by which an entire ship, or some principal

thereof, is let by the owner to another person for a specified time or use; a contract of
affreightment by which the owner of a ship or other vessel lets the whole or part of her to
a merchant or other person for the conveyance of goods, on a particular voyage, in
consideration of the payment of freight.
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 the both cases, the charter party provides for the hire of the vessel
only, either for a determine period of time or for a single or consecutive voyage, the ship
owner to supply the ship‘s store, pay for the wages of the master of the crew or defray the
expenses for the maintenance of the ship.
______________________________________________________________________________________________________________


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The Fraternal Order of St.

Chapter I. Common Carrier in General 1

Chapter II. Common Carrier of Goods 8

Chapter III. Common Carrier of Passengers 20

Chapter IV. Damages Recoverable from Common Carriers 29

Chapter I. Maritime and Admiralty Laws Code of Commerce 35

Chapter II. Charter Party 44

―The King‘s Good Servant, But God‘s First‖

LAWS GOVERNING CONTRACTS OF TRANSPORTATION BY LAND, SEA, OR AIR WITHIN THE

B. Coomercial Transportation (object is merchandise)

A. Domestic – Civil Code

2005 Edition: Jeneath Kingco

1. TERMS CONNECTED WITH THE LAW ON TRANSPORTATION

Transportation is one whereby a certain person or association of persons obligate themselves to

A. According to its Object

B. According to place of travel

PARTIES TO A CONTRACT OF TRANSPORTATION

Freight – The term has been defined as:

2005 Edition: Jeneath Kingco

Notwithstanding that a carrier has no certificate of public convenience, it is still a common

TATAD vs. GARCIA, JR.

2005 Edition: Jeneath Kingco

General Rule: The Law Prohibits Unreasonable Discrimination by Common

Determination of Justifiable Refusal

F.C FISHER vs. YANGCO STEAMSHIP COMPANY

2005 Edition: Jeneath Kingco

HELD: A refusal to carry explosives involves an unnecessary or reasonable preference or

PANTRANCO VS. PSC

ISSUE: Whether or not it applies to valid and subsisting certificates. YES.

2005 Edition: Jeneath Kingco

5. COMMON CARRIER DEFINITION & CHARACTERISTICS

CHARACTERISTICS OF A COMMON CARRIER

DISTINCTIONS: COMMON CARRIER V. PRIVATE CARRIER

COMMON CARRIER PRIVATE CARRIER

2005 Edition: Jeneath Kingco

CALTEX PHILS. INC vs. SULPICIO LINES

2005 Edition: Jeneath Kingco

UNITED STATES vs. TAN PIACO

ISSUE: WON the appellant was a public utility? NO.

Public Utility is hereby define to include individual, co partnership association corporation or

UNITED STATES vs. QUINAJON

ISSUE: WON defendants violated Act 98? YES.

2005 Edition: Jeneath Kingco

Petitioner interposes the ff defenses:

ISSUE: 1. WON petitioner is a common carrier? YES.

Back-hauler of goods: Common carrier

2005 Edition: Jeneath Kingco

FIRST PHILIPPINE PIPELINE CORP. VS, CA

Pipeline Operator: Common carrier

TRANS ORIENT CONTAINER TERMINAL SERVICES vs. CA

ISSUE: WON petitioner is a common carrier? YES.

FIRST MALAYAN LEASING VS CA

2005 Edition: Jeneath Kingco

ISSUE: WON FMLFC should be held liable. YES.

HOME INSURANCE CO. VS. AMERICAN STEAMSHIP AGENCIES, INC.

LOADSTAR SHIPPING CO. INC, VS, CA

Even without certificate of pubic convenience: Common carrier

LASTIMOSO VS. DOLIENTE

2005 Edition: Jeneath Kingco

RESPONSIBILITY/VIGILANCE OVER GOODS

NATURAL DISASTER/FORTUITOUS EVENT

2. LIABILITY FOR LOSS; PRESUMPTION OF NEGLIGENCE

PLANTERS PRODUCRS, INC VS CA