FACTS:

Respondent Ernesto Cendana, a junk dealer, owned two trucks for hauling

scrap materials to Manila. The trucks, on their return trip, were loaded with

cargoes contracted with various merchants  to be delivered to different

establishments in Pangasinan. Respondent charged freight rates which were

commonly lower than regular commercial rates. He was contracted by

petitioner, an authorized dealer of General Milk Company to haul 750

cartons of milk from its warehouse in Makati. 150 cartons were loaded on a

truck driven by respondent himself, while 600 cartons were placed on the

other truck respondent’s driver and employee. However, 600 boxes of milk

were not delivered because the truck, while on its way to Pangasinan, was

held up by armed men and the driver and his helper were kidnapped.

RTC’s finding: Respondent a common carrier.

CA’s decision: Respondent was not liable for the value of the undelivered

cargo. The transport of return loads of freight is “a casual occupation — a

sideline to his scrap iron business” and was not engaged as a common

carrier. The hijacking of respondent’s truck was force majeure.

ISSUES:

1. Is the owner of the truck a common carrier?

2. Is he liable for the undelivered goods?

RULING:

Article 1732 of the Civil Code defines “common carriers” as persons,

corporations, firms or associations engaged in the business of carrying or

transporting passengers or goods or both, by land, water, or air for

compensation, offering their services to the public. This article makes no

distinction between one whose principal business activity is the carrying of

persons or goods or both, and one who does such carrying only as

an ancillary activity or as a mere “sideline”. It makes no distinction between a

person or enterprise offering transportation service on

a regular or scheduled basis and one offering such service on

an occasional, episodic or unscheduled basis. Neither it distinguishes between a

carrier offering its services to the “general public,” i.e., the general community

or population, and one who offers services or solicits business only from a

narrow segment of the general population.

If the goods are lost, destroyed or deteriorated, and the cause was not one

of those enumerated in Article 1734, the respondent is presumed to have

been at fault or to have acted negligently but this presumption may be

overthrown by proof of extraordinary diligence on the part of private

respondent. He must proved that he observed extraordinary diligence as

required by the nature of their business and for reasons of public policy.

Under Article 1745 (6) a stipulation 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 is

considered unreasonable, unjust and contrary to public policy.

SC affirmed the decision of the CA that the truck owner, although

found to be a common carrier, is not liable for the value of the undelivered

merchandise which was lost because the robbery is attended by grave or

irresistible threat, violence or force and he had complied with the rigorous

standard of extraordinary diligence.

NOTES:

Article 1734. Common carriers may be exempted from liability under the

following causes only:

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

(2) Act of the public enemy in war, whether international or civil;

(3) Act or omission of the shipper or owner of the goods;

(4) The character-of the goods or defects in the packing or-in the containers;

and
(5) Order or act of competent public authority.

Eastern Shipping Lines Inc. v. IAC, 150 SCRA 463

 Category: Transportation Laws

Doctrine:
When a carrier fails to establish any caso fortuito, the presumption by law of fault or
negligence on the part of the carrier applies.

Facts:

-    13 coils of uncoated 7-wire stress relived wire strand for prestressed concrete were shipped on
board the vessel “Japri Venture” (owned by Easter Shipping Lines) for delivery to Stresstek Post-
Tensioning Phils. in Manila. The cargo was insured by First Nationwide Assurance Corporation
(FNAC).
-    The vessel arrived in Manila and discharged the cargo to the custody of E.Razon Inc., from whom
the consignee’s customs broker received it for delivery to the consignee’s warehouse.
-    It appears that while en route to Manila, the vessel encountered very rough seas and stormy
weather and the cargo stored in the lower hatch of the vessel was flooded with water about one foot
deep. That upon survey, it was found that several coils were rusty on one side and that the wetting
of the cargo was caused by fresh water that entered the hatch when the vessel encountered heavy
weather.
-    FNAC paid Stresstek about Php 172K for damage and loss to the insured cargo.
-    Being subrogated to the rights of Stresstek, FNAC now seeks o recover from Eastern what it has
indemnified Stresstek less the salvage value of the goods, or the total of about Php 124K.
-    The RTC ordered for the dismissal of the case.
Upon appeal, the CA held that Eastern is liable to FNAC.

Issue:
Whether Easter should be held liable even if it claims that the shipment was discharged and
delivered complete into the custody of the arrastre operator under clean tally sheets.
Held:

-    YES. In arriving at the decision, the SC agreed with the CA on its findings and conclusions.
-    The heavy seas and rains referred to in the master’s report were not caso fortuito, but normal
occurrences that an ocean going vessel, particularly in the month of September which, in our area,
is a month of rains and heavy seas would encounter as a matter of routine. They are not unforeseen
nor unforeseeable. These are conditions that ocean-going vessels would encounter and provide for,
in the ordinary course of voyage.
-    The rain water (not sea water) found its way into Japri Venture is a clear indication that care and
foresight did not attend the closing of the ship’s hatches so that rain water would not find its way
into the cargo,
-     Since Easter has failed to establish any caso fortuito, the presumption of fault or negligence on
the part of the carrier applies; and the carrier must present evidence that it has observed the
extraordinary diligence required in Art. 1733 to escape liability.
The SC held that the presumption that the cargo was in apparent good condition when it was
delivered by the vessel to the arrastre operation by the clean tally sheets has been overturned. The
evidence is clear to the effect that the damage to the cargo was suffered while aboard petitioner’s
vessel.
NATIONAL DEVELOPMENT COMPANY vs. THE COURT OF
APPEALS and DEVELOPMENT INSURANCE AND SURETY
CORPORATION
G.R. No. L-49407 19 August 1988

Facts:

National Development Company (NDC) appointed Maritime Company of the

Philippines (MCP) as its agent to manage and operate its vessel, ‘Dona Nati’, for
and in behalf of its account. In 1964, while en route to Japan from San
Francisco, Dona Nati collided with a Japanese vessel, ‘SS Yasushima Maru’,
causing its cargo to be damaged and lost. The private respondent, as insurer to
the consigners, paid almost Php400,000.00 for said lost and damaged cargo.
Hence, the private respondent instituted an action to recover from NDC.

Issue: 

Which laws govern the loss and destruction of goods due to collision of vessels
outside Philippine waters?

Ruling:

In a previously decided case, it was held that the law of the country to which the
goods are to be transported governs the liability of the common carrier in case of
their loss, destruction or deterioration pursuant to Article 1753 of the Civil Code.
It is immaterial that the collision actually occurred in foreign waters, such as Ise
Bay, Japan.
It appears, however, that collision falls among matters not specifically regulated
by the Civil Code, hence, we apply Articles 826 to 839, Book Three of the Code of
Commerce, which deal exclusively with collision of vessels.

Samar Mining Co., Inc. V. Nordeutcher Lloyd, Et. Al.(1984)

FACTS:

The case arose from an importation made by Samar Mining Co. Inc. of 1 crate Optima
welded wedge wire sieves through the M/S Schwabenstein, a vessel owned by
Nordeutscher Lloyd, (represented in the Philippines by its agent, C.F. Sharp & Co.,
Inc.), which shipment is covered by Bill of Lading No. 18 duly issued to consignee
Samar Mining. Upon arrival of the vessel at the port of Manila, the 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. When the letters of complaint sent to Nordeutscher
Lloyd failed to elicit the desired response, Samar Mining filed a formal claim for
P1,691.93, the equivalent of $424.00 at the prevailing rate of exchange at that time,
against the former, but neither paid.

Samar Mining filed a suit to enforce payment. Nordeutscher Lloyd and CF Sharp & Co.
brought in AMCYL as third party defendant. The trial court rendered judgment in favor
of Samar Mining, ordering Nordeutscher Lloyd, et. al. to pay the amount of P1,691.93
plus attorney’s fees and costs. However, the Court stated that Nordeutscher Lloyd, et.
al. may recoup whatever they may pay Samar Mining by enforcing the judgment
against third party defendant AMCYL, which had earlier been declared in default.
Nordeutscher Lloyd and C.F. Sharp & Co. appealed from said decision.

ISSUE:
Whether or not a stipulation in the bill of lading exempting the carrier from liability for
loss of goods not in its actual custody (i.e., after their discharge from the ship) is valid.

HELD:

We find merits in Nordeutscher’s contention that they are not liable for the loss of the
subject goods by claiming that they have discharged the same in full and good
condition unto the custody of AMCYL at the port of discharge from ship — Manila, and
therefore, pursuant to the aforequoted stipulation (Sec. 11) in the bill of lading, their
responsibility for the cargo had 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 by Us in PHOENIX ASSURANCE CO., LTD.
vs. UNITED STATES LINES, 22 SCRA 674 (1968), ruling that “pursuant to the terms of
the Bill of Lading, appellee's responsibility as a common carrier ceased the moment
the goods were unloaded in Manila and in the matter of transshipment, appellee
acted merely as an agent of the shipper and consignee”

In the present case, by the authority of the above pronouncements, and in conformity
with the pertinent provisions of the Civil Code, Section 11 of Bill of Lading No. 18 and
the third paragraph of Section 1 thereof are valid stipulations between the parties
insofar as they exempt the carrier from liability for loss or damage to the goods while
the same are not in the latter's actual custody.

Acareful perusal of the provisions of the New Civil Code on common carriers directs
our attention to Article 1736, which reads: “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.”
In relation to this, Article 1738 provides: “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.”

MAGELLAN MANUFACTURING MARKETING CORPORATION vs. COURT

OF APPEALS

to Manila and the demurrages in Japan and Manila amounting to P298,150.93

FACTS: Magellan Manufacturers Marketing Corp. (MMMC) entered into a contract

with Choju Co. of Yokohama, Japan to export 136,000 anahaw fans for and in
consideration of $23,220.00. Through its president, James Cu, MMMC then
contracted F.E. Zuellig, a shipping agent to ship the anahaw fans through Orient
Overseas Container Lines, Inc., (OOCL) specifying that he needed an on-board bill
of lading and that transhipment is not allowed under the letter of credit. appellant
MMMC paid F.E. Zuellig the freight charges and secured a copy of the bill of lading
which was presented to Allied Bank However, when appellant's president James Cu,
went back to the bank later, he was informed that the payment was refused by the
buyer allegedly because there was no on-board bill of lading, and there was a
transhipment of goods. As a result of the refusal of the buyer to accept, upon
appellant's request, the anahaw fans were shipped back to Manila by appellees, for
which the latter demanded from appellant payment of P246,043.43. Appellant
abandoned the whole cargo and asked appellees for damages.

TRIAL COURT: MMMMC cannot seek damages as it agreed to a transshipment of

the goods and is liable for demurrages amounting to P298k incurred in Japan and
Manila.

ISSUE: WON MMMMC should be liable for P52k when it exercised its option of
Abandonment.
COURT OF APPEALS: MMMMC cannot seek damages as it agreed to a
transshipment of the goods and is liable for demurrages amounting to P52k incurred
in Japan. While the goods arrived in Manila in October 1980, appellant was notified
of said arrival only in March 1981. No explanation was given for the delay in
notifying appellant.
RULING: No.

Private respondents belatedly informed petitioner of the arrival of its goods in

Manila and that if it wished to take delivery of the cargo it would have to pay P52k.
Private respondents unequivocally offered petitioner the option of paying the
shipping and demurrage charges in order to take delivery of the goods or of
abandoning the same so that private respondents could sell them at public auction
and thereafter apply the proceeds in payment of the shipping and other charges.
There is no dispute that private respondents expressly and on their own volition
granted petitioner an option with respect to the satisfaction of freightage and
demurrage charges. Having given such option, especially since it was accepted by
petitioner, private respondents are estopped from reneging thereon. Petitioner, on its
part, was well within its right to exercise said option. Private respondents, in giving
the option, and petitioner, in exercising that option, are concluded by their respective
actions. To allow either of them to unilaterally back out on the offer and on the
exercise of the option would be to countenance abuse of rights as an order of the day,
doing violence to the long entrenched principle of mutuality of contracts. By analogy,
this can also apply to maritime transportation. Further, with much more reason can
petitioner in the instant case properly abandon the goods, not only because of the
unreasonable delay in its delivery but because of theoption which was categorically
granted to and exercised by it as a means of settling its liability for the cost and
expenses of reshipment. And, said choice having been duly communicated, the same
is binding upon the parties on legal and equitable considerations of estoppel.
Maranan vs Perez
Doctrine: The common carrier liable for intentional assaults committed by its
employees upon its passengers. (Art. 1759)

Facts: Rogelio was a passenger in a taxi owned and operated by Perez, when he was
stabbed and killed by the driver, Valenzuela. Valenzuela was prosecuted for
homicide. He was found guilty. Maranan, Rogelio’s mother, filed an action to recover
damages from Perez and Valenzuela for the death of her son. Defendants asserted
that the deceased was killed in self-defense, since he first assaulted the driver by
stabbing him from behind. Perez further claimed that the death was a caso fortuito
for which the carrier was not liable.

Issue/s: 1. Whether Perez is liable pursuant to Art. 1759 of the Civil Code.
2. Whether the dismissal of the claim against Valenzuela is correct.

Held: 1. YES. Unlike the old Civil Code, the New Civil Code expressly makes the
common carrier liable for intentional assaults committed by its employees upon its
passengers (Art. 1759). This rule was adopted from Anglo American law, where the
majority view, as distinguished from the minority view based on respondeat superior,
is that the carrier is liable as long as the assault occurs within the course of the
performance of the employee's duty. It is no defense for the carrier that the act was
done in excess of authority or in disobedience of the carrier's orders. The carrier's
 liability is absolute in the sense that it practically secures the passengers from
assaults committed by its own employees.

2. NO. Plaintiff’s action was predicated on breach of contract of carriage and the
driver was not a party thereto. His civil liability is covered in the criminal case
wherein he was convicted by final judgment.

Sweet Lines Inc, vs. Court of Appeals (121 SCRA 769)

Facts: Herein private respondents purchased first-class tickets from petitioner at the latter’s office in
Cebu City. They were to board 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 3:00 am of July
9, 1972 only to be towed back to Cebu due to engine trouble, arriving there on the same day at about
4:00 pm. The vessel lifted anchor again on July 10, 1972 at around 8:00 am. Instead of docking at
Catbalogan (the first port of call), the vessel proceeded direct to Tacloban. Private respondents had no
recourse but to disembark and board a ferry boat to Catbalogan. Hence, the suit for breach of contract
of carriage.

Issue: Whether or not the mechanical defect constitutes a fortuitous event which would exempt the
carrier from liability.

Held: No. As found by the trial court and the Court of Appeals, there was no fortuitous event or force
majeure which prevented the vessel from fulfilling its undertaking of taking the private respondents to
Catbalogan. In the first place, mechanical defects in the carrier are not considered a caso fortuito that
exempts the carrier from responsibility. In the second place, even granting arguendo that the engine
failure was a fortuitous event, it accounted on for the delay of departure. When the vessel finally left
the port, there was no longer any force majeure that justified by-passing a port of call.

Magboo vs. Bernardo. G.R. No. L-16790. A TRANSPORTATION CASE. BY C Y.

Magboo vs. Bernardo.

FACTS.
1. Roque and Bernardo entered in to a contract whereby for priveledge of
driving the motor vehicle of Bernardo, Roque must pay the former 8.00 and
what
ever earning left will belong to the latter.
2. The motor vehicle driven by Magboo hit and killed Cesar Magboo and so the
parents of the latter filed a case against roque and bernardo.
3. Roque pleaded guilty and so he was sentenced.
4. Bernardo assailed the decision claiming that employer-employee
relationship does not exist between him and Roque but rather the relation
that exist
between them was that of lessor and lessee relationship.

ISSUE.
WHETHER OR NOT, THERE IS A RELATIONSHIP OF EMPLOYER-EMPLOYEE
BETWEEN DEFENDANT BERNARDO AND ROQUE.
HELD: According to the supreme court, the mere fact that Roque does not
receive a fixed salary does not withdraw the relationship of employer-
employee between
Bernardo and Roque.