BENITO MACAM VS. CA, CHINA OCEAN SCHIPPING CO. AND/OR WALLEM PHILIPPINES SHIPPING, INC.

Benito Macam vs. CA (G.R. No. 125524, Aug 25, 1999) Facts: Macam, owner of BEN-MAC enterprises, entered into a shipping contract with Nen-Jiang, owned and operated by respondent China Ocean Shipping Co. through local agent Wallem Philippines Shipping Inc., 3,500 boxes of watermelon covered by Bill of Lading No. HKG 99012, and 1,611 boxes of fresh mangoes covered by Bill of Lading No. HKG 99013. The shipment was bound for Hongkong with PAKISTAN BANK as consignee and Great Prospect Company of Rowloon (GPC) as a notify party. In Hongkong, shipment was delivered by respondent WALLEM to GPC, not to PAKISTAN BANK and without the required bill of lading having been surrendered. However, GPC failed to pay PAKISTAN BANK, such that the latter, was still in possession of original bill of lading, refused to pay petitioner thru SOLIDBANK. Since SOLIDBANK already pre-paid the value of shipment, it demanded payment from respondent WALLEM but was refused. MACAM forced to return the amount paid by SOLIDBANK and demanded payment from WALLEM but to no avail. WALLEM submitted a telex dated 5 April 1989 as basis for delivering the cargoes to GPC without the bills of lading and bank guarantee. The telex instructed delivery of various shipments to the respective consignees without need of presenting the bill of lading and bank guarantee per the respective shippers request since for prepaid ship of charges already fully paid. MACAM, however, argued that, assuming there was such an instruction, the consignee referred to was PAKISTAN BANK and not GPC. Issue: Whether or not the respondents liable to the petitioner for releasing the goods to GPC without the bills of lading or bank guarantee? Held: The Supreme Court affirmed with the decision of the Court of Appeals. It is a maritime practice when immediate delivery is of the essence, for shipper to request or instruct the carrier to deliver the goods to the buyer upon arrival at the port of destination without requiring presentation of bill of lading as that usually takes time. Thus, since the subject shipment consisted of perishable goods and SOLIDBANK pre-paid the full amount of value thereof, it is not hard to believe the claim of respondent WALLEM that petitioner indeed requested the release of the goods to GPC without presentation of the bills of lading and bank guarantee. Thus, to implement the said telex instruction, the delivery of the shipment must be to GPC, the notify party or real importer/buyer of the goods and not the PAKISTANI BANK since the latter can very well present the original Bills of Lading in its possession. Since that the cargoes consist of perishable fresh fruits and immediate delivery thereof the buyer/importer is essentially a factor to reckon with. We emphasize that the extraordinary responsibility of the common carriers lasts until actual or constructive delivery of the cargoes to the consignee or to the person who has a right to receive them. PAKISTAN BANK was

indicated in the bills of lading as consignee whereas GPC was the notify party. However, in the export invoices GPC was clearly named as buyer/importer. Petitioner also referred to GPC as such in his demand letter to respondent WALLEM and in his complaint before the trial court. This premise draws us to conclude that the delivery of the cargoes to GPC as buyer/importer which, conformably with Art. 1736 had, other than the consignee, the right to receive them was proper. Samar Mining Co., Inc. vs. Nordeutscher Lloyd (132 SCRA 529) Lessons Applicable: Bill of Lading (Transportation) Laws Applicable: Article 1736, Article 1738,Article 1884,Article 1889,Article 1892,Article 1909 Facts: Samar Mining imported 1 crate optima welded wire (amounting to around USD 424 or PhP 1,700) from Germany, which was shipped on a vessel owned by Nordeutscher Lloyd (M/S Schwabenstein). The shipment was unloaded in Manila into a barge for transshipment to Davao and temporarily stored in a bonded warehouse owned by AMCYL. The goods never reached Davao and were never delivered to or received by the consignee, Samar Mining Co. CFI ruled in favor of Samar Mining holding Nordeutscher Lloyd liable. However, defendants may recoup whatever they may pay Samar Mining by enforcing the judgment against third party defendant AMCYL. Issue: Whether Nordeustscher Lloyd is liable for the loss of the goods as common carrier? Held: No. At the time of the loss of the goods, the character of possession of Nordeutscher Lloyd shifted from common carrier to agent of Samar Mining Co. The Bill of Lading is serves both as a receipt of goods and is likewise the contract to transport and deliver the same as stipulated. It is a contract and is therefore the law between the parties. The Bill of Lading in question stipulated that Nordeutscher Lloyd only undertook to transport the goods in its vessel only up to the port of discharge from ship, which is Manila. The Bill of Lading further stipulated that the goods were to be transshipped by the carrier from Manila to the port of destination Davao. By unloading the shipment in Manila and delivering the goods to the warehouse of AMCYL, the appellant was acting within the contractual stipulations contained in the Bill of Lading. Article 1736 of the Civil Code relives the carrier of responsibility over the shipment as soon as the carrier makes actual or constructive delivery of the goods to the consignee or to the person who has a right to receive them. Under the Civil Code provisions governing Agency, an agent can only be held liable in cases where his acts are attended by fraud, negligence, deceit or if there is a conflict of interest between him and the principal. Under the same law an agent is likewise liable if he appoints a substitute when he was not given the power to appoint one or otherwise appoints one that is notoriously incompetent or insolvent. These facts were not proven in the record.

Servando vs. Philippine Steam Navigation Co. (117 SCRA 832) Lessons Applicable: Contract of Adhesion Laws Applicable: Article 1736, Article 1174 Facts: Bico and Servando loaded on board the FS-176 the following cargoes: 1.528 cavans of rice and 44 cartons of colored paper, toys and general merchandise. Upon the arrival of the vessel, the cargoes were discharged, complete and in good order to the warehouse of the Bureau of Customs. At 2:00 pm of the same day, a fire of unknown reasons razed the warehouse. Before the fire, Bico was able to take delivery of 907 cavans of rice. The petitioners are now claiming for the value of the destroyed goods from the common carrier. The Trial Court ordered the respondent to pay the plaintiffs the amount of their lost goods on the basis that the delivery of the shipment to the warehouse is not the delivery contemplated by Article 1736 of the New Civil Code, since the loss occurred before actual or constructive delivery. The petitioners argued that the stipulation in the bills of lading does not bind them because they did not sign the same. The stipulation states that the carrier shall not be responsible for loss unless such loss was due to the carriers negligence. Neither shall it be liable for loss due to fortuitous events such as dangers of the sea and war. Issue: Whether or not the carrier should be held liable for the destruction of the goods Held: No. There is nothing on record to show that the carrier incurred in delay in the performance of its obligation. Since the carrier even notified the plaintiffs of the arrival of their shipments and had demanded that they be withdrawn. The carrier also cannot be charged with negligence since the storage of the goods was in the Customs warehouse and was undoubtedly made with their knowledge and consent. Since the warehouse belonged and maintained by the Government, it would be unfair to impute negligence to the appellant since it has no control over the same. MAERSK LINES vs. CA FACTS Petitioner Maersk Line is engaged in the transportation of goods by sea, doing business in the Philippines through its general agent Compania de Tabacos de Filipinas, while private respondent Efren Castillo is the proprietor of Ethegal Laboratories, a firm engaged in the manufacture of pharmaceutical products. On Nov. 12, 1976, Castillo ordered from Eli Lilly, Inc. of Puerto Rico 600,000 empty gelatin capsules for the manufacture of his pharmaceutical products. The capsules were placed in 6 drums of 100,000 capsules each valued at US$1,668.71. Shipper Eli Liily,Inc. advised Castillo through a Memorandum of Shipment that the products were already shipped on board MV Anders Maesrkline and date of arrival to be April 3, 1977. However, for unknown reasons, said cargoes of capsules were diverted to Richmond, VA and then transported back to Oakland, CA and with the goods finally arriving in the PI on June 10, 1977. Consignee Castillo refused to take delivery of the goods on account of its failure to arrive on time, and filed an action for rescission of

contract with damages against Maersk and Eli Lilly alleging gross negligence and undue delay. Maersk contends that it is liable only in case of loss, destruction or deterioration of goods under Art 1734 NCC while Eli Lilly in its cross claim argued that the delay was due solely to the negligence of Maersk Line. Trial Court dismissed the complaint against Eli Lilly and the latter withdrew cross claim but TC still held Maersk liable and CA affirmed with modifications. ISSUES 1. W/N a cause of action exists against Maersk Line given that there was a dismissal of the complaint against Eli Lilly? Yes, but not under the cross claim rather because Maersk was an original party. 2. W/N Castillo is entitled to damages resulting from delay in the delivery of the shipment in the absence in the bill of lading of a stipulation on the delivery of goods? Yes. RULING The complaint was filed originally against Eli Lilly, Inc. as shipper-supplier and petitioner as carrier. Petitioner Maersk Line being an original party defendant upon whom the delayed shipment is imputed cannot claim that the dismissal of the complaint against Eli Liily inured to its benefit. Petitioner contends as well that it cannot be held liable because there was no special contract under which the carrier undertook to deliver the shipment on or before a specific date and that the Bill of Lading provides that The Carrier does not undertake that the Goods shall arrive at port of discharge or the place of delivery at any particular time. However, although the SC stated that a bill of lading being a contract of adhesion will not be voided on that basis alone, it did declare that the questioned provision to be void because it has the effect of practically leaving the date of arrival of the subject shipment on the sole determination and will of the carrier. It is established that without any stipulated date, the delivery of shipment or cargo should be made within a reasonable time. In the case at hand, the SC declared that a delay in the delivery of the goods spanning a period of 2 months and 7 days falls way beyond the realm of reasonableness. Ganzon vs ca and tumambing G.R. No. L-48757 May 30, 1988. Lessons Applicable: Actionable Document Laws Cited: Art. 1736,Art. 1734 FACTS: Gelacio > Ganzon (via Capt. Niza) > Lighter Batman (common carrier) (loaded half) November 28, 1956: Gelacio Tumambing (Gelacio) contracted the services of of Mauro B. Ganzon to haul 305 tons of scrap iron from Mariveles, Bataan, to the port of Manila on board the light LCT Batman December 1, 1956: Gelacio delivered the scrap iron to Filomeno Niza, captain of the lighter, for loading which was actually begun on the same date by the crew of the lighter under the captains supervisor. When about half of the scrap iron was already loaded, Mayor Jose Advincula of Mariveles, Bataan arrived and demanded P5000 from Gelacio

Upon resisting, the Mayor fired at Gelacio so he had to be taken to the hospital Loading of the scrap iron was resumed

overpower the will of the petitioner's employees. The mere difficulty in the fullfilment of the obligation is not considered force majeure. Pedro de Guzman v. Court of Appeals (G.R. No. L-47822 ) Facts: Respondent Ernesto Cendana was engaged in buying up used bottles and scrap metal in Pangasinan. After collection, respondent would bring such material to Manila for resale. He utilized (2) two six-wheelers trucks which he owned for the purpose. Upon returning to Pangasinan, he would load his vehicle with cargo belonging to different merchants for delivery to different establishments in Pangasisnan for which respondent charged a freight fee. Sometime in November 1970, petitioner Pedro de Guzman, a merchant and dealer of General Milk Company Inc. in Pangasinan contracted with respondent for hauling 750 cartons of milk. Unfortunately, only 150 cartons were delivered, as the other 600 cartons were intercepted by hijackers along Marcos Highway. Hence, petitioner commenced an action against private respondent. In his defense, respondent argued that he cannot be held liable due to force majeure, and that he is not a common carrier, hence not required to exercise extraordinary diligence. Issues: 1. Whether or not respondent is a common carrier. 2. Whether or not respondent can be held liable for loss of the 600 cartons of milk due to force majeure. Held: 1. Respondent is a common carrier. Article 1732 of the New Civil Code does not distinguish between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity. It also avoids a distinction between a person or enterprise offering transportation services on a regular or scheduled basis and one offering such services on an occasional, episodic, and unscheduled basis. 2. The court ruled in the affirmative. The circumstances do not fall under the exemption from liability as enumerated in Article 1734 of the Civil Code. The general rule is established by the article that common carriers are responsible for the loss, destruction or deterioration of the goods which they carry, unless the same is due to any of the following causes only: a) Flood, storm, earthquake, lightning or other natural disasters; b) Act 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; e) Order or act of competent public authority. Bascos v. CA Facts: Rodolfo Cipriano, representing CIPTRADE, entered into a hauling contract with Jibfair Shipping Agency Corporation whereby the former bound itself to haul the latters 2000m/tons of soya bean meal from Manila to Calamba. CIPTRADE subcontracted with petitioner

December 4, 1956: Acting Mayor Basilio Rub (Rub), accompanied by 3 policemen, ordered captain Filomeno Niza and his crew to dump the scrap iron where the lighter was docked Later on Rub had taken custody of the scrap iron RTC: in favor of Gelacio and against Ganzon ISSUE: W/N Ganzon should be held liable under the contract of carriage HELD: YES. Petition is DENIED. Ganzon thru his employees, actually received the scraps is freely admitted. Pursuant to Art. 1736, such extraordinary responsibility would cease only upon the delivery, actual or constructive, by the carrier to the consignee, or to the person who has a right to receive them. The fact that part of the shipment had not been loaded on board the lighter did not impair the said contract of transportation as the goods remained in the custody and control of the carrier, albeit still unloaded. 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, namely:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity; (2) Act of the public enemy in war, whether international or civil; (3) Act or omission of the shipper or owner of the goods; (4) The character of the goods or defects in the packing or in the containers; (5) Order or act of competent public authority. Hence, the petitioner is presumed to have been at fault or to have acted negligently. 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. exempted from any liability had he been able to prove that he observed extraordinary diligence in the vigilance over the goods in his custody, according to all the circumstances of the case, or that the loss was due to an unforeseen event or to force majeure. As it was, there was hardly any attempt on the part of the petitioner to prove that he exercised such extraordinary diligence. We cannot sustain the theory of caso fortuito - "order or act of competent public authority"(Art. 1174 of the Civil Code) 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. Ganzon was not duty bound to obey the illegal order to dump into the sea the scrap iron. Moreover, there is absence of sufficient proof that the issuance of the same order was attended with such force or intimidation as to completely

Estrellita Bascos to transport and deliver the 400 sacks of soya beans. Petitioner failed to deliver the cargo, and as a consequence, Cipriano paid Jibfair the amount of goods lost in accordance with their contract. Cipriano demanded reimbursement from petitioner but the latter refused to pay. Cipriano filed a complaint for breach of contract of carriage. Petitioner denied that there was no contract of carriage since CIPTRADE leased her cargo truck, and that the hijacking was a force majeure. The trial court ruled against petitioner. Issues: (1) Was petitioner a common carrier? (2) Was the hijacking referred to a force majeure? Held: (1) Article 1732 of the Civil Code defines a common carrier as "(a) person, corporation or firm, or association engaged in the business of carrying or transporting passengers or goods or both, by land, water or air, for compensation, offering their services to the public." The test to determine a common carrier is "whether the given undertaking is a part of the business engaged in by the carrier which he has held out to the general public as his occupation rather than the quantity or extent of the business transacted." In this case, petitioner herself has made the admission that she was in the trucking business, offering her trucks to those with cargo to move. Judicial admissions are conclusive and no evidence is required to prove the same. (2) Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods transported by them. Accordingly, they are presumed to have been at fault or to have acted negligently if the goods are lost, destroyed or deteriorated. There are very few instances when the presumption of negligence does not attach and these instances are enumerated in Article 1734. In those cases where the presumption is applied, the common carrier must prove that it exercised extraordinary diligence in order to overcome the presumption. The presumption of negligence was raised against petitioner. It was petitioner's burden to overcome it. Thus, contrary to her assertion, private respondent need not introduce any evidence to prove her negligence. Her own failure to adduce sufficient proof of extraordinary diligence made the presumption conclusive against her. EVERETT STEAMSHIP vs. CA FACTS Hernandez trading company imported three crates of bus spare parts marked as Marco 12, Marco 13, Marco 14 from its supplier Maruman trading company. Said crates were shipped from Japan to Manila on noard the vessel owned by Everette Orient Lines. Upon arrival in Manila, it was discovered that Marco 14 was missing. Hernandez makes a formal claim to Everette in an amount of 1 mill ++ Yen, which is the amount of the cargo lost. However, Everett offers an amount of 100k because it is the amount that was stipulated in its Bill of Lading. Hernandez files a case at the RTC of Caloocan, RTC rules in favor of Hernandez holding Everett liable for the amount of !mill ++ Yen.

THE CA affirmed the RTCs ruling and made an additional observation that since Hernandez is not a privy to the contract in the bill of lading ( the contract was entered by Everett and Maruman trading [shipper]), and so the 100k limit stipulated will not bind Hernandez making Everett liable for the full amount of 1mill ++ Yen. ISSUE 1. Is Everett liable for the full amount or the amount that was stipulated in the contract?- what was stipulated in the contract 2. Is Hernandez a privy to the contract which says that Petitioner is liable only for 100k? Yes RULING 1. Controlling provisions for this issue would be 1749 and 1750 of the Civil Code. In Sea Land Service, Inc. vs Intermediate Appellate Court That said stipulation is just and reasonable is arguable from 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 lading. To hold otherwise would amount to questioning the justness and fairness of the law itself, and this the private respondent does not pretend to do. But over and above that consideration, 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 in the bill of lading The clause of the contract goes: The carrier shall not be liable for any loss of or any damage to or in any connection with, goods in an amount exceeding One Hundred Thousand Yen in Japanese Currency (Y100,000.00) or its equivalent in any other currency per package or customary freight unit (whichever is least) unless the value of the goods higher than this amount is declared in writing by the shipper before receipt of the goods by the carrier and inserted in the Bill of Lading and extra freight is paid as required. (Emphasis supplied) The shipper, Maruman Trading, had the option to declare a higher valuation if the value of its cargo was higher than the limited liability of the carrier. Considering that the shipper did not declare a higher valuation, it had itself to blame for not complying with the stipulations. The trial courts ratiocination that private respondent could not have fairly and freely agreed to the limited liability clause in the bill of lading because the said conditions were printed in small letters does not make the bill of lading invalid. In Ong Yiu VS. CA the court said that contracts of adhesion wherein one party impose a ready-made form of contract on the other, as the plane ticket in the case at bar, are contracts not entirely prohibited 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 The shipper, Maruman Trading, we assume, has been extensively engaged in the trading business. It can not be

said to be ignorant of the business transactions it entered into involving the shipment of its goods to its customers. The shipper could not have known, or should know the stipulations in the bill of lading and there it should have declared a higher valuation of the goods shipped. Moreover, Maruman Trading has not been heard to complain that it has been deceived or rushed into agreeing to ship the cargo in petitioners vessel. 2. Even if the consignee was not a signatory to the contract of carriage between the shipper and the carrier. The consignee can still be bound by the contract. private respondent (Hernandez) formally claimed reimbursement for the missing goods from petitioner and subsequently filed a case against the latter based on the very same bill of lading, it (private respondent) accepted the provisions of the contract and thereby made itself a party thereto, or at least has come to court to enforce it. Thus, private respondent cannot now reject or disregard the carriers limited liability stipulation in the bill of lading. In other words, private respondent is bound by the whole stipulations in the bill of lading and must respect the same. Aboitiz Shipping Corporation vs. Court of Appeals (188 SCRA 387 ) Facts: Anacleto Viana was a passenger of M/V Antonia bound for Manila which was owned by defendant Aboitiz. After the said vessel has landed, the Pioneer Stevedoring Corp., as the arrastre operator, took over the exclusive control of the cargoes loaded on it. One hour after the passengers had disembarked, Pioneer Stevedoring started operation by unloading the cargoes using its crane. Viana who had already disembarked remembered that some of his cargoes were still inside the vessel. While pointing to the crew of the vessel the place where his cargoes were, the crane hit him, pinning him between the side of the vessel and the crane which resulted to his death. Vianas wife filed a complaint for damages against Aboitiz for breach of contract f carriage. Aboitiz, however filed a third party complaint against Pioneer since it had control completely over the vessel during the incident. Furthermore, petitioner contends that one hour has already elapsed from the time Viana disembarked, thus he has already ceased to be a passenger. Issue: Whether or not Aboitiz is liable for the death of Viana. Held: The Supreme Court held that the failure of Aboitiz to exercise extraordinary diligence for the safety of its passengers makes Aboitiz liable. It has been recognized as a rule that the relation of the carrier and passenger does not cease the moment the passenger alights from the carriers vehicle, but continues until the passenger has had a reasonable time or a reasonable opportunity to leave the carriers premises. A reasonable time or a reasonable delay within this rule is to be determined from all the circumstances. The primary factor to be considered is the existence of a reasonable cause as will justify the presence of the victim on or near the petitioners vessel. In the case at bar, such justifiable cause exists because he had to come back for his cargo. Aboitiz has failed to safeguard its passenger with extraordinary diligence in requiring or seeing to it that precautionary measures were strictly and actually enforced to subserve their purpose of preventing entry into a forbidden area.

Facts: On January\y 28, 1954, Severina Garces and her one year old son, Precillano Necesito boarded passenger auto truck bus of the Philippine Rabbit Bus Lines at Agno, Pangasinan. After the bus entered a wooden bridge, the front wheels swerved to the right. The driver lost control, and after wrecking the bridges wooden rails, the truck fell on its right side into a creek where water was breast deep. The mother, Severina was drowned and the son Precillano was injured. These cases involve actions ex contractu against the owners of PRBL filed by the son and the heirs of the mother. Lower Court dismissed the actions, holding that the accident was a fortuitous event. ISSUES: Whether or not the carrier is liable for the manufacturing defect of the steering knuckle, and whether the evidence discloses that in regard thereto the carrier exercised the diligence required by law (Art. 1755, new Civil Code) HELD: Yes. While the carrier is not an insurer of the safety of the passengers, the manufacturer of the defective appliance is considered in law the agent of the carrier, and the good repute of the manufacturer will not relieve the carrier from liability. The rationale of the carriers liability is the fact that the passengers has no privity with the manufacturer of the defective equipment; hence, he has no remedy against him, while the carrier has. We find that the defect could be detected. The periodical, usual inspection of the steering knuckle did not measure up to the utmost diligence of a very cautious person as far as human care and foresight can provide and therefore the knuckles failure cannot be considered a fortuitous event that exempts the carrier from responsibility. (Alternate ruling: It is clear that the carrier is not an insurer of the passengers safety. His liability rest upon negligence, that his failure to exercise utmost degree of diligence that the law requires. The passenger has neither choice nor control over the carrier in the selection and use of the equipment and the appliances in use by the carrier. Having no privity whatever with the manufacturer or vendor of the defective equipment, the passenger has no remedy against him, while carrier usually has. It is but logical, therefore, that the carrier, while not an insurer of the safety of his passengers, should nevertheless be held to answer for flaws of his equipment if such cause were at all discoverable.) Bacarro vs. Castano (GR L-34597, 5 November 1982) FACTS: Respondent Castano boarded a jeep driven by Petitioner Montefalcon who thereafter drove it at around 40 kilometers per hour. While approaching Sumasap Bridge at the said speed, a cargo truck coming from behind, blowing its horn to signal its intention to overtake the jeep. The jeep, without changing its speed, gave way by swerving to the right, such that both vehicles ran side by side for a distance of around 20 meters. Thereafter as the jeep was left behind, its driver was unable to return it to its former lane and instead it obliquely or diagonally ran down an inclined terrain towards the right until it fell

into a ditch pinning down and crushing Castanos right leg in the process. Castano filed a case for damages against Rosita Bacarro, William Sevilla, and Felario Montefalcon. Defendants alleged that the jeepney was sideswiped by the overtaking cargo truck. After trial, the CFI of Misamis Oriental ordered Bacarro, et.al. to jointly and severally pay Castano. It was affirmed by the CA upon appeal. ISSUES: 1. Whether or not there was a contributory negligence on the part of the jeepney driver. 2. Whether or not extraordinary diligence is required of the jeepney driver. 3. Whether or not the sideswiping is a fortuitous event. HELD: 1.) Yes. X x x. The fact is, petitioner-driver Montefalcon did not slacken his speed but instead continued to run the jeep at about forty (40) kilometers per hour even at the time the overtaking cargo truck was running side by side for about twenty (20) meters and at which time he even shouted to the driver of the truck. Thus, had Montefalcon slackened the speed of the jeep at the time the truck was overtaking it, instead of running side by side with the cargo truck, there would have been no contact and accident. He should have foreseen that at the speed he was running, the vehicles were getting nearer the bridge and as the road was getting narrower the truck would be to close to the jeep and would eventually sideswiped it. Otherwise stated, he should have slackened his jeep when he swerved it to the right to give way to the truck because the two vehicles could not cross the bridge at the same time. 2.) Yes. x x x [T]he fact is, there was a contract of carriage between the private respondent and the herein petitioners in which case the Court of Appeals correctly applied Articles 1733, 1755 and 1766 of the Civil Code which require the exercise of extraordinary diligence on the part of petitioner Montefalcon. Indeed, the hazards of modern transportation demand extraordinary diligence. A common carrier is vested with public interest. Under the new Civil Code, instead of being required to exercise mere ordinary diligence a common carrier is exhorted to carry the passengers safely as far as human care and foresight can provide "using the utmost diligence of very cautious persons." (Article 1755). Once a passenger in the course of travel is injured, or does not reach his destination safely, the carrier and driver are presumed to be at fault. 3.) The third assigned error of the petitioners would find fault upon respondent court in not freeing petitioners from any liability, since the accident was due to a fortuitous event. But, We repeat that the alleged fortuitous event in this case - the sideswiping of the jeepney by the cargo truck, was something which could have been avoided considering the narrowness of the Sumasap Bridge which was not wide enough to admit two vehicles. As found by the Court of Appeals, Montefalcon contributed to the occurrence of the mishap.

Trans-Asia Shipping vs. Court of Appeals (254 SCRA 260) Facts: Plaintiff (herein private respondent Atty. Renato Arroyo) bought a ticket from herein petitioner for the voyage of M/V Asia Thailand Vessel to Cagayan de Oro from Cebu City. Arroyo boarded the vessel in the evening of November 12, 1991 at around 5:30. At that instance, plaintiff noticed that some repair works were being undertaken on the evening of the vessel. The vessel departed at around 11:00 in the evening with only one engine running. After an hour of slow voyage, vessel stopped near Kawit Island and dropped its anchor threat. After an hour of stillness, some passenger demanded that they should be allowed to return to Cebu City for they were no longer willing to continue their voyage to Cagayan de Oro City. The captain acceded to their request and thus the vessel headed back to Cebu City. At Cebu City, the plaintiff together with the other passengers who requested to be brought back to Cebu City was allowed to disembark. Thereafter, the vessel proceeded to Cagayan de Oro City. Plaintiff, the next day boarded the M/V Asia Japan for its voyage to Cagayan de Oro City, likewise a vessel of the defendant. On account of this failure of defendant to transport him to the place pf destination on November 12, 1991, plaintiff filed before the trial court a complaint for damages against the defendant. Issue: Whether or not the failure of a common carrier to maintain in seaworthy condition its vessel involved in a contract of carriage a breach of its duty? Held: Undoubtedly, there was, between the petitioner and private respondent a contract of carriage. Under Article 1733 of the Civil Code, the petitioner was bound to observed extraordinary diligence in ensuring the safety of the private respondent. That meant that the petitioner was pursuant to the Article 1755 off the said Code, bound to carry the private respondent safely as far as human care and foresight could provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances. In this case, the Supreme Court is in full accord with the Court of Appeals that the petitioner failed or discharged this obligation. Before commencing the contact of voyage, the petitioner undertook some repairs on the cylinder head of one of the vessels engines. But even before it could finish these repairs it allowed the vessel to leave the port of origin on only one functioning engine, instead of two. Moreover, even the lone functioning engine was not in perfect condition at sometime after it had run its course, in conked out. Which cause the vessel to stop and remain adrift at sea, thus in order to prevent the ship from capsizing, it had to drop anchor. Plainly, the vessel was unseaworthy even before the voyage begun. For the vessel to be seaworthy, it must be adequately equipped for the voyage and manned with the sufficient number of competent officers and crew. The Failure of the common carrier to maintain in seaworthy condition its vessel involved in a contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code.
(short version Facts: Plaintiff boarded a vessel from Cebu to Cagayan de Oro. After an hour of slow voyage, the vessel stopped at Kawit Island and dropped its anchor. Passengers demanded that they be returned to Cebu, and was heeded to by the parties. Held:The carrier would not have been liable for loss or income if the plaintiff was unable to report to his office on the day he was supposed to arrive were it not for delay.)

Singson v. CA Facts: Carlos Singson and his cousin Crescentino Tiongson bought 2 identically routed, round-trip tickets from Cathay Pacific. Each ticket consisted of 5 coupons, and the procedure is that one coupn will be detached from the booklet at every start of the flight. The two left Manila on June 6, 1988. On July 1, 1988, Singsons coupon corresponding to the San Francisco-Hongkong trip was found to be missing. Instead, what was there is the ticket for Los Angeles-San Francisco, which was supposed to be already detached. It was only on July 6 that the airline company arranged for his flight back to Manila. Singson filed a complaint for damages. The trial court ruled in his favor, but the decision was reversed by the Court of Appeals. Issues: (1) Whether a breach of contract was committed by Cathay when it failed to confirm the booking of petitioner for its July 1 flight (2) Whether the carrier was liable not only for actual, but also for moral and exemplary damages Held: (1) CATHAY undoubtedly committed a breach of contract when it refused to confirm petitioner's flight reservation back to the Philippines on account of his missing flight coupon. Its contention that there was no contract of carriage that was breached because petitioner's ticket was open-dated is untenable. To begin with, the round trip ticket issued by the carrier to the passenger was in itself a complete written contract by and between the carrier and the passenger. It has all the elements of a complete written contract, to wit: (a) the consent of the contracting parties manifested by the fact that the passenger agreed to be transported by the carrier to and from Los Angeles via San Francisco and Hongkong back to the Philippines, and the carrier's acceptance to bring him to his destination and then back home; (b) cause or consideration, which was the fare paid by the passenger as stated in his ticket; and, (c) object, which was the transportation of the passenger from the place of departure to the place of destination and back, which are also stated in his ticket. Interestingly, it appears that CATHAY was responsible for the loss of the ticket. One of two (2) things may be surmised from the circumstances of this case: first, US Air (CATHAY's agent) had mistakenly detached the San Francisco-Hongkong flight coupon thinking that it was the San Francisco-Los Angeles portion; or, second, petitioner's booklet of tickets did not from issuance include a San Francisco-Hongkong flight coupon. In either case, the loss of the coupon was attributed to the negligence of CATHAY's agents and was the proximate cause of the non-confirmation of petitioner's return flight on 1 July 1988. It virtually prevented petitioner from demanding the fulfillment of the carrier's obligations under the contract. (2) Although the rule is that moral damages predicated upon a breach of contract of carriage may only be recoverable in instances where the mishap results in the death of a passenger, or where the carrier is guilty of fraud or bad faith, there are situations where the negligence of the carrier is so gross and reckless as to

virtually amount to bad faith, in which case, the passenger likewise becomes entitled to recover moral damages. To be stranded for five (5) days in a foreign land because of an air carrier's negligence is too exasperating an experience for a plane passenger. For sure, petitioner underwent profound distress and anxiety, not to mention the worries brought by the thought that he did not have enough money to sustain himself, and the embarrassment of having been forced to seek the generosity of relatives and friends. Private respondent's mistake in removing the wrong coupon was compounded by several other independent acts of negligence above-enumerated. Taken together, they indubitably signify more than ordinary inadvertence or inattention and thus constitute a radical departure from the extraordinary standard of care required of common carriers. Put differently, these circumstances reflect the carrier's utter lack of care and sensitivity to the needs of its passengers, clearly constitutive of gross negligence, recklessness and wanton disregard of the rights of the latter, acts evidently indistinguishable or no different from fraud, malice and bad faith. As the rule now stands, 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 damages, in addition to actual damages, is proper. In the instant case, the injury suffered by petitioner is not so serious or extensive as to warrant an award amounting to P900,000.00. The assessment of P200,000.00 as moral damages and P50,000.00 as exemplary damages in his favor is, in our view, reasonable and realistic.

First Philippine Industrial Corp. vs. CA

Facts: Petitioner is a grantee of a pipeline concession under Republic Act No. 387. Sometime in January 1995, petitioner applied for mayors permit in Batangas. However, the Treasurer required petitioner to pay a local tax based on gross receipts amounting to P956,076.04. In order not to hamper its operations, petitioner paid the taxes for the first quarter of 1993 amounting to P239,019.01 under protest. On January 20, 1994, petitioner filed a letterprotest to the City Treasurer, claiming that it is exempt from local tax since it is engaged in transportation business. The respondent City Treasurer denied the protest, thus, petitioner filed a complaint before the Regional Trial Court of Batangas for tax refund. Respondents assert that pipelines are not included in the term common carrier which refers solely to ordinary carriers or motor vehicles. The trial court dismissed the complaint, and such was affirmed by the Court of Appeals. Issue:

Whether a pipeline business is included in the term common carrier so as to entitle the petitioner to the exemption Held: Article 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firm or association engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public." The test for determining whether a party is a common carrier of goods is: (1) He must be engaged in the business of carrying goods for others as a public employment, and must hold himself out as ready to engage in the transportation of goods for person generally as a business and not as a casual occupation; (2) He must undertake to carry goods of the kind to which his business is confined; (3) He must undertake to carry by the method by which his business is conducted and over his established roads; and (4) The transportation must be for hire. Based on the above definitions and requirements, there is no doubt that petitioner is a common carrier. It is engaged in the business of transporting or carrying goods, i.e. petroleum products, for hire as a public employment. It undertakes to carry for all persons indifferently, that is, to all persons who choose to employ its services, and transports the goods by land and for compensation. The fact that petitioner has a limited clientele does not exclude it from the definition of a common carrier.
VLASONS SHIPPING, INC vs. CA and NATIONAL STEEL CORPORATION [G.R. No. 112350. December 12, 1997] NATIONAL STEEL CORPORATION vs. CA and VLASONS SHIPPING, INC. [G.R. No. 112287. December 12, 1997]

VSIs vessel, the MV VLASONS I to make one (1) voyage to load steel products at Iligan City and discharge them at North Harbor, Manila. VSI carried passengers or goods only for those it chose under a special contract of charter party. The vessel arrived with the cargo in Manila, but when the vessels three (3) hatches containing the shipment were opened, nearly all the skids of tin plates and hot rolled sheets were allegedly found to be wet and rusty. NSC filed its complaint against defendant before the CFI wherein it claimed that it sustained losses as a result of the act, neglect and default of the master and crew in the management of the vessel as well as the want of due diligence on the part of the defendant to make the vessel seaworthy -- all in violation of defendants undertaking under their Contract of Voyage Charter Hire. In its answer, defendant denied liability for the alleged damage claiming that the MV VLASONS I was seaworthy in all respects for the carriage of plaintiffs cargo; that said vessel was not a common carrier inasmuch as she was under voyage charter contract with the plaintiff as charterer under the charter party. The trial court ruled in favor of VSI; it was affirmed by the CA on appeal. ISSUE: Whether or not Vlazons is a private carrier. HELD: Yes. At the outset, it is essential to establish whether VSI contracted with NSC as a common carrier or as a private carrier. The resolution of this preliminary question determines the law, standard of diligence and burden of proof applicable to the present case. Article 1732 of the Civil Code defines a common carrier as persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public. It has been held that the true test of a common carrier is the carriage of passengers or goods, provided it has space, for all who opt to avail themselves of its transportation service for a fee. A carrier which does not qualify under the above test is deemed a private carrier. Generally, private carriage is undertaken by special agreement and the carrier does not hold himself out to carry goods for the general public. The most

FACTS: National Steel Corporation (NSC) as Charterer and defendant Vlasons Shipping, Inc. (VSI) as Owner, entered into a Contract of Voyage Charter Hire (Affreightment) whereby NSC hired

typical, although not the only form of private carriage, is the charter party, a maritime contract by which the charterer, a party other than the shipowner, obtains the use and service of all or some part of a ship for a period of time or a voyage or voyages. In the instant case, it is undisputed that VSI did not offer its services to the general public. As found by the Regional Trial Court, it carried passengers or goods only for those it chose under a special contract of charter party. As correctly concluded by the Court of Appeals, the MV Vlasons I was not a common but a private carrier. Consequently, the rights and obligations of VSI and NSC, including their respective liability for damage to the cargo, are determined primarily by stipulations in their contract of private carriage or charter party. Recently, in Valenzuela Hardwood and Industrial Supply, Inc., vs. Court of Appeals and Seven Brothers Shipping Corporation, the Court ruled: x x x [I]n a contract of private carriage, the parties may freely stipulate their duties and obligations which perforce would be binding on them. Unlike in a contract involving a common carrier, private carriage does not involve the general public. Hence, the stringent provisions of the Civil Code on common carriers protecting the general public cannot justifiably be applied to a ship transporting commercial goods as a private carrier. Consequently, the public policy embodied therein is not contravened by stipulations in a charter party that lessen or remove the protection given by law in contracts involving common carriers.