Baliwag Transit, Inc. v. CA and Sps.

Sotero Cailipan, Jr and Zenaida Lopez and George Cailipan

G.R. No. 80447 January 31, 1989
Melencio-Herrera, J.
FACTS:
George was a paying passenger on a Baliwag bus who suffered multiple serious physical
injuries when he was thrown off said bus driven in a careless and negligent manner by Leonardo
Cruz, the bus driver, along Brgy. Patubig, Marilao, Bulacan; as a result, he was confined in the
hospital for treatment, incurring medical expenses, which were borne by his parents in the sum
of about P200,000.00 plus other incidental expenses of about P10,000.00. Georges parents,
Spouses Cailipan filed a complaint for damages arising from breach of contract of carriage.
Baliwag Transit alleged that the cause of the injuries sustained by George was solely attributable
to his own voluntary act in that, without warning and provocation, he suddenly stood up from his
seat and headed for the door of the bus as if in a daze, opened it and jumped off while said bus
was in motion, in spite of the protestations by the driver and without the knowledge of the
conductor a third-Party Complaint against Fortune Insurance & Surety Company, Inc., on its thirdparty liability insurance in the amount of P50,000.00; Fortune Insurance claimed limited
liability, the coverage being subject to a Schedule of Indemnities forming part of the insurance
policy. Fortune Insurance and Baliwag filed Motions to Dismiss the complaint filed against them
on the ground that George, in consideration of the sum of P8,020.50 had executed a Release of
Claims. Sotero opposed the motion to dismiss; he testified that be is the father of George, who
at the time of the incident was a student, living with his parents and totally dependent on them
for their support; that the expenses for his hospitalization were shouldered by his parents; and
that they had not signed the Release of Claims
RTC dismissed the complaint (dismissal was predicated on Georges execution of Release of
Claims)
ISSUE: What is the legal effect of the Release of Claims executed by George?
HELD:
Since the suit is one for breach of contract of carriage, the Release of Claims executed by him, as
the injured party, discharging Fortune Insurance and Baliwag from any and all liability is valid. He
was then of legal age, a graduating student of Agricultural Engineering, and had the capacity to
do acts with legal effect (Article 37 in relation to Article 402, Civil Code). Thus, he could sue and
be sued even without the assistance of his parents. The contract of carriage was
actually between George, as the paying passenger, and Baliwag, as the common carrier; since a
contract may be violated only by the parties thereto, as against each other, in an action upon
that
contract,
the real
parties
in
interest,
either
as plaintiff or as defendant, must be parties to said contract (real party-in-interest-plaintiff one
who has a legal right; real party-in-interest-defendant one who has a correlative legal obligation
whose act or omission violates the legal right of the former); in the absence of any contract of
carriage between Baliwag and Georges parents, the latter are not real parties-in-interest in an
action for breach of that contract
Release of Claims have the effect of a compromise agreement since it was entered into or the
purpose of making a full and final compromise adjustment and settlement of the cause of action
involved

Everett Steamship Corporation vs. CA

G.R. No.122494, October 8, 1998
PARTIES:
Everett Steamship Corporation, petitioner
Court of Appeals and Hernandez Trading Co. Inc., respondents
BRIEF STATEMENT OF THE CASE:
Validity of the Bill of lading in a contract of carriage
BRIEF STATEMENT OF THE FACTS:
Private respondent imported 3 crates of bus spare parts marked as MARCO C/No. 12, MARCO
C/No. 13 and MARCO C/No. 14, from its supplier, Maruman Trading Company, Ltd. (Maruman
Trading), a foreign corporation based in Inazawa, Aichi, Japan. The crates were shipped from
Nagoya, Japan to Manila on board "ADELFAEVERETTE," a vessel owned by petitioner's principal,
Everett Orient Lines. Upon arrival at the port of Manila, it was discovered that the crate marked
MARCO C/No. 14 was missing. Private respondent claim upon petitioner for the value of the lost
cargo amounting to One Million Five Hundred Fifty Two Thousand Five Hundred (Y1, 552,500.00)
Yen, the amount shown in an Invoice No. MTM-941, dated November 14, 1991. However,
petitioner offered to pay only One Hundred Thousand (Y100,000.00) Yen, the maximum amount
stipulated under Clause 18 of the covering bill of lading which limits the liability of petitioner.
Private respondent rejected the offer and thereafter instituted a suit for collection. The trial court
rendered a decision in favour of the private respondents and this was affirmed by the Court of
Appeals. Thus, this instant petition.
ISSUES:
1. Is the petitioner liable for the actual value and not the maximum value recoverable under
the bill of lading?
2. Is private respondent, as consignee, who is not a signatory to the bill of lading bound by
the stipulations thereof?
ARGUMENTS:
1. The Petitioner is only liable for the maximum value recoverable under the bill of lading.
Clause 18 of the covering bill of lading:
18. All claims for which the carrier may be liable shall be adjusted and settled on the basis of
the shipper's net invoice cost plus freight and insurance premiums, if paid, and in no event
shall the carrier be liable for any loss of possible profits or any consequential loss.
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)
Pertinent provisions that is applicable as to this case:
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 freely and fairly agreed upon.
Pursuant to the afore-quoted provisions of law, it is required that the stipulation limiting the
common carrier's liability for loss must be "reasonable and just under the circumstances, and has
been freely and fairly agreed upon."
The above stipulations are reasonable and just. In the bill of lading, the carrier made it clear that
its liability would only be up to One Hundred Thousand (Y100,000.00) Yen. However, 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.
2. Private Respondents are still bound by the stipulations of the bill of lading
In Sea-Land Service, Inc. vs. Intermediate Appellate Court (supra), it was held that 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.
RULING:
The decision of the Court of Appeals is hereby REVERSED and SET ASIDE.
In fine, the liability of petitioner for the loss of the cargo is limited to One Hundred Thousand
(Y100,000.00) Yen, pursuant to Clause 18 of the bill of lading..

British Airways, Inc. v. Court of Appeals 12 th Division, First International Trading and
General Services
G.R. No. 92288 February 9, 1993
Nocon, J.
FACTS:
First International Trading and General Services Co. duly licensed domestic recruitment and
placement agency; it received a telex message from its principal ROLACO Engineering and
Contracting Services in Jeddah, Saudi Arabia to recruit Filipino contract workers in
behalf of said principal. ROLACO paid to the Jeddah branch of petitioner British Airways, Inc.
airfare tickets for 93contract workers with specific instruction to transport said workers to Jeddah
on or before March 30, 1981.
March 1981: First International was informed by British Airways that ROLACO had forwarded 93
prepaid tickets; First International instructed its travel agent, ADB Travel and Tours.
Inc., to book the 93 workers with petitioner but the latter failed to fly said workers, thereby
compelling private respondent to borrow money in the amount of P304,416.00 in order to
purchase airline tickets from the other airlines for the 93 workers it had recruited who must leave
immediately since the visas of said workers are valid only for 45 days and the Bureau of
Employment Services mandates that contract workers must be sent to the job site within a
period of 30 days
June 1981: First International was again informed by British Airways that it had received a
prepaid ticket advice from its Jeddah branch for the transportation of 27 contract workers; First
International instructed its travel agent to book the 27 contract workers with the
petitioner but the latter was only able to book and confi rm 16 seats on its June 9,
1981fl ight; on the date of the scheduled fl ight only 9 workers were able to board said
fl ight while the remaining 7 workers were rebooked to June 30, 1981 which bookings were again
cancelled by the petitioner without any prior notice to either private respondent or
the workers; thereafter, the 7 workers were rebooked to the July 4,1981 fl ight of
petitioner with 6 more workers booked for said flight; but the confirmed bookings of the 13
workers were again cancelled and rebooked to July 7, 1981
First International paid the travel tax of the said workers as required by British Airways but
when the receipt of the tax payments was submitted, the latter informed First International that
it can only confirm the seats of the 12 workers on its July 7, 1981 flight; but the confi rmed
seats of said workers were again cancelled without any prior notice either to First
International or said workers; the 12 workers were finally able to leave for Jeddah after First
International had bought tickets from the other airlines
July 1981: First International sent a letter to petitioner demanding compensation for the damages
in the amount of P350, 000.00 it had incurred by the latters repeated failure to
transport its contract workers despite confirmed bookings and payment of the
corresponding
travel taxes.
British Airways narration:
it received a telex message from Jeddah advising that ROLACO had prepaid the airfares of 100
persons to transport First Internationals contract workers from Manila to Jeddah on or before
March 30, 1981; however, due to the unavailability of space and limited time, it had to return to

its sponsor in Jeddah the prepaid ticket advice consequently not even one of the alleged 93
contract workers were booked in any of its flights.
June 1981: British Airways received another prepaid ticket advice to transport 16 contract
workers of First International to Jeddah but the travel agent of First International booked only 10
contract workers for British Airways June 9, 1981 flight; however, only 9 contract workers
boarded the scheduled flight with 1 passenger not showing up as evidenced by the Philippine
Airlines passenger manifest
First Internationals travel agent booked seats for 5 contract workers on British Airways July 4,
1981 flight but said travel agent cancelled the booking of 2 passengers while the other 3
passengers did not show up on said flight
July 1981: the travel agent of First International booked 7 more contract workers inaddition to the
previous 5 contract workers who were not able to board the July 4, 1981flight with British
Airways July 7, 1981 flight which was accepted by British Airways subject to reconfirmation
July 1981: British Airways computer system broke down which resulted to its failure to get a
reconfirmation from Saudi Arabia Airlines causing the automatic cancellation of the bookings of
First Internationals 12 contract workers; the computer system of the petitioner were reinstalled
the next day and immediately British Airways tried to reinstate the bookings of 12 workers with
either Gulf Air or Saudi Arabia Airlines but both airlines replied that no seat was available on that
date and had to place the 12 workers on the wait list; said information was duly relayed to the
First International and the 12 workers before the scheduled flight.
ISSUE: WON British Airways is liable
HELD:
Yes. Its repeated failures to transport First Internationals workers in its flight despite confirmed
booking of said workers clearly constitutes breach of contract and bad faith on its part.
Two aspects of contract of common carriage of passengers:
A. contract to carry at some future time consensual and is necessarily perfected
by mere consent
B. contract of carriage o r o f common carriage itself real contract for not
until the carrier is actually used can the carrier be said to have already assumed the
obligation of a carrier
Contract to carry was involved in the case; its elements are consent, consideration
and object certain
CONSENT: British Airways consent to the contract was manifested by its acceptance of the
PTA or prepaid ticket advice that ROLACO has prepaid the airfares of the
first
Internationals
contract workers advising the appellant that it must transport the contract workers on or before
the end of March, 1981 and the other batch in June, 1981.
CONSIDERATION: the fare paid for the passengers by the principal of First International
OBJECT CERTAIN: the transport of the passengers from the place of departure to the place of
destination
First International has fully complied with the obligation, namely, the payment of the fare and its
willingness for its contract workers to leave for their place of destination.

On the other hand, British Airways was remiss in its obligation to transport the contract workers
on their flight despite confirmation and bookings made by First Internationals travelling agent.
British
Airways
should
have
refused
acceptance
of
the
PTA
from
by
FirstInternationals principal or to at least inform by First International that it could notaccommod
ate the contract workers.

Mauro Ganzon v. CA and Gelacio Tumambing

G.R. No. L-48757 May 30, 1988
Sarmiento, J.
FACTS:
Tumambing contracted the services of Ganzon to haul 305 tons of scrap iron from Mariveles,
Bataan, to the port of Manila on board the lighter LCT Batman; pursuant to the agreement,
Ganzon sent his lighter Batman to Mariveles where it docked; Tumambing delivered the scrap
iron to Filomeno Niza, captain of the lighter, for loading; when about half of the scrap iron was
already loaded, Mayor Jose Advincula of Mariveles, Bataan, arrived and demanded P5,000.00
from Tumambing (note: extortion); Tumambing resisted the shakedown and after a heated
argument between them, Advincula drew his gun and fired at Tumambing, because of which
he sustained physical injuries
Acting Mayor Basilio Rub, accompanied by three policemen, ordered captain Niza and his crew to
dump the scrap iron where the lighter was docked; the rest was brought to the compound of
NASSCO; Rub issued a receipt stating that the Municipality of Mariveles had taken custody of the
scrap iron
ISSUES:
WON Ganzon is guilty of breach of contract of transportation
HELD:
Yes.
The scraps were unconditionally placed in the possession and control of the common carrier
owned by Ganzon, and upon their receipt by the carrier for transportation, the contract of
carriage was deemed perfected; hence, Ganzons extraordinary responsibility for the loss,
destruction or deterioration of the goods commenced; pursuant to Art. 1736,
such extraordinary responsibility would cease only upon the delivery, actual orconstructive,
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
notimpair the said contract of transportation as the goods remained in the custody andcontrol of
the carrier, albeit still unloaded.
Ganzon has failed to show that the loss of the scraps was due to any of the causes enumerated
in Art. 1734; hence he is presumed to have been at fault or to have acted negligently; he could
have been 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, but he failed to do so.
Theory of caso fortuito not applicable

Ganzons defense was that the loss of the scraps was due to an order or act of competent public
authority
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 proof or intimidation as to completely overpower the will of the petitioners employees;
mere difficulty in the fulfillment of the obligation is not considered force majeure.

[G.R. No. 114061. August 3, 1994.]KOREAN AIRLINES CO., LTD. vs. COURT OF APPEALS
FACTS:
Juanito Lapuz, an automotive electrician, was contracted for employment in Jeddah,
Saudi Arabia. Lapuz was supposed to leave on November 8, 1980, via Korean Airlines. Initially, he
was "wait listed," which meant that he could only be accommodated if any of the confirmed passengers
failed to show up at the airport before departure. When two of such passengers did not appear, Lapuz
and another person by the name of Perico were given the two unclaimed seats. According to Lapuz,
he was allowed to check in with one suit case and one shoulder bag at the check-in counter of
KAL. He passed through the customs and immigration sections for routine check-up and was
cleared for departure. Together with the other passengers, he rode in the shuttle bus and
proceeded to the ramp of the KAL aircraft for boarding. However, when he was at the third or
fourth rung of the stairs, a KAL officer pointed to him and shouted "Down! Down!" He was thus
barred from taking the flight. When he later asked for another booking, his ticket was canceled
by KAL. Consequently, he was unable to report for his work in Saudi Arabia within the stipulated
2-week period and so lost his employment. KAL, on the other hand, alleged that on November 8,
1980, Pan Pacific Recruiting Services Inc. coordinated with KAL for the departure of 30 contract
workers, of whom only 21were confirmed and 9 were wait-listed passengers. The agent of Pan
Pacific, Jimmie Joseph, after being informed that there was a possibility of having one or two
seats becoming available, gave priority to Perico, who was one of the supervisors of the hiring
company in Saudi Arabia. The other seat was won through lottery by Lapuz. However, only one
seat became available and so, pursuant to the earlier agreement that Perico was to be given priority, he
alone was allowed to board .After trial, the Regional Trial Court of Manila, adjudged KAL liable for
damages. KAL appealed before the Court of Appeals.
ISSUE:
1. WON there was breach of contract of carriage.2.WON the CA abused its discretion in awarding
moral and exemplary damages in favor to Lapuz.
RULING:
1. CONTRACT OF CARRIAGE; BREACH THEREOF MANIFESTWHERE CONFIRMED PASSENGER WAS
NOT ALLOWED TOBOARD THE AIRLINE; CASE AT BAR.

The status of Lapuzas standby passenger was changed to that of a confirmed passenger when
his name was entered in the passenger manifest of KAL for its Flight No. KE 903. His clearance
through immigration and customs clearly shows that he had indeed been confirmed as a
passenger of KAL in that flight. KAL thus committed a breach of the contract of carriage between
them when it failed to bring Lapuz to his destination. The evidence presented by Lapuz shows

that he had indeed checked in at the departure counter, passed through customs and
immigration, boarded the shuttle bus and proceeded to the ramp of KAL's aircraft. In fact, his
baggage had already been loaded in KAL's aircraft, to be flown with him to Jeddah. The contract
to carriage between him and KAL had already been perfected when he was summarily and
insolently prevented from boarding theaircraft.2. PASSENGER; SUBJECTED TO DISCOURTEOUS
CONDUCTBY AIRLINE OFFICER ENTITLED THERETO: ENTITLED TOMORAL AND EXEMPLARY
DAMAGES

This Court has held that a contract to transport passengers is different in kind and degree
from any other contractual relation. The business of the carrier is mainly with the traveling
public. It invites people to avail themselves of the comforts and advantages it offers. The
contract of air carriage generates a relation attended with a public duty. Passengers have the
right to be treated by the carrier's employees with kindness, respect, courtesy and due
consideration. They are entitled to be protected against personal misconduct, injurious language,
indignities and abuses from such employees. So it is that any discourteous conduct on the part of
these employees toward a passenger gives the latter an action for damages against the
carrier. The breach of contract was aggravated in this case when, instead of courteously informing
Lapuz of his being a "wait-listed" passenger, a KAL officer rudely shouted "Down! Down!" while
pointing at him, thus causing him embarrassment and public humiliation. The Court of Appeals
granted moral and exemplary damages because the findings of the court a quo that the
defendant-appellant has committed breach of contract of carriage in bad faith and in wanton,
disregard of plaintiff-appellant's rights as passenger laid the basis and justification of an award
for moral damages. KAL acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner when it "bumped off" plaintiff-appellant and treated him rudely and arrogantly as a "patay
gutom na contract worker fighting Korean Air Lines," which clearly malice and bad faith, thus
entitling plaintiff-appellant to moral damages.
G.R. No. 95582 October 7, 1991
Lessons
Applicable:
Actionable
Document
(Transportation)
Laws Applicable: Art. 1733, Art. 1755
FACTS:
May 13, 1985: Theodore M. Lardizabal was driving a passenger bus belonging to
DangwaTransportation Co. Inc. (Dangwa)
The bus was at full stop bet. Bunkhouses 53 and 54 when Pedro alighted
Pedro Cudiamat fell from the platform of the bus when it suddenly accelerated forward
Pedro was ran over by the rear right tires of the vehicle
Theodore first brought his other passengers and cargo to their respective destinations before
bringing Pedro to Lepanto Hospital where he expired
Private respondents filed a complaint for damages against Dangwa for the death of Pedro
Cudiamat
Dangwa: observed and continued to observe the extraordinary diligence required in the
operation of the co. and the supervision of the employees even as they are not absolute
insurers of the public at large
RTC: in favour of Dangwa holding Pedrito as negligent and his negligence was the cause of his
death but still ordered to pay in equity P 10,000 to the heirs of Pedrito
CA: reversed and ordered to pay Pedrito indemnity, moral damages, actual and compensatory
damages and cost of the suit
ISSUE: W/N Dangwa should be held liable for the negligence of its driver Theodore

HELD: YES. CA affirmed.

A public utility once it stops, is in effect making a continuous offer to bus riders (EVEN when
moving as long as it is still slow in motion)
Duty of the driver: do NOT make acts that would have the effect of increasing peril to a
passenger while he is attempting to board the same
Premature acceleration of the bus in this case = breach of duty
Stepping and standing on the platform of the bus is already considered a passenger and is
entitled all the rights and protection pertaining to such a contractual relation
Duty extends to boarding and alighting
GR: By contract of carriage, the carrier assumes the express obligation to transport the
passenger to his destination safely and observe extraordinary diligence with a due regard for
all the circumstances, and any injury that might be suffered by the passenger is right away
attributable to the fault or negligence of the carrier
EX: carrier to prove that it has exercised extraordinary diligence as prescribed in Art. 1733
and 1755 of the Civil Code
Failure to immediately bring Pedrito to the hospital despite his serious condition = patent and
incontrovertible proof of their negligence
Hospital was in Bunk 56
1st proceeded to Bunk 70 to allow a passenger (who later called the family of Pedrito on his
own will) to alight and deliver a refrigerator
In tort, actual damages is based on net earnings
Pedro de Guzman v. Court of AppealsG.R. No. L-47822, December 22, 1988
PARTIES:
Pedro de Guzman, petitionerCourt of Appeals and Ernesto Cendana, respondents
BRIEF STATEMENT OF THE CASE:
Breach of the contract to carryExtraordinary diligence needed over common carriers
BRIEF STATEMENT OF THE FACTS:
Ernesto Cendana was engaged in buying up used bottles and scrap metal inPangasinan.
Upon gathering sufficient quantities of such scrap material, respondent would bring such
material to Manila for resale. He utilized (2) two six-wheeler trucks which he owned for the
purpose.
Upon
returning
to
Pangasinan,
he
would
load
hisvehicle with cargo belonging to different merchants to different establishments inPangasisnan
which respondents charged a freight fee for. Sometime in November 1970, herein petitioner
Pedro
de
Guzman,
a
merchant
and
dealer
of
General
Milk
CompanyInc. In Pangasinan contracted with respondent for hauling 750 cartons of milk.Unfortuna
tely,
only
150 cartons
made
it,
as the
other
600 cartons
were intercepted
byhijackers along Marcos Highway. Hence, petitioners commenced an action againstprivate
respondent. In his defense, respondent argued that he cannot be held liable due to force
majuere, and that he is not a common carrier and hence is not required to exercise extraordinary
diligence. On appeal before the Court of Appeals, Cendana urged that the trial court had erred in
considering him a common carrier; in finding that he had habitually offered trucking services to
the public; in not exempting him from liability on the ground of force majeure; and in ordering
him to pay damages and attorneys fees.

The Court of Appeals reversed the judgment of the trial court and held
thatCendana had been engaged in transporting return loads of freight as a casualoccupation
a sideline to his scrap iron business and not as a common carrier. De Guzman came to the
Supreme Court by way of a Petition for Review.
ISSUES:
1. Is respondent a common carrier?
2. Is the respondent liable for the loss of the cartons of milk due to force majeure?
ARGUMENTS:
1. Herein respondent is considered as a common carrier. Article 1732 of the New Civil Code
avoids any distinction between one whose principal business activity is the carrying of persons or
goods or both and one who does such carrying only as an ancillary activity. It also avoids a
distinction
between
a
person
orenterprise offering transportation services on a regular or scheduled basis and oneoffering
such services on an occasional, episodic, and unscheduled basis.
2. Respondent is not liable for the value of the undelivered merchandise.
Article 1734 of the Civil Code- The general rule is established by the
a r t i c l e t h a t 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.
Applying the above article, we note firstly that the specific cause alleged in the instant c a s e
t h e h i j a c k i n g o f t h e c a r r i e r ' s t r u c k d o e s n o t f a l l w i t h i n a n y o f t h e fi v e
( 5 ) categories of exempting causes listed in Article 1734. It would follow; therefore, that the
hijacking of the carrier's vehicle must be dealt with under the provisions of Article 1735,in other
words, the private respondent as common carrier is presumed to have been at fault or to have
acted negligently. This presumption, however, may be overthrown by proof of
extraordinary diligence on the part of private respondent.
Article 1745: Any of the following or similar stipulations shall be consideredunreasonable, unjust
and contrary to public policy:
xx xxx xxx(5) that the common carrier shall not be responsible for the acts or omissions 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; and(7) that the common carrier shall
not responsible for the loss, destruction or deterioration of goods on account of the defective
condition
of
the
car
vehicle,
ship,
airplane
or
otherequipment used in the contract of carriage. (Emphasissupplied)Under Article 1745 (6)
above, a common carrier is held responsible and will not be allowed to divest or to diminish
such responsibility even for acts of strangers like thieves or robbers, except where such
thieves or robbers in fact acted "with grave or irresistible threat, violence or force." We believe
and so hold that the limits of the duty of extraordinary diligence in the vigilance over the goods
carried are reached where the goods are lost as a result of a robbery which is attended by "grave
or irresistible threat, violence or force." The decision of the trial court shows that the armed men
who held up the second truck owned by private respondent acted with grave, if not irresistible,
threat, violence or force, which is an exception of the general rule of Article 1745 (6).
RULING:
The Petition for Review on certiorari is hereby DENIED and the Decision of the Court of Appeals
dated 3 August 1977 is AFFIRMED. The occurrence of the loss must reasonably be regarded as
quite beyond the control of the common carrier and properly regarded as a fortuitous event. It is
necessary to recall that even common carriers are not made absolute insurers against all risks of

travel and of transport of goods, and are not held liable for acts or events which cannot be
foreseen or are inevitable, provided that they shall have complied with the rigorous standard of
extraordinary
diligence.
We,
therefore, agree with the
result reached by the
Court of Appeals that private respondent Cendana is not liable for the value of the undelivered
merchandise which was lost because of an event entirely beyond private respondent's control.

NATIONAL STEEL CORPORATION vs. CA and VLASONS SHIPPING, INC.

[G.R. No. 112287. December 12, 1997]
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
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 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 ship owner, 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.
Estrelita Bascos v. CA and Rodolfo Cipriano
G.R. No. 101089 April 7, 1993
Campos, Jr., J.
FACTS:
Cipriano, representing Cipriano Trading Enterprise (CIPTRADE) entered into a haulingcontract
with Jibfair Shipping Agency Corporation whereby the former bound itself to haul the latters
2,000 m/tons of soya bean meal from Magallanes Drive, Del Pan, Manila to the warehouse
of Purefoods Corporation in Calamba,
Laguna.
To carry out its obligation,
CIPTRADE
subcontracted with Bascos to transport and to deliver 400 sacks of soya bean meal worth
P156,404.00 from the Manila Port Area to Calamba, Laguna at the rate of P50.00 per metric ton.
Petitioner failed to deliver the said cargo. As a consequence of that failure, Cipriano paid Jibfair

Shipping Agency the amount of the lost goods in accordance with the contract which stated
that: CIPTRADE shall be held liable and answerable for any loss in bags due to theft, hijacking
and non-delivery or damages to the cargo during transport at market value.
Cipriano filed a complaint for a sum of money and damages with writ of preliminary attachment
for breach of a contract of carriage
Bascos answer to the complaint: truck carrying the cargo was hijacked along Canonigo St., Paco,
Manila; that hijacking, being a force majeure, exculpated her from any liability to CIPTRADE; and
that the contract they entered into was a mere lease of the truck
ISSUES:
1. was p e ti ti on e r a common carri e r?; 2. was th e hi j ack i ng re f e rre d to a f orce
majeure?
HELD:
1. Yes. See Art. 1732. (the article makes no distinction between onewhose
principal
business
activity
is
the
carrying
of
persons
or
goods
or
both,
and
one
who
does such carrying only as an ancillary activity; no distinction between a person orenterprise
offering transportation service on a regular or scheduled basis and one offering such service
on an occasional, episodic or unscheduled basis; no distinction between a carrier offering its
services to the general public and one who offers services or solicits business only from a narrow
segment of the general population) 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 Basco herself has made the admission that she was in the trucking business
under the name of A.M. Bascos Trucking, offering her trucks to those with cargo to move (hence
she is a common carrier) their contract was not one of lease: a contract is what the law defines it
to be and not what it is called by the contracting parties; furthermore, petitioner presented no
other proof of the existence of the contract of lease
2. Yes. Common carriers are obliged to observe extraordinary diligence in the vigilance over the
goods transported by them; they are presumed to have been at fault or to have acted
negligently if the goods are lost, destroyed or deteriorated; in those cases where the
presumption of negligence is applied, the common carrier must prove that it exercised
extraordinary diligence in order to overcome the presumption. In this case, hijacking, not being
included in the provisions of Article 1734, must be dealt with under the provisions of Article 1735
and
thus,
the
common
carrier
is
presumed
tohave been at fault or negligent. To exculpate the carrier from liability arising from hijacking, he
must prove that the robbers or the hijackers acted with grave or irresistible threat, violence, or
force. This is in accordance with Article 1745 of the Civil Code which provides: Any of the
following or similar stipulations shall be considered unreasonable, unjust and contrary to public
policy: x x x (6) That the common carriers 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. Under Article 1745 (6) above, a common carrier is held responsible and will
not
be
allowed to divest
or to diminish such responsibility even for acts of strangers likethieves or robbers except
where such thieves or robbers in fact acted with grave orirresistible threat, violence or force. We
believe and so hold that the limits of the duty of extraordinary diligence in the vigilance over the
goods carried are reached where the goods are lost as a result of a robbery which is attended by
grave or irresistible threat, violence or force.
G.R. No. 186312 June 29, 2010SPOUSES DANTE CRUZ and LEONORA CRUZ,
Petitioners,vs.
SUN HOLIDAYS, INC.,
Respondent.

Facts:
Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on January 25,2001 against
Sun Holidays, Inc. (respondent) with the Regional Trial Court (RTC) of Pasig City for damages
arising from the death of their son Ruelito C. Cruz (Ruelito) who perished with his wife on
September 11, 2000 on board the boat M/B Coco Beach III that capsized en route to Batangas
from Puerto Galera, Oriental Mindoro where the couple had stayed at Coco Beach Island Resort
(Resort) owned and operated by respondent. On September 11, 2000, as it was still windy,
Matute and 25 other Resort guests including petitioners son and his wife trekked to the other
side of the Coco Beach Mountain that was sheltered from the wind where they boarded M/B
Coco Beach III, which was to ferry them to Batangas. Shortly after the boat sailed, it started to
rain. As it moved farther away from Puerto Galera and into the open seas, the rain and wind got
stronger, causing the boat to tilt from side to side and the captain to step forward to the front,
leaving the wheel to one of the crew members. The waves got more unwieldy.
After
getting
hit
by
two
big
waves
which
came
one
after the other, M/B Coco Beach III capsized putting all passengers underwater. The passengers,
who had put on their life jackets, struggled to get out of the boat. Upon seeing the captain,
Matute and the other passengers who reached the surface asked him what they could do to save
the people who were still trapped under the boat. The captain replied "Iligtas niyo na lang ang
sarili niyo" (Just save yourselves).Help came after about 45 minutes when two boats owned by
Asia Divers in Sabang, Puerto Galera passed by the capsized M/B Coco Beach III. Boarded on
those two boats were22 persons, consisting of 18 passengers and four crew members, who were
brought to Pisa Island. Eight passengers, including petitioners son and his wife, died during the
incident.
Issue: Whether or not respondent is a common carrier.
Held: The Civil Code defines "common carriers" in the following terms: Article 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 airfor compensation, offering their
services to the public.
The above article makes no distinction between one whose principalbusiness activity is the carryi
ng of persons or goods or both, and one who does suchcarrying only as an ancillary activity (in lo
cal idiom, as "a sideline"). Article 1732 alsocarefully avoids making any distinction between a per
son or enterprise offeringtransportation
service on a regular or scheduled basis and one offering such service onan occasional, episodic
or unscheduled basis.
Neither
does
Article
1732
distinguish
betweena carrier offering its services to the "general public," i.e., the general community or
population, and one who offers services or solicits business only from a narrow segment of the
general population. We think that Article 1733 deliberately refrained from making such
distinctions. Indeed, respondent is a common carrier. Its ferry services are so intertwined with its
main business as to be properly considered ancillary thereto. The constancy of respondents ferry
services in its resort operations is underscored by its having its own Coco Beach boats.
And the tour packages it offers, which include the ferry services, may be availed of by anyone
who can afford to pay the same. These services are thus available to the public. That respondent
does not charge a separate fee or fare for its ferry services is of no moment. It would be
imprudent
to suppose
that
it
provides
said
services
at
a
loss.
The
Courtis aware of the practice of beach resort operators offering tour packages to factor thetransp
ortation fee in arriving at the tour package price. That guests who opt not to avail
of respondents ferry services pay the same amount is likewise inconsequential. These guests
may only be deemed to have overpaid.

Asia Lighterage and Shipping Inc. v. CA Gr, No. 147246, August 19, 2003
FACTS:
Petitioner was contracted as carrier by a corporation from Portland, Oregon to deliver a cargo to
the consignee's warehouse at Pasig City. The cargo, however, never reached the consignee as
the barge that carried the cargo sank completely, resulting in damage to the cargo. Private
respondent, as insurer, indemnified the consignee for the lost cargo and thus, as subrogee,
sought recovery from petitioner. Both the trial court and the appellate court ruled in favor of
private respondent. The Court ruled in favor of private respondent. Whether or not petitioner is a
common carrier, the Court ruled in the affirmative. The principal business of petitioner is that of
lighterage and drayage, offering its barges to the public, although for limited clientele, for
carrying or transporting goods by water for compensation. Whether or not petitioner failed to
exercise extraordinary diligence in its care and custody of the consignee's goods, the Court also
ruled in the affirmative. The barge completely sank after its towing bits broke, resulting in the
loss of the cargo. Petitioner failed to prove that the typhoon was the proximate and only cause of
the loss and that it has exercised due diligence before, during and after the occurrence.
ISSUE: Whether or Not the petitioner is a common carrier.
RULING: YES. Petitioner is a common carrier whether its carrying of goods is done on an
irregular rather than scheduled manner, and with an only limited clientele. A common carrier
need not have fixed and publicly known routes. Neither does it have to maintain terminals or
issue tickets. To be sure, petitioner fits the test of a common carrier as laid down in Bascos vs.
Court of Appeals. The test to determine a common carrier is "whether the given undertaking is a
part of the business engaged in by the carrier which he has held out to the general public as his
occupation rather than the quantity or extent of the business transacted." In the case at bar, the
petitioner admitted that it is engaged in the business of shipping and lighterage, offering its
barges to the public, despite its limited clientele for carrying or transporting goods by water for
compensation. 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. Petitioner
contends that it is not a common carrier but a private carrier. Allegedly, it has no fixed and
publicly known route, maintains no terminals, and issues no tickets. It points out that it is not
obliged to carry indiscriminately for any person. It is not bound to carry goods unless it consents.
In short, it does not hold out its services to the general public. In De Guzman vs. Court of
Appeals, we held that the definition of common carriers in Article 1732 of the Civil Code makes
no distinction between one whose principal business activity is the carrying of persons or goods
or both, and one who does such carrying only as an ancillary activity. We also did not distinguish
between a person or enterprise offering transportation service on a regular or scheduled basis
and one offering such service on an occasional, episodic or unscheduled basis. Further, we ruled
that Article 1732 does not distinguish between a carrier offering its services to the general
public, and one who offers services or solicits business only from a narrow segment of the
general population. Common carriers are bound to observe extraordinary diligence in the
vigilance over the goods transported by them. They are presumed to have been at fault or to
have acted negligently if the goods are lost, destroyed or deteriorated. To overcome the
presumption of negligence in the case of loss, destruction or deterioration of the goods,
deterioration of the goods, the common carrier must prove that it exercised extraordinary
diligence. There are, however, exceptions to this rule. Article 1734 of the Civil Code enumerates
the instances when the presumption of negligence does not attach: Art. 1734. Common carriers
are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to
any of the following causes only: (1) Flood, storm, earthquake, lightning, or other natural disaster
or calamity; (2) Act of the public enemy in war, whether international or civil; (3) Act or omission
of the shipper or owner of the goods; (4) The character of the goods or defects in the packing or
in the containers; (5) Order or act of competent public authority. In the case at bar, the barge
completely sank after its towing bits broke, resulting in the total loss of its cargo. Petitioner

claims that this was caused by a typhoon, hence, it should not be held liable for the loss of the
cargo. However, petitioner failed to prove that the typhoon is the proximate and only cause of
the loss of the goods, and that it has exercised due diligence before, during and after the
occurrence of the typhoon to prevent or minimize the loss. The evidence show that, even before
the towing bits of the barge broke, it had already previously sustained damage when it hit a
sunken object while docked at the Engineering Island. It even suffered a hole. Clearly, this could
not be solely attributed to the typhoon. The partly-submerged vessel was refloated but its hole
was patched with only clay and cement. The patch work was merely a provisional remedy, not
enough for the barge to sail safely. Thus, when petitioner persisted to proceed with the voyage, it
recklessly exposed the cargo to further damage.
Mr. and Mrs. Engracio Fabre, Jr. and Porfirio Cabil v. CA, The Word for the World
Christian Fellowship, Inc., Amyline Antonio, etc.
G.R. No. 111127 July 26, 1996
Mendoza, J.
FACTS:
Engracio Fabre, Jr. and his wife 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;
they had a driver, Porfirio Cabil, whom they hired in 1981, after trying him out for two weeks; his
job was to take school children to and from the St. Scholasticas College in Malate, Manila Word
for the World Christian Fellowship Inc. arranged with Fabres for the transportation of 33 members
of its Young Adults Ministry from Manila to La Union and back usual route to Caba, La Union was
through Carmen, Pangasinan; however, the bridge at Carmen was under repair, so that petitioner
Cabil, who was unfamiliar with the area (it being his first trip to La Union), was forced to take a
detour through the town of Baay in Lingayen, Pangasinan; Cabil came upon a sharp curve on the
highway, running on a south to east direction, which he described as siete; the road was
slippery because it was raining, causing the bus, which was running at the speed of 50 kph, 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 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; Amyline Antonio was
thrown on the floor of the bus and pinned down by a wooden seat which came down by a
wooden seat which came off after being unscrewed; she is now suffering from paraplegia (total
inability to move both legs and usually the lower part of the trunk, often as a result of disease or
injury of the spine)and is permanently paralyzed from the waist down Cabils answer: he did not
see the curve until it was too late; he was not familiar with the area and he could not have seen
the curve despite the care he took in driving the bus, because it was dark and there was no sign
on the road; he saw the curve when he was already within 15 to 30 meters of it; he allegedly
slowed down to 30 kilometers per hour, but it was too late
ISSUES:
1. WON petitioners (a. Cabil; b. employers Fabres) were negligent;
2. WONpetitioners were liable for the injuries suffered by private respondents
HELD:
1. On Cabils negligence: On the night of the accident, it was raining, and as a consequence, the
road was slippery, and it was dark. Cabil drove his bus at the speed of 50kilometers per hour and
only slowed down when he noticed the curve some 15 to 30 meters ahead. By then it was too
late for him to avoid falling off the road. Given the conditions of the road and considering that
the trip was Cabils first one outside of Manila

G.R. No.148496
March 19, 2002
Lessons Applicable: Legal Effect (Transportation)
FACTS:
At the time material to this case, Transorient Container Terminal Services, Inc. (TCTSI)owned
by Virgines Calvo entered into a contract with San Miguel Corporation (SMC) for the transfer of
114 reels of semi-chemical fluting paper and 124 reels of kraft liner board from the Port Area
in Manila to SMC's warehouse at the Tabacalera Compound, Romualdez St., Ermita, Manila.
The cargo was insured by respondent UCPB General Insurance Co., Inc.
July 14, 1990: arrived in Manila on board "M/V Hayakawa Maru" and later on unloaded from the
vessel to the custody of the arrastre operator, Manila Port Services, Inc.
July 23 to July 25, 1990: Calvo withdrew the cargo from the arrastre operator and delivered it to
SMC's warehouse in Ermita, Manila.
July 25, 1990: goods were inspected by Marine Cargo Surveyors, who found that 15 reels of the
semi-chemical fluting paper were "wet/stained/torn" and 3 reels of kraft liner board were likewise
torn.
SMC collected payment from UCPB the total damage of P93,112 under its insurance contract
UCPB brought suit against Calvo as subrogee of SMC
Calvo: Art. 1734(4) The character of the goods or defects in the packing or in the containers
spoilage or wettage" took place while the goods were in the custody of either the carrying vessel
"M/V Hayakawa Maru," which transported the cargo to Manila, or the arrastre operator, to whom
the goods were unloaded and who allegedly kept them in open air for 9 days notwithstanding the
fact that some of the containers were deformed, cracked, or otherwise damaged
Trial Court: Calvo liable
CA: affirmed
ISSUE: W/N Calvo can be exempted from liability under Art. 1734(4)
HELD: NO. CA AFFIRMED.

mere proof of delivery of goods in good order to a carrier, and of their arrival at the place of
destination in bad order, makes out a prima facie case against the carrier, so that if no
explanation is given as to how the injury occurred, the carrier must be held responsible.
Extraordinary responsibility 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 the right to receive the
same
Article 1732. Common carriers are persons, corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods or both, by land, water, or air for
compensation, offering their services to the public."
The above article makes no distinction between one whose principal business activity is the
carrying of persons or goods or both, and one who does such carrying only as
an ancillary activity . . . Article 1732 also carefully avoids making any distinction between a
person or enterprise offering transportation service on a regular or scheduled basis and one
offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the "general public," i.e.,
the general community or population, and one who offers services or solicits business only from
a narrow segment of the general population.
Concept of "common carrier" under Article 1732 may be seen to coincide neatly with the notion
of "public service," under the Public Service Act (Commonwealth Act No. 1416, as amended)
which at least partially supplements the law on common carriers set forth in the Civil Code
Under Section 13, paragraph (b) of the Public Service Act, "public service" includes:
" x x x every person that now or hereafter may own, operate, manage, 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, any common
carrier, railroad, street railway, traction railway, subway motor vehicle, either for freight or
passenger, or both, with or without fixed route and whatever may be its classification, freight
or carrier service of any class, express service, steamboat, or steamship line, pontines, ferries
and water craft, engaged in the transportation of passengers or freight or both, shipyard,
marine repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system,
gas, electric light, heat and power, water supply and power petroleum, sewerage system,
wire or wireless communications systems, wire or wireless broadcasting stations and other
similar public services. x x x"
When Calvo's employees withdrew the cargo from the arrastre operator, they did so without
exception or protest either with regard to the condition of container vans or their contents
Calvo must do more than merely show the possibility that some other party could be responsible
for the damage. It must prove that it used "all reasonable means to ascertain the nature and
characteristic of goods tendered for transport and that it exercised due care in the handling

G.R. No. 149038

April 9, 2003
Lessons Applicable: Charter Party (Transportation)
FACTS:
Davao Union Marketing Corporation (DUMC) contracted the services of PKS Shipping Company
(PKS Shipping) for the shipment to Tacloban City of 75,000bags of cement worth P3,375,000.
DUMC insured the goods for its full value with Philippine American General Insurance Company
(Philamgen).
The goods were loaded aboard the dumb barge Limar I belonging to PKS Shipping.
December 22, 1988 9 pm: While Limar I was being towed by PKS tugboat MT Iron Eagle, the
barge sank a couple of miles off the coast of Dumagasa Point, in Zamboanga del Sur, bringing
down with it the entire cargo of 75,000 bags of cement.
DUMC filed a formal claim with Philamgen for the full amount of the insurance. Philamgen
promptly made payment; it then sought reimbursement from PKS Shipping of the sum paid to
DUMC but the shipping company refused to pay so Philamgen to file suit against PKS Shipping
RTC: dismissed the complaint - fortuitous event
CA: Affirmed - not a common carrier but a casual occupation
ISSUE: W/N PKS Shipping is NOT liable since it was NOT a common carrier

HELD: NO. Petition is DENIED

Article 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
Complementary is Section 13, paragraph (b), of the Public Service Act public service" to be
"x x x every person that now or hereafter may own, operate, manage, 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, any common carrier, railroad,
street railway, subway motor vehicle, either for freight or passenger, or both, with or without
fixed route and whatever may be its classification, freight or carrier service of any class, express
service, steamboat, or steamship, or steamship line, pontines, ferries and water craft, engaged in
the transportation of passengers or freight or both, shipyard, marine repair shop, wharf or dock,
ice plant, ice refrigeration plant, canal, irrigation system, gas, electric light, heat and power,
water supply and power petroleum, sewerage system, wire or wireless communication systems,
wire or wireless broadcasting stations and other similar public services
So understood, the concept of `common carrier under Article 1732 may be seen to coincide
neatly with the notion of `public service, under the Public Service Act
Distinction between: common or public carrier
private or special carrier - character of the business, such that if the undertaking is an isolated
transaction , not a part of the business or occupation, and the carrier does not hold itself out to
carry the goods for the general public or to a limited clientele, although involving the carriage of
goods for a fee
EX: charter party which includes both the vessel and its crew, such as in a bareboat or demise,
where the charterer obtains the use and service of all or some part of a ship for a period of time
or a voyage or voyages and gets the control of the vessel and its crew.
The regularity of its activities in this area indicates more than just a casual activity on its part
The appellate court ruled, gathered from the testimonies and sworn marine protests of the
respective vessel masters ofLimar I and MT Iron Eagle, that there was no way by which the
barges or the tugboats crew could have prevented the sinking of Limar I. The vessel was
suddenly tossed by waves of extraordinary height of 6 to 8 feet and buffeted by strong winds of
1.5 knots resulting in the entry of water into the barges hatches. The official Certificate of
Inspection of the barge issued by the Philippine Coastguard and the Coastwise Load Line
Certificate would attest to the seaworthiness of Limar I and should strengthen the factual
findings of the appellate court.

Findings of fact of the Court of Appeals generally conclude this Court; none of the recognized
exceptions from the rule - (1) when the factual findings of theCourt of Appeals and the trial
court are contradictory; (2) when the conclusion is a finding grounded entirely on speculation,
surmises, or conjectures; (3) when the inference made by the Court of Appeals from its findings
of fact is manifestly mistaken, absurd, or impossible; (4) when there is a grave abuse of
discretion in the appreciation of facts; (5) when the appellate court, in making its findings, went
beyond the issues of the case and such findings are contrary to the admissions of both appellant
and appellee; (6) when the judgment of the Court of Appeals is premised on a misapprehension
of facts; (7) when the Court of Appeals failed to notice certain relevant facts which, if properly
considered, would justify a different conclusion; (8) when the findings of fact are themselves
conflicting; (9) when the findings of fact are conclusions without citation of the specific evidence
on which they are based; and (10) when the findings of fact of the Court of Appeals are premised
on the absence of evidence but such findings are contradicted by the evidence on record would
appear to be clearly extant in this instance.

131166 September 30, 1999

Lessons Applicable: Charter Party (Transportation)
FACTS:
December 19, 1987 8 pm: motor tanker MT Vector owned and operated by Vector Shipping
Corporation carried 8,800 barrels of petroleum products of Caltex by virtue of a charter contract
December 20, 1987 6:30 am: MV Doa Paz passenger and cargo vessel owned and operated by
Sulpicio Lines, Inc. left the port of Tacloban headed for Manila with 1,493 passengers indicated in
the Coast Guard Clear
December 20, 1987: MT Vector collided with MV Doa Paz in the open sea within the vicinity of
Dumali Point between Marinduque and Oriental Mindoro, killing almost all the passengers and
crew members of both ships except for 24 survivors

MV Doa Paz carried an estimated 4,000 passengers most were not in the passenger manifest
board of marine inquiry in BMI Case No. 653-87 after investigation found that the MT Vector, its
registered operator Francisco Soriano, and its owner and actual operator Vector Shipping
Corporation, were at fault and responsible for its collision with MV Doa Paz
February 13, 1989: Teresita Caezal and Sotera E. Caezal, Sebastian Caezals wife and mother
respectively, filed a complaint for Damages Arising from Breach of Contract of Carriage against
Sulpicio Lines, Inc. for the death of Sebastian E. Caezal (public school teacher 47 years old) and
his 11-year old daughter Corazon G. Caezal
Sulpicio, in turn, filed a 3rd party complaint against Francisco Soriano, VectorShipping
Corporation and Caltex
Sulpicio alleged that Caltex chartered MT Vector with gross and evident bad faith knowing fully
well that MT Vector was improperly manned, ill-equipped, and unseaworthy and a hazard to safe
navigation
RTC: dismissed the third party complaint and favored the Caezal's against Sulpicio Lines
CA: included Caltex as liable party
ISSUE: W/N Caltex as a voyage charterer of a sea vessel liable for damages resulting from a
collision between the chartered vessel and a passenger ship
HELD: NO. Grants Petition. CA set aside.
Respective rights and duties of a shipper and the carrier depends not on whether the carrier is
public or private, but on whether the contract of carriage:
bill of lading or equivalent shipping documents; or
charter party or similar contract on the other
Caltex and Vector entered into a contract of affreightment, also known as a voyage charter
charter party
contract by which an entire ship, or some principal part thereof, is let by the owner to another
person for a specified time or use
Charter parties fall into three main categories:
(1) Demise or bareboat charterer mans the vessel with his own people and becomes, in
effect, the owner for the voyage or service stipulated, subject to liability for damages caused
by negligence common carrier becomes private
contract of affreightment one 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 may be either:
(2)time charter - wherein the leased vessel is leased to the charterer for a fixed period of
time
(3) voyage charter - wherein the ship is leased for a single voyage

charter-party provides for the hire of the vessel only, either for a determinate period of time
or for a single or consecutive voyage, the ship owner to supply the ships store, pay for the
wages of the master of the crew, and defray the expenses for the maintenance of the ship
charterer is free from liability to third persons in respect of the ship does not convert the
common carrier into a private carrier
Carriage of Goods by Sea Act :
Sec. 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;
xxx
xxx
xxx
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
sufficient number of competent officers and crew. The failure of a common carrier to
maintain in seaworthy condition the vessel involved in its contract of carriage is a clear
breach of its duty prescribed in Article 1755 of the Civil Code a passenger or a shipper of
goods is under no obligation to conduct an inspection of the ship and its crew, the carrier
being obliged by law to impliedly warrant its seaworthiness nature of the obligation of Caltex
demands ordinary diligence like any other shipper in shipping his cargoes Caltex and
Vector Shipping Corporation had been doing business since 1985, or for about two years
before the tragic incident occurred in 1987. Past services rendered showed no reason for
Caltex to observe a higher degree of diligence.
Caltex had the right to presume that the ship was seaworthy as even the Philippine Coast
Guard itself was convinced of its seaworthiness

Loadstar v Pioneer G.R. No. 157481 January 24, 2006 J. Quisimbing

Facts:
Petitioner Loadstar Shipping is the registered owner and operator of the vessel M/V Weasel. On
June
6,
1984,
it
entered
into
a
voyage-charter
with
Northern
Mindanao Transport Company, Inc. for the carriage of 65,000 bags of cement

from Iligan City to Manila. The shipper was Iligan Cement Corporation, while the consignee in
Manila was Market Developers, Inc.67, 500 bags of cement were loaded on board M/V Weasel
and stowed in the cargo holds for delivery to the consignee. Prior to the voyage, the consignee
insured the shipment of cement with respondent Pioneer Asia Insurance Corporation for P1,
400,000, for which there was a marine policy issued. The vessel ran aground. Consequently, the
entire shipment of cement was good as gone due to exposure to sea water. Petitioner thus failed
to deliver the goods to the consignee in Manila. The consignee demanded from petitioner
full reimbursement
of
the cost
of the
lost
shipment.
Petitioner refused to reimburse despite repeated demands. The
insurance company paid the consignee P1, 400,000 plus an additional amountofP500, 000, the
value of the lost shipment of cement. In return, the consignee executed a Loss and Subrogation
Receipt in favor of respondent concerning the latters subrogation rights against petitioner.
Respondent filed a complaint against petitioner in the trial court for the recovery of the sum it
paid. The trial court ruled in favor of the insurance company. Petitioners defense of force
majeure was found bereft of factual basis. The RTC called attention to the PAG-ASA report that at
the time of the incident, tropical storm Asiang had moved away from the Philippines.
Further,
records
showed
that
the sea and weather conditions in the area of Hinubaan, Negros Occidentalfrom 8:00 p.m. of June
24, 1984 to 8:00 a.m. the next day were slight and smooth.
Thus, the trial court concluded that the cause of the loss was not tropical storm Asiang or any
other
force
majeure,
but gross
negligence
of
petitioner.
Petitioner appealed to the Court of Appeals.
It affirmed the RTC Decision with modification that Loadstar shall only pay the sum of 10% of the
total claim for attorneys fees and litigation expenses. Hence this petition.
Issue: 1. WON petitioner is a common or a private carrier?
2. In either case, did petitioner exercise the required diligence: the extraordinary diligence
of a common carrier or the ordinary diligence of a private carrier?
Held: common carrier, No. Petition denied.
Ratio: Petitioner is a corporation engaged in the business of transporting cargo by water and
for compensation, offering its services indiscriminately to the public. Thus, without doubt, it is
a common
carrier. The
voyage-charter
agreement
between
petitioner and Northern Mindanao Transport Company, Inc. did not in any way
convert
the
common carrier into a private carrier. Conformably, petitioner remains a common carrier
notwithstanding the existence of the charter agreement with the Northern Mindanao Transport
Company, Inc. since the said charter is limited to the ship only and does not involve both the
vessel and its crew. As elucidated in Planters Products, this charter is only a voyage-charter, not
a bareboat charter. It is only when the charter includes both the vessel and its crew, as in
a bareboat or demise that a common carrier becomes private, at least insofar as the particular
voyage covering the charter-party is concerned. Indubitably, a ship owner in a time or voyage
charter retains possession and control of the ship, although her holds may, for the moment, be
the property of the charterer. As a common carrier, petitioner is required to observe
extraordinary diligence in the vigilance over the goods it transports. When the goods placed in its
care are lost, petitioner is presumed to have been at fault or to have acted negligently. Petitioner
therefore has the burden of proving that it observed extraordinary diligence in order to avoid
responsibility
for
the lost
cargo.
Article 1734 enumerates the instances when a carrier might be exempt fromliability for the loss
of the goods. These are : ( 1) Flood, storm, earthquake, lightning, or other natural disaster or
calamity Petitioner claims that the loss of the goods was due to a fortuitous event under
paragraph 1. Yet, its claim is not substantiated. On the contrary, there was evidence that the loss
of the entire shipment of cement was due to the gross negligence of petitioner. Records show

that in the evening of June 24, 1984, the sea and weather conditions in the vicinity of Negros
Occidental were calm. The records reveal that petitioner took a shortcut route, instead of the
usual route, which exposed the voyage to unexpected hazard. Petitioner has only itself to blame
for its misjudgment.