Hi Transportation Class,

Kindly, read and understand the following cases:

FGU Insurance Corp. v. GP Sarmiento Trucking Corp August 6, 2002

Planters Products Inc v. CA, G.R No. September 15, 1993
Crisostomo v. CA G.R No. 138334, August 25, 2003

Mindanao Terminal and Brokerage Services v. Phoenix Assurance Company of

NYC/MCgee, May 8 2009

Also read: New Civil Code

Art. 1734, 1735, 1745, no. 5, 6, and 7, 1755 and 1756.

Sps. Cruz v. Sun Holidays, Inc., GR No. 186312 June 29, 2010
National Trucking And Forwarding Corp.v. Lorenzo Shipping Corp. GR no. 153563
Feb 7, 2005
Gatchalian v. Delim GR No.. L56487 October 21, 1991

PRESUMPTION OF NEGLIGENCE:

Coastwise Lighterage Corp. v. CA

Regional Container Lines of Singapore and EDSA Shipping Agency v. The
Netherlands Insurance Co. September 4, 2009
Calalas v. CA May 31, 2000
Sy v. Malate Taxi Cab & Garage, Inc., GR No. L8937 November 29, 1957
Roque v. Buan, October 31, 1967

Common Carrier not insurer of all risk

Pilapil v. CA, GR No. 52159 December 22, 1989

HOW to overturned:

National Trucking and Forwarding Corporation v. Lorenzo Shipping Corporation v.

Lorenzo Shipping Corp Feb 7, 2005
Belgian Overseas Charter and Shipping NV and Jardine Davies Transport v. Phil First
Insurance Co., GR No. 143133 June 5, 2002

LIABILITIES OF COMMON CARRIER:

Central Shipping Comp v. Insurance Company of North America GR No. 150751

September 20, 2004
Read also codal provisions in the NCC on quasi delict
FGU INSURANCE CORPORATION vs. G.P.S TRUCKING CORPORATION and LAMBERT
M. EROLES
G.R.No. 141910 06August2002

FACTS OF THE CASE:

G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver on 18 June 1994
thirty (30) units of Condura S.D. white refrigerators aboard one of its Isuzu truck,
driven by Lambert Eroles. While the truck was traversing the north diversion road
along McArthur highway in Barangay Anupol, Bamban, Tarlac, it collided with an
unidentified truck, causing it to fall into a deep canal, resulting in damage to the
cargoes.
FGU Insurance Corporation (FGU), an insurer of the shipment, paid to Concepcion
Industries, Inc., the value of the covered cargoes: P204, 450.00. FGU, in turn, being
the subrogee of the rights and interests of the insured sought reimbursement of
the amount, from GPS. Since GPS failed to heed the claim, FGU filed a complaint
for damages and breach of contract of carriage against GPS and its driver with the
Regional Trial Court, Branch 66, of Makati City. In its answer, respondents asserted
that GPS was the exclusive hauler only of Concepcion Industries, Inc., since 1988,
and it was not so engaged in business as a common carrier. Respondents further
claimed that the cause of damage was purely accidental. GPS, instead of
submitting its evidence, filed with leave of court a motion to dismiss the complaint
by way of demurrer to evidence on the ground that petitioner had failed to prove
that it was a common carrier. The RTC and CA both ruled in favor of the
Respondent.

ISSUES OF THE CASE:

WHETHER RESPONDENT GPS, EITHER AS A COMMON CARRIER OR A PRIVATE

CARRIER, MAY BE PRESUMED TO HAVE BEEN NEGLIGENT WHEN THE GOODS IT
UNDERTOOK TO TRANSPORT SAFELY WERE SUBSEQUENTLY DAMAGED WHILE IN
ITS PROTECTIVE CUSTODY AND POSSESSION.

- In culpa contractual, upon which the action of petitioner rests as being the
subrogee of Concepcion Industries, Inc., the mere proof of the existence of the
contract and the failure of its compliance justify, prima facie, a corresponding right
of relief. Thus, FGU has a claim for the amount paid out.
- The law, recognizing the obligatory force of contracts, will not permit a party to
be set free from liability for any kind of misperformance of the contractual
undertaking or a contravention of the tenor thereof
- GPS recognizes the existence of a contract of carriage between it and petitioner’s
assured, and admits that the cargoes it has assumed to deliver have been lost or
damaged while in its custody. In such a situation, a default on, or failure of
compliance with, the obligation in this case, the delivery of the goods in its custody
to the place of destination - gives rise to a presumption of lack of care and
corresponding liability on the part of the contractual obligor the burden being on
him to establish otherwise. GPS has failed to do so.

HELD:
The decision of the lower courts insofar as Lambert M. Eroles is concerned is
affirmed but assailed decision with regard to GPS trucking is reversed. It, is hereby
ordered to pay FGU Insurance Corporation the value of the damaged and lost
cargoes in the amount of P204, 450.00

Obligations and Contracts Terms:

• expectation interest- the interest in having the benefit of his bargain by being put
in as good a position as he would have been in had the contract been performed
• reliance interest- the interest in being reimbursed for loss caused by reliance on
the contract by being put in as good a position as he would have been in had the
contract not been made
• Restitution interest- which is his interest in having restored to him any benefit
that he has conferred on the other party.
• Subrogee- the person or entity that assumes the legal right to attempt to collect
a claim of another (subrogor) in return for paying the other's expenses or debts
which the other claims against a third party. A subrogee is usually the insurance
company which has insured the party whose expenses were paid.
PLANTERS PRODUCTS vs. CA

FACTS
Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation
(MITSUBISHI) of New York, U.S.A., 9,329.7069 metric tons (M/T) of Urea 46%
fertilizer which the latter shipped in bulk on 16 June 1974 aboard the cargo vessel
M/V "Sun Plum" owned by private respondent Kyosei Kisen Kabushiki Kaisha (KKKK)
from Kenai, Alaska, U.S.A., to Poro Point, San Fernando, La Union, Philippines, as
evidenced by Bill of Lading No. KP-1 signed by the master of the vessel and issued
on the date of departure.

On 17 May 1974, or prior to its voyage, a time charter-party on the vessel M/V
"Sun Plum" pursuant to the Uniform General Charter was entered into between
Mitsubishi as shipper/charterer and KKKK as shipowner, in Tokyo, Japan.

Before loading the fertilizer aboard the vessel, four (4) of her holds were all
presumably inspected by the charterer's representative and found fit to take a load
of urea in bulk pursuant to par. 16 of the charter-party.

After the Urea fertilizer was loaded in bulk by stevedores hired by and under the
supervision of the shipper, the steel hatches were closed with heavy iron lids,
covered with three (3) layers of tarpaulin, then tied with steel bonds. The hatches
remained closed and tightly sealed throughout the entire voyage.

Upon arrival of the vessel at her port of call on 3 July 1974, the steel pontoon
hatches were opened with the use of the vessel's boom. Petitioner unloaded the
cargo from the holds into its steelbodied dump trucks which were parked
alongside the berth, using metal scoops attached to the ship, pursuant to the
terms and conditions of the charter-partly (which provided for an F.I.O.S. clause).
The hatches remained open throughout the duration of the discharge.

Each time a dump truck was filled up, its load of Urea was covered with tarpaulin
before it was transported to the consignee's warehouse located some fifty (50)
meters from the wharf. Midway to the warehouse, the trucks were made to pass
through a weighing scale where they were individually weighed for the purpose of
ascertaining the net weight of the cargo. The port area was windy, certain portions
of the route to the warehouse were sandy and the weather was variable, raining
occasionally while the discharge was in progress. The petitioner's warehouse was
made of corrugated galvanized iron (GI) sheets, with an opening at the front where
the dump trucks entered and unloaded the fertilizer on the warehouse floor.
Tarpaulins and GI sheets were placed in-between and alongside the trucks to
contain spillages of the ferilizer.

It took eleven (11) days for PPI to unload the cargo, from 5 July to 18 July 1974
(except July 12th, 14th and 18th). A private marine and cargo surveyor, Cargo
Superintendents Company Inc. (CSCI), was hired by PPI to determine the "outturn"
of the cargo shipped, by taking draft readings of the vessel prior to and after
discharge. The survey report submitted by CSCI to the consignee (PPI) dated 19
July 1974 revealed a shortage in the cargo of 106.726 M/T and that a portion of
the Urea fertilizer approximating 18 M/T was contaminated with dirt. The same
results were contained in a Certificate of Shortage/Damaged Cargo dated 18 July
1974 prepared by PPI which showed that the cargo delivered was indeed short of
94.839 M/T and about 23 M/T were rendered unfit for commerce, having been
polluted with sand, rust and 
 dirt.

Consequently, PPI sent a claim letter dated 18 December 1974 to Soriamont

Steamship Agencies (SSA), the resident agent of the carrier, KKKK, for P245,969.31
representing the cost of the alleged shortage in the goods shipped and the
diminution in value of that portion said to have been contaminated with dirt.

Respondent SSA explained that they were not able to respond to the consignee's
claim for payment because, according to them, what they received was just a
request for shortlanded certificate and not a formal claim, and that this "request"
was denied by them because they "had nothing to do with the discharge of the
shipment." Hence, on 18 July 1975, PPI filed an action for damages with the Court
of First Instance of Manila.

The defendant carrier argued that the strict public policy governing common
carriers does not apply to them because they have become private carriers by
reason of the provisions of the charter-party.

The trial court however sustained the claim of the plaintiff against the defendant
carrier for the value of the goods lost or damaged.
On appeal, respondent Court of Appeals reversed the lower court and absolved the
carrier from liability for the value of the cargo that was lost or damaged. Relying on
the 1968 case of Home Insurance Co. v. American Steamship Agencies, Inc., the
appellate court ruled that the cargo vessel M/V "Sun Plum" owned by private
respondent KKKK was a private carrier and not a common carrier by reason of the
time charterer-party. Accordingly, the Civil Code provisions on common carriers
which set forth a presumption of negligence do not find application in the case at
bar.

ISSUE
W/N a charter-party between a shipowner and a charterer transform a common
carrier into a private one as to negate the civil law presumption of negligence in
case of loss or damage to its cargo?

RULING
It is not disputed that respondent carrier, in the ordinary course of business,
operates as a common carrier, transporting goods indiscriminately for all persons.
When petitioner chartered the vessel M/V "Sun Plum", the ship captain, its officers
and compliment were under the employ of the shipowner and therefore continued
to be under its direct supervision and control. Hardly then can we charge the
charterer, a stranger to the crew and to the ship, with the duty of caring for his
cargo when the charterer did not have any control of the means in doing so. This is
evident in the present case considering that the steering of the ship, the manning
of the decks, the determination of the course of the voyage and other technical
incidents of maritime navigation were all consigned to the officers and crew who
were screened, chosen and hired by the shipowner.
It is therefore imperative that a public carrier shall remain as such,
notwithstanding the charter of the whole or portion of a vessel by one or more
persons, provided the charter is limited to the ship only, as in the case of a time-
charter or voyage-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 shipowner 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.
In an action for recovery of damages against a common carrier on the goods
shipped, the shipper or consignee should first prove the fact of shipment and its
consequent loss or damage while the same was in the possession, actual or
constructive, of the carrier. Thereafter, the burden of proof shifts to respondent to
prove that he has exercised extraordinary diligence required by law or that the
loss, damage or deterioration of the cargo was due to fortuitous event, or some
other circumstances inconsistent with its liability.

Although it is considered a common carrier, respondent has sufficiently overcome,

by clear and convincing proof, the prima facie presumption of negligence.

The master of the carrying vessel, Captain Lee Tae Bo, in his deposition taken on 19
April 1977 before the Philippine Consul and Legal Attache in the Philippine
Embassy in Tokyo, Japan, testified that before the fertilizer was loaded, the four (4)
hatches of the vessel were cleaned, dried and fumigated. After completing the
loading of the cargo in bulk in the ship's holds, the steel pontoon hatches were
closed and sealed with iron lids, then covered with three (3) layers of serviceable
tarpaulins which were tied with steel bonds. The hatches remained close and
tightly sealed while the ship was in transit as the weight of the steel covers made it
impossible for a person to open without the use of the ship's boom.

It was also shown during the trial that the hull of the vessel was in good condition,
foreclosing the possibility of spillage of the cargo into the sea or seepage of water
inside the hull of the vessel. When M/V "Sun Plum" docked at its berthing place,
representatives of the consignee boarded, and in the presence of a representative
of the shipowner, the foreman, the stevedores, and a cargo surveyor representing
CSCI, opened the hatches and inspected the condition of the hull of the vessel. The
stevedores unloaded the cargo under the watchful eyes of the shipmates who
were overseeing the whole operation on rotation basis.
Verily, the presumption of negligence on the part of the respondent carrier has
been efficaciously overcome by the showing of extraordinary zeal and assiduity
exercised by the carrier in the care of the cargo.
Crisostomo v. CA, 409 SCRA 528 (2003)

Problem:

Estela L. Crisostomo contracted the services of Caravan Travel and Tours

International, Inc. to arrange and facilitate her booking, ticketing and
accommodation in a tour dubbed "Jewels of Europe". The package tour cost her
P74, 322.70. She was given a 5% discount on the amount, which included airfare,
and the booking fee was also waived because petitioner’s niece, Meriam Menor,
was former’s company’s ticketing manager.

Menor went to her aunt’s residence on a Wednesday to deliver petitioner’s travel

documents and plane tickets. Estela, in turn, gave Menor the full payment for the
package tour. Menor then told her to be at the Ninoy Aquino International Airport
(NAIA) on Saturday, two hours before her flight on board British Airways.

Without checking her travel documents, Estela went to NAIA on Saturday, to take
the flight for the first leg of her journey from Manila to Hongkong. She discovered
that the flight she was supposed to take had already departed the previous day.
She learned that her plane ticket was for the flight scheduled on June 14, 1991.
She thus called up Menor to complain.
Subsequently, Menor prevailed upon Estela to take another tour the "British
Pageant”, which cost P20, 881.00. She gave caravan travel and tours P7, 980.00 as
partial payment and commenced the trip in July 1991.

Upon petitioner’s return from Europe, she demanded from respondent the
reimbursement of P61, 421.70, representing the difference between the sum she
paid for "Jewels of Europe" and the amount she owed respondent for the "British
Pageant" tour. Despite several demands, respondent company refused to
reimburse the amount, contending that the same was non-refundable.

Estela filed a complaint against Caravan travel and Tours for breach of contract of
carriage and damages.
A) Will the action prosper?

B) Will she be entitled to damages?

Answer:

No, for there was no contract of carriage.

By definition, a contract of carriage or transportation is one whereby a certain

person or association of persons obligate themselves to transport persons, things,
or news from one place to another for a fixed price.

From the above definition, Caravan Travel and Tours is not an entity engaged in
the business of transporting either passengers or goods and is therefore, neither a
private nor a common carrier. Caravan Travel and Tours did not undertake to
transport Estela from one place to another since its covenant with its customers is
simply to make travel arrangements in their behalf. Caravan travel and tour’s
services as a travel agency include procuring tickets and facilitating travel permits
or visas as well as booking customers for tours.

While Estela concededly bought her plane ticket through the efforts of respondent
company, this does not mean that the latter ipso facto is a common carrier. At
most, Caravan Travel and Tours acted merely as an agent of the airline, with whom
the former ultimately contracted for her carriage to Europe.

B) No.

The negligence of the obligor in the performance of the obligation renders him
liable for damages for the resulting loss suffered by the obligee. Fault or negligence
of the obligor consists in his failure to exercise due care and prudence in the
performance of the obligation as the nature of the obligation so demands.
In the case at bar, Caravan Travel and Tours exercised due diligence in performing
its obligations under the contract and followed standard procedure in rendering its
services to Estela. The plane ticket issued to petitioner clearly reflected the
departure date and time, contrary to Estela’s contention. The travel documents,
consisting of the tour itinerary, vouchers and instructions, were likewise delivered
to her two days prior to the trip. The Caravan Travel and Tours also properly
booked Estela for the tour, prepared the necessary documents and procured the
plane tickets. It arranged Estela’s hotel accommodation as well as food, land
transfers and sightseeing excursions, in accordance with its avowed undertaking.

From the foregoing, it is clear that the Caravan Travel and Tours performed its
prestation under the contract as well as everything else that was essential to book
Estela for the tour.
Hence, Estela cannot recover and must bear her own damage.
MINDANAO TERMINAL AND BROKERAGE SERVICE, INC., vs. PHOENIX ASSURANCE
COMPANY OF NEW YORK/MCGEE & CO., INC.,

G.R. No. 162467. May 8, 2009.

FACTS:
Del Monte Phils.contracted Mindanao Terminal, a stevedoring company, to load
and stow ashipment of fresh green bananas and pineapples into the vessel M/V
Mistrau docked at the port of Davao City andbound for Incheon, South Korea. The
goods were insured with Phoenix Assurance. Upon discharge of thecargo in Korea,
several cartons of the fresh green bananas and pineapples were damaged and no
longer had anycommercial value. Del Monte filed an insurance claim and was paid
by Phoenix Assurance. The lattersued Mindanao Terminal for damages before the
RTC of Davao City. The RTC dismissed the complaintfor lack of cause of action
against Mindanao Terminal because its services were contracted by Del Monteand
not by the insurer; in addition to that, Mindanao had acted merely as a labor
provider. The CA reversed the ruling and held Mindanao Terminal to be liable for
damages.

ISSUE/S:
Whether or not Phoenix and McGee have a cause of action and whether Mindanao
Terminal is liable for not having exercise extraordinary diligence in the transport
and storage of the cargo.

HELD/RULING:
No. It was neither alleged nor proven by Phoenix and McGee that Mindanao
Terminal was bound by contractual stipulation to observe a higher degree of
diligence than that required of a good father of a family. Hence, the Supreme
Court concluded that following Article 1173, Mindanao Terminal was required to
observe ordinary diligence only in loading and stowing the cargoes of Del Monte
Produce aboard M/V Mistrau. There is a distinction between an arrastre and a
stevedore. Arrastre, a Spanish word which refers to hauling of cargo, comprehends
the handling of cargo on the wharf or between the establishment of the consignee
or shipper and the ship’s tackle. The responsibility of the arrastre operator lasts
until the delivery of the cargo to the consignee. The service is usually performed by
longshoremen. On the other hand, stevedoring refers to the handling of the cargo
from the pier to the ship’s cargo hold. The responsibility of the stevedore ends
upon the loading and stowing of the cargo in the vessel. It is not disputed that
Mindanao Terminal was performing purely stevedoring function while the private
respondent in thesummarized case was performing arrastre function.
SPOUSES DANTE CRUZ and LEONORA CRUZ, petitioners,
vs. SUN HOLIDAYS, INC., respondent.

Ponente: CARPIO MORALES, J p:

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.

The stay of the newly wed Ruelito and his wife at the Resort from September 9 to
11, 2000 was by virtue of a tour package-contract with respondent that included
transportation to and from the Resort and the point of departure in Batangas.
Miguel C. Matute (Matute), a scuba diving instructor and one of the survivors, gave
his account of the incident that led to the filing of the complaint as follows:

Matute stayed at the Resort from September 8 to 11, 2000. He was originally
scheduled to leave the Resort in the afternoon of September 10, 2000, but was
advised to stay for another night because of strong winds and heavy rains.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). AcCTaD
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 were 22 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.
At the time of Ruelito's death, he was 28 years old and employed as a contractual
worker for Mitsui Engineering & Shipbuilding Arabia, Ltd. in Saudi Arabia, with a
basic monthly salary of $900.

Petitioners, by letter of October 26, 2000, demanded indemnification from

respondent for the death of their son in the amount of at least P4,000,000.
Respondent denied any responsibility for the incident which it considered to be a
fortuitous event. It nevertheless offered, as an act of commiseration, the amount
of P10,000 to petitioners upon their signing of a waiver.Petitioners declined, they
filed the Complaint, alleging that respondent, as a common carrier, was guilty of
negligence in allowing M/B Coco Beach III to sail notwithstanding storm warning
bulletins issued by the Philippine Atmospheric, Geophysical and Astronomical
Services Administration (PAGASA) as early as 5:00 a.m. of September 11, 2000.

Carlos Bonquin, captain of M/B Coco Beach III, averred that the Resort customarily
requires four conditions to be met before a boat is allowed to sail, to wit: (1) the
sea is calm, (2) there is clearance from the Coast Guard, (3) there is clearance from
the captain and (4) there is clearance from the Resort's assistant manager. He
added that M/B Coco Beach III met all four conditions on September 11, 2000, but
a subasco or squall, characterized by strong winds and big waves, suddenly
occurred, causing the boat to capsize.

By Decision of February 16, 2005, Branch 267 of the Pasig RTC dismissed
petitioners' Complaint and respondent's Counterclaim Petitioners' Motion for
Reconsideration having been denied by Order dated September 2, 2005, they
appealed to the Court of Appeals.

By Decision of August 19, 2008, the appellate court denied petitioners' appeal,
holding, among other things, that the trial court correctly ruled that respondent is
a private carrier which is only required to observe ordinary diligence; that
respondent in fact observed extraordinary diligence in transporting its guests on
board M/B Coco Beach III; and that the proximate cause of the incident was a
squall, a fortuitous event.

Petitioners' Motion for Reconsideration having been denied by Resolution dated

January 16, 2009, they filed the present Petition for Review

ISSUE:
1. WON respondent is a common carrier
2. WON respondent is guilty of negligence in allowing M/B Coco Beach III sail
notwithstanding storm warning bulletins issued by PAGASA.

HELD:
1. YES.

Petitioners correctly rely on De Guzman v. Court of Appeals in characterizing

respondent as a common carrier.
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 air for compensation, offering their services to the public.
The above article makes no distinction between one whose principal business
activity is the carrying of persons or goods or both, and one who does such
carrying only as an ancillary activity (in local idiom, as "a sideline"). Article 1732
also carefully avoids making any distinction between a person or enterprise
offering transportation service on a regular or scheduled basis and one offering
such service on an occasional, episodic or unscheduled basis. Neither does Article
1732 distinguish between a carrier offering its services to the "general public," i.e.,
the general community or population, and one who offers services or solicits
business only from a narrow segment of the general population. We think that
Article 1733 deliberately refrained from making such distinctions.

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
(Commonwealth Act No. 1416, as amended) which at least partially supplements
the law on common carriers set forth in the Civil Code.
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
respondent's 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 Court is aware of the practice of beach resort operators offering tour
packages to factor the transportation fee in arriving at the tour package price. That
guests who opt not to avail of respondent's ferry services pay the same amount is
likewise inconsequential. These guests may only be deemed to have overpaid.

2. YES.

A very cautious person exercising the utmost diligence would thus not brave such
stormy weather and put other people's lives at risk. The extraordinary diligence
required of common carriers demands that they take care of the goods or lives
entrusted to their hands as if they were their own. This respondent failed to do.

Respondent cites the squall that occurred during the voyage as the fortuitous
event that overturned M/B Coco Beach III. As reflected above, however, the
occurrence of squalls was expected under the weather condition of September 11,
2000. Moreover, evidence shows that M/B Coco Beach III suffered engine trouble
before it capsized and sank. The incident was, therefore, not completely free from
human intervention.
The Court need not belabor how respondent's evidence likewise fails to
demonstrate that it exercised due diligence to prevent or minimize the loss before,
during and after the occurrence of the squall.

As De Guzman instructs, Article 1732 of the Civil Code defining "common carriers"
has deliberately refrained from making distinctions on whether the carrying of
persons or goods is the carrier's principal business, whether it is offered on a
regular basis, or whether it is offered to the general public. The intent of the law is
thus to not consider such distinctions. Otherwise, there is no telling how many
other distinctions may be concocted by unscrupulous businessmen engaged in the
carrying of persons or goods in order to avoid the legal obligations and liabilities of
common carriers.

The evidence shows that PAGASA issued 24-hour public weather forecasts and
tropical cyclone warnings for shipping on September 10 and 11, 2000 advising of
tropical depressions in Northern Luzon which would also affect the province of
Mindoro. By the testimony of Dr. Frisco Nilo, supervising weather specialist of
PAGASA, squalls are to be expected under such weather condition.

Respondent's insistence that the incident was caused by a fortuitous event does
not impress either.

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

To fully free a common carrier from any liability, the fortuitous event must have
been the proximate and only cause of the loss. And it should have exercised due
diligence to prevent or minimize the loss before, during and after the occurrence
of the fortuitous event.

Article 1764 vis-à-vis Article 2206 of the Civil Code holds the common carrier in
breach of its contract of carriage that results in the death of a passenger liable to
pay the following: (1) indemnity for death, (2) indemnity for loss of earning
capacity and (3) moral damages.

Petitioners are entitled to indemnity for the death of Ruelito which is fixed at
P50,000.
As for damages representing unearned income, the formula for its computation is:

Net Earning Capacity=life expectancy x (gross annual income - reasonable and

necessary living expenses).
Life expectancy is determined in accordance with the formula:
2/3 x [80 — age of deceased at the time of death]
Applying the above guidelines, the Court determines Ruelito's life expectancy as
follows:
Life expectancy = 2/3 x [80 — age of deceased at the time of death]
2/3 x [80 - 28]
2/3 x [52]
Life expectancy = 35

Documentary evidence shows that Ruelito was earning a basic monthly salary of
$900 which, when converted to Philippine peso applying the annual average
exchange rate of $1 = P44 in 2000, amounts to P39,600. Ruelito's net earning
capacity is thus computed as follows:

Net Earning Capacity = life expectancy x (gross annual income - reasonable and
necessary living expenses).
= 35 x (P475,200 - P237,600)
= 35 x (P237,600)

Net Earning Capacity = P8,316,000

Respecting the award of moral damages, since respondent common carrier's

breach of contract of carriage resulted in the death of petitioners' son, following
Article 1764 vis-à-vis Article 2206 of the Civil Code, petitioners are entitled to
moral damages. DAETHc

Since respondent failed to prove that it exercised the extraordinary diligence

required of common carriers, it is presumed to have acted recklessly, thus
warranting the award too of exemplary damages, which are granted in contractual
obligations if the defendant acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner.

Under the circumstances, it is reasonable to award petitioners the amount of

P100,000 as moral damages and P100,000 as exemplary damages.
THE Court of Appeals Decision of August 19, 2008 is REVERSED and SET ASIDE.
Judgment is rendered in favor of petitioners ordering respondent to pay
petitioners the following:
(1) P50,000 as indemnity for the death of Ruelito Cruz;
(2) P8,316,000 as indemnity for Ruelito's loss of earning capacity;
(3) P100,000 as moral damages;
(4) P100,000 as exemplary damages;
(5) 10% of the total amount adjudged against respondent as attorneys fees; and
(6) the costs of suit.

The total amount adjudged against respondent shall earn interest at the rate of
12% per annum computed from the finality of this decision until full payment.
REPUBLIC OF THE PHIL., represented by the DEPARTMENT OF HEALTH, NATIONAL
TRUCKING AND FORWARDING CORPORATION (NTFC) and COOPERATIVE FOR
AMERICAN RELIEF EVERYWHERE, INC. (CARE) VS. LORENZO SHIPPING CORPORATION
(LSC)
G.R. No. 153563. February 7, 2005

Facts: The Philippine government entered into a contract of carriage of goods with
petitioner NTFC whereby the latter shipped bags of non-fat dried milk through
respondent LSC. The consignee named in the bills of lading issued by the
respondent was Abdurahma Jama, petitioner’s branch supervisor in Zamboanga
City.

On reaching the port of Zamboanga City, the respondent’s agent unloaded the
goods and delivered the same to petitioner’s warehouse. Before each delivery, the
delivery checkers of respondent’s agent requested Jama to surrender the original
bills of lading, but the latter merely presented certified true copies thereof. Upon
completion of each delivery, the delivery checkers asked Jama to sign the delivery
receipts. However, at times when Jama had to attend to other business before a
delivery was completed, he instructed his subordinates to sign the delivery receipts
for him.

Notwithstanding the precautions taken, petitioner NTFC allegedly did not receive
the good and filed a formal claim for non-delivery of the goods shipped through
respondent. Respondent explained that the cargo had already been delivered to
Jama. The government through the DOH, CARE and NTFC as plaintiffs filed an
action for breach of contract of carriage against respondent as defendant.
Issue: Whether or not respondent is presumed at fault or negligent as common
carrier for the loss or deterioration of the goods.

Held: Article 1733 of the Civil Code demands that a common carrier observe
extraordinary diligence over the goods transported by it. Extraordinary diligence is
that extreme measure of care and caution which persons of unusual prudence and
circumspection use for securing and preserving their own property or rights. This
exacting standard imposed on common carriers in a contract of carriage of goods is
intended to tilt the scales in favor of the shipper who is at the mercy of the
common carrier once the goods have been lodged for shipment. Hence, in case of
loss of goods in transit, the common carrier is presumed under the law to have
been at fault or negligent. However, the presumption of fault or negligence may be
overturned by competent evidence showing that the common carrier has observed
extraordinary diligence over the goods.
The respondent has observed such extraordinary diligence in the delivery of the
goods. Prior to releasing the goods to Jama, the delivery checkers required the
surrender of the original bills of lading, and in their absence, the certified true
copies showing that Jama was indeed the consignee of the goods. In addition, they
required Jama or his designated subordinates to sign the delivery receipts upon
completion of each delivery.
Gatchalian V. Delim (1991)
G.R. No. L-56487 October 21, 1991
Lessons Applicable: Personal Injury and Death (Torts and Damages)
Laws Applicable:

FACTS:
July 11,1973: Reynalda Gatchalian boarded Thames" mini bus at Aringay, La
Union bound for Bauang, of the same province. The bus bumped a cement flower
pot on the side of the road, went off the road, turned turtle and fell into a ditch.
Gatchalian got injured with physical injuries on the leg, arm and forehead
Mrs. Adela Delim visited the passenger and later paid for their hospitalization and
medical expenses. She also gave transportation expense of P12 in going home
from the hospital and they were made to sign a Joint Affidavit stating that they
are no longer interested to file a complaint, criminal or civil against the said driver
and owner of the said Thames.
Gatchalian filed in the CFI an action extra contractu to recover compensatory and
moral damages stating that the mishap had left her with a conspicuous white scar
measuring 1 by 1/2 inches on the forehead, generating mental suffering and an
inferiority complex on her part
as a result, she had to retire in seclusion and stay away from her friends
scar diminished her facial beauty and deprived her of opportunities for
employment
Delim averred that it was a fortuitous event
CFI: dismissed because of the Joint Affidavit
CA: affirmed

ISSUE: W/N Gatchalian is entitled to damages

HELD: YES. CA, CFI REVERSED and SET ASIDE 1) P15,000 actual or compensatory
damages to cover the cost of plastic surgery for the removal of the scar on
petitioner's forehead; 2) P30,000 moral damages; and 3) P1,000 attorney's fees,
the aggregate amount to bear interest at the legal rate of 6% per annum counting
from the promulgation of this decision until full payment thereof
A waiver, to be valid and effective, must in the first place be couched in clear and
unequivocal terms which leave no doubt as to the intention of a person to give up
a right or benefit which legally pertains to him.
while reading the same, she experienced dizziness but that, seeing the other
passengers who had also suffered injuries sign the document, she too signed
without bothering to read the Joint Affidavit in its entirety. Considering these
circumstances there appears substantial doubt whether petitioner understood
fully the import of the Joint Affidavit

To uphold a supposed waiver of any right to claim damages by an injured

passenger, under circumstances like those exhibited in this case, would be to dilute
and weaken the standard of extraordinary diligence exacted by the law from
common carriers and hence to render that standard unenforceable.

To exempt a common carrier from liability for death or physical injuries to

passengers upon the ground of force majeure, the carrier must clearly show not
only that the efficient cause of the casualty was entirely independent of the human
will, but also that it was impossible to avoid.

The driver did not stop to check if anything had gone wrong with the bus after the
snapping sound

Court of Appeals, however, found that at the time of the accident, she was no
longer employed in a public school since, being a casual employee and not a Civil
Service eligible, she had been laid off. Her employment as a substitute teacher
was occasional and episodic, contingent upon the availability of vacancies for
substitute teachers.

A person is entitled to the physical integrity of his or her body; if that integrity is
violated or diminished, actual injury is suffered for which actual or compensatory
damages are due and assessable. Petitioner Gatchalian is entitled to be placed as
nearly as possible in the condition that she was before the mishap. A scar,
especially one on the face of the woman, resulting from the infliction of injury
upon her, is a violation of bodily integrity, giving raise to a legitimate claim for
restoration to her conditio ante. If the scar is relatively small and does not
grievously disfigure the victim, the cost of surgery may be expected to be
correspondingly modest.
In view of the testimony, and the fact that a considerable amount of time has
lapsed since the mishap in 1973 which may be expected to increase not only the
cost but also very probably the difficulty of removing the scar, we consider that the
amount of P15,000.00 to cover the cost of such plastic surgery is not
unreasonable moral damages may be awarded where gross negligence on the part
of the common carrier.

Coastwise Lighterage Corporation v. CA

Facts:
Pag-asa Sales Inc. entered into a contract to transport molasses from the province of Negros to
Manila with Coastwise Lighterage Corporation (Coastwise for brevity), using the latter's dumb
barges. The barges were towed in tandem by the tugboat MT Marica, which is likewise owned
by Coastwise. Upon reaching Manila Bay, one of the barges, "Coastwise 9", struck an unknown
sunken object. The forward buoyancy compartment was damaged, and water gushed in
through a hole "two inches wide and twenty-two inches long". As a consequence, the molasses
at the cargo tanks were contaminated. Pag-asa filed a claim against Philippine General
Insurance Company, the insurer of its cargo. Philgen paid P700,000 for the value of the
molasses lost.
Philgen then filed an action against Coastwise to recover the money it paid, claiming to be
subrogated to the claims which the consignee may have against the carrier. Both the trial court
and the Court of Appeals ruled against Coastwise.

Issues:
(1) Whether Coastwise was transformed into a private carrier by virtue of the contract it
entered into with Pag-asa, and whether it exercised the required degree of diligence
(2) Whether Philgen was subrogated into the rights of the consignee against the carrier

Held:
(1) Pag-asa Sales, Inc. only leased three of petitioner's vessels, in order to carry cargo from one
point to another, but the possession, command mid navigation of the vessels remained with
petitioner Coastwise Lighterage. Coastwise Lighterage, by the contract of affreightment, was
not converted into a private carrier, but remained a common carrier and was still liable as such.
The law and jurisprudence on common carriers both hold that the mere proof of delivery of
goods in good order to a carrier and the subsequent arrival of the same goods at the place of
destination in bad order makes for a prima facie case against the carrier. It follows then that the
presumption of negligence that attaches to common carriers, once the goods it is sports are
lost, destroyed or deteriorated, applies to the petitioner. This presumption, which is overcome
only by proof of the exercise of extraordinary diligence, remained unrebutted in this case. Jesus
R. Constantino, the patron of the vessel "Coastwise 9" admitted that he was not licensed.
Coastwise Lighterage cannot safely claim to have exercised extraordinary diligence, by placing a
person whose navigational skills are questionable, at the helm of the vessel which eventually
met the fateful accident. It may also logically, follow that a person without license to navigate,
lacks not just the skill to do so, but also the utmost familiarity with the usual and safe routes
taken by seasoned and legally authorized ones. Had the patron been licensed he could be
presumed to have both the skill and the knowledge that would have prevented the vessel's
hitting the sunken derelict ship that lay on their way to Pier 18. As a common carrier, petitioner
is liable for breach of the contract of carriage, having failed to overcome the presumption of
negligence with the loss and destruction of goods it transported, by proof of its exercise of
extraordinary diligence.
(2) Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. If the
insured property is destroyed or damaged through the fault or negligence of a party other than
the assured, then the insurer, upon payment to the assured will be subrogated to the rights of
the assured to recover from the wrongdoer to the extent that the insurer has been obligated to
pay. Payment by the insurer to the assured operated as an equitable assignment to the former
of all remedies which the latter may have against the third party whose negligence or wrongful
act caused the loss. The right of subrogation is not dependent upon, nor does it grow out of,
any private of contract or upon written assignment of, claim. It accrues simply upon payment of
the insurance claim by the insurer.