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transportation LAW

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CASE TITLE: Pedro de Guzman v. Court of Appeals


G.R. NO/DATE: G.R. No. L-47822, December 22, 1988
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
DOCTRINE:
or robbers, except where such thieves or robbers in fact acted "with grave or irresistible
threat, violence or force”.

BRIEF STATEMENT OF THE CASE:


Breach of the contract to carry
Extraordinary diligence needed over common carriers

FACTS:

Ernesto Cendana was engaged in buying up used bottles and scrap metal in Pangasinan . 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 his vehicle with cargo belonging to different merchants to different establishments in
Pangasisnan which respondents charged a freight fee for. Sometime in November 1970, herein petitioner
Pedro de Guzman, a merchant and dealer of General Milk Company Inc. in Pangasinan contracted with
respondent for hauling 750 cartons of milk. Unfortunately, only 150 cartons made it, as the other 600
cartons were intercepted by hijackers along Marcos Highway. Hence, petitioners commenced an action
against private 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 attorney’s fees. The Court of Appeals reversed the judgment of the trial court and held that Cendana
had been engaged in transporting return loads of freight “as a casual occupation — 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 or enterprise offering transportation services on a regular or
scheduled basis and one offering such services on an occasional, episodic, and unscheduled basis.

2. Respondent is not liable for the value of the undelivered merchandise .

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Article 1734 of the Civil Code- The general rule is established by the article that common carriers are
responsible for the loss, destruction or deterioration of the goods which they carry, unless the same is due
to any of the following causes only:

a. Flood, storm, earthquake, lightning or other natural disasters;


b. Act of the public enemy, whether international or civil;
c. Act or omission of the shipper or owner of the goods;
d. Character of the goods or defects in the packing;
e. Order or act of competent public authority.

Applying the above article, we note firstly that the specific cause alleged in the instant case — the
hijacking of the carrier's truck — does not fall within any of the five (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 considered unreasonable, unjust and
contrary to public policy:

xxx 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 other equipment used in the contract of
carriage. (Emphasis supplied)

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

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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.

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CASE TITLE: FIRST PHILIPPINE INDUSTRIAL CORPORATION VS. COURT OF APPEALS


G.R. NO/DATE: G.R. No. 125948. December 29, 1998
COMMON CARRIERS: The Civil Code makes no distinction as to the means of transporting,
DOCTRINE: as long as it is by land, water or air. It does not provide that the transportation of the
passengers or goods should be by motor vehicle.
FACTS:

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

ISSUE:

Whether a pipeline business is included in the term “common carrier” so as to entitle the petitioner to the
exemption

HELD:

Article 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firm or association
engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public."
The test for determining whether a party is a common carrier of goods is:
(1) He must be engaged in the business of carrying goods for others as a public employment, and must
hold himself out as ready to engage in the transportation of goods for person generally as a business and
not as a casual occupation;
(2) He must undertake to carry goods of the kind to which his business is confined;
(3) He must undertake to carry by the method by which his business is conducted and over his
established roads; and
(4) The transportation must be for hire.
Based on the above definitions and requirements, there is no doubt that petitioner is a common carrier. It
is engaged in the business of transporting or carrying goods, i.e. petroleum products, for hire as a public
employment. It undertakes to carry for all persons indifferently, that is, to all persons who choose to
employ its services, and transports the goods by land and for compensation. The fact that petitioner has a
limited clientele does not exclude it from the definition of a common carrier.
Furthermore, the definition of "common carriers" in the Civil Code makes no distinction as to the means of
transporting, as long as it is by land, water or air. It does not provide that the transportation of the
passengers or goods should be by motor vehicle.

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CASE TITLE: NATIONAL STEEL CORPORATION v. COURT OF APPEALS


G.R. NO/DATE: G.R. No. 112287 December 12, 1997
The stringent provisions of the Civil Code on common carriers protecting the general public
DOCTRINE:
cannot justifiably be applied to a private carrier.

FACTS:

Plaintiff National Steel Corporation (NSC) as Charterer and defendant Vlasons Shipping, Inc. (VSI) as
Owner, entered into a Contract of Voyage Charter Hire whereby NSC hired VSI’s vessel, the MV Vlasons
I to make one voyage to load steel products at Iligan City and discharge them at North Harbor, Manila.
The handling, loading and unloading of the cargoes were the responsibility of the Charterer.
The skids of tinplates and hot rolled sheets shipped were allegedly found to be wet and rusty. Plaintiff,
alleging negligence, filed a claim for damages against the defendant who denied liability claiming that
the MV Vlasons I was seaworthy in all respects for the carriage of plaintiff’s 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; that in the course its voyage, the vessel encountered very rough seas.

ISSUE:

Whether or not the provisions of the Civil Code on common carriers pursuant to which there exists a
presumption of negligence against the common carrier in case of loss or damage to the cargo are
applicable to a private carrier.

HELD:

No. In 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.
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 [Mendoza vs.
Philippine Airlines, Inc., 90 Phil. 836, 842-843 (1952)]. 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.
Because the MV Vlasons I was a private carrier, the ship owner’s obligations are governed by the
foregoing provisions of the Code of Commerce and not by the Civil Code which, as a general
rule, places the prima facie presumption of negligence on a common carrier.

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CASE TITLE: First Philippine Industrial Corp. vs. CA


G.R. NO/DATE: 300 SCRA 661
The fact that petitioner has a limited clientele does not exclude it from the definition of
DOCTRINE:
a common carrier.

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

ISSUE:
Whether a pipeline business is included in the term “common carrier” so as to entitle the petitioner to the
exemption

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

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CASE TITLE: CALTEX (PHILIPPINES) VS SULPICIO LINES INC.


G.R. NO/DATE: G.R. No. 131166 / September 30, 1999
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
DOCTRINE:
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.

FACTS:
On December 19, 1987, the passenger ship MV Doa Paz, owned and operated by Sulpicio
Linesbound for Manila colided with motor tanker MT Vector. MT Vector carried on board oil products
owned by Caltex by virtue of a charter contract. Numerous people died in that accident including public
school teacher Sebastian Caezal and his 11 year old daughter. The ship carried an estimated 4,000
passengers; many indeed, were not in the passenger manifest. Only 24 survived the tragedy. In 1989,
Caezals wife and mother filed a complaint for Damages arising from Breach of Contract of Carriage
against Sulpicio Lines, Inc. Sulpicio Lines, in turn, filed a third party complaint against Vector Shipping,
Inc. and Caltex Phils. The trial court rendered decision against Sulpicio Lines and dismissed the third-
party complaint. On appeal, the Court of Appeals modified the trial courts ruling and held Vector Shipping
Co. and Caltex Phils., Inc., equally liable. Hence, this petition.
ISSUE:
Is the charterer of a sea vessel liable for damages resulting from a collision between the
chartered vessel and a passenger ship?
HELD:
The charterer has no liability for damages under Philippine Maritime laws.
Petitioner and Vector entered into a contract of affreightment, also known as a voyage charter. A
charter party is a 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; a contract of affreightment is 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. A contract of affreightment may be
either time charter, wherein the leased vessel is leased to the charterer for a fixed period of time, or
voyage charter, wherein the ship is leased for a single voyage. In both cases, the 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 ship’s store, pay for the wages of the master of the crew, and defray the
expenses for the maintenance of the ship. If the charter is a contract of affreightment, which leaves the
general owner in possession of the ship as owner for the voyage, the rights and the responsibilities of
ownership rest on the owner. The charterer is free from liability to third persons in respect of the ship.
MT Vector is a common carrier
The charter party agreement did not convert the common carrier into a private carrier. The parties
entered into a voyage charter, which retains the character of the vessel as a common carrier. It is
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 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. A common carrier is a person or corporation whose regular business is to carry passengers or
property for all persons who may choose to employ and to remunerate him. 16 MT Vector fits the
definition of a common carrier under Article 1732 of the Civil Code.
The public must of necessity rely on the care and skill of common carriers in the vigilance over
the goods and safety of the passengers, especially because with the modern development of science and
invention, transportation has become more rapid, more complicated and somehow more hazardous. For

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these reasons, 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.

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CASE TITLE: Coastwise Lighterage Corporation v. CA


G.R. NO/DATE: 245 SCRA 797 (1995)
DEMISE; AFFREIGHTMENT - To create a demise, the owner of a vessel must completely
and exclusively relinquish possession, command and navigation thereof to the charterer,
DOCTRINE: anything short of such a complete transfer is a contract of affreightment (time or voyage
charter party) or not a charter party at all. In this case, there was no demise, and only a
contract of affreightment. Hence, the carrier was not transformed into a private carrier.

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.

ISSUE: 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? NO

HELD:

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.

The distinction between the two kinds of charter parties (i.e. bareboat or demise and contract of
affreightment) is more clearly set out in the case of Puromines, Inc. vs. Court of Appeals:

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Under the demise or bareboat charter of the vessel, the charterer will generally be regarded as the owner
for the voyage or service stipulated. The charterer mans the vessel with his own people and becomes the
owner pro hac vice, subject to liability to others for damages caused by negligence. To create a demise,
the owner of a vessel must completely and exclusively relinquish possession, command and navigation
thereof to the charterer, anything short of such a complete transfer is a contract of affreightment (time or
voyage charter party) or not a charter party at all. In this case, there was no demise, and only a contract
of affreightment. Hence, the carrier was not transformed into a private carrier.

On the other hand a contract of affreightment is one in which the owner of the vessel leases part or all of
its space to haul goods for others. It is a contract for special service to be rendered by the owner of the
vessel and under such contract the general owner retains the possession, command and navigation of
the ship, the charterer or freighter merely having use of the space in the vessel in return for his payment
of the charter hire.

An owner who retains possession of the ship though the hold is the property of the charterer,
remains liable as carrier and must answer for any breach of duty as to the care, loading and
unloading of the cargo. Although a charter party may transform a common carrier into a private
one, the same however is not true in a contract of affreightment on account of the
aforementioned distinctions between the two. PETITION DENIED.

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CASE TITLE: CALVO V. UCPB GEN INSURANCE CO.


G.R. NO/DATE: G.R. No.148496 March 19, 2002
COMMON CARRIER: Article 1732 makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one who does such
carrying only as ancillary activity. Article 1732 also carefully avoids making any distinction
between a person or enterprise offering transportation service on a regular or scheduled
DOCTRINE: 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 distinction. (De Guzman v. CA, 68 SCRA 612)

FACTS:
Petitioner Virgines Calvo, owner of Transorient Container Terminal Services, Inc. (TCTSI), and a custom
broker, 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 to the Tabacalera Compound,
Ermita, Manila. The cargo was insured by respondent UCPB General Insurance Co., Inc.

On July 14, 1990, contained in 30 metal vans, arrived in Manila on board “M/V Hayakawa Maru”. After 24
hours, they were unloaded from vessel to the custody of the arrastre operator, Manila Port Services, Inc.
From July 23 to 25, 1990, petitioner, pursuant to her contract with SMC, withdrew the cargo from the
arrastre operator and delivered it to SMC’s warehouse in Manila. On July 25, the goods were inspected
by Marine Cargo Surveyors, reported that 15 reels of the semi-chemical fluting paper were
“wet/stained/torn” and 3 reels of kraft liner board were also torn. The damages cost P93,112.00.

SMC collected the said amount from respondent UCPB under its insurance contract. Respondent on the
other hand, as a subrogee of SMC, brought a suit against petitioner in RTC, Makati City. On December
20, 1995, the RTC rendered judgment finding petitioner liable for the damage to the shipment. The
decision was affirmed by the CA.

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 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 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. We think that Article 1733 deliberately refrained from making such
distinction. (De Guzman v. CA, 68 SCRA 612)

The concept of “common carrier” under Article 1732 coincide with the notion of “public service”, under the
Public Service Act which partially supplements the law on common carrier. Under Section 13, paragraph
(b) of the Public Service Act, it includes:

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“ 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

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CASE TITLE: Philippine American General Insurance Co. v PKS Shipping


G.R. NO/DATE: GR No. 149038 April 9, 2003

Common carriers; Art. 1732 of NCC-- 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
DOCTRINE: 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
1732 deliberately refrained from making such distinctions.

FACTS:

Davao Union Marketing Corporation (DUMC) contracted the services of PKS Shipping Company (PKS
Shipping) for the shipment to Tacloban City of 75,000 bags 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. On 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,

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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 barge’s or the tugboat’s 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
barge’s 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.

The 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 the Court 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.

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CASE TITLE: Asia Lighterage and Shipping, Inc. v. Court of Appeals


G.R. NO/DATE: G.R. No. 147246
Determination of a common carrier.—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
DOCTRINE:
out to the general public as his occupation rather than the quantity or extent of the business
transacted.”

FACTS:
Asia Lighterage and Shipping, Inc was contracted as carrier to deliver 3,150 metric tons of Better Western
White Wheat in bulk, (US$423,192.35) to the consignee‘s (General Milling Corporation) warehouse at Bo.
Ugong, Pasig City insured by Prudential Guarantee and Assurance, Inc. against loss/damage for
P14,621,771.75.

It appears that on August 17, 1990, the transport of said cargo was suspended due to a warning of an
incoming typhoon. PSTSI III was tied down to other barges which arrived ahead of it while weathering out
the storm that night. A few days after, the barge developed a list because of a hole it sustained after
hitting an unseen protuberance underneath the water. It filed a Marine Protest on August 28, 1990 and
also secured the services of Gaspar Salvaging Corporation to refloat the barge.

The barge was then towed to ISLOFF terminal before it finally headed towards the consignee’s wharf on
September 5, 1990. Upon reaching the Sta. Mesa spillways, the barge again ran aground due to strong
current. 7 days later, a bidding was conducted to dispose of the damaged wheat retrieved & loaded on the
3 other barges. The total proceeds from the sale of the salvaged cargo was P201,379.75.

ISSUE:
1. Whether petitioner is a common carrier.

2. Assuming petitioner is a common carrier, whether it exercised extraordinary care and diligence in its
care and custody of the consignee’s cargo.

HELD:
1. Petitioner is a common carrier.

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.

In De Guzman vs. CA it was 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. There is also no distinction between a
person or enterprise offering transportation service on a regular/scheduled basis and one offering such
service on an occasional, episodic or unscheduled basis.]

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

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in the business of shipping, lighterage and drayage, offering its barges to the public, despite its limited
clientele for carrying/transporting goods by water for compensation.

2. The findings of the lower courts should be upheld. Petitioner failed to exercise extraordinary diligence
in its care and custody of the consignee’s goods.

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, the common carrier must prove that it exercised extraordinary
diligence.There are, however, exceptions

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;

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/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.
Thus, when petitioner persisted to proceed with the voyage, it recklessly exposed the cargo to further
damage.

Moreover, petitioner still headed to the consignee’s wharf despite knowledge of an incoming typhoon.
During the time that the barge was heading towards the consignee’s wharf on September 5, 1990,
typhoon “Loleng” has already entered the Philippine area of responsibility.

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CASE TITLE: PLANTERS PRODUCT INC. VS CA


G.R. NO/DATE: G.R. No. 101503 / September 15, 1993
Common carrier should observe extraordinary diligence in the vigilance over the goods they
DOCTRINE: carry; in case of loss, destruction or deterioration of the goods, it is presumed to be at fault or
to have acted negligently, and the burden of proving otherwise rests on it.

FACTS:
Planters Products purchased from Mitsubishi Inter’l Corp. 9.3K metric tons of Urea (fertilizer),
46% of which the latter shipped in bulk aboard the cargo vessel M/V “Sun Plum” owned by Kyosei Kisen
Kabushiki Kaisha (KKKK). A Time Charter- Party on the vessel M/V “Sun Plum” pursuant to the Uniform
General Charter was entered into between Mitsubishi as shipper/charter and KKKK as ship owner.
Before loading the fertilizer aboard the vessel they were inspected by the charterer’s
representative and found fit for loading. After the Urea fertilizer was loaded in bulk by stevedores
(somebody whose job is to load and unload ships) hired by and under the supervision of the shipper, the
steel hatches were closed with heavy iron lids, covered with 3 layers of tarpaulin, then tied with steel
bonds. The hatches remained closed and tightly sealed throughout the entire voyage.
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. Survey report 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 sand, rust and dirt. Planters Products sent a claim letter to Soriamont Steamship
Agencies, the resident agent of the carrier, for damages.
ISSUE:
Whether or not a common carrier becomes a private carrier by reason of a charter-party;
HELD:
Yes. The Supreme Court defined Charter- party as a “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; a contract of
affreightment by which the owner of a ship or other vessel lets the whole or a 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” It went further on discussing the two types of charter-party:
a. contract of affreightment – involves the use of shipping space on vessels leased by the owner
in part or as a whole, to carry goods for others; may either be: (i) time charter - vessel is leased to the
charterer for a fixed period of time; or (ii)voyage charter - ship is leased for a single voyage
b. charter by demise or bareboat charter – whole vessel is let to the charterer with a transfer to
him of its entire command and possession and consequent control over its navigation, including the
master and the crew, who are his servants.
In both types, the charter party provides for the hire of vessel only, either for a determinate period
of time or for a single or consecutive voyage, the ship owner to supply the ship’s stores, pay for the
wages of the master and the crew, and defray the expenses for the maintenance of the ship.
Distinction between a “common or public carrier” and a “private or special carrier” lies in the
character of the business, such that if the undertaking is a single transaction, not a part of the general
business or occupation, although involving the carriage of goods for a fee, the person or corporation
offering such service is a private carrier.
Common carrier should observe extraordinary diligence in the vigilance over the goods they
carry; in case of loss, destruction or deterioration of the goods, it is presumed to be at fault or to have
acted negligently, and the burden of proving otherwise rests on it. Private carrier -exercise of ordinary
diligence in the carriage of goods will suffice; no such presumption applies to private carriers 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 when
Planters Products chartered the vessel M/V “Sun Plum”, the ship captain, its officers and compliment
were under the employ of the ship owner and therefore continued to be under its direct supervision and
control. As stranger to the crew and to the ship, Planters Products did not have the duty of caring for its
cargo as it did not have control of the means in doing so.

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CASE TITLE: ENGRACIO FABRE, JR. and PORFIRIO CABIL vs. COURT OF APPEALS
G.R. NO/DATE: G.R. no. 111127, July 26, 1996
COMMON CARRIER; CULPA CONTRACTUAL; CULPA ACQUILIANA – petitioner liable
for breach of contract of carriage or culpa contractual or on the theory of quasi delict or culpa
DOCTRINE:
aquiliana holding that the relation of passenger and carrier is “contractual both in origin and
nature,” nevertheless “the act that breaks the contract may be also a tort”.

FACTS:

Petitioners Engracio Fabre, Jr. and his wife were owners of a Mazda minibus. They used the bus
principally in connection with a bus service for school children which they operated in Manila. It was
driven by Porfirio Cabil.

On November 2, 1984 private respondent Word for the World Christian Fellowship Inc. (WWCF) arranged
with the petitioners for the transportation of 33 members of its Young Adults Ministry from Manila to La
Union and back in consideration of which private respondent paid petitioners the amount of P3,000.00.

The 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 Ba-ay in Lingayen, Pangasinan. At 11:30 that
night, petitioner Cabil came upon a sharp curve on the highway. The road was slippery because it was
raining, causing the bus, which was running at the speed of 50 kilometers per hour, to skid to the left road
shoulder. The bus hit the left traffic steel brace and sign along the road and rammed the fence of one
Jesus Escano, then turned over and landed on its left side, coming to a full stop only after a series of
impacts. The bus came to rest off the road. A coconut tree which it had hit fell on it and smashed its front
portion. Because of the mishap, several passengers were injured particularly Amyline Antonio.

Criminal complaint was filed against the driver and the spouses were also made jointly liable. Spouses
Fabre on the other hand contended that they are not liable since they are not a common carrier. The RTC
of Makati ruled in favor of the plaintiff and the defendants were ordered to pay jointly and severally to the
plaintiffs. The Court of Appeals affirmed the decision of the trial court.

ISSUE:

Whether or not the spouses Fabre are common carriers.

Whether or not the petitioners are liable for the injuries suffered by the respondents based on culpa
contractual and/or culpa aquiliana.

RULING:

a. Spouses Fabre are common carriers.

The Supreme Court held that this case actually involves a contract of carriage. Petitioners, the Fabres,
did not have to be engaged in the business of public transportation for the provisions of the Civil Code on
common carriers to apply to them. As this Court has held: 10 Art. 1732, Common carriers are persons,
corporations, firms or associations engaged in the business of carrying or transporting passengers or
goods or both, by land, water, or air for compensation, offering their services to the public.

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

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"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
1732 deliberately refrained from making such distinctions.

b. The Court ruled that damages should be awarded based on the theory that petitioners are
liable for breach of contract of carriage or culpa contractual or on the theory of quasi delict or culpa
aquiliana holding that the relation of passenger and carrier is “contractual both in origin and nature,”
nevertheless “the act that breaks the contract may be also a tort. In both sources of obligation, the
existence of negligence of petitioners must be determined. In this case, Cabil drove his bus negligently,
while his employer, the Fabres, who owned the bus, failed to exercise the diligence of a good father of the
family in the selection and supervision of their employee is fully supported by the evidence on record.
Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to the presumption that his
employers, the Fabres, were themselves negligent in the selection and supervision of their employee.
Thus, the finding of the Court that petitioners are liable under Arts. 2176 and 2180 for quasi delict fully
justify that they are guilty of breach of contract of carriage under Arts. 1733, 1755 and 1759 of the Civil
Code.

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CASE TITLE: DE GUZMAN V. CA


G.R. NO/DATE: G.R. No. L-47822 December 22, 1988
COMMON CARRIERS; Hijacking of the carrier's truck - does not fall within any of the five
DOCTRINE:
(5) categories of exempting causes listed in Article 1734

FACTS:
Respondent Ernesto Cendana was a junk dealer. He buys scrap materials and brings those that he
gathered to Manila for resale using 2 six-wheeler trucks. On the return trip to Pangasinan, respondent
would load his vehicle with cargo which various merchants wanted delivered, charging fee lower than the
commercial rates. Sometime in November 1970, petitioner Pedro de Guzman contracted with respondent
for the delivery of 750 cartons of Liberty Milk. On December 1, 1970, respondent loaded the cargo. Only
150 boxes were delivered to petitioner because the truck carrying the boxes was hijacked along the way.
Petitioner commenced an action claiming the value of the lost merchandise. Petitioner argues that
respondent, being a common carrier, is bound to exercise extraordinary diligence, which it failed to do.
Private respondent denied that he was a common carrier, and so he could not be held liable for force
majeure. The trial court ruled against the respondent, but such was reversed by the Court of Appeals.
ISSUE:
1. Whether or not private respondent is a common carrier
2. Whether private respondent is liable for the loss of the goods

HELD:
1. Article 1732 makes no distinction between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only as an 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. It appears to the Court that private respondent is properly characterized as a common
carrier even though he merely "back-hauled" goods for other merchants from Manila to
Pangasinan, although such backhauling was done on a periodic or occasional rather than regular
or scheduled manner, and even though private respondent's principal occupation was not the
carriage of goods for others. There is no dispute that private respondent charged his customers a
fee for hauling their goods; that fee frequently fell below commercial freight rates is not relevant
here. A certificate of public convenience is not a requisite for the incurring of liability under the
Civil Code provisions governing common carriers.

2. Article 1734 establishes the general rule that common carriers are responsible for the loss,
destruction or deterioration of the goods which they carry, "unless the same is due to any of the
following causes only:

a. Flood, storm, earthquake, lightning, or other natural disaster or calamity;


b. Act of the public enemy in war, whether international or civil;
c. Act or omission of the shipper or owner of the goods;
d. The character of the goods or defects in the packing or in the containers; and
e. Order or act of competent public authority."

The hijacking of the carrier's truck - does not fall within any of the five (5) categories of
exempting causes listed in Article 1734. 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.
We believe and so hold that the limits of the duty of extraordinary diligence in the

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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." we hold that
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.

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NATIONAL DEVELOPMENT COMPANY vs. THE COURT OF APPEALS and


CASE TITLE:
DEVELOPMENT INSURANCE AND SURETY CORPORATION
G.R. NO/DATE: G.R. No. L-49407 19 August 1988
Primary liability is imposed on the shipowner or carrier in recognition of the universally
DOCTRINE: accepted doctrine that the shipmaster or captain is merely the representative of the owner
who has the actual or constructive control over the conduct of the voyage.

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

ISSUE:
1. Which laws govern the loss and destruction of goods due to collision of vessels outside Philippine
waters?
2. Who is liable for the loss of the cargo?

RULING:
1. This issue has already been laid to rest by this Court of Eastern Shipping Lines Inc. v. IAC (1 50
SCRA 469-470 [1987]) where it was held under similar circumstance "that the law of the country
to which the goods are to be transported governs the liability of the common carrier in case of
their loss, destruction or deterioration" (Article 1753, Civil Code). Thus, the rule was specifically
laid down that for cargoes transported from Japan to the Philippines, the liability of the carrier is
governed primarily by the Civil Code and in all matters not regulated by said Code, the rights and
obligations of common carrier shall be governed by the Code of commerce and by laws (Article
1766, Civil Code). Hence, the Carriage of Goods by Sea Act, a special law, is merely suppletory
to the provision of the Civil Code.

In the case at bar, it has been established that the goods in question are transported from San
Francisco, California and Tokyo, Japan to the Philippines and that they were lost or due to a
collision which was found to have been caused by the negligence or fault of both captains of the
colliding vessels. Under the above ruling, it is evident that the laws of the Philippines will apply,
and it is immaterial that the collision actually occurred in foreign waters, such as Ise Bay, Japan.

2. As found by the trial court and by the Court of Appeals, the Memorandum Agreement of
September 13, 1962 shows that NDC appointed MCP as Agent, a term broad enough to include
the concept of Ship-agent in Maritime Law. In fact, MCP was even conferred all the powers of the
owner of the vessel, including the power to contract in the name of the NDC. Consequently, under
the circumstances, MCP cannot escape liability.

It is well settled that both the owner and agent of the offending vessel are liable for the damage
done where both are impleaded; that in case of collision, both the owner and the agent are civilly
responsible for the acts of the captain; that while it is true that the liability of the naviero in the
sense of charterer or agent, is not expressly provided in Article 826 of the Code of Commerce, it
is clearly deducible from the general doctrine of jurisprudence under the Civil Code but more
specially as regards contractual obligations in Article 586 of the Code of Commerce. Moreover,
the Court held that both the owner and agent (Naviero) should be declared jointly and
severally liable, since the obligation which is the subject of the action had its origin in a
tortious act and did not arise from contract. Consequently, the agent, even though he may

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not be the owner of the vessel, is liable to the shippers and owners of the cargo
transported by it, for losses and damages occasioned to such cargo, without prejudice,
however, to his rights against the owner of the ship, to the extent of the value of the
vessel, its equipment, and the freight.

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CASE TITLE: Alitalia v. Intermediate Appellate Court


G.R. NO/DATE: G.R. No. 147246
The Warsaw Convention does not operate as an absolute limit of the extent of an
airline's liability; it does not regulate or exclude liability for other breaches of contract
DOCTRINE:
by the carrier, or misconduct of its employees, or for some particular or exceptional
type of damage.

FACTS:
Dr. Felipa Pablo, a professor from UP was invited to attend a meeting by the United Nations in
Ispra, Italy. She was to read a paper regarding foreign substances in food and the agriculture
environment which she had specialized knowledge of. She booked a flight to Italy with Alitalia airlines,
petitioner herein. She had arrived in Milan the day before the meeting however her luggage did not arrive
with her. The airline informed her that her luggage was delayed because it was placed in one of the
succeeding flights to Italy. She never got her luggage.
When she got back to Manila she demanded that Alitalia compensate her for the damages that
she suffered. Petitioner herein offered free airline tickets in order to compensate for the alleged
damages, however she rejected this offer and instead filed a case. Subsequently it was found out that
the luggages of Dr. Pablo were not placed in the succeeding flights. She received her luggage 11
months after and after she had already instituted a case against Alitalia.
The lower court rendered a decision in favor of Dr. Pablo and ordered plaintiff to pay damages.
On appeal, the Court of Appeals affirmed the decision and even increased the amount of damages to be
awarded to Dr. Pablo. Hence this petition for certiorari.

ISSUE:
Whether or not Alitalia is liable for damages incurred by Dr. Pablo.

HELD:
The Court held that Alitalia is liable to pay Dr. Pablo for nominal damages. The Warsaw
Convention provides that an air carrier is made liable for damages when: (1) the death, wounding or
other bodily injury of a passenger if the accident causing it took place on board the aircraft or in the
course of its operations of embarking or disembarking; (2) the destruction or loss of, or damage to, any
registered luggage or goods, if the occurrence causing it took place during the carriage by air"; and (3)
delay in the transportation by air of passengers, luggage or goods. However, the claim for damages may
be brought subject to limitations provided in the said convention.
In this case, Dr. Pablo did not suffer any other injury other than not being able to read her paper
in Italy. This was due to the fact that Alitalia misplaced her luggage. There was no bad faith or malice on
the part of Alitalia in the said delay in the arrival of her luggage. Dr. Pablo received all her things which
were returned to her in good condition although 11 months late. Therefore she shall receive nominal
damages for the special injury caused.

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CASE TITLE: MAPA VS COURT OF APPEALS


G.R. NO/DATE: G.R. No. 122308 / July 8, 1997
There are then two categories of international transportation, viz., (1) that where the place of
departure and the place of destination are situated within the territories of two High
Contracting Parties regardless of whether or not there be a break in the transportation or a
DOCTRINE: transshipment; and (2) that where the place of departure and the place of destination are
within the territory of a single High Contracting Party if there is an agreed stopping place
within a territory subject to the sovereignty, mandate, or authority of another power, even
though the power is not a party to the Convention.

FACTS:
Plaintiffs Cornelio Mapa and Purita Mapa entered into contract of air transportation with
defendant TWA as evidenced by TWA tickets. Said TWA tickets are for Los Angeles-New York-Boston-St.
Louis-Chicago.

The domicile of carrier TWA is Kansas City, Missouri, USA. Its principal place of business
is Kansas City, Missouri, USA. TWA's place of business through which the contracts were made is
Bangkok, Thailand. The place of destination is Chicago, USA.

On August 10, 1990, plaintiffs Carmina (daughter of Cornelio and Purita) and Purita left Manila on
board a PAL flight for Los Angeles. Carmina was to commence schooling and thus was accompanied by
Purita to assist her in settling down at the University.

They arrived Los Angeles on the same date and stayed there until August 14, 1990 when they left
for New York City on a TWA flight. On August 27, 1990, plaintiffs Purita and Carmina S. Mapa departed
for Boston, checking in seven (7) pieces of luggage at the TWA counter in the JFK Airport. They were
issued receipts for the said baggage.

Upon arriving in Boston, plaintiffs Purita and Carmina proceeded to the carousel to claim
their baggages and found only three out of the seven they checked in. Plaintiffs immediately reported the
loss of their four baggages to the TWA Baggage Office at Logan Airport. TWA's representative confidently
assured them that their baggages would be located within 24 hours and not more than 48 hours.

They were requested to accomplish a passenger property questionnaire to facilitate a


further intensive and computerized search for the lost luggage, which they duly accomplished. The total
value of the lost items amounted to $11,283.79.

ISSUE:
Whether the Warsaw Convention is applicable to this case
HELD:
No, the Warsaw Convention is not applicable because the carriage or transportation was not
international in character. The RTC is directed to proceed with pre-trial.

It appears clear to us that TWA itself, the trial court, and the Court of Appeals impliedly admit that
if the sole basis were the two TWA tickets for Los Angeles-New York-Boston-St. Louis-Chicago, the
contracts cannot be brought within the term "international transportation," as defined in Article I(2) of the
Warsaw Convention. As provided therein, a contract is one of international transportation only if according
to the contract made by the parties, the place of departure and the place of destination, whether or not
there be a break in the transportation or a transshipment, are situated either within the territories of two
High Contracting Parties, or within the territory of a single High Contracting Party, if there is an agreed
stopping place within a territory subject to the sovereignty, mandate or authority of another power, even
though that power is not a party to this convention.

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There are then two categories of international transportation, (1) that where the place of
departure and the place of destination are situated within the territories of two High Contracting Parties
regardless of whether or not there be a break in the transportation or a transshipment; and (2) that where
the place of departure and the place of destination are within the territory of a single High Contracting
Party if there is an agreed stopping place within a territory subject to the sovereignty, mandate, or
authority of another power, even though the power is not a party of the Convention.

The contracts of transportation in this case are evidenced by the two TWA tickets, both purchased
and issued in Bangkok, Thailand. On the basis alone of the provisions therein, it is obvious that the place
of departure and the place of destination are all in the territory of the United States, or of a single High
Contracting Party. The contracts, therefore, cannot come within the purview of the first category of
international transportation. Neither can it be under the second category since there was NO agreed
stopping place within a territory subject to the sovereignty, mandate, or authority of another power.

The only way to bring the contracts between Purita and Carmina Mapa, on the one hand, and
TWA, on the other, within the first category of "international transportation" is to link them with, or to make
them an integral part of, the Manila-Los Angeles travel of Purita and Carmina through PAL aircraft. The
"linkages" which have been pointed out by the TWA, the trial court, and the Court of Appeals are (1) the
handwritten notations, on the two TWA tickets; and (2) the entries made by petitioners Purita and Carmina
Mapa in column YOUR COMPLETE ITINERARY in TWA's Passenger Property Questionnaire, wherein
they mentioned their travel from Manila to Los Angeles in flight PR 102.

The alleged "international tickets" mentioned in the notations in conjunction with which the two
TWA tickets were issued were not presented. Clearly then, there is at all no factual basis of the finding
that the TWA tickets were issued in conjunction with the international tickets, which are even, at least as
of now, non-existent.

As regards the petitioner's entry in “Your Complete Itenerary” column of the Passenger Property
Questionnaire wherein they included the Manila-Los Angeles travel, it must be pointed out that this was
made by petitioners Purita and Carmina Mapa, and only in connection with their claim for their lost pieces
of baggage. The entry can by no means be considered as a part of, or supplement to, their contracts of
transportation evidenced by the TWA tickets which covered transportation within the United States only.

It must be underscored that the first category of international transportation under the Warsaw
Convention is based on "the contract made by the parties." TWA does not claim that the Manila-Los
Angeles contracts of transportation which brought Purita and Carmina to Los Angeles were also its
contracts. It does not deny the assertion of the petitioners that those contracts were independent of the
TWA tickets issued in Bangkok, Thailand. No evidence was offered that TWA and PAL had an agreement
concerning transportation of passengers from points of departures not served with aircrafts of one or the
other.

TWA relies on Article I(3) of the Convention, which provides as follows:

3. A carriage to be performed by several successive air carriers is deemed, for the purposes of
this Convention, to be one undivided carriage, if it has been regarded by the parties as a single
operation, whether it had been agreed upon under the form of a single contract or of a series of
contracts, and it shall not lose its international character merely because one contract or a series
of contracts is to be performed entirely within a territory subject to the sovereignty, suzerainty,
mandate, or authority of the same High Contracting Party.

The flaw of respondent's position is the presumption that the parties have "regarded" as an "undivided
carriage" or as a "single operation" the carriage from Manila to Los Angeles through PAL then to New
York-Boston-St. Louis-Chicago through TWA.

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BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. and JARDINE DAVIES


CASE TITLE:
TRANSPORT SERVICES, INC., vs. PHILIPPINE FIRST INSURANCE CO., INC.,
G.R. NO/DATE: G.R. No. 143133, June 5, 2002
Proof of the delivery of goods in good order to a common carrier and of their arrival in bad
order at their destination constitutes prima facie fault or negligence on the part of the carrier.
DOCTRINE:
If no adequate explanation is given as to how the loss, the destruction or the deterioration of
the goods happened, the carrier shall be held liable therefor.

FACTS: On June 13, 1990, CMC Trading A.G. shipped on board the M/V 'Anangel Sky' at Hamburg,
Germany 242 coils of various Prime Cold Rolled Steel sheets for transportation to Manila consigned to
the Philippine Steel Trading Corporation. On July 28, 1990, M/V Anangel Sky arrived at the port of Manila
and, within the subsequent days, discharged the subject cargo. Four (4) coils were found to be in bad
order. Finding the four (4) coils in their damaged state to be unfit for the intended purpose, the consignee
Philippine Steel Trading Corporation declared the same as total loss.
Petitioners refused to submit to the consignee's claim. Consequently, respondent paid the consignee and
was subrogated to the latter's rights. Subsequently, respondent instituted this complaint for recovery of
the amount paid by them, to the consignee as insured.
Petitioners imputed that the damage and/or loss was due to pre-shipment damage. In addition thereto,
they argued that their liability, if there be any, should not exceed the limitations of liability provided for in
the bill of lading and other pertinent laws. Finally, they averred that, in any event, they exercised due
diligence and foresight required by law to prevent any damage/loss to said shipment.
RTC dismissed the Complaint because respondent had failed to prove its claims. In reversing the trial
court, the CA ruled that petitioners were liable for the loss or the damage of the goods shipped, because
they had failed to overcome the presumption of negligence imposed on common carriers.
ISSUES:
1. Whether or not a notation in the bill of lading at the time of loading is sufficient to show pre-
shipment damage and to exempt herein defendants from liability.
2. Whether or not the consignee/plaintiff filed the required notice of loss within the time required by
law.
3. Whether or not the "PACKAGE LIMITATION" of liability under Section 4 (5) of COGSA is
applicable.
HELD:
1. NO. Mere proof of delivery of the goods in good order to a common carrier and of their arrival
in bad order at their destination constitutes a prima facie case of fault or negligence against the
carrier. If no adequate explanation is given as to how the deterioration, the loss or the destruction of the
goods happened, the transporter shall be held responsible. Petitioners failed to rebut the prima facie
presumption of negligence in the case at bar. True, the words "metal envelopes rust stained and slightly
dented" were noted on the Bill of Lading; however, there is no showing that petitioners exercised due
diligence to forestall or lessen the loss. Having failed to discharge the burden of proving that they have
exercised the extraordinary diligence required by law, petitioners cannot escape liability for the
damage to the four coils.
2. YES. Pursuant to Section 3, paragraph 6 of the Carriage of Goods by Sea Act (COGSA), a
failure to file a notice of claim within three days will not bar recovery if it is nonetheless filed within
one year. This one-year prescriptive period also applies to the shipper, the consignee, the insurer of
the goods or any legal holder of the bill of lading. In the present case, the cargo was discharged on July
31, 1990, while the Complaint was filed by respondent on July 25, 1991, within the one-year prescriptive
period.
3. YES. In the case before us, there was no stipulation in the Bill of Lading limiting the carrier's
liability. Neither did the shipper declare a higher valuation of the goods to be shipped. This fact
notwithstanding, the insertion of the words "L/C No. 90/02447 cannot be the basis for petitioners' liability.
A notation in the Bill of Lading which indicated the amount of the Letter of Credit obtained by the
shipper for the importation of steel sheets did not effect a declaration of the value of the goods as

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required by the bill. In the light of the foregoing, petitioners' liability should be computed based on
US$500 per package and not on the per metric ton price declared in the Letter of Credit.

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CASE TITLE: CALALAS V. CA


G.R. NO/DATE: G.R. No. 122039 May 31, 2000
CASO FORTUITO: An event which could not be foreseen, or which, though foreseen, was
inevitable; MORAL DAMAGES ARE NOT RECOVERABLE IN ACTIONS FOR DAMAGES
DOCTRINE:
PREDICATED ON A BREACH OF CONTRACT unless the carrier is guilty of fraud or bad
faith.

FACTS:
Private respondent Eliza Jujeurche G. Sunga took a passenger jeepney owned and operated by petitioner
Vicente Calalas. As the jeepney was already full, Calalas gave Sunga an stool at the back of the door at
the rear end of the vehicle. Along the way, the jeepney stopped to let a passenger off. Sunga stepped
down to give way when an Isuzu truck owned by Francisco Salva and driven by Iglecerio Verena bumped
the jeepney. As a result, Sunga was injured. Sunga filed a complaint against Calalas for violation of
contract of carriage. Calalas filed a third party complaint against Salva. The trial court held Salva liable
and absolved Calalas, taking cognisance of another civil case for quasi-delict wherein Salva and Verena
were held liable to Calalas. The Court of Appeals reversed the decision and found Calalas liable to Sunga
for violation of contract of carriage.
ISSUE:
1. Whether the decision in the case for quasi delict between Calalas on one hand and Salva and
Verena on the other hand, is res judicata to the issue in this case
2. Whether Calalas exercised the extraordinary diligence required in the contract of carriage
3. Whether moral damages should be awarded

HELD:
1. The argument that Sunga is bound by the ruling in Civil Case No. 3490 finding the driver and the
owner of the truck liable for quasi-delict ignores the fact that she was never a party to that case
and, therefore, the principle of res judicata does not apply. Nor are the issues in Civil Case No.
3490 and in the present case the same. The issue in Civil Case No. 3490 was whether Salva and
his driver Verena were liable for quasi-delict for the damage caused to petitioner's jeepney. On
the other hand, the issue in this case is whether petitioner is liable on his contract of carriage.
The first, quasi-delict, also known as culpa aquiliana or culpa extra contractual, has as its source
the negligence of the tortfeasor. The second, breach of contract or culpa contractual, is premised
upon the negligence in the performance of a contractual obligation. Consequently, in quasi-delict,
the negligence or fault should be clearly established because it is the basis of the action, whereas
in breach of contract, the action can be prosecuted merely by proving the existence of the
contract and the fact that the obligor, in this case the common carrier, failed to transport his
passenger safely to his destination. In case of death or injuries to passengers, Art. 1756 of the
Civil Code provides that common carriers are presumed to have been at fault or to have acted
negligently unless they prove that they observed extraordinary diligence as defined in Arts. 1733
and 1755 of the Code. This provision necessarily shifts to the common carrier the burden of
proof. It is immaterial that the proximate cause of the collision between the jeepney and the truck
was the negligence of the truck driver. The doctrine of proximate cause is applicable only in
actions for quasi-delict, not in actions involving breach of contract. The doctrine is a device for
imputing liability to a person where there is no relation between him and another party. In such a
case, the obligation is created by law itself. But, where there is a pre-existing contractual relation
between the parties, it is the parties themselves who create the obligation, and the function of the
law is merely to regulate the relation thus created.

2. We do not think so. First, the jeepney was not properly parked, its rear portion being exposed
about two meters from the broad shoulders of the highway, and facing the middle of the highway
in a diagonal angle. Second, it is undisputed that petitioner's driver took in more passengers than
the allowed seating capacity of the jeepney. The fact that Sunga was seated in an "extension
seat" placed her in a peril greater than that to which the other passengers were exposed.

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Therefore, not only was petitioner unable to overcome the presumption of negligence imposed on
him for the injury sustained by Sunga, but also, the evidence shows he was actually negligent in
transporting passengers. We find it hard to give serious thought to petitioner's contention that
Sunga's taking an "extension seat" amounted to an implied assumption of risk. It is akin to
arguing that the injuries to the many victims of the tragedies in our seas should not be
compensated merely because those passengers assumed a greater risk of drowning by boarding
an overloaded ferry. This is also true of petitioner's contention that the jeepney being bumped
while it was improperly parked constitutes caso fortuito. A caso fortuito is an event which could
not be foreseen, or which, though foreseen, was inevitable. This requires that the following
requirements be present: (a) the cause of the breach is independent of the debtor's will; (b) the
event is unforeseeable or unavoidable; (c) the event is such as to render it impossible for the
debtor to fulfill his obligation in a normal manner, and (d) the debtor did not take part in causing
the injury to the creditor. Petitioner should have foreseen the danger of parking his jeepney with
its body protruding two meters into the highway.

3. As a general rule, moral damages are not recoverable in actions for damages predicated
on a breach of contract for it is not one of the items enumerated under Art. 2219 of the
Civil Code. As an exception, such damages are recoverable: (1) in cases in which the
mishap results in the death of a passenger, as provided in Art. 1764, in relation to Art.
2206(3) of the Civil Code; and (2) in the cases in which the carrier is guilty of fraud or
bad faith, as provided in Art. 2220. In this case, there is no legal basis for awarding moral
damages since there was no factual finding by the appellate court that petitioner acted in
bad faith in the performance of the contract of carriage.

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CASE TITLE: Trans-Asia Shipping Lines, Inc. VS Court of Appeals


G.R. NO/DATE: GR 118126 4 March 1996
Extraordinary Diligence--A common carrier is bound to observe extraordinary diligence in
DOCTRINE:
ensuring the safety of the its passenger.

FACTS:

Atty. Renato Arroyo purchased a ticket from Trans-Asia Shipping lines, Inc. for the voyage of M/V Asia
Thailand vessel to Cagayan de Oro from Cebu City. Upon boarding he noticed that engines of the vessel
were being repaired. Regardless, he boarded the same.

The vessel departed on time with only 1 engine running. It stopped near Kawit Island and after half an
hour of stillness, the passengers, who already were suffering from mental distress, demanded that they
be brought back to their port of origin.

At Cebu City, passengers who wished to disembark were allowed and given 10 minutes. Atty. Arroyo as
one of the passengers. After which, the vessel continued its voyage.

On this account, Passenger Arroyo filed before the trial court a complaint for damages against Trans-Asia
Shipping Inc. for failure of transporting the former to his place of destination.

ISSUE:

WON a vessel being unworthy of the sea is tantamount to a breach of contract?

HELD:

Under Article 1733 of the Civil Code, the petitioner was bound to observe extraordinary diligence in
ensuring the safety of the private respondent. That meant that the petitioner was, pursuant to Article 1755
of the said Code, bound to carry the private respondent safely as far as human care and foresight could
provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances. In
this case, we are in full accord with the Court of Appeals that the petitioner failed to discharge this
obligation.

Before commencing the contracted voyage, the petitioner undertook some repairs on the cylinder
head of one of the vessel's engines. But even before it could finish these repairs, it allowed the
vessel to leave the port of origin on only one functioning engine, instead of two. Moreover, even
the lone functioning engine was not in perfect condition as sometime after it had run its course, it
conked out. This caused the vessel to stop and remain a drift at sea, thus in order to prevent the
ship from capsizing, it had to drop anchor. Plainly, the vessel was unseaworthy even before the
voyage began. 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. 21 The failure of a common
carrier to maintain in seaworthy condition its vessel involved in a contract of carriage is a clear
breach of its duty prescribed in Article 1755 of the Civil Code.

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CASE TITLE: Cokaliong Shipping Lines v. UCPB, Gen. Insurance Co.


G.R. NO/DATE: G.R. No. 146018
A common carrier is presumed to have been negligent if it fails to prove that it
DOCTRINE:
exercised extraordinary vigilance over the goods if transported.

FACTS:
December 11, 1991: Nestor Angelia (shipper and consignee) delivered to the petitioner Edgar Cokaliong
Shipping Lines, Inc. (now Cokaliong Shipping Lines), a cargo consisting of one (1) carton of Christmas
decor and two (2) sacks of plastic toys, to be transported on board the M/V Tandag from Cebu City for
Tandag, Surigao del Sur. This cargo is under Bill of Lading No. 58, in the amount of P6,500.00.

Zosimo Mercado (another shipper and consignee) likewise delivered cargo to petitioner consisting of two
(2) cartons of plastic toys and Christmas decor, one (1) roll of floor mat and one (1) bundle of various or
assorted goods. This is under Bill of Lading No. 59, valued in the amount of P14,000.00

Feliciana Legaspi (owner of the goods) insured the cargo, covered by BOL Nos. 59 and No. 58, with the
UCPB General Insurance Co., Inc., [respondent]. No. 59 was insured for P100,000 while No. 58 for
P50,000. [*Note that both amounts are far from the actual and declared value in the BOLs issued by
Cokaliong]

After the vessel had passed by the Mandaue-Mactan Bridge, fire ensued in the engine room, and, despite
earnest efforts of the officers and crew of the vessel, the fire engulfed and destroyed the entire vessel
resulting in the loss of the vessel and the cargoes therein.

Feliciana Legaspi filed a claim, with [respondent], for the value of the cargos insured. The latter approved
the claim. For Bill of Lading No. 59, Legaspi received from UCPB P99,000.00 while for No. 58,
P60,338.00.

UCPB as subrogee of Legaspi, filed a complaint anchored on torts against petitioner, with the RTC of
Makati City, for the collection of the total principal amount of P148,500.00. Respondent alleged that the
loss of the cargo was due to the negligence of the petitioner

Petitioner alleged that: (a) It was cleared by the Board of Marine Inquiry of any negligence in the burning
of the vessel; and (b) it cannot be held liable for the loss of the cargo beyond the value thereof declared in
the Bill of Lading.

ISSUE:
Is petitioner liable for the loss of the goods?

HELD:
YES. The uncontroverted findings of the Philippine Coast Guard show that the M/V Tandag sank due to a
fire, which resulted from a crack in the auxiliary engine fuel oil service tank. The crack was located on the
side of the fuel oil tank, which had a mere two-inch gap from the engine room walling, thus precluding
constant inspection and care by the crew

Having originated from an unchecked crack in the fuel oil service tank, the fire could not have been
caused by force majeure. Broadly speaking, force majeure generally applies to a natural accident, such
as that caused by a lightning, an earthquake, a tempest or a public enemy.

Hence, fire is not considered a natural disaster or calamity. It does not fall within the category of an act of
God unless caused by lighting or by other natural disaster or calamity. It may even be caused by the
actual fault or privity of the carrier.

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Peril of fire is not comprehended within the exceptions in Article 1734; Article 1735 applies (please see
provision)

Where loss of cargo results from the failure of the officers of a vessel to inspect their ship frequently so as
to discover the existence of cracked parts, that loss cannot be attributed to force majeure, but to the
negligence of those officials.

Ensuring the seaworthiness of the vessel is the first step in exercising the required vigilance. Petitioner
did not present sufficient evidence showing what measures or acts it had undertaken to ensure the
seaworthiness of the vessel.

It failed to show when the last inspection and care of the auxiliary engine fuel oil service tank was made,
or some other evidence to establish that it had exercised extraordinary diligence.

It merely stated that constant inspection and care were not possible, and that the last time the vessel was
dry-docked was in November 1990.

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CASE TITLE: DELSAN TRANSPORT LINES VS COURT OF APPEALS


G.R. NO/DATE: G.R. No. 127897 / November 15, 2001
In the event of loss, destruction or deterioration of the insured goods, common carriers shall
DOCTRINE: be responsible unless the same is brought about, among others, by flood, storm,
earthquake, lightning or other natural disaster or calamity.

FACTS:
The facts show that Caltex Philippines (Caltex for brevity) entered into a contract of affreightment
with the petitioner, Delsan Transport Lines, Inc., for a period of one year whereby the said common carrier
agreed to transport Caltex’s industrial fuel oil from the Batangas-Bataan Refinery to different parts of the
country. Under the contract, petitioner took on board its vessel, MT Maysun 2,277.314 kiloliters of
industrial fuel oil of Caltex to be delivered to the Caltex Oil Terminal in Zamboanga City. The shipment
was insured with the private respondent, American Home Assurance Corporation. During the voyage, the
vessel sank. The insurer paid Caltex and now seeks recovery under the right of subrogation. The trial
court found the vessel seaworthy and the incident was caused by force majeure hence, exempt from
liability. CA reversed the trial court’s decision, explaining that petitioner was liable as a common carrier
due to lack of manpower and absent any explanation why the vessel sank.
ISSUES:
1. Whether or not there was an implied admission of seaworthiness thus precluding the right of
recovery by private respondent as insurer.
2. Whether or not the non-presentation of the marine insurance policy bars the complaint for
recovery of sum of money for lack of cause of action.
HELD:
No. The payment made by the private respondent for the insured’s value of the lost cargo
operates as waiver of its (private respondent) right to enforce the term of the implied warranty against
Caltex under the marine insurance policy. However, the same cannot be validly interpreted as an
automatic admission of the vessel’s seaworthiness by the private respondent as to foreclose recourse
against the petitioner for any liability under its contractual obligation as a common carrier. The fact of
payment grants the private respondent subrogatory right which enables it to exercise legal remedies that
would otherwise be available to Caltex as owner of the lost cargo against the petitioner common carrier.
From the nature of their business and for reasons of public policy, common carriers are bound to
observe extraordinary diligence in the vigilance over the goods and for the safety of passengers
transported by them, according to all the circumstance of each case. In the event of loss, destruction or
deterioration of the insured goods, common carriers shall be responsible unless the same is brought
about, among others, by flood, storm, earthquake, lightning or other natural disaster or calamity. In all
other cases, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been
at fault or to have acted negligently, unless they prove that they observed extraordinary diligence. The
said presumption was not overturned by petitioner in this case. Hence, private respondent as insurer can
exercise its right of subrogation against petitioner.
Thus, as the appellate court correctly ruled, petitioner’s vessel, MT Maysun, sank with its entire
cargo for the reason that it was not seaworthy. There was no squall or bad weather or extremely poor sea
condition in the vicinity when the said vessel sank.
Anent the second issue, it is our view and so hold that the presentation in evidence of the marine
insurance policy is not indispensable in this case before the insurer may recover from the common carrier
the insured value of the lost cargo in the exercise of its subrogatory right. The subrogation receipt, by
itself, is sufficient to establish not only the relationship of herein private respondent as insurer and Caltex,
as the assured shipper of the lost cargo of industrial fuel oil, but also the amount paid to settle the
insurance claim. The right of subrogation accrues simply upon payment by the insurance company of the
insurance claim.

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