Module 2 Cases
CONCEPTS IN TRANSPORTATION LAW
Cases
Goods/Passenger
1.
EVERETT
STEAMSHIP
CORP. vs. CA
Goods - vessel
Facts/Problem
Ruling:
Shipper: Maruman Trading, Japan >>> The contract limiting the
CC: Everett >>> Consignee: Hernandez liability is VALID.
Goods: 3 crates of bus spare parts
Problem: one crate was missing,
Shipper wants to recover the entire
value
2.
MOF CO., INC. vs.
SHIN YANG
BROKERAGE
CORP.
Goods - vessel
Defense: it can only be liable to what
was stated in the contract.
Shipper: Korean CO >>> CC: Hanjin
>>> Consignee: Shin Yang
Problem: Shin Yang – indicated liable
for the freight and other charges
Defense: It denied that it authorized
the Korean co to ship on its behalf,
denied that it got hold of the bill of
lading covering the shipment nor
demand the release of cargo.
Is Shin Yang liable or bound by the
stipulations on bill of lading even it is
not a signatory thereof.
No. Shin yang is not liable.
Doctrine:
A contract of adhesion is not
void per se. The mere fact that
the text was in fine print does
not invalidate it. The law is
clear that for a common carrier
to be liable for the entire
amount, such amount must be
stipulated in the contract or bill
of lading.
A consignee, although not a
signatory to the contract of
carriage between the shipper
and the carrier, becomes a
party to the contract by reason
of either a) the relationship of
agency between the consignee
and the shipper/ consignor; b)
the unequivocal acceptance of
the bill of lading delivered to
the consignee, with full
knowledge of its contents or c)
availment of the stipulation
pour autrui, i.e., when the
consignee, a third person,
demands before the carrier the
fulfillment of the stipulation
made by the consignor/shipper
in the consignees favor,
specifically the delivery of the
goods�cargoes shipped.
3.
4.
Dangwa
Transportation
Co. vs. CA
KOREAN
AIRLINES CO. vs.
CA
Passenger – Bus
Passenger Airplane
-
The victim board in the
(Dangwa) bus when it was at a
full stop,
- he was closing his umbrella at
the platform of the bus when
the bus made a sudden jerk
movement.
- After the premature
acceleration, the victim fell
from the platform and
- was run over by rear right tire
of the bus.
Flight: Mnl to Saudi Arabia via Korean
Airlines
Dangwa is liable.
There was negligence on
its part or fault.
The victim by stepping and
standing on the platform
of the bus is already
considered a passenger.
Lapuz was a passenger.
-
Problem:
- Lapuz was wait listed,
- when two passengers did not
appear, the passenger was
given the unclaimed seat.
- He was allowed to check in
- Passed through immigration
sections
- cleared for departure
- when he was at the third or fourth
rung of the stairs, a KAL officer
pointed to him and shouted "Down!
Down!"
-
His status as
standby passenger was
changed to that of a
confirmed passenger
when his name was
entered in the
passenger
His clearance through
immigration and
customs clearly shows
that he had indeed
been confirmed as a
passenger
A public utility bus, once
it stops, is in effect making
a CONTINUOUS OFFER
TO BUS RIDERS.
-
5.
CATHAY PACIFIC
AIRWAYS vs.
REYES, ET. AL
Passenger –
Airplane
He was thus barred from taking the
flight.
Flight: Manila-Hongkong- Adelaide-
Airline is liable.
There was breach of
contract.
It was aggravated when
KAL officer rudely shouted
at him, causing
embarrassment and
humiliation
Cathay is liable.
Hongkong-Manila.
Airline Cathay
Problem:
-
One week before their flight, Reyes
confirmed it
But then on Adelaide, Wilfredo
was informed by a staff from Cathay
Pacific that the Reyeses did not
confirm the reservations, and only
one family member’s �Sixta� flight
booking was confirmed.
-when an airline issues a ticket
to a passenger confirmed on a
particular flight, on a certain
date, a contract of carriage
arises, and the passenger has
every right to expect that he
would fly on that flight and on
that date. If he does not, then
the carrier opens itself to a suit
for breach of contract of
carriage.
Cathay and passenger –
contact of carriage
Contract of Services –
contact of service
A contract of carriage is defined
as one whereby a certain
person or association of persons
obligate themselves to
transport person, things, or
news from one place to another
for a fixed price.
a contract of services = the
object of the contract is
arranging and facilitating the
latter’s booking and ticketing.
6.
LRTA vs.
NAVIDAD
Passenger – train
- drunk passenger entered EDSA LRT
station after purchasing a "token"
- While Navidad was standing on the
platform near the LRT tracks, sec guard
approached him
- misunderstanding between the two ensued
that led to a fist fight.
-Navidad later fell on the LRT tracks.
- Navidad was struck by the moving train, and
he was killed instantaneously.
7.
RAMOS, ET. AL
VS. CHINA
SOUTHERN
AIRLINES CO.
LTD.
Passenger –
airplane
Flight for 5 : Manila-Xiamen-Manila
LRTA is liable for the death of
Navidad in failing to exercise
extraordinary diligence
imposed upon a common
carrier.
The foundation of LRTA‘s
liability is the contract of
carriage and its obligation to
indemnify the victim arises
from the breach of that
contract by reason of its failure
to exercise the high diligence
required of the common
carrier. In the discharge of its
commitment to ensure the
safety of passengers, a carrier
may choose to hire its own
employees or avail itself of the
services of an outsider or an
independent firm to undertake
the task. In either case, the
common carrier is not relieved
of its responsibilities under the
contract of carriage.
Airline is liable to moral
and exemplary damages.
Problem:
Moral:
-
petitioners were prevented from
taking their designated flight
earlier that day an agent from Active
Tours informed them that their
airline company acted in bad
faith in insolently bumping
petitioners off the flight after
they have completed all the
A person who wants to board a
train in a railway station must
purchase a ticket and must
present himself at the proper
place in a proper manner to be
transported. Such person must
have a bona fide intention to
use the facilities of the carrier,
possess sufficient fare with
which to pay for his passage
and present himself to the
carrier for transportation in the
place and manner provided.
�A contract of carriage arises
when an airline issues a ticket
to a passenger confirmed on a
particular flight, on a certain
date and the passenger has
every right to expect that he
would fly on that flight and on
that date, otherwise, the carrier
-
bookings for CSA 1920H flight are
confirmed
refusal came after petitioners
already checked in all their baggages
and were given the corresponding
claim stubs and after they had paid
the terminal fee
-
pre-departure routine. Bad
faith is evident when the
ground personnel of the airline
company unjustly and
unreasonably refused to board
petitioners to the plane which
compelled them to rent a car
and take the train to the
nearest airport where they
bought new sets of plane
tickets from another airline that
could fly them home.
opens itself to a suit for breach
of contract of carriage.
Exemplary
CSA is also liable for exemplary
damages as it acted in a
wantonly oppressive manner as
succinctly discussed above
against the petitioners.
Exemplary damages which are
awarded by way of example or
correction for the public good,
may be recovered in
contractual obligations, as in
this case, if defendant acted in
wanton, fraudulent, reckless,
oppressive or malevolent
manner.
8.
SPS. FERNANDO
vs. NORTHWEST
AIRLINES, INC.
Passenger –
airplane
Problem:
- ticket has been used and could not be
considered as valid.
Thus, Northwest committed a
breach of contract "in failing to
provide the spouses with the
proper assistance to avoid any
inconvenience" and that the
actuations of Northwest in both
In an action based on a breach
of contract of carriage, the
aggrieved party does not have
to prove that the common
carrier was at fault or was
negligent. All that he has to
- on the interrogation room he was asked subject incidents "fall short of
humiliating questions for more than two
hours.
the utmost diligence of a very
cautious person expected of it".
prove is the existence of the
contract and the fact of its nonperformance by the carrier.
- 2nd incident: in the presence of the other
passengers, Northwest personnel Linda Tang
pulled the Fernandos out of the queue and
asked for paper tickets (coupon type).
COMMON CARRIAGE
Cases
1.
DE GUZMAN vs.
CA
Goods/Passenger
Facts/Problem
Ruling:
Doctrine:
Goods – trucksl
Carrier Cendana: Brings scrap
materials to manila, On the return trip to
He is a common carrier.
But he is not liable for the
loss because hijacking was
a fortuitous event.
ART. 1732- definition of CC
Pangasinan, respondent would load his
vehicle with cargo which various merchants
wanted delivered, charging fee lower than
the commercial rates.
The above article makes no
distinction
-
Owner of goods: De guzman >>> CC:
Cendana >>> consignee
Goods: 750 cartos liberty milk
Problem: Only 150 boxes were delivered
because the truck carrying the boxes was
hijacked along the way.
-
between one whose
principal business
activity is the carrying
of persons or goods or
both, and one who
does such carrying only
as an ancillary activity
(in local Idiom as "a
sideline").
between a person or
enterprise offering
transportation service
on a regular or
scheduled basis and
one offering such
Defense: He was not a CC.
-
2.
PLANTERS
PRODUCTS, INC.
vs. CA
Goods: Fertilizer
Shipper: Mitsubishi >>> CC: MV Sun
Plum/ KKK >>> Consignee: PPI
Prior to its voyage, a time charter-party on
the vessel M/V "Sun Plum" pursuant to the
Uniform General Charter was entered into
between Mitsubishi as shipper/charterer and
KKKK as ship owner, in Tokyo, Japan.
Problem: revealed a shortage in the cargo
of 106.726 M/T and that a portion of the Urea
fertilizer approximating 18 M/T was
contaminated with dirt.
KKK is a CC. But it is not
liable.
When petitioner chartered the
vessel M/V "Sun Plum", the ship
captain, its officers and
compliment were under the
employ of the shipowner and
therefore continued to be
under its direct supervision and
control. Hardly then can we
charge the charterer, a stranger
to the crew and to the ship,
with the duty of caring for his
cargo when the charterer did
not have any control of the
means in doing so. This is
evident in the present case
considering that the steering of
the ship, the manning of the
decks, the determination of the
course of the voyage and other
technical incidents of maritime
navigation were all consigned
service on an
occasional, episodic or
unscheduled basis.
between a carrier
offering its services to
the "general public
and one who offers
services or solicits
business only from a
narrow segment of
the general
population.
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.
A "charter-party" is defined 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; Charter parties are of two
types:
(a) contract of affreightment which
involves the use of shipping space
on vessels leased by the owner in
to the officers and crew who
were screened, chosen and
hired by the shipowner.
Indeed, we agree with
respondent carrier that bulk
shipment of highly soluble
goods like fertilizer carries with
it the risk of loss or damage.
More so, with a variable
weather condition prevalent
during its unloading, as was the
case at bar. This is a risk the
shipper or the owner of the
goods has to face. Clearly,
respondent carrier has
sufficiently proved the inherent
character of the goods which
makes it highly vulnerable to
deterioration; as well as the
inadequacy of its packaging
which further contributed to
the loss. On the other hand, no
proof was adduced by the
petitioner showing that the
carrier was remise in the
exercise of due diligence in
order to minimize the loss or
damage to the goods it carried.
3.
BASCOS vs. CA
Goods – vessel
-
(CIPTRADE) entered into a hauling
contract with Jibfair
CIPTRADE bound itself to haul
JIBFAIR’s �,��� m/tons of soya bean
meal
BASCOS is a common
carrier.
part or as a whole, to carry goods for
others; and,
(b) charter by demise or bareboat
charter, by the terms of which the
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.
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
-
CIPTRAD subcontracted with Bascos
to transport and to deliver 400 sacks
of soya bean meal from the Manila
Port Area to Calamba, Laguna
Problem: BASCOS failed to deliver the said
cargo.
4.
Fabre Jr. vs CA
Passenger –
school bus
-
-
Fabre and wife owner of minibus
used as a bus service for school
children.
They also accept arrangement with
WWCF for the transpo of 33
memebers of Young Ad Ministry for
a consideration.
Problem: 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.
r. 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. Several passengers were injured.
In this case, petitioner herself
has made the admission that
she was in the trucking
business, offering her trucks to
those with cargo to move.
Judicial admissions are
conclusive and no evidence is
required to prove the same.
Petitioners were a
common carrier. And are
liable.
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.
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.
occupation rather than the
quantity or extent of the
business transacted.�
Common carriers are liable for
the death of or injuries to
passengers through the
negligence or willful acts of the
former�s employees, although
such employees may have
acted beyond the scope of their
authority or in violation of the
orders of the common carriers.
5.
FIRST PHIL.
INDUSTRIAL
CORP. vs. CA
FPIC is a grantee of a
pipeline concession
to contract, install
and operate oil
pipelines.
Problem: The City of Batangas City Treasurer
denied the protest contending that FPIC
cannot be considered engaged in
transportation business, thus it cannot claim
exemption under the LGC.
FPIC is a common carrier.
The fact that FPIC has a limited
clientele does not exclude it
from the definition of a
common carrier. As correctly
pointed out by FPIC, the
definition of "common carrier"
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. In
fact, in the United States, oil
pipe line operators are
considered common carriers.
FPIC is exempt from payment
of local tax under the LGC.
6.
LOADSTAR
SHIPPING CO. vs.
CA
Goods – vessel
Problem: vessel sank while it was on its way
to Manila, along with its cargoes.
LOADSTAR is a common
carrier.
Defense: Loadstar is not liable
It is not necessary that the
carrier be issued a certificate of
public convenience,
�A Pipeline concessionaire is a
common carrier�
Test for determining whether a
party is a common carrier of
goods:
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
4. The transportation
must be for hire.
ART. 1732- definition of CC
The above article makes no
distinction
-
between one whose
principal business
- because the ship sank due force majeure,
caused by the typhoon.
- It contended that the vessel is a private
carrier and not a common carrier because it
was not issued a certificate of public
convenience,
- it did not have a regular trip or schedule nor
a fixed route, and there was only, one
shipper.
7.
CALVO vs. UCPB
GEN. INSURANCE
TERMINAL
SERVICES, INC.
Goods: vessel
Petitioner Virgines Calvo is the owner of
Transorient Container Terminal Services, Inc.
(TCTSI), a sole proprietorship customs broker.
Petitioner entered into a contract with San
Miguel Corporation (SMC) for the transfer of
114 reels of semi- chemical fluting paper and
124 reels of kraft liner board from the Port
Area in Manila
15 reels of the semi-chemical fluting paper
were wet/stained/torn and 3 reels of kraft
liner board were likewise torn.
LOADSTAR was negligent. The
limited liability should not be
applied where there was
negligence on the part of the
vessel owner or agent.
LOADSTAR was at fault or
negligent in not maintaining a
seaworthy vessel and in having
allowed a vessel to sail despite
knowledge of approaching
typhoon.
Petitioner is a common carrier.
Petitioner is liable to the
damage cargoes.
There is greater reason for
holding petitioner to be a
common carrier because the
transportation of goods is an
integral part of her business.
-
activity is the carrying
of persons or goods or
both, and one who
does such carrying only
as an ancillary activity
(in local Idiom as "a
sideline").
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.
between a carrier offering its
services to the "general public
and one who offers services or
solicits business only from a
narrow segment of the general
population.
Same with number 6
8.
ASIA LIGHTRAGE
AND SHIPPING
INC. vs. CA
Goods – vessel
The delivery was delayed due to the barge
being suspended when a typhoon had had
approached their destination. After a few
days, a hole was found but was later on
patched.
The principal business of the
petitioner is that of lightrage
and drayage and it offers its
barges to the public for carrying
or transporting goods by water
for compensation. Petitioner is
clearly a common carrier.
One can be a common carrier
even if its carrying of goods is
done on an irregular manner
and even with only limited
clients.
Problem ; goods delivered in bad condition.
CC is liable.
Defense: damage was due to improper and
insufficient export packaging, discovered
when the sealed containers were opened
outside the PSI warehouse.
damage was due to improper
and insufficient export
packaging, discovered when the
sealed containers were opened
outside the PSI warehouse.
A common carrier is liable to
the resulting damage to the
goods if the improper
packaging is known to the
carrier or his employees or is
apparent upon ordinary
observation, but he
nevertheless accepts the same
without protest or exception.
Upon reaching Sta. Mesa spillways, the barge
again ran aground due to strong current. To
avoid the complete sinking of the barge, a
portion of the goods was transferred to other
barges. The next day, the towing bits of the
barge broke resulting to the barge sinking and
the total loss of the remaining cargo
9.
A.F. SANCHEZ
BROKERAGE vs.
CA
Goods – vessel
In the event that the goods are
lost, destroyed or deteriorated,
it is presumed to have been at
fault or to have acted
negligently, unless it proves
that it observed extraordinary
diligence.
10. PHIL� CHARTER
��� M�V
�NATIONAL
HONOR�
Goods: vessel
They inspected the hatches, checked the
cargo and found it in apparent good
condition. Claudio Cansino, the stevedore of
the ICTSI, placed two sling cables on each
end of Crate No. 1. No sling cable was
fastened on the mid- portion of the crate. In
Dauz’s experience, this was a normal
procedure. As the crate was being hoisted
from the vessel’s hatch, the mid -portion of
the wooden flooring suddenly snapped in
the air, about five feet high from the vessel’s
twin deck, sending all its contents crashing
down hard, resulting in extensive damage to
the shipment.
The case at bar falls under one
of the exceptions mentioned in
Article 1734 of the Civil Code,
particularly number (4) thereof,
i.e., the character of the goods
or defects in the packing or in
the containers. The trial court
found that the breakage of the
crate was not due to the fault
or negligence of ICTSI, but to
the inherent defect and
weakness of the materials used
in the fabrication of the said
crate.
The crate should have three
solid and strong wooden batten
placed side by side underneath
or on the flooring of the crate
to support the weight of its
contents. However, in the case
of the crate in dispute, although
there were three wooden
battens placed side by side on
its flooring, the middle wooden
batten, which carried
substantial volume of the
weight of the crate's contents,
had a knot hole or "bukongbukong," which considerably
affected, reduced and
weakened its strength.
It appears that the wooden
batten used as support for the
flooring was not made of good
materials, which caused the
The common carrier's duty to
observe the requisite diligence
in the shipment of goods lasts
from the time the articles are
surrendered to or
unconditionally placed in the
possession of, and received by,
the carrier for transportation
until delivered to, or until the
lapse of a reasonable time for
their acceptance, by the person
entitled to receive them. When
the goods shipped are either
lost or arrive in damaged
condition, a presumption arises
against the carrier of its failure
to observe that diligence, and
there need not be an express
finding of negligence to hold it
liable.
middle portion thereof to give
way when it was lifted. The
shipper also failed to indicate
signs to notify the stevedores
that extra care should be
employed in handling the
shipment.
11. LEA MER
INDUSTRIES INC.
vs. MALAYAN
INSURANCE CO.,
INC.
Goods: vessel
Shipper: Ilian Silca mining >>> CC: Lea Mer
Ind. >>> Consignee: Vulcan Industrial
Problem: During the voyage, the vessel sank,
resulting in the loss of the cargo.
Lea mer is a common carrier.
Petitioner is clearly a common
carrier, because it offers to the
public its business of
transporting goods through its
vessels.
The finding of the RTC that
petitioner became a private
carrier when Vulcan chartered
it is incorrect.
Charter parties are classified as
contracts of demise (or
bareboat) and affreightment.
The Contract in the present
case was one of affreightment.
Necessarily, petitioner was a
common carrier, and the
pertinent law governs the
present factual circumstances
Lea Mer is liable.
First, petitioner presented no
evidence that it had attempted
�Common carriers are bound to
observe extraordinary diligence
in their vigilance over the goods
entrusted to them, as required
by the nature of their business
and for reasons of public policy.
Consequently, the law presumes
that common carriers are at
fault or negligent for any loss or
damage to the goods that they
transport.�
to minimize or prevent the loss
before, during or after the
alleged fortuitous event.
Second, the alleged fortuitous
event was not the sole and
proximate cause of the loss.
There is a preponderance of
evidence that the barge was
not seaworthy when it sailed
for Manila. Respondent was
able to prove that, in the hull of
the barge, there were holes
that might have caused or
aggravated the sinking. Because
the presumption of negligence
or fault applied to petitioner, it
was incumbent upon it to show
that there were no holes; or, if
there were, that they did not
aggravate the sinking.
12. LOADSTAR
SHIPPING vs.
PIONEER ASIA
Goods; vessel
Loadstar entered into a voyage-charter with
Northern Mindanao Transport Company, Inc.
for the carriage of 65,000 bags of cement
Problem: However, at 4:31 in the morning,
Captain Vicente C. Montera, master of M/V
Weasel, ordered the vessel to be forced
aground. Consequently, the entire shipment
of cement was good as gone due to exposure
to sea water. Petitioner thus failed to deliver
the goods to the consignee in Manila.
(1) Loadstar remains a
common carrier.
petitioner remains a common
carrier notwithstanding the
existence of the charter
agreement with the Northern
Mindanao Transport Company,
Inc. since the said charter is
limited to the ship only and
Conformably, petitioner
remains a common carrier
notwithstanding the existence
of the charter agreement with
the Northern Mindanao
Transport Company, Inc. since
the said charter is limited to the
ship only and does not involve
both the vessel and its crew.
Defense:
at the time of the voyage the carriers voyagecharter with the shipper converted it into a
private carrier.
Thus, the presumption of negligence against
common carriers could not apply.
Petitioner further avers that the stipulation
in the voyage-charter holding it free from
liability is valid and binds the respondent
13. CEBU SALVAGE
CORP. vs. PHIL.
HOME
ASSURANCE
CORP.
Goods: vessel
Cebu Salvage Corporation and Maria Cristina
Chemicals Industries, Entered into a voyage
charter wherein Cebu Salvage Corporation
was to load 1,100 metric tons of silica quartz
on board the M/T Espiritu Santo at Ayungon,
Negros Occidental for transport to and
discharge at Tagoloan, Misamis Oriental
Problem: M/T Espiritu Santo sank off the
beach of Opol, Misamis Oriental, thus
resulting in the total loss of the cargo
does not involve both the
vessel and its crew.
Loadstar is liable.
Records show that in the
evening of June 24, 1984, the
sea and weather conditions in
the vicinity of Negros
Occidental were calm. The
records reveal that petitioner
took a shortcut route, instead
of the usual route, which
exposed the voyage to
unexpected hazard. Petitioner
has only itself to blame for its
misjudgment.
YES. Cebu Salvage Corporation
is liable for the loss of the
cargo.
CSC and MCCII entered into a
voyage charter, also known as a
contract of affreightment
wherein the ship was leased for
a single voyage for the
conveyance of goods, in
consideration of the payment
of freight.
�Common carriers are bound to
observe extraordinary diligence
over the goods they transport
according to the circumstances
of each case. In the event of loss
of the goods, common carriers
are responsible, unless they can
prove that this was brought
about by the causes specified in
Article ���� of the Civil Code.�
14. SPS. CRUZ vs.
SUN HOLIDAYS,
INC.
Beach resort with
tour package
Note: Beach resorts
cannot be a common
carrier; except in this case
that they provided tourpackages
Problem: death of their son Ruelito who
perished with his wife
Sun Holidays Inc. is a common
carrier
Shortly after the boat sailed on that day, it
started to rain and as it moved farther away
from Puerto Galera and into the open seas,
the rain and wind got stronger. After getting
hit by two big waves, M/B Coco Beach III
capsized putting all passengers underwater
and resulted to the death of 8 passengers,
including petitioners’ son Ruelito and his wife.
Its ferry services are so
intertwined with its main
business as to be properly
considered ancillary thereto.
The constancy of respondent's
ferry services in its resort
operations is underscored by its
having its own Coco Beach
boats. And the tour packages it
offers, which include the ferry
services, may be availed of by
anyone who can afford to pay
the same. These services are
thus available to the public.
The stay of Ruelito and his wife was by virtue
of a tour package-contract with respondent
that included transportation to and from the
resort and the point of departure in
Batangas.
�The operator of a beach resort
that accepts clients by virtue of
tour package- contracts that
included transportation to and
from the Resort and the point of
departure is considered a
common carrier. Its ferry service
is so intertwined with its main
business as to be properly
considered ancillary thereto.�
Defense: Respondent denied being a
common carrier, alleging that its boats are
not available to the general public as they
only ferry resort guests and crew members.
15. UNSWORTH
TRANSPORT
INTERNATIONAL
(PHILS.), INC. VS.
CA
FREIGHT BROKER
Goods: vessel
27 drums of various materials for
pharmaceutical manufacturing delivered by
SSPC to UTI.
1st survey: in good condition
the term freight forwarder"
refers to a firm holding itself
out to the general public (other
than as a pipeline, rail, motor,
or water carrier) to provide
transportation of property for
A freight forwarders liability is
limited to damages arising from
its own negligence, including
negligence in choosing the
carrier; however, where the
forwarder contracts to deliver
goods to their destination
instead of merely arranging for
The arrastre Jardine Davies Transport
Services, Inc. (Jardine) issued a gate pass
which stated that 22 drums Raw
Materials for Pharmaceutical Mfg. were
loaded on a truck.
2nd survey;



1-p/bag torn on side contents partly
spilled
1-s/drum #7 punctured and retaped
on bottom side content lacking
5-drums shortship/short delivery
compensation and, in the
ordinary course of its business
their transportation, it becomes
liable as a common carrier for
loss or damage to goods.
It is undisputed that UTI issued
a bill of lading in favor of
Unilab. Pursuant thereto,
petitioner undertook to
transport, ship, and deliver the
27 drums of raw materials for
pharmaceutical manufacturing
to the consignee. Undoubtedly,
UTI is liable as a common
carrier.
Whether or not UTI is a common carrier?
16. SPS. PERENA vs
SPS. ZARATE
School Bus
Perenã s were owners of a van being used for private
school transport. Nicolas and Teresita Zarate
contracted Teodoro and Nanette Perenã to transport
their (Zarate’s) son, Aaron, to and from the school
The Perenã s are common carriers.
They are not merely private carriers.
Private transport for schools are
common carriers.
Problem: the driver, Alfaro decided to take a short
cut in order to avoid traffic. The usual short cut was
a railroad crossing. Alfaro saw that the barandilla
(the pole used to block vehicles crossing the railway)
was up. He then tried to overtake a bus. However,
there was in fact an oncoming train but Alfaro no
longer saw the train as his view was already blocked
by the bus he was trying to overtake. The bus was
able to cross unscathed but the van’s rear end
was hit.
The Perenã s, as the operators of a
school bus service were: (a)
engaged in transporting passengers
generally as a business, not just as a
casual occupation; (b) undertaking
to carry passengers over established
roads by the method by which the
business was conducted; and (c)
transporting students for a fee.
During the collision, Aaron, was thrown off the
van. His body hit the railroad tracks and his
head was severed. It turns out that Alfaro was not
able to hear the train honking from 50 meters away
before the collision because the van’s stereo was
playing loudly.
the Pereñas operated as a
common carrier because they
held themselves out as a ready
transportation indiscriminately
to the students of a particular
school living within or near
where they operated the service
and for a fee.
Defense: Perenã s invoked that as private carriers
they were not negligent in selecting Alfaro as their
driver as they made sure that he had a driver’s
license and that he was not involved in any accident
Observance of Extraordinary
Diligence - The operator of a
school bus service is a common
carrier in the eyes of the law. He
is bound to observe
extraordinary diligence in the
conduct of his business. He is
presumed to be negligent when
death occurs to a passeng
prior to his being hired. In short, they observed the
diligence of a good father in selecting their
employee.
Thus, they are liable.
Being a common carrier, what is
required of the Perenã s is not mere
diligence of a good father. What is
specifically required from them by
law is extraordinary diligence
17. WESTWIND
SHIPPING CORP.
VS. UCPB
GENERAL
INSURANCE CO.,
INC., ET AL
Goods vessel
During the unloading operation, however, six
containers/skids sustained dents and punctures from
the forklift used by the stevedores of Ocean
Terminal Services, Inc. (OTSI) in centering and
shuttling the containers/skid. As a consequence, the
local ship agent of the vessel Baliwag Shipping
Agency, Inc., issued two Bad Order Cargo Receipt.
Orient Freight International, Inc. (OFII), the customs
broker of SMC, withdrew from ATI the 197
containers/skids, including the six in damaged
condition. It was discovered upon discharge that
additional nine containers/skids due to the forklift
operations; thus, making the total number of 15
containers/skids in bad order.
Defense: As for OFII, it maintains that it is not a
common carrier, but only a customs broker whose
participation is limited to facilitating withdrawal of
the shipment in the custody of ATI by overseeing
and documenting the turnover.
OFII is a common carrier
A customs broker has been regarded
as a common carrier because
transportation of goods is an integral
part of its business
OFII is a common carrier is
buttressed by the testimony of its
own witness, Mr. Loveric Panganiban
Cueto, that part of the services it
offers to clients is cargo forwarding,
which includes the delivery of the
shipment to the consignee.
18. FEDERAL
PHOENIX
ASSURANCE CO.,
LTD. VS.
FORTUNE SEA
CARRIER, INC.
Goods – vessel
Fortune Sea agreed to lease its vessel MV Ricky Rey
to Northern Mindanao Transport. The time charter
party agreement contained that it shall be leased for
90 days (extended for another 90) to carry bags of
cement to different ports.
Upon its arrival, the stevedores noticed smokes from
the cargo haul; 60 bales of abaca were damaged.
Defense: Fortune Sea alleged that it was acting as a
private carrier at the time. The agreement provided
that MV Ricky Rey shall be under the orders and
complete control of Northern Transport.
Whether Fortune Sea was converted into a private
carrier by virtue of the charter party agreement
19. TORRES-MADRID
BROKERAGE, INC.
VS. FEB MITSUI
MARINE
INSURANCE CO.,
INC., ET AL
Goods – vessel
Shipper: Sony >>> CC: Torres-Madrid >>>
Consignee: Binan
TMBI subcontracted BMT Trucking services
since it did not own any delivery truck which
Sony did not object to the arrangement.
Problem:
4 trucks left BMT’s garage but only 1 arrived
at the warehouse. One truck was found
abandoned. Both the driver and the
shipment were missing. TMBI filed a
complaint for “hijacking”.
Whether or not TMBI is liable for the loss of
goods
Yes. The charter party agreement
converted Fortune Sea into a private
carrier.
It has been settled in various
jurisprudence that the nature of a
contract is not dependent on the
assigned name of the parties. The
decisive factor being the intention of
the parties evident on the contract
or other conducts. In the case,
although it was denominated as a
time charter party agreement, it
includes not only the vessel but also
its crew thereby making Northern
Transport the owner pro hac vice of
the vessel during the whole period
of the voyage. It assumes all
operational control as evidenced by
the master of the vessel being under
Northern Transport’s command.
Yes. TMBI is liable for the loss of
goods
TMBI failed to successfully
establish that it had acted with
extraordinary diligence and
TMBI’s current theory that
hijacking was attended by force
is untenable.
However, TMBI and BMT
cannot be solidarily liable as
TMBI’s liability did not stem
from a quasi-delict but from its
breach of contract or culpa
contractual while Mitsui’s
action against BMT could only
A common carrier to be
absolved of its liability for a
resulting loss:
1.
2.
If it proves that it
exercised
extraordinary
diligence in
transporting and
safekeeping the
goods;
If it stipulated with the
shipper or owner of
the goods to limit its
liability for the loss,
destruction or
deterioration of the
goods to a degree less
rise from quasi-delict or culpa
aquiliana.
than extraordinary
diligence.
In this case, TMBI entered
another contract of carriage
with BMT which failed to prove
that it observed extraordinary
diligence in the performance of
its obligation to TMBI.
So, TMBI is liable to Mitsui. In
turn, TMBI is entitled to
reimbursement from BMT due
to the latter’s own breach of
contract with TMBI.
Private Carriers
Cases
HOME INSURANCE
COMPANY VS. AMERICAN
STEAMSHIP AGENCIES,
INC. AND LUZON
STEVEDORING
CORPORATION
Private
Goods/Passenger
Facts/Problem
Ruling:
Doctrine:
-When the cargo was delivered to consignee
Is the stipulation in the charter
party of the owner’s nonliability valid as to absolve the
American Steamship Agencies
from liability for los
A common carrier undertaking
to carry a special cargo or
chartered to a special person
only, becomes a private carrier.
As a private carrier, a
stipulation exempting the
owner from the liability for the
negligence of its agent is not
against public policy, and is
deemed valid.�
SMB, there were shortages
Defense of American Steamship:
It denied the liability by alleging that under
the provisions of the Charter party referred to
in the Bills of Lading, the charterer, not the
shipowner, was responsible for any loss or
damage of the cargo. Furthermore, it claimed
to have exercised due diligence in stowing the
goods and that as a mere forwarding agent, it
was not responsible for losses or damages to
the cargo.
YES.
NATIONAL STEEL CORP.
vs. CA
Private
NSC hired MV Vlasons I, a private vessel
owned by VSI. They entered into a contract
of affreightment or contract of voyage
charter hire wherein the contract states that
NSC hired VSI's vessel to make one voyage to
load steel products at Iligan City and
discharge them at North Harbor, Manila
Problem: nearly all the skids of tinplates
and hot rolled sheets were allegedly found to
be wet and rusty.
MV Vlasons was
seaworthy.
-
-
underwent drydocking
in Cebu and was
thoroughly inspected
by the Philippine Coast
Guard;
subject voyage was the
vessel's first voyage
after the drydocking
. In fact, the Philippine Coast
Guard Station in Cebu cleared it
as seaworthy, fitted and
equipped; it met all
requirements for trading as
cargo vessel.
But it was not liable.
-the damage was brought
about the unloading process
when rain and seawater seeped
through the cargo due to the
fault or negligence of the
stevedores employed by it.
- Also, the agreement between
the parties — the Contract of
Voyage Charter Hire — placed
the burden of proof for such
loss or damage upon the
shipper, not upon the
shipowner. The stipulation,
while disadvantageous to NSC,
is valid because the parties
entered into a contract of
private charter, not one of
common carriage. Verily, the
extent of VSI's responsibility
and liability over NSC's cargo
are determined primarily by the
stipulations in the contract of
carriage or charter party and
the Code of Commerce. In the
instant case, the burden of
proof lies on the part of NSC
and not the VSI.
VALENZUELA
HARDWOOD AND
INDUSTRIAL SUPPLY, INC.
VS. CA
Private
Problem: vessel M/V Seven Ambassador
sank on 25 January 1984 resulting in the loss
of the plaintiffs insured logs.
WON the stipulation in the charter party
executed between the petitioner and the
private respondent exempting the latter from
liability for the loss of petitioners logs arising
from the negligence of its (Seven Brothers)
captain valid?
Validity of Stipulation is Lis
Mota
no dispute between the parties
that the proximate cause of the
sinking of M/V Seven
Ambassadors resulting in the
loss of its cargo was the
snapping of the iron chains and
the subsequent rolling of the
logs to the portside due to the
negligence of the captain in
stowing and securing the logs
on board the vessel and not
due to fortuitous event.
Likewise undisputed is the
status of Private Respondent
Seven Brothers as a private
The stipulation in the charter
party absolving the owner from
liability for loss due to the
negligence of its agent would
be void only if the strict public
policy governing common
carriers is applied. Such policy
has no force where the public at
large is not involved, as in this
case of a ship totally chartered
for the use of a single party.�
carrier when it contracted to
transport the cargo of
Petitioner Valenzuela.
Ina contract of private carriage,
the parties may validly stipulate
that responsibility for the cargo
rests solely on the charterer,
exempting the shipowner from
liability for loss of or damage to
the cargo caused even by the
negligence of the ship captain.
Pursuant to Article 1306 of the
Civil Code, such stipulation is
valid because it is freely
entered into by the parties and
the same is not contrary to law,
morals, good customs, public
order, or public policy. Indeed,
their contract of private
carriage is not even a contract
of adhesion. We stress that in a
contract of private carriage, the
parties may freely stipulate
their duties and obligations
which perforce would be
binding on them.
Distinction from towage, arrastre, stevedoring. And contract of services
Cases
Goods/Passenger Facts/Problem
Ruling:
Marina Port Services v.
Countercorp Trading PTE., Ltd. shipped from
MPSI is not liable for the loss of the
Goods – vessel
American Homes
Singapore to the Philippines 10 container vans of
bags of flour.
Flour
soft wheat flour with seals intact on board the vessel
M/V Uni Fortune.
Upon arrival at the Manila South Harbor on
September 25, 1989, agents of the Bureau of
MPSI was able to prove delivery of
the shipment to MSC in good and
Doctrine:
MPSI cannot just the same be held
liable for the missing bags of flour
since the consigned goods were
shipped under "Shipper's Load
and Count" arrangement. "This
means that the shipper was
solely responsible for the
Customs officially broke the seals, opened the
container vans, and examined the shipment for tax
evaluation in the presence of MSC's broker and
checker. Thereafter, the customs inspector closed
the container vans and refastened them with safety
wire seals. MPSI then placed the said container vans
in a back-to-back arrangement at the delivery area
of the harbor's container yard where they were
watched over by the security guards of MPSI and of
the Philippine Ports Authorit
MSC's representative, AD's Customs Services (ACS),
took out five container vans for delivery to MSC. At
the compound's exit, MPSI issued to ACS the
corresponding gate passes for the vans indicating its
turnover of the subject shipment to MSC.
complete condition and with locks
and seals intact.
Even in the light of Article 1981, no
presumption of fault on the part of
MPSI arises since it was not
sufficiently shown that the container
vans were re-opened or that their
locks and seals were broken for the
second time.
loading of the container, while
the carrier was oblivious to the
contents of the shipment.
Protection against pilferage of
the shipment was the
consignee's lookout.
At any rate, the goods were shipped
under "Shipper's Load and Count"
arrangement. Thus, protection
against pilferage of the subject
shipment was the consignees
lookout.
Problem: However, upon receipt of the container
vans at its warehouse, MSC discovered substantial
shortages in the number of bags of flour delivered.
Hence, it filed a formal claim for loss with MPSI.
CRISOSTOMO vs. CA
Passenger –
airplane
Travel agency –
not a cc
Flight: England, Holland, Germany, Austria,
Liechstenstein, Switzerland and Franc
Problem: o petitioner’s dismay, she
discovered that the flight she was supposed
to take had already departed the previous
day.
It is obvious from the above
definition that respondent is
not an entity engaged in the
business of transporting either
passengers or goods and is
therefore, neither a private nor
a common carrier. Respondent
did not undertake to transport
petitioner from one place to
another since its covenant with
its customers is simply to make
travel arrangements in their
behalf. Respondent’s services
as a travel agency include
procuring tickets and facilitating
travel permits or visas as well as
booking customers for tours.
While petitioner concededly
bought her plane ticket
through the efforts of
respondent company, this does
not mean that the latter ipso
facto is a common carrier. At
most, respondent acted merely
as an agent of the airline, with
whom petitioner ultimately
contracted for her carriage to
Europe. Respondent’s
obligation to petitioner in this
regard was simply to see to it
that petitioner was properly
booked with the airline for the
appointed date and time. Her
.
he evidence on record shows
that respondent exercised due
diligence in performing its
obligations under the contract
and followed standard
procedure in rendering its
services to petitioner. As
correctly observed by the lower
court, the plane ticket issued to
petitioner clearly reflected the
departure date and time,
contrary to petitioner’s
contention. The travel
documents, consisting of the
tour itinerary, vouchers and
instructions, were likewise
delivered to petitioner two days
prior to the trip. Respondent
also properly booked petitioner
for the tour, prepared the
necessary documents and
procured the plane tickets. It
arranged petitioner’s hotel
accommodation as well as food,
land transfers and sightseeing
excursions, in accordance with
its avowed
ASIAN TERMINALS, INC.
vs. ALLIED GUARANTEE
INSURANCE CO., INC.
transport to the place of
destination, meanwhile,
pertained directly to the airline
Since the relationship of an
arrastre operator and a
consignee is akin to that
between a warehouseman and
a depositor, then, in instances
when the consignee claims any
loss, the burden of proof is on
the arrastre operator to show
that it complied with the
obligation to deliver the goods
and that the losses were not
due to its negligence or that of
its employees.
A mere sign-off from the
customs broker's representative
that he had received the subject
shipment "in good order and
condition without exception"
would not absolve the arrastre
from liability, simply because
the representative's signature
merely signifies that said person
thereby frees the arrastre from
any liability for loss or damage
to the cargo so withdrawn while
the same was in the custody of
such representative to whom
the cargo was released, but it
does not foreclose the remedy
or right of the consignee (or its
subrogee) to prove that any loss
or damage to the subject
shipment occurred while the
same was under the custody,
control and possession of the
arrastre operator.
REGISTERED OWNER RULE AND KABIT SYSTEM
Cases
LIM, ET AL vs. CA, ET AL
Goods/Passenger
Facts/Problem
- Gonzales bought an Isuzu passenger
jeepney from Gomercino Vallarta, a
holder of a certificate of public
convenience for the operation of
public utility vehicle.
Problem:
While the jeep was running northbound along
the North diversion road somewhere in
Meycauayan, Bulacan, it collided with a tenwheeler-truck owned by peti, The said truck
collided with a Ferroza and the jeepney
owned by Gonzales.
im offered P20,000 for the repairs of the
jeepney. However, Gonzales insisted that the
jeepney be replaced with a new one or that
Lim pay the amount of P236,000. Since they
were not able to come to terms as to the
compensation, Gonzales filed the complaint
for damages against Lim.
Defense: Lim set up the defense that
Gonzales was not a real party in interest to
file a claim against him, as he is not the
registered owner of the vehicle,
Ruling:
WON the new owner of a
passenger jeepney who
continued to operate the same
under the so-called kabit
system and in the course
thereof met an accident has the
legal personality to bring the
action for damages against the
erring vehicle.
YES.
In the present case it is at once
apparent that the evil sought to
be prevented in enjoining the
kabit system does not exist.
First, neither of the parties to
the pernicious kabit system is
being held liable for damages.
Second, the case arose from the
negligence of another vehicle in
using the public road to whom
no representation, or
misrepresentation, as regards
the ownership and operation of
the passenger jeepney was
made and to whom no such
representation, or
misrepresentation, was
necessary. Thus it cannot be
said that private respondent
Doctrine:
The owner of a passenger
jeepney who operates under a
kabit system is not precluded
from filing a case for damages if
the public at large is not
deceived, much less involved.
Gonzales and the registered
owner of the jeepney were in
estoppel for leading the public
to believe that the jeepney
belonged to the registered
owner. Third, the riding public
was not bothered nor
inconvenienced at the very
least by the illegal
arrangement. On the contrary,
it was private respondent
himself who had been wronged
and was seeking compensation
for the damage done to him.
Certainly, it would be the height
of inequity to deny him his
right.
FEB LEASING AND
FINANCE CORP. (NOW BPI
LEASING CORP.) VS. SPS.
BAYLON, ET AL
Problem: Loretta V. Baylon, daughter of the
respondent spouses was hit by an Isuzu oil
tanker
The oil tanker was registered in the name of
petitioner FEB Leasing and Financing Corp at
the time of the accident. The oil tanker was
leased to BG Hauler, Inc. and was being
driven by the latter’s driver, Manuel Y.
Estilloso.
WON the FEB Leasing and
Finance Corp as the registered
owner remains liable for loss,
damage, or injury caused by the
vehicle notwithstanding an
exemption provision in the
financial lease contract.
Yes, in accordance with the law
on compulsory motor vehicle
registration, the court has
consistently ruled that, with
respect to the public and third
persons, the registered owner
of a motor vehicle is directly
and primarily responsible for
�The registered owner of a
vehicle is directly and primarily
responsible for the
consequences of its operation
regardless of who the actual
vehicle owner might be.�
the consequences of its
operation regardless of who
the actual vehicle owner might
be. Well-settled is the rule that
the registered owner of the
vehicle is liable for quasi-delicts
resulting from its use. Thus,
even if the vehicle has already
been sold leased, or transferred
to another person at the time
the vehicle figured in an
accident, the registered vehicle
owner would still be liable for
damages caused by the
accident.
The policy behind the rule is to
enable the victim to find
redress by the expedient
recourse of identifying the
registered vehicle owner in the
records of LT
FILCAR TRANSPORT
SERVICES VS. ESPINAS
Problem: n. He was already in the middle of
the intersection when another car, traversing
President Quirino Street and going to Roxas
Boulevard, suddenly hit and bumped his car.
As a result of the impact, Espinas' car turned
clockwise. The other car escaped from the
scene of the incident, but Espinas was able to
get its plate number.
Yes.
The set-up may be inconvenient
for the registered owner of the
motor vehicle, but the
inconvenience cannot outweigh
the more important public
policy being advanced by the
law in this case which is the
protection of innocent persons
who may be victims of reckless
In so far as third persons are
concerned, the registered
owner of the motor vehicle is
the employer of the negligent
driver, and the actual employer
is considered merely as an
agent of such owner. Whether
there is an employer-employee
relationship between the
, Espinas learned that the owner of the other
car, with plate number UCF-545, is Filcar.
drivers and irresponsible motor
vehicle owners.
WON Filcar, as registered owner of the motor
vehicle which figured in an accident, may be
held liable for the damages caused to Espinas
METRO MANILA TRANSIT
CORP. vs. CUEVAS
Metro Manila Transit Corporation �MMTC�
and Mina’s Transit Corporation �Mina’s
Transit) entered into an agreement to sell
whereby the latter bought several bus units
from the former at a stipulated price. They
agreed that MMTC would retain the
ownership of the buses until certain
conditions were met, but in the meantime
Mina’s Transit could operate the buses within
Metro Manila.
Problem: one of the buses subject of the
agreement to sell hit and damaged a Honda
Motorcycle owned by Reynaldo and driven by
Junnel.
Whether or not MMTC is liable considering
that it was not the actual operator and
employer of the bus driver
YES. In view of MMTC’s
admission in its pleadings that it
had remained the registered
owner of the bus at the time of
the incident, it could not escape
liability for the personal injuries
and property damage suffered
by the Cuevases. This is because
of the registered-owner rule,
whereby the registered owner
of the motor vehicle involved in
a vehicular accident could be
held liable for the
consequences.
Ma� MMTC �eco�e� f�om
Mina�� T�an�i� ��he ac��al
em�lo�e� of �he negligen�
driver)?
YES. Although the registeredowner rule might seem to be
unjust towards MMTC, the law
did not leave it without any
remedy or recourse. According
registered owner and the driver
is irrelevant in determining the
liability of the registered owner
who the law holds primarily and
directly responsible for any
accident, injury or death caused
by the operation of the vehicle
in the streets and highways.
�The registered owner of a
motor vehicle whose operation
causes injury to another is
legally liable to the latter. But it
is error not to allow the
registered owner to recover
reimbursement from the actual
and present owner by way of its
cross- claim.�
to Filcar Transport Services v.
Espinas, MMTC could recover
from Mina’s Transit, the actual
employer of the negligent
driver, under the principle of
unjust enrichment, by means of
a cross-claim seeking
reimbursement of all the
amounts that it could be
required to pay as damages
arising from the driver’s
negligence. A cross-claim is a
claim by one party against a coparty arising out of the
transaction or occurrence that
is the subject matter either of
the original action or of a
counterclaim therein, and may
include a claim that the party
against whom it is asserted is or
may be liable to the crossclaimant for all or part of a
claim asserted in the action
against the cross-claimant.