TRANSPORTATION LAWS

Case Digests
2016

COVERAGE FOR MIDTERMS:

Cathay Pacific v. Reyes
G.R. No. 185891
FACTS:
Respondent Alcantara was a first class passenger of a Cathay Pacific flight to
Jakarta to attend a business conference with the Director General of Trade of
Indonesia. Upon his arrival in Jakarta, he discovered that his luggage was
missing. He was informed that his luggage was left behind in Hongkong and
was offered $20.00 as "inconvenience money" to buy his immediate personal
needs. He had to seek postponement of his pre-arranged conference. And
when his luggage finally reached Jakarta after a day, it was required to be
picked up by an official of the Philippine Embassy. The trial court ordered
Cathay to pay. The CA affirmed but increased the award of damages. SC
affirmed but modified the award of damages. Cathay argues that the oneday delay was not made in bad faith because it had a mechanical trouble
wherein all pieces of luggage on board the first aircraft bound for Jakarta
were unloaded and transferred to the second aircraft which departed an
hour and a half later. Cathay also argues that he was not treated rudely and
arrogantly by its employees. Also, that the CA erred in failing to apply the
Warsaw Convention on the liability of a carrier to its passengers.
ISSUE: Whether or not Cathay breached its contract of carriage with
Alcantara and acted in bad faith?
HELD:
YES. Cathay failed to deliver his luggage at the designated place and time, it
being the obligation of a common carrier to carry its passengers and their
luggage safely to their destination, which includes the duty not to delay their
transportation. It was not even aware that the luggage was left behind until its
attention was called by the Hongkong Customs authorities. It also refused to
deliver the luggage at his hotel and required him to pick it up with an official
of the Philippine Embassy The Cathay employees were also discourteous,
rude, and insulting. He was simply advised to buy anything he wanted with
only $20.00 which was certainly not enough to purchase comfortable clothing
appropriate for an executive conference. Cathays agents only replied, "What
can we do, the baggage is missing. I cannot do anything . . . Anyhow, you
can buy anything you need, charged to Cathay Pacific." Moral and
exemplary damages are proper where in breaching the contract of carriage
bad faith or fraud is shown. In the absence of fraud or bad faith, liability is
limited to the natural and probable consequences of the breach of obligation
which the parties had foreseen or could have reasonably foreseen. Further,
Cathay contends that the extent of its liability should be limited absolutely to
that set forth in the Warsaw Convention. The said treaty does not operate as

an exclusive enumeration of the instances for declaring a carrier liable for

breach of contract of carriage or as an absolute limit of the extent of that
liability. The Warsaw Convention declares the carrier liable for damages in the
enumerated cases and under certain limitations. However, it must not be
construed to preclude the operation of the Civil Code and other pertinent
laws. It does not regulate, much less exempt, the carrier from liability for
damages for violating the rights of its passengers under the contract of
carriage, especially if wilfull misconduct on the part of the carrier's employees
is found or established, as in this case.
LRTA v. Navidad
G.R. No. 145804, February 6, 2003
FACTS:

October 14, 1993, 7:30 p.m. : Drunk Nicanor Navidad (Nicanor)

entered the EDSA LRT station after purchasing a token.

While Nicanor was standing at the platform near the LRT tracks, the
guard Junelito Escartin approached him.

Due to misunderstanding, they had a fist fight

Nicanor fell on the tracks and killed instantaneously upon being hit by
a moving train operated by Rodolfo Roman

December 8, 1994: The widow of Nicanor, along with her children,

filed a complaint for damages against Escartin, Roman, LRTA, Metro
Transit Org. Inc. and Prudent (agency of security guards) for the death
of her husband.

LRTA and Roman filed a counter-claim against Nicanor and a crossclaim against Escartin and Prudent

Prudent: denied liability averred that it had exercised due diligence

in the selection and surpervision of its security guards

LRTA and Roman: presented evidence

Prudent and Escartin: demurrer contending that Navidad had failed

to prove that Escartin was negligent in his assigned task

RTC: In favour of widow and against Prudent and Escartin, complaint

against LRT and Roman were dismissed for lack of merit

CA: reversed by exonerating Prudent and held LRTA and Roman

liable
ISSUE: Whether or not LRTA and Roman should be liable according to the
contract of carriage
HELD:

NO. Affirmed with Modification: (a) nominal damages is DELETED

(CANNOT co-exist w/ compensatory damages) (b) Roman is
absolved.
Law and jurisprudence dictate that a common carrier, both from the
nature of its business and for reasons of public policy, is burdened with

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the duty off exercising utmost diligence in ensuring the safety of

passengers

Civil Code:

Art. 1755. A common carrier is bound to carry the passengers safely

as far as human care and foresight can provide, using the utmost
diligence of very cautious persons, with a due regard for all the
circumstances
Art. 1756. In case of death or injuries to passengers, common carriers
are presumed to have been at fault or to have acted negligently,
unless they prove that they observed extraordinary diligence as
prescribed in articles 1733 and 1755
Art. 1759. Common carriers are liable for the death of or injuries to
passengers through the negligence or wilful acts of the formers
employees, although such employees may have acted beyond the
scope of their authority or in violation of the orders of the common
carriers
This liability of the common carriers does NOT cease upon
proof that they exercised all the diligence of a good father of
a family in the selection and supervision of their employees
Art. 1763. A common carrier is responsible for injuries suffered by a
passenger on account of the wilful acts or negligence of other
passengers or of strangers, if the common carriers employees through
the exercise of the diligence of a good father of a family could have
prevented or stopped the act or omission.

Carriers presumed to be at fault or been negligent and by simple

proof of injury, the passenger is relieved of the duty to still establish the
fault or negligence of the carrier or of its employees and the burden
shifts upon the carrier to prove that the injury is due to an unforeseen
event or to force majeure
Where it hires its own employees or avail itself of the services of an
outsider or an independent firm to undertake the task, the common
carrier is NOT relieved of its responsibilities under the contract of
carriage
GR: Prudent can be liable only for tort under Art. 2176 and related
provisions in conjunction with Art. 2180 of the Civil Code. (Tort may
arise even under a contract, where tort [quasi-delict liability] is that
which breaches the contractFACTS:
EX: if employers liability is negligence or fault on the part of the
employee, employer can be made liable on the basis of the

presumption juris tantum that the employer failed to exercise

diligentissimi patris families in the selection and supervision of its
employees.
EX to the EX: Upon showing due diligence in the selection and
supervision of the employee
Factual finding of the CA: NO link bet. Prudent and the death of
Nicanor for the reason that the negligence of Escartin was NOT
proven
NO showing that Roman himself is guilty of any culpable act or
omission, he must also be absolved from liability
Contractual tie bet. LRT and Nicanor is NOT itself a juridical relation
bet. Nicanor and Roman
Roman can be liable only for his own fault or negligence

De Guzman v. CA
G.R. No. L-47822, December 22, 1988
FACTS:
Respondent Ernesto Cendana, a junk dealer, was engaged in buying up used
bottles and scrap metal in Pangasinan. As a sideline business, he would
engage in backhauling services of different merchandise and in turn would
charge his clients a much lower freight rates than the usual.
On November 1970, petitioner Pedro de Guzman, a merchant and authorized
dealer of General Milk contracted with respondent for the hauling of 750
cartons of Liberty filled milk from a warehouse of General Milk in Makati, Rizal,
to petitioner's establishment in Urdaneta on or before 4 December 1970.
Accordingly, on 1 December 1970, respondent loaded in Makati the
merchandise on to his trucks: 150 cartons were loaded on a truck driven by
respondent himself, while 600 cartons were placed on board the other truck
which was driven by Manuel Estrada, respondent's driver and employee.
Only 150 boxes of Liberty filled milk were delivered to petitioner. The other 600
boxes never reached petitioner, since the truck which carried these boxes
was hijacked somewhere along the MacArthur Highway in Paniqui, Tarlac, by
armed men who took with them the truck, its driver, his helper and the cargo.
With that, petitioner commenced action against private respondent in
demanding payment of P 22,150.00, the claimed value of the lost
merchandise, plus damages and attorney's fees. Petitioner alleged that
private respondent, being a common carrier, and having failed to exercise
the extraordinary diligence required of him by the law, should be held liable
for the value of the undelivered goods.
In his Answer, private respondent denied that he was a common carrier and
argued that he could not be held responsible for the value of the lost goods,
such loss having been due to force majeure.

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On 10 December 1975, the trial court rendered a Decision 1 finding private

respondent to be a common carrier and holding him liable for the value of
the undelivered goods (P 22,150.00) as well as for P 4,000.00 as damages and
P 2,000.00 as attorney's fees.
However on appeal, the court reversed the judgment of the trial court and
held that respondent 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.
ISSUE:
1.) W/N respondent is considered a common carrier.
2.) W/N respondent is liable, if found to be a common carrier
HELD:
The Civil Code defines "common carriers" in the following terms:
Article 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air for compensation,
offering their services to the public.
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 back-hauling 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.
Even granting that he held no certificate of public convenience, such
certificate is not a requisite for the incurring of liability under the Civil Code
provisions governing common carriers. That liability arises the moment a
person or firm acts as a common carrier, without regard to whether or not
such carrier has also complied with the requirements of the applicable
regulatory statute and implementing regulations and has been granted a
certificate of public convenience or other franchise.
Hence, the respondent is considered a common carrier.
Common carriers, "by the nature of their business and for reasons of public
policy" 2 are held to a very high degree of care and diligence ("extraordinary
diligence") in the carriage of goods as well as of passengers. The specific
import of extraordinary diligence in the care of goods transported by a
common carrier is, according to Article 1733, "further expressed in Articles
1734,1735 and 1745, numbers 5, 6 and 7" of the Civil Code.

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:
1) Flood, storm, earthquake, lightning or other natural disaster or
calamity;
2) Act of the public enemy in war, whether international or civil;
3) Act or omission of the shipper or owner of the goods;
4) The character-of the goods or defects in the packing or-in the
containers; and
5) Order or act of competent public authority.
Applying the above-quoted Articles 1734 and 1735, 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,
that 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.
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."
In the light of the peculiar circumstances, 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.
Hence the Court agrees 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.
ACCORDINGLY, the Petition for Review on certiorari is hereby DENIED and the
Decision of the Court of Appeals dated 3 August 1977 is AFFIRMED.

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Sps. Perea v. Zarate

G.R. No. 157917, August 29, 2012
FACTS:
The Pereas were engaged in the business of transporting students from their
respective residences in Paraaque City to Don Bosco in Pasong Tamo,
Makati City, and back. In their business, the Pereas used a KIA Ceres Van
(van) with Plate No. PYA 896, which had the capacity to transport 14 students
at a time, two of whom would be seated in the front beside the driver, and
the others in the rear, with six students on either side. They employed
Clemente Alfaro (Alfaro) as driver of the van.
Considering that the students were due at Don Bosco by 7:15 a.m., and that
they were already running late because of the heavy vehicular traffic on the
South Superhighway, Alfaro took the van to an alternate route at about 6:45
a.m. by traversing the narrow path underneath the Magallanes Interchange
that was then commonly used by Makati-bound vehicles as a short cut into
Makati.
At about the time the van was to traverse the railroad crossing, PNR
Commuter No. 302 (train), operated by Jhonny Alano (Alano), was in the
vicinity of the Magallanes Interchange travelling northbound. As the train
neared the railroad crossing, Alfaro drove the van eastward across the
railroad tracks, closely tailing a large passenger bus. His view of the oncoming
train was blocked because he overtook the passenger bus on its left side. The
train blew its horn to warn motorists of its approach. When the train was about
50 meters away from the passenger bus and the van, Alano applied the
ordinary brakes of the train. He applied the emergency brakes only when he
saw that a collision was imminent. The passenger bus successfully crossed the
railroad tracks, but the van driven by Alfaro did not. The train hit the rear end
of the van, and the impact threw nine of the 12 students in the rear, including
Aaron, out of the van. Aaron landed in the path of the train, which dragged
his body and severed his head, instantaneously killing him. Alano fled the
scene on board the train, and did not wait for the police investigator to arrive.
Devastated by the early and unexpected death of Aaron, the Zarates
commenced this action for damages against Alfaro, the Pereas, PNR and
Alano.
RTC: The court decreed them to pay jointly and severally liable with Philippine
National Railways (PNR), their co-defendant. It denied the Pereas' motion for
reconsideration, 4 reiterating that the cooperative gross negligence of the
Pereas and PNR had caused the collision that led to the death of Aaron; and
that the damages awarded to the Zarates were not excessive, but based on
the established circumstances.

CA: CA affirmed the findings of the RTC, but limited the moral damages to
P2,500,000.00; and deleted the attorney's fees because the RTC did not state
the factual and legal bases. CA upheld the award for the loss of Aaron's
earning capacity.
ISSUE:
Whether or not CA erred in affirming the trial court's decision holding the
petitioners jointly and severally liable to pay damages with Philippine National
Railways and dismissing their cross-claim against the latter.
HELD:
The petition has no merit. The Zarates brought this action for recovery of
damages against both the Pereas and the PNR, basing their claim against
the Pereas on breach of contract of carriage and against the PNR on quasidelict.
There is no question that the Pereas 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. Despite catering to a limited clientle, the
Pereas 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.
The common carrier's standard of care and vigilance as to the safety of the
passengers is defined by law. Given the nature of the business and for reasons
of public policy, the common carrier is bound "to observe extraordinary
diligence in the vigilance over the goods and for the safety of the passengers
transported by them, according to all the circumstances of each case." 22
Article 1755 of the Civil Code specifies that the common carrier should "carry
the passengers safely as far as human care and foresight can provide, using
the utmost diligence of very cautious persons, with a due regard for all the
circumstances." To successfully fend off liability in an action upon the death or
injury to a passenger, the common carrier must prove his or its observance of
that extraordinary diligence; otherwise, the legal presumption that he or it was
at fault or acted negligently would stand. No device, whether by stipulation,
posting of notices, statements on tickets, or otherwise, may dispense with or
lessen the responsibility of the common carrier as defined under Article 1755 of
the Civil Code.
At any rate, the lower courts correctly held both the Pereas and the PNR
"jointly and severally" liable for damages arising from the death of Aaron. They
had been impleaded in the same complaint as defendants against whom the
Zarates had the right to relief, whether jointly, severally, or in the alternative, in
respect to or arising out of the accident, and questions of fact and of law
were common as to the Zarates. Although the basis of the right to relief of the

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Zarates (i.e., breach of contract of carriage) against the Pereas was distinct
from the basis of the Zarates' right to relief against the PNR (i.e., quasi-delict
under Article 2176, Civil Code), they nonetheless could be held jointly and
severally liable by virtue of their respective negligence combining to cause
the death of Aaron.
Ponente: 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
passenger. His liability may include indemnity for loss of earning capacity even
if the deceased passenger may only be an unemployed high school student
at the time of the accident.
Westwind v. UCPB
G.R. No. 200289, November 25, 2013
FACTS:
Kinsho-Mataichi Corporation shipped from the port of Kobe, Japan 197 metal
containers/skids of tin-free steel for delivery to consignee, San Miguel
Corporation (SMC). The shipment was loaded and received clean on board
M/V Golden Harvest Voyage No. 66, a vessel owned and operated by
Westwind Shipping Corporation (Westwind).
SMC insured the cargoes against all risks with UCPB General Insurance Co. The
shipment arrived in Manila and was discharged in the custody of the arrastre
operator, Asian Terminals, Inc. (ATI). During the unloading operation, 6
containers/skids sustained dents and punctures from the forklift used by the
stevedore of Ocean Terminal Services, Inc. (OTSI) in centering and shuttling
the containers/skids.
Orient Freight International, Inc. (OFII), the customs broker of SMC, withdrew
from ATI the 197 containers/skids, including the 6 in damaged condition and
delivered the same at SMCs warehouse. It was discovered upon discharge
that additional 9 containers/skids were also damages due to the forklift
operations, making the total number of 15 containers/skids in bad order.
SMC filed a claim against UCPB, Westwind, ATI, and OFII to recover the
amount corresponding to the damaged containers/skids. UCPB paid the total
sum; SMC signed the subrogation receipt. UCPB instituted a complaint for
damages against Westwind, ATI and OFII.
RTC dismissed UCPBs complaint
CA reversed RTCs decision

Westwinds Contentions:

It no longer had actual or constructive custody of the

containers/skids at the time they were damaged by ATI's forklift
operator during the unloading operations.

Its responsibility already ceased from the moment the cargoes

were delivered to ATI, which is reckoned from the moment the
goods were taken into the latter's custody.

ATI had full control over its employees and stevedores as well as
the manner and procedure of the discharging operations.
OFIIs Contentions:

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 and counterchecking if the quantity of the shipments
were in tally with the shipping documents at hand, but without
participating in the physical withdrawal and loading of the
shipments into the delivery trucks of JBL.

The loading to the trucks were made by way of forklifts owned

and operated by ATI and the unloading from the trucks at the
SMC warehouse was done by way of forklifts owned and
operated by SMC employees.

Neither the undertaking to deliver nor the acknowledgment by

the consignee of the fact of delivery makes a person or entity a
common carrier, since delivery alone is not the controlling factor
in order to be considered as such.
ISSUE: Whether or not Westwind, ATI and OFII are liable.
HELD:
Common carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in the vigilance over the
goods transported by them. Common carriers are responsible for the loss,
destruction, or deterioration of the goods. The extraordinary responsibility of
the common carrier 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 a right to receive them.
The functions of an arrastre operator involve the handling of cargo deposited
on the wharf or between the establishment of the consignee or shipper and
the ship's tackle. Being the custodian of the goods discharged from a vessel,
an arrastre operator's duty is to take good care of the goods and to turn them
over to the party entitled to their possession.
The legal relationship between the consignee and the arrastre operator is akin
to that of a depositor and warehouseman. The relationship between the

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Eastern Shipping Lines v. BPI

G.R. No. 193986, 15 January 2014
consignee and the common carrier is similar to that of the consignee and the
arrastre operator. Since it is the duty of the ARRASTRE to take good care of the
goods that are in its custody and to deliver them in good condition to the
consignee, such responsibility also devolves upon the CARRIER. Both the
ARRASTRE and the CARRIER are therefore charged with and obligated to
deliver the goods in good condition to the consignee.
What Westwind failed to realize is that the extraordinary responsibility of the
common carrier lasts until the time the goods are actually or constructively
delivered by the carrier to the consignee or to the person who has a right to
receive them. There is actual delivery in contracts for the transport of goods
when possession has been turned over to the consignee or to his duly
authorized agent and a reasonable time is given him to remove the goods.
In this case, since the discharging of the containers/skids, which were covered
by only one bill of lading, had not yet been completed at the time the
damage occurred, there is no reason to imply that there was already delivery,
actual or constructive, of the cargoes to ATI.
The contention of OFII is likewise untenable. A customs broker has been
regarded as a common carrier because transportation of goods is an integral
part of its business. Article 1732 does not distinguish between one whose
principal business activity is the carrying of goods and one who does such
carrying only as an ancillary activity. OFII is considered a common carrier. As
long as a person or corporation holds itself to the public for the purpose of
transporting goods as a business, it is already considered a common carrier
regardless of whether it owns the vehicle to be used or has to actually hire
one.
As a common carrier, OFII is mandated to observe, under Article 1733 of the
Civil Code, extraordinary diligence in the vigilance over the goods 24 it
transports according to the peculiar circumstances of each case. 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.
It is incumbent upon OFII to prove that it actively took care of the goods by
exercising extraordinary diligence in the carriage thereof. It failed to do so.
Hence, its presumed negligence under Article 1735 of the Civil Code remains
unrebutted.
Federal Phoenix v. Fortune Sea

FACTS:
Through vessels owned by petitioner Eastern Shipping Lines, Inc. there were
three shipments of steel sheets in coil from Japan for delivery in favor of the
consignee Calamba Steel. However, upon arrival at the port of Manila, there
were coils observed to be in bad condition as evidenced by the Turn Over
Survey of Bad Order Cargo. The cargo was then turned over to Asian
Terminals, Inc. (ATI) for stevedoring, storage and safekeeping pending
Calamba Steels withdrawal of the goods. When ATI delivered the cargo to
Calamba Steel, the latter rejected its damaged portion, on each shipment.
Calamba Steel filed an insurance claim with Mitsui through the latters settling
agent, respondent BPI/MS Insurance Corporation (BPI/MS), and the former
was paid the sum of US$30,210.32 for the damage suffered by all three
shipments. Correlatively, as insurer and subrogee of Calamba Steel, Mitsui and
BPI/MS filed a Complaint for Damages against petitioner and ATI. Petitioner
prayed to be absolved; that it had no participation whatsoever in the
discharging operations and that petitioner did not have a choice in selecting
the stevedore since ATI is the only arrastre operator mandated to conduct
discharging operations in the South Harbor.
The RTC ruled in favor of Mitsui and BPI/MS. On appeal, the CA affirmed the
RTCs factual findings that both petitioner and ATI were both negligent in
handling the goods pointing to the affidavit of the Cargo Surveyor.
ISSUE: Whether or not the carrier is responsible for the damage of certain
goods considering it did not participate in the discharging operations.
HELD:
Yes. In the case at bar, the Supreme Court said that it is settled in maritime law
jurisprudence that cargoes while being unloaded generally remain under the
custody of the carrier. As found by the RTC and affirmed by the CA based on
the evidence presented, the goods were damaged even before they were
turned over to ATI. Such damage was even compounded by the negligent
acts of petitioner and ATI which both mishandled the goods during the
discharging operations. Thus, it bears stressing unto petitioner that common
carriers, from the nature of their business and for reasons of public policy, are
bound to observe extraordinary diligence in the vigilance over the goods
transported by them.
Subject to certain exceptions enumerated under Article 1734 of the Civil
Code, common carriers are responsible for the loss, destruction, or
deterioration of the goods. The extraordinary responsibility of the common
carrier lasts from the time the goods are unconditionally placed in the

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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 a right to receive them. Owing to this high degree of
diligence required of them, common carriers, as a general rule, are presumed
to have been at fault or negligent if the goods they transported deteriorated
or got lost or destroyed. That is, unless they prove that they exercised
extraordinary diligence in transporting the goods. In order to avoid
responsibility for any loss or damage, therefore, they have the burden of
proving that they observed such high level of diligence. In this case, petitioner
failed to hurdle such burden.
Asian Terminals v. Simon Enterprises
Marina Port Services v. American Home
G.R. No. 201822, August 12, 2015
FACTS:
On September 21, 1989, Countercorp Trading PTE., Ltd. shipped from
Singapore to the Philippines 10 container vans of soft wheat flour with seals
intact on board the vessel M/V Uni Fortune. The shipment was insured against
all risks by AHAC and consigned to MSC Distributor (MSC). Upon arrival at the
Manila South Harbor on September 25, the shipment was discharged in good
and complete order condition and with safety seals in place to the custody of
the arrastre operator, MPSI. After unloading and prior to hauling, agents of the
Bureau of 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 while MSC's broker padlocked the
same. 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
Authority.
On October 10, 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. 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. From October
12 to 14, 1989 and pursuant to the gate passes issued by MPSI, ACS took out
the remaining five container vans from the container yard and delivered them
to MSC. Upon receipt, MSC once more discovered substantial shortages. Thus,
MSC filed another claim with MPSI. According to MSC, the total number of the
missing bags of flour was 1,650 with a value of 257,083.00.

MPSI denied both claims of MSC. As a result, MSC sought insurance indemnity
for the lost cargoes from AHAC. AHAC paid MSC the value of the missing bags
of flour after finding the tetter's claim in order. In turn, MSC issued a
subrogation receipt in favor of AHAC.
Thereafter, AHAC filed a Complaint6 for damages against MPSI before the
RTC. The RTC dismissed AHACs complaint holding that while there was indeed
a shortage of 1,650 sacks of soft wheat flour, AHAC's evidence failed to clearly
show that the loss happened while the subject shipment was still under MPSI's
responsibility. On appeal, the CA stressed that in a claim for loss filed by a
consignee, the burden of proof to show due compliance with the obligation
to deliver the goods to the appropriate party devolves upon the arrastre
operator. In consonance with this, a presumption of fault or negligence for the
loss of the goods arises against the arrastre operator pursuant to Articles
126511 and 198112 of the Civil Code. In this case, the CA found that MPSI
failed to discharge such burden and to rebut the aforementioned
presumption. Thus, it was held liable to AHAC for the value of the missing bags
of flour.
ISSUE: Is MPSI liable for the loss of the bags of flour?
HELD:
There is merit in the Petition. The relationship between an arrastre operator
and a consignee is similar to that between a warehouseman and a depositor,
or to that between a common carrier and the consignee and/or the owner of
the shipped goods. Thus, an arrastre operator should adhere to the same
degree of diligence as that legally expected of a warehouseman or a
common carrier as set forth in Article 1733, NCC. As custodian of the shipment
discharged from the vessel, the arrastre operator must take good care of the
same and turn it over to the party entitled to its possession. In case of claim for
loss filed by a consignee or the insurer as subrogee, it is the arrastre operator
that carries the burden of proving compliance with the obligation to deliver
the goods to the appropriate party.24 It must show that the losses were not
due to its negligence or that of its employees.25 It must establish that it
observed the required diligence in handling the shipment. Otherwise, it shall
be presumed that the loss was due to its fault.27 In the same manner, an
arrastre operator shall be liable for damages if the seal and lock of the goods
deposited and delivered to it as closed and sealed, be broken through its
fault.28 Such fault on the part of the arrastre operator is likewise presumed
unless there is proof to the contrary.
Further, MPSI was able to prove delivery of the shipment to MSC in good and
complete condition and with locks and seals intact. MPSI, in order to prove
that it properly delivered the subject shipment consigned to MSC, presented
10 gate passes, each of which bore the duly identified signature of MSC's
representative which serves, among others, as an acknowledgement that the
issuance constitutes delivery to and receipt by consignee of the goods as

TRANSPORTATION LAWS

Case Digests
2016

described in good order and condition, unless an accompanying B.O.

certificate duly issued and noted on the face of [the] Gate Pass appears.
Also, the delivery to MSC's representative was with lock and seals intact, as
established by the testimonies of MPSFs employees who were directly involved
in the processing of the subject shipment.
Noteworthy is the fact that during the turn-over of goods from the arrastre to
[ACS], there had been no protest on anything on the part of consignee's
representative. Otherwise, the complaint would have been shown [on] the
gate passes. In fact, each gate pass showed the date of delivery, the location
of delivery, the truck number of the truck used in the delivery, the actual
quantity of goods delivered, the numbers of the safety wires and padlocks of
the vans and the signatures of the receiver. More importantly, the gate passes
bared the fact that the shipments were turned-over by [MPSI] to [ACS] on the
same dates of customs inspections and turnovers.38 There being no exception
as to bad order, the subject shipment, therefore, appears to have been
accepted by MSC, through ACS, in good order.39 "It logically follows [then]
that the case at bar presents no occasion for the necessity of discussing the
diligence required of an [arrastre operator] or of the theory of [its] prima facie
liability for from all indications, the shipment did not suffer loss or damage
while it was under the care of the arrastre operator.
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 reopened or that their locks and seals were broken for the second time. Indeed,
Article 1981 mandates a presumption of fault on the part of the arrastre
operator (See article). Fault on the part of the depositary is presumed, unless
there is proof to the contrary. As regards the value of the thing deposited, the
statement of the depositor shall be accepted, when the forcible opening is
imputable to the depositary, should there be no proof to the contrary.
However, the courts may pass upon the credibility of the depositor with
respect to the value claimed by him.
No such presumption arises in this case considering that it was not sufficiently
shown that the container vans were re-opened or that their locks and seals
were broken for the second time. As may be recalled, the container vans
were opened by a customs official for examination of the subject shipment
and were thereafter resealed with safety wires. There being no other
competent evidence that the container vans were reopened or that their
locks and seals were broken for the second time, MPSI cannot be held liable
for damages due to the alleged loss of the bags of flour pursuant to Article
1981.
Lastly, the goods were shipped under "Shipper's Load and Count"
arrangement. Thus, protection against pilferage of the subject shipment was

the consignees lookout. This means that the shipper was solely responsible for
the 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. The arrastre operator was, like any ordinary depositary,
duty-bound to take good care of the goods received from the vessel and to
turn the same over to the party entitled to their possession, subject to such
qualifications as may have validly been imposed in the contract between the
parties. The arrastre operator was not required to verify the contents of the
container received and to compare them with those declared by the shipper
because, as earlier stated, the cargo was at the shipper's load and count. The
arrastre operator was expected to deliver to the consignee only the container
received from the carrier."