TRANSPORTATION NOTES BASED ON ATTY PADILLAS SYLLABUS
PART I - COMMON CARRIERS
CHAPTER I. DEFINITION AND CONCEPT OF COMMON
CARRIER
1. ARTICLE 1732, CIVIL CODE; BROAD CONCEPT
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.
COMMON CARRIER; DEFINITION;
The Civil Code defines "common carriers" in the
following terms: "Article 1732. Common carriers are
persons, corporations, firms or associations engaged in
the business of carrying or transporting passengers or
goods or both, by land, water, or air for compensation,
offering their services to the public."
The above article makes no distinction between
one whose principal business activity is the carrying
of persons or goods or both, and one who does such
carrying only as an ancillary activity (in local idiom, as
"a sideline").
Article 1732 also carefully avoids making any
distinction between a person or enterprise offering
transportation service on a regular or scheduled
basis and one offering such service on an occasional,
episodic or unscheduled basis.
Neither does Article 1732 distinguish between a
carrier offering its services to the "general public," i.e.,
the general community or population, and one who
offers services or solicits business only from a
narrow segment of the general population. We think
that Article 1733 deliberately refrained from making
such distinctions.
(De Guzman vs CA)
LAW ON COMMON CARRIERS SUPPLEMENTED BY THE
PUBLIC SERVICE ACT; SCOPE OF PUBLIC SERVICE.
So understood, the concept of "common carrier"
under Article 1732 may be seen to coincide neatly with
the notion of "public service," under the Public Service
Act (Commonwealth Act No. 1416, as amended) which
at least partially supplements the law on common
carriers set forth in the Civil Code.
Under Section 13, paragraph (b) of the Public
Service Act, "public service" includes: ". . . every
person that now or hereafter may own, operate,
manage, or control in the Philippines, for hire or
compensation, with general or limited clientele,
whether permanent, occasional or accidental, and
done for general business purposes, any common
carrier, railroad, street railway, traction railway,
subway motor vehicle, either for freight or
passenger, or both, with or without fixed route and
whatever may be its classification, freight or
carrier service of any class, express service,
steamboat, or steamship line, pontines, ferries and
water craft, engaged in the transportation of
passengers or freight or both, shipyard, marine
ENGR. ARIEL MARK PILOTIN
repair shop, wharf or dock, ice plant,
ice-refrigeration plant, canal, irrigation system,
gas, electric light, heat and power, water supply
and power petroleum, sewerage system, wire or
wireless communications systems, wire or wireless
broadcasting stations and other similar public
services . . ."
1.1 De Guzman vs. CA( Junk Dealer- Cendena)
ISSUE 1: Is it a common carrier even if the carriage
was only ancillary to its main business?
HELD. Yes.
Xxx although such backhauling was done on a periodic or
occasional rather than regular or scheduled manner,
and even though private respondent's
principal occupation was not the carriage of goods for
others. There is no dispute that private respondent
charged his customers a fee for hauling their goods; that
fee frequently fell below commercial freight rates is not
relevant here.
Article 1732 makes no distinction between one
whose principal business activity is the carrying of
persons or goods or both, and one who does such
carrying only as an ancillary activity (in local idiom, as
"a sideline").
1.2 Cruz vs Sun Holidays Inc (Newly Weds- Puerto
Galera-Coco Beach)
ISSUE: Is M/B Coco Beach a common carrier even if it
is not available to the general public as they are only
for resort guests and crew members?
HELD. YES.
Xxx Neither does Article 1732 distinguish between a
carrier offering its services to the "general
public," i.e., the general community or
population, and one who offers services or solicits
business only from a narrow segment of the general
population. We think that Article 1733 deliberately
refrained from making such distinctions.
Indeed, respondent is a common carrier. Its
ferry services are so intertwined with its main
business as to be properly considered ancillary
thereto. The constancy of respondent's ferry services
in its resort operations is underscored by its having its
own Coco Beach boats. And the tour packages it
offers, which include the ferry services, may be
availed of by anyone who can afford to pay the same.
These services are thus available to the public.
1.3 First Phil. Industrial Corp vs CA (Pipeline)
ISSUE: Is a pipeline a common carrier?
Held. YES.
The civil code does not make a distinction as to the
means of transporting, as long as it is by land, water, or
air. It does not provide that the transportation of the
passengers or goods should be by motor vehicle.
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 TRANSPORTATION NOTES BASED ON ATTY PADILLAS SYLLABUS
Petitioner is engaged in the business of transporting
or carrying goods (petroleum products) for hire as a
public employment. It undertakes to carry all persons
indifferently, that is, to all persons who choose to
employ its services,and transports the goods by land and
for compensation.
Under Petroleum Act of the Phil (Sec 86 of RA
387), Petitioner is a common carrier.
1.4 Calvo vs UCPB General Insurance (Customs Broker
and Warehouseman)
ISSUE: Is the petitoner as a customs broker and
warehouseman who does not indiscriminately hold her
services out to the public but only offers the same to
select parties with whom she may contract in the
conduct of her business a common carrier?
HELD. YES.
There is greater reason for holding petitioner to be a
common carrier because the transportation of goods is
an integral part of her business. To uphold petitioner's
contention would be to deprive those with whom she
contracts the protection which the law affords them
notwithstanding the fact that the obligation to carry
goods for her customers, as already noted, is part and
parcel of petitioner's business.
1.5 Asia Lighterage and Shipping vs CA
ISSUE: Petitioner alleges it has no fixed and publicly
known route, maintains no terminals, and issues no
tickets. It points out that it is not obliged to carry
indiscriminately for any person. It is not bound to carry
goods unless it consents. In short, it does not hold out
its services to the general public. Is it a common
carrier?
HELD. Yes.
We therefore hold that petitioner is a common carrier
whether its carrying of goods is done on an irregular
rather than scheduled manner, and with an only limited
clientele. A common carrier need not have fixed and
publicly known routes. Neither does it have to maintain
terminals or issue tickets.
The test to determine a common carrier is "whether
the given undertaking is a part of the business engaged
in by the carrier which he has held out to the general
public as his occupation rather than the quantity or
extent of the business transacted."
In the case at bar, the petitioner admitted that it is
engaged in the business of shipping and
lighterage, offering its barges to the public, despite its
limited clientele for carrying or transporting goods by
water for compensation.
1.6 Asian Terminals Inc vs Daehan Fire and Marine
Insurance
1.7 Sps Perena vs Sps Zarate (School service- PNR
collision)
ISSUE: Is the school service a common carrier?
ENGR. ARIEL MARK PILOTIN
HELD. YES.
The true test for a common carrier is not the
quantity or extent of the business actually transacted,
or the number and character of the conveyances used in
the activity, but whether the undertaking is a part of
the activity engaged in by the carrier that he has held
out to the general public as his business or occupation.
If the undertaking is a single transaction, not a part
of the general business or occupation engaged in, as
advertised and held out to the general public, the
individual or the entity rendering such service is a
private, not a common, carrier.
Applying these considerations to the case before us,
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. E
2. CHARACTERISTICS; TEST
TEST TO DETERMINE WHETHER A PARTY IS A COMMON
CARRIER OF GOODS (FIRST PHIL. INDUSTRIAL
CORPORATION V. CA) [K-E-H-M berlush]
(1) He must be engaged in the business of carrying
goods for others as a public employment and must hold
himself as ready to engage in the transportation of
goods for person generally as a business and not as a
casual occupation.
(2) He must undertake to carry goods of the kind to
which his business is confined;
(3) He must undertake to carry by the method by which
his business is conducted and over his established roads;
and
(4) The transportation must be for hire.
2.1. Fisher v. Yangco Steamship (Dynamite delivery)
ISSUE: Board Resolution ordered the refusal of
delivery of dynamites, but such violates Act. No. 98.
Can state interfere?
HELD. YES.
CONTROL AND REGULATION OF CARRIERS. The
nature of the business of a common carrier as a public
employment is such that it is clearly within the power
of the state to impose such just and reasonable
regulations thereon in the interest of the public as the
legislator may deem proper.
The right to enter the public employment as a
common carrier and to offer one's services to the
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public for hire does not carry with it the right to
conduct that business as one pleases, without regard
to the interests of the public, and free from such
reasonable and just regulations as may be prescribed
for the protection of the public from the reckless or
careless indifference of the carrier as to the public
welfare and for the prevention of unjust and
unreasonable discriminations of any kind whatsoever
in the performance of the carrier's duties as a servant
of the public.
2.2 US vs Quinajon (Delivery Price for Provincial Govt
is higher)
ISSUE: Can a common carrier charge higher price for
the same service?
HELD. No.
Common carriers are allowed to fix rates byt not
undue discrimination.
Act No. 98 does not prohibit the charging of a
different rate for the carrying of passengers or
property when the actual cost of handling and
transporting the same is different. Common carriers
can not make a different rate to different persons for
carrying persons or merchandise, unless the actual
cost of handling and shipping is different. It is when
the price charged is for the purpose of favoring
persons or localities or particular kinds of
merchandise, that the law intervenes and prohibits. It
is favoritism and discrimination which the law
prohibits. If the services are alike and
contemporaneous, discrimination in the price charged
is prohibited.
2.3 Loadstar Shipping Co. Vs CA
It is not necessary that a common carrier be issued a
certificate of public convenience, and this public
character is not altered by the fact that the carriage of
the goods in question was periodic, occasional, episodic
or unscheduled.
A certificate of public convenience 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 cpc or other
franchise.
2.4 National Steel Corp. Vs CA (Special Contract)
Generally, private carriage is undertaken by special
agreement and the carrier does not hold himself out to
carry goods for the general public.
The most typical, although not the only form of
private carriage, is the charter party, a maritime
contract by which the charterer, a party other than the
shipowner, obtains the use and service of all or some
part of a ship for a period of time or voyage or voyages.
In the case at bar, VSI did not offer its services to the
general public but only to passengers under a special
contract of charter party.
ENGR. ARIEL MARK PILOTIN
2.5 Certificate of Public Convenience
A certificate of public convenience (CPC) is an
authorization granted by the LTFRB for the operation
of land transportation services for public use as
required by law.
Pursuant to Section 16(a) of the Public Service
Act, as amended, the following requirements must
be met before a CPC may be granted, to wit:
(i) the applicant must be a citizen of the
Philippines, or a corporation or co-partnership,
association or joint-stock company constituted and
organized under the laws of the Philippines, at least
60 per centum of its stock or paid-up capital must
belong entirely to citizens of the Philippines;
(ii) the applicant must be financially capable of
undertaking the proposed service and meeting the
responsibilities incident to its operation; and
(iii) the applicant must prove that the operation
of the public service proposed and the authorization
to do business will promote the public interest in a
proper and suitable manner. It is understood that
there must be proper notice and hearing before the
PSC can exercise its power to issue a CPC.
De Guzman vs. CA ( Junk dealer- Cendena)
ISSUE 2. Is he a common carrier even if he does not
posses CPC?
HELD. YES.
Certificate of public convenience 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. To exempt private
respondent from the liabilities of a common carrier
because he has not secured the necessary certificate of
public convenience, would be offensive to sound public
policy; that would be to reward private respondent
precisely for failing to comply with applicable statutory
requirements. The business of a common carrier
impinges directly and intimately upon the safety and
well being and property of those members of the
general community who happen to deal with such
carrier. The law imposes duties and liabilities upon
common carriers for the safety and protection of those
who utilize their services and the law cannot allow a
common carrier to render such duties and liabilities
merely facultative by simply failing to obtain the
necessary permits and authorizations.
2.6 Ownership of Vehicle Used as Carrier
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2.6.1. Registered owner rule the Civil Code the Civil Code, the Public
2.6.2 Cebu Salvage Corporation vs. Philippine Home Service Act, and other
Assurance Corp special laws relating to
ISSUE: May a carrier be held liable for the loss of cargo transportation.
resulting from the sinking of a ship it does not own? Diligence required is only -required to observe
ordinary, that is, the extraordinary diligence,
HELD. YES. diligence of a good father and is presumed to be at
It had control over what vessel it would use. All of the family. fault or to have acted
throughout its dealings with MCCII, it represented itself negligently in case of the
as a common carrier. The fact that it did not own the loss of the effects of
vessel it decided to use to consummate the contract of passengers, or the death
carriage did not negate its character and duties as a or injuries to passengers.
common carrier.
The MCCII (respondent's subrogor) could not be
reasonably expected to inquire about the ownership of 3.1 PLANTERS PRODUCT INC. VS CA (Charter Party)
the vessels which petitioner carrier offered to utilize. ISSUE: Does a charter-party between a shipowner and a
charterer transform a common carrier into a private one
As a practical matter, it is very difficult and often as to negate the civil law presumption of negligence in
impossible for the general public to enforce its rights of case of loss or damage to its cargo?
action under a contract of carriage if it should be
required to know who the actual owner of the vessel is. HELD. NO.

In fact, in this case, the voyage charter itself When petitioner chartered the vessel M/V "Sun
denominated petitioner as the "owner/operator" of the Plum", the ship captain, its officers and compliment
vessel. 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
2.6.3 NONVESSEL OPERATING COMMON CARRIER the crew and to the ship, with the duty of caring for his
(NVOCC) cargo when the charterer did not have any control of
the means in doing so. This is evident in the present
Non-Vessel Operating Common Carrier
case considering that the steering of the ship, the
(NVOCC) refers to an entity, which may or may not own manning of the decks, the determination of the course
or operate a vessel that provides a point-to-point of the voyage and other technical incidents of maritime
service which may include several modes of transport navigation were all consigned to the officers and crew
and/or undertakes group age of less container load (LCL) who were screened, chosen and hired by the
shipments and issues the corresponding transport shipowner.
document|
|| It is therefore imperative that a public carrier shall
3. DISTINGUISH FROM PRIVATE CARRIER remain as such, notwithstanding the charter of the
A carrier is a person or corporation who undertakes whole or portion of a vessel by one or more persons,
to transport or convey goods or persons from one place provided the charter is limited to the ship only, as in the
to another, gratuitously or for hire. The carrier is case of a time-charter or voyage-charter.
classified either as a private/special carrier or as a
It is only when the charter includes both the
common/public carrier.
vessel and its crew, as in a bareboat or demise that a
PRIVATE CARRIER COMMON CARRIER common carrier becomes private, at least insofar as
A private carrier is A common carrier is the particular voyage covering the charter-party is
one who, without making a person, corporation, concerned. Indubitably, a shipowner in a time or
the activity a vocation, or firm or association voyage charter retains possession and control of the
without holding himself or engaged in the business of ship, although her holds may, for the moment, be the
itself out to the public as carrying or transporting property of the charterer.
ready to act for all who passengers or goods or
may desire his or its both, by land, water, or --------------------------------------------------------------
services, undertakes, by air, for
special agreement in a compensation, offering A "charter-party" is defined as a contract by which an
particular instance such services to the entire ship, or some principal part thereof, is let by the
only, to transport goods or public. owner to another person for a specified time or use; a
persons from one place to contract of affreightment by which the owner of a ship
another either gratuitously or other vessel lets the whole or a part of her to a
or for hire. merchant or other person for the conveyance of goods,
on a particular voyage, in consideration of the payment
Governed by provisions on governed by the provisions of freight;
ordinary contracts of on common carriers of

ENGR. ARIEL MARK PILOTIN 4

 TRANSPORTATION NOTES BASED ON ATTY PADILLAS SYLLABUS
Charter parties are of two types:
(a) contract of affreightment which
involves the use of shipping space on vessels leased by
the owner in 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.
Contract of affreightment may either be time
charter, wherein the vessel is leased to the charterer
for a fixed period of time, or voyage charter, wherein
the ship is leased for a single voyage.
In both cases, the charter-party provides for the hire
of the vessel only, either for a determinate period of
time or for a single or consecutive voyage, the
shipowner to supply the ship's stores, pay for the wages
of the master and the crew, and defray the expenses for
the maintenance of the ship.
3.2 SAN PABLO VS PANTRANCO (Open Sea not
continuation of Highway)
The contention of private respondent PANTRANCO
that its ferry service operation is as a private carrier,
not as a common carrier for its exclusive use in the
ferrying of its passenger buses and cargo trucks is
absurd.
PANTRANCO does not deny that it charges its
passengers separately from the charges for the bus trips
and issues separate tickets whenever they board the
M/V "Black Double" that crosses Matnog to
Allen, PANTRANCO cannot pretend that in issuing
tickets to its passengers it did so as a private carrier and
not as a common carrier.
SEPARATE CERTIFICATE OF PUBLIC CONVENIENCE
MUST BE SECURED. Respondent PANTRANCO should
secure a separate CPC for the operation of an
interisland or coastwise shipping service in
accordance with the provisions of law. Its CPC as a bus
transportation cannot be merely amended to include
this water service under the guise that it is a mere
private ferry service. Thus the Court holds that the
water transport service between Matnog and Allen is
not a ferryboat service but a coastwise or interisland
shipping service. Before private respondent may be
issued a franchise or CPC for the operation of the said
service as a common carrier, it must comply with the
usual requirements of filing an application, payment
of the fees, publication, adducing evidence at a
hearing and affording the oppositors the opportunity
to be heard, among others, as provided by law.
ENGR. ARIEL MARK PILOTIN
3.3 Limited Clientele
3.3.1 Philippine American General Insurance Co. vs
PKS Shipping Company
ISSUE: Is PKS Shipping company a common carrier
albeit its limited clientele?
HELD. YES.
Respondent PKS Shipping Corp transported the
75,000 bags of cement of petitioner DUMC in a barge.
The bags of cement sank together with the barge when
the latter was being towed by a tug boat.
SC declared that PKS was a common carrier because
it was engaged in the business of carrying goods for
others for a fee.
The regularity of its activities in this area indicates
more than just a casual activity on its part. Neither can
the concept of a common carrier change merely
because individual contracts are executed or entered
into with patrons of the carrier. Such restrictive
interpretation would make it easy for a common carrier
to escape liability by the simple expedient of entering
into those distinct agreements with clients.
3.3.2. FGU Insurance Corp. Vs G.P. Sarmiento
Trucking Corp. (Exception: Limited Clientele)
ISSUE: Is GPS a private carrier for having a limited
clientele as evidenced by a special contract?
HELD. Yes.
GPS, being an exclusive contractor and hauler of
Concepcion Industries, Inc., rendering or offering its
services to no other individual or entity, cannot be
considered a common carrier.
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 hire or compensation, offering their
services to the public, whether to the public in general
or to a limited clientele in particular, but never on an
exclusive basis.
The true test of a common carrier is the carriage of
passengers or goods, providing space for those who opt
to avail themselves of its transportation service for a
fee. Given accepted standards, GPS scarcely falls within
the term "common carrier."
3.4 LINE SERVICE VS TRAMP SERVICE
Cargo operations may be classified into two types,
line services and tramp services.
(a) LINE SERVICE [ Common Carrier]
- carries general cargoes, whatever is
offered is accepted for shipment.
- the operation of a common carrier which
publicly offers services without discrimination to
any user, has regular ports of call/destination,
fixed sailing schedules and frequencies and
published freight rates and attendant charges and
usually carries multiple consignments.(RA 9515)
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(b) TRAMP SERVICES [ Contract carrier, but
may be considered a common carrier]
-usually gets a full cargo loaded by a single
shipper and such cargoes are most often in bulk or
in standard packages and standard packages and
typically consist of raw materials, fuels and
unprocessed foods so vital to the world economy.
-operation of a contract carrier which has no
regular and fixed routes and schedules but accepts
cargo wherever and whenever the shipper desires,
is hired on a contractual basis, or chartered by
anyone or few shippers under mutually agreed
terms and usually carries bulk or break bulk
cargoes.
4. CONTRACT OF CARRIAGE DISTINGUISHED FROM
OTHER TRANSACTIONS
4.1 Towage
Baer Senior & Co. Vs La Compania Maritima
ISSUE: Is there a presumption of negligence in a
contract to tow?
HELD. No.
A general ship carrying goods for hire, whether
employed in internal, in coasting, or in foreign
commerce, is a common carrier; and the ship and her
owners, in the absence of a valid agreement to the
contrary, are liable to the owners of the goods carried
as insurers against all losses, excepting only such
irresistible causes as the act of God and public enemies.
But a tug and her owners are subject to no such
liability to the owners of the vessels towed, or of the
cargoes can not maintain any action for the loss of
either against the tug of her owners, without proving
negligence on her part.
As was said by Mr. Justice Strong, and repeated by
the present Chief Justice: "An engagement to tow does
not impose either an obligation to insure or the
liability of common carriers. The burden is always upon
him who alleges the breach of such a contract to show
either that there has been no attempt at performance,
or that there has been negligence or unskillfulness to his
injury in the performance. Unlike the case of common
carriers, damage sustained by the tow does not
ordinarily raise a presumption that the tug has been in
fault.
4.2 Stevedoring
- refers to the handling of the cargo in the holds of the
vessel or between the ships tackle an the holds of the
vessel.
-ltn. stipare meaning to stuff -refers to the hauling of cargo,comprehends the
- directly from Spanish escribador or Portugese
estivador which means a man who stuffs in the sense
of a man who loads ships.
- the function of stevedores involves the loading and
unloading of coastwise vessels calling at the port.
Mindanao Terminal and Brokerage Service Ince. Vs
Pheonix Assurance Company of New York/Mcgee &Co.
ISSUE: Whether Mindanao Terminal, as a stevedoring
company, is under obligation to observe the same
ENGR. ARIEL MARK PILOTIN
extraordinary degree of diligence in the conduct of its
business as required by law for common carriers and
warehousemen.
HELD. NO.
Mindanao Terminal, a stevedoring company which
was charged with the loading and stowing the cargoes
of Del Monte Produce aboard M/V Mistrau, had acted
merely as a labor provider in the case at bar. There is
no specific provision of law that imposes a higher
degree of diligence than ordinary diligence for a
stevedoring company or one who is charged only with
the loading and stowing of cargoes. We therefore
conclude that following Article 1173, Mindanao
Terminal was required to observe ordinary diligence
only in loading and stowing the cargoes of Del Monte
Produce aboard M/V Mistrau.
DISTINCTION BETWEEN ARRASTRE AND STEVEDORE;
Arrastre, a Spanish word which refers to hauling of
cargo, comprehends the handling of cargo on the
wharf or between the establishment of the consignee
or shipper and the ship's tackle. The responsibility of
the arrastre operator lasts until the delivery of the
cargo to the consignee. The service is usually
performed by longshoremen. On the other hand,
stevedoring refers to the handling of the cargo in the
holds of the vessel or between the ship's tackle and
the holds of the vessel. The responsibility of the
stevedore ends upon the loading and stowing of the
cargo in the vessel.
STEVEDORES ARE NOT COMMON CARRIERS; A
stevedore is not a common carrier for it does not
transport goods or passengers; it is not akin to a
warehouseman for it does not store goods for profit.
The loading and stowing of cargoes would not have a
far reaching public ramification as that of a common
carrier and a warehouseman; the public is adequately
protected by our laws on contract and on quasi-delict.
The public policy considerations in legally imposing
upon a common carrier or a warehouseman a higher
degree of diligence is not present in a stevedoring
outfit which mainly provides labor in loading and
stowing of cargoes for its clients.
4.3 Arrastre/ Terminal Operator
handling of cargo on the wharf or between the
establishment of the consignee or shipper and the ships
tackle.
-Arrastres services are not different from those of
depositary and warehouseman.
Asian Terminals Inc. Vs Daehan Fire and Marine
Insurance
ISSUE: Is petitioner arrastre operator liable?
HELD..YES.
The relationship, therefore, between the consignee and
the arrastre operator must be examined. This relationship is
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akin to that existing between the consignee and/or the owner
of the shipped goods and the common carrier, or that between
a depositor and warehouseman.
In the performance of its obligations, an arrastre
operator should observe the same degree of diligence as
that required of a common carrier and a warehouseman.
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.
Asian Terminals vs FIrst Lepanto- Taisho Insurance
Co.
In a claim for loss filed by the consignee, the burden of
proof to show compliance with the obligation to deliver
the goods to the appropriate party devolves upon the
arrastre operator. Since the safekeeping of goods is its
responsibility, it must prove that the losses were not
due to its negligence or to that of its employees. To
avoid liability, the arrastre operator must prove that it
exercised diligence and due care in handling the
shipment.
4.4 Freight Forwarding
-refers to a firm holding itself out to the general public
to provide transportation of property for compensation
and, in the ordinary course of its business.
Freight Forwarder refers to a local entity that acts
as a cargo intermediary and facilitates transport of
goods on behalf of its client without assuming the role
of a carrier, which can also perform other forwarding
services, such as booking cargo space, negotiating
freight rates, preparing documents, advancing freight
payments, providing packing/crating, trucking and
warehousing, engaging as an agent/representative of a
foreign non-vessel operating as a common carrier/cargo
consolidator named in a master bill of lading as
consignee of a consolidated shipment, and other related
undertakings.|||
Unsworth Transport International Inc. vs CA
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 their transportation, it becomes
liable as a common carrier for loss or damage to goods.
A freight forwarder assumes the responsibility of a
carrier, which actually executes the transport, even
though the forwarder does not carry the merchandise
itself.
4.5 Travel Agency
-not a common carrier.
Crisostomo vs CA
ISSUE: Is the Caravan Travels, a travel agency, a
common carrier?
HELD. NO.
Travel agencies are not entities engaged in the
business of transporting either passengers or goods and
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is therefore, nether a private nor a common carrier.
Caravan did not undertake to transport petitioner
from one place to another since its convenant with its
customers is simply to make travel arrangements.
The object of the contractual relation woth Caravam
Travels is the service of arranging and facilitating
petitioners booking, ticketing and accomodation in the
package tour. In contrast, the object of a contract of
carriage is the transportation of passengers or goods.
4.6 TRANSPORT NETWORK COMPANIES (TNS) VS
TRANSPORTATION NETWORK VEHICLE SERVICE (TNVS)
LTFRB MEMORANDUM CIRCULAR NO. 2015-015
Transportation Network Company (TNC) shall mean as
an "organization whether a corporation, partnership, or
sole proprietor, that provides pre-arranged
transportation services for compensation using an
internet-based technology application or digital
platform technology to connect passengers with drivers
using their personal vehicles."|||
Transport Network Vehicle Services (TNVS) is the
official term used to describe vehicle owners who
provide services via the Uber or Grabcar application,
according to Memorandum Circulars #2015-017 to 018 of
the Land Transportation Franchising & Regulatory Board
or LTFRB.
TNC TNVS
-does not require -required to secure a
Certificate of public Certificate of Public
convenience Convenience
-The internet-based -the registered vehicle to
digital technology app which the TNC connects a
that provides services by passenger to.
connecting available
registered vehicles with
registered customers who
request rides. (Uber,
Grabcar)
----> Surge Pricing (Alternate Surge Pricing)
5. GOVERNMENT REGULATION OF COMMON
CARRIERS BUSINESS; PUBLIC POLICIES
5.1 Public Interest Doctrine
KMU Labor Center vs Garcia
Public utilities are privately owned and operated
businesses whose service are essential to the general
public. They are enterprises which specially cater to the
needs of the public and conduce to their comfort and
convenience. As such, public utility services are
impressed with public interest and concern. The same is
true with respect to the business of common carrier
which holds such a peculiar relation to the public
interest that there is superinduced upon it the right of
public regulation when private properties are affected
with public interest, hence, they cease to be juris
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privati only. When, therefore, one devotes his property
to a use in which the public has an interest, he, in effect
grants to the public an interest in that use, and must
submit to the control by the public for the common
good, to the extent of the interest he has thus created.
5.2 Tatad vs Garcia Jr.
OPERATION OF PUBLIC UTILITY AND OWNERSHIP OF
FACILITIES, DISTINGUISHED.
In law, there is a clear distinction between the
"operation" of a public utility and the ownership of the
facilities and equipment used to serve the public.
Ownership is defined as a relation in law by
virtue of which a thing pertaining to one person is
completely subjected to his will in everything not
prohibited by law or the concurrence with the rights of
another. The exercise of the rights encompassed in
ownership is limited by law so that a property cannot be
operated and used to serve the public as a public utility
unless the operator has a franchise.
The operation of a rail system as a public utility
includes the transportation of passengers from one
point to another point, their loading and unloading at
designated places and the movement of the trains at
pre-scheduled times. The right to operate a public
utility may exist independently and separately from the
ownership of the facilities thereof.
One can own said facilities without operating
them as a public utility, or conversely, one may operate
a public utility without owning the facilities used to
serve the public. The devotion of property to serve the
public may be done by the owner or by the person in
control thereof who may not necessarily be the owner
thereof
BUILD-OPERATE-AND-TRANSFER (BOT) SCHEME;
BUILD-AND-TRANSFER (BT) SCHEME; DEFINED AND
DISTINGUISHED.
The BOT scheme is expressly defined as one where
the contractor undertakes the construction and
financing of an infrastructure facility, and operates and
maintains the same. The contractor operates the
facility for a fixed period during which it may recover its
expenses and investment in the project plus a
reasonable rate of return thereon. After the expiration
of the agreed term, the contractor transfers the
ownership and operation of the project to the
government.
In the BT scheme, the contractor undertakes the
construction and financing of the facility, but after
completion, the ownership and operation thereof are
turned over to the government. The government, in
turn, shall pay the contractor its total investment on
the project in addition to a reasonable rate of return. If
payment is to be effected through amortization
payments by the government infrastructure agency or
local government unit concerned, this shall be made in
accordance with a scheme proposed in the bid and
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incorporated in the contract (R.A. No. 6957, Sec. 6).
Emphasis must be made that under the BOT
scheme, the owner of the infrastructure facility must
comply with the citizenship requirement of the
Constitution on the operation of a public utility. No such
a requirement is imposed in the BT scheme.
5.3 REGISTERED OWNER RULE
-RA 4136, The Land Transportation and Traffic
Code
-the person who is the registered owner of a
vehicle is liable for any damage caused by the negligent
operation of the vehicle although the same was already
sold or conveyed to another person at the time of the
accident.
5.3.1 Gelisan vs Alday
ISSUE: Should owner be liable for damages caused by
a leasee of his public vehicle and that there is a
stipulation in the lease contract that he shall not be
liable for damages to third persons?
HELD. Yes.
The claim of the petitioner that he is not liable in
view of the lease contract executed by and between
him and Roberto Espiritu which exempts him from
liability to third persons, cannot be sustained because it
appears that the lease contract, adverted to, had not
been approved by the Public Service Commission. It is
settled in our jurisprudence that if the property
covered by a franchise is transferred or leased to
another without obtaining the requisite approval, the
transfer is not binding upon the public and third
persons.
REASON: Since a franchise is PERSONAL in nature any
transfer or lease thereof should be notified to the
Public Service Commission so that the latter may take
proper safeguards to protect the interest of the public.
In fact, the law requires that, before the approval
is granted, there should be a public hearing, with notice
to all interested parties, in order that the Commission
may determine if there are good and reasonable
grounds justifying the transfer or lease of the property
covered by the franchise, or if the sale or lease is
detrimental to public interest. Such being the reason
and philosophy behind this requirement, it follows that
if the property covered by the franchise is transferred,
or leased to another without obtaining the requisite
approval the transfer is not binding against the Public
Service Commission and in contemplation of law the
grantee continues to be responsible under the franchise
in relation to the Commission and to the Public.
Since the lease of the jeepney in question was
made without such approval, the only conclusion that
can be drawn is that Marcelino Ignacio still continues to
be its operator in contemplation of law, and as such is
responsible for the consequences incident to its
operation, one of them being the collision under
consideration."
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5.3.2 Benedicto vs Intermediate Appellate Court
ISSUE: Should petitioner be held liable for
undelivered or loss cargo by the buyer of a vehicle
registered under her name?
HELD. YES.
There is no dispute that petitioner Benedicto has
been holding herself out to the public as engaged in the
business of hauling or transporting goods for hire or
compensation. Petitioner Benedicto is, in brief, a
common carrier.
The prevailing doctrine on common carriers makes
the registered owner liable for consequences flowing
from the operations of the carrier, even though the
specific vehicle involved may already have been
transferred to another person. This doctrine rests upon
the principle that in dealing with vehicles registered
under the Public Service Law, the public has the right
to assume that the registered owner is the actual or
lawful owner thereof.
It would be very difficult and often impossible as
a practical matter, for members of the general public to
enforce the rights of action that they may have for
injuries inflicted by the vehicles being negligently
operated if they should be required to prove who the
actual owner is.
The registered owner is not allowed to deny
liability by proving the identity of the alleged
transferee. Thus, contrary to petitioner's claim, private
respondent is not required to go beyond the vehicle's
certificate of registration to ascertain the owner of the
carrier.
To permit the ostensible or registered owner to
prove who the actual owner is, would be to set at
naught the purpose or public policy which infuses that
doctrine
5.3.3 Erezo vs Jepte
The registered owner of any vehicle, even if not
used for a public service, should primarily be
responsible to the public or to third persons for
injuries caused the latter while the vehicle is being
driven on the highways or streets.
MOTOR VEHICLES OFFICE; REGISTRATION REQUIRED
AS PERMISSION TO USE PUBLIC HIGHWAY.
Registration is required not to make said registration
the operative act by which ownership in vehicles is
transferred as in land registration cases, because the
administrative proceeding of registration does not
bear any essential relation to the contract of sale
between the parties, but to permit the use and
operation of the vehicle upon any public highway
AIM OR PURPOSE OF MOTOR VEHICLE
REGISTRATION. The main aim of motor vehicle
registration is to identify the owner so that if any
accidents happens, or that any damage or injury is
caused, by the vehicle on the public highways,
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responsibility therefor can be fixed on a definite
individual, the registered owner.
EVIDENCE; REGISTERED OWNER NOT ALLOWED TO
PROVE ACTUAL OWNER OF VEHICLE; POLICY OF THE
LAW.
The law does not allow the registered owner to
prove who the actual owner is; the law, with its claim
and policy in mind, does not relieve him directly of
the responsibility that the law fixes and places upon
him as an incident or consequence of registration.
Were the registered owner allowed to evade
responsibility by proving who the supposed transferee
or owner is, it would be easy for him by collusion with
others or otherwise, to escape said responsibility and
transfer the same to an indefinite person. or to one
who possesses no property with which to respond
financially for the damage or injury done.
5.4. KABIT SYSTEM
-is an arrangement whereby a person who has been
granted a certificate of public convenience allows
another person who own motor vehicles to operate the
under his license, sometimes for a fee, or percentage of
the earnings.
- A certificate of public convenience is a special
privilege conferred by the government. Abuse of this
privilege by the grantees thereof cannot be
countenanced. The "kabit system" has been identified as
one of the root causes of the prevalence of graft and
corruption in the government transportation offices.
-In the words of Chief Justice Makalintal, (Dizon vs.
Octavio, 51 O.G. 4059) "this is a pernicious system that
cannot be too severely condemned. It constitutes an
imposition upon the good faith of the government."
5.4.1 Santos vs. Sibug
ISSUE: Can Santos annul the levy on a vehicle
registered under the name of Vidad, the operator,
with the claim that he is the real owner?
HELD. NO.
SANTOS had fictitiously sold the jeepney to VIDAD,
who had become the registered owner and operator of
record at the time of the accident. It is true that VIDAD
had executed a re-sale to SANTOS, but the document
was not registered.
Although SANTOS, as the kabit, was the true
owner as against VIDAD, the latter, as the registered
owner/operator and grantee of the franchise, is directly
and primarily responsible and liable for the damages
caused to SIBUG, the injured party, as a consequence of
the negligent or careless operation of the vehicle.
This ruling is based on the principle that the
operator of record is considered the operator of the
vehicle in contemplation of law as regards the public
and third persons even if the vehicle involved in the
accident had been sold to another where such sale had
not been approved by the then Public Service
Commission.
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SANTOS, as the kabit, should not be allowed to
defeat the levy on his vehicle and to avoid his
responsibilities as a kabit owner for he had led the
public to believe that the vehicle belonged to VIDAD.
This is one way of curbing the pernicious kabit system
that facilitates the commission of fraud against the
travelling public.
5.4.2 Lita Enterprises vs IAC (Taxi cars, renting of
franchise)
"Ex pacto illicito non oritur actio" [No action arises out
of an illicit bargain]
ISSUE: Can parties to a Kabit System seek the aid of
the court in resolving their disputes (demand for the
return of certificates of registration)?
HELD. NO.
It is a fundamental principle that the court will not
aid either party to enforce an illegal contract, but will
leave them both where it finds them. Upon this
premise, it was flagrant error on the part of both the
trial and appellate courts to have accorded the parties
relief from their predicament. Article 1412 of the Civil
Code denies them such aid.
The principle of in pari delicto states that: "The
proposition is universal that no action arises, in equity
or at law, from an illegal contract; no suit can be
maintained for its specific performance, or to recover
the property agreed to be sold or delivered, or damages
for its violation. The rule has sometimes been laid down
as though it was equally universal, that where the
parties are in pari delicto, no affirmative relief of any
kind will be given to one against the other."
5.4.3 Teja Marketing vs IAC
ISSUE: Can petitioner seek the aid of the court for the
return of a motor vehicle purchased by respondent
but failed to pay in full, when it is stated that the
same is still registered in the name of petitioner and
was operated under the latters franchise?
HELD. No.
The court ruled that it will not aid either party to
enforce an illegal contract.
5.4.4 Abelardo Lim vs CA
ISSUE:When a passenger jeepney covered by a CPC is
sold to another who continues to operate it under the
same CPC under the kabit system, and the vehicle
meets an accident through the fault of another vehicle,
may the new owner sue for damages against the erring
vehicle?
HELD. 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
perniciouskabit 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
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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 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.
In light of the foregoing, it is evident that private
respondent has the right to proceed against petitioners
for the damage caused on his passenger jeepney as well
as on his business.
KABIT SYSTEM; DEFINED AND CONSTRUED AS BEING
CONTRARY TO PUBLIC POLICY; RATIONALE.
In the early case of Dizon v. Octavio the Court
explained that one of the primary factors considered in
the granting of a certificate of public convenience for
the business of public transportation is the financial
capacity of the holder of the license, so that liabilities
arising from accidents may be duly compensated.
The kabit system renders illusory such purpose and,
worse, may still be availed of by the grantee to escape
civil liability caused by a negligent use of a vehicle
owned by another and operated under his license. If a
registered owner is allowed to escape liability by
proving who the supposed owner of the vehicle is, it
would be easy for him to transfer the subject vehicle to
another who possesses no property with which to
respond financially for the damage done. Thus, for the
safety of passengers and the public who may have been
wronged and deceived through the
baneful kabit system, the registered owner of the
vehicle is not allowed to prove that another person has
become the owner so that he may be thereby relieved
of responsibility. Subsequent cases affirm such basic
doctrine.
It would seem then that the thrust of the law in
enjoining the kabit system is not so much as to penalize
the parties but to identify the person upon whom
responsibility may be fixed in case of an accident with
the end view of protecting the riding public. The policy
therefore loses its force if the public at large is not
deceived, much less involved.
5.5 BOUNDARY SYSTEM
5.5.1 Magboo vs Bernardo
An employer-employee relationship exists
between a jeepney-owner and a driver under a
"boundary system" namely, the fact that the driver
does not receive a fixed wage but gets only the excess
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of the amount of fares collected by him over the
amount he pays to the jeep-owner, and that the
gasoline consumed by the jeeps is for the account of the
driver are not sufficient to withdraw the relationship
between them from that of employer and employee.
Consequently, the jeepney-owner is subsidiary liable as
employer in accordance with Art. 103, Revised Penal
Code.
5.5.2 Sps. Hernandez vs Sps Dolor
Employers are solidarily liable with their
employees for quasi-delicts.
The Hernandez spouses maintained that Julian
Gonzales is not their employee since their relationship
relative to the use of the jeepney is that of a lessor and
a lessee. They argue that Julian Gonzales pays them a
daily rental of P150.00 for the use of the jeepney. In
essence, petitioners are practicing the "boundary
system" of jeepney operation albeit disguised as a lease
agreement between them for the use of the jeepney.
SC held that an employer-employee relationship
exists between the Hernandez spouses and Julian
Gonzales.
Indeed to exempt from liability the owner of a
public vehicle who operates it under the "boundary
system" on the ground that he is a mere lessor would be
not only to abet flagrant violations of the Public Service
Law, but also to place the riding public at the mercy of
reckless and irresponsible drivers reckless because
the measure of their earnings depends largely upon the
number of trips they make and, hence, the speed at
which they drive; and irresponsible because most if not
all of them are in no position to pay the damages they
might cause.
6. GOVERNING LAW ON COMMON CARRIERS
-Art 1766 of CC expresses the primacy of the Code
over the laws that were in force prior to its enactment.
-Art 1766 states that In all matters not regulated
by this Code, the rights and obligations of common
carriers shall be governed by the Code of Commerce and
by special laws.
6.1 Applicable Laws
-Philippine laws apply if the goods are to be
transported from Japan to the Philippines.
6.2 Conflicts Rule (Art 1753 NCC)
The law of the country to which the goods are to be
transported governs the liability of the common carriers
in case of their loss, destruction or deterioration.xxx
However, in all matters not regulated by civil code, the
rights and obligations of common cariers shall be
governed by the Code of Commerce and by special laws.
Thus COGSA, a special law, is suppletory to the
provisions of the Civil Code.
6.3 Eastern Shipping Lines vs IAC
ISSUE:(1) which law should govern the Civil Code
provisions on Common carriers or the Carriage of
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Goods by Sea Act?
HELD.
The law of the country to which the goods are to
be transported governs the liability of the common
carrier in case of their loss, destruction or
deterioration. As the cargoes in question were
transported from Japan to the Philippines, the liability
of Petitioner Carrier is governed primarily by the Civil
Code. However, in all matters not regulated by said
Code, the rights and obligations of common carrier shall
be governed by the Code of Commerce and by special
laws. Thus, the Carriage of Goods by Sea Act, a special
law, is suppletory to the provisions of the Civil Code.
6.4 National Development Co. Vs CA
ISSUE: Which law should govern?
HELD.
In the case at bar, it has been established that the
goods in question are transported from San Francisco,
California and Tokyo, Japan to the Philippines and that
they were lost or damaged due to a collision which was
found to have been caused by the negligence or fault of
both captains of the colliding vessels. Under the above
ruling, it is evident that the laws of the Philippines will
apply, and it is immaterial that the collision actually
occurred in foreign waters, such as Ise Bay, Japan.
7. OBLIGATIONS OF COMMON CARRIER, IN GENERAL
- the duties of the common carrier are:
(1) to accept passengers and goods without
discrimination;
(2) To seasonably deliver the goods or to bring the
passenger to the destination;
(3) To deliver the goods to the proper person; and
(4) To exercise extraordinary diligence in the
performance of dutiesl
(5) To transfer goods to the proper destination.
7.1 Commencement
- from the time the goods are unconditionally placed in
the possession of, and received by the carrier for
transportation -Art 1736
7.2 Duty to ACCEPT; Exceptions
- A common carrier granted a CPC is duty bound to
accept passengers or cargo without any discrimination.
Art 1753. The law of the country to which the goods
are to be transported shall govern the liability of the
common carrier for their loss, destruction or
deterioration.
(FC Fisher vs Yangco Steamship Co.)
EXCEPTIONS (Valid Grounds for Non-acceptance)
(1) When the goods sought to be transported are
dangerous objects, ro substances including dynamites
and other explosives;
(2) The goods are unfit for transportation;
(3) Acceptance would result in overloading;
(4) The goods are considered contrabands or illegal
goods;
(5) Goods are injurious to health;
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 TRANSPORTATION NOTES BASED ON ATTY PADILLAS SYLLABUS
(6) Goods will be exposed to untoward danger like
flood, capture by enemies and the like;
(7) Goods like livestock will be exposed to
diseases;
(8) Strike; and
(9) Failure to tender goods on time.
7.2.1 International Maritime Dangerous Goods (IMDG)
Code
7.2.2 MARINA Circular No. 1 Series of 2008 (Carriage
of Dangerous Goods in Domestic Trade
7.3 Duty to Deliver
-duty bound to deliver within the time agreed upon to
the designated consignee.
- a carrier is not an insurer against delay in the
transportation of goods. When a common carrier
undertakes to convey goods, the law implies a contract
that they shall be delivered at destination within a
reasonable time, in the absence, of any agreement as to
the time of delivery. (Saludo Jr. Vs CA)
7.3.1 Actual vs Constructive Delivery
7.3.2 Code of Commerce Provisions on Delay
7.3.3 Where and to Whom Delivered
Code of Commerce.
Art 368. The carrier must deliver to the consignee,
without any delay or obstruction, the goods which he
may have received, by the mere fact of being named
in the bill of lading to receive them; and if he does
not do so, he shall be liable for the damages which
may be caused thereby.
Art 369. If the consignee cannot be found at the
residence indicated in the bill of lading, or if he
refuses to pay the transportation charges and
expenses, or If he refuses to receive the goods, the
municipal judge, where there is none of the first
instance, shall provide for their deposit at the
disposal of the shipper, this deposit producing all the
effects of delivery without prejudice to third parties
with a better right.
7.3.3.1 Place
Code of Commerce. Art 360. The shipper, without
changing the place where the delivery is to be made,
may change the consignment of the goods which he
delivered to the carrier, provided that at the time of
ordering the change of consignee the bill of lading
signed by the carrier, if one has been issued, be
returned to him, in exchange for another wherein the
novation of the contract appears.
The expenses which this change of consignment
occasions shall be for the account of the shipper.
7.3.3.2 Consignee
7.4 Duty to Exercise Extra-ordinary diligence
8. PERFECTION OF CONTRACTOF COMMON CARRIAGE
8.1 Aspects of Contract of Carriage
There are two (2) aspects of the same, namely:
(a) the contract 'to carry (at some future time),'
which contract is consensual and is necessarily
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perfected by mere consent (See Article 1356, Civil Code
of the Philippines) and
b) the contract 'of carriage' or 'of common
carriage' itself which should be considered as a real
contract for not until the carrier is actually used can the
carrier be said to have already assumed the obligation
of a carrier. (British Airways vs CA)
8.1.1 British Airways Inc. Vs CA
ISSUE: Is there a perfected contract of carriage
existing between them as no ticket was ever issued to
private respondents contract workers?
HELD. Yes.
In the instant case, the contract 'to carry' is
the one involved, which is consensual and is perfected
by the mere consent of the parties.
"There is no dispute as to the appellee's consent to
the said contract 'to carry' its contract workers from
Manila to Jeddah. The appellant's consent thereto, on
the other hand, was manifested by its acceptance of
the PTA or prepaid ticket advice that ROLACO
Engineering has prepaid the airfares of the appellee's
contract workers advising the appellant that it must
transport the contract workers on or before the end of
March, 1981 and the other batch in June, 1981.
8.2 Carriage of Goods
-parties:
(1) Shipper-the person who pays the consideration
or on whose behalf payment is made.
(2) Carrier- person who delivers the goods for
transportation
(3) Consignee-the person to whom the goods are to
be delivered.
8.3 Carriage of Passengers
(1) Passenger- one who travels in a public
conveyance by virtue of contract, express or implied,
with the carrier as to the payment of fare or that which
is accepted as an equivalent thereof.
8.3.1 Manay vs Cebu Air
When a common carrier, through its
ticketing agent, has not yet issued a ticket to the
prospective passenger, the transaction between
them is still that of a seller and a buyer. The
obligation of the airline to exercise extraordinary
diligence commences upon the issuance of the
contract of carriage. Ticketing, as the act of issuing
the contract of carriage, is necessarily included in
the exercise of extraordinary diligence.
In this case, both parties stipulated that the
flight schedule stated on the nine (9) disputed
tickets was the 10:05 a.m. flight of July 22, 2008.
According to the contract of carriage, respondent's
obligation as a common carrier was to transport
nine (9) of the petitioners safely on the 10:05 a.m.
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 TRANSPORTATION NOTES BASED ON ATTY PADILLAS SYLLABUS
flight of July 22, 2008.
CHAPTER II. CONTRACT OF COMMON CARRIAGE
A. VIGILANCE OVER GOODS
1. EXTRAORDINARY DILIGENCE REQUIRED OF COMMON
CARRIER
Art 1733. 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, according to all
circumstances of each case.
Such extraordinary diligence in the vigilance over
the goods is further expressed in Articles 1734, 1735,
an 1745, Nos. 5,6,and 7, while the extraordinary
diligence for safety of the passengers is further set
forth in Articles 1755 and 1756.
1.1 Definition and Reason for the Policy
With respect to carriage of goods, Extraordinary
diligence is the extreme measure of care and caution
which persons of unusual prudence and
circumspection use for securing and preserving their
own property rights.
The extraordinary diligence required of common
carriers is calculated to protect the passengers from the
tragic mishaps that frequently occur in connection with
rapid modern transportation.
A common carrier is presumed to have been
negligent if it fails to prove that it exercised
extraordinary vigilance over the goods it
transported. When the goods shipped are either lost
or arrived 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.
To overcome the presumption of negligence, the
common carrier must establish by adequate proof
that it exercised extraordinary diligence over the
goods. It must do more than merely show that some
other party could be responsible for the damage.
1.1.1 Republic vs Lorenzo Shipping Corp
ISSUE: Should common carrier be liable even upon
evidence of exercise of extraordinary diligence,
when the bill of lading is still in the hands of the
petitioner?
Held. No.
In case of loss of goods in transit, the common
carrier is presumed undue the law to have been at
fault or negligent. However, the presumption of fault
or negligence, may be overturned by competent
evidence showing that the common carrier has
observed extraordinary diligence over the goods.
The bill of lading is not necessary. The carrier
asked for the certified true copies of the bills of
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lading and was signed by the subordinates of the
shipper.
1.1.2 Doctrine for Non-delegable Duty as applied to
Common Carriers
1.2 Carriage by Sea
1.2.1 Seaworthiness; Meaning
-fit or safe for voyage.
Seaworthiness is that strength, durability and
engineering skill made a part of a ship's construction
and continued maintenance, together with a competent
and sufficient crew, which would withstand the
vicissitudes and dangers of the elements which might
reasonably be expected or encountered during her
voyage without loss or damage to her particular cargo.
For a vessel to be seaworthy, it must be adequately
equipped for the voyage and manned with a suffucent
crew. Failure of a common carrier to maintain in
seaworthy condition the vessel involved in its contract
of carriage is a clear breach of its duty prescribed in Art
1755 of CC.
1.2.1.1 Case Law
Standard Vacuum Oil Company vs Luzon Stevedoring
ISSUE: Has defendant proven that its failure to deliver
the gasoline to its place of destination is due to
accident or force majeure or to a cause beyond its
control?
HELD. No.
The fact that the tugboat was a surplus property, has
not been dry-docked, and was not provided with the
requisite equipment to make it seaworthy, shows that
defendant did not use reasonable diligence in putting
the tugboat in such a condition as would make its use
safe for operation.
In the present case, the gasoline was delivered in
accordance with the contract but defendant failed to
transport it to its place of destination, not because of
accident or force majeure or cause beyond its control,
but due to the unseaworthiness of the tugboat towing
the large carrying the gasoline, lack of necessary spare
parts on board, and deficiency or incompetence in the
man power of the tugboat. The loss was also caused
because the defendant did not have in readiness any
tugboat sufficient in tonnage and equipment to attend
to the rescue. Under the circumstances, defendant is
not exempt from liability under the law.
Loadstar Shipping vs CA
M/V "Cherokee" was not seaworthy when it embarked
on its voyage on 19 November 1984. The vessel was not
even sufficiently manned at the time. "For a vessel to be
seaworthy, it must be adequately equipped for the
voyage and manned with a sufficient number of
competent officers and crew. The failure of a common
carrier to maintain in seaworthy condition its vessel
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 TRANSPORTATION NOTES BASED ON ATTY PADILLAS SYLLABUS
involved in a contract of carriage is a clear breach of its
duty prescribed in Article 1755 of the Civil Code."
1.2.1.2 Statutes in Pari Materia
COGSA
SECTION 3. (1) The carrier shall be bound, before and at
the beginning of the voyage, to exercise due diligence
to
(a) Make the ship seaworthy;
(b) Properly man, equip, and supply the ship;
(c) Make the holds, refrigerating and cooling chambers,
and all other parts of the ship in which goods are
carried, fit and safe for their reception, carriage and
preservation.
INSURANCE CODE
Sec 116. A warranty of seaworthiness extends not only
to the condition of the structure of the ship itself, but
requires that it be properly laden, and provided with a
competent master, a sufficient number of competent
officers and seamen, and the requisite appurtenances
and equipment, such as ballasts cables and anchors,
cordage and sails, food, water, fuel and light, and other
necessary or proper stores and implements for the
voyage.
Sec 119. A ship which is seaworthy for the purpose of an
insurance upon the ship may, nevertheless, by reason of
being unfitted to receive the cargo, be unseaworthy for
the purpose of insurance upon the cargo.
1.2.2 When Should a Ship be Seaworthy?
1.2.2.1 COGSA
Sec 3(1) of COGSA, provides that ship should be
seaworthy before and at the beginning of the voyage
1.2.2.2 Common Law; Doctrine of Stages
It is well to emphasize that an absolute obligation
of the carrier of goods by sea to provide a seaworthy
ship is not continuous under common law. It requires,
for example, that the ship must be fit to receive her
cargo at the commencement of loading only as a ship for
the ordinary perils of lying afloat in harbour and need
not be fit for sailing. Then on the completion of each
stage she must have the degree of fitness which is
required for the next stage.
Thus absolute common law undertaking of
seaworthiness is not continuous one but applies at the
beginning of each separate stage of voyage, while
stages are marked either by the completion of a
particular operation, e.g. loading, or by changes in the
nature of the operation to be performed, e.g. river
transit or ocean transit.
1.2.2.3 Domestic Shipping (R.A No. 9295)
SECTION 9. Safety Standards. All vessels operated by
domestic ship operators shall at all times be in
seaworthy condition, properly equipped with adequate
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life-saving, communication, safety and other equipment,
operated and maintained in accordance with the
standards set by MARINA, and manned by duly licensed
and competent vessel crew.
1.2.3 Does Presumption of Fault Translate to
Presumption of Unseaworthiness?
1.2.4. Presumption of Unseaworthiness in Certain
Cases
A vessel is not required to be in perfect condition to be
seaworthy. Moreover, the mere happening of an
accident aboard a vessel does not raise a presumption
the vessel was unseaworthy. However, a presumption of
unseaworthiness does arise if the vessel's equipment
fails under normal use. A presumption of
unseaworthiness also arises if the vessel sinks without
explanation in fair weather and calm seas. A certificate
from a classification society or marine surveyor is not
conclusive as to a vessel's seaworthiness.
1.2.5. Cargoworthiness; Meaning
-means that the vessel must be sufficiently strong
and equipped to carry the particular kind of cargo which
she has contracted to carry the particular kind of cargo
which se has contracted to carry and her cargo must be
so loaded that it is safe for her to proceed on her
voyage.
1.2.5.1 Santiago Lighterage Corp. V CA
In examining what is meant by seaworthiness we
must bear in mind the dual nature of the carrier's
obligations under a contract of affreightment. To satisfy
these duties the vessel must (a) be efficient as an
instrument of transport and (b) as a storehouse for her
cargo. The latter part of the obligation is sometimes
referred to as cargoworthiness.
A ship is efficient as an instrument of transport if its
hull, tackle and machinery are in a state of good repair,
if she is sufficiently provided with fuel and ballast, and
is manned by an efficient crew.
And a vessel is cargoworthy if it is sufficiently strong
and equipped to carry the particular kind of cargo which
she has contracted to carry, and her cargo must be so
loaded that it is safe for her to proceed on her voyage. A
mere right given to the charterer to inspect the vessel
before loading and to satisfy himself that she was fit for
the contracted cargo does not free the shipowner from
his obligation to provide a cargoworthy ship.
1.2.5.2 Sec3 (1)(c) of COGSA
1.2.6 Sufficient Freeboard (See 1.1.1.1 International
Convention on Load Lines
1.2.6.1 Compulsory marking of International Load
Lines (Plimsoll line)
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 TRANSPORTATION NOTES BASED ON ATTY PADILLAS SYLLABUS
1.2.6.2. Plimsoll line must not be Submereged
1.2.7 Warranty against improper deviation
Art 359 of Code of Commerce. If there is an agreement
between the hipper and the carrier as to the road over
which the conveyance is to be made, the carrier may
not change the route, unless it be by reason of force
majeure; and should he do so without this cause, he
shall be liable for all the losses which the goods he
transports may suffer from any othe cause, beside
paying the sum which may have been stipulated for such
case.
When on account of said cause of force majeure,
the carrier had to take another route which produced an
increase in transportation charges, he shall be
reimbursed for such icrease upon formal proof thereof.
- improper deviation may be a valid ground to
deny a marine insurance claim under the Insurance
Code.
1.2.8 Survey or Inspection of Cargo on Reasonable
Grounds
-duty of a carrier to inspect depends on the
circumstances.
- It is the duty of the carrier to make inquiry as
to the general nature of the articles shipped and of
their value before it consents to carry them; and its
failure to do so cannot defeat the shippers right to
recovery of the full value of the package if lost, in
the absence of showing of fraud or deceit on the
part of the shipper.
-To be subjected to unsusual search, other
than the routinary inspection procedure
customarily undertaken, there must exist proof
that would justify cause for apprehension that the
baggage is dangerous as to warrant exhaustive
inspection, or even refusal to accept carriage of
the same; and it is the failure of the carrier to act
accordingly in the face of suchproof that
constitutes the basis of the common carriers
liability.
1.3 CARRRIAGE BY LAND
1.3.1 Roadworthiness vs Railworthiness
Roadworthiness or streetworthiness is
a property or ability of a car, bus, truck or any kind
of automobile to be in a suitable operating condition or
meeting acceptable standards
for safe driving and transport of people, baggage or
cargo in roads or streets, being therefore street-legal.
Railworthiness is the property or ability of
a locomotive, passenger car, freight car, train or any
kind of railway vehicle to be in proper operating
condition or to meet acceptable safety standards
of project, manufacturing, maintenance and railway us
e for transportation of persons, luggage or cargo.
Railworthiness is the condition of the rail system
and its suitability for rail operations in that it has been
designed, constructed, maintained and operated to
ENGR. ARIEL MARK PILOTIN
approved standards and limitations by competent and
authorised individuals, who are acting as members of an
approved organisation and whose work is both certified
as correct and accepted on behalf of the rail system
owner.
1.3.2. Motor Vehicle Must be in Good Condition
- Carrier cannot be excused from liability on the ground
that the tire blow-out was due to a fortuitous event
when it was shown that the passengers were injured
because the floor of the bus give way.
1.3.3. Warranty Against Defective Vehicle Parts
- if carrier replaces certain parts of the motor vehicle,
they are duty bound to make sure that the parts that
they are purchasing are not defective.
-they are duty bound to exercise extraordinary
diligence in the purchasing and use of vehicle parts that
are not defective.
1.3.4 Compliance with Traffic Regulations
-Carrier fails to exercise Extraordinary diligence
if it will not comply with traffic rules (Art 2185)
-Doctrine of Negligence Per Se
-Negligence per se is a doctrine whereby an act is
considered negligent because it violates a statute
1.3.5. Prohibition Against Improper Deviation
1.3.6 Duty to Inspect Cargo on Reasonable Grounds
1.4 CARRIAGE BY AIR
1.4.1 Airworthiness
- Sec 3(z), Civil Aviation Authority Act
Airworthiness" means that an aircraft, its engines,
propellers, and other components and accessories, are
of proper design and construction, and are safe for air
navigation purposes, such design and construction being
consistent with accepted engineering practice and in
accordance with aerodynamic laws and aircraft science.
1.4.2 Competence and Fitness of Ce
1.4.3 Warranty Against Improper Deviation
1.4.4 Duty to Inspect Cargo and Baggage (Sec 8, RA
6235 or Anti Hijacking Law)
Section 8. Aircraft companies which operate as public
utilities or operators of aircraft which are for hire are
authorized to open and investigate suspicious packages
and cargoes in the presence of the owner or shipper, or
his authorized representatives if present; in order to
help the authorities in the enforcement of the
provisions of this Act: Provided, That if the owner,
shipper or his representative refuses to have the same
opened and inspected, the airline or air carrier is
authorized to refuse the loading thereof.
1.5 CARRIAGE OF DANGEROUS GOODS (DG)
1.5.1 Safe Carriage of Dangerous Goods
1.5.2 Duty to Discharge or Destroy DG
- Sec 4(6), COGSA
(6) Goods of an inflammable, explosive, or dangerous
nature to the shipment whereof, the carrier, master or
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 TRANSPORTATION NOTES BASED ON ATTY PADILLAS SYLLABUS
agent of the carrier, has not consented with knowledge
of their nature and character, may at any time before
discharge be landed at any place or destroyed or
rendered innocuous by the carrier without
compensation, and the shipper of such goods shall be
liable for all damages and expenses directly or
indirectly arising out of or resulting from such shipment.
If any such goods shipped with such knowledge and
consent shall become a danger to the ship or cargo, they
may in like manner be landed at any place, or destroyed
or rendered innocuous by the carrier without liability on
the part of the carrier except to general average if
any. ch
1.5.3 Acceptance, Shipping and Handling of DG in
Accordance with the 2012 International Maritime
Dangerous Goods Code (IMDG) and MARINA Memo
Circular No. 1 Series of 2008
1.5.4 Duty to Secure DG from Unauthorized Access
1.5.5 Proper Training in Handling DG
1.5.6 Survey or Inspection of Cargo to Enforce
Compliance with IMDG and Other Regulations
2. LIABILTY OF CARRIERS FOR LOSS, DESTRUCTION
AND DETERIORATION OF GOODS
SUBSECTION 2. Vigilance Over Goods
Article 1734. Common carriers are responsible for
the loss, destruction, or deterioration of the goods,
unless the same is due to any of the following causes
only:
(1) Flood, storm, earthquake, lightning, or other
natural disaster or calamity;
(2) Act of the public enemy in war, whether
international or civil;
(3) Act or omission of the shipper or owner of the
goods;
(4) The character of the goods or defects in the
packing or in the containers;
(5) Order or act of competent public authority.
Article 1735. In all cases other than those mentioned
in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the
goods are lost, destroyed or deteriorated, common
carriers are presumed to have been at fault or to have
acted negligently, unless they prove that they
observed extraordinary diligence as required in
article 1733.
Article 1739. In order that the common carrier may be
exempted from responsibility, the natural disaster must
have been the proximate and only cause of the loss.
However, the common carrier must exercise due
diligence to prevent or minimize loss before, during and
after the occurrence of flood, storm or other natural
disaster in order that the common carrier may be
exempted from liability for the loss, destruction, or
deterioration of the goods. The same duty is incumbent
upon the common carrier in case of an act of the public
enemy referred to in article 1734, No. 2.
ENGR. ARIEL MARK PILOTIN
Article 1740. If the common carrier negligently incurs
in delay in transporting the goods, a natural disaster
shall not free such carrier from responsibility.
Article 1741. If the shipper or owner merely
contributed to the loss, destruction or deterioration of
the goods, the proximate cause thereof being the
negligence of the common carrier, the latter shall be
liable in damages, which however, shall be equitably
reduced.
Article 1742. Even if the loss, destruction, or
deterioration of the goods should be caused by the
character of the goods, or the faulty nature of the
packing or of the containers, the common carrier must
exercise due diligence to forestall or lessen the loss.
Article 1743. If through the order of public authority
the goods are seized or destroyed, the common carrier
is not responsible, provided said public authority had
power to issue the order.
2.1 Presumption of Negligence
A common carrier is presumed to have been
negligent if it fails to prove that it exercised
extraordinary vigilance over the goods it
transported. When the goods shipped are either lost
or arrived 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.
To overcome the presumption of negligence, the
common carrier must establish by adequate proof
that it exercised extraordinary diligence over the
goods. It must do more than merely show that some
other party could be responsible for the damage.
Regional Container vs Netherland
ISSUE: Should the RCL and EDSA be liable for the loss
of goods due to fluctuations in the temperature in
their cargo which occured after the cargo was already
removed from the vessel?
Held. Yes.
In the present case, RCL and EDSA Shipping failed
to prove that they did exercise that degree of
diligence required by law over the goods they
transported. Indeed, there is sufficient evidence
showing that the fluctuation of the temperature in
the refrigerated container van, as recorded in the
temperature chart, occurred after the cargo had been
discharged from the vessel and was already under the
custody of the arrastre operator, ICTSI. This evidence,
however, does not disprove that the condenser fan
which caused the fluctuation of the temperature in
the refrigerated container was not damaged while
the cargo was being unloaded from the ship.
2.2 COMMON CARRIER DEFENSES; EXCLUSIVE?(No)
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 TRANSPORTATION NOTES BASED ON ATTY PADILLAS SYLLABUS
2.2.1 Acts of God [Arts 1734 (1), 1739, and 1740]
The principle embodied in the act of God doctrine
strictly requires that the act must be occasioned solely
by the violence of nature. Human intervention is to be
excluded from creating or entering into the cause of the
mischief. When the effect is found to be in part the
result of the participation of man, whether due to his
active intervention or neglect or failure to act, the
whole occurrence is then humanized and removed from
the rules applicable to the acts of God.
2.2.1.1 2013 Heavy Weather Guidelines (PCG
Memorandum Memorandum Circular No. 02-2013)
Policies
A. No vessel of any type or tonnage shall be allowed to
sail except to take shelter, as the situation may
warrant, when Public Storm Warning Signal (PSWS)
Number 1 or higher is hoisted within its point of origin,
the intended route, and point of destination. Xxx
G. Public Storm Warning Signal
(PSWS) Nr. 1 declared if
winds of 30-60 kph
(approximately 16-32 knots)
are expected in the locality in
at least 36 hours.
2.2.1.2 Eastern Shipping Lines vs IAC [fire]
ISSUE: Can carrier disclaim liability from the loss on
account that fire exempts it from liability under
natural disaster or calamity?
HELD. No.
Fire may not be considered a natural disaster or
calamity. This must be so as it arises almost invariably
from some act of man or by human means. It does not
fall within the category of an act of God UNLESS caused
by lightning or by other natural disaster or calamity. It
may even be caused by the actual fault or privity of the
carrier.
As the peril of fire is not comprehended within the
exceptions in Article 1734, Article 1735 of the Civil Code
provides that in all cases other than those mentioned in
Article 1734, the common carrier shall be presumed to
have been at fault or to have acted negligently, unless it
proves that it has observed the extraordinary diligence
required by law.
PROXIMATE AND ONLY CAUSE
And even if fire were to be considered a "natural
disaster" within the meaning of Article 1734 of the Civil
Code, it is required under Article 1739 of the same Code
that the "natural disaster" must have been the
"proximate and only cause of the loss," and that the
carrier has "exercised due diligence to prevent or
minimize the loss before, during or after the occurrence
of the disaster." This Petitioner Carrier has also failed to
establish satisfactorily.
ENGR. ARIEL MARK PILOTIN
2.2.1.3 Eastern Shipping Lines vs CA [ Monsoon, not
fortuitous]
ISSUE: CAN PETITIONER DISCLAIM LIABILITY
FOR LOSS DUE TO THE MONSOON?
HELD. NO.
Plainly, the heavy seas and rains referred to in the
master's report were not caso fortuito, but normal
occurrences that an ocean going vessel, particularly in
the month of September which, in our area, is a month
of rains and heavy seas would encounter as a matter of
routine. They are not unforeseen nor unforeseeable.
These are conditions that ocean-going vessels would
encounter and provide for, in the ordinary course of a
voyage. That rain water (not sea water) found its way
into the holds of the Jupri Venture is a clear indication
that care and foresight did not attend the closing of the
ship's hatches so that rain water would not find its way
into the cargo holds of the ship.
Moreover, under Article 1733 of the Civil Code,
common carriers are bound to observe 'extra-ordinary
vigilance over goods . . . according to all circumstances
of each case,'
2.2.1.4 Schmitz Transport & Brokerage Corp. Vs
Transport Venture
ISSUE: Can carrier disclaim liability on account of the
Storm, when they did not unload the cargo promptly
then Storm came and the barge sank with the cargo?
Held. No.
Human intervention in the form of contributory
negligence by all the defendants resulted to the loss of
the cargoes.
The proximate cause of the loss of the cargoes.
Had the barge been towed back promptly to the
pier, the deteriorating sea conditions notwithstanding,
the loss could have been avoided. But the barge
was left floating in open sea until big waves set in at
5:30 a.m., causing it to sink along with the cargoes. The
loss thus falls outside the "act of God doctrine."
2.2.1.5 Phil. Am Gen Insurance vs PKS Shipping
Company
ISSUE: Can carrier disclaim liability on the loss due to
a storm, when evidence shows they exercised
extraordinary diligence?
HELD: Yes.
Testimonies of respective vessel masters of Limar
I and MT Iron Eagle, provide that there was no way by
which the barge's or the tugboat's crew could have
prevented the sinking of Limar I.
The vessel was suddenly tossed by waves of
extraordinary height of six (6) to eight (8) feet and
buffeted by strong winds of 1.5 knots resulting in the
entry of water into the barge's hatches.
The official Certificate of Inspection of the barge
issued by the Philippine Coastguard and the Coastwise
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 TRANSPORTATION NOTES BASED ON ATTY PADILLAS SYLLABUS
Load Line Certificate would attest to the seaworthiness
of Limar I and should strengthen the factual findings of
the appellate court.
2.2.1.6 Central Shipping Co. Vs Insurance Company of
North America [Monsoos , fortuitous]
ISSUE: Can carrier disclaim responsibility for the loss of
the cargo and M/V Central Bohol by claiming the
occurrence of a southwestern monsoon under Article
1734(1)?
Normally expected on sea voyages, however, were
such monsoons, during which strong winds were not
unusual.PAGASA representative testified that a
thunderstorm occurred in the midst of a southwest
monsoon. According to her.
Storm; Definition
According to PAGASA, a storm has a wind force of
48 to 55 knots, equivalent to 55 to 63 miles per hour
or 10 to 11 in the Beaufort Scale. The second mate of
the vessel stated that the wind was blowing around
force 7 to 8 on the Beaufort Scale. Consequently, the
strong winds accompanying the southwestern monsoon
could not be classified as a "storm." Such winds are the
ordinary vicissitudes of a sea voyage.
Even if the weather encountered by the ship is to be
deemed a natural disaster under Article 1739 of the
Civil Code, petitioner failed to show that such natural
disaster or calamity was the proximate and only cause
of the loss.
Human agency must be entirely excluded from the
cause of injury or loss. In other words, the damaging
effects blamed on the event or phenomenon must not
have been caused, contributed to, or worsened by the
presence of human participation. The defense of
fortuitous event or natural disaster cannot be
successfully made when the injury could have been
avoided by human precaution.
The loss of the vessel was caused not only by the
southwestern monsoon, but also by the shifting of the
logs in the hold. Such shifting could been due only to
improper stowage
2.2.1.7 Transimex Co. Vs Mafre Asian Insurance Corp
ISSUE: Whether there is sufficient proof that the loss
or damage incurred by the cargo was caused by a
"storm" or a "peril of the sea."
HELD. NO.
American jurisprudence generally limit the
application of the phrase perils of the sea to
weather that is "so unusual, unexpected and
catastrophic as to be beyond reasonable
expectation."
In this case, the documentary and testimonial
evidence cited by petitioner indicate that M/V
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Meryem Ana faced winds of only up to 40 knots while
at sea. This wind force clearly fell short of the 48 to
55 knots required for "storms" under Article 1734 (1)
of the Civil Code based on the threshold established
by PAGASA.
Petitioner also failed to prove that the inclement
weather encountered by the vessel was unusual,
unexpected, or catastrophic.
2.2.2 Acts of Public Enemy
- presupposes the (1) existence of an actual state
of war, and (2) refers to the government of a foreign
nation at war with the country to which the carrier
belongs, though not necessarily with that to which
the owner of the goods owes allegiance.
2.2.2.1 Existence of War
Prize Cases
War has been well defined to be, "That state in
which a nation prosecutes its right by force."
The parties belligerent in a public war are
independent nations. But it is not necessary, to
constitute war, that both parties should be
acknowledged as independent nations or sovereign
States. A war may exist where one of the belligerents
claims sovereign rights as against the other.
Insurrection against a government may or may not
culminate in an organized rebellion, but a civil war
always begins by insurrection against the lawful
authority of the Government.
A civil war is never solemnly declared; it becomes
such by its accidents -- the number, power, and
organization of the persons who originate and carry it
on. When the party in rebellion occupy and hold in a
hostile manner a certain portion of territory, have
declared their independence, have cast off their
allegiance, have organized armies, have commenced
hostilities against their former sovereign, the world
acknowledges them as belligerents, and the contest a
war. They claim to be in arms to establish their liberty
and independence, in order to become a sovereign
State, while the sovereign party treats them as
insurgents and rebels who owe allegiance, and who
should be punished with death for their treason.
As a civil war is never publicly proclaimed, eo
nomine, against insurgents, its actual existence is a fact
in our domestic history which the Court is bound to
notice and to know.
The true test of its existence is, "When the
regular course of justice is interrupted by revolt,
rebellion, or insurrection, so that the Courts of Justice
cannot be kept open, civil war exists, and hostilities
may be prosecuted on the same footing as if those
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 TRANSPORTATION NOTES BASED ON ATTY PADILLAS SYLLABUS
opposing the Government were foreign enemies
invading the land."
2.2.2.2 Piracy
PIRATES on the high seas
-considered the enemies of all civilized nations
and indeed of human race, and consequently their
depradations on a common carrier will excuse them
from liability.
2.2.2.3 Rebels as Public Enemy
REBELS, not included.
-rebels in insurrection against their own
government.
EXCEPT, when in such a magnitude as to
constitute a CIVIL WAR.
2.2.3 Shipper or Owners Fault
2.2.3.1 Who are Considered Shipper and/or owner
2.2.3.2 Sole and Proximate vs Contributory Only
2.2.3.3. Campania Maritima vs CA
ISSUE: Can Carrier disclaim liability for loss of goods
due to misdeclaration of the correct tonnage by the
Shipper?
HELD. No. It mitigates the liability.
Shippers act of furnishing petitioner with an
inaccurate weight of the payloader cannot be used by
the as an excuse to avoid liability for the damage
caused, as the same could have been avoided had
petitioner utilized the "jumbo" lifting apparatus which
has a capacity of lifting 20 to 25 tons of heavy cargoes.
Even if petitioner chose not to take the necessary
precaution to avoid damage by checking the correct
weight of the payloader, extraordinary care and
diligence compel the use of the "jumbo" lifting
apparatus as the most prudent course for petitioner.
CONTRIBUTORY ACT MITIGATES THE LIABILITY
The act of shipper in furnishing carrier with an
inaccurate weight of the payloader constitutes a
contributory circumstance to the damage caused on the
payloader, which mitigates the liability for damages of
petitioner in accordance with Article 1741 of the Civil
Code, to wit:
Art. 1741. If the shipper or owner merely
contributed to the loss, destruction or deterioration of
the goods, the proximate cause thereof being the
negligence of the common carrier, the latter shall be
liable in damages, which however, shall be equitably
reduced.
2.2.3.4 Delsan Transport Lines vs American Home
Asssurance Co. [Ship sank for no reason]
The Court weighed the testimonies and evidence
presented and gave more credence to the weather
bulleting report from PAGASA saying that the weather
was normal rather than the testimony of the captain
and the chief mate. Thus, petitioners vessel, MT
ENGR. ARIEL MARK PILOTIN
Maysun, sank with its entire cargo for the reason that it
was not seaworthy. There was no squall or bad weather
or extremely poor sea condition in the vicinity when the
said vessel sank.
2.2.3.5 Shippers Load and Count Arrangement
Marina Port Services vs American Home Assurance
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.
At any rate, 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 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."
All told, the Court holds that MPSI is not liable for
the loss of the bags of flour
2.2.4 Inherent Vice
2.2.4.1 Belgian Overseas Chartering and Shipping vs
Phil First Insurance
ISSUE: Can carrier escape liability on account of the
alleged defect in the packing on the containers, citing
the notation metal envelopes rust stained and
slightly dented on the Bill of Lading?
HELD. No
From the evidence on record, it cannot be
reasonably concluded that the damage to the four coils
was due to the condition noted on the Bill of Lading.
The exception in Art 1734 refers to cases when goods
are lost or damaged while in transit as a result of the
natural decay of perishable goods or the fermentation
or evaporation of substances liable therefor, the
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 TRANSPORTATION NOTES BASED ON ATTY PADILLAS SYLLABUS
necessary and natural wear of goods in transport,
defects in packages in which they are shipped, or the
natural propensities of animals.None of these is present
in the instant case.
Further, even if the fact of improper packing was
known to the carrier or its crew or was apparent upon
ordinary observation, it is not relieved of liability for
loss or injury resulting therefrom, once it accepts the
goods notwithstanding such condition. 42 Thus,
petitioners have not successfully proven the
application of any of the aforecited exceptions in the
present case
2.2.4.2 Asian Terminals Inc vs Simon Enterprises
[Soybean; moisture]
ISSUE: Should ATI be liable for shortage in the
delivery of Soybeans?
HELD.NO.It should be noted that the shortage being
claimed by the respondent is minimal.
Moisture is perhaps the most important single factor
affecting storage of soybeans and soybean
meal. Soybeans contain moisture ranging from 12% to
15% (wet basis) at harvest time. Taking this into
consideration, 10% more or less than the contracted
shipment, and the fact that the alleged shortage is
only 6.05% of the total quantity of 3,300 metric tons,
the alleged percentage loss clearly does not exceed
the allowable 10% allowance for loss. The alleged loss,
if any, not having exceeded the allowable percentage of
shortage, the respondent then has no cause of action to
claim for shortages.
2.2.4.3 Planters Products Inc. vs CA [Urea]
The dissipation of quantities of fertilizer, or its
deterioration in value, is caused either by an extremely
high temperature in its place of storage, or when it
comes in contact with water.
When Urea is drenched in water, either fresh or
saline, some of its particles dissolve. But the salvaged
portion which is in liquid form still remains potent and
usable although no longer saleable in its original market
value.
The probability of the cargo being damaged or
getting mixed or contaminated with foreign particles
was made greater by the fact that the fertilizer was
transported in "bulk," thereby exposing it to the inimical
effects of the elements and the grimy condition of the
various pieces of equipment used in transporting and
hauling it.
2.2.5. DEFECTS IN THE PACKAGING OR IN THE
CONTAINER
2.2.5.1 Regional Container Lines of Singapore vs
Netherlands
RCL and EDSA Shipping failed to satisfy this standard of
evidence and in fact offered no evidence at all on this
ENGR. ARIEL MARK PILOTIN
point; a reversal of a dismissal based on a demurrer to
evidence bars the defendant from presenting evidence
supporting its allegations.
2.2.5.2 Philippine Charter Insurance Cor. Vs
Unknown owner of M/V National Honor [Wooden
Crates]
- Loss was due solely to the inherent defect and
weakness of the materials used in the fabrication of said
crate.
"Defect" is the want or absence of something
necessary for completeness or perfection; a lack or
absence of something essential to completeness; a
deficiency in something essential to the proper use for
the purpose for which a thing is to be used. On the other
hand, inferior means of poor quality, mediocre, or
second rate. A thing may be of inferior quality but not
necessarily defective. In other words, "defectiveness" is
not synonymous with "inferiority."
The cargo fell while it was being carried only at
about 5 feet high above the ground. It would not have so
easily collapsed had the cargo been properly packed.
The shipper should have used materials of stronger
quality to support the heavy machines. Not only did the
shipper fail to properly pack the cargo, it also failed to
indicate an arrow in the middle portion of the cargo
where additional slings should be attached. At any rate,
the issue of negligence is factual in nature and in this
regard, it is settled that factual findings of the lower
courts are entitled to great weight and respect on
appeal, and, in fact, accorded finality when supported
by substantial evidence.
2.2.5.3 Southern Lines vs CA
If the fact of improper packing is known to the carrier
or his servants, or apparent upon ordinary observation,
but it accepts the goods notwithstanding such
condition, it is not relieved of liability for loss or injury
resulting therefrom.
Appellant (petitioner) itself frankly admitted that the
strings that tied the bags of rice were broken; some
bags were with holes and plenty of rice were spilled
inside the hull of the boat, and that the personnel of the
boat collected no less than 26 sacks of rice which they
had distributed among themselves."
2.2.5.4 Calvo vs UCPB
If the improper packing or, in this case, the defects in
the container, are known to the carrier or his employees
or apparent upon ordinary observation, but he
nevertheless accepts the same without protest or
exception notwithstanding such condition, he is not
relieved of liability for damage resulting therefrom
In this case, carrier accepted the cargo withoit
exception despite the apparent defects in some of the
container vans. Hence, failure of petitioner to prove
that she exercised extraordinary diligence in the
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carriage of goods in this case or that she is exempt from
liability, the presumptionof negligence as provided
under Art 1735 holds.
2.2.6 ACTS OF PUBLIC AUTHORITY
-Defense is not available if
(1) the public authority had no authority to issue
the subject order, or
(2) If the public authority exceeded his
authority.
Art 1743. If through the order of public authority the
goods are seized or destroyed, the common carrier is
not responsible, provided said public authority had
power to issue the order.
2.2.6.1 Ganzon vs CA [Mayor]
Before Ganzon could be absolved from responsibility
on the ground that he was ordered by competent public
authority to unload the scrap iron, it must be shown
that Acting Mayor Basilio Rub had the power to issue the
disputed order, or that it was lawful, or that it was
issued under legal process of authority.
The appellee failed to establish this. Indeed, no
authority or power of the acting mayor to issue such an
order was given in evidence. Neither has it been shown
that the cargo of scrap iron belonged to the Municipality
of Mariveles.
What we have in the record is the stipulation of the
parties that the cargo of scrap iron was accilmillated by
the appellant through separate purchases here and
there from private individuals.
The fact remains that the order given by the acting
mayor to dump the scrap iron into the sea was part of
the pressure applied by Mayor Jose Advincula to
shakedown the appellant for P5,000.00. The order of
the acting mayor did not constitute valid authority for
appellee Mauro Ganzon and his representatives to carry
out.
2.2.7 Extraordinary Diligence
2.2.7.1 Republic vs Lorenzo Shipping
Article 1733 of the Civil Code demands that a
common carrier observe extraordinary diligence over
the goods transported by it. Extraordinary diligence is
that extreme measure of care and caution which
persons of unusual prudence and circumspection use for
securing and preserving their own property or
rights. This exacting standard imposed on common
carriers in a contract of carriage of goods is intended to
tilt the scales in favor of the shipper who is at the mercy
of the common carrier once the goods have been lodged
for shipment. Hence, in case of loss of goods in transit,
the common carrier is presumed under the law to have
been at fault or negligent. However, the presumption of
fault or negligence, may be overturned by competent
evidence showing that the common carrier has observed
extraordinary diligence over the goods.
In the instant case, we agree with the court a
ENGR. ARIEL MARK PILOTIN
quo that the respondent adequately proved that it
exercised extraordinary diligence. Although the original
bills of lading remained with petitioner, respondents
agents demanded from Abdurahman the certified true
copies of the bills of lading. They also asked the latter
and in his absence, his designated subordinates, to sign
the cargo delivery receipts.
2.2.7.2 De Guzman vs CA
Applying Articles 1734 and 1735, the hijacking of the
carrier's truck does not fall within any of the 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.
The precise issue that we address here relates to the
specific requirements of the duty of extraordinary
diligence in the vigilance over the goods carried in the
specific context of hijacking or armed robbery.
Under Article 1745 (6), 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."
In the instant case, armed men held up the second
truck owned by private respondent which carried
petitioner's cargo. Three (3) of the five (5) hold-uppers
were armed with firearms. The robbers not only took
away the truck and its cargo but also kidnapped the
driver and his helper.
In these 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.
2.2.8 FORTUITOUS EVENTS
In order, to be considered a fortuitous event,
however,
(1) the cause of the unforeseen and unexpected
occurrence, or the failure of the debtor to comply with
his obligation, must be independent of human will;
(2) it must be impossible to foresee the event
which constitute the caso fortuito, or if it can be
foreseen it must be impossible to avoid;
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 TRANSPORTATION NOTES BASED ON ATTY PADILLAS SYLLABUS
(3) the occurrence must be such as to render it
impossible for the debtor to fulfill his obligation in any
manner; and
(4) the obligor must be free from any participation
in the aggravation of the injury resulting to the
creditor.
2.2.8.1 Casus Fortuitos Nemo Prestat; Impossibilum
Nulla Obligatio Est
-principle that the law does not require the
performance of an impossible act
(impossibilum nulla obligatio est).
-"caso fortuito" is "an event that takes place by accident
and could not been have foreseen. Examples of this are
destruction of houses, unexpected fire, shipwreck,
violence of robbers."|||
2.2.8.2 De Guzman vs CA
2.2.8.3 Ganzon vs CA
2.2.8.4 Bascos vs CA
2.2.8.5 Loadmaster Customs Services vs Glodel
Brokerage Corp
2.2.8.6 Torres-Madrd Brokerage vs FEB Mitsui Marine
Insurance ||
2.2.8.7 Servando vs Philippine Steam Navigation
{fire}
In the case at bar, the burning of the customs
warehouse was an extraordinary event which happened
independently of the will of the appellant. The latter
could not have foreseen the event.|||
There is nothing in the record to show that appellant
carrier incurred in delay in the performance of its
obligation. It appears that appellant had not only
notified appellees of the arrival of their shipment, out
had demanded that the same be withdrawn. In fact,
pursuant to such demand, appellee Uy Bico had taken
delivery of 907 cavans of rice before the burning of the
warehouse.
Nor can the appellant or its employees be charged with
negligence. The storage of the goods in the Customs
warehouse pending withdrawal thereof by the appellees
was undoubtedly made with their knowledge and
consent. Since the warehouse belonged to and was
maintained by the government, it would be unfair to
impute negligence to the appellant, the latter having no
control whatsoever over the same.
2.2.9 PARTIAL DEFENSE; SHIPPER/CONSIGNEES
CONTRIBUTORY FAULT OR NEGLIGENCE
2.2.9.1 Tabacalera Insurance vs North Front Shipping
Services(CORN)
North Front Shipping Services, Inc., proved that the
vessel was inspected prior to actual loading by
representatives of the shipper and was found fit to take
a load of corn grains. They were also issued Permit to
Sail by the Coast Guard. The master of the vessel
testified that the corn grains were farm wet when
ENGR. ARIEL MARK PILOTIN
loaded. However, this testimony was disproved by the
clean bill of lading issued by North Front Shipping
Services, Inc., which did not contain a notation that the
corn grains were wet and improperly dried. Having been
in the service since 1968, the master of the vessel would
have known at the outset that corn grains that were
farm wet and not properly dried would eventually
deteriorate when stored in sealed and hot
compartments as in hatches of a ship. Equipped with
this knowledge, the master of the vessel and his crew
should have undertaken precautionary measures to
avoid or lessen the cargo's possible deterioration as they
were presumed knowledgeable about the nature of such
cargo. But none of such measures was taken.|
However, we cannot attribute the destruction, loss
or deterioration of the cargo solely to the carrier. We
find the consignee Republic Flour Mills Corporation
guilty of contributory negligence. It was seasonably
notified of the arrival of the barge but did not
immediately start the unloading operations. No
explanation was proffered by the consignee as to why
there was a delay of six (6) days. Had the unloading
been commenced immediately the loss could have been
completely avoided or at least minimized. As testified
to by the chemist who analyzed the corn samples, the
mold growth was only at its incipient stage and could
still be arrested by drying. The corn grains were not yet
toxic or unfit for consumption. For its contributory
negligence, Republic Flour Mills Corporation should
share at least 40% of the loss.
2.2.9.2 Compania Maritima vs CA
3. COMMENCEMENT, DURATION AND TERMINATION OF
CARRIERS RESPONSIBILITY OVER THE GOODS
Art 1736. 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 the 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, without prejudice to the
provisions of Article 1738.
Art. 1737. The common carriers duty to observe
extraordinary diligence over the goods remains in full
force and effect even when they are temporarily
unloaded or stored in transit, unless the shipper or
owner has made use of the right of stoppage in
transitu.
Art. 1738. The extraordinary liability of the common
carrier continues to be operative even during the
time the goods are stored in a warehouse of the
carrier at the place of destination, until the
consignee has been advised of the arrival of the goods
and has had reasonable opportunity thereafter to
remove them or otherwise.
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 TRANSPORTATION NOTES BASED ON ATTY PADILLAS SYLLABUS
3.1 Unconditionally Placed in the Possession of and
Received by the Carrier
- if actually no goods are received there can be no
contract. The liability and responsibility of the carrier
under a contract for the carriage of goods commence on
their actual delivery to, or receipt by, the carrier or an
authorized agent.
-The test as to whether the relation of shipper
and carrier had been established is, had the control
and possession of the goods been completely
surrendered by the shipper to the carrier? Whenever
the control and possession of goods passes to the carrier
and nothing remains to be done by the shipper, then it
can be said with certainty that the relation of shipper
and carrier has been established.
3.1.1 Compania Maritima vs Insurance Co. Of North
America
ISSUE. (1) IS CARRIER LIABLE FOR LOSS OF GOODS WHILE
STILL IN THE LIGHTER AND HAS YET TO BE LOADED ON
THE ACTUAL SHIP?
HELD. YES.
The claim that there can be no contract of
affreightment because the hemp was not actually
loaded on the ship that was to take it from Davao City to
Manila is of no moment, for, as already stated, the
delivery of the hemp to the carrier's lighter is in line
with the contract. In fact, the receipt signed by the
patron of the lighter that carried the hemp stated that
he was receiving the cargo "in behalf of S.S. Bowline
Knot in good order and condition.
3.1.2. Ganzon vs CA
ISSUE: Was there an unconditional delivery albeit only
part of the goods have been loaded?
HELD. YES.
By the said act of delivery, the scraps were
unconditionally placed in the possession and control of
the common carrier, and upon their receipt by the
carrier for transportation, the contract of carriage was
deemed perfected. Consequently, the
petitioner-carrier's extraordinary responsibility for the
loss, destruction, or determination of the goods
commenced. Pursuant to Art. 1736, such extraordinary
responsibility would cease only upon the delivery,
actual or constructive, by the carrier to the consignee,
or to the person who has a right to receive them. The
fact that part of the shipment had not been loaded on
board the lighter did not impair the said contract of
transportation as the goods remained in the custody and
control of the carrier, albeit still unloaded.
3.2 Bill of Lading as Evidence of Delivery to the
Carrier
A bill of lading is a written acknowledgment of the
receipt of the goods and an agreement to transport and
deliver them at a specified place to a person named or
ENGR. ARIEL MARK PILOTIN
on his order. Such instrument may be called a shipping
receipt, forwarder's receipt and receipt for
transportation. The designation, however, is immaterial.
It has been held that freight tickets for bus companies
as well as receipts for cargo transported by all forms of
transportation, whether by sea or land, fall within the
definition. Under the Tariff and Customs Code, a bill of
lading includes airway bills of lading.
TWO FOLD CHARACTER OF A BILL OF LADING
(1) it is a receipt as to the quantity and description of
the goods shipped; and
(2) a contract to transport the goods to the consignee
or other person therein designated, on the terms
specified in such instrument.
3.2.1. Saludo vs CA
ISSUE: Does the issuance of Bill of lading constitute
delivery? And does it estop the carrier from denying
the liability?
HELD. NO. NO.
Logically, since a bill of lading acknowledges receipt
of goods to be transported, delivery of the goods to the
carrier normally precedes the issuance of the bill; or, to
some extent, delivery of the goods and issuance of the
bill are regarded in commercial practice as
simultaneous acts. However, except as may be
prohibited by law, there is nothing to prevent an inverse
order of events, that is, the execution of the bill of
lading even prior to actual possession and control by the
carrier of the cargo to be transported.
Ordinarily, a receipt is not essential to a complete
delivery of goods to the carrier for transportation but,
when issued, is competent and prima facie, but not
conclusive, evidence of delivery to the carrier.
as between the shipper and the carrier, when no goods
have been delivered for shipment no recitals in the bill
can estop the carrier from showing the true
facts . . .. Between the consignor of goods and a
receiving carrier, recitals in a bill of lading as to the
goods shipped raise only a rebuttable presumption that
such goods were delivered for shipment. As between
the consignor and a receiving carrier, the fact must
outweigh the recital."
3.3 Temporary Unloading and Storage in Transit
3.3.1. Effect of Stoppage in Transitu
-Explicit is the rule under Article 1736 of the Civil
Code that the extraordinary responsibility of the
common carrier begins from the time the goods are
delivered to the carrier. This responsibility remains in
full force and effect even when they are temporarily
unloaded or stored in transit, unless the shipper or
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 TRANSPORTATION NOTES BASED ON ATTY PADILLAS SYLLABUS
owner exercises the right of stoppage in transitu, and
terminates only after the lapse of a reasonable time for
the acceptance of the goods by the consignee or such
other person entitled to receive them. And, there is
delivery to the carrier when the goods are ready for and
have been placed in the exclusive possession, custody
and control of the carrier for the purpose of their
immediate transportation and the carrier has accepted
them. Where such a delivery has thus been accepted by
the carrier, the liability of the common carrier
commences eo instanti. (Saludo vs CA)
3.4 ACTUAL OR CONSTRUCTIVE DELIVERY
Carrier may be relieved from the responsibility for
loss or damage to the goods upon actual or constructive
delivery of the same by the carrier to the consignee or
to the person who has the right to receive them.
(a) ACTUAL DELIVERY
-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.
(b) CONSTRUCTIVE DELIVERY
(c) When are the goods deemed delivered? When the
goods are ready for and have been placed in the
exclusive possession, custody and control of the carrier
for the purpose of their immediate transportation and
the carrier has accepted them. When such delivery has
thus been accepted by the carrier, the liability of the
carrier commences eo instanti.
3.4.1 To the Consignee
3.4.2 To the Person who has Right to Receive Cargo
3.4.2.1 Lu Do & Lu vs Binamira
ISSUE: Is carrier liable for loss that occurs during
when goods are delivered to customs?
GR. Yes.
. It may be stipulated.
-while delivery of the cargo to the customs
authorities is not delivery to the consignee, or "to the
person who has a right to receive them", contemplated
in Article 1736, because in such case the goods are still
in the hands of the Government and the owner cannot
exercise dominion over them, we believe however that
the parties may agree to limit the liability of the carrier
considering that the goods have still to go through the
inspection of the customs authorities before they are
actually turned over to the consignee.
This is a situation where we may say that the
carrier loses control of the goods because of a custom
regulation and it is unfair that it be made responsible
for what may happen during the interregnum.
3.4.2.2 Nedlloyd Lijnen BV Rotterdam vs Glow Laks
Enterprises
ISSUE. Is carrier liable for loss due to misdelivery by
ENGR. ARIEL MARK PILOTIN
fraudulent bill of lading when it was already turned
over to National Port Authority in Panama?
HELD.
In this case, there is no dispute that the custody of the
goods was never turned over to the consignee or his
agents but was lost into the hands of unauthorized
persons who secured possession thereof on the strength
of falsified documents. The loss or the misdelivery of
the goods in the instant case gave rise to the
presumption that the common carrier is at fault or
negligent.
3.4.2.3 Macam vs CA
ISSUE: Goods were delivered to the notify party and
not the consignee.
3.5 CUSTODY OVER CARGO DURING UNLOADING
It is settled in maritime law jurisprudence
that cargoes while being unloaded generally remain
under the custody of the carrier (Regional Container
Lines v. Netherlands)
3.5.1 Regional Container Lines v. Netherlands
Insurance co.
ISSUE: Liability of Carrier over cargoes while being
unloaded?
Held. Carrier is liable.
RCL and EDSA Shipping could have offered evidence
before the trial court to show that the damage to the
condenser fan did not occur: (1) while the cargo was in
transit; (2) while they were in the act of discharging it
from the vessel; or (3) while they were delivering it
actually or constructively to the consignee. They could
have presented proof to show that they exercised
extraordinary care and diligence in the handling of the
goods, but they opted to file a demurrer to evidence
3.5.2 Philippine First Insurance vs Wallem Phils.
Shipping Lines
ISSUE
HELD. It is settled in maritime law jurisprudence that
cargoes while being unloaded generally remain under
the custody of the carrier.
In the instant case, the damage or losses were
incurred during the discharge of the shipment while
under the supervision of the carrier.
Consequently, the carrier is liable for the damage
or losses caused to the shipment.
3.6 DUTY TO SHIP VS DUTY TO TRANSHIP
"transship" means:
"to transfer for further transportation from one
ship or conveyance to another"
3.6.1 Samar Mining vs Nordeutscher Lloyd
FACTS
Goods were to be transshipped from
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 TRANSPORTATION NOTES BASED ON ATTY PADILLAS SYLLABUS
Nordeutscher Lloyd to AMCYL in Davao, the goods
were lost after delivery by Nordeutscher in Davao in
good condition.
Bill of lading stipulates that Nordeutcher cannot
be held liable for any loss during transshipment.
ISSUE: Can Nordeutscher Lloyd be held liable?
HELD. No.
the moment when the subject goods are discharged in
Manila, its personality changes from that of carrier to
that of agent of the consignee. Thus, the character of
appellant's possession also changes, from possession in
its own name as carrier, into possession in the name of
consignee as the latter's agent. Such being the case,
there was, in effect, actual delivery of the goods from
appellant as carrier to the same appellant as agent of
the consignee. Upon such delivery, the appellant, as
erstwhile carrier, ceases to be responsible for any loss
or damage that may befall the goods from that point
onwards. This is the full import of Article 1736, as
applied to the case before Us.
4. STIPULATIONS LIMITING CARRIERS LIABILITY
4.1 Articles 1744-1748, 1751 and 1752 of NCC
Art. 1744. A stipulation between the common carrier
and the shipper or owner limiting the liability of the
former for the loss, destruction, or deterioration of
the goods to a degree less than extraordinary
diligence shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other
than the service rendered by the common carrier;
and
(3) Reasonable, just and not contrary to public
policy.
Art 1745. Any of the following or similar stipulations
shall be considered unreasonable, unjust and
contrary to public policy:
(1) That the goods are transported at the risk of
the owner or shipper;
(2) That the common carrier will not be liable for
any loss, destruction, or deterioration of the goods;
(3) That the common carrier need not observe any
diligence in the custody of goods;
(4) That the common carrier shall exercise a
degree of diligence less than a good father of a
family, or of man of ordinary prudence in the
vigilance over the movables transported;
(5) That the common carrier not be responsible for
the acts or omission of his or its employees;
(6) That the common carriers liability for acts
committed by thieves, or of robbers who do not act
with grave or irresistible threat, violence or force, is
dispensed with or diminished;
(7) That the common carrier is not responsible for
the loss, destruction, or deterioration of goods on
account of the defective condition of the car, vehicle,
ship airplane or other equipment used in the contract
ENGR. ARIEL MARK PILOTIN
of carriage.
Art 1746. An agreement limiting the common
carriers liability may be annulled by the shipper or
owner if the common carrier refused to carry the
goods unless the former agreed to such stipulation.
Art 1747. If the common carrier, without just cause,
delays the transportation of the goods or changes the
stipulated or usual route, the contract limiting the
common carriers liability cannot be availed of in case
of loss, destruction, or deterioration of the goods.
Art 1748. An agreement limiting the common
carriers liability for delay on account of strikes or
riots is valid.
Art 1751. The fact that the common carrier has no
competitor along the line or route, or part thereof, to
which the contract refers shall be taken into
consideration on the question of whether or not a
stipulation limiting the common carriers liability is
reasonable, just and in consonance with public
policy.
Art 1752. Even when there is an agreement limiting
the liability of the common carrier in the vigilance
over the goods, the common carrier is disputably
presumed to have been negligent in case of their loss,
destruction or deterioration.
4.2. Minimum Degree of Diligence required
4.3 Void Stipulations (Art 1745 NCC)
4.3.1 Sweet Lines vs Teves
Issue: Is the stipulation on which court an action may
be filed valid?
Held. No. It is void for being contrary to public policy.
The Court may declare the agreement as to venue to be
in effect contrary to public policy, despite that in
general, changes and transfers of venue by written
agreement of the parties are allowable whenever it is
shown that a stipulation as to venue works injustice by
practically denying to the party concerned designated
by the rules.
It is void and unenforceable for the following
reasons
first, under circumstances obtaining in the
inter-island shipping industry, it is not just and fair to
bind passengers to the terms of the conditions printed
at the back of the passage tickets, on which Condition
No. 14 is printed in fine letters, and
second, Condition No. 14 subverts the public
policy on transfer of venue of proceedings of this
nature, since the same will prejudice rights and
interests of innumerable passengers in different parts of
the country who, under Condition No. 14, will have to
file suits against petitioner only in the City of Cebu.
4.4. Reasonable Time in Delivery of Goods
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 TRANSPORTATION NOTES BASED ON ATTY PADILLAS SYLLABUS
While it is true that common carriers are not
obligated by law to carry and to deliver merchandise,
and persons are not vested with the right to prompt
delivery, unless such common carriers previously
assume the obligation to deliver at a given date or time,
delivery of shipment or cargo should at least be made
within a reasonable time.
Maersk Line vs CA
DELAY FOR A PERIOD OF MORE THAN TWO (2)
MONTHS IN BEYOND THE REALM OF REASONABLENESS.
An examination of the subject bill of lading shows
that the subject shipment was estimated to arrive in
Manila on April 3, 1977. While there was no special
contract entered into by the parties indicating the date
of arrival of the subject shipment, petitioner
nevertheless, was very well aware of the specific date
when the goods were expected to arrive as indicated in
the bill of lading itself. In this regard, there arises no
need to execute another contract for the purpose as it
would be a mere superfluity.
In the case before us, we find that a delay in the
delivery of the goods spanning a period of two (2)
months and seven (7) days falls way beyond the realm of
reasonableness. Described as gelatin capsules for use in
pharmaceutical products, subject shipment was
delivered to, and left in, the possession and custody of
petitioner-carrier for transport to Manila via Oakland,
California. But through petitioner's negligence was
mishipped to Richmond, Virginia. Petitioner's insistence
that it cannot be held liable for the delay finds no
merit.
4.5. LIMITATIONS ON THE AMOUNT OF LIABILITY
Art 1749. A stipulation that the common carriers
liability is limited to the value of the goods appearing
in the bill of lading, unless the shipper or owner
declares a greater value, is binding.
Art 1750. A contract fixing the sum that may be
recovered by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it
is reasonable and just under the circumstances, and
has been fairly and freely agreed upon.
4.5.1 Ad Valorem B/L
- payment in proportion to the estimated value of
the goods to be transported.
4.5.2 Ysmael vs Barretto
ISSUE: Can common carrier limit liability for loss
caused by its own negligence?
HELD. No.
The clause in question provides that the carrier shall
not be liable for loss or damage from any cause or for
any reason to an amount in excess of P300 "for any
single package of silk or other valuable cargo."
By the weight of modern authority, the carrier
cannot limit its liability for injury to or loss of goods
ENGR. ARIEL MARK PILOTIN
shipped where such injury or loss was caused by its own
negligence.
The rule rests on consideration of public policy, as
the contract of the carrier is to carry and deliver the
goods, and a contract that undertakes to relieve the
carrier from any liability for loss or damage accruing or
arising from its own negligence would in legal effect
nullify the contract.
4.5.3. Shewaram vs PAL
Issue: Whether or not the limitation of pecuniary
liability clause printed at the back of the ticket stubs is
binding upon plaintiff-appellee?
Held:
In the instant case, the fact that the conditions are
printed at the back of the ticket stub in letters so small
that they are hard to read would not warrant the
presumption that the appellee was aware of those
conditions such that he had "fairly and freely agreed" to
those conditions. Appellee, therefore, is not and cannot
be bound, by the conditions of carriage found at the
back of the ticket stub issued to him when he made the
flight on appellant's plane on November 23, 1959.
4.5.4 Ong Yiu vs CA
ISSUE: Can shipper be bound by the stipulation
limiting liability printed on his plane ticket when he
did not sign such?
HELD. Yes.
While it may be true that petitioner had not signed
the plane ticket , he is nevertheless bound by the
provisions thereof. "Such provisions have been held to
be a part of the contract of carriage, and valid and
binding upon the passenger regardless of the latter's
lack of knowledge or assent to the regulation". It is
what is known as a contract of "adhesion", in regards
which it has been said that contracts of adhesion
wherein one party imposes a ready made form of
contract on the other, as the plane ticket in the case at
bar, are contracts not entirely prohibited. The one who
adheres to the contract is in reality free to reject it
entirely; if he adheres, he gives his consent. And as
held in Randolph v. American Airlines, "a contract
limiting liability upon an agreed valuation does not
offend against the policy of the law forbidding one from
contracting against his own negligence."
Considering, therefore, that petitioner had failed to
declare a higher value for his baggage, he cannot be
permitted a recovery in excess of P100.00. Besides,
passengers are advised not to place valuable items
inside their baggage but "to avail of our V-cargo service"
(Exh. "1"). It is likewise to be noted that there is nothing
in the evidence to show the actual value of the goods
allegedly lost by petitioner. L
4.5.5. Sea-land Services vs IAC
ISSUE: Whether or not the CONSIGNEE of seaborne
freight is bound by stipulations in the covering bill of
lading limiting to a fixed amount the liability of the
carrier for loss or damage to the cargo where its value is
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not declared in the bill.|||
HELD. YES.
what is a just and reasonable, and a fair and free,
stipulation, in this wise:
". . . That said stipulation is just and reasonable is
arguable from the fact that it echoes Art. 1750 itself in
providing a limit to liability only if a greater value is not
declared for the shipment in the bill of lading. To hold
otherwise would amount to questioning the justice and
fairness of that law itself, and this the private
respondent does not pretend to do. But over and above
that consideration, the just and reasonable character of
such stipulation is implicit in it giving the shipper or
owner the option of avoiding accrual of liability
limitation by the simple and surely far from onerous
expedient of declaring the nature and value of the
shipment in the bill of lading. And since the shipper
here has not been heard to complain of having been
'rushed,' imposed upon or deceived in any significant
way into agreeing to ship the cargo under a bill of lading
carrying such a stipulation in fact, it does not appear
that said party has been heard from at all insofar as this
dispute is concerned there is simply no ground for
assuming that its agreement thereto was not as the law
would require, freely and fairly sought and given."
4.5.6 Citadel Lines vs CA
ISSUE: Whether the stipulation limiting the liability of
the carrier contained in the bill of lading is binding on
the consignee|||
HELD. Yes.
The CONSIGNEE itself admits in its memorandum that
the value of the goods shipped does not appear in the
bills of lading. 16 Hence, the stipulation on the carrier's
limited liability applies. |||
4.5.7 Everett Steamship Corp vs CA
A stipulation in the bill of lading limiting the
common carrier's liability for loss or destruction of a
cargo to a certain sum, unless the shipper or owner
declares a greater value, is sanctioned by law,
particularly Articles 1749 and 1750 of the Civil Code.
Such limited-liability clause has also been consistently
upheld by this Court in a number of cases.
Pursuant to the afore-quoted provisions of law, it is
required that the stipulation limiting the common
carrier's liability for loss must be "reasonable and just
under the circumstances, and has been freely and fairly
agreed upon."
IN THE CASE AT BAR. In the bill of lading, the carrier
made it clear that its liability would only be up to One
Hundred Thousand (100,000.00) Yen. However, the
shipper, Maruman Trading, had the option to declare a
higher valuation if the value of its cargo was higher than
the limited liability of the carrier.
Considering that the shipper did not declare a higher
valuation, it had itself to blame for not complying with
the stipulations.
SC held that petitioner should be liable for the full
value of the lost cargo. In fine, the liability of petitioner
ENGR. ARIEL MARK PILOTIN
for the loss of the cargo is limited to One Hundred
Thousand (100,000.00) Yen, pursuant to Clause 18 of
the bill of lading.|||
4.5.8 British Airways vs CA
ISSUE: Is the benefit from limited liability waivabe?
HELD. YES.
Benefits of limited liability are subject to waiver
such as when the air carrier failed to raise timely
objections during the trial when questions and answers
regarding the actual claims and damages sustained by
the passenger were asked. Given the foregoing
postulates, the inescapable conclusion is that BA had
waived the defense of limited liability when it allowed
Mahtani to testify as to the actual damages he incurred
due to the misplacement of his luggage, without any
objection. It is a well-settled doctrine that where the
proponent offers evidence deemed by counsel of the
adverse party to be inadmissible for any reason, the
latter has the right to object. However, such right is a
mere privilege which can be waived. Necessarily, the
objection must be made at the earliest opportunity, lest
silence when there is opportunity to speak may operate
as a waiver of objections. BA has precisely failed in this
regard. To compound matters for BA, its counsel failed,
not only to interpose a timely objection, but even
conducted his own cross-examination as well.|||
4.5.9 H.E. Heacock vs Macondary
Three kinds of stipulation have often been
made in a bill of lading. The first is one exempting
the carrier from any and all liability for loss or
damage occasioned by its own negligence.
The second is one providing for an unqualified
limitation of such liability to an agreed valuation.
And the third is one limiting the liability of the
carrier to an agreed valuation unless the shipper
declare a higher value and pays a higher rate of
freight. According to an almost uniform weight of
authority, the first and second kinds of stipulations
are invalid as being contrary to public policy, but
the third is valid and enforceable.
A stipulation in a bill of lading which either
exempts the carrier from liability for loss or damage
occasioned by its negligences or provides for an
unqualified limitation of such liability to an agreed
valuation, is invalid as being contrary to public
policy.
But a stipulation in such bill of lading which
limits the liability of the carrier to a specified
amount unless the shipper declares a higher value
and pays a higher rate of freight, is valid and
enforceable. Thus, if a common carrier gives to a
shipper the choice of two rates, the lower of them
conditioned upon his agreeing to a stipulated
valuation of his property in case of loss, even by the
carrier's negligence, if the shipper makes the choice
understandingly and freely, and names his
valuation, he cannot thereafter recover more than
the value which he thus places upon his property.
|||
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 TRANSPORTATION NOTES BASED ON ATTY PADILLAS SYLLABUS
5. PASSENGERS BAGGAGES
Art. 1754. The provisions of Articles 1733 to 1753
shall apply to the passengers baggage which is not in
his personal custody or in that of his employee. As to
other baggage, the rules in articles 1998 and 2000 to
2003 concerning the responsibility of hotel-keepers
shall be applicable.
BAGGAGE- includes whatever articles a passenger
usually takes with him for his own personal use, comfort,
and convenience according to the habits or wants of the
particular class to which he belongs, either with
reference to his immediate necessities or to the
ultimate purpose of his journey.
5.1 Checked-in vs Hand-carried Baggages
Checked-In Hand-Carried
-bags delivered to the -bags brought by
carrier passengers but did not
deliver to the carrier
-requires extraordinary
diligence by carrier
5.2 Quisumbing Sr. vs CA
The Court opined that since the plaintiffs "did not notify
defendant or its employees that they were in possession
of the cash, jewelries, and the wallet they are now
claiming," the very provision of law invoked by them,
Article 1998 of the Civil Code, denies them any recourse
against PAL. The Court also pointed out that
". . . while it is true that the use of arms
was not taken advantage of by the robbers
in gaining entrance to defendant's ill-fated
plane, the armed robbery that took place
constitutes force majeure for which
defendant is not liable because the robbers
were able to gain entrance to the plane
with the guns they used already in their
possession, which fact could not have been
prevented nor avoided by the defendant
since it was not authorized to search its
passengers for firearms and deadly
weapons as shown in Exhibits '6,' '7,' '8,' and
'8-A.' As its robbery constitutes force
majeure, defendant is not liable.
5.3. Pan American Airlines vs Rapadas
In Pan American World Airways, Inc. v. I.A.C., the
Warsaw Convention was applied as regards the
limitation on the carrier's liability, there being a simple
loss of baggage without any otherwise improper conduct
on the part of the officials or employees of the airline or
other special injury sustained by the passenger.|||
5.4. British Airways vs CA
LIABILITY ON LOST UNCHECKED LUGGAGE; RULE; CASE
AT BAR. The attache case was originally handcarried
does not beg the conclusion that the amount of
$4,750.00 in cash could have been placed inside. It may
be noted that out of a claim for US$42,403.90 as the
ENGR. ARIEL MARK PILOTIN
amount lost, the trial court found for only US$5,228.90
and 100 paengs. The court had doubts as to the total
claim. The lost luggage was declared as weighing around
18 pounds or approximately 8 kilograms. At $20.00 per
kilogram, the petitioner offered to pay $160.00 as a
higher value was not declared in advance and additional
charges were not paid. We note, however, that an
amount of $400.00 per passenger is allowed for
unchecked luggage. Since the checking-in was against
the will of the respondent, we treat the lost bag as
partaking of involuntarily and hurriedly checked-in
luggage and continuing its earlier status as unchecked
luggage. The fair liability under the petitioner's own
printed terms is $400.00. Since the trial court ruled out
discriminatory acts or bad faith on the part of Pan Am or
other reasons warranting damages, there is no factual
basis for the grant of P20,000.00 damages.|||
5.5 Alitalia vs IAC
In the case at bar, no bad faith or otherwise improper
conduct may be ascribed to the employees of petitioner
airline; and Dr. Pablo's luggage was eventually returned
to her, belatedly, it is true, but without appreciable
damage. The fact is, nevertheless, that some special
species of injury was caused to Dr. Pablo because
petitioner ALITALIA misplaced her baggage and failed to
deliver it to her at the time appointed a breach of its
contract of carriage, to be sure with the result that
she was unable to read the paper and make the
scientific presentation (consisting of slides,
autoradiograms or films, tables and tabulations) that
she had painstakingly labored over, at the prestigious
international conference, to attend which she had
traveled hundreds of miles, to her chagrin and
embarrassment and the disappointment and annoyance
of the organizers. She felt, not unreasonably, that the
invitation for her to participate at the conference,
extended by the Joint FAO/IAEA Division of Atomic
Energy in Food and Agriculture of the United Nations,
was a singular honor not only to herself, but to the
University of the Philippines and the country as well, an
opportunity to make some sort of impression among her
colleagues in that field of scientific activity. The
opportunity to claim this honor or distinction was
irretrievably lost to her because of Alitalia's breach of
its contract.|||
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