Transportation Law Case Digest (Case No.

16-20)

Case No. 16
Sulpicio Lines, Inc. vs. First Lepanto-Taisho Insurance
GR No. 140349, June 29, 2005
FACTS:
Taiyo Yuden Philippines, Inc. (owner of the goods) and Delbros, Inc. (shipper) entered into a
contract, evidenced by Bill of Lading issued by the latter in favor of the owner of the goods, for Delbros,
Inc. to transport a shipment of goods consisting of 3 wooden crates containing 136 cartons of inductors
and LC compound on board the V Singapore V20 from Cebu City to Singapore in favor of the consignee,
Taiyo Yuden Singapore Pte, Ltd. For the carriage of said shipment from Cebu City to Manila, Delbros, Inc.
engaged the services of the vessel M/V Philippine Princess, owned and operated by petitioner Sulpicio
Lines, Inc. (carrier). During the unloading of the shipment, one crate containing 42 cartons dropped from
the cargo hatch to the pier apron. The owner of the goods examined the dropped cargo, and upon an
alleged finding that the contents of the crate were no longer usable for their intended purpose, they were
rejected as a total loss and returned to Cebu City. The owner of the goods filed a claim with herein
petitioner-carrier for the recovery of the value of the rejected cargo which was refused by the latter.
Thereafter, the owner of the goods sought payment from respondent First Lepanto-Taisho Insurance
Corporation (insurer) under a marine insurance policy issued to the former. Respondent-insurer paid the
claim less thirty-five percent (35%) salvage value or P194, 220.31. The payment of the insurance claim of
the owner of the goods by the respondent-insurer subrogated the latter to whatever right or legal action
the owner of the goods may have against Delbros, Inc. and petitioner-carrier, Sulpicio Lines, Inc. Thus,
respondent-insurer then filed claims for reimbursement from Delbros, Inc. and petitioner-carrier Sulpicio
Lines, Inc. which were subsequently denied. In 1992, respondent-insurer filed a suit for damages with the
trial court against Delbros, Inc. and herein petitioner-carrier. Delbros, Inc. filed on 15 April 1993 its Answer
with Counterclaim and Cross-claim, alleging that assuming the contents of the crate in question were
trulyin bad order, fault is with herein petitioner-carrier which was responsible forthe unloading of the
crates. Petitioner-carrier filed its Answer to Delbros, Inc.s cross-claim asserting that it observed
extraordinary diligence in the handling, storage and general care of the goods
ISSUE:
Whether or not petitioner is liable for the breach of contract of carriage (vigilance over goods)?
RULING:
YES. There was damage suffered by the goods which consisted in the destruction of one wooden
crate and the tearing of two (2) cardboard boxes therein which rendered them unfit to be sent to
Singapore. The falling of the crate was negligence on the part of Sulpicio Lines, Inc. for which it cannot
exculpate itself from liability because it failed to prove that it exercised extraordinary diligence.

Case No. 17
Delsan Transport Lines vs. American Home Assurance
GR No. 149019, August 15, 2006
FACTS:
Caltex engaged into a contract of freight with the petitioner, Delsan Transport Lines, Inc.,
(Delsan), for a period of one year whereby the said common carrier agreed to transport Caltexs industrial
fuel oil from the Batangas-Bataan Refinery to different parts of the country. Under the contract, petitioner
took on board its vessel, MT Maysun, 2,277.314 kiloliters of industrial fuel oil of Caltex to be delivered to
the Caltex Oil Terminal in Zamboanga City. The shipment was insured with private respondent, American
Home Assurance Corporation (American Home). The vessel sank in the early morning of August 15, 1986
near Panay Gulf in the Visayas taking with it the entire cargo of fuel oil. Subsequently, American Home
paid Caltex the sum of Php 5,096,635.57 representing the insured value of the cargo. Exercising its right
to subrogation under Article 2207 of the New Civil Code, the American Home demanded the Delsan the
same amount it paid to Caltex. Due to its failure to collect from Delsan despite prior demand, American
Home filed a complaint with the RTC of Makati for collection of a sum of money. The trial court dismissed
the complaint against Delsan. It ruled that the vessel, MT Maysun, was seaworthy and that the incident
was caused by unexpected inclement weather condition or force majeure, thus exempting the common
carrier from liability for the loss of its cargo. The CA reversed. It gave credence to the weather report
issued by PAGASA which stated that the waves were only .7 to 2 meters in height in the vicinity of the
Panay Gulf at the day the ship sank, in contrast to the claim of the crew of the ship that the waves were
20 feet high.
ISSUE:
Whether or not the payment made by American Home to Caltex for the insured value of the lost
cargo amounted to an admission that the vessel was seaworthy, thus precluding any action for recovery
against the petitioner.
RULING:
NO. The payment made by American Home for the insured value of the lost cargo operates as
waiver of its right to enforce the term of the implied warranty against Caltex under the marine insurance
policy. However, the same cannot be validly interpreted as an automatic admission of the vessels
seaworthiness by American Home as to foreclose recourse against Delsan for any liability under its
contractual obligation as a common carrier. The fact of payment grants American Home subrogatory right
which enables it to exercise legal remedies that would otherwise be available to Caltex as owner of the
lost cargo against Delsan, the common carrier.
From the nature of their business and for reasons of public policy, common carriers are bound to observe
extraordinary diligence in the vigilance over the goods and for the safety of passengers transported by
them, according to all the circumstances of each case. In the event of loss, destruction or deterioration of
the insured goods, common carriers shall be responsible unless the same is brought about, among
others, by flood, storm, earthquake, lightning or other natural disaster or calamity. In all other cases, if the
goods are lost, destroyed or deteriorated. Common carriers are presumed to have been at fault or to have
acted negligently, unless they prove they observed extraordinary diligence.
In order to escape liability for the loss of its cargo of industrial fuel oil belonging to Caltex, Delsan
attributes the sinking of MT Maysun to fortuitous event or force majeure. Although the testimony of the
captain and chief mate that there were strong winds and waves 20 feet high was effectively rebutted and
belied by the weather report of PAGASA. Thus, as the CA correctly ruled, Delsans vessel, MT Maysun,
sank with its entire cargo for the reason that it was not seaworthy. There was no squall or bad weather or
extremely poor sea condition in the vicinity where the said vessel sank.

Additionally, the exoneration of MT Maysuns officers and crew merely concern their respective
administrative liabilities. It does not in any way operate to absolve Delsan the common carrier from its civil
liability arising from its failure to observe extraordinary diligence in the vigilance over the goods it was
transporting and for the negligent acts or omissions of its employees, the determination of which properly
belongs to the courts. In the case at bar, Delsan is liable for the insured value of the lost cargo of
industrial fuel oil belonging to Caltex for its failure to rebut the presumption of fault or negligence as
common carrier occasioned by the unexplained sinking of its vessel, MT Maysun, while in transit.

Case No. 18
Calalas vs. CA, et. al.
GR No. 122039, May 31, 2000
FACTS:
Private respondent Eliza Jujeurche G. Sunga took a passenger jeepney owned and operated by
petitioner Vicente Calalas. As the jeepney was already full, Calalas gave Sunga an stool at the back of
the door at the rear end of the vehicle. Along the way, the jeepney stopped to let a passenger off. Sunga
stepped down to give way when an Isuzu truck owned by Francisco Salva and driven by Iglecerio Verena
bumped the jeepney. As a result, Sunga was injured. Sunga filed a complaint against Calalas for violation
of contract of carriage. Calalas filed a third party complaint against Salva. The trial court held Salva liable
and absolved Calalas, taking cognizance of another civil case for quasi-delict wherein Salva and Verena
were held liable to Calalas. The Court of Appeals reversed the decision and found Calalas liable to Sunga
for violation of contract of carriage.
ISSUE:
Whether or not Calalas exercised the extraordinary diligence required in the contract of carriage.
RULING:
NO. First, the jeepney was not properly parked, its rear portion being exposed about two meters
from the broad shoulders of the highway, and facing the middle of the highway in a diagonal
angle. Second, it is undisputed that petitioner's driver took in more passengers than the allowed seating
capacity of the jeepney. The fact that Sunga was seated in an "extension seat" placed her in a peril
greater than that to which the other passengers were exposed. Therefore, not only was petitioner unable
to overcome the presumption of negligence imposed on him for the injury sustained by Sunga, but also,
the evidence shows he was actually negligent in transporting passengers. We find it hard to give serious
thought to petitioner's contention that Sunga's taking an "extension seat" amounted to an implied
assumption of risk. It is akin to arguing that the injuries to the many victims of the tragedies in our seas
should not be compensated merely because those passengers assumed a greater risk of drowning by
boarding an overloaded ferry. This is also true of petitioner's contention that the jeepney being bumped
while it was improperly parked constitutes caso fortuito. A caso fortuito is an event which could not be
foreseen, or which, though foreseen, was inevitable. This requires that the following requirements be
present: (a) the cause of the breach is independent of the debtor's will; (b) the event is unforeseeable or
unavoidable; (c) the event is such as to render it impossible for the debtor to fulfill his obligation in a
normal manner, and (d) the debtor did not take part in causing the injury to the creditor. Petitioner should
have foreseen the danger of parking his jeepney with its body protruding two meters into the highway.

Case No. 19
Philippine Charter Insurance vs. Chemoil
GR No. 136888, June 29, 2005
FACTS:
Philippine Charter Insurance Corporation is a domestic corporation engaged in the business of
non-life insurance. Respondent Chemoil Lighterage Corporation is also a domestic corporation engaged
in the transport of goods. On 24 January 1991, Samkyung Chemical Company, Ltd., based in South
Korea, shipped 62.06 metric tons of the liquid chemical DIOCTYL PHTHALATE (DOP) on board MT
TACHIBANA which was valued at US$90,201.57 and another 436.70 metric tons of DOP valued at
US$634,724.89 to the Philippines. The consignee was Plastic Group Phils., Inc. in Manila. PGP insured
the cargo with Philippine Charter Insurance Corporation against all risks. The insurance was under
Marine Policies No. MRN-30721 dated 06 February 1991. Marine Endorsement No. 2786 dated 11 May
1991 was attached and formed part of MRN-30721, amending the latters insured value to
P24,667,422.03, and reduced the premium accordingly. The ocean tanker MT TACHIBANA unloaded
the cargo to the tanker barge, which shall transport the same to Del Pan Bridge in Pasig River and haul it
by land to PGPs storage tanks in Calamba, Laguna. Upon inspection by PGP, the samples taken from
the shipment showed discoloration demonstrating that it was damaged. PGP then sent a letter where it
formally made an insurance claim for the loss it sustained. Petitioner requested the GIT Insurance
Adjusters, Inc. (GIT), to conduct a Quantity and Condition Survey of the shipment which issued a report
stating that DOP samples taken were discolored. Inspection of cargo tanks showed manhole covers of
ballast tanks ceilings loosely secured and that the rubber gaskets of the manhole covers of the ballast
tanks re-acted to the chemical causing shrinkage thus, loosening the covers and cargo ingress. Petitioner
paid PGP the full and final payment for the loss and issued a Subrogation Receipt. Meanwhile, PGP paid
the respondent the as full payment for the latters services. On 15 July 1991, an action for damages was
instituted by the petitioner-insurer against respondent-carrier before the RTC, Br.16, City of Manila.
Respondent filed an answer which admitted that it undertook to transport the shipment, but alleged that
before the DOP was loaded into its barge, the representative of PGP, Adjustment Standard Corporation,
inspected it and found the same clean, dry, and fit for loading, thus accepted the cargo without any
protest or notice. As carrier, no fault and negligence can be attributed against respondent as it exercised
extraordinary diligence in handling the cargo. After due hearing, the trial court rendered a Decision in
favor of plaintiff. On appeal, the Court of Appeals promulgated its Decision reversing the trial court. A
petition
for
review
on
certiorari
was
filed
by
the
petitioner
with
this
Court.
ISSUE:
Whether or not the notice of claim was filed within the required period?
RULING:
YES. The petitioner contends that the notice of contamination was given by PGP employee, to
Ms. Abastillas, at the time of the delivery of the cargo, and therefore, within the required period. The
respondent, however, claims that the supposed notice given by PGP over the telephone was denied by
Ms. Abastillas. The Court of Appeals declared that a telephone call made to defendant-company could
constitute substantial compliance with the requirement of notice. However, it must be pointed out that
compliance with the period for filing notice is an essential part of the requirement.

Case No. 20
Estacion vs. Bernardo, et. al
GR No. 144723, February 27, 2006
FACTS:
In the afternoon of October 16, 1982, respondent Noe was going home to Dumaguete from
Cebu, via Bato and Tampi. At Tampi, he boarded a Ford Fiera passenger jeepney with plate no. NLD 720
driven by respondent Geminiano Quinquillera (Quinquillera), owned by respondent Cecilia Bandoquillo
(Bandoquillo), and was seated on the extension seat placed at the center of the Fiera. From San Jose, an
old woman wanted to ride, so respondent Noe offered his seat. Since the Fiera was already full,
respondent Noe hung or stood on the left rear carrier of the vehicle. Somewhere along Barangay Sto.
Nio, San Jose, Negros Oriental, between kilometers 13 and 14, the Fiera began to slow down and then
stopped by the right shoulder of the road to pick up passengers. Suddenly, an Isuzu cargo truck, owned
by petitioner and driven by Gerosano, which was traveling in the same direction, hit the rear end portion
of the Fiera where respondent Noe was standing. Due to the tremendous force, the cargo truck smashed
respondent Noe against the Fiera crushing his legs and feet which made him fall to the ground. A passing
vehicle brought him to the Silliman University Medical Center where his lower left leg was amputated.
Police investigation reports showed that respondent Noe was one of the 11 passengers of the Fiera who
suffered injuries; that when the Fiera stopped to pick up a passenger, the cargo truck bumped the rear left
portion of the Fiera; that only one tire mark from the front right wheel of the cargo truck was seen on the
road. A sketch of the accident was drawn by investigator Mateo Rubia showing the relative positions of
the two vehicles, their distances from the shoulder of the road and the skid marks of the right front wheel
of the truck measuring about 48 feet.
ISSUE:
Whether or not the petitioners liability be equitably reduced due to contributory negligence?
RULING:
NO. As the employer of Gerosano, petitioner is primarily and solidarily liable for the quasidelict committed by the former. Petitioner is presumed to be negligent in the selection and supervision of
his employee by operation of law and may be relieved of responsibility for the negligent acts of his driver,
who at the time was acting within the scope of his assigned task, only if he can show that he observed all
the diligence of a good father of a family to prevent damage