1. Transportation Case Digest: Magellan Mfg. Marketing Corp. V.

CA Supra (1991)

G.R. No. 95529 August 22, 1991

Lessons Applicable: Bill of Lading (Transportation)

FACTS:
Choju Co., Ltd purchased from Magellan Manufacturers Marketing Corp. (MMMC) 136,000 anahaw fans for
$23,220
MMMC contracted with F.E. Zuellig, a shipping agent of Orient Overseas Container Lines, Inc.,
(OOCL) specifying that he needed an on-board bill of lading and that transhipment is not allowed under the
letter of credit
MMMC paid F.E. Zuellig the freight charges and secured a copy of the bill of lading which was presented to
Allied Bank. The bank then credited the amount of US$23,220 covered by the letter of credit to MMMC
When MMMC's President James Cu, went back to the bank later, he was informed that the payment was
refused by the buying for lack of bill of lading and there was a transhipment of goods
The anahaw fans were shipped back to Manila through OOCL who are demanding from MMMC P246,043.43
(freight charges from Japan to Manila, demurrage incurred in Japan and Manila from October 22, 1980 up to
May 20, 1981 and charges for stripping the container van of the Anahaw fans on May 20, 1981)
MMMC abandoned the whole cargo and asked OOCL for damages
OOCL: bill of lading clearly shows that there will be a transhipment and that petitioner was well aware that
MV (Pacific) Despatcher was only up to Hongkong where the subject cargo will be transferred to another
vessel for Japan
RTC: favored OOCL:
consented because the bill of lading where it is clearly indicated that there will be transhipment
MMMC was the one who ordered the reshipment of the cargo from Japan to Manila
CA: Affirmed with modification of excluding demurrage in Manila
ISSUE: W/N the bill of lading which reflected the transhipment against the letter of credit is consented by MMMC
HELD: YES. CA Affirmed with modification

Transhipment
act of taking cargo out of one ship and loading it in another
the transfer of goods from the vessel stipulated in the contract of affreightment to another vessel before the
place of destination named in the contract has been reached
transfer for further transportation from one ship or conveyance to another
the fact of transhipment is not dependent upon the ownership of the transporting ships or conveyances or in
the change of carriers, as the petitioner seems to suggest, but rather on the fact of actual physical transfer of
cargo from one vessel to another
appears on the face of the bill of lading the entry "Hong Kong" in the blank space labeled "Transhipment,"
which can only mean that transhipment actually took place
bill of lading
 operates both as a receipt and as a contract
receipt for the goods shipped
contract to transport and deliver the same as therein stipulated
names the parties, which includes the consignee, fixes the route, destination, and freight rates or charges, and
stipulates the rights and obligations assumed by the parties
law between the parties who are bound by its terms and conditions provided that these are not contrary to
law, morals, good customs, public order and public policy
GR: acceptance of the bill without dissent raises the presumption that all the terms therein were brought to
the knowledge of the shipper and agreed to by him and, in the absence of fraud or mistake, he is estopped
from thereafter denying that he assented to such term
There clearly appears on the face of the bill of lading under column "PORT OF TRANSHIPMENT" an entry
"HONGKONG'
On board bill of lading vs. received for shipment bill of lading:
on board bill of lading
stated that the goods have been received on board the vessel which is to carry the goods
received for shipment bill of lading
stated that the goods have been received for shipment with or without specifying the vessel by which the
goods are to be shipped
issued whenever conditions are not normal and there is insufficiency of shipping space
certification of F.E. Zuellig, Inc. cannot qualify the bill of lading, as originally issued, into an on board bill of
lading as required by the terms of the letter of credit issued in favor of petitioner - it is a received for shipment
bill of lading
issued only on July 19, 1980, way beyond the expiry date of June 30, 1980 specified in the letter of credit for
the presentation of an on board bill of lading
Demurrage
compensation provided for in the contract of affreightment for the detention of the vessel beyond the time
agreed on for loading and unloading
claim for damages for failure to accept delivery
before it could be charged for demurrage charges it should have been notified of the arrival of the goods first
Since abandon option was communicated, the same is binding upon the parties on legal and equitable
considerations of estoppel

2. KRAMER v CA, G.R. No. L-83524, October 13, 1989

FACTS: April 8, 1976- F/B Marjolea, a fishing boat owned by the petitioners Ernesto Kramer, Jr. and Marta Kramer,
was navigating its way from Marinduque to Manila. Somewhere near Maricabon Island and Cape Santiago, the boat
figured in a collision with an inter-island vessel, the M/V Asia Philippines owned by the private respondent Trans-
Asia Shipping Lines, Inc. As a consequence of the collision, the F/B Marjolea sank, taking with it its fish catch.
After the mishap, the captains of both vessels filed their respective marine protests with the Board of Marine Inquiry
of the Philippine Coast Guard. The Board conducted an investigation for the purpose of determining the proximate
cause of the maritime collision.
The Board concluded that the loss of the F/B Marjolea and its fish catch was attributable to the negligence of the
employees of the private respondent who were on board the M/V Asia Philippines during the collision.
May 30, 1985 (9 years after the incident) - The petitioners instituted a Complaint for damages against the private
respondent the Regional Trial Court

ISSUE: Whether or not the prescriptive period for filing the complaint has been prescribed

HELD: The petition is devoid of merit. Under Article 1146 of the Civil Code, an action based upon a quasi-delict must
be instituted within four (4) years. The prescriptive period begins from the day the quasi-delict is committed.

RATIO: In Espanol vs. Chairman, Philippine Veterans Administration, 17 this Court held as follows-
The right of action accrues when there exists a cause of action, which consists of 3 elements, namely: a) a
right in favor of the plaintiff by whatever means and under whatever law it arises or is created; b) an
obligation on the part of defendant to respect such right; and c) an act or omission on the part of such
defendant violative of the right of the plaintiff ... It is only when the last element occurs or takes place that
it can be said in law that a cause of action has arisen ...
From the foregoing ruling, it is clear that the prescriptive period must be counted when the last element occurs or
takes place, that is, the time of the commission of an act or omission violative of the right of the plaintiff, which is
the time when the cause of action arises.
The aggrieved party need not wait for a determination by an administrative body like a Board of Marine Inquiry, that
the collision was caused by the fault or negligence of the other party before he can file an action for damages.

3. Magboo v. Bernardo, 7 SCRA 952

Facts: Urbano and Emilia Magboo are the parents of Cesar Magboo, a child of 8 years old, who lived with them and
was under their custody until his death on 24 October 1956 when he was killed in a motor vehicle accident, the
fatal vehicle being a passenger jeepney owned by Delfin Bernardo. At the time of the accident, said passenger
jeepney was driven by Conrado Roque. The contract between Roque and Bernardo was that Roque was to pay to
Bernardo the sum of P8.00, which he paid to Bernardo, for privilege of driving the jeepney, it being their
agreement that whatever earnings Roque could make out of the use of the jeepney in transporting passengers
from one point to another in the City of Manila would belong entirely to Roque.

As a consequence of the accident and as a result of the death of Cesar Magboo in said accident, Roque was
prosecuted for homicide thru reckless imprudence before the CFI Manila. Roque was sentenced to 6 months of
arresto mayor, with the accessory penalties of the law; to indemnify the heirs of the deceased in, with subsidiary
imprisonment in case of insolvency, and to pay the costs.

Pursuant to said judgment Roque served his sentence but he was not able to pay the indemnity because he was
insolvent. An action was filed by the spouses Magboo against Bernardo is for enforcement of his subsidiary
liability. The trial court ordered Bernardo to pay the. Bernardo appealed to the Court of Appeals, which certified
the case to the Supreme Court on the ground that only questions of law are involved.

Issue: Whether or not an employer-employee relationship between the jeepney operator and the driver?

Held: An employer-employee relationship exists between a jeepney owner and a driver under a boundary system
arrangement. The features which characterize the boundary system - namely the fact that the driver does not
receive a fixed wage but gets only the excess of the amount of fares collected by him over the amount he pays to
the jeep-owner, and the gasoline consumed by the jeep is for the amount of the driver - are not sufficient to
withdraw the relationship between them from that of employee and employer. Consequently, the jeepney owner
is subsidiary liable as employer in accordance with Art.103, Revised Penal Code.
4. Transportation Case Digest: Sweet Lines, Inc. V. Teves (1978), G.R. No. L-37750 May 19, 1978

Lessons Applicable: Contract of Adhesion (Transportation)

FACTS:

Atty. Leovigildo Tandog and Rogelio Tiro bought tickets for Tagbilaran City via the port of Cebu
Since many passengers were bound for Surigao, M/S "Sweet Hope would not be proceeding to Bohol
They went to the proper brancg office and was relocated to M/S "Sweet Town" where they were forced to
agree "to hide at the cargo section to avoid inspection of the officers of the Philippine Coastguard." and they
were exposed to the scorching heat of the sun and the dust coming from the ship's cargo of corn grits and
their tickets were not honored so they had to purchase a new one
They sued Sweet Lines for damages and for breach of contract of carriage before the Court of First Instance of
Misamis Oriental who dismissed the compalitn for improper venue
A motion was premised on the condition printed at the back of the tickets -dismissed
instant petition for prohibition for preliminary injunction
ISSUE: W/N a common carrier engaged in inter-island shipping stipulate thru condition printed at the back of
passage tickets to its vessels that any and all actions arising out of the contract of carriage should be filed only in a
particular province or city
HELD: NO.petition for prohibition is DISMISSED. Restraining order LIFTED and SET ASIDE
contract of adhesion
not that kind of a contract where the parties sit down to deliberate, discuss and agree specifically on all its
terms, but rather, one which respondents took no part at all in preparing
just imposed upon them when they paid for the fare for the freight they wanted to ship
We find and hold that Condition No. 14 printed at the back of the passage tickets should be held as void and
unenforceable for the following reasons
circumstances obligation in the inter-island ship
will prejudice rights and interests of innumerable passengers in different s of the country who, under
Condition No. 14, will have to file suits against petitioner only in the City of Cebu
subversive of public policy on transfers of venue of actions
philosophy underlying the provisions on transfer of venue of actions is the convenience of the plaintiffs as well
as his witnesses and to promote 21 the ends of justice

5. La Mallorca and Pampanga Bus Co. vs. De Jesus, Tolentino and CA, G.R. No. L-21486. 14 May 1966.

Facts: The suit arose by reason of the death of Lolita de Jesus, 20-year old daughter of Valentin de Jesus and wife
of Manolo Tolentino, in a head-on collision between petitioner's bus, on which she was a passenger, and a freight
truck traveling in the opposite direction, in a barrio in Marilao Bulacan, in the morning of October 8, 1959. The
immediate cause of the collision was the fact that the driver of the bus lost control of the wheel when its left front
tire suddenly exploded. The court a quo sentenced the defendant, now petitioner, to pay to plaintiffs actual,
compensatory, and moral damages; and counsel fees. CA affirmed.

Issues: (1) WON the petitioners are liable for the consequences of the accident. (2) WON petitioners are liable for
moral damages.
Ruling: Judgment affirmed.
(1) Petitioner maintains that a tire blow-out is a fortuitous event and gives rise to no liability for negligence. Both
the CFI and the CA found that the bus was running quite fast immediately before the accident. Considering that the
tire which exploded was not new, petitioner describes it as "hindi masyadong kalbo," or not so very worn out, the
plea of caso fortuito by petitioner cannot be entertained. The cause of the blow-out was a mechanical defect of
the conveyance or a fault in its equipment which was easily discoverable if the bus had been subjected to a more
thorough check-up before it took to the road. Hence, petitioners are liable for the accident.

(2) The second issue raised by petitioner is already a settled one. In this jurisdiction moral damages are
recoverable by reason of the death of a passenger caused by the breach of contract of a common carrier, as
provided in Article 1764, in relation to Article 2206, of the Civil Code.

6. Samar Mining Co., Inc. vs Nordeutscher Lloyd (G.R. No. L-28673, 1984)

FACTS: The case arose from an importation made by Samar Mining Co. Inc. of 1 crate Optima welded wedge wire
sieves through the M/S Schwabenstein, a vessel owned by Nordeutscher Lloyd, (represented in the Philippines by
its agent, C.F. Sharp & Co., Inc.), which shipment is covered by Bill of Lading No. 18 duly issued to consignee Samar
Mining. Upon arrival of the vessel at the port of Manila, the importation was unloaded and delivered in good order
and condition to the bonded warehouse of AMCYL. The goods were however never delivered to, nor received by,
the consignee at the port of destination Davao. When the letters of complaint sent to Nordeutscher Lloyd failed
to elicit the desired response, Samar Mining filed a formal claim for P1,691.93, the equivalent of $424.00 at the
prevailing rate of exchange at that time, against the former, but neither paid.

Samar Mining filed a suit to enforce payment. Nordeutscher Lloyd and CF Sharp & Co. brought in AMCYL as third
party defendant. The trial court rendered judgment in favor of Samar Mining, ordering Nordeutscher Lloyd, et. al.
to pay the amount of P1,691.93 plus attorneys fees and costs. However, the Court stated that Nordeutscher Lloyd,
et. al. may recoup whatever they may pay Samar Mining by enforcing the judgment against third party defendant
AMCYL, which had earlier been declared in default. Nordeutscher Lloyd and C.F. Sharp & Co. appealed from said
decision.

Notes
The following are the pertinent ports, as provided in the bill of lading:
Port of Loading: Bremen, Germany
Port of discharge from ship: Manila
Port of destination/Port of discharge of the goods: Davao

As plainly indicated on the face of the bill, the vessel M/S Schwabenstein is to transport the goods only up to
Manila. Thereafter, the goods are to be transshipped by the carrier to the port of destination.

ISSUE: Whether or not a stipulation in the bill of lading exempting the carrier from liability for loss of goods not in
its actual custody (i.e., after their discharge from the ship) is valid.

HELD: It is clear that in discharging the goods from the ship at the port of Manila, and delivering the same into the
custody of AMCYL, the bonded warehouse, appellants were acting in full accord with the contractual stipulations
contained in Bill of Lading No. 18. The delivery of the goods to AMCYL was part of appellants' duty to transship
(meaning to transfer for further transportation from one ship or conveyance to another) the goods from Manila to
their port of destination-Davao.

The extent of appellant carrier's responsibility and/or liability in the transshipment of the goods in question are
spelled out and delineated under Section 1, paragraph 3 of Bill of Lading No. 18, to wit: the carrier shall not be
liable in any capacity whatsoever for any delay, loss or damage occurring before the goods enter ship's tackle to be
loaded or after the goods leave ship's tackle to be discharged, transshipped or forwarded. Further, in Section 11
of the same bill, it was provided that this carrier, in making arrangements for any transshipping or forwarding
vessels or means of transportation not operated by this carrier shall be considered solely the forwarding agent of
the shipper and without any other responsibility whatsoever even though the freight for the whole transport has
been collected by him Pending or during forwarding or transshipping the carrier may store the goods ashore or
afloat solely as agent of the shipper

We find merits in Nordeutschers contention that they are not liable for the loss of the subject goods by claiming
that they have discharged the same in full and good condition unto the custody of AMCYL at the port of discharge
from ship Manila, and therefore, pursuant to the aforequoted stipulation (Sec. 11) in the bill of lading, their
responsibility for the cargo had ceased.The validity of stipulations in bills of lading exempting the carrier from
liability for loss or damage to the goods when the same are not in its actual custody has been upheld by Us in
PHOENIX ASSURANCE CO., LTD. vs. UNITED STATES LINES, 22 SCRA 674 (1968), ruling that pursuant to the terms
of the Bill of Lading, appellee's responsibility as a common carrier ceased the moment the goods were unloaded in
Manila and in the matter of transshipment, appellee acted merely as an agent of the shipper and consignee

In the present case, by the authority of the above pronouncements, and in conformity with the pertinent
provisions of the Civil Code, Section 11 of Bill of Lading No. 18 and the third paragraph of Section 1 thereof are
valid stipulations between the parties insofar as they exempt the carrier from liability for loss or damage to the
goods while the same are not in the latter's actual custody.

A careful perusal of the provisions of the New Civil Code on common carriers directs our attention to Article 1736,
which reads: The extraordinary responsibility of the common carrier lasts from the time the goods are
unconditionally placed in the possession of, and received by the carrier for transportation until the same are
delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive
them, without prejudice to the provisions of article 1738. In relation to this, Article 1738 provides: 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 dispose of them.

Art. 1738 finds no applicability to the instant case. The said article contemplates a situation where the goods had
already reached their place of destination and are stored in the warehouse of the carrier. The subject goods were
still awaiting transshipment to their port of destination, and were stored in the warehouse of a third party when
last seen and/or heard of. However, Article 1736 is applicable to the instant suit. Under said article, the carrier may
be relieved of 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 a right to receive them. There is actual delivery in
contracts for the transport of goods when possession has been turned over to the consignee or to his duly
authorized agent and a reasonable time is given him to remove the goods. In the present case, there was actual
delivery to the consignee through its duly authorized agent, the carrier.

Lastly, two undertakings are embodied in the bill of lading: the transport of goods from Germany to Manila, and
the transshipment of the same goods from Manila to Davao, with Samar Mining acting as the agent of the
consignee. The moment the subject goods are discharged in Manila, Samar Minings personality changes from that
of carrier to that of agent of the consignee. 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.
But even as agent of the consignee, the appellant cannot be made answerable for the value of the missing goods.
It is true that the transshipment of the goods, which was the object of the agency, was not fully performed.
However, appellant had commenced said performance, the completion of which was aborted by circumstances
beyond its control. An agent who carries out the orders and instructions of the principal without being guilty of
negligence, deceit or fraud, cannot be held responsible for the failure of the principal to accomplish the object of
the agency.

7. Philippine Airlines v. Court of Appeals [G.R. No. L-49188. January 30, 1990]

FACTS: Amelia Tan was found to have been wronged by Philippine Air Lines (PAL). She filed her complaint in 1967.
After ten (10) years of protracted litigation in the Court of First Instance and the Court of Appeals, Ms. Tan won her
case. Almost twenty-two (22) years later, Ms. Tan has not seen a centavo of what the courts have solemnly
declared as rightfully hers. Through absolutely no fault of her own, Ms. Tan has been deprived of what, technically,
she should have been paid from the start, before 1967, without need of her going to court to enforce her rights.
And all because PAL did not issue the checks intended for her, in her name. Petitioner PAL filed a petition for
review on certiorari the decision of Court of Appeals dismissing the petition for certiorari against the order of the
Court of First Instance (CFI) which issued an alias writ of execution against them. Petitioner alleged that the
payment in check had already been effected to the absconding sheriff, satisfying the judgment.

ISSUE: Whether or not payment by check to the sheriff extinguished the judgment debt.

RULING: NO. The payment made by the petitioner to the absconding sheriff was not in cash or legal tender but in
checks. The checks were not payable to Amelia Tan or Able Printing Press but to the absconding sheriff. In the
absence of an agreement, either express or implied, payment means the discharge of a debt or obligation in
money and unless the parties so agree, a debtor has no rights, except at his own peril, to substitute something in
lieu of cash as medium of payment of his debt. Strictly speaking, the acceptance by the sheriff of the petitioners
checks, in the case at bar, does not, per se, operate as a discharge of the judgment debt. The check as a negotiable
instrument is only a substitute for money and not money, the delivery of such an instrument does not, by itself,
operate as payment. A check, whether a managers check or ordinary cheek, is not legal tender, and an offer of a
check in payment of a debt is not a valid tender of payment and may be refused receipt by the obligee or creditor.
Mere delivery of checks does not discharge the obligation under a judgment. The obligation is not extinguished
and remains suspended until the payment by commercial document is actually realized (Art. 1249, Civil Code, par.
3).

8. BRINAS VS. PEOPLE, (125 SCRA 687)

Facts: In the afternoon of January 6, 1957, Juanito Gesmundo bought a train ticket at the railroad station in
Tagkawayan, Quezon for his 55-year old mother Martina Bool and his 3-year old daughter Emelita Gesmundo. The
two were bound for Lusacan in Tiaong, Quezon.

They boarded the train of Manila Railroad Company at about 2pm. Upon approaching Barrio Lagalag at 8pm, the
train slowed down and the conductor, accused-appellant, Clemente Brinas, shouted Lusacan, Lusacan!

The old woman walked towards the train exit carrying the child with one hand and holding her baggage with the
other. When they were near the door, the train suddenly picked up speed. The old woman and the child stumbled
from the train causing them to fall down the tracks and were hit by an oncoming train, causing their instant death.
A criminal information was filed against Victor Milan, the driver, Hermogenes Buencamino, the assistant conductor
and Clemente Brinas for Double Homicide thru Reckless Imprudence. But the lower court acquitted Milan and
Buencamino. On appeal to the CA, respondent CA affirmed the decision.

Issue: Whether or not the CA erred in ruling the accused-appellant was negligent?

Held: There was no error in the factual findings of the respondent court and in the conclusion drawn from the
findings.

It is a matter of common knowledge and experience about common carriers like trains and buses that before
reaching a station or flagstop they slow down and the conductor announces the name of the place. It is also a
matter of common experience that as the train or bus slackens its speed, some passengers usually stand and
proceed to the nearest exit, ready to disembark as the train or bus comes to a full stop. This is especially true of a
train because passengers feel that if the train resumes its run before they are able to disembark; there is no way to
stop it as a bus may be stopped. The appellant was negligent because his announcement was premature and
erroneous, for it took a full 3 minutes more before the next barrio of Lusacan was reached. The premature
announcement prompted the two victims to stand and proceed to the nearest exit. Without said announcement,
the victims would have been safely seated in their respective seats when the train jerked and picked up speed. The
proximate cause of the death of the victims was the premature and erroneous announcement of petitioner-
appellant.

9. Air France vs Rafael Carrascoso

Civil Law Torts and Damages Negligence Malfeasance Quasi-Delict

Remedial Law Evidence Hearsay Rule Res Gestae Startling Event

Facts: In March 1958, Rafael Carrascoso and several other Filipinos were tourists en route to Rome from Manila.
Carrascoso was issued a first class round trip ticket by Air France. But during a stop-over in Bangkok, he was asked
by the plane manager of Air France to vacate his seat because a white man allegedly has a better right than him.
Carrascoso protested but when things got heated and upon advise of other Filipinos on board, Carrascoso gave up
his seat and was transferred to the planes tourist class.
After their tourist trip when Carrascoso was already in the Philippines, he sued Air France for damages for the
embarrassment he suffered during his trip. In court, Carrascoso testified, among others, that he when he was forced
to take the tourist class, he went to the planes pantry where he was approached by a plane purser who told him
that he noted in the planes journal the following:
First-class passenger was forced to go to the tourist class against his will, and that the captain refused to intervene

The said testimony was admitted in favor of Carrascoso. The trial court eventually awarded damages in favor of
Carrascoso. This was affirmed by the Court of Appeals.
Air France is assailing the decision of the trial court and the CA. It avers that the issuance of a first class ticket to
Carrascoso was not an assurance that he will be seated in first class because allegedly in truth and in fact, that was
not the true intent between the parties.
Air France also questioned the admissibility of Carrascosos testimony regarding the note made by the purser
because the said note was never presented in court.
ISSUE 1: Whether or not Air France is liable for damages and on what basis.
ISSUE 2: Whether or not the testimony of Carrasoso regarding the note which was not presented in court is
admissible in evidence.
HELD 1: Yes. It appears that Air Frances liability is based on culpa-contractual and on culpa aquiliana.
Culpa Contractual
There exists a contract of carriage between Air France and Carrascoso. There was a contract to furnish Carrasocoso
a first class passage; Second, That said contract was breached when Air France failed to furnish first class
transportation at Bangkok; and Third, that there was bad faith when Air Frances employee compelled Carrascoso
to leave his first class accommodation berth after he was already, seated and to take a seat in the tourist class, by
reason of which he suffered inconvenience, embarrassments and humiliations, thereby causing him mental anguish,
serious anxiety, wounded feelings and social humiliation, resulting in moral damages.
The Supreme Court did not give credence to Air Frances claim that the issuance of a first class ticket to a passenger
is not an assurance that he will be given a first class seat. Such claim is simply incredible.
Culpa Aquiliana
Here, the SC ruled, even though there is a contract of carriage between Air France and Carrascoso, there is also a
tortuous act based on culpa aquiliana. Passengers do not contract merely for transportation. They have a right to be
treated by the carriers employees with kindness, respect, courtesy and due consideration. They are entitled to be
protected against personal misconduct, injurious language, indignities and abuses from such employees. So it is, that
any rule or discourteous conduct on the part of employees towards a passenger gives the latter an action for
damages against the carrier. Air Frances contract with Carrascoso is one attended with public duty. The stress of
Carrascosos action is placed upon his wrongful expulsion. This is a violation of public duty by the Air France a case
of quasi-delict. Damages are proper.
HELD: 2: Yes. The testimony of Carrascoso must be admitted based on res gestae. The subject of inquiry is not the
entry, but the ouster incident. Testimony on the entry does not come within the proscription of the best evidence
rule. Such testimony is admissible. Besides, when the dialogue between Carrascoso and the purser happened, the
impact of the startling occurrence was still fresh and continued to be felt. The excitement had not as yet died down.
Statements then, in this environment, are admissible as part of the res gestae. The utterance of the purser regarding
his entry in the notebook was spontaneous, and related to the circumstances of the ouster incident. Its
trustworthiness has been guaranteed. It thus escapes the operation of the hearsay rule. It forms part of the res
gestae.

10. CASE DIGEST (Transportation Law): Philippine Charter Insurance Corp. vs. Unknown Owner, [G.R. No.
161833. July 8, 2005]

FACTS: Petitioner Philippine Charter Insurance Corporation (PCIC) is the insurer of a shipment on board the vessel
M/V National Honor, represented in the Philippines by its agent, National Shipping Corporation of the Philippines
(NSCP).

The M/V National Honor arrived at the Manila International Container Terminal (MICT). The International
Container Terminal Services, Incorporated (ICTSI) was furnished with a copy of the crate cargo list and bill of lading,
and it knew the contents of the crate. The following day, the vessel started discharging its cargoes using its winch
crane. The crane was operated by Olegario Balsa, a winchman from the ICTSI, exclusive arrastre operator of MICT.

Denasto Dauz, Jr., the checker-inspector of the NSCP, along with the crew and the surveyor of the ICTSI, conducted
an inspection of the cargo. They inspected the hatches, checked the cargo and found it in apparent good condition.
Claudio Cansino, the stevedore of the ICTSI, placed two sling cables on each end of Crate No. 1. No sling cable was
fastened on the mid-portion of the crate. In Dauzs experience, this was a normal procedure. As the crate was
being hoisted from the vessels hatch, the mid-portion of the wooden flooring suddenly snapped in the air, about
five feet high from the vessels twin deck, sending all its contents crashing down hard, resulting in extensive
damage to the shipment.

PCIC paid the damage, and as subrogee, filed a case against M/V National Honor, NSCP and ICTSI. Both RTC and CA
dismissed the complaint.

ISSUE: Whether or not the presumption of negligence is applicable in the instant case.

HELD: No. We agree with the contention of the petitioner that common carriers, from the nature of their business
and for reasons of public policy, are mandated to observe extraordinary diligence in the vigilance over the goods
and for the safety of the passengers transported by them, according to all the circumstances of each case. he Court
has defined extraordinary diligence in the vigilance over the goods as follows:

The extraordinary diligence in the vigilance over the goods tendered for shipment requires the common carrier to
know and to follow the required precaution for avoiding damage to, or destruction of the goods entrusted to it for
sale, carriage and delivery. It requires common carriers to render service with the greatest skill and foresight and
to use all reasonable means to ascertain the nature and characteristic of goods tendered for shipment, and to
exercise due care in the handling and stowage, including such methods as their nature requires.

The common carriers duty to observe the requisite diligence in the shipment of goods lasts from the time the
articles are surrendered to or unconditionally placed in the possession of, and received by, the carrier for
transportation until delivered to, or until the lapse of a reasonable time for their acceptance, by the person
entitled to receive them.] >When the goods shipped are either lost or arrive in damaged condition, a presumption
arises against the carrier of its failure to observe that diligence, and there need not be an express finding of
negligence to hold it liable. To overcome the presumption of negligence in the case of loss, destruction or
deterioration of the goods, the common carrier must prove that it exercised extraordinary diligence.

However, under Article 1734 of the New Civil Code, the presumption of negligence does not apply to any of the
following causes:

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.

It bears stressing that the enumeration in Article 1734 of the New Civil Code which exempts the common carrier
for the loss or damage to the cargo is a closed list. To exculpate itself from liability for the loss/damage to the
cargo under any of the causes, the common carrier is burdened to prove any of the aforecited causes claimed by it
by a preponderance of evidence. If the carrier succeeds, the burden of evidence is shifted to the shipper to prove
that the carrier is negligent.

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.

xxx
In the present case, the trial court declared that based on the record, the loss of the shipment was caused by the
negligence of the petitioner as the shipper:

The same may be said with respect to defendant ICTSI. The breakage and collapse of Crate No. 1 and the total
destruction of its contents were not imputable to any fault or negligence on the part of said defendant in handling
the unloading of the cargoes from the carrying vessel, but was due solely to the inherent defect and weakness of
the materials used in the fabrication of said crate.

The crate should have three solid and strong wooden batten placed side by side underneath or on the flooring of
the crate to support the weight of its contents. x x x

11. Servando vs. Philippine Steam Navigation Co.

Facts:

1. Clara UyBico and AmparoServando loaded on board a vessel of Philippine Steam Navigation Co. for carriage
from Manila to Negros Occidental 1,528 cavans of rice and 44 cartons of colored paper, toys and general
merchandise.

2. The contract of carriage of cargo was evidenced by a Bill of Lading (B/L). There was a stipulation limiting the
responsibility of the carrier for loss or damage that may be caused to the shipment
a. carrier shall not be responsible for loss or damage to shipments billed owners risk unless such loss or
damage is due to the negligence of the carrier. Nor shall the carrier be responsible for loss or damage caused by
force majeure, dangers or accidents of the sea, war, public enemies, fire.

3. Upon arrival of the vessel at its destination, the cargoes were discharged in good condition and placed inside
the warehouse of the Bureau of Customs.

4. UyBico was able to take delivery of 907 cavans of rice.

5. Unfortunately, the warehouse was razed by fire of unknown origin later that same day destroying the
remaining cargoes.

6. UyBico and Servando filed a claim for the value of the goods against the carrier.

7. The lower court ruled in their favor. It held that the delivery of the shipment to the warehouse is not the
delivery contemplated by Art. 1736 of the CC. And since the burning of the warehouse occurred prior to the actual
or constructive delivery of the goods, the loss is chargeable against the vessel.

Issue: Whether or not the carrier is liable for the loss of the goods.
Held: No.
1. Article 1736 of the CC imposes upon common carriers the duty to observe extraordinary diligence from the
moment the goods are unconditionally placed in their possession "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. The court a quo held that the delivery of the shipment in question to the
warehouse of the Bureau of Customs is not the delivery contemplated by Article 1736; and since the burning of the
warehouse occurred before actual or constructive delivery of the goods to the appellees, the loss is chargeable
against the appellant.
2. It should be pointed out, however, that in the bills of lading issued for the cargoes in question, the parties
agreed to limit the responsibility of the carrier. The stipulation is valid not being contrary to law, morals or public
policy.

3. The petitioners however, contend that the stipulation does not bind them since it was printed at the back of
the B/L and that they did not sign the same. However, as the Court held in OngYiu vs. CA, while it may be true that
a passenger 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.

4. Also, where fortuitous event is the immediate and proximate cause of the loss, the obligor is exempt from
liability for non-performance. 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.

5. There is nothing in the record to show that the carrier incurred in delay in the performance of its obligation. It
appears that it had not only notified UyBico and Servando of the arrival of their shipment, but had demanded that
the same be withdrawn. In fact, pursuant to such demand, UyBico had taken delivery of 907 cavans of rice before
the burning of the warehouse.

6. Nor can the carrier or its employees be charged with negligence. The storage of the goods in the Customs
warehouse pending withdrawal thereof by UyBico and Servando 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 carrier, the latter having no control whatsoever over the same.

12. De Guzman v. CA

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

Issues:

(1) Whether or not private respondent is a common carrier

(2) Whether private respondent is liable for the loss of the goods

Held:

(1) Article 1732 makes no distinction between one whose principal business activity is the carrying of persons or
goods or both, and one who does such carrying only as an ancillary activity. Article 1732 also carefully avoids
making any distinction between a person or enterprise offering transportation service on a regular or scheduled
basis and one offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the "general public," i.e., the general community or
population, and one who offers services or solicits business only from a narrow segment of the general population.
It appears to the Court that private respondent is properly characterized as a common carrier even though he
merely "back-hauled" goods for other merchants from Manila to Pangasinan, although such backhauling was done
on a periodic or occasional rather than regular or scheduled manner, and even though private respondent's
principal occupation was not the carriage of goods for others. There is no dispute that private respondent charged
his customers a fee for hauling their goods; that fee frequently fell below commercial freight rates is not relevant
here. A certificate of public convenience is not a requisite for the incurring of liability under the Civil Code
provisions governing common carriers.

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

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

b. Act of the public enemy in war, whether international or civil;

c. Act or omission of the shipper or owner of the goods;

d. The character of the goods or defects in the packing or in the containers; and

e. Order or act of competent public authority."

The hijacking of the carrier's truck - does not fall within any of the five (5) categories of exempting causes listed in
Article 1734. Private respondent as common carrier is presumed to have been at fault or to have acted negligently.
This presumption, however, may be overthrown by proof of extraordinary diligence on the part of private
respondent. We believe and so hold that the limits of the duty of extraordinary diligence in the vigilance over the
goods carried are reached where the goods are lost as a result of a robbery which is attended by "grave or
irresistible threat, violence or force." we hold that the occurrence of the loss must reasonably be regarded as quite
beyond the control of the common carrier and properly regarded as a fortuitous event. It is necessary to recall that
even common carriers are not made absolute insurers against all risks of travel and of transport of goods, and are
not held liable for acts or events which cannot be foreseen or are inevitable, provided that they shall have
complied with the rigorous standard of extraordinary diligence.

13. Eastern Shipping Lines Inc. v. IAC, 150 SCRA 463

Doctrine: When a carrier fails to establish any caso fortuito, the presumption by law of fault or negligence on the
part of the carrier applies.

Facts:

- 13 coils of uncoated 7-wire stress relived wire strand for prestressed concrete were shipped on board the vessel
Japri Venture (owned by Easter Shipping Lines) for delivery to Stresstek Post-Tensioning Phils. in Manila. The
cargo was insured by First Nationwide Assurance Corporation (FNAC).
- The vessel arrived in Manila and discharged the cargo to the custody of E.Razon Inc., from whom the
consignees customs broker received it for delivery to the consignees warehouse.
- It appears that while en route to Manila, the vessel encountered very rough seas and stormy weather and the
cargo stored in the lower hatch of the vessel was flooded with water about one foot deep. That upon survey, it
was found that several coils were rusty on one side and that the wetting of the cargo was caused by fresh water
that entered the hatch when the vessel encountered heavy weather.
- FNAC paid Stresstek about Php 172K for damage and loss to the insured cargo.
- Being subrogated to the rights of Stresstek, FNAC now seeks o recover from Eastern what it has indemnified
Stresstek less the salvage value of the goods, or the total of about Php 124K.
- The RTC ordered for the dismissal of the case.
Upon appeal, the CA held that Eastern is liable to FNAC.

Issue: Whether Easter should be held liable even if it claims that the shipment was discharged and delivered
complete into the custody of the arrastre operator under clean tally sheets.

Held:
- YES. In arriving at the decision, the SC agreed with the CA on its findings and conclusions.
- The heavy seas and rains referred to in the masters 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 voyage.
- The rain water (not sea water) found its way into Japri Venture is a clear indication that care and foresight did
not attend the closing of the ships hatches so that rain water would not find its way into the cargo,
- Since Easter has failed to establish any caso fortuito, the presumption of fault or negligence on the part of the
carrier applies; and the carrier must present evidence that it has observed the extraordinary diligence required in
Art. 1733 to escape liability.
The SC held that the presumption that the cargo was in apparent good condition when it was delivered by the
vessel to the arrastre operation by the clean tally sheets has been overturned. The evidence is clear to the effect
that the damage to the cargo was suffered while aboard petitioners vessel.