Transportation Law Case Digests | Atty.
Norianne Tan | 2016
FIRST PHILIPPINE INDUSTRIAL CORPORATION v. CA
G.R. No. 125948, December 29, 1998
Definition of common carrier
CASE:
FPIC is a pipeline concessionaire. It transports petroleum products
through pipelines. The City Treasurer required it to pay the local tax on its
gross receipts before it can be issued a mayor's permit. After paying under
protest, FPIC now claims for a tax refund under the premise that it is exempt
from paying said tax since it is a common carrier (under the LGC, common
carriers are exempt from such tax). Respondents assert that pipelines are
not included in the term "common carrier" which refers solely to ordinary
carriers such as trucks, trains, ships and the like.
SC held that FPIC is a common carrier, hence exempt from said tax.
Art. 1732 of the Civil Code defines a "common carrier" as "any
person, corporation, firm or association 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.
There is no doubt that petitioner is a common carrier. It is
engaged in the business of transporting or carrying goods, i.e. petroleum
products, for hire as a public employment. It undertakes to carry for all
persons indifferently, that is, to all persons who choose to employ its
services, and transports the goods by land and for compensation. The fact
that petitioner has a limited clientele does not exclude it from the definition of
a common carrier. Also, the definition of "common carriers" in the Civil Code
makes no distinction as to the means of transporting, as long as it is by land,
water or air. It does not provide that the transportation of the
passengers or goods should be by motor vehicle.
FACTS:
First Philippine Industrial Corporation (FPIC) is a grantee of a
pipeline concession under Republic Act No. 387, as amended, to
contract, install and operate oil pipelines. It is engaged in the
business of transporting petroleum products from the Batangas
refineries, via pipeline, to Sucat and JTF Pandacan Terminals.
When it applied for a mayor's permit, the respondent City Treasurer
required petitioner to pay a local tax based on its gross receipts for
the fiscal year 1993 pursuant to the Local Government Code. In
order not to hamper its operations, petitioner paid the tax under
protest.
Petitioner filed with the RTC of Batangas City a complaint for tax
refund. It contends that the authority of cities to impose and collect a
Lim Miranda Rivera Santos Yogue
tax on the gross receipts of "contractors and independent
contractors" under Sec. 141 (e) and 151 does not include the
authority to collect such taxes on transportation contractors.
Respondents argued that petitioner cannot be exempt from taxes
under Section 133 (j) of the Local Government Code as said
exemption applies only to "transportation contractors and persons
engaged in the transportation by hire and common carriers by air,
land and water." Respondents assert that pipelines are not included
in the term "common carrier" which refers solely to ordinary carriers
such as trucks, trains, ships and the like.
Section 133 (j) of the Local Government Code provides:
Sec. 133. Common Limitations on the Taxing Powers
of Local Government Units. Unless otherwise provided herein, the
exercise of the taxing powers of provinces, cities, municipalities, and
barangays shall not extend to the levy of the following:
xxx xxx xxx
(j) Taxes on the gross receipts of transportation contractors and
persons engaged in the transportation of passengers or freight by
hire and common carriers by air, land or water, except as provided in
this Code.
ISSUE:
WoN FPIC may be considered as a common carrier for the purpose of
claiming exemption from the local tax.
HELD & RATIO:
YES
I. Art. 1732 of the Civil Code defines a "common carrier" as "any person,
corporation, firm or association 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 test for determining whether a party is a common carrier of goods is:
1. He must be engaged in the business of carrying goods for others as
a public employment, and must hold himself out as ready to engage
in the transportation of goods for person generally as a business and
not as a casual occupation;
2. He must undertake to carry goods of the kind to which his business
is confined;
3. He must undertake to carry by the method by which his business is
conducted and over his established roads; and
Transportation Law Case Digests | Atty. Norianne Tan | 2016
4. The transportation must be for hire.
a.) Based on the above definitions and requirements, there is no doubt
that petitioner is a common carrier. It is engaged in the business of
transporting or carrying goods, i.e. petroleum products, for hire as a public
employment. It undertakes to carry for all persons indifferently, that is, to all
persons who choose to employ its services, and transports the goods by land
and for compensation. The fact that petitioner has a limited clientele does not
exclude it from the definition of a common carrier.
Art. 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"). Article 1732
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.
b.) Also, respondent's argument that the term "common carrier" as
used in Section 133 (j) of the Local Government Code refers only to
common carriers transporting goods and passengers through moving
vehicles or vessels either by land, sea or water, is erroneous.
The definition of "common carriers" in the Civil Code makes no distinction as
to the means of transporting, as long as it is by land, water or air. It does not
provide that the transportation of the passengers or goods should be by
motor vehicle. In fact, in the United States, oil pipe line operators are
considered common carriers.
c.) The BIR likewise considers the petitioner a "common carrier" in BIR
Ruling No. 069-83 for the purposes of the withholding tax.
II. The deliberations conducted in the House of Representatives on the Local
Government Code of 1991 reveals that the intent behind the exemption of
common carriers from local taxation is to prevent duplication of the common
carrier's tax which is already imposed by the national government.
Lim Miranda Rivera Santos Yogue
CALVO vs. UCPB GENERAL INSURANCE CO.,INC.
G.R. No. 148496, March 19, 2002
Common Carriers
CASE:
Calvo operates as a customs broker. She entered into contract with
SMC for the transfer of chemical fluting paper and kraft liner from Port Area
of Manila to to SMCs warehouse in Ermita, Manila. The goods were insured
by UCPB. After 24 hours from the arrival of the shipment, the arrastre
operator removed the goods from the ship. Subsequently, petitioner withdrew
the cargo and proceeded to deliver it to SMCs warehouse. Upon inspection,
it was discovered that some of the goods were damaged. SMC collected the
amount from UCPB, and now UCPB, by virtue of subrogation, claims from
Calvo. Petitioner contends that she is not common carrier and denies liability
for the damage incurred by SMC. There are two issues in this case: WoN
Calvo is a common carrier and WoN she is liable.
The Court rules in the AFFIRMATIVE for both issues. Art. 1732 which
defines who a common carrier is, did not make any distinction (see sub-
bullets under bullet #2, issue 1). The concept of common carrier coincides
with the notion of public service under the Public Service Act. On the issue
on her liability, the Court ruled that petitioner, being a common carrier is
expected to exercise extraordinary diligence in the performance of her
obligations under the contract and that merely showing the possibility that
some other party could be responsible for the damage does not suffice. She
must prove that she used all reasonable means to ascertain the nature and
charateristics of goods tendered for transport, and it should exercise due
care in the handling thereof. In this, petitioner failed.
FACTS:
Petitioner Virgines Calvo is the owner of Transorient Container
Terminal Services, Inc. (TCTSI), a sole proprietorship customs
broker.
Petitioner entered into a contract with San Miguel Corporation (SMC)
for the transfer of 114 reels of semi-chemical fluting paper and 124
reels of kraft liner board from the Port Area in Manila to SMC's
warehouse at the Tabacalera Compound, Romualdez St., Ermita,
Manila. The cargo was insured by respondent UCPB General
Insurance Co., Inc.
The shipment arrived in Manila on board "M/V Hayakawa Maru" and,
after 24 hours, were unloaded from the vessel to the custody of the
arrastre operator, Manila Port Services, Inc. From July 23 to July 25,
1990, petitioner withdrew the cargo from the arrastre operator and
delivered it to SMC's warehouse in Ermita, Manila. On July 25, 1990,
Transportation Law Case Digests | Atty. Norianne Tan | 2016
the goods were inspected by Marine Cargo Surveyors, who found
that 15 reels of the semi-chemical fluting paper were
"wet/stained/torn" and 3 reels of kraft liner board were likewise torn.
The damage was placed at P93,112.00.
SMC collected payment from respondent UCPB under its insurance
contract. In turn, respondent, as subrogee of SMC, brought suit
against petitioner.
Petitioner contends that she is not a common carrier but a private
carrier because, as a customs broker and warehouseman, she 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.
ISSUE:
1) Whether or not Calvo is a common carrier.
2) Whether or not Calvo is liable.
HELD & RATIO:
1) YES.
Applicable Provision:
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 abovementioned provision did not make any distinction:
o 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.
o between a person or enterprise offering transportation
service on aregular or scheduled basis and one offering
such service on an occasional, episodic or unscheduled
basis.
o 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
narrowsegment of the general population. We think that
Article 1732 deliberately refrained from making such
distinctions.
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.
Lim Miranda Rivera Santos Yogue
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.
2) YES.
Applicable Provision:
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 and for the safety of the
passengers transported by them, according to all the circumstances
of each case. . . .
Petitioners Contention: She denies liability for the damage to the
cargo and claims that the "spoilage or wettage" took place while the
goods were in the custody of either the carrying vessel "M/V
Hayakawa Maru," which transported the cargo to Manila, or the
arrastre operator, to whom the goods were unloaded and who
allegedly kept them in open air for nine days from July 14 to July 23,
1998 notwithstanding the fact that some of the containers were
deformed, cracked, or otherwise damaged.
To prove the exercise of extraordinary diligence, petitioner must do
more than merely show the possibility that some other party could be
responsible for the damage. It must prove that it used "all reasonable
means to ascertain the nature and characteristic of goods tendered
for [transport] and that [it] exercise[d] due care in the handling
[thereof]." Petitioner failed to do this.
Another contention: She denies liabilty by invoking Art. 1734 (4)
which provides that: 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: . . . .
(4) The character of the goods or defects in the packing or in the
containers.
For this provision to apply, the rule is that if the improper packing or,
in this case, the defect/s in the container, is/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, petitioner accepted the
cargo without exception despite the apparent defects in some of the
Transportation Law Case Digests | Atty. Norianne Tan | 2016
container vans. Hence, for failure of petitioner to prove that she
exercised extraordinary diligence in the carriage of goods in this
case or that she is exempt from liability, the presumption of
negligence as provided under Art. 1735 holds.
VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY INC v. CA and
SEVEN BROTHERS SHIPPING CORPORATION
G.R. No. 102316 June 30, 1997
CASE:
Valenzuela entered into an agreement with Seven Brothers for the
shipment of the formers logs by the latter to Manila. It insured the logs
against loss and/or damage with South Sea. The vessel sank resulting in the
loss of the insured logs. CA held South Sea liable but not Seven Brothers
because there was a stipulation that the ship owner would be exempted from
liability in case of loss.
W/N CA erred in upholding the validity of the stipulation in the charter party
exempting the ship owner from liability for the loss of petitioner's logs arising
from the negligence of the formers (Seven Brothers') captain.
NO. The Civil Code provisions on common carriers should not be applied
where the carrier is not acting as such but as a private carrier. It is
undisputed that Seven Brothers had acted as a private carrier in transporting
petitioner's logs. Thus, Article 1745 and other Civil Code provisions on
common carriers which were cited by petitioner may not be applied unless
expressly stipulated by the parties in their charter party. In a contract of
private carriage, the parties may validly stipulate that responsibility for
the cargo rests solely on the charterer, exempting the ship owner from
liability for loss of or damage to the cargo caused even by the
negligence of the ship captain. Pursuant to Article 1306 of the Civil Code,
such stipulation is valid because it is freely entered into by the parties and
the same is not contrary to law, morals, good customs, public order, or public
policy.
FACTS:
Valenzuela Hardwood and Industrial Supply, Inc. (Valenzuela)
entered into an agreement with Seven Brothers Shipping
Corporation (Seven Brothers) for the latter to load on board its vessel
the former's 940 lauan round logs for shipment to Manila.
Valenzuela insured the logs against loss and/or damage with South
Sea Surety and Insurance Co., Inc. (South Sea) for P2M & the latter
issued its Marine Cargo Insurance Policy for P2M on said date.
Lim Miranda Rivera Santos Yogue
The vessel carrying the logs sank resulting in the loss of the insured
logs.
Valenzuela demanded from South Sea payment of the proceeds of
the policy but the latter denied liability under the policy. Valenzuela
also filed a formal claim with Seven Brothers for the value of the lost
logs but the latter denied the claim.
The trial court deemed the charter party stipulation void for being
contrary to public policy, citing Article 1745 of the Civil Code.
CA sustained the liability of South Sea but held that Seven Brothers
was not liable for the lost cargo because:
o there was a stipulation that the ship owner would be
exempted from liability in case of loss;
o The provisions on common carriers should not be applied
where the carrier is not acting as such but as a private
carrier;
o Under American jurisprudence, a common carrier
undertaking to carry a special cargo or chartered to a special
person only, becomes a private carrier. As such, a
stipulation exempting the owner from liability even for the
negligence of its agent is valid. The shipping corporation
should not therefore be held liable for the loss of the logs.
ISSUE:
Whether or not CA erred in upholding the validity of the stipulation in the
charter party executed between the petitioner and the private respondent
exempting the latter from liability for the loss of petitioner's logs arising from
the negligence of its (Seven Brothers') captain.
HELD & RATIO:
NO. The Civil Code provisions on common carriers should not be applied
where the carrier is not acting as such but as a private carrier.
It is undisputed that private respondent had acted as a private
carrier in transporting petitioner's lauan logs. Thus, Article 1745 and
other Civil Code provisions on common carriers which were cited by
petitioner may not be applied unless expressly stipulated by the
parties in their charter party.
In a contract of private carriage, the parties may validly stipulate
that responsibility for the cargo rests solely on the charterer,
exempting the ship owner from liability for loss of or damage to
the cargo caused even by the negligence of the ship captain.
Pursuant to Article 1306 of the Civil Code, such stipulation is valid
because it is freely entered into by the parties and the same is not
contrary to law, morals, good customs, public order, or public policy.
Transportation Law Case Digests | Atty. Norianne Tan | 2016
In a contract of private carriage, the parties may freely stipulate their
duties and obligations which perforce would be binding on them.
Unlike in a contract involving a common carrier, private carriage
does not involve the general public. Hence, the stringent
provisions of the Civil Code on common carriers protecting the
general public cannot justifiably be applied to a ship
transporting commercial goods as a private carrier.
Consequently, the public policy embodied therein is not contravened
by stipulations in a charter party that lessen or remove the protection
given by law in contracts involving common carriers.
The law on common carriers extends its protective mantle against
one-sided stipulations inserted in tickets, invoices or other
documents over which the riding public has no understanding or,
worse, no choice. Compared to the general public, a charterer in a
contract of private carriage is not similarly situated. It can and in
fact it usually does enter into a free and voluntary agreement.
NATIONAL STEEL CORP. v. CA and VLASONS SHIPPING, INC.
G.R. No. 112287, December 12, 1997
Common Carriers (Carriage of Goods)
CASE:
National Steel (charterer) entered into a Contract for Contract
Voyage Hire with Vlasons (ship owner). Under the contract, Vlasons would
transport steel and tinplates owned by National Steel. The contract,
incorporating the NONYOZAI Charter Party, states that the ship owner will
not be liable for loss of or damage to the cargoes arising from
unseaworthiness unless caused by want of due diligence on the part of the
ship owner.
When the carrier carrying the cargoes (MV Vlasons I) arrived at its
destination, the cargoes were found to be rusting due to contact with
seawater during the vessels voyage. Because of this, National Steel filed for
damages against Vlasons, advancing the argument that the provisions of the
Civil Code on prima facie presumption of negligence placed upon common
carries are applicable to private carriers.
The Court held that private carriers are not governed by the Civil
Code but by the Code of Commerce. Generally, a private carrier is
undertaken by a special agreement and the carrier does not hold himself out
to carry goods for the general public. Unlike in a contract involving a common
carrier, private carriage does not involve the general public. Hence, the
stringent provisions of the Civil Code on common carriers protecting the
general public cannot be applied to private carriers. In view of this, and as
also provided in the Contract entered into between the two parties, National
Steel has the burden of proving that Vlasons was negligent in ensuring that
Lim Miranda Rivera Santos Yogue
MV Vlasons I was unseaworthy. In this case, National Steel failed to
discharge this burden.
FACTS:
The MV Vlasons I is a private carrier, which renders tramping
service, and as such, it does not transport cargo for the general
public. Its services are available only to specific persons who enter
into a special contract of charter party with its owner. Its owner,
Vlasons Shipping, Inc. (Vlasons), entered into a contract of
affreightment or contract of voyage charter hire with National Steel
Corp. (National Steel).
The contract tasks MV Vlasons I to load steel products of National
Steel at Iligan City and discharge them at North Harbor, Manila. The
contract has the following pertinent terms and conditions:
o 9. Cargo Insurance: Charterers and/or Shippers must
insure the cargoes. Shipowners not responsible for
losses/damages except on proven willful negligence of the
officers of the vessel.
o 10. Other terms: (a) All terms/conditions of NONYOZAI C/P
or other international recognized Charter Party Agreement
shall form part of this Contract.
o Freight In and Out including Stevedoring and Trading
(F.I.O.S.T.) is a term in the NONYAZAI Charter Party, which
states the handling, loading, and unloading of the cargoes
are the responsibility of the Charterer (in this case, National
Steel). The NONYAZI C/P also states that the F.I.O.S.T. to
be undertaken by the Charterer is free of risk and expenses
to owner/s.
o While the NONYAZI C/P obliges the Owner to exercise due
diligence to make the vessel seaworthy and properly
manned, it also absolves the Owner any liability for any loss
of or damage to the cargo arising from unseaworthiness
unless caused by want of due diligence on the part of the
Owners to make the vessel seaworthy.
In August 1974, in accordance with the Contract of Voyage Charter
Hire, MV Vlasons I loaded National Steels shipment of 1,677 skids
of tinplates and 92 packages of hot rolled sheets for carriage to
Manila.
When the vessel arrived in Manila and the hatches containing the
shipment were opened by National Steels agents, nearly all the
cargoes were allegedly found to be wet and rusty. The complete
unloading was delayed for 11 days due to the heavy weather.
Transportation Law Case Digests | Atty. Norianne Tan | 2016
To determine the nature and extent of the wetting and rusting,
National Steel called for a survey of the shipment by the Manila
Adjusters and Surveyors Company. It reported that the rusting was
caused by contact with seawater sustained while on board the vessel
and as a consequence of the heavy weather and rough seas.
On this basis, National Steel filed for damages against Vlasons.
The principal defense of Vlasons, aside from seaworthiness of MV
Vlasons I, is that the said vessel was not a common carrier
inasmuch as she was under voyage charter contract with National
Steel as charterer. And as such, under the Contract of Voyage
Charter Hire, it is not responsible for losses or damages except on
proven willful negligence of the officers of the vessel.
ISSUE:
There are three questions of law and four questions of fact in the case but
the most relevant to the topic is this: Whether or not the Civil Code provisions
on common carriers, under which there exists a presumption of negligence
against common carrier in case of loss or damage to the cargo, are
applicable to a private carrier
HELD & RATIO:
NO, private carriers are not covered by the provisions of the Civil Code, but
by those of Code of Commerce.
As a preliminary matter, it is important to determine whether MV
Vlasons I is a common carrier or a private carrier, because this will
determine the applicable law, standard of diligence and burden of
proof. Spoiler alert: shes a private carrier.
o Art. 1732 of the Civil Code defines a common carrier as
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 true test of a common carrier is
the carriage of passengers or goods, provided it has space,
for all who opt to avail themselves of its transportation
service for a fee. Otherwise, it is a private carrier.
o Generally, a private carrier is undertaken by a special
agreement and the carrier does not hold himself out to carry
goods for the general public. The most typical form is the
charter party, a maritime contract by which the charterer, a
party other than the ship owner, obtains the use and service
of all or some part of a ship for a period of time or voyage/s.
o In this case, it is undisputed that Vlasons did not offer its
services to the general public. It carried goods or
Lim Miranda Rivera Santos Yogue
passengers only for those it chose under a special contract
of charter party. As such, the rights and obligations of both
National Steel and Vlasons, including their liabilities, are
determined primarily by their contract of private carriage.
Unlike in a contract involving a common carrier, private carriage
does not involve the general public. Hence, the stringent provisions
of the Civil Code on common carriers protecting the general public
cannot be applied to private carriers.
o The Contract of Voyage Charter Hire stipulates that Vlasons
shall not be responsible for losses except on proven willful
negligence of the officers of the vessels. The NANYOZAI
Charter Party, which was incorporated in the parties' contract
of transportation further provided that the shipowner shall not
be liable for loss of or a damage to the cargo arising or
resulting from unseaworthiness, unless the same was
caused by its lack of due diligence to make the vessel
seaworthy.
o Burden of proof: In view of the contractual stipulations,
National Steel must prove that the damage to its shipment
was caused by Vlasons willful negligence to ensure MV
Vlasons Is seaworthiness (unlike in common carrier where
the burden lies on the common carrier to prove that it
exercised extraordinary diligence in case loss of or damage
to cargoes it transports). This is supported by several
provisions in the Code of Commerce:
Art. 361. Merchandise shall be transported at the
risk and venture of the shipper, if the contrary has
not been expressly stipulated. Therefore, the
damage and impairment suffered by the goods
during the transportation, due to fortuitous event,
force majeure, or the nature and inherent defect of
the things, shall be for the account and risk of the
shipper.
The burden of proof of these accidents is on the
carrier.
Art. 362. The carrier, however, shall be liable for
damages arising from the cause mentioned in the
preceding article if proofs against him show that they
occurred on account of his negligence or his
omission to take the precautions usually adopted by
careful persons, unless the shipper committed fraud
in the bill of lading, making him to believe that the
goods were of a class or quality different from what
they really were.
Transportation Law Case Digests | Atty. Norianne Tan | 2016
o In other words, in an action against a private carrier for loss
of, or injury to, cargo, the burden is on the plaintiff to prove
that the carrier was negligent or unseaworthy.
In this case, National Steel failed to discharge this
burden. (National Steel was so engrossed in its
argument that there is a prima facie presumption of
negligence on the part of Vlasons hence has the
burden of proof, that it failed to prove anything.)
Additional points that may be asked during recitation:
o On seaworthiness: MV Vlasons I was seaworthy. The
records reveal that Vlasons exercised due diligence to make
the ships seaworthy and fit for carriage. The vessel was
inspected by the Philippine Coast Guard before it proceeded
its voyage.
o On failure to secure insurance: The obligation of National
Steel to insure the cargo stipulated in the Contract of Voyage
Charter Hire is totally separate and distinct from the
contractual or statutory responsibility that may be incurred by
VSI for damage to the cargo caused by the willful negligence
of the officers and the crew of MV Vlasons I.
o On demurrage: Demurrage, in its strict sense, is the
compensation provided for in the contract of affreightment
for the detention of the vessel beyond the laytime or that
period agreed on for loading and unloading of cargo. In this
case, the Contract of Voyage Charter Hire provided for a
four-day laytime; it also qualified laytime as WWDSHINC or
weather working days Sundays and holidays included. The
running of laytime was thus made subject to the weather,
and would cease to run in the event unfavorable weather
interfered with the unloading of cargo. 43 Consequently,
NSC may not be held liable for demurrage as the four-day
laytime allowed it did not lapse, having been tolled by
unfavorable weather condition.
FGU INSURANCE CORPORATION vs. G.P. SARMIENTO TRUCKING
CORPORATION and LAMBERT M. EROLES
G.R. No. 141910; August 6, 2002
Common Carriers; Presumption of Negligence
CASE:
GPS undertook to deliver 30 units of white refrigerators from the
plant site of Concepcion Industries Inc., to the Central Luzon Appliances in
Dagupan City. On the way to the Dagupan City, it collided with an
unidentified truck, causing it to fall into a deep canal, resulting to damage to
Lim Miranda Rivera Santos Yogue
the cargoes. FGU, as the insurer of the shipment, paid to Concepcion
Industries Inc., the value of the covered cargoes. FGU, now, being the
subrogee of the rights and interests of Concepcion Industries, Inc., sought
reimbursement of the amount it had paid to the latter from GPS. As FGUs
claims went unheeded, it filed a complaint for breach of contract of carriage
and damages against GPS and its driver. GPS filed a motion to dismiss by
way of demurrer to evidence. It contended that FGU failed to prove that GPS
was a common carrier hence, a presumption of negligence/fault on its part is
not warranted.
The issues that are relevant are: (1) won GPS is a common carrier;
(2) won GPS, either as a common carrier or a private carrier, may be
presumed to have been negligent when the goods it undertook to transport
safely were subsequently damaged while in its protective custody and
possession.
st
On the 1 issue, SC ruled that GPS is NOT 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. 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.
nd
On the 2 issue, SC ruled that GPS is presumed to have been
negligent when the goods it undertook to transport safely were
subsequently damaged while in its protective custody and possession.
GPS recognizes the existence of a contract of carriage between it and
petitioners assured, and admits that the cargoes it has assumed to deliver
have been lost or damaged while in its custody. In such a situation, a default
on, or failure of compliance with, the obligation in this case, the delivery of
the goods in its custody to the place of destination - gives rise to a
presumption of lack of care and corresponding liability on the part of the
contractual obligor the burden being on him to establish otherwise. GPS has
failed to do so. Since, a demurrer to evidence was granted and later, on
appeal, said order was reversed, GPS is deemed to have waived its right to
present evidence. Thus, GPS may no longer offer proof to establish that
it has exercised due care in transporting the cargoes of the assured so
as to still warrant a remand of the case to the trial court. GPS is liable to
FGU!
FACTS:
G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver
thirty (30) units of Condura S.D. white refrigerators aboard one of its
Transportation Law Case Digests | Atty. Norianne Tan | 2016
Isuzu truck, driven by Lambert Eroles, from the plant site of
Concepcion Industries, Inc., along South Superhighway in Alabang,
Metro Manila, to the Central Luzon Appliances in Dagupan City.
While the truck was traversing McArthur Highway in Brgy. Anupol,
Bamban, Tarlac, it collided with an unidentified truck, causing it to fall
into deep canal, resulting in damage to the cargoes.
FGU Insurance Corporation (FGU), an insurer of the shipment, paid
to Concepcion Industries, Inc., the value of the covered cargoes.
FGU, in turn, being the subrogee of the rights and interests of
Concepcion Industries, Inc., sought reimbursement of the amount it
had paid to the latter from GPS.
Since GPS failed to heed the claim, FGU filed a complaint for
damages and breach of contract of carriage against GPS and its
driver Lambert Eroles with the RTC- Makati City.
In its answer, GPS asserted that it was the exclusive hauler only
of Concepcion Industries, Inc., since 1988, and it was not so
engaged in business as a common carrier. GPS further claimed
that the cause of damage was purely accidental.
A motion to dismiss the complaint was filed by demurrer to evidence
by GPS on the ground that that FGU had failed to prove that GPS
was a common carrier.
Motion was approved by the trial court.
CA rejected FGUs appeal and affirmed the ruling of trial court.
ISSUES+HELD:
1. WON GPS may be considered as a common carrier NO!
2. WON GPS, either as a common carrier or a private carrier, may be
presumed to have been negligent when the goods it undertook to
transport safely were subsequently damaged while in its protective
custody and possession YES!
3. WON the doctrine of Res Ipsa Loquitor is applicable in the case at
bar. NO!
RATIO:
1. GPS is not a common carrier.
Common Carriers 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.
Lim Miranda Rivera Santos Yogue
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.
2. GPS is presumed to have been negligent when the goods it
undertook to transport safely were subsequently damaged while in
its protective custody and possession. Since, a demurrer to evidence
was granted and later, on appeal, said order was reversed, GPS is
deemed to have waived its right to present evidence. Thus, GPS may
no longer offer proof to establish that it has exercised due care in
transporting the cargoes of the assured so as to still warrant a
remand of the case to the trial court. GPS is liable to FGU!
In culpa contractual, upon which the action of petitioner rests as
being the subrogee of Concepcion Industries, Inc., the mere proof of
the existence of the contract and the failure of its compliance justify,
prima facie, a corresponding right of relief. The law, recognizing the
obligatory force of contracts, will not permit a party to be set free
from liability for any kind of misperformance of the contractual
undertaking or a contravention of the tenor thereof.
A breach upon the contract confers upon the injured party a valid
cause for recovering that which may have been lost or suffered.
GPS recognizes the existence of a contract of carriage between
it and petitioners assured, and admits that the cargoes it has
assumed to deliver have been lost or damaged while in its
custody. In such a situation, a default on, or failure of
compliance with, the obligation in this case, the delivery of the
goods in its custody to the place of destination - gives rise to a
presumption of lack of care and corresponding liability on the
part of the contractual obligor the burden being on him to
establish otherwise. GPS has failed to do so.
Respondent driver, on the other hand, without concrete proof of his
negligence or fault, may not himself be ordered to pay petitioner.
The driver, not being a party to the contract of carriage between
petitioners principal and defendant, may not be held liable under the
agreement. FGUs civil action against the driver can only be based
on culpa aquiliana, which would require the claimant for damages to
prove negligence or fault on the part of the defendant.
3. Doctrine of Res Ipsa Loquitur is not applicable in the case at bar.
Resort to the doctrine may be allowed only when (a) the event is
of a kind which does not ordinarily occur in the absence of
negligence; (b) other responsible causes, including the conduct
of the plaintiff and third persons, are sufficiently eliminated by the
Transportation Law Case Digests | Atty. Norianne Tan | 2016
evidence; and (c) the indicated negligence is within the scope of
the defendant's duty to the plaintiff.
In the case of the truck driver, whose liability in a civil action is
predicated on culpa acquiliana, while he admittedly can be said
to have been in control and management of the vehicle which
figured in the accident, it is not equally shown, however, that the
accident could have been exclusively due to his negligence, a
matter that can allow, forthwith, res ipsa loquitur to work against
him.
LOADSTAR SHIPPING CO., INC. v. CA
G.R. No. 131621 September 28, 1999
Definition of common carrier
CASE:
Loadstar received certain goods it its vessel M/V "Cherokee" for
shipment. The goods were insured with Manila Insurance Co. (MIC) while the
vessel was insured with Prudential Guarantee & Assurance, Inc. (PGAI).
When the vessel sank, MIC paid the consignee. MIC now demands
reimbursement from Loadstar claiming that the latter was negligent. On the
other hand, Loadstar argues that The vessel was a private carrier because it
was not issued certificate of public convenience, it did not have a regular trip
or schedule nor a fixed route, and there was only "one shipper, one
consignee for a special cargo." That being a private carrier, any agreement
limiting its liability, such as what transpired in this case, is valid. Since the
cargo was being shipped at "owner's risk," LOADSTAR was not liable for any
loss or damage to the same.
SC held that LOADSTAR is a common carrier. It is not necessary
that the 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. Also, certificate of public
convenience is not a requisite for the incurring of liability under the Civil Code
provisions governing common carriers.
The Court also invalidated the stipulation for being contrary to public
policy. (See ratio for the ruling on the other arguments forwarded by
Loadstar.)
FACTS:
LOADSTAR received on board its M/[V Cherokee vessel certain
goods for shipment. There was an agreement limiting Loadstars
liability such that the cargo was being shipped at "owner's risk."
Lim Miranda Rivera Santos Yogue
The goods were insured with Manila Insurance Co. (MIC) while the
vessel was insured with Prudential Guarantee & Assurance, Inc.
(PGAI).
On 20 November 1984, on its way to Manila from the post of Nasipit,
Agusan del Norte, the vessel, along with its cargo, sank off
Limawasa Island. As a result of the total loss of its shipment, MIC
paid the insured in full settlement of its claim.
MIC filed a complaint against LOADSTAR and PGAI, alleging that
the sinking o[f the vessel was due to[ the fault and negligence of
LOADSTAR and its employees. It also prayed that PGAI be odered
to pay the insurance proceeds from the loss the vessel directly to
MIC, said amount to be deducted from MICs claim from LOADSTAR.
LOADSTAR argued that:
The vessel was a private carrier because it was not issued certificate
of public convenience, it did not have a regular trip o[r schedule nor
at a fixed route, and there was only one shipper, one consignee for
a special cargo.
That being a private carrier, any agreement limiting its liability, such
as what transpired in this case, is valid. Since the cargo was being
shipped at "owner's risk," LOADSTAR was not liable for any loss or
damage to the same.
LOADSTAR further claims that it was not responsible for the loss of
the cargo, such loss being due to force majeure.
ISSUES:
1. WoN LOADSTAR is a private carrier is a common carrier common
carrier
2. WoN LOADSTAR was negligent - YES
HELD & RATIO:
1. LOADSTARs argument: The vessel was a private carrier because it was
not issued certificate of public convenience, it did not have a regular trip
or schedule nor a fixed route, and there was only one shipper, one
consignee for a special cargo.
LOADSTAR is a common carrier. It is not necessary that the 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.
The records do not disclose that the M/V "Cherokee," on the date in
Transportation Law Case Digests | Atty. Norianne Tan | 2016
question, undertook to carry a special cargo or was chartered to a special
person only. Further, the bare fact that the vessel was carrying a particular
type of cargo for one shipper, which appears to be purely coincidental, is not
reason enough to convert the vessel from a common to a private carrier,
especially where, as in this case, it was shown that the vessel was also
carrying passengers.
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 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.
2. LOADSTAR was negligent
a. 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.
b. LOADSTAR's argument that the "limited liability" theory should be
applied in this case. The doctrine of limited liability does not apply where
there was negligence on the part of the vessel owner or
agent. LOADSTAR was at fault or negligent in not maintaining a
seaworthy vessel and in having allowed its vessel to sail despite
knowledge of an approaching typhoon.
c. The stipulation in the case at bar (shipment at owners risk) effectively
reduces the common carrier's liability for the loss or destruction of the
goods to a degree less than extraordinary (Articles 1744 and 1745), that
is, the carrier is not liable for any loss or damage to shipments made at
"owner's risk." Such stipulation is obviously null and void for being
contrary to public policy.
Three kinds of stipulations have often been made in a bill of lading.
The first 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 declares a higher value and pays a higher rate of.
Lim Miranda Rivera Santos Yogue
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.
Since the stipulation in question is null and void, it follows that when MIC
paid the shipper, it was subrogated to all the rights which the latter has
against the common carrier, LOADSTAR.
d. Neither is there merit to the contention that the claim in this case was
barred by prescription. MIC's cause of action had not yet prescribed at the
time it was concerned. Inasmuch as neither the Civil Code nor the Code
of Commerce states a specific prescriptive period on the matter, the
Carriage of Goods by Sea Act (COGSA) which provides for a one-year
period of limitation on claims for loss of, or damage to, cargoes sustained
during transit may be applied suppletorily to the case at bar. This one-
year prescriptive period also applies to the insurer of the goods. In this
case, the period for filing the action for recovery has not yet elapsed.
Moreover, a stipulation reducing the one-year period is null and void; it
must, accordingly, be struck down.
DELSAN TRANSPORT LINES, INC. vs. CA
G.R. No. 127897, November 15, 2001
Common Carriers; Liability
CASE:
Caltex entered into a contract of affreightment with Delsan where the
latter agreed to transport fuel oil from Batangas-Bataan Refinery to different
parts of the country. 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 American
Home Assurance Corporation. The vessel sank. Insurance company paid the
insured value and now claims against Delsan. The issue (on Transpo) is
whether or not Delsan is liable. YES, It is liable. (read with issue number 2 on
seaworthiness). 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 circumstance 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 that they observed extraordinary diligence. In
this case, the Court rejected the report of the captain and the chief mates
tale of strong winds during the voyage. Instead, it gave more credence to the
Transportation Law Case Digests | Atty. Norianne Tan | 2016
report of PAGASA that the weather was normal. Since the sinking of the ship policy in evidence is allegedly fatal to its claim inasmuch as there is
cannot be attributed to bad weather conditions (fortuitious event), it shall be no way to determine the rights of the parties thereto.
presumed that the vessel was not seaworthy.
ISSUE:
FACTS: 3) Whether or not Delsan, as a common carrier is liable. (not explicit in
Caltex entered into a contract of affreightment with the petitioner, the case, but for purposes of Transpo issue, this is the important
Delsan Transport Lines, Inc., for a period of one year whereby the issue)
said common carrier agreed to transport Caltexs industrial fuel oil
from the Batangas-Bataan Refinery to different parts of the country. 4) Whether or not the payment made by the private respondent to
Under the contract, petitioner took on board its vessel, MT Maysun Caltex for the insured value of the lost cargo amounted to an
2,277.314 kiloliters of industrial fuel oil of Caltex to be delivered to admission that the vessel was seaworthy, thus precluding any action
the Caltex Oil Terminal in Zamboanga City. The shipment was for recovery against the petitioner.
insured with the private respondent, American Home Assurance
Corporation. 5) Whether or not the non-presentation of the marine insurance policy
The vessel sank in the early morning of August 16, 1986 near Panay bars the complaint for recovery of sum of money for lack of cause of
Gulf in the Visayas taking with it the entire cargo of fuel oil. action.
Insurance company paid Caltex the sum of P5,096,635.67
HELD & RATIO:
representing the insured value of the lost cargo. Exercising its right
3) YES.
of it demanded of the petitioner the same amount it paid to Caltex.
Due to failure to collect, American Home Assurance filed this Applicable Provisions:
complaint. Arts. 1733, 1734, 1735 of the Civil Code
Trial court dismissed the complaint and found that the vessel, MT
Maysum, was seaworthy to undertake the voyage and that the From the nature of their business and for reasons of public policy,
incident was caused by unexpected inclement weather condition common carriers are bound to observe extraordinary diligence in the
or force majeure, thus exempting the common carrier (herein vigilance over the goods and for the safety of passengers
petitioner) from liability for the loss of its cargo. transported by them, according to all the circumstance of each case.
In the event of loss, destruction or deterioration of the insured goods,
CA reversed. It gave credence to the weather report issued by
common carriers shall be responsible unless the same is brought
PAGASA which showed that the weather was normal during those
about, among others, by flood, storm, earthquake, lightning or other
times. In the absence of any explanation as to what may have
natural disaster or calamity. In all other cases, if the goods are lost,
caused the sinking of the vessel coupled with the finding that the
destroyed or deteriorated, common carriers are presumed to have
same was improperly manned, the appellate court ruled that the
been at fault or to have acted negligently, unless they prove that they
petitioner is liable on its obligation as common carrier to herein
observed extraordinary diligence.
private respondent insurance company as subrogee of Caltex.
Petitioner contends that there is an implied warranty by the shipper
The Court weighed the testimonies and evidnce presented and gave
that the ship is seaworthy. Consequently, the insurer will not be liable
more credence to the weather bulleting report from PAGASA saying
to the assured for any loss under the policy in case the vessel would
that the weather was normal rather than the testimony of the captain
later on be found as not seaworthy at the inception of the insurance.
and the chief mate. Thus, petitioners vessel, MT Maysun, sank with
It theorized that when private respondent paid Caltex the value of its
its entire cargo for the reason that it was not seaworthy. There was
lost cargo, the act of the private respondent is equivalent to a tacit
no squall or bad weather or extremely poor sea condition in the
recognition that the ill-fated vessel was seaworthy
vicinity when the said vessel sank.
Furthermore, petitioner avers that private respondent failed, for
unknown reason, to present in evidence during the trial of the instant
4) NO.
case the subject marine cargo insurance policy it entered into with
Caltex. the failure of the private respondent to present the insurance
Lim Miranda Rivera Santos Yogue
Transportation Law Case Digests | Atty. Norianne Tan | 2016
The payment made by the private respondent for the insured value
of the lost cargo operates as waiver of its (private respondent) 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 the private respondent as to foreclose recourse against the
petitioner for any liability under its contractual obligation as a
common carrier. The fact of payment grants the private respondent
subrogatory right which enables it to exercise legal remedies that
would otherwise be available to Caltex as owner of the lost cargo.
The right of subrogation has its roots in equity. It is designed to
promote and to accomplish justice and is the mode which equity
adopts to compel the ultimate payment of a debt by one who in
9
justice and good conscience ought to pay. It is not dependent upon,
nor does it grow out of, any privity of contract or upon written
assignment of claim. It accrues simply upon payment by the
insurance company of the insurance claim. Consequently, the
payment made by the private respondent (insurer) to Caltex
(assured) operates as an equitable assignment to the former of all
the remedies which the latter may have against the petitioner.
5) NO.
The presentation in evidence of the marine insurance policy is not
indispensable in this case before the insurer may recover from the
common carrier the insured value of the lost cargo in the exercise of
its subrogatory right. The subrogation receipt, by itself, is sufficient to
establish not only the relationship of herein private respondent as
insurer and Caltex, as the assured shipper of the lost cargo of
industrial fuel oil, but also the amount paid to settle the insurance
claim. The right of subrogation accrues simply upon payment by the
insurance company of the insurance claim.
SARKIES TOURS PHILIPPINES, INC., v. CA, DR. ELINO G. FORTADES,
MARISOL A. FORTADES and FATIMA MINERVA A. FORTADES
G.R. No. 108897 October 2, 1997
CASE:
Fatima boarded petitioner's bus bringing 3 pieces of luggage with
her. Her brother helped her load them on the bus compartment. During a
stopover at Daet, it was discovered that only one bag remained in the open
compartment. Private respondents asked assistance from the radio stations
and from Philtranco bus drivers who plied the same route. They were able to
recover one of Fatima's bags. After a few weeks, private respondents
Lim Miranda Rivera Santos Yogue
formally demanded from petitioner. In its letter, petitioner tacitly admitted its
liability by apologizing and assuring respondents that efforts were being
made to recover the lost items. Months later, respondents filed a case to
recover the value of the remaining lost items claiming that the loss was due
to petitioner's failure to observe extraordinary diligence in the care of
Fatima's luggage and that petitioner dealt with them in bad faith from the
start. Petitioner denied liability on the ground that Fatima allegedly did not
declare any excess baggage upon boarding its bus.
W/N petitioner, as a common carrier, is responsible for the loss.
YES. Under the Civil Code, "(c)ommon 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," and this
liability "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 tothe
person who has a right to receive them," unless the loss is due to any of
the excepted causes under Article 1734 thereof. The cause of the loss in the
case at bar was petitioner's negligence in not ensuring that the doors of the
baggage compartment of its bus were securely fastened. Further, where the
common carrier accepted its passenger's baggage for transportation and
even had it placed in the vehicle by its own employee, its failure to collect the
freight charge is the common carrier's own lookout; it is responsible for the
consequent loss of the baggage. In this case, petitioners employee even
helped Fatima and her brother load the luggages in the bus' baggage
compartment, without asking that they be weighed, declared, receipted or
paid for.
FACTS:
Fatima boarded petitioner's De Luxe Bus in Manila on her way to
Legazpi City. Her brother Raul helped her load 3 pieces of luggage
containing all of her optometry review books, materials and
equipment, trial lenses, trial contact lenses, passport and visa, her
mothers U.S. green card, among other important documents and
personal belongings. Her belongings were kept in the baggage
compartment of the bus, but during a stopover at Daet, it was
discovered that only one bag remained in the open compartment.
The others, including Fatima's things, were missing and might have
dropped along the way. Some of the passengers suggested retracing
the route of the bus to try to recover the lost items, but the driver
ignored them and proceeded to Legazpi City.
Fatima immediately reported the loss to petitioner through her
mother. Petitioner, however, merely offered her P1k for each piece of
luggage lost, which she turned down.
Transportation Law Case Digests | Atty. Norianne Tan | 2016
After returning to Bicol, private respondents asked assistance from
the radio stations and from Philtranco bus drivers who plied the
same route. They were able to recover one of Fatima's bags.
After a few weeks, private respondents formally demanded
satisfaction of their complaint from petitioner.
In a letter, petitioner apologized for the delay and said that "(a) team
has been sent out to Bicol for the purpose of recovering or at least
getting the full detail" of the incident.
After more than 9 months of fruitless waiting, respondents decided to
file a case to recover the value of the remaining lost items, as well as
moral and exemplary damages, attorney's fees and expenses of
litigation. They claimed that the loss was due to petitioner's failure to
observe extraordinary diligence in the care of Fatima's luggage and
that petitioner dealt with them in bad faith from the start. Petitioner,
on the other hand, disowned any liability for the loss on the ground
that Fatima allegedly did not declare any excess baggage upon
boarding its bus.
ISSUE:
Whether or not petitioner, as a common carrier, is responsible for the loss.
HELD & RATIO:
YES.
Under the Civil Code, "(c)ommon 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," and this liability "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
person who has a right to receive them," unless the loss is due to
any of the excepted causes under Article 1734 thereof.
The cause of the loss in the case at bar was petitioner's
negligence in not ensuring that the doors of the baggage
compartment of its bus were securely fastened. As a result of this
lack of care, almost all of the luggages were lost, to the prejudice of
the paying passengers.
Where the common carrier accepted its passenger's baggage for
transportation and even had it placed in the vehicle by its own
employee, its failure to collect the freight charge is the common
carrier's own lookout. It is responsible for the consequent loss of the
baggage.
o In the instant case, petitioners employee even helped
Fatima and her brother load the luggages in the bus'
Lim Miranda Rivera Santos Yogue
baggage compartment, without asking that they be weighed,
declared, receipted or paid for.
THE PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC. v. MGG
MARINE SERVICES, INC. and DOROTEO GAERLAN
G.R. No. 135645, March 8, 2002
Common Carriers (Carriage of Goods)
CASE:
San Miguel Corporation loaded cargoes in MV Peatheray Patrick-G
owned by respondents. It insured the cargoes with petitioner. The captain of
the vessel confirmed with the Coast Guard that the weather was good for
sailing. Relying on this, the vessel proceeded to its voyage. However, the
vessel listed and subsequently sunk off Cawit Points, Cortes, Surigao del
Sur. Petitioner paid the amount of loss to San Migue.
Upon petitioners investigation, the listing and subsequent sinking
were allegeldy caused by the shifting of ballast water from starboard to
portside, which affected the stability of the vessel. Meanwhile, the Board of
Marine Inquiry conducted its own investigation and found out that the sole
and proximate cause of the sinking and consequently of the loss of the
cargoes was the strong wind and huge wave, which it considered as a
fortuitous event.
The issuer is whether or not the sole and proximate cause of the loss
of the cargoes was the occurrence of a natural disaster.
The Court upheld the investigation of the Board of Marine Inquiry.
Generally, common carriers are presumed to have been negligent if the
goods transported by them are lost, destroyed or deteriorated. Article 1734 of
the Civil Code provides for exceptions, one of which is flood, storm,
earthquake, lightning or other natural disaster or calamity.
In this case, the terrible weather condition was considered a
fortuitous event (elements of which are found in the Ratio). The Coast Guard
even assured the captain of the vessel that the weather was safe for sailing.
The Board also found no intervention from respondents or its captain and
crew in the sinking of the vessel. Since the sole and proximate cause is the
strong winds and huge waves, respondents cannot be held liable for the loss
of San Miguels cargoes.
FACTS:
On 1 March 1987, San Miguel Corporation insured several beer
bottle cases with petitioner Philippine American Insurance Company
(petitioner) with an aggregate value of Php5,836,222.80. The
cargoes were loaded on board the MV Peatheray Parick-G owned by
Doroteo Gaerlan with MGG Marine Services, Inc. (respondents) as
agent.
Transportation Law Case Digests | Atty. Norianne Tan | 2016
On 2 March 1987, the vessel started its voyage, when the weather
was calm and after the Coast Guard Station cleared it for voyage.
The following day, March 3, 1987, MV Peatheray Patrick-G listed
and subsequently sunk off Cawit Point, Cortes, Surigao del Sur. As a
consequence thereof, the cargo belonging to San Miguel Corporation
was lost.
San Miguel claimed the amount of its loss from petitioner.
Petitioner initiated a survey of the vessel. The survey report said that
the vessel was structurally sound, and that the listing and
subsequent sinking were caused by the shifting of ballast water from
starboard to portside, which affected the stability of the vessel.
On 3 November 1987, as subrogee of San Miguel, petitioner filed for
collection against respondents.
Meanwhile, the Board of Marine Inquiry conducted its own
investigation to determine whether or not the captain and crew of the
vessel should be held responsible for the incident. The Board
rendered a decision exonerating the captain and crew, and said that
the cause of the sinking was the existence of strong winds and
enormous waves in Surigao del Sure, a fortuitous event that could
not have been foreseen.
The RTC held that respondents are solidarily liable for the loss of
San Miguels cargoes. The CA reversed this decision, stating
fortuitous event as the proximate and only cause of the loss.
ISSUE:
Whether or not the sole and proximate cause of the loss of the cargoes was
the occurrence of a natural disaster
HELD & RATIO:
YES, the loss of the cargoes was due to natural disaster as the sole and
proximate cause.
Common carriers are mandated to observe extraordinary diligence in
the vigilance over the goods and for the safety of the passengers
transported by them. As such, common carriers, as a general rule,
are presumed to have been at fault or negligent if the goods
transported by them are lost, destroyed or deteriorated.
However, this presumption of fault or negligence does not arise in
the cases enumerated under Article 1734 of the Civil Code:
o (1) Flood, storm, earthquake, lightning or other natural
disaster or calamity;
o (2) Act of the public enemy in war, whether international or
civil;
o (3) Act or omission of the shipper or owner of the goods;
Lim Miranda Rivera Santos Yogue
o (4) The character of the goods or defects in the packing or in
the containers; and
o (5) Order or act of competent public authority.
In order that a common carrier may be absolved from liability where
the loss, destruction or deterioration of the goods is due to a natural
disaster or calamity, it must further be shown that the such natural
disaster or calamity was the proximate and only cause of the loss;
there must be "an entire exclusion of human agency from the cause
of the injury of the loss." Even then, common carriers are expected to
exercise due diligence.
o In this case, the findings of the Board of Marine Inquiry hold
true.
o An event is considered fortuitous if the following elements
occur:
(a) the cause of the unforeseen and unexpected
occurrence, or the failure of the debtor to comply
with his obligations, must be independent of human
will;
(b) it must be impossible to foresee the event which
constitutes the caso fortuito, or if it can be foreseen,
it must be impossible to avoid;
(c) the occurrence must be such as to render it
impossible for the debtor to fulfill his obligation in a
normal manner; and
(d) the obligor must be free from any participation in
the aggravation of the injury resulting to the creditor.
o Before the vessel took voyage, her captain confirmed with
the Coast Guard that the weather condition would permit
safe travel. Thus, the captain could be expected to have
foreseen the terrible weather condition and strong waves.
o The vessel was also found to be seaworthy.
Since the presence of strong winds and enormous waves was shown
to be the proximate and only cause of the sinking of the vessel and
the loss of the cargo belonging to San Miguel Corporation,
respondents cannot be held liable for the said loss.
GANZON v. CA
G.R. No. L-48757; May 30, 1988
CASE:
Tumambing contracted the services of Ganzon to haul 305 tons of
scrap iron from Mariveles Bataan to the port of Manila on board the lighter
Batman. Tumambing deliverd the said scrap iron to Captain Niza, captain of
Batman, for loading which actually begun on the said day. When about half
Transportation Law Case Digests | Atty. Norianne Tan | 2016
of the scrap iron was loaded, Mayor Advincula (of Mariveles) arrived and
demanded 5 k from Tumambing. The latter refused and resulted to a heated
argument. Mayor Advincula shot Tumambing. The guns shot was not fatal
but he had to be taken to the hospital for treatment. Later, the loading was
resumed. However, the acting mayor ordered Cpt. Niza and his crew to
dump the scrap iron where the lighter was docked. The rest were brought to
the NASSCO. Acting Mayor then issued a receipt stating that the Municipality
of Mariveles had taken custody of the scrap iron.
Tumambing instituted a complaint for damages based on culpa
contractual. The issue in this case is WON Ganzon should be held liable
under the contract of carriage.
SC ruled in favor of Tumambing and held Ganzon liable. SC denied
Ganzons argument that the scrap iron had not been unconditionally placed
under his custody and control to make him liable. Accdg. to SC, Ganzon
admitted that tumambing delivered the scraps to Cpt. Nazi for loading in
Batman and that thru his employees, Ganzon actually received the scrap
iron. 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. 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.
Moreover, SC ruled that Ganzon failed to show that the loss of
scraps was due to any of the causes enumerated under Art. 1734 of the CCP
(see ratio, bullet 4 for the causes). Ganzon is presumed to have been at
fault or to have acted negligently. By reason of this presumption, the court
is not even required to make an express finding of fault or negligence before
it could hold the petitioner answerable for the breach of the contract of
carriage.
Lastly, SC cannot accept the theory of Ganzon that he is exempt
from any liability because the loss of the scraps was due mainly to the
intervention of the municipal officials of Mariveles which constitutes a caso
fortuito as defined in Article 1174 of the Civil Code. The intervention of the
municipal officials was not in any case, of a character that would render
impossible the fulfillment by the carrier of its obligation. Ganzon was
not duty bound to obey the illegal order to dump into the sea the scrap
iron. The mere difficulty in the fullfilment of the obligation is not
considered force majeure.
Lim Miranda Rivera Santos Yogue
FACTS:
Gelacio Tumambing (private respondent) contracted the services of
Mauro Ganzon to haul 305 tons of scrap iron from Mariveles Bataan
to the port of Manila on board the lighter LCT BATMAN.
Pursuant thereto, Ganzon sent his lighter Batman to Mariveles
where it docked.
Tumambing delivered the scrap iron to Filomeno Niza, captain of
lighter, for loading which was actually begun on the same dare by
the crew of the lighter under the supervision of captain Niza.
When about half of the scrap iron was loaded, Mayor Advincula of
Mariveles, Bataan arrived and demanded P5000 from Tumambing.
o Tumambing resisted and after a heated argument, Mayor
Advincula shot Tumambing. The gunshot was not fatal but
Tumambing had to be taken to the hospital for treatment.
After sometime, the loading of the scrap iron was resumed. But the
Acting Mayor ordered Captain Niza and his crew to dump the scrap
iron where the lighter was docked. The rest were brought to the
compound of NASSCO.
Later, Acting Mayor issued a receipt stating that the Municipality of
Mariveles had taken custody of the scrap iron.
Tumambing filed an action against Ganzon for damages based on
culpa contractual. Court of Appeals reversed the lower court and
ordered Ganzon to pay Tumambing, the sum of P5,895 as actual
damages and P5000 for exemplary damages and P2000 for
Attorneys fees.
Hence, this appeal. Ganzon contends that the scrap iron had not
been unconditionally placed under his custody and control to make
him liable.
ISSUE:
1. W/N Ganzon should be held liable under the contract of carriage YES!
RATIO:
1. Ganzon is liable under the contract of carriage.
Ganzon admitted: That
i. Tumambing delivered the scraps to Captain Niza for loading in
the lighter Batman;
ii. Ganzon, thru his employees, actually received the scraps;
iii. Soon after the scraps were delivered to and received by Ganzon
(common carrier), loading was commenced.
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
Transportation Law Case Digests | Atty. Norianne Tan | 2016
petitioner-carrier's extraordinary responsibility for the loss,
destruction or deterioration 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.
o 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.
Ganzon failed to show that the loss of scraps was due to any of the
following causes (Art. 1734 of CCP):
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.
Hence, the Ganzon is presumed to have been at fault or to have
acted negligently.
o By reason of this presumption, the court is not even required to
make an express finding of fault or negligence before it could
hold the petitioner answerable for the breach of the contract of
carriage.
o Still, the Ganzon could have been exempted from any liability
had he been able to prove that he observed extraordinary
diligence in the vigilance over the goods in his custody,
according to all the circumstances of the case, or that the loss
was due to an unforeseen event or to force majeure. As it was,
there was hardly any attempt on the part of Ganzon to
prove that he exercised such extraordinary diligence.
SC cannot accept the theory of Ganzon that he is exempt from any
liability because the loss of the scraps was due mainly to the
intervention of the municipal officials of Mariveles which constitutes a
caso fortuito as defined in Article 1174 of the Civil Code.
o In the courts below, the petitioner's defense was that the loss of
the scraps was due to an "order or act of competent public
authority," and this contention was correctly passed upon by
the Court of Appeals which ruled that 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. he fact remains that the order
given by the acting mayor to dump the scrap iron into the sea
Lim Miranda Rivera Santos Yogue
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.
Now, Ganzon is changing his theory to caso fortuito.
Such a change on appeal cannot be allowed.
o In any case, the intervention of the municipal officials was
not in any case, of a character that would render
impossible the fulfillment by the carrier of its obligation.
Ganzon was not duty bound to obey the illegal order to
dump into the sea the scrap iron. Moreover, there is absence
of sufficient proof that the issuance of the same order was
attended with such force or intimidation as to completely
overpower the will of the petitioner's employees. The mere
difficulty in the fullfilment of the obligation is not
considered force majeure.
SC agrees with Tumambing that the scraps could have
been properly unloaded at the shore or at the NASSCO
compound, so that after the dispute with the local
officials concerned was settled, the scraps could then be
delivered in accordance with the contract of carriage.
There is no incompatibility between the Civil Code provisions on
common carriers and Articles 361 and 362 of the Code of
Commerce.
o For Art. 1735 of the Civil Code, conversely stated, means that
the shipper will suffer the losses and deterioration arising from
the causes enumerated in Art. 1734; and in these instances,
the burden of proving that damages were caused by the fault or
negligence of the carrier rests upon him. However, the carrier
must first establish that the loss or deterioration was
occasioned by one of the excepted causes or was due to an
unforeseen event or to force majeure.
o Be that as it may, insofar as Art. 362 appears to require of the
carrier only ordinary diligence, the same is deemed to have
been modified by Art. 1733 of the Civil Code.
BENITO MACAM v. CA
G.R. No. 125524, August 25, 1999
Liability of a common carrier
CASE:
Macam shipped on board the vessel Nen Jiang 3,500 boxes of
watermelons and 1,611 boxes of fresh mangoes. The shipment was covered
by a Bill of Lading with the following pertinent provision: "One of the Bills of
Transportation Law Case Digests | Atty. Norianne Tan | 2016
Lading must be surrendered duly endorsed in exchange for the goods or
delivery order. The shipment was bound for Hongkong with PAKISTAN
BANK as consignee and Great Prospect Company of Kowloon, Hongkong
(hereinafter GPC) as notify party. Upon arrival in Hongkong, the shipment
was delivered by respondent WALLEM directly to GPC, not to PAKISTAN
BANK, and without the required bill of lading having been surrendered.
Macam sought collection of the value of the shipment from respondents
based on delivery of the shipment to GPC without presentation of the bills of
lading and bank guarantee.
1. WoN there was a misdelivery of the shipment. NONE.
Under Article 1736 of the Civil Code, The extraordinary responsibility of the
common carriers lasts until actual or constructive delivery of the cargoes to
the consignee or to the person who has a right to receive them. PAKISTAN
BANK was indicated in the bills of lading as consignee whereas GPC was
the notify party. However, in the export invoices GPC was clearly named as
buyer/importer. Petitioner also referred to GPC as such in his demand letter
to respondent WALLEM and in his complaint before the trial court. This
premise draws us to conclude that the delivery of the cargoes to GPC
as buyer/importer which, conformably with Art. 1736 had, other than the
consignee, the right to receive them was proper.
2. WoN respondents are liable to petitioner for releasing the goods to GPC
without the bills of lading or bank guarantee. NO
Macam declared that it was his practice to ask the shipping lines to
immediately release shipment of perishable goods through telephone calls by
himself or his "people." He no longer required presentation of a bill of lading
nor of a bank guarantee as a condition to releasing the goods in case he was
already fully paid. Thus, taking into account that subject shipment consisted
of perishable goods and SOLIDBANK pre-paid the full amount of the value
thereof, it is not hard to believe the claim of respondent WALLEM that
petitioner indeed requested the release of the goods to GPC without
presentation of the bills of lading and bank guarantee.
FACTS:
Benito Macam, doing business under the name and style Ben-Mac
Enterprises, shipped on board the vessel Nen Jiang, through local
agent respondent Wallem Philippines Shipping, Inc. (hereinafter
WALLEM), 3,500 boxes of watermelons and 1,611 boxes of fresh
mangoes. The shipment was covered by a Bill of Lading with the
Lim Miranda Rivera Santos Yogue
following pertinent provision: "One of the Bills of Lading must be
surrendered duly endorsed in exchange for the goods or delivery
order. The shipment was bound for Hongkong with PAKISTAN
BANK as consignee and Great Prospect Company of Kowloon,
Hongkong (hereinafter GPC) as notify party.
Copies of the bills of lading and commercial invoices were submitted
to petitioner's depository bank, Consolidated Banking Corporation
(hereinafter SOLIDBANK), which paid petitioner in advance the total
value of the shipment.
Upon arrival in Hongkong, the shipment was delivered by respondent
WALLEM directly to GPC, not to PAKISTAN BANK, and without the
required bill of lading having been surrendered.
Subsequently, GPC failed to pay PAKISTAN BANK such that the
latter, still in possession of the original bills of lading, refused to pay
petitioner through SOLIDBANK. Since SOLIDBANK already pre-paid
petitioner the value of the shipment, Macam was thus allegedly
constrained to return the amount involved to SOLIDBANK, then
demanded payment from respondent WALLEM in writing but to no
avail.
Macam sought collection of the value of the shipment from
respondents based on delivery of the shipment to GPC without
presentation of the bills of lading and bank guarantee.
Respondents explained that it is a standard maritime practice, when
immediate delivery is of the essence, for the shipper to request or
instruct the carrier to deliver the goods to the buyer upon arrival at
the port of destination without requiring presentation of the bill of
lading as that usually takes time. As proof thereof, respondents
apprised the trial court that for the duration of their two-year business
relationship with petitioner concerning similar shipments to GPC
deliveries were effected without presentation of the bills of lading.
ISSUES:
1. WoN there was a misdelivery of the shipment.
2. WoN respondents are liable to petitioner for releasing the goods to
GPC without the bills of lading or bank guarantee.
HELD & RATIO:
1. None.
Macam argues that "the fact that the shipment was not delivered to the
consignee as stated in the Bill of Lading or to a party designated or named
by the consignee constitutes a misdelivery thereof."
Transportation Law Case Digests | Atty. Norianne Tan | 2016
a. Article 1736 of the Civil Code provides
Art. 1736. The extraordinary responsibility of the common carriers 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.
The extraordinary responsibility of the common carriers lasts until actual or
constructive delivery of the cargoes to the consignee or to the person who
has a right to receive them. PAKISTAN BANK was indicated in the bills of
lading as consignee whereas GPC was the notify party. However, in the
export invoices GPC was clearly named as buyer/importer. Petitioner also
referred to GPC as such in his demand letter to respondent WALLEM and in
his complaint before the trial court. This premise draws us to conclude
that the delivery of the cargoes to GPC as buyer/importer which,
conformably with Art. 1736 had, other than the consignee, the right to
receive them was proper.
b. The instruction in the telex of 5 April 1989 was "to deliver the shipment to
respective consignees." And so petitioner argues that, assuming there
was such an instruction, the consignee referred to was PAKISTAN
BANK.
The consignee referred to was not PAKISTAN BANK but GPC. The delivery
of the shipment must be to GPC, the notify party or real importer/buyer of the
goods and not the Pakistani Bank since the latter can very well present the
original Bills of Lading in its possession.
Besides, GPC is listed as one among the several consignees in the telex
(Exhibit 5-B) and the instruction in the telex was to arrange delivery of A/M
shipment (not any party) to respective consignees without presentation of
OB/L and bank guarantee.
2. NO.
Respondents submitted in evidence a telex. The telex instructed delivery of
various shipments to the respective consignees without need of presenting
the bill of lading and bank guarantee per the respective shipper's request.
However, petitioner disputes the existence of such instruction and claims that
this evidence is self-serving.
Lim Miranda Rivera Santos Yogue
SC gathered that Macam has been transacting with GPC as buyer/importer
for around two (2) or three (3) years already. When mangoes and
watermelons are in season, his shipment to GPC using the facilities of
respondents is twice or thrice a week. The goods are released to GPC. It has
been the practice of petitioner to request the shipping lines to immediately
release perishable cargoes such as watermelons and fresh mangoes through
telephone calls by himself or his "people." In transactions covered by a letter
of credit, bank guarantee is normally required by the shipping lines prior to
releasing the goods. But for buyers using telegraphic transfers, petitioner
dispenses with the bank guarantee because the goods are already fully paid.
In his several years of business relationship with GPC and respondents,
there was not a single instance when the bill of lading was first presented
before the release of the cargoes.
Thus, taking into account that subject shipment consisted of perishable
goods and SOLIDBANK pre-paid the full amount of the value thereof, it is not
hard to believe the claim of respondent WALLEM that petitioner indeed
requested the release of the goods to GPC without presentation of the bills of
lading and bank guarantee.
PHIL. AMERICAN GENERAL INSURANCE CO., INC. vs. CA
G.R. No. 101426, May 17, 1993
Common Carriers; Liability
CASE:
Davao Union shipped on board a vessel operated by Transpacific
Towage cargo consisting of GI sheet and bags of cement bound to Pasacao,
Camarines Sur. The vessel arrived at the destination on time but due to
several factors like the buoy, discharge permit, intermittent rains and
absence of stevedores, the discharging of the cargoes could not be effected
immediately. More than a month later, typhoon Saling entered the PAR and
caused damage to the vessel. The shipmaster ordered that the ship be
abandoned and ordered the crew to secure the vessel while he went to the
police to see assistance to prevent pilferage. However, the vessel was
continuously pounded by strong sea waves and they were not able to stop
pilferage and looting from the people. Because the cargo was insured,
PhilAmGen paid the shipper and now claims from Transpacific Towage
saying that the loss was due to the delay in discharging the cargo. The issue
is WoN Transpacific Towage is liable. NO. Art. 1739 provides that a common
carrier may be exempted from liability if it can show that it exercised diligence
to prevent or minimize the loss due to the happening of the fortuitous event.
In this case, the discharging of the cargo could not be effected immediately
because of several factors, which are not attributable to the carrier (Facts,
Transportation Law Case Digests | Atty. Norianne Tan | 2016
Bullet 3). The loss of the cargo was solely attributable to Typhoon Saling and
it was sufficiently prove that Transpacific Towage, through its shipmaster,
exercised due diligence in minimizing or preventing the loss (Ratio, Bullet 6).
Hence, the carrier is not liable.
FACTS:
Davao Union Marketing Corporation shipped on board the vessel
M/V "Crazy Horse" operated by the Transpacific Towage, Inc. cargo
consisting of sheets of union brand GI sheets and bags of union
Pozzolan and union Portland Cement. The cargo was consigned to
the Bicol Union Center of Pasacao, Camarines Sur, with a certain
Pedro Olivan as the "Notify-Party." The cargo was insured by the
Philippine American General Insurance Co., Inc.
The vessel arrived on September 7, 1985 as scheduled as the port
of Pasacao, Camarines Sur. Upon arrival the shipmaster notified the
consignee's "Notify-Party" that the vessel was ready to discharge the
cargo.
However, the discharging could not be effected immediately and
continuously because of certain reasons.
o First, the buoys were installed only on September 11, 1985;
o second, the discharge permit was secured by the consignee
only on September 13, 1985;
o third a wooden catwalk had to be installed and extension of
the wharf had to be made, which was completed only on
September 26, 1985;
o fourth, the discharging was not continuous because there
were intermittent rains and the stevedores supplied by the
consignee did not work during the town fiesta.
On October 16, 1985, a super typhoon code named "Saling" entered
the Philippine area of responsibility and Pasacao was placed under
Storm Signal No. 3. The discharging of the cargo had to be
suspended at 11:40 A.M. on October 17, 1985 due to the heavy
downpour, strong winds, and turbulent sea. To prevent damage to
the cargo all hatches of the vessel were closed and secured.
From 8:00 P.M. of October 17, 1985 to 8:00 P.M. of October 18,
1985 the typhoon raged in the area. It was at about 5:20 A.M. of
October 18, 1985 when the shipmaster ordered the maneuvering of
the vessel but it could not be steered on account of the strong winds
and rough seas. The vessel's lines snapped, causing her to be
dragged against the rocks, and the anchor chain stopper gave way.
The vessel sustained holes in the engine room and there was a
power failure in the vessel. Water started to fill the engine room and
at about 6:15 A.M. the engine broke down.
Lim Miranda Rivera Santos Yogue
The shipmaster had no choice but to order the ship to be
abandoned. He told the crew to secure the vessel while he went to
the Municipal Mayor of Pasacao to request for police assistance to
prevent pilferage of the vessel and its cargo. He was, however,
unable to get any assistance. When he returned to the vessel he
found that it was being continuously pounded by the strong sea
waves against the rocks. This caused the vessel to break into two (2)
parts and to sink partially. The shipmaster reported the incident to
the Philippine Coast Guard but inspite the presence of three (3)
coast guards, nothing could be done about the pilferage done on the
vessel and its cargo. Almost the whole barrio and because there
were so many of them the crew and the guards were helpless to stop
the pilferage and looting. As a result of the incident the cargo of
cement was damaged while the GI sheets were looted and nothing
was left of the undischarged pieces.
Because the cargo was insured by it the Philippine American
General Insurance Co., Inc. paid the shipper Davao Union Marketing
Corporation. Insurer made demands upon the Transpacific Towage,
Inc. for the payment of said amount as subrogee of the insured,
claiming that the loss of the cargo was directly and exclusively
brought about by the fault and negligence of the shipmaster and the
crew of M/V "Crazy Horse".
Trial Court: Although immediate cause may be due to an act of God,
carrier had exposed the property to the accident.
CA: carrier is not responsible for the loss as loss was due to a
fortuituous eevent.
ISSUE:
6) Whether or not Transpacific Towage, as a common carrier, is liable.
HELD & RATIO:
6) NO.
Applicable Provisions:
Arts. 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 delay in fully unloading the cargo from the vessel "was
occasioned by causes that may not be attributed solely to human
factors, among which were the natural conditions of the port where
Transportation Law Case Digests | Atty. Norianne Tan | 2016
the M/V "Crazy Horse" had docked, the customs of the place and the
weather conditions. (See Facts, Bullet 3)
The loss of cargo in the present case was due solely to typhoon
"Saling" and that private respondent had shown that it had observed
due diligence before, during and after the occurrence of "Saling";
hence, it should not be liable under Article 1739.
Indeed, from the time the vessel arrived at port Pasacao on 7
September 1985 up to 17 October 1985 when the Pasacao area was
placed under storm signal No. 3 due to typhoon "Saling", forty (40)
days had passed. Under normal conditions, a period of forty (40)
days is undoubtedly more than enough time within which the
unloading of the cargo (given its nature) from the vessel could be
completed.
While it is true that there was indeed delay in discharging the cargo
from the vessel, we agree with the Court of Appeals that neither of
the parties herein could be faulted for such delay, for the same
(delay) was due not to negligence, but to several factors earlier
discussed.
Furthermore, private respondent through its shipmaster exercised
due negligence to prevent or minimize the loss of the cargo, as
shown by the following facts:
o (1) at 5:20 a.m. of 18 October 1985, as typhoon "Saling"
continued to batter the Pasacao area, the shipmaster tried to
maneuver the vesel amidst strong winds and rough seas;
o (2) when water started to enter the engine room and later the
engine broke down, the shipmaster ordered ths ship to be
abandoned, but he sought police assistance to prevent
pilferage of the vessel and its cargo;
o (3) after the vessel broke into two parts and sank partially,
the shipmaster reported th eincident to the Philippine Coast
Guard, but unfortunately, despite the presence of three coast
guards, nothing could be done to stop the pilferage as
almost the entire barrio folk came to loot the vessel and its
cargo, including the G.I. sheets.
The diligence exercised by the shipmaster further supports the
exemption of private respondent from liability for the loss of the
cargo, in accordance with Article 1739 of the Civil Code.
MAERSK LINE v. CA AND EFREN V. CASTILLO
G.R. No. 94761 May 17, 1993
CASE:
Lim Miranda Rivera Santos Yogue
Castillo ordered from Eli Lilly empty gelatin capsules. Through a
Memorandum of Shipment, Eli Lilly advised Castillo that the cargoes were
already shipped on board petitioners vessel for shipment to the Philippines.
In said Memo, Eli Lilly specified the date of arrival to be April 3, 1977. For
unknown reasons, the cargoes were mis-shipped. The goods arrived in the
Philippines after 2 months from the date specified in the memo. Castillo
refused to take delivery of the goods on account of its failure to arrive on
time. Trial court held that there was a breach in the performance of their
obligation by Maersk Line consisting of their negligence to ship the cargos
which under their own memorandum shipment would arrive in the Philippines
on April 3, 1977.
W/N Castillo is entitled to damages resulting from delay in the delivery of the
shipment in the absence in the bill of lading of a stipulation on the period of
delivery.
YES. Petitioner is liable for breach of contract of carriage through gross
negligence amounting to bad faith. The oft-repeated rule regarding a carrier's
liability for delay is that in the absence of a special contract, a carrier is not
an insurer against delay in 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. But where a carrier has made an
express contract to transport and deliver properly within a specified time, it is
bound to fulfill its contract and is liable for any delay, no matter from what
cause it may have arisen.
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.
Delay in the delivery of the goods spanning a period of two (2) months and
seven (7) days falls was beyond the realm of reasonableness. Petitioner's
insistence that it cannot be held liable for the delay finds no merit.
FACTS:
Petitioner Maersk Line is engaged in the transportation of goods by
sea. Private respondent Efren Castillo (Castillo) is the proprietor of
Ethegal Laboratories, a firm engaged in the manufacture of
pharmaceutical products.
Castillo ordered from Eli Lilly. Inc. of Puerto Rico (Eli Lilly) 600,000
empty gelatin capsules for the manufacture of his pharmaceutical
Transportation Law Case Digests | Atty. Norianne Tan | 2016
products. The capsules were placed in six (6) drums of 100,000
capsules each.
Through a Memorandum of Shipment, the shipper Eli Lilly advised
Castillo that the cargoes were already shipped on board MV "Anders
Maerskline" for shipment to the Philippines. In said Memorandum, Eli
Lilly specified the date of arrival to be April 3, 1977.
For reasons unknown, the cargo of capsules were mis-shipped and
diverted to Richmond, Virginia, USA and then transported back
Oakland, Califorilia. The goods finally arrived in the Philippines after
2 months from the date specified in the memo. As a consequence,
Castillo refused to take delivery of the goods on account of its failure
to arrive on time.
Castillo filed an action for rescission of contract with damages
against petitioner and Eli Lilly alleging gross negligence and undue
delay in the delivery of the goods.
Petitioner (Maersk) countered that the subject shipment was
transported in accordance with the provisions of the covering bill of
lading and that its liability under the law on transportation of good
attaches only in case of loss, destruction or deterioration of the
goods as provided for in Article 1734 of Civil Code.
Castillo moved for the dismissal of the complaint against Eli Lilly on
the ground that the evidence shows that the delay in the delivery of
the shipment was attributable solely to petitioner.
Trial court held that there was a breach in the performance of their
obligation by the defendant Maersk Line consisting of their
negligence to ship the cargos which under their own memorandum
shipment would arrive in the Philippines on April 3, 1977 and which
under Art. 1170 of the New Civil Code, they should be liable for
damages.
ISSUE:
Whether or not Castillo is entitled to damages resulting from delay in the
delivery of the shipment in the absence in the bill of lading of a stipulation on
the period of delivery.
HELD & RATIO:
YES. Petitioner is liable for breach of contract of carriage through gross
negligence amounting to bad faith
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 (Mendoza v.
Lim Miranda Rivera Santos Yogue
Philippine Air Lines, Inc., 90 Phil. 836 [1952]), delivery of shipment or
cargo should at least be made within a reasonable time.
The oft-repeated rule regarding a carrier's liability for delay is that in
the absence of a special contract, a carrier is not an insurer against
delay in 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. But where a carrier has
made an express contract to transport and deliver properly within a
specified time, it is bound to fulfill its contract and is liable for any
delay, no matter from what cause it may have arisen.
Whether or not there has been such an undertaking on the part of
the carrier is to be determined from the circumstances surrounding
the case and by application of the ordinary rules for the interpretation
of contracts.
o 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.
Delay in the delivery of the goods spanning a period of two (2)
months and seven (7) days falls was beyond the realm of
reasonableness. Petitioner's insistence that it cannot be held liable
for the delay finds no merit.
EVERETT STEAMSHIP CORPORATION v. CA and HERNANDEZ
TRADING CO. INC.
G.R. No. 122494, October 8, 1998
Common Carriers (Carriage of Goods)
CASE:
Private respondent Hernandez Trading imported crates of bus spare
parts from its supplier, Maruman Trading (the shipper in this case). The
crates were shipped on board ADELFAEVERETTE, a vessel owned by
petitioner Everett Steamship Corp. under a bill of lading. Upon the vessels
arrival in Manila, it was discovered that one of the crates was missing, which
prompted private respondent to formally claim the amount of loss from
petitioner. It demanded Y,152,500.00 from petitioner, but the latter offered
only Y100,000.00 as the maximum liability stipulated in Clause 18 of the bill
of lading. The Clause states that the carrier shall not be liable for any loss
Transportation Law Case Digests | Atty. Norianne Tan | 2016
exceeding Y100,000.00 unless the value of the goods higher than this
amount is declared in writing by the shipper before receipt of goods by
carrier.
The issues are: whether or not the limited liability in the bill of lading
is valid; and whether or not private respondent, as consignee, was bound by
the stipulations in the bill of lading when it is not a party thereto.
The Court held in the affirmative in both issues.
First, the Civil Code provides that the amount that can be claimed for
the loss of, or damage to, cargoes is valid if it is reasonable and just, and
fairly and free agreed upon by the parties. To the Courts opinion,
Y100,000.00 is a reasonable and just amount. Moreover, the shipper could
not rejected this limited liability by declaring the amount of the cargoes in
writing. But shipper failed to do so; that is why the liability is limited to this
amount, as provided for in the bill of lading. In fact, it was found out that
shipper Maruman Trading had made no complaints about the limited liability.
Second, the Court held in several cases that a consignee is bound
by the provisions in a contract entered into by a shipper and a carrier. The
right of a consignee to recover the amount for loss of goods shipped under a
contract entered into by shipper and carrier stems from a relation of agency
between consignee and shipper. In this case, when private respondent, as
consignee, formally filed its claim with petitioner and filed a collection suit
before the RTC, it accepted the provisions in the contract as binding to it.
The clause being valid and accepted by private respondent,
petitioner is limited to pay only Y100,000.00.
FACTS:
Consignee Hernandez Trading (private respondent) imported three
crates of bus spare parts from its supplier, shipper Maruman Trading
Company (Maruman Trading), a foreign corporation based in
Japan. The crates were shipped from Japan to Manila on board
ADELFAEVERETTE, a vessel owned by Everett Orient Lines,
principal of Everett Steamship Corp. (petitioner). The crates were
marked as MARCO C/No. 12, MARCO C/No. 13 and MARCO C/No.
14.
Upon the vessels arrival in Manila, it was discovered that the crate
marked MARCO C/No. 14 was missing. Petitioner confirmed the loss
through a letter sent to private respondent.
Private respondent made a formal claim from petitioner for the value
of the lost cargo amounting to Y1,552,500.00. Petitioner offered to
pay only Y100,000.00, the maximum amount stipulated under clause
of the bill of lading which covered their transaction. The clause
specifically provides:
18. All claims for which the carrier may be liable shall be
adjusted and settled on the basis of the shipper's net invoice cost
Lim Miranda Rivera Santos Yogue
plus freight and insurance premiums, if paid, and in no event
shall the carrier be liable for any loss of possible profits or any
consequential loss.
The carrier shall not be liable for any loss of or any damage to or
in any connection with, goods in an amount exceeding One
Hundred thousand Yen in Japanese Currency (Y100,000.00) or
its equivalent in any other currency per package or customary
freight unit (whichever is least) unless the value of the goods
higher than this amount is declared in writing by the shipper
before receipt of the goods by the carrier and inserted in the Bill
of Lading and extra freight is paid as required.
Private respondent rejected the offer and instituted a suit for
collection before the RTC.
The RTC ruled in favor of private respondent on the ground of
petitioners categorical admission of the loss and its failure to
overcome the presumption of negligence. It ordered petitioner to pay
private respondent Y1,552,500.00.
Furthermore, as stipulated in Art. 1750 of the Civil Code, the sum of
money that may recovered by the owner or shipper for the loss or
destruction of goods is valid if it is reasonable, and fairly and freely
agreed upon. The RTC ruled that private respondent was not bound
by Clause 18 of the bill of lading because as it is a fine print not
agreed to by private respondent.
The CA affirmed the decision with the additional observation that
private respondent could not be bound by the terms and conditions
of the bill of lading because it was not privy to the contract of
carriage.
ISSUE:
1. Whether or not the limited liability in the bill of lading is valid, thereby
limiting petitioners liability to only Y100,000.00
2. Whether or not private respondent, as consignee, is bound by the
stipulations of the bill of lading even though it was not a signatory thereto
HELD & RATIO:
1. YES, the clause on limited liability is valid.
The Civil Code provides:
o Art. 1749. A stipulation that the common carrier's 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.
o Art. 1750. A contract fixing the sum that may be recovered
by the owner or shipper for the loss, destruction, or
Transportation Law Case Digests | Atty. Norianne Tan | 2016
deterioration of the goods is valid, if it is reasonable and just
under the circumstances, and has been freely and fairly
agreed upon.
Pursuant to the above provisions, it is required that the stipulation
limiting the common carriers liability for loss must be reasonable
and just under the circumstances, and has been freely and fairly
agreed upon.
In the Courts opinion, the amount in Clause 18 is reasonable and
just, 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. In this case, the shipper did not
declare a higher valuation; it must bear the consequences of its own
failure.
As for the fact that private respondent allegedly could not have fairly
and freely agreed to the limited liability clause because the same
was fine printed, the Court ruled otherwise.
o Contracts of adhesion are not invalid per se. The Court uses
strict vigilance in determining the validity of contracts of
adhesion.
Art. 24 of the Civil Code provides that "(i)n all
contractual, property or other relations, when one of
the parties is at a disadvantage on account of his
moral dependence, ignorance, indigence, mental
weakness, tender age or other handicap, the courts
must be vigilant for his protection."
o In this case, Maruman Trading cannot be said to be ignorant
of the business transactions it entered into involving the
shipment of its goods. Moreover, Maruman Trading had not
even complained that it had been deceived into agreeing to
ship the cargoes in petitioners vessel. In fact, it was not
even impleaded in this case.
2. YES, private respondent is bound by the stipulations in the bill of lading.
The Court has held in other cases that even if the consignee was not
a signatory to the contract of carriage between the shipper and the
carrier, the consignee can still be bound by the contract.
Furthermore, the right of the consignee in a bill of lading to recover
from the carrier for loss of, or damage to, goods shipped under a
contract entered into by the shipper and carrier springs from either a
relation of agency between shipper or consignee, or its status as
stranger in whose favor some stipulation is made in the contract.
o In this case, when private respondent formally claimed
reimbursement for the missing goods from petitioner and
Lim Miranda Rivera Santos Yogue
subsequently filed a case against the latter based on the bill
of lading, private respondent accepted the provisions of the
contract, and made itself party thereto. Hence, private
respondent cannot now reject the limited liability in Clause
18.
o Therefore, petitioners liability is limited to Y100,000.00.
REGIONAL CONTAINER LINES (RCL) OF SINGAPORE and EDSA
SHIPPING AGENCY v. THE NETHERLANDS INSURANCE CO.
(PHILIPPINES), INC.
G.R. No. 168151; September 4, 2009
CASE:
405 cartons of Epoxy Molding Compound were consigned to be
shipped from Singapore to Manila for Temic. U-Freight Singapore contracted
the services of Pacific Eagle to transport the subject cargo. The cargo was
packed, stored and sealed by Pacific Eagle in its refrigerated container. As
the cargo was highly perishable, the inside of the container had to be
kept at a temperature of 0 Celsius. Pacific Eagle then loaded said
refrigerated container on board M/V Piya Bhum, a vessel owned by Regional
Container Lines (RCL). To insure the cargo against loss and damage,
Netherlands Insurance issued a Marine Open Policy in favor of Temic to
cover all losses/damages to the shipment. The M/V Piya Bhum docked in
Manila. After unloading the refrigerated container, it was plugged to the
power terminal of the pier to keep its temperature constant. However, at
midnight of October 25, 1995 when the cargo had already been unloaded
from the ship the temperature fluctuated with a reading of 33 Celsius. When
Temic received the shipment, it found the cargo completely damaged. Temic
filed a claim for cargo loss against Netherlands Insurance, with supporting
claims documents. The Netherlands Insurance paid Temic under the terms of
their marine insurance policy. Temic then executed a loss and subrogation
receipt in favor of Netherlands Insurance. Netherlands Insurance Temic then
executed a loss and subrogation receipt in favor of Netherlands Insurance.
RCL and EDSA Shipping sought leave of court to file their respective
motions to dismiss based on demurrer to evidence.
The issue is WON RCL and Edsa Shipping Agency should be held
liable as common carrier under the theory of presumption of negligenc. SC
held them liable as such. 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.
Transportation Law Case Digests | Atty. Norianne Tan | 2016
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. It is settled in maritime
law jurisprudence that cargoes while being unloaded generally remain
under the custody of the carrier; RCL and EDSA Shipping failed to dispute
this.
RCL and EDSA Shipping 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. As the order granting their
demurrer was reversed on appeal, the CA correctly ruled that they are
deemed to have waived their right to present evidence, and the
presumption of negligence must stand.
FACTS:
405 cartons of Epoxy Molding Compound were consigned to be
shipped from Singapore to Manila for Temic Telefunken
Microelectronics Philippines (Temic).
U-Freight Singapore, a forwarding agent based in Singapore,
contracted the services of Pacific Eagle Lines PTE. Ltd. (Pacific
Eagle) to transport the subject cargo.
o The cargo was packed, stored, and sealed by Pacific Eagle in its
Refrigerated Container. As the cargo was highly perishable,
the inside of the container had to be kept at a temperature of
0 Celsius.
o Pacific Eagle then loaded the refrigerated container on board the
M/V Piya Bhum, a vessel owned by Regional Container Lines
(RCL), with which Pacific Eagle had a slot charter agreement.
RCL duly issued its own Bill of Lading in favor of Pacific
Eagle.
To insure the cargo against loss and damage, Netherlands
Insurance issued a Marine Open Policy in favor of Temic to
cover all losses/damages to the shipment.
The M/V Piya Bhum docked in Manila. After unloading the
refrigerated container, it was plugged to the power terminal of the
pier to keep its temperature constant. However, at midnight of
October 25, 1995 when the cargo had already been unloaded from
the ship the temperature fluctuated with a reading of 33 Celsius.
When Temic received the shipment, it found the cargo completely
damaged.
Lim Miranda Rivera Santos Yogue
Temic filed a claim for cargo loss against Netherlands Insurance,
with supporting claims documents. The Netherlands Insurance paid
Temic the sum of P1,036,497.00 under the terms of the Marine Open
Policy.
o Temic then executed a loss and subrogation receipt in favor of
Netherlands Insurance.
Netherlands Inc filed a complaint for subrogation of insurance
settlement against the unknown owner of M/V Piya Bhum and TMS
Ship Agencies (local agent of M/V Piya Bhum), EDSA Shipping,
RCL, Eagle Liner Pacific Agencies, U-Freight Singapore, U-Ocean
and Pacific Eagle.
Defendants all disclaimed liability for the damage caused to the
cargo.
After Netherlands Insurance had made its formal offer of evidence,
the defendants including RCL and EDSA Shipping sought leave of
court to file their respective motions to dismiss based on
demurrer to evidence.
o RCL and EDSA Shipping, in their motion, insisted that
Netherlands Insurance had (1) failed to prove any valid
subrogation, and (2) failed to establish that any negligence on
their part or that the loss was sustained while the cargo was in
their custody.
RTC ruled in favor of RCL and EDSA Shipping Agency but CA
reversed said ruling and order them to reimburse Netherlands
Insurance Inc.
ISSUE+HELD:
1. WON RCL and Edsa Shipping Agency should be held liable as
common carrier under the theory of presumption of negligence
YES!
RATIO:
1. RCL and Edsa Shipping Agency are liable as common carrier under
the theory of presumption of negligence.
PETITIONERS CONTENTION RCL and EDSA Shipping disclaim
any responsibility for the loss or damage to the goods in question.
They contend that the cause of the damage to the cargo was the
fluctuation of the temperature in the reefer van, which fluctuation
occurred after the cargo had already been discharged from the
vessel. As the cause of the damage to the cargo occurred after the
same was already discharged from the vessel and was under the
custody of the arrastre operator (International Container Terminal
Services, Inc. or ICTSI), RCL and EDSA Shipping posit that the
presumption of negligence provided in Article 1735 of the Civil Code
Transportation Law Case Digests | Atty. Norianne Tan | 2016
should not apply. What applies in this case is Article 1734,
particularly paragraphs 3 and 4 thereof, which exempts the carrier
from liability for loss or damage to the cargo when it is caused either
by an act or omission of the shipper or by the character of the goods
or defects in the packing or in the containers.
SC RULING RCL and EDSAs claims are unmeritorious!
o 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.
o 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.
o 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.
o It is settled in maritime law jurisprudence that cargoes while
being unloaded generally remain under the custody of the
carrier; RCL and EDSA Shipping failed to dispute this.
o 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. As the order granting
their demurrer was reversed on appeal, the CA correctly
ruled that they are deemed to have waived their right to
present evidence, and the presumption of negligence must
stand.
Lim Miranda Rivera Santos Yogue
MINDANAO TERMINAL AND BROKERAGE SERVICE, INC.v. PHOENIX
ASSURANCE COMPANY OF NEW YORK/MCGEE & CO., INC.
G.R. No. 162467, May 8, 2009
CASE:
Del Monte contracted petitioner Mindanao Terminal, a stevedoring
company, to load and stow a shipment of fresh green Philippine bananas and
fresh pineapples belonging to Del Monte Produce. The shipment was insured
with Phoenix. The cargo arrived at a bad condition. As a result, Phoenix and
McGee paid Del Monte Produce and was subrogated. Phoenix and McGee
instituted an action for damages against Mindanao Terminal in the RTC of
Davao City.
WoN Mindanao Terminal was required to observe extraordinary
diligence of a common carrier.
NO. There is a distinction between an arrastre and a stevedore. 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. An arrastre operator should observe the same degree of
diligence as that required of a common carrier and a warehouseman while a
stevedoring is not. 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. Hence, since there is no law or contract which
states the degree of diligence which is to be observed in the performance of
an obligation, then that which is expected of a good father of a family or
ordinary diligence shall be required.
Phoenix and McGee failed to prove by preponderance of
evidence that Mindanao Terminal had acted negligently.
FACTS:
Del Monte contracted petitioner Mindanao Terminal and Brokerage
Service, Inc. (Mindanao Terminal), a stevedoring company, to load
and stow a shipment of 146,288 cartons of fresh green Philippine
bananas and 15,202 cartons of fresh pineapples belonging to Del
Monte Fresh Produce International, Inc. (Del Monte Produce) into
the cargo hold of the vessel M/V Mistrau. The vessel was docked at
the port of Davao City and the goods were to be transported by it to
the port of Inchon, Korea in favor of consignee Taegu Industries, Inc.
Transportation Law Case Digests | Atty. Norianne Tan | 2016
Del Monte Produce insured the shipment under an "open cargo
policy" with private respondent Phoenix Assurance Company of New
York (Phoenix), a non-life insurance company, and private
respondent McGee & Co. Inc. (McGee).
Upon arrival at the port of Inchon, Korea. It was then discovered
upon discharge that some of the cargo was in bad condition. In a
survey report, it was stated that 16,069 cartons of the banana
shipment and 2,185 cartons of the pineapple shipment were so
damaged that they no longer had commercial value.
Del Monte Produce filed a claim under the open cargo policy for the
damages to its shipment. Phoenix and McGee paid Del Monte
Produce and was subrogated.
Phoenix and McGee instituted an action for damages against
Mindanao Terminal in the RTC of Davao City.
ISSUE:
1. WoN Mindanao Terminal was required to observe extraordinary
diligence of a common carrier.
2. WoN Mindanao Terminal was careless and negligent in the loading
and stowage of the cargoes onboard M/V Mistrau making it liable for
damages.
HELD & RATIO:
1. Mindanao is NOT a common carrier hence NOT required to observe
extraordinary diligence.
Article 1173 of the Civil Code is very clear that if the law or contract does not
state the degree of diligence which is to be observed in the performance of
an obligation then that which is expected of a good father of a family or
ordinary diligence shall be required.
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. It was neither alleged nor proven by Phoenix and McGee
that Mindanao Terminal was bound by contractual stipulation to
observe a higher degree of diligence than that required of a good
father of a family. Thus, following Article 1173, Mindanao
Terminal was required to observe ordinary diligence only in
Lim Miranda Rivera Santos Yogue
loading and stowing the cargoes of Del Monte Produce
aboard M/V Mistrau.
There is a distinction between an arrastre and a 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. An arrastre operator should
observe the same degree of diligence as that required of a
common carrier and a warehouseman while a stevedoring is
not.
It is not disputed that Mindanao Terminal was performing purely
stevedoring function while the private respondent in the Summa case
was performing arrastre function. In the present case, Mindanao
Terminal, as a stevedore, was only charged with the loading and
stowing of the cargoes from the pier to the ships cargo hold; it was
never the custodian of the shipment of Del Monte Produce. 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.
2. NO.
Phoenix and McGee failed to prove by preponderance of evidence that
Mindanao Terminal had acted negligently. The only participation of Mindanao
Terminal was to load the cargoes on board M/V Mistrau. It was not disputed
by Phoenix and McGee that the materials, such as ropes, pallets, and
cardboards, used in lashing and rigging the cargoes were all provided by M/V
Mistrau and these materials meets industry standard.
It was further established that Mindanao Terminal loaded and stowed the
cargoes of Del Monte Produce aboard the M/V Mistrau in accordance with
the stowage plan, a guide for the area assignments of the goods in the
Transportation Law Case Digests | Atty. Norianne Tan | 2016
vessels hold, prepared by Del Monte Produce and the officers of M/V
Mistrau. The loading and stowing was done under the direction and
supervision of the ship officers. The vessels officer would order the closing
of the hatches only if the loading was done correctly after a final
inspection. The said ship officers would not have accepted the cargoes on
board the vessel if they were not properly arranged and tightly secured to
withstand the voyage in open seas. They would order the stevedore to rectify
any error in its loading and stowing. A foremans report, as proof of work
done on board the vessel, was prepared by the checkers of Mindanao
Terminal and concurred in by the Chief Officer of M/V Mistrau after they were
satisfied that the cargoes were properly loaded.

Lim Miranda Rivera Santos Yogue