TRANSPORTATION LAW CASES UNDER ATTY.
BANGGOY 1
G.R. No. 80447 January 31, 1989
BALIWAG TRANSIT, INC., petitioner,
vs.
HON. COURT OF APPEALS and SPS. SOTERO
CAILIPAN, JR. and ZENAIDA LOPEZ and
GEORGE L. CAILIPAN, respondents.
MELENCIO-HERRERA, J.:
On 10 April 1985 a Complaint for damages arising
from breach of contract of carriage was filed by private
respondents, the Spouses Sotero Cailipan, Jr. and
Zenaida Lopez, and their son George, of legal age,
against petitioner Baliwag Transit (Baliwag, for
brevity). The Complaint alleged that George, who was
a paying passenger on a Baliwag bus on 17 December
1984, suffered multiple serious physical injuries when
he was thrown off said bus driven in a careless and
negligent manner by Leonardo Cruz, the authorized
bus driver, along Barangay Patubig, Marilao, Bulacan.
As a result, he was confined in the hospital for
treatment, incurring medical expenses, which were
borne by his parents, the respondent Spouses, in the
sum of about P200,000.00 plus other incidental
expenses of about P10,000.00.
On 26 April 1985 an Answer was filed by petitioner
alleging that the cause of the injuries sustained by
George was solely attributable to his own voluntary
act in that, without warning and provocation, he
suddenly stood up from his seat and headed for the
door of the bus as if in a daze, opened it and jumped
off while said bus was in motion, in spite of the
protestations by the driver and without the knowledge
of the conductor.
Baliwag then filed a Third-Party Complaint against
Fortune Insurance & Surety Company, Inc., on its
third-party liability insurance in the amount of
P50,000.00. In its Answer, Fortune Insurance claimed
limited liability, the coverage being subject to a
Schedule of Indemnities forming part of the insurance
policy.
On 14 November 1985 and 18 November 1985,
respectively, Fortune Insurance and Baliwag each
filed Motions to Dismiss on the ground that George, in
consideration of the sum of P8,020.50 had executed a
"Release of Claims" dated 16 May 1985. These
Motions were denied by the Trial Court in an Order
dated 13 January 1986 as they were filed beyond the
time for pleading and after the Answer were already
filed.
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
On 5 February 1986 Baliwag filed a Motion to Admit
Amended Answer, which was granted by the Trial
Court. The Amended Answer incorporated the
affirmative defense in the Motion to Dismiss to the
effect that on 16 May 1985, George bad been paid all
his claims for damages arising from the incident
subject matter of the complaint when he executed the
following "Release of Claims":
For and in consideration of the payment to me/us of
the sum of EIGHT THOUSAND TWENTY and
50/100 PESOS ONLY (P8,020.50), the receipt of
which is hereby acknowledged, I/we, being of lawful
age, do hereby release, acquit and forever discharge
Fortune Insurance and/or Baliwag transit, Inc.
his/her heirs, executors and assigns, from any and all
liability now accrued or hereafter to accrue on
account of any and all claims or causes of action
which I/we now or may here after have for personal
injuries, damage to property, loss of services,
medical expenses, losses or damages of any and
every kind or nature whatsoever, now known or what
may hereafter develop by me/us sustained or
received on or about 17th day of December, 1984
through Reckless Imprudence Resulting to Physical
Injuries, and I/we hereby declare that I/we fully
understand the terms of this settlement and
voluntarily accept said sum for the purpose of
making a full and final compromise adjustment and
settlement of the injuries and damages, expenses and
inconvenience above mentioned. (Rollo, p. 11)
During the preliminary hearing on the aforementioned
affirmative defense, Baliwag waived the presentation
of testimonial evidence and instead offered as its
Exhibit "1" the "Release of Claims" signed by George
and witnessed by his brother Benjamin L. Cailipan, a
licensed engineer.
By way of opposition to petitioner's affirmative
defense, respondent Sotero Cailipan, Jr. testified that
be is the father of George, who at the time of the
incident was a student, living with his parents and
totally dependent on them for their support; that the
expenses for his hospitalization were shouldered by
his parents; and that they had not signed the "Release
of Claims."
In an Order dated 29 August 1986, the Regional Trial
Court of Bulacan, Branch 20, 1 dismissed the
Complaint and Third-party Complaint, ruling that
since the contract of carriage is between Baliwag and
George L. Cailipan, the latter, who is of legal age, had
the exclusive right to execute the Release of Claims
despite the fact that he is still a student and dependent
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
on his parents for support. Consequently, the
execution by George of the Release of Claims
discharges Baliwag and Fortune Insurance.
Aggrieved, the Spouses appealed to respondent Court
of Appeals.
On 22 October 1987, the Appellate Court rendered a
Decision 2 setting aside the appealed Order and
holding that the "Release of Claims" cannot operate as
a valid ground for the dismissal of the case because it
does not have the conformity of all the parties,
particularly George's parents, who have a substantial
interest in the case as they stand to be prejudiced by
the judgment because they spent a sizeable amount for
the medical bills of their son; that the Release of
Claims was secured by Fortune Insurance for the
consideration of P8,020.50 as the full and final
settlement of its liability under the insurance policy
and not for the purpose of releasing Baliwag from its
liability as a carrier in this suit for breach of contract.
The Appellate Court also ordered the remand of the
case to the lower Court for trial on the merits and for
George to return the amount of P8,020.50 to Fortune
Insurance.
Hence, this Petition for Review on certiorari by
Baliwag assailing the Appellate Court judgment.
The issue brought to the fore is the legal effect of the
Release of Claims executed by George during the
pendency of this case.
We hold that since the suit is one for breach of contract
of carriage, the Release of Claims executed by him, as
the injured party, discharging Fortune Insurance and
Baliwag from any and all liability is valid. He was then
of legal age, a graduating student of Agricultural
Engineering, and had the capacity to do acts with legal
effect (Article 37 in relation to Article 402, Civil
Code). Thus, he could sue and be sued even without
the assistance of his parents.
Significantly, the contract of carriage was actually
between George, as the paying passenger, and
Baliwag, as the common carrier. As such carrier,
Baliwag was bound to carry its passengers safely as far
as human care and foresight could provide, and is
liable for injuries to them through the negligence or
wilful acts of its employees (Articles 1755 and 1759,
Civil Code). Thus, George had the right to be safely
brought to his destination and Baliwag had the
correlative obligation to do so. Since a contract may
be violated only by the parties thereto, as against each
other, in an action upon that contract, the real parties
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
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in interest, either as plaintiff or as defendant, must be
parties to said contract (Marimperio Compania
Naviera, S.A. vs. Court of Appeals, No. L-40234,
December 14, 1987, 156 SCRA 368). A real party-in-
interest -plaintiff is one who has a legal right while a
real party-in-interest-defendant is one who has a
correlative legal obligation whose act or omission
violates the legal right of the former (Lee vs. Romillo,
Jr., G.R. No. 60973, May 28, 1988). In the absence of
any contract of carriage between Baliwag and
George's parents, the latter are not real parties-in-
interest in an action for breach of that contract.
The general rule of the common law is that every
action must be brought in the name of the party whose
legal right has been invaded or infringed. 15 Enc. P1.
& Pr. p. 484. "For the immediate wrong and damage
the person injured is the only one who can maintain
the action." Id. p. 578. The person who sustains an
injury is the person to bring an action for the injury
against the wrongdoer." Dicey parties to Actions, 347.
(Cited in Green v. Shoemaker, 73 A 688, 23 L.R.A.,
N.S. 667).
There is no question regarding the genuineness and
due execution of the Release of Claims. It is a duly
notarized public document. It clearly stipulates that the
consideration of P8,020.50 received by George was
"to release and forever discharge Fortune Insurance
and/or Baliwag from any and all liabilities now
accrued or to accrue on account of any and all claims
or causes of action ... for personal injuries, damage to
property, loss of services, medical expenses, losses or
damages of any and every kind or nature whatsoever,
sustained by him on 17 December 1984 thru Reckless
Imprudence Resulting to Physical Injuries."
Consequently, the ruling of respondent Appellate
Court that the "Release of Claims" was intended only
as the full and final settlement of a third-party liability
for bodily injury claim and not for the purpose of
releasing Baliwag from its liability, if any, in a breach
of a contract of carriage, has to be rejected for being
contrary to the very terms thereof. If the terms of a
contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning
of its stipulations shall control (Article 1370, Civil
Code). The phraseology "any and all claims or causes
of action" is broad enough to include all damages that
may accrue to the injured party arising from the
unfortunate accident.
The Release of Claims had the effect of a compromise
agreement since it was entered into for the purpose of
making a full and final compromise adjustment and
settlement of the cause of action involved. A
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compromise is a contract whereby the parties, by
making reciprocal concessions, avoid a litigation or
put an end to one already commenced (Article 2028,
Civil Code). The Release of Claims executed by the
injured party himself wrote finish to this litigation.
WHEREFORE, the Decision dated 22 October 1987
of respondent Court of Appeals is SET ASIDE, the
Decision of the Regional Trial Court of Bulacan,
Branch 20, is REINSTATED, and the Complaint and
Third-Party Complaint are hereby ordered
DISMISSED. No costs.
SO ORDERED.
Paras, Padilla, Sarmiento and Regalado, JJ., concur.
[G.R. No. 122494. October 8, 1998]
EVERETT STEAMSHIP
CORPORATION, petitioner, vs. COURT OF
APPEALS and HERNANDEZ TRADING CO.
INC., respondents.
DECISION
MARTINEZ, J.:
Petitioner Everett Steamship Corporation,
through this petition for review, seeks the reversal of
the decision[1] of the Court of Appeals, dated June 14,
1995, in CA-G.R. No. 428093, which affirmed the
decision of the Regional Trial Court of Kalookan City,
Branch 126, in Civil Case No. C-15532, finding
petitioner liable to private respondent Hernandez
Trading Co., Inc. for the value of the lost cargo.
Private respondent imported three crates of bus
spare parts marked as MARCO C/No. 12, MARCO
C/No. 13 and MARCO C/No. 14, from its supplier,
Maruman Trading Company, Ltd. (Maruman
Trading), a foreign corporation based in Inazawa,
Aichi, Japan. The crates were shipped from Nagoya,
Japan to Manila on board ADELFAEVERETTE, a
vessel owned by petitioners principal, Everett Orient
Lines. The said crates were covered by Bill of Lading
No. NGO53MN.
Upon arrival at the port of Manila, it was
discovered that the crate marked MARCO C/No. 14
was missing. This was confirmed and admitted by
petitioner in its letter of January 13, 1992 addressed to
private respondent, which thereafter made a formal
claim upon petitioner for the value of the lost cargo
amounting to One Million Five Hundred Fifty Two
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
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Thousand Five Hundred (Y1,552,500.00) Yen, the
amount shown in an Invoice No. MTM-941, dated
November 14, 1991. However, petitioner offered to
pay only One Hundred Thousand (Y100,000.00) Yen,
the maximum amount stipulated under Clause 18 of
the covering bill of lading which limits the liability of
petitioner.
Private respondent rejected the offer and
thereafter instituted a suit for collection docketed as
Civil Case No. C-15532, against petitioner before the
Regional Trial Court of Caloocan City, Branch 126.
At the pre-trial conference, both parties
manifested that they have no testimonial evidence to
offer and agreed instead to file their respective
memoranda.
On July 16, 1993, the trial court rendered
judgment[2] in favor of private respondent, ordering
petitioner to pay: (a) Y1,552,500.00; (b) Y20,000.00
or its peso equivalent representing the actual value of
the lost cargo and the material and packaging cost; (c)
10% of the total amount as an award for and as
contingent attorneys fees; and (d) to pay the cost of the
suit. The trial court ruled:
Considering defendants categorical
admission of loss and its failure to
overcome the presumption of negligence
and fault, the Court conclusively finds
defendant liable to the plaintiff. The next
point of inquiry the Court wants to resolve
is the extent of the liability of the
defendant. As stated earlier, plaintiff
contends that defendant should be held
liable for the whole value for the loss of the
goods in the amount of Y1,552,500.00
because the terms appearing at the back of
the bill of lading was so written in fine prints
and that the same was not signed by plaintiff
or shipper thus, they are not bound by the
clause stated in paragraph 18 of the bill of
lading. On the other hand, defendant merely
admitted that it lost the shipment but shall
be liable only up to the amount of
Y100,000.00.
The Court subscribes to the provisions of
Article 1750 of the New Civil Code -
Art. 1750. A contract fixing the
sum that may be recovered by the
owner or shipper for the loss,
destruction or deterioration of the
goods is valid, if it is reasonable
and just under the circumstances,
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and has been fairly and freely
agreed upon.
It is required, however, that the contract
must be reasonable and just under the
circumstances and has been fairly and freely
agreed upon. The requirements provided in
Art. 1750 of the New Civil Code must be
complied with before a common carrier can
claim a limitation of its pecuniary liability
in case of loss, destruction or deterioration
of the goods it has undertaken to transport.
In the case at bar, the Court is of the view
that the requirements of said article have not
been met. The fact that those conditions are
printed at the back of the bill of lading in
letters so small that they are hard to read
would not warrant the presumption that the
plaintiff or its supplier was aware of these
conditions such that he had fairly and freely
agreed to these conditions. It can not be said
that the plaintiff had actually entered into a
contract with the defendant, embodying the
conditions as printed at the back of the bill
of lading that was issued by the defendant to
plaintiff.
On appeal, the Court of Appeals deleted the
award of attorneys fees but affirmed the trial courts
findings with the additional observation that private
respondent can not be bound by the terms and
conditions of the bill of lading because it was not privy
to the contract of carriage. It said:
As to the amount of liability, no evidence
appears on record to show that the appellee
(Hernandez Trading Co.) consented to the
terms of the Bill of Lading. The shipper
named in the Bill of Lading is Maruman
Trading Co., Ltd. whom the appellant
(Everett Steamship Corp.) contracted with
for the transportation of the lost goods.
Even assuming arguendo that the shipper
Maruman Trading Co., Ltd. accepted the
terms of the bill of lading when it delivered
the cargo to the appellant, still it does not
necessarily follow that appellee Hernandez
Trading Company as consignee is bound
thereby considering that the latter was never
privy to the shipping contract.
xxxxxxxxx
Never having entered into a contract with
the appellant, appellee should therefore not
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be bound by any of the terms and conditions
in the bill of lading.
Hence, it follows that the appellee may
recover the full value of the shipment lost,
the basis of which is not the breach of
contract as appellee was never a privy to the
any contract with the appellant, but is based
on Article 1735 of the New Civil Code,
there being no evidence to prove
satisfactorily that the appellant has
overcome the presumption of negligence
provided for in the law.
Petitioner now comes to us arguing that the Court
of Appeals erred (1) in ruling that the consent of the
consignee to the terms and conditions of the bill of
lading is necessary to make such stipulations binding
upon it; (2) in holding that the carriers limited package
liability as stipulated in the bill of lading does not
apply in the instant case; and (3) in allowing private
respondent to fully recover the full alleged value of its
lost cargo.
We shall first resolve the validity of the limited
liability clause in the bill of lading.
A stipulation in the bill of lading limiting the
common carriers liability for loss or destruction of a
cargo to a certain sum, unless the shipper or owner
declares a greater value, is sanctioned by law,
particularly Articles 1749 and 1750 of the Civil Code
which provide:
ART. 1749. A stipulation that the common
carriers liability is limited to the value of the
goods appearing in the bill of lading, unless
the shipper or owner declares a greater
value, is binding.
ART. 1750. A contract fixing the sum that
may be recovered by the owner or shipper
for the loss, destruction, or deterioration of
the goods is valid, if it is reasonable and just
under the circumstances, and has been
freely and fairly agreed upon.
Such limited-liability clause has also been
consistently upheld by this Court in a number of
cases.[3] Thus, in Sea Land Service, Inc. vs
Intermediate Appellate Court[4], we ruled:
It seems clear that even if said section 4 (5) of the
Carriage of Goods by Sea Act did not exist, the
validity and binding effect of the liability limitation
clause in the bill of lading here are nevertheless fully
sustainable on the basis alone of the cited Civil Code
Provisions. That said stipulation is just and reasonable
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is arguable from the fact that it echoes Art. 1750 itself
in providing a limit to liability only if a greater value
is not declared for the shipment in the bill of lading. To
hold otherwise would amount to questioning the
justness and fairness of the law itself, and this the
private respondent does not pretend to do. But over
and above that consideration, the just and reasonable
character of such stipulation is implicit in it giving the
shipper or owner the option of avoiding accrual of
liability limitation by the simple and surely far from
onerous expedient of declaring the nature and value of
the shipment in the bill of lading..
Pursuant to the afore-quoted provisions of law, 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.
The bill of lading subject of the present
controversy specifically provides, among others:
18. All claims for which the carrier may be
liable shall be adjusted and settled on the
basis of the shippers net invoice cost 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. (Emphasis
supplied)
The above stipulations are, to our mind,
reasonable and just. In the bill of lading, the carrier
made it clear that its liability would only be up to One
Hundred Thousand (Y100,000.00) Yen. However, the
shipper, Maruman Trading, had the option to declare
a higher valuation if the value of its cargo was
higher than the limited liability of the
carrier. Considering that the shipper did not
declare a higher valuation, it had itself to blame for
not complying with the stipulations.
The trial courts ratiocination that private
respondent could not have fairly and freely agreed to
the limited liability clause in the bill of lading because
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
5
the said conditions were printed in small letters does
not make the bill of lading invalid.
We ruled in PAL, Inc. vs. Court of
Appeals[5] that the jurisprudence on the matter reveals
the consistent holding of the court that contracts of
adhesion are not invalid per se and that it has on
numerous occasions upheld the binding effect
thereof. Also, in Philippine American General
Insurance Co., Inc. vs. Sweet Lines , Inc.[6] this Court
, speaking through the learned Justice Florenz D.
Regalado, held:
x x x Ong Yiu vs. Court of Appeals, et.al.,
instructs us that contracts of
adhesion wherein one party imposes a
ready-made form of contract on the other x
xx are contracts not entirely
prohibited. The one who adheres to the
contract is in reality free to reject it entirely;
if he adheres he gives his consent. In the
present case, not even an allegation of
ignorance of a party excuses non-
compliance with the contractual stipulations
since the responsibility for ensuring full
comprehension of the provisions of a
contract of carriage devolves not on the
carrier but on the owner, shipper, or
consignee as the case may be. (Emphasis
supplied)
It was further explained in Ong Yiu vs Court of
Appeals[7] that stipulations in contracts of adhesion are
valid and binding.
While it may be true that petitioner had not
signed the plane ticket x x, he is
nevertheless bound by the provisions
thereof. Such provisions have been held to
be a part of the contract of carriage, and
valid and binding upon the passenger
regardless of the latters lack of knowledge
or assent to the regulation. It is what is
known as a contract of adhesion, in regards
which it has been said that contracts of
adhesion wherein one party imposes a
ready-made form of contract on the other, as
the plane ticket in the case at bar, are
contracts not entirely prohibited. The one
who adheres to the contract is in reality free
to reject it entirely; if he adheres, he gives
his consent. x x x , a contract limiting
liability upon an agreed valuation does not
offend against the policy of the law
forbidding one from contracting against his
own negligence. (Emphasis supplied)
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Greater vigilance, however, is required of the
courts when dealing with contracts of adhesion in that
the said contracts must be carefully scrutinized in
order to shield the unwary (or weaker party) from
deceptive schemes contained in ready-made
covenants,[8] such as the bill of lading in question. The
stringent requirement which the courts are enjoined to
observe is in recognition of Article 24 of the Civil
Code which mandates 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.
The shipper, Maruman Trading, we assume, has
been extensively engaged in the trading business. It
can not be said to be ignorant of the business
transactions it entered into involving the shipment of
its goods to its customers. The shipper could not have
known, or should know the stipulations in the bill of
lading and there it should have declared a higher
valuation of the goods shipped. Moreover, Maruman
Trading has not been heard to complain that it has been
deceived or rushed into agreeing to ship the cargo in
petitioners vessel. In fact, it was not even impleaded in
this case.
The next issue to be resolved is whether or not
private respondent, as consignee, who is not a
signatory to the bill of lading is bound by the
stipulations thereof.
Again, in Sea-Land Service, Inc. vs.
Intermediate Appellate Court (supra), we held 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. Speaking through Mr. Chief Justice Narvasa,
we ruled:
To begin with, there is no question of the right,
in principle, of a consignee in a bill of lading to
recover from the carrier or shipper for loss of,
or damage to goods being transported under
said bill, although that document may have
been- as in practice it oftentimes is-drawn up
only by the consignor and the carrier without
the intervention of the consignee. x x x.
x x x the right of a party in the same situation
as respondent here, to recover for loss of a
shipment consigned to him under a bill of
lading drawn up only by and between the
shipper and the carrier, springs from either
a relation of agency that may exist between
him and the shipper or consignor, or his
status as stranger in whose favor some
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
6
stipulation is made in said contract, and who
becomes a party thereto when he demands
fulfillment of that stipulation, in this case the
delivery of the goods or cargo shipped. In
neither capacity can he assert personally, in
bar to any provision of the bill of lading, the
alleged circumstance that fair and free
agreement to such provision was vitiated by
its being in such fine print as to be hardly
readable. Parenthetically, it may be observed
that in one comparatively recent case (Phoenix
Assurance Company vs. Macondray & Co.,
Inc., 64 SCRA 15) where this Court found that a
similar package limitation clause was printed
in the smallest type on the back of the bill of
lading, it nonetheless ruled that the consignee
was bound thereby on the strength of
authority holding that such provisions on
liability limitation are as much a part of a bill
of lading as though physically in it and as
though placed therein by agreement of the
parties.
There can, therefore, be no doubt or
equivocation about the validity and
enforceability of freely-agreed-upon
stipulations in a contract of carriage or bill of
lading limiting the liability of the carrier to an
agreed valuation unless the shipper declares a
higher value and inserts it into said contract
or bill. This proposition, moreover, rests upon
an almost uniform weight of authority.
(Underscoring supplied)
When private respondent formally claimed
reimbursement for the missing goods from petitioner
and subsequently filed a case against the latter based
on the very same bill of lading, it (private respondent)
accepted the provisions of the contract and thereby
made itself a party thereto, or at least has come to court
to enforce it.[9] Thus, private respondent cannot now
reject or disregard the carriers limited liability
stipulation in the bill of lading. In other words, private
respondent is bound by the whole stipulations in the
bill of lading and must respect the same.
Private respondent, however, insists that the
carrier should be liable for the full value of the lost
cargo in the amount of Y1,552,500.00, considering
that the shipper, Maruman Trading, had "fully
declared the shipment x x x, the contents of each crate,
the dimensions, weight and value of the
contents,"[10] as shown in the commercial Invoice No.
MTM-941.
This claim was denied by petitioner, contending
that it did not know of the contents, quantity and value
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of "the shipment which consisted of three pre-packed
crates described in Bill of Lading No. NGO-53MN
merely as 3 CASES SPARE PARTS.[11]
The bill of lading in question confirms
petitioners contention. To defeat the carriers limited
liability, the aforecited Clause 18 of the bill of lading
requires that the shipper should have declared in
writing a higher valuation of its goods before receipt
thereof by the carrier and insert the said declaration
in the bill of lading, with the extra freight paid. These
requirements in the bill of lading were never complied
with by the shipper, hence, the liability of the carrier
under the limited liability clause stands. The
commercial Invoice No. MTM-941 does not in itself
sufficiently and convincingly show that petitioner has
knowledge of the value of the cargo as contended by
private respondent. No other evidence was proffered
by private respondent to support is contention. Thus,
we are convinced that petitioner should be liable for
the full value of the lost cargo.
In fine, the liability of petitioner for the loss of
the cargo is limited to One Hundred Thousand
(Y100,000.00) Yen, pursuant to Clause 18 of the bill
of lading.
WHEREFORE, the decision of the Court of
Appeals dated June 14, 1995 in C.A.-G.R. CV No.
42803 is hereby REVERSED and SET ASIDE.
SO ORDERED.
MOF Co. Inc. vs Shin Yang Brokerage Corp.GR No.
172822 Dec 18 2009 (citing 3 cases)
DEL CASTILLO, J.:
The necessity of proving lies with the person who
sues.
The refusal of the consignee named in the bill of
lading to pay the freightage on the claim that it is not privy
to the contract of affreightment propelled the shipper to sue
for collection of money, stressing that its sole evidence, the
bill of lading, suffices to prove that the consignee is bound
to pay. Petitioner now comes to us by way of Petition for
Review on Certiorari[1] under Rule 45 praying for the
reversal of the Court of Appeals' (CA) judgment that
dismissed its action for sum of money for insufficiency of
evidence.
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
7
Factual Antecedents
On October 25, 2001, Halla Trading Co., a
company based in Korea, shipped to Manila secondhand
cars and other articles on board the vessel
Hanjin Busan 0238W. The bill of lading covering the
shipment, i.e., Bill of Lading No.
HJSCPUSI14168303,[2] which was prepared by the carrier
Hanjin Shipping Co., Ltd. (Hanjin), named respondent Shin
Yang Brokerage Corp. (Shin Yang) as the consignee and
indicated that payment was on a Freight Collect basis, i.e.,
that the consignee/receiver of the goods would be the one to
pay for the freight and other charges in the total amount
of P57,646.00.[3]
The shipment arrived in Manila on October 29,
2001. Thereafter, petitioner MOF Company, Inc. (MOF),
Hanjins exclusive general agent in the Philippines,
repeatedly demanded the payment of ocean freight,
documentation fee and terminal handling charges from Shin
Yang. The latter, however, failed and refused to pay
contending that it did not cause the importation of the goods,
that it is only the Consolidator of the said shipment, that the
ultimate consignee did not endorse in its favor the original
bill of lading and that the bill of lading was prepared without
its consent.
Thus, on March 19, 2003, MOF filed a case for sum of
money before
the Metropolitan Trial Court of Pasay City (MeTC Pasay)
which was docketed as Civil Case No. 206-03 and raffled to
Branch 48. MOF alleged that Shin Yang, a regular client,
caused the importation and shipment of the goods and
assured it that ocean freight and other charges would be paid
upon arrival of the goods in Manila. Yet, after Hanjin's
compliance, Shin Yang unjustly breached its obligation to
7
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
pay. MOF argued that Shin Yang, as the named consignee
in the bill of lading, entered itself as a party to the contract
and bound itself to the Freight Collect arrangement. MOF
thus prayed for the payment of P57,646.00 representing
ocean freight, documentation fee and terminal handling
charges as well as damages and attorneys fees.
Claiming that it is merely a consolidator/forwarder and that
Bill of Lading No. HJSCPUSI14168303 was not endorsed
to it by the ultimate consignee, Shin Yang denied any
involvement in shipping the goods or in promising to
shoulder the freightage. It asserted that it never authorized
Halla Trading Co. to ship the articles or to have its name
included in the bill of lading. Shin Yang also alleged that
MOF failed to present supporting documents to prove that it
was Shin Yang that caused the importation or the one that
assured payment of the shipping charges upon arrival of the
goods in Manila.
Ruling of the Metropolitan Trial Court
On June 16, 2004, the MeTC of Pasay City, Branch 48
rendered its Decision[4] in favor of MOF. It ruled that Shin
Yang cannot disclaim being a party to the contract of
affreightment because:
x x x it would appear that defendant has business
transactions with plaintiff. This is evident from
defendants letters dated 09 May 2002 and 13 May
2002 (Exhibits 1 and 2, defendants Position Paper)
where it requested for the release of refund of
container deposits x x x. [In] the mind of the
Court, by analogy, a written contract need not be
necessary; a mutual understanding [would
suffice]. Further, plaintiff would have not included
the name of the defendant in the bill of lading, had
there been no prior agreement to that effect.
In sum, plaintiff has sufficiently proved
its cause of action against the defendant and the
latter is obliged to honor its agreement with
plaintiff despite the absence of a written contract.[5]
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
8
The dispositive portion of the MeTC Decision reads:
WHEREFORE, premises considered, judgment
is hereby rendered in favor of plaintiff and against
the defendant, ordering the latter to pay plaintiff as
follows:
1. P57,646.00 plus legal interest from the date of
demand until fully paid,
2. P10,000.00 as and for attorneys fees and
3. the cost of suit.
SO ORDERED.[6]
Ruling of the Regional Trial Court
The Regional Trial Court (RTC) of Pasay City, Branch 108
affirmed in toto the Decision of the MeTC. It held that:
MOF and Shin Yang entered into a contract of
affreightment which Blacks Law Dictionary
defined as a contract with the ship owner to hire
his ship or part of it, for the carriage of goods and
generally take the form either of a charter party
or a bill of lading.
The bill of lading contain[s] the information
embodied in the contract.
Article 652 of the Code of Commerce provides
that the charter party must be in writing;
however, Article 653 says: If the cargo should
be received without charter party having been
signed, the contract shall be understood as
executed in accordance with what appears in the
bill of lading, the sole evidence of title with
regard to the cargo for determining the rights
and obligations of the ship agent, of the captain
and of the charterer. Thus, the Supreme Court
opined in the Market Developers, Inc. (MADE)
vs. Honorable Intermediate Appellate Court and
Gaudioso Uy, G.R. No. 74978, September 8,
1989, this kind of contract may be oral. In
another case, Compania Maritima vs. Insurance
Company of North America, 12 SCRA 213 the
contract of affreightment by telephone was
recognized where the oral agreement was later
confirmed by a formal booking.
xxxx
8
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
Defendant is liable to pay the sum
of P57,646.00, with interest until fully paid,
attorneys fees of P10,000.00 [and] cost of suit.
Considering all the foregoing, this Court
affirms in toto the decision of the Court a quo.
SO ORDERED.[7]
Ruling of the Court of Appeals
Seeing the matter in a different light, the CA dismissed
MOFs complaint and refused to award any form of damages
or attorneys fees. It opined that MOF failed to substantiate
its claim that Shin Yang had a hand in the importation of the
articles to the Philippines or that it gave its consent to be a
consignee of the subject goods. In its March 22,
2006 Decision,[8] the CA said:
This Court is persuaded [that except] for
the Bill of Lading, respondent has not
presented any other evidence to bolster
its claim that petitioner has entered
[into] an agreement of affreightment
with respondent, be it verbal or
written. It is noted that the Bill of Lading
was prepared by Hanjin Shipping, not
the petitioner. Hanjin is the principal
while respondent is the formers agent.
(p. 43, rollo)
The conclusion of the court a quo,
which was upheld by
the RTC Pasay City, Branch 108 xxx is
purely speculative and conjectural. A
court cannot rely on speculations,
conjectures or guesswork, but must
depend upon competent proof and on
the basis of the best evidence obtainable
under the circumstances. Litigation
cannot be properly resolved by
suppositions, deductions or even
presumptions, with no basis in evidence,
for the truth must have to be determined
by the hard rules of admissibility and
proof (Lagon vs. Hooven Comalco
Industries, Inc. 349 SCRA 363).
While it is true that a bill of lading serves
two (2) functions: first, it is a receipt for
the goods shipped; second, it is a
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
9
contract by which three parties, namely,
the shipper, the carrier and the
consignee who undertake specific
responsibilities and assume stipulated
obligations (Belgian Overseas
Chartering and Shipping N.V. vs. Phil.
First Insurance Co., Inc., 383 SCRA
23), x x x if the same is not accepted, it
is as if one party does not accept the
contract. Said the Supreme Court:
A bill of lading delivered and accepted
constitutes the contract of carriage[,] even
though not signed, because the acceptance
of a paper containing the terms of a
proposed contract generally constitutes an
acceptance of the contract and of all its
terms and conditions of which the
acceptor has actual or constructive notice
(Keng Hua Paper Products Co., Inc. vs.
CA, 286 SCRA 257).
In the present case, petitioner did not
only [refuse to] accept the bill of lading,
but it likewise disown[ed] the shipment
x x x. [Neither did it] authorize Halla
Trading Company or anyone to ship or
export the same on its behalf.
It is settled that a contract is upheld as
long as there is proof of consent, subject
matter and cause (Sta. Clara
Homeowners Association vs. Gaston,
374 SCRA 396). In the case at bar, there
is not even any iota of evidence to show
that petitioner had given its consent.
He who alleges a fact has the burden
of proving it and a mere allegation is
not evidence (Luxuria Homes Inc.
vs. CA, 302 SCRA 315).
The 40-footer van contains goods of
substantial value. It is highly
improbable for petitioner not to pay the
charges, which is very minimal
compared with the value of the goods, in
order that it could work on the release
thereof.
For failure to substantiate its claim by
preponderance of evidence, respondent
has not established its case against
petitioner.[9]
9
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
Petitioners filed a motion for reconsideration but it was
denied in a Resolution[10] dated May 25, 2006. Hence, this
petition for review on certiorari.
Petitioners Arguments
In assailing the CAs Decision, MOF argues that the factual
findings of both the MeTC and RTC are entitled to great
weight and respect and should have bound the CA. It
stresses that the appellate court has no justifiable reason to
disturb the lower courts judgments because their conclusions
are well-supported by the evidence on record.
MOF further argues that the CA erred in labeling the
findings of the lower courts as purely speculative and
conjectural. According to MOF, the bill of lading, which
expressly stated Shin Yang as the consignee, is the best
evidence of the latters actual participation in the
transportation of the goods. Such document, validly entered,
stands as the law among the shipper, carrier and the
consignee, who are all bound by the terms stated
therein. Besides, a carriers valid claim after it fulfilled its
obligation cannot just be rejected by the named consignee
upon a simple denial that it ever consented to be a party in a
contract of affreightment, or that it ever participated in the
preparation of the bill of lading. As against Shin Yangs bare
denials, the bill of lading is the sufficient preponderance of
evidence required to prove MOFs claim. MOF maintains
that Shin Yang was the one that supplied all the details in the
bill of lading and acquiesced to be named consignee of the
shipment on a Freight Collect basis.
Lastly, MOF claims that even if Shin Yang never
gave its consent, it cannot avoid its obligation to pay,
because it never objected to being named as the consignee
in the bill of lading and that it only protested when the
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
10
shipment arrived in the Philippines, presumably due to a
botched transaction between it and Halla Trading
Co. Furthermore, Shin Yangs letters asking for the refund of
container deposits highlight the fact that it was aware of the
shipment and that it undertook preparations for the intended
release of the shipment.
Respondents Arguments
Echoing the CA decision, Shin Yang insists that MOF has
no evidence to prove that it consented to take part in the
contract of affreightment. Shin Yang argues that MOF
miserably failed to present any evidence to prove that it was
the one that made preparations for the subject shipment, or
that it is an actual shipping practice that
forwarders/consolidators as consignees are the ones that
provide carriers details and information on the bills of lading.
Shin Yang contends that a bill of lading is
essentially a contract between the shipper and the carrier and
ordinarily, the shipper is the one liable for the freight
charges. A consignee, on the other hand, is initially a
stranger to the bill of lading and can be liable only when the
bill of lading specifies that the charges are to be paid by the
consignee. This liability arises from either a) the contract of
agency between the shipper/consignor and the consignee; or
b) the consignees availment of the stipulation pour
autrui drawn up by and between the shipper/ consignor and
carrier upon the consignees demand that the goods be
delivered to it. Shin Yang contends that the fact that its name
was mentioned as the consignee of the cargoes did not make
it automatically liable for the freightage because it never
benefited from the shipment. It never claimed or accepted
the goods, it was not the shippers agent, it was not aware of
its designation as consignee and the original bill of lading
was never endorsed to it.
10
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
Issue
The issue for resolution is whether a consignee, who is not a
signatory to the bill of lading, is bound by the stipulations
thereof. Corollarily, whether respondent who was not an
agent of the shipper and who did not make any demand for
the fulfillment of the stipulations of the bill of lading drawn
in its favor is liable to pay the corresponding freight and
handling charges.
Our Ruling
Since the CA and the trial courts arrived at different
conclusions, we are constrained to depart from the general
rule that only errors of law may be raised in a Petition for
Review on Certiorari under Rule 45 of the Rules of Court
and will review the evidence presented.[11]
The bill of lading is oftentimes drawn up by the
shipper/consignor and the carrier without the intervention of
the consignee. However, the latter can be bound by the
stipulations of the bill of lading when a) there is a relation of
agency between the shipper or consignor and the consignee
or b) when the consignee demands fulfillment of the
stipulation of the bill of lading which was drawn up in its
favor.[12]
In Keng Hua Paper Products Co., Inc. v. Court of
Appeals,[13] we held that once the bill of lading is received by
the consignee who does not object to any terms or
stipulations contained therein, it constitutes as an acceptance
of the contract and of all of its terms and conditions, of which
the acceptor has actual or constructive notice.
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
11
In Mendoza v. Philippine Air Lines, Inc.,[14] the
consignee sued the carrier for damages but nevertheless
claimed that he was never a party to the contract of
transportation and was a complete stranger thereto. In
debunking Mendozas contention, we held that:
x x x First, he insists that the articles of the Code of Commerce
should be applied; that he invokes the provisions of said Code
governing the obligations of a common carrier to make prompt
delivery of goods given to it under a contract of transportation.
Later, as already said, he says that he was never a party to the
contract of transportation and was a complete stranger to it,
and that he is now suing on a tort or a violation of his rights as
a stranger (culpa aquiliana). If he does not invoke the contract
of carriage entered into with the defendant company, then he
would hardly have any leg to stand on. His right to prompt
delivery of the can of film at the Pili Air Port stems and is
derived from the contract of carriage under which contract, the
PAL undertook to carry the can of film safely and to deliver it
to him promptly. Take away or ignore that contract and the
obligation to carry and to deliver and right to prompt delivery
disappear. 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. Said rights and obligations
are created by a specific contract entered into by the parties. In
the present case, the findings of the trial court which as
already stated, are accepted by the parties and which we
must accept are to the effect that the LVN Pictures Inc.
and Jose Mendoza on one side, and the defendant
company on the other, entered into a contract of
transportation (p. 29, Rec. on Appeal). One interpretation
of said finding is that the LVN Pictures Inc. through
previous agreement with Mendoza acted as the latter's
agent. When he negotiated with the LVN Pictures Inc. to
rent the film 'Himala ng Birhen' and show it during the
Naga town fiesta, he most probably authorized and
enjoined the Picture Company to ship the film for him on
the PAL on September 17th. Another interpretation is
that even if the LVN Pictures Inc. as consignor of its own
initiative, and acting independently of Mendoza for the
time being, made Mendoza a consignee. [Mendoza made
himself a party to the contract of transportaion when he
appeared at the Pili Air Port armed with the copy of the
Air Way Bill (Exh. 1) demanding the delivery of the
shipment to him.] The very citation made by appellant in his
memorandum supports this view. Speaking of the possibility
of a conflict between the order of the shipper on the one hand
and the order of the consignee on the other, as when the
shipper orders the shipping company to return or retain the
goods shipped while the consignee demands their delivery,
Malagarriga in his book Codigo de Comercio Comentado,
Vol. 1, p. 400, citing a decision of the Argentina Court of
11
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY 12

Appeals on commercial matters, cited by Tolentino in Vol. II

of his book entitled 'Commentaries and Jurisprudence on the
Commercial Laws of the Philippines' p. 209, says that the
right of the shipper to countermand the shipment
terminates when the consignee or legitimate holder of the
bill of lading appears with such bill of lading before the
carrier and makes himself a party to the contract. Prior to
that time he is a stranger to the contract.
Still another view of this phase of the case is that
contemplated in Art. 1257, paragraph 2, of the old Civil
Code (now Art. 1311, second paragraph) which reads
thus:
Should the contract contain any stipulation in
favor of a third person, he may demand its fulfillment
provided he has given notice of his acceptance to the
person bound before the stipulation has been revoked.'
In the instant case, Shin Yang consistently denied
in all of its pleadings that it authorized Halla Trading, Co. to
ship the goods on its behalf; or that it got hold of the bill of
lading covering the shipment or that it demanded the release
of the cargo. Basic is the rule in evidence that the burden of
proof lies upon him who asserts it, not upon him who denies,
since, by the nature of things, he who denies a fact cannot
produce any proof of it.[17] Thus, MOF has the burden to
controvert all these denials, it being insistent that Shin Yang
asserted itself as the consignee and the one that caused the
shipment of the goods to the Philippines.

Here, the contract of In civil cases, the party having the burden of proof
carriage between the LVN Pictures
Inc. and the defendant carrier must establish his case by preponderance of
contains the stipulations of delivery
evidence,[18] which means evidence which is of greater
to Mendoza as consignee. His
demand for the delivery of the can of weight, or more convincing than that which is offered in
film to him at the Pili Air Port may
be regarded as a notice of his opposition to it.[19] Here, MOF failed to meet the required
acceptance of the stipulation of the quantum of proof. Other than presenting the bill of lading,
delivery in his favor contained in the
contract of carriage and delivery. In which, at most, proves that the carrier acknowledged receipt
this case he also made himself a party of the subject cargo from the shipper and that the consignee
to the contract, or at least has come to
court to enforce it. His cause of action named is to shoulder the freightage, MOF has not adduced
must necessarily be founded on its any other credible evidence to strengthen its cause of
breach.[15] (Emphasis Ours)
action. It did not even present any witness in support of its
allegation that it was Shin Yang which furnished all the
In sum, a consignee, although not a signatory to the contract
details indicated in the bill of lading and that Shin Yang
of carriage between the shipper and the carrier, becomes a
consented to shoulder the shipment costs. There is also
party to the contract by reason of either a) the relationship of
nothing in the records which would indicate that Shin Yang
agency between the consignee and the shipper/ consignor;
was an agent of Halla Trading Co. or that it exercised any act
b) the unequivocal acceptance of the bill of lading delivered
that would bind it as a named consignee. Thus, the CA
to the consignee, with full knowledge of its contents or c)
correctly dismissed the suit for failure of petitioner to
availment of the stipulation pour autrui, i.e., when the
establish its cause against respondent.
consignee, a third person, demands before the carrier the
fulfillment of the stipulation made by the consignor/shipper
WHEREFORE, the petition is DENIED. The assailed
in the consignees favor, specifically the delivery of the
Decision of the Court of Appeals dated March 22,
goods/cargoes shipped.[16]
2006 dismissing petitioners complaint and the Resolution

TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 12

 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
dated May 25, 2006denying the motion for reconsideration
are AFFIRMED.
G.R. No. 114061 August 3, 1994
KOREAN AIRLINES CO., LTD., petitioner,
vs.
COURT OF APPEALS and JUANITO C.
LAPUZ, respondents.
G.R. No. 113842 August 3, 1994
JUANITO C. LAPUZ, petitioner,
vs.
COURT OF APPEALS and KOREAN
AIRLINES CO., LTD., respondents.
M.A. Aguinaldo and Associates for Korean
Airlines Co., Ltd.
Camacho and Associates for Juanito Lapuz.
CRUZ, J.:
Sometime in 1980, Juanito C. Lapuz, an
automotive electrician, was contracted for
employment in Jeddah, Saudi Arabia, for a
period of one year through Pan Pacific
Overseas Recruiting Services, Inc. Lapuz was
supposed to leave on November 8, 1980, via
Korean Airlines. Initially, he was "wait-listed,"
which meant that he could only be
accommodated if any of the confirmed
passengers failed to show up at the airport
before departure. When two of such
passengers did not appear, Lapuz and another
person by the name of Perico were given the
two unclaimed seats.
According to Lapuz, he was allowed to check
in with one suitcase and one shoulder bag at
the check-in counter of KAL. He passed
through the customs and immigration sections
for routine check-up and was cleared for
departure as Passenger No. 157 of KAL Flight
No. KE 903. Together with the other
passengers, he rode in the shuttle bus and
proceeded to the ramp of the KAL aircraft for
boarding. However, when he was at the third or
fourth rung of the stairs, a KAL officer pointed
to him and shouted "Down! Down!" He was
thus barred from taking the flight. When he later
asked for another booking, his ticket was
canceled by KAL. Consequently, he was
unable to report for his work in Saudi Arabia
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
13
within the stipulated 2-week period and so lost
his employment.
KAL, on the other hand, alleged that on
November 8, 1980, Pan Pacific Recruiting
Services Inc. coordinated with KAL for the
departure of 30 contract workers, of whom only
21 were confirmed and 9 were wait-listed
passengers. The agent of Pan Pacific, Jimmie
Joseph, after being informed that there was a
possibility of having one or two seats becoming
available, gave priority to Perico, who was one
of the supervisors of the hiring company in
Saudi Arabia. The other seat was won through
lottery by Lapuz. However, only one seat
became available and so, pursuant to the
earlier agreement that Perico was to be given
priority, he alone was allowed to board.
After trial, the Regional Trial Court of Manila,
Branch 30, 1 adjudged KAL liable for damages,
disposing as follows:
WHEREFORE, in view of the foregoing
consideration, judgment is hereby rendered
sentencing the defendant Korean Air Lines to
pay plaintiff Juanito C. Lapuz the following:
1. The amount of TWO HUNDRED SEVENTY-
TWO THOUSAND ONE HUNDRED SIXTY
(P272,160.00) PESOS as
actual/compensatory damages, with legal
interest thereon from the date of the filing of the
complaint until fully paid.
2. The sum of TWENTY-FIVE THOUSAND
(P25,000.00) PESOS as and for attorney's
fees; and
3. The costs of suit.
The case is hereby dismissed with respect to
defendant Pan Pacific Overseas Recruiting
Services, Inc.
The counterclaims and cross-claim of
defendant Korean Air Lines Co., Ltd. are
likewise dismissed.
On appeal, this decision was modified by the
Court of Appeals 2 as follows:
13
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
WHEREFORE, in view of all the foregoing, the
appealed judgment is hereby AFFIRMED with
the following modifications: the amount of
actual damages and compensatory damages
is reduced to P60,000.00 and defendant-
appellant is hereby ordered to pay plaintiff-
appellant the sum of One Hundred Thousand
Pesos (P100,000.00) by way of moral and
exemplary damages, at 6% interest per annum
from the date of the filing of the Complaint until
fully paid.
KAL and Lapuz filed their respective motions
for reconsideration, which were both denied for
lack of merit. Hence, the present petitions for
review which have been consolidated because
of the identity of the parties and the similarity of
the issues.
In G. R. No. 114061, KAL assails the decision
of the appellate court on the following grounds:
1. That the Court of Appeals erred in
concluding that petitioner committed a breach
of contract of carriage notwithstanding lack of
proper, competent and sufficient evidence of
the existence of such contract.
2. That the Court of Appeals erred in not
according the proper evidentiary weight to
some evidence presented and the fact that
private respondent did not have any boarding
pass to prove that he was allowed to board and
to prove that his airline ticket was confirmed.
3. That the Court of Appeals erred in
concluding that the standby passenger status
of private respondent Lapuz was changed to a
confirmed status when his name was entered
into the passenger manifest.
4. That the Court of Appeals abused its
discretion in awarding moral and exemplary
damages in the amount of P100,000.00 in
favor of private respondent notwithstanding its
lack of basis and private respondent did not
state such amount in his complaint nor had
private respondent proven the said damages.
5. That the Court of Appeals erred in dismissing
the counterclaims.
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
14
6. That the Court of Appeals erred in dismissing
the counterclaim of petitioner against Pan
Pacific.
7. That the Court of Appeals erred in ruling that
the 6% per annum legal interest on the
judgment shall be computed from the filing of
the complaint.
In G. R. No. 113842, Lapuz seeks: (a) the
setting aside of the decision of the Court of
Appeals insofar as it modifies the award of
damages; b) actual and compensatory
damages in the sum equivalent to 5 years' loss
of earnings based on the petitioner's monthly
salary of 1,600 Saudi rials at the current
conversion rate plus the cost of baggage and
personal belongings worth P2,000 and the
service fee of P3,000 paid to the recruiting
agency, all with legal interest from the filing of
the complaint until fully paid; c) moral damages
of not less than P1 million and exemplary
damages of not less than P500,000.00, both
with interest at 6% per annum from the filing of
the complaint; and d) attorney's fees in the sum
equivalent to 30% of the award of damages.
It is evident that the issues raised in these
petitions relate mainly to the correctness of the
factual findings of the Court of Appeals and the
award of damages. The Court has consistently
affirmed that the findings of fact of the Court of
Appeals and the other lower courts are as a
rule binding upon it, subject to certain
exceptions. As nothing in the record indicates
any of such exceptions, the factual conclusions
of the appellate court must be affirmed.
The status of Lapuz as standby passenger was
changed to that of a confirmed passenger
when his name was entered in the passenger
manifest of KAL for its Flight No. KE 903. His
clearance through immigration and customs
clearly shows that he had indeed been
confirmed as a passenger of KAL in that flight.
KAL thus committed a breach of the contract of
carriage between them when it failed to bring
Lapuz to his destination.
This Court has held that a contract to transport
passengers is different in kind and degree from
any other contractual relation. 3 The business
14
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
of the carrier is mainly with the traveling public.
It invites people to avail themselves of the
comforts and advantages it offers. The contract
of air carriage generates a relation attended
with a public duty. Passengers have the right to
be treated by the carrier's employees with
kindness, respect, courtesy and due
consideration. They are entitled to be protected
against personal misconduct, injurious
language, indignities and abuses from such
employees. 4 So it is that any discourteous
conduct on the part of these employees toward
a passenger gives the latter an action for
damages against the carrier.
The breach of contract was aggravated in this
case when, instead of courteously informing
Lapuz of his being a "wait-listed" passenger, a
KAL officer rudely shouted "Down! Down!"
while pointing at him, thus causing him
embarrassment and public humiliation.
KAL argues that "the evidence of confirmation
of a chance passenger status is not through the
entry of the name of a chance passenger in the
passenger manifest nor the clearance from the
Commission on Immigration and Deportation,
because they are merely means of facilitating
the boarding of a chance passenger in case his
status is confirmed." We are not persuaded.
The evidence presented by Lapuz shows that
he had indeed checked in at the departure
counter, passed through customs and
immigration, boarded the shuttle bus and
proceeded to the ramp of KAL's aircraft. In fact,
his baggage had already been loaded in KAL's
aircraft, to be flown with him to Jeddah. The
contract of carriage between him and KAL had
already been perfected when he was
summarily and insolently prevented from
boarding the aircraft.
KAL's allegation that the respondent court
abused its discretion in awarding moral and
exemplary damages is also not tenable.
The Court of Appeals granted moral and
exemplary damages because:
The findings of the court a quo that the
defendant-appellant has committed breach of
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
15
contract of carriage in bad faith and in wanton,
disregard of plaintiff-appellant's rights as
passenger laid the basis and justification of an
award for moral damages.
xxxx
In the instant case, we find that defendant-
appellant Korean Air Lines acted in a wanton,
fraudulent, reckless, oppressive or malevolent
manner when it "bumped off" plaintiff-appellant
on November 8, 1980, and in addition treated
him rudely and arrogantly as a "patay gutom na
contract worker fighting Korean Air Lines,"
which clearly shows malice and bad faith, thus
entitling plaintiff-appellant to moral damages.
xxxx
Considering that the plaintiff-appellant's
entitlement to moral damages has been fully
established by oral and documentary evidence,
exemplary damages may be awarded. In fact,
exemplary damages may be awarded, even
though not so expressly pleaded in the
complaint (Kapoe vs. Masa, 134 SCRA 231).
By the same token, to provide an example for
the public good, an award of exemplary
damages is also proper (Armovit vs. Court of
Appeals, supra).
On the other hand, Lapuz's claim that the
award of P100,000.00 as moral and exemplary
damages is inadequate is not acceptable
either. His prayer for moral damages of not less
than P1 million and exemplary damages of not
less than P500,000.00 is overblown.
The well-entrenched principle is that moral
damages depend upon the discretion of the
court based on the circumstances of each
case. 5 This discretion is limited by the principle
that the "amount awarded should not be
palpably and scandalously excessive" as to
indicate that it was the result of prejudice or
corruption on the part of the trial
court. 6 Damages are not intended to enrich the
complainant at the expense of the defendant.
They are awarded only to alleviate the moral
suffering that the injured party had undergone
by reason of the defendant's culpable
action. 7 There is no hard-and-fast rule in the
15
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
determination of what would be a fair amount
of moral damages since each case must be
governed by its own peculiar facts.
A review of the record of this case shows that
the injury suffered by Lapuz is not so serious or
extensive as to warrant an award of P1.5
million. The assessment of P100,000 as moral
and exemplary damages in his favor is, in our
view, reasonable and realistic.
Lapuz likewise claims that the respondent
court could not rule upon the propriety of the
award of actual damages because it had not
been assigned as an error by KAL. Not so. The
rule is that only errors specifically assigned and
properly argued in the brief will be considered
except errors affecting jurisdiction over the
subject matter and plain as well as clerical
errors. 8 But this is not without qualification for,
as the Court held in Vda. de Javellana vs.
Court of Appeals: 9
. . . [T]he Court is clothed with ample authority
to review matters, even if they are not assigned
as errors in their appeal, if it finds that their
consideration is necessary in arriving at a just
decision of the case.
A similar pronouncement was made
in Baquiran vs. Court of Appeals 10 in this wise:
Issues, though not specifically raised in the
pleading in the appellate court, may, in the
interest of justice, be properly considered by
said court in deciding a case, if they are
questions raised in the trial court and are
matters of record having some bearing on the
issue submitted which the parties failed to raise
or the lower court ignored.
The Court of Appeals was therefore justified in
decreasing the award of actual damages even
if the issue was not assigned as an error by
KAL. Consideration of this question was
necessary for the just and complete resolution
of the present case. Furthermore, there was
enough evidence to warrant the reduction of
the original award, as the challenged decision
correctly observed:
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
16
A perusal of the plaintiff-appellant's contract of
employment shows that the effectivity of the
contract is for only one year, renewable every
year for five years. Although plaintiff-appellant
intends to renew his contract, such renewal will
still be subject to his foreign employer. Plaintiff-
appellant had not yet started working with his
foreign employer, hence, there can be no basis
as to whether his contract will be renewed by
his foreign employer or not. Thus, the damages
representing the loss of earnings of plaintiff-
appellant in the renewal of the contract of
employment is at most speculative. Damages
may not be awarded on the basis of
speculation or conjecture (Gachalian vs. Delim,
203 SCRA 126). Hence, defendant-appellant's
liability is limited to the one year contract only.
Plaintiff-appellant is, therefore, entitled only to
his lost earnings for one year, i.e., P60,000.00,
which is 1/5 of P300,000.00, the total amount
of actual damages, representing lost earnings
for five years prayed for in the Complaint.
Plaintiff-appellant's contention that in
computing his lost earnings, the current rate of
the Saudi Rial to the Philippine Peso at the time
of payment should be used, is untenable,
considering that in his Complaint, plaintiff-
appellant has quantified in Philippine Peso his
lost earnings for five years.
We disagree with the respondent court,
however, on the date when the legal interest
should commence to run. The rule is that the
legal interest of six percent (6%) on the
amounts adjudged in favor of Lapuz should
resume from the time of the rendition of the trial
court's decision instead of November 28, 1980,
the date of the filing of the complaint.
On this matter, the Court has held:
If suit were for payment of a definite sum of
money, the contention might be tenable.
However, if it is for damages, unliquidated and
not known until definitely ascertained,
assessed and determined by the courts after
proof, interest should be from the date of the
decision. 11
xxxx
16
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
The obligation to pay interest on a sum filed in
a judgment exists from the date of the
sentence, when so declared; for until the net
amount of the debtor's liability has been
determined, he cannot he considered
delinquent in the fulfillment of his obligation to
pay the debt with interest thereon. 12
Finally, we find that the respondent court did
not err in sustaining the trial court's dismissal
of KAL's counterclaim against Pan Pacific
Overseas Recruiting Services Inc., whose
responsibility ended with the confirmation by
KAL of Lapuz as its passenger in its Flight No.
903.
This is still another case of the maltreatment of
our overseas contract workers, this time by the
airline supposed to bring the passenger to his
foreign assignment. Our OCW's sacrifice much
in seeking employment abroad, where they are
deprived of the company of their loved ones,
the direct protection of our laws, and the
comfort of our own native culture and way of
life. This Court shall exert every effort to
vindicate their rights when they are abused and
shall accord them the commensurate
reparation of their injuries consistent with their
dignity and worth as members of the working
class.
WHEREFORE, the appealed judgment is
AFFIRMED, but with the modification that the
legal interest on the damages awarded to
private respondent should commence from the
date of the decision of the trial court on
November 14, 1990. The parties shall bear
their own costs.
SO ORDERED.
G.R. No. 92288 February 9, 1993
BRITISH AIRWAYS, INC., petitioner,
vs.
THE HON. COURT OF APPEALS, Twelfth
Division, and FIRST INTERNATIONAL
TRADING AND GENERAL
SERVICES, respondents.
Quasha, Asperilla, Ancheta, Peña & Nolasco
for petitioner.
Monina P. Lee for private respondent.
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
17
NOCON, J.:
This is a petition for review on certiorari to
annul and set aside the decision dated
November 15, 1989 of the Court of
Appeals1 affirming the decision of the trial
court2 in ordering petitioner British Airways, Inc.
to pay private respondent First International
Trading and General Services actual damages,
moral damages, corrective or exemplary
damages, attorney's fees and the costs as well
as the Resolution dated February 15,
19903 denying petitioner's Motion for
Reconsideration in the appealed decision.
It appears on record that on February 15, 1981,
private respondent First International Trading
and General Services Co., a duly licensed
domestic recruitment and placement agency,
received a telex message from its principal
ROLACO Engineering and Contracting
Services in Jeddah, Saudi Arabia to recruit
Filipino contract workers in behalf of said
principal.4
During the early part of March 1981, said
principal paid to the Jeddah branch of
petitioner British Airways, Inc. airfare tickets for
93 contract workers with specific instruction to
transport said workers to Jeddah on or before
March 30, 1981.
As soon as petitioner received a prepaid ticket
advice from its Jeddah branch to transport the
93 workers, private respondent was
immediately informed by petitioner that its
principal had forwarded 93 prepaid tickets.
Thereafter, private respondent instructed its
travel agent, ADB Travel and Tours. Inc., to
book the 93 workers with petitioner but the
latter failed to fly said workers, thereby
compelling private respondent to borrow
money in the amount of P304,416.00 in order
to purchase airline tickets from the other
airlines as evidenced by the cash vouchers
(Exhibits "B", "C" and "C-1 to C-7") for the 93
workers it had recruited who must leave
immediately since the visas of said workers are
valid only for 45 days and the Bureau of
Employment Services mandates that contract
workers must be sent to the job site within a
period of 30 days.
17
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
Sometime in the first week of June, 1981,
private respondent was again informed by the
petitioner that it had received a prepaid ticket
advice from its Jeddah branch for the
transportation of 27 contract workers.
Immediatety, private respondent instructed its
travel agent to book the 27 contract workers
with the petitioner but the latter was only able
to book and confirm 16 seats on its June 9,
1981 flight. However, on the date of the
scheduled flight only 9 workers were able to
board said flight while the remaining 7 workers
were rebooked to June 30, 1981 which
bookings were again cancelled by the
petitioner without any prior notice to either
private respondent or the workers. Thereafter,
the 7 workers were rebooked to the July 4,1981
flight of petitioner with 6 more workers booked
for said flight. Unfortunately, the confirmed
bookings of the 13 workers were again
cancelled and rebooked to July 7, 1981.
On July 6, 1981, private respondent paid the
travel tax of the said workers as required by the
petitioner but when the receipt of the tax
payments was submitted, the latter informed
private respondent that it can only confirm the
seats of the 12 workers on its July 7, 1981
flight. However, the confirmed seats of said
workers were again cancelled without any prior
notice either to the private respondent or said
workers. The 12 workers were finally able to
leave for Jeddah after private respondent had
bought tickets from the other airlines.
As a result of these incidents, private
respondent sent a letter to petitioner
demanding compensation for the damages it
had incurred by the latter's repeated failure to
transport its contract workers despite
confirmed bookings and payment of the
corresponding travel taxes.
On July 23, 1981, the counsel of private
respondent sent another letter to the petitioner
demanding the latter to pay the amount of
P350,000.00 representing damages and
unrealized profit or income which was denied
by the petitioner.
On August 8, 1981, private respondent
received a telex message from its principal
cancelling the hiring of the remaining recruited
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
18
workers due to the delay in transporting the
workers to Jeddah.5
On January 27, 1982, private respondent filed
a complaint for damages against petitioner with
the Regional Trial Court of Manila, Branch 1 in
Civil Case No. 82-4653.
On the other hand, petitioner, alleged in its
Answer with counterclaims that it received a
telex message from Jeddah on March 20, 1981
advising that the principal of private respondent
had prepaid the airfares of 100 persons to
transport private respondent's contract workers
from Manila to Jeddah on or before March 30,
1981. However, due to the unavailability of
space and limited time, petitioner had to return
to its sponsor in Jeddah the prepaid ticket
advice consequently not even one of the
alleged 93 contract workers were booked in
any of its flights.
On June 5, 1981, petitioner received another
prepaid ticket advice to transport 16 contract
workers of private respondent to Jeddah but
the travel agent of the private respondent
booked only 10 contract workers for petitioner's
June 9, 1981 flight. However, only 9 contract
workers boarded the scheduled flight with 1
passenger not showing up as evidenced by the
Philippine Airlines' passenger manifest for
Flight BA-020 (Exhibit "7", "7-A", "7-B" and "7-
C").6
Thereafter, private respondent's travel agent
booked seats for 5 contract workers on
petitioner's July 4, 1981 flight but said travel
agent cancelled the booking of 2 passengers
while the other 3 passengers did not show up
on said flight.
Sometime in July 1981, the travel agent of the
private respondent booked 7 more contract
workers in addition to the previous 5 contract
workers who were not able to board the July 4,
1981 flight with the petitioner's July 7, 1981
flight which was accepted by petitioner subject
to reconfirmation.
However on July 6, 1981, petitioner's computer
system broke down which resulted to
petitioner's failure to get a reconfirmation from
18
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
Saudi Arabia Airlines causing the automatic
cancellation of the bookings of private
respondent's 12 contract workers. In the
morning of July 7, 1981, the computer system
of the petitioner was reinstalled and
immediately petitioner tried to reinstate the
bookings of the 12 workers with either Gulf Air
or Saudi Arabia Airlines but both airlines
replied that no seat was available on that date
and had to place the 12 workers on the wait list.
Said information was duly relayed to the private
respondent and the 12 workers before the
scheduled flight.
After due trial on or on August 27, 1985, the
trial court rendered its decision, the dispositive
portion of which reads as follows:
WHEREFORE, in view of all
the foregoing, this Court
renders judgment:
1. Ordering the defendant to
pay the plaintiff actual
damages in the sum of
P308,016.00;
2. Ordering defendant to pay
moral damages to the plaintiff
in the amount of P20,000.00;
3. Ordering the defendant to
pay the plaintiff P10,000.00 by
way of corrective or exemplary
damages;
4. Ordering the defendant to
pay the plaintiff 30% of its total
claim for and as attorney's
fees; and
5. To pay the costs.7
On March 13, 1986, petitioner appealed said
decision to respondent appellate court after the
trial court denied its Motion for Reconsideration
on February 28, 1986.
On November 15, 1989, respondent appellate
court affirmed the decision of the trial court, the
dispositive portion of which reads:
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
19
WHEREFORE, the decision
appealed from is hereby
AFFIRMED with costs against
the appellant.8
On December 9, 1989, petitioner filed a Motion
for Reconsideration which was also denied.
Hence, this petition.
It is the contention of petitioner that private
respondent has no cause of action against it
there being no perfected contract of carriage
existing between them as no ticket was ever
issued to private respondent's contract workers
and, therefore, the obligation of the petitioner
to transport said contract workers did not arise.
Furthermore, private respondent's failure to
attach any ticket in the complaint further proved
that it was never a party to the alleged
transaction.
Petitioner's contention is untenable.
Private respondent had a valid cause of action
for damages against petitioner. A cause of
action is an act or omission of one party in
violation of the legal right or rights of the
other.9 Petitioner's repeated failures to
transport private respondent's workers in its
flight despite confirmed booking of said
workers clearly constitutes breach of contract
and bad faith on its part. In resolving
petitioner's theory that private respondent has
no cause of action in the instant case, the
appellate court correctly held that:
In dealing with the contract of common carriage
of passengers for purpose of accuracy, there
are two (2) aspects of the same, namely: (a)
the contract "to carry (at some future time),"
which contract is consensual and is necessarily
perfected by mere consent (See Article 1356,
Civil Code of the Philippines), and (b) the
contract "of carriage" or "of common carriage"
itself which should be considered as a real
contract for not until the carrier is actually used
can the carrier be said to have already
assumed the obligation of a carrier. (Paras,
Civil Code Annotated, Vol. V, p. 429, Eleventh
Ed.)
19
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
In the instant case, the contract "to carry" is the
one involved which is consensual and is
perfected by the mere consent of the parties.
There is no dispute as to the appellee's
consent to the said contract "to carry" its
contract workers from Manila to Jeddah. The
appellant's consent thereto, on the other hand,
was manifested by its acceptance of the PTA
or prepaid ticket advice that ROLACO
Engineering has prepaid the airfares of the
appellee's contract workers advising the
appellant that it must transport the contract
workers on or before the end of March, 1981
and the other batch in June, 1981.
Even if a PTA is merely an advice from the
sponsors that an airline is authorized to issue a
ticket and thus no ticket was yet issued, the fact
remains that the passage had already been
paid for by the principal of the appellee, and the
appellant had accepted such payment. The
existence of this payment was never objected
to nor questioned by the appellant in the lower
court. Thus, the cause or consideration which
is the fare paid for the passengers exists in this
case.
The third essential requisite of a contract is an
object certain. In this contract "to carry", such
an object is the transport of the passengers
from the place of departure to the place of
destination as stated in the telex.
Accordingly, there could be no more
pretensions as to the existence of an oral
contract of carriage imposing reciprocal
obligations on both parties.
In the case of appellee, it has fully complied
with the obligation, namely, the payment of the
fare and its willingness for its contract workers
to leave for their place of destination.
On the other hand, the facts clearly show that
appellant was remiss in its obligation to
transport the contract workers on their flight
despite confirmation and bookings made by
appellee's travelling agent.
xxx xxx xxx
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
20
Besides, appellant knew very well that time
was of the essence as the prepaid ticket advice
had specified the period of compliance
therewith, and with emphasis that it could only
be used if the passengers fly on BA. Under the
circumstances, the appellant should have
refused acceptance of the PTA from appellee's
principal or to at least inform appellee that it
could not accommodate the contract workers.
xxx xxx xxx
While there is no dispute that ROLACO
Engineering advanced the payment for the
airfares of the appellee's contract workers who
were recruited for ROLACO Engineering and
the said contract workers were the intended
passengers in the aircraft of the appellant, the
said contract "to carry" also involved the
appellee for as recruiter he had to see to it that
the contract workers should be transported to
ROLACO Engineering in Jeddah thru the
appellant's transportation. For that matter, the
involvement of the appellee in the said contract
"to carry" was well demonstrated when
the appellant upon receiving the PTA
immediately advised the appellee thereof. 10
Petitioner also contends that the appellate
court erred in awarding actual damages in the
amount of P308,016.00 to private respondent
since all expenses had already been
subsequently reimbursed by the latter's
principal.
In awarding actual damages to private
respondent, the appellate court held that the
amount of P308,016.00 representing actual
damages refers to private respondent's second
cause of action involving the expenses
incurred by the latter which were not
reimbursed by ROLACO Engineering.
However, in the Complaint 11 filed by private
respondent, it was alleged that private
respondent suffered actual damages in the
amount of P308,016.00 representing the
money it borrowed from friends and financiers
which is P304,416.00 for the 93 airline tickets
and P3,600.00 for the travel tax of the 12
workers. It is clear therefore that the actual
damages private respondent seeks to recover
are the airline tickets and travel taxes it spent
for its workers which were already reimbursed
20
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
by its principal and not for any other expenses
it had incurred in the process of recruiting said
contract workers. Inasmuch as all expenses
including the processing fees incurred by
private respondent had already been paid for
by the latter's principal on a staggered basis as
admitted in open court by its managing
director, Mrs. Bienvenida Brusellas. 12 We do
not find anymore justification in the appellate
court's decision in granting actual damages to
private respondent.
Thus, while it may be true that private
respondent was compelled to borrow money
for the airfare tickets of its contract workers
when petitioner failed to transport said workers,
the reimbursements made by its principal to
private respondent failed to support the latter's
claim that it suffered actual damages as a
result of petitioner's failure to transport said
workers. It is undisputed that private
respondent had consistently admitted that its
principal had reimbursed all its expenses.
Article 2199 of the Civil Code provides that:
Except as provided by law or by stipulations,
one is entitled to an adequate
compensation only for such pecuniary loss
suffered by him as he has duly proved. Such
compensation is referred to as actual or
compensatory damages.
Furthermore, actual or compensatory damages
cannot be presumed, but must be duly proved,
and proved with reasonable degree of
certainty. A court cannot rely on speculation,
conjecture or guesswork as to the fact and
amount of damages, but must depend upon
competent proof that they have suffered and on
evidence of the actual amount thereof. 13
However, private respondent is entitled to an
award of moral and exemplary damages for the
injury suffered as a result of petitioner's failure
to transport the former's workers because of
the latter's patent bad faith in the performance
of its obligation. As correctly pointed out by the
appellate court:
As evidence had proved, there was complete
failure on the part of the appellant to transport
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
21
the 93 contract workers of the appellee on or
before March 30, 1981 despite receipt of the
payment for their airfares, and acceptance of
the same by the appellant, with specific
instructions from the appellee's principal to
transport the contract workers on or before
March 30, 1981. No previous notice was ever
registered by the appellant that it could not
comply with the same. And then followed the
detestable act of appellant in unilaterally
cancelling, booking and rebooking
unreasonably the flight of appellee's contract
workers in June to July, 1981 without prior
notice. And all of these actuations of the
appellant indeed constitute malice and evident
bad faith which had caused damage and
besmirched the reputation and business image
of the appellee. 14
As to the alleged damages suffered by the
petitioner as stated in its counterclaims, the
record shows that no claim for said damages
was ever made by the petitioner immediately
after their alleged occurrence therefore said
counterclaims were mere afterthoughts when
private respondent filed the present case.
WHEREFORE, the assailed decision is hereby
AFFIRMED with the MODIFICATION that the
award of actual damages be deleted from said
decision.
SO ORDERED.
G.R. No. L-48757 May 30, 1988
MAURO GANZON, petitioner,
vs.
COURT OF APPEALS and GELACIO E.
TUMAMBING, respondents.
SARMIENTO, J.:
The private respondent instituted in the Court of First Instance of
Manila 1 an action against the petitioner for damages based on
culpa contractual. The antecedent facts, as found by the
respondent Court, 2 are undisputed:
On November 28, 1956, Gelacio Tumambing
contracted the services of Mauro B. Ganzon to
haul 305 tons of scrap iron from Mariveles,
Bataan, to the port of Manila on board the
lighter LCT "Batman" (Exhibit 1, Stipulation of
21
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
Facts, Amended Record on Appeal, p. 38).
Pursuant to that agreement, Mauro B. Ganzon
sent his lighter "Batman" to Mariveles where it
docked in three feet of water (t.s.n., September
28, 1972, p. 31). On December 1, 1956,
Gelacio Tumambing delivered the scrap iron to
defendant Filomeno Niza, captain of the lighter,
for loading which was actually begun on the
same date by the crew of the lighter under the
captain's supervision. When about half of the
scrap iron was already loaded (t.s.n.,
December 14, 1972, p. 20), Mayor Jose
Advincula of Mariveles, Bataan, arrived and
demanded P5,000.00 from Gelacio
Tumambing. The latter resisted the shakedown
and after a heated argument between them,
Mayor Jose Advincula drew his gun and fired
at Gelacio Tumambing (t.s.n., March 19, 1971,
p. 9; September 28, 1972, pp. 6-7). The <äre||anº• 1àw>
gunshot was not fatal but Tumambing had to
be taken to a hospital in Balanga, Bataan, for
treatment (t.s.n., March 19, 1971, p. 13;
September 28, 1972, p. 15).
After sometime, the loading of the scrap iron
was resumed. But on December 4, 1956,
Acting Mayor Basilio Rub, accompanied by
three policemen, ordered captain Filomeno
Niza and his crew to dump the scrap iron (t.s.n.,
June 16, 1972, pp. 8-9) where the lighter was
docked (t.s.n., September 28, 1972, p. 31). The
rest was brought to the compound of NASSCO
(Record on Appeal, pp. 20-22). Later on Acting
Mayor Rub issued a receipt stating that the
Municipality of Mariveles had taken custody of
the scrap iron (Stipulation of Facts, Record on
Appeal, p. 40; t.s.n., September 28, 1972, p.
10.)
On the basis of the above findings, the
respondent Court rendered a decision, the
dispositive portion of which states:
WHEREFORE, the decision appealed
from is hereby reversed and set aside
and a new one entered ordering
defendant-appellee Mauro Ganzon to
pay plaintiff-appellant Gelacio E.
Tumambimg the sum of P5,895.00 as
actual damages, the sum of P5,000.00
as exemplary damages, and the amount
of P2,000.00 as attorney's fees. Costs
against defendant-appellee Ganzon. 3
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
22
In this petition for review on certiorari, the
alleged errors in the decision of the Court of
Appeals are:
I
THE COURT OF APPEALS FINDING THE
HEREIN PETITIONER GUILTY OF BREACH
OF THE CONTRACT OF TRANSPORTATION
AND IN IMPOSING A LIABILITY AGAINST
HIM COMMENCING FROM THE TIME THE
SCRAP WAS PLACED IN HIS CUSTODY
AND CONTROL HAVE NO BASIS IN FACT
AND IN LAW.
II
THE APPELLATE COURT ERRED IN
CONDEMNING THE PETITIONER FOR THE
ACTS OF HIS EMPLOYEES IN DUMPING
THE SCRAP INTO THE SEA DESPITE THAT
IT WAS ORDERED BY THE LOCAL
GOVERNMENT OFFICIAL WITHOUT HIS
PARTICIPATION.
III
THE APPELLATE COURT FAILED TO
CONSIDER THAT THE LOSS OF THE
SCRAP WAS DUE TO A FORTUITOUS
EVENT AND THE PETITIONER IS
THEREFORE NOT LIABLE FOR LOSSES AS
A CONSEQUENCE THEREOF. 4
The petitioner, in his first assignment of error,
insists that the scrap iron had not been
unconditionally placed under his custody and
control to make him liable. However, he
completely agrees with the respondent Court's
finding that on December 1, 1956, the private
respondent delivered the scraps to Captain
Filomeno Niza for loading in the lighter
"Batman," That the petitioner, thru his
employees, actually received the scraps is
freely admitted. Significantly, there is not the
slightest allegation or showing of any condition,
qualification, or restriction accompanying the
delivery by the private respondent-shipper of
the scraps, or the receipt of the same by the
petitioner. On the contrary, soon after the
scraps were delivered to, and received by the
22
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
petitioner-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 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. 5 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.
The petitioner has failed to show that the loss
of the scraps was due to any of the following
causes enumerated in Article 1734 of the Civil
Code, namely:
(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 petitioner is presumed to have been
at fault or to have acted negligently. 6 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. Still, the petitioner 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
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
23
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 the petitioner to prove
that he exercised such extraordinary diligence.
It is in the second and third assignments of
error where the petitioner maintains 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. 7
We cannot sustain the theory of caso fortuito.
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:
... In the second place, before the
appellee Ganzon could be absolved
from responsibility on the ground that
he was ordered by competent public
authority to unload the scrap iron, it
must be shown that Acting Mayor
Basilio Rub had the power to issue
the disputed order, or that it was
lawful, or that it was issued under
legal process of authority. The
appellee failed to establish this.
Indeed, no authority or power of the
acting mayor to issue such an order
was given in evidence. Neither has it
been shown that the cargo of scrap
iron belonged to the Municipality of
Mariveles. What we have in the
record is the stipulation of the parties
that the cargo of scrap iron was
accilmillated by the appellant through
separate purchases here and there
from private individuals (Record on
Appeal, pp. 38-39). The fact remains
that the order given by the acting
mayor to dump the scrap iron into the
sea was part of the pressure applied
by Mayor Jose Advincula to
shakedown the appellant for
P5,000.00. The order of the acting
mayor did not constitute valid
authority for appellee Mauro Ganzon
and his representatives to carry out.
23
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
Now the petitioner is changing his theory to
caso fortuito. Such a change of theory on
appeal we cannot, however, allow. 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. The petitioner 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. We agree with the
private respondent 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 8 and 362 9 of the Code of
Commerce which were the basis for this
Court's ruling in Government of the Philippine
Islands vs. Ynchausti & Co.10 and which the
petitioner invokes in tills petition. 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. 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.
Finding the award of actual and exemplary
damages to be proper, the same will not be
disturbed by us. Besides, these were not
sufficiently controverted by the petitioner.
WHEREFORE, the petition is DENIED; the
assailed decision of the Court of Appeals is
hereby AFFIRMED. Costs against the
petitioner.
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
24
This decision is IMMEDIATELY EXECUTORY.
Yap, C.J., Paras and Padilla, JJ., concur.
Separate Opinion
MELENCIO-HERRERA, J., dissenting:
I am constrained to dissent.
It is my view that petitioner can not be held
liable in damages for the loss and destruction
of the scrap iron. The loss of said cargo was
due to an excepted cause an 'order or act of
competent public authority" (Article 1734[5],
Civil Code).
The loading of the scrap iron on the lighter had
to be suspended because of Municipal Mayor
Jose Advincula's intervention, who was a
"competent public authority." Petitioner had no
control over the situation as, in fact,
Tumambing himself, the owner of the cargo,
was impotent to stop the "act' of said official
and even suffered a gunshot wound on the
occasion.
When loading was resumed, this time it was
Acting Mayor Basilio Rub, accompanied by
three policemen, who ordered the dumping of
the scrap iron into the sea right where the
lighter was docked in three feet of water. Again,
could the captain of the lighter and his crew
have defied said order?
Through the "order" or "act" of "competent
public authority," therefore, the performance of
a contractual obligation was rendered
impossible. The scrap iron that was dumped
into the sea was "destroyed" while the rest of
the cargo was "seized." The seizure is
evidenced by the receipt issues by Acting
Mayor Rub stating that the Municipality of
Mariveles had taken custody of the scrap iron.
Apparently, therefore, the seizure and
destruction of the goods was done under legal
process or authority so that petitioner should
be freed from responsibility.
Art. 1743. If through order of
public authority the goods are
seized or destroyed, the
24
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
common carrier is not
responsible, provided said
public authority had power to
issue the order.
Separate Opinions
MELENCIO-HERRERA, J., dissenting:
I am constrained to dissent.
It is my view that petitioner can not be held
liable in damages for the loss and destruction
of the scrap iron. The loss of said cargo was
due to an excepted cause an 'order or act of
competent public authority" (Article 1734[5],
Civil Code).
The loading of the scrap iron on the lighter had
to be suspended because of Municipal Mayor
Jose Advincula's intervention, who was a
"competent public authority." Petitioner had no
control over the situation as, in fact,
Tumambing himself, the owner of the cargo,
was impotent to stop the "act' of said official
and even suffered a gunshot wound on the
occasion.
When loading was resumed, this time it was
Acting Mayor Basilio Rub, accompanied by
three policemen, who ordered the dumping of
the scrap iron into the sea right where the
lighter was docked in three feet of water. Again,
could the captain of the lighter and his crew
have defied said order?
Through the "order" or "act" of "competent
public authority," therefore, the performance of
a contractual obligation was rendered
impossible. The scrap iron that was dumped
into the sea was "destroyed" while the rest of
the cargo was "seized." The seizure is
evidenced by the receipt issues by Acting
Mayor Rub stating that the Municipality of
Mariveles had taken custody of the scrap iron.
Apparently, therefore, the seizure and
destruction of the goods was done under legal
process or authority so that petitioner should
be freed from responsibility.
Art. 1743. If through order of public
authority the goods are seized or
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
25
destroyed, the common carrier is not
responsible, provided said public
authority had power to issue the order.
G.R. No. 95582 October 7, 1991
DANGWA TRANSPORTATION CO., INC.
and THEODORE LARDIZABAL y
MALECDAN, petitioners,
vs.
COURT OF APPEALS, INOCENCIA
CUDIAMAT, EMILIA CUDIAMAT BANDOY,
FERNANDO CUDLAMAT, MARRIETA
CUDIAMAT, NORMA CUDIAMAT, DANTE
CUDIAMAT, SAMUEL CUDIAMAT and
LIGAYA CUDIAMAT, all Heirs of the late
Pedrito Cudiamat represented by
Inocencia Cudiamat, respondents.
Francisco S. Reyes Law Office for petitioners.
Antonio C. de Guzman for private
respondents.
REGALADO, J.:
On May 13, 1985, private respondents filed a
complaint 1 for damages against petitioners for
the death of Pedrito Cudiamat as a result of a
vehicular accident which occurred on March
25, 1985 at Marivic, Sapid, Mankayan,
Benguet. Among others, it was alleged that on
said date, while petitioner Theodore M.
Lardizabal was driving a passenger bus
belonging to petitioner corporation in a
reckless and imprudent manner and without
due regard to traffic rules and regulations and
safety to persons and property, it ran over its
passenger, Pedrito Cudiamat. However,
instead of bringing Pedrito immediately to the
nearest hospital, the said driver, in utter bad
faith and without regard to the welfare of the
victim, first brought his other passengers and
cargo to their respective destinations before
banging said victim to the Lepanto Hospital
where he expired.
On the other hand, petitioners alleged that
they had observed and continued to observe
the extraordinary diligence required in the
25
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY 26

Petitioners' motion for reconsideration was denied by the Court of Appeals in its resolution dated October 4,
operation of the transportation company and
the supervision of the employees, even as hence this petition with the central issue
1990, 5

they add that they are not absolute insurers of herein being whether respondent court erred
the safety of the public at large. Further, it was in reversing the decision of the trial court and
alleged that it was the victim's own in finding petitioners negligent and liable for
carelessness and negligence which gave rise the damages claimed.
to the subject incident, hence they prayed for
the dismissal of the complaint plus an award It is an established principle that the factual
of damages in their favor by way of a findings of the Court of Appeals as a rule are
counterclaim. final and may not be reviewed by this Court on
appeal. However, this is subject to settled
On July 29, 1988, the trial court rendered a exceptions, one of which is when the findings
decision, effectively in favor of petitioners, with of the appellate court are contrary to those of
this decretal portion: the trial court, in which case a reexamination
of the facts and evidence may be
undertaken. 6
IN VIEW OF ALL THE FOREGOING,
judgment is hereby pronounced that
Pedrito Cudiamat was negligent,
which negligence was the proximate In the case at bar, the trial court and the Court of Appeal have
cause of his death. Nonetheless, discordant positions as to who between the petitioners an the victim
defendants in equity, are hereby is guilty of negligence. Perforce, we have had to conduct an
ordered to pay the heirs of Pedrito evaluation of the evidence in this case for the prope calibration of
Cudiamat the sum of P10,000.00 their conflicting factual findings and legal conclusions.
which approximates the amount
defendants initially offered said heirs The lower court, in declaring that the victim was negligent, made the
for the amicable settlement of the following findings:
case. No costs.

SO ORDERED. 2
This Court is satisfied that Pedrito Cudiamat was negligent in trying to board a moving
Not satisfied therewith, private respondents appealed to the Court of Appeals which, in a decision 3
in vehicle, especially with one of his hands holding an umbrella. And, without having given

CA-G.R. CV No. 19504 promulgated on the driver or the conductor any indication that he wishes to board the bus. But defendants
can also be found wanting of the necessary diligence. In this connection, it is safe to
August 14, 1990, set aside the decision of the assume that when the deceased Cudiamat attempted to board defendants' bus, the

lower court, and ordered petitioners to pay vehicle's door was open instead of being closed. This should be so, for it is hard to believe
that one would even attempt to board a vehicle (i)n motion if the door of said vehicle is
private respondents: closed. Here lies the defendant's lack of diligence. Under such circumstances, equity
demands that there must be something given to the heirs of the victim to assuage their
feelings. This, also considering that initially, defendant common carrier had made

1. The sum of Thirty Thousand overtures to amicably settle the case. It did offer a certain monetary consideration to the
victim's heirs. 7
(P30,000.00) Pesos by way of
indemnity for death of the victim
Pedrito Cudiamat;
However, respondent court, in arriving at a different opinion, declares
2. The sum of Twenty Thousand that:
(P20,000.00) by way of moral
damages;

3. The sum of Two Hundred Eighty

Eight Thousand (P288,000.00) Pesos From the testimony of appellees'own witness in the
as actual and compensatory person of Vitaliano Safarita, it is evident that the subject
damages; bus was at full stop when the victim Pedrito Cudiamat
boarded the same as it was precisely on this instance
4. The costs of this suit. 4 where a certain Miss Abenoja alighted from the bus.
Moreover, contrary to the assertion of the appellees, the

TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 26

 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
victim did indicate his intention to board the bus as can be
seen from the testimony of the said witness when he
declared that Pedrito Cudiamat was no longer walking
and made a sign to board the bus when the latter was still
at a distance from him. It was at the instance when
Pedrito Cudiamat was closing his umbrella at the platform
of the bus when the latter made a sudden jerk movement
(as) the driver commenced to accelerate the bus.
Evidently, the incident took place due to the gross negligence of the appellee-driver in
prematurely stepping on the accelerator and in not waiting for the passenger to first
secure his seat especially so when we take into account that the platform of the bus was
at the time slippery and wet because of a drizzle. The defendants-appellees utterly failed
to observe their duty and obligation as common carrier to the end that they should
observe extra-ordinary diligence in the vigilance over the goods and for the safety of the
passengers transported by them according to the circumstances of each case (Article
1733, New Civil Code). 8
After a careful review of the evidence on record, we find no reason to
disturb the above holding of the Court of Appeals. Its aforesaid
findings are supported by the testimony of petitioners' own witnesses.
One of them, Virginia Abalos, testified on cross-examination as
follows:
Q It is not a fact Madam witness, that at bunkhouse 54,
that is before the place of the incident, there is a
crossing?
A The way going to the mines but it is not being pass(ed)
by the bus.
Q And the incident happened before bunkhouse 56, is
that not correct?
A It happened between 54 and 53 bunkhouses. 9
The bus conductor, Martin Anglog, also declared:
Q When you arrived at Lepanto on March 25, 1985, will
you please inform this Honorable Court if there was anv
unusual incident that occurred?
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
27
A When we delivered a baggage at Marivic because a
person alighted there between Bunkhouse 53 and 54.
Q What happened when you delivered this passenger at
this particular place in Lepanto?
A When we reached the place, a passenger alighted and I
signalled my driver. When we stopped we went out
because I saw an umbrella about a split second and I
signalled again the driver, so the driver stopped and we
went down and we saw Pedrito Cudiamat asking for help
because he was lying down.
Q How far away was this certain person, Pedrito
Cudiamat, when you saw him lying down — from the bus
how far was he?
A It is about two to three meters.
Q On what direction of the bus was he found about three
meters from the bus, was it at the front or at the back?
A At the back, sir. 10 (Emphasis supplied.)
The foregoing testimonies show that the place of the accident and the
place where one of the passengers alighted were both between
Bunkhouses 53 and 54, hence the finding of the Court of Appeals that
the bus was at full stop when the victim boarded the same is correct.
They further confirm the conclusion that the victim fell from the
platform of the bus when it suddenly accelerated forward and was run
over by the rear right tires of the vehicle, as shown by the physical
evidence on where he was thereafter found in relation to the bus
when it stopped. Under such circumstances, it cannot be said that the
deceased was guilty of negligence.
The contention of petitioners that the driver and the conductor had no knowledge that the victim would ride
on the bus, since the latter had supposedly not manifested his intention to board the same, does not merit
consideration. When the bus is not in motion there is no necessity for a person who wants to ride the same
to signal his intention to board. A public utility bus, once it stops, is in effect making a continuous offer to bus
riders. Hence, it becomes the duty of the driver and the conductor, every time the bus stops, to do no act
that would have the effect of increasing the peril to a passenger while he was attempting to board the same.
The premature acceleration of the bus in this case was a breach of such duty. 11
It is the duty of common carriers of passengers, including common carriers by railroad train, streetcar, or
motorbus, to stop their conveyances a reasonable length of time in order to afford passengers an
opportunity to board and enter, and they are liable for injuries suffered by boarding passengers resulting
from the sudden starting up or jerking of their conveyances while they are doing so. 12
Further, even assuming that the bus was moving, the act of the victim in boarding the same cannot be
considered negligent under the circumstances. As clearly explained in the testimony of the aforestated
27
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY 28

witness for petitioners, Virginia Abalos, th bus had "just started" and "was still in slow motion" at the point
where the victim had boarded and was on its platform. 13
It is not negligence per se, or as a matter of law, for one attempt to board a train or streetcar which is moving
... The pretension of the appellees that the delay was due to the fact that they had to wait
for about twenty minutes for Inocencia Cudiamat to get dressed deserves scant
consideration. It is rather scandalous and deplorable for a wife whose husband is at the
verge of dying to have the luxury of dressing herself up for about twenty minutes before
attending to help her distressed and helpless husband. 19

An ordinarily prudent person would have

slowly. 14

made the attempt board the moving Further, it cannot be said that the main intention of petitioner Lardizabal in going to Bunk 70 was to inform
the victim's family of the mishap, since it was not said bus driver nor the conductor but the companion of the
conveyance under the same or similar
circumstances. The fact that passengers In fact, it was only after the
victim who informed his family thereof. 20

board and alight from slowly moving vehicle is refrigerator was unloaded that one of the
a matter of common experience both the passengers thought of sending somebody to
driver and conductor in this case could not the house of the victim, as shown by the
have been unaware of such an ordinary testimony of Virginia Abalos again, to wit:
practice.
Q Why, what happened to your
The victim herein, by stepping and standing refrigerator at that particular time?
on the platform of the bus, is already
considered a passenger and is entitled all the A I asked them to bring it down
rights and protection pertaining to such a because that is the nearest place to
contractual relation. Hence, it has been held our house and when I went down and
that the duty which the carrier passengers asked somebody to bring down the
owes to its patrons extends to persons refrigerator, I also asked somebody to
boarding cars as well as to those alighting call the family of Mr. Cudiamat.
therefrom. 15
COURT:
Common carriers, from the nature of their business and reasons of public policy, are bound to observe
extraordina diligence for the safety of the passengers transported by the according to all the circumstances

A common carrier is bound to carry

of each case. 16 Q Why did you ask somebody to call
the passengers safely as far as human care the family of Mr. Cudiamat?
and foresight can provide, using the utmost
diligence very cautious persons, with a due A Because Mr. Cudiamat met an
regard for all the circumstances. 17 accident, so I ask somebody to call for
the family of Mr. Cudiamat.
It has also been repeatedly held that in an action based on a contract of carriage, the court need not make
an express finding of fault or negligence on the part of the carrier in order to hold it responsible to pay the
damages sought by the passenger. By contract of carriage, the carrier assumes the express obligation to Q But nobody ask(ed) you to call for
transport the passenger to his destination safely and observe extraordinary diligence with a due regard for
all the circumstances, and any injury that might be suffered by the passenger is right away attributable to the
the family of Mr. Cudiamat?
fault or negligence of the carrier. This is an exception to the general rule that negligence must be proved,
and it is therefore incumbent upon the carrier to prove that it has exercised extraordinary diligence as
prescribed in Articles 1733 and 1755 of the Civil Code. 18
A No sir. 21
With respect to the award of damages, an oversight was, however, committed by respondent Court of
Appeals in computing the actual damages based on the gross income of the victim. The rule is that the
amount recoverable by the heirs of a victim of a tort is not the loss of the entire earnings, but rather the loss
of that portion of the earnings which the beneficiary would have received. In other words, only net earnings,
Moreover, the circumstances under which the driver and the
not gross earnings, are to be considered, that is, the total of the earnings less expenses necessary in the
conductor failed to bring the gravely injured victim immediately to the creation of such earnings or income and minus living and other incidental expenses. 22

hospital for medical treatment is a patent and incontrovertible proof of

We are of the opinion that the deductible living and other expense of the deceased may fairly and
their negligence. It defies understanding and can even be stigmatized
reasonably be fixed at P500.00 a month or P6,000.00 a year. In adjudicating the actual or compensatory
as callous indifference. The evidence shows that after the accident damages, respondent court found that the deceased was 48 years old, in good health with a remaining
productive life expectancy of 12 years, and then earning P24,000.00 a year. Using the gross annual income
the bus could have forthwith turned at Bunk 56 and thence to the
as the basis, and multiplying the same by 12 years, it accordingly awarded P288,000. Applying the
hospital, but its driver instead opted to first proceed to Bunk 70 to aforestated rule on computation based on the net earnings, said award must be, as it hereby is, rectified and
reduced to P216,000.00. However, in accordance with prevailing jurisprudence, the death indemnity is
allow a passenger to alight and to deliver a refrigerator, despite the
hereby increased to P50,000.00. 23
serious condition of the victim. The vacuous reason given by
petitioners that it was the wife of the deceased who caused the delay
was tersely and correctly confuted by respondent court:

WHEREFORE, subject to the above modifications, the challenged

judgment and resolution of respondent Court of Appeals are hereby
AFFIRMED in all other respects.

TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 28

 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
SO ORDERED.
G.R. No. L-22005 May 3, 1968
JESUSA LACSON VDA. DE ARROYO, ET
AL., petitioners,
vs.
EL BEATERIO DEL SANTISSIMO ROSARIO
DE MOLO, ET AL., respondents.
Jose W. Diokno for petitioners.
Uy and Artiaga for respondents.
DIZON, J.:
Appeal by certiorari taken by Jesusa Lacson
Vda. de Arroyo and other heirs of the late
Ignacio Arroyo, from the decision of the Court
of Appeals in CA-G.R.-28555 affirming the
one rendered by the Court of First Instance of
Iloilo in Civil Case No. 4759 entitled "Jesusa
Lacson Vda. de Arroyo, et al. vs. Beaterio del
Santissimo Rosario de Molo, et al." holding
"that the plaintiffs have failed to establish fair
and reliable basis upon which the donation in
question may be justly declared inofficious",
and, for this reason, dismissing the case,
without costs.
The facts as found by the Court of Appeals —
substantially the same as those found by the
Court of First Instance — are as follows:
On July 2, 1924, the late Ignacio
Arroyo partitioned his entire
estate inter vivos among his three
children, Jose Arroyo, Mariano Arroyo
and Sor Rosario (Arroyo) de la
Visitacion by executing with them a
public instrument called "Convenio de
Reparticion de Bienes y Adjudicacion
de Herencia" (Exh. "A"). The three
children also received therein their
inheritance from their deceased
mother Maria Pidal, the first wife of
Ignacio Arroyo. The estate of Ignacio
Arroyo was apportioned in four parts,
with specified properties being given
to each of the three children, and the
remaining properties, likewise
specified, being adjudicated to Ignacio
Arroyo, or reserved for himself, as
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
29
comprising his one-third portion of free
disposal.
On March 8, 1927 Jose Arroyo died
leaving his widow Jesusa Lacson Vda.
de Arroyo and their children as his
only heirs.
On January 9, 1928, Ignacio Arroyo, in
a public document called "Escritura de
Donacion" (Exh. "B"), disposed of
almost all of the properties adjudicated
to him in the aforementioned
"Convenio de Reparticion," in favor of
Beaterio del Santissimo Rosario de
Molo, a religious corporation. This
donation, with all the conditions
thereof, was accepted by the donee
on the same date and in the same
instrument. Subsequent documents
clarifying the properties subject matter
of the donation, and modifying the
conditions imposed thereby, were
executed on August 11, 1931 and on
October 8, 1931 (Exhs. "C", "D" and
"E").
On October 22, 1931 Ignacio Arroyo
executed his last will and testament
(Exh. "F"). The "Convenio de
Reparticion" aforementioned was
reproduced in said will as an integral
part thereof, following a statement
therein regarding its execution, and
regarding its being confirmed and
reproduced therein so that its validity
will never be questioned. The donation
in favor of the Beaterio del Santissimo
Rosario de Molo, its acceptance and
subsequent modifications were
likewise related in the said will.
On January 8, 1935 Ignacio Arroyo
died and his last will and testament
was probated, without any opposition,
by the Court of First Instance of Iloilo
on February 25, 1935.
On January 20, 1936 Ricardo
Carreon, as administrator of the
intestate estate of Concepcion
Gerona, filed an amended complaint
29
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
(Exh. "G") against Lucio Lacson as
executor of Ignacio Arroyo, Jose
Arroyo, Jr. as administrator of the
intestate estate of Jose Arroyo, the
Beaterio del Santissimo Rosario de
Molo and the Municipality of Iloilo,
docketed as Civil Case No. 9137 of
the Court of First Instance of Iloilo,
seeking the recovery, inter alia, of
one-half of the properties adjudicated
to Jose Arroyo and Mariano Arroyo in
the "Convenio de Reparticion" (Exh.
"A") and one-half of the properties
donated to the Beaterio del
Santissimo Rosario de Molo in the
"Escritura de Donacion" (Exh. "B").
The court rendered judgment against
the defendants, but cleared the
Beaterio and the municipality of Iloilo
from any liability, and refrained from
disturbing the status of the properties
donated to them, reserving the right of
the plaintiff to claim from the executor
of Ignacio Arroyo one-half of the value
of these donated properties. The
Arroyos appealed the decision to the
Supreme Court but war destroyed the
records of the case, so that a new trial
was ordered. Civil Case No. 9137 of
the Court of First Instance of Iloilo was
then tried anew, but on November 3,
1949, the plaintiffs therein and Jesusa
Lacson Vda. de Arroyo, as
administratrix of the intestate estate of
Jose Arroyo entered into an
agreement whereby the former
renounced and waived in favor of the
latter all their rights and interest on
any and all the properties therein
litigated in consideration of the sum of
P65,000.00 and the assumption of the
obligation to pay the attorney's fees of
the counsel of the plaintiffs in the sum
of P40,000.00 (Exh. "M-1"). Upon
motion of both parties the Court of
First Instance dismissed the complaint
in Civil Case No. 9137 on the same
date (Exh. "R").
On March 13, 1958, Jesusa Lacson
Vda. de Arroyo and her children, as
the heirs of Jose Arroyo, filed the
complaint in this case, seeking
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
30
declaration of the donation made by
Ignacio Arroyo to the Beaterio del
Santissimo Rosario de Molo in 1928
as inofficious and to recover the
excess thereof. The principal
defendant is the Beaterio del
Santissimo Rosario de Molo, although
the estate of Sor Rosario (Arroyo) de
la Visitacion as the heirs of Mariano
Arroyo were impleaded as defendants
for being allegedly unwilling co-
plaintiffs. On March 24, 1958
defendants filed their answer including
a counterclaim, which plaintiffs
answered on April 14, 1958. After due
trial, decision was rendered on August
29, 1960, dismissing the complaint for
failure of the plaintiffs to establish fair
and reasonable basis upon which the
donation in question may be justly
declared inofficious. The counterclaim
was likewise dismissed.
After a careful consideration of the foregoing
facts, the trial court held "that the plaintiffs
have failed to establish fair and reasonable
basis upon which the donation in question
may be justly declared inofficious" (Record on
Appeal, p. 168). For its part, the Court of
Appeals affirmed the decision of the trial court
because, in its opinion, "the decision appealed
from does not err in finding no fair and
reasonable basis for declaring the Beaterio
donation inofficious".
According to the decision of the Court of
Appeals, the lone assignment of error
submitted by the appellants in their brief
argued "for the sufficiency of plaintiffs-
appellants' evidence as a fair and reasonable
basis for resting a finding that the donation in
question is inofficious". It is clear, therefore,
that the only issue submitted to said court,
and by it decided, was purely one of fact.
In this connection it is a matter removed from
dispute that We can review decisions of the
Court of Appeals only on errors of law, its
findings of fact being conclusive.
A question of law has been declared as one
not calling for the examination of the probative
value of the evidence presented by the parties
30
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
(Goduco vs. Court of Appeals, et al., G.R. No.
L-17647, February 28, 1964; Air France, etc.
vs. Carrascoso, et al., G.R. No. L-21438,
September 28, 1966). Moran's Comments on
the subject (Rules of Court, Volume 11, 1963
Edition, p. 412) are to the effect that "For a
question to be one of law, it must involve no
examination of the probative value of the
evidence presented by the litigants or any of
them."
In a case similar to the one at bar (Lim vs.
Calaguas, G.R. No. L-2031, May 30, 1949, 40
O.G., 11 Supp. 247, 83 Phil. 796) We held:
Our review should be confined to the
facts and circumstances found by the
Court of Appeals. And we agree that
such facts and circumstances in this
case do not sustain the theory of the
appellant. Indeed it is seriously to be
doubted whether we could reverse the
conclusion of the appellate court to the
effect that those facts and
circumstances are not "enough
evidence" to show clearly and beyond
doubt that the parties intended the
contract to be a mortgage instead of a
conditional conveyance. That
conclusion is obviously ONE OF
FACT, not a bit different from the
verdict of a jury in a murder trial that
the circumstantial evidence presented
by the prosecution has proved, or has
not proved the accused had killed the
deceased.
In disputes of this nature, the pivotal
inquiry is: Do the circumstances show
beyond doubt that the parties made a
contract different from the express
terms of the document they signed? Is
the evidence clear, convincing and
satisfactory that the deal was a
mortgage instead of a sale with pacto
de retro? (Cuyugan v. Santos, 34 Phil.
100; Tolentino v. Gonzales, 50 Phil.
558). That query necessarily invites
calibration of the hole "evidence,"
considering mainly the credibility of
witnesses, existence and relevancy of
specific surrounding circumstances,
their relation to each other and to the
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
31
whole and the probabilities of the
situation. Consequently, the question
must be deemed factual, for the
Appeals' Court to solve.
In the United States where questions
of law are for the judge and questions
of fact for the jury, it is held that if the
question whether a given transaction
amounts to a conditional sale or mere
mortgage depends upon written
instruments alone, it is a question for
the court; but if extraneous evidence is
required or received for the purpose of
ascertaining the real intention of the
parties, the question is for the jury (41
C.J. 361 citing many cases,
particularly Bogk v. Gasset, 149 U.S.
17; Howard v. Kopperl, 74 Tex. 194; 5
SW 627 and Kinnert v. Strong, 103
Wis. 70; 79 N.W. 32) and 'an issue
involving determination of the ... intent
of a person or persons with respect to
act done by them is a question of fact
for the jury. (64 C.J. 365). (Emphasis
ours).
In Rapatan vs. Chicano G.R. No. L-13828,
February 25, 1960, We likewise said:
But the trial court did not merely
dismiss the complaint, proceeded to
receive evidence on the counterclaim
of defendants. In this respect the trial
court said 'With respect to the
counterclaim alleged in the amended
answer of the said defendants, the
preponderance of evidence discloses
that the imputations contained in the
complaint that the late Escolastico G.
Chicano, husband of Coleta de
Chicano and father of Elpidio Chicano,
had acquired the land in question from
the plaintiffs through fraud and that the
said defendants "taking advantage of
the ignorance of the plaintiffs herein
managed fraudulently to transfer the
tax declaration of the land in question
in the name of the plaintiffs to the
name of defendants, are false,
malicious and defamatory to the
memory of the late Escolastico
Chicano and the reputation of his
31
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
heirs, Elpidio Chicano and Coleta de
Chicano, thus causing the latter
mental anguish, besmirched
reputation, wounded feelings, moral
shock and similar injuries," and
accordingly, ordered plaintiffs to pay
the sum of P5,000.00 as moral
damages.
Considering that the foregoing finding
is a question of fact which involves an
evaluation of the evidence and the
same is now assigned as error, we are
of the opinion that this case comes
within the appellate jurisdiction of the
Court of Appeals.
In the light of the foregoing it is clear that
petitioners now seek a reversal of the decision
of the Court of Appeals not upon a question of
law but upon one of fact — one which
necessarily involves the examination of the
probative value of the evidence presented by
them, it being their contention that such
evidence, which the Court of Appeals
precisely held to be insufficient to justify the
granting of the relief sought, is, in fact,
sufficient for that purpose. In other words,
petitioners seek to have Us substitute our
judgment in lieu of that of the Court of Appeals
in the resolution of a question of fact.
But to avoid the necessarily fatal application of
the well settled rule on the matter, petitioners'
lone assignment of error in the brief submitted
to Us attempts to state the issue somewhat
differently, saying that the Court of Appeals
"gravely erred in not declaring the donation in
question inofficious and in not ordering the
return to petitioners of the excess thereof".
Re-stating the issue at page 2 of their brief
they submit again that "the only question
presented in this appeal is whether the
conclusions of the Honorable Court of
Appeals drawn from the undisputed facts are
correct or not".
Petitioners' obvious effort to show in this
manner that the Court of Appeals committed
errors of laws is unavailing, because for Us to
hold that, upon the evidence of record, the
questioned donation is inofficious, We must
necessarily weigh or evaluate their evidence
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
32
and hold that — contrary to the opinion of the
Court of Appeals — that evidence is of
sufficient probative value to show that the
questioned donation is inofficious.
Upon the other hand, the authorities relied
upon by petitioners do not support their
contention.
What We said in Manila Railroad Company
vs. Attorney General, 41 Phil. 160, 169, is
simply to the effect that a witness who
personally knows the land sought to be
expropriated because he had possessed it as
owner or had administered it or levied on it for
a long time, or because he had bought and
sold much land situated in the same
municipality, or had been engaged in farming
and business and had therefore acquired
experience and knowledge of the value of
lands in the locality, is competent to testify on
the value of said land. To hold that a particular
person is competent to testify upon a given
matter does not mean that his testimony upon
the same must be believed by the Court or
must be deemed by the Court or must be
deemed by the latter to be of sufficient
probative value to establish the point which it
was intended to prove. Competency as a
witness is one thing, and it is another to be a
credible witness, so credible that the Court
must accept what he says. A perusal of the
decision subject of review clearly shows that
the Court of Appeals did not hold that witness
Doromal was not a competent witness in
relation to the value of the properties involved
in the questioned donation; it simply declined
to believe his testimony or to give it probative
value sufficient to prove what petitioners were
trying to establish. Had the Court of Appeals
considered him not to be a competent witness
upon that matter, it would have completely
ignored or disregarded his testimony instead
of weighing it or evaluating it; this, however,
resulting in the Court arriving at the conclusion
that such evidence did not have sufficient
probative value to convince the Court.
The passages quoted from 20 American
Jurisprudence, pp. 749-750 and 755 are
likewise in support of the proposition that
"professional appraisers and dealers engaged
in the business of buying and selling similar
32
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
property are competent to testify as to value"
or are "competent to express his (their)
judgment as to its value". To say that a
particular witness "is competent to express his
judgment" as to the value of particular
properties is manisfestly a far cry from the
proposition that because he is competent to
express such judgment, the Court must
necessarily accept and believe his testimony.
The Court — particularly trial courts — may
allow a person to testify as a witness upon a
given matter because he is competent but
may thereafter decide whether to believe or
not to believe his testimony.
As regards the Court of Appeals' refusal to
believe or to be bound by the testimony of
petitioner Jesusa Lacson Vda. de Arroyo
because "a sale between brothers can not be
a reliable index of the fair market value of a
property", petitioners now contend that there
is no evidence at all that the deceased Jose
Arroyo (late husband of said petitioner) or the
deceased Mariano Arroyo were trying to help
one another when they executed the deed of
conveyance involving one-half share of
Haciendas "Manolita" and "Conchita" in favor
of the former. This obviously raises the same
question of whether or not the Court of
Appeals committed any error in evaluating the
testimony of the witness already named — a
question purely of fact which We are not
authorized to review.
IN VIEW OF ALL THE FOREGOING, the
decision appealed from is affirmed, with costs.
[G.R. No. 145804. February 6,
2003]
LIGHT RAIL TRANSIT
AUTHORITY & RODOLFO
ROMAN, petitioners,
vs. MARJORIE NAVIDAD,
Heirs of the Late NICANOR
NAVIDAD & PRUDENT
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
33
SECURITY
AGENCY, respondents.
DECISION
VITUG, J.:
The case before the Court is an
appeal from the decision and
resolution of the Court of Appeals,
promulgated on 27 April 2000 and
10 October 2000, respectively, in
CA-G.R. CV No. 60720, entitled
Marjorie Navidad and Heirs of the
Late Nicanor Navidad vs. Rodolfo
Roman, et. al., which has modified
the decision of 11 August 1998 of
the Regional Trial Court, Branch
266, Pasig City, exonerating
Prudent Security Agency (Prudent)
from liability and finding Light Rail
Transit Authority (LRTA) and
Rodolfo Roman liable for damages
on account of the death of Nicanor
Navidad.
On 14 October 1993, about half
an hour past seven oclock in the
evening, Nicanor Navidad, then
drunk, entered the EDSA LRT
station after purchasing a token
(representing payment of the
fare). While Navidad was standing
on the platform near the LRT tracks,
Junelito Escartin, the security guard
assigned to the area approached
Navidad. A misunderstanding or an
altercation between the two
apparently ensued that led to a fist
fight. No evidence, however, was
adduced to indicate how the fight
started or who, between the two,
delivered the first blow or how
33
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
Navidad later fell on the LRT
tracks. At the exact moment that
Navidad fell, an LRT train, operated
by petitioner Rodolfo Roman, was
coming in. Navidad was struck by
the moving train, and he was killed
instantaneously.
On 08 December 1994, the
widow of Nicanor, herein respondent
Marjorie Navidad, along with her
children, filed a complaint for
damages against Junelito Escartin,
Rodolfo Roman, the LRTA, the
Metro Transit Organization, Inc.
(Metro Transit), and Prudent for the
death of her husband. LRTA and
Roman filed a counterclaim against
Navidad and a cross-claim against
Escartin and Prudent. Prudent, in its
answer, denied liability and averred
that it had exercised due diligence in
the selection and supervision of its
security guards.
The LRTA and Roman
presented their evidence while
Prudent and Escartin, instead of
presenting evidence, filed a
demurrer contending that Navidad
had failed to prove that Escartin was
negligent in his assigned task. On 11
August 1998, the trial court rendered
its decision; it adjudged:
WHEREFORE, judgment is hereby
rendered in favor of the plaintiffs and
against the defendants Prudent Security
and Junelito Escartin ordering the latter
to pay jointly and severally the
plaintiffs the following:
a) 1) Actual damages of P44,830.00;
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
34
2) Compensatory damages
of P443,520.00;
3) Indemnity for the death
of Nicanor Navidad
in the sum of
P50,000.00;
b) Moral damages of P50,000.00;
c) Attorneys fees of P20,000;
d) Costs of suit.
The complaint against defendants
LRTA and Rodolfo Roman are
dismissed for lack of merit.
The compulsory counterclaim of LRTA
and Roman are likewise dismissed. [1]
Prudent appealed to the Court of
Appeals. On 27 August 2000, the
appellate court promulgated its now
assailed decision exonerating
Prudent from any liability for the
death of Nicanor Navidad and,
instead, holding the LRTA and
Roman jointly and severally liable
thusly:
WHEREFORE, the assailed judgment
is hereby MODIFIED, by exonerating
the appellants from any liability for the
death of Nicanor Navidad, Jr. Instead,
appellees Rodolfo Roman and the Light
Rail Transit Authority (LRTA) are held
liable for his death and are hereby
directed to pay jointly and severally to
the plaintiffs-appellees, the following
amounts:
34
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
a) P44,830.00 as actual damages;
b) P50,000.00 as nominal damages;
c) P50,000.00 as moral damages;
d) P50,000.00 as indemnity for the
death of the deceased; and
e) P20,000.00 as and for attorneys
fees.
[2]
The appellate court ratiocinated
that while the deceased might not
have then as yet boarded the train, a
contract of carriage theretofore had
already existed when the victim
entered the place where passengers
were supposed to be after paying
the fare and getting the
corresponding token therefor. In
exempting Prudent from liability, the
court stressed that there was
nothing to link the security agency to
the death of Navidad. It said that
Navidad failed to show that Escartin
inflicted fist blows upon the victim
and the evidence merely established
the fact of death of Navidad by
reason of his having been hit by the
train owned and managed by the
LRTA and operated at the time by
Roman. The appellate court faulted
petitioners for their failure to present
expert evidence to establish the fact
that the application of emergency
brakes could not have stopped the
train.
The appellate court denied
petitioners motion for
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
35
reconsideration in its resolution of 10
October 2000.
In their present recourse,
petitioners recite alleged errors on
the part of the appellate court; viz:
I.
THE HONORABLE COURT OF
APPEALS GRAVELY ERRED BY
DISREGARDING THE FINDINGS
OF FACTS BY THE TRIAL COURT
II.
THE HONORABLE COURT OF
APPEALS GRAVELY ERRED IN
FINDING THAT PETITIONERS ARE
LIABLE FOR THE DEATH OF
NICANOR NAVIDAD, JR.
III.
THE HONORABLE COURT OF
APPEALS GRAVELY ERRED IN
FINDING THAT RODOLFO ROMAN
IS AN EMPLOYEE OF LRTA. [3]
Petitioners would contend that
the appellate court ignored the
evidence and the factual findings of
the trial court by holding them liable
on the basis of a sweeping
conclusion that the presumption of
negligence on the part of a common
carrier was not
overcome. Petitioners would insist
that Escartins assault upon Navidad,
which caused the latter to fall on the
tracks, was an act of a stranger that
could not have been foreseen or
prevented. The LRTA would add
that the appellate courts conclusion
35
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
on the existence of an employer-
employee relationship between
Roman and LRTA lacked basis
because Roman himself had
testified being an employee of Metro
Transit and not of the LRTA.
Respondents, supporting the
decision of the appellate court,
contended that a contract of carriage
was deemed created from the
moment Navidad paid the fare at the
LRT station and entered the
premises of the latter, entitling
Navidad to all the rights and
protection under a contractual
relation, and that the appellate court
had correctly held LRTA and Roman
liable for the death of Navidad in
failing to exercise extraordinary
diligence imposed upon a common
carrier.
Law and jurisprudence dictate
that a common carrier, both from the
nature of its business and for
reasons of public policy, is burdened
with the duty of exercising utmost
diligence in ensuring the safety of
passengers. The
[4]
Civil Code,
governing the liability of a common
carrier for death of or injury to its
passengers, provides:
Article 1755. A common carrier is
bound to carry the passengers safely as
far as human care and foresight can
provide, using the utmost diligence of
very cautious persons, with a due
regard for all the circumstances.
Article 1756. In case of death of or
injuries to passengers, common carriers
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
36
are presumed to have been at fault or to
have acted negligently, unless they
prove that they observed extraordinary
diligence as prescribed in articles 1733
and 1755.
Article 1759. Common carriers are
liable for the death of or injuries to
passengers through the negligence or
willful acts of the formers employees,
although such employees may have
acted beyond the scope of their
authority or in violation of the orders of
the common carriers.
This liability of the common carriers
does not cease upon proof that they
exercised all the diligence of a good
father of a family in the selection and
supervision of their employees.
Article 1763. A common carrier is
responsible for injuries suffered by a
passenger on account of the willful acts
or negligence of other passengers or of
strangers, if the common carriers
employees through the exercise of the
diligence of a good father of a family
could have prevented or stopped the act
or omission.
The law requires common
carriers to carry passengers safely
using the utmost diligence of very
cautious persons with due regard for
all circumstances. Such duty of a
[5]
common carrier to provide safety to
its passengers so obligates it not
only during the course of the trip but
for so long as the passengers are
within its premises and where they
ought to be in pursuance to the
36
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
contract of carriage. The statutory
[6]
provisions render a common carrier
liable for death of or injury to
passengers (a) through
the negligence or wilful acts of its
employees or b) on account of
wilful acts or negligence of other
passengers or of strangers if the
common carriers employees
through the exercise of due
diligence could have prevented or
stopped the act or omission. In
case of such death or injury, a carrier
is presumed to have been at fault or
been negligent, and by simple proof
[8]
of injury, the passenger is relieved of
the duty to still establish the fault or
negligence of the carrier or of its
employees and the burden shifts
upon the carrier to prove that the
injury is due to an unforeseen event
or to force majeure. In the absence
[9]
of satisfactory explanation by the
carrier on how the accident
occurred, which petitioners,
according to the appellate court,
have failed to show, the presumption
would be that it has been at
fault, an exception from the
[10]
general rule that negligence must be
proved. [11]
The foundation of LRTAs liability
is the contract of carriage and its
obligation to indemnify the victim
arises from the breach of that
contract by reason of its failure to
exercise the high diligence required
of the common carrier. In the
discharge of its commitment to
ensure the safety of passengers, a
carrier may choose to hire its own
37
employees or avail itself of the
services of an outsider or an
independent firm to undertake the
task. In either case, the common
carrier is not relieved of its
responsibilities under the contract of
carriage.
Should Prudent be made
likewise liable? If at all, that liability
could only be for tort under the
provisions of Article 2176 and [12]
[7]
related provisions, in conjunction
with Article 2180, of the Civil
[13]
Code. The premise, however, for the
employers liability is negligence or
fault on the part of the
employee. Once such fault is
established, the employer can then
be made liable on the basis of the
presumption juris tantum that the
employer failed to
exercise diligentissimi patris
families in the selection and
supervision of its employees. The
liability is primary and can only be
negated by showing due diligence in
the selection and supervision of the
employee, a factual matter that has
not been shown. Absent such a
showing, one might ask further, how
then must the liability of the common
carrier, on the one hand, and an
independent contractor, on the other
hand, be described? It would be
solidary. A contractual obligation
can be breached by tort and when
the same act or omission causes the
injury, one resulting in culpa
contractual and the other in culpa
aquiliana, Article 2194 of the Civil
[14]
Code can well apply. In fine, a [15]
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 37
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
liability for tort may arise even under
a contract, where tort is that which
breaches the contract. Stated[16]
differently, when an act which
constitutes a breach of contract
would have itself constituted the
source of a quasi-delictual liability
had no contract existed between the
parties, the contract can be said to
have been breached by tort, thereby
allowing the rules on tort to apply.[17]
Regrettably for LRT, as well as
perhaps the surviving spouse and
heirs of the late Nicanor Navidad,
this Court is concluded by the factual
finding of the Court of Appeals that
there is nothing to link (Prudent) to
the death of Nicanor (Navidad), for
the reason that the negligence of its
employee, Escartin, has not been
duly proven x x x. This finding of the
appellate court is not without
substantial justification in our own
review of the records of the case.
There being, similarly, no
showing that petitioner Rodolfo
Roman himself is guilty of any
culpable act or omission, he must
also be absolved from
liability. Needless to say, the
contractual tie between the LRT and
Navidad is not itself a juridical
relation between the latter and
Roman; thus, Roman can be made
liable only for his own fault or
negligence.
The award of nominal damages
in addition to actual damages is
untenable. Nominal damages are
adjudicated in order that a right of
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
38
the plaintiff, which has been violated
or invaded by the defendant, may be
vindicated or recognized, and not for
the purpose of indemnifying the
plaintiff for any loss suffered by
him. It is an established rule that
[18]
nominal damages cannot co-exist
with compensatory damages. [19]
WHEREFORE, the assailed
decision of the appellate court is
AFFIRMED with MODIFICATION
but only in that (a) the award of
nominal damages is DELETED and
(b) petitioner Rodolfo Roman is
absolved from liability. No costs.
SO ORDERED.
G.R. No. L-47822 December 22, 1988
PEDRO DE GUZMAN, petitioner,
vs.
COURT OF APPEALS and ERNESTO
CENDANA, respondents.
Vicente D. Millora for petitioner.
Jacinto Callanta for private respondent.
FELICIANO, J.:
Respondent Ernesto Cendana, a junk dealer, was engaged in
buying up used bottles and scrap metal in Pangasinan. Upon
gathering sufficient quantities of such scrap material, respondent
would bring such material to Manila for resale. He utilized two (2)
six-wheeler trucks which he owned for hauling the material to
Manila. On the return trip to Pangasinan, respondent would load
his vehicles with cargo which various merchants wanted
delivered to differing establishments in Pangasinan. For that
service, respondent charged freight rates which were commonly
lower than regular commercial rates.
Sometime in November 1970, petitioner Pedro
de Guzman a merchant and authorized dealer
of General Milk Company (Philippines), Inc. in
Urdaneta, Pangasinan, contracted with
respondent for the hauling of 750 cartons of
Liberty filled milk from a warehouse of
38
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
General Milk in Makati, Rizal, to petitioner's
establishment in Urdaneta on or before 4
December 1970. Accordingly, on 1 December
1970, respondent loaded in Makati the
merchandise on to his trucks: 150 cartons
were loaded on a truck driven by respondent
himself, while 600 cartons were placed on
board the other truck which was driven by
Manuel Estrada, respondent's driver and
employee.
Only 150 boxes of Liberty filled milk were
delivered to petitioner. The other 600 boxes
never reached petitioner, since the truck
which carried these boxes was hijacked
somewhere along the MacArthur Highway in
Paniqui, Tarlac, by armed men who took with
them the truck, its driver, his helper and the
cargo.
On 6 January 1971, petitioner commenced
action against private respondent in the Court
of First Instance of Pangasinan, demanding
payment of P 22,150.00, the claimed value of
the lost merchandise, plus damages and
attorney's fees. Petitioner argued that private
respondent, being a common carrier, and
having failed to exercise the extraordinary
diligence required of him by the law, should be
held liable for the value of the undelivered
goods.
In his Answer, private respondent denied that
he was a common carrier and argued that he
could not be held responsible for the value of
the lost goods, such loss having been due
to force majeure.
On 10 December 1975, the trial court
rendered a Decision 1 finding private
respondent to be a common carrier and
holding him liable for the value of the
undelivered goods (P 22,150.00) as well as
for P 4,000.00 as damages and P 2,000.00 as
attorney's fees.
On appeal before the Court of Appeals,
respondent urged that the trial court had erred
in considering him a common carrier; in
finding that he had habitually offered trucking
services to the public; in not exempting him
from liability on the ground of force
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
39
majeure; and in ordering him to pay damages
and attorney's fees.
The Court of Appeals reversed the judgment
of the trial court and held that respondent had
been engaged in transporting return loads of
freight "as a casual
occupation — a sideline to his scrap iron
business" and not as a common carrier.
Petitioner came to this Court by way of a
Petition for Review assigning as errors the
following conclusions of the Court of Appeals:
1. that private respondent was
not a common carrier;
2. that the hijacking of
respondent's truck was force
majeure; and
3. that respondent was not
liable for the value of the
undelivered cargo. (Rollo, p.
111)
We consider first the issue of whether or not
private respondent Ernesto Cendana may,
under the facts earlier set forth, be properly
characterized as a common carrier.
The Civil Code defines "common carriers" in
the following terms:
Article 1732. Common carriers
are persons, corporations,
firms or associations engaged
in the business of carrying or
transporting passengers or
goods or both, by land, water,
or air for compensation,
offering their services to the
public.
The above article makes no distinction
between one whose principal business activity
is the carrying of persons or goods or both,
and one who does such carrying only as
an ancillary activity (in local Idiom as "a
sideline"). Article 1732 also carefully avoids
making any distinction between a person or
enterprise offering transportation service on
a regular or scheduled basis and one offering
39
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its
services to the "general public," i.e., the
general community or population, and one
who offers services or solicits business only
from a narrow segment of the general
population. We think that Article 1733
deliberaom making such distinctions.
So understood, the concept of "common
carrier" under Article 1732 may be seen to
coincide neatly with the notion of "public
service," under the Public Service Act
(Commonwealth Act No. 1416, as amended)
which at least partially supplements the law on
common carriers set forth in the Civil Code.
Under Section 13, paragraph (b) of the Public
Service Act, "public service" includes:
... every person that now or
hereafter may own, operate,
manage, or control in the
Philippines, for hire or
compensation, with general or
limited clientele, whether
permanent, occasional or
accidental, and done for
general business purposes,
any common carrier, railroad,
street railway, traction railway,
subway motor vehicle, either
for freight or passenger, or
both, with or without fixed
route and whatever may be its
classification, freight or carrier
service of any class, express
service, steamboat, or
steamship line, pontines,
ferries and water craft,
engaged in the transportation
of passengers or freight or
both, shipyard, marine repair
shop, wharf or dock, ice plant,
ice-refrigeration plant, canal,
irrigation system, gas, electric
light, heat and power, water
supply and power petroleum,
sewerage system, wire or
wireless communications
systems, wire or wireless
broadcasting stations and
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
40
other similar public services. ...
(Emphasis supplied)
It appears to the Court that private respondent
is properly characterized as a common carrier
even though he merely "back-hauled" goods
for other merchants from Manila to
Pangasinan, although such back-hauling was
done on a periodic or occasional rather than
regular or scheduled manner, and even
though private
respondent's principal occupation was not the
carriage of goods for others. There is no
dispute that private respondent charged his
customers a fee for hauling their goods; that
fee frequently fell below commercial freight
rates is not relevant here.
The Court of Appeals referred to the fact that
private respondent held no certificate of public
convenience, and concluded he was not a
common carrier. This is palpable error. 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. The law
imposes duties and liabilities upon common
carriers for the safety and protection of those
who utilize their services and the law cannot
allow a common carrier to render such duties
and liabilities merely facultative by simply
failing to obtain the necessary permits and
authorizations.
40
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
We turn then to the liability of private
respondent as a common carrier.
Common carriers, "by the nature of their
business and for reasons of public
policy" 2 are held to a very high degree of care
and diligence ("extraordinary diligence") in the
carriage of goods as well as of passengers.
The specific import of extraordinary diligence
in the care of goods transported by a common
carrier is, according to Article 1733, "further
expressed in Articles 1734,1735 and 1745,
numbers 5, 6 and 7" of the Civil Code.
Article 1734 establishes the general rule that
common carriers are responsible for the loss,
destruction or deterioration of the goods which
they carry, "unless the same is due to any of
the following causes only:
(1) Flood, storm, earthquake, lightning
or other natural disaster or calamity;
(2) Act of the public enemy in war,
whether international or civil;
(3) Act or omission of the shipper or
owner of the goods;
(4) The character-of the goods or
defects in the packing or-in the
containers; and
(5) Order or act of competent public
authority.
It is important to point out that the above list of
causes of loss, destruction or deterioration
which exempt the common carrier for
responsibility therefor, is a closed list. Causes
falling outside the foregoing list, even if they
appear to constitute a species of force
majeure fall within the scope of Article 1735,
which provides as follows:
In all cases other than those
mentioned in numbers 1, 2, 3,
4 and 5 of the preceding
article, if the goods are lost,
destroyed or deteriorated,
common carriers are
presumed to have been at
fault or to have acted
negligently, unless they prove
that they observed
extraordinary diligence as
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
41
required in Article 1733.
(Emphasis supplied)
Applying the above-quoted Articles 1734 and
1735, we note firstly that the specific cause
alleged in the instant case — the hijacking of
the carrier's truck — does not fall within any of
the five (5) categories of exempting causes
listed in Article 1734. It would follow,
therefore, that the hijacking of the carrier's
vehicle must be dealt with under the
provisions of Article 1735, in other words, that
the private respondent as common carrier is
presumed to have been at fault or to have
acted negligently. This presumption, however,
may be overthrown by proof of extraordinary
diligence on the part of private respondent.
Petitioner insists that private respondent had
not observed extraordinary diligence in the
care of petitioner's goods. Petitioner argues
that in the circumstances of this case, private
respondent should have hired a security guard
presumably to ride with the truck carrying the
600 cartons of Liberty filled milk. We do not
believe, however, that in the instant case, the
standard of extraordinary diligence required
private respondent to retain a security guard
to ride with the truck and to engage brigands
in a firelight at the risk of his own life and the
lives of the driver and his helper.
The precise issue that we address here
relates to the specific requirements of the duty
of extraordinary diligence in the vigilance over
the goods carried in the specific context of
hijacking or armed robbery.
As noted earlier, the duty of extraordinary
diligence in the vigilance over goods is, under
Article 1733, given additional specification not
only by Articles 1734 and 1735 but also by
Article 1745, numbers 4, 5 and 6, Article 1745
provides in relevant part:
Any of the following or similar
stipulations shall be
considered unreasonable,
unjust and contrary to public
policy:
xxx xxx xxx
41
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
(5) that the common carrier shall
not be responsible for the acts
or omissions of his or its
employees;
(6) that the common carrier's
liability for acts committed by
thieves, or of robbers who
donot act with grave or
irresistible threat, violence or
force, is dispensed with or
diminished; and
(7) that the common carrier shall
not responsible for the loss,
destruction or deterioration of
goods on account of the
defective condition of the car
vehicle, ship, airplane or other
equipment used in the contract
of carriage. (Emphasis supplied)
Under Article 1745 (6) above, a common
carrier is held responsible — and will not be
allowed to divest or to diminish such
responsibility — even for acts of strangers like
thieves or robbers, except where such thieves
or robbers in fact acted "with grave or
irresistible threat, violence or force." We
believe and so hold that the limits of the duty
of extraordinary diligence in the vigilance over
the goods carried are reached where the
goods are lost as a result of a robbery which
is attended by "grave or irresistible threat,
violence or force."
In the instant case, armed men held up the
second truck owned by private respondent
which carried petitioner's cargo. The record
shows that an information for robbery in band
was filed in the Court of First Instance of
Tarlac, Branch 2, in Criminal Case No. 198
entitled "People of the Philippines v. Felipe
Boncorno, Napoleon Presno, Armando
Mesina, Oscar Oria and one John Doe."
There, the accused were charged with willfully
and unlawfully taking and carrying away with
them the second truck, driven by Manuel
Estrada and loaded with the 600 cartons of
Liberty filled milk destined for delivery at
petitioner's store in Urdaneta, Pangasinan.
The decision of the trial court shows that the
accused acted with grave, if not irresistible,
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
42
threat, violence or force.3 Three (3) of the five
(5) hold-uppers were armed with firearms. The
robbers not only took away the truck and its
cargo but also kidnapped the driver and his
helper, detaining them for several days and
later releasing them in another province (in
Zambales). The hijacked truck was
subsequently found by the police in Quezon
City. The Court of First Instance convicted all
the accused of robbery, though not of robbery
in band. 4
In these circumstances, we hold that the
occurrence of the loss must reasonably be
regarded as quite beyond the control of the
common carrier and properly regarded as a
fortuitous event. It is necessary to recall that
even common carriers are not made absolute
insurers against all risks of travel and of
transport of goods, and are not held liable for
acts or events which cannot be foreseen or
are inevitable, provided that they shall have
complied with the rigorous standard of
extraordinary diligence.
We, therefore, agree with the result reached
by the Court of Appeals that private
respondent Cendana is not liable for the value
of the undelivered merchandise which was
lost because of an event entirely beyond
private respondent's control.
ACCORDINGLY, the Petition for Review on
certiorari is hereby DENIED and the Decision
of the Court of Appeals dated 3 August 1977
is AFFIRMED. No pronouncement as to costs.
SO ORDERED.
[G.R. No. 125948. December 29, 1998]
FIRST PHILIPPINE
INDUSTRIAL
CORPORATION, petitioner,
vs. COURT OF APPEALS,
42
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
HONORABLE PATERNO V.
TAC-AN, BATANGAS CITY
and ADORACION C.
ARELLANO, in her official
capacity as City Treasurer of
Batangas, respondents.
DECISION
MARTINEZ, J.:
This petition for review
on certiorari assails the Decision of the
Court of Appeals dated November 29, 1995,
in CA-G.R. SP No. 36801, affirming the
decision of the Regional Trial Court of
Batangas City, Branch 84, in Civil Case No.
4293, which dismissed petitioners' complaint
for a business tax refund imposed by the City
of Batangas.
Petitioner is a grantee of a pipeline
concession under Republic Act No. 387, as
amended, to contract, install and operate oil
pipelines. The original pipeline concession
was granted in 1967[1] and renewed by the
Energy Regulatory Board in 1992.[2]
Sometime in January 1995, petitioner
applied for a mayor's permit with the Office
of the Mayor of Batangas City. However,
before the mayor's permit could be issued, 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.[3] The respondent City
Treasurer assessed a business tax on the
petitioner amounting to P956,076.04 payable
in four installments based on the gross
receipts for products pumped at GPS-1 for
the fiscal year 1993 which amounted
to P181,681,151.00. In order not to hamper
its operations, petitioner paid the tax under
protest in the amount of P239,019.01 for the
first quarter of 1993.
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
43
On January 20, 1994, petitioner filed a
letter-protest addressed to the respondent
City Treasurer, the pertinent portion of which
reads:
"Please note that our Company (FPIC)
is a pipeline operator with a
government concession granted under
the Petroleum Act. It is engaged in the
business of transporting petroleum
products from the Batangas refineries,
via pipeline, to Sucat and JTF
Pandacan Terminals. As such, our
Company is exempt from paying tax on
gross receipts under Section 133 of the
Local Government Code of 1991 x x x
x
"Moreover, Transportation contractors
are not included in the enumeration of
contractors under Section 131,
Paragraph (h) of the Local Government
Code. Therefore, the authority to
impose tax 'on contractors and other
independent contractors' under Section
143, Paragraph (e) of the Local
Government Code does not include the
power to levy on transportation
contractors.
"The imposition and assessment cannot
be categorized as a mere fee authorized
under Section 147 of the Local
Government Code. The said section
limits the imposition of fees and
charges on business to such amounts as
may be commensurate to the cost of
regulation, inspection, and
licensing. Hence, assuming arguendo
that FPIC is liable for the license fee,
the imposition thereof based on gross
receipts is violative of the aforecited
43
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
provision. The amount of P956,076.04
(P239,019.01 per quarter) is not
commensurate to the cost of regulation,
inspection and licensing. The fee is
already a revenue raising measure, and
not a mere regulatory imposition."[4]
On March 8, 1994, the respondent City
Treasurer denied the protest contending that
petitioner cannot be considered engaged in
transportation business, thus it cannot claim
exemption under Section 133 (j) of the Local
Government Code.[5]
On June 15, 1994, petitioner filed with
the Regional Trial Court of Batangas City a
complaint[6] for tax refund with prayer for a
writ of preliminary injunction against
respondents City of Batangas and Adoracion
Arellano in her capacity as City Treasurer. In
its complaint, petitioner alleged, inter alia,
that: (1) the imposition and collection of the
business tax on its gross receipts violates
Section 133 of the Local Government Code;
(2) the authority of cities to impose and
collect a 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 for, as defined
under Sec. 131 (h), the term "contractors"
excludes transportation contractors; and, (3)
the City Treasurer illegally and erroneously
imposed and collected the said tax, thus
meriting the immediate refund of the tax
paid.[7]
Traversing the complaint, the
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
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
44
ordinary carriers such as trucks, trains, ships
and the like. Respondents further posit that
the term "common carrier" under the said
code pertains to the mode or manner by
which a product is delivered to its
destination.[8]
On October 3, 1994, the trial court
rendered a decision dismissing the complaint,
ruling in this wise:
"xxx Plaintiff is either a contractor or
other independent contractor.
xxx the exemption to tax claimed by
the plaintiff has become unclear. It is a
rule that tax exemptions are to be
strictly construed against the taxpayer,
taxes being the lifeblood of the
government. Exemption may therefore
be granted only by clear and
unequivocal provisions of law.
"Plaintiff claims that it is a grantee of a
pipeline concession under Republic Act
387, (Exhibit A) whose concession was
lately renewed by the Energy
Regulatory Board (Exhibit B). Yet
neither said law nor the deed of
concession grant any tax exemption
upon the plaintiff.
"Even the Local Government Code
imposes a tax on franchise holders
under Sec. 137 of the Local Tax
Code. Such being the situation obtained
in this case (exemption being unclear
and equivocal) resort to distinctions or
other considerations may be of help:
1. That the exemption
granted under Sec.
133 (j)
44
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
encompasses
only common
carriers so as not to
overburden the
riding public or
commuters with
taxes. Plaintiff is
not a common
carrier, but a
special carrier
extending its
services and
facilities to a single
specific or "special
customer" under a
"special contract."
2. The Local Tax Code of
1992 was basically
enacted to give
more and effective
local autonomy to
local governments
than the previous
enactments, to
make them
economically and
financially viable to
serve the people
and discharge their
functions with a
concomitant
obligation to accept
certain devolution
of powers, x x x
So, consistent with
this policy even
franchise grantees
are taxed (Sec. 137)
and contractors are
also taxed under
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
45
Sec. 143 (e) and
151 of the Code."[9]
Petitioner assailed the aforesaid decision
before this Court via a petition for
review. On February 27, 1995, we referred
the case to the respondent Court of Appeals
for consideration and adjudication.[10]On
November 29, 1995, the respondent court
rendered a decision[11] affirming the trial
court's dismissal of petitioner's
complaint. Petitioner's motion for
reconsideration was denied on July 18,
1996.[12]
Hence, this petition. At first, the petition
was denied due course in a Resolution dated
November 11, 1996.[13] Petitioner moved for
a reconsideration which was granted by this
Court in a Resolution[14]of January 20,
1997. Thus, the petition was reinstated.
Petitioner claims that the respondent
Court of Appeals erred in holding that (1) the
petitioner is not a common carrier or a
transportation contractor, and (2) the
exemption sought for by petitioner is not
clear under the law.
There is merit in the petition.
A "common carrier" may be defined,
broadly, as one who holds himself out to the
public as engaged in the business of
transporting persons or property from place
to place, for compensation, offering his
services to the public generally.
Article 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:
45
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
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
4. The transportation must be
for hire.[15]
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. In De
Guzman vs. Court of Appeals[16] we ruled
that:
"The above article (Art. 1732, Civil
Code) makes no distinction between
one whose principal business activity is
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
46
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 x x
x avoids making any distinction
between a person or enterprise
offering transportation service on
a regular or scheduled basis and one
offering such service on
an occasional, episodic or
unscheduled basis. Neither does
Article 1732 distinguish between a
carrier offering its services to the
'general public,' i.e., the general
community or population, and one
who offers services or solicits
business only from a
narrow segment of the general
population. We think that Article
1877 deliberately refrained from
making such distinctions.
So understood, the concept of 'common
carrier' under Article 1732 may be seen
to coincide neatly with the notion of
'public service,' under the Public
Service Act (Commonwealth Act No.
1416, as amended) which at least
partially supplements the law on
common carriers set forth in the Civil
Code. Under Section 13, paragraph (b)
of the Public Service Act, 'public
service' includes:
'every person that now or hereafter may
own, operate, manage, or control in the
Philippines, for hire or
compensation, with general or limited
clientele, whether permanent,
occasional or accidental, and done for
general business purposes, any
46
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
common carrier, railroad, street
railway, traction railway, subway motor
vehicle, either for freight or passenger,
or both, with or without fixed route and
whatever may be its classification,
freight or carrier service of any class,
express service, steamboat, or
steamship line, pontines, ferries and
water craft, engaged in the
transportation of passengers or freight
or both, shipyard, marine repair shop,
wharf or dock, ice plant, ice-
refrigeration plant, canal, irrigation
system gas, electric light heat and
power, water supply and power
petroleum, sewerage system, wire or
wireless communications systems, wire
or wireless broadcasting stations and
other similar public services.'
"(Underscoring Supplied)
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.
As correctly pointed out by petitioner,
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.[17]
Under the Petroleum Act of the
Philippines (Republic Act 387), petitioner is
considered a "common carrier." Thus, Article
86 thereof provides that:
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
47
"Art. 86. Pipe line concessionaire as a
common carrier. - A pipe line shall
have the preferential right to utilize
installations for the transportation of
petroleum owned by him, but is
obligated to utilize the remaining
transportation capacity pro rata for the
transportation of such other petroleum
as may be offered by others for
transport, and to charge without
discrimination such rates as may have
been approved by the Secretary of
Agriculture and Natural Resources."
Republic Act 387 also regards petroleum
operation as a public utility. Pertinent portion
of Article 7 thereof provides:
"that everything relating to the
exploration for and exploitation of
petroleum x x and everything relating
to the manufacture, refining, storage,
or transportation by special methods
of petroleum, is hereby declared to be
a public utility." (Underscoring
Supplied)
The Bureau of Internal Revenue likewise
considers the petitioner a "common
carrier." In BIR Ruling No. 069-83, it
declared:
"x x x since [petitioner] is a pipeline
concessionaire that is engaged only in
transporting petroleum products, it is
considered a common carrier under
Republic Act No. 387 x x x. Such being
the case, it is not subject to withholding
tax prescribed by Revenue Regulations
No. 13-78, as amended."
From the foregoing disquisition, there is
no doubt that petitioner is a "common carrier"
47
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
and, therefore, exempt from the business tax
as provided for in Section 133 (j), of the
Local Government Code, to wit:
"Section 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 :
xxxxxxxxx
(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."
The deliberations conducted in the
House of Representatives on the Local
Government Code of 1991 are illuminating:
"MR. AQUINO (A). Thank you, Mr.
Speaker.
Mr. Speaker, we would like to proceed
to page 95, line 1. It states : "SEC.121
[now Sec. 131]. Common Limitations
on the Taxing Powers of Local
Government Units." x x x
MR. AQUINO (A.). Thank you Mr.
Speaker.
Still on page 95, subparagraph 5, on
taxes on the business of
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
48
transportation. This appears to be one
of those being deemed to be exempted
from the taxing powers of the local
government units. May we know the
reason why the transportation
business is being excluded from the
taxing powers of the local
government units?
MR. JAVIER (E.). Mr. Speaker, there
is an exception contained in Section
121 (now Sec. 131), line 16, paragraph
5. It states that local government units
may not impose taxes on the business
of transportation, except as otherwise
provided in this code.
Now, Mr. Speaker, if the Gentleman
would care to go to page 98 of Book II,
one can see there that provinces have
the power to impose a tax on business
enjoying a franchise at the rate of not
more than one-half of 1 percent of the
gross annual receipts. So, transportation
contractors who are enjoying a
franchise would be subject to tax by the
province. That is the exception, Mr.
Speaker.
What we want to guard against here,
Mr. Speaker, is the imposition of
taxes by local government units on
the carrier business. Local
government units may impose taxes on
top of what is already being imposed
by the National Internal Revenue Code
which is the so-called "common
carriers tax." We do not want a
duplication of this tax, so we just
provided for an exception under
Section 125 [now Sec. 137] that a
48
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY 49

province may impose this tax at a VLASONS SHIPPING,

specific rate. INC., petitioner, vs. COUR
T OF APPEALS AND
MR. AQUINO (A.). Thank you for NATIONAL STEEL
that clarification, Mr. Speaker. x x CORPORATION, responde
x[18] nts.
It is clear that the legislative intent in
excluding from the taxing power of the local
DECISION
government unit the imposition of business PANGANIBAN, J.:
tax against common carriers is to prevent a
duplication of the so-called "common The Court finds occasion to
carrier's tax." apply the rules on the seaworthiness
Petitioner is already paying three (3%) of a private carrier, its owners
percent common carrier's tax on its gross responsibility for damage to the
sales/earnings under the National Internal cargo and its liability for demurrage
Revenue Code.[19] To tax petitioner again on and attorneys fees.The Court also
its gross receipts in its transportation of reiterates the well-known rule that
petroleum business would defeat the purpose findings of facts of trial courts, when
of the Local Government Code.
affirmed by the Court of Appeals, are
WHEREFORE, the petition is hereby binding on this Court.
GRANTED. The decision of the respondent
Court of Appeals dated November 29, 1995
in CA-G.R. SP No. 36801 is REVERSED The Case
and SET ASIDE.
SO ORDERED.
Before us are two separate
petitions for review filed by National
Steel Corporation (NSC) and
[G.R. No. 112287. December 12, Vlasons Shipping, Inc. (VSI), both of
1997] which assail the August 12, 1993
Decision of the Court of
Appeals. The Court of Appeals
[1]

NATIONAL STEEL modified the decision of the

CORPORATION, petitioner Regional Trial Court of Pasig, Metro
, vs. COURT OF APPEALS Manila, Branch 163 in Civil Case No.
AND VLASONS SHIPPING, 23317. The RTC disposed as
INC., respondents. follows:

WHEREFORE, judgment is hereby

rendered in favor of defendant and
[G.R. No. 112350. December 12, against the plaintiff dismissing the
1997] complaint with cost against plaintiff,

TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 49

 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
and ordering plaintiff to pay the
defendant on the counterclaim as
follows:
1. The sum of P75,000.00 as
unpaid freight and P88,000.00
as demurrage with interest at the
legal rate on both amounts from
April 7, 1976 until the same shall
have been fully paid;
2. Attorneys fees and expenses of
litigation in the sum
of P100,000.00; and
3. Cost of suit.
SO ORDERED. [2]
On the other hand, the Court of
Appeals ruled:
WHEREFORE, premises considered,
the decision appealed from is modified
by reducing the award for demurrage
to P44,000.00 and deleting the award
for attorneys fees and expenses of
litigation. Except as thus modified, the
decision is AFFIRMED. There is no
pronouncement as to costs.
SO ORDERED. [3]
The Facts
The MV Vlasons I is a vessel
which renders tramping service and,
as such, does not transport cargo or
shipment for the general public. Its
services are available only to
specific persons who enter into a
special contract of charter party with
its owner. It is undisputed that the
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
50
ship is a private carrier. And it is in
this capacity that its owner, Vlasons
Shipping, Inc., entered into a
contract of affreightment or contract
of voyage charter hire with National
Steel Corporation.
The facts as found by
Respondent Court of Appeals are as
follows:
(1) On July 17, 1974, plaintiff National
Steel Corporation (NSC) as Charterer
and defendant Vlasons Shipping, Inc.
(VSI) as Owner, entered into a Contract
of Voyage Charter Hire (Exhibit B;
also Exhibit 1) whereby NSC hired
VSIs vessel, the MV VLASONS I to
make one (1) voyage to load steel
products at Iligan City and discharge
them at North Harbor, Manila, under
the following terms and conditions, viz:
1. x x x x x x.
2. Cargo: Full cargo of steel products of
not less than 2,500 MT, 10% more or
less at Masters option.
3. x x x x x x
4. Freight/Payment: P30.00 /metric ton,
FIOST basis. Payment upon
presentation of Bill of Lading within
fifteen (15) days.
5. Laydays/Cancelling: July 26,
1974/Aug. 5, 1974.
6. Loading/Discharging Rate: 750 tons
per WWDSHINC. (Weather Working
50
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
Day of 24 consecutive hours, Sundays
and Holidays Included).
7. Demurrage/Dispatch: P8,000.00/P4,0
00.00 per day.
8. x x x x x x
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.
10. Other terms:(a) All
terms/conditions of NONYAZAI C/P
[sic] or other internationally recognized
Charter Party Agreement shall form
part of this Contract.
xxxxxxxxx
The terms F.I.O.S.T. which is used in
the shipping business is a standard
provision in the NANYOZAI Charter
Party which stands for Freight In and
Out including Stevedoring and Trading,
which means that the handling, loading
and unloading of the cargoes are the
responsibility of the Charterer. Under
Paragraph 5 of the NANYOZAI
Charter Party, it states, Charterers to
load, stow and discharge the cargo free
of risk and expenses to owners. x x
x (Underscoring supplied).
Under paragraph 10 thereof, it is
provided that (o)wners shall, before and
at the beginning of the voyage, exercise
due diligence to make the vessel
seaworthy and properly manned,
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
51
equipped and supplied and to make the
holds and all other parts of the vessel in
which cargo is carried, fit and safe for
its reception, carriage and
preservation. Owners shall not be liable
for loss of or damage of the cargo
arising or resulting
from: unseaworthiness unless caused
by want of due diligence on the part of
the owners to make the vessel
seaworthy, and to secure that the vessel
is properly manned, equipped and
supplied and to make the holds and all
other parts of the vessel in which cargo
is carried, fit and safe for its reception,
carriage and preservation; xxx; perils,
dangers and accidents of the sea or
other navigable waters; xxx; wastage in
bulk or weight or any other loss or
damage arising from inherent defect,
quality or vice of the cargo;
insufficiency of packing; xxx; latent
defects not discoverable by due
diligence; any other cause arising
without the actual fault or privity of
Owners or without the fault of the
agents or servants of owners.
Paragraph 12 of said NANYOZAI
Charter Party also provides that
(o)wners shall not be responsible for
split, chafing and/or any damage unless
caused by the negligence or default of
the master and crew.
(2) On August 6, 7 and 8, 1974, in
accordance with the Contract of
Voyage Charter Hire, the MV
VLASONS I loaded at plaintiffs pier at
Iligan City, the NSCs shipment of
1,677 skids of tinplates and 92
51
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
packages of hot rolled sheets or a total
of 1,769 packages with a total weight
of about 2,481.19 metric tons for
carriage to Manila. The shipment was
placed in the three (3) hatches of the
ship. Chief Mate Gonzalo Sabando,
acting as agent of the vessel[,]
acknowledged receipt of the cargo on
board and signed the corresponding bill
of lading, B.L.P.P. No. 0233 (Exhibit
D) on August 8, 1974.
(3) The vessel arrived with the cargo at
Pier 12, North Harbor, Manila, on
August 12, 1974. The following day,
August 13, 1974, when the vessels
three (3) hatches containing the
shipment were opened by plaintiffs
agents, nearly all the skids of tinplates
and hot rolled sheets were allegedly
found to be wet and rusty. The cargo
was discharged and unloaded by
stevedores hired by the
Charterer. Unloading was completed
only on August 24, 1974 after incurring
a delay of eleven (11) days due to the
heavy rain which interrupted the
unloading operations. (Exhibit E)
(4) To determine the nature and extent
of the wetting and rusting, NSC called
for a survey of the shipment by the
Manila Adjusters and Surveyors
Company (MASCO). In a letter to the
NSC dated March 17, 1975 (Exhibit
G), MASCO made a report of its ocular
inspection conducted on the cargo, both
while it was still on board the vessel
and later at the NDC warehouse in
Pureza St., Sta. Mesa, Manila where the
cargo was taken and stored. MASCO
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
52
reported that it found wetting and
rusting of the packages of hot rolled
sheets and metal covers of the tinplates;
that tarpaulin hatch covers were noted
torn at various extents; that
container/metal casings of the skids
were rusting all over. MASCO
ventured the opinion that rusting of the
tinplates was caused by contact with
SEA WATER sustained while still on
board the vessel as a consequence of
the heavy weather and rough seas
encountered while en route to
destination (Exhibit F). It was also
reported that MASCOs surveyors drew
at random samples of bad order
packing materials of the tinplates and
delivered the same to the M.I.T.
Testing Laboratories for analysis. On
August 31, 1974, the M.I.T. Testing
Laboratories issued Report No. 1770
(Exhibit I) which in part, states, The
analysis of bad order samples of
packing materials xxx shows that
wetting was caused by contact with
SEA WATER.
(5) On September 6, 1974, on the basis
of the aforesaid Report No. 1770,
plaintiff filed with the defendant its
claim for damages suffered due to the
downgrading of the damaged tinplates
in the amount of P941,145.18. Then on
October 3, 1974, plaintiff formally
demanded payment of said claim but
defendant VSI refused and failed to
pay. Plaintiff filed its complaint against
defendant on April 21, 1976 which was
docketed as Civil Case No. 23317, CFI,
Rizal.
52
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
(6) In its complaint, plaintiff claimed
that it sustained losses in the aforesaid
amount of P941,145.18 as a result of
the act, neglect and default of the
master and crew in the management of
the vessel as well as the want of due
diligence on the part of the defendant to
make the vessel seaworthy and to make
the holds and all other parts of the
vessel in which the cargo was carried,
fit and safe for its reception, carriage
and preservation -- all in violation of
defendants undertaking under their
Contract of Voyage Charter Hire.
(7) In its answer, defendant denied
liability for the alleged damage
claiming that the MV VLASONS I was
seaworthy in all respects for the
carriage of plaintiffs cargo; that said
vessel was not a common
carrier inasmuch as she was under
voyage charter contract with the
plaintiff as charterer under the charter
party; that in the course of the voyage
from Iligan City to Manila, the MV
VLASONS I encountered very rough
seas, strong winds and adverse weather
condition, causing strong winds and big
waves to continuously pound against
the vessel and seawater to overflow on
its deck and hatch covers; that under
the Contract of Voyage Charter Hire,
defendant shall not be responsible for
losses/damages except on proven
willful negligence of the officers of the
vessel, that the officers of said MV
VLASONS I exercised due diligence
and proper seamanship and were not
willfully negligent; that furthermore the
Voyage Charter Party provides that
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
53
loading and discharging of the cargo
was on FIOST terms which means that
the vessel was free of risk and expense
in connection with the loading and
discharging of the cargo; that the
damage, if any, was due to the inherent
defect, quality or vice of the cargo or to
the insufficient packing thereof or to
latent defect of the cargo not
discoverable by due diligence or to any
other cause arising without the actual
fault or privity of defendant and
without the fault of the agents or
servants of defendant; consequently,
defendant is not liable; that the
stevedores of plaintiff who discharged
the cargo in Manila were negligent and
did not exercise due care in the
discharge of the cargo; and that the
cargo was exposed to rain and seawater
spray while on the pier or in transit
from the pier to plaintiffs warehouse
after discharge from the vessel; and that
plaintiffs claim was highly speculative
and grossly exaggerated and that the
small stain marks or sweat marks on
the edges of the tinplates were
magnified and considered total loss of
the cargo. Finally, defendant claimed
that it had complied with all its duties
and obligations under the Voyage
Charter Hire Contract and had no
responsibility whatsoever to
plaintiff. In turn, it alleged the
following counterclaim:
(a) That despite the full and proper
performance by defendant of its
obligations under the Voyage Charter
Hire Contract, plaintiff failed and
refused to pay the agreed charter hire
53
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
of P75,000.00 despite demands made
by defendant;
(b) That under their Voyage Charter
Hire Contract, plaintiff had agreed to
pay defendant the sum of P8,000.00 per
day for demurrage. The vessel was on
demurrage for eleven (11) days in
Manila waiting for plaintiff to
discharge its cargo from the
vessel. Thus, plaintiff was liable to pay
defendant demurrage in the total
amount of P88,000.00.
(c) For filing a clearly unfounded civil
action against defendant, plaintiff
should be ordered to pay defendant
attorneys fees and all expenses of
litigation in the amount of not less
than P100,000.00.
(8) From the evidence presented by
both parties, the trial court came out
with the following findings which were
set forth in its decision:
(a) The MV VLASONS I is a vessel of
Philippine registry engaged in the
tramping service and is available for
hire only under special contracts of
charter party as in this particular case.
(b) That for purposes of the voyage
covered by the Contract of Voyage
Charter Hire (Exh. 1), the MV
VLASONS I was covered by the
required seaworthiness certificates
including the Certification of
Classification issued by an international
classification society, the NIPPON
KAIJI KYOKAI (Exh. 4); Coastwise
License from the Board of
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
54
Transportation (Exh. 5); International
Loadline Certificate from the
Philippine Coast Guard (Exh. 6); Cargo
Ship Safety Equipment Certificate also
from the Philippine Coast Guard (Exh.
7); Ship Radio Station License (Exh.
8); Certificate of Inspection by the
Philippine Coast Guard (Exh. 12); and
Certificate of Approval for Conversion
issued by the Bureau of Customs (Exh.
9). That being a vessel engaged in both
overseas and coastwise trade, the MV
VLASONS I has a higher degree of
seaworthiness and safety.
(c) Before it proceeded to Iligan City to
perform the voyage called for by the
Contract of Voyage Charter Hire, the
MV VLASONS I underwent
drydocking in Cebu and was
thoroughly inspected by the Philippine
Coast Guard. In fact, subject voyage
was the vessels first voyage after the
drydocking. The evidence shows that
the MV VLASONS I was seaworthy
and properly manned, equipped and
supplied when it undertook the
voyage. It had all the required
certificates of seaworthiness.
(d) The cargo/shipment was securely
stowed in three (3) hatches of the
ship. The hatch openings were covered
by hatchboards which were in turn
covered by two or double
tarpaulins. The hatch covers were water
tight. Furthermore, under the
hatchboards were steel beams to give
support.
(e) The claim of the plaintiff that
defendant violated the contract of
54
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
carriage is not supported by
evidence. The provisions of the Civil
Code on common carriers pursuant to
which there exists a presumption of
negligence in case of loss or damage to
the cargo are not applicable. As to the
damage to the tinplates which was
allegedly due to the wetting and rusting
thereof, there is unrebutted testimony
of witness Vicente Angliongto that
tinplates sweat by themselves when
packed even without being in contract
(sic) with water from outside especially
when the weather is bad or raining. The
rust caused by sweat or moisture on the
tinplates may be considered as a loss or
damage but then, defendant cannot be
held liable for it pursuant to Article
1734 of the Civil Case which exempts
the carrier from responsibility for loss
or damage arising from the character of
the goods x x x. All the 1,769 skids of
the tinplates could not have been
damaged by water as claimed by
plaintiff. It was shown as claimed by
plaintiff that the tinplates themselves
were wrapped in kraft paper lining and
corrugated cardboards could not be
affected by water from outside.
(f) The stevedores hired by the plaintiff
to discharge the cargo of tinplates were
negligent in not closing the hatch
openings of the MV VLASONS I when
rains occurred during the discharging
of the cargo thus allowing rainwater to
enter the hatches. It was proven that the
stevedores merely set up temporary
tents to cover the hatch openings in
case of rain so that it would be easy for
them to resume work when the rains
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
55
stopped by just removing the tent or
canvas. Because of this improper
covering of the hatches by the
stevedores during the discharging and
unloading operations which were
interrupted by rains, rainwater drifted
into the cargo through the hatch
openings. Pursuant to paragraph 5 of
the NANYOSAI [sic] Charter Party
which was expressly made part of the
Contract of Voyage Charter Hire, the
loading, stowing and discharging of the
cargo is the sole responsibility of the
plaintiff charterer and defendant carrier
has no liability for whatever damage
may occur or maybe [sic] caused to the
cargo in the process.
(g) It was also established that the
vessel encountered rough seas and bad
weather while en route from Iligan City
to Manila causing sea water to splash
on the ships deck on account of which
the master of the vessel (Mr. Antonio
C. Dumlao) filed a Marine Protest on
August 13, 1974 (Exh. 15) which can
be invoked by defendant as a force
majeure that would exempt the
defendant from liability.
(h) Plaintiff did not comply with the
requirement prescribed in paragraph 9
of the Voyage Charter Hire contract
that it was to insure the cargo because it
did not. Had plaintiff complied with the
requirement, then it could have
recovered its loss or damage from the
insurer. Plaintiff also violated the
charter party contract when it loaded
not only steel products, i.e. steel bars,
angular bars and the like but also
55
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
tinplates and hot rolled sheets which
are high grade cargo commanding a
higher freight. Thus plaintiff was able
to ship high grade cargo at a lower
freight rate.
(I) As regards defendants counterclaim,
the contract of voyage charter hire
under paragraph 4 thereof, fixed the
freight at P30.00 per metric ton payable
to defendant carrier upon presentation
of the bill of lading within fifteen (15)
days. Plaintiff has not paid the total
freight due of P75,000.00 despite
demands. The evidence also showed
that the plaintiff was required and
bound under paragraph 7 of the same
Voyage Charter Hire contract to pay
demurrage of P8,000.00 per day of
delay in the unloading of the
cargoes. The delay amounted to eleven
(11) days thereby making plaintiff
liable to pay defendant for demurrage
in the amount of P88,000.00.
Appealing the RTC decision to
the Court of Appeals, NSC alleged
six errors:
I VSI filed separate motions for
The trial court erred in finding that
the MV VLASONS I was seaworthy,
properly manned, equipped and
supplied, and that there is no proof
of willful negligence of the vessels
officers.
II
The trial court erred in finding that
the rusting of NSCs tinplates was
due to the inherent nature or
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
56
character of the goods and not due
to contact with seawater.
III
The trial court erred in finding that
the stevedores hired by NSC were
negligent in the unloading of NSCs
shipment.
IV
The trial court erred in exempting
VSI from liability on the ground of
force majeure.
V
The trial court erred in finding that
NSC violated the contract of voyage
charter hire.
VI
The trial court erred in ordering NSC
to pay freight, demurrage and
attorneys fees, to VSI. [4]
As earlier stated, the Court of
Appeals modified the decision of the
trial court by reducing the demurrage
from P88,000.00 to P44,000.00 and
deleting the award of attorneys fees
and expenses of litigation. NSC and
reconsideration. In a
Resolution dated October 20, 1993,
[5]
the appellate court denied both
motions. Undaunted, NSC and VSI
filed their respective petitions for
review before this Court. On motion
of VSI, the Court ordered on
February 14, 1994 the consolidation
of these petitions. [6]
The Issues
56
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
In its petition and
memorandum, NSC raises the
[8]
following questions of law and fact:
Questions of Law
1. Whether or not a charterer of a
vessel is liable for demurrage
due to cargo unloading delays
caused by weather interruption;
2. Whether or not the alleged
seaworthiness certificates
(Exhibits 3, 4, 5, 6, 7, 8, 9, 11 and
12) were admissible in evidence
and constituted evidence of the
vessels seaworthiness at the
beginning of the voyages; and
3. Whether or not a charterers
failure to insure its cargo
exempts the shipowner from
liability for cargo damage.
Questions of Fact
1. Whether or not the vessel was
seaworthy and cargo-worthy;
2. Whether or not vessels officers
and crew were negligent in
handling and caring for NSCs
cargo;
3. Whether or not NSCs cargo of
tinplates did sweat during the
voyage and, hence, rusted on
their own; and
(4) Whether or not NSCs
stevedores were negligent and
caused the wetting[/]rusting of
NSCs tinplates.
In its separate petition, VSI
submits for the consideration of this
57
[7]
Court the following alleged errors of
the CA:
A. The respondent Court of Appeals
committed an error of law in reducing
the award of demurrage
from P88,000.00 to P44,000.00.
B. The respondent Court of Appeals
committed an error of law in deleting
the award of P100,000 for attorneys
fees and expenses of litigation.
Amplifying the foregoing, VSI
raises the following issues in its
memorandum: [10]
I. Whether or not the provisions of the
Civil Code of the Philippines on
common carriers pursuant to which
there exist[s] a presumption of
negligence against the common carrier
in case of loss or damage to the cargo
are applicable to a private carrier.
II. Whether or not the terms and
conditions of the Contract of Voyage
Charter Hire, including the Nanyozai
Charter, are valid and binding on both
contracting parties.
The foregoing issues raised by
the parties will be discussed under
the following headings:
1. Questions of Fact
2. Effect of NSCs Failure to Insure
the Cargo
3. Admissibility of Certificates
[9]
Proving Seaworthiness
4. Demurrage and Attorneys Fees.
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 57
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
The Courts Ruling
The Court affirms the assailed
Decision of the Court of Appeals,
except in respect of the demurrage.
Preliminary Matter: Common
Carrier or Private Carrier?
At the outset, it is essential to
establish whether VSI contracted
with NSC as a common carrier or as
a private carrier. The resolution of
this preliminary question determines
the law, standard of diligence and
burden of proof applicable to the
present case.
Article 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. It
has been held that 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. A carrier which
[11]
does not qualify under the above test
is deemed a private
carrier. Generally, private carriage is
undertaken by special agreement
and the carrier does not hold himself
out to carry goods for the general
public. The most typical, although
not the only form of private carriage,
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
58
is the charter party, a maritime
contract by which the charterer, a
party other than the shipowner,
obtains the use and service of all or
some part of a ship for a period of
time or a voyage or voyages. [12]
In the instant case, it is
undisputed that VSI did not offer its
services to the general public. As
found by the Regional Trial Court, it
carried passengers or goods only for
those it chose under a special
contract of charter party. As [13]
correctly concluded by the Court of
Appeals, the MV Vlasons I was not a
common but a private
carrier. Consequently, the rights
[14]
and obligations of VSI and NSC,
including their respective liability for
damage to the cargo, are
determined primarily by stipulations
in their contract of private carriage or
charter party. Recently,
[15]
in
Valenzuela Hardwood and Industrial
Supply, Inc., vs. Court of Appeals
and Seven Brothers Shipping
Corporation, the Court ruled:
[16]
x x x 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
58
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
contravened by stipulations in a charter
party that lessen or remove the
protection given by law in contracts
involving common carriers. [17]
Extent of VSIs Responsibility and
Liability Over NSCs Cargo
It is clear from the parties
Contract of Voyage Charter Hire,
dated July 17, 1974, that VSI shall
not be responsible for losses except
on proven willful negligence of the
officers of the vessel. 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 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 or to ensure that the
same was properly manned,
equipped and supplied, and to make
the holds and all other parts of the
vessel in which cargo [was] carried,
fit and safe for its reception, carriage
and preservation. The NANYOZAI
[18]
Charter Party also provided that
[o]wners shall not be responsible for
split, chafing and/or any damage
unless caused by the negligence or
default of the master or crew. [19]
Burden of Proof
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
59
In view of the aforementioned
contractual stipulations, NSC must
prove that the damage to its
shipment was caused by VSIs willful
negligence or failure to exercise due
diligence in making MV Vlasons
I seaworthy and fit for holding,
carrying and safekeeping the
cargo. Ineluctably, the burden of
proof was placed on NSC by the
parties agreement.
This view finds further support in
the Code of Commerce which
pertinently provides:
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
59
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
or quality different from what they
really were.
Because the MV Vlasons I was a
private carrier, the shipowners
obligations are governed by the
foregoing provisions of the Code of
Commerce and not by the Civil Code
which, as a general rule, places
the prima facie presumption of
negligence on a common carrier. It
is a hornbook doctrine that:
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,
and the fact that the goods were lost or
damaged while in the carriers custody
does not put the burden of proof on the
carrier.
Since x x x a private carrier is not an
insurer but undertakes only to exercise
due care in the protection of the goods
committed to its care, the burden of
proving negligence or a breach of that
duty rests on plaintiff and proof of loss
of, or damage to, cargo while in the
carriers possession does not cast on it
the burden of proving proper care and
diligence on its part or that the loss
occurred from an excepted cause in the
contract or bill of lading. However, in
discharging the burden of proof,
plaintiff is entitled to the benefit of the
presumptions and inferences by which
the law aids the bailor in an action
against a bailee, and since the carrier is
in a better position to know the cause of
the loss and that it was not one
involving its liability, the law requires
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
60
that it come forward with the
information available to it, and its
failure to do so warrants an inference or
presumption of its liability. However,
such inferences and presumptions,
while they may affect the burden of
coming forward with evidence, do not
alter the burden of proof which remains
on plaintiff, and, where the carrier
comes forward with evidence
explaining the loss or damage, the
burden of going forward with the
evidence is again on plaintiff.
Where the action is based on the
shipowners warranty of seaworthiness,
the burden of proving a breach thereof
and that such breach was the proximate
cause of the damage rests on plaintiff,
and proof that the goods were lost or
damaged while in the carriers
possession does not cast on it the
burden of proving seaworthiness. x x x
Where the contract of carriage exempts
the carrier from liability for
unseaworthiness not discoverable by
due diligence, the carrier has the
preliminary burden of proving the
exercise of due diligence to make the
vessel seaworthy. [20]
In the instant case, the Court of
Appeals correctly found that NSC
has not taken the correct position in
relation to the question of who has
the burden of proof. Thus, in its brief
(pp. 10-11), after citing Clause 10
and Clause 12 of the NANYOZAI
Charter Party (incidentally plaintiff-
appellants [NSCs] interpretation of
Clause 12 is not even correct), it
60
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
argues that a careful examination of
the evidence will show that VSI
miserably failed to comply with any
of these obligations as if defendant-
appellee [VSI] had the burden of
proof.[21]
First Issue: Questions of Fact
Based on the foregoing, the
determination of the following factual
questions is manifestly relevant: (1)
whether VSI exercised due diligence
in making MV Vlasons I seaworthy
for the intended purpose under the
charter party; (2) whether the
damage to the cargo should be
attributed to the willful negligence of
the officers and crew of the vessel or
of the stevedores hired by NSC; and
(3) whether the rusting of the
tinplates was caused by its own
sweat or by contact with seawater.
These questions of fact were
threshed out and decided by the trial
court, which had the firsthand
opportunity to hear the parties
conflicting claims and to carefully
weigh their respective
evidence. The findings of the trial
court were subsequently affirmed by
the Court of Appeals. Where the
factual findings of both the trial court
and the Court of Appeals coincide,
the same are binding on this
Court. We stress that, subject to
[22]
some exceptional instances, only [23]
questions of law -- not questions of
fact -- may be raised before this
Court in a petition for review under
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
61
Rule 45 of the Rules of Court. After
a thorough review of the case at bar,
we find no reason to disturb the
lower courts factual findings, as
indeed NSC has not successfully
proven the application of any of the
aforecited exceptions.
Was MV Vlasons I Seaworthy?
In any event, the records reveal
that VSI exercised due diligence to
make the ship seaworthy and fit for
the carriage of NSCs cargo of steel
and tinplates. This is shown by the
fact that it was drydocked and
inspected by the Philippine Coast
Guard before it proceeded to Iligan
City for its voyage to Manila under
the contract of voyage charter
hire. The vessels voyage from
[24]
Iligan to Manila was the vessels first
voyage after drydocking. The
Philippine Coast Guard Station in
Cebu cleared it as seaworthy, fitted
and equipped; it met all
requirements for trading as cargo
vessel. The Court of Appeals itself
[25]
sustained the conclusion of the trial
court that MV Vlasons I was
seaworthy. We find no reason to
modify or reverse this finding of both
the trial and the appellate courts.
Who Were Negligent: Seamen or
Stevedores?
As noted earlier, the NSC had
the burden of proving that the
61
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
damage to the cargo was caused by
the negligence of the officers and the
crew of MV Vlasons I in making their
vessel seaworthy and fit for the
carriage of tinplates. NSC failed to
discharge this burden.
Before us, NSC relies heavily on
its claim that MV Vlasons I had used
an old and torn tarpaulin or canvas
to cover the hatches through which
the cargo was loaded into the cargo
hold of the ship. It faults the Court of
Appeals for failing to consider such
claim as an uncontroverted
fact and denies that MV Vlasons
[26]
I was equipped with new canvas
covers in tandem with the old ones
as indicated in the Marine Protest
xxx. We disagree.
[27]
The records sufficiently support
VSIs contention that the ship used
the old tarpaulin, only in addition to
the new one used primarily to make
the ships hatches watertight. The
foregoing are clear from the marine
protest of the master of the MV
Vlasons I, Antonio C. Dumlao, and
the deposition of the ships
boatswain, Jose Pascua. The
salient portions of said marine
protest read:
x x x That the M/V VLASONS I
departed Iligan City or or about 0730
hours of August 8, 1974, loaded with
approximately 2,487.9 tons of steel
plates and tin plates consigned to
National Steel Corporation; that before
departure, the vessel was rigged, fully
equipped and cleared by the authorities;
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
62
that on or about August 9, 1974, while
in the vicinity of the western part of
Negros and Panay, we encountered
very rough seas and strong winds and
Manila office was advised by telegram
of the adverse weather conditions
encountered; that in the morning of
August 10, 1974, the weather condition
changed to worse and strong winds and
big waves continued pounding the
vessel at her port side causing sea water
to overflow on deck andhatch (sic)
covers and which caused the first layer
of the canvass covering to give way
while the new canvass covering still
holding on;
That the weather condition improved
when we reached Dumali Point
protected by Mindoro; that we re-
secured the canvass covering back to
position; that in the afternoon of
August 10, 1974, while entering
Maricaban Passage, we were again
exposed to moderate seas and heavy
rains; that while approaching Fortune
Island, we encountered again rough
seas, strong winds and big waves which
caused the same canvass to give way
and leaving the new canvass holding
on;
xxx xxx xxx [28]
And the relevant portions of Jose
Pascuas deposition are as follows:
Q: What is the purpose of the
canvas cover?
A: So that the cargo would not be
soaked with water.
62
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
A: And will you describe how the
canvas cover was secured on
the hatch opening?
WITNESS
A: It was placed flat on top of the
hatch cover, with a little canvas
flowing over the sides and we
place[d] a flat bar over the
canvas on the side of the
hatches and then we place[d] a
stopper so that the canvas
could not be removed.
ATTY DEL ROSARIO
Q: And will you tell us the size of the
hatch opening? The length and
the width of the hatch opening.
A: Forty-five feet by thirty-five feet,
sir.
xxxxxxxxx
Q: How was the canvas supported
in the middle of the hatch
opening?
A: There is a hatch board.
ATTY DEL ROSARIO
Q: What is the hatch board made
of?
A: It is made of wood, with a handle.
Q: And aside from the hatch board,
is there any other material
there to cover the hatch?
A: There is a beam supporting the
hatch board.
Q: What is this beam made of?
A: It is made of steel, sir.
Q: Is the beam that was placed in
the hatch opening covering the
whole hatch opening?
A: No, sir.
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
63
Q: How many hatch beams were
there placed across the
opening?
A: There are five beams in one
hatch opening.
ATTY DEL ROSARIO
Q: And on top of the beams you
said there is a hatch
board. How many pieces of
wood are put on top?
A: Plenty, sir, because there are
several pieces on top of the
hatch beam.
Q: And is there a space between
the hatch boards?
A: There is none, sir.
Q: They are tight together?
A: Yes, sir.
Q: How tight?
A: Very tight, sir.
Q: Now, on top of the hatch boards,
according to you, is the canvas
cover. How many canvas
covers?
A: Two, sir. [29]
That due diligence was
exercised by the officers and the
crew of the MV Vlasons I was further
demonstrated by the fact that,
despite encountering rough weather
twice, the new tarpaulin did not give
way and the ships hatches and
cargo holds remained
waterproof. As aptly stated by the
Court of Appeals, xxx we find no
reason not to sustain the conclusion
of the lower court based on
overwhelming evidence, that the MV
VLASONS I was seaworthy when it
undertook the voyage on August 8,
63
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
1974 carrying on board thereof
plaintiff-appellants shipment of
1,677 skids of tinplates and 92
packages of hot rolled sheets or a
total of 1,769 packages from NSCs
pier in Iligan City arriving safely at
North Harbor, Port Area, Manila, on
August 12, 1974; xxx. [30]
Indeed, NSC failed to discharge
its burden to show negligence on the
part of the officers and the crew
of MV Vlasons I. On the contrary,
the records reveal that it was the
stevedores of NSC who were
negligent in unloading the cargo
from the ship.
The stevedores employed only a
tent-like material to cover the
hatches when strong rains
occasioned by a passing typhoon
disrupted the unloading of the
cargo. This tent-like covering,
however, was clearly inadequate for
keeping rain and seawater away
from the hatches of the ship. Vicente
Angliongto, an officer of VSI,
testified thus:
ATTY ZAMORA:
Q: Now, during your testimony on
November 5, 1979, you stated
on August 14 you went on
board the vessel upon notice
from the National Steel
Corporation in order to conduct
the inspection of the
cargo. During the course of the
investigation, did you chance to
see the discharging operation?
WITNESS:
A: Yes, sir, upon my arrival at the
vessel, I saw some of the
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
64
tinplates already discharged on
the pier but majority of the
tinplates were inside the hall,
all the hatches were opened.
Q: In connection with these cargoes
which were unloaded, where is
the place.
A: At the Pier.
Q: What was used to protect the
same from weather?
ATTY LOPEZ:
We object, your Honor, this
question was already
asked. This particular matter . .
. the transcript of stenographic
notes shows the same was
covered in the direct
examination.
ATTY ZAMORA:
Precisely, your Honor, we would
like to go on detail, this is the
serious part of the testimony.
COURT:
All right, witness may answer.
ATTY LOPEZ:
Q: What was used in order to
protect the cargo from the
weather?
A: A base of canvas was used as
cover on top of the tin plates,
and tents were built at the
opening of the hatches.
Q: You also stated that the hatches
were already opened and that
there were tents constructed at
the opening of the hatches to
protect the cargo from the
rain. Now, will you describe [to]
the Court the tents constructed.
A: The tents are just a base of
canvas which look like a tent of
an Indian camp raise[d] high at
the middle with the whole side
64
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
separated down to the hatch,
the size of the hatch and it is
soaks [sic] at the middle
because of those weather and
this can be used only to
temporarily protect the cargo
from getting wet by rains.
Q: Now, is this procedure adopted
by the stevedores of covering
tents proper?
A: No, sir, at the time they were
discharging the cargo, there
was a typhoon passing by and
the hatch tent was not good
enough to hold all of it to
prevent the water soaking
through the canvas and enter
the cargo.
Q: In the course of your inspection,
Mr. Anglingto [sic], did you see
in fact the water enter and soak
into the canvas and tinplates.
A: Yes, sir, the second time I went
there, I saw it.
Q: As owner of the vessel, did you
not advise the National Steel
Corporation [of] the procedure
adopted by its stevedores in
discharging the cargo
particularly in this tent covering
of the hatches?
A: Yes, sir, I did the first time I saw
it, I called the attention of the
stevedores but the stevedores
did not mind at all, so, I called
the attention of the
representative of the National
Steel but nothing was done,
just the same. Finally, I wrote a
letter to them. [31]
NSC attempts to discredit the
testimony of Angliongto by
questioning his failure to complain
immediately about the stevedores
negligence on the first day of
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
65
unloading, pointing out that he wrote
his letter to petitioner only seven
days later. The Court is not
[32]
persuaded. Angliongtos candid
answer in his aforequoted testimony
satisfactorily explained the
delay. Seven days lapsed because
he first called the attention of the
stevedores, then the NSCs
representative, about the negligent
and defective procedure adopted in
unloading the cargo. This series of
actions constitutes a reasonable
response in accord with common
sense and ordinary human
experience. Vicente Angliongto
could not be blamed for calling the
stevedores attention first and then
the NSCs representative on location
before formally informing NSC of the
negligence he had observed,
because he was not responsible for
the stevedores or the unloading
operations. In fact, he was merely
expressing concern for NSC which
was ultimately responsible for the
stevedores it had hired and the
performance of their task to unload
the cargo.
We see no reason to reverse the
trial and the appellate courts findings
and conclusions on this point, viz:
In the THIRD assigned error, [NSC]
claims that the trial court erred in
finding that the stevedores hired by
NSC were negligent in the unloading of
NSCs shipment. We do not think
so. Such negligence according to the
trial court is evident in the stevedores
hired by [NSC], not closing the hatch
65
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
of MV VLASONS I when rains
occurred during the discharging of the
cargo thus allowing rain water and
seawater spray to enter the hatches and
to drift to and fall on the cargo. It was
proven that the stevedores merely set
up temporary tents or canvas to cover
the hatch openings when it rained
during the unloading operations so that
it would be easier for them to resume
work after the rains stopped by just
removing said tents or canvass. It has
also been shown that on August 20,
1974, VSI President Vicente
Angliongto wrote [NSC] calling
attention to the manner the stevedores
hired by [NSC] were discharging the
cargo on rainy days and the improper
closing of the hatches which allowed
continuous heavy rain water to leak
through and drip to the tinplates covers
and [Vicente Angliongto] also
suggesting that due to four (4) days
continuos rains with strong winds that
the hatches be totally closed down and
covered with canvas and the hatch tents
lowered. (Exh 13). This letter was
received by [NSC] on 22 August 1974
while discharging operations were still
going on (Exhibit 13-A). [33]
The fact that NSC actually
accepted and proceeded to remove
the cargo from the ship during
unfavorable weather will not make
VSI liable for any damage caused
thereby. In passing, it may be noted
that the NSC may seek
indemnification, subject to the laws
on prescription, from the stevedoring
company at fault in the discharge
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
66
operations. A stevedore company
engaged in discharging cargo xxx
has the duty to load the cargo xxx in
a prudent manner, and it is liable for
injury to, or loss of, cargo caused by
its negligence xxx and where the
officers and members and crew of
the vessel do nothing and have no
responsibility in the discharge of
cargo by stevedores xxx the vessel
is not liable for loss of, or damage to,
the cargo caused by the negligence
of the stevedores xxx as in the
[34]
instant case.
Do Tinplates Sweat?
The trial court relied on the
testimony of Vicente Angliongto in
finding that xxx tinplates sweat by
themselves when packed even
without being in contact with water
from outside especially when the
weather is bad or raining xxx. The
[35]
Court of Appeals affirmed the trial
courts finding.
A discussion of this issue
appears inconsequential and
unnecessary. As previously
discussed, the damage to the
tinplates was occasioned not by
airborne moisture but by contact with
rain and seawater which the
stevedores negligently allowed to
seep in during the unloading.
Second Issue: Effect of NSCs
Failure to Insure the Cargo
66
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
The obligation of NSC 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. Clearly, therefore, NSCs
failure to insure the cargo will not
affect its right, as owner and real
party in interest, to file an action
against VSI for damages caused by
the latters willful negligence. We do
not find anything in the charter party
that would make the liability of VSI
for damage to the cargo contingent
on or affected in any manner by
NSCs obtaining an insurance over
the cargo.
Third Issue: Admissibility of
Certificates Proving
Seaworthiness
NSCs contention that MV
Vlasons I was not seaworthy is
anchored on the alleged
inadmissibility of the certificates of
seaworthiness offered in evidence
by VSI. The said certificates include
the following:
1. Certificate of Inspection of the
Philippine Coast Guard at Cebu
2. Certificate of Inspection from the
Philippine Coast Guard
3. International Load Line
Certificate from the Philippine
Coast Guard
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
67
4. Coastwise License from the
Board of Transportation
5. Certificate of Approval for
Conversion issued by the
Bureau of Customs. [36]
NSC argues that the certificates
are hearsay for not having been
presented in accordance with the
Rules of Court. It points out that
Exhibits 3, 4 and 11 allegedly are not
written records or acts of public
officers; while Exhibits 5, 6, 7, 8, 9,
11 and 12 are not evidenced by
official publications or certified true
copies as required by Sections 25
and 26, Rule 132, of the Rules of
Court. [37]
After a careful examination of
these exhibits, the Court rules that
Exhibits 3, 4, 5, 6, 7, 8, 9 and 12 are
inadmissible, for they have not been
properly offered as
evidence. Exhibits 3 and 4 are
certificates issued by private parties,
but they have not been proven by
one who saw the writing executed,
or by evidence of the genuineness of
the handwriting of the maker, or by a
subscribing witness. Exhibits 5, 6, 7,
8, 9, and 12 are photocopies, but
their admission under the best
evidence rule have not been
demonstrated.
We find, however, that Exhibit 11
is admissible under a well-settled
exception to the hearsay rule per
Section 44 of Rule 130 of the Rules
of Court, which provides that
(e)ntries in official records made in
the performance of a duty by a public
67
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
officer of the Philippines, or by a
person in the performance of a duty
specially enjoined by law, are prima
facie evidence of the facts therein
stated. Exhibit 11 is an original
[38]
certificate of the Philippine Coast
Guard in Cebu issued by Lieutenant
Junior Grade Noli C. Flores to the
effect that the vessel VLASONS I
was drydocked x x x and PCG
Inspectors were sent on board for
inspection x x x. After completion of
drydocking and duly inspected by
PCG Inspectors, the vessel
VLASONS I, a cargo vessel, is in
seaworthy condition, meets all
requirements, fitted and equipped
for trading as a cargo vessel was
cleared by the Philippine Coast
Guard and sailed for Cebu Port on
July 10, 1974. (sic) NSCs claim,
therefore, is obviously misleading
and erroneous.
At any rate, it should be stressed
that that NSC has the burden of
proving that MV Vlasons I was not
seaworthy. As observed earlier, the
vessel was a private carrier and, as
such, it did not have the obligation of
a common carrier to show that it was
seaworthy. Indeed, NSC glaringly
failed to discharge its duty of proving
the willful negligence of VSI in
making the ship seaworthy resulting
in damage to its cargo. Assailing the
genuineness of the certificate of
seaworthiness is not sufficient proof
that the vessel was not seaworthy.
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
68
Fourth Issue: Demurrage and
Attorneys Fees
The contract of voyage charter
hire provides inter alia:
xxx xxx xxx
2. Cargo: Full cargo of steel products of
not less than 2,500 MT, 10% more or
less at Masters option.
xxx xxx xxx
6. Loading/Discharging Rate : 750 tons
per WWDSHINC.
7. Demurrage/Dispatch : P8,000.00/P4,
000.00 per day. [39]
The Court defined demurrage in
its strict sense as the compensation
provided for in the contract of
affreightment for the detention of the
vessel beyond the laytime or that
period of time agreed on for loading
and unloading of cargo. It is given
[40]
to compensate the shipowner for the
nonuse of the vessel. On the other
hand, the following is well-settled:
Laytime runs according to the
particular clause of the charter party. x
x x If laytime is expressed in running
days, this means days when the ship
would be run continuously, and
holidays are not excepted. A
qualification of weather permitting
excepts only those days when bad
weather reasonably prevents the work
contemplated. [41]
68
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
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
[42]
was thus made subject to the
weather, and would cease to run in
the event unfavorable weather
interfered with the unloading of
cargo. Consequently, NSC may
[43]
not be held liable for demurrage as
the four-day laytime allowed it did
not lapse, having been tolled by
unfavorable weather condition in
view of the WWDSHINC
qualification agreed upon by the
parties. Clearly, it was error for the
trial court and the Court of Appeals
to have found and affirmed
respectively that NSC incurred
eleven days of delay in unloading
the cargo. The trial court arrived at
this erroneous finding by subtracting
from the twelve days, specifically
August 13, 1974 to August 24, 1974,
the only day of unloading
unhampered by unfavorable
weather or rain which was August
22, 1974. Based on our previous
discussion, such finding is a
reversible error. As mentioned, the
respondent appellate court also
erred in ruling that NSC was liable to
VSI for demurrage, even if it reduced
the amount by half.
Attorneys Fees
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
69
VSI assigns as error of law the
Court of Appeals deletion of the
award of attorneys fees. We
disagree. While VSI was compelled
to litigate to protect its rights, such
fact by itself will not justify an award
of attorneys fees under Article 2208
of the Civil Code when x x x no
sufficient showing of bad faith would
be reflected in a partys persistence
in a case other than an erroneous
conviction of the righteousness of
his cause x x x. Moreover, [44]
attorneys fees may not be awarded
to a party for the reason alone that
the judgment rendered was
favorable to the latter, as this is
tantamount to imposing a premium
on ones right to litigate or seek
judicial redress of legitimate
grievances. [45]
Epilogue
At bottom, this appeal really
hinges on a factual issue: when, how
and who caused the damage to the
cargo? Ranged against NSC are
two formidable truths. First, both
lower courts found that such
damage was brought about during
the unloading process when rain and
seawater seeped through the cargo
due to the fault or negligence of the
stevedores employed by it.Basic is
the rule that factual findings of the
trial court, when affirmed by the
Court of Appeals, are binding on the
Supreme Court. Although there are
settled exceptions, NSC has not
69
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
satisfactorily shown that this case is
one of them. Second, the agreement
between the parties -- the Contract
of Voyage Charter Hire -- placed the
burden of proof for such loss or
damage upon the shipper, not upon
the shipowner. Such stipulation,
while disadvantageous to NSC, is
valid because the parties entered
into a contract of private charter, not
one of common carriage. Basic too
is the doctrine that courts cannot
relieve a party from the effects of a
private contract freely entered into,
on the ground that it is allegedly one-
sided or unfair to the plaintiff. The
charter party is a normal commercial
contract and its stipulations are
agreed upon in consideration of
many factors, not the least of which
is the transport price which is
determined not only by the actual
costs but also by the risks and
burdens assumed by the shipper in
regard to possible loss or damage to
the cargo. In recognition of such
factors, the parties even stipulated
that the shipper should insure the
cargo to protect itself from the risks
it undertook under the charter
party. That NSC failed or neglected
to protect itself with such insurance
should not adversely affect VSI,
which had nothing to do with such
failure or neglect.
WHEREFORE, premises
considered, the instant consolidated
petitions are hereby DENIED. The
questioned Decision of the Court of
Appeals is AFFIRMED with the
MODIFICATION that the demurrage
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
70
awarded to VSI is deleted. No
pronouncement as to costs.
SO ORDERED.
Narvasa, C.J., (Chairman),
Romero, Melo, and Francisco, JJ.,
concur.
G.R. No. 101089. April 7, 1993.
ESTRELLITA M. BASCOS, petitioners,
vs.
COURT OF APPEALS and RODOLFO A.
CIPRIANO, respondents.
Modesto S. Bascos for petitioner.
Pelaez, Adriano & Gregorio for private
respondent.
SYLLABUS
1. CIVIL LAW; COMMON CARRIERS;
DEFINED; TEST TO DETERMINE COMMON
CARRIER. — Article 1732 of the Civil Code
defines a common carrier as "(a) person,
corporation or 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 to determine a
common carrier is "whether the given
undertaking is a part of the business engaged
in by the carrier which he has held out to the
general public as his occupation rather than
the quantity or extent of the business
transacted." . . . The holding of the Court in
De Guzman
vs. Court of Appeals is instructive. In referring
to Article 1732 of the Civil Code, it held thus:
"The above article makes no distinction
between one whose principal business activity
is the carrying of persons or goods or both,
and one who does such carrying only as an
ancillary activity (in local idiom, as a
"sideline"). Article 1732 also carefully avoids
making any distinction between a person or
enterprise offering transportation service on a
regular or scheduled basis and one offering
70
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732
distinguished between a carrier offering its
services to the "general public," i.e., the
general community or population, and one
who offers services or solicits business only
from a narrow segment of the general
population. We think that Article 1732
deliberately refrained from making such
distinctions."
2. ID.; ID.; DILIGENCE REQUIRED IN
VIGILANCE OVER GOODS TRANSPORTED;
WHEN PRESUMPTION OF NEGLIGENCE
ARISES; HOW PRESUMPTION OVERCAME;
WHEN PRESUMPTION MADE ABSOLUTE.
— Common carriers are obliged to observe
extraordinary diligence in the vigilance over
the goods transported by them. Accordingly,
they are presumed to have been at fault or to
have acted negligently if the goods are lost,
destroyed or deteriorated. There are very few
instances when the presumption of negligence
does not attach and these instances are
enumerated in Article 1734. In those cases
where the presumption is applied, the
common carrier must prove that it exercised
extraordinary diligence in order to overcome
the presumption . . . The presumption of
negligence was raised against petitioner. It
was petitioner's burden to overcome it. Thus,
contrary to her assertion, private respondent
need not introduce any evidence to prove her
negligence. Her own failure to adduce
sufficient proof of extraordinary diligence
made the presumption conclusive against her.
3. ID.; ID.; HIJACKING OF GOODS;
CARRIER PRESUMED NEGLIGENT; HOW
CARRIER ABSOLVED FROM LIABILITY. —
In De Guzman vs. Court of Appeals, the Court
held that hijacking, not being included in the
provisions of Article 1734, must be dealt with
under the provisions of Article 1735 and thus,
the common carrier is presumed to have been
at fault or negligent. To exculpate the carrier
from liability arising from hijacking, he must
prove that the robbers or the hijackers acted
with grave or irresistible threat, violence, or
force. This is in accordance with Article 1745
of the Civil Code which provides: "Art. 1745.
Any of the following or similar stipulations
shall be considered unreasonable, unjust and
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
71
contrary to public policy . . . (6) That the
common carrier's liability for acts committed
by thieves, or of robbers who do not act with
grave or irresistible threat, violences or force,
is dispensed with or diminished"; In the same
case, the Supreme Court also held that:
"Under Article 1745 (6) above, a common
carrier is held responsible — and will not be
allowed to divest or to diminish such
responsibility — even for acts of strangers like
thieves or robbers, except where such thieves
or robbers in fact acted "with grave of
irresistible threat, violence of force," We
believe and so hold that the limits of the duty
of extraordinary diligence in the vigilance over
the goods carried are reached where the
goods are lost as a result of a robbery which
is attended by "grave or irresistible threat,
violence or force."
4. REMEDIAL LAW; EVIDENCE; JUDICIAL
ADMISSIONS CONCLUSIVE. — In this case,
petitioner herself has made the admission that
she was in the trucking business, offering her
trucks to those with cargo to move. Judicial
admissions are conclusive and no evidence is
required to prove the same.
5. ID.; ID.; BURDEN OF PROOF RESTS
WITH PARTY WHO ALLEGES A FACT. —
Petitioner presented no other proof of the
existence of the contract of lease. He who
alleges a fact has the burden of proving it.
6. ID.; ID.; AFFIDAVITS NOT CONSIDERED
BEST EVIDENCE IF AFFIANTS AVAILABLE
AS WITNESSES. — While the affidavit of
Juanito Morden, the truck helper in the
hijacked truck, was presented as evidence in
court, he himself was a witness as could be
gleaned from the contents of the petition.
Affidavits are not considered the best
evidence if the affiants are available as
witnesses.
7. CIVIL LAW; OBLIGATIONS AND
CONTRACTS; CONTRACT IS WHAT LAW
DEFINES IT TO BE. — Granting that the said
evidence were not self-serving, the same
were not sufficient to prove that the contract
was one of lease. It must be understood that a
contract is what the law defines it to be and
not what it is called by the contracting parties.
71
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
DECISION
CAMPOS, JR., J p:
This is a petition for review on certiorari of the
decision ** of the Court of Appeals in
"RODOLFO A. CIPRIANO, doing business
under the name CIPRIANO TRADING
ENTERPRISES plaintiff-appellee, vs.
ESTRELLITA M. BASCOS, doing business
under the name of BASCOS TRUCKING,
defendant-appellant," C.A.-G.R. CV No.
25216, the dispositive portion of which is
quoted hereunder:
"PREMISES considered, We find no
reversible error in the decision appealed from,
which is hereby affirmed in toto. Costs against
appellant." 1
The facts, as gathered by this Court, are as
follows:
Rodolfo A. Cipriano representing Cipriano
Trading Enterprise (CIPTRADE for short)
entered into a hauling contract 2 with Jibfair
Shipping Agency Corporation whereby the
former bound itself to haul the latter's 2,000
m/tons of soya bean meal from Magallanes
Drive, Del Pan, Manila to the warehouse of
Purefoods Corporation in Calamba, Laguna.
To carry out its obligation, CIPTRADE,
through Rodolfo Cipriano, subcontracted with
Estrellita Bascos (petitioner) to transport and
to deliver 400 sacks of soya bean meal worth
P156,404.00 from the Manila Port Area to
Calamba, Laguna at the rate of P50.00 per
metric ton. Petitioner failed to deliver the said
cargo. As a consequence of that failure,
Cipriano paid Jibfair Shipping Agency the
amount of the lost goods in accordance with
the contract which stated that:
"1. CIPTRADE shall be held liable and
answerable for any loss in bags due to theft,
hijacking and non-delivery or damages to the
cargo during transport at market value, . . ." 3
Cipriano demanded reimbursement from
petitioner but the latter refused to pay.
Eventually, Cipriano filed a complaint for a
sum of money and damages with writ of
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
72
preliminary attachment 4 for breach of a
contract of carriage. The prayer for a Writ of
Preliminary Attachment was supported by an
affidavit 5 which contained the following
allegations:
"4. That this action is one of those specifically
mentioned in Sec. 1, Rule 57 the Rules of
Court, whereby a writ of preliminary
attachment may lawfully issue, namely:
"(e) in an action against a party who has
removed or disposed of his property, or is
about to do so, with intent to defraud his
creditors;"
5. That there is no sufficient security for the
claim sought to be enforced by the present
action;
6. That the amount due to the plaintiff in the
above-entitled case is above all legal
counterclaims;"
The trial court granted the writ of preliminary
attachment on February 17, 1987.
In her answer, petitioner interposed the
following defenses: that there was no contract
of carriage since CIPTRADE leased her cargo
truck to load the cargo from Manila Port Area
to Laguna; that CIPTRADE was liable to
petitioner in the amount of P11,000.00 for
loading the cargo; that the truck carrying the
cargo was hijacked along Canonigo St., Paco,
Manila on the night of October 21, 1988; that
the hijacking was immediately reported to
CIPTRADE and that petitioner and the police
exerted all efforts to locate the hijacked
properties; that after preliminary investigation,
an information for robbery and carnapping
were filed against Jose Opriano, et al.; and
that hijacking, being a force majeure,
exculpated petitioner from any liability to
CIPTRADE.
After trial, the trial court rendered a decision
*** the dispositive portion of which reads as
follows:
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
"WHEREFORE, judgment is hereby rendered
in favor of plaintiff and against defendant
ordering the latter to pay the former:
1. The amount of ONE HUNDRED FIFTY-SIX
THOUSAND FOUR HUNDRED FOUR
PESOS (P156,404.00) as an (sic) for actual
damages with legal interest of 12% per cent
per annum to be counted from December 4,
1986 until fully paid;
2. The amount of FIVE THOUSAND PESOS
(P5,000.00) as and for attorney's fees; and
3. The costs of the suit.
The "Urgent Motion To Dissolve/Lift
preliminary Attachment" dated March 10,
1987 filed by defendant is DENIED for being
moot and academic.
SO ORDERED." 6
Petitioner appealed to the Court of Appeals
but respondent Court affirmed the trial court's
judgment.
Consequently, petitioner filed this petition
where she makes the following assignment of
errors; to wit:
"I. THE RESPONDENT COURT ERRED IN
HOLDING THAT THE CONTRACTUAL
RELATIONSHIP BETWEEN PETITIONER
AND PRIVATE RESPONDENT WAS
CARRIAGE OF GOODS AND NOT LEASE
OF CARGO TRUCK.
II. GRANTING, EX GRATIA ARGUMENTI,
THAT THE FINDING OF THE RESPONDENT
COURT THAT THE CONTRACTUAL
RELATIONSHIP BETWEEN PETITIONER
AND PRIVATE RESPONDENT WAS
CARRIAGE OF GOODS IS CORRECT,
NEVERTHELESS, IT ERRED IN FINDING
PETITIONER LIABLE THEREUNDER
BECAUSE THE LOSS OF THE CARGO WAS
DUE TO FORCE MAJEURE, NAMELY,
HIJACKING.
III. THE RESPONDENT COURT ERRED IN
AFFIRMING THE FINDING OF THE TRIAL
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
73
COURT THAT PETITIONER'S MOTION TO
DISSOLVE/LIFT THE WRIT OF
PRELIMINARY ATTACHMENT HAS BEEN
RENDERED MOOT AND ACADEMIC BY
THE DECISION OF THE MERITS OF THE
CASE." 7
The petition presents the following issues for
resolution: (1) was petitioner a common
carrier?; and (2) was the hijacking referred to
a force majeure?
The Court of Appeals, in holding that
petitioner was a common carrier, found that
she admitted in her answer that she did
business under the name A.M. Bascos
Trucking and that said admission dispensed
with the presentation by private respondent,
Rodolfo Cipriano, of proofs that petitioner was
a common carrier. The respondent Court also
adopted in toto the trial court's decision that
petitioner was a common carrier, Moreover,
both courts appreciated the following pieces of
evidence as indicators that petitioner was a
common carrier: the fact that the truck driver
of petitioner, Maximo Sanglay, received the
cargo consisting of 400 bags of soya bean
meal as evidenced by a cargo receipt signed
by Maximo Sanglay; the fact that the truck
helper, Juanito Morden, was also an
employee of petitioner; and the fact that
control of the cargo was placed in petitioner's
care.
In disputing the conclusion of the trial and
appellate courts that petitioner was a common
carrier, she alleged in this petition that the
contract between her and Rodolfo A. Cipriano,
representing CIPTRADE, was lease of the
truck. She cited as evidence certain affidavits
which referred to the contract as "lease".
These affidavits were made by Jesus Bascos
8 and by petitioner herself. 9 She further
averred that Jesus Bascos confirmed in his
testimony his statement that the contract was
a lease contract. 10 She also stated that: she
was not catering to the general public. Thus,
in her answer to the amended complaint, she
said that she does business under the same
style of A.M. Bascos Trucking, offering her
trucks for lease to those who have cargo to
move, not to the general public but to a few
73
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
customers only in view of the fact that it is only
a small business. 11
We agree with the respondent Court in its
finding that petitioner is a common carrier.
Article 1732 of the Civil Code defines a
common carrier as "(a) person, corporation or
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 to determine a common
carrier is "whether the given undertaking is a
part of the business engaged in by the carrier
which he has held out to the general public as
his occupation rather than the quantity or
extent of the business transacted." 12 In this
case, petitioner herself has made the
admission that she was in the trucking
business, offering her trucks to those with
cargo to move. Judicial admissions are
conclusive and no evidence is required to
prove the same. 13
But petitioner argues that there was only a
contract of lease because they offer their
services only to a select group of people and
because the private respondents, plaintiffs in
the lower court, did not object to the
presentation of affidavits by petitioner where
the transaction was referred to as a lease
contract.
Regarding the first contention, the holding of
the Court in De Guzman vs. Court of Appeals
14 is instructive. In referring to Article 1732 of
the Civil Code, it held thus:
"The above article makes no distinction
between one whose principal business activity
is the carrying of persons or goods or both,
and one who does such carrying only as an
ancillary activity (in local idiom, as a
"sideline"). Article 1732 also carefully avoids
making any distinction between a person or
enterprise offering transportation service on a
regular or scheduled basis and one offering
such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its
services to the "general public," i.e., the
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
74
general community or population, and one
who offers services or solicits business only
from a narrow segment of the general
population. We think that Article 1732
deliberately refrained from making such
distinctions."
Regarding the affidavits presented by
petitioner to the court, both the trial and
appellate courts have dismissed them as self-
serving and petitioner contests the conclusion.
We are bound by the appellate court's factual
conclusions. Yet, granting that the said
evidence were not self-serving, the same
were not sufficient to prove that the contract
was one of lease. It must be understood that a
contract is what the law defines it to be and
not what it is called by the contracting parties.
15 Furthermore, petitioner presented no other
proof of the existence of the contract of lease.
He who alleges a fact has the burden of
proving it. 16
Likewise, We affirm the holding of the
respondent court that the loss of the goods
was not due to force majeure.
Common carriers are obliged to observe
extraordinary diligence in the vigilance over
the goods transported by them. 17
Accordingly, they are presumed to have been
at fault or to have acted negligently if the
goods are lost, destroyed or deteriorated. 18
There are very few instances when the
presumption of negligence does not attach
and these instances are enumerated in Article
1734. 19 In those cases where the
presumption is applied, the common carrier
must prove that it exercised extraordinary
diligence in order to overcome the
presumption.
In this case, petitioner alleged that hijacking
constituted force majeure which exculpated
her from liability for the loss of the cargo. In
De Guzman vs. Court of Appeals, 20 the
Court held that hijacking, not being included in
the provisions of Article 1734, must be dealt
with under the provisions of Article 1735 and
thus, the common carrier is presumed to have
been at fault or negligent. To exculpate the
carrier from liability arising from hijacking, he
must prove that the robbers or the hijackers
74
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
acted with grave or irresistible threat, violence,
or force. This is in accordance with Article
1745 of the Civil Code which provides:
"Art. 1745. Any of the following or similar
stipulations shall be considered unreasonable,
unjust and contrary to public policy;
xxx xxx xxx
(6) That the common carrier's liability for acts
committed by thieves, or of robbers who do
not act with grave or irresistible threat,
violences or force, is dispensed with or
diminished;"
In the same case, 21 the Supreme Court also
held that:
"Under Article 1745 (6) above, a common
carrier is held responsible — and will not be
allowed to divest or to diminish such
responsibility — even for acts of strangers like
thieves or robbers except where such thieves
or robbers in fact acted with grave or
irresistible threat, violence or force. We
believe and so hold that the limits of the duty
of extraordinary diligence in the vigilance over
the goods carried are reached where the
goods are lost as a result of a robbery which
is attended by "grave or irresistible threat,
violence or force."
To establish grave and irresistible force,
petitioner presented her accusatory affidavit,
22 Jesus Bascos' affidavit, 23 and Juanito
Morden's 24 "Salaysay". However, both the
trial court and the Court of Appeals have
concluded that these affidavits were not
enough to overcome the presumption.
Petitioner's affidavit about the hijacking was
based on what had been told her by Juanito
Morden. It was not a first-hand account. While
it had been admitted in court for lack of
objection on the part of private respondent,
the respondent Court had discretion in
assigning weight to such evidence. We are
bound by the conclusion of the appellate
court. In a petition for review on certiorari, We
are not to determine the probative value of
evidence but to resolve questions of law.
Secondly, the affidavit of Jesus Bascos did
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
75
not dwell on how the hijacking took place.
Thirdly, while the affidavit of Juanito Morden,
the truck helper in the hijacked truck, was
presented as evidence in court, he himself
was a witness as could be gleaned from the
contents of the petition. Affidavits are not
considered the best evidence if the affiants
are available as witnesses. 25 The
subsequent filing of the information for
carnapping and robbery against the accused
named in said affidavits did not necessarily
mean that the contents of the affidavits were
true because they were yet to be determined
in the trial of the criminal cases.
The presumption of negligence was raised
against petitioner. It was petitioner's burden to
overcome it. Thus, contrary to her assertion,
private respondent need not introduce any
evidence to prove her negligence. Her own
failure to adduce sufficient proof of
extraordinary diligence made the presumption
conclusive against her.
Having affirmed the findings of the respondent
Court on the substantial issues involved, We
find no reason to disturb the conclusion that
the motion to lift/dissolve the writ of
preliminary attachment has been rendered
moot and academic by the decision on the
merits.
In the light of the foregoing analysis, it is Our
opinion that the petitioner's claim cannot be
sustained. The petition is DISMISSED and the
decision of the Court of Appeals is hereby
AFFIRMED.
SO ORDERED.
SPOUSES G.R.
DANTE CRUZ No. 186312
and
LEONORA Present:
CRUZ,
Petitioners, CARPIO
MORALES, J.,
Chairperson,
BRION,
75
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
BERSAMIN,
- versus - ABAD,* and
VILLARAMA,
SUN JR., JJ.
HOLIDAYS,
INC., Promulgated:
Respondent. June 29, 2010
x-------------------------
------------------------x
DECISION
CARPIO MORALES, J.:
Spouses Dante and Leonora Cruz
(petitioners) lodged a Complaint on
January 25, 2001[1] against Sun
Holidays, Inc. (respondent) with the
Regional Trial Court (RTC) of Pasig
City for damages arising from the
death of their son Ruelito C. Cruz
(Ruelito) who perished with his wife
on September 11, 2000 on board the
boat M/B Coco Beach III that capsized
en route to Batangas from Puerto
Galera, Oriental Mindoro where the
couple had stayed at Coco Beach
Island Resort (Resort) owned and
operated by respondent.
The stay of the newly wed Ruelito and
his wife at the Resort from September
9 to 11, 2000 was by virtue of a tour
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
76
package-contract with respondent that
included transportation to and from the
Resort and the point of departure in
Batangas.
Miguel C. Matute (Matute),[2] a scuba
diving instructor and one of the
survivors, gave his account of the
incident that led to the filing of the
complaint as follows:
Matute stayed at the Resort
from September 8 to 11, 2000. He was
originally scheduled to leave the
Resort in the afternoon of September
10, 2000, but was advised to stay for
another night because of strong winds
and heavy rains.
On September 11, 2000, as it was still
windy, Matute and 25 other Resort
guests including petitioners son and
his wife trekked to the other side of
the Coco Beach mountain that was
sheltered from the wind where they
boarded M/B Coco Beach III, which
was to ferry them to Batangas.
Shortly after the boat sailed, it started
to rain. As it moved farther away from
Puerto Galera and into the open seas,
the rain and wind got stronger, causing
the boat to tilt from side to side and the
captain to step forward to the front,
leaving the wheel to one of the crew
members.
76
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
The waves got more
unwieldy. After getting hit by two big
waves which came one after the
other, M/B Coco Beach III capsized
putting all passengers underwater.
The passengers, who had put on their
life jackets, struggled to get out of the
boat. Upon seeing the captain, Matute
and the other passengers who reached
the surface asked him what they could
do to save the people who were still
trapped under the boat. The captain
replied Iligtas niyo na lang ang sarili
niyo (Just save yourselves).
Help came after about 45 minutes
when two boats owned by Asia Divers
in Sabang, Puerto Galera passed by the
capsized M/B Coco Beach
III. Boarded on those two boats were
22 persons, consisting of 18
passengers and four crew members,
who were brought to Pisa Island. Eight
passengers, including petitioners son
and his wife, died during the incident.
At the time of Ruelitos death, he was
28 years old and employed as a
contractual worker for Mitsui
Engineering & Shipbuilding Arabia,
Ltd. in Saudi Arabia, with a basic
monthly salary of $900.[3]
Petitioners, by letter of October 26,
2000,[4] demanded indemnification
from respondent for the death of their
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
77
son in the amount of at
least P4,000,000.
Replying, respondent, by letter
dated November 7, 2000,[5] denied any
responsibility for the incident which it
considered to be a fortuitous event. It
nevertheless offered, as an act of
commiseration, the amount of P10,000
to petitioners upon their signing of a
waiver.
As petitioners declined respondents
offer, they filed the Complaint, as
earlier reflected, alleging that
respondent, as a common carrier, was
guilty of negligence in allowing M/B
Coco Beach III to sail notwithstanding
storm warning bulletins issued by the
Philippine Atmospheric, Geophysical
and Astronomical Services
Administration (PAGASA) as early as
5:00 a.m. of September 11, 2000.[6]
In its Answer,[7] respondent denied
being a common carrier, alleging that
its boats are not available to the general
public as they only ferry Resort guests
and crew members.Nonetheless, it
claimed that it exercised the utmost
diligence in ensuring the safety of its
passengers; contrary to petitioners
allegation, there was no storm
on September 11, 2000as the Coast
Guard in fact cleared the voyage;
and M/B Coco Beach III was not filled
77
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY 78

to capacity and had sufficient life other things, that the trial court
jackets for its passengers. By way of correctly ruled that respondent is a
Counterclaim, respondent alleged that private carrier which is only required
it is entitled to an award for attorneys to observe ordinary diligence; that
fees and litigation expenses amounting respondent in fact observed
to not less than P300,000. extraordinary diligence in transporting
its guests on board M/B Coco Beach
Carlos Bonquin, captain of M/B Coco III; and that the proximate cause of the
Beach III, averred that the Resort incident was a squall, a fortuitous
customarily requires four conditions to event.
be met before a boat is allowed to sail,
to wit: (1) the sea is calm, (2) there is Petitioners Motion for
clearance from the Coast Guard, (3) Reconsideration having been denied
there is clearance from the captain and by Resolution dated January 16,
(4) there is clearance from the Resorts 2009,[14] they filed the present Petition
assistant manager.[8] He added for Review.[15]
that M/B Coco Beach III met all four
conditions on September 11, Petitioners maintain the position
[9]
2000, but a subasco or squall, they took before the trial court, adding
characterized by strong winds and big that respondent is a common carrier
waves, suddenly occurred, causing the since by its tour package, the
boat to capsize.[10] transporting of its guests is an integral
By Decision of February 16, part of its resort business. They inform
[11]
2005, Branch 267 of the Pasig RTC that another division of the appellate
dismissed petitioners Complaint and court in fact held respondent liable for
respondents Counterclaim. damages to the other survivors of the
incident.
Petitioners Motion for
Reconsideration having been denied Upon the other hand, respondent
by Order dated September 2, contends that petitioners failed to
[12]
2005, they appealed to the Court of present evidence to prove that it is a
Appeals. common carrier; that the Resorts ferry
services for guests cannot be
By Decision of August 19, considered as ancillary to its business
[13]
2008, the appellate court denied as no income is derived therefrom; that
petitioners appeal, holding, among it exercised extraordinary diligence as

TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 78

 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY 79

shown by the conditions it had n, offering

imposed before allowing M/B Coco their services
to the public.
Beach III to sail; that the incident was
caused by a fortuitous event without The above article
any contributory negligence on its makes no
part; and that the other case wherein distinction between one
the appellate court held it liable for whose principal
damages involved different plaintiffs, business activity is the
issues and evidence.[16] carrying of persons or
goods or both, and one
who does such carrying
The petition is impressed with merit. only as an ancillary
activity (in local idiom, as
Petitioners correctly rely on De a sideline). Article 1732
Guzman v. Court of Appeals[17] in also carefully avoids
characterizing respondent as a making any
distinction between a
common carrier.
person or enterprise
offering transportation
The Civil Code defines service on a regular or
common carriers in the scheduled basis and one
following terms: offering such service on
Article an occasional, episodic or
1732. Comm unscheduled
on carriers basis. Neither does
are persons, Article 1732 distinguish
corporations, between a carrier offering
firms or its services to the general
associations public, i.e., the general
engaged in community or
the business population, and one who
of carrying offers services or solicits
or business only from
transporting a narrow segment of the
passengers general population. We
or goods or think that Article 1733
both, by deliberately refrained from
land, water, making such distinctions.
or air for
compensatio

TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 79

 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY 80

So understood, the concept railroad,

of common carrier under street
Article 1732 may be seen railway,
to coincide neatly with the traction
notion of public service, railway,
under the Public Service subway
Act (Commonwealth Act motor
No. 1416, as amended) vehicle,
which at least partially either for
supplements the law on freight or
common carriers set forth passenger, or
in the Civil Code. Under both, with or
Section 13, paragraph (b) without fixed
of the Public Service Act, route and
public service includes: whatever
may be its
. . . every classification
person that , freight or
now or carrier
hereafter service of
may own, any class,
operate, express
manage, or service,
control in the steamboat, or
Philippines, steamship
for hire or line,
compensatio pontines,
n, with ferries and
general or water craft,
limited engaged in
clientele, the
whether transportatio
permanent, n of
occasional or passengers
accidental, or freight or
and done for both,
general shipyard,
business marine repair
purposes, shop, wharf
any common or dock, ice
carrier, plant, ice-

TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 80

 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY 81

refrigeration same. These services are thus available

plant, canal, to the public.
irrigation
system, gas,
electric light, That respondent does not charge
heat and a separate fee or fare for its ferry
power, water services is of no moment. It would be
supply and imprudent to suppose that it provides
power said services at a loss. The Court is
petroleum, aware of the practice of beach resort
sewerage
system, wire operators offering tour packages to
or wireless factor the transportation fee in arriving
communicati at the tour package price. That guests
ons systems, who opt not to avail of respondents
wire or ferry services pay the same amount is
wireless likewise inconsequential. These guests
broadcasting
may only be deemed to have overpaid.
stations and
other similar
public As De Guzman instructs, Article 1732
services . . of the Civil Code defining common
.[18] (emphasi carriers has deliberately refrained from
s and making distinctions on whether the
underscoring
carrying of persons or goods is the
supplied.)
carriers principal business, whether it
is offered on a regular basis, or
Indeed, respondent is a common whether it is offered to the general
carrier. Its ferry services are so public. The intent of the law is thus to
intertwined with its main business as to not consider such
be properly considered ancillary distinctions. Otherwise, there is no
thereto. The constancy of respondents telling how many other distinctions
ferry services in its resort operations is may be concocted by unscrupulous
underscored by its having its businessmen engaged in the carrying
own Coco Beach boats. And the tour of persons or goods in order to avoid
packages it offers, which include the the legal obligations and liabilities of
ferry services, may be availed of by common carriers.
anyone who can afford to pay the

TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 81

 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
Under the Civil Code, common
carriers, from the nature of their
business and for reasons of public
policy, are bound to observe
extraordinary diligence for the safety
of the passengers transported by them,
according to all the circumstances of
each case.[19] They are bound to carry
the passengers safely as far as human
care and foresight can provide, using
the utmost diligence of very cautious
persons, with due regard for all the
circumstances.[20]
When a passenger dies or is
injured in the discharge of a contract of
carriage, it is presumed that the
common carrier is at fault or
negligent. In fact, there is even no need
for the court to make an express
finding of fault or negligence on the
part of the common carrier. This
statutory presumption may only be
overcome by evidence that the carrier
exercised extraordinary diligence.[21]
Respondent nevertheless harps on its
strict compliance with the earlier
mentioned conditions of voyage before
it allowed M/B Coco Beach III to sail
on September 11, 2000.Respondents
position does not impress.
The evidence shows that PAGASA
issued 24-hour public weather
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
82
forecasts and tropical cyclone
warnings for shipping on September
10 and 11, 2000 advising of tropical
depressions in Northern Luzon which
would also affect
[22]
the province of Mindoro. By the
testimony of Dr. Frisco Nilo,
supervising weather specialist of
PAGASA, squalls are to be expected
under such weather condition.[23]
A very cautious person exercising the
utmost diligence would thus not brave
such stormy weather and put other
peoples lives at risk. The extraordinary
diligence required of common carriers
demands that they take care of the
goods or lives entrusted to their hands
as if they were their own. This
respondent failed to do.
Respondents insistence that the
incident was caused by a fortuitous
event does not impress either.
The elements of a "fortuitous event"
are: (a) the cause of the unforeseen and
unexpected occurrence, or the failure
of the debtors to comply with their
obligations, must have been
independent of human will; (b) the
event that constituted the caso
fortuito must have been impossible to
foresee or, if foreseeable, impossible
82
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY 83

to avoid; (c) the occurrence must have

been such as to render it impossible for
the debtors to fulfill their obligation in
a normal manner; and (d) the obligor
must have been free from any
participation in the aggravation of the
resulting injury to the creditor.[24]
To fully free a common carrier from
any liability, the fortuitous event must
have been the proximate and only
cause of the loss. And it should have
exercised due diligence to prevent or
minimize the loss before, during and
after the occurrence of the fortuitous
event.[25]
Article 1764[27] vis--vis Article
2206[28] of the Civil Code holds the
common carrier in breach of its
contract of carriage that results in the
death of a passenger liable to pay the
following: (1) indemnity for death, (2)
indemnity for loss of earning capacity
and (3) moral damages.
Petitioners are entitled to
indemnity for the death of Ruelito
which is fixed at P50,000.[29]

Respondent cites the squall that As for damages representing

occurred during the voyage as the unearned income, the formula for its
fortuitous event that overturned M/B computation is:
Coco Beach III. As reflected above,
however, the occurrence of squalls was Net Earning
expected under the weather condition C
a
of September 11, 2000. Moreover,
p
evidence shows that M/B Coco Beach a
III suffered engine trouble before it c
capsized and sank.[26]The incident was, i
therefore, not completely free from t
human intervention. y

=
The Court need not belabor how
respondents evidence likewise fails to l
demonstrate that it exercised due i
diligence to prevent or minimize the f
loss before, during and after the e
occurrence of the squall. e

TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 83

TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY 84

x a
p n
e d
c n
t e
a c
n e
c s
y s
a
x r
y
(
g l
r i
o v
s i
s n
a g
n e
n x
u p
a e
l n
i s
n e
c s
o )
m .
e
- Life expectancy is
r d
e e
a t
s e
o r
n m
a i
b n
l e
e d

TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 84

 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY 85

i e
n a
a t
c h
c ]
[
o
3
r 0
d ]
a
n
c
e The first factor, i.e., life
w expectancy, is computed by applying
i the formula (2/3 x [80 age at death])
t adopted in the American Expectancy
h Table of Mortality or the Actuarial of
t
Combined Experience Table of
h
e Mortality.[31]
f The second factor is computed
o by multiplying the life expectancy by
r the net earnings of the deceased, i.e.,
m the total earnings less expenses
u
necessary in the creation of such
l
a earnings or income and less living and
: other incidental expenses.[32] The loss
is not equivalent to the entire earnings
2 / 3 x [80 age of deceased of the deceased, but only such portion
a as he would have used to support his
t dependents or heirs. Hence, to be
t
h deducted from his gross earnings are
e the necessary expenses supposed to be
t used by the deceased for his own
i needs.[33]
m
e In computing the third
o
factor necessary living expense, Smith
f
d Bell Dodwell Shipping Agency Corp.

TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 85

 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
v. Borja[34] teaches that when, as in this
case, there is no showing that the living
expenses constituted the smaller
percentage of the gross income, the
living expenses are fixed at half of the
gross income.
Applying the above guidelines,
the Court determines Ruelito's life
expectancy as follows:
Life expectancy = 2/3 x
[80 - age of deceased at
the time of death]
2/3 x [80 - 28]
2/3 x [52]
Life expectancy = 35
Documentary evidence shows
that Ruelito was earning a basic
monthly salary of $900[35] which,
when converted to Philippine peso
applying the annual average exchange
rate of $1 = P44 in 2000,[36] amounts
to P39,600. Ruelitos net earning
capacity is thus computed as follows:
Net Earning Capacity = life
expectancy x (gross annual
income -
reasonable and necessary
living expenses).
= 35 x (P475,200 - P237,600)
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
86
= 35 x (P237,600)
Net Earning Capacity
= P8,316,000
Respecting the award of moral
damages, since respondent common
carriers breach of contract of carriage
resulted in the death of petitioners son,
following Article 1764 vis--vis Article
2206 of the Civil Code, petitioners are
entitled to moral damages.
Since respondent failed to prove
that it exercised the extraordinary
diligence required of common carriers,
it is presumed to have acted recklessly,
thus warranting the award too of
exemplary damages, which are granted
in contractual obligations if the
defendant acted in a wanton,
fraudulent, reckless, oppressive or
malevolent manner.[37]
Under the circumstances, it is
reasonable to award petitioners the
amount of P100,000 as moral damages
and P100,000 as exemplary
[38]
damages.
Pursuant to Article 2208[39] of
the Civil Code, attorney's fees may
also be awarded where exemplary
damages are awarded. The Court finds
86
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY 87

that 10% of the total amount adjudged 2. When an

against respondent is reasonable for obligation, not
constituting a loan or
the purpose.
forbearance of money, is
breached, an interest on
Finally, Eastern Shipping Lines, the amount of damages
Inc. v. Court of Appeals[40] teaches that awarded may be imposed
when an obligation, regardless of its at the discretion of the
source, i.e., law, contracts, quasi- court at the rate of 6% per
contracts, delicts or quasi-delicts is annum. No interest,
however, shall be
breached, the contravenor can be held adjudged on unliquidated
liable for payment of interest in the claims or damages except
concept of actual and compensatory when or until the demand
damages, subject to the following can be established with
rules, to wit reasonable certainty.
Accordingly, where the
demand is established with
1. When the reasonable certainty, the
obligation is breached, and interest shall begin to run
it consists in the payment from the time the claim is
of a sum of money, i.e., a made judicially or
loan or forbearance of extrajudicially (Art. 1169,
money, the interest due Civil Code) but when such
should be that which may certainty cannot be so
have been stipulated in reasonably established at
writing. Furthermore, the the time the demand is
interest due shall itself made, the interest shall
earn legal interest from the begin to run only from the
time it is judicially date the judgment of the
demanded. In the absence court is made (at which
of stipulation, the rate of time the quantification of
interest shall be 12% per damages may be deemed
annum to be computed to have been reasonably
from default, i.e., from ascertained). The actual
judicial or extrajudicial base for the computation
demand under and subject of legal interest shall, in
to the provisions of Article any case, be on the amount
1169 of the Civil Code. finally adjudged.

TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 87

 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
3. When the
judgment of the court
awarding a sum of money
becomes final and
executory, the rate of legal
interest, whether the case
falls under paragraph 1 or
paragraph 2, above, shall
be 12% per annum from
such finality until its
satisfaction, this interim
period being deemed to be
by then an equivalent to a
forbearance of credit.
(emphasis supplied).
Since the amounts payable by
respondent have been determined with
certainty only in the present petition,
the interest due shall be computed
upon the finality of this decision at the
rate of 12% per annum until
satisfaction, in accordance with
paragraph number 3 of the
immediately cited guideline in Easter
Shipping Lines, Inc.
WHEREFORE, the Court of Appeals
Decision of August 19,
2008 is REVERSED and SET
ASIDE. Judgment is rendered in favor
of petitioners ordering respondent to
pay petitioners the following:
(1) P50,000 as indemnity for the death
of Ruelito Cruz; (2) P8,316,000 as
indemnity for Ruelitos loss of earning
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
88
capacity; (3) P100,000 as moral
damages; (4) P100,000 as exemplary
damages; (5) 10% of the total amount
adjudged against respondent as
attorneys fees; and (6) the costs of suit.
The total amount adjudged against
respondent shall earn interest at the
rate of 12% per annum computed from
the finality of this decision until full
payment.
SO ORDERED.
G.R. No. 200289 November 25,
2013
WESTWIND SHIPPING
CORPORATION, Petitioner,
vs.
UCPB GENERAL INSURANCE CO., INC.
and ASIAN TERMINALS INC., Respondents.
x-----------------------x
G.R. No. 200314
ORIENT FREIGHT INTERNATIONAL
INC., Petitioner,
vs.
UCPB GENERAL INSURANCE CO., INC.
and ASIAN TERMINALS INC., Respondents.
DECISION
PERALTA, J.:
These two consolidated cases challenge, by
way of petition for certiorari under Rule 45 of
the 1997 Rules of Civil Procedure, September
13, 2011 Decision1 and January 19, 2012
Resolution2 of the Court of Appeals (CA) in
CA-G.R. CV No. 86752, which reversed and
set aside the January 27, 2006 Decision3 of
88
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
the Manila City Regional Trial Court Branch
(RTC) 30. The facts, as established by the
records, are as follows:
On August 23, 1993, Kinsho-Mataichi
Corporation shipped from the port of Kobe,
Japan, 197 metal containers/skids of tin-free
steel for delivery to the consignee, San Miguel
Corporation (SMC). The shipment, covered by
Bill of Lading No. KBMA-1074,4 was loaded
and received clean on board M/V Golden
Harvest Voyage No. 66, a vessel owned and
operated by Westwind Shipping Corporation
(Westwind).
SMC insured the cargoes against all risks with
UCPB General Insurance Co., Inc. (UCPB) for
US Dollars: One Hundred Eighty-Four
Thousand Seven Hundred Ninety-Eight and
Ninety-Seven Centavos (US$184,798.97),
which, at the time, was equivalent to
Philippine Pesos: Six Million Two Hundred
Nine Thousand Two Hundred Forty-Five and
Twenty-Eight Centavos (₱6,209,245.28).
The shipment arrived in Manila, Philippines on
August 31, 1993 and was discharged in the
custody of the arrastre operator, Asian
Terminals, Inc. (ATI), formerly Marina Port
Services, Inc.5 During the unloading operation,
however, six containers/skids worth Philippine
Pesos: One Hundred Seventeen Thousand
Ninety-Three and Twelve Centavos
(₱117,093.12) sustained dents and punctures
from the forklift used by the stevedores of
Ocean Terminal Services, Inc. (OTSI) in
centering and shuttling the containers/skids.
As a consequence, the local ship agent of the
vessel, Baliwag Shipping Agency, Inc., issued
two Bad Order Cargo Receipt dated
September 1, 1993.
On September 7, 1993, Orient Freight
International, Inc. (OFII), the customs broker
of SMC, withdrew from ATI the 197
containers/skids, including the six in damaged
condition, and delivered the same at SMC’s
warehouse in Calamba, Laguna through J.B.
Limcaoco Trucking (JBL). It was discovered
upon discharge that additional nine
containers/skids valued at Philippine Pesos:
One Hundred Seventy-Five Thousand Six
Hundred Thirty-Nine and Sixty-Eight Centavos
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
89
(₱175,639.68) were also damaged due to the
forklift operations; thus, making the total
number of 15 containers/skids in bad order.
Almost a year after, on August 15, 1994, SMC
filed a claim against UCPB, Westwind, ATI,
and OFII to recover the amount corresponding
to the damaged 15 containers/skids. When
UCPB paid the total sum of Philippine Pesos:
Two Hundred Ninety-Two Thousand Seven
Hundred Thirty-Two and Eighty Centavos
(₱292,732.80), SMC signed the subrogation
receipt. Thereafter, in the exercise of its right
of subrogation, UCPB instituted on August 30,
1994 a complaint for damages against
Westwind, ATI, and OFII.6
After trial, the RTC dismissed UCPB’s
complaint and the counterclaims of Westwind,
ATI, and OFII. It ruled that the right, if any,
against ATI already prescribed based on the
stipulation in the 16 Cargo Gate Passes
issued, as well as the doctrine laid down in
International Container Terminal Services, Inc.
v. Prudential Guarantee & Assurance Co.
Inc.7 that a claim for reimbursement for
damaged goods must be filed within 15 days
from the date of consignee’s knowledge. With
respect to Westwind, even if the action
against it is not yet barred by prescription,
conformably with Section 3 (6) of the Carriage
of Goods by Sea Act (COGSA) and Our
rulings in E.E. Elser, Inc., et al. v. Court of
Appeals, et al.8 and Belgian Overseas
Chartering and Shipping N.V. v. Phil. First
Insurance Co., Inc.,9 the court a quo still
opined that Westwind is not liable, since the
discharging of the cargoes were done by ATI
personnel using forklifts and that there was no
allegation that it (Westwind) had a hand in the
conduct of the stevedoring operations. Finally,
the trial court likewise absolved OFII from any
liability, reasoning that it never undertook the
operation of the forklifts which caused the
dents and punctures, and that it merely
facilitated the release and delivery of the
shipment as the customs broker and
representative of SMC.
On appeal by UCPB, the CA reversed and set
aside the trial court. The fallo of its September
13, 2011 Decision directed:
89
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
WHEREFORE, premises considered, the
instant appeal is hereby GRANTED. The
Decision dated January 27, 2006 rendered by
the court a quo is REVERSED AND SET
ASIDE. Appellee Westwind Shipping
Corporation is hereby ordered to pay to the
appellant UCPB General Insurance Co., Inc.,
the amount of One Hundred Seventeen
Thousand and Ninety-Three Pesos and
Twelve Centavos (Php117,093.12), while
Orient Freight International, Inc. is hereby
ordered to pay to UCPB the sum of One
Hundred Seventy-Five Thousand Six Hundred
Thirty-Nine Pesos and Sixty-Eight Centavos
(Php175,639.68). Both sums shall bear
interest at the rate of six (6%) percent per
annum, from the filing of the complaint on
August 30, 1994 until the judgment becomes
final and executory. Thereafter, an interest
rate of twelve (12%) percent per annum shall
be imposed from the time this decision
becomes final and executory until full payment
of said amounts.
SO ORDERED.10
While the CA sustained the RTC judgment
that the claim against ATI already prescribed,
it rendered a contrary view as regards the
liability of Westwind and OFII. For the
appellate court, Westwind, not ATI, is
responsible for the six damaged
containers/skids at the time of its unloading. In
its rationale, which substantially followed
Philippines First Insurance Co., Inc. v. Wallem
Phils. Shipping, Inc.,11 it concluded that the
common carrier, not the arrastre operator, is
responsible during the unloading of the
cargoes from the vessel and that it is not
relieved from liability and is still bound to
exercise extraordinary diligence at the time in
order to see to it that the cargoes under its
possession remain in good order and
condition. The CA also considered that OFII is
liable for the additional nine damaged
containers/skids, agreeing with UCPB’s
contention that OFII is a common carrier
bound to observe extraordinary diligence and
is presumed to be at fault or have acted
negligently for such damage. Noting the
testimony of OFII’s own witness that the
delivery of the shipment to the consignee is
part of OFII’s job as a cargo forwarder, the
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
90
appellate court ruled that Article 1732 of the
New Civil Code (NCC) does not distinguish
between one whose principal business activity
is the carrying of persons or goods or both
and one who does so as an ancillary activity.
The appellate court further ruled that OFII
cannot excuse itself from liability by insisting
that JBL undertook the delivery of the cargoes
to SMC’s warehouse. It opined that the
delivery receipts signed by the inspector of
SMC showed that the containers/skids were
received from OFII, not JBL. At the most, the
CA said, JBL was engaged by OFII to supply
the trucks necessary to deliver the shipment,
under its supervision, to SMC.
Only Westwind and OFII filed their respective
motions for reconsideration, which the CA
denied; hence, they elevated the case before
Us via petitions docketed as G.R. Nos.
200289 and 200314, respectively.
Westwind argues that it no longer had actual
or constructive custody of the containers/skids
at the time they were damaged by ATI’s forklift
operator during the unloading operations. In
accordance with the stipulation of the bill of
lading, which allegedly conforms to Article
1736 of the NCC, it contends that its
responsibility already ceased from the
moment the cargoes were delivered to ATI,
which is reckoned from the moment the goods
were taken into the latter’s custody. Westwind
adds that ATI, which is a completely
independent entity that had the right to receive
the goods as exclusive operator of
stevedoring and arrastre functions in South
Harbor, Manila, had full control over its
employees and stevedores as well as the
manner and procedure of the discharging
operations.
As for OFII, it maintains that it is not a
common carrier, but only a customs broker
whose participation is limited to facilitating
withdrawal of the shipment in the custody of
ATI by overseeing and documenting the
turnover and counterchecking if the quantity of
the shipments were in tally with the shipping
documents at hand, but without participating
in the physical withdrawal and loading of the
shipments into the delivery trucks of JBL.
Assuming that it is a common carrier, OFII
90
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
insists that there is no need to rely on the
presumption of the law – that, as a common
carrier, it is presumed to have been at fault or
have acted negligently in case of damaged
goods – considering the undisputed fact that
the damages to the containers/skids were
caused by the forklift blades, and that there is
no evidence presented to show that OFII and
Westwind were the owners/operators of the
forklifts. It asserts that the loading to the
trucks were made by way of forklifts owned
and operated by ATI and the unloading from
the trucks at the SMC warehouse was done
by way of forklifts owned and operated by
SMC employees. Lastly, OFII avers that
neither the undertaking to deliver nor the
acknowledgment by the consignee of the fact
of delivery makes a person or entity a
common carrier, since delivery alone is not
the controlling factor in order to be considered
as such.
Both petitions lack merit.
The case of Philippines First Insurance Co.,
Inc. v. Wallem Phils. Shipping, Inc.12 applies,
as it settled the query on which between a
common carrier and an arrastre operator
should be responsible for damage or loss
incurred by the shipment during its unloading.
We elucidated at length:
Common carriers, from the nature of their
business and for reasons of public policy, are
bound to observe extraordinary diligence in
the vigilance over the goods transported by
them. Subject to certain exceptions
enumerated under Article 1734 of the Civil
Code, common carriers are responsible for
the loss, destruction, or deterioration of the
goods. The extraordinary responsibility of the
common carrier lasts from the time the goods
are unconditionally placed in the 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.
For marine vessels, Article 619 of the Code of
Commerce provides that the ship captain is
liable for the cargo from the time it is turned
over to him at the dock or afloat alongside the
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
91
vessel at the port of loading, until he delivers it
on the shore or on the discharging wharf at
the port of unloading, unless agreed
otherwise. In Standard Oil Co. of New York v.
Lopez Castelo, the Court interpreted the ship
captain’s liability as ultimately that of the
shipowner by regarding the captain as the
representative of the shipowner.
Lastly, Section 2 of the COGSA provides that
under every contract of carriage of goods by
sea, the carrier in relation to the loading,
handling, stowage, carriage, custody, care,
and discharge of such goods, shall be subject
to the responsibilities and liabilities and
entitled to the rights and immunities set forth
in the Act. Section 3 (2) thereof then states
that among the carriers’ responsibilities are to
properly and carefully load, handle, stow,
carry, keep, care for, and discharge the goods
carried.
xxxx
On the other hand, the functions of an arrastre
operator involve the handling of cargo
deposited on the wharf or between the
establishment of the consignee or shipper and
the ship's tackle. Being the custodian of the
goods discharged from a vessel, an arrastre
operator's duty is to take good care of the
goods and to turn them over to the party
entitled to their possession.
Handling cargo is mainly the arrastre
operator's principal work so its
drivers/operators or employees should
observe the standards and measures
necessary to prevent losses and damage to
shipments under its custody.
In Fireman’s Fund Insurance Co. v. Metro Port
Service, Inc., the Court explained the
relationship and responsibility of an arrastre
operator to a consignee of a cargo, to quote:
The legal relationship between the consignee
and the arrastre operator is akin to that of a
depositor and warehouseman. The
relationship between the consignee and the
common carrier is similar to that of the
consignee and the arrastre operator. Since it
91
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
is the duty of the ARRASTRE to take good
care of the goods that are in its custody and to
deliver them in good condition to the
consignee, such responsibility also devolves
upon the CARRIER. Both the ARRASTRE
and the CARRIER are therefore charged with
and obligated to deliver the goods in good
condition to the consignee. (Emphasis
supplied) (Citations omitted)
The liability of the arrastre operator was
reiterated in Eastern Shipping Lines, Inc. v.
Court of Appeals with the clarification that the
arrastre operator and the carrier are not
always and necessarily solidarily liable as the
facts of a case may vary the rule.
Thus, in this case, the appellate court is
correct insofar as it ruled that an arrastre
operator and a carrier may not be held
solidarily liable at all times. But the precise
question is which entity had custody of the
shipment during its unloading from the
vessel?
The aforementioned Section 3 (2) of the
COGSA states that among the carriers’
responsibilities are to properly and carefully
load, care for and discharge the goods
carried. The bill of lading covering the subject
shipment likewise stipulates that the carrier’s
liability for loss or damage to the goods
ceases after its discharge from the vessel.
Article 619 of the Code of Commerce holds a
ship captain liable for the cargo from the time
it is turned over to him until its delivery at the
port of unloading.
In a case decided by a U.S. Circuit Court,
Nichimen Company v. M/V Farland, it was
ruled that like the duty of seaworthiness, the
duty of care of the cargo is non-delegable,
and the carrier is accordingly responsible for
the acts of the master, the crew, the
stevedore, and his other agents. It has also
been held that it is ordinarily the duty of the
master of a vessel to unload the cargo and
place it in readiness for delivery to the
consignee, and there is an implied obligation
that this shall be accomplished with sound
machinery, competent hands, and in such
manner that no unnecessary injury shall be
done thereto. And the fact that a consignee is
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
92
required to furnish persons to assist in
unloading a shipment may not relieve the
carrier of its duty as to such unloading.
xxxx
It is settled in maritime law jurisprudence that
cargoes while being unloaded generally
remain under the custody of the carrier x x x.13
In Regional Container Lines (RCL) of
Singapore v. The Netherlands Insurance Co.
(Philippines), Inc.14 and Asian Terminals, Inc.
v. Philam Insurance Co., Inc.,15 the Court
echoed the doctrine that cargoes, while being
unloaded, generally remain under the custody
of the carrier. We cannot agree with
Westwind’s disputation that "the carrier in
Wallem clearly exercised supervision during
the discharge of the shipment and that is why
it was faulted and held liable for the damage
incurred by the shipment during such time."
What Westwind failed to realize is that the
extraordinary responsibility of the common
carrier lasts until the time the goods are
actually or constructively delivered by the
carrier to the consignee or to the person who
has a right to receive them. There is actual
delivery in contracts for the transport of goods
when possession has been turned over to the
consignee or to his duly authorized agent and
a reasonable time is given him to remove the
goods.16 In this case, since the discharging of
the containers/skids, which were covered by
only one bill of lading, had not yet been
completed at the time the damage occurred,
there is no reason to imply that there was
already delivery, actual or constructive, of the
cargoes to ATI. Indeed, the earlier case of
Delsan Transport Lines, Inc. v. American
Home Assurance Corp.17 serves as a useful
guide, thus:
Delsan’s argument that it should not be held
liable for the loss of diesel oil due to backflow
because the same had already been actually
and legally delivered to Caltex at the time it
entered the shore tank holds no water. It had
been settled that the subject cargo was still in
the custody of Delsan because the
discharging thereof has not yet been finished
when the backflow occurred. Since the
discharging of the cargo into the depot has not
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
yet been completed at the time of the spillage
when the backflow occurred, there is no
reason to imply that there was actual delivery
of the cargo to the consignee. Delsan is
straining the issue by insisting that when the
diesel oil entered into the tank of Caltex on
shore, there was legally, at that moment, a
complete delivery thereof to Caltex. To be
sure, the extraordinary responsibility of
common carrier lasts from the time the goods
are unconditionally placed in the possession
of, and received by, the carrier for
transportation until the same are delivered,
actually or constructively, by the carrier to the
consignee, or to a person who has the right to
receive them. The discharging of oil products
to Caltex Bulk Depot has not yet been
finished, Delsan still has the duty to guard and
to preserve the cargo. The carrier still has in it
the responsibility to guard and preserve the
goods, a duty incident to its having the goods
transported.
To recapitulate, common carriers, from the
nature of their business and for reasons of
public policy, are bound to observe
extraordinary diligence in vigilance over the
goods and for the safety of the passengers
transported by them, according to all the
circumstances of each case. The mere proof
of delivery of goods in good order to the
carrier, and their arrival in the place of
destination in bad order, make out a prima
facie case against the carrier, so that if no
explanation is given as to how the injury
occurred, the carrier must be held
responsible. It is incumbent upon the carrier to
prove that the loss was due to accident or
some other circumstances inconsistent with its
liability.18
The contention of OFII is likewise untenable.
A customs broker has been regarded as a
common carrier because transportation of
goods is an integral part of its business.19 In
Schmitz Transport & Brokerage Corporation v.
Transport Venture, Inc.,20 the Court already
reiterated: It is settled that under a given set of
facts, a customs broker may be regarded as a
common carrier. Thus, this Court, in A.F.
1âwphi1
Sanchez Brokerage, Inc. v. The Honorable
Court of Appeals held:
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
93
The appellate court did not err in finding
petitioner, a customs broker, to be also a
common carrier, as defined under Article 1732
of the Civil Code, to wit, Art. 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.
xxxx
Article 1732 does not distinguish between one
whose principal business activity is the
carrying of goods and one who does such
carrying only as an ancillary activity. The
contention, therefore, of petitioner that it is not
a common carrier but a customs broker whose
principal function is to prepare the correct
customs declaration and proper shipping
documents as required by law is bereft of
merit. It suffices that petitioner undertakes to
deliver the goods for pecuniary consideration.
And in Calvo v. UCPB General Insurance Co.
Inc., this Court held that as the transportation
of goods is an integral part of a customs
broker, the customs broker is also a common
carrier. For to declare otherwise "would be to
deprive those with whom [it] contracts the
protection which the law affords them
notwithstanding the fact that the obligation to
carry goods for [its] customers, is part and
parcel of petitioner’s business."21
That OFII is a common carrier is buttressed by
the testimony of its own witness, Mr. Loveric
Panganiban Cueto, that part of the services it
offers to clients is cargo forwarding, which
includes the delivery of the shipment to the
consignee.22 Thus, for undertaking the
transport of cargoes from ATI to SMC’s
warehouse in Calamba, Laguna, OFII is
considered a common carrier. As long as a
person or corporation holds itself to the public
for the purpose of transporting goods as a
business, it is already considered a common
carrier regardless of whether it owns the
vehicle to be used or has to actually hire one.
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
As a common carrier, OFII is mandated to
observe, under Article 1733 of the Civil
Code,23 extraordinary diligence in the vigilance
over the goods24 it transports according to the
peculiar circumstances of each case. In the
event that the goods are lost, destroyed or
deteriorated, it is presumed to have been at
fault or to have acted negligently unless it
proves that it observed extraordinary
diligence.25 In the case at bar it was
established that except for the six
containers/skids already damaged OFII
received the cargoes from ATI in good order
and condition; and that upon its delivery to
SMC additional nine containers/skids were
found to be in bad order as noted in the
Delivery Receipts issued by OFII and as
indicated in the Report of Cares Marine Cargo
Surveyors. Instead of merely excusing itself
from liability by putting the blame to ATI and
SMC it is incumbent upon OFII to prove that it
actively took care of the goods by exercising
extraordinary diligence in the carriage thereof.
It failed to do so. Hence its presumed
negligence under Article 1735 of the Civil
Code remains unrebutted.
WHEREFORE, premises considered the
petitions of Westwind and OFII in G.R. Nos.
200289 and 200314 respectively are DENIED.
The September 13 2011 Decision and
January 19 2012 Resolution of the Court of
Appeals in CA-G.R. CV No. 86752 which
reversed and set aside the January 27 2006
Decision of the Manila City Regional Trial
Court Branch 30 are AFFIRMED.
SO ORDERED.
DIOSDADO M. PERALTA
Associate Justice
WE CONCUR:
[G.R. No. 148496. March 19, 2002]
VIRGINES CALVO doing business
under the name and style
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
94
TRANSORIENT
CONTAINER TERMINAL
SERVICES, INC., petitioner,
vs. UCPB GENERAL
INSURANCE CO., INC.
(formerly Allied Guarantee
Ins. Co., Inc.) respondent.
DECISION
MENDOZA, J.:
This is a petition for review of the
decision,[1] dated May 31, 2001, of the
Court of Appeals, affirming the
decision[2] of the Regional Trial Court,
Makati City, Branch 148, which ordered
petitioner to pay respondent, as
subrogee, the amount of P93,112.00
with legal interest, representing the
value of damaged cargo handled by
petitioner, 25% thereof as attorneys
fees, and the cost of the suit.
The facts are as follows:
Petitioner Virgines Calvo is the
owner of Transorient Container
Terminal Services, Inc. (TCTSI), a sole
proprietorship customs broker. At the
time material to this case, 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 SMCs
warehouse at the Tabacalera
Compound, Romualdez St., Ermita,
Manila. The cargo was insured by
respondent UCPB General Insurance
Co., Inc.
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
On July 14, 1990, the shipment in
question, contained in 30 metal vans,
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, pursuant to her
contract with SMC, withdrew the cargo
from the arrastre operator and delivered
it to SMCs warehouse in Ermita,
Manila. On July 25, 1990, 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 for the aforementioned amount.
In turn, respondent, as subrogee of
SMC, brought suit against petitioner in
the Regional Trial Court, Branch 148,
Makati City, which, on December 20,
1995, rendered judgment finding
petitioner liable to respondent for the
damage to the shipment.
The trial court held:
It cannot be denied . . . that the subject
cargoes sustained damage while in the
custody of defendants. Evidence such
as the Warehouse Entry Slip (Exh. E);
the Damage Report (Exh. F) with
entries appearing therein, classified as
TED and TSN, which the claims
processor, Ms. Agrifina De Luna,
claimed to be tearrage at the end and
tearrage at the middle of the subject
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
95
damaged cargoes respectively, coupled
with the Marine Cargo Survey Report
(Exh. H - H-4-A) confirms the fact of
the damaged condition of the subject
cargoes. The surveyor[s] report (Exh.
H-4-A) in particular, which provides
among others that:
. . . we opine that damages sustained by
shipment is attributable to improper
handling in transit presumably whilst in
the custody of the broker . . . .
is a finding which cannot be traversed
and overturned.
The evidence adduced by the
defendants is not enough to sustain
[her] defense that [she is] are not
liable. Defendant by reason of the
nature of [her] business should have
devised ways and means in order to
prevent the damage to the cargoes
which it is under obligation to take
custody of and to forthwith deliver to
the consignee. Defendant did not
present any evidence on what
precaution [she] performed to prevent
[the] said incident, hence the
presumption is that the moment the
defendant accepts the cargo [she] shall
perform such extraordinary diligence
because of the nature of the cargo.
....
Generally speaking under Article 1735
of the Civil Code, if the goods are
proved to have been lost, destroyed or
deteriorated, common carriers are
presumed to have been at fault or to
have acted negligently, unless they
95
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY 96

prove that they have observed the Accordingly, the trial court ordered
extraordinary diligence required by petitioner to pay the following amounts
law. The burden of the plaintiff,
therefore, is to prove merely that the 1. The sum of P93,112.00 plus interest;
goods he transported have been lost,
destroyed or deteriorated. Thereafter, 2. 25% thereof as lawyers fee;
the burden is shifted to the carrier to
prove that he has exercised the 3. Costs of suit.[4]
extraordinary diligence required by
law. Thus, it has been held that the The decision was affirmed by the
mere proof of delivery of goods in Court of Appeals on appeal. Hence this
good order to a carrier, and of their petition for review on certiorari.
arrival at the place of destination in bad Petitioner contends that:
order, makes out a prima facie case I. THE COURT OF APPEALS
against the carrier, so that if no COMMITTED SERIOUS AND
explanation is given as to how the REVERSIBLE ERROR [IN]
injury occurred, the carrier must be DECIDING THE CASE NOT ON
held responsible. It is incumbent upon THE EVIDENCE PRESENTED
BUT ON PURE SURMISES,
the carrier to prove that the loss was SPECULATIONS AND
due to accident or some other MANIFESTLY MISTAKEN
circumstances inconsistent with its INFERENCE.
liability. (cited in Commercial Laws of II. THE COURT OF APPEALS
the Philippines by Agbayani, p. 31, COMMITTED SERIOUS AND
Vol. IV, 1989 Ed.) REVERSIBLE ERROR IN
CLASSIFYING THE
PETITIONER AS A COMMON
Defendant, being a customs brother, CARRIER AND NOT AS
warehouseman and at the same time a PRIVATE OR SPECIAL
common carrier is supposed [to] CARRIER WHO DID NOT HOLD
exercise [the] extraordinary diligence ITS SERVICES TO THE
PUBLIC.[5]
required by law, hence the
extraordinary responsibility lasts from It will be convenient to deal with
the time the goods are unconditionally these contentions in the inverse order,
placed in the possession of and for if petitioner is not a common carrier,
received by the carrier for although both the trial court and the
transportation until the same are Court of Appeals held otherwise, then
delivered actually or constructively by she is indeed not liable beyond what
the carrier to the consignee or to the ordinary diligence in the vigilance over
person who has the right to receive the the goods transported by her, would
same.[3] require.[6] Consequently, any damage to
the cargo she agrees to transport cannot

TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 96

 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
be presumed to have been due to her
fault or negligence.
Petitioner contends that contrary to
the findings of the trial court and the
Court of Appeals, 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.
The contention has no merit. In De
Guzman v. Court of Appeals,[7] the Court
dismissed a similar contention and held
the party to be a common carrier, thus
The Civil Code defines common
carriers in the following terms:
Article 1732. Common carriers are
persons, corporations, firms or
associations engaged in the business of
carrying or transporting passengers or
goods or both, by land, water, or air for
compensation, offering their services to
the public.
The above article makes no distinction
between one whose principal business
activity is the carrying of persons or
goods or both, and one who does such
carrying only as an ancillary activity
. . . Article 1732 also carefully avoids
making any distinction between a
person or enterprise offering
transportation service on a regular or
scheduled basis and one offering such
service on an occasional, episodic or
unscheduled basis. Neither does Article
1732 distinguish between a carrier
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
97
offering its services to the general
public, i.e., the general community or
population, and one who offers services
or solicits business only from a
narrow segment of the general
population. We think that Article 1732
deliberately refrained from making
such distinctions.
So understood, the concept of common
carrier under Article 1732 may be seen
to coincide neatly with the notion of
public service, under the Public Service
Act (Commonwealth Act No. 1416, as
amended) which at least partially
supplements the law on common
carriers set forth in the Civil
Code. Under Section 13, paragraph (b)
of the Public Service Act, public
service includes:
x x x every person that now or hereafter
may own, operate, manage, or control
in the Philippines, for hire or
compensation, with general or limited
clientele, whether permanent,
occasional or accidental, and done for
general business purposes, any
common carrier, railroad, street
railway, traction railway, subway motor
vehicle, either for freight or passenger,
or both, with or without fixed route and
whatever may be its classification,
freight or carrier service of any class,
express service, steamboat, or
steamship line, pontines, ferries and
water craft, engaged in the
transportation of passengers or freight
or both, shipyard, marine repair shop,
wharf or dock, ice plant, ice-
refrigeration plant, canal, irrigation
97
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
system, gas, electric light, heat and
power, water supply and power
petroleum, sewerage system, wire or
wireless communications systems, wire
or wireless broadcasting stations and
other similar public services. x x x [8]
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
petitioners 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 petitioners business.
Now, as to petitioners liability, Art.
1733 of the Civil Code provides:
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. . . .
In Compania Maritima v. Court of
Appeals,[9] the meaning of extraordinary
diligence in the vigilance over goods
was explained thus:
The extraordinary diligence in the
vigilance over the goods tendered for
shipment requires the common carrier
to know and to follow the required
precaution for avoiding damage to, or
destruction of the goods entrusted to it
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
98
for sale, carriage and delivery. It
requires common carriers to render
service with the greatest skill and
foresight and to use all reasonable
means to ascertain the nature and
characteristic of goods tendered for
shipment, and to exercise due care in
the handling and stowage, including
such methods as their nature requires.
In the case at bar, petitioner denies
liability for the damage to the
cargo. She 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, as noted in the Marine Survey
Report (Exh. H), to wit:
MAXU-2062880 - rain gutter
deformed/cracked
ICSU-363461-3 - left side rubber
gasket on door distorted/partly loose
PERU-204209-4 - with pinholes on
roof panel right portion
TOLU-213674-3 - wood
floori
ng
we[t]
and/or
with
signs
98
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
of
water
soake
d Details of Discharge:
MAXU-201406-0 - with dent/crack on
roof panel
ICSU-412105-0 - rubber gasket on left
side/door panel partly detached
loosened.[10]
In addition, petitioner claims that
Marine Cargo Surveyor Ernesto
Tolentino testified that he has no
personal knowledge on whether the
container vans were first stored in
petitioners warehouse prior to their
delivery to the consignee. She likewise
claims that after withdrawing the
container vans from the arrastre
operator, her driver, Ricardo Nazarro,
immediately delivered the cargo to
SMCs warehouse in Ermita, Manila,
which is a mere thirty-minute drive from
the Port Area where the cargo came
from. Thus, the damage to the cargo
could not have taken place while these
were in her custody.[11]
Contrary to petitioners assertion, the
Survey Report (Exh. H) of the Marine
Cargo Surveyors indicates that when the
shipper transferred the cargo in question
to the arrastre operator, these were
covered by clean Equipment
Interchange Report (EIR) and, when
petitioners employees withdrew the
cargo from the arrastre operator, they
did so without exception or protest
either with regard to the condition of
container vans
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
99
or their contents. The Survey
Report pertinently reads
Shipment, provided with our protective
supervision was noted discharged ex
vessel to dock of Pier #13 South
Harbor, Manila on 14 July 1990,
containerized onto 30 x 20 secure metal
vans, covered by clean EIRs. Except
for slight dents and paint scratches on
side and roof panels, these containers
were deemed to have [been] received in
good condition.
....
Transfer/Delivery:
On July 23, 1990, shipment housed
onto 30 x 20 cargo containers was
[withdrawn] by Transorient Container
Services, Inc. . . . without exception.
[The cargo] was finally delivered to the
consignees storage warehouse located
at Tabacalera Compound, Romualdez
Street, Ermita, Manila from July 23/25,
1990.[12]
As found by the Court of Appeals:
From the [Survey Report], it [is] clear
that the shipment was discharged from
the vessel to the arrastre, Marina Port
Services Inc., in good order and
condition as evidenced by clean
Equipment Interchange Reports
(EIRs). Had there been any damage to
the shipment, there would have been a
report to that effect made by the
99
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
arrastre operator. The cargoes were
withdrawn by the defendant-appellant
from the arrastre still in good order and
condition as the same were received by
the former without exception, that is,
without any report of damage or
loss. Surely, if the container vans were
deformed, cracked, distorted or dented,
the defendant-appellant would report it
immediately to the consignee or make
an exception on the delivery receipt or
note the same in the Warehouse Entry
Slip (WES). None of these took
place. To put it simply, the defendant-
appellant received the shipment in good
order and condition and delivered the
same to the consignee damaged. We
can only conclude that the damages to
the cargo occurred while it was in the
possession of the defendant-appellant.
Whenever the thing is lost (or
damaged) in the possession of the
debtor (or obligor), it shall be presumed
that the loss (or damage) was due to his
fault, unless there is proof to the
contrary. No proof was proffered to
rebut this legal presumption and the
presumption of negligence attached to a
common carrier in case of loss or
damage to the goods.[13]
Anent petitioners insistence that the
cargo could not have been damaged
while in her custody as she immediately
delivered the containers to SMCs
compound, suffice it to say that 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
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
100
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.
Nor is there basis to exempt
petitioner from liability under Art.
1734(4), which provides
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.[14] In this case,
petitioner accepted the cargo without
exception despite the apparent defects in
some of the 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[15] holds.
10
0
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY 101

WHEREFORE, the decision of the with petitioner Philippine American

Court of Appeals, dated May 31, 2001, General Insurance Company
is AFFIRMED. (Philamgen). The goods were
loaded aboard the dumb
SO ORDERED.
barge Limar I belonging to PKS
Shipping. On the evening of 22
December 1988, about nine oclock,
[G.R. No. 149038. April 9, 2003] while Limar I was being towed by
respondents tugboat, MT Iron
Eagle, the barge sank a couple of
PHILIPPINE AMERICAN miles off the coast of Dumagasa
GENERAL INSURANCE Point, in Zamboanga del Sur,
COMPANY, petitioner, vs. bringing down with it the entire cargo
PKS SHIPPING of 75,000 bags of cement.
COMPANY, respondent. DUMC filed a formal claim with
Philamgen for the full amount of the
DECISION insurance. Philamgen promptly
VITUG, J.: made payment; it then sought
reimbursement from PKS Shipping
The petition before the Court of the sum paid to DUMC but the
seeks a review of the decision of the shipping company refused to pay,
Court of Appeals in C.A. G.R. CV prompting Philamgen to file suit
No. 56470, promulgated on 25 June against PKS Shipping with the
2001, which has affirmed in toto the Makati RTC.
judgment of the Regional Trial Court
The RTC dismissed the
(RTC), Branch 65, of Makati,
complaint after finding that the total
dismissing the complaint for
loss of the cargo could have been
damages filed by petitioner
caused either by a fortuitous event,
insurance corporation against
in which case the ship owner was
respondent shipping company.
not liable, or through the negligence
Davao Union Marketing of the captain and crew of the vessel
Corporation (DUMC) contracted the and that, under Article 587 of the
services of respondent PKS Code of Commerce adopting the
Shipping Company (PKS Shipping) Limited Liability Rule, the ship owner
for the shipment to Tacloban City of could free itself of liability by
seventy-five thousand (75,000) bags abandoning, as it apparently so did,
of cement worth Three Million Three the vessel with all her equipment
Hundred Seventy-Five Thousand and earned freightage.
Pesos (P3,375,000.00). DUMC
Philamgen interposed an appeal
insured the goods for its full value
to the Court of Appeals which

TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 10

1
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
affirmed in toto the decision of the
trial court. The appellate court ruled
that evidence to establish that PKS
Shipping was a common carrier at
the time it undertook to transport the
bags of cement was wanting
because the peculiar method of the
shipping companys carrying goods
for others was not generally held out
as a business but as a casual
occupation. It then concluded that
PKS Shipping, not being a common
carrier, was not expected to observe
the stringent extraordinary diligence
required of common carriers in the
care of goods. The appellate court,
moreover, found that the loss of the
goods was sufficiently established
as having been due to fortuitous
event, negating any liability on the
part of PKS Shipping to the shipper.
In the instant appeal, Philamgen
contends that the appellate court
has committed a patent error in
ruling that PKS Shipping is not a
common carrier and that it is not
liable for the loss of the subject
cargo. The fact that respondent has
a limited clientele, petitioner argues,
does not militate against
respondents being a common
carrier and that the only way by
which such carrier can be held
exempt for the loss of the cargo
would be if the loss were caused by
natural disaster or
calamity. Petitioner avers that
typhoon "APIANG" has not entered
the Philippine area of responsibility
and that, even if it did, respondent
would not be exempt from liability
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
102
because its employees, particularly
the tugmaster, have failed to
exercise due diligence to prevent or
minimize the loss.
PKS Shipping, in its comment,
urges that the petition should be
denied because what Philamgen
seeks is not a review on points or
errors of law but a review of the
undisputed factual findings of the
RTC and the appellate court. In any
event, PKS Shipping points out, the
findings and conclusions of both
courts find support from the
evidence and applicable
jurisprudence.
The determination of possible
liability on the part of PKS Shipping
boils down to the question of
whether it is a private carrier or a
common carrier and, in either case,
to the other question of whether or
not it has observed the proper
diligence (ordinary, if a private
carrier, or extraordinary, if a
common carrier) required of it given
the circumstances.
The findings of fact made by the
Court of Appeals, particularly when
such findings are consistent with
those of the trial court, may not at
liberty be reviewed by this Court in a
petition for review under Rule 45 of
the Rules of
Court. The conclusions derived
[1]
from those factual findings,
however, are not necessarily just
matters of fact as when they are so
linked to, or inextricably intertwined
with, a requisite appreciation of the
10
2
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
applicable law. In such instances,
the conclusions made could well be
raised as being appropriate issues in
a petition for review before this
Court. Thus, an issue whether a
carrier is private or common on the
basis of the facts found by a trial
court or the appellate court can be a
valid and reviewable question of law.
The Civil Code defines common
carriers in the following terms:
Article 1732. Common carriers are
persons, corporations, firms or
associations engaged in the business of
carrying or transporting passengers or
goods or both, by land, water, or air for
compensation, offering their services to
the public.
Complementary to the codal
definition is Section 13, paragraph
(b), of the Public Service Act; it
defines public service to be
x x x every person that now or hereafter
may own, operate, manage, or control
in the Philippines, for hire or
compensation, with general or limited
clientele, whether permanent,
occasional or accidental, and done for
general business purposes, any
common carrier, railroad, street
railway, subway motor vehicle, either
for freight or passenger, or both, with
or without fixed route and whatever
may be its classification, freight or
carrier service of any class, express
service, steamboat, or steamship, or
steamship line, pontines, ferries and
water craft, engaged in the
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
103
transportation of passengers or freight
or both, shipyard, marine repair shop,
wharf or dock, ice plant, ice
refrigeration plant, canal, irrigation
system, gas, electric light, heat and
power, water supply and power
petroleum, sewerage system, wire or
wireless communication systems, wire
or wireless broadcasting stations and
other similar public services. x x
x. (Underscoring supplied).
The prevailing doctrine on the
question is that enunciated in the
leading case of De Guzman vs.
Court of Appeals. Applying Article
[2]
1732 of the Code, in conjunction with
Section 13(b) of the Public Service
Act, this Court has held:
The above article makes no distinction
between one whose principal business
activity is the carrying of persons or
goods or both, and one who does such
carrying only as an ancillary activity
(in local idiom, as `a sideline). Article
1732 also carefully avoids making any
distinction between a person or
enterprise offering transportation
service on a regular or scheduled
basis and one offering such service on
an occasional, episodic or unscheduled
basis. Neither does Article 1732
distinguish between a carrier offering
its services to the `general public,
i.e., the general community or
population, and one who offers services
or solicits business only from a narrow
segment of the general population. We
think that Article 1732 deliberately
10
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
refrained from making such
distinctions.
So understood, the concept of `common
carrier under Article 1732 may be seen
to coincide neatly with the notion of
`public service, under the Public
Service Act (Commonwealth Act No.
1416, as amended) which at least
partially supplements the law on
common carriers set forth in the Civil
Code.
Much of the distinction between
a common or public carrier and a
private or special carrier lies in the
character of the business, such that
if the undertaking is an isolated
transaction, not a part of the
business or occupation, and the
carrier does not hold itself out to
carry the goods for the general
public or to a limited clientele,
although involving the carriage of
goods for a fee, the person or
[3]
corporation providing such service
could very well be just a private
carrier. A typical case is that of a
charter party which includes both the
vessel and its crew, such as in a
bareboat or demise, where the
charterer obtains the use and
service of all or some part of a ship
for a period of time or a voyage or
voyages and gets the control of the
[4]
vessel and its crew. Contrary to the
[5]
conclusion made by the appellate
court, its factual findings indicate
that PKS Shipping has engaged
itself in the business of carrying
goods for others, although for a
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
104
limited clientele, undertaking to carry
such goods for a fee. The regularity
of its activities in this area indicates
more than just a casual activity on its
part. Neither can the concept of a
[6]
common carrier change merely
because individual contracts are
executed or entered into with
patrons of the carrier. Such
restrictive interpretation would make
it easy for a common carrier to
escape liability by the simple
expedient of entering into those
distinct agreements with clients.
Addressing now the issue of
whether or not PKS Shipping has
exercised the proper diligence
demanded of common carriers,
Article 1733 of the Civil Code
requires common carriers to
observe extraordinary diligence in
the vigilance over the goods they
carry. In case of loss, destruction or
deterioration of goods, common
carriers are presumed to have been
at fault or to have acted negligently,
and the burden of proving otherwise
rests on them. The provisions of
[7]
Article 1733, notwithstanding,
common carriers are exempt from
liability for loss, destruction, or
deterioration of the goods due to any
of the following causes:
(1) Flood, storm, earthquake,
lightning, or other natural
disaster or calamity;
(2) Act of the public enemy in
war, whether international
or civil;
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
(3) Act or omission of the
shipper or owner of the
goods;
(4) The character of the goods
or defects in the packing or
in the containers; and
(5) Order or act of competent
public authority.
[8]
The appellate court ruled,
gathered from the testimonies and
sworn marine protests of the
respective vessel masters of Limar
I and MT Iron Eagle, that there was
no way by which the barges or the
tugboats crew could have prevented
the sinking of Limar I. The vessel
was suddenly tossed by waves of
extraordinary height of six (6) to
eight (8) feet and buffeted by strong
winds of 1.5 knots resulting in the
entry of water into the barges
hatches. The official Certificate of
Inspection of the barge issued by the
Philippine Coastguard and the
Coastwise Load Line Certificate
would attest to the seaworthiness
of Limar I and should strengthen the
factual findings of the appellate
court.
Findings of fact of the Court of
Appeals generally conclude this
Court; none of the recognized
exceptions from the rule - (1) when
the factual findings of the Court of
Appeals and the trial court are
contradictory; (2) when the
conclusion is a finding grounded
entirely on speculation, surmises, or
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
105
conjectures; (3) when the inference
made by the Court of Appeals from
its findings of fact is manifestly
mistaken, absurd, or impossible;
(4) when there is a grave abuse of
discretion in the appreciation of
facts; (5) when the appellate court,
in making its findings, went beyond
the issues of the case and such
findings are contrary to the
admissions of both appellant and
appellee; (6) when the judgment of
the Court of Appeals is premised on
a misapprehension of facts;
(7) when the Court of Appeals failed
to notice certain relevant facts
which, if properly considered, would
justify a different conclusion;
(8) when the findings of fact are
themselves conflicting; (9) when the
findings of fact are conclusions
without citation of the specific
evidence on which they are based;
and (10) when the findings of fact of
the Court of Appeals are premised
on the absence of evidence but such
findings are contradicted by the
evidence on record would appear to
be clearly extant in this instance.
All given then, the appellate
court did not err in its judgment
absolving PKS Shipping from liability
for the loss of the DUMC cargo.
WHEREFORE, the petition
is DENIED. No costs.
SO ORDERED.
[G.R. No. 147246. August 19,
2003]
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY 106

ASIA LIGHTERAGE AND Marine Cargo Risk Note RN

SHIPPING, 11859/90. [6]

INC., petitioner, vs. COURT On July 25, 1990, the carrying

OF APPEALS and vessel arrived in Manila and the
PRUDENTIAL cargo was transferred to the custody
GUARANTEE AND of the petitioner Asia Lighterage and
ASSURANCE, Shipping, Inc. The petitioner was
INC., respondents. contracted by the consignee as
carrier to deliver the cargo to
DECISION consignee's warehouse at Bo.
PUNO, J.: Ugong, Pasig City.
On August 15, 1990, 900 metric
On appeal is the Court of
tons of the shipment was loaded on
Appeals May 11, 2000 Decision in [1]

barge PSTSI III, evidenced by

CA-G.R. CV No. 49195 and
Lighterage Receipt No. 0364 for [7]

February 21, 2001

Resolution affirming
[2]
with
modification the April 6, 1994
Decision of the Regional Trial Court
[3]
of Manila which found petitioner
liable to pay private respondent the
amount of indemnity and attorney's
fees.
First, the facts.
On June 13, 1990, 3,150 metric
tons of Better Western White Wheat
in bulk, valued at
US$423,192.35 was shipped by
[4]
Marubeni American Corporation of
Portland, Oregon on board the
vessel M/V NEO CYMBIDIUM V-26
for delivery to the consignee,
General Milling Corporation in
Manila, evidenced by Bill of Lading
delivery to consignee. The cargo did
not reach its destination.
It appears that on August 17,
1990, the transport of said cargo
was suspended due to a warning of
an incoming typhoon. On August 22,
1990, the petitioner proceeded to
pull the barge to Engineering Island
off Baseco to seek shelter from the
approaching typhoon. PSTSI III was
tied down to other barges which
arrived ahead of it while weathering
out the storm that night.A few days
after, the barge developed a list
because of a hole it sustained after
hitting an unseen protuberance
underneath the water. The petitioner
filed a Marine Protest on August 28,
1990. It likewise secured the
[8]

No. PTD/Man-4. The shipment was

[5]
services of Gaspar Salvaging
insured by the private respondent Corporation which refloated the
Prudential Guarantee and barge. The hole was then patched
[9]

Assurance, Inc. against loss or with clay and cement.

damage for P14,621,771.75 under

TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 10

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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
The barge was then towed to
ISLOFF terminal before it finally
headed towards the consignee's
wharf on September 5, 1990. Upon
reaching the Sta. Mesa spillways,
the barge again ran aground due to
strong current. To avoid the
complete sinking of the barge, a
portion of the goods was transferred
to three other barges. [10]
The next day, September 6,
1990, the towing bits of the barge
broke. It sank completely, resulting
in the total loss of the remaining
cargo. A second Marine Protest
[11]
was filed on September 7, 1990.
On September 14, 1990, a
bidding was conducted to dispose of
the damaged wheat retrieved and
loaded on the three other
barges. The total proceeds from
[13]
the sale of the salvaged cargo
was P201,379.75. [14]
On the same date, September
14, 1990, consignee sent a claim
letter to the petitioner, and another
letter dated September 18, 1990 to
the private respondent for the value
of the lost cargo.
On January 30, 1991, the private
respondent indemnified the
consignee in the amount
of P4,104,654.22. Thereafter, as
[15]
subrogee, it sought recovery of said
amount from the petitioner, but to no
avail.
On July 3, 1991, the private
respondent filed a complaint against
the petitioner for recovery of the
107
amount of indemnity, attorney's fees
and cost of suit. Petitioner filed its
[16]
answer with counterclaim. [17]
The Regional Trial Court ruled in
favor of the private respondent. The
dispositive portion of its Decision
states:
WHEREFORE, premises considered,
judgment is hereby rendered ordering
defendant Asia Lighterage & Shipping,
Inc. liable to pay plaintiff Prudential
Guarantee & Assurance Co., Inc. the
sum of P4,104,654.22 with interest
from the date complaint was filed on
[12] July 3, 1991 until fully satisfied plus
10% of the amount awarded as and for
attorney's fees. Defendant's
counterclaim is hereby
DISMISSED.With costs against
defendant.[18]
Petitioner appealed to the Court
of Appeals insisting that it is not a
common carrier. The appellate court
affirmed the decision of the trial court
with modification. The dispositive
portion of its decision reads:
WHEREFORE, the decision appealed
from is hereby AFFIRMED with
modification in the sense that the
salvage value of P201,379.75 shall be
deducted from the amount
of P4,104,654.22. Costs against
appellant.
SO ORDERED.
Petitioners Motion for
Reconsideration dated June 3, 2000
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 10
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY 108

was likewise denied by the appellate EXERCISE DUE DILIGENCE

court in a Resolution promulgated on AND/OR WAS NEGLIGENT
IN ITS CARE AND CUSTODY
February 21, 2001. OF THE CONSIGNEES
Hence, this petition. Petitioner CARGO.
submits the following errors The issues to be resolved are:
allegedly committed by the appellate
(1) Whether the petitioner is a
court, viz:
[19]

common carrier; and,

(1) THE COURT OF APPEALS
DECIDED THE CASE A (2) Assuming the petitioner is a
QUO IN A WAY NOT IN common carrier, whether it
ACCORD WITH LAW exercised extraordinary diligence in
AND/OR WITH THE
APPLICABLE DECISIONS
its care and custody of the
OF THE SUPREME COURT consignees cargo.
WHEN IT HELD THAT
PETITIONER IS A COMMON
On the first issue, we rule that
CARRIER. petitioner is a common carrier.
(2) THE COURT OF APPEALS Article 1732 of the Civil Code
DECIDED THE CASE A defines common carriers as
QUO IN A WAY NOT IN
persons, corporations, firms or
ACCORD WITH LAW
AND/OR WITH THE associations engaged in the
APPLICABLE DECISIONS business of carrying or transporting
OF THE SUPREME COURT passengers or goods or both, by
WHEN IT AFFIRMED THE land, water, or air, for compensation,
FINDING OF THE LOWER
COURT A QUO THAT ON offering their services to the public.
THE BASIS OF THE Petitioner contends that it is not
PROVISIONS OF THE CIVIL
CODE APPLICABLE TO a common carrier but a private
COMMON CARRIERS, THE carrier. Allegedly, it has no fixed and
LOSS OF THE CARGO IS, publicly known route, maintains no
THEREFORE, BORNE BY terminals, and issues no tickets. It
THE CARRIER IN ALL
CASES EXCEPT IN THE
points out that it is not obliged to
FIVE (5) CASES carry indiscriminately for any
ENUMERATED. person. It is not bound to carry
(3) THE COURT OF APPEALS goods unless it consents. In short, it
DECIDED THE CASE A does not hold out its services to the
QUO IN A WAY NOT IN general public. [20]

ACCORD WITH LAW

AND/OR WITH THE We disagree.
APPLICABLE DECISIONS
OF THE SUPREME COURT In De Guzman vs. Court of
WHEN IT EFFECTIVELY Appeals, we
[21]
held that the
CONCLUDED THAT definition of common carriers in
PETITIONER FAILED TO

TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 10

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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
Article 1732 of the Civil Code 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. We also
did not distinguish 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. Further, we
ruled that Article 1732 does not
distinguish between a carrier
offering its services to the general
public, and one who offers services
or solicits business only from a
narrow segment of the general
population.
In the case at bar, the principal
business of the petitioner is that of
lighterage and drayage and it
[22]
offers its barges to the public for
carrying or transporting goods by
water for compensation. Petitioner is
clearly a common carrier. In De
Guzman, supra, we[23]
considered
private respondent Ernesto Cendaa
to be a common carrier even if his
principal occupation was not the
carriage of goods for others, but that
of buying used bottles and scrap
metal in Pangasinan and selling
these items in Manila.
We therefore hold that petitioner
is a common carrier whether its
carrying of goods is done on an
irregular rather than scheduled
manner, and with an only limited
clientele. A common carrier need
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
109
not have fixed and publicly known
routes. Neither does it have to
maintain terminals or issue tickets.
To be sure, petitioner fits the test
of a common carrier as laid down
in Bascos vs. Court of
Appeals. The test to determine a
[24]
common carrier is whether the given
undertaking is a part of the business
engaged in by the carrier which he
has held out to the general public as
his occupation rather than the
quantity or extent of the business
transacted. In the case at bar, the
[25]
petitioner admitted that it is engaged
in the business of shipping and
lighterage, offering its barges to
[26]
the public, despite its limited
clientele for carrying or transporting
goods by water for compensation. [27]
On the second issue, we uphold
the findings of the lower courts that
petitioner failed to exercise
extraordinary diligence in its care
and custody of the consignees
goods.
Common carriers are bound to
observe extraordinary diligence in
the vigilance over the goods
transported by them. They are [28]
presumed to have been at fault or to
have acted negligently if the goods
are lost, destroyed or
deteriorated. To overcome the
[29]
presumption of negligence in the
case of loss, destruction or
deterioration of the goods, the
common carrier must prove that it
exercised extraordinary
diligence. There are, however,
10
9
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
exceptions to this rule. Article 1734
of the Civil Code enumerates the
instances when the presumption of
negligence does not attach:
Art. 1734. Common carriers are
responsible for the loss, destruction, or
deterioration of the goods, unless the
same is due to any of the following
causes only:
(1) Flood, storm,
earthquake,
lightning, or other
natural disaster or
calamity;
(2) Act of the public enemy
in war, whether
international or
civil;
(3) Act or omission of the
shipper or owner of
the goods;
(4) The character of the
goods or defects in
the packing or in
the containers;
(5) Order or act of
competent public
authority.
In the case at bar, the barge
completely sank after its towing bits
broke, resulting in the total loss of its
cargo. Petitioner claims that this was
caused by a typhoon, hence, it
should not be held liable for the loss
of the cargo. However, petitioner
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
110
failed to prove that the typhoon is the
proximate and only cause of the loss
of the goods, and that it has
exercised due diligence before,
during and after the occurrence of
the typhoon to prevent or minimize
the loss. The evidence show that,
[30]
even before the towing bits of the
barge broke, it had already
previously sustained damage when
it hit a sunken object while docked at
the Engineering Island. It even
suffered a hole. Clearly, this could
not be solely attributed to the
typhoon. The partly-submerged
vessel was refloated but its hole was
patched with only clay and
cement. The patch work was merely
a provisional remedy, not enough for
the barge to sail safely. Thus, when
petitioner persisted to proceed with
the voyage, it recklessly exposed the
cargo to further damage. A portion of
the cross-examination of Alfredo
Cunanan, cargo-surveyor of Tan-
Gatue Adjustment Co., Inc., states:
CROSS-EXAMINATION BY ATTY.
DONN LEE: [31]
xxxxxxxxx
q - Can you tell us what else
transpired after that incident?
a - After the first accident, through
the initiative of the barge
owners, they tried to pull out
the barge from the place of the
accident, and bring it to the
anchor terminal for safety, then
after deciding if the vessel is
stabilized, they tried to pull it to
the consignees warehouse,
now while on route another
11
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY 111

accident occurred, now this delivered at their Wharf since

time the barge totally hitting
something in the course.
q - You said there was another
accident, can you tell the court
the nature of the second
accident?
a - The sinking, sir.
q - Can you tell the nature . . . can
you tell the court, if you know
what caused the sinking?
a - Mostly it was related to the first
they needed badly the wheat
that was loaded in PSTSI-3. It
was needed badly by the
consignee.
q - And this is the reason why you
towed the Barge as you did?
a - Yes, sir.
xxxxxxxxx
CROSS-EXAMINATION BY ATTY.
IGNACIO: [34]

accident because there was

already a whole (sic) on the
bottom part of the barge.
xxxxxxxxx

xxxxxxxxx q - And then from ISLOFF

This is not all. Petitioner still Terminal you proceeded
headed to the consignees wharf to the premises of the
despite knowledge of an incoming GMC? Am I correct?
typhoon. During the time that the
a - The next day, in the
barge was heading towards the
morning, we hired for
consignee's wharf on September 5,
additional two (2)
1990, typhoon Loleng has already
tugboats as I have stated.
entered the Philippine area of
responsibility. A part of the
[32]
q - Despite of the threats of an
testimony of Robert Boyd, Cargo incoming typhoon as you
Operations Supervisor of the testified a while ago?
petitioner, reveals:
a - It is already in an inner
DIRECT-EXAMINATION BY ATTY. portion of Pasig
LEE:[33]
River. The typhoon would
be coming and it would be
xxxxxxxxx
dangerous if we are in the
q - Now, Mr. Witness, did it not vicinity of Manila Bay.
occur to you it might be safer to
just allow the Barge to lie where
she was instead of towing it?
q - But the fact is, the typhoon
was incoming? Yes or no?
a - Since that time that the Barge
was refloated, GMC (General
Milling Corporation, the
a - Yes.
consignee) as I have said was
in a hurry for their goods to be

TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 11

1
 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY 112

q - And yet as a standard the typhoon. The typhoon then is not

operating procedure of
your Company, you have
to secure a sort of
Certification to determine
the weather condition, am
I correct?
a - Yes, sir.
q - So, more or less, you had
the knowledge of the
incoming typhoon, right?
the proximate cause of the loss of
the cargo; a human factor, i.e.,
negligence had intervened.
IN VIEW THEREOF, the petition
is DENIED. The Decision of the
Court of Appeals in CA-G.R. CV No.
49195 dated May 11, 2000 and its
Resolution dated February 21, 2001
are hereby AFFIRMED. Costs
against petitioner.
SO ORDERED.

a - Yes, sir.

q - And yet you proceeded to [G.R. No. 131166. September 30,

the premises of the GMC? 1999]

a - ISLOFF Terminal is far

from Manila Bay and CALTEX (PHILIPPINES),
anytime even with the INC. petitioner,
typhoon if you are already vs. SULPICIO LINES, INC.,
inside the vicinity or GO SIOC SO, ENRIQUE S.
inside Pasig entrance, it is GO, EUSEBIO S. GO,
a safe place to tow CARLOS S. GO,
upstream. VICTORIANO S. GO,
DOMINADOR S. GO,
Accordingly, the petitioner
cannot invoke the occurrence of the
RICARDO S. GO, EDWARD
typhoon as force majeure to escape S. GO, ARTURO S. GO,
liability for the loss sustained by the EDGAR S. GO, EDMUND S.
private respondent. Surely, meeting GO, FRANCISCO
a typhoon head-on falls short of due SORIANO, VECTOR
diligence required from a common SHIPPING
carrier. More importantly, the CORPORATION,
officers/employees themselves of TERESITA G. CAEZAL
petitioner admitted that when the AND SOTERA E.
towing bits of the vessel broke that CAEZAL, respondents.
caused its sinking and the total loss
of the cargo upon reaching the Pasig DECISION
River, it was no longer affected by PARDO, J.:

TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 11

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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
Is the charterer of a sea vessel liable for
damages resulting from a collision between
the chartered vessel and a passenger ship?
When MT Vector left the port of Limay,
Bataan, on December 19, 1987 carrying
petroleum products of Caltex (Philippines),
Inc. (hereinafter Caltex) no one could have
guessed that it would collide with MV Doa
Paz, killing almost all the passengers and
crew members of both ships, and thus
resulting in one of the countrys worst
maritime disasters.
The petition before us seeks to reverse
the Court of Appeals decision[1]holding
petitioner jointly liable with the operator of
MT Vector for damages when the latter
collided with Sulpicio Lines, Inc.s passenger
ship MV Doa Paz.
The facts are as follows:
On December 19, 1987, motor tanker
MT Vector left Limay, Bataan, at about 8:00
p.m., enroute to Masbate, loaded with 8,800
barrels of petroleum products shipped by
petitioner Caltex.[2] MT Vector is a tramping
motor tanker owned and operated by Vector
Shipping Corporation, engaged in the
business of transporting fuel products such as
gasoline, kerosene, diesel and crude
oil. During that particular voyage, the MT
Vector carried on board gasoline and other oil
products owned by Caltex by virtue of a
charter contract between them.[3]
On December 20, 1987, at about 6:30
a.m., the passenger ship MV Doa Paz left the
port of Tacloban headed for Manila with a
complement of 59 crew members including
the master and his officers, and passengers
totaling 1,493 as indicated in the Coast Guard
Clearance.[4] The MV Doa Paz is a passenger
and cargo vessel owned and operated by
Sulpicio Lines, Inc. plying the route of
Manila/ Tacloban/ Catbalogan/ Manila/
Catbalogan/ Tacloban/ Manila, making trips
twice a week.
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
113
At about 10:30 p.m. of December 20,
1987, the two vessels collided in the open sea
within the vicinity of Dumali Point between
Marinduque and Oriental Mindoro. All the
crewmembers of MV Doa Paz died, while the
two survivors from MT Vector claimed that
they were sleeping at the time of the incident.
The MV Doa Paz carried an estimated
4,000 passengers; many indeed, were not in
the passenger manifest. Only 24 survived the
tragedy after having been rescued from the
burning waters by vessels that responded to
distress calls.[5] Among those who perished
were public school teacher Sebastian Caezal
(47 years old) and his daughter Corazon
Caezal (11 years old), both unmanifested
passengers but proved to be on board the
vessel.
On March 22, 1988, the board of marine
inquiry in BMI Case No. 653-87 after
investigation found that the MT Vector, its
registered operator Francisco Soriano, and its
owner and actual operator Vector Shipping
Corporation, were at fault and responsible for
its collision with MV Doa Paz.[6]
On February 13, 1989, Teresita Caezal
and Sotera E. Caezal, Sebastian Caezals wife
and mother respectively, filed with the
Regional Trial Court, Branch 8, Manila, a
complaint for Damages Arising from Breach
of Contract of Carriage against Sulpicio
Lines, Inc. (hereafter Sulpicio). Sulpicio, in
turn, filed a third party complaint against
Francisco Soriano, Vector Shipping
Corporation and Caltex (Philippines), Inc.
Sulpicio alleged that Caltex chartered MT
Vector with gross and evident bad faith
knowing fully well that MT Vector was
improperly manned, ill-equipped,
unseaworthy and a hazard to safe navigation;
as a result, it rammed against MV Doa Paz in
the open sea setting MT Vectors highly
flammable cargo ablaze.
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
On September 15, 1992, the trial court
rendered decision dismissing the third party
complaint against petitioner. The dispositive
portion reads:
WHEREFORE, judgement is hereby
rendered in favor of plaintiffs and
against defendant-3rd party plaintiff
Sulpicio Lines, Inc., to wit:
1. For the death of Sebastian E. Caezal
and his 11-year old daughter Corazon
G. Caezal, including loss of future
earnings of said Sebastian, moral and
exemplary damages, attorneys fees, in
the total amount of P 1,241,287.44 and
finally;
2. The statutory costs of the
proceedings.
Likewise, the 3rd party complaint is
hereby DISMISSED for want of
substantiation and with costs against
the 3rd party plaintiff.
IT IS SO ORDERED.
DONE IN MANILA, this 15th day of
September 1992.
ARSENIO M. GONONG
Judge[7]
On appeal to the Court of Appeals
interposed by Sulpicio Lines, Inc., on April
15, 1997, the Court of Appeal modified the
trial courts ruling and included petitioner
Caltex as one of the those liable for
damages. Thus:
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
114
WHEREFORE, in view of all the
foregoing, the judgment rendered by
the Regional Trial Court is hereby
MODIFIED as follows:
WHEREFORE, defendant Sulpicio
Lines, Inc., is ordered to pay the heirs
of Sebastian E. Caezal and Corazon
Caezal:
1. Compensatory damages for the death
of Sebastian E.Caezal and Corazon
Caezal the total amount of ONE
HUNDRED THOUSAND PESOS
(P100,000);
2. Compensatory damages representing
the unearned income of Sebastian E.
Caezal, in the total amount of THREE
HUNDRED SIX THOUSAND FOUR
HUNDRED EIGHTY (P306,480.00)
PESOS;
3. Moral damages in the amount of
THREE HUNDRED THOUSAND
PESOS (P 300,000.00);
4. Attorneys fees in the concept of
actual damages in the amount of FIFTY
THOUSAND PESOS (P 50,000.00);
5. Costs of the suit.
Third party defendants Vector Shipping
Co. and Caltex (Phils.), Inc. are held
equally liable under the third party
complaint to reimburse/indemnify
defendant Sulpicio Lines, Inc. of the
above-mentioned damages, attorneys
fees and costs which the latter is
adjudged to pay plaintiffs, the same to
be shared half by Vector Shipping Co.
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
(being the vessel at fault for the
collision) and the other half by Caltex
(Phils.), Inc. (being the charterer that
negligently caused the shipping of
combustible cargo aboard an
unseaworthy vessel).
SO ORDERED.
JORGE S. IMPERIAL
Associate Justice
WE CONCUR:
RAMON U. MABUTAS. JR. PORTIA
ALIO HERMACHUELOS
Associate Justice Associate Justice[8]
Hence, this petition.
We find the petition meritorious.
First: The charterer has no liability for
damages under Philippine Maritime laws.
The respective rights and duties of a
shipper and the carrier depends not on
whether the carrier is public or private, but on
whether the contract of carriage is a bill of
lading or equivalent shipping documents on
the one hand, or a charter party or similar
contract on the other.[9]
Petitioner and Vector entered into a
contract of affreightment, also known as a
voyage charter.[10]
A charter party is a contract by which an
entire ship, or some principal part thereof, is
let by the owner to another person for a
specified time or use; a contract of
affreightment is one by which the owner of a
ship or other vessel lets the whole or part of
her to a merchant or other person for the
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
115
conveyance of goods, on a particular voyage,
in consideration of the payment of freight.[11]
A contract of affreightment may be
either time charter, wherein the leased
vessel is leased to the charterer for a fixed
period of time, or voyage charter, wherein
the ship is leased for a single voyage. In both
cases, the charter-party provides for the hire
of the vessel only, either for a determinate
period of time or for a single or consecutive
voyage, the ship owner to supply the ships
store, pay for the wages of the master of the
crew, and defray the expenses for the
maintenance of the ship.[12]
Under a demise or bareboat charter on
the other hand, the charterer mans the vessel
with his own people and becomes, in effect,
the owner for the voyage or service
stipulated, subject to liability for damages
caused by negligence.
If the charter is a contract of
affreightment, which leaves the general
owner in possession of the ship as owner for
the voyage, the rights and the responsibilities
of ownership rest on the owner. The charterer
is free from liability to third persons in
respect of the ship.[13]
Second : MT Vector is a common carrier
Charter parties fall into three main
categories: (1) Demise or bareboat, (2) time
charter, (3) voyage charter. Does a charter
party agreement turn the common carrier into
a private one? We need to answer this
question in order to shed light on the
responsibilities of the parties.
In this case, the charter party agreement
did not convert the common carrier into a
private carrier. The parties entered into a
voyage charter, which retains the character of
the vessel as a common carrier.
In Planters Products, Inc. vs. Court of
Appeals,[14] we said:
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
It is therefore imperative that a public
carrier shall remain as such,
notwithstanding the charter of the
whole or portion of a vessel by one or
more persons, provided the charter is
limited to the ship only, as in the case
of a time-charter or voyage charter. It is
only when the charter includes both the
vessel and its crew, as in a bareboat or
demise that a common carrier becomes
private, at least insofar as the particular
voyage covering the charter-party is
concerned. Indubitably, a ship-owner in
a time or voyage charter retains
possession and control of the ship,
although her holds may, for the
moment, be the property of the
charterer.
Later, we ruled in Coastwise Lighterage
Corporation vs. Court of Appeals:[15]
Although a charter party may transform
a common carrier into a private one, the
same however is not true in a contract
of affreightment xxx
A common carrier is a person or
corporation whose regular business is to
carry passengers or property for all persons
who may choose to employ and to
remunerate him.[16] MT Vector fits the
definition of a common carrier under Article
1732 of the Civil Code. In Guzman vs. Court
of Appeals,[17] we ruled:
The Civil Code defines common carriers
in the following terms:
Article 1732. Common carriers are
persons, corporations, firms or
associations engaged in the business of
carrying or transporting passengers for
passengers or goods or both, by land,
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
116
water, or air for compensation, offering
their services to the public.
The above article makes no distinction
between one whose principal business
activity is the carrying of persons or
goods or both, and one who does such
carrying only as an ancillary activity
(in local idiom, as a sideline). Article
1732 also carefully avoids making any
distinction between a person or
enterprise offering transportation
service on a regular or scheduled
basis and one offering such services on
a an occasional, episodic or
unscheduled basis. Neither does Article
1732 distinguish between a carrier
offering its services to the general
public, i.e., the general community or
population, and one who offers services
or solicits business only from a
narrow segment of the general
population. We think that Article 1733
deliberately refrained from making
such distinctions.
It appears to the Court that private
respondent is properly characterized as
a common carrier even though he
merely back-hauled goods for other
merchants from Manila to Pangasinan,
although such backhauling was done on
a periodic, occasional rather than
regular or scheduled manner, and even
though
respondents principal occupation was
not the carriage of goods for
others. There is no dispute that private
respondent charged his customers a fee
for hauling their goods; that the fee
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
frequently fell below commercial
freight rates is not relevant here.
Under the Carriage of Goods by Sea Act
: the Civil Code?
Sec. 3. (1) The carrier shall be bound
before and at the beginning of the
voyage to exercise due diligence to -
(a) Make the ship seaworthy;
(b) Properly man, equip, and supply the
ship;
xxx xxx xxx
Thus, the carriers are deemed to warrant
impliedly the seaworthiness of the ship. For
a vessel to be seaworthy, it must be
adequately equipped for the voyage and
manned with a sufficient number of
competent officers and crew. The failure of
a common carrier to maintain in seaworthy
condition the vessel involved in its contract
of carriage is a clear breach of its duty
prescribed in Article 1755 of the Civil
Code.[18]
The provisions owed their conception to
the nature of the business of common
carriers. This business is impressed with a
special public duty. The public must of
necessity rely on the care and skill of
common carriers in the vigilance over the
goods and safety of the passengers, especially
because with the modern development of
science and invention, transportation has
become more rapid, more complicated and
somehow more hazardous.[19] For these
reasons, a passenger or a shipper of goods is
under no obligation to conduct an inspection
of the ship and its crew, the carrier being
obliged by law to impliedly warrant its
seaworthiness.
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
117
This aside, we now rule on whether
Caltex is liable for damages under the Civil
Code.
Third: Is Caltex liable for damages under
We rule that it is not.
Sulpicio argues that Caltex negligently
shipped its highly combustible fuel cargo
aboard an unseaworthy vessel such as the MT
Vector when Caltex:
1. Did not take steps to have M/T
Vectors certificate of inspection and
coastwise license renewed;
2. Proceeded to ship its cargo despite
defects found by Mr. Carlos Tan of
Bataan Refinery Corporation;
3. Witnessed M/T Vector submitting
fake documents and certificates to
the Philippine Coast Guard.
Sulpicio further argues that Caltex chose
MT Vector to transport its cargo despite these
deficiencies:
1. The master of M/T Vector did not
posses the required Chief Mate
license to command and navigate
the vessel;
2. The second mate, Ronaldo Tarife,
had the license of a Minor Patron,
authorized to navigate only in bays
and rivers when the subject collision
occurred in the open sea;
3. The Chief Engineer, Filoteo Aguas,
had no license to operate the engine
of the vessel;
4. The vessel did not have a Third
Mate, a radio operator and a
lookout; and
5. The vessel had a defective main
engine.[20]
As basis for the liability of Caltex, the
Court of Appeals relied on Articles 20 and
2176 of the Civil Code, which provide:
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
Article 20. - Every person who
contrary to law, willfully or negligently
causes damage to another, shall
indemnify the latter for the same.
Article 2176. - Whoever by act or
omission causes damage to another,
there being fault or negligence, is
obliged to pay for the damage
done. Such fault or negligence, if there
is no pre-existing contractual relation
between the parties, is called a quasi-
delict and is governed by the provisions
of this Chapter.
And what is negligence?
The Civil Code provides:
Article 1173. The fault or negligence
of the obligor consists in the omission
of that diligence which is required by
the nature of the obligation and
corresponds with the circumstances of
the persons, of the time and of the
place. When negligence shows bad
faith, the provisions of Article 1171
and 2201 paragraph 2, shall apply.
If the law does not state the diligence
which is to be observed in the
performance, that which is expected of
a good father of a family shall be
required.
In Southeastern College, Inc. vs. Court
of Appeals,[21] we said that negligence, as
commonly understood, is conduct which
naturally or reasonably creates undue risk or
harm to others. It may be the failure to
observe that degree of care, precaution, and
vigilance, which the circumstances justly
demand, or the omission to do something
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
118
which ordinarily regulate the conduct of
human affairs, would do.
The charterer of a vessel has no
obligation before transporting its cargo to
ensure that the vessel it chartered complied
with all legal requirements. The duty rests
upon the common carrier simply for being
engaged in public service.[22] The Civil Code
demands diligence which is required by the
nature of the obligation and that which
corresponds with the circumstances of the
persons, the time and the place.Hence,
considering the nature of the obligation
between Caltex and MT Vector, the liability
as found by the Court of Appeals is without
basis.
The relationship between the parties in
this case is governed by special
laws. Because of the implied warranty of
seaworthiness,[23] shippers of goods, when
transacting with common carriers, are not
expected to inquire into the vessels
seaworthiness, genuineness of its licenses
and compliance with all maritime laws. To
demand more from shippers and hold them
liable in case of failure exhibits nothing but
the futility of our maritime laws insofar as the
protection of the public in general is
concerned. By the same token, we cannot
expect passengers to inquire every time they
board a common carrier, whether the carrier
possesses the necessary papers or that all the
carriers employees are qualified. Such a
practice would be an absurdity in a business
where time is always of the
essence. Considering the nature of
transportation business, passengers and
shippers alike customarily presume that
common carriers possess all the legal
requisites in its operation.
Thus, the nature of the obligation of
Caltex demands ordinary diligence like any
other shipper in shipping his cargoes.
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
A cursory reading of the records
convinces us that Caltex had reasons to
believe that MT Vector could legally
transport cargo that time of the year.
Atty. Poblador: Mr. Witness, I direct your
attention to this portion here containing
the entries here under VESSELS
DOCUMENTS
1. Certificate of Inspection No. 1290-
85, issued December 21, 1986, and
Expires December 7, 1987, Mr.
Witness, what steps did you take
regarding the impending expiry of
the C.I. or the Certificate of
Inspection No. 1290-85 during the
hiring of MT Vector?
Apolinar Ng: At the time when I extended the
Contract, I did nothing because the
tanker has a valid C.I. which will expire
on December 7, 1987 but on the last week
of November, I called the attention of Mr.
Abalos to ensure that the C.I. be renewed
and Mr. Abalos, in turn, assured me they
will renew the same.
Q: What happened after that?
A: On the first week of December, I again
made a follow-up from Mr. Abalos, and
said they were going to send me a copy
as soon as possible, sir.[24]
xxx xxx xxx
Q: What did you do with the C.I.?
A: We did not insist on getting a copy of the
C.I. from Mr. Abalos on the first place,
because of our long business relation, we
trust Mr. Abalos and the fact that the
vessel was able to sail indicates that the
documents are in order. xxx[25]
On cross examination -
Atty. Sarenas: This being the case, and this
being an admission by you, this
Certificate of Inspection has expired on
December 7. Did it occur to you not to let
the vessel sail on that day because of the
very approaching date of expiration?
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
119
Apolinar Ng: No sir, because as I said
before, the operation Manager
assured us that they were able to
secure a renewal of the Certificate of
Inspection and that they will in time
submit us a copy.[26]
Finally, on Mr. Ngs redirect
examination:
Atty. Poblador: Mr. Witness, were you
aware of the pending expiry of the
Certificate of Inspection in the coastwise
license on December 7, 1987. What was
your assurance for the record that this
document was renewed by the MT
Vector?
Atty. Sarenas: xxx
Atty. Poblador: The certificate of
Inspection?
A: As I said, firstly, we trusted Mr. Abalos as
he is a long time business partner;
secondly, those three years, they were
allowed to sail by the Coast Guard. That
are some that make me believe that they
in fact were able to secure the necessary
renewal.
Q: If the Coast Guard clears a vessel to sail,
what would that mean?
Atty. Sarenas: Objection.
Court: He already answered that in the cross
examination to the effect that if it was
allowed, referring to MV Vector, to sail,
where it is loaded and that it was
scheduled for a destination by the Coast
Guard, it means that it has Certificate of
Inspection extended as assured to this
witness by Restituto Abalos. That in no
case MV Vector will be allowed to sail if
the Certificate of Inspection is, indeed,
not to be extended. That was his repeated
explanation to the cross-
examination. So, there is no need to
clarify the same in the re-direct
examination.[27]
Caltex and Vector Shipping Corporation
had been doing business since 1985, or for
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
about two years before the tragic incident
occurred in 1987. Past services rendered
showed no reason for Caltex to observe a
higher degree of diligence.
Clearly, as a mere voyage charterer,
Caltex had the right to presume that the ship
was seaworthy as even the Philippine Coast
Guard itself was convinced of its
seaworthiness. All things considered, we find
no legal basis to hold petitioner liable for
damages.
As Vector Shipping Corporation did not
appeal from the Court of Appeals decision,
we limit our ruling to the liability of Caltex
alone. However, we maintain the Court of
Appeals ruling insofar as Vector is concerned
.
WHEREFORE, the Court hereby
GRANTS the petition and SETS ASIDE the
decision of the Court of Appeals in CA-G. R.
CV No. 39626, promulgated on April 15,
1997, insofar as it held Caltex liable under the
third party complaint to reimburse/indemnify
defendant Sulpicio Lines, Inc. the damages
the latter is adjudged to pay plaintiffs-
appellees. The Court AFFIRMS the decision
of the Court of Appeals insofar as it orders
Sulpicio Lines, Inc. to pay the heirs of
Sebastian E. Caezal and Corazon Caezal
damages as set forth therein. Third-party
defendant-appellee Vector Shipping
Corporation and Francisco Soriano are held
liable to reimburse/indemnify defendant
Sulpicio Lines, Inc. whatever damages,
attorneys fees and costs the latter is adjudged
to pay plaintiffs-appellees in the case.
No costs in this instance.
SO ORDERED.
G.R. No. 114167 July 12, 1995
COASTWISE LIGHTERAGE
CORPORATION, petitioner,
vs.
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
120
COURT OF APPEALS and the PHILIPPINE
GENERAL INSURANCE
COMPANY, respondents.
RESOLUTION
FRANCISCO, R., J.:
This is a petition for review of a Decision
rendered by the Court of Appeals, dated
December 17, 1993, affirming Branch 35 of
the Regional Trial Court, Manila in holding that
herein petitioner is liable to pay herein private
respondent the amount of P700,000.00, plus
legal interest thereon, another sum of
P100,000.00 as attorney's fees and the cost
of the suit.
The factual background of this case is as
follows:
Pag-asa Sales, Inc. entered into a contract to
transport molasses from the province of
Negros to Manila with Coastwise Lighterage
Corporation (Coastwise for brevity), using the
latter's dumb barges. The barges were towed
in tandem by the tugboat MT Marica, which is
likewise owned by Coastwise.
Upon reaching Manila Bay, while approaching
Pier 18, one of the barges, "Coastwise 9",
struck an unknown sunken object. The
forward buoyancy compartment was
damaged, and water gushed in through a hole
"two inches wide and twenty-two inches
long"1 As a consequence, the molasses at the
cargo tanks were contaminated and rendered
unfit for the use it was intended. This
prompted the consignee, Pag-asa Sales, Inc.
to reject the shipment of molasses as a total
loss. Thereafter, Pag-asa Sales, Inc. filed a
formal claim with the insurer of its lost cargo,
herein private respondent, Philippine General
Insurance Company (PhilGen, for short) and
against the carrier, herein petitioner,
Coastwise Lighterage. Coastwise Lighterage
denied the claim and it was PhilGen which
paid the consignee, Pag-asa Sales, Inc., the
amount of P700,000.00, representing the
value of the damaged cargo of molasses.
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY 121

In turn, PhilGen then filed an action against affreightment over the whole
Coastwise Lighterage before the Regional vessel, rather than a demise.
Trial Court of Manila, seeking to recover the As such, the liability of the
amount of P700,000.00 which it paid to Pag- shipowner for acts or
asa Sales, Inc. for the latter's lost cargo. negligence of its captain and
PhilGen now claims to be subrogated to all crew, would remain in the
the contractual rights and claims which the absence of stipulation.3
consignee may have against the carrier, which
is presumed to have violated the contract of The distinction between the two kinds of
carriage. charter parties (i.e. bareboat or demise and
contract of affreightment) is more clearly set
The RTC awarded the amount prayed for by out in the case of Puromines, Inc. vs. Court of
PhilGen. On Coastwise Lighterage's appeal to Appeals,4 wherein we ruled:
the Court of Appeals, the award was affirmed.
Under the demise or bareboat
Hence, this petition. charter of the vessel, the
charterer will generally be
There are two main issues to be resolved regarded as the owner for the
herein. First, whether or not petitioner voyage or service stipulated.
Coastwise Lighterage was transformed into a The charterer mans the vessel
private carrier, by virtue of the contract of with his own people and
affreightment which it entered into with the becomes the owner pro hac
consignee, Pag-asa Sales, Inc. Corollarily, if it vice, subject to liability to
were in fact transformed into a private carrier, others for damages caused by
did it exercise the ordinary diligence to which negligence. To create a
a private carrier is in turn bound? Second, demise, the owner of a vessel
whether or not the insurer was subrogated must completely and
into the rights of the consignee against the exclusively relinquish
carrier, upon payment by the insurer of the possession, command and
value of the consignee's goods lost while on navigation thereof to the
board one of the carrier's vessels. charterer, anything short of
such a complete transfer is a
On the first issue, petitioner contends that the contract of affreightment (time
RTC and the Court of Appeals erred in finding or voyage charter party) or not
that it was a common carrier. It stresses the a charter party at all.
fact that it contracted with Pag-asa Sales, Inc.
to transport the shipment of molasses from On the other hand a contract
Negros Oriental to Manila and refers to this of affreightment is one in
contract as a "charter agreement". It then which the owner of the vessel
proceeds to cite the case of Home Insurance leases part or all of its space
Company vs. American Steamship Agencies, to haul goods for others. It is a
Inc.2 wherein this Court held: ". . . a common contract for special service to
carrier undertaking to carry a special cargo or be rendered by the owner of
chartered to a special person only becomes a the vessel and under such
private carrier." contract the general owner
retains the possession,
Petitioner's reliance on the aforementioned command and navigation of
case is misplaced. In its entirety, the the ship, the charterer or
conclusions of the court are as follows: freighter merely having use of
the space in the vessel in
return for his payment of the
Accordingly, the charter party
charter hire. . . . .
contract is one of

TRANSPORTATION LAW CASES BY MANUEL ALAMEDA 12

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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
. . . . An owner who retains
possession of the ship though
the hold is the property of the
charterer, remains liable as
carrier and must answer for
any breach of duty as to the
care, loading and unloading of
the cargo. . . .
Although a charter party may transform a
common carrier into a private one, the same
however is not true in a contract of
affreightment on account of the
aforementioned distinctions between the two.
Petitioner admits that the contract it entered
into with the consignee was one of
affreightment.5 We agree. Pag-asa Sales, Inc.
only leased three of petitioner's vessels, in
order to carry cargo from one point to another,
but the possession, command and navigation
of the vessels remained with petitioner
Coastwise Lighterage.
Pursuant therefore to the ruling in the
aforecited Puromines case, Coastwise
Lighterage, by the contract of affreightment,
was not converted into a private carrier, but
remained a common carrier and was still liable
as such.
The law and jurisprudence on common
carriers both hold that the mere proof of
delivery of goods in good order to a carrier
and the subsequent arrival of the same goods
at the place of destination in bad order makes
for a prima facie case against the carrier.
It follows then that the presumption of
negligence that attaches to common carriers,
once the goods it transports are lost,
destroyed or deteriorated, applies to the
petitioner. This presumption, which is
overcome only by proof of the exercise of
extraordinary diligence, remained unrebutted
in this case.
The records show that the damage to the
barge which carried the cargo of molasses
was caused by its hitting an unknown sunken
object as it was heading for Pier 18. The
object turned out to be a submerged derelict
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
122
vessel. Petitioner contends that this
navigational hazard was the efficient cause of
the accident. Further it asserts that the fact
that the Philippine Coastguard "has not
exerted any effort to prepare a chart to
indicate the location of sunken derelicts within
Manila North Harbor to avoid navigational
accidents"6 effectively contributed to the
happening of this mishap. Thus, being
unaware of the hidden danger that lies in its
path, it became impossible for the petitioner to
avoid the same. Nothing could have
prevented the event, making it beyond the
pale of even the exercise of extraordinary
diligence.
However, petitioner's assertion is belied by
the evidence on record where it appeared that
far from having rendered service with the
greatest skill and utmost foresight, and being
free from fault, the carrier was culpably remiss
in the observance of its duties.
Jesus R. Constantino, the patron of the vessel
"Coastwise 9" admitted that he was not
licensed. The Code of Commerce, which
subsidiarily governs common carriers (which
are primarily governed by the provisions of the
Civil Code) provides:
Art. 609. — Captains, masters,
or patrons of vessels must be
Filipinos, have legal capacity
to contract in accordance with
this code, and prove the skill
capacity and qualifications
necessary to command and
direct the vessel, as
established by marine and
navigation laws, ordinances or
regulations, and must not be
disqualified according to the
same for the discharge of the
duties of the position. . . .
Clearly, petitioner Coastwise Lighterage's
embarking on a voyage with an unlicensed
patron violates this rule. It cannot safely claim
to have exercised extraordinary diligence, by
placing a person whose navigational skills are
questionable, at the helm of the vessel which
eventually met the fateful accident. It may also
logically, follow that a person without license
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
to navigate, lacks not just the skill to do so,
but also the utmost familiarity with the usual
and safe routes taken by seasoned and
legally authorized ones. Had the patron been
licensed, he could be presumed to have both
the skill and the knowledge that would have
prevented the vessel's hitting the sunken
derelict ship that lay on their way to Pier 18.
As a common carrier, petitioner is liable for
breach of the contract of carriage, having
failed to overcome the presumption of
negligence with the loss and destruction of
goods it transported, by proof of its exercise of
extraordinary diligence.
On the issue of subrogation, which petitioner
contends as inapplicable in this case, we once
more rule against the petitioner. We have
already found petitioner liable for breach of
the contract of carriage it entered into with
Pag-asa Sales, Inc. However, for the damage
sustained by the loss of the cargo which
petitioner-carrier was transporting, it was not
the carrier which paid the value thereof to
Pag-asa Sales, Inc. but the latter's insurer,
herein private respondent PhilGen.
Article 2207 of the Civil Code is explicit on this
point:
Art. 2207. If the plaintiffs
property has been insured,
and he has received indemnity
from the insurance company
for the injury or loss arising out
of the wrong or breach of
contract complained of, the
insurance company shall be
subrogated to the rights of the
insured against the wrongdoer
or the person who violated the
contract. . . .
This legal provision containing the equitable
principle of subrogation has been applied in a
long line of cases including Compania
Maritima v. Insurance Company of North
America;7 Fireman's Fund Insurance
Company v. Jamilla & Company, Inc.,8 and
Pan Malayan Insurance Corporation v. Court
of Appeals,9 wherein this Court explained:
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
123
Article 2207 of the Civil Code
is founded on the well-settled
principle of subrogation. If the
insured property is destroyed
or damaged through the fault
or negligence of a party other
than the assured, then the
insurer, upon payment to the
assured will be subrogated to
the rights of the assured to
recover from the wrongdoer to
the extent that the insurer has
been obligated to
pay. Payment by the insurer to
the assured operated as an
equitable assignment to the
former of all remedies which
the latter may have against the
third party whose negligence
or wrongful act caused the
loss. The right of subrogation
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
of the insurance claim by the
insurer.
Undoubtedly, upon payment by respondent
insurer PhilGen of the amount of P700,000.00
to Pag-asa Sales, Inc., the consignee of the
cargo of molasses totally damaged while
being transported by petitioner Coastwise
Lighterage, the former was subrogated into all
the rights which Pag-asa Sales, Inc. may have
had against the carrier, herein petitioner
Coastwise Lighterage.
WHEREFORE, premises considered, this
petition is DENIED and the appealed decision
affirming the order of Branch 35 of the
Regional Trial Court of Manila for petitioner
Coastwise Lighterage to pay respondent
Philippine General Insurance Company the
"principal amount of P700,000.00 plus interest
thereon at the legal rate computed from March
29, 1989, the date the complaint was filed until
fully paid and another sum of P100,000.00 as
attorney's fees and costs"10 is likewise hereby
AFFIRMED
SO ORDERED.
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
Feliciano, Romero, Melo and Vitug, JJ.,
concur.
FIRST DIVISION
[G.R. No. 101503. September 15, 1993.]
PLANTERS PRODUCTS, INC., Petitioner, v.
COURT OF APPEALS, SORIAMONT
STEAMSHIP AGENCIES AND KYOSEI KISEN
KABUSHIKI KAISHA, Respondents.
Gonzales, Sinense, Jimenez & Associates
for Petitioner.
Siguion Reyna, Montecillo & Ongsiako Law
Office for Private Respondents.
DECISION
BELLOSILLO, J.:
Does a charter-party 1 between a shipowner and
a charterer transform a common carrier into a
private one as to negate the civil law presumption
of negligence in case of loss or damage to its
cargo?
Planters Products, Inc. (PPI), purchased from
Mitsubishi International Corporation
(MITSUBISHI) of New York, U.S.A., 9,329.7069
metric tons (M/T) of Urea 46% fertilizer which the
latter shipped in bulk on 16 June 1974 aboard the
cargo vessel M/V "Sun Plum" owned by private
respondent Kyosei Kisen Kabushiki Kaisha (KKKK)
from Kenai, Alaska, U.S.A., to Poro Point, San
Fernando, La Union, Philippines, as evidenced by
Bill of Lading No. KP-1 signed by the master of
the vessel and issued on the date of departure.
On 17 May 1974, or prior to its voyage, a time
charter-party on the vessel M/V "Sun Plum"
pursuant to the Uniform General Charter 2 was
entered into between Mitsubishi as
shipper/charterer and KKKK as shipowner, in
Tokyo, Japan. 3 Riders to the aforesaid charter-
party starting from par. 16 to 40 were attached to
the pre-printed agreement. Addenda Nos. 1, 2, 3
and 4 to the charter-party were also subsequently
entered into on the 18th, 20th, 21st and 27th of
May 1974, respectively.
Before loading the fertilizer aboard the vessel,
four (4) of her holds 4 were all presumably
inspected by the charterer’s representative and
found fit to take a load of urea in bulk pursuant to
par. 16 of the charter-party which reads: jgc:chan roble s.com.p h
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
124
"16. . . . At loading port, notice of readiness to be
accomplished by certificate from National Cargo
Bureau inspector or substitute appointed by
charterers for his account certifying the vessel’s
readiness to receive cargo spaces. The vessel’s
hold to be properly swept, cleaned and dried at
the vessel’s expense and the vessel to be
presented clean for use in bulk to the satisfaction
of the inspector before daytime commences"
(Emphasis supplied).
After the Urea fertilizer was loaded in bulk by
stevedores hired by and under the supervision of
the shipper, the steel hatches were closed with
heavy iron lids, covered with three (3) layers of
tarpaulin, then tied with steel bonds. The hatches
remained closed and tightly sealed throughout
the entire voyage. 5
Upon arrival of the vessel at her port of call on 3
July 1974, the steel pontoon hatches were
opened with the use of the vessel’s boom.
Petitioner unloaded the cargo from the holds into
its steel-bodied dump trucks which were parked
alongside the berth, using metal scoops attached
to the ship, pursuant to the terms and conditions
of the charter-party (which provided for an
F.I.O.S. clause). 6 The hatches remained open
throughout the duration of the discharge. 7
Each time a dump truck was filled up, its load of
Urea was covered with tarpaulin before it was
transported to the consignee’s warehouse located
some fifty (50) meters from the wharf. Midway to
the warehouse, the trucks were made to pass
through a weighing scale where they were
individually weighed for the purpose of
ascertaining the net weight of the cargo. The port
area was windy, certain portions of the route to
the warehouse were sandy and the weather was
variable, raining occasionally while the discharge
was in progress. 8 The petitioner’s warehouse
was made of corrugated galvanized iron (GI)
sheets, with an opening at the front where the
dump trucks entered and unloaded the fertilizer
on the warehouse floor. Tarpaulins and GI sheets
were placed in-between and alongside the trucks
to contain spillages of the fertilizer. 9
It took eleven (11) days for PPI to unload the
cargo, from 5 July to 18 July 1974 (except July
12th, 14th and 18th). 10 A private marine and
cargo surveyor, Cargo Superintendents Company
Inc. (CSCI), was hired by PPI to determine the
"outturn" of the cargo shipped, by taking draft
readings of the vessel prior to and after
discharge. 11 The survey report submitted by
CSCI to the consignee (PPI) dated 19 July 1974
revealed a shortage in the cargo of 106.726 M/T
and that a portion of the Urea fertilizer
approximating 18 M/T was contaminated with
dirt. The same results were contained in a
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
Certificate of Shortage/Damaged Cargo dated 18
July 1974 prepared by PPI which showed that the
cargo delivered was indeed short of 94.839 M/T
and about 23 M/T were rendered unfit for
commerce, having been polluted with sand, rust
and dirt. 12
Consequently, PPI sent a claim letter dated 18
December 1974 to Soriamont Steamship Agencies
(SSA), the resident agent of the carrier, KKKK, for
P245,969.31 representing the cost of the alleged
shortage in the goods shipped and the diminution
in value of that portion said to have been
contaminated with dirt. 13
Respondent SSA explained that they were not
able to respond to the consignee’s claim for
payment because, according to them, what they
received was just a request for shortlanded
certificate and not a formal claim, and that this
"request" was denied by them because they "had
nothing to do with the discharge of the
shipment." 14 Hence, on 18 July 1975, PPI filed
an action for damages with the Court of First
Instance of Manila. The defendant carrier argued
that the strict public policy governing common
carriers does not apply to them because they
have become private carriers by reason of the
provisions of the charter-party. The court a quo
however sustained the claim of the plaintiff
against the defendant carrier for the value of the
goods lost or damaged when it ruled thus: 15
". . . Prescinding from the provision of the law
that a common carrier is presumed negligent in
case of loss or damage of the goods it contracts
to transport, all that a shipper has to do in a suit
to recover for loss or damage is to show receipt
by the carrier of the goods and delivery by it of
less than what it received. After that, the burden
of proving that the loss or damage was due to
any of the causes which exempt him from liability
is shifted to the carrier, common or private he
may be. Even if the provisions of the charter-
party aforequoted are deemed valid, and the
defendants considered private carriers, it was still
incumbent upon them to prove that the shortage
or contamination sustained by the cargo is
attributable to the fault or negligence on the part
of the shipper or consignee in the loading,
stowing, trimming and discharge of the cargo.
This they failed to do. By this omission, coupled
with their failure to destroy the presumption of
negligence against them, the defendants are
liable" (Italics supplied).
On appeal, respondent Court of Appeals reversed
the lower court and absolved the carrier from
liability for the value of the cargo that was lost or
damaged. 16 Relying on the 1968 case of Home
Insurance Co. v. American Steamship Agencies,
Inc., 17 the appellate court ruled that the cargo
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
125
vessel M/V "Sun Plum" owned by private
respondent KKKK was a private carrier and not a
common carrier by reason of the time charter-
party. Accordingly, the Civil Code provisions on
common carriers which set forth a presumption of
negligence do not find application in the case at
bar. Thus —
". . . In the absence of such presumption, it was
incumbent upon the plaintiff-appellee to adduce
sufficient evidence to prove the negligence of the
defendant carrier as alleged in its complaint. It is
an old and well settled rule that if the plaintiff,
upon whom rests the burden of proving his cause
of action, fails to show in a satisfactory manner
the facts upon which he bases his claim, the
defendant is under no obligation to prove his
exception or defense (Moran, Commentaries on
the Rules of Court, Volume 6, p. 2, citing Belen v.
Belen, 13 Phil. 202).
"But, the record shows that the plaintiff-appellee
dismally failed to prove the basis of its cause of
action, i.e., the alleged negligence of defendant
carrier. It appears that the plaintiff was under the
impression that it did not have to establish
defendant’s negligence. Be that as it may,
contrary to the trial court’s finding, the record of
the instant case discloses ample evidence
showing that defendant carrier was not negligent
in performing its obligations . . ." 18 (Emphasis
supplied).
Petitioner PPI appeals to us by way of a petition
for review assailing the decision of the Court of
Appeals. Petitioner theorizes that the Home
Insurance case has no bearing on the present
controversy because the issue raised therein is
the validity of a stipulation in the charter-party
delimiting the liability of the shipowner for loss or
damage to goods caused by want of due diligence
on its part or that of its manager to make the
vessel seaworthy in all respects, and not whether
the presumption of negligence provided under the
Civil Code applies only to common carriers and
not to private carriers. 19 Petitioner further
argues that since the possession and control of
the vessel remain with the shipowner, absent any
stipulation to the contrary, such shipowner should
be made liable for the negligence of the captain
and crew. In fine, PPI faults the appellate court in
not applying the presumption of negligence
against respondent carrier, and instead shifting
the onus probandi on the shipper to show want of
due deligence on the part of the carrier, when he
was not even at hand to witness what transpired
during the entire voyage.
As earlier stated, the primordial issue here is
whether a common carrier becomes a private
carrier by reason of a charter-party; in the
negative, whether the shipowner in the instant
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
case was able to prove that he had exercised that
degree of diligence required of him under the law.
It is said that etymology is the basis of reliable
judicial decisions in commercial cases. This being
so, we find it fitting to first define important
terms which are relevant to our discussion.
A "charter-party" is defined as a contract by
which an entire ship, or some principal part
thereof, is let by the owner to another person for
a specified time or use; 20 a contract of
affreightment by which the owner of a ship or
other vessel lets the whole or a part of her to a
merchant or other person for the conveyance of
goods, on a particular voyage, in consideration of
the payment of freight; 21 Charter parties are of
two types: (a) contract of affreightment which
involves the use of shipping space on vessels
leased by the owner in part or as a whole, to
carry goods for others; and, (b) charter by
demise or bareboat charter, by the terms of
which the whole vessel is let to the charterer with
a transfer to him of its entire command and
possession and consequent control over its
navigation, including the master and the crew,
who are his servants. Contract of affreightment
may either be time charter, wherein the vessel is
leased to the charterer for a fixed period of time,
or voyage charter, wherein the ship is leased for a
single voyage. 22 In both cases, the charter-party
provides for the hire of the vessel only, either for
a determinate period of time or for a single or
consecutive voyage, the shipowner to supply the
ship’s stores, pay for the wages of the master and
the crew, and defray the expenses for the
maintenance of the ship.
Upon the other hand, the term "common or public
carrier" is defined in Art. 1732 of the Civil Code.
23 The definition extends to carriers either by
land, air or water which hold themselves out as
ready to engage in carrying goods or transporting
passengers or both for compensation as a public
employment and not as a casual occupation. The
distinction between a "common or public carrier"
and a "private or special carrier" lies in the
character of the business, such that if the
undertaking is a single transaction, not a part of
the general business or occupation, although
involving the carriage of goods for a fee, the
person or corporation offering such service is a
private carrier. 24
Article 1733 of the New Civil Code mandates that
common carriers, by reason of the nature of their
business, should observe extraordinary diligence
in the vigilance over the goods they carry. 25 In
the case of private carriers, however, the exercise
of ordinary diligence in the carriage of goods will
suffice. Moreover, in case of loss, destruction or
deterioration of the goods, common carriers are
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
126
presumed to have been at fault or to have acted
negligently, and the burden of proving otherwise
rests on them. 26 On the contrary, no such
presumption applies to private carriers, for
whosoever alleges damage to or deterioration of
the goods carried has the onus of proving that the
cause was the negligence of the carrier.
It is not disputed that respondent carrier, in the
ordinary course of business, operates as a
common carrier, transporting goods
indiscriminately for all persons. When petitioner
chartered the vessel M/V "Sun Plum", the ship
captain, its officers and compliment were under
the employ of the shipowner and therefore
continued to be under its direct supervision and
control. Hardly then can we charge the charterer,
a stranger to the crew and to the ship, with the
duty of caring for his cargo when the charterer
did not have any control of the means in doing
so. This is evident in the present case considering
that the steering of the ship, the manning of the
decks, the determination of the course of the
voyage and other technical incidents of maritime
navigation were all consigned to the officers and
crew who were screened, chosen and hired by the
shipowner. 27
It is therefore imperative that a public carrier
shall remain as such, notwithstanding the charter
of the whole or portion of a vessel by one or more
persons, provided the charter is limited to the
ship only, as in the case of a time-charter or
voyage-charter. It is only when the charter
includes both the vessel and its crew, as in a
bareboat or demise that a common carrier
becomes private, at least insofar as the particular
voyage covering the charter-party is concerned.
Indubitably, a shipowner in a time or voyage
charter retains possession and control of the ship,
although her holds may, for the moment, be the
property of the charterer. 28
Respondent carrier’s heavy reliance on the case
of Home Insurance Co. v. American Steamship
Agencies, supra, is misplaced for the reason that
the meat of the controversy therein was the
validity of a stipulation in the charter-party
exempting the shipowner from liability for loss
due to the negligence of its agent, and not the
effects of a special charter on common carriers.
At any rate, the rule in the United States that a
ship chartered by a single shipper to carry special
cargo is not a common carrier, 29 does not find
application in our jurisdiction, for we have
observed that the growing concern for safety in
the transportation of passengers and/or carriage
of goods by sea requires a more exacting
interpretation of admiralty laws, more
particularly, the rules governing common carriers.
We quote with approval the observations of Raoul
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
Colinvaux, the learned barrister-at-law 30 —
"As a matter of principle, it is difficult to find a
valid distinction between cases in which a ship is
used to convey the goods of one and of several
persons. Where the ship herself is let to a
charterer, so that he takes over the charge and
control of her, the case is different; the shipowner
is not then a carrier. But where her services only
are let, the same grounds for imposing a strict
responsibility exist, whether he is employed by
one or many. The master and the crew are in
each case his servants, the freighter in each case
is usually without any representative on board the
ship; the same opportunities for fraud or
collussion occur; and the same difficulty in
discovering the truth as to what has taken place
arises . . ."
cralaw virtua1aw l ibra ry
In an action for recovery of damages against a
common carrier on the goods shipped, the
shipper or consignee should first prove the fact of
shipment and its consequent loss or damage
while the same was in the possession, actual or
constructive, of the carrier. Thereafter, the
burden of proof shifts to respondent to prove that
he has exercised extraordinary diligence required
by law or that the loss, damage or deterioration
of the cargo was due to fortuitous event, or some
other circumstances inconsistent with its liability.
31
To our mind, respondent carrier has sufficiently
overcome, by clear and convincing proof, the
prima facie presumption of negligence.
The master of the carrying vessel, Captain Lee
Tae Bo, in his deposition taken on 19 April 1977
before the Philippine Consul and Legal Attache in
the Philippine Embassy in Tokyo, Japan, testified
that before the fertilizer was loaded, the four (4)
hatches of the vessel were cleaned, dried and
fumigated. After completing the loading of the
cargo in bulk in the ship’s holds, the steel
pontoon hatches were closed and sealed with iron
lids, then covered with three (3) layers of
serviceable tarpaulins which were tied with steel
bonds. The hatches remained close and tightly
sealed while the ship was in transit as the weight
of the steel covers made it impossible for a
person to open without the use of the ship’s
boom. 32
It was also shown during the trial that the hull of
the vessel was in good condition, foreclosing the
possibility of spillage of the cargo into the sea or
seepage of water inside the hull of the vessel. 33
When M/V "Sun Plum" docked at its berthing
place, representatives of the consignee boarded,
and in the presence of a representative of the
shipowner, the foreman, the stevedores, and a
cargo surveyor representing CSCI, opened the
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
127
hatches and inspected the condition of the hull of
the vessel. The stevedores unloaded the cargo
under the watchful eyes of the shipmates who
were overseeing the whole operation on rotation
basis. 34
Verily, the presumption of negligence on the part
of respondent carrier has been efficaciously
overcome by the showing of extraordinary zeal
and assiduity exercised by the carrier in the care
of the cargo. This was confirmed by respondent
appellate court thus —
". . . Be that as it may, contrary to the trial
court’s finding, the record of the instant case
discloses ample evidence showing that defendant
carrier was not negligent in performing its
obligations. Particularly, the following testimonies
of plaintiff-appellee’s own witnesses clearly show
absence of negligence by the defendant carrier;
that the hull of the vessel at the time of the
discharge of the cargo was sealed and nobody
could open the same except in the presence of
the owner of the cargo and the representatives of
the vessel (TSN, 20 July 1977, p. 14); that the
cover of the hatches was made of steel and it was
overlaid with tarpaulins, three layers of tarpaulins
and therefore their contents were protected from
the weather (TSN, 5 April 1978, p. 24); and, that
to open these hatches, the seals would have to be
broken, all the seals were found to be intact
(TSN, 20 July 1977, pp. 15-16)" (Italics
supplied).
The period during which private respondent was
to observe the degree of diligence required of it
as a public carrier began from the time the cargo
was unconditionally placed in its charge after the
vessel’s holds were duly inspected and passed
scrutiny by the shipper, up to and until the vessel
reached its destination and its hull was re-
examined by the consignee, but prior to
unloading. This is clear from the limitation clause
agreed upon by the parties in the Addendum to
the standard "GENCON" time charter-party which
provided for an F.I.O.S., meaning, that the
loading, stowing, trimming and discharge of the
cargo was to be done by the charterer, free from
all risk and expense to the carrier. 35 Moreover, a
shipowner is liable for damage to the cargo
resulting from improper stowage only when the
stowing is done by stevedores employed by him,
and therefore under his control and supervision,
not when the same is done by the consignee or
stevedores under the employ of the latter. 36
Article 1734 of the New Civil Code provides that
common carriers are not responsible for the loss,
destruction or deterioration of the goods if caused
by the character of the goods or defects in the
packaging or in the containers. The Code of
Commerce also provides that all losses and
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 TRANSPORTATION LAW CASES UNDER ATTY. BANGGOY
deteriorations which the goods may suffer during
the transportation by reason of fortuitous event,
force majeure, or the inherent defect of the
goods, shall be for the account and risk of the
shipper, and that proof of these accidents is
incumbent upon the carrier. 37 The carrier,
nonetheless, shall be liable for the loss and
damage resulting from the preceding causes if it
is proved, as against him, that they arose through
his negligence or by reason of his having failed to
take the precautions which usage has established
among careful persons. 38
Respondent carrier presented a witness who
testified on the characteristics of the fertilizer
shipped and the expected risks of bulk shipping.
Mr. Estanislao Chupungco, a chemical engineer
working with Atlas Fertilizer, described Urea as a
chemical compound consisting mostly of ammonia
and carbon monoxide compounds which are used
as fertilizer. Urea also contains 46% nitrogen and
is highly soluble in water. However, during
storage, nitrogen and ammonia do not normally
evaporate even on a long voyage, provided that
the temperature inside the hull does not exceed
eighty (80) degrees centigrade. Mr. Chupungco
further added that in unloading fertilizer in bulk
with the use of a clamped shell, losses due to
spillage during such operation amounting to one
percent (1%) against the bill of lading is deemed
"normal" or "tolerable." The primary cause of
these spillages is the clamped shell which does
not seal very tightly. Also, the wind tends to blow
away some of the materials during the unloading
process.
The dissipation of quantities of fertilizer, or its
deterioration in value, is caused either by an
extremely high temperature in its place of
storage, or when it comes in contact with water.
When Urea is drenched in water, either fresh or
saline, some of its particles dissolve. But the
salvaged portion which is in liquid form still
remains potent and usable although no longer
saleable in its original market value.
The probability of the cargo being damaged or
getting mixed or contaminated with foreign
particles was made greater by the fact that the
fertilizer was transported in "bulk," thereby
exposing it to the inimical effects of the elements
and the grimy condition of the various pieces of
equipment used in transporting and hauling it.
The evidence of respondent carrier also showed
that it was highly improbable for sea water to
seep into the vessel’s holds during the voyage
since the hull of the vessel was in good condition
and her hatches were tightly closed and firmly
sealed, making the M/V "Sun Plum" in all respects
seaworthy to carry the cargo she was chartered
for. If there was loss or contamination of the
TRANSPORTATION LAW CASES BY MANUEL ALAMEDA
128
cargo, it was more likely to have occurred while
the same was being transported from the ship to
the dump trucks and finally to the consignee’s
warehouse. This may be gleaned from the
testimony of the marine and cargo surveyor of
CSCI who supervised the unloading. He explained
that the 18 M/T of alleged "bad order cargo" as
contained in their report to PPI was just an
approximation or estimate made by them after
the fertilizer was discharged from the vessel and
segregated from the rest of the cargo.
The Court notes that it was in the month of July
when the vessel arrived port and unloaded her
cargo. It rained from time to time at the harbor
area while the cargo was being discharged
according to the supply officer of PPI, who also
testified that it was windy at the waterfront and
along the shoreline where the dump trucks
passed enroute to the consignee’s warehouse.
Indeed, we agree with respondent carrier that
bulk shipment of highly soluble goods like
fertilizer carries with it the risk of loss or damage.
More so, with a variable weather condition
prevalent during its unloading, as was the case at
bar. This is a risk the shipper or the owner of the
goods has to face. Clearly, respondent carrier has
sufficiently proved the inherent character of the
goods which makes it highly vulnerable to
deterioration; as well as the inadequacy of its
packaging which further contributed to the loss.
On the other hand, no proof was adduced by the
petitioner showing that the carrier was remiss in
the exercise of due diligence in order to minimize
the loss or damage to the goods it carried.
WHEREFORE, the petition is DISMISSED. The
assailed decision of the Court of Appeals, which
reversed the trial court, is AFFIRMED.
Consequently, Civil Case No. 98623 of the then
Court of the First Instance, now Regional Trial
Court, of Manila should be, as it is hereby,
DISMISSED.
Costs against petitioner.
SO ORDERED.
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