GLOBE V. NTC G.R. No. 143964.
G.R. No. 143964. July 26, 2004 NTC acted without jurisdiction in declaring that it had no authority
FACTS:
On 4 June 1999, Smart filed a Complaint with public
respondent NTC,praying that NTC order the immediate
interconnection of Smarts and Globes GSM networks. Smart
alleged that Globe, with evident bad faith and malice, refused to
grant Smarts request for the interconnection of SMS.
Globe filed its Answer with Motion to Dismiss on 7 June 1999,
interposing grounds that the Complaint was premature, Smarts
failure to comply with the conditions precedent required in
Section 6 of NTC Memorandum Circular 9-7-93,19 and its
omission of the mandatory Certification of Non-Forum Shopping.
On 19 July 1999, NTC issued the Order now subject of the
present petition.
According to NTC Both Smart and Globe were
equally blameworthy for their lack of cooperation in the
submission of the documentation required for interconnection
and for having unduly maneuvered the situation into the present
impasse.
NTC held that since SMS falls squarely within the definition of
value-added (VAS) service or enhanced-
service given in NTC Memorandum Circular No. 8-9-
95 (MC No. 8-9-95) their implementation of SMS interconnection
is mandatory.The NTC also declared that both Smart and Globe
have been providing SMS without authority from it.
Globe filed with the CA a Petition for Certiorari and Prohibition to
nullify and set aside the Order and to prohibit NTC from taking
any further action in the case.
Globe reiterated its previous arguments that the complaint should
have been dismissed for failure to comply with conditions
precedent and the non-forum shopping rule.They claimed that
to render SMS, pointing out that the matter was not raised as
an issue before it at all.
They alleged that the Order is a patent nullity as it imposed an
administrative penalty for an offense for which neither it
nor Smart was sufficiently charged nor heard on in violation
of their right to due process.
The CA issued a Temporary Restraining Order (TRO) on 31 Aug
1999. In its Memorandum, Globe called the attention of the CA in
an earlier NTC decision regarding Islacom, holding that SMS is a
deregulated special feature and does not require the prior
approval of the NTC.
ISSUE:
Whether NTC may legally require Globe to secure NTC approval
before it continues providing SMS.
WON SMS is a Value Added Service (VAS) under Public
telecommunications Act (PTA) of 1995;
HELD:
1. NO. The NTC may not legally require Globe to secure its
approval for Globe to continue providing SMS. This does not
imply though that NTC lacks authority to regulate SMS or to
classify it as VAS. However, the move should be implemented
properly, through unequivocal regulations applicable to all entities
that are similarly situated, and in an even-handed manner. This
should not be interpreted, however, as removing SMS from the
ambit of jurisdiction and review by the NTC. The NTC will
continue to exercise, by way of its broad grant, jurisdiction over
Globe and Smart’s SMS offerings, including questions of rates
and customer complaints. Yet caution must be had. Much
complication could have been avoided had the NTC adopted a
proactive position, promulgating the necessary rules and
regulations to cope up with the advent of the technologies it
superintends. With the persistent advent of new offerings in the
telecommunications industry, the NTC’s role will become more
crucial than at any time before.
2. NO. There is no legal basis under the PTA or the
memorandum circulars promulgated by the NTC to denominate
SMS as VAS, and any subsequent determination by the NTC on
whether SMS is VAS should be made with proper regard for due
process and in conformity with the PTA.
Is SMS a VAS, enhanced service, or a special
feature? Apparently, even the NTC is unsure. It had told Islacom
that SMS was a special feature, then subsequently held that it
was a VAS. However, the pertinent laws and regulations had not
changed from the time of the Islacom letter up to the day the
Order was issued. Only the thinking of NTC did.
More significantly, NTC never required ISLACOM to apply for
prior approval in order to provide SMS, even after the Order to
that effect was promulgated against Globe and Smart. This fact
was admitted by NTC during oral arguments. NTCs treatment of
Islacom, apart from being obviously discriminatory, puts into
question whether or not NTC truly believes that SMS is VAS. NTC
is unable to point out any subsequent rule or regulation, enacted
after it promulgated the adverse order against Globe and Smart,
affirming the newly-arrived determination that SMS is VAS.
In fact, as Smart admitted during the oral arguments, while it did
comply with the NTC Order requiring it to secure prior approval,
it was never informed by the NTC of any action on its request.
While NTC counters that it did issue a Certificate of Registration
to Smart, authorizing the latter as a provider of SMS, such
Certificate of Registration was issued only on 13 March 2003, or
nearly four (4) years after Smart had made its request.This
inaction indicates a lack of seriousness on the part of the NTC to
implement its own rulings. Also, it tends to indicate the lack of
belief or confusion on NTCs part as to how SMS should be
treated. Given the abstract set of rules the NTC has chosen to
implement, this should come as no surprise. Yet no matter how
content the NTC may be with its attitude of sloth towards
regulation, the effect may prove ruinous to the sector it regulates.
Moreover, the Court realizes that the PTA of 1995 is not intended
to constrain the industry within a cumbersome regulatory regime.
The policy as pre-ordained by legislative fiat renders the
traditionally regimented business in an elementary free state to
make business decisions, avowing that it is under this
atmosphere that the industry would prosper.
It is disappointing at least if the deregulation thrust of the law is
skirted deliberately. But it is ignominious if the spirit is defeated
through a crazy quilt of vague, overlapping rules that are
implemented haphazardly.
Asian Terminals, Inc. v Allied Guarantee Insurance, Co. Inc.
(2015)
Asian Terminals, Inc. v Allied Guarantee Insurance, Co., Inc. GR
No. 182208, October 14, 2015
FACTS: Marina, the predecessor of Asian Terminals Inc., is an
arrastre operator based on Manila. On February 5, 1989, a
shipment of kraft linear board was loaded and received from the
ports of Lake Charles, LA, and Mobile, Al, USA for transport and
delivery to San Miguel. Upon offloading, it was assessed that a
total of 158 rolls were damaged during shipping. Further, upon
the goods' withdrawal from arrastre and their delivery to the
customs broker, Dynamic and eventually to the consignee San
Miguel, another 54 rolls were found to have been damaged, for a
total of 212 rolls of damaged shipment worth P755,666.84.
Allied Insurance was the insurer of the shipment. Thus, it paid
San Miguel P755,666.84 and was subrogated in the latter's right.
Allied filed a Complaint against Transocean, Philippine
Transmarine, Dynamic and Marina seeking to be indemnified for
the P755,666.84 it lost paying San Miguel.
ISSUES: Whether or not petitioner has been proven liable for the
additional 54 rolls of damaged goods to respondent
RULING: Yes. Marina, the arrastre operator, from the above
evidence, was not able to overcome the presumption of
negligence. The Bad Order Cargo Receipts, the Turn Over
Survey of Bad Order Cargoes as well as the Request for Bad
Order Survey did not establish that the additional 54 rolls were in
good condition while in the custody of the arrastre. Said
documents proved only that indeed the 158 rolls were already
damaged when they were discharged to the arrastre operator and
when it was subsequently withdrawn from the arrastre operator
by [the] customs broker. Further, the Turn Over Inspector and
the Bad Order Inspector who conducted the inspections and who
signed the Turn Over Survey of Bad [Order] Cargoes and the
Request for Bad Order Survey, respectively, were not presented
by Marina as witnesses to verify the correctness of the document
and to testify that only 158 rolls was reported and no others
sustained damage while the shipment was in its possession.
On the other hand, defendant Dynamic (which) in its capacity as
broker, withdrew the 357 rolls of kraft linear board from the
custody of defendant Marina and delivered the same to the
consignee, San Miguel Corporation's warehouse in Tabacalera
at United Nations, Manila, is considered a common carrier.
It is noteworthy to mention that "in general, the nature of the work
of an arrastre operator covers the handling of cargoes at piers
and wharves,"
"To carry out its duties, the arrastre is required to provide cargo
handling equipment which includes, among others, trailer,
chassis for containers."
Hence, the "legal relationship betw.een the consignee and the
arrastre operator is akin to that of a depositor and the
warehouseman. The relationship between the consignee and the
common carrier is similar to that of the consignee and the arrastre
operator. Since it 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 develops
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."
Since the relationship of an arrastre operator and a consignee is
akin to that between a warehouseman and a depositor, then, in
instances when the consignee claims any loss, the burden of
proof is on the arrastre operator to show that it complied with the
obligation to deliver the goods and that the losses were not due
to its negligence or that of its employees.
the broker, Dynamic, cannot alone be held liable for the additional
54 rolls of damaged goods since such damage occurred during
the following instances: (1) while the goods were in the custody
of the arrastre ATI; (2) when they were in transition from ATI's
custody to that of Dynamic (i.e., during loading to Dynamic's
trucks); and (3) during Dynamic's custody.
While the trial court could not determine with pinpoint accuracy
who among the two caused which particular damage and in what
proportion or quantity, it was clear that both ATI and Dynamic
failed to discharge the burden of proving that damage on the 54
rolls did not occur during their custody. As for petitioner ATI, in
particular, what worked against it was the testimony, as cited
above, that its employees' use of the wrong lifting equipment
while loading the goods onto Dynamic's trucks had a role in
causing the damage. Such is a finding of fact made by the trial
court which this Court, without a justifiable ground, will not
disturb,
The arrastre operator's principal work is that of handling cargo,
so that its drivers/operators or employees should observe the
standards and measures necessary to prevent losses and
damage to shipments under its custody.
In the performance of its obligations, an arrastre operator should
observe the same degree of diligence as that required of a
common carrier and a warehouseman.
Being the custodian of the goods discharged from a vessel, an
arrastre operator's duty is to take good care of the goods and to
turn them over to the party entitled to their possession. With such
a responsibility, the arrastre operator must prove that the losses
were not due to its negligence or to that of its employees. And to
prove the exercise of diligence in handling the subject cargoes,
petitioner must do more than merely show the possibility that
some other party could be responsible for the loss or the damage.
It must prove that it exercised due care in the handling thereof.
a mere sign-off from the customs broker's representative that he
had received the subject shipment "in good order and condition
without exception" would not absolve the arrastre from liability,
simply because the representative's signature merely signifies
that said person thereby frees the arrastre from any liability for
loss or damage to the cargo so withdrawn while the same was in
the custody of such representative to whom the cargo was
released, but it does not foreclose the remedy or right of the
consignee (or its subrogee) to prove that any loss or damage to
the subject shipment occurred while the same was under the
custody, control and possession of the arrastre operator.
As it is now established that there was negligence in both
petitioner ATI's and Dynamic's performance of their duties in the
handling, storage and delivery of the subject shipment to San
Miguel, resulting in the loss of 54 rolls of kraft linear board, both
shall be solidarily liable for such loss.
Transportation Case Digest: Phil Am Gen Insurance Co, Et Al. V.
PKS Shipping Co (2003)
G.R. No. 149038 April 9, 2003
Lessons Applicable: Charter Party (Transportation)
FACTS:
 Davao Union Marketing Corporation (DUMC) contracted
the services of PKS Shipping Company (PKS Shipping) for
the shipment to Tacloban City of 75,000 bags of cement
worth P3,375,000.
 DUMC insured the goods for its full value with Philippine
American General Insurance Company (Philamgen).
 The goods were loaded aboard the dumb barge Limar
I belonging to PKS Shipping.
 December 22, 1988 9 pm: While Limar I was being towed
by PKS’ tugboat MT Iron Eagle, the barge sank a couple
of miles off the coast of Dumagasa Point, in Zamboanga
del Sur, bringing down with it the entire cargo of 75,000
bags of cement.
 DUMC filed a formal claim with Philamgen for the full
amount of the insurance. Philamgen promptly made
payment; it then sought reimbursement from PKS
Shipping of the sum paid to DUMC but the shipping
company refused to pay so Philamgen to file suit against
PKS Shipping
 RTC: dismissed the complaint - fortuitous event
 CA:Affirmed - not a common carrier but a casual
occupation
ISSUE: W/N PKS Shipping is NOT liable since it was NOT a
common carrier
HELD: NO. Petition is DENIED

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 is Section 13, paragraph (b), of the Public
Service Act
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 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
 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
 distinction between:
 common or public carrier
 private or special carrier - 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
 EX: 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 vessel and its crew.
 The regularity of its activities in this area indicates more
than just a casual activity on its part
 The appellate court ruled, gathered from the testimonies
and sworn marine protests of the respective vessel
masters ofLimar I and MT Iron Eagle, that there was no
way by which the barge’s or the tugboat’s crew could have
prevented the sinking of Limar I. The vessel was suddenly
tossed by waves of extraordinary height of 6 to 8 feet and
buffeted by strong winds of 1.5 knots resulting in the entry
of water into the barge’s hatches. The official Certificate of
Inspection of the barge issued by the Philippine
Coastguard and the Coastwise 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
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.
FGU INSURANCE CORP. VS. G.P. SARMIENTO TRUCKING
CORP. (GPS)G.R. No. 141910. August 6, 2002Facts:
GPS is an exclusive contractor and hauler of Concepcion
Industries, Inc. One day, it wasto deliver certaingoods of
Concepcion Industries, Inc. aboard one of its trucks. On its way,
thetruck collided with an unidentified truck, resulting in damage
to the cargoes.FGU, insurer ofthe shipment paid to Concepcion
Industries, Inc. the amount of the damage and filed a
suitagainstGPS. GPS filed a motion to dismiss for failure to prove
that it was a common carrier.
Issue:
Whether or not GPS falls under the category of a common
carrier.
Held:
Note that GPS is an exclusive contractor and hauler of
Concepcion Industries, Inc.offering its service to noother
individual or entity. A common carrier is one which offers
itsservices whether to the public in general or to a limited clientele
in particular but never on anexclusive basis. Therefore, GPS
does not fit the category of a common carrier although it is
notfreedfrom its liability based on culpa contractual
Culpa Aquiliana vs. Culpa Contractual
Culpa Aquiliana:1. Only private concern.2. Repairs the damage
by indemnification.3. Covers all acts that are faulty or negligent.4.
Preponderance of evidence.5. No reservation – it’s independent
from crime. (Andamo vs IAC, 191 SCRA 203)6. Employer’s
liability is solidary (Fabre Jr. vs CA, 259 SCRA 426, ‘ 96) Culpa
Contractual(i) Pre-existing obligation between the parties(ii) Fault
or negligence is incidental to the performance of the obligation(iii)
Defense of having exercised diligence of a good father of a family
is not available, just like in criminal action. Applied doctrine of
Respondent Superior, or Master and Servant Rule.
FGU Insurance Corp. vs. GP Sarmiento Trucking Corp. and
Lambert M. ErolesFacts
Respondent GP Sarmiento Trucking Company (GTS) undertook
to transport cargoesfor Concepcion Industries Inc. when it
collided with an unidentified truck causing damage tothe
cargoes. Petitioner !G" insurer of the shipment paid to
Concepcion Industries the#alue of the co#ered cargoes. Then
as su$rogee of Concepcion Industries Inc. petitioner!G" sued
GPS for $reach of contract of carriage for reim$ursement. Instead
of filing ananswer GPS filed a demurrer to e#idence claiming
that it could not $e held lia$le as acommon carrier $ecause it was
only a pri#ate carrier $eing the e%clusi#e hauler only
of Concepcion Industries Inc. since &' .The lower court granted
the motion ruling that plaintiff !G" failed to pro#e that GPSwas a
common carrier. The C affirmed the trial court*s order.
Issue
+hether or not GPS is considered a common carrier and may $e
presumed negligentand therefore lia$le for damages.
uling
The Supreme Court held that GPS cannot $e considered a
common carrier as
itrenders ser#ice e%clusi#ely to Concepcion Industries,
that notwithstanding GPS cannotescape from lia$ility since in
culpa contractual
mere proof of the e%istence of the
contractand the failure of its compliance -ustify
prima facie
a corresponding right of relief.Respondent dri#er howe#er
who is not a party to the contract of carriage may not
$e heldlia$le under the agreement without concrete proof of his
negligence or fault. ence the Supreme Court affirmed the
assailed order of the trial court and the C insofar as the
respondent dri#er was concerned $ut GPS trucking company
was ordered topay the petitioner !G" the #alue of the damaged
and lost cargoes.
First Philippine Industrial Corp. vs. CA
Facts:
Petitioner is a grantee of a pipeline concession under Republic
Act No. 387. Sometime in January 1995, petitioner applied for
mayor’s permit in Batangas. However, the Treasurer required
petitioner to pay a local tax based on gross receipts amounting to
P956,076.04. In order not to hamper its operations, petitioner
paid the taxes for the first quarter of 1993 amounting to
P239,019.01 under protest. On January 20, 1994, petitioner filed
a letter-protest to the City Treasurer, claiming that it is exempt
from local tax since it is engaged in transportation business. The
respondent City Treasurer denied the protest, thus, petitioner
filed a complaint before the Regional Trial Court of Batangas for
tax refund. Respondents assert that pipelines are not included in
the term “common carrier” which refers solely to ordinary carriers
or motor vehicles. The trial court dismissed the complaint, and
such was affirmed by the Court of Appeals.
Issue:
Whether a pipeline business is included in the term “common
carrier” so as to entitle the petitioner to the exemption
Held:
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:
(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.
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.
Valenzuela Hardwood vs. CA
(GR 102316, 30 June 1997)
FACTS:
Valenzuela Hardwood and Industrial Supply, Inc. (VHIS) entered
into an agreement with the Seven Brothers whereby the latter
undertook to load on board its vessel M/V Seven Ambassador the
former’s lauan round logs numbering 940 at the port of
Maconacon, Isabela for shipment to Manila. VHIS insured the
logs against loss and/or damage with South Sea Surety and
Insurance Co.
The said vessel sank resulting in the loss of VHIS’ insured logs.
VHIS demanded from South Sea Surety the payment of the
proceeds of the policy but the latter denied liability under the
policy for non-payment of premium. VHIS likewise filed a formal
claim with Seven Brothers for the value of the lost logs but the
latter denied the claim.
The RTC ruled in favor of the petitioner.Both Seven Brothers and
South Sea Surety appealed. The Court of Appeals affirmed the
judgment except as to the liability of Seven Brothers.South Sea
Surety and VHIS filed separate petitions for review before the
Supreme Court. In a Resolution dated 2 June 1995, the Supreme
Court denied the petition of South Sea Surety. The present
decision concerns itself to the petition for review filed by VHIS.
ISSUE:
Is a stipulation in a charter party that the “(o)wners shall not be
responsible for loss, split, short-landing, breakages and any kind
of damages to the cargo” valid?
HELD:
Yes. Xxx [I]t is undisputed that private respondent had acted as
a private carrier in transporting petitioner’s lauan logs. Thus,
Article 1745 and other Civil Code provisions on common carriers
which were cited by petitioner may not be applied unless
expressly stipulated by the parties in their charter party.
In a contract of private carriage, the parties may validly stipulate
that responsibility for the cargo rests solely on the charterer,
exempting the shipowner from liability for loss of or damage to
the cargo caused even by the negligence of the ship captain.
Pursuant to Article 1306 of the Civil Code, such stipulation is valid
because it is freely entered into by the parties and the same is
not contrary to law, morals, good customs, public order, or public
policy. Indeed, their contract of private carriage is not even a
contract of adhesion. We stress that in a contract of private
carriage, the parties may freely stipulate their duties and
obligations which perforce would be binding on them. Unlike in a
contract involving a common carrier, private carriage does not
involve the general public. Hence, the stringent provisions of the
Civil Code on common carriers protecting the general public
cannot justifiably be applied to a ship transporting commercial
goods as a private carrier. Consequently, the public policy
embodied therein is not contravened by stipulations in a charter
party that lessen or remove the protection given by law in
contracts involving common carriers.
x x x
The general public enters into a contract of transportation with
common carriers without a hand or a voice in the preparation
thereof. The riding public merely adheres to the contract; even if
the public wants to, it cannot submit its own stipulations for the
approval of the common carrier. Thus, the law on common
carriers extends its protective mantle against one-sided
stipulations inserted in tickets, invoices or other documents over
which the riding public has no understanding or, worse, no
choice. Compared to the general public, a charterer in a contract
of private carriage is not similarly situated. It can -- and in fact it
usually does -- enter into a free and voluntary agreement. In
practice, the parties in a contract of private carriage can stipulate
the carrier’s obligations and liabilities over the shipment which, in
turn, determine the price or consideration of the charter. Thus, a
charterer, in exchange for convenience and economy, may opt to
set aside the protection of the law on common carriers. When the
charterer decides to exercise this option, he takes a normal
business risk.
Planters Products vs. Court of Appeals
G.R. No. 101503 September 15, 1993
Facts: Planters Product Inc. purchased from Mitsubishi
international corporation metric tons of Urea fertilizer, which the
latter shipped aboard the cargo vessel M/V Sun Plum owned by
private respondent Kyosei Kisen Kabushiki Kaisha. Prior to its
voyage, a time charter-party on the vessel respondent entered
into between Mitsubishi as shipper/charterer and KKKK as ship
owner, in Tokyo, Japan.
Before loading the fertilizer aboard the vessel, (4) of her holds
were presumably inspected by the charterer’s representative and
found fit to take a load of urea in bulk. 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.
Upon arrival of vessel at port, the petitioner unloaded the cargo
pursuant to the terms and conditions of the charter-party. The
hatches remained open throughout the duration of the discharge.
Upon arrival at petitioner’s warehouse a survey conducted over
the cargo revealed a shortage and the most of the fertilizer was
contaminated with dirt. As such, Planters filed an action for
damages. The defendant argued that the public policy governing
common carriers do not apply to them because they have
become private carriers by reason of the provisions of the charter-
party.
Issue: Whether or not the charter-party contract between the
ship owner and the charterer transforms a common carrier into a
private carrier?
Held: A charter party may either her be time charter wherein the
vessel is leased to the charterer, wherein the ship 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
time or for a single or consecutive voyage.
It is therefor imperative that such common carrier shall remain as
such, notwithstanding the charter of the whole or part of the
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 ship and its crew as in
bareboat or demise that it becomes a private carrier.
Undoubtedly, a shipowner in a time or voyage charter retains in
possession and control of the ship, although her holds may be
the property of the charterer.
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REGIONAL CHARTER LINES OF SG et al vs THE
NETHERLANDS INSURANCE Co.FACTS:Parties:Regional
Charter Lines –DEFENDANT, Carrier, based in SGEDSA
Shipping Agency –Agent of RCLNetherlands Insurance –insured
the goods shipped, paid claims, subrogated RCLTemic
Telefunken Microelectronices (Temic) –ConsigneeU Freight –
forwarding agent based in SG contracted services of Eagle
LinesEagle Lines –tasked by U Freight to transport cargo,
contracted services of RCL (as a ship owner)-Epoxy Molding
Compound (the merchandise) was to be shipped from SG to
Manila. -The merchandise is temperature sensitive thus it is
refrigerated in transit at O degrees Celsius. -Unloaded from the
ship in good condition, refrigerator was working well.-However,
goods were damaged because temperature in the ref
fluctuated to 33 degree C allegedly because of burnt condenser
more of the ref container-Temic claimed from Netherlands,
Netherlands paid the insurance claim-Netherlands filed a
complaint for subrogation of insurance settlement against RCL -
RCL and agent EDSA Shipping denied any negligence in the
shipment, and that there is no valid subrogationISSUE/S:W/N
RCL and EDSA Shipping is liable as CC under the theory of
presumption of negligence?HELD:YES. SC held CC is
presumed to have been negligent if it fails to prove that it
exercised extraordinary vigilance over the goods it
transported.When the goods shipped are either lost or arrived
in damaged condition, a presumption arises against the carrier
of its failure to observe that diligence, and there need not be an
express finding of negligence to hold it liable.RCL and EDSA
Shipping failed to prove that they did exercise that degree
of diligence required by law over the goods they transported.
Indeed, there is sufficient evidence showing that the
fluctuation of the temperature in the refrigerated container
van, as recorded in the temperature chart, occurred after
the cargo had been discharged from the vessel and was already
under the custody of the arrastre operator, ICTSI. This evidence,
however, does not disprove that the condenser fan –which
caused the fluctuation of the temperature in the refrigerated
container –was not damaged while the cargo was being unloaded
from the ship. It is settled in maritime law jurisprudence that
cargoes while being unloaded generally remain under the
custody of the carrier;RCL and EDSA Shipping failed to
dispute this. –BURDEN OF PROOF HAS SHIFTED TO THE
SHIPPER.
CENTRAL SHIPPING COMPANY, INC., petitioner, vs.
INSURANCE COMPANY OF NORTH AMERICA, respondent.
G.R. No. 150751 September 20, 2004
121 SCRA 769
Facts: On July 25, 1990 at Puerto Princesa, Palawan, the
petitioner received on board its vessel, the M/V Central Bohol,
376 pieces of Round Logs and undertook to transport said
shipment to Manila for delivery to Alaska Lumber Co., Inc. The
cargo is insured for P3, 000, 000.00 against total lost under
respondents MarineCargo Policy.
After loading the logs, the vessel starts its voyage. After few hours
of the trip, the ship tilts 10 degrees to its side, due to the shifting
of the logs in the hold. It continues to tilt causing the captain and
the crew to abandon ship. The ship sank.
Respondent alleged that the loss is due to the negligence and
fault of the captain. While petitioner contends that the happening
is due to monsoons which is unforeseen or casa fortuito.
Issue: Whether or not petitioner is liable for the loss of cargo?
Held: From the nature of their business and for reasons of public
policy, common carriers are bound to observe extraordinary
diligence over the goods they transport, according to all the
circumstances of each case. In the event of loss, destruction or
deterioration of the insured goods, common carriers are
responsible; that is, unless they can prove that such loss,
destruction or deterioration was brought about -- among others -
- by "flood, storm, earthquake, lightning or other natural disaster
or calamity." In all other cases not specified under Article 1734 of
the Civil Code, common carriers are presumed to have been at
fault or to have acted negligently, unless they prove that they
observed extraordinary diligence.
The contention of the petitioner that the loss is due to casa fortuito
exempting them from liability is untenable. Petitioner failed to
show that such natural disaster or calamity was the proximate
and only cause of the loss. Human agency must be entirely
excluded from the cause of injury or loss. In other words, the
damaging effects blamed on the event or phenomenon must not
have been caused, contributed to, or worsened by the presence
of human participation. The defense of fortuitous event or natural
disaster cannot be successfully made when the injury could have
been avoided by human precaution.
The monsoon is not the proximate cause of the sinking but is due
to the improper stowage of logs. The logs were not secured by
cable wires, causing the logs to shift and later on the sinking the
ship. This shows that they did not exercise extraordinary
diligence, making them liable for such loss.
Transportation Law Case
Singapore Airlines Ltd. vs. Fernandez, GR 142305, Dec. 10,
2003
FACTS:Respondent Andion Fernandez is an acclaimed soprano
in the Philippines andabroad. At the time of the incident she was
availing of an educational grant
from the Federal Republic of Germany pursuing a Master’s
Degree in Music
major in Voice. She was invited to sing before the King and
Queen of Malaysiaon Feb. 3-4, 1991. For this purpose, she took
an airline ticket from SingaporeAirlines (SAL) FOR THE
Frankfurt-Manila-Malaysia route. Respondent had to passby
Manila in order to gather her wardrobe and rehearse with the
pianist. SALissued ticket for Flight SQ 27 leaving Frankfurt on
Jan. 27, 1991 for Singapore withconnections to Manila in the
morning of Jan. 28, 1991. On Jan. 27, 1991 SQ 27LEFT Frankfurt
but arrived two hours late in Singapore on Jan. 28, 1991. By
then,the aircraft bound for Manila had already left. Upon
deplaning in Singapore,Fernandez approached the transit
counter at Changi Airport and was told by alady employee that
there were no more flights to Manila on that day and thatshe had
to stay in Singapore, if she wanted, she could fly to HK but at her
ownexpense. Respondent stayed with a relative in Singapore for
the night. The nextday, she was brought back to the airport and
approached a counter for
immediate booking but was told by a male employee: “Can’t you
see I amdoing something.” She explained her predicament but
was told: “It’s yourproblem, not ours.”
The respondent never made it to Manila and was forced to take
a direct flightto Malaysia on Jan. 29, 1991 through the efforts of
her mother and a travelagency in Manila. Her mother had to travel
to Malaysia with the wardrobewhich caused them to incur its non-performance by the carrier.SAL failed to inform of the
expenses of delay in the turnaround aircraft in Frankfurt, neitherdid it ask if the
respondent and 25 other delayed passengers are amenable to
₱
astay
50,000.RTC Manila ordered SAL to pay respondent
in Singapore. Even SAL’s manual mandates that in cases of
₱ urgent

50k as actual damages, connections the head office of defendant in Singapore has to be
informed ofdelays so as to make needed arrangements for
₱ connecting passengers.When respondent conveyed her
250k asmoral damages, apprehension in Frankfurt of the impending

₱ delay, she was assured by petitioner’s personnel in Frankfurt that

she will be
100k as exemplary damages,
transported to Manila on the same date. The lady employee at
₱ the counter inSingapore only allowed respondent to use the
7 phone upon threat of suit, the

5k as attorney’s fees and
costs of suit.CA affirmed RTC decision.ISSUE:Did SAL break the
contract of carriage?RULING:Yes, when an airline issues a ticket
to a passenger, confirmed for a particularflight on a certain date,
a contract of carriage arises. The passenger has everyright to
expect that he be transported on that flight and on that date. If he
does
Transportation Law Case
not, then the carrier opens itself to a suit for a breach of contract
of carriage. Acontract of carriage requires common carriers to
transport passengers safely ashuman care and foresight can
provide (Art. 1755, NCC). In an action for brechof a contract of
carriage, the aggrieved party does not have to prove that
thecommon carrier was at fault or was negligent. All that is
necessary is to provethe existence of the contract and the fact of
male employee at the counter marked “Immediate Attention to
Passengers withImmediate Booking” was rude to her.
Petition is denied. CA decision affirmed.
Arada v. CAFacts: Alejandro Arada doing business under
the name and style South Negros Enterprises is engaged in
the business of small scale shipping as a common carrier,
servicing the hauling of cargoes of different corporationsand
companies with 5 vessels it was operating. It entered into a
contract with San Miguel Corporation totransport as a common
carrier cargoes of the latter from San Carlos City Negros
Occidental to Mandaue Cityusing one of its vessels M/L Maya.
The cargoes of San Mig Corp valued at 176, 824. 80.The master
crew applied for clearance to sail which was denied by the Phil
Coast Guard due to a typhoon.However, the next day, it was
granted clearance as there was no storm and the sea was calm.
So, ML Maya leftfor Mandaue City. While it was navigating
towards Cebu, a typhoon developed and said vessel sank
withwhatever was left if its cargoes. The crew was rescued. The
Board of Marine Inquiry exonerated Arada and hiscrew from
administrative liability.Meanwhile, San Miguel Corporation filed
with the RTC for the recovery of the value of its cargoes anchored
on breach of contract of carriage.The RTC rendered its decision
dismissing the claim of San Miguel for recovery of the value of its
cargoes. Onappeal, the CA reversed the decision of the
RTC.Hence, this petition.Issue: WON Arada is liable for the loss
of the cargo of San Miguel Corporation.Held: Yes. South Negros
Enterprises was exercising its function as a common carrier when
it entered into acontract with San Miguel Corp to carry and
transport the latter’s cargoes. A common carrier both from
thenature of its business and for insistent reasons of public policy
is burdened by law with the duty of exercisingextraordinary
diligence not only in ensuring the safety of passengers, but in
caring for the goods transported byit. The loss, or deterioration or
destruction of goods turned over to the common carrier for
the conveyance to adesignated destination raises instantly a
presumption of fault or negligence on the part of the carrier,
save onlyin cases where such loss, destruction or deterioration
arises from extreme circumstances such as a naturaldisaster or
calamity.In order that a common carrier may be exempted from
responsibility, the natural disaster must have been the proximate
cause of the loss. However, the common carrier must exercise
due diligence to prevent or minimizethe loss before, during and
after the occurrence of the flood, storm or other natural disaster
in order that thecommon carrier may be exempted from liability
from the destruction or deterioration of the goods.In the case at
bar, Southern Negros failed to observe extraordinary diligence
over the cargo in question wasnegligent previous to the sinking
of the carrying vessel. The master crew knew that there was a
typhoon coming before his departure but did not check where it
was. He should have verified first where the typhoon was
beforedeparting. The master crew did not ascertain where the
typhoon was headed by the use of his vessel’s barometer and
radio. Neither did the captain of the vessel monitor and record the
weather conditions as required under Art.612 of the Code of
Commerce.A common carrier is obliged to
observed extraordinary diligence and the failure of the master
crew to ascertainthe direction of the storm and the weather
condition of the path they would be traversing, constitute lack
of foresight and minimum vigilance over its cargoes taking
into account the surrounding circumstances of the case.
Gatchalian vs Delim Case Digest
Gatchalian v Delim and Court of Appeals
203 SCRA 126
Facts: Gatchalian boarded the respondent’s “Thames” minibus
at San Eugenio, Aringay, La Union bound of the same province.
On the way, a snapping sound was suddenly heard at one part of
the bus and shortly thereafter, the vehicle bumped a cement
flower pot on the side of the road, went off the road and fell into
a ditch. Several passengers including the petitioner was injured.
They were taken into an hospital for treatment. While there,
private respondent’s wife Adela Delim visited and paid for the
expenses, hospitalization and transportation fees. However,
before she left, she had the injured passengers including the
petitioner sign an already prepared Joint Affidavit constituting a
waiver of any future complaint. However, notwithstanding this
document, petitioner filed an action Ex Contractu to recover
compensatory and Actual Damages. Private respondent denied
liability on the ground that it was an accident and the Joint which
constitutes as a waiver. The trial court dismissed the complaint
based on the waiver and the CA affirmed.
Issue: Whether or not the private respondent has successfully
proved that he exercised extraordinary diligence.

Held: The court held that they failed to prove extraordinary
diligence. After a snapping sound was suddenly heard at one part
of the bus, the driver didn’t even bother to stop and look f anything
had gone wrong with the bus. With regard to the waiver, it must
to be valid and effective, couched in clear and unequivocal terms
which leave no doubt as to the intention of the person to give up
a right or benefit which legally pertains to him. In this case, such
waiver is not clear and unequivocal. When petitioner signed the
waiver, she was reeling from the effects of the accident and while
reading the paper, she experienced dizziness but upon seeing
other passengers sign the document, she too signed which
bothering to read to its entirety. There appears substantial doubt
whether the petitioner fully understood the joint affidavit.
Gacal vs. Philippine Airlines
(183 SCRA 189, G.R. No. 55300 March 16, 1990)
Facts: Plaintiffs Franklin Gacal, his wife and three others were
passengers of PAL plane at Davao Airport for a flight to Manila,
not knowing that the flight, were Commander Zapata with other
members of Moro National Liberation Front. They were armed
with grenades and pistols. After take off, the members of MNLF
announced a hijacking and directed the pilot to fly directly to
Libya, later to Sabah. They were, however, forced to land in
Zamboanga airport for refueling, because the plane did not have
enough fuel to make direct flight to Sabah. When the plane began
to taxi at the runaway of Zamboanga airport, it was met by two
armored cars of the military.
An armored car subsequently bumped the stairs leading inside
the plane. That commenced the battle between the military and
the hijackers, which led ultimately to the liberation of the plane’s
surviving crew and passengers with the final score of ten
passengers and three hijackers dead.
Issue: Whether or not hijacking is a case fortuito or force
majeure, which would exempt an aircraft from liability for,
damages to its passengers and personal belongings that were
lost during the incident?
Held: In order to constitute a caso fortuito that would exempt from
liability under Art 1174 of the civil code, it is necessary that the
following elements must occur: (a) the cause of the breach of
obligation must be independent of human will; (b) the event must
be unforeseeable or unavoidable; (c) the event must be such as
to render it impossible for the debtor to fulfill his obligation in a
normal manner; (d) the debtor must be free from any participation
in or aggravation of the injury to the creditor.
Applying the above guidelines, the failure to transport the
petitioners safely from Davao to Manila was due to the skyjacking
incident staged buy the MNLF without connection to the private
respondent, hence, independent of will of PAL or its passengers.
The events rendered it impossible for PAL to perform its
obligation in a normal manner and it cannot be faulted for
negligence on the duty performed by the military. The existence
of force majeure has been established thus exempting PAL from
payment of damages.

Bachelor Express vs. CAG.R. No. 85691, July 31, 1990FACTS:A
bus owned by Bachelor express and driven by Cresencio Rivera
was thesitus of a stampeded which resulted in the death of
passengers Ornominio Beterand Narcisa Rautraut. A passenger
at the rear portion suddenly stabbed a PC soldier which
causedcommotion and panic among the passengers. When the
bus stopped, the two saidpassengers were found lying on the
road and dead because of head injuries. Thepassenger-assailant
ran alighted the bus and ran towards the bushes but was killedby
the police. The heirs of the deceased filed a complaint for “a sum
of money”against Bachelor Express, the owner, and the driver
Rivera. RTC dismissed complaint and later on reversed and
found Bachelor Express, its owner and the driver solidarily liable.
Bachelor Express, Inc. denies liability for the death of Beter and
Rautraut on its posture that the death of the said passengers was
caused by a third person who was beyond its control and
supervision; that the accident resulting in the death of
the two passengers was caused by force majeure over which the
CC did not have any control. (1174) ISSUE:Whether or not
Bachelor Express is liable. RULING:The liability is anchored on
culpa contractual. Bachelor Express, being a CC, is presumed to
have acted negligently unless itcan prove that it had observed
extraordinary diligence in accordance with Art. 1733and 1755. A
caso fortuito presents the following essential characteristics: (1)
The causeof the unforeseen and unexpected occurrence, or of
the failure of the debtor tocomply with his obligation, must be
independent of the human will. (2) It must beimpossible to foresee
the event which constitutes the caso fortuito, or if it can
beforeseen, it must be impossible to avoid. (3) The occurrence
must be such as torender it impossible for the debtor to fulfill his
obligation in a normal manner. And(4) the obligor (debtor) must
be free from any participation in the aggravation of theinjury
resulting to the creditor.The running amuck of the passenger was
the proximate cause of the incident as it triggered off a commotion
an panic among the passengers such that the passengers started
running to the sole exit shoving each other resulting in the falling
off the bus by passengers Beter and Rautraut causing them fatal
injuries. Thesudden act o the passenger who stabbed another
passenger in the bus is within the context of force
majeure.However, in order that a common carrier may be
absolved from liability in case of force majeure, it is not enough
that the accident was caused by force majeure. The common
carrier must still prove that it was not negligent I causing
theinjuries resulting from such accident.The CC was negligent in
the provision of safety precautions so that its passengers may be
transported safely to their destinations. The door was not locked
as to prevent the passengers from alighting. The conductor
opened the door when the passengers started shouting. The door
was forced open by the onrushing passengers. The speed of the
bus was not slow, 30/40. Appeals the bus driver did not
immediately stop the bus at the height of the commotion; the bus
was speeding from a full stop; the victims fell from the bus
doorwhen it was opened or gave way while the bus was still
running; the conductor
panicked and blew his whistle after people had already fallen off
the bus; and the bus was not properly equipped with doors in
accordance with lawit is clear that the petitioners have failed to
overcome the presumption of fault and negligence found in the
law governing common carriers.
Aboitiz shipping vs. General Accident Fire and Life
(GR No. 100446 January 21, 1993)
Facts: Petitioner is a corporation engaged in the business of maritime trade
as a carrier. As such, it owned and operated the M/V P/ ABOITIZ, a common
carrier that sank on voyage from Hong Kong to Manila. Private respondent
GAFLAC is a foreign insurance company pursuing its remedy as a subrogee
of several cargo consignees whose respective cargo sank with the said
vessel and for which it has priory paid. The sinking of vessel gave rise to
filling of suit to recover the lost cargo either by shippers, their successors-in-
interest, or the cargo insurers like GAFLAC as subrogees. The sinking was
initially investigated by the Board of Marine Inquiry, which found that such
sinking was due to fortuitous event.

Issue: Whether or not the doctrine of limited liability is applicable to the

case?

Held: The real an hypothecary nature of maritime law simple means that
the liability of the carrier in connection with losses related to maritime
contracts is confined to the vessel, which is hypothecated for such
obligations or which stands as the guaranty for their settlement. It has its
origin by reason of the conditions and risks attending maritime trade in its
earliest years when such trade was replete with innumerable and unknown
hazards since vessels had to go through largely uncharted waters to ply their
trade. Thus, the liability of the vessel owner and agent arising form the
operation of such vessel were confined to the vessel itself, its equipment,
freight and insurance, if any, which limitation served to induce capitalist into
effectively wagering their resources against consideration of the large
attainable in the trade.