TRANSPORTATION LAW

AEJAY V. BARIAS
PCU-COLLEGE OF LAW
CHAPTER I
PRELIMINARY CONSIDERATION
TRANSPORTATION LAWS IN THE PHILIPPINES
Transportation Laws in the Philippines whether by land, sea or air
are generally governed by the Civil Code (Art. 1732-1766) thus, it
declares:

“In all matters not regulated by this Code, the rights

and obligations of common carriers shall be governed by the
Code of Commerce and by special laws.”
 In the absence, therefore, of any
provisions of the New Civil Code on the
rights and obligations of common carriers,
the Code of Commerce and other Special
laws such as Carriage of Goods by Sea Act,
Salvage Law, and other special law insofar as
pertinent may be applied.
TRANSPORTATION LAWS AND THE CONSTITUTIONS

It is time honored that the Constitution is the Supreme

Law of the Land. It is the law of all laws. If there is
conflict between a statute and the Constitution, the
statute shall yield to the Constitution.
The 1987 Philippine Constitution provides, some
restrictions or limitations in the issuance of franchise to
public utilities, which includes transportation industries.
(Art. XII, Sec 11, 16,17,18, & 19 and Art. XVI, Sec.11)
 MAY A 100% FOREIGN
CORPORATION
OWN A PUBLIC UTILITY?
MAY YES.
A 100% FOREIGN CORPORATION OWN A PUBLIC
While franchise is needed to operate a facilities to serve the public, they do not, by
UTILITY?
themselves, constitute a public utility. What constitute a public utility is not their
ownership but their use to serve the public. ( Iloilo Ice & Cold Storage Co. vs. Public service
Board)
The Constitution, in no uncertain terms, requires a franchise for the operation of a
public utility. However, it does not require a franchise before one can own the facilities
needed to operate the public utility so long as it does note operate them to serve the public.
The right to operate a public utility may exist independently and separate from the
ownership of the facilities thereof. One can own said facilities without operating them as
public utility, or conversely, one my operate a public utility without owning the facilities
used to serve the public.
Indeed, a mere owner and lessor of the facilities used by a public utility is NOT A
PUBLIC UTILITY. Neither are owners of tanks, refrigerator, wine, poultry and beer
cars who supply cars under contract to railroad companies considered as public
utilities.
MAY A 100% FOREIGN CORPORATION OWN A PUBLIC
UTILITY?
Even the mere formation of a public utility
corporation does not ipso facto characterize the
corporation as one operating a public utility.
The moment for determining the requisite
Filipino Nationality is when the entity applies
for a franchise, certificate or any other form of
authorization for that purpose.
MAY A 100% FOREIGN CORPORATION OWN A PUBLIC
UTILITY?
“The President, the Congress, and the Court
cannot create directly franchise that are
exclusive in character. What the President,
Congress and the Courts cannot legally do
directly, they cannot do indirectly”
TAWANG MULTI-PURPOSE COOP. VS LA TRINIDAD WATER
DISTRICT (GR. NO. 166471, MARCH 22, 2011)
FACTS: Tawang Multi-Purpose Cooperative (TMPC) is a cooperative, registered with the Cooperative
Development Authority, and organized to provide domestic water services in Barangay Tawang, La
Trinidad, Benguet. La Trinidad water District (LTWD) is a loal water utility created under P.D. No.
198 as amended. TMPC filed with the National Water Resources Board (NWRB) an application for a
Certificate of Public Convenience (CPC) to operate and maintain the waterworks system in Barangay
Tawang. LTWD opposed TMPC’s application. LTWD claimed that under Section 47 of P.D. No. 198, as
amended, its franchise is exclusive under Section 47.
In its resolution, the NWRB approved TMPC’s application for a CPC. In its August 15, 2002
decision, the NWRB held that LTWD’s franchise cannot be exclusive since exclusive franchise are
unconstitutional and found that TMPC is legally and financially qualified to operate and maintained
waterworks system.
LTWD filed a motion for reconsideration. NWRB denied the motion.
LTWD appealed to the RTC. RTC set aside the NWRB’s Resolution and August 15, 2002 decision,
and cancelled the TMPC’s CPC. RTC held that Sec. 47 of P.D. 198 is valid.
TAWANG MULTI-PURPOSE COOP. VS LA TRINIDAD WATER DISTRICT
(GR. NO. 166471, MARCH 22, 2011)

ISSUE: WON the RTC erred in holding that Section 47 of P.D. 198 is valid.

HELD: Yes. The President, the Congress, and the Court cannot create directly franchise that are exclusive in character.
Sec. 8, Art XIII of the 1987 Constitution states that: “No franchise, certificate, or any other form of authorization for
operation of a public utility shall be granted except to citizens of the Philippines or to Corporations or other entities
organized under the laws of the Philippines, sixty per centum of capital of the capital which is owned by citizens of the
Philippines, nor shall such franchise, certificate or authorization be exclusive in character or for longer period than
fifty years.”
Sec. 5, Art. XIV of the 1973 Constitution and Sec. 11, Art. XII of the 1987 Constitution provides the same prohibition.
Sec. 47 of P.D. 198 gives the BOD and LWUA the authority to make an exception to the absolute prohibition of the
Constitution. In short, the BOD and the LWUA are given the discretion to create franchises that are exclusive in character.
The BOD and the LWUA is not a regulatory body but simply a management board of a water district. Indeed, neither the
BOD nor the LWUA can be granted the power to create any exception to the absolute prohibition of the
Constitution, the power that the Congress it self cannot exercise.
Therefore, Section 47 of P.D. 198 as amended is hereby declared unconstitutional and may not be relied upon by the
LWUA in support of its opposition against TMPC’s application for CPC and the subsequent grant thereof by the NWRB.
ARTICLE 1732 (NEW CIVIL CODE)

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.
ARTICLE 1732
The article (NEW
makes CIVIL CODE)
no distinction between one whose principal
business activity is 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 it 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.
ARTICLE 1732 (NEW CIVIL CODE)
A certificate of public convenience is not a requisite for the
incurring of liability under the Civil Code provisions governing
the common carriers. That liability arises the moment a
person or firm acts as a common carriers, 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 franchise.
ARTICLE 1732someone
To exempt (NEWfrom
CIVIL CODE)
liability 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 a person precisely for failing to comply
with applicable statutory requirements... 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 permit and authorizations.
ELEMENTS OF A COMMON CARRIER
 Any persons, corporations, firms or associations;
 Such persons, corporations, firms or associations must be engaged in
the business of carrying or transporting passengers or goods or both;
 The means of carriage or transporting passengers, goods or both is
by land, water or air;
 The carrying or transporting of passengers or goods or both is for a
fee or compensation; and
 The services is offered to the public without distinction.
COMMON CARRIERS DISTINGUISHED FROM PRIVATE CARRIERS

Common / Public Carriers Private / Special Carriers

 For reasons of public policy, a common carrier in a  Private carriers is not bound under the law to
contract of carriage is bound by law to carry observe extraordinary diligence in the performance
passengers as far as human care and foresight can of its obligation.
provide using the UTMOST DILIGENT OF VERY  The standard of care required is that of a GOOD
CAUTIOUS PERSONS and with due regard for all the
FATHER OF A FAMILY under At. 1173 of NCC.
circumstances.
 Undertaking is an isolated transaction, not part of the
 persons, corporations, firms or associations engaged
business or occupation and the carrier does not hold
in the business of carrying or transporting
itself out to carry the goods for the general public or
passengers or goods or both, by land, water, or, air,
for compensation, offering their services to the public
to a limited clientele, although involving the carriage
of goods for a fee.
TEST FOR DETERMINING WHETHER A PARTY IS A COMMON
CARRIER OF GOODS
FACTS: Petitioner is a grantee of a pipeline concession
under Republic Act No. 387. Sometime in January 1995,
FIRST PHILIPPINE petitioner applied for mayor’s permit in Batangas.
However, the Treasurer required petitioner to pay a local
INDUSTRIAL CORPORATION 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
VS P239,019.01 under protest. On January 20, 1994,
petitioner filed a letter-protest to the City Treasurer,
COURT OF APPEALS 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.
(G.R. No. 125948, DECEMBER 29, 1998) 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.
VLASONS SHIPPING, INC VS COURT OF APPEALS
(G.R. NO. L-112350, DECEMBER 12,1997)

FACTS: National Steel Corporation (NSC) as Charterer and defendant Vlasons Shipping, Inc. (VSI) as Owner, entered into a
Contract of Voyage Charter Hire (Affreightment) whereby NSC hired VSI’s vessel, the MV ‘VLASONS I’ to make one (1) voyage to
load steel products at Iligan City and discharge them at North Harbor, Manila. VSI carried passengers or goods only for those it
chose under a “special contract of charter party.”

The vessel arrived with the cargo in Manila, but when the vessel’s three (3) hatches containing the shipment were opened,
nearly all the skids of tin plates and hot rolled sheets were allegedly found to be wet and rusty.

NSC filed its complaint against defendant before the CFI wherein it claimed that it sustained losses 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 … -- all in violation of defendant’s undertaking under their Contract of Voyage
Charter Hire.”

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 plaintiff’s 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.

The trial court ruled in favor of VSI; it was affirmed by the CA on appeal.
ISSUE: Whether or not Vlazons is a private carrier.

HELD: Yes. 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
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, 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.”
 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 correctly concluded by the Court of Appeals, the MV
Vlasons I “was not a common but a private carrier.” Consequently, the rights 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, in
Valenzuela Hardwood and Industrial Supply, Inc., vs. Court of Appeals and Seven Brothers
Shipping Corporation, the Court ruled:

“ x x x [I]n 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.”
 
 In a contract of private carrier, the parties
may freely stipulate their duties and
obligations which perforce be binding on them.
Unlike in a contract involving common carrier,
private carriage does not involve the general
public.
 
VALENZUELA HARDWOOD AND INDUSTRIAL SUPPLY INC. VS
CA & SEVEN BROTHERS SHIPPING CORPORATION
(G.R. NO. 102316 JUNE 30,1997)

FACTS: Valenzuela Hardwood entered into an agreement with Seven Brothers whereby the latter
undertook to load on board its vessel the former’s 940 lauan round logs at the port of Maconacon,
Isabela for shipment to Manila. The charter party between Valenzuela Hardwood and Seven
Brothers stipulated that the owners shall not be responsible for loss, split, short-landing, breakages
and any kind of damages to the cargo. Valenzuela Hardwood insured the logs against loss and/or
damage with South Sea Surety and Insurance Co., Inc. The vessel sank resulting in the loss of the
insured logs. A check to cover payment of the premium and documentary stamps due on the
insurance policy procured by Valenzuela Hardwood was tendered to the insurer but was not
accepted; South Sea Surety cancelled the insurance policy it issued as of the date of the inception for
non-payment of the premium due in accordance with Section 77 of the Insurance Code. Valenzuela
Hardwood demanded from defendant South Sea Surety the payment of the proceeds of the policy
but the latter denied liability under the policy; it also filed a formal claim with Seven Brothers for
the value of the lost logs but the latter denied the claim.
ISSUES:
1. WON a stipulation in a charter party that the owners shall not be responsible for loss, split, short-
landing, breakages and any kind of damages to the cargo is valid.

2. WON the charter party stipulation is contrary to Arts. 586 and 587 of the Code of Commerce which
confer on petitioner the right to recover damages from the ship-owner and ship agent for the acts
or conduct of the captain

3. WON the charter party stipulation is void for being contrary to Arts. 1170 and 1173

4. What is the effect of the South Sea Resolution wherein the SC affirmed the liability of South Sea for
the loss suffered by Valenzuela Hardwood with respect to the latter’s action for damages against
Seven Brothers?
HELD:
1. Yes. Seven Brothers had acted as a private carrier in transporting petitioner’s
lauan logs. Thus, Article 1745 and other Civil Code provisions on common
carriers may not be applied unless expressly stipulated by the parties in their
charter party. The proximate cause of the sinking of the vessel resulting in the
loss of its cargo was the snapping of the iron chains and the subsequent
rolling of the logs to the portside due to the negligence of the captain in
stowing and securing the logs on board the vessel and not due to fortuitous
event. Contract of private carriage – 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 Art. 1306, the assailed 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.
2. No. Whatever rights Valenzuela Hardwood may have under the
aforementioned statutory provisions were waived when it entered into the
charter party.

3. No. These articles are applicable only to the obligor or the one with an
obligation to perform. In this case, Seven Brothers is not an obligor in respect
of the cargo, for this obligation to bear the loss was shifted to petitioner by
virtue of the charter party.

4. The Resolution SC affirming the liability of South Sea does not, by itself,
necessarily preclude the petitioner from proceeding against private
respondent. Pursuant to Art. 2207, an aggrieved party may still recover the
deficiency for the person causing the loss in the event the amount paid by the
insurance company does not fully cover the loss.
 A customs broker, whose principal
business is the preparation of the correct
customs declaration and proper shipping
documents, is still considered a common
carrier if it also undertakes to deliver the
goods for its customers.
TORRES-MADRID BROKERAGE VS FEB MITSUI MARINE INSURANCE
CO. (G.R. NO. 194121, JULY 1, 2016)

FACTS:
Sony had engaged Torres-Madrid Brokerage Inc (TMBI) in facilitating, processing, withdrawing and
delivering the shipment of various electronic goods (from Thailand and Malaysia) from the port of
Manila to its warehouse in Binan, Laguna. TMBI subcontracted BMT Trucking services since it
did not own any delivery truck which Sony did not object to the arrangement.
4 trucks left BMT’s garage but only 3 arrived at the warehouse. One truck was found abandoned.
Both the driver and the shipment were missing. TMBI filed a complaint for “hijacking”. Sony filed an
insurance claim with the Mitsui, the insurer of the goods. After being subrogated to Sony’s rights,
Mitsui sent a demand letter to TMBI for payment of the lost goods. TMBI impleaded BMT as it was
due to BMT’s negligence as the proximate cause of the loss. Also, it added that in the event it is
held liable to Mitsui for the loss, it should be reimbursed by BMT.
RTC and CA-
found TMBI and BMT jointly and solidary liable to pay Mitsui. ARGUMENTS OF TMBI-
Denies being a common carrier because it did not own a single truck and the service
that it offered was limited to the processing of paperwork and blames BMT as it had
the full control and custody of the cargo when it was lost. And BMT being a common
carrier is presumed negligent and shall be responsible for the loss. 

ARGUMENTS OF BMT
That it observed the required standard of care and hijacking was a fortuitous event. 

ARGUMENTS OF MITSUI:
The incident cannot be considered force majeure; that TMBI is a common carrier and
its brokerage service includes the eventual delivery of the cargo to the consignee.
ISSUE: Whether or not TMBI and BMT are solidarily liable

RULING: BROKERAGE MAY BE CONSIDERED COMMON CARRIER Common carriers are persons, corporations,
firms or associations engaged in the business of transporting passengers or goods or both, by land, water, or air,
for compensation, offering their services to the public. They are bound to observe extraordinary diligence in
the vigilance over the goods and in the safety of their passengers. For all other cases- such as theft or robbery- a
common carrier is presumed to have been at fault or to have acted negligently, unless it can prove that it
observed extraordinary diligence. Simply put theft or robbery is not considered fortuitous event. A common
carrier to be absolved of its liability for a resulting loss:
1. If it proves that it exercised extraordinary diligence in transporting and safekeeping the goods;
2. f it stipulated with the shipper or owner of the goods to limit its liability for the loss, destruction or
deterioration of the goods to a degree less than extraordinary diligence.
However, a robbery attended by “grave or irresistible force” is a fortuitous event that absolves the common
carrier from liability. TMBI failed to successfully establish that it had acted with extraordinary diligence
and TMBI’s current theory that hijacking was attended by force is untenable. TMBI AND BMT ARE NOT
SOLIDARILY LIABLE TO MITSUI
Article 2194. The responsibility of two or more persons who are liable for quasi delict is solidary.
 However, TMBI and BMT cannot be solidarily liable as TMBI’s liability did not stem from a
quasi-delict but from its breach of contract or culpa contractual while Mitsui’s action against BMT
could only rise from quasi-delict or culpa aquiliana. THIRD PARTY MAY RECOVER FROM ACOMMON
CARRIER FOR QUASI-DELICTBUT MUST PROVE ACTUAL NEGLIGENCE Since there is no direct
contractual relationship existed between Sony/Mitsui and BMT, the former’s cause of action against
the latter could arise only from quasi-delict, a third party suffering damage from the action of
another due to the latter’s fault or negligence. In culpa contractual, the plaintiff only needs to
establish the existence of the contract and its failure to perform the obligation and it can only free
from liability by proving that observed extraordinary diligence. In culpa aquiliana, the plaintiff
must establish the defendant’s fault or negligence because this is the very basis of the action. The
defendant may absolve by proving that he observed the diligence of a good father of a family to
prevent the damage. In this case, Mitsui did not sue BMT, much less prove any negligence on its part.
If BMT has entered the picture at all, it is because TMBI sued it for reimbursement for the liability
that TMBI might incur from its contract of carriage. Accordingly, no basis to hold BMT liable to
Mitsui. So, TMBI is liable to Mitsui. In turn, TMBI is entitled to reimbursement from BMT due to the
latter’s own breach of contract with TMBI.
ARTICLE 1732 (NEW CIVIL CODE)
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.
Such extraordinary diligence in the vigilance over the goods
is further expressed in Articles 1734, 1735, and 1745, Nos. 5, 6,
and 7, while the extraordinary diligence for the safety of the
passengers is further set forth in Articles 1755 and 1756.
 The law itself (Art. 1733) provides what kind of
diligence is required of common carriers. To over come
the presumption of negligence in the case of loss,
destruction of the goods, the common carrier must
prove that it exercised extraordinary diligence.
 The extraordinary diligence in the vigilance over the
goods tendered for shipping requires the common carrier
to know and to follow the required precaution for avoiding
damage to, or destruction of the goods entrusted to it for
sale, carriage and delivery. It requires common carriers to
render services 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.”
 As a rule, the diligence required of every
obligor is ordinary diligence of a good father of a
family. However, the requirement of proper
diligence may be controlled by law or stipulation
of the parties., thus, the extraordinary diligence
required of common carriers may be limited by
the parties themselves as Articles 1744 and 1748
provide
 Non-ownership of the vessel or vehicle
use by the carrier does not render
ineffective observance of extraordinary
diligence in the vigilance over the goods
and for the safety of passengers transported
by the carrier.
 For a vessel to be seaworthy,
it must be adequately equipped
for the voyage and manned with
sufficient number of competent
officers and crew.
LOADSTAR SHIPPING CO.,INC. VS CA
(G.R. NO. 131621, SEPTEMBER 28, 1999)

FACTS: LOADSTAR received on board its M/V “Cherokee” goods for shipment from Manilato Nasipit,
Agusan del Norte. However, the vessel, along with its cargo, sank of Limasawa Island resulting to the
total loss of its shipment. The consignee made a claim with LOADSTAR however, the latter ignored
the same, denying liability for the loss of the shipper’s goods and that the sinking of its vessel was
due to force majeure. LOADSTAR submits that the vessel was a private carrier because it was not
issued a certificate of public convenience, it did not have a regular trip or schedule nor a fixed route,
and there was only “one shipper, one consignee for a special cargo.” MIC, insurer of said cargo,
argues that while it is true that the vessel had on board only the cargo of wood products for delivery
to one consignee, it was also carrying passengers as part of its regular business. Moreover, the bills
of lading in this case made no mention of any charter party but only a statement that the vessel was
a “general cargo”. Neither was there any “special arrangement” between LOADSTAR and the shipper
regarding the shipment of the cargo. The singular fact that was carrying a particular type of cargo
for one shipper is not sufficient to convert the vessel into a private carrier.
ISSUE: Whether Loadstar observed due and/or ordinary diligence in the
premises.
HELD: M/V “Cherokee” was not seaworthy when it embarked on its voyage on
Nov. 19, 1984. The vessel as not even sufficiently manned at the time. For a
vessel to be seaworthy, it must be adequately equipped for the voyage and
manned with sufficient number of competent officers and crew. The failure of the
common carrier to maintain in seaworthy its vessel involved in the contract of
carriage is a clear breach of its duty prescribed in Art. 1755 of the NCC.
Neither do the court agrees with the Loadstar’s argument the limited liability
theory should be applied in this case. The doctrine of limited liability does not
apply where there was a negligence on the part of the vessel owner or agent.
LOADSTAR was at fault or negligent in not maintaining a seaworthy vessel and in
having allowed its vessel to sail despite knowledge of a approaching typhoon.
Since it as remiss in the performance of its duties, LOADSTAR cannot hide behind
the “limited Liability” dotrine to escape responsibility for the loss of the vessel
and its cargo.
 Common carrier presumed at fault
or acted negligently in cases other
than those mentioned in Art. 1734.
Fire not considered a natural
disaster or calamity.
(Eastern shipping lines, Inc. VS The Nisshin Fire and Maritime Insurance)
FAULT OR NEGLIGENCE ; PROXIMATE CAUSE DEFINED

Fault or negligence consists in the omission of that diligence which

is demanded by the nature of an obligation and corresponds with the
circumstances of the person, of the time, and of the place. When the
source of obligation is derived from a contact the mere breach or non-
fulfilment of the prestation gives rise to the presumption of fault on the
part of the obligor. This rule is no different in the case of common
carriers in the carriage of goods which, indeed are bound to observe
not just the due diligence of a good father of the family but that of
“extraordinary” care in the vigilance over the goods.
 Under the domestic law and jurisprudence, the
attendance of gross negligence (given the equivalent of
fraud or bad faith) holds the common carrier liable for
all damages which can be reasonably attributed,
although unforeseen, to the non-performance of the
obligation, including moral and exemplary damages.
(Sabena Belgian World Airlines VS Court of Appeals and Ma. Paula San Agustin, G.R. No. 104685, March 14, 1996)
CHAPTER II
VIGILANCE OVER THE GOODS
ARTICLE 1734

Common carriers are responsible for the loss, destruction, or deterioration

of the goods, unless the same is due to any of the following cases 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 good or defects in the packaging or in the containers;
5) Order or act of competent public authority.
 It is important to point out that the list of causes of
loss, destruction or deterioration which exempts the
common carrier for responsibility therefore, is a closed
list. Causes falling outside the foregoing list even if they
appear to constitute a specie of force majeure, fall within
the scope of Art. 1735. In other words, if the goods are
lost, destroyed or deteriorated by causes other than
those mentioned in Art. 1734, the common carrier must
present clear and convincing evidence that they are not
negligent.
 The general rule for fortuitous events provides
that except in cases provided by law, or when it is
otherwise declared by stipulation or when the
nature of the obligation requires the assumption of
risk, no person shall be responsible for those
events which could not be foreseen, or which
though foreseen, were inevitable. (Art. 1174)
 In order that an obligor may be exempted from a breach of an
obligation due to caso fortuito or an act o God, the following requisites
must occur:
 The cause of the breach of the obligation must be independent of the
will of the debtor;
 The event must be unforeseen or unavoidable;
 The event must be such as to renderit impossible for the debtor to fulfil
his obligation in a normal manner ; and
 The debtor must be free from any participation in, or aggravation of
the injury to the creditor.
 Broadly speaking, force majeure generally apples to a natural
accident, such as that caused by a lightning, an earthquake, a tempest or
a public enemy. Hence, Fire is not considered a natural disaster or
calamity.

This must be so as it arises almost invariably from some act of man

or by human means. It does not fall within the category of an act of God
unless caused by lightning or by other natural disaster or calamity. It may
even be caused by the actual fault or privity of the carrier.
(Edgar Cokaliong Shipping Lines, Inc. vs UCPB General Insurance Company, Inc.)
ARTICLE 1735

In all cases other than those mentioned in Nos.

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 required in Article 1733.
 The law provides that a common carrier is
presumed to have been negligent if it fails to prove hat it
exercised extraordinary vigilance over the goods it
transported. Ensuring the seaworthiness of the vessel is
the first step in exercising the required vigilance.
(Edgar Cokaliong Shipping Lines, Inc. vs UCPB General Insurance Company,
Inc.)
 Mere proof of delivery of goods in
good order to carrier and the subsequent
arrival of the same goods at the place of
destination in bad order makes a prima
facie case against the carrier.
( Coastline Lighterage Corporation vs CA and Philippine General Insurance
Company)
 END
)