1. De Guzman vs. CA, GR No.

L-47822, dec 22, 1988

FACTS:

 Ernesto Cendana 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 (2) two six-
wheeler trucks which he owned for the purpose.
 Upon returning to Pangasinan, he would load his vehicle with cargo belonging to different merchants to different
establishments in Pangasisnan which respondents charged a freight fee for.
 Sometime in November 1970, herein petitioner Pedro de Guzman, a merchant and dealer of General Milk Company
Inc. in Pangasinan contracted with respondent for hauling 750 cartons of milk. Unfortunately, only 150 cartons made
it, as the other 600 cartons were intercepted by hijackers along Marcos Highway.
 Hence, petitioners commenced an action against private respondent. In his defense, respondent argued that he
cannot be held liable due to force majuere, and that he is not a common carrier and hence is not required to
exercise extraordinary diligence.
 On appeal before the Court of Appeals, Cendana 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 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 Cendana 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. De Guzman came to the Supreme Court by way of a Petition for Review.

ISSUES:
1. Is respondent a common carrier?
2. Is the respondent liable for the loss of the cartons of milk due to force majeure?

ARGUMENTS:
1. Herein respondent is considered as a common carrier.

Article 1732 of the New Civil Code avoids any 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. It also avoids a distinction between a
person or enterprise offering transportation services on a regular or scheduled basis and one offering such services on an
occasional, episodic, and unscheduled basis.

2. Respondent is not liable for the value of the undelivered merchandise.

Article 1734 of the Civil Code- The general rule is established by the article that common carriers are responsible for the loss,
destruction or deterioration of the goods which they carry, unless the same is due to any of the following causes only:
a. Flood, storm, earthquake, lightning or other natural disasters;
b. Act of the public enemy, whether international or civil;
c. Act or omission of the shipper or owner of the goods;
d. Character of the goods or defects in the packing;
e. Order or act of competent public authority.

Applying the above article, 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,
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.

Article 1745: Any of the following or similar stipulations shall be considered unreasonable, unjust and contrary to public
policy:

xxx xxx xxx

(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 do
not 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."

The decision of the trial court shows that the armed men who held up the second truck owned by private respondent acted
with grave, if not irresistible, threat, violence or force, which is an exception of the general rule of Article 1745 (6).

RULING:
The Petition for Review on certiorari is hereby DENIED and the Decision of the Court of Appeals dated 3 August 1977 is
AFFIRMED.

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.

2. Spouses Perena vs. Spouses Nicolas, GR No. 157917, Aug. 29. 2012

FACTS:

 Spouses Teodoro and Nanette Peres (Peres) were engaged in the business of transporting students from their
respective residences in Paraque City to Don Bosco in Pasong Tamo, Makati City, and back. They employed
Clemente Alfaro (Alfaro) as driver of the van. Spouses Nicolas and Teresita Zarate (Zarates) contracted the Peres
to transport their son Aaron to and from Don Bosco.
 Considering that the students were due at Don Bosco by 7:15 a.m., and that they were already running late
because of the heavy vehicular traffic on the South Superhighway, Alfaro took the van to an alternate route at
about 6:45 a.m. by traversing the narrow path underneath the Magallanes Interchange.
 The railroad crossing in the narrow path had no railroad warning signs, or watchmen, or other responsible
persons manning the crossing. In fact, the bamboo barandilla was up, leaving the railroad crossing open to
traversing motorists.
 At about the time the van was to traverse the railroad crossing, PNR Commuter No. 302 (train), was in the
vicinity of the Magallanes Interchange travelling northbound. As the train neared the railroad crossing, Alfaro
drove the van eastward across the railroad tracks, closely tailing a large passenger bus.
 His view of the oncoming train was blocked because he overtook the passenger bus on its left side. The train
blew its horn to warn motorists of its approach. The passenger bus successfully crossed the railroad tracks, but
the van driven by Alfaro did not. The impact threw nine of the 12 students in the rear, including Aaron, out of
the van. Aaron landed in the path of the train, which dragged his body and severed his head, instantaneously
killing him.
 Thus, the Zarates sued the Peres for breach of contract of carriage and the PNR for quasi-delict. The RTC ruled in
favor of the Zarates. On appeal, the CA affirmed the findings of the RTC.

ISSUE: Whether or not the Peres are liable for breach of contract of carriage?

Ruling: The petition has no merit.

 A common carrier is a 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 such services to the
public. Contracts of common carriage are governed by the provisions on common carriers of the Civil Code, the
Public Service Act, and other special laws relating to transportation.
 A common carrier is required to observe extraordinary diligence, and is presumed to be at fault or to have
acted negligently in case of the loss of the effects of passengers, or the death or injuries to passengers.
 The true test for a common carrier is not the quantity or extent of the business actually transacted, or the
number and character of the conveyances used in the activity, but whether the undertaking is a part of the
activity engaged in by the carrier that he has held out to the general public as his business or occupation.
 Applying these considerations to the case before us, there is no question that the Peres as the operators of a
school bus service were:
 o (a) engaged in transporting passengers generally as a business, not just as a casual occupation;
o (b) undertaking to carry passengers over established roads by the method by which the business was
conducted; and
o (c) transporting students for a fee.
 Despite catering to a limited clientele, the Peres operated as a common carrier because they held themselves
out as a ready transportation indiscriminately to the students of a particular school living within or near where
they operated the service and for a fee.
 Article 1755 of the Civil Code specifies that the common carrier should "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." To successfully fend off liability in an action upon the death or injury to a passenger,
the common carrier must prove his or its observance of that extraordinary diligence; otherwise, the legal
presumption that he or it was at fault or acted negligently would stand.
 According to Article 1759 of the Civil Code, their liability as a common carrier did not cease upon proof that they
exercised all the diligence of a good father of a family in the selection and supervision of their employee.
 The Peres were liable for the death of Aaron despite the fact that their driver might have acted beyond the
scope of his authority or even in violation of the orders of the common carrier. DENIED.

Ratio:

1. The Supreme Court concurred with the CA's findings that the Pereñas, as operators of a school bus service, were
common carriers and thus required to observe extraordinary diligence.

 The Pereñas failed to overturn the presumption of negligence, as their defense of exercising the
diligence of a good father of a family was insufficient.

 Driver Alfaro was found negligent for traversing a non-designated railroad crossing, playing loud music,
and overtaking a bus on the left side, blocking his view of the oncoming train.

 The PNR was also found negligent for failing to install safety devices at the crossing, despite being aware
of the risks.

 Both parties' negligence combined to cause Aaron's death, making them joint tortfeasors.

3. Caltex Phils. Vs. Sulpicio Lines, 315 SCRA 709

In the case of Caltex (Philippines), Inc. v. Sulpicio Lines, Inc., the Supreme Court ruled that Caltex, as the charterer, is not
liable for damages resulting from a collision between the chartered vessel and a passenger ship, emphasizing that the
duty to ensure seaworthiness rests upon the common carrier and shippers of goods are not expected to inquire into the
vessel's seaworthiness and compliance with maritime laws.

Facts:

 On December 19, 1987, MT Vector, owned by Vector Shipping Corporation, departed from Limay, Bataan,
carrying 8,800 barrels of petroleum products owned by Caltex (Philippines), Inc. under a charter contract.

 On December 20, 1987, MV Doña Paz, owned by Sulpicio Lines, Inc., left Tacloban for Manila with 59 crew
members and 1,493 passengers.

 At around 10:30 p.m., the two vessels collided near Dumali Point between Marinduque and Oriental Mindoro.

 The collision resulted in a catastrophic fire and the deaths of nearly all passengers and crew members on both
ships, with only 24 passengers from MV Doña Paz surviving.

 Among the deceased were public school teacher Sebastian Cañezal and his daughter Corazon Cañezal.

 The Board of Marine Inquiry found MT Vector and its operators at fault.

 Teresita Cañezal and Sotera E. Cañezal, the wife and mother of Sebastian Cañezal, filed a complaint for damages
against Sulpicio Lines.
  Sulpicio Lines filed a third-party complaint against Vector Shipping Corporation and Caltex, alleging that Caltex
had chartered an unseaworthy vessel.

 The Regional Trial Court dismissed the third-party complaint against Caltex, but the Court of Appeals held both
Vector Shipping Corporation and Caltex equally liable for the damages.

 Caltex petitioned the Supreme Court to reverse the Court of Appeals' decision.

Issue:

1. Is the charterer of a sea vessel, Caltex, liable for damages resulting from a collision between the chartered
vessel, MT Vector, and a passenger ship, MV Doña Paz?

Ruling:

 The Supreme Court ruled that Caltex, as the charterer, is not liable for the damages resulting from the collision
between MT Vector and MV Doña Paz.

 The Court set aside the decision of the Court of Appeals insofar as it held Caltex liable under the third-party
complaint to reimburse/indemnify Sulpicio Lines.

 The Court affirmed the decision of the Court of Appeals in ordering Sulpicio Lines to pay damages to the heirs of
Sebastian and Corazon Cañezal.

 Vector Shipping Corporation was held liable to reimburse/indemnify Sulpicio Lines for the damages.

Ratio:

 Nature of the Charter Contract: The contract between Caltex and Vector Shipping Corporation was a contract of
affreightment, specifically a voyage charter. The shipowner retains possession and control of the vessel, and the
charterer is free from liability to third parties in respect of the ship. The rights and responsibilities of ownership
rest on the shipowner, not the charterer.

 Common Carrier Status: The voyage charter did not convert MT Vector from a common carrier to a private
carrier. As a common carrier, MT Vector was subject to the obligations and liabilities of common carriers under
Philippine law, including the implied warranty of seaworthiness.

 Implied Warranty of Seaworthiness: Common carriers are deemed to warrant the seaworthiness of their
vessels. Shippers of goods, such as Caltex, are not expected to inquire into the vessel's seaworthiness or
compliance with maritime laws. The duty to ensure seaworthiness rests with the common carrier.

 Negligence and Liability: There was no basis for holding Caltex liable for negligence. Caltex had reasons to
believe that MT Vector was seaworthy and had complied with legal requirements. The Philippine Coast Guard
had allowed MT Vector to sail, indicating its seaworthiness. Caltex had exercised the ordinary diligence expected
of a shipper in shipping its cargo.

 Special Laws Governing Relationships: The relationship between the parties was governed by special maritime
laws, which protect shippers and passengers by placing the burden of ensuring seaworthiness on the common
carrier. Holding shippers liable for the carrier's failure to comply with maritime laws would undermine the
protection intended by these laws.

In summary, the Supreme Court held that Caltex, as a mere voyage charterer, was not liable for the damages resulting
from the collision, as the responsibility for ensuring the vessel's seaworthiness rested with Vector Shipping Corporation,
the owner and operator of MT Vector.

4. Virgenes Calvo vs. UCPB General Ins. Co. , GR No. 148496, March 19, 2002
A common carrier is held liable for damages to insured cargo due to failure to exercise extraordinary diligence in
handling and accepting the cargo.

Facts:

Petitioner Virgines Calvo, operating under Transorient Container Terminal Services, Inc. (TCTSI), a sole proprietorship
customs broker, was contracted by San Miguel Corporation (SMC) to transport 114 reels of semi-chemical fluting paper
and 124 reels of kraft liner board from the Port Area in Manila to SMC's warehouse at the Tabacalera Compound,
Romualdez St., Ermita, Manila. The cargo, insured by UCPB General Insurance Co., Inc., arrived in Manila on July 14,
1990, aboard "M/V Hayakawa Maru" and was unloaded to the custody of Manila Port Services, Inc. From July 23 to July
25, 1990, TCTSI withdrew the cargo and delivered it to SMC's warehouse. Upon inspection on July 25, 1990, Marine
Cargo Surveyors found damage to 15 reels of semi-chemical fluting paper and 3 reels of kraft liner board, amounting to
P93,112.00. SMC collected this amount from UCPB under its insurance contract, and UCPB, as subrogee, sued Calvo in
the Regional Trial Court (RTC) of Makati City, Branch 148. The RTC ruled in favor of UCPB, ordering Calvo to pay
P93,112.00 plus interest, 25% of the amount as attorney's fees, and the cost of the suit. The Court of Appeals (CA)
affirmed this decision, leading to Calvo's petition for review on certiorari to the Supreme Court.

Issue:

1. Is the petitioner, Virgines Calvo, classified as a common carrier or a private/special carrier?

2. Did the petitioner exercise extraordinary diligence in the handling and transportation of the cargo?

3. Is the petitioner liable for the damages to the cargo?

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.

Ruling:

1. The Supreme Court ruled that the petitioner is a common carrier.

2. The Supreme Court found that the petitioner did not exercise extraordinary diligence in handling the cargo.

3. The Supreme Court affirmed the petitioner's liability for the damages to the cargo.

Ratio:

1. Common Carrier Classification: The Supreme Court held that Calvo, as a customs broker and warehouseman, is
a common carrier because the transportation of goods is an integral part of her business. The Court referenced
Article 1732 of the Civil Code, which defines common carriers without distinguishing between those whose
principal business is transportation and those for whom it is ancillary. The Court also cited De Guzman v. Court
of Appeals, emphasizing that offering services to select parties does not exclude one from being a common
carrier.

2. Extraordinary Diligence: The Court explained that common carriers are required to exercise extraordinary
diligence in the vigilance over goods, as per Article 1733 of the Civil Code. This includes using all reasonable
means to ascertain the nature and characteristics of the goods and exercising due care in handling them. The
Court found that Calvo failed to prove such diligence, as the cargo was received in good condition but delivered
damaged, and no evidence was presented to show that the damage occurred outside her custody.

3. Liability for Damages: The Court noted that under Article 1735 of the Civil Code, common carriers are presumed
negligent if goods are lost, destroyed, or deteriorated while in their custody unless they prove otherwise. Calvo's
acceptance of the cargo without exception, despite apparent defects in some container vans, did not exempt
her from liability under Article 1734(4). The Court concluded that Calvo did not meet the burden of proving that
the damage was due to causes exempting her from liability, thus affirming the presumption of negligence.

5. Spouses Cruz vs. Sun Holidays. Inc., GR No. 186312, June 29, 2010.
In the case of Spouses Cruz v. Sun Holidays, Inc., the Supreme Court ruled in favor of the petitioners, holding Sun
Holidays liable for damages due to negligence as a common carrier in allowing a boat to sail despite storm warnings,
resulting in the death of passengers.

Facts:
 Spouses Dante and Leonora Cruz filed a Complaint on January 25, 2001, against Sun Holidays, Inc. with the
Regional Trial Court (RTC) of Pasig City.
 The complaint was for damages due to the death of their son, Ruelito C. Cruz, and his wife on September 11,
2000.
 The couple perished when the boat M/B Coco Beach III capsized en route to Batangas from Puerto Galera,
Oriental Mindoro.
 They were staying at Coco Beach Island Resort, owned by the respondent, under a tour package-contract that
included transportation.
 Miguel C. Matute, a survivor and scuba diving instructor, stated that the boat capsized due to strong winds and
waves shortly after departure.
 Despite wearing life jackets, eight passengers, including Ruelito and his wife, died.
 Ruelito was 28 years old and employed in Saudi Arabia with a monthly salary of $900 at the time of his death.
 Petitioners demanded indemnification of at least P4,000,000, which the respondent denied, claiming the
incident was a fortuitous event and offering P10,000 as commiseration.
 The RTC dismissed the complaint, and the Court of Appeals upheld this decision, ruling that the respondent was
a private carrier and had exercised extraordinary diligence.
 Petitioners then filed a Petition for Review with the Supreme Court.
Issue:
1. Is Sun Holidays, Inc. a common carrier under the law?
2. Did Sun Holidays, Inc. exercise extraordinary diligence in ensuring the safety of its passengers?
3. Was the incident caused by a fortuitous event, absolving Sun Holidays, Inc. of liability?
Ruling:
 Yes, Sun Holidays, Inc. is a common carrier.
 No, Sun Holidays, Inc. did not exercise extraordinary diligence.
 No, the incident was not solely caused by a fortuitous event.
Ratio:
 The Supreme Court ruled that Sun Holidays, Inc. is a common carrier as defined under Article 1732 of the Civil
Code.
 The definition does not distinguish between carriers whose principal business is transportation and those for
whom it is ancillary.
 The ferry services were integral to the resort's operations and available to the public.
 The Court found that the respondent failed to exercise extraordinary diligence by allowing the boat to sail
despite storm warnings from PAGASA.
 The claim of a fortuitous event was rejected because the occurrence of squalls was foreseeable under the
weather conditions.
 The boat had engine trouble before capsizing.
 The Court awarded the petitioners P50,000 for the death of Ruelito, P8,316,000 for the loss of earning capacity,
P100,000 each for moral and exemplary damages, 10% of the total amount as attorney's fees, and the costs of
the suit.
 Interest at 12% per annum was to be applied from the finality of the decision until full payment.

Petitioners maintain the position they took before the trial court, adding that respondent is a common carrier since
by its tour package, the transporting of its guests is an integral part of its resort business. They inform that another
division of the appellate court in fact held respondent liable for damages to the other survivors of the incident.

Upon the other hand, respondent contends that petitioners failed to present evidence to prove that it is a common
carrier; that the Resort’s ferry services for guests cannot be considered as ancillary to its business as no income is
derived therefrom; that it exercised extraordinary diligence as shown by the conditions it had imposed before
allowing M/B Coco Beach III to sail; that the incident was caused by a fortuitous event without any contributory
negligence on its part; and that the other case wherein the appellate court held it liable for damages involved
different plaintiffs, issues and evidence.16

The petition is impressed with merit.

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 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 deliberately refrained from making such distinctions.

Indeed, respondent is a common carrier. Its ferry services are so intertwined with its main business as to be properly
considered ancillary thereto. The constancy of respondent’s ferry services in its resort operations is underscored by
its having its own Coco Beach boats. And the tour packages it offers, which include the ferry services, may be
availed of by anyone who can afford to pay the same. These services are thus available to the public.

That respondent does not charge a separate fee or fare for its ferry services is of no moment. It would be imprudent
to suppose that it provides said services at a loss. The Court is aware of the practice of beach resort operators
offering tour packages to factor the transportation fee in arriving at the tour package price. That guests who opt not
to avail of respondent’s ferry services pay the same amount is likewise inconsequential. These guests may only be
deemed to have overpaid.

Respondent’s 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 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.

6. Planters Product, Inc. Vs. Ca, GR No. 105090, Sept. 15, 1993

Facts:
 Planters Products, Inc. (PPI) purchased 9,329.7069 metric tons of Urea 46% fertilizer from Mitsubishi
International Corporation (MITSUBISHI) of New York, U.S.A.
 The fertilizer was shipped in bulk on June 16, 1974, aboard the cargo vessel M/V "Sun Plum," owned by Kyosei
Kisen Kabushiki Kaisha (KKKK), from Kenai, Alaska, U.S.A., to Poro Point, San Fernando, La Union, Philippines.
 The shipment was evidenced by Bill of Lading No. KP-1.
 A time charter-party was entered into on May 17, 1974, between Mitsubishi as shipper/charterer and KKKK as
shipowner.
 The vessel's holds were inspected and deemed fit for loading the fertilizer.
 The cargo was loaded by stevedores hired by the shipper, and the hatches were sealed and remained closed
throughout the voyage.
 Upon arrival on July 3, 1974, the cargo was unloaded by PPI using dump trucks, and it was discovered that there
was a shortage of 106.726 M/T and contamination of approximately 18 M/T of the fertilizer.
 PPI sent a claim letter to Soriamont Steamship Agencies (SSA), the resident agent of KKKK, for P245,969.31,
which was not responded to.
 Consequently, PPI filed an action for damages.
 The Court of First Instance ruled in favor of PPI, but the Court of Appeals reversed the decision, absolving the
carrier from liability.
 PPI then appealed to the Supreme Court.
Issue:
1. Does a charter-party between a shipowner and a charterer transform a common carrier into a private one,
thereby negating the civil law presumption of negligence in case of loss or damage to its cargo?
2. Was the shipowner able to prove that it exercised the required degree of diligence under the law?
Ruling:
1. No, a charter-party does not transform a common carrier into a private one.
2. Yes, the shipowner was able to prove that it exercised the required degree of diligence.
Ratio:
 The Supreme Court held that a common carrier remains as such even if the vessel is chartered, provided the
charter is limited to the ship only, as in a time-charter or voyage-charter.
 The shipowner retains possession and control of the ship, and the crew remains under the shipowner's employ.
 Therefore, the presumption of negligence under the Civil Code applies to the shipowner.
  The Court found that the shipowner exercised extraordinary diligence in the care of the cargo, as evidenced by
the proper sealing of the hatches and the good condition of the vessel's hull.
 The loss and contamination of the cargo were attributed to the inherent characteristics of the fertilizer and the
conditions during unloading, not to the negligence of the carrier.
 The Court affirmed the decision of the Court of Appeals, dismissing the petition and absolving the carrier from
liability.

7. Trans- Asia Shipping Lines vs. CA, 254 Scra 260

A common carrier is held liable for damages to a passenger due to its failure to ensure safety, as the vessel was
unseaworthy and sailed with only one functioning engine. The passenger is entitled to moral and exemplary damages,
but the award for attorney's fees was set aside.

Facts:
 The petitioner, Trans-Asia Shipping Lines, Inc., was engaged in inter-island shipping.
 The private respondent, Atty. Renato T. Arroyo, purchased a ticket for a voyage from Cebu City to Cagayan de
Oro City on November 12, 1991, aboard the M/V Asia Thailand.
 Upon boarding, Arroyo noticed repair works on the vessel's engine.
 Despite these repairs, the vessel departed at around 11:00 PM with only one functioning engine.
 After an hour, the vessel stopped near Kawit Island due to engine trouble and dropped anchor.
 Some passengers, including Arroyo, requested to return to Cebu City, and the captain complied.
 Upon returning to Cebu City, Arroyo and other passengers disembarked.
 Arroyo then boarded another vessel, M/V Asia Japan, the next day to reach his destination.
 Arroyo filed a complaint for damages against Trans-Asia Shipping Lines, Inc., alleging breach of contract and tort
due to the company's failure to transport him safely and on time.
 The Regional Trial Court (RTC) of Cagayan de Oro City dismissed the complaint, finding no fraud, negligence, bad
faith, or malice on the part of the petitioner.
 Arroyo appealed to the Court of Appeals, which reversed the RTC's decision and awarded moral and exemplary
damages, as well as attorney's fees, to Arroyo.
Issue:
1. Did Trans-Asia Shipping Lines, Inc. act with fraud, negligence, bad faith, or malice in its failure to transport Atty.
Renato T. Arroyo safely and on time?
2. Is Trans-Asia Shipping Lines, Inc. liable for moral and exemplary damages?
3. Is the award of attorney's fees to Atty. Renato T. Arroyo justified?
Ruling:
1. Yes, Trans-Asia Shipping Lines, Inc. acted with bad faith and negligence.
2. Yes, Trans-Asia Shipping Lines, Inc. is liable for moral and exemplary damages.
3. No, the award of attorney's fees to Atty. Renato T. Arroyo is not justified and is set aside.
Ratio:
 The Supreme Court found that Trans-Asia Shipping Lines, Inc. failed to exercise the extraordinary diligence
required of common carriers under Article 1733 and Article 1755 of the Civil Code.
 The vessel was unseaworthy as it departed with only one functioning engine, which subsequently failed, causing
the vessel to stop at sea.
 This constituted a breach of the carrier's duty to ensure the safety of its passengers.
 The Court of Appeals correctly awarded moral and exemplary damages, as the petitioner's actions demonstrated
bad faith and a wanton disregard for passenger safety.
 However, the award for attorney's fees was set aside because it lacked factual and legal basis, and the amount
was not proven as required under Article 2208 of the Civil Code.
 The decision of the Court of Appeals was affirmed with the modification that the award for attorney's fees was
deleted.

Under Article 1733 of the Civil Code, the petitioner was bound to observe extraordinary diligence in ensuring the safety of
the private respondent. That meant that the petitioner was, pursuant to Article 1755 of the said Code, bound to carry the
private respondent safely as far as human care and foresight could provide, using the utmost diligence of very cautious
persons, with due regard for all the circumstances. In this case, we are in full accord with the Court of Appeals that the
petitioner failed to discharge this obligation.

Before commencing the contracted voyage, the petitioner undertook some repairs on the cylinder head of one of the
vessel's engines. But even before it could finish these repairs, it allowed the vessel to leave the port of origin on only one
functioning engine, instead of two. Moreover, even the lone functioning engine was not in perfect condition as sometime
after it had run its course, it conked out. This caused the vessel to stop and remain a drift at sea, thus in order to prevent
the ship from capsizing, it had to drop anchor. Plainly, the vessel was unseaworthy even before the voyage began. 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. 21 The failure of a common carrier to maintain in seaworthy condition its vessel involved in a contract of
carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code.
8. Delsan Transport Lines vs. CA, GR No. 127897, Nov 15, 2001.

In a dispute over liability for the loss of cargo, the Supreme Court ruled in favor of American Home Assurance
Corporation, stating that their payment to the shipper does not imply the vessel's seaworthiness, and that the sinking
was caused by the carrier's unseaworthiness.

Facts:
 Delsan Transport Lines, Inc. entered into a contract with Caltex Philippines to transport industrial fuel oil.
 The shipment was insured by American Home Assurance Corporation.
 On August 14, 1986, Delsan's vessel, MT Maysun, set sail from Batangas for Zamboanga City carrying 2,277.314
kiloliters of industrial fuel oil.
 The vessel sank near Panay Gulf on August 16, 1986, resulting in the loss of the entire cargo.
 American Home Assurance Corporation paid Caltex the insured value of the lost cargo amounting to
P5,096,635.57.
 The insurer sought to recover this amount from Delsan Transport Lines, Inc. under its right of subrogation.
 The Regional Trial Court of Makati City initially dismissed the complaint, citing the vessel's seaworthiness and
unexpected inclement weather.
 The Court of Appeals reversed this decision, ruling the vessel was not seaworthy and holding Delsan liable for
the loss.
Issue:
1. Whether the payment by American Home Assurance Corporation to Caltex for the insured value of the lost
cargo amounted to an admission of the vessel's seaworthiness, precluding any action for recovery against
Delsan Transport Lines, Inc.
2. Whether the non-presentation of the marine insurance policy bars the complaint for recovery of the sum of
money for lack of cause of action.
Ruling:
 The Supreme Court ruled in the negative on both issues.
 The petition was denied, and the decision of the Court of Appeals was affirmed, holding Delsan Transport Lines,
Inc. liable for the insured value of the lost cargo.
Ratio:
 The payment by American Home Assurance Corporation to Caltex did not amount to an admission of the vessel's
seaworthiness.
 The payment operated as a waiver of the insurer's right to enforce the implied warranty against Caltex under
the marine insurance policy.
 The insurer's subrogatory rights allowed it to exercise legal remedies available to Caltex against the common
carrier, supported by Article 2207 of the New Civil Code.
 Common carriers are bound to observe extraordinary diligence and are presumed at fault in case of loss unless
proven otherwise.
 The PAGASA weather report rebutted the petitioner's claim of force majeure, showing weather conditions were
not as severe as claimed.
 Certificates of seaworthiness did not negate the presumption of unseaworthiness triggered by the unexplained
sinking.
 The exoneration of the vessel's officers and crew by the Board of Marine Inquiry was irrelevant to the
petitioner's civil liability.
 The presentation of the marine insurance policy was not indispensable for the insurer to recover from the
common carrier.
 The subrogation receipt was sufficient to establish the insurer's right to subrogation and the amount paid to
settle the insurance claim.
 The Court distinguished this case from Home Insurance Corporation v. CA, where the presentation of the
insurance policy was necessary due to multiple parties and stages in handling the cargo.

9. Asia Lighterage and Shipping, Inc. Vs. CA, et al., GR No. 147246, Aug 19, 2003

A common carrier is held liable for the loss of cargo during transportation due to failure to exercise extraordinary
diligence, resulting in a ruling in favor of the insurer and ordering the carrier to pay indemnity and attorney's fees.

Facts:
 On June 13, 1990, Marubeni American Corporation shipped 3,150 metric tons of Better Western White Wheat
valued at US$423,192.35 from Portland, Oregon, to General Milling Corporation in Manila.
 The shipment was insured by Prudential Guarantee and Assurance, Inc. for P14,621,771.75.
 Upon arrival in Manila on July 25, 1990, the cargo was transferred to Asia Lighterage and Shipping, Inc. for
delivery to the consignee's warehouse in Pasig City.
 On August 15, 1990, 900 metric tons of the shipment were loaded onto barge PSTSI III.
  Due to a typhoon warning, the transport was suspended on August 17, 1990.
 The barge was moved to Engineering Island for shelter, where it sustained a hole after hitting an underwater
protrusion.
 Despite patching the hole with clay and cement, the barge sank on September 6, 1990, resulting in the total loss
of the remaining cargo.
 The consignee was indemnified by Prudential Guarantee and Assurance, Inc. for P4,104,654.22, which then
sought recovery from Asia Lighterage and Shipping, Inc.
 The Regional Trial Court ruled in favor of Prudential Guarantee and Assurance, Inc., ordering Asia Lighterage and
Shipping, Inc. to pay the indemnity and attorney's fees.
 The Court of Appeals affirmed the decision with a modification to deduct the salvage value from the indemnity
amount.
 Asia Lighterage and Shipping, Inc. then appealed to the Supreme Court.
Issue:
1. Whether Asia Lighterage and Shipping, Inc. is a common carrier.
2. Whether Asia Lighterage and Shipping, Inc. exercised extraordinary diligence in the care and custody of the
consignee's cargo.
Ruling:
1. The Supreme Court ruled that Asia Lighterage and Shipping, Inc. is a common carrier.
2. The Supreme Court upheld the lower courts' findings that Asia Lighterage and Shipping, Inc. failed to exercise
extraordinary diligence in the care and custody of the consignee's cargo.
Ratio:
 The Supreme Court determined that Asia Lighterage and Shipping, Inc. fits the definition of a common carrier
under Article 1732 of the Civil Code, which does not distinguish between carriers offering services to the general
public or a limited clientele.
 The Court cited the case of De Guzman vs. Court of Appeals, which held that a common carrier need not have
fixed routes, terminals, or issue tickets.
 Asia Lighterage and Shipping, Inc. was engaged in the business of lighterage and drayage, offering its services to
the public for compensation, thus qualifying as a common carrier.
 Regarding the second issue, the Court found that Asia Lighterage and Shipping, Inc. failed to exercise
extraordinary diligence as required of common carriers.
 The barge had already sustained damage before the typhoon, and the patching with clay and cement was
insufficient for safe navigation.
 The decision to proceed with the voyage despite the incoming typhoon demonstrated a lack of due diligence.
 The Court noted that the proximate cause of the cargo loss was not the typhoon but the negligence of Asia
Lighterage and Shipping, Inc. in handling the damaged barge and continuing the voyage under unsafe conditions.
 The petition was denied, and the decision of the Court of Appeals was affirmed.

10. Southern Lines, Inc vs. CA, 4 SCRA 258

In a dispute over a shipment of rice, Southern Lines, Inc. is held liable for the loss and shortage of the shipment, and is
ordered to pay the City of Iloilo the amount of P4,931.41.

Facts:
 Southern Lines, Inc. was held liable for the loss and shortage of a shipment of rice and ordered to pay the City of
Iloilo P4,931.41.
 In 1948, the City of Iloilo requisitioned rice from the National Rice and Corn Corporation (NARIC) in Manila.
 On August 24, 1948, NARIC shipped 1,726 sacks of rice (totaling 129,450 kilos) to the City of Iloilo aboard the SS
"General Wright," owned by Southern Lines, Inc.
 Upon receipt on September 3, 1948, the City of Iloilo noted a shortage of 13,319 kilos (41 sacks) valued at
P6,486.35.
 On February 14, 1951, the City of Iloilo filed a complaint in the Court of First Instance of Iloilo against NARIC and
Southern Lines, Inc.
 The lower court absolved NARIC but ordered Southern Lines, Inc. to pay P4,931.41.
 Southern Lines, Inc. appealed to the Court of Appeals, which affirmed the lower court's decision, leading to this
petition for review.
Issue:
1. Is Southern Lines, Inc. liable for the loss or shortage of the rice shipment?
2. Is the City of Iloilo precluded from filing an action for damages due to its failure to present a claim within 24
hours from receipt of the shipment?

Ruling:
1. Yes, Southern Lines, Inc. is liable for the loss or shortage of the rice shipment.
2. No, the City of Iloilo is not precluded from filing an action for damages despite its failure to present a claim
within 24 hours from receipt of the shipment.
Ratio:
 The decision was based on Articles 361 and 362 of the Code of Commerce.
 Article 361: The carrier is exempt from liability only if it proves the damages were due to the inherent nature or
defect of the goods.
 Article 362: The carrier is liable if the damages occurred due to its negligence or failure to take necessary
precautions.
 Southern Lines, Inc. argued the shortage was due to shrinkage, leakage, or spillage from poor packing and
negligence by the City of Iloilo's agents.
 The court found this claim untenable as the carrier had accepted the goods despite improper packing.
 The Court of Appeals' finding that the shortage was due to the negligence of Southern Lines, Inc. was binding.
 The petitioner's argument that the City of Iloilo was precluded from filing an action due to not presenting a claim
within 24 hours was rejected as it was not pleaded in the answer and thus waived.
 The action was filed within a reasonable time and was for a refund of the excess amount paid, not for damages
or recovery of the shortage.
 The Court of Appeals' decision was affirmed, and the petition for certiorari was denied.