TRANSPORTATION LAWS CASE DOCTRINES-MIDTERMS

law forbids. The law of equality is in force only where the services performed in the different cases are
substantially the same and the circumstances and conditions are similar.

De Guzman vs. Court of Appeals

Loadstar Shipping Co., Inc. vs. CA
Article 1732 makes no distinction between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only as an ancillary activity (in local Idiom
as "a sideline"). Article 1732 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.
The Court of Appeals referred to the fact that private respondent held no certificate of public
convenience. A certificate of public convenience is not a requisite for the incurring of liability. That
liability arises the moment a person or firm acts as a common carrier, without regard to whether or not
such carrier has also complied with the requirements of the applicable regulatory statute and
implementing regulations and has been granted a certificate of public convenience or other franchise.
To exempt private respondent from the liabilities of a common carrier because he has not secured the
necessary certificate of public convenience, would be offensive to sound public policy; that would be to
reward private respondent precisely for failing to comply with applicable statutory requirements.
Planters Products, Inc. vs. CA
It is not disputed that respondent carrier, in the ordinary course of business, operates as a common
carrier, transporting goods indiscriminately for all persons. When petitioner chartered the vessel M/V
"Sun Plum", the ship captain, its officers and compliment were under the employ of the shipowner and
therefore continued to be under its direct supervision and control. Hardly then can the charterer be
charged, a stranger to the crew and to the ship, with the duty of caring for his cargo when the charterer
did not have any control of the means in doing so. This is evident in the present case considering that
the steering of the ship, the manning of the decks, the determination of the course of the voyage and
other technical incidents of maritime navigation were all consigned to the officers and crew who were
screened, chosen and hired by the shipowner. It is therefore imperative that a public carrier shall
remain as such, notwithstanding the charter of the whole or portion of a vessel by one or more
persons, provided the charter is limited to the ship only, as in the case of a time-charter or voyagecharter. It is only when the charter includes both the vessel and its crew, that a common carrier
becomes private, at least insofar as the particular voyage covering the charter-party is concerned.
Indubitably, a shipowner in a time or voyage charter retains possession and control of the ship,
although her holds may, for the moment, be the property of the charterer.
Fisher vs. Yangco
In construing Act 98 for the alleged violation, the test is whether the refusal of YSC to carry the
explosives without qualification or conditions may have the effect of subjecting any person or locality or
the traffic is such explosives to an unduly unreasonable or unnecessary prejudice or discrimination.
Common carriers in this jurisdiction cannot lawfully decline to accept a particular class of goods unless
it appears that for some sufficient reason the discrimination for such is reasonable and necessary.
YSC has not met those conditions.
The nature of the business of a common carrier as a public employment is such that it is within the
power of the State to impose such just regulations in the interest of the public as the legislator may
deem proper.
US vs. Quinahon
There is no pretense that it actually cost more to handle the rice for the province than it did for the
merchants with whom the special contracts were made. There was a clear discrimination against the
province which is prohibited by the law. It is however not believed that the law prohibits common
carriers from making special rates for the handling and transporting of merchandise, when the same
are made for the purpose of increasing their business and to manage their important interests upon the
same principles which are regarded as sound and adopted in other trades and pursuits. Absolute
equality is not required in all cases. It is only unjust, undue and unreasonable discrimination which the

Loadstar submits that the vessel was a private carrier because it was not issued a CPC; 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.
The SC held that Loadstar is a common carrier. It is not necessary that the carrier be issued a CPC,
and this character is not altered by the fact that the carriage of the goods in question was periodic,
occasional, episodic or unscheduled.
First Philippine Industrial Corporation vs. CA
Based on Article 1732 NCC, 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. (De Guzman Ruling upheld)
Respondents argument that the term common carrier as used in Section 133(j) of the Local
Government Code refers only to common carriers transporting goods and passengers through moving
vehicles or vessels either by land, sea or water is erroneous. The definition of common carriers in
NCC makes no distinction as to the means of transporting as long as it is by land, water or air. It does
not provide that the transporting of the passengers or goods should be by motor vehicle.
Home Insurance Company vs. American Steamship Agencies, Inc.
The NCC provisions on common carriers should not apply where the common carrier is not acting as
such but as a private carrier. Under American Jurisprudence, a common carrier undertaking to carry a
special cargo or chartered to a special person only becomes a private carrier. As a private carrier, a
stipulation exempting the owner from liability for the negligence of its agent is valid.
The stipulation in the charter party absolving the owner from liability for loss due to the negligence of
its agent would be void only if strict public policy governing common carrier is applied. Such policy has
no force where the public at large is not involved, as in the case of a ship totally chartered for the use
of a single party. The stipulation exempting the owner from liability for negligence of its agent is not
against public policy and is deemed valid. Recovery cant be had, for loss or damage to the cargo
against shipowners, unless the same is due to personal acts or negligence of said owner or its
managers, as distinguished from agents or employees.
San Pablo vs. PANTRANCO
Considering the environmental circumstances of the case, the conveyance of passengers, trucks and
cargo from Matnog to Allen is certainly not a ferry boat service but a coastwise or interisland shipping
service. Under no circumstance can the sea between Matnog and Allen be considered a continuation
of the highway. While a ferry boat service has been considered as a continuation of the highway when
crossing rivers or even lakes, which are small body of waters - separating the land, however, when as
in this case the two terminals, Matnog and Allen are separated by an open sea it can not be
considered as a continuation of the highway. Respondent PANTRANCO should secure a separate
CPC for the operation of an interisland or coastwise shipping service in accordance with the provisions
of law. Its CPC as a bus transportation cannot be merely amended to include this water service under
the guise that it is a mere private ferry service.
The contention of private respondent PANTRANCO that its ferry service operation is as a private
carrier, not as a common carrier for its exclusive use in the ferrying of its passenger buses and cargo
trucks is absurd. PANTRANCO does not deny that it charges its passengers separately from the
charges for the bus trips and issues separate tickets whenever they board the MV "Black Double" that
crosses Matnog to Allen, PANTRANCO cannot pretend that in issuing tickets to its passengers it did so
as a private carrier and not as a common carrier. The Court does not see any reason why inspite of its
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amended franchise to operate a private ferry boat service it cannot accept walk-in passengers just for
the purpose of crossing the sea between Matnog and Allen. Indeed evidence to this effect has been
submitted.
National Steel Corporation vs. CA
In the instant case, it is undisputed that VSI did not offer its services to the general public. It carried
passengers or goods only for those it chose under a special contract of charter party. It is a private
carrier that renders tramping service and as such, does not transport cargo or shipment for the general
public. Its services are available only to specific persons who enter into a special contract of charter
party with its owner. 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 contracts of
private carriage or charter party.
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.
KMU vs. Garcia
The issuance of a Certificate of Public Convenience is determined by public need. The presumption of
public need for a service shall be deemed in favor of the applicant, while the burden of proving that
there is no need for the proposed service shall be the oppositor's.
By its terms, public convenience or necessity generally means something fitting or suited to the public
need. As one of the basic requirements for the grant of a CPC, public convenience and necessity
exists when the proposed facility or service meets a reasonable want of the public and supply a need
which the existing facilities do not adequately supply. The existence or non-existence of public
convenience and necessity is therefore a question of fact that must be established by evidence, real
and/or testimonial; empirical data; statistics and such other means necessary, in a public hearing
conducted for that purpose. The object and purpose of such procedure, among other things, is to look
out for, and protect, the interests of both the public and the existing transport operators.

Eastern Shipping Lines vs. Intermediate Appellate Court

1) The law of the country to which the goods are to be transported governs the liability of the common
carrier in case of their loss, destruction or deterioration. As the cargoes in question were transported
from Japan to the Philippines, the liability of Petitioner Carrier is governed primarily by the Civil Code.
However, in all matters not regulated by said Code, the rights and obligations of common carrier shall
be governed by the Code of Commerce and by special laws. Thus, the Carriage of Goods by Sea Act,
a special law, is suppletory to the provisions of the Civil Code.
(2) Under the 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 goods, according to all the
circumstances of each case. Common carriers are responsible for the loss, destruction, or deterioration
of the goods unless the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;
Petitioner Carrier claims that the loss of the vessel by fire exempts it from liability under the phrase
"natural disaster or calamity. However, the Court said that fire may not be 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.
As the peril of the fire is not comprehended within the exception in Article 1734, supra, Article 1735 of
the Civil Code provides that all cases than those mention in Article 1734, the common carrier shall be
presumed to have been at fault or to have acted negligently, unless it proves that it has observed the
extraordinary diligence required by law.
And even if fire were to be considered a "natural disaster" within the meaning of Article 1734 of the
Civil Code, it is required under Article 1739 of the same Code that the "natural disaster" must have
been the "proximate and only cause of the loss," and that the carrier has "exercised due diligence to
prevent or minimize the loss before, during or after the occurrence of the disaster. This Petitioner
Carrier has also failed to establish satisfactorily.

Tatad vs. Garcia

National Development Company vs. CA

In law, there is a clear distinction between the "operation" of a public utility and the ownership of the
facilities and equipment used to serve the public. The right to operate a public utility may exist
independently and separately from the ownership of the facilities thereof. One can own said facilities
without operating them as a public utility, or conversely, one may operate a public utility without owning
the facilities used to serve the public. The devotion of property to serve the public may be done by the
owner or by the person in control thereof who may not necessarily be the owner thereof.

Significantly, under the provisions of the Code of Commerce, particularly Articles 826 to 839, the
shipowner or carrier, is not exempt from liability for damages arising from collision due to the fault or
negligence of the captain. Primary liability is imposed on the shipowner or carrier in recognition of the
universally accepted doctrine that the shipmaster or captain is merely the representative of the owner
who has the actual or constructive control over the conduct of the voyage.

Samar Mining Company, Inc. vs. Nordeutscher Lloyd

The validity of stipulations in bills of lading exempting the carrier from liability for loss or damage to the
goods when the same are not in its actual custody has been upheld. There is no doubt that Art. 1738
finds no applicability to the instant case. The said article contemplates a situation where the goods had
already reached their place of destination and are stored in the warehouse of the carrier. The subject
goods were still awaiting transshipment to their port of destination, and were stored in the warehouse
of a third party when last seen and/or heard of.
Article 1736 is applicable to the instant suit. Under said article, the carrier may be relieved of the
responsibility for loss or damage to the goods upon actual or constructive delivery of the same by the
carrier to the consignee, or to the person who has a right to receive them. In sales, actual delivery has
been defined as the ceding of corporeal possession by the seller, and the actual apprehension of
corporeal possession by the buyer or by some person authorized by him to receive the goods as his
representative for the purpose of custody or disposal. By the same token, there is actual delivery in
contracts for the transport of goods when possession has been turned over to the consignee or to his
duly authorized agent and a reasonable time is given him to remove the goods. The court a quo found
that there was actual delivery to the consignee through its duly authorized agent, the carrier.

The agreement between NDC and MCP shows that MCP is appointed as agent, a term broad enough
to include the concept of ship agent in maritime law. In fact MCP was even conferred all the powers of
the owner of the vessel, including the power to contract in the name of the NDC. Both owner and
agent should be declared jointly and severally liable since the obligation which is the subject of the
action had its origin in a fortuitous act and did not arise from contract.
Gelisan vs. Alday
The court has held in several decisions that the registered owner of a public service is responsible for
damages that may arise from consequences incident to its operation or that may be caused to any of
the passengers therein. The claim of the petitioners that he is not liable in view of the lease contract
executed by and between him and Espiritu which exempts him from liability to 3rd persons, cannot be
sustained because it appears that the lease contract had not been approved by the Public Service
Commission. It is a settled rule in our jurisprudence that if the property covered by a Franchise is
transferred or lease to another without obtaining the requisite approval, the transfer is not binding upon
the public and 3rd persons. However, Gelisan is not without recourse because he has a right to be
indemnified by Espiritu for the amount he may be required to pay. This is due to the fact that the lease
contract in question, although not effective against the public is valid and binding between the
contracting parties.
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Benedicto vs. Intermediate Appellate Court

The prevailing doctrine in common carriers make the owner liable for consequences having from the
operations of the carrier even though the specific vehicle involved may have been transferred to
another person. This doctrine rests upon the principle in dealing with vehicles registered under Public
Service Law, the public has the right to assume that the registered owner is the actual or lawful owner
thereof. It would be very difficult and often impossible as a practical matter, for members of the general
public to enforce the rights of action that they may have for injuries inflicted by the vehicles being
negligently operated if they should be required to prove who the actual owner is. The registered owner
is not allowed to deny liability by proving the identity of the alleged transferee. Thus, contrary to
petitioners claim, private respondents are not required to go beyond the vehicles certificate of
registration to ascertain the owner of the carrier.

system on the ground that he is a mere lessor would be not only to abet flagrant violations of the
Public Service Law but also to place the riding public at the mercy of reckless and irresponsible
drivers.
Ganzon vs. CA
Petitioner Ganzon failed to show that the loss of the scrap iron due to any cause enumerated in Art.
1734. The order of the acting Mayor did not constitute valid authority for petitioner to carry out. In any
case, the intervention of the municipal officials was not of a character that would render impossible the
fulfillment by the carrier of its obligation. The petitioner was not duly bound to obey the illegal order to
dump into the sea the scrap of iron. Moreover, there is absence of sufficient proof that the issuance of
the same order was attended with such force or intimidation as to completely overpower the will of the
petitioners employees.

PHILTRANCO Service Enterprise, Inc. vs. Court of Appeals

We have consistently held that the liability of the registered owner of a public service vehicle, like
petitioner Philtranco, for damages arising from the tortious acts of the driver is primary, direct, and joint
and several or solidary with the driver. As to solidarity, Article 2194 expressly provides:
Art. 2194. The responsibility of two or more persons who are liable for a quasi-delict is solidary.
Since the employer's liability is primary, direct and solidary, its only recourse if the judgment for
damages is satisfied by it is to recover what it has paid from its employee who committed the fault or
negligence which gave rise to the action based on quasi-delict. Article 2181 of the Civil Code provides:
Art. 2181. Whoever pays for the damage caused by his dependents or employees may recover from
the latter what he has paid or delivered in satisfaction of the claim.
Santos vs. Sibug
Although SANTOS, as the kabit was the true owner as against VIDAD, the latter, as the registered
owner/operator and grantee of the franchise, is directly and primarily responsible and liable for the
damages caused to SIBUG, the injured party, as a consequence of the negligent or careless operation
of the vehicle. This ruling is based on the principle that the operator of record is considered the
operator of the vehicle in contemplation of law as regards the public and third persons even if the
vehicle involved in the accident had been sold to another where such sale had not been approved by
the then Public Service Commission.

By the delivery made during Dec. 1, 1956, the scraps were unconditionally placed in the possession
and control of the common carrier, and upon their receipt by the carrier of transportation, the contract
of carriage was deemed perfected. Consequently, Ganzons extraordinary responsibility for the loss,
destruction or deterioration of the goods commenced. According to Art 1738, such extraordinary
responsibility would cease only upon the delivery by the carrier to the consignee or persons with right
to receive them. The fact that part of the shipment had not been loaded on board did not impair the
contract of transportation as the goods remained in the custody & control of the carrier.
Eastern Shipping Lines vs. Court of Appeals

The common carrier's duty to observe the requisite diligence in the shipment of goods lasts from the
time the articles are surrendered to or unconditionally placed in the possession of, and received by, the
carrier for transportation until delivered to, or until the lapse of a reasonable time for their acceptance,
by the person entitled to receive them (Arts. 1736-1738, Civil Code; Ganzon vs. Court of Appeals, 161
SCRA 646; Kui Bai vs. Dollar Steamship Lines, 52 Phil. 863). When the goods shipped either are lost
or arrive 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 (Art. 1735, Civil
Code;Philippine National Railways vs. Court of Appeals, 139 SCRA 87; Metro Port Service vs. Court of
Appeals, 131 SCRA 365). There are, of course, exceptional cases when such presumption of fault is
not observed but these cases, enumerated in Article 1734 of the Civil Code, are exclusive, not one of
which can be applied to this case.

Lita Enterprises Inc. vs. Intermediate Appellate Court

Unquestionably, the parties herein operated under an arrangement, comonly known as the "kabit
system", whereby a person who has been granted a certificate of convenience allows another person
who owns motors vehicles to operate under such franchise for a fee. A certificate of public convenience
is a special privilege conferred by the government . Abuse of this privilege by the grantees thereof
cannot be countenanced. Although not outrightly penalized as a criminal offense, the "kabit system" is
invariably recognized as being contrary to public policy and, therefore, void and inexistent under Article
1409 of the Civil Code, It is a fundamental principle that the court will not aid either party to enforce an
illegal contract, but will leave them both where it finds them.
Teja Marketing vs. Intermediate Appellate Court
The ruling in Lita Enterprises Inc. vs. IAC is upheld. The defect of in existence of a contract is
permanent and cannot be cured by ratification or by prescription. The mere lapse of time cannot give
efficacy to contracts that are null and void.
Magboo vs. Bernardo
The features which characterize the boundary system are not sufficient to withdraw the relationship
between the parties from that of employer and employee. The owner continued to be the operator of
the vehicle in legal contemplation and as such, he is responsible for the consequences incident to its
operation. To exempt from liability the owner of a public vehicle who operates it under the boundary

Sarkies Tours Phils vs. Court of Appeals

Under the 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 transported by
them, and this liability lasts from the time the goods are unconditionally placed in the possession of,
and received by the carrier for transportation until the same are delivered, actually or constructively, by
the carrier to the person who has a right to receive them, unless the loss is due to any of the excepted
causes under Article 1734 thereof.
Where the common carrier accepted its passenger's baggage for transportation and even had it placed
in the vehicle by its own employee, its failure to collect the freight charge is the common carrier's own
lookout. It is responsible for the consequent loss of the baggage. In the instant case, defendant
appellant's employee even helped Fatima Minerva Fortades and her brother load the
luggages/baggages in the bus' baggage compartment, without asking that they be weighed, declared,
receipted or paid for. Neither was this required of the other passengers.
Valenzuela Hardwood & Industrial Supply vs. Court of Appeals
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 17 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
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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.
Yobido vs. Court of Appeals
The explosion of the new tire is not a fortuitous event. There are human factors involved in the
situation. The fact that the tire was new did not imply that it was entirely free from manufacturing
defects or that it was properly mounted on the vehicle. Neither may the fact that the tire bought and
used is of a brand name noted for quality, resulting in the conclusion that it could not explode within
five days use. It is settled that an accident caused either by defects in the automobile or through the
negligence of its driver is not a caso fortuito. Moreover, a common carrier may not be absolved from
liability in case of force majeure. A common carrier must still prove that it was not negligent in causing
the death or injury resulting from the accident. Thus, having failed to overthrow the presumption of
negligence with clear and convincing evidence, petitioners are hereby held liable for damages.

and obligations. Therefore, although Sec 4(5) of COGSA states that the carrier shall not be liable in an
amount exceeding $500 per package unless the value of the goods had been declared by the shipper
and asserted in the bill of lading, said section is merely supplementary to the provisions of the New
Civil Code.
Servando vs. Phil. Steam
The court a quo held that the delivery of the shipment in question to the warehouse of the Bureau of
Customs is not the delivery contemplated by Article 1736; and since the burning of the warehouse
occurred before actual or constructive delivery of the goods to the appellees, the loss is chargeable
against the appellant.
It should be pointed out, however, that in the bills of lading issued for the cargoes in question, the
parties agreed to limit the responsibility of the carrier for the loss or damage that may be caused to the
shipment therein the following stipulation:
Clause 14. Carrier shall not be responsible for loss or damage to shipments billed 'owner's risk' unless
such loss or damage is due to negligence of carrier. Nor shall carrier be responsible for loss or damage
caused by force majeure, dangers or accidents of the sea or other waters; war; public enemies; . . . fire
. ...

Compania Maritima vs. Insurance Co. of North America

The receipt of goods by the carrier has been said to lie at the foundation of the contract to carry and
deliver, and if actually no goods are received there can be no such contract. The liability and
responsibility of the carrier under a contract for the carriage of goods commence on their actual
delivery to, or receipt by, the carrier or an authorized agent and delivery to a lighter in charge of a
vessel for shipment on the vessel, where it is the custom to deliver in that way, is a good delivery and
binds the vessel receiving the freight, the liability commencing at the time of delivery to the lighter and,
similarly, where there is a contract to carry goods from one port to another, and they cannot be loaded
directly on the vessel and lighters are sent by the vessel to bring the goods to it, the lighters are for the
time its substitutes, so that the bill of landing is applicable to the goods as soon as they are placed on
the lighters.
Whenever the control and possession of goods passes to the carrier and nothing remains to be done
by the shipper, then it can be said with certainty that the relation of shipper and carrier has been
established. A bill of lading is not indispensable for the creation of a contract of carriage. The bill of
lading is juridically a documentary proof of the stipulations and conditions agreed upon by both parties.
The liability of the carrier as common carrier begins with the actual delivery of the goods for
transportation, and not merely with the formal execution of a receipt or bill of lading; the issuance of a
bill of lading is not necessary to complete delivery and acceptance. Even where it is provided by
statute that liability commences with the issuance of the bill of lading, actual delivery and acceptance
are sufficient to bind the carrier.
Lu Do vs. Binamira
While delivery of the cargo to the consignee, or to the person who has a right to receive them,
contemplated in Article 1736, because in such case the goods are still in the hands of the Government
and the owner cannot exercise dominion over them, we believe however that the parties may agree to
limit the liability of the carrier considering that the goods have still to through the inspection of the
customs authorities before they are actually turned over to the consignee. This is a situation where we
may say that the carrier losses control of the goods because of a custom regulation and it is unfair that
it be made responsible for what may happen during the interregnum.
American President Lines, Ltd. vs. Klepper
With regard to the contention of the carrier that COGSA should control in this case, the same is of as
moment. Art. 1763 of the New Civil Code provides that the laws of the country to which the goods are
transported shall govern the liability of the common carrier in case of loss, destruction and
deterioration. This means that the law of the Philippines on the New Civil Code. Under 1766 of NCC,
in all matter not regulated by this Code, the rights and obligations of common carriers shall be
governed by the Code of Commerce and by Special Laws. Art. 1736-1738, NCC governs said rights

We sustain the validity of the above stipulation; there is nothing therein that is contrary to law, morals
or public policy.
Appellees would contend that the above stipulation does not bind them because it was printed in fine
letters on the back-of the bills of lading; and that they did not sign the same. This argument overlooks
the pronouncement of this Court in Ong Yiu vs. Court of Appeals, where the same issue was resolved
in this wise:
While it may be true that petitioner had not signed the plane ticket, he is nevertheless bound by the
provisions thereof. 'Such provisions have been held to be a part of the contract of carriage, and valid
and binding upon the passenger regardless of the latter's lack of knowledge or assent to the
regulation'. It is what is known as a contract of 'adhesion', in regards which it has been said that
contracts of adhesion wherein one party imposes a ready made form of contract on the other, as the
plane ticket in the case at bar, are contracts not entirely prohibited. The one who adheres to the
contract is in reality free to reject it entirely; if he adheres, he gives his consent."
Saludo, Jr. vs. Court of Appeals
Except as may be prohibited by law, there is nothing to prevent an inverse order of events, that is, the
execution of the bill of lading even prior to actual possession and control by the carrier of the cargo to
be transported. There is no law which requires that the delivery of the goods for carriage and the
issuance of the covering bill of lading must coincide in point of time or, for that matter, that the former
should precede the latter. While we agree with petitioners' statement that "an airway bill estops the
carrier from denying receipt of goods of the quantity and quality described in the bill," a further reading
and a more faithful quotation of the authority cited would reveal that "(a) bill of lading may contain
constituent elements of estoppel and thus become something more than a contract between the
shipper and the carrier. . . . (However), as between the shipper and the carrier, when no goods have
been delivered for shipment no recitals in the bill can estop the carrier from showing the true facts . . .
Between the consignor of goods and receiving carrier, recitals in a bill of lading as to the goods
shipped raise only a rebuttable presumption that such goods were delivered for shipment. As between
the consignor and a receiving carrier, the fact must outweigh the recital."
There is a holding in most jurisdictions that the acceptance of a bill of lading without dissent raises a
presumption that all terms therein were brought to the knowledge of the shipper and agreed to by him,
and in the absence of fraud or mistake, he is estopped from thereafter denying that he assented to
such terms. This rule applies with particular force where a shipper accepts a bill of lading with full
knowledge of its contents, and acceptance under such circumstances makes it a binding contract. In
order that any presumption of assent to a stipulation in a bill of lading limiting the liability of a carrier
may arise, it must appear that the clause containing this exemption from liability plainly formed a part of
the contract contained in the bill of lading. A stipulation printed on the back of a receipt or bill of lading
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or on papers attached to such receipt will be quite as effective as if printed on its face, if it is shown that
the consignor knew of its terms. Thus, where a shipper accepts a receipt which states that its
conditions are to be found on the back, such receipt comes within the general rule, and the shipper is
held to have accepted and to be bound by the conditions there to be found.
Explicit is the rule under Article 1736 of the Civil Code that the extraordinary responsibility of the
common carrier begins from the time the goods are delivered to the carrier. This responsibility remains
in full force and effect even when they are temporarily unloaded or stored in transit, unless the shipper
or owner exercises the right of stoppage in transitu, and terminates only after the lapse of a reasonable
time for the acceptance, of the goods by the consignee or such other person entitled to receive them.
And, there is delivery to the carrier when the goods are ready for and have been placed in the
exclusive possession, custody and control of the carrier for the purpose of their immediate
transportation and the carrier has accepted them. Where such a delivery has thus been accepted by
the carrier, the liability of the common carrier commences. Only when such fact of delivery has been
unequivocally established can the liability for loss, destruction or deterioration of goods in the custody
of the carrier, absent the excepting causes under Article 1734, attach and the presumption of fault of
the carrier under Article 1735 be invoked.
Macam vs. CA
The extraordinary responsibility of the common carriers lasts until actual or constructive delivery of the
cargoes to the consignee or to the person who has a right to receive them. PAKISTAN BANK was
indicated in the bills of lading as consignee whereas GPC was the notify party. However, in the export
invoices GPC was clearly named as buyer/importer. Petitioner also referred to GPC as such in his
demand letter to respondent WALLEM and in his complaint before the trial court. This premise draws
us to conclude that the delivery of the cargoes to GPC as buyer/importer which, conformably with Art.
1736 had, other than the consignee, the right to receive them was proper.
The real issue is whether respondents are liable to petitioner for releasing the goods to GPC without
the bills of lading or bank guarantee. From the testimony of petitioner, we gather that he has been
transacting with GPC as buyer/importer for around two (2) or three (3) years already. When mangoes
and watermelons are in season, his shipment to GPC using the facilities of respondents is twice or
thrice a week. The goods are released to GPC. It has been the practice of petitioner to request the
shipping lines to immediately release perishable cargoes such as watermelons and fresh mangoes
through telephone calls by himself or his "people." In transactions covered by a letter of credit, bank
guarantee is normally required by the shipping lines prior to releasing the goods. But for buyers using
telegraphic transfers, petitioner dispenses with the bank guarantee because the goods are already fully
paid. In his several years of business relationship with GPC and respondents, there was not a single
instance when the bill of lading was first presented before the release of the cargoes.
Maersk Line vs. CA
While it is true that common carriers are not obligated by law to carry and to deliver merchandise, and
persons are not vested with the right to prompt delivery, unless such common carriers previously
assume the obligation to deliver at a given date or time, delivery of shipment or cargo should at least
be made within a reasonable time.
While there was no special contract entered into by the parties indicating the date of arrival of the
subject shipment, petitioner nevertheless, was very well aware of the specific date when the goods
were expected to arrive as indicated in the bill of lading itself. In this regard, there arises no need to
execute another contract for the purpose as it would be a mere superfluity. In the case before us, we
find that a delay in the delivery of the goods spanning a period of two months and seven days falls was
beyond the realm of reasonableness.
Ysmael vs. Barretto
Limiting the common carriers liability for loss or damage from any cause or for any reason for less
than 1/8 the actual value of the goods is unconscionable and therefore against public policy. A common
carrier cannot lawfully stipulate for exemption from liability, unless such exemption is just and
reasonable and the contract is freely and fairly made.

Shewaram vs. Philippine Airlines

It can not be said that a contract has been entered into between a passenger and the common carrier,
embodying the conditions as printed at the back of the ticket. The fact that those conditions are printed
at the back of the ticket stub in letters so small that they are hard to read would not warrant the
presumption that the passenger was aware of those conditions such that he had "fairly and freely
agreed" to those conditions. The passenger is considered not having agreed to the stipulation on the
ticket, as manifested by the fact that he did not sign the ticket.
Ong Yiu vs. Court of Appeals
While it may be true that the passenger had not signed the plane ticket, he is nevertheless bound by
the provisions thereof. "Such provisions have been held to be a part of the contract of carriage, and
valid and binding upon the passenger regardless of the latter's lack of knowledge or assent to the
regulation". It is what is known as a contract of "adhesion", in regards which it has been said that
contracts of adhesion wherein one party imposes a ready made form of contract on the other, as the
plane ticket in the case at bar, are contracts not entirely prohibited. The one who adheres to the
contract is in reality free to reject it entirely; if he adheres, he gives his consent. A contract limiting
liability upon an agreed valuation does not offend against the policy of the law forbidding one from
contracting against his own negligence.
Sea Land Services, Inc. vs. IAC
Since the liability of a common carrier for loss of or damage to goods transported by it under a contract
of carriage so governed by the laws of the country of destination and the goods in question were
shipped from the United States to the Philippines, the liability of common carrier to the consignee is
governed primarily by the Civil Code. Applying the Civil Code provisions (Article 1749 and 1750) the
stipulation in the bill of lading limiting the liability of the common carrier for loss or damages to the
shipment covered by said rule unless the shipper declares the value of the shipment and pays
additional charges is valid and binding on the consignee.
Citadel Lines, Inc. vs. CA
Basic is the rule that a stipulation limiting the liability of the carrier to the value of the goods appearing
in the bill of lading, unless the shipper or owner declares a greater value, is binding. Furthermore, a
contract fixing the sum that may be recovered by the owner or shipper for the loss, destruction or
deterioration of the goods is valid, if it is reasonable and just under the circumstances, and has been
fairly and freely agreed upon.
In this case, the award based on the alleged market value of the goods is erroneous. It is provided in a
clause in the BOL that its liability is limited to US$2.00/kilo. The consignee also admits in the
memorandum that the value of the goods does not appear in the bill of lading. Hence, the stipulation
on the carriers limited liability applies.
Everett Seamship Corp. vs. CA
In the bill of lading, the carrier made it clear that all claims for which it may be liable shall be adjusted
and settled on the basis of the shipper's net invoice cost plus freight and insurance premiums, if paid,
and in no event shall the carrier be liable for any loss of possible profits or any consequential loss. Its
liability would only be up to One Hundred Thousand (Y100,000.00) Yen. However, the shipper, had the
option to declare a higher valuation if the value of its cargo was higher than the limited liability of the
carrier. Considering that the shipper did not declare a higher valuation, it had itself to blame for not
complying with the stipulations.
The commercial Invoice does not in itself sufficiently and convincingly show that the common carrier
has knowledge of the value of the cargo as contended by the shipper.
British Airways vs. CA
The contract of transportation was exclusively between the passenger and common carrier BA. The
latter merely endorsing the Manila to Hong Kong log of the formers journey to PAL, as its
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subcontractor or agent. Conditions of contracts were one of continuous air transportation. Well-settled
rule that an agent is also responsible for any negligence in the performance of its function and is liable
for damages which the principal may suffer by reason of its negligent act. When an action is based on
breach of contract of carriage, the passenger can only sue BA and not PAL, since the latter was not a
party in the contract.
The contention of BA with respect to limited liability was overruled although it is recognized in the
Philippines, stating that BA had waived the defense of limited liability when it allowed Mahtani(the
passenger) to testify as to the actual damages he incurred due to the misplacement of his luggage,
without any objection.

introduced into the airplane surreptitiously and with the utmost cunning and stealth, although there is
an occasional use of innocent hostages who will be coldly murdered unless a plane is given to the
hijackers' complete disposal.
PAL was not negligent so as to overcome the force majeure nature of the hi-jacking. Hijackers do not
board an airplane through a blatant display of firepower and violent fury. Firearms and grenades are
brought to the plane surreptitiously. PAL could not have been faulted for want of diligence, particularly
for failing to take positive measures to implement Civil Aeronautics Administration regulations
prohibiting civilians from carrying firearms on board the plane. The use of the most sophisticated
electronic detection devices may have minimized hijacking but still ineffective against truly determining
hijackers.

H.E. Heacock Co. vs. Macondray

Pan American World Airways, Inc. vs. Rapadas
Three kinds of stipulations have often been made in a bill of lading. The first is one exempting the
carrier from any and all liability for loss or damage occasioned by its own negligence. The second is
one providing for an unqualified limitation of such liability to an agreed valuation. And the third is one
limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and
pays a higher rate of freight. According to an almost uniform weight of authority, the first and second
kinds of stipulations are invalid as being contrary to public policy, but the third is valid and enforceable.
If a common carrier gives to a shipper the choice of two rates and if the shipper makes such a choice,
understandingly and freely, and names his valuation, he cannot thereafter recover more than the value
which he thus places upon his property. A limitation of liability based upon an agreed value does not
conflict with any sound principle of public policy; and it is not conformable to plain principles of justice
that a shipper may understate value in order to reduce the rate and then recover a larger value in case
of loss.
Sweet Lines Inc. vs. TEVES
Considered in the light of circumstances prevailing in the inter-island shipping industry in the country
today, We find and hold that Condition No. 14 printed at the back of the passage tickets should be held
as void and unenforceable for the following reasons first, under circumstances obligation in the interisland shipping industry, it is not just and fair to bind passengers to the terms of the conditions printed
at the back of the passage tickets, on which Condition No. 14 is Printed in fine letters, and second,
Condition No. 14 subverts the public policy on transfer of venue of proceedings of this nature, since the
same will prejudice rights and interests of innumerable passengers located in different places of the
country who, under Condition No. 14, will have to file suits against petitioner only in the City of Cebu.
Considering the expense and trouble a passenger residing outside of Cebu City would incur to
prosecute a claim in the City of Cebu, he would most probably decide not to file the action at all. The
condition will thus defeat, instead of enhance, the ends of justice. Upon the other hand, petitioner has
branches or offices in the respective ports of call of its vessels and can afford to litigate in any of these
places. Hence, the filing of the suit in the CFI of Misamis Oriental, as was done in the instant case, will
not cause inconvenience to, much less prejudice, petitioner.
Under Art. 2220 of the Civil Code, moral damages are justly due in breaches of contract where the
defendant acted fraudulently or in bad faith. Both the Trial Court and the Appellate Court found that
there was bad faith on the part of petitioner in that:
(1) Defendants- Appellants did not give notice to plaintiffs-appellates as to the change of scheduled of
the vessel;
(2) Knowing fully well that it would take no less than fifteen hours to effect the repairs of the damaged
engine, defendants- appellants instead made announce ment of assurance that the vessel would leave
within a short period of time, and when plaintiff-appellees wanted to leave the port and gave up the trip,
defendants- appellants employees would come and say, we are leaving already.
(3) Defendants- appellants did not offer to refund plaintiffs-appellees tickets nor provide them with
transportation form Tacloban to Catbalogan.
Quisumbing Sr. vs. Court of Appeals

The Warsaw Convention governs the availment of the liability limitations where the baggage check is
combined with or incorporated in the passenger ticket. In the case at bar, the baggage check is
combined with the passenger ticket in one document of carriage. The passenger ticket complies with
Article 3, which provides:
(c) a notice to the effect that, if the passenger's journey involves an ultimate destination or stop in a
country other than the country of departure, the Warsaw Convention may be applicable and that the
Convention governs and in most cases limits the liability of carriers for death or personal injury and in
respect of loss of or damage to baggage.
The provisions in the plane ticket are sufficient to govern the limitations of liabilities of the airline for
loss of luggage. The passenger, upon contracting with the airline and receiving the plane ticket, was
expected to be vigilant insofar as his luggage is concerned. If the passenger fails to adduce evidence
to overcome the stipulations, he cannot avoid the application of the liability limitations.
The facts show that the private respondent actually refused to register the attache case and chose to
take it with him despite having been ordered by the PANAM agent to check it in. In attempting to avoid
registering the luggage by going back to the line, private respondent manifested a disregard of airline
rules on allowable handcarried baggages. Prudence of a reasonably careful person also dictates that
cash and jewelry should be removed from checked-in-luggage and placed in one's pockets or in a
handcarried Manila-paper or plastic envelope.
The alleged lack of enough time for him to make a declaration of a higher value and to pay the
corresponding supplementary charges cannot justify his failure to comply with the requirement that will
exclude the application of limited liability.
Alitalia vs. Intermediate Appellate Court
The Warsaw Convention's provisions, do not regulate or exclude liability for other breaches of contract
by the carrier' or misconduct of its officers and employees, or for some particular or exceptional type of
damage, Otherwise, an air carrier would be exempt from any liability for damages in the event of its
absolute refusal, in bad faith, to comply with a contract of carriage, which is absurd. In the case at bar,
no bad faith or otherwise improper conduct may be ascribed to the employees of petitioner airline; and
Dr. Pablo's luggage was eventually returned to her, belatedly, it is true, but without appreciable
damage.
There can be no doubt that Dr. Pablo underwent profound distress and anxiety, which gradually turned
to panic and finally despair, from the time she learned that her suitcases were missing up to the time
when, having gone to Rome, she finally realized that she would no longer be able to take part in the
conference. Certainly, the compensation for the injury suffered by Dr. Pablo cannot under the
circumstances be restricted to that prescribed by the Warsaw Convention for delay in the transport of
baggage.
She is not, of course, entitled to be compensated for loss or damage to her luggage. As already
mentioned, her baggage was ultimately delivered to her in Manila, tardily, but safely.

The highjacking-robbery was force majeure. The hijackers do not board an airplane through a blatant
display of firepower and violent fury. Firearms, hand-grenades, dynamite, and explosives are
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