Haystacks

Transportation Law
Michael Vernon Guerrero Mendiola 2004 Shared under Creative Commons AttributionNonCommercial-ShareAlike 3.0 Philippines license.

Some Rights Reserved.

Table of Contents
Caltex vs. Sulpicio Lines (GR 131166, 30 September 1999) …......... 1 First Philippine Industrial Corp. vs. CA (GR 125948, 29 December 1998) …......... 4 Arada vs. CA (GR 98243, 1 July 1992) …......... 6 Sabena Belgian World Airlines vs. CA (GR 104685, 14 March 1996) …......... 8 Philippine National Railways (PNR) vs. CA (GR L-55347, 4 October 1985) …......... 11 Eastern Shipping Lines vs. CA (GR 97412, 12 July 1994) …......... 13 Metro Port Services vs. CA (GR L-57582, 24 August 1984) …......... 15 Home Insurance Co. vs. American Steamship Agencies (GR L-25599, 4 April 1968) …......... 16 Lastimosa vs. Doliente …......... [unavailable] National Steel vs. CA (GR 112287, 12 December 1997) …......... 18 De Villata vs. JS Stanley (GR 8154, 20 December 1915) …......... 24 US vs. Quinajon (GR 8686, 30 July 1915) …......... 31 De Guzman vs. CA (GR L-47822, 22 December 1988) …......... 35 Planters Products vs. CA (GR 101503, 15 September 1993) …......... 39 Bascos vs. CA (GR 101089, 7 April 1993) …......... 43 Mendoza vs. PAL (GR L-3678, 29 February 1952) …......... 45 Coastwise Lighterage Corp. vs. CA (GR 114167, 12 July 1995) …......... 49 Benedicto vs. IAC (GR 70876, 19 July 1990) …......... 51 Teja Marketing vs. IAC (GR L-65510, 9 March 1987) …......... 53 BA Finance vs. CA (GR 98275, 13 November 1992) …......... 55 Vargas vs. Langkay …......... [unavailable] Nocum vs. Laguna Tayabas Bus Co. (GR L-23733, 31 October 1969) …......... 57 Tamayo vs. Aquino, et.al. (GR L-12634 & L-12720, 29 May 1959) …......... 60 Erezo vs. Jepte (GR L-9605, 30 September 1957) …......... 62 Zamboanga Transportation Co. vs. CA (GR L-25292, 29 November 1969) …......... 64 Santos vs. Sibog (GR L-26815, 26 May 1981) …......... 66 PAL vs. NLRC (GR L-62961, 2 September 1983) …......... 70 Vasquez vs. CA (GR L-42926, 13 September 1985) …......... 71 Dangwa Transportation vs. CA (GR 95582, 7 October 1991) …......... 73 Delsan Transport Lines vs. CA (GR 127897, 15 November 2001) …......... 76 Loadstar Shipping vs. CA (GR 131621, 28 September 1999) …......... 79 Metro Manila Transit Corporation vs. CA (GR 104408, 21 June 1993) …......... 81 Kapalaran Bus vs. Coronado (GR 85331, 25 August 1989) …......... 86 Trans-Asia Shipping Lines vs. CA (GR 118126, 4 March 1996) …......... 90 Belgian Overseas Chartering and Shipping vs. Philippine First Insurance Co. Inc. (GR 143133, 5 June 2002) …......... 93 Yobido vs. CA (GR 113003, 17 October 1997) …......... 96 Tan Liam Grocery. vs. De La Rama Steamship …......... [unavailable] National Development Co. vs. CA (GR L-49407, 19 August 1988) …......... 99 Ganzon vs. CA (GR L-48757, 30 Mary 1988) …......... 102 Mirasol vs. Robert Dollar Co. (GR 29721, 27 March 1929) …......... 104 Eastern Shipping Lines vs. IAC (GR L-69044, 29 May 1987) …......... 106 Kui Pai & Co. vs. Dollar Steamship Line (GR 30019, 2 March 1929) …......... 112 Compania Maritima vs. Insurance Co. of North America (GR L-18965, 30 October 1964) …......... 114 Government vs. Inchausti (GR 6957, 14 February 1913) …......... 117 Samar Mining Co. vs. Nordeutscher Lloyd (GR L-28673, 23 October 1984) …......... 119 Macam vs. CA (GR 125524, 25 August 1999) …......... 122 Saludo vs. CA (GR 95536, 23 March 1992) …......... 125 Delgado Bros. vs. CA (GR L-15654, 29 December 1960) …......... 134 Eastern Shipping Lines vs. CA (GR 80936, 17 October 1990) …......... 136 Limpangco Sons vs. Yangco Steamship (GR 10283, 25 July 1916) …......... 139

G. Martini Ltd. vs. Macondray & Co. (GR 13972, 28 July 1919) …......... 141 Heirs of de los Santos vs. CA (GR 51165, 21 June 1990) …......... 146 International Department Store vs. Jabellana …......... [unavailable] Compania Maritima vs. CA (GR L-31379, 29 August 1988) …......... 150 HE Heacock vs. Macondray (GR 16598, 3 October 1921) …......... 153 St. Paul Fire & Marine Insurance vs. Macondray (GR L-27795, 25 March 1976) …......... 155 Valenzuela Hardwood and Industrial vs. CA (GR 102316, 30 June 1997) …......... 157 Sweet Line vs. Teves (GR L-37750, 19 May 1978) …......... 161 Eastern and Australian Steamship vs. Great American Insurance (GR L-37604, 23 October 1981) …......... 164 Sea-land Service vs. IAC (GR 75118, 31 August 1987) …......... 165 Aboitiz Shipping vs. CA (GR 89757, 6 August 1990) …......... 170 Everett Steamship Corp. vs. CA (GR 122494, 8 October 1998) …......... 173 Shewaram vs. PAL (GR L-20099, 7 July 1966) …......... 177 Ong Yiu vs. CA (GR L-40597, 29 June 1979) …......... 179 British Airways vs. CA (GR 121824, 29 January 1998) …......... 182 PAL vs. CA (GR 92501, 6 March 1992) …......... 185 Robles vs. Santos …......... [unavailable] Quisumbing vs. CA (GR 50076, 14 September 1990) …......... 187 PanAm World Airways vs. Rapadas (GR 60673, 19 May 1992) …......... 189 PAL vs. CA (GR 120262, 17 July 1997) …......... 193 Baliwag Transit vs. CA (GR 116110, 15 May 1996) …......... 196 Mecenas vs. CA (GR 88052, 14 December 1989) …......... 199 PAL vs. CA (GR L-46558, 31 July 1981) …......... 204 Pilapil vs. CA (GR 52159, 22 December 1989) …......... 208 Fortune Express vs. CA (GR 119756, 18 March 1999) …......... 211 Landingin vs. Pangasinan Transportation (GR L-28014-15, 29 May 1970) …......... 214 California Lines vs. de los Santos (GR L-13254, 30 December 1961) …......... 216 Estrada vs. Consolacion (GR L-40948, 29 June 1976) …......... 217 Lara vs. Valencia (GR L-9907, 30 June 1958) …......... 220 Bayasen vs. CA (GR L-25785, 26 February 1981) …......... 222 Cervantes vs. CA (GR 125138, 2 March 1999) …......... 223 De Gillaco vs. Manila Railroad Co. (GR L-8034, 18 November 1955) …......... 225 Maranan vs. Perez (GR L-2272, 26 June 1967) …......... 227 Lasam vs. Smith (GR 19495, 2 February 1924) …......... 230 Sweet Lines vs. CA (GR L-46340, 28 April 1983) …......... 232 Magboo vs. Bernardo (GR L-16790, 30 April 1963) …......... 234 Isaac vs. AL Ammen Transportation (GR L-9671, 23 August 1957) …......... 235 Sanez vs. Samala …......... [unavailable] Panay Autobus vs. Pastor (GR 47933, 29 July 1942) …......... 238 Del Prado vs. Meralco (GR 29462, 7 March 1929) …......... 238 Cangco vs. Manila Railroad (GR 12191, 14 October 1918) …......... 241 De Guia vs. Manila Electric Railroad & Light Co. (GR 14335, 28 January 1920) …......... 248 Calalas vs. CA (GR 122039, 31 May 2000) …......... 251 Jesusa Vda. De Nueca vs Manila Railroad …......... [unavailable] Light Rail Transit Authority vs. Navidad (GR 145804, 6 February 2003) …......... 253 La Mallorca vs. CA (GR L-20761, 27 July 1966) …......... 256 Aboitiz Shipping Corp. vs. CA (GR 84458, 6 November 1989) …......... 258 Bachelor Express vs. CA (GR 85691, 31 July 1990) …......... 261 Bacarro vs. Castano (HR L-34597, 5 November 1982) …......... 265 Laguna Tayabas Bus vs. Tiongson (GR L-22143, 30 April 1966) …......... 267

Sulpicio Lines vs. CA (GR 113578, 14 July 1995) …......... 269 Fisher vs. Yangco Steamship (GR 8085, 5 November 1914) …......... 272 Fisher vs. Yangco Steamship (GR 8095, 31 March 1915) …......... 280 Maritime Co. of the Philippines vs. CA (GR 47004, 8 March 1989) …......... 282 Gatchalian vs. Delim (GR 56487, 21 October 1991) …......... 284 American Home Assurance vs. CA (GR 94149, 5 May 1992) …......... 288 Eastern Shipping Lines vs. Margarine-Verkaufs-Union GmbH (GR L-31087, 27 September 1979) …......... 290 Magellan Manufacturing Marketing vs. CA (GR 95529, 22 August 1991) …......... 292 Reyma Brokerage vs. Philippine Home Assurance Corp. (GR 93464, 7 October 1991) …......... 296 Keng Hua Paper Products vs. CA (GR 116863, 12 February 1998) …......... 298 Ysmael vs. Barretto (GR 28028, 25 November 1927) …......... 301 Maersk Line vs. CA (GR 94761, 17 May 1993) …......... 304 New Zealand Insurance Co. vs. IAC (GR L-66596, 28 August 1984) …......... 307 Mariano Uy Chaco Sons & Co. vs. Admiral Line (GR 22134, 17 October 1924) …......... 308 Standard Vacuum Oil Co. vs. Luzon Stevedoring Co. (GR L-5203, 18 April 1956) …......... 310 Tan Chiong Sian vs. Inchausti (GR 6092, 8 March 1912) …......... 313 World Fire vs. Macondray …......... [unavailable] Heacock’s Aklam vs. Aboitiz …......... [unavailable] New Zealand Insurance vs. Chua Joy (GR L-7311, 30 September 1955) …......... 318 E. Razon vs, CA (GR L-50242, 21 May 1988) …......... 320 Pernito Arrastre Services vs. Mendoza (GR L-53492, 29 December 1986) …......... 322 Tan Pho vs. Dalamal (GR 45598, 26 April 1939) …......... 327 Baer Senior & Co. vs. La Compania Maritima (GR 1963, 30 April 1906) …......... 328 Lopez vs. Duruelo (GR 29166, 22 October 1928) …......... 330 Philippine Refining v. Jarque (GR 41506, 25 March 1935) …......... 333 McMicking vs. El Banco Espanol-Filipino (GR 5029, 1 April 1909) …......... 334 Ivancich vs. Odlin (GR 924, 1 May 1902) …......... 337 Heath vs. Steamer San Nicolas (GR L-3066, 25 February 1907) …......... 339 Manila Steamship vs. Insa Abdulhaman (GR L-9534, 29 September 1956) …......... 343 Chua Yek Hong vs. IAC (GR L-74811, 30 September 1988) …......... 345 Commissioner vs. US Lines (GR L-16850, 30 May 1962) …......... 348 Madrigal Shipping vs. Ogilve (GR L-8431, 30 October 1958) …......... 350 Garcia vs. Ruiz (GR 923, 16 January 1903) …......... 353 Yaptico vs. Anderson (GR 9366, 1 August 1916) …......... 355 Yu Con vs. Ipil (GR 10195, 29 December 1916) …......... 356 US vs. Steamship “Islas Filipinas” (GR 8746, 30 October 1914) …......... 360 Ohta Development Co. vs. Steamship Pompey (GR 24658, 31 March 1926) …......... 363 Triton Insurance vs. Jose (GR 10381 and 10714, 14 January 1916) …......... 364 USA vs. Steamship Rubi (GR 9235, 17 November 1915) …......... 365 International Harvester Co. in Russia vs. Hamburg-American Line (GR 11515, 29 July 1918) …......... 370 Compagnie Franco-Indochinoise vs. Deutsch Australische Dampschiffs Gesselschaft (GR 11169, 31 March 1917) …......... 374 Guzman vs. William X (GR L-3649, 24 October 1907) …......... 378 US vs. Bacho (GR L-4091, 25 March 1908) …......... 380 Vir-Jen Shipping and Marine Services, NLRC (GR L-58011-12, 20 July 1982) …......... 381 Wallem Phil. Shipping vs. Minister of Labor (GR L-50734-37, 20 February 1981) …......... 387 Abueg vs. San Diego (CA-773-775, 17 December 1946) …......... 390 Murillo vs. Mendoza (GR 46020, 8 December 1938) …......... 392 Macondray vs. Delgado Bros. (GR L-13118, 28 April 1960) …......... 397 Bryan vs. Eastern & Australian SS (GR 9403, 4 November 1914) …......... 398 Puromines Inc. vs. CA (GR 91228, 22 March 1993) …......... 400

Litonjua Shipping vs. National Seamen Board (GR 51910, 10 August 1989) …......... 403 Maritime Agencies & Services vs. CA (GR 77638, 12 July 1990) …......... 406 Ouano vs. CA (GR 95900, 23 July 1992) …......... 411 NFA vs. CA (GR 96453, 4 August 1999) …......... 414 Market Developers vs. IAC (GR 74978, 8 September 1989) …......... 418 Marimperio Compania Naviera vs. CA (GR L-40234, 14 December 1987) …......... 421 O’Farrel vs. Meralco (GR 31222, 29 October 1929) …......... 424 Overseas Factors Inc. vs. South Sea Shipping (GR L-12138, 27 February 1962) …......... 426 Phoenix Assurance Co. Ltd. vs. US Lines GR L-24033, 22 February 1968) …......... 431 Telengtan Bros. & Sons. Vs. CA (GR 110581, 21 September 1994) …......... 434 De la Riva vs. Lizarraga Hermanos (GR L-2464, 7 January 1907) …......... 438 Banco Agricola y Pecuario v. El Dorado Trading …......... [unavailable] PC Ailment v. Macondray …......... [unavailable] Litton v. PNB …......... [unavailable] Oriental Commercial v. La Naviera Filipina …......... [unavailable] Philippine Home Assurance vs. CA (GR 106999, 20 June 1996) …......... 439 A. Magsaysay Inc. vs. Agan (GR L-6393, 31 January 1955) …......... 441 Austria vs. CA (GR 133323, 9 March 2000) …......... 443 Smith Bell vs. CA (GR 56294, 20 May 1991) …......... 445 Manila vs. Atlantic Gulf and Pacific Co. (GR 4510, 19 December 1908) …......... 450 Marine Trading vs. Government (GR 13422, 8 November 1918) …......... 451 A. Urrutia & Co. vs. Baco River Plantation (GR 7675, 25 March 1913) …......... 452 Versoza vs. Lim (GR 20145, 15 November 1923) …......... 458 Government vs. Philippine Steamship Co. (GR 18957, 16 January 1923) …......... 461 Picart vs. Smith (GR L-12219, 15 March 1918) …......... 462 US vs. Smith Bell (GR 1876, 30 September 1905) …......... 464 Philippine Shipping Co. vs. Vergara (GR 1600, 1 June 1906) …......... 465 Chin Guan vs. Compania Maritima (GR 45070, 28 November 1938) …......... 467 Manila Railroad vs. Macondray (GR L-12475, 21 March 1918) …......... 468 Standard Oil Co. of New York vs. Lopez Castelo (GR 13695, 18 October 1921) …......... 470 Jarque vs. Smith Bell (GR 32986, 11 November 1930) …......... 473 Taxicab Operators v. The Board of Transportation [GR L-59234, 30 September 1982] …......... 475 Napocor vs. CA (GR 113103, 13 June 1997) …......... 476 GMCR vs. Bell Telecoms (GR 126496, 30 April 1997) …......... 480 Maceda vs. ERB (GR 95203-05, 18 December 1990) …......... 485 Lagman vs. Manila (GR L-23305, 30 June 1966) …......... 488 Philippine Global Communications vs. Relova (GR L-52819, 2 October 1980) …......... 491 Philippine Global vs. Relova (GR L-60548, 10 November 1986) …......... 492 PLDT vs. NTC (GR 88404, 18 October 1990) …......... 496 RCPI vs. Rodriguez (GR 83768, 28 February 1990) …......... 502 Telefast Communications vs. Castro (GR 73867, 29 February 1988) …......... 505 RCPI vs. CA (GR 79578, 13 March 1991) …......... 507 Zulueta vs. Pan American World Airways (GR L-28589, 8 January 1973); Res. …......... 509 Lopez vs. Pan American World Airways (GR L-22415, 30 March 1966) …......... 516 Pan American World Airways vs. IAC (GR L-70462, 11 August 1988) …......... 521 Luna vs. CA (GR 100374-75, 27 November 1992) …......... 524 Santos vs. Northwest Orient Airlines (GR 101538, 23 June 1992) …......... 526 Tan vs. Northwestern Airlines (GR 135802, 3 March 2000) …......... 532 American Airlines vs. CA (GR 116044-45, 9 March 2000) …......... 533 Yu Eng Cho vs. Pan American World Airways (GR 123560, 27 March 2000) …......... 535 {200-11}

Rizal Surety & Insurance vs. Macondray & Co. (GR L-24064, 29 February 1968) …......... 540 The American Insurance Co. vs. Compania Maritima (GR L-24515, 18 November 1967) …......... 541 Mitsui vs. CA (GR 119571, 11 March 1998) …......... 542 Mayer Steel Pipe vs. CA (GR 124050, 19 June 1997) …......... 544 Barrios vs. Go Thong (GR L-17192, 30 March 1963) …......... 545 Wallace vs. Pujalte Co. (GR 10019, 29 March 1916) …......... 547 Atlantic Gulf & Pacific Co. vs. Uchida Kisen Kaisha (GR 15871, 7 November 1921) …......... 549 Erlanger & Galinger vs. Swedish East Asiatic (GR 10051, 9 March 1916) …......... 552 Pestano vs. Sumayang (GR 139875, 4 December 2000) …......... 561

This collection contains one hundred ninety eight (198) out of two hundred nine (209) assigned cases summarized in this format by Michael Vernon M. Guerrero (as a junior law student) during the First Semester, school year 2004-2005 in the Transportation Law class under Atty. Porfirio Panganiban at the Arellano University School of Law (AUSL). Compiled as PDF, July 2011. Berne Guerrero entered AUSL in June 2002 and eventually graduated from AUSL in 2006. He passed the Philippine bar examinations immediately after (April 2007).

www.berneguerrero.com

Haystacks (Berne Guerrero)

[1], also [173] Caltex vs. Sulpicio Lines (GR 131166, 30 September 1999) First Division, Pardo (J): 3 concur, 1 took no part Facts: MT Vector is a tramping motor tanker owned and operated by Vector Shipping Corporation, which is engaged in the business of transporting fuel products such as gasoline, kerosene, diesel and crude oil. On the other hand, the MV Doña Paz is a passenger and cargo vessel owned and operated by Sulpicio Lines, Inc. plying the route of Manila/ Tacloban/ Catbalogan/ Manila/ Catbalogan/ Tacloban/ Manila, making trips twice a week. On 19 December 1987, motor tanker MT Vector left Limay, Bataan, enroute to Masbate, loaded with 8,800 barrels of petroleum products shipped by Caltex, by virtue of a charter contract between Vector Shipping and Caltex. The next day, the passenger ship MV Doña Paz left the port of Tacloban headed for Manila with a complement of 59 crew members including the master and his officers, and passengers totaling 1,493 as indicated in the Coast Guard Clearance, but possibly carrying an estimated 4,000 passengers. At about 10:30 p.m. of 20 December 1987, the two vessels collided in the open sea within the vicinity of Dumali Point between Marinduque and Oriental Mindoro. All the crewmembers of MV Doña Paz died, while the two survivors from MT Vector claimed that they were sleeping at the time of the incident. Only 24 survived the tragedy after having been rescued from the burning waters by vessels that responded to distress calls. Among those who perished were public school teacher Sebastian Cañezal (47 years old) and his daughter Corazon Cañezal (11 years old), both unmanifested passengers but proved to be on board the vessel. On 22 March 1988, the board of marine inquiry after investigation found that the MT Vector, its registered operator Francisco Soriano, and its owner and actual operator Vector Shipping Corporation, were at fault and responsible for its collision with MV Doña Paz. On 13 February 1989, Teresita and Sotera Cañezal, filed with the RTC Manila, a complaint for “Damages Arising from Breach of Contract of Carriage” against Sulpicio Lines, Inc. Sulpicio, in turn, filed a third party complaint against Francisco Soriano, Vector Shipping Corporation and Caltex (Philippines), Inc. On 15 September 1992, the trial court rendered decision dismissing the third party complaint against Caltex. On appeal to the Court of Appeals interposed by Sulpicio Lines, Inc. (CA-GR CV 39626), on 15 April 1997, the Court of Appeal modified the trial court’s ruling and included petitioner Caltex as one of the those liable for damages. Hence the petition. The Supreme Court granted the petition and 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, Inc. the damages the latter is adjudged to pay plaintiffs-appellees. The Court affirmed the decision of the Court of Appeals insofar as it orders Sulpicio Lines, Inc. to pay the heirs of Sebastian E. Cañezal and Corazon Cañezal damages as set forth therein. Third-party defendant-appellee Vector Shipping Corporation and Francisco Soriano are held liable to reimburse/indemnify defendant Sulpicio Lines, Inc. whatever damages, attorneys’ fees and costs the latter is adjudged to pay plaintiffs-appellees in the case. 1. The respective rights and duties of a carrier depends on the nature of the contract of carriage The respective rights and duties of a shipper and the carrier depends not on whether the carrier is public or private, but on whether the contract of carriage is a bill of lading or equivalent shipping documents on the one hand, or a charter party or similar contract on the other. In the case at bar, Caltex and Vector entered into a contract of affreightment, also known as a voyage charter. 2. Charter party and contract of affreightment defined A charter party is a contract by which an entire ship, or some principal part thereof, is let by the owner to another person for a specified time or use; a contract of affreightment is one by which the owner of a

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Haystacks (Berne Guerrero)

ship or other vessel lets the whole or part of her to a merchant or other person for the conveyance of goods, on a particular voyage, in consideration of the payment of freight. 3. Kinds of contract of affreightment A contract of affreightment may be either time charter, wherein the leased vessel is leased to the charterer for a fixed period of time, or voyage charter, wherein the ship is leased for a single voyage. In both cases, the charter-party provides for the hire of the vessel only, either for a determinate period of time or for a single or consecutive voyage, the ship owner to supply the ship’s store, pay for the wages of the master of the crew, and defray the expenses for the maintenance of the ship. 4. Charterer’s liability: Bareboat charter vs. Contract of affreightment Under a demise or bareboat charter, the charterer mans the vessel with his own people and becomes, in effect, the owner for the voyage or service stipulated, subject to liability for damages caused by negligence. If the charter is a contract of affreightment, which leaves the general owner in possession of the ship as owner for the voyage, the rights and the responsibilities of ownership rest on the owner. The charterer is free from liability to third persons in respect of the ship. 5. charter. 6. Bareboat, but not voyage charter, transforms common carrier into private carrier Although a charter party may transform a common carrier into a private one, the same however is not true in a contract of affreightment (Coastwise Lighterage Corp. vs. CA) A public carrier shall remain as such, notwithstanding the charter of the whole or portion of a vessel by one or more persons, provided the charter is limited to the ship only, as in the case of a time-charter or voyage charter. It is only when the charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier becomes private, at least insofar as the particular voyage covering the charter-party is concerned. Indubitably, a ship-owner in a time or voyage charter retains possession and control of the ship, although her holds may, for the moment, be the property of the charterer. (Planters Products vs. CA). In the case at bar, the charter party agreement did not convert the common carrier into a private carrier. The parties entered into a voyage charter, which retains the character of the vessel as a common carrier. 7. Common carrier defined A common carrier is a person or corporation whose regular business is to carry passengers or property for all persons who may choose to employ and to remunerate him. In the case at bar, MT Vector fits the definition of a common carrier under Article 1732 of the Civil Code (Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers for passengers or goods or both, by land, water, or air for compensation, offering their services to the public). 8. Article 1732, Common carrier, construed 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 services on a an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the “general public,” i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. Article 1733 deliberately refrained from making such distinctions. 9. Responsibility of carrier before voyage; Seaworthiness
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Categories of charter parties Charter parties fall into three main categories: (1) Demise or bareboat, (2) time charter, (3) voyage

Haystacks (Berne Guerrero)

Under Section 3 of the Carriage of Goods by Sea Act, (1) The carrier shall be bound before and at the beginning of the voyage to exercise due diligence to (a) Make the ship seaworthy; (b) Properly man, equip, and supply the ship; among others. Carriers are deemed to warrant impliedly the seaworthiness of the ship. For a vessel to be seaworthy, it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. The failure of a common carrier to maintain in seaworthy condition the vessel involved in its contract of carriage is a clear breach of its duty prescribed in Article 1755 of the Civil Code. 10. Article 1173 of the New Civil Code Article 1173 of the Civil Code provides that “the fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of Article 1171 and 2201 paragraph 2, shall apply. If the law does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required.” 11. Negligence defined Negligence, as commonly understood, is conduct which naturally or reasonably creates undue risk or harm to others. It may be the failure to observe that degree of care, precaution, and vigilance, which the circumstances justly demand, or the omission to do something which ordinarily regulate the conduct of human affairs, would do (Southeastern College vs. CA). 12. Reason for the applicability of Section 3 COGSA, and Article 1755 NCC to carriers, not shipper and passengers; Ordinary diligence required of shippers The provisions owed their conception to the nature of the business of common carriers. This business is impressed with a special public duty. The public must of necessity rely on the care and skill of common carriers in the vigilance over the goods and safety of the passengers, especially because with the modern development of science and invention, transportation has become more rapid, more complicated and somehow more hazardous. For these reasons, a passenger or a shipper of goods is under no obligation to conduct an inspection of the ship and its crew, the carrier being obliged by law to impliedly warrant its seaworthiness. The charterer of a vessel has no obligation before transporting its cargo to ensure that the vessel it chartered complied with all legal requirements. The duty rests upon the common carrier simply for being engaged in “public service.” The Civil Code demands diligence which is required by the nature of the obligation and that which corresponds with the circumstances of the persons, the time and the place. Because of the implied warranty of seaworthiness, shippers of goods, when transacting with common carriers, are not expected to inquire into the vessel’s seaworthiness, genuineness of its licenses and compliance with all maritime laws. To demand more from shippers and hold them liable in case of failure exhibits nothing but the futility of our maritime laws insofar as the protection of the public in general is concerned. By the same token, passengers cannot be expected to inquire every time they board a common carrier, whether the carrier possesses the necessary papers or that all the carrier’s employees are qualified. Such a practice would be an absurdity in a business where time is always of the essence. Considering the nature of transportation business, passengers and shippers alike customarily presume that common carriers possess all the legal requisites in its operation. In the case at bar, the nature of the obligation of Caltex demands ordinary diligence like any other shipper in shipping his cargoes. 13. Caltex not liable for damages Caltex and Vector Shipping Corporation had been doing business since 1985, or for about two years before the tragic incident occurred in 1987. Past services rendered showed no reason for Caltex to observe a higher degree of diligence. Clearly, as a mere voyage charterer, Caltex had the right to presume that the ship was seaworthy as even the Philippine Coast Guard itself was convinced of its seaworthiness. All things considered, we find no legal basis to hold petitioner liable for damages.

Transportation Law, 2004 ( 3 )

Haystacks (Berne Guerrero)

[2], also [10] First Philippine Industrial Corp. vs. CA (GR 125948, 29 December 1998) Second Division , Martinez (J): 3 concur Facts: First Philippine Industrial Corporation (FPIC) is a grantee of a pipeline concession under RA 387, as amended, to contract, install and operate oil pipelines. The original pipeline concession was granted in 1967 and renewed by the Energy Regulatory Board in 1992. Sometime in January 1995, FPIC applied for a mayor’s permit with the Office of the Mayor of Batangas City. However, before the mayor’s permit could be issued, the City Treasurer required FPIC to pay a local tax based on its gross receipts for the fiscal year 1993 pursuant to the Local Government Code. The City Treasurer assessed a business tax on the petitioner amounting to P956,076.04 payable in four installments based on the gross receipts for products pumped at GPS-1 for the fiscal year 1993 which amounted to P181,681,151.00. In order not to hamper its operations, FPIC paid the tax under protest in the amount of P239,019.01 for the first quarter of 1993. On 8 March 1994, the City Treasurer denied the protest contending that petitioner cannot be considered engaged in transportation business, thus it cannot claim exemption under Section 133 (j) of the Local Government Code. On 15 June 1994, FPIC filed with the RTC Batangas City a complaint for tax refund with prayer for writ of preliminary injunction against the City of Batangas and Adoracion Arellano in her capacity as City Treasurer (Civil Case 4293). On 3 October 1994, the trial court rendered a decision dismissing the complaint. PFIC assailed the aforesaid decision before the Supreme Court via a petition for review. On 27 February 1995, the Supreme Court referred the case to the Court of Appeals for consideration and adjudication (CA-GR SP 36801). On 29 November 1995, the CA rendered a decision affirming the trial court’s dismissal of petitioner’s complaint. FPIC’s motion for reconsideration was denied on 18 July 1996. Hence, the petition for review on certiorari. At first, the petition was denied due course in a Resolution dated 11 November 1996. FPIC moved for a reconsideration which was granted by the Supreme Court in a Resolution of 22 January 1997. Thus, the petition was reinstated. Finally, the Supreme Court granted the petition, and thus reversed and set aside the decision of the Court of Appeals. 1. Common Carrier defined (broad definition) A “common carrier” may be defined, broadly, as one who holds himself out to the public as engaged in the business of transporting persons or property from place to place, for compensation, offering his services to the public generally. 2. Common Carrier defined (Article 1732) Article 1732 of the Civil Code defines a “common carrier” as “any person, corporation, firm or association engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public.” 3. Test for determining whether a party is a common carrier of goods a. He must be engaged in the business of carrying goods for others as a public employment, and must hold himself out as ready to engage in the transportation of goods for person generally as a business and not as a casual occupation; b. He must undertake to carry goods of the kind to which his business is confined; c. He must undertake to carry by the method by which his business is conducted and over his established roads; and d. The transportation must be for hire.

Transportation Law, 2004 ( 4 )

Haystacks (Berne Guerrero)

4.

FPIC is a common carrier Based on the definitions and requirements, FPIC 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. 5. The fact that FPIC has a limited clientele does not exclude it from the definition of a common carrier Article 1732 of the Civil Code makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (in local idiom, as a ‘sideline’). Article 1732 . . . avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its services to the ‘general public,’ i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population. We think that Article 1877 deliberately refrained from making such distinctions. (De Guzman vs. CA) 6. Common Carrier under Article 1732 coincides neatly with notion of Public Service The concept of ‘common carrier’ under Article 1732 may be seen to coincide neatly with the notion of “public service,” under the Public Service Act (Commonwealth Act 1416, as amended) which at least partially supplements the law on common carriers set forth in the Civil Code. Under Section 13, paragraph (b) of the Public Service Act, ‘public service’ includes “every person that now or hereafter may own, operate, manage, or control in the Philippines, for hire or compensation, with general or limited clientele, whether permanent, occasional or accidental, and done for general business purposes, any common carrier, railroad, street railway, traction railway, subway motor vehicle, either for freight or passenger, or both, with or without fixed route and whatever may be its classification, freight or carrier service of any class, express service, steamboat, or steamship line, pontines, ferries and water craft, engaged in the transportation of passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system gas, electric light heat and power, water supply and power petroleum, sewerage system, wire or wireless communications systems, wire or wireless broadcasting stations and other similar public services.” 7. Oil pipeline operators are common carriers; Motor vehicle not required The definition of “common carriers” in the Civil Code makes no distinction as to the means of transporting, as long as it is by land, water or air. It does not provide that the transportation of the passengers or goods should be by motor vehicle. In fact, in the United States, oil pipe line operators are considered common carriers. 8. Pipeline concessionaire as common carrier (RA 387) Under the Petroleum Act of the Philippines (Republic Act 387), FPIC is considered a “common carrier.” Thus, Article 86 thereof provides that “Pipe line concessionaire as common carrier. — A pipe line shall have the preferential right to utilize installations for the transportation of petroleum owned by him, but is obliged to utilize the remaining transportation capacity pro rata for the transportation of such other petroleum as may be offered by others for transport, and to change without discrimination such rates as may have been approved by the Secretary of Agriculture and Natural Resources.” 9. Petroleum operation regarded as public utility (RA 387) Republic Act 387 also regards petroleum operation as a public utility. Pertinent portion of Article 7 thereof provides “that everything relating to the exploration for and exploitation of petroleum . . . and everything relating to the manufacture, refining, storage, or transportation by special methods of petroleum, is hereby declared to be a public utility.”

Transportation Law, 2004 ( 5 )

2004 ( 6 ) . M/L Maya. the Board of Marine Inquiry conducted a hearing of the sinking of M/L Maya wherein SMC was duly represented. On 27 March 1982 at about 4:00 a. of the Local Government Code.” 12.Haystacks (Berne Guerrero) 10. Paras (J): 3 concur Facts: Alejandro Arada is the proprietor and operator of the firm South Negros Enterprises which has been organized and established for more than 10 years. municipalities. FPIC is already paying 3% common carrier’s tax on its gross sales/earnings under the National Internal Revenue Code. officers and crew of M/L Maya from any administrative liability. 1 July 1992) Second Division. Its rudder was destroyed and it drifted for 16 hours although its engine was running. a typhoon developed and said vessel was buffeted on all its sides by big waves. Arada thru its crew master. . cities. except as provided in this Code. On 25 March 1982 M/L Maya was given clearance as there was no storm and the sea was calm. Case No. Pipeline concessionaire a common carrier (BIR Ruling 069-83) The Bureau of Internal Revenue likewise considers FPIC a “common carrier. land or water. Vivencio Babao.m. it declared that “.. It is engaged in the business of small scale shipping as a common carrier. LGC FPIC is a common carrier and is thus exempt from the business tax provided in Section 133 (j) FPIC is a “common carrier” and. Arada entered into a contract with San Miguel Corporation (SMC) to safely transport as a common carrier.” In BIR Ruling 069-83. Section 133 (j) provides that “(Common Limitations on the Taxing Powers of Local Government Units) Unless otherwise provided herein. Transportation Law. Non-imposition of business tax against common carriers to prevent duplication of “common carrier’s tax” The legislative intent in excluding from the taxing power of the local government unit the imposition of business tax against common carriers is to prevent a duplication of the so-called “common carrier’s tax. since (petitioner) is a pipeline concessionaire that is engaged only in transporting petroleum products. it is not subject to withholding tax prescribed by Revenue Regulations No. exempt from the business tax as provided for in Section 133 (j). On the basis of such marine protest. the Commandant of the Philippine Coast Guard rendered a decision dated 21 December 1984 in SBMI Adm. 387 . as amended. cargoes of the latter from San Carlos City. To tax FPIC again on its gross receipts in its transportation of petroleum business would defeat the purpose of the Local Government Code. applied for a clearance with the Philippine Coast Guard for M/L Maya to leave the port of San Carlos City. but due to a typhoon. and barangays shall not extend to the levy of the following: xxx (j. On 24 March 1982.” 11. they were brought to Palompon. Leyte. therefore. Negros Occidental to Mandaue City using one of Arada’s vessels. . Mr. said vessel left for Mandaue City. Later in the afternoon. 13-78. On the basis of such report. [3] Arada vs.) Taxes on the gross receipts of transportation contractors and persons engaged in the transportation of passengers or freight by hire and common carriers by air. The crew was rescued by a passing pump boat and was brought to Calanggaman Island. it was denied clearance by SNI Antonio Prestado PN who was then assigned at San Carlos City Coast Guard Detachment. where Vivencio Babao filed a marine protest. . While it was navigating towards Cebu. Hence. the exercise of the taxing powers of provinces. Said Board made it findings and recommendation dated 7 November 1983. CA (GR 98243. The Board’s report containing its findings and recommendation was then forwarded to the headquarters of the Philippine Coast Guard for appropriate action. absolving the owner/operator. servicing the hauling of cargoes of different corporations and companies with the five vessels it was operating. . 88-82 exonerating the owner/operator officers and crew of the ill-fated M/L Maya from any administrative liability on account of said incident. Such being the case. In the case at bar.” The legislature thus provided an exception under Section 125 (now Section 137) that a province may impose this tax at a specific rate. it is considered a common carrier under Republic Act No. the vessel sank with whatever was left of its cargoes. On 24 March 1982.

187 SCRA 547) 3.47 due the defendant. 1. Common carriers defined Common carriers are persons. In its decision promulgated on 8 April 1991. (3) In the third cause of action. This fact is best supported by the admission of petitioner’s son. who testified as the officer-in-charge for operations of South Negros Enterprises in Cebu City.20. G. After due hearing.00. Hence. 1732 of the New Civil Code). NO COSTS. However.824. storm or other natural disaster in order that the common carrier may be exempted from liability for the destruction or deterioration of the goods (Article 1739.997. by land. firms or associations engaged in the business of carrying or transporting passengers or goods or both.148. 193-195). during and after the occurrence of flood. the defendant must pay plaintiff the sum of P2. 70876. The loss or destruction or deterioration of goods turned over to the common carrier for the conveyance to a designated destination raises instantly a presumption of fault or negligence on the part of the carrier. M/L Maya. corporations. the natural disaster must have been the proximate and only cause of the loss. Records will show that Babao did not ascertain where the typhoon was headed by the use of his vessel’s barometer and radio. SMC filed a complaint in the RTC its first cause of action being for the recovery of the value of the cargoes anchored on breach of contract of carriage. the plaintiff should deduct the amount of P4. (4) Since the plaintiff has withheld the payment of P12. Thereafter. New Civil Code). Mr. but in caring for the goods transported by it. it affirmed the appealed decision. Natural disaster must be the proximate and only cause of the loss to exempt common carrier from liability In order that the common carrier may be exempted from responsibility. Duty of common carrier to exercise extraordinary diligence.Haystacks (Berne Guerrero) On 25 March 1983. July 19. there is no doubt that Arada was exercising its function as a common carrier when it entered into a contract with SMC to carry and transport the latter’s cargoes. for compensation offering their services to the public (Art. and thereupon ordered Arada to pay unto the SMC the amount of P176. claim of plaintiff is hereby dismissed. and the costs. pp. the petition for review on certiorari. No. the common carrier must exercise due diligence to prevent or minimize the loss before. On 20 November 1991.27 must be paid to the defendant. the ship’s captain. Finally.20 from the P12. until fully paid. Less than 24 hours elapsed since the time of the denial of said clearance and the time a clearance to sail was finally issued on 25 March 1982. 2. save only where such loss.R. defendant must pay plaintiff the sum of P2.” (Orig.000. knew of the impending typhoon on 24 March 1982 when the Philippine Coast Guard denied M/L Maya the issuance of a clearance to sail. where (1) With respect to the first cause of action. SMC appealed the decision to the Court of Appeals (CA-GR CV 20597). Neither did the captain of the vessel monitor and record the weather conditions everyday Transportation Law. 1990.80 representing the value of the cargo lost on board the ill-fated vessel. In the case at bar. Failure to ascertain the location and direction of typhoon shows negligence Vivencio Babao.997. (2) Under the second cause of action. with interest thereon at the legal rate from date of the filing of the complaint on 25 March 1983.(Benedicto v. said court rendered a decision dated 18 July 1988. destruction or damage arises from extreme circumstances such as a natural disaster or calamity. is likewise dismissed.849. and (5) Defendant’s counterclaim not having been substantiated by evidence. Eric Arada. IAC.849. both from the nature of its business and for insistent reasons of public policy is burdened by law with the duty of exercising extraordinary diligence not only in ensuring the safety of passengers.47 and the balance of P8. 4. the Court of Appeals reversed the decision of the lower court. water or air. Fortuitous event A common carrier. 2004 ( 7 ) . the Supreme Court gave due course to the petition. Record.

” 10. Exoneration from administrative liability does not mean exoneration from liability as common carrier The exoneration made by the Special Board of Marine Inquiry was but with respect to the administrative liability of the “owner/operator. Jr. Ballan. 612 of the Code of Commerce. While it is true that they were given special permit to man the vessel. clearly. Had he done so while navigating for 31 hours. Civil Code.Haystacks (Berne Guerrero) as required by Art. also [101] Sabena Belgian World Airlines vs. 6. G. Such is the function of the Court. 2004 ( 8 ) . PAG-ASA’s records as per March 25-27. Carrier’s fault or negligence presumed While the goods are in the possession of the carrier. 89757. Cebu As per official records of the Climatological Division of the Philippine Atmospheric. Cebu during the period March 25-27. all of whom were unlicensed. 7. Jurisdiction of the Board of Marine Inquiry and the Special Board of Marine Inquiry The Philippine Merchant Marine Rules and Regulations particularly Chapter XVI thereof entitled “Marine Investigation and Suspension and Revocation Proceedings” prescribes the Rules governing maritime casualties or accidents. officers and crew of the ill-fated” vessel. Primitivo G.R. Court of Appeals. that is necessary to protect the interest of the shipper which is at the mercy of the carrier (Art. 1982. [4]. Aboitiz Shipping Corporation v. Geophysical and Astronomical Services Administration (PAG-ASA) issued by its Chief of Climatological Division. Circumstances constitute lack of foresight and minimum vigilance over the cargoes A common carrier is obliged to observe extraordinary diligence and the failure of Babao to ascertain the direction of the storm and the weather condition of the path they would be traversing. 5. not the Special Board of Marine Inquiry. the sea conditions on March 25. 9. the law presumes that it was due to the carrier’s fault or negligence. limiting the jurisdiction of the Board of Marine Inquiry and Special Board of Marine Inquiry to the administrative aspect of marine casualties in so far as it involves the shipowners and officers. he could have anticipated the strong winds and big waves and taken shelter. 1982 were slight to rough and the weather conditions then prevailing during those times were cloudy skies with rainshowers and the small waves grew larger and larger. it is but fair that it exercises extraordinary diligence in protecting them from loss or damage. 1990. the rules and procedures in administrative investigation of all maritime cases within the jurisdiction or cognizance of the Philippine Coast Guard and the grounds for suspension and revocation of licenses/certificates of marine officers and seamen (1601 — SCOPE). 6. constitute lack of foresight and minimum vigilance over its cargoes taking into account the surrounding circumstances of the case. Aug. as to the weather and sea conditions that prevailed in the vicinity of Catmon. 1982 on conditions prevailing in the vicinity of Catmon. such permit was issued at the risk and responsibility of the owner. Crew of M/L Maya did not have the required qualifications The records show that the crew of M/L Maya did not have the required qualifications provided for in PD 97 or the Philippine Merchant Marine Officers Law. 1756. and if loss occurs. CA (GR 104685. 8. 188 SCRA 387). No. It could not have meant exoneration of Arada from liability as a common carrier for his failure to observe extraordinary diligence in the vigilance over the goods it was transporting and for the negligent acts or omissions of his employees. 14 March 1996) Transportation Law.

the airlines’s Local Manager. Belgium.000. Paula San Agustin (a) US$4.Haystacks (Berne Guerrero) First Division: Vitug (J): 4 concur Facts: On 21 August 1987.000. storm.265. in its decision of 27 February 1992. San Agustin demanded from the defendant the money value of the luggage and its contents amounting to $4. (c) P10. with costs against Sabena Belgian World Airlines. lightning. The Supreme Court affirmed the appealed decision. destroyed or deteriorate. She followed up her claim on 14 September 1987 but the luggage remained to be missing. destruction.’ And Art. 2.00 shoes/bag $150. Fault or negligence. She stayed overnight in Brussels and her luggage was left on board Flight SN 284. Extraordinary diligence required on carriers Art. (d) P10. she filed her formal complaint with the office of Ferge Massed.265. Transportation Law. according to Art. Exceptions to extraordinary diligence requirement The only exceptions to the foregoing extraordinary responsibility of the common carrier is when the loss. But unfortunately San Agustin was informed that the luggage was lost for the second time.00 or its legal exchange in Philippine pesos.00. She was advised to accomplish and submitted and filed on the same day.265. 1736. clothes $1. or a total of $4. 2004 ( 9 ) . 1735 establishes the presumption that if the goods are lost.000. or deterioration of the goods is due to any of the following causes: (1) Flood. Art 1737 states that the common carrier’s duty to observe extraordinary diligence in the vigilance over the goods transported by them remains in full force and effect even when they are temporarily unloaded or stored in transits. Sabena appealed the decision of the Regional Trial Court to the Court of Appeals. “(b) P30.00 as exemplary damages. demanding immediate attention. accessories $75.00. attorney’s fees.00.00. earthquake. luggage itself $10. 3. and (e) (t)he cost of the suit. lasts from the time the goods are unconditionally placed in the possession of and received by the consignee or person who has the right to receive them. of the time. namely: jewelries valued at $2. the trial court rendered judgment ordering Sabena Belgian World Airlines to pay Ma.00 or its exchange value. When the source of an obligation is derived from a contract. the petition for review. 1733 of the [Civil] Code provides that from the very nature of their business and by reason of public policy. common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them.00 as moral damages. At the time of the filling of the complaint. Ma. Paula San Agustin was a passenger on board flight SN 284 of Sabena Belgian World Airlines originating from Casablanca to Brussels. On 30 September 1987. unless they prove that they had observed extraordinary diligence as required in Article 1733. the mere breach or non-fulfillment of the prestation gives rise to the presumption of fault on the part of the obligor. or other natural disaster or calamity.350. After trial. This rule is not different in the case of common carriers in the carriage of good father of a family but that of “extraordinary” care in the vigilance over the goods. affirmed in toto the trial court’s judgment. but the airline refused to settle the claim. and of the place. She was issued Tag 77143 on her valuables. she was furnished copies of the airlines’s telexes with and information that the Brussel’s Office of defendant found the luggage and that they have assured by the airline that it has notified its Manila Office 1987. 1. The appellate court. When she arrived at Manila International Airport on 2 September 1987 and immediately submitted her Tag to facilitate the release of her luggage but the luggage was missing. On 15 September 1987. This extraordinary responsibility. Rule in contracts and common carriers Fault or negligence consists in the omission of that diligence which is demanded by the nature of an obligation and corresponds with the circumstances of the person. on the Occasion of San Agustin’s following up her luggage claim.500. common carrier are presumed to have been at fault or to have acted negligently. the luggage was its content has not been found. Hence.

and declaring the stated limits of liability not applicable “if it is proved that the damage resulted from an act or omission of the carrier. signed at Warsaw. its servants or agents. Warsaw convention denies the carrier availment of provisions limiting liability if damage is caused by willful misconduct or default The Warsaw Convention denies to the carrier availment “of the provisions which exclude or limit his liability if the damage is caused by his willful. 5.” The same deletion was effected by the Montreal Agreement of 1966.” or “if the damage is (similarly) caused by any agent of the carrier acting within the scope of his employment. The airline company is not thus entirely off track when it has likewise raised in its defense the tort doctrine cannot support its case. done with intent to cause damage or recklessly and with knowledge that damage would probably result. Proximate legal cause defined The proximate legal cause is that acting first and producing the injury. and the carrier may refuse to carry as checked baggage. only to be told later that her luggage had been lost for the second time. or as an absolute limit of the extent of that liability. On 23 October 1987. for the “loss of said baggage not only once by twice underscore the wanton negligence and lack of care “ on the part of the carrier. on 02 October 1929. 6. of the General Conditions of Carriage. Slight reflection readily leads to the conclusion that it should be deemed a limit of Transportation Law. 8. money. 2004 ( 10 ) . each having a close causal connection with its immediate predecessors. Poland. securities or other valuable”) although noncontradictory principles on quasi-delict may then be assimilated as also forming part of the governing law. Thus. with its contents intact. Act of the public enemy in war. have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom. It was supposed to arrive on the same flight that San Agustin took in returning to Manila on 2 September 1987.” The Hague Protocol amended the Warsaw Convention by removing the provision that if the airline took all necessary steps to avoid the damage. it could exculpate itself completely. as an ordinarily prudent and intelligent person. Article IX. produces injury and without which the result would not have occurred. generally observed by International carriers. jewelry.Haystacks (Berne Guerrero) (2) (3) (4) (5) 4. the final event in the chain immediately affecting the injury as a natural and probable result of the cause which first acted. Act or omission of the shipper or owner of the goods. is considered to be equivalent to willful misconduct. all constituting a natural and continuous chain of events. The character of the goods or defects in the packing or in the containers. either immediately or by setting other events in motion. Fragiles or perishable articles. she was advised that her luggage had finally been found. precious metals. negotiable papers. Tort doctrine not a defense in failure to observe extraordinary diligence The rules as to the extraordinary diligence required in carriers remain basically unchanged even when the contract is breached by tort (on the ground that Section 5(c). Proximate cause defined Proximate cause is that which. in natural and continues sequence. that: “Passengers shall not include in his checked baggage. unbroken by any efficient intervening cause. The Convention does not thus operate as an exclusive enumeration of the instances of an airline’s liability. whether international or civil. 7. misconduct or by such default on his part as. stating among other things. as amended by the Hague Protocol of 1955. with the result that a passenger could recover unlimited damages upon proof of wilful misconduct. Loss of baggage twice shows gross negligence It remained undisputed that San Agustin’s luggage was lost while it was in the custody of Sabena Belgian World Airlines. in accordance with the law of the court seized of the case. Sabena Belgian World Airlines is ultimately guilty of “gross negligence” in the handling of San Agustin’s luggage. under such circumstances that the person responsible for the event should. Order or act of excepted causes obtains in the case.

Due to some mechanical defect. the PNR raised for the first time. at about 9:00 p. and the carrier’ or misconduct of its employees.00 as moral damages. although unforeseen. husband of Rosario Tupang. Winifredo Tupang fell off the train resulting in his death. or for some Particular or exceptional type of damage. As shown by the autopsy report. Section 4 of the said Act provides that “the Philippine National Railways shall have the following powers: (a) To do all such other things and to transact all such business directly or indirectly necessary. recklessness or otherwise improper conduct on the part of any official or employee for which the carrier is responsible. the doctrine of state immunity from suit. for repairs. bad faith. CA (GR L-55347. (Alitalia vs. taking some two hours before the train could resume its trip to Manila. the characteristics and attributes of a corporation under the Transportation Law. Moving for reconsideration of the above decision. Quezon. without costs.00 adjudicated as moral and exemplary damages. the Appellate Court sustained the holding of the trial court that the PNR did not exercise the utmost diligence required by law of a common carrier.. Perfecto Abrazado. Philippines is country of destination.” Under the foregoing section.000. The train did not stop despite the alarm raised by the other passengers that somebody fell from the train. to the non-performance of the obligation. [5] Philippine National Railways (PNR) vs. Camarines Sur.000.00 for loss of his earning capacity. Rosario Tupang. Hence the petition for review. PNR created under RA 4196. 2004 ( 11 ) .m. and requested for verification of the information. Quezon.000. held the PNR liable for damages for breach of contract of carriage and ordered it to pay Rosario Tupang the sum of P12. and (b) Generally. It further increased the amount adjudicated by the trial court by ordering PNR to pay the Rosario Tupang an additional sum of P5. as a defense. loss or damage to property or delay in its transport is not attributable to or attended by any wilful misconduct.000. the train conductor. the attendance of gross negligence (given the equivalent of fraud or bad faith) holds the common carrier liable for all damages which can be reasonably attribute. incidental or conducive to the attainment of the purpose of the corporation. Under domestic law and jurisprudence (the Philippines being the country of destination). respectively. upon passing Iyam Bridge at Lucena. or destruction. and P2.00 as exemplary damages. Winifredo Tupang died of cardio-respiratory failure due to massive cerebral hemorrhage due to traumatic injury. called the station agent at Candelaria. including moral and exemplary damages. PNR may sue and be sued like any other corporation The PNR was created under A 4156. IAC) 9.000. and the further sum of P10. after trial. No error in application of usual rules on extent of recoverable damages beyond the Warsaw limitations There is no error in the preponderant application to the case of the usual rules on the extent of recoverable damages beyond the Warsaw limitations. and cost. Tupang was later buried in the public cemetery of Lucena City by the local police authorities. the PNR has all the powers.00 for the death of Winifredo Tupang. the train stopped at Sipocot. as amended.00 and P5.Haystacks (Berne Guerrero) liability only in those cases where the cause of the death or injury to person.00 as attorney’s fees. Escolin (J): 3 concur Facts: On 10 September 1972. Unfortunately. The motion was denied. to exercise all powers of a corporation under the Corporation Law. On appeal. as a paying passenger bound for Manila. plus P20. Camarines Sur. Upon complaint filed by the deceased’s widow.000. boarded Train 516 of the Philippine National Railways at Libmanan. the then CFI Rizal. 4 October 1985) Second Division.000. Police authorities of Lucena City were dispatched to the Iyam Bridge where they found the lifeless body of Winifredo Tupang. 1. Instead. Winifredo Tupang. The Supreme Court modified the decision of the appellate court by eliminating therefrom the amounts of P10.

was resolved in two recent decisions. Other cases as to garnishment of GOCC funds a. Since he opted to sit on the open platform between the coaches of the train. malice or bad faith Transportation Law. 7. he should have held tightly and tenaciously on the upright metal bar found at the side of said platform to avoid falling off from the speeding train. government divests itself pro hac vice of its sovereign character. PNR may sue and be sued and may be subjected to court processes just like any other corporation.. 6. PNR has obligation to observe extraordinary diligence in transporting passengers to their destinations PNR has the obligation to transport its passengers to their destinations and to observe extraordinary diligence in doing so. PNR cannot legally set up the doctrine of non-suability as a bar to the Tupang’s suit for damages. 2004 ( 12 ) . (2) that the train did not even slow down when it approached the Iyam Bridge which was under repair at the time. Court of Industrial Relations: A government-owned and controlled corporation has a personality of its own. Court of Industrial Relations [81 SCRA 314] and Philippine National Bank v. Doctrine of non-suability cannot be legally set up As held in Manila Hotel Employees Association v. Hon. 2. “whether or not the funds of the Philippine National Railways could be garnished or levied upon on execution”. said that the main issue posed in said proceeding. nevertheless justified the deletion of the amount adjudicated as moral damages. Judge Pabalan [83 SCRA 595]. i. Philippine National Bank v. 5. 4.. National Shipyard and Steel Corporation v. the government divests itself pro hac vice of its sovereign character. inasmuch as PNR does not deny. it appears that the deceased was chargeable with contributory negligence. The argument based on non-suability of a state allegedly because the funds are governmental in character was unavailing. while not exempting the PNR from liability. then Justice Fernando. so as to render the corporation subject to the rules of law governing private corporations. distinct and separate from that of the Government. and (3) that neither did the train stop. it abdicates part of its sovereign prerogatives and descends to the level of a citizen” In the case at bar. it was held that “when the government engages in business. 3. By engaging in a particular business through the instrumentality of a corporation. (1) that the train boarded by the deceased Winifredo Tupang was so overcrowded that he and many other passengers had no choice but to sit on the open platforms between the coaches of the train.e. et al. Manila Hotel Co. the Philippine National Bank v.Haystacks (Berne Guerrero) Corporation Law. Death or any injury suffered by any of its passengers gives rise to the presumption that it was negligent in the performance of its obligation under the contract of carriage. where the Court ruled that there was no legal bar to garnishment or execution. Union de Maquinistas. “ b. By engaging in a particular business as a corporation. It does not follow though that they were exempt from garnishment. Award of exemplary damages in the absence of fraud. Court of Industrial Relations: “The premise that the funds could be spoken of as public in character may be accepted in the sense that the People’s Homesite and Housing Corporation was a government-owned entity. CIR. later Chief Justice. when the government enters into commercial business. PNR failed to overthrow such presumption of negligence with clear and convincing evidence. despite the alarm raised by other passengers that a person had fallen off the train at Iyam Bridge. In Prisco v. Such contributory negligence. Contributory negligence of Tupang warrants deletion of moral damages While PNR failed to exercise extraordinary diligence as required by law. PNR funds subject to garnishment or execution In Philippine National Railways v. it abandons its sovereign capacity and is to be treated like any other corporation.

whichever is lesser. The Court affirmed the appealed decision with the modification that the legal interest to be paid is 6% on the amount due computed from the decision. by the person entitled to receive them (Arts. damage of goods. crate box or container in no case to exceed P5.01 of the Management Contract). Upon arrival of the shipment in Manila on 12 December 1981. reckless. Dissatisfied. the consignee suffered losses totaling P19. The latter excepted to one drum. the grant of exemplary damages should be discarded. Inc.95 with the present legal interest of 12% per annum from October 1. so that it became subrogated to all the rights of action of said consignee against the shipping company. in solidum. On 7 January 1982. arrastre operator and broker-forwarder. Allied Brokerage made deliveries of the shipment to the consignees’ warehouse. shall not exceed US$500 per case or the CIF value of the loss. Allied Brokerage Corporation received the shipment from Metro Port Service. of the court a quo. the amount of P19. After trial. Vitug (J): 13 concur. Dollar Steamship Lines. fraudulent. 12 July 1994) En Banc. Inc. Duration of common carrier’s duty to observe requisite diligence 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. the date of filing of this complaints. it was discharged unto the custody of Metro Port Services. None of the exclusive exceptions can be applied Transportation Law.000.032.382. 1736-1738. 1982. while the rest of the contents was adulterated/fake. There being no evidence of fraud. Eastern Shipping Lines appealed to the Court of Appeals. and dismissing the counterclaims and crossclaim of defendant/cross-claimant Allied Brokerage Corporation.032. Mercantile Insurance was compelled to pay the consignee P19. Kui Bai vs. the trial court rendered judgment (1) ordering the shipping company. 161 SCRA 646. As a consequence of the losses sustained. CA (GR 97412.Haystacks (Berne Guerrero) The award of exemplary damages must be set aside. The Supreme Court partly granted the petition.38. shall be imposed on such amount upon finality of this decision until the payment thereof. shall be to the extent of the actual invoice value of each package. etc. until fully paid (the liability of defendant Eastern Shipping. A 12% interest. 2 fiber drums of riboflavin were shipped from Yokohama. Presumption of carrier’s negligence in case of loss.032.95 under the aforestated marine insurance policy. 2004 ( 13 ) . The shipment was insured under Mercantile Insurance Company’s Marine Insurance Policy 81/01177 for P36. and received by. oppressive or malevolent manner. said to be in bad order. and costs. Court of Appeals. The latter excepted to one drum which contained spillages. Japan for delivery vessel “SS Eastern Comet” owned by Eastern Shipping Lines under Bill of Lading YMA-8. one drum opened and without seal. Inc. Ganzon vs. due to the fault and negligence of the shipping company. 863). 2. Due to the losses/damage sustained by said drum. 1982. On January 8 and 14. Claims were presented against them who failed and refused to pay the same. dated 3 February 1988. Exemplary damages may be allowed only in cases where the defendant acted in a wanton.00 as attorney’s fees.00 each. also [51] Eastern Shipping Lines vs. P3. [6]. Civil Code. 1 took no part Facts: On 4 December 1981. the carrier for transportation until delivered to. while the liability of defendant Metro Port Service.466.000. the arrastre operator and the broker-forwarder to pay Mercantile Insurance. pursuant to Section 6. malice or bad faith on the part of PNR. in lieu of 6%.95. which damage was unknown to Mercantile Insurance. 52 Phil. The Court of Appeal affirmed in toto the judgment of the court a quo. or until the lapse of a reasonable time for their acceptance. 1.

and there need not be an express finding of negligence to hold it liable (Art. enumerated in Article 1734 1 of the Civil Code. from the time the complaint is filed until the adjudged amount is fully paid.. The factual circumstances may have called for different applications. Manila Port Service (1969). 2004 ( 14 ) . depending on whether or not the amount involved is a loan or forbearance. 107 Phil. ‘unliquidated and not known until definitely ascertained. too. Metro Port Service vs.’” American Express International v. and American Express International v. Court of Appeals. 1735. Tomol (1985). not one of which can be applied to the case at bar. i. Cruz (1986). The relationship between the consignee and the common carrier is similar to that of the consignee and the arrastre operator (Northern Motors. Prince Line. Philippine Rabbit Bus Lines v. IAC. assessed and determined by the courts after proof. a common time frame in the computation of the 6% interest per annum has been applied. introduced a different time frame for reckoning the 6% interest by ordering it to be “computed from the finality of (the) decision until paid. however. v.” The Nakpil and Sons case ruled that 12% interest per annum should be imposed from the finality of the decision until the judgment amount is paid.. such responsibility also devolves upon the Carrier. explaining that “if the suit were for damages. It is easily discernible in these cases that there has been a consistent holding that the Central Bank Circular imposing the 12% interest per annum applies only to loans or forbearance 16 of money. the basic issue focus on the application of either the 6% (under the Civil Code) or 12% (under the Central Bank Circular) interest per annum. 131 SCRA 365). Nakpil and Sons v. goods or credits.’ then. on the award of interest. a presumption arises against the carrier of its failure to observe that diligence. Both the Arrastre and the Carrier are therefore charged with the obligation to deliver the goods in goods condition to the consignee. 5. 19 SCRA 5 [1967].” The pronouncement. Florendo v. goods or credits. Court of Appeals. Since it is the duty of the Arrastre to take good care of the goods that are in its custody and to deliver them in good condition to the consignee. Observe. 6. of course. depending on the equities of each case. nor that attendant facts in a given case may not vary the rule. does not imply that the arrastre operator and the customs broker are themselves always and necessarily liable solidarily with the carrier. Malayan held that the amount awarded should bear legal interest from the date of the decision of the court a quo. did not alter the pronounced rule on the application of the 6% or 12% interest per annum. Rules in the determination of legal interests Transportation Law. et al. Second group of cases on variances on the Court’s ruling on legal interest The cases of Malayan Insurance Company v. First group of cases on variances on the Court’s ruling on legal interest In the cases of the cases of Reformina v. Inc.e. Court of Appeals (1988). in the manner that “The legal relationship between the consignee and the arrastre operator is akin to that of a depositor and warehouseman (Lua Kian v. Philippine National Railways vs. the “second group” varied on the commencement of the running of the legal interest. that in these cases. on the other hand. the Court has explained in holding the carrier and the arrastre operator liable in solidum. 3. Ruiz (1989) and National Power Corporation v. 4. or one of indemnity for damage. Unlike. interest ‘should be from the date of the decision. Metro Port Services (182 SCRA 455). 139 SCRA 87. on the one hand. The rationale why the carrier and arrastre operator are made liable in solidum In Fireman’s Fund Insurance vs. Civil Code. Intermediate Appellate Court (1988). are exclusive. however. angas (1992). the “first group” which remained consistent in holding that the running of the legal interest should be from the time of the filing of the complaint until fully paid. There are. 253 [1960]).. Manila Railroad Co. exceptional cases when such presumption of fault is not observed but these cases. or vice-versa.Haystacks (Berne Guerrero) When the goods shipped either are lost or arrive in damaged condition. guided by the rule that the courts are vested with discretion. and that the 6% interest under the Civil Code governs when the transaction involves the payment of indemnities in the concept of damage arising from the breach of a delay in the performance of obligations in general. as well as to judgments involving such loan or forbearance of money.

is breached. where the demand is established with reasonable certainty. to pay Charter Insurance Co. i. Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made. (INSURER) for P212. a loan or forbearance of money. be on the amount of finally adjudged. to pay Charter Insurance Co. and was loaded at Antwerp. the rate of legal interest. whether the case falls under paragraph 1 or paragraph 2. Belgium. at the conversion rate of P6.000 bags. this interim period being deemed to be by then an equivalent to a forbearance of credit. Union Sales Marketing Corporation (UNION) ordered from Union Carbide of Antwerp. Melencio-Herrera (J): 5 concur Facts: Sometime in April 1973. in addition to exemplary damages and attorney’s fees. and it consists in the payment of a sum of money. When an obligation. 3. the interest due shall itself earn legal interest from the time it is judicially demanded. With regard particularly to an award of interest in the concept of actual and compensatory damages.848 to a US Dollar. the interest due should be that which may have been stipulated in writing. above. the interest shall begin to run only from the date of the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained).738.050 bags were received by the consignee UNION in bad order condition. Accordingly. regardless of its source. from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. quasi-contracts.94 plus 12% interest per annum from July 1. shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. 2. Inc. in good order condition on board the “S/S Dingalan Bay”. 1974 Transportation Law. (ARRASTRE). delicts or quasidelicts 18 is breached. i. the INSURER paid UNION the sum of P35.000 bags of 25 net kilograms.. 99. Belgium.. more or less. is imposed. the INSURER sued for damages with the then CFI Manila against the CARRIER and the ARRASTRE in the amount of P35. an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. the contravenor can be held liable for damages. now called Metro Port Service. (2) E.e. the rate of interest. When the judgment of the court awarding a sum of money becomes final and executory.763. Furthermore. The shipment was covered by a Marine Risk Note issued by Charter Insurance Co. contracts.11 in full settlement of the claim. the interest shall begin to run from the time the claim is made judicially or extrajudicially (Article 1169. in any case.17 against all risks.. When the obligation is breached. 1.709.245 per kilogram or a total purchase price of US $24.30. CA (GR L-57582. In its Decision.. as well as the accrual thereof. for each bag. The CARRIER arrived in Manila on 22 June 1973 and arrastre services were handled by E. not constituting a loan or forbearance of money. The actual base for the computation of legal interest shall.Haystacks (Berne Guerrero) a.709.540 kilograms of Low Density Polyethylene. Razon Inc. the amount of P12. 2004 ( 15 ) . Inc. law. (CARRIER) and consigned to UNION in Manila. valued at US $. Razon. and the INSURER became the subrogee of all of UNION’s rights to recover from the parties concerned. the amount of P9. as follows: 1. The shipment was packed in 4. shall be 12% per annum from such finality until its satisfaction. Out of the 4.e.417. the Trial Court ordered (1) the Universal Shipping Lines. b. No interest. When a obligation. Inc. i. 24 August 1984) First Division. the rate of interest shall be 12% per annum to be computed from default. Inc.e. On 1 July 1974. 1974 until full payment thereof.285. In the absence of stipulation. The provisions under Title XVIII on “Damages” of the Civil Code govern in determining the measure of reoverable damages.94 plus 12% interest per annum from July 1. As a consequence of the damage and loss. [7] Metro Port Services vs.11. however. owned and operated by Universal Shipping Lines.

Razon to pay Charter Insurance. at 16. as evidenced by the original and duplicate copies of the Cargo Receipts issued by the CARRIER to the ARRASTRE and signed by their respective representatives. The condition of the 619 bags before the turnover to the ARRASTRE from the CARRIER was loss or spoilage of up to 50%. in a Petition for Review on Certiorari. however. 3.85. have the judgment modified. which the Court finds present in the case at bar in that the appellate court’s findings of facts are contrary to those of the Trial Court and are contradicted by the evidence on record. The Court has held in a number of cases that findings of fact by the Court of Appeals are.” and the INSURER did not appeal said award by the Trial Court in its desire to have the case terminated soonest. 2004 ( 16 ) . ARRASTRE’s liability fixed to 351 bags. Accordingly. Peru. as reflected in the Survey of Bad Order Cargoes. The Supreme Court reversed and set aside the appealed judgment of Court of Appeals. exceptions Ordinarily. Inc. as INSURER failed to appeal award However. less than the actual weight of 25 kilograms net per bag due to some recovery of spoilage. (3) both Universal Shipping and E.033. arrived in Manila on 7 March 1963 and was discharged into the lighters of Luzon Stevedoring Company.00 as attorney’s fees. Inc. 2. [8]. and (4) both Universal Shipping and E. 1. without costs.. Appellate Court’s ruling disregards evidence of the CARRIER and ARRASTRE that 619 bags were discharged in bad order condition In absolving the CARRIER. Bengzon JP (J): 7 concur Facts: “Consorcio Pesquero del Peru of South America” shipped freight pre-paid at Chimbate. and insured by Home Insurance Company for $202. there were shortages amounting to P12. When the cargo was delivered to consignee San Miguel Brewery.Haystacks (Berne Guerrero) until full payment thereof. owner Transportation Law. 4 April 1968) En Banc. The rule is not absolute. as this is the “evidence of the plaintiff” (INSURER). Reconsideration filed by the ARRASTRE was denied by the Appellate Court. covered by clean bills of lading Numbers 1 and 2. vs. in this appeal. The liability of the ARRASTRE for P9.94 fixed by the Trial Court is thus in order. the appellate court completely disregards the evidence of the CARRIER and the ARRASTRE that 619 bags were discharged by the CARRIER to the ARRASTRE in bad order condition. and allows of exceptions. causing the latter to lay claims against Luzon Stevedoring Corporation. signed by the CARRIER and ARRASTRE representatives. Since 619 bags were discharged from the CARRIER already in bad order condition. Branch XI. and reinstated that of the CFI Manila. The cargo. Razon to pay the costs.285. 21. Only questions of law may be raised in a Petition for Review on Certiorari. only questions of law may be raised.. the Trial Court held the CARRIER liable only for the value of a total of 443 bags. the INSURER may not. or a total liability of P12. conclusive on the Supreme Court when supported by the evidence on record. since the Trial Court computed the liability of the ARRASTRE at 351 bags. the then Court of Appeals. notwithstanding the ARRASTRE’s admission that “80 bags were not included in the bad order cargo certificate.94. Home Insurance Company and the American Steamship Agencies. P2.000. both dated 17 January 1963. American Steamship Agencies (GR L-25599. it follows that the remaining 431 bags were damaged while in the ARRASTRE’s custody for which it should be held liable. consigned to San Miguel Brewery.763. on 23 March 1981. absolved the CARRIER of any and all liability and held the ARRASTRE solely liable. On appeal by the CARRIER and ARRASTRE. in general. also [174] Home Insurance Co.8209 kilograms per bag.740 jute bags of Peruvian fish meal through SS Crowborough.505. in solidum. now San Miguel Corporation.

a common carrier undertaking to carry a special cargo or chartered to a special person only. 3. absolved Luzon Stevedoring Corporation. the charterer had the option to go north or south or vice-versa. Section 2. however. Because the others denied liability.870. The consignee may not claim ignorance of said charter party because the bills of lading expressly referred to the same. covering the shipment of Peruvian fish meal provide at the back thereof that the bills of lading shall be governed by and subject to the terms and conditions of the charter party. as shipper. for the contract is the charter party. Such policy has no force where the public at large is not involved. American Steamship Agencies appealed directly to the Supreme Court. And as stated recovery cannot be had thereunder. paragraph 2 of the charter party – which provides that the owner is liable for loss or damage to the goods caused by personal want of due diligence on its part or its manager to make the vessel in all respects seaworthy and to secure that she be properly manned. is in fact and legal contemplation merely a receipt and a document of title. as bills of lading expressly referred to the same.71 — the insurance value of the loss. As such. Home Insurance Company. and is deemed valid. as subrogee to the consignee.870. the liability of the shipowner for acts or negligence of its captain and crew. Dec.870. Having been refused reimbursement by both the Luzon Stevedoring Corporation and American Steamship Agencies. Accordingly. 2004 ( 17 ) . Said paragraph. a stipulation exempting the owner from liability for the negligence of its agent is not against public policy. Source of provisions of Civil Code on common carriers The provisions of our Civil Code on common carriers were taken from Anglo-American law.Haystacks (Berne Guerrero) and operator of SS Crowborough. without costs. the CFI. the charter party contract is one of affreightment over the whole vessel rather than a demise. 13. the consignees under the bills of lading must likewise abide by the terms of the charter party. and ordered American Steamship Agencies to pay Home Insurance Co. On the face of the bills are stamped “Freight prepaid as per charter party. conditions and exceptions of charter party dated London. filed against them on 6 March 1964 before the CFI Manila a complaint for recovery of P14. the bill of lading issued by the master to the charterer. In the case at bar. becomes a private carrier. 1. if any. the Civil Code provisions on common carriers (especially Article 1744) should not be applied where the carrier is not acting as such but as a private carrier. Subject to all terms. Contents of the bill lading in the present case The bills of lading. loading. Consignee cannot claim ignorance of charter party. for loss or damage to the Transportation Law. stowing and discharging at its risk and expense. Thus. Furthermore. The Supreme Court reversed the judgment appealed from. for whose acts the owner would ordinarily be liable except for said paragraph – is valid. Home Insurance Company paid the consignee P14. the bills of lading prevail over all the agreements. even from the neglect or fault of the captain or crew or some other person employed by the owner on board. Disagreeing with such judgment. 1962. not a contract.71 with legal interest plus P1.71 with legal interest. Under American jurisprudence.” 2. after trial.000 attorneys fees. 4. would remain in the absence of stipulation. P14. Instance for recovery not present in case In a charter of the entire vessel. On 17 November 1965. otherwise. Accordingly. Charter party in instant case is a Contract of Affreightment A perusal of the charter party referred to shows that while the possession and control of the ship were not entirely transferred to the charterer.. exempts the owner of the vessel from any loss or damage or delay arising from any other source. as in the case of a ship totally chartered for the use of a single party. as full settlement of the claim. and absolved the American Steamship Agencies from liability to Home Insurance Co. the vessel was chartered to its full and complete capacity. equipped and supplied or by the personal act or default of the owner or its manager. As a private carrier. having found the latter to have merely delivered what it received from the carrier in the same condition and quality. plus attorney’s fees.

FIOST basis. when the vessel’s 3 hatches containing the shipment were opened by NSC’s agents.000. see [2] [11] National Steel vs. entered into a contract of affreightment or contract of voyage charter hire with National Steel Corporation (NSC) on 17 July 1974. 12 December 1997) Vlasons Shipping vs. The following day. 1974. acting as agent of the vessel. (VSA).” On 6 September 1974. the MV ‘VLASONS I’ to make 1 voyage to load steel products at Iligan City and discharge them at North Harbor.. (7) Demurrage/Dispatch: P8. The cargo was discharged and unloaded by stevedores hired by the Charterer. The ship is a private carrier. in accordance with the Contract of Voyage Charter Hire. Manila. the MV ‘VLASONS I’ loaded at NSC’s pier at Iligan City. the MIT Testing Laboratories issued Report 1770 which in part. Doliente [10] FPIC vs. (5) Laydays/Cancelling: July 26. . Shipowners not responsible for losses/damages except on proven willful negligence of the officers of the vessel. and it is in this capacity that its owner. In this case.00 per day. (6) Loading/Discharging Rate: 750 tons per WWDSHINC. 5. Unloading was completed only on 24 August 1974 after incurring a delay of 11 days due to the heavy rain which interrupted the unloading operations. [9] Lastimosa vs. CA (GR 112287. does not transport cargo or shipment for the general public. as such. CA. both while it was still on board the vessel and later at the NDC warehouse in Pureza St. NSC filed with VSI its claim for Transportation Law. Payment upon presentation of Bill of Lading within fifteen (15) days. Chief Mate Gonzalo Sabando. 7 and 8. 2004 ( 18 ) . NSC called for a survey of the shipment by the Manila Adjusters and Surveyors Company (MASCO). that container/metal casings of the skids were rusting all over. viz: “xxx (2) Cargo: Full cargo of steel products of not less than 2. Manila where the cargo was taken and stored. whereby NSC hired VSI’s vessel. unless the same is due to personal acts or negligence of said owner or its manager. under the following terms and conditions. Manila. against the shipowners. Mesa.481.00/metric ton. the NSC’s shipment of 1. Vlasons Shipping. on 12 August 1974. xxx” On August 6. that tarpaulin hatch covers were noted torn at various extents. To determine the nature and extent of the wetting and rusting.Haystacks (Berne Guerrero) cargo. on the basis of Report 1770. On 31 August 1974. . BLPP 0233 on 8 August 1974. MASCO reported that it found wetting and rusting of the packages of hot rolled sheets and metal covers of the tinplates. CA (GR 112350) Third Division. 1974/Aug. shows that wetting was caused by contact with sea water. The shipment was placed in the 3 hatches of the ship. acknowledged receipt of the cargo on board and signed the corresponding bill of lading. MASCO’s surveyors drew at random samples of bad order packing materials of the tinplates and delivered the same to the MIT Testing Laboratories for analysis. North Harbor. “The analysis of bad order samples of packing materials . Inc. The vessel arrived with the cargo at Pier 12.677 skids of tinplates and 92 packages of hot rolled sheets or a total of 1. Panganiban (J): 4 concur Facts: The MV Vlasons I is a vessel which renders tramping service and. Its services are available only to specific persons who enter into a special contract of charter party with its owner. (Weather Working Day of 24 consecutive hours. MASCO made a report of its ocular inspection conducted on the cargo.769 packages with a total weight of about 2.19 metric tons for carriage to Manila. Sta. In a letter to the NSC dated 17 March 1975. states. xxx (9) Cargo Insurance: Charterer’s and/or Shipper’s must insure the cargoes. 1974. no such personal act or negligence has been proved. as distinguished from its other agents or employees.000. Sundays and Holidays Included). 10% more or less at Master’s option. xxx (4) Freight/Payment: P30. (10) Other terms: (a) All terms/conditions of NONYAZAI C/P [sic] or other internationally recognized Charter Party Agreement shall form part of this Contract.00/P4.500 MT. nearly all the skids of tinplates and hot rolled sheets were allegedly found to be wet and rusty.

it is provided that “owners shall. equipped and supplied and to make the holds and all other parts of the vessel in which cargo is carried. perils. .T.” 2. NSC formally demanded payment of said claim but VSI refused and failed to pay.” It has been held that the true test of a common carrier is the carriage of passengers or goods. water.’ which is used in the shipping business is a standard provision in the NANYOZAI Charter Party which stands for ‘Freight In and Out including Stevedoring and Trading’. or air. offering their services to the public. NSC filed its complaint against VSI on 21 April 1976 (Civil Case 23317) before the CFI of Rizal. firms or associations engaged in the business of carrying or transporting passengers or goods or both. Paragraph 12 of the NANYOZAI Charter Party Paragraph 12 of said NANYOZAI Charter Party also provides that “owners shall not be responsible for split.O. Common carriers defined (Article 1732).Haystacks (Berne Guerrero) damages suffered due to the downgrading of the damaged tinplates in the amount of P941. carriage and preservation. Owners shall not be liable for loss of or damage of the cargo arising or resulting from: unseaworthiness unless caused by want of due diligence on the part of the owners to make the vessel seaworthy. dangers and accidents of the sea or other navigable waters. wastage in bulk or weight or any other loss or damage arising from inherent defect. provided it has space. the appellate court denied both motions.000. by land. carriage and preservation.000. 1.000..I. Paragraph 5 of the NANYOZAI Charter Party The terms ‘F. 2004 ( 19 ) . . Under Paragraph 5 of the NANYOZAI Charter Party. “Charterers to load.” 4. attorney’s fees and expenses of litigation in the sum of P100. insufficiency of packing. The trial court rendered judgment in favor of VSI and against NSC dismissing the complaint with costs against NSC. it states. .00. fit and safe for its reception. and affirmed the questioned Decision of the Court of Appeals with the modification that the demurrage awarded to VSI is deleted. On appeal. In a Resolution dated 20 October 1993. 1976 until the same shall have been fully paid. and on 12 August 1993. Then on 3 October 1974. No pronouncement as to costs. The Supreme Court denied the consolidated petitions. exercise due diligence to make the vessel seaworthy and properly manned. . latent defects not discoverable by due diligence. loading and unloading of the cargoes are the responsibility of the Charterer. . equipped and supplied and to make the holds and all other parts of the vessel in which cargo is carried. The term “FIOST”. On motion of VSI. NSC and VSI filed separate motions for reconsideration.000.S. quality or vice of the cargo. and cost of suit. Test of common carrier Article 1732 of the Civil Code defines a common carrier as “persons. before and at the beginning of the voyage. for all who opt to avail themselves of its transportation service for a fee. which means that the handling. for compensation.00 as demurrage with interest at the legal rate on both amounts from April 7. any other cause arising without the actual fault or privity of Owners or without the fault of the agents or servants of owners. . .000. and to secure that the vessel is properly manned. fit and safe for its reception. . the Court ordered on 14 February 1994 the consolidation of the petitions.00 as unpaid freight and P88. Paragraph 10 of the NANYOZAI Charter Party Under paragraph 10 of the NANYOZAI Charter Party.145. the Court of Appeals modified the decision of the trial court by reducing the demurrage from P88.00 to P44. Transportation Law. chafing and/or any damage unless caused by the negligence or default of the master and crew. and ordering NSC to pay VSI on the counterclaim for the sum of P75. . NSC and VSI filed their respective petitions for review before the Supreme Court. . . Undaunted.” 3. stow and discharge the cargo free of risk and expenses to owners.18. corporations.00 and deleting the award of attorneys fees and expenses of litigation. .

the parties may freely stipulate their duties and obligations which perforce would be binding on them. the Court ruled that “in a contract of private carriage.Haystacks (Berne Guerrero) 5. The most typical. carrying and safekeeping the cargo. are determined primarily by stipulations in their contract of private carriage or charter party. vs. The burden of proof of these accidents is on the carrier.” The NANYOZAI Charter Party also provided that “owners shall not be responsible for split. shall be liable for damages arising from the cause mentioned in the preceding article if proofs against him show that they occurred on Transportation Law. It carried passengers or goods only for those it chose under a “special contract of charter party. Court of Appeals and Seven Brothers Shipping Corporation. 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. carriage and preservation. Rights and obligations of VSI and NSC are determined by stipulations in charter party Herein. Charter party A carrier which does not qualify under the test of a common carrier is deemed a private carrier. private carriage does not involve the general public.” 6. Ineluctably. however. 2004 ( 20 ) . CA In Valenzuela Hardwood and Industrial Supply. Inc. due to fortuitous event. the damage and impairment suffered by the goods during the transportation. including their respective liability for damage to the cargo. Contract of private carriage. dated 17 July 1974. unless the same was caused by its lack of due diligence to make the vessel seaworthy or to ensure that the same was “properly manned. Therefore. a maritime contract by which the charterer.” The NANYOZAI Charter Party. private carriage is undertaken by special agreement and the carrier does not hold himself out to carry goods for the general public. although not the only form of private carriage.” 8. is the charter party. Private Carrier. if the contrary has not been expressly stipulated. equipped and supplied. shall be for the account and risk of the shipper. Article 361 of the Code of Commerce Article 361 of the Code of Commerce provides that “Merchandise shall be transported at the risk and venture of the shipper.” 9. chafing and/or any damage unless caused by the negligence or default of the master or crew. the burden of proof was placed on NSC by the parties’ agreement. Article 362 of the Code of Commerce Article 362 of the Code of Commerce provides that “The carrier. Unlike in a contract involving a common carrier. VSI “shall not be responsible for losses except on proven willful negligence of the officers of the vessel. VSI a private carrier. 7. VSI did not offer its services to the general public. which was incorporated in the parties’ contract of transportation further provided that the shipowner shall not be liable for loss of or damage to the cargo arising or resulting from unseaworthiness. Valenzuela Hardwood vs.” 11. force majeure. or the nature and inherent defect of the things.” The MV Vlasons I “was not a common but a private carrier. Extent of VSI’s Responsibility and Liability Over NSC’s Cargo From the parties’ Contract of Voyage Charter Hire.” Consequently. 10. fit and safe for its reception. “Generally. NSC must prove that the damage to its shipment was caused by VSI’s willful negligence or failure to exercise due diligence in making MV Vlasons I seaworthy and fit for holding.. 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.” and to “make the holds and all other parts of the vessel in which cargo was carried. Hence. Burden of Proof (parties’ agreement) Herein. a party other than the shipowner. Consequently. obtains the use and service of all or some part of a ship for a period of time or a voyage or voyages. the rights and obligations of VSI and NSC.

while they may affect the burden of coming forward with evidence. unless the shipper committed fraud in the bill of lading. not Civil Code As the MV Vlasons I was a private carrier. However. 13. subsequently affirmed by the Court of Appeals. Plaintiff entitled to benefit of presumptions and inferences In an action against a private carrier for loss of. the burden is on the plaintiff to prove that the carrier was negligent or unseaworthy. only questions of law — not questions of fact — may be raised before the Supreme Court in a petition for review under Rule 45 of the Rules of Court. or damage to. fitted and equipped. MV Vlasons I was seaworthy VSI exercised due diligence to make the ship seaworthy and fit for the carriage of NSC’s cargo of steel and tinplates. where the carrier comes forward with evidence explaining the loss or damage. .Haystacks (Berne Guerrero) account of his negligence or his omission to take the precautions usually adopted by careful persons. the shipowner’s obligations are governed by the foregoing provisions of the Code of Commerce and not by the Civil Code which. cargo. This is shown by the fact that it was drydocked and harbored by the Philippine Coast Guard before it proceeded to Iligan City for its voyage to Manila under the contract of voyage charter hire. . Transportation Law. or injury to. The vessel’s voyage from Iligan to Manila was the vessel’s first voyage after drydocking. and proof that the goods were lost or damaged while in the carrier’s possession does not cast on it the burden of proving seaworthiness. Private carrier. Burden of proof in action against private carrier for loss of cargo. making him to believe that the goods were of a class or quality different from what they really were. 2004 ( 21 ) . Where contract of carriage exempts carrier from liability for unseaworthiness not discoverable by due diligence Where the action is based on the shipowner’s warranty of seaworthiness. Where the contract of carriage exempts the carrier from liability for unseaworthiness not discoverable by due diligence. the Court finds no reason to disturb the lower courts’ factual findings. Findings of the trial court. the law requires that it come forward with the information available to it. The Philippine Coast Guard Station in Cebu cleared it as seaworthy. However. plaintiff is entitled to the benefit of the presumptions and inferences by which the law aids the bailor in an action against a bailee.” 12. subject to some exceptional instances. it met all requirements for trading as cargo vessel. . in discharging the burden of proof. the burden of going forward with the evidence is again on plaintiff. binding upon the Supreme Court Where the factual findings of both the trial court and the Court of Appeals coincide. the same are binding on the Supreme Court. such inferences and presumptions. 14. Burden of proof in action based on shipowner’s warranty of seaworthiness. 15. as a general rule. Since a private carrier is not an insurer but undertakes only to exercise due care in the protection of the goods committed to its care. the carrier has the preliminary burden of proving the exercise of due diligence to make the vessel seaworthy. cargo while in the carrier’s possession does not cast on it the burden of proving proper care and diligence on its part or that the loss occurred from an excepted cause in the contract or bill of lading. the burden of proving negligence or a breach of that duty rests on plaintiff and proof of loss of. 16. and. and since the carrier is in a better position to know the cause of the loss and that it was not one involving its liability. Herein. places the prima facie presumption of negligence on a common carrier. and its failure to do so warrants an inference or presumption of its liability. and the fact that the goods were lost or damaged while in the carrier’s custody does not put the burden of proof on the carrier. Shipowner’s obligation governed by Code of Commerce. after a thorough review of the case. The Court stresses that. the burden of proving a breach thereof and that such breach was the proximate cause of the damage rests on plaintiff. do not alter the burden of proof which remains on plaintiff.

because he was not responsible for the stevedores or the unloading operations. Nothing in the charter party would make the liability of VSI for damage to the cargo contingent on or affected in any manner by NSC’s obtaining an insurance over the cargo. 18. 19. the ship used the old tarpaulin. This was further demonstrated by the fact that. it may be noted that the NSC may seek indemnification. Stevedores of NSC negligent in unloading cargo form ship. or loss of. The foregoing are clear from the marine protest of the master of the MV Vlasons I. Duty of a stevedore company A stevedore company engaged in discharging cargo has the duty to load the cargo in a prudent manner. Angliongto could not be blamed for calling the stevedores’ attention first and then the NSC’s representative on location before formally informing NSC of the negligence he had observed. In passing. 7 days lapsed because he first called the attention of the stevedores. 21. Due diligence exercised by officers and crew of MV Vlasons I. and the deposition of the ship’s boatswain. NSC attempts to discredit the testimony of Vicente Angliongto. the cargo caused by the negligence of the stevedores. Effect of NSC’s Failure to Insure the Cargo The obligation of NSC to insure the cargo stipulated in the Contract of Voyage Charter Hire is totally separate and distinct from the contractual or statutory responsibility that may be incurred by VSI for damage to the cargo caused by the willful negligence of the officers and the crew of MV Vlasons I . NSC has cause of action against stevedoring company. In fact. 22. or damage to. therefore. then the NSC’s representative. cargo caused by its negligence and where the officers and members and crew of the vessel do nothing and have no responsibility in the discharge of cargo by stevedores. pointing out that he wrote his letter to NSC only 7 days later. an officer of VSI. from the stevedoring company at fault in the discharge operations. the vessel is not liable for loss of. however. as owner and real party in interest. Clearly. only in addition to the new one used primarily to make the ship’s hatches watertight. NSC failed to discharge its burden to show negligence on the part of the officers and the crew of MV Vlasons I. about the negligent and defective procedure adopted in unloading the cargo. to file an action against VSI for damages caused by the latter’s willful negligence. Reason for delay in pointing out stevedores’ negligence to NSC It was the stevedores of NSC who were negligent in unloading the cargo from the ship. Jose Pascua. This tent-like covering.Haystacks (Berne Guerrero) 17. This series of actions constitutes a reasonable response in accord with common sense and ordinary human experience. despite encountering rough weather twice. where it was stated that every time the strong winds and big waves caused the first layer of the canvass covering to give way. subject to the laws on prescription. Admissibility of certificates proving seaworthiness. NSC’s failure to insure the cargo will not affect its right. the new canvass covering still hold on. was clearly inadequate for keeping rain and seawater away from the hatches of the ship. Antonio C. 2004 ( 22 ) . the new tarpaulin did not give way and the ship’s hatches and cargo holds remained waterproof. he was merely expressing concern for NSC which was ultimately responsible for the stevedores it had hired and the performance of their task to unload the cargo. and not against VSI The fact that NSC actually accepted and proceeded to remove the cargo from the ship during unfavorable weather will not make VSI liable for any damage caused thereby. Exhibits 3-9 and 12 inadmissible Transportation Law. by questioning his failure to complain immediately about the stevedores’ negligence on the first day of unloading. Dumlao. 20. The stevedores employed only a tent-like material to cover the hatches when strong rains occasioned by a passing typhoon disrupted the loading of the cargo. Herein. and it is liable for injury to. Use of old tarpaulin an addition to new one used to make hatch waterproof Due diligence was exercised by the officers and the crew of the MV Vlasons I.

Flores to the effect that “the vessel ‘VLASONS I’. a cargo vessel. and 12 are photocopies. but their admission under the best evidence rule have not been demonstrated. Assailing the genuineness of the certificate of seaworthiness is not sufficient proof that the vessel was not seaworthy. Demurrage defined The Court defined demurrage in its strict sense as the compensation provided for in the contract of affreightment for the detention of the vessel beyond the laytime or that period of time agreed on for loading and unloading of cargo. 40 It is given to compensate the shipowner for the nonuse of the vessel. it also qualified laytime as WWDSHINC or weather working days Sundays and holidays included. Consequently. (4) Coastwise License from the Board of Transportation. Exhibits 5. 27. or by evidence of the genuineness of the handwriting of the maker. 5. or by a person in the performance of a duty specially enjoined by law. such fact by itself will not justify an award of attorney’s fees under Article 2208 of the Civil Code when “no sufficient showing of bad faith would be Transportation Law. in present case Herein. but they have not been proven by one who saw the writing executed. Clearly. How laytime runs Laytime runs according to the particular clause of the charter party. for they have not been properly offered as evidence. Exhibits 3 and 4 are certificates issued by private parties. is obviously misleading and erroneous.” (sic) NSC’s Claim. which provides that “(e)ntries in official records made in the performance of a duty by a public officer of the Philippines. having been tolled by unfavorable weather condition in view of the WWDSHINC qualification agreed upon by the parties. Attorney’s fees not justified While VSI was compelled to litigate to protect its rights. 28. 9. the contract of voyage charter hire provided for a four-day laytime. and (5) Certificate of Approval for Conversion issued by the Bureau of Customs. 8. NSC may not be held liable for demurrage as the four-day laytime allowed it did not lapse. or by a subscribing witness. 7. Exhibit 11 admissible as exception to hearsay rule Herein. After completion of drydocking and duly inspected by PCG Inspectors. 2004 ( 23 ) . If laytime is expressed in “running days. 9 and 12 are inadmissible. 8. and qualified as WWDSHINC. NSC glaringly failed to discharge its duty of proving the willful negligence of VSI in making the ship seaworthy resulting in damage to its cargo. The running of laytime was thus made subject to the weather. as such. Exhibit 11 is admissible under a well-settled exception to the hearsay rule per Section 44 of Rule 130 of the Rules of Court. and would cease to run in the event unfavorable weather interfered with the unloading of cargo.Haystacks (Berne Guerrero) The certificates of seaworthiness offered in evidence by VSI include the (1) Certificate of Inspection of the Philippine Coast Guard at Cebu. The vessel was a private carrier and. (3) International Load Line Certificate from the Philippine Coast Guard. 24.” this means days when the ship would be run continuously. it was error for the trial court and the Court of Appeals to have found and affirmed respectively that NSC incurred 11 days of delay in unloading the cargo. is in seaworthy condition. it did not have the obligation of a common carrier to show that it was seaworthy. 26. Laytime for four days. therefore. fitted and equipped for trading as a cargo vessel was cleared by the Philippine Coast Guard and sailed for Cebu Port on July 10. A qualification of “weather permitting” excepts only those days when bad weather reasonably prevents the work contemplated. 6. 1974. 6. and holidays are not excepted. Indeed.” Exhibit 11 is an original certificate of the Philippine Coast Guard in Cebu issued by Lieutenant Junior Grade Noli C. are prima facie evidence of the facts therein stated. Assailing genuineness of certificate of seaworthiness not sufficient proof of unseaworthiness NSC has the burden of proving that MV Vlasons I was not seaworthy. 23. (2) Certificate of Inspection from the Philippine Coast Guard. was drydocked and PCG Inspectors were sent on board for inspection. Exhibits 3. 7. meets all requirements. 25. 4. the vessel ‘VLASONS I’.

on 6 July 1912. or other mail matter delivered on board the vessel after the mails have been closed at the post office for that particular voyage. Masters. owners.Haystacks (Berne Guerrero) reflected in a party’s persistence in a case other than an erroneous conviction of the righteousness of his cause. All mail matter deposited in such box shall be delivered by the master. Philippine Islands. and therefore failed to carry the mails between said ports. on the ground that no cause of action is developed by the pleadings. . The Collector of Customs (JS Stanley. De Villata filed an application for a writ of prohibition directed against the Collector of Customs to restrain him from enforcing Customs Administrative Circular 627 against de Villata. and shall keep the same free from injury by water or otherwise. in advance. he failed to notify the postmaster of the former port. .” 2. or other person in charge of a vessel shall be legally liable for the loss of or damage to mail in his custody. attorney’s fees may not be awarded to a party for the reason alone that the judgment rendered was favorable to the latter. The Court ordered that 20 days thereafter. [par 4] The master. provided as follows: “In the matter of the investigation made for the application of the provisions now in force relative to the notice to be given in advance to the post office of the Transportation Law. 1. when sailing from the port of Gubat to the port of Legaspi.” Moreover. the complaint be dismissed at the costs of the de Villata unless amended so as to set forth a cause of action. [par 5] The license of the master of any vessel engaged in the coastwise trade of the Philippine Islands may be suspended or revoked by the Insular Collector of Customs for failure to comply with or strictly enforce the regulations governing the transportation of mails. Decree of 4 August 1863 A decree dated 4 August 1863. unless amended. papers. 355 to engage in the coastwise trade of the Philippine Islands . and 10 days thereafter let the record be filed in the archives of original actions in the Supreme Court. [par 6] Postmasters throughout the Islands are requested to promptly report to this office in writing any unnecessary delay in the handling of mails transported by vessels. 1 concur in result Facts: Joaquin de Villata is the master of SS Vizcaya of the coastwise trade. and shall be taken from shore or wharf just before the vessel’s sailing time. 24 December 1910) [par 1] Every vessel to which a license is granted under the provisions of section 117 of Act No. under and by virtue of the terms of Customs Administrative Circular 627. owner. Any changes in such sailings shall also be promptly communicated to the postmaster. Acting Insular Collector of Customs) was threatening to suspend or revoke the license of de Villata by reason of said facts. must be dismissed. or in the custody of his representatives or agents. Carson (J): 4 concur. JS Stanley (GR 8154. 20 December 1915) En Banc. [par 3] Each vessel mentioned in the preceding paragraph shall be provided with a lock box having a slot in the top or side thereof to receive letters. to the postmaster at a port of call where a post office is located. [12] De Villata vs. or his representative. or failure on the part of masters thereof to comply with the requirements of this circular. The Supreme Court held that the complaint. agent. As such captain. or agents of vessels shall give prompt advance notice of the intended sailing thereof to the postmaster at each port of departure in ample time to permit the making up of mails for dispatch. 2004 ( 24 ) . The case was submitted to the Supreme Court upon de Villata’s demurrer to Stanley’s answer to the complaint. of his intended sailing. shall carry mail tendered for transportation in a safe and secure manner. except at ports where the postal authorities have arranged for ship-side delivery. Customs Administrative Circular 627 (Prescribing regulations for the transportation of mails on vessels engaged in the Philippine coastwise trade. as this is tantamount to imposing a premium on one’s right to litigate or seek judicial redress of legitimate grievances. [par 7] Philippine customs officers shall give due publicity to the terms of this circular. [par 2] Mails carried by vessels shall be delivered at ports of call on shore or on a wharf immediately after arrival and prior to the discharge or lading of any cargo.

pp. shall give notice to the captain of the port’s before midday. plying between this port and the other ports of the Archipelago or China and vice versa. The capitamia del puerto. was as follows: “Having considered the consultation made by the comandancia general de marina proposing the amendment of section 7 of the superior decree of December 18. Considering that the actual application of such provisions might affect in a remarkable way the commercial interests in the very exceptional case spoken of. For the purposes that may be proper. p. This superior civil government ordains: That when a ship falls within the precise exceptional case raised by the within resolution. and the ship may sail in the afternoon of the day next following. 1868. (6) The centro de correos shall send the notices to the Gazette and other newspapers. vol. Having considered the ordinances relating to packet boats and other royal orders and superior decrees imposing upon the captain of every ship the duty of giving notice to the postoffice four days in advance at least of the date they are to sail and the port of destination. 1868. and let same be published in the Gazette for general information. all vessels engaged in the coasting trade were required to carry the mails. Indeed it is a matter of common knowledge that. and to furnish the postal authorities with due notice of their sailing hours. to their great prejudice. and file. and vice versa. Diccionario de la Administracion de Filipinas. the fortunate increase of steamers and consequently the frequent repetition of voyages made by them.” (Berriz. (3) The office of the captain of the port will report daily to the administracion general de correos all ships that at 12 o’clock. may have requested the visita de salida and in the event of there being none a report shall be sent stating that fact. and shall post them besides on a bulletin board at the door of the postoffice. comandancia general de carabineros and the administracion general de correos. Decree of 13 January 1876 A later decree dated 13 January 1876. this circumstance alone would change the object or reason which at that time made it necessary to impose the duty referred to in said section 7. This general government ordains as follows: (1) The period of four days prescribed by section 7 of the superior decree of December 18. noon. 2004 ( 25 ) .) 4. 1888. (2) The shipowners or consignees of steamers. M. under the laws and regulations in force at the time of the change of sovereignty. Considering the importance and value at certain times of the prompt clearance of one of its ships to a commercial firm which is at all times worthy of protection by the government. (5) Captains and consignees of ships can in no case request the visita de salida without the period of forty-eight hours intervening between the time they report and the visit. let this decree be communicated to the comandancia general de marina. capitania del puerto de Manila and Cavite and the administracion general de correos. Vessels required to carry mails under Spanish sovereignty An examination of its terms leaves little room for doubt that under Spanish sovereignty the Government of these Islands assumed and exercised the right to prescribe reasonable regulations requiring vessels trading in the Philippine Islands to carry the mails and to give due notice of their sailing hours to the postal authorities. every day. the administracion general de aduanas. There is no allegation in the Transportation Law. its captain shall only be required to give.Haystacks (Berne Guerrero) sailings of ships. and therefore. p. 1.” (Berriz. Report to the government of H. is reduced to two. and Having considered the reports submitted by the direccion general de administracion civil and the administracion general de correos: Considering the fact that since that superior order was enforced. relative to the duty imposed upon shipowners or consignees of steamers whether national or foreign. 516. is evident. 1. plying between this port and the other ports of the archipelago or China.) 3. of giving four days’ notice before the day they are to sail. where the ship just anchored should have to set sail again before the period of four days referred to. 529. immediate notice to the postoffice stating the day and hour in which the sailing must be made. (4) The report of the captain of the port’s office must be at that administracion general before 2 o’clock. from the very instant of determining the sailing of the ship. having been heard. so as to give opportune notice to the administracion de correos. m. in the exceptional case of a ship just arrived in port and which has to sail immediately for the convenience of the interests of its owners or consignees. vol. 1888. whether national or foreign. in order that the post office may have immediate notice of the sailing at an hour that may enable it to insert same in the Gazette of next day. Diccionario de la Administracion de Filipinas. 528..

S. and to control the free exercise of their discretion in the conduct of their business to a degree and in a form and manner which would not be tolerated under the constitutional guarantees with relation to the private business of a private citizen. Smyth vs. that is. such a flagrant attack upon the rights and property under the guise of regulations as to compel the court to say that the regulations in question will have the effect to deny just compensation for private property taken for the public use.. 382.man. 2004 ( 26 ) . S. judicial interference should never occur unless the case presents. Co. or without due process of law. 7. 169 U. 134 U. v.) Transportation Law. nor of confiscating or appropriating private property without just compensation. 94 U. 8. 339. Ames. Henderson City. Co. Rep. Well. 5. Of course such regulations must not have the effect of depriving an owner of this property without due process of law. nor of limiting or prescribing irrevocably vested rights or privileges lawfully acquired under a charter or franchise. vs. 6 How... 173 U. Minneapolis Eastern R. 1. 467. R. Nor can it do that which in law amounts to a taking of private property for public use without just compensation. limitation not confiscation The power to regulate is not a power to destroy.. 524. Co. and this notwithstanding the fact that the enforcement of such regulations may tend to restrict their liberty. 143 U. is such that it is clearly within the power of the state to impose such just and reasonable regulations thereon as in the interest of the public it may deem proper. As business is of public employment. S. therefore.) “ (Fisher vs. and have duties to perform in which the public is interested. Under pretense of regulating fares and freights the state can not require a railroad corporation to carry persons or property without reward. vs. the determination of the nature and extent of the regulations which should be precribed rests in the hands of the legislator. But aside from such constitutional limitations. Business of common carriers affected with public interest Common carriers exercise a sort of public office. and limitation is not the equivalent of confiscation. and is subject to public regulation. clearly and beyond all doubt. 466. 6. S. 592. there is an extensive field of regulation and control which may properly be exercised by the state without contravention of the provisions of the Philippine Bill of Rights or the Constitution of the United States. Merchants’ Bank. Illinois. 134 U. and that as to them..s.Haystacks (Berne Guerrero) pleadings denying the continuance in force of this practice under American sovereignty down to the date of the issuance of the above cited Customs Administrative Circular.. Power to regulate not power to destroy. Yangco Steamship Co. 13(). 344.. Minnesota. R. S. affected with a public interest. Judicial interference does not occur unless the case presents flagrant attack upon rights and property in guise of regulation The judiciary ought not to interfere with regulations established under legislative sanction unless they are so plainly and palpably unreasonable as to make their enforcement equivalent to the taking of property for public use without such compensation as under all the circumstances is just both to the owner and to the public. vs. Co.. S. 614. 418. (Chicago etc. 113. Regulations and control exercised on vessels licensed to engage in interisland trade not in contravention of Philippine Bill of Rights or US Constitution Vessels licensed to engage in the interisland trade are common carriers. Munn vs. Their business is. 31 Phil.) 10. (Chicago etc. Minnesota. Nothing in Philippine Bill of Rights depriving government power to make and enforce regulations There is nothing in the Philippine Bill of Rights which deprived the Philippine Government of the power to make and enforce reasonable regulations of this nature with which it was clothed prior to the enactment of that statute. state may impose reasonable regulations The nature of the business in which they are engaged as a public employment. (New Jersey Steam Nav.. Henderson Bridge Co.) 9. vs.

Regulations only begin to affect business of shipowner when it enters into employment as common carrier It is only when the owner of a vessel enters the quasi-public employment of a common carrier that regulations of this kind begin to affect or control the conduct of his business. Largely for the purpose of conveying timely warnings of threatening weather to those that go down into the sea in ships. 241: “In practice.. Governments incur considerable expenditures to secure safety of vessels plying in Philippine waters Considerable expenditures of public money have been made in the past and continue to be made annually for the purpose of securing the safety of vessels plying in Philippine waters. which the state has a right to impose when it grants licenses to the vessels affected thereby. and to engage in a business. and if he does enter such business he cannot. made in the interests of the public. in whose behalf the public funds are so lavishly expended. charts and general information as to conditions affecting travel by water are kept up to date. therefore. Maps. the Government unhesitatingly spends a considerable part of the public funds wherever and whenever it appears that the safety and even the convenience of the shipping in Philippine waters will be advanced thereby. Coast and geodetic surveys are conducted to keep them informed as to the dangers hidden beneath the treacherous sea. and uniformity does not require the equal application of the tax to all persons or corporations who may come within its operation. and buoys. Licensed pilots are provided to insure safe entry into the dangerous ports and harbors throughout the Islands. of that which he voluntarily agrees to surrender. No one is compelled to comply with these regulations unless he voluntarily enters upon the business which they affect. 12. and he cannot be heard to complain that he is deprived of his property without due process of law when he elects. claim that he is unlawfully deprived. The only limitation upon the authority conferred is uniformity in laying the tax. Distinction between “equality” and “uniformity” The distinction between “equality” and “uniformity” in taxation is thus stated in Black on Constitutional Law. citing Miller. wharfs and docks constructed.Haystacks (Berne Guerrero) 11. page 392. 15. and of changes of sailing hours. without due process of law. Can it be fairly contended that a regulation is unreasonable which requires vessels licensed to engage in the interisland trade. Regulation is reasonable A regulation requiring all coasting vessels licensed to engage in the interisland trade to carry the mails and give prompt advance notice in all cases of intended sailings in ample time to permit dispatch of mails. To this end lighthouses have been erected. as one of the conditions upon which they were permitted to engage in the quasi-public employment of carriers in the interisland trade. 2004 ( 27 ) . In a word. and to give such reasonable notice of their sailing hours as will insure the prompt dispatch of all mails ready for delivery at the hours thus designated? 13. of his own free will and accord. (manifestly with a view to make it possible for the post-office officials to tender mail for transportation at the last practicable moment prior to the hour of departure) is a reasonable regulation. but it is limited to geographical uniformity. 14. ‘equality’ in taxation means Transportation Law. one of the conditions of which is that he will comply with such regulations. and furnished all vessels having need for them. Under the law in force in these Islands at the time of the change of sovereignty. and of the enactment of the Act of Congress the owners of all licensed coasting vessels were required to comply with regulations of this character. appropriations are made for the support of a Weather Bureau. Uniformity of taxes (assuming) If regulations of this kind be regarded as in the nature of a tax upon the vessels affected thereby. to hold themselves in readiness to carry the public mails when duly tendered for transportation. bells and other warning signals maintained at points of danger. Const. to secure a license as a common carrier in Philippine waters. the tax cannot be attacked for lack of uniformity so long as it is laid uniformly upon all the members of the class to which it extends.

Judicial department unfit to inquire on degree of taxation It is unfit for the judicial department to inquire what degree of taxation is the legitimate use. privileges. necessities. This is. a sufficient security against erroneous and oppressive taxation. It resides in the government as part of itself. and it imposes a burden which. whether particularly specified in the constitution among the powers to be exercised by it or not. use. This is an original principle. but to the people by Transportation Law. Security against abuse of power of taxation The only security against the abuse of this power is found in the structure of the government itself. No constitutional government can exist without it. and as the exigencies of the government cannot be limited. in general. and may be legitimately exercised on the objects to which it is applicable to the utmost extent to which the government may choose to carry it. may be followed by seizure and sale or confiscation of property. The legislature of every free State will possess it under the general grant of legislative power. incomes. Different articles may be taxed at different amounts. shall be taxed at the same rate. No attribute of sovereignty is more pervading. It reaches to every trade or occupation. therefore. 20. to every object of industry. securities. of the power. which taxes shall be strictly proportioned to the relative value of their taxable property. to guard them against its abuse. the legislature acts upon its constituents. and at all times. but the responsibility of the legislature is not to the courts. of the same class. and consequently of taxation. and at no point does the power of the Government affect more constantly and intimately all the relations of life than through the exactions made under it.’ 19. and that portion must be determined by the legislature. and its relations with its constituents. Chief Justice Marshall has said of this power: ‘The power of taxing the people and their property is essential to the very existence of government. and justice of the representative body. The people of a State. as well as against unwise legislation generally. furnish the only security where there is no express contract against unjust and excessive taxation. 17. it is still in the nature of that right that it must bear a portion of the public burdens. to every species of possession. It does not mean that lands. 18. except such as rest in the discretion of the authority which exercises it. and luxuries shall all be assessed at the same rate. chattels. The power to tax may be exercised oppressively upon persons. or enjoyment. . occupations. in case of failure to discharge it. or the right to use it in any manner. resting confidently on the interest of the legislator. and need not be reserved where property of any description. which has its foundation in society itself. 2004 ( 28 ) . Power to impose taxes unlimited in force The power to impose taxes is one so unlimited in force and so searching in extent. since the only alterative to taxation would be a forced extortion for the needs of government from such persons or objects as the men in power might select as victims. but the interest. “ 16. franchises. This vital power may be abused. Power to tax rests upon necessity. is granted to individuals or corporate bodies. It is granted by all for the benefit of all. Scope of power of legislation and taxation The power of legislation. The judicial cannot prescribe to the legislative department of the government limitations upon the exercise of its acknowledged powers. And ‘uniformity’ in taxation means that all taxable articles or kinds of property. and is inherent in every sovereignty The power to tax rests upon necessity. give to their government a right of taxing themselves and their property. . and is inherent in every sovereignty. and on the influence of the constituents over their representative. and no arbitrary government without regular and steady taxation could be anything but an oppressive and vexatious despotism. However absolute the right of an individual may be. provided the rate is uniform on the same class everywhere. with all people. they prescribe no limits to the exercise of this right.iect to any restrictions whatever. that the courts scarcely venture to declare that it is sub.Haystacks (Berne Guerrero) to be called upon to pay taxes. In imposing a tax. . operates on all persons and property belonging to the body politic. and what degree may amount to the abuse. wisdom.

be pronounced contrary to the Constitution. The allegations of the complaint disclose merely that he threatened to enforce the regulations of the circular requiring the master of the Vizcaya to make provision for the transportation of the mails when tendered. S. as shall be established by competent authority. No fact or allegation in pleading that Collector of Customs is compelling vessel’s master to carry mail free of charge There is absence of the necessary allegations setting forth that the Collector of Customs has compelled and is threatening to compel the master of the Viscaya to carry mails free of charge. 533. among other things. etc.. 25. and therefore in cases properly presented.. This does not necessarily require these vessels to accept and to carry mail free of charge. over his protest. 2004 ( 29 ) .. and that this paragraph was intended merely as a regulation requiring the acceptance of all mail thus lawfully tendered and the safe transportation of such mail when accepted for transportation. Section 3 of Act 355 Section 3 of Act 355 provides that the customs service shall embrace.Haystacks (Berne Guerrero) whom its members are elected.) 22. 27. To announce such a principle would amount to declaring that in our constitutional system the judiciary was not only charged with the duty of upholding the Constitution but also with the responsibility of correcting every possible abuse arising from the exercise by the other departments of their conceded authority. and (5) the regulation of the carriage of passengers by water and the licensing of vessels therefor. and would be a mere act of judicial usurpation. 8 Wall. it must be presumed that the Collector did not intend to require vessels to accept mail without tender of reasonable compensation for such services or provision for payment by contract or otherwise. or a contract providing for such compensation. 548. because it appeared to the judicial mind that the particular exertion of constitutional power was either unwise or unjust. 23. judicial and executive departments of the government. (2) the exclusion of foreign vessels from the coastwise trade. for that reason only.. It does not appear from the pleadings. (1) the documenting of vessels built or owned in the Philippine Islands. (McCray vs. So to hold would be to overthrow the entire distinction between the legislative. 24. Fenno. U. It is only when goods are lawfully tendered that common carriers may be compelled to carry them. of determining whether a given manifestation of authority has exceed the power conferred by that instrument. that any attempt has been made or is being made by the Collector to compel the master of the Vizcaya. Separation of powers As a result of our written constitution. in part. was declared to be repugnant to the Constitution. upon which our system is founded. and for the giving of reasonable notice as to sailing hours upon which such tender might be based. and it must be presumed that the author of the circular had in mind a lawful tender of mails when he wrote this paragraph. to carry mail without compensation. nor in fact. So if a particular tax bears heavily upon a corporation or a class of corporations. 195 U. (4) the enforcement of such regulation of commerce. Section 7 of Act 355 Section 7 of Act 355 provides. as follows: “The Insular Collector shall have general authority throughout the Philippine Islands in all matters embraced within the jurisdiction of the Customs Service.) 21. Presumed intention of Collector in circular The provisions of paragraph I require trading vessels to carry mails tendered for transportation in a safe and secure manner. which was within a power conferred. it cannot.” 26. no instance is afforded from the foundation of the government where an act. it is axiomatic that the judicial department of the government is charged with the solemn duty of enforcing the Constitution. foreign and coastwise. Section 19 of Act 355 Transportation Law. Judicial department charged with duty of enforcing constitution. S. If a vessels may not be required to carry mail without direct compensation. (3) the entry and clearance of vessels. (Veazie Bank vs.

not inconsistent withlaw. and character are such as to warrant the belief that he can be safely intrusted with the duties and responsibilities of the position for which he makes application.” 28. and immigration. railways. and enforce such orders and regulations respecting the same as have been heretofore or shall hereafter be prescribed by the proper authority. promulgate. habits of life. the evidence he presents in support of his application. incapacity. or engineer of a Philippine coastwise vessel it shall be the duty of the Board on Philippine Marine Examinations to make a thorough inquiry as to his character and carefully to examine the applicant. but each renewal shall be operative for only one year. whose duty it shall be to examine and certify for licenses all applicants for licenses as watch officers and engineers upon vessels of the Philippine Islands. Section 2 of Act 780 Section 2 of Act 780 is as follows: “Whenever any person applies for license as master. mate. applicable. nineteen hundred and four. 2004 ( 30 ) . in his sound judgment. In the absence of such regulations or orders he shall observe and follow the laws of the United States and the regulations of the Treasury Department of the United States so far as the same may be. In case of renewal of license the written examination required by section three of said Act shall not be had but the applicant for renewal shall only be required to submit to an Transportation Law.” 31. mate. it shall so certify to the Insular Collector of Customs. make and promulgate general rules and regulations. patron. the said Board is further authorized and empowered to renew such license from year to year upon due application being made as prescribed in said Act. enrollment and licensing of vessels built or owned in the Philippine Archipelago and in the making and recording of all documents relating thereto. or engineer. in part. experience. Section 1 of Act 780. vessels. the supervising inspector of hulls and boilers. or otherwise” 27. documenting. Certificates of protection shall hereafter be signed by the collector of customs at ports where issued and countersigned by the Insular Collector. and if satisfied that his capacity. but the Insular Collector of Customs may at any time suspend or revoke any license upon satisfactory proof of misconduct. or inattention to duty on the part of the licensee. as the case may be. as amended by Section 1 of Act 1602 Section 1 of Act 780. subject to the approval of the Secretary of Finance and Justice: (1) Directing the manner of execution of the customs law and laws relating to commerce. the Insular Collector shall observe. one person holding an unexpired license as master in the Philippine coastwise trade. in part.Haystacks (Berne Guerrero) Section 19 of Act 355 provides. provides. Section 6 of Act 780 Section 6 of Act 780 is as follows: “Every license authorized to be issued as above set forth shall be operative and in force until July first. to consist of the Insular Collector of Customs. Section 134 of Act 355 Section 134 of Act 355 is as follows: “The coastwise trade shall be under the general control and supervision of the Insular Collector. Section 73 of Act 355 Section 73 of Act 355 provides as follows: “In the coasting trade. carts. as amended by section 1 of Act 1602. intemperate habits. and assistant inspector of hulls. and such other evidence as it may deem proper or desirable.” 30. Section 2 of Act 1025 Section 2 of Act 1025 is as follows: “Upon the expiration of the license authorized to be issued by said Act Numbered Seven Hundred and eighty. as follows: “A board is hereby created.” 29. as follows: “The Insular Collector shall.” 32. from time to time. bonded lighters. and one other competent person. patron. navigation. the admeasurement. who shall issue a license authorizing such applicant to act as master. xxx (7) Prescribing the method of loading and unloading merchandise and the transportation thereof by bonded carriers. and under the direct supervision of collectors of customs at the subports of entry within their respective collection districts.

touching the conduct of coastwise vessels and their officers with reference to the transportation of mails.Haystacks (Berne Guerrero) examination. so far as those decrees and similar regulations continued in force at that time. and engaged by means of virayes as common carriers of passengers and in loading and unloading freight from steamers anchoring at said port. but the Board is authorized to refuse any application for renewal upon satisfactory evidence of misconduct. judge. 625. July. and vice versa. collected from the provincial government of Ilocos Norte 10 centavos for each of the 5. Quinajon and Quitoriano were charged with a violation of the provisions of Act 98. From that sentence. A complaint was presented in the court of the justice of the peace on 11 November 1912. established at the port of Currimao. and to return to the provincial government of the Province of Ilocos Norte the sum of P359. as that office formerly existed and as provided in the Spanish laws. Upon that complaint Quinajon and Quitoriano were duly arraigned.986 sacks of rice which they unloaded from the steamers during the months of June. Any duties which the captain of the port was required to perform under the decrees and similar regulations issued under the Spanish Administration of the Government of these Islands. when granted. in case the same is not paid.” 33. to the shore or to the warehouses. [13] US vs. for which execution may issue when this judgment becomes final. Duties of captain of the port devolved upon Insular Collector of Customs and his subordinates The duties of the captain of the port. for which sum a judgment is ordered to be entered against them. Transportation Law. promulgate. now devolve upon the Insular Collector of Customs and his subordinates as he may direct. with modification. as property belonging to the said government. such a body of reasonable regulations. 30 July 1915) En Banc. devolved upon the Collector of Customs at the date of the promulgation of Circular 627. 2004 ( 31 ) . promulgation and enforcement. the prosecuting attorney of the Province of Ilocos Norte presented a complaint. to pay a fine of $100 (P200) and costs. The Supreme Court affirmed the judgment of the lower court. Quinajon (GR 8686. with reference to the transportation of mail. 6 centavos for each sack of rice loaded or unloaded by said association. the Insular Collector was clothed with the necessary authority at the date of the circular for its preparation. to test his physical soundness. representing the same association. Johnson (J): 4 concur. have regularly collected. A preliminary examination was had and Quinajon and Quitoriano were held for trial in the Court of First Instance of the Province of Ilocos Norte. Quinajon and Quitoriano. found guilty of the crime charged. and of licensed officers aboard such vessels. and sentenced by the Honorable Dionisio Chanco. during the last four years. intemperate habits. incapacity. Ilocos Norte. 34. The Court ordered Quinajon and Quitoriano to the Province of Ilocos Norte the sum P239. Insular collector clothed with necessary authority to prepare. pursuant to the provisions of section 1 of Act No. tried. Quinajon and Quitoriano appealed to the Supreme Court. and enforce Customs Administrative Circular 627 Insofar as Customs Administrative Circular 627 consists of a body of reasonable regulations controlling and prescribing the conduct of vessels licensed to engage in the coastwise trade. or any of them. acting as representatives of the Union Obrera. or inattention to duty on the part of the licensee and also to revoke any such renewal license. when correctly construed. With costs. On 17 November 1912. a price which differed from the usual charge of 6 centavos made to other shippers of said commodity. The circular is.16. for the same reasons. if deemed necessary by the Board.44. 1 dissents Facts: Pascual Quinajon and Eugenio Quitoriano. and September.

collects or receives from any other person or persons from doing for him a like or contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and conditions. we feel justified in adopting the interpretation given by the Federal courts of the United States to said Act of Congress. drawback or other device. as well as the Province of Ilocos Norte. Act of Congress. large or small. 4 February 1887 Transportation Law. collect. charged and collected from some shippers and merchants. of whatever kind of merchandise. by any special rate. corporation or locality or any kind of traffic. Section 2. Quinajon and Quitoriano collected 6 centavos for each package. The language of the two Acts. a greater or less compensation for any service rendered in the transportation of passengers or property on land or water between any points in the Philippine Islands than such common carriers charges. Section 3. They collected from the Province of Ilocos Norte 10 centavos for each sack of rice which they unloaded from the steamers during the months of June. and September. so far as they relate to the present case. which is hereby prohibited and declared to be unlawful. Act 98 and Act of Congress of 4 February 1887 are similar. under and by virtue of the terms of which they charged and collected. demand. Act 98 “It shall be unlawful for any common carrier engaged in the transportation of passengers or property as above set forth to make or give any unnecessary or unreasonable preference or advantage to any particular person.. and any such unjust discrimination is hereby prohibited and declared to be lawful. from those merchants only with whom they had a special contract. in the transportation of passengers or property. Said Act of Congress has been construed by the Federal courts of the United States in several decisions. they collected a different rate. such common carrier shall be deemed guilty of unjust discrimination. or to subject any particular person. demands. or other device. directly.” 5. is practically the same. with whom they had not made said special contract. subject to the provisions of this Act. a certain price for each package of merchandise. collect or receive from any person or persons. company. Section 2. Quinajon and Quitoriano collected 6 centavos per package Herein. The prices fixed in the schedule depended upon the size and weight of the package. company. charge. than it charges. without reference to its size or weight. Section 1. July. firm. heavy or light. 2004 ( 32 ) . In view of the similarity of the two Acts. drawback. or to be rendered. 4. From other merchants.Haystacks (Berne Guerrero) 1. firm. to any undue or unreasonable prejudice or discrimination is also hereby prohibited and declared to be unlawful. Adoption of interpretation by US Federal courts justified Act 98 was largely borrowed from the Act of Congress of 4 February 1887. as common carriers. Act 98 “No person or corporation engaged as a common carrier of passengers or property shall directly or indirectly by any special rate. (2) The defendants entered into a special contract with certain merchants. demands. charge. demand. or any particular kind of traffic in any respect whatsoever. the sum of 6 centavos for each package. loaded or unloaded. collects. according to a certain schedule. 2.” 7. or receives from any person or persons for doing for him or them a like and contemporaneous service in the transportation of a like kind of traffic under substantially similar circumstances and conditions. corporation or locality. or indirectly. 4 February 1887 “That if any common carrier subject to the provision of this Act shall. 3. rebate.” 6. or receive from any person or persons a greater or less compensation for any service rendered. Act of Congress. for loading and unloading merchandise in said port. rebate. Simplified facts of the case (1) The defendants.

firm. 11. A common carrier is a person or corporation who undertakes to carry goods or persons for hire. or locality. company. It would cost more to handle and transport hemp. so far as it is possible. is to compel common carriers to render to all persons exactly the same or analogous service for exactly the same price. corporation or locality. for example. or to subject any particular person. or any particular description of traffic. than he charges. rebate. than it would to handle and transport the same quantity of rice neatly packed in sacks. corporation. under substantially similar conditions or circumstances. collects. or other device.. Scope Act 98 is “An Act to regulate commerce in the Philippine Islands. (2) The law prohibits common carriers from subjecting any person. demands. drawback. to any undue or unreasonable prejudice or discrimination whatsoever. company. or any particular kind of traffic. to the end that there may be no unjust advantage or unreasonable discrimination. under different and unlike conditions and where the actual cost is different. or receive from any person or persons. What Act 98 does not require.” 8. (4) It is not believed that the law prohibits the charging of a different price for handling and shipping merchandise when the shipper exercises greater care in preparing the same for shipment. demand. What Act 98 provides and what it prohibits (1) The law provides that no common carrier shall directly or indirectly. unless all the conditions are alike and contemporaneous. 9. Or simply. 2004 ( 33 ) . by any special rate. company. It applies to persons or corporations engaged as common carriers of passengers or property. or any particular kind of traffic. and what it does not prohibit (1) The law does not require that the same charge shall be made for the carrying of passengers or property. etc. to any undue or unreasonable prejudice or discrimination whatsoever. Purpose of Act 98. Quinajon and Quitoriano admit that they are common carriers. or locality. thereby reducing the actual cost of handling and transporting. (2) It is not believed that the law prohibits the charging of a different rate for the carrying of passengers or property when the actual cost of handling and transporting the same is different. (3) It is not believed that the law intended to require common carriers to carry the same kind of merchandise. Common Carriers defined A common carrier is a person or corporation whose regular business is to carry passengers or property for all persons who may choose to employ and remunerate him. when it is unbaled and loose. even at the same price. It might cost more to handle and transport household goods uncrated than when they are crated.” Its purpose. for doing a like or contemporaneous service. firm. (1) The law requires common carriers to carry for all persons. or locality. If the shipper puts his merchandise in a condition which costs less to Transportation Law. depending upon the form of the package or other conditions. either passengers or property. firm. between points in the Philippine Islands.Haystacks (Berne Guerrero) “That it shall be unlawful for any common carrier subject to the provision of this Act to make or give any undue or unreasonable preference or advantage to any particular person. charge. (2) The law prohibits any common carrier from making or giving any unnecessary or unreasonable preference or advantage to any particular person. or any particular kind of traffic. or receives from any other person or persons. collect. 10. than it would when it is baled. Herein. a greater or less compensation for any service rendered in the transportation of passengers or property. to any undue or unreasonable prejudice or disadvantage in any respect whatsoever. It would cost more to handle and transport rice packed in open boxes or baskets. The actual cost of handling and transporting the same quantity of rice. might be different. corporation. for exactly the same charge for a like or contemporaneous service in the transportation of like kind of traffic under substantially similar circumstances or conditions. for example.

discrimination in the price charged is prohibited. The quantity. Shipments not rendered unlike because shipment composed of different classes of merchandise. Absolute equality. that the law intervenes and prohibits. Merchandise may be alike in kind or quantity but not as to cost of transportation. while B delivers exactly the same number of bunches of bananas. not be “alike. but they are neatly packed in a few boxes or baskets. It does not require much argument to convince men conversant with the shipping of merchandise. or locality. This rule. less than a car-load. The difference in charge must not be made to favor one merchant. perhaps. For example. therefore. 14. under the law. when the same are made for the purpose of increasing their business. so far as the cost of transportation is concerned. If the services are alike and contemporaneous. or shipper. actual cost may depend upon quantity. to a better rate than the man who ships a single article or package of the same class or kind of merchandise.Haystacks (Berne Guerrero) handle and transport. by reason of the actual cost of handling and shipping. a train-load of cattle might be shipped from Dagupan to Manila at less cost per head than it would cost to ship just a few head. under certain circumstances and conditions. A delivers his bananas to the carrier in separate bundles or bunches. and to manage their important interests upon the same principles which are regarded as sound. (6) It is not believed that the law prohibits common carriers from making special rates for the handling and transporting of merchandise. A is a shipper of rice and hemp and B is a shipper of rice alone. simply because it is of a like kind or quantity. or locality. The law prohibits favoritism and discrimination It is favoritism and discrimination which the law prohibits. may give some shippers an advantage over others. under certain conditions. or shipper. without a wrapper or any kind of protection. Actual cost depend upon and settled upon proof. Difference in charge of handing may depend on actual cost. and yet not be alike. kind. 12. The actual cost may depend upon quantity. he is certainly entitled to a better rate. Example Neither is it believed that shipments may be rendered unlike by the fact that the total shipment is composed of different kinds or classes of merchandise. For example. Both A and B prepare their rice for shipment in exactly the same form of package. As another example. and adopted in other trades and pursuits. (7) It is not believed that the law requires absolute equality in all cases. 16. A and B are each shippers of bananas between the same points. to carry A’s rice for a less price than he carries B’s rice. to the prejudice or disadvantage of another person or locality. however. Difference in charge must be difference in cost The actual cost of each shipment must necessarily depend upon and be settled by its own proof. does not prohibit the making of general schedules. Example For the purposes of the law. unless the actual cost is the same. and quality may be exactly the same. simply because A is also a shipper of hemp. Examples A difference in the charge for handling and transporting may only be made when the difference is based upon actual cost. Circumstances and conditions may make it injurious to the carrier. in such a case. A man who ships freight by the car-load. (5) The law does not require common carriers to perform different services for the same price. A common carrier may discriminate between shippers when the amount of goods shipped by one actually costs less to handle and Transportation Law. For example. may be entitled. 13. The difference in the charge made by the common carrier cannot be made for the purpose of favoring any person or locality. It is when the price charged is for the purpose of favoring persons by localities or particular kinds of merchandise.” although contemporaneous. The difference in the charge to different merchants or shippers must be based upon the actual cost of handling and transporting. to the disadvantage of another merchant. that the actual cost of handling and shipping would be different and would. 15. 2004 ( 34 ) . providing they are made applicable to all. It is not believed that the carrier is permitted. it is not sufficient always to say that merchandise is alike.

Quinajon and Quitoriano required to return overpayment of P239. but he cannot discriminate upon the ground simply that he carries all of the goods of one shipper. and unreasonable discrimination. From the evidence it would seem that there was a clear discrimination made against the province. and it is but just to the carrier that he be permitted to take these circumstances into consideration. undue. A question of fact is raised in each case for the courts to decide. They unloaded for the province 5. Cendaña would load his vehicles with cargo which various merchants wanted delivered to differing establishments in Pangasinan. which bear upon the cost and expense of transportation. undue.60. such as the quantity carried.16. or the sum of P239. He utilized 2 six-wheeler trucks which he owned for hauling the material to Manila. 18. The difference in the charge must be the difference in the cost. who may be damaged by reason of the doing by a common carrier of any matters and things prohibited. when it is made clearly to appear that by such agreements the common carrier has only its interests and the legitimate increase of its profits in view. a junk dealer. 17. They should be required to return to the province the excess which they collected. was engaged in buying up used bottles and scrap metal in Pangasinan. Quinajon and Quitoriano discriminated against the province Herein.986 sacks. Circumstances may intervene in determining rate of compensation It is only unjust.60 and P359. Numerous circumstances may intervene.16.44. 22 December 1988) Third Division. CA (GR L-47822. and the like. whereby advantage may accrue to individuals. They had a right to collect 6 centavos. Law prohibits unjust. and unreasonable discrimination which the law forbids. or P239. for which they charged the sum of P598. or the sum of P359. Quinajon and Quitoriano collected from the province more than they had a right to collect.Haystacks (Berne Guerrero) transport. On the return trip to Pangasinan. Cendaña charged freight rates which were commonly Transportation Law. 20. 19. and the circumstances and conditions are similar. Section 5 of Act 98 Section 5 of Act 98 provides that any person or corporation. Discrimination is the thing which is specifically prohibited and punished under the law. Cendaña would bring such material to Manila for resale. Many considerations may properly enter into the agreement for the carriage or shipment rate. and when the common carrier gives all shippers exactly the same rate. 21. 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. its risks. its nature. and when the consideration given to the individual is for the interest of the common carrier alone. Common carriers competent to enter into special agreements for handling and transporting merchandise It is competent for a common carrier under the law to enter into special agreements for handling and transporting merchandise. 2004 ( 35 ) . etc. the difference between P598. while he does not carry all of the goods of another.44. Feliciano (J): 4 concur Facts: Ernesto Cendaña.44 Quinajon and Quitoriano had a right to charge the provincial government 6 centavos for each sack of rice unloaded. Upon gathering sufficient quantities of such scrap material. under the same conditions. For that service. the expense of carriage at different periods of time. shall be entitled to sue for and recover all damages so incurred. [14] also [39] De Guzman vs. The law of equality is in force only where the services performed in the different cases are substantially the same. in determining the rate or amount of his compensation.

The other 600 boxes never reached de Guzman. de Guzman commenced action against Cendaña in the CFI of Pangasinan. in finding that he had habitually offered trucking services to the public. and one who does such carrying only as an ancillary activity (in local idiom. in Urdaneta. in not exempting him from liability on the ground of force majeure.000.” i. Common carriers defined. a merchant and authorized dealer of General Milk Company (Philippines). the general community or population. or air for compensation. Cendaña urged that the trial court had erred in considering him a common carrier. the trial court rendered a Decision’ finding Cendaña to be a common carrier and holding him liable for the value of the undelivered goods (P22. Pangasinan. such loss having been due to force majeure. since the truck which carried these boxes was hijacked somewhere along the MacArthur Highway in Paniqui. Rizal.. and having failed to exercise the extraordinary diligence required of him by the law. On 10 December 1975. corporations. Article 1732 NCC The Civil Code defines “common carriers” in the following terms (Article 1732): “Common carriers are persons. as “a sideline”). offering their services to the public. Cendaña loaded in Makati the merchandise on to his trucks: 150 cartons were loaded on a truck driven by Cendaña himself. Inc.150. firms or associations engaged in the business of carrying or transporting passengers or goods or both. while 600 cartons were placed on board the other truck which was driven by Manuel Estrada.150. and one who offers services or solicits business only from a narrow segment of the general population. Cendaña denied that he was a common carrier and argued that he could not be held responsible for the value of the lost goods. Article 1732 NCC makes no distinctions Article 1732 of the Civil Code makes no distinction between one whose principal business activity is the carrying of persons or goods or both. the claimed value of the lost merchandise.” 2.e. episodic or unscheduled basis. its driver. and in ordering him to pay damages and attorney’s fees. being a common carrier. The Court of Appeals reversed the judgment of the trial court and held that Cendaña 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. 3.000. water. plus damages and attorney’s fees. paragraph (b) of the Public Service Act Transportation Law.00 as attorney’s fees. 4.00) as well as for P4. Concept of “common carrier” coincides neatly with the notion of “public service” The concept of “common carrier” under Article 1732 may be seen to coincide neatly with the notion of “public service. De Guzman argued that Cendaña. 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. De Guzman came to the Supreme Court by way of a Petition for Review. by land.Haystacks (Berne Guerrero) lower than regular commercial rates. The Supreme Court denied the Petition for Review on Certiorari. should be held liable for the value of the undelivered goods.00. and affirmed the Decision of the Court of Appeals dated 3 August 1977. Accordingly. contracted with Cendaña for the hauling of 750 cartons of Liberty filled milk from a warehouse of General Milk in Makati. In his Answer. to de Guzman’s establishment in Urdaneta on or before 4 December 1970. 1.00 as damages and P2. Sometime in November 1970. as amended) which at least partially supplements the law on common carriers set forth in the Civil Code. Section 13. Cendaña ‘s driver and employee. On 6 January 1971. Neither does Article 1732 distinguish between a carrier offering its services to the “general public. Only 150 boxes of Liberty filled milk were delivered to de Guzman. Public Service. without pronouncement as to costs. 2004 ( 36 ) . On appeal before the Court of Appeals.” under the Public Service Act (Commonwealth Act 1416. Tarlac. demanding payment of P22. Article 1733 deliberately refrained from making such distinctions. Pedro de Guzman. on 1 December 1970. by armed men who took with them the truck. his helper and the cargo.

(2) Act of the public enemy in war. 1735 and 1745. whether permanent. That liability arises the moment a person or firm acts as a common carrier. wire or wireless broadcasting stations and other similar public services. either for freight or passenger. whether international or civil. with or without fixed route and whatever may be its classification. The specific import of extraordinary diligence in the care of goods transported by a common carrier is. occasional or accidental. earthquake. “public service” includes “every person that now or hereafter may own. express service. that fee frequently fell below commercial freight rates is not relevant. Business of common carrier imbued with public interest The business of a common carrier impinges directly and intimately upon the safety and well being and property of those members of the general community who happen to deal with such carrier. (4) The character of the goods or defects in the packing or in the containers. or both. would be offensive to sound public policy. any common carrier. ferries and water craft. and (5) Order or act of competent public authority. street railway. Article 1734 NCC Article 1734 establishes the general rule that common carriers are responsible for the loss. Extraordinary diligence required of common carriers Common carriers. freight or carrier service of any class. electric light. Cendaña a common carrier Cendaña is properly characterized as a common carrier even though he merely “back-hauled” goods for other merchants from Manila to Pangasinan. “ 5. according to Article 1733. ice plant.Haystacks (Berne Guerrero) Under Section 13. numbers 5. marine repair shop. that would be to reward private respondent precisely for failing to comply with applicable statutory requirements. 6. canal. water supply and power petroleum. (3) Act or omission of the shipper or owner of the goods. “by the nature of their business and for reasons of public policy. or steamship line. 8. railroad. 9. engaged in the transportation of passengers or freight or both. There is no dispute that Cendaña charged his customers a fee for hauling their goods. for hire or compensation. steamboat. “further expressed in Articles 1734. with general or limited clientele. traction railway. 2004 ( 37 ) . The law imposes duties and liabilities upon common carriers for the safety and protection of those who utilize their services and the law cannot allow a common carrier to render such duties and liabilities merely facultative by simply failing to obtain the necessary permits and authorizations. Article 1735 NCC Transportation Law. Enumeration in Article 1734 NCC exclusive.” are held to a very high degree of care and diligence (“extraordinary diligence”) in the carriage of goods as well as of passengers. and even though Cendaña’s principal occupation was not the carriage of goods for others. destruction or deterioration of the goods which they carry. or control in the Philippines. 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. or other natural disaster or calamity. 7. although such backhauling was done on a periodic or occasional rather than regular or scheduled manner. lightning. 6 and 7” of the Civil Code. irrigation system. shipyard. manage. gas. to exempt Cendaña from the liabilities of a common carrier because he has not secured the necessary certificate of public convenience. paragraph (b) of the Public Service Act. subway motor vehicle. and done for general business purposes. heat and power. sewerage system. Certificate of public convenience not requisite for incurring of liability as common carrier A certificate of public convenience is not a requisite for the incurring of liability under the Civil Code provisions governing common carriers. storm.” 10. wharf or dock. operate. wire or wireless communications systems. “unless the same is due to any of the following causes only: (1) Flood. pontines. ice-refrigeration plant. Herein.

Common carriers not absolute insurers against all risks of travel and of transport of goods Transportation Law. if not irresistible. given additional specification not only by Articles 1734 and 1735 but also by Article 1745. driven by Manuel Estrada and loaded with the 600 cartons of Liberty filled milk destined for delivery at de Guzman’s store in Urdaneta. may be overthrown by proof of extraordinary diligence on the part of Cendaña. detaining them for several days and later releasing them in another province (in Zambales). 12. Branch 2. The record shows that an information for robbery in band was filed in the CFI of Tarlac. in Criminal Case 198 entitled “People of the Philippines v.Haystacks (Berne Guerrero) It is important to point out that the above list of causes of loss. if the goods are lost. violence or force. The hijacked truck was subsequently found by the police in Quezon City. however. unjust and contrary to public policy: xxx (5) that the common carrier shall not be responsible for the acts or omissions of his or its employees. under Article 1733. 12. the accused were charged with willfully and unlawfully taking and carrying away with them the second truck. destruction or deterioration of goods on account of the defective condition of the car. It would follow that the hijacking of the carrier’s vehicle must be dealt with under the provisions of Article 1735. Pangasinan. 3. Article 1745 provides in relevant part: “Any of the following or similar stipulations shall be considered unreasonable. numbers 4. The CFI convicted all the accused of robbery. that Cendaña as common carrier is presumed to have been at fault or to have acted negligently. 4 and 5 of the preceding article. The decision of the trial court shows that the accused acted with grave. vehicle. in other words. 14. 2004 ( 38 ) . Armed robbery herein is fortuitous event The duty of extraordinary diligence in the vigilance over goods is. Hold uppers of second truck armed Herein. 3 of the 5 holduppers were armed with firearms. threat. the hijacking of the carrier’s truck does not fall within any of the 5 categories of exempting causes listed in Article 1734. Napoleon Presno. 5 and 6. Cendaña presumed at fault. which provides that “In all cases other than those mentioned in numbers 1. 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.” 11.” 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. destruction or deterioration which exempt the common carrier for responsibility therefor. not required to retain security guard to ride with truck Applying Articles 1734 and 1735. ship. The robbers not only took away the truck and its cargo but also kidnapped the driver and his helper. This presumption. 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. Cendaña. The standard of extraordinary diligence required Cendaña to retain a security guard to ride with the truck and to engage brigands in a fire fight at the risk of his own life and the lives of the driver and his helper. Felipe Boncorno.” There. and (7) that the common carrier shall not responsible for the loss. except where such thieves or robbers in fact acted “with grave or irresistible threat. is dispensed with or diminished. fall within the scope of Article 1735.” In these circumstances. Specific requirements of the duty of extraordinary diligence in the vigilance over the goods carried in the specific context of hijacking or armed robbery. airplane or other equipment used in the contract of carriage. (6) that the common carrier’s liability for acts committed by thieves. even if they appear to constitute a species of force majeure. though not of robbery in band. armed men held up the second truck owned by Cendaña which carried de Guzman’s cargo. common carriers are presumed to have been at fault or to have acted negligently. destroyed or deteriorated. unless they prove that they observed extraordinary diligence as required in Article 1733. Armando Mesina. 2. violence or force. is a closed list.” Under Article 1745 (6). or of robbers who do not act with grave or irresistible threat. however. Oscar Oria and one John Doe. violence or force. Causes falling outside the foregoing list. violence or force.

the resident agent of the carrier. then tied with steel bonds. Each time a dump truck was filled up. [15]. 1 on leave. PPI unloaded the cargo from the holds into its steel-bodied dump trucks which were parked alongside the berth. respectively. USA. the steel pontoon hatches were opened with the use of the vessel’s boom. was hired by PPI to determine the “outturn” of the cargo shipped. 14th and 18th). and that this “request” was denied by them because they “had nothing to do with the discharge of the shipment. raining occasionally while the discharge was in progress. (CSCI). according to them. Before loading the fertilizer aboard the vessel.329.31 representing the cost of the alleged shortage in the goods shipped and the diminution in value of that portion said to have been contaminated with dirt. 9. Addenda 1. It took 11 days for PPI to unload the cargo. SSA explained that they were not able to respond to the consignee’s claim for payment because. for P245. rust and dirt. 4 of her holds were all presumably inspected by the charterer’s representative and found fit to take a load of urea in bulk pursuant to paragraph 16 of the charter-party. a time charter-party on the vessel M/V “Sun Plum” pursuant to the Uniform General Charter was entered into between Mitsubishi as shipper/charterer and KKKK as shipowner. On 17 May 1974.969. in Tokyo. KKKK. La Union. by taking draft readings of the vessel prior to and after discharge. 2004 ( 39 ) . 2. 20th. 3 and 4 to the charter-party were also subsequently entered into on the 18th. its load of Urea was covered with tarpaulin before it was transported to the consignee’s warehouse located some 50 meters from the wharf. The survey report submitted by CSCI to the consignee (PPI) dated 19 July 1974 revealed a shortage in the cargo of 106. PPI’s warehouse was made of corrugated galvanized iron (GI) sheets. The hatches remained open throughout the duration of the discharge. certain portions of the route to the warehouse were sandy and the weather was variable. purchased from Mitsubishi International Corporation of New York. CA (GR 101503.726 M/T and that a portion of the Urea fertilizer approximating 18 M/T was contaminated with dirt. using metal scoops attached to the ship. Midway to the warehouse. or prior to its voyage. The port area was windy. having been polluted with sand. covered with 3 layers of tarpaulin. as evidenced by Bill of Lading KP-1 signed by the master of the vessel and issued on the date of departure. 21st and 27th of May 1974. the trucks were made to pass through a weighing scale where they were individually weighed for the purpose of ascertaining the net weight of the cargo.” Transportation Law. Japan. The hatches remained closed and tightly sealed throughout the entire voyage. Inc. After the Urea fertilizer was loaded in bulk by stevedores hired by and under the supervision of the shipper. Cargo Superintendents Company Inc. Tarpaulins and GI sheets were placed in-between and alongside the trucks to contain spillages of the fertilizer. also [171] Planters Products vs. Philippines. Alaska. Bellosillo (J): 2 concur. PPI sent a claim letter dated 18 December 1974 to Soriamont Steamship Agencies (SSA). 15 September 1993) First Division. 1 took no part Facts: Planters Products.Haystacks (Berne Guerrero) Even common carriers are not made absolute insurers against all risks of travel and of transport of goods. A private marine and cargo surveyor. what they received was just a request for shortlanded certificate and not a formal claim. Riders to the aforesaid charter-party starting from paragraph 16 to 40 were attached to the pre-printed agreement. provided that they shall have complied with the rigorous standard of extraordinary diligence. from 5 July to 18 July 1974 (except July 12th.839 M/T and about 23 M/T were rendered unfit for commerce. with an opening at the front where the dump trucks entered and unloaded the fertilizer on the warehouse floor. USA. (PPI).7069 metric tons (M/T) of Urea 46% fertilizer which the latter shipped in bulk on 16 June 1974 aboard the cargo vessel M/V “Sun Plum” owned by Kyosei Kisen Kabushiki Kaisha (KKKK) from Kenai. to Poro Point. and are not held liable for acts or events which cannot be foreseen or are inevitable. Upon arrival of the vessel at her port of call on 3 July 1974. The same results were contained in a Certificate of Shortage/Damaged Cargo dated 18 July 1974 prepared by PPI which showed that the cargo delivered was indeed short of 94. San Fernando. the steel hatches were closed with heavy iron lids. Consequently. pursuant to the terms and conditions of the charter-party (which provided for an FIOS clause).

in consideration of the payment of freight. to carry goods for others. with costs against PPI. Common or public carrier defined. or voyage charter. In both cases. the Court of Appeals reversed the lower court and absolved the carrier from liability for the value of the cargo that was lost or damaged. Ordinary diligence required of private carriers Article 1733 of the New Civil Code mandates that common carriers. common carriers are presumed to have been at fault or to have acted negligently. and the burden of proving otherwise rests on them. On appeal. Common carriers presumed negligent in case of loss. In the case of private carriers. Charter party defined A “charter-party” is defined as a contract by which an entire ship. 3. PPI filed an action for damages with the Court of First Instance of Manila. is let by the owner to another person for a specified time or use. etc. the shipowner to supply the ship’s stores. Distinction between common or public carrier. which reversed the trial court. dismissed Civil Case 98623 of the then CFI. wherein the vessel is leased to the charterer for a fixed period of time. 1. of goods. (b) charter by demise or bareboat charter. Types of charter parties Charter parties are of two types: (a) contract of affreightment which involves the use of shipping space on vessels leased by the owner in part or as a whole. no Transportation Law. by the terms of which the whole vessel is let to the charterer with a transfer to him of its entire command and possession and consequent control over its navigation. who are his servants. a contract of affreightment by which the owner of a ship or other vessel lets the whole or a part of her to a merchant or other person for the conveyance of goods. not a part of the general business or occupation. air or water which hold themselves out as ready to engage in carrying goods or transporting passengers or both for compensation as a public employment and not as a casual occupation. 2. No presumption in private carriers In case of loss. although involving the carriage of goods for a fee. on a particular voyage. The definition extends to carriers either by land. 7. On the contrary. such that if the undertaking is a single transaction. 5.Haystacks (Berne Guerrero) On 18 July 1975. the person or corporation offering such service is a private carrier. pay for the wages of the master and the crew. Kinds of contract of affreightment Contract of affreightment may either be time charter. or some principal part thereof. including the master and the crew. either for a determinate period of time or for a single or consecutive voyage. and private or special carrier The distinction between a “common or public carrier” and a “private or special carrier” lies in the character of the business. of Manila. Extraordinary diligence required of common carriers (Article 1733). and consequently. however. the exercise of ordinary diligence in the carriage of goods will suffice. 6. 2004 ( 40 ) . now RTC. and. affirmed the assailed decision of the Court of Appeals. wherein the ship is leased for a single voyage. by reason of the nature of their business. should observe extraordinary diligence in the vigilance over the goods they carry. the charter-party provides for the hire of the vessel only. destruction or deterioration of the goods. 4. The Supreme Court dismissed the petition. Scope of definition The term “common or public carrier” is defined in Article 1732 of the Civil Code. The court a quo however sustained the claim of PPI against the carrier for the value of the goods lost or damaged. and defray the expenses for the maintenance of the ship. PPI appealed by way of petition for review.

its officers and compliment were under the employ of the shipowner and therefore continued to be under its direct supervision and control. the burden of proof shifts to respondent to prove that he has exercised extraordinary diligence required by law or that the loss. Reliance on case of Home Insurance vs. v. notwithstanding the charter of the whole or portion of a vessel by one or more persons. in the ordinary course of business. 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. operates as a common carrier. the rules governing common carriers. Burden of proof in an action for recovery of damages against a common carrier In an action for recovery of damages against a common carrier on the goods shipped. more particularly. 9. Kyosei Kisen Kabushiki Kaisha a common carrier. Observations of Raoul Colinvaux. When charter party converts common carrier to private carrier It is only when the charter includes both the vessel and its crew. Thus. American Steamship Agencies is misplaced for the reason that the meat of the controversy therein was the validity of a stipulation in the charter-party exempting the shipowner from liability for loss due to the negligence of its agent. a public carrier shall remain as such. does not find application in Philippine jurisdiction. be the property of the charterer. and the same difficulty in discovering the truth as to what has taken place arises . Carrier has sufficiently overcome. the shipowner is not then a carrier. American rule as to shipper carrying special cargo not applicable in the Philippines. whether he is employed by one or many. 11. remained as so in charter party Kyosei Kisen Kabushiki Kaisha. for the Court has observed that the growing concern for safety in the transportation of passengers and/or carriage of goods by sea requires a more exacting interpretation of admiralty laws.Haystacks (Berne Guerrero) such presumption applies to private carriers. When PPI chartered the vessel M/V “Sun Plum”. transporting goods indiscriminately for all persons. a shipowner in a time or voyage charter retains possession and control of the ship. for whosoever alleges damage to or deterioration of the goods carried has the onus of proving that the cause was the negligence of the carrier. Thereafter. provided the charter is limited to the ship only. the case is different. American Steamship misplaced The carrier’s heavy reliance on the case of Home Insurance Co. damage or deterioration of the cargo was due to fortuitous event. the same opportunities for fraud or collussion occur. it is difficult to find a valid distinction between cases in which a ship is used to convey the goods of one and of several persons. by clear and convincing proof. the learned barrister-at-law “As a matter of principle. or some other circumstances inconsistent with its liability. the manning of the decks. . of the carrier. Considering that the steering of the ship. . for the moment. and not the effects of a special charter on common carriers. 12. 14. so that he takes over the charge and control of her. the ship captain. Indubitably. at least insofar as the particular voyage covering the charter-party is concerned. as in a bareboat or demise that a common carrier becomes private. actual or constructive. the charterer is a stranger to the crew and to the ship. Stricter interpretation of admiralty laws The rule in the United States that a ship chartered by a single shipper to carry special cargo is not a common carrier. But where her services only are let. chosen and hired by the shipowner. as in the case of a time-charter or voyage-charter. 10. The master and the crew are in each case his servants.” 13. 2004 ( 41 ) . Where the ship herself is let to a charterer. the same grounds for imposing a strict responsibility exist. although her holds may. the prima facie presumption of negligence Transportation Law. 8. the shipper or consignee should first prove the fact of shipment and its consequent loss or damage while the same was in the possession. the freighter in each case is usually without any representative on board the ship.

that they arose through his negligence or by reason of his having failed to take the precautions which usage has established among careful persons. Characteristics of urea Urea is a chemical compound consisting mostly of ammonia and carbon monoxide compounds which are used as fertilizer. the wind tends to blow away some of the materials during the unloading process. and a cargo surveyor representing CSCI. (2) The dissipation of quantities of fertilizer. trimming and discharge of the cargo was to be done by the charterer. and in the presence of a representative of the shipowner. the 4 hatches of the vessel were cleaned. that the loading. the steel pontoon hatches were closed and sealed with iron lids. losses due to spillage during such operation amounting to one percent (1%) against the bill of lading is deemed “normal” or “tolerable. The carrier. but prior to unloading.I. dried and fumigated. provided that the temperature inside the hull does not exceed 80 degrees centigrade.” The primary cause of these spillages is the clamped shell which does not seal very tightly. as against him. not when the same is done by the consignee or stevedores under the employ of the latter. shall be liable for the loss and damage resulting from the preceding causes if it is proved.S. free from all risk and expense to the carrier. destruction or deterioration of the goods if caused by the character of the goods or defects in the packaging or in the containers. stowing. Period which carrier was to observe degree of diligence. or when it comes in contact with water. Limitation clause of FIOS meaning The period during which the carrier was to observe the degree of diligence required of it as a public carrier began from the time the cargo was unconditionally placed in its charge after the vessel’s holds were duly inspected and passed scrutiny by the shipper.O. However. The stevedores unloaded the cargo under the watchful eyes of the shipmates who were overseeing the whole operation on rotation basis. nitrogen and ammonia do not normally evaporate even on a long voyage. up to and until the vessel reached its destination and its hull was re-examined by the consignee. (2) It was also shown during the trial that the hull of the vessel was in good condition. Japan. Moreover. After completing the loading of the cargo in bulk in the ship’s holds. The Code of Commerce also provides that all losses and deteriorations which the goods may suffer during the transportation by reason of fortuitous event. is caused either by an extremely high temperature in its place of storage. This is clear from the limitation clause agreed upon by the parties in the Addendum to the standard “GENCON” time charter-party which provided for an F. in his deposition taken on 19 April 1977 before the Philippine Consul and Legal Attache in the Philippine Embassy in Tokyo. 15. opened the hatches and inspected the condition of the hull of the vessel. foreclosing the possibility of spillage of the cargo into the sea or seepage of water inside the hull of the vessel. When M/V “Sun Plum” docked at its berthing place. meaning. 17. representatives of the consignee boarded.Haystacks (Berne Guerrero) (1) The master of the carrying vessel. then covered with 3 layers of serviceable tarpaulins which were tied with steel bonds. the foreman. Captain Lee Tae Bo. 15. either fresh or saline. or the inherent defect of the goods. 2004 ( 42 ) . some of its particles Transportation Law. the stevedores. a shipowner is liable for damage to the cargo resulting from improper stowage only when the stowing is done by stevedores employed by him. and that proof of these accidents is incumbent upon the carrier. 16. Verily. Expected risks of bulk shipping (1) In unloading fertilizer in bulk with the use of a clamped shell. Also. destruction or deterioration of goods Article 1734 of the New Civil Code provides that common carriers are not responsible for the loss. force majeure. When common carriers not liable for loss. testified that before the fertilizer was loaded. nonetheless. shall be for the account and risk of the shipper.. or its deterioration in value. When Urea is drenched in water. the presumption of negligence on the part of respondent carrier has been efficaciously overcome by the showing of extraordinary zeal and assiduity exercised by the carrier in the care of the cargo. and therefore under his control and supervision. Urea also contains 46% nitrogen and is highly soluble in water. during storage. The hatches remained close and tightly sealed while the ship was in transit as the weight of the steel covers made it impossible for a person to open without the use of the ship’s boom.

Transportation Law. more so. and (3) the costs of the suit. Manila to the warehouse of Purefoods Corporation in Calamba. Laguna at the rate of P50. The court further denied the “Urgent Motion To Dissolve/Lift preliminary Attachment” dated 10 March 1987 filed by Bascos for being moot and academic. 7 April 1993) Second Division.000.00 from the Manila Port Area to Calamba. ordering Bascos to pay Cipriano (1) the amount of P156. Cipriano paid Jibfair Shipping Agency the amount of the lost goods in accordance with the contract. This may be gleaned from the testimony of the marine and cargo surveyor of CSCI who supervised the unloading. it was more likely to have occurred while the same was being transported from the ship to the dump trucks and finally to the consignee’s warehouse. 18. through Rodolfo Cipriano. Campos Jr. Variable weather condition a risk of loss or damage which owner or shipper of goods has to face Herein. The trial court granted the writ of preliminary attachment on 17 February 1987. Eventually. After trial. Laguna. 2004 ( 43 ) . Del Pan.000 m/tons of soya bean meal from Magallanes Drive. Hull of vessel in good condition. Cipriano representing Cipriano Trading Enterprise (CIPTRADE) entered into a hauling contract with Jibfair Shipping Agency Corp. (2) the amount of P5.00 for actual damages with legal interest of 12% per cent per annum to be counted from 4 December 1986 until fully paid. But the salvaged portion which is in liquid form still remains potent and usable although no longer saleable in its original market value. Cipriano filed a complaint for a sum of money and damages with writ of preliminary attachment for breach of a contract of carriage.404. who also testified that it was windy at the waterfront and along the shoreline where the dump trucks passed enroute to the consignee’s warehouse. Bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss or damage. To carry out its obligation. [16] Bascos vs. He explained that the 18 M/T of alleged “bad order cargo” as contained in their report to PPI was just an approximation or estimate made by them after the fertilizer was discharged from the vessel and segregated from the rest of the cargo.” thereby exposing it to the inimical effects of the elements and the grimy condition of the various pieces of equipment used in transporting and hauling it.00 per metric ton. with a variable weather condition prevalent during its unloading. Cipriano demanded reimbursement from Bascos but the latter refused to pay. whereby the former bound itself to haul the latter’s 2. Bascos failed to deliver the said cargo.00 as and for attorney’s fees. This is a risk the shipper or the owner of the goods has to face. (J): 4 concur Facts: Rodolfo A. it was in the month of July when the vessel arrived port and unloaded her cargo. (3) The probability of the cargo being damaged or getting mixed or contaminated with foreign particles was made greater by the fact that the fertilizer was transported in “bulk. the petition for review on certiorari. CIPTRADE. 19.Haystacks (Berne Guerrero) dissolve. the trial court rendered a decision. If there was loss or contamination of the cargo. subcontracted with Estrellita Bascos to transport and to deliver 400 sacks of soya bean meal worth P156. The Supreme Court dismissed the petition and affirmed the decision of the Court of Appeals. Bascos appealed to the Court of Appeals (CA-GR CV 25216) but the appellate court affirmed the trial court’s judgment. Improbable that sea water seep in vessel’s hold It was highly improbable for sea water to seep into the vessel’s holds during the voyage since the hull of the vessel was in good condition and her hatches were tightly closed and firmly sealed. making the M/V “Sun Plum” in all respects seaworthy to carry the cargo she was chartered for. It rained from time to time at the harbor area while the cargo was being discharged according to the supply officer of PPI. CA (GR 101089. As a consequence of that failure. Hence.404.

Court of Appeals that “The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both. both the trial and appellate courts have dismissed them as self-serving. In a petition for review on certiorari. CA Transportation Law. Ruling in De Guzman vs. Judicial admissions are conclusive Judicial admissions are conclusive and no evidence is required to prove the same. for compensation. 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.” i. episodic or unscheduled basis. Burden of proof Granting that the said evidence were not self-serving. Herein. the general community or population. offering their services to the public. Factual conclusions of the appellate court conclusive upon the Supreme Court. offering her trucks to those with cargo to move. Bascos presented no other proof of the existence of the contract of lease. Bascos herself has made the admission that she was in the trucking business. Hijacking not included in Article 1734. In those cases where the presumption is applied. Article 1745 NCC. by land. the court is not to determine the probative value of evidence but to resolve questions of law. 7. Burden of Proof Common carriers are obliged to observe extraordinary diligence in the vigilance over the goods transported by them. 4. and one who offers services or solicits business only from a narrow segment of the general population.e. There are very few instances when the presumption of negligence does not attach and these instances are enumerated in Article 1734. Test to determine common carrier The test to determine a common carrier is “whether the given undertaking is a part of the business engaged in by the carrier which he has held out to the general public as his occupation rather than the quantity or extent of the business transacted. 2004 ( 44 ) .” 3.Haystacks (Berne Guerrero) 1. it held in De Guzman vs. Furthermore. CA In referring to Article 1732 of the Civil Code. Neither does Article 1732 distinguish between a carrier offering its services to the “general public. Court’s role in a petition for review on certiorari Regarding the affidavits (lease agreements) presented by Bascos to the court.. water or air. corporation or firm. Article 1732 NCC defines common carrier Article 1732 of the Civil Code defines a common carrier as “(a) person.” 2. Contracts are understood as what the law defines them to be and not what parties call them. 6. the same were not sufficient to prove that the contract was one of lease. He who alleges a fact has the burden of proving it. destroyed or deteriorated. Accordingly. Extraordinary diligence. Exceptions in Article 1734. they are presumed to have been at fault or to have acted negligently if the goods are lost. De Guzman vs. and one who does such carrying only as an ancillary activity (in local idiom. the common carrier must prove that it exercised extraordinary diligence in order to overcome the presumption. No distinctions in Article 1732 as to common carriers. The Supreme Court is bound by the appellate court’s factual conclusions. It must be understood that a contract is what the law defines it to be and not what it is called by the contracting parties. 8. as a “sideline”). We think that Article 1732 deliberately refrained from making such distinctions. Presumption of negligence.” 5. or association engaged in the business of carrying or transporting passengers or goods or both.

violences or force. Montemayor (J): 7 concur Facts: In 1948. also [117] Mendoza vs. De Guzman vs. (3) While the affidavit of Juanito Morden. The posters and advertisement stated that the film would be Transportation Law. (2) The affidavit of Jesus Bascos did not dwell on how the hijacking took place. or force. This is in accordance with Article 1745 of the Civil Code. unjust and contrary to public policy. [17]. Court of Appeals. and Juanito Morden’s “Salaysay”. To exculpate the carrier from liability arising from hijacking. Bascos presented her accusatory affidavit. A month before the holiday. It was not a first-hand account. 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. both the trial court and the Court of Appeals have concluded that these affidavits were not enough to overcome the presumption. He also advertised in a weekly of general circulation in the province. Jesus Bascos’ affidavit. the common carrier is presumed to have been at fault or negligent. that is to say. he must prove that the robbers or the hijackers acted with grave or irresistible threat. 29 February 1952) En Banc. Jose Mendoza was the owner of the Cita Theater located in the City of Naga. 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. (1) Bascos’s affidavit about the hijacking was based on what had been told her by Juanito Morden. held on September 17 and 18. violence or force. he himself was a witness as could be gleaned from the contents of the petition. Camarines Sur. Article 1745 (6) NCC Article 1745 of the Civil Code provides that “Any of the following or similar stipulations shall be considered unreasonable. CA “Under Article 1745 (6) above. is dispensed with or diminished. he contracted with the LVN pictures Inc.000 posters printed and later distributed not only in the City of Naga but also in the neighboring towns. The fiesta or town holiday of the City of Naga.. violence. xxx (6) That the common carrier’s liability for acts committed by thieves. The subsequent filing of the information for carnapping and robbery against the accused named in said affidavits did not necessarily mean that the contents of the affidavits were true because they were yet to be determined in the trial of the criminal cases. where he used to exhibit movie pictures booked from movie producers or film owners in Manila. 12. While it had been admitted in court for lack of objection on the part of Cipriano. he took advantage of these circumstances and decided to exhibit a film which would fit the occasion and have a special attraction and significance to the people attending said fiesta. he had 2. 2004 ( 45 ) . 9.Haystacks (Berne Guerrero) In De Guzman vs.” 11. As a good businessman. or of robbers who do not act with grave or irresistible threat. violence or force. He made extensive preparations. the Court held that hijacking. August 1948. When armed robbery a force majeure.” 10. a movie producer in Manila for him to show during the town fiesta the Tagalog film entitled “Himala ng Birhen” or Miracle of the Virgin. the lower court had discretion in assigning weight to such evidence. Affidavits not considered best evidence if affiants are available as witnesses Affidavits are not considered the best evidence if the affiants are available as witnesses. especially since the Patron Saint Virgin of Peña Francia was believed by many to be miraculous. not being included in the provisions of Article 1734. mostly from the Bicol region. the truck helper in the hijacked truck. must be dealt with under the provisions of Article 1735 and thus. was presented as evidence in court. was usually attended by a great many people. However. yearly. Grave and irresistible force not shown To establish grave and irresistible force. PAL (GR L-3678.

2. a can containing the film “Himala ng Birhen” consigned to the Cita Theater. or which might have been foreseen. once said can of film was loaded and shipped on one of its planes making the trip to Camarines. Mendoza brought this action against the PAL. the lower court found that because of his failure to exhibit the film “Himala ng Birhen” during the town fiesta. but which would appear to be the fault of its employees or agents. Contract of transportation by air may be regarded as commercial. for the reason that neither the shipper LVN Pictures Inc. Corporacion de PP Agustinos Recoletos. the former on September 17th. then it assumed the obligation to unload it at its point of destination and deliver it to the consignee. at the time of constituting the obligation.m.000. nor the consignee Mendoza had called its attention to the special circumstances attending the shipment and the showing of the film during the town fiesta of Naga. 4. In pursuance of the agreement between the LVN Pictures Inc. For reasons not explained by PAL. For this shipment. PAL issued its Air Way Bill 317133. Mendoza may not recover the damages sought. went to the Air Port and inquired from PAL’s station master there about the can of film. Mendoza who had completed all arrangements for the exhibition of the film beginning in the evening of September 17th. Obvious reason why transport by air not included in Code of Commerce A contract of transportation by air may be regarded as commercial. PAL a debtor in good faith Although PAL was not obligated to load the film on any specified plane or on any particular day. After trial. The Supreme Court affirmed the decision appealed from. When Aircraft Operator is common carrier Transportation Law. and then shipped to the Pili Air Port on September 20th. September 18th. and its unexplained failure to comply with this duty constituted negligence. transportation by air on a commercial basis was not yet known. September 17th. Mendoza suffered damages or rather failed to earn profits in the amount of P3.00. an airline company engaged in the transportation business is regarded as a common carrier. To recoup his losses. besides. corresponding to the eve and day of the fiesta itself. 1948. and Mendoza. the Court held that inasmuch as these damages suffered by Mendoza were not foreseen or could not have been foreseen at the time that PAL accepted the can of film for shipment. 1. The Court however found that fraud was not involved and that PAL was a debtor in good faith. but finding the PAL not liable for said damages. of the same day. 1107 of the Civil Code which provides that losses and damages for which a debtor in good faith is liable are those foreseen. A debtor in good faith is liable only for foreseen losses and damages Applying the provisions of Art. The obvious reason for its non-inclusion in the Code of Commerce was that at the time of its promulgation. In the United States where air transportation has reached its highest development. Camarines Sur. this can of film was not unloaded at Pili Air Port and it was brought back to Manila. 2004 ( 46 ) . and which are a necessary consequence of the failure to perform it. to exploit the presence of the big crowd that came to attend the town fiesta. delivered to the Philippine Airlines (PAL) whose planes carried passengers and cargo and made regular trips from Manila to the Pili Air Port near Naga. the plane arriving at the Air Port at Pili a little after 4:00 p. dismissed the complaint. (See Similar case of Daywalt vs. Mendoza received it and exhibited the film but he had missed his opportunity to realize a large profit as he expected for the people after the fiesta had already left for their towns.Haystacks (Berne Guerrero) shown in the Cita Theater on the 17th and 18th of September. 39 PHIL 587) 3. The reason is that at least in the present case the transportation company (PAL) is a common carrier. the film was finally located the following day. This can of films was loaded on PAL flight 113. with no pronouncement as to costs. air transportation is clearly similar or analogous to land and water transportation. Said station master could not explain why the film was not unloaded and sent several radiograms to his principal in Manila making inquiries and asking that the film be sent to Naga immediately. After investigation and search in the Manila office.

R. Test to determine common carrier by air The test of whether one is a common carrier by air is whether he holds out that he will carry for hire. 1049. (1918 F) p. Chapman vs.A. for hire. the status and the liability as a common carrier may exist notwithstanding the passenger’s ticket issued by an airplane carrier of passengers for hire contains a statement that it is not a common carrier. But an airplane owner cannot be classed as a common carrier of passengers unless he undertakes. Article 358 of the Code of Commerce similar to Article 1101 of the Civil Code. then in the last analysis. so long as he has room. such as by railroad or motor bus. govern carriers by aircraft. the plaintiff in Troy. There was delay in their delivery and it was found that the plaintiff because of his failure to exhibit the film in Utica due to the Transportation Law. particularly Art. under the general law of common carriers. and basing its charges not on the number of passengers. At the time of shipment the attention of the express company was called to the fact that the shipment involved motion picture films to be exhibited in Utica. 2004 ( 47 ) . the carrier shall be bound to forward them in the first shipment of the same or similar merchandise which he may make to the point of delivery. times of leaving. but on the operating cost of the plane per mile. There can be no doubt. and make the usual stipulation as to baggage. Fargo similar In the case of Chapman vs. but in the absence of applicable provisions. delivered motion picture films to Fargo. pertaining to ordinary damages or damages in general Art. 1101 thereof. to carry all persons who apply for passage indiscriminately as long as there is room and no legal excuse for refusing. This is a general provision for ordinary damages and is no different from the provisions of the Civil Code. goods of everyone bringing goods to him for carriage. Order of applicable laws pertaining to commercial transactions Article 2 of the Code of Commerce provides that commercial transactions are to be governed by the provisions of the Code of Commerce. etc. and that they should be sent to their destination. Rules and principles applied to other common carrier applicable to carriers by aircraft The principles which govern carriers by other means. are common carriers by air. neither has it been shown that there are any commercial usages applicable thereto. in order to make one carrying passengers by aircraft a common carrier of passengers that the passengers be carried from one point to another. 9. who solicit the patronage of the traveling public. or a stipulation that it is to be held only for its proven negligence. not special damages like those suffered by Mendoza. 10. and in default of both. providing for the payment of damages caused by the negligence or delay in the fulfillment of one’s obligation. L. and that upon failure to do so. The rules governing the business of a common carrier by airship or flying machine may be readily assimilated to those applied to other common carriers. rush. Fargo. an express company. New York. though not operating on regular routes or schedules. “ 5. the damages caused by the delay should be suffered by the carrier. will take anyone anywhere at any time. assuming that the present case involved a commercial transaction. In the present case. the rules of the civil law would have to come into play. according to its printed advertising. by those of the Civil Law. that those air lines and aircraft owners engaged in the passenger service on regular schedules on definite routes. 6. consigned and to be delivered to him in Utica. and rates of fare. they will be governed by the usages of commerce generally observed in each place.. It is not necessary. not whether he is carrying as a public employment or whether he carries to a fixed place. A flying service company which. advertise schedules for routes. 358 of the Code of Commerce provides that if there is no period fixed for the delivery of the goods.Haystacks (Berne Guerrero) “That aircraft and the industry of carriage by aircraft are new is no reason why one in fact employing aircraft as common-carrier vehicles should not be classified as a common carrier and charged with liability as such. 7. has been held to be a common carrier. still inasmuch as the special damages claimed finds no applicable provision in the Code of Commerce. The pertinent provisions regarding damages only treats of ordinary damages or damages in general.

Prior to that time. Mendoza. His demand for the delivery of the can of film to him at the Pili Air Port may be regarded as a notice of his acceptance of the stipulation of the delivery in his favor contained in the contract of carriage. i. and PAL contains the stipulations of delivery to Mendoza as consignee (Art. 2004 ( 48 ) . such demand being one for the fulfillment of the contract of carriage and delivery. 1257. and acting independently of Mendoza for the time being. b. 15. a. Means to make common carrier liable for special damages Before defendant could be held to special damages. and PAL on the other.” 12. made Mendoza as consignee. to rent the film “Himala ng Birhen” and show it during the Naga town fiesta. But the highest court in the State of New York refused to award him special damages. Prompt delivery not required of common carriers. he most probably authorized and enjoined the Picture Company to ship the film for him on the PAL on September 17th. as the rule has been stated in another form. notice then of any special circumstances which will show that the damages to be anticipated from a breach would be enhanced has been held sufficient for this effect. appeared at the Pili Air Port armed with the copy of the Air Way Bill demanding the delivery of the shipment to him. it must have appeared that he had notice at the time of delivery to him of the particular circumstances attending the shipment. Malagarriga in his book Codigo de Comercio Comentado. 16. and which probably would lead to such special loss if he defaulted. Mendoza a party to the contract of transportation LVN Pictures Inc.. or at least has come to court to enforce it. entered into a contract of transportation. One interpretation of said finding is that the LVN Pictures Inc. p. 13. Vol. the right of the shipper to countermand the shipment terminates when the consignee or legitimate holder of the bill of lading appears with such bill of lading before the carrier and makes himself a party to the contract. such unusual or extraordinary damages must have been brought within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting. Or. of the old Civil Code: Should the contract contain any stipulation in favor of a third person. unless they previously assume the obligation Common carriers are not obligated by law to carry and to deliver merchandise. he may demand its fulfillment. in order to impose on the defaulting party further liability than for damages naturally and directly. paragraph 2. a stranger to the contract if that is possible. Precautions to be made by exhibitor in similar cases Transportation Law. 14. arising from a breach of contract. in the ordinary course of things. such as alleged loss of profits on account of delay or failure of delivery. provided he has given notice of his acceptance to the person bound before the stipulation has been revoked). His cause of action must necessarily be founded on its breach. and persons are not vested with the right to prompt delivery. and Jose Mendoza on one side. as consignor of its own initiative. 11. I. he thereby made himself a party to the contract of transportation. through previous agreement with Mendoza acted as the latter’s agent. In this case he also made himself a party to the contract. he is stranger to the contract. unless such common carriers previously assume the obligation. 400 On the possibility of a conflict between the order of the shipper on the one hand and the order of the consignee on the other. nevertheless when he. Generally. A cause of action by a party to the contract of transportation must be founded on its breach The contract of carriage between the LVN Pictures Inc.e. When he negotiated with the LVN Pictures Inc. Another interpretation is that even if the LVN Pictures Inc. Said rights and obligations are created by a specific contract entered into by the parties. as when the shipper orders the shipping company to return or retain the goods shipped while the consignee demands their delivery.Haystacks (Berne Guerrero) delay suffered damages or loss of profits.

seeking to recover the amount of P700. Coastwise Lighterage.00 which it paid to Pag-asa Sales for the latter’s lost cargo PhilGen now claims to be subrogated to all the contractual rights and claims which the consignee may have against the carrier. The RTC (Branch 35) awarded the amount prayed for by PhilGen. Pag-asa Sales. remains in the absence of the stipulation When the charter party contract is one of affreightment over the whole vessels. The charterer mans the vessel with his own people and becomes Transportation Law. and water gushed in through a hole “2 inches wide and 22 inches long”. and affirmed the appealed decision. entered into a contract to transport molasses from the province of Negros to Manila with Coastwise Lighterage Corp. paid the consignee.Haystacks (Berne Guerrero) In situations where failure to exhibit films on a certain day would spell substantial damages or considerable loss of profits. as common carrier. This prompted the consignee. including waste of efforts on preparations and expenses incurred in advertisements. one of the barges. in order to carry cargo from one point to another. Puromines vs. PhilGen then filed an action against Coastwise Lighterage before the RTC of Manila. CA Under the demise or bareboat charter of the vessel. “Coastwise 9”. vs.. Pag-asa Sales only leased three of Coastwise Lighterage’s vessels. the principal amount of P700.00 as attorney’s fees and costs. Inc. 12 July 1995) Third Division. Herein. 1. The Supreme Court denied the petition. calling the attention of the carrier to the circumstances surrounding the case and the approximate amount of damages to be suffered in case of delay. the award was affirmed on 17 December 1993. Demise or bareboat charter of the vessel. Philippine General Insurance Company (PhilGen) and against the carrier. CA (GR 114167. to reject the shipment of molasses as a total loss. Hence. Although a charter party may transform a common carrier into a private one. the molasses at the cargo tanks were contaminated and rendered unfit for the use it was intended. Thereafter.000. would remain in the absence of stipulation. rather than a demise.00 plus interest thereon at the legal rate computed from 29 March 1989. also [177] Coastwise Lighterage Corp. The barges were towed in tandem by the tugboat MT Marica. which is presumed to have violated the contract of carriage. exhibitors.000. the liability of the shipowner for acts or negligence of its captain and crew.00 representing the value of the damaged cargo of molasses. which is likewise owned by Coastwise. The forward buoyancy compartment was damaged. Liability of shipowner in contract of affreightment over vessels. the same however is not true in a contract of affreightment on account of the distinctions between a contract of affreightment and a bareboat charter. Francisco R. while approaching Pier 18. [18]. Inc. struck an unknown sunken object. command mid navigation of the vessels remained with Coastwise Lighterage. Coastwise Lighterage denied the claim and it was PhilGen which.000. the petition for review. or else enter into a special contract or make a suitable arrangement with the common carrier for the prompt delivery of the films. Pag-asa Sales.000. On Coastwise Lighterage’s appeal to the Court of Appeals.e. 2004 ( 49 ) . i. but the possession. The contract thus entered into with the consignee was one of affreightment. As a consequence. Pag-asa Sales the amount of P700. (J): 4 concur Facts: Pag-asa Sales Inc. In turn. the date the complaint was filed until fully paid and another sum of P100. may either get hold of the films well ahead of the time of exhibition in order to make allowance for any hitch in the delivery. using the latter’s dumb barges. filed a formal claim with the insurer of its lost cargo. the charterer will generally be regarded as the owner for the voyage or service stipulated. for their security. 2. Upon reaching Manila Bay.

which subsidiarily governs common carriers (which are primarily governed by the provisions of the Civil Code) provides that “captains. Puromines vs. command and navigation thereof to the charterer anything short of such a complete transfer is a contract of affreightment (time or voyage charter party) or not a charter party all. 3. CA A contract of affreightment is one in which the owner of the vessel leases part or all of its space to haul goods for others. destroyed or deteriorated. Presumption of negligence The law and jurisprudence on common carriers both hold that the mere proof of delivery of goods in good order to a carrier and the subsequent arrival of the same goods at the place of destination in bad order makes for a prima facie case against the carrier. by placing a person whose navigational skills are questionable. Had the patron been licensed he could be presumed to have both the skill and the knowledge that would have prevented the vessel’s hitting the sunken derelict ship that lay on their way to Pier 18.Haystacks (Berne Guerrero) the owner pro hac vice. 7. by proof of its exercise of extraordinary diligence. For one. It cannot safely claim to have exercised extraordinary diligence. masters. Clearly. It is a contract for special service to be rendered by the owner of the vessel and under such contract the general owner retains the possession. Coastwise Lighterage’s embarking on a voyage with an unlicensed patron violates Article 609 of the Code of Commerce. Constantino. the owner of a vessel must completely and exclusively relinquish possession. It follows then that the presumption of negligence that attaches to common carriers. lacks not just the skill to do so. or patrons of vessels must be Filipinos. subject to liability to others for damages caused by negligence. applies to Coastwise Lighterage. at the helm of the vessel which eventually met the fateful accident. the carrier was culpably remiss in the observance of its duties. and prove the skill capacity and qualifications necessary to command and direct the vessel.” 8. but also the utmost familiarity with the usual and safe routes taken by seasoned and legally authorized ones. which is overcome only by proof of the exercise of extraordinary diligence. and he has received indemnity from the insurance company for the injury or loses arising out of the wrong or breach of contract complained of the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who violated the contract. command and navigation of the ship. remains liable as carrier and must answer for any breach of duty as to the care. It may also logically. follow that a person without license to navigate. Contract of affreightment. the charterer or freighter merely having use of the space in the vessel in return for his payment or the charter hire. Article 609 of the Code of Commerce Article 609 of the Code of Commerce. . To create a demise. Jesus R. 5. As a common carrier. the patron of the vessel “Coastwise 9” admitted that he was not licensed. Article 2207 NCC Article 2207 of the Civil Code provides that “If the plaintiff’s property has been insured. remained unrebutted in the present case. and being free from fault. loading and unloading of the cargo . and must not be disqualified according to the same for the discharge of the duties of the position. ordinances or regulations. . This presumption. Unlicensed patron presumes lack of skill and lack of familiarity to usual and safe routes taken by seasoned and authorized ones Far from having rendered service with the greatest skill and outmost foresight. Carrier remised in observance of duties. 2004 ( 50 ) . have legal capacity to contract in accordance with this code. once the goods it is sports are lost. Principle of subrogation explained Transportation Law. having failed to overcome the presumption of negligence with the loss and destruction of goods it transported.” 6. An owner who retains possession of the ship though the hold is the property of the charterer. as established by marine and navigation laws. Coastwise Lighterage is liable for breach of the contract of carriage.” 4.

Homes. Cruz instructed Licuden to give the original copies of the 2 invoices to the consignee upon arrival in Valenzuela. Bulacan 100. Greenhills Wood filed Criminal Case 668 against driver Licuden for estafa. a company with business operations in Valenzuela. supervised the loading of 7. Dominador Cruz. Before the cargo truck left Maddela for Valenzuela. Bautista.316 board feet.095. Firesman’s Fund Insurance Company v. Inc. a lumber manufacturing firm with business address at Dagupan City. Greenhills Wood bound itself to sell and deliver to Blue Star Mahogany. any private of contract or upon written assignment of. and Pan Malayan Insurance Corporation v..” On 25 June 1980. In her answer.374 board feet of sawn lumber. Benedicto denied liability alleging that she was a Transportation Law. 1 took no part Facts: Greenhills Wood Industries Co. after confirming the above with Blue Star and after trying vainly to persuade it to continue with their contract. upon payment to the assured will be subrogated to the rights of the assured to recover from the wrongdoer to the extent that the insurer has been obligated to pay. Bulacan. then the insurer. Insurance Company of North America. “they were constrained to look for other suppliers. Henry Lee Chuy. it was not the carrier which paid the value thereof to Pag-asa Sales but the latter’s insurer. operates a sawmill in Maddela. the Manager of Blue Star called up by long distance telephone Greenhills Wood’ president. Court of Appeals. 19 July 1990) Third Division. Bulacan. Jamilla & Company.918. On 15 May 1980. Quirino. with main office in B. the former was.20 as the value of 2.80 representing the value of 5. It accrues simply upon payment of the insurance claim by the insurer. The first invoice was for the amount of P11. On 16 May 1980. 2004 ( 51 ) . Cruz in the presence and with the consent of driver Licuden. Upon payment by insurer PhilGen of the amount of P700. while the other set out the amount of P5. Inc. subrogated into all the rights which Pag-asa Sales may have had against the carrier. Inc.000 board feet of sawn lumber with the understanding that an initial delivery would be made on 15 May 1980. Cruz issued to Licuden Charge Invoices 3259 and 3260 both of which were initialed by the latter at the bottom left corner. Greenhills Wood also filed against Benedicto Civil Case D-5206 for recovery of the value of the lost sawn lumber plus damages before the RTC of Dagupan City. informing him that the sawn lumber on board the subject cargo truck had not yet arrived in Valenzuela. The latter in turn informed Greenhills Wood’ resident manager in its Maddela sawmill of what had happened. formally informed Greenhills Wood’ president and general manager that Blue Star still had not received the sawn lumber which was supposed to arrive on 15 May 1980 and because of this delay. the consignee of the cargo of molasses totally damaged while being transported by Coastwise Lighterage. Bulacan and to retain the duplicate copies in order that he could afterwards claim the freightage from Greenhills Wood’s Manila office.” Herein. Bulacan. wherein the Court explained that “Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. [19] Benedicto vs. Sometime in May 1980. for the damage sustained by the loss of the cargo which the carrier was transporting.000. the proprietor of Macoven Trucking. However. the driver of a cargo truck bearing Plate 225 GA TH to transport its sawn lumber to the consignee Blue Star in Valenzuela.822. PhilGen. claim. IAC (GR 70876. Luisa Benedicto.F.Haystacks (Berne Guerrero) Article 2207 NCC containing the equitable principle of subrogation has been applied in a long line of cases including Compania Maritima v.. nor does it grow out of..00 aboard the cargo truck. Payment by the insurer to the assured operated as an equitable assignment to the former of all remedies which the latter may have against the third party whose negligence or wrongful act caused the loss. Coastwise Lighterage. Blue Star’s administrative and personnel manager. Manuel R.00 to Pag-asa Sales. a business enterprise engaged in hauling freight. This cargo truck was registered in the name of Ma. If the insured property is destroyed or damaged through the fault or negligence of a party other than the assured. Feliciano (J): 3 concur.690 board feet of sawn lumber with invoice value of P16. Coastwise Lighterage was liable for breach of the contract of carriage it entered into with the Pag-asa Sales. Parañaque. contracted Virgilio Licuden. The right of subrogation is not dependent upon. Greenhills Wood’s resident manager in Maddela. To effect its first delivery. In a letter dated 18 May 1980.

Retention of registered ownership erroneous Herein. 3. 1.00 out of the total agreed price of P68. upon appeal by Benedicto. Presumption of fault or negligence.000. and affirmed the Decision of the former IAC dated 30 January 1985. or she. Benedicto has the legal security device of chattel mortgage. On 30 January 1985.000. exceptions A common carrier. the letter allegedly written by Benjamin Tee admitting that Licuden was his driver. The Supreme Court denied the Petition for Review for lack of merit. the petition for review.00 However.016 cost of the sawn lumber loaded on the cargo truck. the Intermediate Appellate Court affirmed the decision of the trial court in toto. and to pay the costs of the suit. 2. the public has the right to assume that the registered owner is the actual or lawful owner thereof. without success. 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. in brief. Public Service Law as basis Herein.Haystacks (Berne Guerrero) complete stranger to the contract of carriage. 4. On 20 June 1983. on 28 February 1980 as evidenced by a deed of sale. a common carrier. Benedicto moved for reconsideration. She claimed that the truck had remained registered in her name notwithstanding its earlier sale to Tee because the latter had paid her only P50. to pay attorney’s fees in the amount of P2. Registered owner not allowed to prove actual owner Herein.e. The prevailing doctrine on common carriers makes the registered owner liable for consequences flowing from the operations of the carrier. Benedicto has been holding herself out to the public as engaged in the business of hauling or transporting goods for hire or compensation. and that. with costs against Benedicto. Benedicto is. the subject truck having been earlier sold by her to Benjamin Tee. and holding that Licuden was her employee. the trial court ordered Benedicto to pay the Greenhills Wood. the amount of P16. Conclusive presumption. In this regard. or her buyer. In either case. although the specific vehicle has been transferred to another person. she averred that Tee had been operating the said truck in Central Luzon from that date (28 February 1980) onwards. assuming the truth of her story.000. with legal rate of interest from the filing of the complaint. is burdened by the law with the duty of exercising extraordinary diligence not only in ensuring the safety of Transportation Law. based on the finding that petitioner Benedicto was still the registered owner of the subject truck.00. It would be very difficult and often impossible as a practical matter. She may have been unaware of the legal security device of chattel mortgage. Licuden was Tee’s employee and not hers. 2004 ( 52 ) . to secure the payment of the balance of the selling price of the truck. even though the specific vehicle involved may already have been transferred to another person. both from the nature of its business and for insistent reasons of public policy. Extraordinary diligence required of common carriers. The registered owner is not allowed to deny liability by proving the identity of the alleged transferee. would be to set at naught the purpose or public policy which infuses that doctrine. therefore. Registered owner liable for consequences flowing from the operation of the carrier. had no evidentiary value not only because Benjamin Tee was not presented in court to testify on this matter but also because of the above doctrine. Benedicto retained registered ownership of the freight truck for her own benefit and convenience. may have been unwilling to absorb the expenses of registering a chattel mortgage over the truck. Hence. Greenhills Wood is not required to go beyond the vehicle’s certificate of registration to ascertain the owner of the carrier. considerations both of public policy and of equity require that she bear the consequences flowing from registered ownership of the subject vehicle. To permit the ostensible or registered owner to prove who the actual owner is. thru its President and General Manager. i. This doctrine rests upon the principle that in dealing with vehicles registered under the Public Service Law.

It appears that. or from an act or omission of the shipper himself or from the character of the goods or their packaging or container. Bulacan was also proven. Reason Clearly. for whose acts Benedicto must respond. failed to comply with his promise and so upon his own request. Driver Licuden has implied authority to contract carriage of goods Herein. 6. save only where such loss. No one came forward to question that contract or the authority of Licuden to represent the owner of the carrier truck. raises instantly a presumption of fault or negligence on the part of the carrier. Contract of carriage perfected. to require the shipper to go behind a certificate of registration of a public utility vehicle. Driver Licuden. loss or non-delivery of the lumber at Blue Star’s premises in Valenzuela. would be utterly subversive of the purpose of the law and doctrine. Nale. Benedicto’s liability to Greenhills Wood was thus fixed and complete. destruction or damage arises from extreme circumstances such as a natural disaster or calamity or act of the public enemy in time of war. that is.00 as shown by Invoice 144.700. Paras (J): 5 concur. The loss or destruction or deterioration of goods turned over to the common carrier for conveyance to a designated destination. the thrust of the public policy here involved is as sharp and real in the case of carriage of goods as it is in the transporting of human beings. Greenhills Wood had no reason at all to doubt the authority of Licuden to enter into a contract of carriage on behalf of the registered owner. IAC (GR L-65510. and Benedicto has not proven either that she had exercised extraordinary diligence to prevent such loss or non-delivery or that the loss or non-delivery was due to some casualty or force majeure inconsistent with her liability.Haystacks (Berne Guerrero) passengers but also in caring for goods transported by it. 9 March 1987) Second Division. the sawn lumber was loaded on board the freight truck. since the freight was at least determinable if not fixed by the tariff schedules in Benedicto’s main business office. earlier. Nale bought from Teja Marketing (and/or Angel Jaucian) a motorcycle with complete accessories and a sidecar in the total consideration of P8. for that matter). A contract of carriage of goods was shown. Driver Licuden was entrusted with possession and control of the freight truck by the registered owner (and by the alleged secret owner. did not prevent the contract of carriage from arising. 7. Greenhills Wood had contracted Licuden who was then driving the same cargo truck to transport and carry a load of sawn lumber from the Maddela sawmill to Dagupan City. has right to proceed against Tee and Licuden for reimbursement or contribution That the freight to be paid may not have been fixed before loading and carriage. 2004 ( 53 ) .00 with a promise that he would pay plaintiff the balance within 60 days. without prejudice to her right to proceed against her putative transferee Benjamin Tee and driver Licuden for reimbursement or contribution. driver Licuden is in law regarded as the employee and agent of Benedicto. in the first week of May 1980. 1 took no part Facts: On 9 May 1975. Common carrier cannot be permitted to escape responsibility by proving prior sale of vehicle. It would also open wide the door to collusion between the carrier and the supposed vendee and to shifting liability from the carrier to one without financial capability to respond for the resulting damages. The presumption may be overcome only by proof of extraordinary diligence on the part of the carrier. [20] Teja Marketing vs. Herein. In other words. Pedro N. under the circumstances. however. 5. the Transportation Law.000. Put in somewhat different terms. was clothed with at least implied authority to contract to carry goods and to accept delivery of such goods for carriage to a specified destination. Out of the total purchase price Nale gave a downpayment of P1. to sustain Benedicto’s contention. to permit a common carrier to escape its responsibility for the passengers or goods transported by it by proving a prior sale of the vehicle or means of transportation to an alleged vendee would be to attenuate drastically the carrier’s duty of extraordinary diligence. Benedicto’s liability to Greenhills Wood fixed.

On appeal to the Court of First Instance of Camarines Sur. a 2% service charge. the decision was affirmed in toto. without pronouncements as to costs. The “kabit system” has been identified as one of the root causes of the prevalence of graft and corruption in the government transportation offices.21 for attorney’s fees and P100.000.00 representing the unpaid balance of the purchase price with legal rate of interest from the date of the filing of the complaint until the same is fully paid. is contrary to public policy Transportation Law. On 18 July 1983.00 but an additional 12% interest per annum on the said balance from 26 January 1976 to 27 February 1978. Hence.00 as expenses of litigation. Further. the P8. Pursuant to the agreement and on 22 February 1976. Nature of the kabit system Herein. 2004 ( 54 ) . includes not only the balance of P1. The City Court rendered judgment in favor of Teja Marketing. Nale filed a petition for review with the Intermediate Appellate Court.21 as attorney’s fees.00 for the registration fee of the motorcycle.700. Nale suffered damages when he failed to claim any insurance indemnity which would amount to no less than P15. The Supreme Court dismissed the petition for lack of merit.00. as well as the counterclaim of Nale. although not penalized as a criminal offense.05 as shown in a statement of account. the parties operated under an arrangement. Nale gave Teja Marketing P90. and the costs. because it was made to appear that way only as Nale had no franchise of his own and he attached the unit to Teja Marketing’s MCH Line. and ordered Nale to pay Teja Marketing the sum of P1. without costs. Teja Marketing made demands for the payment of the motorcycle but just the same Nale failed to comply. A certificate of public convenience is a special privilege conferred by the government. 2. and affirmed the assailed decision of the Intermediate Appellate Court (now the Court of Appeals).700. 1. thus forcing Teja Marketing to consult a lawyer and file an action for damage before the City Court of Naga in the amount of P546.00 still payable to Teja Marketing. Abuse of this privilege by the grantees thereof cannot be countenanced.00 would be for the mortgage fee and the P82. the petition for review was filed by Teja Marketing and/or Angel Jaucian.00 for expenses of litigation. the total account of Nale was already P2. In this particular transaction a chattel mortgage was constituted as a security for the payment of the balance of the purchase price.00 as boundary fee beginning October 1976 when the motorcycle was impounded by the LTC for not being registered. failed to register the motorcycle on that year on the ground that Nale failed to comply with some requirements such as the payment of the insurance premiums and the bringing of the motorcycle to the LTC for stenciling.00 for the more than 2 times that the motorcycle figured in accidents aside from the loss of the daily income of P15. the appellate court set aside the decision under review on the basis of doctrine of “pari delicto. The motorcycle sold to Nale was first mortgaged to the Teja Marketing by Angel Jaucian though the Teja Marketing and Angel Jaucian are one and the same.21 representing attorney’s fees.731. dismissing the counterclaim. and P546.Haystacks (Berne Guerrero) period of paying the balance was extended to 1 year in monthly installments until January 1976 when he stopped paying anymore. the sum of P546. commonly known as the “kabit system” whereby a person who has been granted a certificate of public convenience allows another person who owns motor vehicles to operate under such franchise for a fee. The agreement was that Teja Marketing undertake the yearly registration of the motorcycle with the Land Transportation Commission (LTC).” and accordingly. although the ownership of the motorcycle was already transferred to Nale the vehicle was still mortgaged with the consent of Nale to the Rural Bank of Camaligan for the reason that all motorcycle purchased from Teja Marketing on credit was rediscounted with the bank. Teja Marketing. Kabit system. Nale did not dispute the sale and the outstanding balance of P1. On his part. Teja Marketing also claimed that as of 20 February 1978. the sum of P200. however. but contends that because of this failure of Teja Marketing to comply with his obligation to register the motorcycle. dismissed the complaint of Teja Marketing.700.

CA (GR 98275. 2004 ( 55 ) . and (d) Inocencio Turla.Haystacks (Berne Guerrero) Although not outrightly penalized as a criminal offense. and Imperial concurring.00 which the latter is adjudged to pay to Ocampo. resulting in triple homicide with multiple physical injuries with damage to property. al. The mere lapse of time cannot give efficacy to contracts that are null and void. without special pronouncement as to costs. inasmuch as the truck was registered in the name of the latter.” (Lita Enterprises vs. 3. It provides that “If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense. the trial court rendered a decision (1) ordering Rock Component Philippines Inc. (c) Nicolas Cruz P154. but will leave both where it finds them.00. The Court of Appeals affirmed the appealed disposition in toto through Justice Rasul. the kabit system is invariably recognized as being contrary to public policy and. 13 November 1992) Third Division. Ex pacto illicito non oritur actio “‘Ex pacto illicito’ non oritur actio’ (No action arises out of illicit bargain) is the time-honored maxim that must be applied to the parties in the present case.650. and affirmed the decision under review. IAC. the performance of the other’s undertaking. the injured in the accident against driver Villar and BA Finance.500. and (5) ordering Rock to reimburse BA Finance the total amount of P622. on practically the same grounds arrived at by the court a quo.000. 5. Melo (J): 4 concur Facts: On 6 March 1983.al. (2) dismissing the case against Lino Castro. Jr. (3) dismissing the third-party complaint against Stronghold. Upon this premise it would be error to accord the parties relief from their predicament. Inexistent contract cannot be cured by ratification nor by prescription The defect of inexistence of a contract is permanent and cannot be cured by ratification or by prescription.00. 129 SCRA 81. et. void and inexistent under Article 1409 of the Civil Code. BA Finance and Rogelio Villar y Amare jointly and severally to pay (a) Carlos Ocampo P121. Sr..890..) [21] BA Finance vs.48.740. Hence. Efforts exerted towards re-evaluation of the adverse judgment were futile. the petition for review on certiorari. and each must bear the consequences of his acts. RTC Malolos Bulacan) found Villar guilty beyond reasonable doubt of reckless imprudence resulting in triple homicide with multiple physical injuries with damage to property on 16 February 1984. Article 1412 of the Civil Code denies them such aid. as the truck was leased by BA Finance to Rock Component Philippines Onc. (b) Moises Ocampo P298.” 4. Rogelio Villar y Amera.. The Supreme Court dismissed the petition. (4) dismissing all the counterclaims of Villar and BA Finance and Stronghold. Article 1412 NCC It is a fundamental principle that the court will not aid either party to enforce an illegal contract. The trial court of Bulacan (Branch 6. an accident occurred involving BA Finance Corp. or demand.00. A criminal suit was filed against Villar. Having entered into an illegal contract. with Justices De Pano. therefore. Neither Lino Castro nor the driver was connected with BA Finance Corp..’s Isuzu ten-wheeler truck then driven by an employee of Lino Castro. neither can seek relief from the courts. neither may recover that he has given by virtue of the contract. A suit for damages was filed by Carlos Ocampo. the following rules shall be observed: (1) When the fault is on the part of both contracting parties. Transportation Law..00. et. On 13 October 1988.

but to permit the use and operation of the vehicle upon any public highway (section 5 [a]. Main of motor vehicle registration The main aim of motor vehicle registration is to identify the owner so that if any accident happens. No vehicle used in public highway unless properly registered The Revised Motor vehicles Law (Act 3992. Doctrine does not imply that registered owner cannot recover By the doctrine. as in land registration cases. the public has the right to assume or presume that the registered owner is the actual owner thereof. Not only are vehicles to be registered and that no motor vehicles are to be used or operated without being properly registered for the current year. because the administrative proceeding of registration does not bear any essential relation to the contract of sale between the parties (Chinchilla vs. or that any damage or injury is caused by the vehicle on the public highways. Instances are numerous where vehicles running on public highways caused accidents or injuries to pedestrians or other vehicles without positive identification of the owner or drivers. (Section 5[c]. 6. so inconvenient or prejudicial to the public. Revised Motor Vehicles Law. Act 3992. as amended).Haystacks (Berne Guerrero) 1. however. It is to forestall these circumstances. should primarily be responsible to the public or to third persons for injuries caused the latter while the vehicle is being driven on the highways or streets. 4. 5. There is a presumption that the owner of the guilty vehicle as he is the registered owner in the Motor Vehicles Office. that the motor vehicle registration is primarily ordained. even though the same had been transferred to a third person. Basis of doctrine The registered owner of a certificate of public convenience is liable to the public for the injuries or damages suffered by passengers or third persons caused by the operation of said vehicle. in the interest of the determination of persons responsible for damages or injuries caused on public highways. 3. as amended) provides that no vehicle may be used or operated upon any public highway unless the same is properly registered. even if not used for a public service. assigned or conveyed the vehicle. Act 3992. Registered owner of CPC liable to public for injuries or damages suffered by passengers or third persons. It has been stated that the system of licensing and the requirement that each machine must carry a registration number. 888). the registered owner. responsibility therefor can be fixed on a definite individual. it is not implied that the registered owner may not recover whatever amount he had paid by virtue of his liability to third persons from the person to whom he had actually sold. 39 Phil. as amended). regulating the speed and operation of machines upon the highways. Rafael and Verdaguer. conspicuously displayed. not as an operative act in which ownership is transferred in vehicles but permit use of vehicle in highways Registration is required not to make said registration the operative act by which ownership in vehicles is transferred. Registered owner of vehicle primarily responsible to public and third persons Under the same principle the registered owner of any vehicle. or with very scant means of identification. but that dealers in motor vehicles shall furnish the Motor Vehicles Office a report showing the name and address of each purchaser of motor vehicle during the previous month and the manufacturer’s serial number and motor number. Registration required. 2. 2004 ( 56 ) . The principle upon which this doctrine is based is that in dealing with vehicles registered under the Public Service Law. is one of the precautions taken to reduce the danger of injury to pedestrians and other travellers from the careless management of automobiles. Transportation Law. for it would be difficult for the public to enforce the actions that they may have for injuries caused to them by the vehicles being negligently operated if the public should be required to prove who the actual owner is. and to furnish a means of ascertaining the identity of persons violating the laws and ordinances.

to prove that a third person or another has become the owner. 1 reserves vote Facts: Herminio L. 31 October 1969) First Division. the defendant therein cannot be held liable for anything because of circumstances which indicated that the truck was driven without the consent or knowledge of the owner thereof. The inconvenience of the suit is no justification for relieving him of liability. (GR L-23733. as it will thwart the purpose of the statute. Court cannot entertain registrant’s defense to avoid liability. Laguna Tayabas Bus Co. that is. which was then making a trip within the barrio of Dita. the registered owner should not be allowed to prove the contrary to the prejudice of the person injured. Barredo (J): 7 concur. Transportation Law. The protection that the law aims to extend to him would become illusory were the registered owner given the opportunity to escape liability by disproving his ownership. A registered owner who has already sold or transferred a vehicle has the recourse to a third-party complaint. CA and Duquillo vs. and escape liability by the manner in which they recompense their servants. 2004 ( 57 ) . A victim of recklessness on the public highways is usually without means to discover or identify the person actually causing the injury or damage. 1 concur in result. Court of Appeals and in Duquillo vs. the Court was cognizant of the inculpatory testimony spewed by Sabiniano when he admitted that he took the jeep from the garage of Duavit without the consent or authority of the latter. In the Duquillo case. The vehicles adverted to in the two cases shared a common thread.Haystacks (Berne Guerrero) 7. against the vendee or transferee of the vehicle. Bayot is legally unpalatable for the purpose of the present discourse. Bayot not applicable The rulings in Duavit vs. Nocum. The purpose of the statute is thwarted. Whatever purpose there may be in these statutes. [22] Vargas vs. so that he may thereby be relieved of the responsibility to the injured person. in case of accident. Municipality of Bay. loaded in said bus and declared to its conductor as containing clothes and miscellaneous items by a co-passenger. If the policy of the law is to be enforced and carried out. contained in a box. in the same action brought against him to recover for the damage or injury done. Registered not allowed to prove vehicle’s ownership One of the principal purposes of motor vehicles legislation is identification of the vehicle and of the operator. and the displayed number becomes a ‘snare and delusion. but actually is not. a passenger in Laguna Tayabas Bus Co. 8.’s Bus 120. said inconvenience is the price he pays for failure to comply with the registration that the law demands and requires. Cases of Duavit vs. 9. in that the jeep and the truck were driven in reckless fashion without the consent or knowledge of the respective owners. He has no means other than by a recourse to the registration in the Motor Vehicles Office to determine who is the owner.’ if an individual or corporation should be allowed to pace a “middleman” between them and the public. CA. and another is that the knowledge that means of detection are always available may act as a deterrent from lax observance of the law and of the rules of conservative and safe operation. In the case of Duavit vs. Laguna. Policy and application of law not harsh The above policy and application of the law may appear quite harsh and would seem to conflict with truth and justice. was injured as a consequence of the explosion of firecrackers. Langkay [23] Nocum vs. it is subordinate at the last to the primary purpose of rendering it certain that the violator of the law or of the rules of safety shall not escape because of lack of means to discover him.

inquiry was made with the passenger carrying the same as to what was in it. Article 1733 NCC Article 1733 of the Civil Code provides that “Common carriers.” “In fact. as stated by Dispatcher Cornista. but beyond this. without costs. common carriers are presumed to have been at fault or to have acted negligently.” 4. constitutional boundaries are already in danger of being transgressed. 3. when he protests the innocuousness of his baggage and nothing appears to indicate the contrary.” According to the judge of the lower court.” Even it that may be true. for it reasonably qualifies the extraordinary diligence required of common carriers for the safety of the passengers transported by them to be “according to all the circumstances of each case. while the extraordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756. and 7. He cannot be subjected to any unusual search. fairness demands that in measuring a common carrier’s duty towards its passengers. the contents of the box could have been discovered and the accident avoided. “if proper and rigid inspection were observed by the defendant. Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734. Carrier not mandated to require opening of baggage Before the box containing the firecrackers were allowed to be loaded in the bus by the conductor. Article 1755 repeats this same qualification: “A common carrier is bound to carry the passengers safely as far as human care and foresight can provide. 1. as in the case at bar. and 1745. 5. unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755. 2. Passengers presumed that a passenger that will not take with him anything dangerous While it is true the passengers of Laguna Tayabas’ bus should not be made to suffer for something over which they had no control. It is to be presumed that a passenger will not take with him anything dangerous to the lives and limbs of his co-passengers. employees should call the police if there were packages containing articles against company regulations. since its “opening was folded and tied with abaca. 2004 ( 58 ) . 6. Nos. In other words.00 as attorney’s fees. with due regard for all the circumstances. are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them. The Supreme Court reversed the appealed judgment of the trial court. The CFI of Batangas (Civil Case 834) sentenced Laguna Tayabas to pay Nocum the sum of P1. with legal interest from the filing of the complaint plus costs. Laguna Tayabas appealed. not to speak of his own. according to all the circumstances of each case. using the utmost diligence of very cautious persons. and dismissed the case. Article 1755 NCC Article 1755 of the Civil Code provides that “A common carrier is bound to carry the passengers safely as far as human care and foresight can provide. from the nature of their business and for reasons of public policy. Article 1756 NCC Article 1756 of the Civil Code provides that “In case of death of or injuries to passengers. 6. Refusal by the passenger to have the package opened was no excuse because. Right to privacy Not to be lightly considered be the right to privacy to which each passenger is entitled. allowance must be given to the reliance that should be reposed on the sense of responsibility of all the passengers in regard to their common safety.351. Article 1733 NCC not too exacting. the law does not require as much. Article 1733 is not as unbending.Haystacks (Berne Guerrero) Nocum filed a case against Laguna Tayabas Bus for damages.” 5. using the utmost diligence of very cautious persons. with a due regard for all the circumstances. 1735. inquiry may be verbally made as to the nature of a passenger’s baggage when such is not outwardly perceptible.00 for actual damages and P500. after the passenger had already declared that the box contained mere clothes and Transportation Law. Calling a policeman to his aid in compelling the passenger to submit to more rigid inspection.

The trial court peremptorily instructed the jury to find for the defendant. the constitutional rights of the passenger. It cannot be successfully denied that Harris had the right as a passenger to carry baggage on the train. W. v. 29 Ky. Shields. in the absence of some intimation or circumstance indicating that the sack contained something dangerous to other passengers. A. & S. 839. 42 S. 2004 ( 59 ) . F. Rep. In the opinion in that case it is said: ‘It was but a short period of time after the alcohol was spilt when it was set on fire and the accident occurred. Principle controlling servants of the carrier. that then the company is responsible. 703. Louisville & N. Renfro. Shields as cited in Clark vs. though the conductor had collected his fare. C. to its conductors must be understood.W. 98 Ky. 590. Louisville & N. and it was not shown that appellant’s employees knew that the jug contained alcohol. in assuming the liability of a railroad to its passengers for injury done by another passenger. Withal. 898. R. R. Co. Co. W.) 133. In fact. 231. considering how easily the duty to inspect can be made an excuse for mischief and abuse. and in that case asserting it to be the duty of the conductor of the railroad train to use all reasonable means to prevent such injury. 33 L. 135 S. Louisville & N. 742. Co. 1120). It is in this sense that the service manual issued by Laguna Tayabas Bus Co. 29 S. Co. Rep. R. Clark vs. not necessarily to force the passenger to open his baggage. it was not the duty of appellant’s conductor or any other employee to open the sack and examine its contents. it is said: ‘It may be stated briefly. and doubtless knew that he had the sack on the seat with him. It ignited and exploded. 10. Civ. Co. v. Gulf vs. Another passenger took a quantity of gasoline into the same coach in which Clarke was riding. W. Proper understanding of the service manual issued by Laguna Tayabas When there are sufficient indications that the representations of the passenger regarding the nature of his baggage may not be true. S. [Quinn v. in the interest of the common safety of all. (20 Ky L. vs. emphasize that there is need for evidence of circumstances indicating cause or causes for apprehension that the passenger’s baggage is dangerous and that it is failure of the common carrier’s employee to act in the face of such evidence that constitutes the cornerstone of the common carrier’s liability in cases similar to the present one. (N. 32 S. 652. 9 Tex. what must be importantly considered is not so much the infringement of the fundamental sacred rights of the particular passenger involved. Vincent. the assistance of the police authorities may be solicited. affirming the judgment. W. Louisville & N. 101 Ky. that otherwise the railroad is not responsible. and injury is done. 349. 652. In the opinion. R. 1049. 96 S. 9. by reason of which he was severely injured. R. 7. and if he neglects this reasonable duty. L. W. 49 S. 266] Transportation Law. Principle controlling servants of the carrier. 142 Ky.Haystacks (Berne Guerrero) other miscellanies. Police officers acting without judicial authority secured in the manner provided by law are not beyond the pale of constitutional inhibitions designed to protect individual human rights and liberties. Co. Resort to decisions of foreign jurisdiction similar tot the present one Decisions in other jurisdictions evidently because of the paucity of local precedents squarely in point. and that he had a right to carry it in a sack if he chose to do so. only where the conduct of this passenger had been such before the injury as to induce a reasonably prudent and vigilant conductor to believe that there was reasonable ground to apprehend violence and danger to the other passengers. Wood v. App. in which case the plaintiff was injured by alcohol which had been carried upon the train by another passenger. but the constant threat any contrary ruling would pose on the right of privacy of all passengers of all common carriers. Louisville “The opinion quotes with approval from the case of Gulf. above all. but to conduct the needed investigation consistent with the rules of propriety and. Louisville The principle that must control the servants of the carrier in a case is correctly stated in the opinion in the case of Clarke v. We think it is equally clear that. 8. it is not shown that the conductor or any other employee knew that Harris had a jug with him until it fell out of the sack. Louisville & N. R. could not have justified invasion of a constitutionally protected domain. In that case Clarke was a passenger on the defendant’s train.R.

Rayos alleged that if any indemnity is due. A. Co. Tamayo and Rayos filed separate petitions for certiorari before the Supreme Court. “according to the circumstances of the case”. P10. holder of a certificate of public convenience to operate two trucks for damages for the death of Inocencio’s wife. Clarke v. and another sum of P5. Epifania Gonzales. 139 S. (Bogard v. 36 L. but did not inform the Public Service Commission of the sale until 30 June 1953. Appeal against the above decision was made to the Court of Appeals. with interest. [24] Tamayo vs. 123 [explosion of can of gasoline]. A. Inocencio Aquino and his children brought an action against Jose G. R Co. to recover from the other any sum in excess of ½ of the amount ordered to be paid. alleging that he no longer had any interest whatsoever in the said truck. 34. whoever should pay the entire amount. (GR L-12634 & L-12720. Illinois C. [N. S. Mukerjee [1901] A. one fender was smashed and the engine damaged beyond repair. W. 3 B. 855. but that Tamayo has the right to be indemnified by Rayos of the amount he was ordered to pay. The complaint was for the recovery of P10. R. it should come from Tamayo. one month after the accident.] 337. 39 S. in the absence of any evidence that the carrier. Tamayo answered. 2004 ( 60 ) . C. 144 Ky. v. Louisville & N. Tamayo. [N. En Banc.000 as compensatory damages for the death of the deceased. [Eng. 649.] 396. A. S. Co.000 as compensatory damages. because he did not have any transaction with him regarding such sale. [explosion of fireworks]. Upon being summoned. alleging that the truck is owned by Silvestre Rayos so he filed a third-party complaint against the latter.000 as moral damages. The CFI found that the truck with plate TPU-735 was one of the trucks of Tamayo under a certificate of public convenience issued to him. it bumped against a culvert on the side of the road in Bugallon.] 725.Haystacks (Berne Guerrero) 11. 840. in that Tamayo was ordered to pay to Aquino the sum of P6. R. R. was aware of the nature of the article or had any reason to anticipate danger therefrom. Extraordinary diligence shown. 101 Ky. Aquino. W. Pangasinan. while riding aboard Tamayo’s truck.) 12. R. Answering the third-party complaint. 420 — P. Transportation Law. The court also dismissed the third-party complaint. et. 36 L. Ruling on fortuitous event not necessary Since the Court holds that Laguna Tayabas has succeeded in rebutting the presumption of negligence by showing that it has exercised extraordinary diligence for the safety of its passengers. This court affirmed the judgment of the CFI in all respects. with costs against Tamayo and Rayos. East Indian R.000 as moral damages. On the basis of said facts. C. C. and authorized Tamayo or Rayos. Explosive or Dangerous Contents Explosive or Dangerous Contents. as he had sold the same before the accident to Rayos. through its employees. with interest. al. Tamayo. 29 May 1959) Also Rayos vs. Annotation: 37 L. the CFI ordered Tamayo and Rayos to pay Aquino jointly and severally the sum of P6. R. and costs.al.000 as actual damages. Labrador (J): 7 concur Facts: While Epifania Gonzales was making a trip aboard truck with Plate TPU-735. — A carrier is ordinarily not liable for injuries to passengers from fires or explosions caused by articles brought into its conveyances by other passengers. the Court deemed it unnecessary to rule whether or not there was any fortuitous event in the present case. The impact of the truck against the culvert was so violent that the roof of the vehicle was ripped off from its body. The Supreme Court modified the judgment appealed from. As a consequence of this accident Epifania Gonzales was thrown away from the vehicle and two pieces of wood embeded in her skull as a result of which she died. that he had sold it to Rayos in March 1953. et.

but he (defendant-appellant) has a right to be indemnified by the real or actual owner of the amount that he may be required to pay as damage for the injury caused to the plaintiff-appellant. Responsibility of the transferee (as agent of the registered owner). that is. 5. for failure Tamayo to carry safety the deceased to her destination. it would be easy for him by collusion with others or otherwise. Registered owner of public service vehicle responsible for damages As held in the cases of Medina vs.” 3. the transferee acted merely as agent of the registered owner and should be responsible to him (the registered owner). actually operating the vehicle. 506. [11] 4606). Jepte (102 Phil. rather than quasi-delict The action instituted in the present case is one for breach of contract... for the reasons given in the decision in the case of Erezo vs. Erezo vs. 4. Gaz.. to prove that a third person or another has become the owner. 52 Off. 432. Cresencia (99 Phil. the court held that the registered owner (the defendant appellant therein) is primarily responsible for the damage caused to the vehicle of the plaintiff-appellee. Malibay (L-8561. the registered owner of a public service vehicle is responsible for damages that may be caused to any of the passengers therein. Montoya vs. Erezo vs. 18 November 1955). their responsibility is not solidary as provided in Article 2194 NCC (joint tortfeasors). and Roque vs. for the death of the passenger.. Jepte. As the registered owner Tamayo and his tranferee Rayos may not be held guilty of tort or a quasi-delict. for any damages that he may cause the latter by his negligence. The liability for which he is made responsible. Jepte The reason for the liability imposed upon the registered owner of the vehicle under a certificate of public convenience is that “the law. The protection that the law aims to extend to him would become illusory were the registered owner given the opportunity to escape liability by disproving his ownership. Timbol vs. Gaz. For this additional reason. 50 Off. A victim of recklessness on the public highways is usually without means to discover or identify the person actually causing the injury or damage. He has no means other than by a recourse to the registration in the Motor Vehicles Office to determine who is the owner. Reason why liability imposed upon the registered owner of the vehicle under a certificate of public convenience. the agent or Rayos must be held responsible to the registered owner. Jepte In the case of Erezo vs. Further. who operated the vehicle when the passenger died. 108).. Jepte. Responsibility of the transferee (as agent of the registered owner). to the extent that the latter may suffer damage by reason of the death caused during the accident. does not relieve him directly of the responsibility that the law fixes and places upon him as an incident or consequence of registration. Gaz. But as the transferee.. at the time of the accident. e. 2004 ( 61 ) . his responsibility to the public or to any passenger riding in the vehicle or truck must be direct. If the policy of the law is to be enforced and carried out. were a registered owner allowed to evade responsibility by proving who the supposed transferee or owner is. Osias (98 Phil. Ignacio (94 Phil. is the one directly responsible for the accident and death he should in turn be made responsible to the registered owner for what the latter may have been adjudged to pay. the registered owner should not be allowed to prove the contrary to the prejudice of the person injured. Present case As Tamayo is the registered owner of the truck. 52 Off. 2. even if the said vehicle had already been sold. [3] 1392). may not be considered as arising from a quasi-delict.Haystacks (Berne Guerrero) 1. 103). i. the latter used the same in transporting passengers outside the route covered by the franchise of Tamayo. 182. or to one who possesses no property with which to respond financially for the damage or injury done. with its aim and policy in mind. Transportation Law. Source of obligation based on breach of contract. leased or transferred to another person who was. This principle was also reafirmed in the case of Erezo vs. so that he may thereby be relieved of the responsibility to the injured. to escape said responsibility and transfer the same to an indefinite person.. In operating the truck without transfer thereof having been approved by the Public Service Commission. inspite of the fact that the agreement between Tamayo and Rayos was for Rayos to use the truck in carrying of gasoline.

Gaudioso Erezo. it collided with a taxicab at the intersection of San Andres and Dakota Streets. on part of Rayos There was no fraud or bad faith committed on the part of the transferee or agent either.000. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith. Herein. but this is certainly not bad faith as contemplated by law. as a result of which he died. Jepte. The accused pleaded guilty and was sentenced to suffer imprisonment and to pay the heirs of Ernesto Erezo the sum of P3. while the same was being driven by Rodolfo Espino y Garcia. when he presented third-party complaint against Rayos. [25] Erezo vs. Rules of Court). On August 9. there could have been no shade or tint of bad faith at all. Jepte did not deny that at the time of the fatal accident the cargo truck driven by Rodolfo Espino y Garcia was registered in his name. only breach of agreement. 1 concur in result Facts: Aguedo Jepte is the registered owner of a six by six truck bearing plate No. it hit Ernesto Erezo and another. None can be said to have been present in the present case. Civil Code).Haystacks (Berne Guerrero) 6. As the amount of the judgment could not be enforced against him. Herein. There may have been a violation of the regulations because Tamayo did not secure a previous authority to transfer from said Commission. There may have been a breach of the agreement between Tamayo and Rayos. 2004 ( 62 ) . this procedure was adopted by Tamayo. No moral damages due in culpa-contractual. or any other kind of deceit which may have been used by both defendants. Consequently. Jepte. It was the negligence of the driver. Ernesto’s father. What the law would seem to consider as bad faith which may furnish a ground for the award of moral damages in the present case would be bad faith in the securing and in the execution of the contract and in the enforcement of its terms (Article 1338. There appears to be no fraud at all in the transfer. claims Transportation Law. Labrador (J): 7 concur. No bad faith. there was negligence of the driver employed by him. The transferee is liable to indemnify the registered owner for the damages that the latter may be required to pay for the accident. the holder of the certificate was not guilty of fraud or bad faith. The courts should have adjudged the responsibility to make indemnity in accordance therewith. Transfers are prohibited only if made without approval by the Public Service Commission. which provides that “willful injury to property may be a legal ground for awarding moral damages if the court should find that. 9. 1949. No bad faith on part of Tamayo present to allow award of moral damages The law expressly provides that award of moral damages can be made in a suit for breach of contract only when the defendants acted fraudulently or in bad faith. but he actually applied for and obtained said permission or approval about a month after the accident. and the former suffered injuries. Manila. but this was not the immediate cause of the accident. the ground upon which moral damages may be demanded from him does not exist. Article 2220 NCC As the responsibility of Tamayo and his agent Rayos is culpa-contractual. Jepte (GR L-9605. TC-1253. such damages are justly due. He. Rule 12 of Rules of Court The procedural means by which the liability of the transferee to the holder of the certificate should be enforced is that indicated in the case of Erezo vs. however. brought the action against the registered owner of the truck. As the truck went off the street. 30 September 1957) First Division. 7. so that insofar as Tamayo is concerned. Besides. hence the remedy is by third-party complaint (See Rule 12. The driver was prosecuted for homicide through reckless negligence in criminal case 10663 of the CFI Manila. There was no bad faith on the part of the agent Rayos. the truck was transferred to Rayos with the understanding that the same was not to be used as a public convenience. under the circumstances.” 8. The law on this matter is expressed in Article 2220 of the Civil Code. no award of moral damages can be given. Third party complaint proper.

It.) The principle upon which this doctrine is based is that in dealing with vehicles registered under the Public Service Law. Gaz. Act No.. registered the vehicles in his name. assigned or conveyed the vehicle. as amended. Vda. L-8561. as in land registration cases..Haystacks (Berne Guerrero) that the vehicle belonged to the Port Brokerage. 506. 1 G. therefore. (Montoya vs. (Section 5 [c]. the Government and all persons affected by the representation had the right to rely on his declaration of ownership and registration. Duties of motor vehicle dealers The Revised Motor Vehicles Law (Act No. 3992.) 4. 888). and another is that the knowledge that means of detection are always available may act as a deterrent from lax observance of the law and of the rules of conservative and safe operation. It has been stated that the system of licensing and the requirement that each machine must carry a registration number. L. of which he was the broker at the time of the accident. 94 Phil. 108. Registered owner of CPC liable to public for injuries and damages suffered by passengers or third person caused by his vehicle’s operation. the public has the right to assume or presume that the registered owner is the actual owner thereof. conspicuously displayed. C. Roque vs. should primarily be responsible to the public or to third persons for injuries caused the latter while the vehicle is being driven on the highways or streets. 50 Off. 99 Phil. the appeal. even though the same had been transferred to a third person. Motor Vehicles Registration. 1176). Transportation Law. R.. as amended). Hence. No. Rationale of the law. Cresencia. and to furnish a means of ascertaining the identity of persons violating the laws and ordinances. 2004 ( 63 ) . for it would be difficult for the public to enforce the actions that they may have for injuries caused to them by the vehicles being negligently operated if the public should be required to prove who the actual owner is. 182. Rafael and Verdaguer. November 18. Ignacio. Right of recourse The registered owner of a certificate of public convenience is liable to the public for the injuries or damages suffered by passengers or third persons caused by the operation of said vehicle. even if not used for a public service. in case of accident. Gaz. because the administrative proceeding of registration does not bear any essential relation to the contract of sale between the parties (Chinchilla vs. Act No. Purpose of motor vehicle registration One of the principal purposes of motor vehicles legislation is identification of the vehicle and of the operator. [10].. The doctrine however does not imply that the registered owner may not recover whatever amount he had paid by virtue of his liability to third persons from the person to whom he had actually sold. held that Jepte is liable because he cannot be permitted to repudiate his own declaration. but that dealers in motor vehicles shall furnish the Motor Vehicles Office a report showing the name and address of each purchaser of motor vehicle during the previous month and the manufacturer’s serial number and motor number. 3992. as amended) provides that no vehicle may be used or operated upon any public highway unless the same is properly registered. is one of the precautions taken to reduce the danger of injury to pedestrians and other travellers from the careless management of automobiles.. relying on his representation. Not only are vehicles to be registered and that no motor vehicles are to be used or operated without being properly registered for the current year. 2. 3. 5. Registered owner of vehicle primary responsible even he was no longer owner of vehicle at time of damage Under the same principle the registered owner of any vehicle. Nature of motor vehicle registration Registration is required not to make said registration the operative act by which ownership in vehicles is transferred. Malibay Transit Inc. 39 Phil. with costs against Jepte. 52 Off. 1955. 3992. The Supreme Court affirmed the judgment appealed from. The trial court held that as Jepte represented himself to be the owner of the truck and the Motor Vehicles Office. 1. but to permit the use and operation of the vehicle upon any public highway (section 5 [a]. regulating the speed and operation of machines upon the highways (2 R. System of licensing. 4606. de Medina vs.

but Jepte has a right to be indemnified by the real or actual owner of the amount that he may be required to pay as damage for the injury caused to Erezo. the registered owner should not be allowed to prove the contrary to the prejudice of the person injured. The protection that the law aims to extend to him would become illusory were the registered owner given the opportunity to escape liability by disproving his ownership. 7. in the interest of the determination of persons responsible for damages or injuries caused on public highways. The law. and escape liability by the manner in which they recompense their servants. it is subordinate at the last to the primary purpose of rendering it certain that the violator of the law or of the rules of safety shall not escape because of lack of means to discover him. The motor vehicle registration is primarily ordained. Registered owner not allowed to prove actual and real owner The law does not allow the registered owner to prove who the actual and real owner is at the trial. even if Jepte was no longer the owner of the vehicle at the time of the damage because he had previously sold it to another. A victim of recklessness on the public highways is usually without means to discover or identify the person actually causing the injury or damage. If the policy of the law is to be enforced and carried out. with recourse against real or actual owner Herein. Zamboanga City. to prove that a third person or another has become the owner. and the displayed number becomes a “snare and delusion. vs. Transportation Law. Registered owner primary responsible. with its aim and policy in mind. He has no means other than by a recourse to the registration in the Motor Vehicles Office to determine who is the owner. 8. 2004 ( 64 ) . 2 took no part Facts: In the evening of 13 August 1955. so that he may thereby be relieved of the responsibility to the injured person. said inconvenience is the price he pays for failure to comply with the registration that the law demands and requires. also in Zamboanga City. of 14 August 1955. The registered owner is primarily responsible for the damage caused to the vehicle of Erezo. and driven by Valeriano Marcos. the bus (1955 TPU-1137). 6. The purpose of the statute is thwarted. or to one who possesses no property with which to respond financially for the damage or injury done. that is. A registered owner who has already sold or transferred a vehicle has the recourse to a third-party complaint. it would be easy for him. Barredo (J): 7 concur. After the dance.” No responsible person or corporation could be held liable for the most outrageous acts of negligence. the spouses Ramon and Josefina Dagamanuel boarded a bus at Manicahan. by collusion with others or otherwise.Haystacks (Berne Guerrero) Whatever purpose there may be in these statutes. where Josefina was a public school teacher. Application of law not in conflict with truth and justice The policy and application of the law may appear quite harsh and would seem to conflict with truth and justice. CA (GR L-25292. to escape said responsibility and transfer the same to an indefinite person. fell off the road and pinned to death the said spouses and several other passengers. The inconvenience of the suit is no justification for relieving him of liability. At around 1 a. if they should be allowed to place a “middleman” between them and the public. [26] Zamboanga Transportation Co. does not relieve him directly of the responsibility that the law fixes and places upon him as an incident or consequence of registration. but actually is not. 29 November 1969) En Banc. Were a registered owner allowed to evade responsibility by proving who the supposed transferee or owner is. the couple boarded the same bus to return to Manicahan. Jepte should be held liable to Erezo for the injuries occasioned to the latter because of the negligence of the driver. in the same action brought against him to recover for the damage or injury done.m. against the vendee or transferee of the vehicle. to attend a benefit dance at the Bunguiao Elementary School.

. was in their employ. Pascuala Julian de Punzalan.000 as exemplary damages. Sale and merger of Zambraco with Zamtranco subject of application with PSC.. to the effect that for the trip to and from Bunguiao where the benefit dance was held.000. exemplary damages in the sum of P20. Zamtranco was in fact the operator There is abundant evidence that although the Zambraco appears to be the registered owner. hence as to him the judgment is already final and executory. (2) the accident was due to the negligence of the driver who was under their employ. Zambraco remains registered with Zambraco TPU Bus 1327. To start with. jointly and severally. Application of previous rulings as to liabilities of parties where CPC is transferred not necessary as both owners of bus admit driver was in their employ While it is true that according to previous decisions of the Supreme Court. the companies both admitted separately that they are the owners of the bus involved in the incident in question and that Valeriano Marcos. and (2) annulling the deed of sale executed by Marcos.000 as attorney’s fees. the only child of the deceased spouses. Marcos’ appeal was later dismissed. and that he paid the fare to the driver of Zamtranco. was registered in the name of Zambraco in the year 1955. he contracted with Zamtranco at Tetuan. 2004 ( 65 ) . the transferor of such certificate continues to be the operator of the service as long as the transfer is not yet approved. with the modification that as to damages. and (3) the sale made by Marcos of his property was done with intent to defraud his creditors.000.000 as exemplary damages. Finding that (1) the Zamtranco and the Zambraco were under one management at the time of the accident. there is the testimony of Filoteo de los Reyes. attorney’s fees in the sum of P5. with no costs in this instance. Hence. (Zambraco) for breach of contract of carriage. Zamtranco was in fact the operator. instituted an action against Zamboanga Transportation Co.000 as moral damages. and costs. the driver of said bus at the time of said incident. This testimony was never contradicted by the companies. The latter moved for reconsideration. and as such operator. Zamtranco.000. but the same was denied. (1) P12. The Supreme Court affirmed the judgment of the Court of Appeals. Zamtranco filed a third-party complaint against the driver Marcos. P2. The Zambraco also filed a third-party complaint against the driver.Haystacks (Berne Guerrero) Jose Mario Dagamanuel. (Zamtanco) and the Zamboanga Rapids Co. alleging that the accident was due to the fault and negligence of the driver in operating the bus and due to the negligence of the companies in their supervision of their driver. Zambraco and Marcos appealed. which figured in the accident that caused the death of the spouses Ramon Dagamanuel and Josefina Punzalan. moral damages in the sum of P40. the trial court rendered judgment (1) sentencing the three. 2. Inc. that he saw in Bunguiao the bus sent by Zamtranco. to wit. to pay the plaintiff P16. (3) P5. P4. the appeal via a petition for certiorari. Zambraco appears to be the registered owner. either by documentary or testimonial evidence.000 for the death of the spouses Ramon and Josefina Dagamanuel. 1.000 for the death of the spouses. Inc. and (4) P5.520 for the loss of earnings of both spouses. The appellate court affirmed the judgment of the trial court with modification as to the award of damages.000 and costs. transfer of a certificate of public convenience to operate a transportation service is not effective and binding insofar as the responsibility of the grantee under the franchise in its relation to the public is concerned. (2) P11. At that time. Transportation Law. Zamtranco and Zambraco are sentenced to pay jointly and severally no more than the amounts of damages adjudged by the trial court. Dagamanuel asks for actual or compensatory damages in the sum of P40. he is the one responsible jointly and severally with his driver for damages incurred by passengers or third persons in consequence of injuries or deaths resulting from the operation of such service. through his maternal grandmother as guardian ad-litem. principal teacher of Josefina. and that in contemplation of law. without the approval of the transfer by the Public Service Commission required by the Public Service Act. the Court does not find any need for applying these rulings to the present case for the simple reason that in their respective third-party complaints. 3. with costs against Zamtranco and Zambraco.

he must appeal. Sept. Redado vs. the ill-fated bus was again registered in the name of the Zambraco in the year 1956. 26 May 1981) Transportation Law. Bautista. 1962. must be commensurate with the mental anguish suffered by the heir.. 6. et al. Nos. Discretion in fixing moral and exemplary damages primarily lay in the trial court The discretion in fixing moral and exemplary damages primarily lay in the trial court and the same should be respected. if any. an appellee who has not himself appealed cannot obtain from the appellate court any affirmative relief other than the ones granted in the decision of the court below. 5. (Mercado. [27] Santos vs. et al. 51 O. as to warrant such excessive award of P5. cannot yet feel the mental anguish resulting from their death. admits whatever liability it has and vigorously objects to any finding that the actual operator. ‘It is well-settled rule that whenever an appeal is taken in a civil case. Herein. Claparols. The Court of Appeals properly interpreted the P16. then Acting Registrar of the Motor Vehicle Office in Zamboanga. (Coleongco vs. March 8. 21809-R. CA-G. but he may not do so if his purpose is to have the judgment modified or reversed. it had already sold the vehicle to Zamtranco and the latter was actually operating it. 4059-4061. Kuison. et al. 30. CA-G. the registered owners invariably sought to pass on liability to the actual operators on the pretext that they had already sold or transferred their units to the latter. What degree of mental torture could have been possibly endured by a boy of such tender age? The measure of moral damages. L-16654.000 awarded by the trial court as including not only damages for the deceased couple but also the other items of recoverable damages.000. Octavio.R. Interest of public requires both registered and actual operators to be solidarily liable with driver For the better protection of the public that both the owner of record and the actual operator. Sibog (GR L-26815. An appellee. Pages. the amounts awarded by the trial court cannot be considered excessive. as to the item of moral damages. There. Previous rulings inapplicable. as held by the Court in the past. 1961. L-18616.Haystacks (Berne Guerrero) the sale and merger of this Zambraco with the Zamtranco was to be the subject of application with the Public Service Commission. 29.. claiming that as registered owner. No. Castanares vs. should be adjudged jointly and severally liable with the driver (see Dizon vs. April 29. vs. 1961. Bering vs.R. Child of three years cannot feel mental anguish resulting from parent’s death to warrant award of excessive moral damages A child 3-year old. according to the testimony given at the trial by Leonardo Galvez. the Zamtranco. Registered owners do not seek to pass on liability to the actual operators on the pretext that they had already sold or transferred their units to the latter There is no application of the ruling in the previous cases to the present case. 1965). Dagamanuel did not appeal and so it was error for the Court of Appeals to award him a relief not granted by the lower court. Noeth. Lira. Pending such approval. 7. whereas in the present case. 8. et al. vs. who is not appellant.) 8. it alone should be adjudged liable. 19295-R. like compensatory or actual. 1961). Thus viewed. as Dagamanuel herein was when his parents died. the registered owner. But the fact stands out in bold relief that although still the registered owner at the time of the accident. except perhaps. CA-G. March 31. (Dy. Award of damages by trial court not excessive The judgment of the Court of Appeals in respect to the matter of damages to be more in accordance with the facts. for. We would not inquire into the motive of the Zambraco why instead of sharing whatever liability it has with the Zamtranco. 1964). 19.00 moral damages. 28483-R. L-13328-29 and L-13358. in such a case. Nov. it prefers to shoulder it alone. is also liable with it. 4. the Zambraco. etc. 2004 ( 66 ) .G. Sept. No. may assign errors in his brief where his purpose is to maintain the judgment on other grounds.R.

Sibug submitted to the Sheriff a bond issued by the Philippine Surety Insurance Company. 1 concur in result.” From the judgment in the Branch X case. Sibug filed a complaint for damages against Vidad and Gragas with the Court of First Instance of Manila (Branch XVII. and that Branch X had no power to interfere by injunction with the judgment of Branch XVII. Santos presented a third-party claim with the Sheriff alleging actual ownership of the motor vehicle levied upon.20 as actual damages. Branch X affirmed Santos’ ownership of the jeepney in question based on the evidence adduced. Abraham Sibug was bumped by a passenger jeepney operated by Vidad and driven by Severo Gragas.Haystacks (Berne Guerrero) First Division. As a result thereof.00 a day from 10 April 1964 until the vehicle is returned to him. but he had no certificate of public convenience for the operation of the vehicle as a public passenger jeep. On 11 May 1964. Sibug sought relief from the Appellate Court in a Petition for Certiorari with Preliminary Injunction. Vidad executed a re-transfer document to the former. On 18 November 1965. This was subsequently amended on 5 December 1965.” Without waiting for the resolution of his Motion for Reconsideration.000. provided that the liability of the Philippine Surety shall in no case exceed P6.00 as attorney’s fees as well as the costs. and costs.00 as attorney’s fees. before the scheduled sale of 8 May 1964. Santos was the owner of a passenger jeep. Branch X issued a Restraining Order enjoining the Sheriff from conducting the public auction sale of the motor vehicle levied upon. and decreed that the Sibug. a judgment was rendered by the trial court sentencing Vidad and Gragas. jointly and severally. 1 designated to sit in first division. a Court of concurrent or coordinate jurisdiction. to save the Sheriff from liability if he were to proceed with the sale and if Santos’ third-party claim should be ultimately upheld. On 10 April 1964. The Court further ordered Sibug to pay the Philippine Surety. to pay Sibug the sums of P506. 2004 ( 67 ) . Branch X released an Order authorizing immediate execution on the theory that the Branch X case is “principally an action for the issuance of a writ of prohibition to forbid the Sheriff from selling at public auction property not belonging to the judgment creditor (sic) and there being no attempt in this case to interfere with the judgment or decree of another court of concurrent jurisdiction. On 11 April 1964. the Court of Appeals Transportation Law. On 13 November 1965. Meanwhile. and stating that registration thereof in the name of Vidad was merely to enable Santos to make use of Vidad’s Certificate of Public Convenience. Vidad and the Sheriff are enjoined from proceeding with the sale of the vehicle in question and ordering its return to Santos and furthermore sentencing Sibug to pay Santos the sum of P15. upon motion for reconsideration filed by Santos. Sibug opposed it on the ground that Branch X had no jurisdiction over the Branch XVII case. and P500. Sibug appealed. the same sums it is ordered to pay under the decision. Santos then transferred his jeep to the name of Vidad so that it could be operated under the latter’s certificate of public convenience. and scheduled the public auction sale thereof on 8 May 1964.500. After the third-party complaint was filed.00. P3. In other words. Arsenio Solidum). registered in the name of Vidad. Melencio-Herrera (J): 3 concur. On 22 April 1964. P500. Santos instituted an action for Damages and Injunction with a prayer for Preliminary Mandatory Injunction against Sibug. The complaint was later amended to include the Philippine Surety as a party defendant although its bond had not become effective. then presided by Hon. and the Sheriff (Civil Case 56842 of Branch X. On 14 October 1965. Santos moved for immediate execution. For the protection of Santos. the Sheriff of Manila levied on a motor vehicle (PUJ-343-64). No public sale was conducted on 8 May 1964. Santos became what is known in ordinary parlance as a kabit operator. Vidad was a duly authorized passenger jeepney operator. to include the Philippine Surety as jointly and severally liable with Sibug. On 26 April 1963.00 as moral damages. which was to be a private document presumably to be registered if and when it was decided that the passenger jeep of Santos was to be withdrawn from the kabit arrangement. of the same CFI of Manila). while Adolfo L. Vidad. On 5 December 1963. 1 on leave Facts: Vicente U.

307. 5. 308. et al.. “the powers of the Sheriff involve both discretional power and personal liability. with the public auction. 754. He is not authorized to levy upon the property of the third-party claimant (Polaris Marketing Corporation vs. If the third-party claim is sufficient.. 2. is applied in cases. the sheriff may proceed with the levy even without the indemnity bond. 21 Phil. Inc. L-40666. vs. 97. the action taken by the Sheriff cannot be restrained by another Court or by another Branch of the same Court. 94. the Court of Appeals rendered the herein challenged Decision nullifying the judgment rendered in the Branch X Case and permanently restraining Branch X from taking cognizance of the Branch X case filed by Santos. a power which devolves upon the proper appellate court. that no court has authority to interfere by injunction with the judgments or decrees of a concurrent or coordinate jurisdiction having equal power to grant the injunctive relief. the rule. Johnson. the writ of injunction.. 69 SCRA 93. Bell & Co. in order to prevent one court from nullifying the judgment or process of another court of the same rank or category. 8 Phil. No court can interfere by injunction judgment of concurrent or coordinate jurisdiction. Inc. 1. the petition for review on certiorari filed by Santos on 14 December 1966.” Transportation Law. discretion comes in. Salvador The Court. Section 15 thereof provides for the procedure to be followed where the property levied on execution is claimed by a third person. the Sheriff has to proceed with the public auction. “the duty of the Sheriff in connection with the execution and satisfaction of judgment of the court is governed by Rule 39 of the Rules of Court. seizes a stranger’s property. Peterson. is not bound to proceed with the levy of the property. 565). 48 Phil. January 22. the sheriff. is not an interference with the writ of execution issued by another court because the writ of execution was improperly implemented by the sheriff. 419. But the decision to proceed or not with the public sale lies with him. which is issued to stop the auction sale of that property. et al. 341 de los abogados de Smith. Ramos. The Sheriff has the right to continue with the public sale on his own responsibility. Provincial Sheriff. where it was held. upon receiving it.. 88 Phil. Attaching creditor should furnish bond. 368). Planas vs. in Arabay.Haystacks (Berne Guerrero) enjoined the enforcement of the Branch X Decision and the Order of execution issued by said Branch.. unless he is given by the judgment creditor an indemnity bond against the claim (Mangaoang vs. 9 Phil. 91 Phil. 15 of Rule 39). Osmeña. 1976. On 28 September 1966. The Supreme Court dismissed the petition for review on certiorari filed by Santos.” 3. then the Sheriff shall decide whether to proceed. 94 Phil.. Uy Piaoco vs. 2004 ( 68 ) . he could attach the property of the judgment debtor. vs. Hence. or to desist from proceeding. When such bond is not filed. Osmena As said in Uy Piaoco vs. he will incur personal liability in favor of the successful third-party claimant..” 4. 102). vs. Alzua. Manila Herald Publishing Co. exceptions. with costs against Santos. Of course. Rule 39. acting beyond the bounds of his authority. And the rule also provides that nothing therein contained shall prevent a third person from vindicating his claim to the property by any proper action (Sec. 299. Consulta No. succinctly held that “generally. et al.. Madrigal The discretional power and personal liability have been further elucidated in Planas and Verdon vs. Hon. Madrigal & Co. Serafin Salvador. When sheriff proceeds It appears from the above that if the attaching creditor should furnish an adequate bond. but in such case he will answer for any damages with his own personal funds (Waite vs. Discretional power and personal liability of the sheriff. Plan. Restraining order wrongfully issued by Branch X Under the provisions of Section 17. If he decides to proceed. xxx When the sheriff. or he can desist from conducting the public sale unless the attaching creditor files a bond securing him against the third-party claim. Arabay vs. Under the writ. Powers of the sheriff.. If bond not filed. where no third-party claimant is involved.

the property must be one in which the defendant has proprietary interest. what is meant is a separate and independent action. When applicable (Abiera vs. Jurisdiction.” 8. Santos candidly admitted his participation in the illegal and pernicious practice in the transportation business known as the kabit system. And this is so because property belonging to a stranger is not ordinarily subject to levy. ‘Action’ in section 17. is not subject to levy — then an interlocutory order. constitute interference with the powers or processes of Branch XVII which rendered the judgment. A judgment rendered in his favor — declaring him to be the owner of the property — would not constitute interference with the powers or processes of the court which rendered the judgment to enforce which the execution was levied. 2004 ( 69 ) . Exception. While it is true that the vehicle in question was in custodia legis. For instance. to enforce which the jeepney was levied upon. Courts. declaring him to be the owner of the property. as a matter of procedure. The judgment rendered in his favor by Branch X . CA) “The right of a person who claims to be the owner of property levied upon on execution to file a third-party claim with the sheriff is not exclusive. It has also been noted that the Complaint against Vidad was dismissed. Courts without power to interfere by injunction with judgments or decrees of a court of concurrent jurisdiction (Abiera vs. cannot be considered as such interference either. as an ordinary third-party claimant. to vindicate his claim of ownership in a separate action under Section 17 of Rule 39. Execution. Where the Sheriff seizes a stranger’s property.” 7. the judgment against Sibug was inequitable. Courts without power to interfere by injunction with judgments or decrees of a court of concurrent jurisdiction. for Santos. Transportation Law. Courts. CA) “Under Section 17 of Rule 39 a third person who claims property levied upon on execution may vindicate such claim by action. interpreted (Abiera vs. such as injunction. and should not be interfered with without the permission of the proper Court. upon a claim and prima facie showing of ownership by the claimant. the injunction issued by one court must interfere with the judgment or decree issued by another court of equal or coordinate jurisdiction and the relief sought by such injunction must be one which could be granted by the court which rendered the judgment or issued the decree.Haystacks (Berne Guerrero) 6. Courts. did not as a basic proposition. and he may file an action to vindicate his claim even if the judgment creditor files an indemnity bond in favor of the sheriff to answer for any damages that may be suffered by the third party claimant. Jurisdiction. the rule does not apply and interference with his custody is not interference with another Court’s Order of attachment. Rule 39 of the Rules of Court. 11.” 10. Judgment of Branch X legally unpalatable The judgment in the Branch X case appears to be quite legally unpalatable.” 9. Most important of all. the public sale thereof having been restrained. Jurisdiction. Interference with sheriff’s custody not an interference with another court’s order of attachment It was appropriate. In asserting his rights of ownership to the vehicle in question. If that be so — and it is so because the property. CA) “For this doctrine to apply. Judgment rendered by another court in favor of a third person who claims property levied upon on execution (Abiera vs. Where property levied on claimed by third person. there was no reason for promulgating judgment against the Philippine Surety. since the undertaking furnished to the Sheriff by the Philippine Surety did not become effective for the reason that the jeep was not sold. CA) “No court has power to interfere by injunction with the judgments or decrees of a court of concurrent or coordinate jurisdiction having equal power to grant the relief sought by injunction. Courts without power to interfere by injunction with judgments or decrees of a court of concurrent jurisdiction. By ‘action’ as stated in the Rule. Santos has right to vindicate claim of ownership in a separate action. being that of a stranger.

with its effects on the riding public. Registered owner/operator and grantee of franchise directly and primarily liable for damages against Sibug Herein. Manzano against Gempis was Transportation Law. Santos. who had become the registered owner and operator of record at the time of the accident. Santos had fictitiously sold the jeepney to Vidad. alienate. 4 November 1980. or rights. lessee or operator thereof. 16. the Court finds the judgment of the Court of Appeals to be in consonance with justice. Erezo case As indicated in the Erezo case. the latter. [28] PAL vs. Jaime H. should be upheld.” 13. had been impleaded as a party defendant in the Branch XVII case. is involved. encumber or lease its property. as the vehicle here in question was registered in Vidad’s name. was the true owner as against Vidad. is directly and primarily responsible and liable for the damages caused to Sibug. 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. the levy on execution against said vehicle should be enforced so that the judgment in the Branch XVII case may be satisfied. as well as for exemplary damages. notwithstanding the fact that the secret ownership of the vehicle belonged to another. is to go against Vidad. The charge of PAL and Capt. Salvador Gempis. nullifying the Decision of Branch X. In fact. Santos’ remedy. The ultimate conclusion of the appellate court. but the document was not registered. should not be allowed to defeat the levy on his vehicle and to avoid his responsibilities as a kabit owner for he had led the public to believe that the vehicle belonged to Vidad. a complaint against PAL for illegal suspension and dismissal. as the kabit. 2004 ( 70 ) . as the real owner of the vehicle. registered in the name of Vidad. if Santos. Section 20 (g) of the Public Service Act Section 20 (g) of the Public Service Act. Although Santos. as the kabit. filed with the Ministry of Labor. without the approval and authorization of the Commission previously had — (g) to sell. The next day. permanently enjoining the auction sale. And what is more. Kabit cannot be allowed to defeat levy of his vehicle For the same basic reason. The vehicle was. as a consequence of the negligent or careless operation of the vehicle. specifically provided that “it shall be unlawful for any public service or for the owner. mortgage. then the applicable law. Relova (J): 4 concur Facts: On 3 November 1980. it was not a “stranger’s property” that was levied upon by the Sheriff pursuant to the judgment rendered by Branch XVII. the injured party. in fact. or any part thereof. one of the judgment debtors. he should be held jointly and severally liable with Vidad and the driver for damages suffered by Sibug. NLRC (GR L-62961. Proper remedy of Santos. privileges. 2 September 1983) First Division. certificates. as the kabit. a YS-11 pilot of Philippine Airlines (PAL) with the rank of captain. as the registered owner/operator and grantee of the franchise. This is one way of curbing the pernicious kabit system that facilitates the commission of fraud against the travelling public. Property levied not “stranger’s” Legally speaking.Haystacks (Berne Guerrero) 12. Whatever legal technicalities may be invoked. 14. PAL filed with the same office an application for clearance to terminate the employment of Gempis on the grounds of (1) serious misconduct and (2) violation of the liquor ban and company policies. 15. It is true that Vidad had executed a re-sale to Santos. for the recovery of whatever damages Santos may suffer by reason of the execution. the actual operator who was responsible for the accident. National Capital Region. the aspect of public service. franchise.

Ranches to drink on 27 February 1980. extraordinary measures and diligence should be exercised by it for the safety of its passengers and their belongings. Gempis is a risk and liability rather than an asset to PAL. Filipinas Pioneer Lines Inc. The Supreme Court set aside the decision of the NLRC dated 29 November 1982. Mario Marlon Vasquez. located somewhere north of the island of Cebu and subsequently sunk. the trial Court awarded damages. and P10. Said passengers were unheard from since then. 2.Haystacks (Berne Guerrero) “serious misconduct (abuse of authority)” for forcing First Officers A. CA (GR L-42926. [29] Vasquez vs. ordering Filipinas Pioneer to pay (a) Pedro Vasquez and Soledad Ortega the sums of P15. Thus. 1. Gempis and those persons he abused (F/Os A. This is so because the duties of a pilot consist of handling controls of the aircraft and to ensure that the flight is conducted safely and economically. Due to the loss of their children. It would be unjust for an employer like petitioner PAL to be compelled to continue with the employment of a person whose continuance in the service is obviously inimical to its interests.m. The Labor Arbiter Teodorico Dogelio denied PAL’s application for clearance to terminate Gempis’ services inasmuch as the penalty of 6 months demotion was enough to appear in Gempis’ employment file and ordering PAL to effect Gempis’ immediate reinstatement as YS-11 Captain. 2004 ( 71 ) . The foremost consideration called for by their position as pilots is the safety of the passengers.00 for moral damages. Romeo Vasquez and Maximina Cainay are the parents Mario Marlon Vasquez.00 for the loss of earning capacity of the deceased Alfonso Vasquez.00 for support. Ranches) are pilots. defended on the plea of force majeure. After proper proceedings.m. (b) Transportation Law. The nature of employment of Gempis necessitates that he should not violate the liquor ban as provided for in the Basic Operations Manual in order to protect not only the interest of the company but the public as well.000.m. the two pilots were ordered to stand erect and were hit on the stomach by Gempis. Barcebal and J. Cleto Bagaipo and Agustina Virtudes are the parents of Filipinas Bagaipo. The petition alleged that “the incident occurred with Gempis’ full knowledge that the 2 affected co-pilots have flight duties the next day with initial assignments as early as 7:10 a. among her passengers. Barcebal and J. it had on board the spouses Alfonso Vasquez and Filipinas Bagaipo and a 4-year old boy.100. The MV ‘Pioneer Cebu’ encountered typhoon ‘Klaring’ and struck a reef on the southern part of Malapascua Island. Pedro Vasquez and Soledad Ortega are the parents of Alfonso Vasquez. within 30 minutes. Due Diligence of a good father of a family in the selection and supervision of its employees The business of Philippine Airlines is such that whenever a passenger dies or is injured the presumption is. and as late as 12:00 p. at 10:30 p. Pilot’s reinstatement grossly unfair as pilot is a risk and liability to the common carrier It would be grossly unfair to order PAL to reinstate him back to his work as pilot. 6 bottles of beer each. Melencio-Herrera (J): 6 concur Facts: When the interisland vessel MV ‘Pioneer Cebu’ left the Port of Manila in the early morning of 15 May 1966 bound for Cebu. at the coffee shop of the Triton Hotel at Cebu. a pilot must be sober all the time for he may be called upon to fly a plane even before his regular scheduled hours.000. P2. 13 September 1985) First Division. with back wages for a period of 6 months corresponding to the position. it is at fault notwithstanding the fact that it has exercised due diligence of a good father of a family in the selection and supervision of its employees. Needless to state. otherwise so many lives will be in danger if he is drunk. and approved PAL’s application for clearance to terminate Gempis from employment. The National Labor Relations Commission affirmed the decision of the Labor Arbiter on 29 November 1982. and the extinction of its liability by the actual total loss of the vessel. Unable to consume the bottles of beer within the time limit set by Gempis. they sued for damages before the CFI of Manila (Civil Case 67139).

Unfortunately. however. upon inspection. Crew failed to observe extraordinary diligence (utmost diligence required of very cautious persons) Herein. and the vessel having been cleared by the Customs authorities. Circumstances of the last voyage of MV Pioneer Cebu came mainly from Filipinas Pioneer Lines The evidence on record as to the circumstances of the last voyage of the MV ‘Pioneer Cebu’ came mainly. (2) the occurrence must render it impossible for the debtor to fulfill the obligation in a normal manner. they failed to observe that extraordinary diligence required of them explicitly by law for the safety of the passengers transported by them with due regard for all circumstances and Transportation Law.m. 15 May 1966. the Petition for Review on Certiorari. having been kept posted on the course of the typhoon by weather bulletins at intervals of 6 hours. at about noontime on 16 May 1966. There must be an entire exclusion of human agency from the cause of injury or loss. When it reached Romblon Island. 1. while the typhoon was an inevitable occurrence. or if it could be foreseen. it was decided not to seek shelter thereat. resulting on the tallying of 168 adults and 20 minors. On appeal. bringing with her Captain Floro Yap who was in command of the vessel. and P10. It undertook the said voyage on a special permit issued by the Collector of Customs inasmuch as. Requisites for caso fortuito To constitute a caso fortuito that would exempt a person from responsibility. In so doing. A headcount was made of the passengers on board. and that (3) the obligor must be free of participation in. When the vessel left Manila. The Supreme Court reversed the appealed judgment. yet. inasmuch as the weather condition was still good. it is necessary that (1) the event must be independent of the human will.00 for loss of earning capacity of deceased Filipinas Bagaipo. It had a passenger capacity of 322 including the crew. Hence.” In the language of the law. the vessel struck a reef near Malapascua island.000. and (c) Romeo Vasquez and Maximina Cainay the sum of P10. After passing Romblon and while near Jintotolo island. the event must have been impossible to foresee. and reinstated the judgment of the then CFI of Manila (Branch V. the captain and crew were well aware of the risk they were taking as they hopped from island to island from Romblon up to Tanguingui. The special permit authorized the vessel to carry only 260 passengers due to the said deficiency and for lack of safety devices for 322 passengers.000.000. They held frequent conferences. the appellate court reversed the judgment and absolved Filipinas Pioneer from any and all liability. however. Fearing that due to zero visibility. Scheduled to leave the Port of Manila at 9:00 p. the following day. it was found to be without an emergency electrical power system. without costs. that the headcount is not reliable inasmuch as it was only done by one man on board the vessel. the captain ordered a reversal of the course so that the vessel could ‘weather out’ the typhoon by facing the winds and the waves in the open. on 14 May 1966. its officers were already aware of the typhoon Klaring building up somewhere in Mindanao. the MV ‘Pioneer Cebu’ left on its voyage to Cebu despite the typhoon. they decided to take a calculated risk. the weather suddenly changed and heavy rains fell. the injury to the creditor.Haystacks (Berne Guerrero) Cleto B. it actually left port at 5:00 a. although the passengers manifest only listed 106 passengers. the barometer still indicated the existence of good weather condition continued until the vessel approached Tanguingui island. 3. from Filipinas Pioneer Lines. It has been admitted.00 for moral damages. the vessel might hit Chocolate island group. or aggravation of. must have been impossible to avoid. and oblivious of the utmost diligence required of very cautious persons. sustained leaks and eventually sunk. The MV ‘Pioneer Cebu’ was owned and operated by Filipinas Pioneer and used in the transportation of goods and passengers in the interisland shipping.00 by way of moral damages by reason of the death of Mario Marlon Vasquez. Upon passing the latter island.” 2. if not exclusively. Civil Case 67139). 2004 ( 72 ) . Bagaipo and Agustina Virtudes the sum of P17.m. There being no typhoon signals on the route from Manila to Cebu.

Despite the total loss of the vessel therefore. suffice it to state that even in said case. 330 [1941]. Inocencia Cudiamat.” While the Court is bound by the Board’s factual findings. the trial court rendered a decision. Construction of “moot and academic” ruling of the Board of Marine Inquiry. instead of bringing Pedrito immediately to the nearest hospital. The Supreme Court affirmed the challenged judgment and resolution of the Court of Appeals.00 by way of indemnity for death of the victim Pedrito Cudiamat. which investigated the disaster. and ordered Dangwa and Lardizabal to pay the Cudiamats (1) the sum of P30.000. Regalado (J): 4 concur Facts: On 25 March 1985 at Marivic. Laserna. with modifications. Nonetheless. which negligence was the proximate cause of his death. in utter bad faith and without regard to the welfare of the victim. the Court disagreed with its conclusion since it obviously had not taken into account the legal responsibility of a common carrier towards the safety of the passengers involved. 73 Phil. Lardizabal and Dangwa Transportation.000. CA (GR 95582. exonerated the captain from any negligence. On 13 May 1985. the petition. 4. it was held that the liability of a shipowner is limited to the value of the vessel or to the insurance thereon. Laserna With respect to the submission that the total loss of the vessel extinguished its liability pursuant to Article 587 of the Code of Commerce as construed in Yangco vs. Emilia Cudiamat Bandoy. 7 October 1991) Second Division. Samuel Cudiamat and Ligaya Cudiamat (heirs of Pedrito Cudiamat. (2) the sum of P20. [30] also [104] Dangwa Transportation vs. On 29 July 1988. Mankayan. its insurance answers for the damages that a shipowner or agent may be held liable for by reason of the death of its passengers. Factual findings of the Court of Appeals generally final. Sapid. and (4) the costs of the suit. in equity. it ran over its passenger.000. without costs. Fernando Cudiamat. set aside the decision of the lower court. Lardizabal was driving a passenger bus belonging to Dangwa Transportation Co. (3) the sum of P288. Marrieta Cudiamat. Theodore M. 1. in a decision (CA-GR CV 19504) promulgated on 14 August 1990. it was because it had considered the question of negligence as “moot and academic. first brought his other passengers and cargo to their respective destinations before bringing said victim to the Lepanto Hospital where he expired.Haystacks (Berne Guerrero) unnecessarily exposed the vessel and passengers to the tragic mishap. Exceptions Transportation Law. in a reckless and imprudent manner and without due regard to traffic rules and regulations and safety to persons and property. Benguet. pronouncing that Pedrito Cudiamat was negligent. Hence. Dangwa’s and Lardizabal’s motion for reconsideration was denied by the Court of Appeals in its resolution dated 4 October 1990. Contention on limited liability rule as per Yangco vs. Norma Cudiamat. Dante Cudiamat. Court disagrees with Board’s conclusion While the Board of Marine Inquiry. The Cudiamats appealed to the Court of Appeals which. 2004 ( 73 ) . the said driver.000.” the captain having “lived up to the true tradition of the profession. were hereby ordered to pay the heirs of Pedrito Cudiamat the sum of P10.00 by way of moral damages. and represented by Inocencia Cudiamat) filed a complaint for damages against petitioners for the death of Pedrito Cudiamat as a result of a vehicular accident which occurred. 5. They failed to overcome that presumption of fault or negligence that arises in cases of death or injuries to passengers.00 as actual and compensatory damages. However.00 which approximates the amount Lardizabal and Dangwa Transportation initially offered said heirs for the amicable settlement of the case. Pedrito Cudiamat.

to do no act that would have the effect of increasing the peril to a passenger while he was attempting to board the same. Deceased not guilty of negligence The Supreme Court finds no reason to disturb the holding of the Court of Appeals. also considering that initially. Its findings are supported by the testimony of Dangwa Transportation’s own witnesses. Hence. Moreover. and its the bus conductor. every time the bus stops. This. Findings of the appellate court The subject bus was at full stop when the victim Pedrito Cudiamat boarded the same as it was precisely on this instance where a certain Miss Abenoja alighted from the bus. Under such circumstances. In this connection. in which case a reexamination of the facts and evidence may be undertaken. as shown by the physical evidence on where he was thereafter found in relation to the bus when it stopped. However. the trial court and the Court of Appeals have discordant positions as to who between Dangwa Transportation and the victim is guilty of negligence. This should be so. The company utterly failed to observe its duty and obligation as common carrier to the end that they should observe extra-ordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them according to the circumstances of each case (Article 1733. once it stops. and. the common carrier had made overtures to amicably settle the case. equity demands that there must be something given to the heirs of the victim to assuage their feelings. Findings of the appellate court supported by witnesses’ testimony.Haystacks (Berne Guerrero) It is an established principle that the factual findings of the Court of Appeals as a rule are final and may not be reviewed by this Court on appeal. It was at the instance when Pedrito Cudiamat was closing his umbrella at the platform of the bus when the latter made a sudden jerk movement as the driver commenced to accelerate the bus. New Civil Code). Under such circumstances. Here lies the defendant’s lack of diligence. When bus not in motion. the Court has had to conduct an evaluation of the evidence in this case for the proper calibration of their conflicting factual findings and legal conclusions. It did offer a certain monetary consideration to the victim’s heirs. Virginia Abalos. one of which is when the findings of the appellate court are contrary to those of the trial court. Herein. A public utility bus. it cannot be said that the deceased was guilty of negligence. Herein. The testimonies show that the place of the accident and the place where one of the passengers alighted were both between Bunkhouses 53 and 54. without having given the driver or the conductor any indication that he wishes to board the bus. The incident took place due to the gross negligence of the driver in prematurely stepping on the accelerator and in not waiting for the passenger to first secure his seat especially so when we take into account that the platform of the bus was at the time slippery and wet because of a drizzle. it becomes the duty of the driver and the conductor. Findings of the trial court Pedrito Cudiamat was negligent in trying to board a moving vehicle. 3. 4. the premature acceleration of the bus was a breach of such duty. 5. the victim did indicate his intention to board the bus when he declared that Pedrito Cudiamat was no longer walking and made a sign to board the bus when the latter was still at a distance from him. 2004 ( 74 ) . is in effect making a continuous offer to bus riders. the vehicle’s door was open instead of being closed. Transportation Law. 2. hence the finding of the Court of Appeals that the bus was at full stop when the victim boarded the same is correct. this is subject to settled exceptions. Duty of driver and conductor When the bus is not in motion there is no necessity for a person who wants to ride the same to signal his intention to board. Dangwa Transportation can also be found wanting of the necessary diligence. for it is hard to believe that one would even attempt to board a vehicle (i)n motion if the door of said vehicle is closed. it is safe to assume that when the deceased Cudiamat attempted to board the bus. They further confirm the conclusion that the victim fell from the platform of the bus when it suddenly accelerated forward and was run over by the rear right tires of the vehicle. Martin Anglog. especially with one of his hands holding an umbrella. Perforce.

is already considered a passenger and is entitled to all the rights and protection pertaining to such a contractual relation. from the nature of their business and for reasons of public policy. Even assuming bus moving. the court need not make an express finding of fault or negligence on the part of the carrier in order to hold it responsible to pay the damages sought by the passenger. for one to attempt to board a train or streetcar which is moving slowly. the act of the victim in boarding the same cannot be considered negligent under the circumstances. by stepping and standing on the platform of the bus. 2004 ( 75 ) . according to all the circumstances of each case. not gross earnings. the carrier assumes the express obligation to transport the passenger to his destination safely and to observe extraordinary diligence with a due regard for all the circumstances. Rule as to amount recoverable in tort The rule is that the amount recoverable by the heirs of a victim of a tort is not the loss of the entire earnings. In other words. Exception in ontract of carriage In an action based on a contract of carriage. Failure to bring injured immediately to hospital patent proof of negligence The circumstances under which the driver and the conductor failed to bring the gravely injured victim immediately to the hospital for medical treatment is a patent and incontrovertible proof of their negligence. and any injury that might be suffered by the passenger is right away attributable to the fault or negligence of the carrier. Negligence must be proved. and it is therefore incumbent upon the carrier to prove that it has exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the Civil Code.Haystacks (Berne Guerrero) 6. 7. and they are liable for injuries suffered by boarding passengers resulting from the sudden starting up or jerking of their conveyances while they are doing so. using the utmost diligence of very cautious persons. the total of the earnings less expenses necessary in the creation of such earnings or income and minus living and other incidental expenses. The evidence shows that after the accident the bus could have forthwith turned at Bunk 56 and thence to the hospital. are to be considered. only net earnings. or motorbus. 10. When contractual obligation of common carrier starts The victim herein. to stop their conveyances a reasonable length of time in order to afford passengers an opportunity to board and enter. By the contract of carriage. It defies understanding and can even be stigmatized as callous indifference. with a due regard for all the circumstances. An ordinarily prudent person would have made the attempt to board the moving conveyance under the same or similar circumstances. It is not negligence per se. streetcar. are bound to observe extraordinary diligence for the safety of the passengers transported by them. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide. Hence. 12. that is. deceased still not negligent Even assuming that the bus was moving. despite the serious condition of the victim. or as a matter of law. it has been held that the duty which the carrier of passengers owes to its patrons extends to persons boarding the cars as well as to those alighting therefrom. including common carriers by railroad train. The fact that passengers board and alight from a slowly moving vehicle is a matter of common experience and both the driver and conductor could not have been unaware of such an ordinary practice. but rather the loss of that portion of the earnings which the beneficiary would have received. Transportation Law. This is an exception to the general rule that negligence must be proved. 9. Duty of common carriers of passengers It is the duty of common carriers of passengers. but its driver instead opted to first proceed to Bunk 70 to allow a passenger to alight and to deliver a refrigerator. 11. Diligence required of common carriers Common carriers. 8.

De Leon Jr. Unfortunately.00. CA (GR 127897.000.7 to two (2) meters in height only in the vicinity of the Panay Gulf where the subject vessel sank. which gave credence to the weather report by the Philippine Atmospheric. [31] Delsan Transport Lines vs. was reversed. American Home Assurance paid Caltex the sum of P5. the vessel sank in the early morning of 16 August 1986 near Panay Gulf in the Visayas taking with it the entire cargo of fuel oil. with costs against Delsan Transport.635. Geophysical and Astronomical Services Administration (PAGASA). Subsequently. 1986.314 kiloliters of industrial fuel oil of Caltex to be delivered to the Caltex Oil Terminal in Zamboanga City. MT Maysun.00 a year.00 a year. the wind speed remained at 10 to 20 knots per hour while the waves measured from . Applying the rule on computation based on the net earnings.000.000. the petition for review on certiorari. Under the contract. (J): 4 concur Facts: Caltex Philippines entered into a contract of affreightment with Delsan Transport Lines. The decision of the trial court.096. On 14 August 1986. on appeal. The trial court found that the vessel.00 a month or P6. MT Maysun. it accordingly awarded P288.000. American Home Assurance filed a complaint with the RTC Makati City. 2004 ( 76 ) . by the Court of Appeals on 16 June 1996. however. said award must be rectified and reduced to P216. Exercising its right of subrogation under Article 2207 of the New Civil Code.277. MT Maysun set sail from Batangas for Zamboanga City.00. Branch 137. not an automatic admission of vessel’s seaworthiness Transportation Law. in good health with a remaining productive life expectancy of 12 years. Using the gross annual income as the basis. 1. and multiplying the same by 12 years. American Home Assurance demanded of Delsan Transport the same amount it paid to Caltex. and affirmed the Decision dated 17 June 1996 of the Court of Appeals. in accordance with prevailing jurisprudence. After the trial and upon analyzing the evidence adduced. Inc. 15 November 2001) Second Division. petitioner took on board its vessel. and then earning P24. Payment of insured value of lost cargo operates as waiver to enforce term of implied warranty against Caltex. The subsequent motion for reconsideration of Delsan Transport was denied by the appellate court on 21 January 1997. The shipment was insured with American Home Assurance Corporation. Actual award of damages to be given The deductible living and other expense of the deceased may fairly and reasonably be fixed at P500. for a period of 1 year whereby the said common carrier agreed to transport Caltex’s industrial fuel oil from the Batangas-Bataan Refinery to different parts of the country. Due to its failure to collect from Delsan Transport despite prior demand. the death indemnity is hereby increased to P50. However. PAGASA Weather report for 15 August 1986 The weather report issued by the Philippine Atmospheric.57 representing the insured value of the lost cargo. for collection of a sum of money. thus exempting the common carrier from liability for the loss of its cargo. in contrast to Delsan Transport’s allegation that the waves were 20 feet high.Haystacks (Berne Guerrero) 13. was seaworthy to undertake the voyage as determined by the Philippine Coast Guard per Survey Certificate Report M5-016-MH upon inspection during its annual dry-docking and that the incident was caused by unexpected inclement weather condition or force majeure. The Supreme Court denied the instant petition. In adjudicating the actual or compensatory damages. Geophysical and Astronomical Services Administration (PAGASA for brevity) showed that from 2:00 o’clock to 8:00 o’clock in the morning on August 16.000. the appellate court found that the deceased was 48 years old. the trial court rendered a decision on 29 November 1990 dismissing the complaint against Delsan Transport without pronouncement as to cost. 2. 2. Hence.

a squall (“unos”) carrying strong winds with an approximate velocity of 30 knots per hour and big waves averaging 18 to 20 feet high. It is designed to promote and to accomplish justice and is the mode which equity adopts to compel the ultimate payment of a debt by one who in justice and good conscience ought to pay. from the testimonies of Jaime Jarabe and Francisco Berina. However. and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of. Article 2207 NCC Article 2207 of the New Civil Code provides that “if the plaintiff’s property has been insured. repeatedly buffeted MT Maysun causing it to tilt. Ship captain not expected to testify against interest of employer Herein. It accrues simply upon payment by the insurance company of the insurance claim. common carriers shall be responsible unless the same is brought about.7 to 2 meters in the vicinity of Cuyo East Pass and Panay Gulf where the subject vessel sank. In all other cases. This tale of strong winds and big waves by the said officers of Delsan Transport however. If the amount paid by the insurance company does not fully cover the injury or loss. showing that from 2:00 to 8:00 a. 3. according to all the circumstances of each case. It is not dependent upon. any privity of contract or upon written assignment of claim. ship captain and chief mate. unless they prove that they observed extraordinary diligence. among others. was effectively rebutted and belied by the weather report from PAGASA. Claim of force majeure rebutted by PAGASA report Herein. the same cannot be validly interpreted as an automatic admission of the vessel’s seaworthiness by American Home Assurance as to foreclose recourse against the petitioner for any liability under its contractual obligation as a common carrier. the wind speed remained at 10 to 20 knots per hour while the height of the waves ranged from 0. respectively of the ill-fated vessel. The fact of payment grants American Home Assurance subrogatory right which enables it to exercise legal remedies that would otherwise be available to Caltex as owner of the lost cargo against the petitioner common carrier. Herein. that at around 3:15 a. of the said vessel. 2004 ( 77 ) . Right of Subrogation.m. it appears that a sudden and unexpected change of weather condition occurred in the early morning of 16 August 1986. the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. the independent government agency charged with monitoring weather and sea conditions. destruction or deterioration of the insured goods. common carriers are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of passengers transported by them. Delsan Transport’s witnesses. Liability. the payment made by the insurer to the assured operates as an equitable assignment to the former of all the remedies which the latter may have against the common carrier. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. respectively. 7. Transportation Law.” 4. common carriers are presumed to have been at fault or to have acted negligently. nor does it grow out of. on 16 August 1986. Rationale for right of subrogation The right of subrogation has its roots in equity. storm. by flood. earthquake.m.Haystacks (Berne Guerrero) The payment made by American Home Assurance for the insured value of the lost cargo operates as waiver of its right to enforce the term of the implied warranty against Caltex under the marine insurance policy. the common carrier. destroyed or deteriorated. exception. 5. Presumption of negligence From the nature of their business and for reasons of public policy. captain and chief mate. if the goods are lost. could not be expected to testify against the interest of their employer. take in water and eventually sink with its cargo. There was no squall or bad weather or extremely poor sea condition in the vicinity when the said vessel sank. Jaime Jarabe and Francisco Berina. Diligence required of common carriers. 6. lightning or other natural disaster or calamity. In the event of loss.

from the hauler to the Transportation Law. 11. Certificates of seaworthiness does not satisfy the vessel owner’s obligation Diligence in securing certificates of seaworthiness does not satisfy the vessel owner’s obligation. Seaworthiness not established by certificates Evidence certificates. It does not in any way operate to absolve the petitioner common carrier from its civil liability arising from its failure to observe extraordinary diligence in the vigilance over the goods it was transporting and for the negligent acts or omissions of its employees. is sufficient to establish not only the relationship of the insurer and the assured shipper of the lost cargo of industrial fuel oil. from the shipper to the port of departure. since no evidence was adduced indicating at what stage in the handling process the damage to the cargo was sustained. sixth. vs. The insurance contract. When right of subrogation accrues The presentation in evidence of the marine insurance policy is not indispensable in this case before the insurer may recover from the common carrier the insured value of the lost cargo in the exercise of its subrogatory right. The right of subrogation accrues simply upon payment by the insurance company of the insurance claim. CA because the shipment therein (hydraulic engines) passed through several stages with different parties involved in each stage. from the port of arrival to the arrastre operator. authorities are likewise clear as to their probative value. Herein. do not negate the presumption of unseaworthiness triggered by an unexplained sinking. CA. the ship may have appeared fit. Seaworthiness relates to a vessel’s actual condition. for the cargo owner has no obligation in relation to seaworthiness. or his surveyor. Delsan Transport is liable for the insured value of the lost cargo of industrial fuel oil belonging to Caltex for its failure to rebut the presumption of fault or negligence as common carrier occasioned by the unexplained sinking of its vessel. 2004 ( 78 ) . from the port of departure to the M/S Oriental Statesman. At the time of dry-docking and inspection. CA not applicable The presentation of the insurance policy was necessary in the case of Home Insurance Corporation v. The certificates issued. Also securing the approval of the shipper of the cargo. MT Maysun. by itself.Haystacks (Berne Guerrero) 8. fourth. the hauler can be liable only for any damage that occurred from the time it received the cargo until it finally delivered it to the consignee. from the M/S Pacific Conveyor to the port of arrival. 12. Subrogation receipt merely establish relationship of parties thereto. not civil liabililty The exoneration of MT Maysun’s officers and crew by the Board of Marine Inquiry merely concerns their respective administrative liabilities. Liability of a hauler In the absence of proof of stipulations to the contrary. Home Insurance Corp. Of certificates issued in this regard. Mabuhay Brokerage Co. the determination of which properly belongs to the courts. Exoneration of officers by Board of Marine Inquiry concerns only their administrative liability. and lastly.. third. if any.. Inc. do not necessarily take into account the actual condition of the vessel at the time of the commencement of the voyage. Home Insurance Corp. 10. 13. The subrogation receipt. however. showing that at the time of dry-docking and inspection by the Philippine Coast Guard the vessel MT Maysun was fit for voyage. First. Ordinarily. but also the amount paid to settle the insurance claim. vs. Evidence certificates at time of drydocking and Coast Guard inspection not conclusive as to condition of vessel at the time of commencement of voyage. of the condition of the vessel or her stowage does not establish due diligence if the vessel was in fact unseaworthy. from the M/S Oriental Statesman to the M/S Pacific Conveyor. Neither the granting of classification or the issuance of certificates establishes seaworthiness. while in transit. it cannot be held responsible for the handling of the cargo before it actually received it. second. fifth. which was not presented in evidence in that case would have indicated the scope of the insurer’s liability. from the arrastre operator to the hauler. 9.

with costs against Loadstar. The bills of lading failed to show any special arrangement. as in the case of a ship totally chartered for the use of a single party. The records do not disclose that the M/V “Cherokee” undertook to carry a special cargo or was chartered to a special person only. As a result of the total loss of its shipment. Any stipulation in the charter party absolving the owner from liability for loss due to the negligence of its agent is void only if the strict policy governing common carriers is upheld. along with its cargo.” The vessel. the vessel.075. Loadstar denied any liability for the loss of the shipper’s goods and claimed that the sinking of its vessel was due to force majeure. Agusan del Norte. CA (GR 131621.178. on its way to Manila from the port of Nasipit.000 to the insured in full settlement of its claim. In its answer. No charter party in present case In the 1968 case of Home Insurance Co. agreed with the trial court and affirmed its decision in toto. MIC filed a complaint against Loadstar and PGAI. Court of Appeals. P8. (b) 27 boxes and crates of tilewood assemblies and others.067. 28 September 1999) First Division. however.067.178.” Further. was insured by Prudential Guarantee & Assurance. Loadstar Shipping Co. 1. MIC paid P6. On 4 October 1991. v. which sank while in transit in the vicinity of Panay Gulf and Cuyo East Pass in the early morning of 16 August 1986. and National Steel vs. Home Insurance vs. v. on the other hand. Inc. CA not applicable. the petition for review on certiorari. alleging that the sinking of the vessel was due to the fault and negligence of Loadstar and its employees. the trial court (RTC of Manila. were insured for the same amount with the Manila Insurance Co. however on 30 January 1997. American Steamship Agencies. PGAI was later dropped as a party defendant after it paid the insurance proceeds to Loadstar. v.Haystacks (Berne Guerrero) consignee. [32] Loadstar Shipping vs. ordering Loadstar to pay MIC the amount of P6. Davide Jr. said amount to be deducted from MIC’s claim from Loadstar. MT Maysun. As the insurer. amounting to P6. for there is no doubt that the cargo of industrial fuel oil belonging to Caltex was lost while on board Delsan Transport’s vessel.000 as attorney’s fees. American Steamship. On 4 February 1985. averred that MIC had no cause of action against it. On 20 November 1984. Inc. Civil Case 85-29110) rendered judgment in favor of MIC. These cases are not applicable in the present case as the factual settings are different. and the costs of the suit. Herein. (PGAI) for P4 million. in turn. the consignee made a claim with Loadstar which. Loadstar elevated the matter to the Court of Appeals. (MIC) against various risks including “total loss by total loss of the vessel. Loadstar’s motion for reconsideration was denied on 19 November 1997. It also prayed that PGAI be ordered to pay the insurance proceeds from the loss of the vessel directly to MIC. received on board its M/V “Cherokee” (a) 705 bales of lawanit hardwood. but only a general provision to the effect that the M/V “Cherokee” was a “general cargo carrier. the bare fact Transportation Law. with legal interest from the filing of the complaint until fully paid. In any event. Such policy has no force where the public at large is not involved. The Supreme Court denied the petition and affirmed the challenged decision of the Court of Appeals. Loadstar being the party insured. (CJ): 4 concur Facts: On 19 November 1984. and the latter executed a subrogation receipt therefor. Inc. Hence. and (c) 49 bundles of mouldings R & W (3) Apitong Bolidenized for shipment. the Court held that a common carrier transporting special cargo or chartering the vessel to a special person becomes a private carrier that is not subject to the provisions of the Civil Code. Valenzuela Hardwood vs. The goods. Inc. ignored the same. There was no charter party.. Branch 16. upheld the Home Insurance doctrine. the presentation of the insurance policy is not applicable. PGAI. CA. The cases of Valenzuela Hardwood and Industrial Supply. which. sank off Limasawa Island. Court of Appeals and National Steel Corp. 2004 ( 79 ) .

is not reason enough to convert the vessel from a common to a private carrier. Stipulations in St. The business of a common carrier impinges directly and intimately upon the safety and well being and property of those members of the general community who happen to deal with such carrier. “For a vessel to be seaworthy. 2004 ( 80 ) . Article 1733 deliberately refrained from making such distinctions. inasmuch as the wind condition in the area where it sank was determined to be moderate. it did not sink because of any storm that may be deemed as force majeure.e. To exempt the carrier from the liabilities of a common carrier because he has not secured the necessary certificate of public convenience. and one who offers services or solicits business only from a narrow segment of the general population.” i. firms or associations engaged in the business of carrying or transporting passengers or goods or both. De Guzman vs. as “a sideline”’. that would be to reward private respondent precisely for failing to comply with applicable statutory requirements. In any event. Since it was remiss in the performance of its duties. Present stipulations void as contrary to public policy Transportation Law. 7. Loadstar cannot hide behind the “limited liability” doctrine to escape responsibility for the loss of the vessel and its cargo. especially where it was shown that the vessel was also carrying passengers. by land. the general community or population. Article 1732 NCC construed. 4. Neither does Article 1732 distinguish between a carrier offering its services to the “general public. which appears to be purely coincidental. Common Carriers defined. CA Article 1732 makes no distinction between one whose principal business activity is the carrying of persons or goods or both. 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.” 3. Vessel not seaworthy as it was not sufficiently manned when it embarked on its voyage The M/V “Cherokee” was not seaworthy when it embarked on its voyage on 19 November 1984. corporations. it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. water. Doctrine of limited liability does not apply when there was negligence on part of vessel owner or agent The doctrine of limited liability does not apply where there was negligence on the part of the vessel owner or agent.. The vessel was not even sufficiently manned at the time. 2. The law imposes duties and liabilities upon common carriers for the safety and protection of those who utilize their services and the law cannot allow a common carrier to render such duties and liabilities merely facultative by simply failing to obtain the necessary permits and authorizations.Haystacks (Berne Guerrero) that the vessel was carrying a particular type of cargo for one shipper. Article 1732 NCC Article 1732 of the Civil Code defines “common carriers” as “Common carriers are persons. offering their services to the public. 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. and one who does such carrying only as an ancillary activity (in local idiom. Loadstar was at fault or negligent in not maintaining a seaworthy vessel and in having allowed its vessel to sail despite knowledge of an approaching typhoon. 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.” 6. episodic or unscheduled basis. Paul Fire and National Union Fire Insurance cases different from present one. Herein. Issuance of CPC not a prerequisite for a common carrier. or air for compensation. would be offensive to sound public policy. De Guzman vs. 5. CA A certificate of public convenience is not a requisite for the incurring of liability under the Civil Code provisions governing common carriers.

Metro Manila. Macondray & Co. Taguig. These cases involved a limitation on the carrier’s liability to an amount fixed in the bill of lading which the parties may enter into.Haystacks (Berne Guerrero) In the cases of St. Leonardo was negotiating Honeydew Road. 2004 ( 81 ) . 8. [33] Metro Manila Transit Corporation vs. Taguig. According to an almost uniform weight of authority. MIC’s cause of action had not yet prescribed at the time it was concerned. (MMTC) bus bearing plate 3Z 307 PUB (Philippines) ’79 driven by Godofredo C. the Carriage of Goods by Sea Act (COGSA) — which provides for a one-year period of limitation on claims for loss of. it follows that when MIC paid the shipper. On the other hand. the insurer is subrogated merely to the rights of the assured. Taguig.e. Since the right of the assured in case of loss or damage to the goods is limited or restricted by the provisions in the bills of lading. which are void and which are valid Three kinds of stipulations have often been made in a bill of lading.25 a day.. i. Bicutan. a stipulation reducing the one-year period is null and void. bound for her work at Dynetics Incorporated located in Bicutan. the first and second kinds of stipulations are invalid as being contrary to public policy.” Such stipulation is obviously null and void for being contrary to public policy. it must. Three kinds of stipulations to limit liability. it can recover only the amount that may. in turn. As a consequence. where she then worked as a machine operator earning P16. but the third is valid and enforceable. Herein. the stipulation in the present case effectively reduces the common carrier’s liability for the loss or destruction of the goods to a degree less than extraordinary (Articles 1744 and 1745). Stolt-Nielsen Phils. Loadstar. then driven by Agudo Calebag and owned by Victorino Lamayo. Regalado (J): 2 concur. it was subrogated to all the rights which the latter has against the common carrier. As both vehicles approached the intersection of DBP Avenue and Honeydew Road they failed to slow down and slacken their speed. and National Union Fire Insurance v. cargoes sustained during transit — may be applied suppletorily to the present case. Co. v. MIC subrogated to right of shipper Since the stipulation in question is null and void. 21 June 1993) Second Division.. the period for filing the action for recovery has not yet elapsed. it was ruled that after paying the claim of the insured for damages under the insurance policy.m. of 28 August 1979. The second is one providing for an unqualified limitation of such liability to an agreed valuation. Inc. or damage to. neither did they blow their horns to warn approaching vehicles. the passenger jeepney ramming the left side portion of the MMTC bus. be recovered by the latter. a collision between them occurred. Metro Manila bound for its terminal at Bicutan. This one-year prescriptive period also applies to the insurer of the goods. Inc. Paul Fire & Marine Ins. She was Transportation Law. While the passenger jeepney was travelling at a fast clip along DBP Avenue. i. 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. The collision impact caused Custodio to hit the front windshield of the passenger jeepney and she was thrown out therefrom. Bicutan. the carrier is not liable for any loss or damage to shipments made at “owner’s risk. 9. Stipulation reducing 1 year period void Herein. Action has not yet prescribed. accordingly.. D7 305 PUJ Pilipinas 1979. a suit by the insurer as subrogee is necessarily subject to the same limitations and restrictions. 1 on leave Facts: At about 6:00 a. be struck down. 10.e. Metro Manila another fast moving vehicle. provided that the same was freely and fairly agreed upon (Articles 1749-1750). The first is one exempting the carrier from any and all liability for loss or damage occasioned by its own negligence. Moreover. CA (GR 104408. Inasmuch as neither the Civil Code nor the Code of Commerce states a specific prescriptive period on the matter. a Metro Manila Transit Corp. falling onto the pavement unconscious with serious physical injuries. p Nenita Custodio boarded as a paying passenger a public utility jeepney with plate No..

Effect of motion for reconsideration and motion for extension of time In the case of a petition for review on certiorari from a decision rendered by the Court of Appeals. pursuant to Section 1. dated 31 October 1991. and (g) costs of suit. After consideration of the appropriate pleadings on appeal and finding the appeal meritorious. a motion for Transportation Law. MMTC. in the event a motion for reconsideration is filed and denied. however. was received by MMTC on 18 November 1991 and it seasonably filed a motion for the reconsideration thereof on 28 November 1991. As joint tortfeasors.000. Rule 45 of the Rules of Court. 2004 ( 82 ) . the Court of Appeals modified the trial court’s decision by holding MMTC solidarily liable with the other defendants for the damages awarded by the trial court because of their concurrent negligence. (b) the sum of P5. in its decision of 1 August 1989. (d) the sum of P2. Filing of petition timely. that it may not be able to file said petition before the lapse of the reglementary period therefor. Rule 45 of the Rules of Court. (e) the sum of P5. i. which has long since been clarified in Lacsamana vs.000.00 by way of expenses of litigation. found both drivers of the colliding vehicles concurrently negligent for non-observance of appropriate traffic rules and regulations and for failure to take the usual precautions when approaching an intersection. which in turn was received by MMTC on 9 March 1992. and paying at the same time the corresponding docket fee. Said motion for reconsideration was denied by the court in its resolution dated 17 February 1992. Consequently. Section 1. an appeal was filed by her with appellate court.00 by way of loss of earnings. The Court granted said motion. Therefore. 1. et al. MMTC filed a motion on 19 March 1992 for an extension of 30 days to file the present petition. Second Special Cases Division of the Intermediate Appellate Court. it had. on the bases of the evidence presented was. absolved from liability for the accident. Thereat. the period of 15 days begins to run all over again from notice of the denial resolution. The reorganized trial court. (a) the sum of P10. Anticipating. (c) the sum of P15. A complaint for damages was filed by Custodio. The Court of Appeals was resolute in its conclusion and denied the motions for reconsideration of Custodio and MMTC in a resolution dated 17 February 1982.00 by way of medical expenses. against all of therein named defendants following their refusal to pay the expenses incurred by the former as a result of the collision. who being then a minor was assisted by her parents. as well as Lamayo.000. she was unable to work for 3 ½ months. The Hon.672. allows the same to be filed “within 15 days from notice of judgment or of the denial of the motion for reconsideration filed in due time.00 by way of exemplary damages.00 by way of moral damages. As Custodio’s motion to have that portion of the trial court’s decision absolving MMTC from liability reconsidered having been denied for lack of merit.e.000. Furthermore.” In other words. both drivers (Calebag and Leonardo). Section 1. 15 days therefrom or up to 24 March 1992 within which to file a petition for review on certiorari. the reglementary period within which to appeal the decision of the Court of Appeals to the Supreme Court is reckoned from the date the party who intends to appeal received the order denying the motion for reconsideration.. Reglementary period in a petition for review on certiorari. or up to 23 April 1992. The Supreme Court affirmed the impugned decision of the Court of Appeals. with the extended period to be counted from the expiration of the reglementary period. (f) the sum of P6. Said defendants denied all the material allegations in the complaint and pointed an accusing finger at each other as being the party at fault. she was confined for 24 days.00 by way of attorney’s fees. thus prompting MMTC to file the present petition.Haystacks (Berne Guerrero) brought to the Medical City Hospital where she regained consciousness only after 1 week. Otherwise put. it had 30 days from 24 March 1992 within which to file its petition.000. with proof of service of copies thereof to the court and the adverse parties. were held solidarily liable for damages sustained by Custodio. and the eventual filing of said petition on 14 April 1992 was well within the period granted by the Court. and as a consequence. however. 2. if a motion for reconsideration is filed. Rule 45 of the Rules of Court The decision of the Court of Appeals.

In civil cases.Haystacks (Berne Guerrero) extension of time to file a petition for review may be filed with this Court within said reglementary period. Exceptions The general rule laid down in a plethora of cases is that such findings of fact by the Court of Appeals are conclusive upon and beyond the power of review of the Supreme Court. to wit: (1) when the conclusion is a finding grounded entirely on speculation. 3. which is vested by law with the power to review both legal and factual issues. that rule is not inflexible and is subject to well established exceptions. 6. particularly in the appreciation of evidence. if on the evidence of record. Party to prove his own affirmative assertion. who asserts the affirmative of the issue has the burden of presenting at the trial such amount of evidence required by law to obtain a favorable judgment. are not disputed by the respondents. (9) when the facts set forth in the petition. (8) when the findings of fact are conclusions without citation of specific evidence on which they are based. to hold sway. the Court is spared the necessity of determining the sufficiency of evidence establishing the fact of negligence. incumbent on the plaintiff who is claiming a right to prove his case. MMTC’s attempt to prove its diligentissimi patris familias in the selection and supervision of employees through oral evidence must fail Transportation Law. 7. the owner of the jeepney. the degree of evidence required of a party in order to support his claim is preponderance of evidence. consonant with the theory of the case it or he seeks to advance and subject to such procedural strategy followed thereby. (6) when the Court of Appeals. Factual findings of trial court may be reversed by Court of Appeals Factual findings of the trial court may be reversed by the Court of Appeals. Oral evidence without object or documentary evidence not sufficiently persuasive proof While there is no rule which requires that testimonial evidence. it is paramount that the best and most complete evidence be formally entered. paying at the same time the corresponding docket fee. 2004 ( 83 ) . it appears that the trial court may have been mistaken. 5. absurd or impossible. and even finality at times. as well as in the petitioner’s main and reply briefs. provided only that the same shall measure up to the quantum of evidence required by law. It is therefore. Corollarily. Herein. which is within the domain of the Court of Appeals. Preponderance of evidence in civil cases It is procedurally required for each party in a case to prove his own affirmative assertion by the degree of evidence required by law. the bus driver of MMTC. or even object evidence for that matter. went beyond the issues of the case and the same are contrary to the admissions of both appellant and appellee. 4. must be corroborated by documentary evidence. the driver of the passenger jeepney. to present all available evidence at its or his disposal in the manner which may be deemed necessary and beneficial to prove its or his position. jeepney owner solidarily liable There is no dispute as to the finding of concurrent negligence on the part of Calebag. In making proof in its or his case. (4) when the judgment is based on a misapprehension of facts. defendant must likewise prove its own allegation to buttress its claim that it is not liable. the party. It is entirely within each of the parties discretion. both of whom were solidarily held liable with Lamayo. surmises and conjectures. the Court cannot consider the same as sufficiently persuasive proof that there was observance of due diligence in the selection and supervision of employees. (2) when the inference made is manifestly mistaken. whether plaintiff or defendant. Findings of facts of Court of Appeals conclusive upon the Supreme Court. and (10) when the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and are contradicted by the evidence on record. While the findings of fact of the Court of Appeals are entitled to great respect. or that evidence adduced by one party which is more conclusive and credible than that of the other party. in making its findings. (3) where there is grave abuse of discretion. and Leonardo. inasmuch as the witnesses’ testimonies dwelt on mere generalities. Drivers negligent. (5) when the findings of fact are conflicting. (7) when the findings of the Court of Appeals are contrary to those of the trial court. In fine.

it was held that “there is no hard-and-fast rule on the quantum of evidence needed to prove due observance of all the diligence of a good father of a family as would constitute a valid defense to the legal presumption of negligence on the part of an employer or master whose employee has by his negligence. Ex-Meralco Employees Transportation Co. Article 2180 NCC The pertinent parts of Article 2180 provide that “The obligation imposed by article 2176 is demandable not only for one’s own acts or omissions. Central Taxicab vs. It is clear. Negligence is imputed to them by law. vs. Diligence of a good father of family under Article 2180 refers to due diligence in selection and supervision of employees The rule is applicable only where there is an employer-employee relationship. which forms the foundation of such responsibility. MMTC short of required evidentiary quantum. derived from their failure to exercise due care and vigilance over the acts of subordinates to prevent them from causing damage.” 11. Elements of quasi-delicts The present case isy within the coverage of Articles 2176 and 2177. of the Civil Code provisions on quasi-delicts. although it is not necessary that the employer be engaged in business or industry. nor even the necessity of having somebody else answer for the damages caused by the persons devoid of personality. of the Civil Code. therefore. 2004 ( 84 ) . notwithstanding the calls therefor by both the trial court and the opposing counsel. set amidst an almost identical factual setting. Basis of employer’s vicarious liability The basis of the employer’s vicarious liability has been explained: “The responsibility imposed by this article arises by virtue of a presumption juris tantum of negligence on the part of the persons made responsible under the article. caused damage to another. xxx Employers shall be liable for damages caused by their employees and household helpers acting within the scope of their assigned tasks. (2) fault or negligence of the defendant or some other person for whose act he must respond. that it is not representation. in relation to Article 2180. 9. Diligentissimi patris familias applicable when there is an employer-employee relationship.Haystacks (Berne Guerrero) as it was unable to buttress the same with any other evidence. as all the elements thereof are present. xxx The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage. nor interest. but also for those of persons for whom one is responsible. but it is the non-performance of certain duties of precaution and prudence imposed upon the persons who become responsible by civil bond uniting the actor to them. to wit: (1) damages suffered by the plaintiff. object or documentary. in relation to Article 2180. even though the former are not engaged in any business or industry. unless they prove the contrary. The failure of the company to produce in court any “record” or other documentary proof tending to establish that it had exercised all the diligence of a good father of a family in the selection and supervision of its drivers and buses... Case covered by Articles 2176 and 2177. 8.” 12. 10. the last paragraph of the article says that such responsibility ceases if it is proved that the persons who might be held responsible under it exercised the diligence of a good father of a family (diligentissimi patris familias) to prevent damage. which might obviate the apparent biased nature of the testimony. and (3) the connection of cause and effect between fault or negligence of the defendant and the damages incurred by plaintiff. Whether or not engaged in any business or Transportation Law. Thus. Therein. Ex-Meralco Employees Transportation The evidence for MMTC falls short of the required evidentiary quantum as would convincingly and undoubtedly prove its observance of the diligence of a good father of a family has its precursor in the underlying rationale pronounced in the earlier case of Central Taxicab Corp. argues strongly against its pretensions. et al.

to hold the employer liable. his experience and record of service. the case is undoubtedly based on a quasi-delict under Article 2180. the latter has the burden of proving that it has been diligent not only in the selection of employees but also in the actual supervision of their work. Gutierrez. Admonition as to selection of employees. For failure to rebut such legal presumption of negligence in the selection and supervision of employees. As the negligence of the employee gives rise to the presumption of negligence on the part of the employer. The mere allegation of the Transportation Law. the basis of the liability being the relationship of pater familias or on the employer’s own negligence. Drivers and vehicle owners directly and solidarily liable. the Court adds that actual implementation and monitoring of consistent compliance with said rules should be the constant concern of the employer. 14. Camarote lays down the admonition that “in order that the owner of a vehicle may be considered as having exercised all diligence of a good father of a family. he should have carefully examined the applicant for employment as to his qualifications. When the employee causes damage due to his own negligence while performing his own duties. may find it necessary to interpose the defense of due diligence in the selection and supervision of employees. Once this is done. 16. The diligence of a good father of a family required to be observed by employers to prevent damages under Article 2180 refers to due diligence in the selection and supervision of employees in order to protect the public. Cambo vs. as employer. the Court has consistently held that where the injury is due to the concurrent negligence of the drivers of the colliding vehicles. that the employee was acting within the scope of his assigned task when the tort complained of was committed. 12. But. These steps the vehicle owner failed to observe. the employer is likewise responsible for damages. Camarote The legal obligation of employers to observe due diligence in the selection and supervision of employees is not to be considered as an empty play of words or a mere formalism. failed to exercise all due diligence required of a good father of a family in the choice or selection of driver. the drivers and owners of the said vehicles shall be primarily. there arises the juris tantum presumption that the employer is negligent. the plaintiff must show. as the solidarity of the obligation is justified by the very nature thereof. rebuttable only by proof of observance of the diligence of a good father of a family. directly and solidarily liable for damages and it is immaterial that one action is based on quasi-delict and the other on culpa contractual. he has therefore. the case of Cambo vs. Scope of due diligence in supervision of employees Due diligence in the supervision of employees includes the formulation of suitable rules and regulations for the guidance of employees and the issuance of proper instructions intended for the protection of the public and persons with whom the employer has relations through his or its employees and the imposition of necessary disciplinary measures upon employees in case of breach or as may be warranted to ensure the performance of acts indispensable to the business of and beneficial to their employer.Haystacks (Berne Guerrero) industry. and thereafter. the employer under Article 2180 is liable for torts committed by his employees within the scope of their assigned tasks. 2004 ( 85 ) . since the non-observance thereof actually becomes the basis of their vicarious liability under Article 2180. it is not enough to emptily invoke the existence of said company guidelines and policies on hiring and supervision. Gutierrez vs. Presumption that employer negligent when employee causes damage due to his own negligence With the allegation and subsequent proof of negligence against the driver and of an employeremployee relation between him and MMTC. To this. he should not have been satisfied with the mere possession of a professional driver’s license. On the matter of selection of employees. When defense of due diligence in selection and supervision of employees deemed sufficient In order that the defense of due diligence in the selection and supervision of employees may be deemed sufficient and plausible. Gutierrez As early as the case of Gutierrez vs.” 15. 13. acting through dependable supervisors who should regularly report on their supervisory functions. it is necessary first to establish the employment relationship. as appears to be the fashion of the times. It is only then that the defendant.

17. especially since Custodio did not specifically pray therefor in her complaint. Article 2211 NCC The appellate court acted in the exercise of sound discretion when it affirmed the trial court’s award. Virgilio Llamoso admitted that there was another motor vehicle ahead of him. that “the mere formulation of various company policies on safety without showing that they were being complied with is not sufficient to exempt petitioner from liability arising from negligence of its employees. There have been no intentional dilatory maneuvers or any special circumstances which would justify that additional award.” it stopped and cautiously treated the intersection as a “Thru Stop” street.. .” 19. 18. interest as a part of the damages may be awarded in the discretion of the court. to proceed along the national highway. Cruz. The law seeks to stop and prevent the slaughter and maiming of people (whether passengers or not) and the destruction of property (whether freight or not) on our highways by buses. Article 2211 of the Civil Code provides that in quasi-delicts. Conrado L. Feliciano (J): 4 concur Facts: On 2 August 1982. Atty. without anything more. of course. stopped at the intersection to give way to the jeepney driven by Grajera. there has been little improvement in the transport situation in the country: “In requiring the highest possible degree of diligence from common carriers and creating a presumption of negligence against them. 2004 ( 86 ) .. the passengers and owners of the cargo carried by a common carrier. . the very size and power of which seem often to inflame the minds of their drivers. Virgilio Llamoso inquired from his conductor if they could still accommodate passengers and learning that they were already full. Laguna. as a warning to all employers. 25 August 1989) Third Division. Coronado. . without requiring the payment of interest thereon as an item of damages just because of delay in the determination thereof. a car of his client and another car. Laguna on its way towards the direction of Sta. For if common carriers carefully observe the statutory standard of extraordinary diligence in respect of their own passengers. Transportation Law. Manicad.” Paying lip-service to these injunctions or merely going through the motions of compliance therewith will warrant stern sanctions from the Court. Rationale for the requirement of highest possible degree of diligence from common carriers The Court feels it is necessary to stress the following rationale behind these all-important statutory and jurisprudential mandates. they are not the only persons that the law seeks to benefit. who was driving a Mustang car coming from the direction of Sta. As the KBL bus neared the intersection. and not as a matter of right.Haystacks (Berne Guerrero) existence of hiring procedures and supervisory policies. on the other hand. Coronado (GR 85331. et al. was on its way from Sta. for it has been observed that despite its pronouncement in Kapalaran Bus Line vs. The KBL bus. No interest due as such has not been prayed in the complaint. the jeepney driven by Lope Grajera was then coming from Pila. The regular itinerary of the KBL bus is through the town proper of Pila. Cruz. the law compels them to curb the recklessness of their drivers. they cannot help but simultaneously benefit pedestrians and the owners and passengers of other vehicles who are equally entitled to the safe and convenient use of our roads and highways. is decidedly not sufficient to overcome such presumption. Cruz and proceeding towards the direction of Manila. traversing the old highwayAs the jeepney reached the intersection where there is a traffic sign “yield. which it is not. Behind Manicad were two vehicles. Laguna. While the immediate beneficiaries of the standard of extraordinary diligence are. It is incumbent upon petitioner to show that in recruiting and employing the erring driver the recruitment procedures and company policies on efficiency and safety were followed. [34] Kapalaran Bus vs. Warning of the Court to employers The Court emphatically reiterates its holding. on its way towards Manila. but at times it avoids this if a bus is already fully loaded with passengers and can no longer accommodate additional passengers. driven by its regular driver Virgilio Llamoso. he decided to bypass Pila and instead.

Bus driver actually violating traffic rules and regulations.00.00 as attorney’s fees and litigation expenses. Branch 27.00 in the concept of exemplary damages to serve as a deterrent to others who. A motion for reconsideration by Kapalaran having been denied by the appellate court on 13 October 1988.00 representing the expenses said defendant will incur for his second operation to remove the intramedulary nail from his femur. affirmed the decision of the trial court but modified the award of damages by setting aside the grant of exemplary damages as well as the award of attorney’s fee and litigation expenses made to Dionisio Shinyo. Manicad. A third-party complaint and/or a complaint for intervention was also filed in the same case against Kapalaran by jeepney passenger Dionisio Shinyo. the petition for Review. Herein. the trial court rendered a judgment in favor of Coronado. presumed negligent Transportation Law. Coronado and Grajera answered with their own claims (counter-claims) for damages. 1.000. and the sum of P15. The KBL bus ignored the stopped vehicles of Atty.00 as compensation for the totally wrecked jeepney. Cruz.000. after the collision. Costs against Kapalaran. after trial.000. The Supreme Court denied the Petition for Review on Certiorari for lack of merit and affirmed the Decision of the Court of Appeals.Haystacks (Berne Guerrero) A Laguna Transit bus had just entered the town of Pila ahead of Atty. Kapalaran has made no compelling showing of any misapprehension of facts on the part of the Court of Appeals that would require us to review and overturn the factual findings of that court. The general rules on right-of-way may be invoked only if both vehicles approach the intersection at almost the same time. therefore. On 14 September 1982. apparently believing that the best defense was offense. Kapalaran. Another general rule is that the vehicle coming from the right has the right-of-way over the vehicle coming from the left. like the plaintiff. may be minded to induce accident victims to perjure themselves in a sworn statement. on 28 June 1988. Laguna.000. amply supported by the evidence of record. From the above judgment.000. The KBL bus appeared to have been travelling at a fast rate of speed because. it did not stop. causing the accident.00 as attorney’s fees and litigation expenses.000.00 to serve as moral damages for the pain and suffering inflicted on said defendant. examination of the record shows that not only are the conclusions of fact of the Court of Appeals and the trial court on who had acted negligently and was at fault in the collision of their vehicles. the further sum of P30. but also that Kapalaran’s bus driver was grossly negligent and had acted wantonly and in obvious disregard of the applicable rules on safety on the highway. Supreme Court not a trier of facts It is not the function of the Supreme Court to analyze and weigh evidence presented by the parties all over again and that its jurisdiction is in principle limited to reviewing errors of law that might have been committed by the Court of Appeals. Manicad and the other vehicles behind Atty. On 15 October 1986. On the contrary. it travelled for another 50 meters and stopped only when it hit an electric post.000. the additional sum of P50.00 to Dionisio Shinyo shall similarly be restored.000. plus the sum of P10. filed a complaint for damage to property and physical injuries through reckless imprudence against Angel Coronado and Lope Grajera in the Regional Trial Court. plus the sum of P5. Sta.000. except (1) that the award of exemplary damages to Dionisio Shinyo shall be restored and increased from P10. and (2) that the grant of attorney’s fees and litigation expenses in the sum of P15. The Court of Appeals. Grajera and Shinyo and ordering Kapalaran (a) to pay Angel Coronado the sum of P40. 3. 2.00 representing the expenses incurred by said intervenor for his treatment including his car-hire. and (b) to Dionisio Shinyo the sum of P35.00 to P25. 2004 ( 87 ) . General rules as to right-of-way The general rule is that the vehicle on the national highway has the right-of-way as against a feeder road.000. Kapalaran appealed to the Court of Appeals assailing the trial court’s findings on the issue of fault and the award of damages. Hence. Manicad and overtook both vehicles at the intersection.

upon the right. proceeding in the same direction. Restrictions on overtaking and passing Section 41 (a) provides that “the driver of a vehicle shall not drive to the left side of the center line of a highway in overtaking or passing another vehicle. the bus collided head-on into the jeepney because the bus had been going at an excessively high velocity immediately before and at the time of overtaking the stopped cars. Restriction as to speed Section 35 (a) provides that “any person driving a motor vehicle on a highway shall drive the same at a careful and prudent speed. and or any other condition then and there existing. as amended.” 6. Jeepney driver has right to assume further vehicles would stop The jeepney driver. 4. who was driving at a speed too high to be safe and proper at or near an intersection on the highway. seeing the cars closest to the intersection on the opposite side of the highway come to a stop to give way to him. Section 41 (c) of RA 4136. 2004 ( 88 ) . Section 35(a) of RA 4136. which was precisely the lane or side on which the jeepney had a right to be. The bus driver. limb and property of any person.Haystacks (Berne Guerrero) Kapalaran’s driver had become aware that some vehicles ahead of the bus and travelling in the same direction had already stopped at the intersection obviously to give way either to pedestrians or to another vehicle about to enter the intersection. and is free of oncoming traffic for a sufficient distance ahead to permit such overtaking or passing to be made in safety. and so caught the jeepney within the intersection. Immediately before the collision. unless such intersection or crossing is controlled by traffic signal. chose to swerve to the left lane and overtake such preceding vehicles. in the Land Transportation and Traffic Code. Right of recourse Transportation Law. another vehicle which is making or about to make a left turn. had the right to assume that other vehicles further away and behind the stopped cars would similarly come to a stop and not seek illegally to overtake the stopped vehicles and come careening into the intersection at an unsafe speed. RA 4136. unless such left side is clearly visible. Thus. at any railway grade crossing. entered the intersection and directly smashed into the jeepney within the intersection. 8. Responsibility of driver to see to it that left lane of road was clear It was the responsibility of the bus driver to see to it. nor at a speed greater than will permit him to bring the vehicle to a stop within the assured clear distance ahead.” 5. except on a highway having two or more lanes for movement of traffic in one direction where the driver of a vehicle may overtake or pass another vehicle on the right. not greater nor less than is reasonable and proper. and in any case too high to be able to slow down and stop behind the cars which had preceded it and which had stopped at the intersection. Kapalaran’s bus was still relatively far away from the intersection when the jeepney entered the same. a presumption Kapalaran was unable to overthrow. and no person shall drive any motor vehicle upon a highway at such a speed as to endanger the life. The point of impact was on the left side of the intersection (the right lane so far as concerns the jeepney coming from the opposite side). 7. that the left lane of the road within the intersection and beyond was clear. Driver’s gross negligence raises presumption that Kapalaran guilty of negligence in selection and supervision of employees. a legal presumption arose that the bus driver was negligent. among others. Section 41 (a) of RA 4136. when it overtook the 2 cars ahead which had stopped at the intersection. the width of the highway. Restrictions on overtaking and passing Section 41 (c) provides that “the driver of a vehicle shall not overtake or pass any other vehicle proceeding in the same direction. the bus driver was actually violating the following traffic rules and regulations. or unless permitted to do so by a watchman or a peace officer. 9. Nothing in this section shall be construed to prohibit a driver overtaking or passing. or at any intersection of highways. having due regard for the traffic.

the award of exemplary damages by the trial court was quite proper. its liability for the acts and negligence of its bus driver is not “merely subsidiary. et. it has of course a right of recourse against its own negligent employee. may and should be considered and decided by the Supreme Court even if those issues had not been explicitly raised by the party affected.” Herein. Diligence required of a common carrier The law requires a common carrier to exercise extraordinary diligence in carrying and transporting their passengers safely “as far as human care and foresight can provide. with due regard for all the circumstances. it Issues not raised may be considered by Court if substantial justice and/or public policy require Issues which must be resolved if substantial justice is to be rendered to the parties. they cannot help but simultaneously benefit pedestrians and the owners and passengers of other vehicles who are equally entitled to the safe and convenient use of our roads and highways. it should have appealed from that portion of the trial court’s decision which had failed to hold the bus driver responsible for any damage. Beneficiaries of standard of extraordinary diligence While the immediate beneficiaries of the standard of extraordinary diligence are. although granted for the wrong reason. the law compels them to curb the recklessness of their drivers. the very size and power of which seem often to inflame the minds of their drivers. 12. Exemplary damages. al. The law seeks to stop and prevent the slaughter and maiming of people (whether passengers or not) and the destruction of property (whether freight or not) on our highways by buses. Where the employer is held liable for damages. 13. 11. The liability of the employer under Article 2180 of the Civil Code is direct and immediate. it is not only the demands of substantial justice but also the compelling considerations of public policy noted above. The Court is entitled to take judicial notice of the gross negligence and the appalling disregard of the physical safety and property of others so commonly exhibited today by the drivers of passenger buses and similar vehicles on our highways. 14. the grievous injuries sustained by him in the violent collision. Herein. If Kapalaran was interested in maintaining its right of recourse against or reimbursement from its own driver. which impel us to the conclusion that the trial court’s award of exemplary damages Transportation Law. Award of moral damages in order. a death hastened by.” nor are Coronado. of course. For if common carriers carefully observed the statutory standard of extraordinary diligence in respect of their own passengers. they are not the only persons that the law seeks to benefit. 10. the passengers and owners of cargo carried by a common carrier. it is also quite modest considering Dionisio Shinyo’s death during the pendency of this petition.” and is not limited to cases where the employee “cannot pay his liability. it is not conditioned upon prior recourse against the negligent employee and a prior showing of the insolvency of such employee. Article 2231 NCC Article 2231 of the Civil Code explicitly authorizes the imposition of exemplary damages in cases of quasi-delicts “if the defendant acted with gross negligence.” In requiring the highest possible degree of diligence from common carriers and creating a presumption of negligence against them. Contrary to Kapalaran’s pretense. Shinyo’s death The award of moral damages against Kapalaran is not only entirely in order. if not directly due to. 2004 ( 89 ) .Haystacks (Berne Guerrero) The patent and gross negligence on the part of Kapalaran’s driver raised the legal presumption that Kapalaran as employer was guilty of negligence either in the selection or in the supervision of its bus drivers. Court entitled to take judicial notice of negligence Kapalaran’s bus driver was grossly and very probably criminally negligent in his reckless disregard of the rights of other vehicles and their passengers and of pedestrians as well. 15. and should not only be restored but augmented. using the utmost diligence of very cautious persons. compelled first to proceed against the bus driver.

(2) P10. some passengers demanded that they should be allowed to return to Cebu City for they were no longer willing to continue their voyage to Cagayan de Oro City. The Court dismissed the complaint as it did not appear that Arroyo was left in the Port of Cebu because of the fault. 2208. The vessel departed at around 11:00 p. while for all other matters not regulated thereby. At around 5:30p. After half an hour of stillness. the vessel stopped near Kawit Island and dropped its anchor thereat. and 1173 of the Civil Code as applicable law — not Article 2180 of the same Code. Utmost diligence of very cautious persons Under Article 1733 of the Civil Code. Herein. 2217. 1172. and likewise dismissed Trans-Asia’s counterclaim is likewise dismissed it not appearing also that filing of the case by Arroyo was motivated by malice or bad faith. [35] Trans-Asia Shipping Lines vs. (J): 4 concur Facts: Atty.00 as exemplary damages. Unsatisfied. and (4) Cost of suit. the next day. using the utmost diligence of very cautious persons. Renato Arroyo. Title VIII.00 as moral damages. Davide Jr. Arroyo. At that instance. Extraordinary diligence. 2.m of the said day. Laws applicable Undoubtedly. boarded the M/V Asia Japan for its voyage to Cagayan de Oro City. (3) P5. Trans-Asia failed to discharge this obligation. the Code of Commerce and special laws. there was.000. That meant that Trans-Asia was.Haystacks (Berne Guerrero) was erroneously deleted and must be restored and brought more nearly to the level which public policy and substantial justice require. accordingly. and 2232 of the Civil Code and. likewise a vessel of Trans-Asia. bought a ticket Trans-Asia Shipping Lines Inc. On account of the failure of Trans-Asia to transport him to the place of destination on 12 November 1991.m. Trans-Asia was bound to observe extraordinary diligence in ensuring the safety of Arroyo. a corporation engaged in inter-island shipping. CA (GR 118126. for the voyage of M/V Asia Thailand vessel to Cagayan de Oro City from Cebu City on 12 November 1991. between Trans-Asia and Arroyo. with due regard for all the circumstances. a public attorney. pursuant to Article 1755 of the said Code. a contract of common carriage. Book IV of the Civil Code. with only 1 engine running. After an hour of slow voyage. together with the other passengers who requested to be brought back to Cebu City. At Cebu City. bound to carry Arroyo safely as far as human care and foresight could provide. Article 1733 NCC. Arroyo noticed that some repair work were being undertaken on the engine of the vessel. Article 1755. 1. Arroyo boarded the M/V Asia Thailand vessel. with Articles 1170. awarded (1) P20. negligence. Transportation Law. the Court of Appeals reversed the trial court’s decision by applying Article 1755 in relation to Articles 2201. with costs against Trans-Asia. subject to the modification as to the award for attorney’s fees which is set aside. The Supreme Court denied the petition. the trial court rendered its decision and ruled that the action was only for breach of contract. malice or wanton attitude of Trans-Asia’s employees. The laws of primary application then are the provisions on common carriers under Section 4. 4 March 1996) Third Division. 2004 ( 90 ) .00 as attorney’s fees. Arroyo. and affirmed the challenged decision of the Court of Appeals. The captain acceded [sic] to their request and thus the vessel headed back to Cebu City.. the vessel proceeded to Cagayan de Oro City. In its decision of 23 November 1994.000. Chapter 3. Trans-Asia instituted the petition for review on certiorari. After due trial. Thereafter. Arroyo appealed to the Court of Appeals (CA-GR CV 39901). were allowed to disembark. Arroyo filed before the trial court a complaint for damages against Trans-Asia.000.

in addition to moral. Trans-Asia undertook some repairs on the cylinder head of one of the vessel’s engines. But even before it could finish these repairs. or wanton attitude. it was after the commencement of such voyage. likewise. if they are the proximate result of. the obligor is liable for all the damages which may be reasonably attributed to the non. Moreover. Article 1764 NCC. The failure of a common carrier to maintain in seaworthy condition its vessel involved in a contract of carriage is a clear breach of is duty prescribed in Article 1755 of the Civil Code. concerning Damages. Moral damages Moral damages include moral suffering. If any delay was incurred. 6. Damages resulting in contracts or quasi-contracts In contracts or quasi-contracts. fright. instead of two. more specifically. or similar injury. moral damages may be awarded if the common carrier acted fraudulently or in bad faith. mental anguish. be considered as a matter of right. liquidated. Article 1764 of the Civil Code expressly provides that “Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book. temperate or compensatory damages. as there was in fact no delay in the commencement of the contracted voyage. The damages comprised in Title XVIII of the Civil Code are actual or compensatory. This caused the vessel to stop and remain adrift at sea. 7. the court having to decide whether or not they should be adjudicated. and exemplary. Trans-Asia’s breach of the contract of carriage. oppressive or malevolent manner. This article. the plaintiff must first show that he is entitled to moral. Anent a breach of a contract of common carriage. even the lone functioning engine was not in perfect condition as sometime after it had run its course. Liability for damages As to its liability for damages. but it is not necessary that he prove the monetary value thereof. It cannot. wounded feelings. 2004 ( 91 ) . Unseaworthiness defined. temperate. moral. 4. 9. Article 2206 shall also apply to the death of a passenger caused by the breach of contract by common carrier. reckless. reasoning that no delay was incurred since there was no demand. the vessel was unseaworthy even before the voyage began. however. not a matter of right Exemplary damages are imposed by way of example or correction for the public good. moral shock. They may be recovered in the cases enumerated in Article 2219 of the Civil Code. In contracts and quasi-contracts. it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. bad faith. finds no application in the case because. as herein. social humiliation. Exemplary damages. it conked out. Actual and compensatory damages Actual or compensatory damages represent the adequate compensation for pecuniary loss suffered and for profits the obligee failed to obtain. Article 1169 not applicable The Court of Appeals did not grant Arroyo actual or compensatory damages.performance of the obligation if he is guilty of fraud. malice.Haystacks (Berne Guerrero) 3. thus in order to prevent the ship from capsizing. nominal. Vessel was unseaworthy even before voyage began. as required by Article 1169 of the Civil Code. it had to drop anchor.” 5. however. For a vessel to be seaworthy’. serious anxiety. Plainly. 8. liquidated or compensatory damages. when Transportation Law. exemplary damages may be awarded if the defendant acted in a wanton fraudulent. a clear breach of duty of carrier Before commencing the contracted voyage. temperate or moderate. besmirched reputation. Before the court may consider an award for exemplary damages. it allowed the vessel to leave the port of origin on only one functioning engine.

14. The passengers were not stoics.Haystacks (Berne Guerrero) the voyage was subsequently interrupted when the vessel had to stop near Kawit Island after the only functioning engine conked out. Arroyo not entitled to actual or compensatory damages The cause of the delay or interruption was Trans-Asia’s failure to observe extraordinary diligence. This. Arroyo then took Trans-Asia’s other vessel the following day. Trans-Asia’s assertion shows lack of genuine concern for safety of passengers. Trans-Asia should not expect its passengers to act in the manner it desired. the vessel had to return to its port of origin and allow them to disembark. Article 698 must then be read together with Articles 2199. which Arroyo failed to do. 2004 ( 92 ) . or frightened at the stoppage of a vessel at sea in an unfamiliar zone a nighttime is not the sole prerogative of the faint-hearted. becoming alarmed. but his living expenses during the stay shall be for his own account. he would have reached his destination at noon of 13 November 1991. Any further delay then in Arroyo’s arrival at the port of destination was caused by his decision to disembark. anxious. He. 2201. Article 2208 NCC Transportation Law. assumes that he stayed on the vessel and was with it when it thereafter resumed its voyage. Rights and duties of parties arising out of delay As to the rights and duties of the parties strictly arising out of such delay. As he and some passengers resolved not to complete the voyage. Article 698 of the Code of Commerce applies suppletorily to Article 1766 NCC. For Arroyo. he may not be required to pay any increased price of passage. as correctly pointed out by the petitioner. however. It reads “In case a voyage already begun should be interrupted. using the ticket he had purchased for the previous day’s voyage. the Civil Code is silent. 11. Even so. Trans-Asia is liable for moral and exemplary damages Trans-Asia is liable for moral and exemplary damages. the passengers shall be obliged to pay the fare in proportion to the distance covered. But actual or compensatory damages must be proved.” This article applies suppletorily pursuant to Article 1766 of the Civil Code. In allowing its unseaworthy M/V Asia Thailand to leave the port of origin and undertake the contracted voyage. More so in the light of the many tragedies at sea resulting in the loss of lives of hopeless passengers and damage to property simply because common carriers failed in their duty to exercise extraordinary diligence in the performance of their obligations. and 2208 in relation to Article 21 of the Civil Code. Article 698 of the Code of Commerce specifically provides for such a situation. It was. but with a right to indemnity if the interruption should have been caused by the captain exclusively. thus been able to report to his office in the afternoon. In so reading. Article 698 of the Code of Commerce must be read with Articles 2199. and 2208 in relation to Article 21 NCC. with full awareness that it was exposed to perils of the sea. it deliberately disregarded its solemn duty to exercise extraordinary diligence and obviously acted with bad faith and in a wanton and reckless manner. without right to recover for losses and damages if the interruption is due to fortuitous event or force majeure. 2201. but he did not. such would be the loss of income if unable to report to his office on the day he was supposed to arrive were it not for the delay. 2200. 2200. 12. However. Trans-Asia cannot expect passengers to act in manner it desired Trans-Asia’s assertions that the safety of the vessel and passengers was never at stake because the sea was “calm” in the vicinity where it stopped as faithfully recorded in the vessel’s log book demonstrates beyond cavil Trans-Asia’s lack of genuine concern for the safety of its passengers. perhaps. 13. therefore. There is no convincing evidence that he did not receive his salary for 13 November 1991 nor that his absence was not excused. 10. only providential than the sea happened to be calm. If the interruption should be caused by the disability of the vessel and a passenger should agree to await the repairs. would have lost only the salary for half of a day. it means that Trans-Asia is liable for any pecuniary loss or loss of profits which Arroyo may have suffered by reason thereof. Had he remained on the first vessel.

On 28 July 1990. and on 15 July 1998. Hence. shipped on board the M/V ‘Anangel Sky’ at Hamburg. (PFIC) paid the consignee P506. Philippine First Insurance Co. 5 June 2002) Third Division. (2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. On appeal.G. Thus. Moreover. Panganiban (J): 2 concur. 1 on leave Facts: On 13 June 1990. it is settled that the amount thereof must be proven. to the consignee as insured. other than judicial costs cannot be recovered except: (1) When exemplary damages are awarded.” 15. to merit such an award. and was subrogated to the latter’s rights and causes of action against BOCSNV and JDTSI. Attorney’s fees are recoverable only in the concept of actual damages. No pronouncement as to costs.086.50. (GR 143133. (JDTSI) refused to submit to the consignee’s claim. Award of attorney’s fees not justified Under Article 2208 of the Civil Code. attorney’ s fees and expenses of litigation. In sum. Hence. PFCI instituted a complaint for recovery of the amount paid by them. Belgian Overseas Chartering and Shipping NV (BOCSNV) and Jardine Davies Transport Services Inc. such must be specifically prayed for and may not be deemed incorporated within a general prayer for “such other relief and remedy as the court may deem just and equitable. The statement that the “plaintiff was forced to litigate in order that he can claim moral and exemplary damages for the suffering he incurred” does not satisfy the benchmark of “factual.027. Extraordinary diligence required of common carriers. from the nature of their business and for reasons of public policy. and ordered BOCSNV and JDTSI jointly and severally pay PFIC P451. 2004 ( 93 ) . not as moral damages nor judicial costs.32 as actual damages. are bound to observe extraordinary diligence and vigilance with respect to the safety of the goods and the passengers they transport. as well as the defendants’ counterclaim. until fully paid. within the subsequent days. Despite receipt of a formal demand. BOCSNV and JDTSI’s motion for reconsideration was denied. the consignee Philippine Steel Trading Corporation declared the same as total loss. reversed and set aside the decision of the trial court. Finding the 4 coils in their damaged state to be unfit for the intended purpose. discharged the subject cargo. The Supreme Court partially granted the Petition. Consequently. Germany 242 coils of various Prime Cold Rolled Steel sheets for transportation to Manila consigned to the Philippine Steel Trading Corporation. also [78] and [189] Belgian Overseas Chartering and Shipping vs. Philippine First Insurance Co. and costs of suit. Period as to when observance of extraordinary responsibility lasts Well-settled is the rule that common carriers. the petition for review. representing the value of the damaged cargo. [36]. for lack of factual and legal basis. CMC Trading A. 4 coils were found to be in bad order (BO Tally sheet 154974). common carriers are required to render service with the Transportation Law. dismissing the complaint.000 plus interest at the legal rate of 6% from the time of the filing of the Complaint on 25 July 1991 until the finality of this Decision. 1. the award of attorney’s fees must be deleted. M/V Anangel Sky arrived at the port of Manila and. legal and equitable justification” needed as basis for an award of attorney’s fees. and 12% thereafter until fully paid. The Court reduced BOCSNV and JDTSI’s liability is reduced to US$2. plus interest at the legal rate from the time of filing of the complaint on 25 July 1991. Inc. Inc. The Regional Trial Court of Makati City (Branch 134) rendered judgment. attorney’s fees amounting to 20% of the claim. and modified the assailed Decision.Haystacks (Berne Guerrero) Article 2208 of the Civil Code provides that “ In the absence of stipulation.

(1) as stated in the Bill of Lading. the steel sheets found in bad order were wet with fresh water. therefore.” The extraordinary responsibility lasts from the time the goods are unconditionally placed in the possession of and received for transportation by the carrier until they are delivered. including such methods as their nature requires. actually or constructively. Even if it wants to. This is a closed list. stated that 4 coils were in bad order and condition. they have the burden of proving that they observed such diligence. In order to avoid responsibility for any loss or damage. Rationale why extraordinary diligence required This strict requirement is justified by the fact that. Having been in the service for several years. List exclusive The presumption of fault or negligence will not arise if the loss is due to any of the following causes: (1) flood. storm. Equipped with the proper knowledge of the nature of steel sheets in coils and of the proper way of Transportation Law. the riding public enters into a contract of transportation with common carriers. Common carrier presumed to have been at fault or negligent. the transporter shall be held responsible. 2. Prima facie case of fault of negligence Mere proof of delivery of the goods in good order to a common carrier and of their arrival in bad order at their destination constitutes a prima facie case of fault or negligence against the carrier. If no adequate explanation is given as to how the deterioration. 5. (4) the character of the goods or defects in the packing or the container. and the contents thereof exposed and rusty. Herein. and to exercise due care in the handling and stowage. are presumed to have been at fault or negligent if the goods they transported deteriorated or got lost or destroyed. (3) Bad Order Tally Sheet 154979 issued by JDTSI. it cannot submit its own stipulations for their approval. whether international or civil. the metal envelopes rust-stained and heavily buckled. BOCSNV and JDTSI received the subject shipment in good order and condition in Hamburg. (3) an act or omission of the shipper or owner of the goods. loss or deterioration is other than the enumerated circumstances. the master of the vessel should have known at the outset that metal envelopes in the said state would eventually deteriorate when not properly stored while in transit. without a hand or a voice in the preparation of such contract. common carriers. 4. (2) an act of the public enemy in war. lightning. however. All these conclusively prove the fact of shipment in good order and condition and the consequent damage to the 4 coils while in the possession of petitioner.Haystacks (Berne Guerrero) greatest skill and foresight and “to use all reasonable means to ascertain the nature and characteristics of the goods tendered for shipment. the loss or the destruction of the goods happened. based on the sample submitted and tested. 3. Normally. who notably failed to explain why. there is no showing that BOCSNV and JDTSI exercised due diligence to forestall or lessen the loss. That is. Burden of proof Owing to this high degree of diligence required of them. as a general rule. (5) BOCSNV and JDTSI — in a letter addressed to the Philippine Steel Coating Corporation and dated 12 October 1990 — admitted that they were aware of the condition of the 4 coils found in bad order and condition. 2004 ( 94 ) . to the consignee or to the person who has a right to receive them. If the cause of destruction. it merely adheres to the agreement prepared by them. or (5) an order or act of competent public authority. unless they prove that they exercised extraordinary diligence in transporting the goods. or other natural disaster or calamity. When presumption of fault or negligence will not arise. earthquake. an Inspection Report prepared and signed by representatives of both parties showed the steel bands broken. Germany. a request for a bad order survey is made in case there is an apparent or a presumed loss or damage. (2) prior to the unloading of the cargo. Hence. (4) the Certificate of Analysis stated that. 6. then the carrier is liable therefor. Common carrier should observe precaution to avoid damage or destruction of the goods entrusted to it for safe carriage and delivery The words “metal envelopes rust stained and slightly dented” were noted on the Bill of Lading.

There are. But none of these measures was taken. 13. In all matters not regulated by the Civil Code. Failure to file notice of claim does not bar recovery A failure to file a notice of claim within three days will not bar recovery if it is nonetheless filed within 1 year. paragraph 6 COGSA. the COGSA. prior to unloading the cargo. with full knowledge of its contents. 2004 ( 95 ) . Inc. Section 3. Improper packing does not relieve common carrier from liability per se Even if the fact of improper packing was known to the carrier or its crew or was apparent upon ordinary observation. the insurer of the goods or any legal holder of the bill of lading. COGSA — which provides for a one-year period of limitation on claims for loss of. two conditions to be satisfied: (1) the contract is reasonable and just under the circumstances. Thus. once it accepts the goods notwithstanding such condition. the master of the vessel and his crew should have undertaken precautionary measures to avoid possible deterioration of the cargo. 8. 11. paragraph 6 of COGSA provides that the notice of claim need not be given if the state of the goods. v. First. paragraph 6 COGSA. Limited Liability clause sanctioned by law. Rationale of the rule A stipulation in the bill of lading limiting to a certain sum the common carrier’s liability for loss or destruction of a cargo — unless the shipper or owner declares a greater value — is sanctioned by law. or damage to. 7. the Court ruled that a claim is not barred by prescription as long as the one-year period has not lapsed. the carrier. Suppletory application of Code of Commerce and COGSA The Civil Code does not limit the liability of the common carrier to a fixed amount per package. Loadstar Shipping vs. Claim not barred by prescription as long as 1 year period not lapsed. Having failed to discharge the burden of proving that they have exercised the extraordinary diligence required by law. the right and the obligations of common carriers shall be governed by the Code of Commerce and special laws. it is a contract by which three parties — namely. gives rise to the presumption that it constituted a perfected and binding contract. BOCSNV and JDTSI have not successfully proven the application of any of the exceptions in the present case. In a nutshell. it is not relieved of liability for loss or injury resulting therefrom. CA In Loadstar Shipping Co. however. Civil Code does not limit liability of the common carrier to a fixed amount per package. and (2) it has been fairly and freely agreed upon by the parties. cargoes sustained during transit — may be applied suppletorily. 9. Second. an Inspection Report as to the condition of the goods was prepared and signed by representatives of both parties. This one-year prescriptive period also applies to the shipper. BOCSNV and JDTSI cannot escape liability for the damage to the 4 coils. 12. Section 3. Thus. The provisions on limited liability are as Transportation Law. Notice of claim need not be given at time of receipt if subject of a joint inspection or survey Section 3. it is a receipt for the goods shipped. supplements the latter by establishing a statutory provision limiting the carrier’s liability in the absence of a shipper’s declaration of a higher value in the bill of lading. has been the subject of a joint inspection or survey. Court of Appeals. the acceptance of the bill of lading by the shipper and the consignee. Herein. The rationale for this rule is to bind the shippers by their agreement to the value (maximum valuation) of their goods. Functions of bill of lading A bill of lading serves two functions. Conditions required. the shipper. and the consignee — undertake specific responsibilities and assume stipulated obligations. 10. the consignee. at the time of their receipt.Haystacks (Berne Guerrero) transporting them. Inasmuch as neither the Civil Code nor the Code of Commerce states a specific prescriptive period on the matter. which is suppletory to the provisions of the Civil Code..

17. In Eastern Shipping Lines. considering the ruling in Eastern Shipping Lines and the fact that the Bill of Lading clearly disclosed the contents of the containers. 2004 ( 96 ) . 15. They also filed a third-party complaint against Philippine Phoenix Surety Transportation Law. Surigao del Sur. meaning of package BOCSNV and JDTSI’s liability should be computed based on US$500 per package and not on the per metric ton price declared in the Letter of Credit. v. the left front tire of the bus exploded. before the RTC of Davao City. spouses Tito and Leny Tumboy and their minor children named Ardee and Jasmin. as stipulated in the bill of lading. The incident resulted in the death of 28-year-old Tito Tumboy. and the contract of issuance of a letter of credit between the amount of goods described in the commercial invoice in the contract of sale and the amount allowed in the letter of credit will not affect the validity and enforceability of the contract of carriage as embodied in the bill of lading. [37] Yobido vs. Along Picop Road in Km. Bill of lading separate from other letter of credit arrangements In Keng Hua Paper Products v. “when what would ordinarily be considered packages are shipped in a container supplied by the carrier and the number of such units is disclosed in the shipping documents. 17 October 1997) Third Division. IAC. damages and attorney’s fees was filed by Leny and her children against Alberta Yobido. must be treated independently of the contract of sale between the seller and the buyer. the Court explained the meaning of package. Court of Appeals. CA. Therein. Maria. On 21 November 1988. a Yobido Liner bus bound for Davao City. the number of units. CA (GR 113003. Romero (J): 4 concur Facts: On 26 April 1988. as well as the nature of the steel sheets. Thus. Sta. 14. the Court held that a bill of lading was separate from the Other Letter of Credit arrangements. the 4 damaged coils should be considered as the shipping unit subject to the US$500 limitation. the contract of carriage. and physical injuries to other passengers. boarded at Mangagoy. and Cresencio Yobido. the discrepancy between the amount of goods indicated in the invoice and the amount in the bill of lading cannot negate the obligation arising from the contract of transportation.e. the owner of the bus. Inc. As the bank cannot be expected to look beyond the documents presented to it by the seller pursuant to the letter of credit.Haystacks (Berne Guerrero) much a part of the bill of lading as though physically in it and as though placed there by agreement of the parties. Eastern Shipping Line vs. Keng Hua Paper Products vs. its driver.” Herein. The insertion of the words “L/C 90/02447 cannot be the basis for BOCSNV and JDTSI ‘s liability A notation in the Bill of Lading which indicated the amount of the Letter of Credit obtained by the shipper for the importation of steel sheets did not effect a declaration of the value of the goods as required by the bill. Agusan del Sur. they raised the affirmative defense of caso fortuito. When the Yobidos filed their answer to the complaint. 16. i. each of those units and not the container constitutes the ‘package’ referred to in the liability limitation provision of Carriage of Goods by Sea Act. neither can the carrier be expected to go beyond the representations of the shipper in the bill of lading and to verify their accuracy vis-a-vis the commercial invoice and the letter of credit. BOCSNV and JDTSI’s liability should be computed based on US$500 per package. The bus fell into a ravine around 3 feet from the road and struck a tree. Intermediate Appellate Court. a complaint for breach of contract of carriage. That notation was made only for the convenience of the shipper and the bank processing the Letter of Credit.

upon such re-examination. 1. when a passenger is injured or dies. Carrier not an insurer of safety of its passengers. the law presumes that the common carrier is negligent. the passenger has neither choice nor control over the carrier in the selection and use of its equipment and the good repute of the manufacturer will not necessarily. with costs against the Yobidos. in addition to the monetary awards therein.000. The cause of the blow-out. the Tumboys appealed to the Court of Appeals.000. there may have been adverse conditions on the road that were unforeseeable and/or inevitable. the parties agreed to a stipulation of facts.00 for the death of Tito Tumboy. 3. As enunciated in Necesito vs. Article 1755 NCC. ordering the Yobidos to pay the Tumboys the sum of P50. On 29 August 1991. a carrier is not an insurer of the safety of its passengers and is not bound absolutely and at all events to carry them safely and without injury. The Yobidos filed a motion for reconsideration of said decision which was denied on 4 November 1993 by the Court of Appeals. The Supreme Court affirmed the Decision of the Court of Appeals subject to the modification that the Yobidos shall. the Court of Appeals rendered the Decision reversing that of the lower court. when a passenger boards a common carrier. improper mounting. Paras. Diligence required Article 1755 provides that “(a) common carrier is bound to carry the passengers safely as far as human care and foresight can provide. it is the burden of the defendants to prove that the cause of the blow-out was a fortuitous event. while traveling.000. and P7. but he was not presented as witness. excessive tire pressure. However. Exception The Court did re-examine the facts and evidence because of the inapplicability of the established principle that the factual findings of the Court of Appeals are final and may not be reviewed on appeal by the Supreme Court.000. however. On the other hand. However. be liable for the award of exemplary damages in the amount of P20.00 for funeral and burial expenses.” Transportation Law. trial on the merits ensued. Hence. Owing to the statutory presumption of negligence against the carrier and its obligation to exercise the utmost diligence of very cautious persons to carry the passenger safely as far as human care and foresight can provide. is not an unavoidable event. It is not incumbent upon the plaintiff to prove that the cause of the blow-out is not caso fortuito. This third-party defendant filed an answer with compulsory counterclaim. On 23 August 1993. when passenger injured or dies. After all. the petition for review on certiorari. P30. the lower court dismissed the third party complaint. Ruling of the Court of Appeals. the Court found no reason to overturn the findings and conclusions of the Court of Appeals. No amicable settlement having been arrived at by the parties. The fact that the cause of the blow-out was not known does not relieve the carrier of liability. using the utmost diligence of very cautious persons. which could make the blow-out a caso fortuito. with a due regard for all the circumstances. Factual findings may not be reviewed on appeal by the Supreme Court. there is evidence that the bus was moving fast. the lower court rendered a decision dismissing the action for lack of merit. Herein. The driver could have explained that the blow out that precipitated the accident that caused the death of the passenger could not have been prevented even if he had exercised due care to avoid the same. Dissatisfied. 2004 ( 97 ) . Explosion of the tire not in itself a fortuitous event The explosion of the tire is not in itself a fortuitous event. At the pre-trial conference.00 in moral damages. Moreover. and the road was wet and rough. This general principle is subject to exceptions such as that the lower court and the Court of Appeals arrived at diverse factual findings. common carrier presumed negligent As a rule. 2. 4. relieve the carrier from liability. if due to a factory defect. he takes the risks incidental to the mode of travel he has taken.00. Upon a finding that the third party defendant was not liable under the insurance contract.Haystacks (Berne Guerrero) and Insurance. Inc. Proving that the tire that exploded is a new Goodyear tire is not sufficient to discharge defendants’ burden.

9. Characteristics of a fortuitous event A fortuitous event is possessed of the following characteristics: (a) the cause of the unforeseen and unexpected occurrence. However. Culpa contractual. they failed to rebut the testimony of Leny Tumboy that the bus was running so fast that she cautioned the driver to slow down. once a passenger dies or is injured. winding and wet due to the rain. that the bus was running at “60-50” kilometers per hour only or within the prescribed lawful speed limit.Haystacks (Berne Guerrero) 5. must be independent of human will. the explosion of the new tire may not be considered a fortuitous event. This disputable presumption may only be overcome by evidence that the carrier had observed extraordinary diligence as prescribed by Articles 1733. the court need not make an express finding of fault or negligence on the part of the carrier to hold it responsible for damages sought by the passenger. Disputable presumption of negligence. the carrier is presumed to have been at fault or to have acted negligently. Salce. Article 1174 NCC As Article 1174 provides. Routinary check-ups of vehicle’s parts part of exercise of extraordinary diligence of the carrier Transportation Law. 11. Presumption of negligence Article 1756 of the Civil Code provides that “In case of death or injuries to passengers. therefore. how to overcome In culpa contractual. 12. or the failure of the debtor to comply with his obligations. 2004 ( 98 ) . resulting in the conclusion that it could not explode within 5 days’ use. it must be impossible to avoid. though foreseen. The common carrier must still prove that it was not negligent in causing the death or injury resulting from an accident. These contradictory facts must. 7. Coupled with this is the established condition of the road — rough. be resolved in favor of liability in view of the presumption of negligence of the carrier in the law. 8. 1755 and 1756 of the Civil Code or that the death or injury of the passenger was due to a fortuitous event. Article 1756 of the Civil Code. 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 that would exempt the carrier from liability for damages. or if it can be foreseen. common carriers are presumed to have been at fault or to have acted negligently. Neither may the fact that the tire bought and used in the vehicle is of a brand name noted for quality. There must be an entire exclusion of human agency from the cause of injury or loss Herein. There are human factors involved in the situation. Consequently. (c) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner. or which. It was incumbent upon the defense to establish that it took precautionary measures considering partially dangerous condition of the road. no person shall be responsible for a fortuitous event which could not be foreseen. was inevitable. (b) it must be impossible to foresee the event which constitutes the caso fortuito. unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755. and (d) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor. Contradictory facts as to bus’ speed resolved in favor of liability due to presumption of negligence of carrier The Yobidos proved through the bus conductor.” 6. 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. should prove not negligent A common carrier may not be absolved from liability in case of force majeure or fortuitous event alone. Common carrier not absolved by force majeure alone. Be that as it may. 10.

Kaisa. Inc. vs.000 as damages for the death of a passenger. Amount of damages for death of passenger Article 1764 in relation to Article 2206 of the Civil Code prescribes the amount of at least P3. Exemplary damages Exemplary damages. such as conducting daily routinary check-ups of the vehicle’s parts. 19 August 1988) Maritime Co. Thus.00. oppressive. NDC as the first preferred mortgagee of three ocean going vessels including one with the name ‘Doña Nati’ appointed MCP as its agent to manage and operate said vessel for and in its behalf and account. vs. on 28 February 1964 the E. on 15 April 1964 at Ise Bay. reckless. CA (GR L-49469) Second Division. However. it is deemed to have acted recklessly. awarded by way of example or correction for the public good when moral damages are awarded. because the Yobidos failed to exercise the extraordinary diligence required of a common carrier.. Failure of carrier to overthrow presumption of negligence makes it liable for damages Having failed to discharge its duty to overthrow the presumption of negligence with clear and convincing evidence. see [14] [40] also [48] and [195] National Development Co. Under prevailing jurisprudence. Philipp Corporation of New York loaded on board the vessel ‘Doña Nati’ at San Francisco. 13. 16. Herein. 15. CA (GR L-49407.. a total of 1. 14. Japan with a Japanese vessel ‘SS Yasushima Maru’ as a result of which 550 bales of aforesaid cargo of American raw Transportation Law. California. which resulted in the death of Tito Tumboy. Manila and the People’s Bank and Trust Company acting for and in behalf of the Pan Asiatic Commercial Company. of the Philippines vs. the Tumboys shall be entitled to exemplary damages. may likewise be recovered in contractual obligations if the defendant acted in wanton.200 bales of American raw cotton consigned to the order of Manila Banking Corporation. En route to Manila the vessel Doña Nati figured in a collision at 6:04 a. the same damages may be recovered when breach of contract of carriage results in the death of a passenger as in the present case. who represents Riverside Mills Corporation. the award of damages under Article 2206 has been increased to P50. The Yobidos should have shown that it undertook extraordinary diligence in the care of its carrier. CA . Ltd. Moral damages Moral damages are generally not recoverable in culpa contractual except when bad faith had been proven.000. (MCP) on 13 September 1962. Paras (J): 3 concur Facts: In accordance with a memorandum agreement entered into between National Development Corporation (NDC) and Maritime Corporation of the Philippines Inc. fraudulent. consigned to the order of Manila Banking Corporation consisting of 200 cartons of sodium lauryl sulfate and 10 cases of aluminum foil. to require of carriers to test the strength of each and every part of its vehicles before each trip.m.Haystacks (Berne Guerrero) Proof that the tire was new and of good quality is not sufficient proof that it was not negligent. were the cargo of Kyokuto Boekui. due regard for the carrier’s obligations toward the traveling public demands adequate periodical tests to determine the condition and strength of those vehicle portions the failure of which may endanger the safety of the passengers. De La Rama Steamship [39] De Guzman vs. Japan. As such. or malevolent manner. Also loaded on the same vessel at Tokyo. 2004 ( 99 ) . [38] Tan Liam Grocery. the Yobidos held liable for damages. Although it may be impracticable.

in all cases other than those mentioned is Article 1734 thereof. On 22 April 1965. of which 535 bales as damaged were landed and sold on the authority of the General Average Surveyor for Y6. for the said lost or damaged cargoes. and it is immaterial that the collision actually occurred in foreign waters. MCP interposed its appeal on 20 December 1969. Hence. 2.00 against NDC and MCP.86 plus the legal rate of interest to be computed from the filing of the complaint on 22 April 1965.86 plus attorney’s fees of P10. the appeals by certiorari. such as Ise Bay..000. The damaged and lost cargoes was worth P344. the Carriage of Goods by Sea Act. Japan. Boekui.938. while NDC filed its appeal on 17 February 1970 after its motion to set aside the decision was denied by the trial court in its order dated 13 February 1970. unless it proves that it has observed the extraordinary diligence required by law. until fully paid and attorney’s fees of P10. Under the above ruling. v. Accordingly.00.86 which amount.915. Likewise. Extraordinary diligence required of common carriers. destruction or deterioration” (Article 1753. 1. Kaisa Ltd. the common carrier shall be presumed to have been at fault or to have acted negligently. On 12 November 1969.000. 2004 ( 100 ) .915. California and Tokyo. The Supreme Court denied the subject petitions for lack of merit. DISC filed before the then Court of First Instance of Manila an action for the recovery of the sum of P364. the Supreme Court ordered the consolidation of the above cases. it is evident that the laws of the Philippines will apply. Manila. the Court of Appeals promulgated its decision affirming in toto the decision of the trial court. the rule was specifically laid down that for cargoes transported from Japan to the Philippines. common carriers from the nature of their business and for reasons of public policy are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them according to all circumstances of each case. Civil Code). in said decision.045. Japan to the Philippines and that they were lost or damaged due to a collision which was found to have been caused by the negligence or fault of both captains of the colliding vessels.977. Also considered totally lost were the aforesaid shipment of Kyokuto. Thus.Haystacks (Berne Guerrero) cotton were lost and/or destroyed. On 25 July 1979. paid to the Riverside Mills Corporation as holder of the negotiable bills of lading duly endorsed. acting for Guilcon. the trial court granted MCP’s cross-claim against NDC. the liability of the carrier is governed primarily by the Civil Code and in all matters not regulated by said Code. DISC had paid as insurer the total amount of P364. Law of country of destination governs liability of common carrier As held in Eastern Shipping Lines Inc. Actual collision occurring in foreign waters immaterial Herein. it has been established that the goods in question are transported from San Francisco. and affirmed the assailed decision of the Appellate Court. IAC (150 SCRA 469-470 [1987]) where it was held under similar circumstances that “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. under Article 1735 of the same Code.915. the rights and obligations of common carrier shall be governed by the Code of Commerce and by special laws (Article 1766. Thus. consigned to the order of Manila Banking Corporation.500 and 15 bales were not landed and deemed lost. Negligence presumed Under Article 1733 of the Civil Code. Transportation Law. the trial court rendered a decision ordering MCP and NDC to pay jointly and solidarily to DISC the sum of P364. is merely suppletory to the provisions of the Civil Code. Hence. a special law.00 which DISC as insurer paid to Guilcon as holder of the duly endorsed bill of lading. The total loss was P19. Civil Code). On 17 November 1978. after DISC and MCP presented their respective evidence. Manila. the Development Insurance and Surety Corporation (DISC) as insurer. 3.86 to the consignees or their successors-in-interest.

Aside from the fact that the Carriage of Goods by Sea Act (Commonwealth Act 65) does not specifically provide for the subject of collision. it is obvious that said law not only recognizes the existence of the Code of Commerce. Book Three of the Code of Commerce. particularly Articles 826 to 839. 2004 ( 101 ) . so that no reversible error can be found in the lower court’s application to the present case of Articles 826 to 839. it is evident that DISC has a cause of action to recover (what it has paid) from MCP.” By such incorporation. shows that the actual consignees of the said goods are the aforementioned companies. 96 Phil.915. as it is undisputed that the insurer. shall indemnify the losses and damages incurred after an expert appraisal. no less than MCP itself issued a certification attesting to this fact. however. MCP cannot escape liability. it is explicitly provided that “nothing in this Act shall be construed as repealing any existing provision of the Code of Commerce which is now in force. Code of Commerce applies both to domestic and foreign trade. 12 Phil. Liability of owner either when imputable to the personnel of the vessel or imputable to both vessels Article 826 of the Code of Commerce provides that where collision is imputable to the personnel of a vessel. said Act in no uncertain terms. both the owner and the agent are civilly responsible for the acts of the captain (Yueng Sheng Transportation Law. Consequently. including the power to contract in the name of the NDC. Urrutia & Co. DISC a subrogee. that in case of collision. is not exempt from liability for damages arising from collision due to the fault or negligence of the captain. which provides that if the collision is imputable to both vessels. 10. But more in point to the instant case is Article 827 of the same Code.” Under Section 1 thereof. the shipowner or carrier. Articles 826 and 827 of the Code of Commerce. under the circumstances. a term broad enough to include the concept of Ship-agent in Maritime Law.. 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 (Yeung Sheng Exchange and Trading Co. the owner of the vessel at fault. Owner and agent of offending vessel liable when both are impleaded It is well settled that both the owner and agent of the offending vessel are liable for the damage done where both are impleaded (Philippine Shipping Co. Accordingly. Manila are the holders of the duly endorsed bills of lading covering the shipments in question and an examination of the invoices in particular. Moreover. Application of Article 826 to 839 of the Code of Commerce proper The collision. Riverside Mills Corporation and Guilcon. Agency broad enough to include shipagent in maritime law The Memorandum Agreement of 13 September 1962 shows that NDC appointed MCP as Agent. MCP an agent.86 to said consignees for the loss or damage of the insured cargo. falls among matters not specifically regulated by the Civil Code. 7. has a right of action against MCP Herein. In fact. but more importantly does not repeal nor limit its application. 8. 281 [1906]). Collision does not fall under matters regulated by Civil Code. 9. Garcia Vergara. v. Primary liability of shipowner on occasion of collision due to fault of captain Under the provisions of the Code of Commerce. 751 [1909]). each one shall suffer its own damages and both shall be solidarily responsible for the losses and damages suffered by their cargoes. MCP was even conferred all the powers of the owner of the vessel. restricts its application “to all contracts for the carriage of goods by sea to and from Philippine ports in foreign trade.Haystacks (Berne Guerrero) 4. DISC paid the total amount of P364. or as limiting its application. COGSA does not repeal nor limit Code of Commerce’s application The Code of Commerce applies not only to domestic trade but also foreign trade. v. which deal exclusively with collision of vessels. 6. 5.

they could have arrived in Manila on the said dates. the cargo which was supposed to arrive in Manila on 18 April 1964 arrived only on June 12.e. Accordingly. 45 Phil. Later on Acting Mayor Rub issued a receipt stating that the Municipality of Mariveles had taken custody of the scrap iron. 256. for losses and damages occasioned to such cargo.” Negligence of the captains of the colliding vessel being the cause of the collision. Sarmiento (J): 3 concur Facts: On 28 November 1956.. 90 [1927]) “cannot limit its liability for injury to a less of goods where such injury or loss was caused by its own negligence. 276 [1908]). which simply means that the date of arrival of the ship Doña Nati on 18 April 1964 was merely tentative to give allowances for such contingencies that said vessel might not arrive on schedule at Manila and therefore. Code of Commerce). even though he may not be the owner of the vessel. the trial court and the Court of Appeals acted correctly in not applying the law on averages (Articles 806 to 818.” Pursuant to this agreement. to the port of Manila on board the lighter LCT “Batman. Inc. Bataan. to his rights against the owner of the ship. Standard Oil Co. After sometime. because of the collision. The latter resisted the shakedown and after a heated argument between them. Section 3 (6) The bills of lading issued allow trans-shipment of the cargo. Besides. Consequently. in the language of the court in Juan Ysmael & Co. 12. arrived and demanded P5. and the freight (Behn. liability of MCP not limited to P200 per package or per bale of raw cotton as stated in paragraph 17 of bill of lading The declared value of the goods was stated in the bills of lading and corroborated no less by invoices offered as evidence during the trial. Bataan. it is clearly deducible from the general doctrine of jurisprudence under the Civil Code but more specially as regards contractual obligations in Article 586 of the Code of Commerce. Ganzon sent his lighter “Batman” to Mariveles where it docked in 3 feet of water. 18. the complaint was filed on 22 April 1965.Haystacks (Berne Guerrero) Exchange and Trading Co. Ganzon to haul 305 tons of scrap iron from Mariveles. 42 Phil. of New York v. accompanied by 3 policemen. Lim. v. 20 and July 10. 2004 ( 102 ) . common carriers. Bataan. Acting Mayor Basilio Rub. v. captain of the lighter. Moreover.. In fact. and the cargoes not being jettisoned to save some of the cargoes and the vessel. had the cargoes in question been saved.000. also [58] Ganzon vs. v. ordered captain Filomeno Niza and his crew to dump the scrap iron where the lighter was docked. Barretto et al. 13. But on 4 December 1956. resulting in consequent delay of their arrival. 30 Mary 1988) Second Division. for loading which was actually begun on the same date by the crew of the lighter under the captain’s supervision. is liable to the shippers and owners of the cargo transported by it. 262 [1921]). Gelacio Tumambing contracted the services of Mauro B. The gunshot was not fatal but Tumambing had to be taken to a hospital in Balanga. would necessitate the trans-shipment of cargo. Hence. its equipment. McMicking et al. 1964. since the obligation which is the subject of the action had its origin in a tortious act and did not arise from contract (Verzosa and Ruiz. the loading of the scrap iron was resumed. (51 Phil. the agent. Lopez Castelo.00 from Gelacio Tumambing. the Court held that both the owner and agent (Naviero) should be declared jointly and severally liable. i. for treatment. The rest was brought to the compound of NASSCO. When about half of the scrap iron was already loaded. On 1 December 1956. 11 Phil. [41]. without prejudice. Transportation Law. sub-paragraph (6) of COGSA. long before the lapse of 1 year from the date the lost or damaged cargo “should have been delivered” in the light of Section 3. to the extent of the value of the vessel. Meyer Y Co. Mayor Jose Advincula of Mariveles. that while it is true that the liability of the naviero in the sense of charterer or agent. Gelacio Tumambing delivered the scrap iron to Filomeno Niza. Value of goods declared in bills of lading. 11. is not expressly provided in Article 826 of the Code of Commerce. supra citing Article 586 of the Code of Commerce. 13 and 15. Mayor Jose Advincula drew his gun and fired at Gelacio Tumambing. however.. Mauro B. Action not prescribed. 423 [1923]). Rementeria y Cia v. CA (GR L-48757. Urrutia & Co.

Indeed. there was hardly any attempt on the part of Ganzon to prove that he exercised such extraordinary diligence. On appeal. 3. storm.00 as attorney’s fees. The fact that part of the shipment had not been loaded on board the lighter did not impair the said contract of transportation as the goods remained in the custody and control of the carrier. Burden of proof to prove otherwise Herein. Order by competent authority must be valid. 2.00. the petition for review on certiorari. actual or constructive. By reason of this presumption. earthquake. Ganzon is presumed to have been at fault or to have acted negligently. The fact remains that the order given by the acting mayor to dump the scrap iron into the sea was part of the pressure applied by Mayor Jose Advincula to shakedown Tumambing for P5. the appellate court reversed and set aside the decision appealed from. by the carrier to the consignee. and entered a new one ordering Ganzon to pay Tumambing the sum of P5. destruction.00 as actual damages. and affirmed the assailed decision of the Court of Appeals. albeit still unloaded. Duties of the carrier By the act of delivery. The order of the acting mayor did not constitute valid authority for Ganzon and his representatives to carry out. such extraordinary responsibility would cease only upon the delivery. 5. Pursuant to Article 1736. Contract of carriage perfected. the decision being immediately executory. to allow carrier’s absolution from liability as per caso fortuito Before Ganzon could be absolved from responsibility on the ground that he was ordered by competent public authority to unload the scrap iron. (2) Act of the public enemy in war. Ganzon could have been exempted from any liability had he been able to prove that he observed extraordinary diligence in the vigilance over the goods in his custody. By delivery. or determination of the goods commenced.Haystacks (Berne Guerrero) Tumambing instituted in the CFI of Manila an action against Ganzon for damages based on culpa contractual. 1. and (5) Order or act of competent public authority. Consequently.000. and the amount of P2. 2004 ( 103 ) . the carrier’s extraordinary responsibility for the loss. Negligence presumed. whether international or civil. As it was. Loss not due to any cause enumerated in Article 1734 of the Civil Code Herein. with costs against Ganzon. it must be shown that Acting Mayor Basilio Rub had the power to issue the disputed order. however. The trial court rendered a decision absolving Ganzon from liability. Neither has it been shown that the cargo of scrap iron belonged to the Municipality of Mariveles. 4. Ganzon has failed to show that the loss of the scraps was due to any of the following causes enumerated in Article 1734 of the Civil Code. or that it was lawful.000. Still. or to the person who has a right to receive them. lightning. or that it was issued under legal process of authority. or that the loss was due to an unforeseen event or to force majeure. the scraps were unconditionally placed in the possession and control of the common carrier.000. no authority or power of the acting mayor to issue such an order was given in evidence. The Supreme Court denied the petition.895.00 as exemplary damages. according to all the circumstances of the case. (4) The character of the goods or defects in the packing or in the containers. the scraps are placed in the possession of the common carrier. namely: (1) Flood. The intervention of the municipal officials was not of a character that would render impossible the fulfillment by the carrier of its obligation Transportation Law. the sum of P5. Hence. What we have in the record is the stipulation of the parties that the cargo of scrap iron was accumulated by the appellant through separate purchases here and there from private individuals. The appellee failed to establish this. (3) Act or omission of the shipper or owner of the goods. the court is not even required to make an express finding of fault or negligence before it could hold Ganzon answerable for the breach of the contract of carriage. the contract of carriage was deemed perfected. and upon their receipt by the carrier for transportation. with costs against Ganzon. or other natural disaster or calamity.

Article 1733 NCC modified Article 352 as to degree of diligence required of carrier There is no incompatibility between the Civil Code provisions on common carriers and Articles 361 and 362 of the Code of Commerce which were the basis for the Court’s ruling in Government of the Philippine Islands vs. Moreover. and that on 9 September 1927. Robert Dollar made a general and specific denial. Robert Dollar Co. in bad order and damaged condition. [42] Mirasol vs. agent. when the other case was found. For answer. Herein. its master. the scraps could then be delivered in accordance with the contract of carriage. if any. Ynchausti & Co. Findings on actual and exemplary damages not disturbed Finding the award of actual and exemplary damages to be proper. and in these instances. Be that as it may. so that after the dispute with the local officials concerned was settled. No incompatibility between Civil Code provisions on common carriers and Articles 361 and 362 of the Code of Commerce. USA. means that the shipper will suffer the losses and deterioration arising from the causes enumerated in Article 1734. equipped and supplied. for which he filed his claims. if any. 6. with legal interest from the filing of the complaint and costs. all freight charges paid. 7. 27 March 1929) Second Division. Mirasol prayed for corresponding judgment. The mere difficulty in the fulfillment of the obligation is not considered force majeure. there is absence of sufficient proof that the issuance of the same order was attended with such force or intimidation as to completely overpower the will of the petitioner’s employees. that the loss in one case is P1. However. that the two cases arrived in Manila on 1 September 1927. insofar as Article 362 appears to require of the carrier only ordinary diligence. that the damage to Robert Dollar’s merchandise. Ganzon was not duty bound to obey the illegal order to dump into the sea the scrap iron. tackle or appurtenances. and could not determine their value.Haystacks (Berne Guerrero) The intervention of the municipal officials was not of a character that would render impossible the fulfillment by the carrier of its obligation. Robert Dollar alleged that in the bill of lading. on board Robert Dollar Co.630. resulting in the total loss of one case and a partial loss of the other. the same will not be disturbed by the Supreme Court. The scraps could have been properly unloaded at the shore or at the NASSCO compound. For Article 1735 of the Civil Code.’s steamship President Garfield. (GR 29721. 2004 ( 104 ) . conversely stated. crew. Besides.” As a second separate and special defense. the same is deemed to have been modified by Article 1733 of the Civil Code. that Mirasol never entered into any contract with the Robert Dollar limiting the latter’s liability as a common carrier. that he never intended to ratify or confirm any agreement to limit the liability of the defendant. he had not then ascertained the contents of the damaged case. giving as its reason that the damage in question “was caused by sea water”. nor by reason of the vessel being unseaworthy or improperly manned. Johns (J): 5 concur Facts: Amando Mirasol alleged that he is the owner and consignee of two cases of books shipped in good order and condition at New York. officers. resulted from faults or errors in navigation or in the management of said vessel. the burden of proving that damages were caused by the fault or negligence of the carrier rests upon him. and the other P700. and fit for the voyage. it was agreed in writing that Robert Dollar Transportation Law. and Robert Dollar has refused and neglected to pay. for transport and delivery to Mirasol in the City of Manila. and which Ganzon invokes in the petition. was not caused through the negligence of the vessel. these were not sufficiently controverted by Ganzon. Mirasol filed a claim for the real damage of the books therein named in the sum of $375. the carrier must first establish that the loss or deterioration was occasioned by one of the excepted causes or was due to an unforeseen event or to force majeure. and when he wrote the letter of 3 September 1927. “but that such damage. and as a separate and special defense alleged that the steamship President Garfield at all the times alleged was in all respects seaworthy and properly manned.

Case of The Kesington applies Restrictions of the liability of a steamship company for its own negligence or failure of duty toward a passenger. Mirasol could not prove his loss in any other way or manner than he did prove it. 4. 90. In that situation he was not legally bound by the clause which purports to limit Robert Dollar’s liability. is unreasonable and in conflict with public policy. though the ticket was issued and accepted in a foreign country and contained a condition making it subject to the law thereof. which compels him to value his baggage. that on 3 September 1927 Mirasol wrote Robert Dollar a letter which reads “Therefore. see numerous authorities there cited). at a certain sum.” As a fourth special defense.” and that the bill of lading exempts defendant from liability for that cause. An arbitrary limitation of 250 francs for the baggage of any steamship passenger. Mirasol could buy a new set of Encyclopedia Britannica which would contain all of the material and subject matter of the one which he lost. Transportation Law. Gabino Barretto & Co.” As a third special defense.080.. unaccompanied by any right to increase the amount by adequate and reasonable proportional payment. Mirasol is entitled to legal interest from the date of his judgment rendered in the lower court and not the date when it becomes final. for his Encyclopedia Britannica The evidence shows that with the P400 (not P700 as claimed) which the court allowed. 2. Both parties appealed. that is $250 as per condition 13. which sustain such stipulations. Mirasol entitled to legal interest from date of judgment rendered by lower court Under all of the authorities. Mirasol not legally bound by clause limiting the carrier’s liability There is no claim or pretense that Mirasol signed the bill of lading or that he knew of its contents at the time it was issued. to subject it to the provisions of the Harter Act.. the lower court rendered judgment for Mirasol for P2.” and that Mirasol’s damage. is void as against public policy. and in all other respects affirmed. Mirasol entitled to P400. being against the public policy enforced by the courts of the United States. I wish to file claim of damage to the meager maximum value that your bills of lading will indemnify me. in order to have a higher value put upon it. with costs. or. 1. That damage by “sea water” is a shipper’s risk. (51 Phil. was caused by “Acts of God” or “perils of the sea. As a result of the trial upon such issues. A stipulation in a steamship passenger’s ticket. and the trial court who heard him testify must have been convinced of the truth of his testimony. 2004 ( 105 ) . 5. Robert Dollar alleged that the damage. That question was squarely met and decided by the Supreme Court in banc in Juan Ysmael & Co. if any. or damage to. 3.” and that there was no other agreement. to wit: Acts of God. Manner of proving proper The lower court found that Mirasol’s damage was P2. unless a higher value is stated herein and ad valorem freight paid or assessed thereon. and that finding is sustained by the evidence. and that Robert Dollar is not liable. by which the carrier would be exempted from all liability therefor from errors in navigation or management of the vessel or other negligence. was caused by “sea water. The Supreme Court modified the judgment of the lower court. far less than it is worth. so as to give Mirasol legal interest on the amount of his judgment from the date of its rendition in the lower court. with legal interest thereon from the date of the final judgment. Restriction of liability of steamship company against own negligence against public policy. and in the very nature of things. not P700. will not be upheld. Robert Dollar quoted clause 13 of the bill of lading. if any. perils of the sea or other waters. any of said merchandise resulting from any of the following causes.Haystacks (Berne Guerrero) should not be “held liable for any loss of.080. in which it is stated that in no case shall it be held liable “for or in respect to said merchandise or property beyond the sum of 250 dollars for any piece package or any article not enclosed in a package. with costs. vs. Worth of damage sustained by evidence. There was a total loss of one case and a partial loss of the other.

that would be a matter exclusively within the knowledge of the officers of Robert Dollar’s ship. 219) and the present case are very different and. all damages and impairment suffered by the goods during the transportation. hence. and in the very nature of things would not be within Mirasol’s knowledge. Therefore. Government vs. if the contrary was not expressly stipulated. sometime in or prior to June 1977. and the shipowner delivers them to the shipper in bad order and condition.” standing alone and within itself. a vessel operated by Eastern Shipping Lines loaded at Kobe. are under its control and supervision. foundering. From the time of their delivery to Robert Dollar in New York until they were delivered to Mirasol in Manila. shoals. otherwise.” “Something fortuitous and out of the ordinary course is involved in both words ‘peril’ or ‘accident. That is not the law. Ynchausti & Company (40 Phil. and upon all of such questions. Nisshin Fire and Marine Insurance Co. icebergs. no matter what may have caused the damage. IAC (GR L-69044.’” 9. Perils of sea The fact that the cases were damaged by “sea water.” and “where the peril is the proximate cause of the loss. Melencio-Herrera (J): 4 concur Facts: In GR 69044. icebergs and other obstacles are within the expression. the boxes were under the control and supervision of Robert Dollar and beyond the control of Mirasol. and it devolved upon Robert Dollar to both allege and prove that the damage was caused by reason of some fact which exempted it from liability. The proof of these accidents is incumbent on the carrier. Burden of proof against damages shifts to carrier Shippers who are forced to ship goods on an ocean liner or any other ship have some legal rights. such as shipwreck. stranding. Robert Dollar having received the two boxes in good condition. the M/S ASIATICA. they must have been damaged in transit. when or where. and in the very nature of things could not be in the knowledge of Mirasol. rocks. it then devolves upon the shipowner to both allege and prove that the goods were damaged by reason of some fact which legally exempts him from liability. Ynchausti not in point The case of Government of the Philippine Islands vs. if they were damaged by reason of a tempest. the burden of proof then shifted. Article 361 of the Code of Commerce Merchandise shall be transported at the risk and venture of the shipper. which in legal effect would be to say that he could not recover any damage for any reason. is not evidence that they were damaged by force majeure or for a cause beyond the carrier’s control. To require Mirasol to prove as to when and how the damage was caused would force him to call and rely upon the employees of Robert Dollar’s ship.” and among other things. (GR L-71478) First Division. and it is admitted that they were in bad order on their arrival at Manila. the shipper would be left without any redress. In the very nature of things. and when goods are delivered on board ship in good order and condition. by reason of accident. In the present case. Damage by “sea water” not evidence that goods damaged by force majeure.Haystacks (Berne Guerrero) 6. there is a failure of proof. 5.” 8. it is not in point.. was a matter peculiarly and exclusively within the knowledge of Robert Dollar. it is said: “Tempest rocks. 2004 ( 106 ) . the shipowner is excused. Robert Dollar having admitted that the boxes were damaged while in transit and in its possession. Japan for transportation to Manila.000 pieces of calorized lance pipes in 28 Transportation Law. or by virtue of the nature or defect of the articles. As to how the boxes were damaged. [43] Eastern Shipping Lines vs. The words “perils of the sea” apply to “all kinds of marine casualties. there is no claim or pretense that the two cases were not in good order when received on board the ship. force majeure. foundering. Hence. 29 May 1987) Eastern Shipping Lines vs. its legal duty was to deliver them to Mirasol in the same condition in which it received them. stranding or the perils of the sea. Goods. 7. when delivered to carrier. shall be for the account and risk of the shipper. Herein.

and two cases of surveying instruments consigned to Aman Enterprises and General Merchandise. Eastern Shipping sought reconsideration of the Resolution denying the Petition for Review and moved for its consolidation with GR 69044.. consigned to Central Textile Mills. Both Petitions were initially denied for lack of merit. with interest at the legal rate from the date of the filing of the Complaint on 13 June 1978. in 2 containers. resulting in the total loss of ship and cargo. consigned to Mariveles Apparel Corporation.00 because of $500 per package limitation of liability under the COGSA.385.385.00 and P92. the burden of proving negligence of the vessel is shifted to the cargo shipper.361. which was then pending resolution with the First Division. Nisshin.75. and that when the loss of fire is established. the Trial Court rendered judgment in favor of Nisshin and Dowa in the amounts of US$46.00. and P71. to Manila. in GR 71478. Civil Case 116151). on 14 August 1984. Hence. respectively. Upon Eastern Shipping’s Motion for Reconsideration. having been subrogated unto the rights of the two insured companies. Admission of Eastern Shipping as operator of vessel As a general rule. and GR 71478 on 25 September 1985 by the Second Division. GR 69044 was given due course on 25 March 1985. the Resolution of the Second Division of 25 September 1985 was set aside and the Petition was given due course. filed suit against Eastern Shipping for the recovery of the insured value of the cargo lost with the then Court of First Instance of Manila (Branch II. On the other hand. in GR 71478. for US$11..00 as attorney’s fees and costs. the same vessel took on board 128 cartons of garment fabrics and accessories. with legal interest.540 for the 7 cases of spare parts. and 7 cases of spare parts valued at P92.00 and US$11.000. Eastern Shipping filed a petition for review on certiorari. Eastern Shipping denied liability on the principal grounds that the fire which caused the sinking of the ship is an exempting circumstance under Section 4(2) (b) of the Carriage of Goods by Sea Act (COGSA).583. in favor of a party to Transportation Law. Enroute for Kobe. Both sets of goods were insured against marine risk for their stated value with Development Insurance and Surety Corporation. affirmed the judgment. On 31 August 1979. Japan. Eastern Shipping took an appeal to the then Court of Appeals which. the facts alleged in a party’s pleading are deemed admissions of that party and binding upon it. [GR 69044] On 11 May 1978. On appeal by Eastern Shipping. plus P5.039. it is not liable under the law. Inc. and Dowa.039. Civil Case 116087)..361. for US$46. 2004 ( 107 ) . [GR 71478] On 16 June 1978. In GR 71478. however. The 128 cartons were insured for their stated value by Nisshin Fire & Marine Insurance Co. imputing unseaworthiness of the ship and non-observance of extraordinary diligence by Eastern Shipping.00 consigned to Philippine Blooming Mills Co. affirmed with modification the Trial Court’s judgment by decreasing the amount recoverable by Dowa to US$1. The same was granted. on the other hand. as subrogees of the insured.000. with legal interest. respectively. the then Court of Appeals on 10 September 1984.00.Haystacks (Berne Guerrero) packages valued at P256. the vessel caught fire and sank. 1. and the 2 cases by Dowa Fire & Marine Insurance Co.039 for the 28 packages of calorized lance pipes. plus attorney’s fees of P5. Eastern Shipping denied liability mainly on the ground that the loss was due to an extraordinary fortuitous event. The Supreme Court modified the judgment in GR 69044.000 as attorney’s fees.00. affirmed the decision of the trial court. hence. and the parties were required to submit their respective Memoranda. Inc. The respective Insurers paid the corresponding marine insurance values to the consignees concerned and were thus subrogated unto the rights of the latter as the insured. Development Insurance.583.000. The Court. the Trial Court rendered judgment in favor of Development Insurance in the amounts of P256. during the same period. Ltd..00 and costs.. And an admission in one pleading in one action may be received in evidence against the pleader or his successor-in-interest on the trial of another action to which he is a party. the petition for review on certiorari by Eastern Shipping. On 15 September 1980. in that Eastern Shipping shall pay the Development Insurance the amount of P256. plus P35. GR 69044 on 16 January 1985 by the First Division.75. filed suit against Eastern Shipping for the recovery of the amounts it had paid to the insured before the then Court of First Instance of Manila (Branch XXX. and the costs. which they have done.

Eastern Shipping cannot escape liability for the loss of the cargo. 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. 2. and that carrier has exercised due diligence to prevent or minimize loss Even if fire were to be considered a “natural disaster” within the meaning of Article 1734 of the Civil Code. earthquake. common carriers. storm. 2004 ( 108 ) . Common carriers liable for loss. It may even be caused by the actual fault or privity of the carrier. are bound to observe extraordinary diligence in the vigilance over goods. the Carriage of Goods by Sea Act. Construction of Article 1680 as to fire as an extraordinary fortuitous event Article 1680 of the Civil Code. or deterioration of the goods unless the same is due to any of the following causes only: (1) Flood. as it arises almost invariably from some act of man or by human means. Transportation Law. Fire not comprehended within exceptions in Article 1734. the common carrier shall be presumed to have been at fault or to have acted negligently. The burden then is upon Eastern Shipping to prove that it has exercised the extraordinary diligence required by law. Herein. 7. is suppletory to the provisions of the Civil Code. according to all the circumstances of each case. lightning or other natural disaster or calamity. Natural disaster or calamity an exception Under the Civil Code. Herein. being the operator of said vessel. in all matters not regulated by said Code.” Eastern Shipping should thus be held bound to said admission. However. which considers fire as an extraordinary fortuitous event refers to leases of rural lands where a reduction of the rent is allowed when more than one-half of the fruits have been lost due to such event. destruction or deterioration. a special law. during or after the occurrence of the disaster. Fire not a natural disaster or calamity Easter Shipping claims that the loss of the vessel by fire exempts it from liability under the phrase “natural disaster or calamity. unless it proves that it has observed the extraordinary diligence required by law. the liability of Eastern Shipping is governed primarily by the Civil Code.” and that the carrier has “exercised due diligence to prevent or minimize the loss before. Natural disaster must be proximate and only cause of the loss. Herein.” Herein.” However. It does not fall within the category of an act of God unless caused by lightning or by other natural disaster or calamity. Eastern Shipping has also failed to establish satisfactorily. from the nature of their business and for reasons of public policy. destruction. as the cargoes in question were transported from Japan to the Philippines. in fact. have proven that the transported goods have been lost. it. Article 1735 of the Civil Code provides that in all cases other than those mentioned in Article 1734. stated in its petition in GR 69044 that “there are about 22 cases of the ‘ASIATICA’ pending in various courts where various plaintiffs are represented by various counsel representing various consignees or insurance companies. fire may not be considered a natural disaster or calamity.Haystacks (Berne Guerrero) the latter action. Law Applicable 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. Eastern Shipping has also proven that the loss was caused by fire. Carrier presumed at fault unless it proves otherwise As the peril of fire is not comprehended within the exceptions in Article 1734. the rights and obligations of common carrier shall be governed by the Code of Commerce and by special laws. the respective Insurers. as subrogees of the cargo shippers. Having failed to discharge the burden of proving that it had exercised the extraordinary diligence required by law. although Eastern Shipping claimed that it is not the operator of the M/S Asiatica but merely a charterer thereof. 3. Common carriers are responsible for the loss. 5. xxx” 4. Thus. considering that the law adopts a protective policy towards agriculture. The common defendant in these cases is petitioner herein. 6.

Actual liability of Eastern Shipping in GR 69044 In GR 69044. the complete defense afforded by the COGSA when loss results from fire is unavailing to Eastern Shipping. In no event shall the carrier be liable for more than the amount of damage actually sustained. the fire was already big. The goods were shipped in 28 packages. COGSA suppletory to provisions of Civil The Civil Code does not of itself limit the liability of the common carrier to a fixed amount per package although the Code expressly permits a stipulation limiting such liability.160. at the time of payment of the value of the goods lost. unless the nature and value of such goods have been declared by the shipper before shipment and inserted in bill of lading. and the amount affirmed to be paid by the Court. Relief in COGSA unavailing as Eastern shipping actually at fault due to lack of diligence Section 4(2) of COGSA provides that “Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from. 9.000 which. This declaration if embodied in the bill of lading shall be prima facie evidence. xxx” Herein. Section 4 (2) of COGSA. Multiplying 28 packages by $500 would result in a product of $14. would be P286. no regular inspection was made as to their condition during the voyage. Section 4(5) of COGSA Section 4(5) of the COGSA. that the fire must have started 24 hours before the same was noticed. or its peso equivalent. is binding. which is suppletory to the provisions of the Civil Code. steps in and supplements the Code by establishing a statutory provision limiting the carrier’s liability in the absence of a declaration of a higher value of the goods by the shipper in the bill of lading.44 to US$1.Haystacks (Berne Guerrero) 8. 2004 ( 109 ) . unless the shipper or owner declares a greater value. there was “actual fault” of the carrier shown by “lack of diligence” in that “when the smoke was noticed. and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided. (1) the actual total loss for the 5. Eastern Shipping’s liability should not exceed US$500 per package. or the equivalent of that sum in other currency. Nor is there a declaration of a higher value of the goods.” 11. which was exactly the amount of the insurance coverage by Development Insurance. the COGSA. That such maximum shall not be less than the figure above named. per customary freight unit. there is no stipulation in the respective Bills of Lading limiting the carrier’s liability for the loss or destruction of the goods. Article 1749 NCC Article 1749 of the New Civil Code also allows the limitations of liability in this wise. Consequently.000 pieces of calorized lance pipes was P256. but all be conclusive on the carrier. or in case of goods not shipped in packages. master or agent of the carrier. 12. Code Civil Code does not limit liability of common carrier. reads:”(5) Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States. unless caused by the actual fault or privity of the carrier. The provisions of the Carriage of Goods by Sea Act on limited liability are as much a part of a bill of lading as though physically in it and as much a part thereof as though placed therein by agreement of the parties. “A stipulation that the common carrier’s liability is limited to the value of the goods appearing in the bill of lading. Hence. at the current exchange rate of P20. Thus. Eastern Shipping’s liability should not exceed US$500 per package In GR 69044. xxx” 10. but in no case “more than the amount of damage actually sustained. By agreement between the carrier.” and that “after the cargoes were stored in the hatches. xxx (b) Fire.” The foregoing suffices to show that the circumstances under which the fire originated and spread are such as to show that Eastern Shipping or its servants were negligent in connection therewith.” 13.039. or Transportation Law.

American Export Lines. Inc.500 x P20.S. 1304(5)]. [Carriage of Goods by Sea Act. and not P92. 2004 ( 110 ) . Ltd.C. Mitsui vs. their actual value was P92. vs.S. however great might be the temptation to ‘modernize’ or reconstitute it by artful judicial gloss. 46 U. in this regard. Congress alone must undertake the surgery.. Supp. After quoting the statement in Leather’s Best.000 by the Appellate Court following the statutory $500 liability per package.583 to Nisshin. Congress alone must be the one to modernize or reconstitute it The approach gives needed recognition to the responsibility of the courts to construe and apply the statute as enacted. the Appellate Court also limited Eastern Shipping’s liability to $500 per package and affirmed the award of $46. Second Division. multiplying 7 cases by $500 per package at the present prevailing rate of P20. 414 F.” Consequently. is in order. which amount is less than the maximum limitation of the carrier’s liability. It multiplied 128 cartons (considered as COGSA packages) by $500 to arrive at the figure of $64. which had been shipped in vessel-supplied containers.’ A ruling that these large reusable metal pieces of transport equipment qualify as COGSA packages — at least where they were carrier-owned and supplied — would amount to just such a distortion.S.A. Even if language and purposes of Carriage of Goods by Sea Act left doubt as to whether carrier-furnished containers whose contents are disclosed should be treated as packages.540 only. 16. The U. obvious wisdom in the Ninth Circuit’s conclusion in Hartford that technological advancements. 636 F 2d 807 (1981). 451 F 2d at 815. Courts to construe and apply statute as enacted. the interest in securing international uniformity would suggest that they should not be so treated. The 128 cartons and not the 2 containers should be considered as the shipping unit.583. more serviceable loci. 46 U.44 to US$1 (US$3. These containers are likened to detachable stowage compartments of the ship. However.361. modified and affirmed holding that: “When what would ordinarily be considered packages are shipped in a container supplied by the carrier and the number of such units is disclosed in the shipping documents. do not warrant a distortion or artificial construction of the statutory term ‘package. If COGSA’s package limitation scheme suffers from internal illness. whether or not forseeable by the COGSA promulgators.361. They simply serve to divide the ship’s overall cargo stowage space into smaller. 4(5).75. American Export Lines In Mitsui & Co. they do not suddenly lose that character upon being showed in a carrier’s container. the amount awarded to Dowa which was already reduced to $1.C. and explained that “since this amount is more than the insured value of the goods. 15. which is likewise the insured value of the cargo and which amount was affirmed to be paid by the Court. supra. [Carriage of Goods by Sea Act. that is $46. the consignees of tin ingots and the shipper of floor covering brought action against the vessel owner and operator to recover for loss of ingots and floor covering. 14. Individual crates or cartons considered packages although in a carrier’s containers If the individual crates or cartons prepared by the shipper and containing his goods can rightly be considered ‘packages’ standing by themselves.44) would yield P71.Haystacks (Berne Guerrero) “more than the amount of damage actually sustained. in so far as the 2 cases of surveying instruments are concerned. Actual liability of Eastern Shipping in GR 71478 In GR 71478. 1304(5)]. The United States Court of Appeals. (2) With respect to the 7 cases of spare parts. 4(5). and the defendant appealed. the amount of P256. 17.A.039 should be upheld. at 907]. that treating a container as a package is inconsistent with the congressional purpose of establishing a reasonable minimum level of liability [Judge Beeks wrote.75. each of those units and not the container constitutes the ‘package’ referred to in liability limitation provision of Carriage of Goods by Sea Act. There is. the Trial Court was correct in awarding said amount only for the 128 cartons. which is the amount that should be paid by Eastern Shipping for those spare parts.000. Shippers’ Transportation Law. District Court for the Southern District of New York rendered judgment for the plaintiffs. In respect of the shipment of 128 cartons of garment fabrics in 2 containers and insured with Nisshin.

M/V Eurygenes followed the Mitsui test. not the container. The number of cartons was disclosed to the carrier in the bill of lading. 21. as well as the nature of the goods. in clear and unambiguous language. holding therein “Eurygenes concerned a shipment of stereo equipment packaged by the shipper into cartons which were then placed by the shipper into a carrier-furnished container. SS Tando (US) In Yeramex International v. 1977 A. the number of cartons or units. 18. Eurygenes followed the Mitsui test and treated the cartons. the Carrier shall be at liberty to pack and carry them in any type of container[s]”). This applies with even greater force in a contract of adhesion where a contract is already prepared and the other party merely adheres to it. Since after 6 November 1978.Haystacks (Berne Guerrero) packages are quite literally ‘stowed’ in the containers utilizing stevedoring practices and materials analogous to those employed in traditional on board stowage. to 27 August 1979. until 26 September 1978. served upon Development Insurance on August 25th. like the Bill of Lading. that it was going to take the deposition of its witnesses in Japan. Va. to prepare its written interrogatories. No Denial of Opportunity to Present Deposition of Its Witnesses (in GR 69044 only). when the pre-trial conference was conducted for the last time. S. knowing fully well that it was its undertaking on July 11th that the deposition of the witnesses would be dispensed with if by next time it had not yet been obtained. Eurygenes indicated that a carrier could limit its liability to $500 per container if the bill of lading failed to disclose the number of cartons or units within the container. M/V Eurygenes (US) The case of Smithgreyhound v. Eastern Shipping has told the Court since 16 February 1979. Smithgreyhound vs. just two days before the hearing set for August 27th.S. and applying the ruling in the Mitsui and Eurygenes cases it is clear that the 128 cartons. 1807 (E. Yeramex Internation vs. Obscure words or stipulations in contract construed against party who caused obscurity. when its answer was prepared and filed in Court. not the 2 containers should be considered as the shipping unit subject to the $500 limitation of liability. which is drawn up by the carrier. Mitsui and Eurygenes cases applied Considering that the Bill of Lading clearly disclosed the contents of the containers. 19.D. It cannot mean that the shipper had furnished the containers for if so. or more than 6 months. Why did it take until 25 August 1979. the use of the estimate “Say: Two (2) Containers Only” in the Bill of Lading. Its belated notice to take deposition on written interrogatories of its witnesses in Japan.M. Only Eastern Shipping itself is to Transportation Law. or if the parties indicated. “Two (2) Containers” appearing as the first entry would have sufficed and if there is any ambiguity in the Bill of Lading. the cartons and not the containers are the packages. only proves the lack of merit of Eastern Shipping’s motion for postponement. means that the goods could probably fit in 2 containers only. However.). rev’d on other grounds. “Say: Two (2) Containers Only” construed. 22. 1979). Bill of lading disclosed contents of containers. 595 F 2d 943 (4 Cir. it is a cardinal principle in the construction of contracts that the interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity. as the COGSA packages. 2004 ( 111 ) . Tando. an agreement to treat the container as the package.C. for which reason it deserves no sympathy from the Court in that regard. not to mention the time from 27 June 1978. another district with many maritime cases followed Judge Beeks’ reasoning in Matsushita and similarly rejected the functional economics test. Judge Kellam held that when rolls of polyester goods are packed into cardboard cartons which are then placed in containers. especially in a contract of adhesion In light of the stipulation in fine print in the dorsal side of the Bill of lading (“[Use of Container] Where the goods receipt of which is acknowledged on the face of this Bill of Lading are not already packed into container[s] at the time of receipt. Eastern Shipping had more than 9 months to prepare its evidence. What due process abhors Herein.” 20. Eastern Shipping was given full opportunity to present its evidence but it failed to do so.

Dollar Steamship pleads 11 separate defenses. (Art. with interest from April 14. 2 March 1929) En Banc. that through such loss and failure to deliver. that Kui Pai has paid all freight charges to Dollar Steamship.000. and that the weight of the 3 packages was 996 pounds only. and agreed to deliver it Kui Pai in Manila. 1.00 would be more reasonable in GR 69044. Kui Pai prays for a corresponding judgment. and as a first special defense alleges that about 14 April 1927. Dollar Steamship made a general and specific denial. Mee Hing Chan of Hongkong shipped and delivered to Dollar Steamship (a foreign corporation licensed to do business in the Philippine Islands and engaged in the operation of ocean ships) in Hongkong on board its ship President Taft. in person or through a person entrusted thereto in the place indicated for their reception. Liability (responsibility) of a carrier The carrier shall be obliged to deliver the goods transported in the same condition in which. from which Kui Pai appealed. according to the bill of lading. (a limited mercantile partnership) alleged that about 12 April 1927. and in its fourth special defense alleges that at Hongkong on 12 April 1927. for which demand has been made and payment refused. Eastern Shipping was afforded ample time to present its side of the case.734. in the City of Manila. that Dollar Steamshop received and accepted said merchandise. that it has repeatedly demanded the delivery of the merchandise.00 in GR 71478 was affirmed. and that it has never been delivered. 3/6 by 3/5 by 2/3. for which it issued the corresponding bill of lading. Kui Pai has been damaged in the sum of P11. The Supreme Court affirmed the judgment of the lower court. Johns (J): 7 concur Facts: Kui Pai & Co. specifically refer to the identical two cases now claimed by Kui Pai. goods. Code of Commerce.Haystacks (Berne Guerrero) blame for its failure to adduce evidence in support of its defenses. [44] Kui Pai & Co. and refused and refuses to accept delivery of the other 2. Dollar Steamship Line (GR 30019. the lower court rendered judgment for Dollar Steamship. Award of Attorney’s Fees Courts being vested with discretion in fixing the amount of attorney’s fees. 355. they were measured by the Official Measure’s Office at Hongkong. plus freight and profit. 2004 ( 112 ) . when the cases were brought aboard the President Taft. It cannot complain now that it was denied due process when the Trial Court rendered its Decision on the basis of the evidence adduced. Dollar Steamship failed and neglected to deliver 2 cases of the goods. and Transportation Law. without any detriment or impairment. which is the net invoice value of the goods.) 2. vs. which certified that the 3 packages contained 68 cubic feet. it is believed that the amount of P5. and costs. What due process abhors is absolute lack of opportunity to be heard. Dollar Steamship tendered to Kui Pai “the six identical cases shipped by Mee Hing Chan and covered by the Bill of Lading. and that the measurements of the two cases of piece goods described in the certificate. they were at the time of their receipt.1927. that as shown by the records of the Manila Terminal Company of Manila. Thus. the two packages or cases lost or missing were never landed in Manila from the President Taft.000. As a result of the trial upon such issues. wares and merchandise in good order and condition. For answer.15. When liability of a carrier begins The liability of the carrier shall begin from the moment he receives the merchandise. the substance of which is that it tendered to Kui Pai the identical 6 cases which were placed on board Dollar Steamship’s ship at Hongkong. with costs. consigned to Kui Pai. The award of P5. 23.” but that Kui Pai accepted and took delivery of only 4.

C. The marks are in green ink or paint. including the two boxes in question. during the hours when such goods are usually delivered there.” and that the marks on two of them have been changed. cut off from the carrier all temptation of pecuniary gain and made him absolutely liable with the exception of causes for which he could not be supposed to be responsible — namely the act of God or the public enemy. length and depth. These two cases were offered in evidence.) 4. P. No one can possibly be deceived by the changes or alterations and additions. L. The ink or paint used in making the changes is not of the same shade of green as the original letters and numerals. that the numeral 1 is omitted on one side of each of said cases. 548. unless they prove that the loss or damage arose from a fortuitous event or force majeure. as previously observed. 363.. the boxes were measured as to their width. The changes or alterations in the lettering and the addition of the numeral 1 are very crude.) 5. Cargo of ship tallies with bills of lading issued It is a matter of common knowledge that there is no port of call between Hongkong and Manila. 7. No port of call between Hongkong and Manila. It is also conceded that at the time of delivery. and that upon its arrival in Manila. markings changed to R. When liability of a carrier ends The relation of carrier endures from the shipment of the goods until their arrival at their destination. that the number of pieces of cargo on board the ship. altered and added to so as to now read RB 13 and 14. 3. That is to say. Code of Commerce).Haystacks (Berne Guerrero) should he not do so.. proceeding on the moral principle of prudent prevention. 8. formerly read KP. On each. L. which were to be delivered at Manila. and it appears from the records.. boxes or cases in the cargo. The court is convinced that the original markings. and whether they are in proper condition. it is perfectly clear and indisputable that the six letters K have been changed or altered to R and the letters P to B and that the numeral 1 has been placed in front of the numerals 3 and 4 so as to give them the appearance of 13 and 14. which are confirmed by the testimony of the checker at the time the ship was unloaded and that of the Manila Terminal Company. that the cargo of the ship exactly tallies with the bills of lading which were issued by Dollar Steamship. K. thus there are six separate and distinct marks on these two exhibits. 3 and 4 and that they were changed. C. as to the number of pieces. except. The evidence for Kui Pai shows that the six boxes were placed in hold 9 of the ship in Hongkong. correspond exactly with the number of pieces or cargo found on the ship at the time it was unloaded in Manila. (Art. P. Boxes tendered to Kui Pai It is conceded that six boxes or cases consigned to Kui Pai were delivered to Dollar Steamship in Hongkong to be shipped to Manila. (4 R.” 6. and that the boxes which Dollar Steamship delivered and tendered to Kui Pai are each exact in their respective measurements with those which Dollar Steamship received on board of its ship in Hongkong. and continues after the arrival of the goods at their destination until they are ready to be delivered at the usual place of delivery. and the trial court found as a fact that the six boxes were originally marked “K. Without the aid of a magnifying glass but by ocular inspection. 700. he shall be obliged to pay the value of the goods not delivered at the point where they should have been and at the time the delivery should have taken place. six boxes of the same cubical contents were taken out Transportation Law. 2004 ( 113 ) . (4 R. but it is to be observed that the numeral 1 is omitted from one of the three sides of each. of examining them sufficiently to judge from their outward appearance of their identity.. to say the least. the marks appear on three sides of each case. B. and to take them away. Article 1602 NCC Article 1602 of the Civil Code provides that “Carriers are also liable for the loss of and damage to the things which they receive. Alteration evident The evidence is clear and convincing that the two identical cases KP 3 and 4 were delivered from hold 9 of the ship on to pier 7 at Manila. and the owner or consignee has a reasonable opportunity. Exceptions to liability by carrier Consequently the law.

75 piculs of the reconditioned hemp out of the original cargo of 1. grading. Davao City. were insured with the Insurance Company of North America against all losses and damages. to Manila.02. in the very nature of things.. the 2 loaded barges left Macleod’s wharf and proceeded to and moored at the government’s marginal wharf in the same place to await the arrival of the S.863.S. the total loss adds up to P60.324 piculs. to be subsequently transshipped to Boston. During the night of 29 October 1952.162 bales of hemp loaded therein.30 representing Macleod’s expenses in checking. for the shipment of 2. of North America (GR L-18965. The damaged hemp was brought to Odell Plantation in Madaum. reconditioning. Adding to this last amount the sum of P8. Contract of carriage exists Herein. During the period from November 115. also [118] Compania Maritima vs.00. 1.197.421. Thereafter. Macleod filed a claim for the loss it suffered as above stated with said insurance company. for cleaning. the contents of two of those boxes could not be taken out and replaced with Chinese cigarette papers after Dollar Steamship’s ship left Hongkong and while in transit to Manila. Having failed to recover from the carrier the sum of P60. or a loss in value of P31. These two lighters were manned each by a patron and an assistant patron. 2004 ( 114 ) . USA on board the S. This oral contract was later on confirmed by a formal and written booking issued by Macleod’s branch office in Sasa and hand carried to Compañia Maritima’s branch office in Davao in compliance with which the latter sent to Macleod’s private wharf LCT 1023 and 1025 on which the loading of the hemp was completed on 29 October 1952.A.Haystacks (Berne Guerrero) of that same hold. All abaca shipments of Macleod.018.55 was paid. was a subrogation agreement between Macleod and the insurance company wherein the former assigned to the latter its rights over the insured and damaged cargo.162 bales loaded on the carrier’s LCT 1025. rebaling. On 30 October 1952.835. and other fees for washing. [45].S. with costs against Compania Maritima.421.021. 1952. cleaning and redrying in the amount of P19. and the costs.887. washing. Macleod and Company contracted by telephone the services of petitioner to ship the hemp in question from the former’s private pier at Sasa. Steel Navigator. The patron of both barges issued the corresponding carrier’s receipts and that issued by the patron of Barge 1025.S. Massachusetts. Davao. including the 1. After trial.162 bales weighing 2. Bautista Angelo (J): 10 concur Facts: Sometime in October. aside from being a receipt of the amount paid. a shipping corporation. and redrying.72. Macleod promptly notified the carrier’s main office in Manila and its branch in Davao advising it of its liability. with legal interest thereon from the date of the filing of the complaint until fully paid. and after the same had been processed. The Supreme Court affirmed the decision appealed from. which is the only amount supported by receipts. This judgment was affirmed by the Court of Appeals on 14 December 1960. which was noted down in a document which. Macleod and Company of the Philippines contracted by telephone the services of the Compañia Maritima.02. Massachusetts.610. and that the short change artist must have appeared on the scene in Hongkong. Davao City. the sum of P64. Hence. U.28. in virtue of which the carrier sent two of its lighters to Transportation Law. In due time. the petition for review. Bowline Knot belonging to Compañia Maritima on which the hemp was to be loaded. the value of the reconditioned hemp was reduced to P84. the insurance company instituted the action on 28 October 1953.421. Hence. which had a total of P116.947. it must follow that.00. LCT 1025 sank resulting in the damage or loss of 1. the carrier’s trucks and lighters hauled from Odell to Macleod at Sasa a total of 2. 1952. After reclassification. 30 October 1964) En Banc. which oral contract was later confirmed by a formal and written booking issued by the shipper’s branch office. the court a quo rendered judgment ordering the carrier to pay the insurance company the sum of P60.645 bales of hemp from the former’s Sasa private pier at Davao City to Manila and for their subsequent transshipment to Boston. or at the early hours of October 30. Insurance Co.

3. In fact. similarly.S. In other words. and the carrier to the full payment of its freight upon completion of the voyage. and the latter taking possession thereof by placing it on a lighter manned by its authorized employees. and lighters are sent by the vessel to bring the goods to it.’ The bill of lading is not essential to the contract. 350 of the Code of Commerce provides that ‘the shipper as well as the carrier of merchandise of goods may mutually demand that a bill of lading be made. pp. The fact that the carrier sent its lighters free of charge does not impair the contract of carriage The fact that the carrier sent its lighters free of charge to take the hemp from Macleod’s wharf at Sasa preparatory to its loading unto the ship Bowline Knot does not in any way impair the contract of carriage already entered into between the Carrier and the shipper. said bill of lading is not indispensable. there should be no limitations as to form. Test whether relation of shipper and carrier had been established The test as to whether the relation of shipper and carrier had been established is. The liability and responsibility of the carrier under a contract for the carriage of goods commence on their actual delivery to. where there is a contract to carry goods from one port to another. The lighters were merely employed as the first step of the voyage.Haystacks (Berne Guerrero) undertake the service. 2. so that the bill of lading is applicable to the goods as soon as they are placed on the lighters. there is a complete contract of carriage the consummation of which has already begun: the shipper delivering the cargo to the carrier. the lighters are for the time its substitutes. Bill of lading not indispensable to creation of contract of carriage. 12-13) has written that “As to issuance of a bill of lading. although Article.’ still. 2004 ( 115 ) . is a good delivery and binds the vessel receiving the freight. It also appears that the patrons of said lighters were employees of the carrier with due authority to undertake the transportation and to sign the documents that may be necessary therefor so much so that the patron of LCT 1025 signed the receipt covering the cargo of hemp loaded therein. under which Macleod became entitled to the privilege secured to him by law for its safe transportation and delivery. for that preparatory steps is but a part and parcel of said contract of carriage. for the delivery of the hemp to the carrier’s lighter is in line with the contract. Bowline Knot in good order and condition. although it may become obligatory by reason of the regulations of railroad companies. 5. Vol. II. Martin (Philippine Commercial Laws. the rights and obligations of the parties attached thereby subjecting them to the principles and usages of the maritime law. then it can be said with certainty that the relation of shipper and carrier has been established. but once that step was taken and the hemp delivered to the carrier’s employees. Revised Edition. Bowline The claim that there can be no contract of affreightment because the hemp was not actually loaded on the ship that was to take it from Davao City to Manila is of no moment. Knot Contract of affreightment commenced even if the hemp was not actually loaded on S. ‘As regards the form of the contract of carriage it can be said that provided that there is a meeting of the minds and from such meeting arise rights and obligations. the receipt signed by the patron of the lighter that carried the hemp stated that he was receiving the cargo “in behalf of S. or as a condition imposed in the contract by the agreement of Transportation Law. the carrier or an authorized agent and delivery to a lighter in charge of a vessel for shipment on the vessel. or receipt by. and they cannot be loaded directly on the vessel. had the control and possession of the cotton been completely surrendered by the shipper to the railroad company? Whenever the control and possession of goods passes to the carrier and nothing remains to be done by the shipper. the liability commencing at the time of delivery to the lighter and. “ 6.S. where it is the custom to deliver in that way. and if actually no goods are received there can be no contract. Martin on Philippine Commercial Laws The authorities are to the effect that a bill of lading is not indispensable for the creation of a contract of carriage.” 4. When contract of carriage begins The receipt of goods by the carrier has been said to lie at the foundation of the contract to carry and deliver.

cannot be classified as storm. Hence. Since the Cargo that was damaged was insured with the insurance company and the latter paid the amount represented by the loss. under the carrier’s theory.G. 2268).S. if any. Santos.6 miles per hour then prevailing in Davao on 29 October 1952. Robles vs. Even where it is provided by statute that liability commences with the issuance of the bill of lading. The bill of lading is juridically a documentary proof of the stipulations and conditions agreed upon by both parties. Desistance of the carrier from producing the books of accounts of Odell Plantation implies an admission of the correctness of the statements of accounts contained therein The act of Compania Maritima in waiving its right to have the books of accounts of Odell Plantation presented in Court is tantamount to an admission that the statements contained therein are correct and their verification not necessary because its main defense was that it is not liable for the loss because there was no contract of carriage between it and the shipper and the loss caused. but gives right to both the carrier and the shipper to mutually demand of each other the delivery of said bill. therefore. the correctness of the account representing the loss was not so material as would necessitate the presentation of the books in question. 11. is not one between the insured and the insurer. Sup. not due to force majeure The mishap that caused the damage or loss was due.). Carrier cannot set up as a defense any defect in the insurance policy as it was not privy thereto The insurance company can recover from the carrier as assignee of the owner of the cargo for the insurance amount it paid to the latter under the insurance contract. flood. the delivery of the bill of lading to the shipper. 10. At any rate. and by Philippine Weather Bureau standards winds should have a velocity of from 55 to 74 miles per hour in order to be classified as a storm (Northern Assurance Co. (Sp. 314-315. it is but fair that it be given the right to recover from the party responsible for the loss. a storm has wind velocities of from 64 to 75 miles per hour.J. And since the shipper has a direct cause of action against the carrier on account of the damage of the cargo. 9. del Pan & Co. The instant case. Insurance company subrogated to right of shipper. Inc.) attributes the sinking of LCT 1025 to the non-watertight conditions of various buoyancy compartments. Nor can the carrier set up as a defense any defect in the insurance policy not only because it is not a privy to it but also because it cannot avoid its liability to the shipper under the contract of carriage which binds it to pay any loss that may be caused to the cargo involved therein. p. J. Decision. Herein. Ct. but to lack of adequate precaution or measures taken by the carrier to prevent the loss. The report of marine surveyors (R.Haystacks (Berne Guerrero) the parties themselves.” (barge therefore was not seaworthy). 44 O. because the insurance company merely stepped into the shoes of the shipper. actual delivery and acceptance are sufficient to bind the carrier. the Code does not demand. 1895). 2004 ( 116 ) .” 7. on the night of the nautical accident there was no storm.. as necessary requisite in the contract of transportation. 13 C. In other words. May 6. What constitutes a storm According to Beaufort’s wind scale.. Bill of lading not indispensable to creation of contract of carriage. Visayan Stevedore Transportation Co. Ltd. winds of 11 miles per hour. Aside from the fact that the ill-fated barge had cracks on its bottom which admitted sea water in the same manner as rain entered “thru tank manholes. or other natural disaster or calamity. even if the books of accounts were not produced. the issuance of a bill of lading is not necessary to complete delivery and acceptance. 8. 288 The liability of the carrier as common carrier begins with the actual delivery of the goods for transportation.. (Del Viso p. although stronger than the average 4. vs. was due to a fortuitous event. no valid reason is seen why such action cannot be asserted or availed of by the insurance company as a subrogee of the shipper. Mishap due to lack of adequate precaution or measures.. but one between the shipper and the carrier. and not merely with the formal execution of a receipt or bill of lading. not to force majeure. the correctness of the accounts cannot be disputed for the same is supported by the original Transportation Law.

the Court finds the same of no importance. After the periods mentioned have elapsed. Albay. was in good order and condition. Subsequently thereto (the exact time not alleged in the complaint) the consignee discovered that 42 barrels had been broken open and about half of the cement in each barrel lost. the proper protests or reservations should not have been made. when placed aboard the steamer in Manila Bay. There is no allegation in the complaint showing that either the Government or the consignee or anyone else representing them made any complaint or demand on Inchausti at any time prior to the presentation of the complaint. Article 366 of the Code of Commerce Article 366 of the Code of Commerce reads “within the twenty-four hours following the receipt of the merchandise a claim may be brought against the carrier on account of damage or average found therein on opening the packages. with costs against the Government.Haystacks (Berne Guerrero) documents on which the entries in said books were based which were presented by the shipper as part of its evidence. 1. unloaded the 500 barrels of cement and received a receipt therefor from the consignee stating that the property had been received in good condition. The Supreme Court affirmed the order appealed from. in which case said claim would only be admitted on the receipt of the packages.421. Section 67. or after the transportation charges have been paid. {paragraph 2} The actions for damages or defaults cannot be brought if at the time of the delivery of the respective shipments or within the twenty-four hours following. Act 1792 Section 67 of Act 1792 reads “When public funds or property are shipped from one place to another and the consignee whether an agent of the Government or otherwise shall accomplish the bill of lading or Transportation Law. Article 952 (2) of the Code of Commerce Article 952 (2) of the Code of Commerce reads “the following (actions) shall prescribe after one year: xxx (2) {paragraph 1} The actions relating to the delivery of the cargo in maritime or land transportation or to the indemnity for delays and damages suffered by the goods transported. Insurance company has juridical personality to file suit With regard to the question concerning the personality of the insurance company to maintain the action. the Government placed aboard Inchausti’s steamer Venus 500 barrels of cement consigned to the district engineer of the Province of Albay. Hence.” 3. through its agents. 2004 ( 117 ) . The trial court sustained Inchausti’s demurrer. On arrival of the steamer at the port of Tabaco. 14 February 1913) First Division. to be reimbursed for the loss of the cement. to be shipped to Tabaco. 12. and it is alleged that this loss was due to the careless handling on the part of Inchausti’s agents. Trent (J): 4 concur Facts: On 3 June 1909. provided that the indications of the damage or average giving rise to the claim cannot be ascertained from the exterior of said packages.02 made in favor of respondent. when damages which do not appear on the exterior of the packages received are in question. which was filed on 18 February 1911.after 158] Government vs. for the attorney himself of the carrier admitted in open court that it is a foreign corporation doing business in the Philippines with a personality to file the present action. These documents alone sufficiently establish the award of P60. Inchausti (GR 6957. The cement. Inchausti.” 2. [46] also [. or from the day on which it should have been delivered according to the conditions of its transportation. the appeal by the Government. the period of the prescription to be counted from the day of the delivery of the cargo at the place of its destination. no claim whatsoever shall be admitted against the carrier with regard to the condition in which the goods transported were delivered.

(9 Cyc. and when a notation is made upon the bill of lading or receipt of such evidence. The first paragraph of clause 2 of article 952 of the Code of Commerce relates to the same matter as that covered by section 43 of Act 190. Changes made by Section 67. 8. and have not been repealed by section 43. 8. History of Section 67. or other committee appointed under the provisions of this Act: Provided. although the package may have been broken at the time of delivery. and this fact was noted upon the bill of lading. This Act. And if he omits such allegation his declaration. a district auditor. went through a series of amendments until the section was finally inserted in its present form in the Accounting Act as section 67. including the section in question. Article 366 and last paragraph of clause 2 of Article 952 not repealed Article 366 and the last paragraph of clause 2 of article 952 of the Code of Commerce do not relate to the prescription or limitation of actions. Act 1792 Section 67 has made no change whatever in the existing law except with respect to the liability of the consignee as an officer or agent of the Government.” The Act as a whole relates solely to the liability of officers of the Government by reason of the possession of Government funds and other property.Haystacks (Berne Guerrero) receipt therefor without notation thereon of a shortage in or damage to the public property covered by such bill of lading. he must allege and prove fulfillment or excuse for nonfulfillment If the plaintiff’s right of action depends upon a condition precedent.. the contents were intact. Transportation Law. the burden of proof that the shortage or damage occurred after the shipment left the carrier’s possession is upon the carrier. such consignee shall be held for the full amount and value of such public property in default of competent evidence to the contrary satisfactory to the Auditor. And when the fact that the packages in which goods have been received showed evidence of having been opened or tampered with the time of delivery.” the title of that Act being “An Act establishing and regulating accountability for public property in the Philippine Archipelago. and when notation is made upon the bill of lading or receipt of such evidence the burden of proof that the shortage or damage occurred after the shipment left the carrier’s possession shall be upon such carrier. 699. If right action depends upon a condition precedent.) 7. the burden rested upon the carrier to show that. That evidence of the opening or tampering with any package of public property shall bind the carrier for any shortage or damage that may appear therein. First paragraph of clause 2 of Article 952 repealed by Section 43 of the Code of Civil Procedure Section 43 of the Code of Civil Procedure relates to the limitation or prescription of civil actions other than for the recovery of real property. provided the required notice was given in time. or petition will be bad on demurrer. he must allege and prove the fulfillment of the condition or a legal excuse for its nonfulfillment. 6. A reading of the section that the only part which can by any possibility be construed as affecting the liability of common carriers is that liability of the consignee. evidence of the “opening” of a package or “tampering” with the goods delivered to him for transportation made the carrier liable for the loss.” 4. and may properly be said to have been repealed by said section 43. 2004 ( 118 ) . complaint. Such actions must be brought within the periods therein set forth after the right of action accrues. and cases cited. Liability of carrier due to “opening” of package or “tampering” of goods before the passage of Act 1792 Before the passage of Act 1792. Act 1792 Section 67 first appeared as section 23 of Act 215 under the heading of “Transportation of Property. They create conditions precedent to the accruing of the right of action against carriers for damages caused to merchandise. The latter part of this section makes the carrier liable for any shortage in any package of public property or any damage thereto upon proof of the opening or tampering with such package. 5.

vs. Inc. and before the goods have been consumed or their identity destroyed in cases in which it is alleged that the damage has been discovered after the goods were received by the consignee. 2004 ( 119 ) . [47]. ordering Nordeutscher Lloyd. brought in AMCYL as third party defendant. The trial court rendered judgment in favor of Samar Mining. nor received by. The Supreme Court reversed the appealed decision. C. Sharp & Co. 10. but neither paid. 7).Haystacks (Berne Guerrero) 9. the equivalent of $424. Being a contract. without costs. as declared in the case of Cordoba vs. the importation was unloaded and delivered in good order and condition to the bonded warehouse of AMCYL. 1.. Repetition of a part of the existing law cannot be construed to repeal by implication unrepealed parts of the law The mere repetition in the Act or section of a part of the existing law on the subject of the liability of common carriers cannot be construed so as to have the effect of repealing by implication the unrepealed parts of that law in the absence of a clear intention on the part of the Legislature to effect such repeal. Prescription The statement that an annotation of the receipt of goods in bad condition on the bill of lading throws the burden of proof on the carrier to show that they were in fact intact and in good condition at the time of delivery does involve as a necessary corollary the proposition that when the goods are received and receipted for as being in good condition. Article 366 of the Code of Commerce applicable to maritime transporation Article 366 of the Code of Commerce is applicable to maritime transportation. Inc. (1 Phil. of 1 crate Optima welded wedge wire sieves through the M/S Schwabenstein. et. although receipted for as being in good condition. The court finds no reason for changing the doctrine announced in that case. However. When the letters of complaint sent to Nordeutscher Lloyd failed to elicit the desired response. Samar Mining filed a formal claim for P1. Rep. 11. as a contract to transport and deliver the same as stipulated therein. 1 took no part Facts: An importation was made by Samar Mining Co. et.F. within which to sue on an obligation arising from a contract in writing and recover upon proof that the goods. Warner. Nordeutscher Lloyd (GR L-28673. were really received to the Code of Commerce is to give the carrier an opportunity to ascertain whether the claim is a well-founded one before the goods leave his hands with respect to damages which are observable upon the exterior of the goods or of the packages in which they are contained.. Samar Mining filed a suit to enforce payment. Nordeutscher Lloyd and CF Sharp & Co. al. the Court stated that Nordeutscher Lloyd. Nature of bill of lading The nature of the bill of lading is that it operates both as a receipt for the goods. al. 1 concur in result. The goods were however never delivered to.93. Burden of proof when there is annotation of receipt of goods in bad condition. also [185] Samar Mining Co. the consignee at the port of destination — Davao.691. Barnes & Co. Upon arrival of the vessel at the port of Manila.93 plus attorney’s fees and costs.). (represented in the Philippines by its agent.00 at the prevailing rate of exchange at that time. Nordeutscher Lloyd and CF Sharp & Co. to pay the amount of P1. appealed from said decision. Cuevas (J): 4 concur. against the former. and dismissed Samar Mining’s complaint. which shipment is covered by Bill of Lading 18 duly issued to consignee Samar Mining.691. it is the law Transportation Law. a vessel owned by Nordeutscher Lloyd. and more importantly. may recoup whatever they may pay Samar Mining by enforcing the judgment against third party defendant AMCYL which had earlier been declared in default. that the shipper can bring an action against the carrier at any time within the 10 years allowed by section 43 of Act 190. 23 October 1984) Second Division.

This carrier. Law of country of destination Transportation Law. . thus. Pending or during forwarding or transshipping the carrier may store the goods ashore or afloat solely as agent of the shipper and at risk and expense of the goods and the carrier shall not be liable for detention nor responsible for the acts. paragraph 3 of Bill of Lading 18. in making arrangements for any transshipping or forwarding vessels or means of transportation not operated by this carrier shall be considered solely the forwarding agent of the shipper and without any other responsibility whatsoever even though the freight for the whole transport has been collected by him. but were discharged from ship in Manila. neglect. United States Lines. while the freight had been prepaid up to the port of destination or the “port of discharge of goods”. vs. . Phoenix Assurance Co. the goods in question in both cases were destined for Davao. 2. The stipulation is plainly indicated on the face of the bill which contains the following phrase printed below the space provided for the “port of discharge from ship”. Applicable law. the carrier undertook to transport the goods in its vessel. As if to underline their awesome likeness. Extent of carrier’s responsibility or liability in transshipment delineated under Section 1 paragraph 3 and Section 11 of the Bill of Lading The extent of the carrier’s responsibility and/or liability in the transshipment of the goods are spelled out and delineated under Section 1. Germany. the goods were to be transshipped by the carrier to the port of destination or “port of discharge of goods”. 7. who are bound by its terms and conditions provided that these are not contrary to law. . Validity of stipulations exempting carrier from liability for loss of goods not in its actual custody. 2004 ( 120 ) . 22 SCRA 674 (1968). delay or failure to act of anyone to whom the goods are entrusted or delivered for storage.’” 3. Ltd. the carrier or master may. good customs. as to the stipulations contained in the bill of lading concerned. only up to the “port of discharge from ship” — Manila.Haystacks (Berne Guerrero) between the parties thereto. US Lines 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 by the Court in Phoenix Assurance Co. Content of” description of contents” in bill of lading The following words appeared typewritten under the column for “description of contents”: “PORT OF DISCHARGE OF GOODS: DAVAO FREIGHT PREPAID” 4. Said case matches the present controversy not only as to the material facts but more importantly. “if goods are to be transshipped at port of discharge. in accordance with their respective bills of lading. Transship defined The word “transship” means “to transfer for further transportation from one ship or conveyance to another. loss or damage occurring before the goods enter ship’s tackle to be loaded or after the goods leave ship’s tackle to be discharged. . show destination under the column for `description of contents. public order and public policy. forward the whole or any part of the goods before or after loading at the original port of shipment.” 5. to wit “The carrier shall not be liable in any capacity whatsoever for any delay. which provides that “Wherever the carrier or master may deem it advisable or in any case where the goods are placed at carrier’s disposal at or consigned to a point where the ship does not expect to load or discharge. without notice. transshipped or forwarded”. M/S SCHWABENSTEIN. Thereafter. . vs. Goods to be transshipped at “port of discharge from ship” (Manila) to “port of discharge of goods” (Davao) Bill of Lading 18 sets forth in page 2 thereof that one (1) crate of Optima welded wedge wire sieves was received by the carrier NORDEUTSCHER LLOYD at the “port of loading” which is Bremen. . handling or any service incidental thereto” 6. morals. Davao. and in Section 11 of the same Bill.

actual delivery of the goods from Nordeutscher Lloyd as carrier to itself as agent of the consignee. the carrier. Nordeutscher Lloyd. In sales.” 9. the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws. ceases to be responsible for any loss or damage that may befall the goods from that point onwards. 11. By the same token. or to the person who has a right to receive them. When responsibility of common carrier lasts Article 1736 of the Civil Code provides that “The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of. At the hiatus between these two undertakings of Nordeutscher Lloyd which is the moment when the subject goods are discharged in Manila.” 10. without prejudice to the provisions of article 1738. into possession in the name of consignee as the latter’s agent. 2004 ( 121 ) . actual delivery has been defined as the ceding of corporeal possession by the seller. 8. Thus.Haystacks (Berne Guerrero) The liability of the common carrier for the loss. Article 1736 NCC. actually or constructively. and received by the carrier for transportation until the same are delivered. Nordeutscher Lloyd cannot be made answerable for the value of the missing goods. 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. Herein. 13. Upon such delivery. the character of the Nordeutscher Lloyd’s possession also changes. Article 1738 not applicable Article 1738 finds no applicability to the present case. Article 1736 applicable Article 1736 is applicable to the present case. When liability of common carrier operative Article 1738. deceit or fraud. referred to in Article 1736. Relationship between Samar Mining and the Nordeutscher Lloyd and Sharp as to the transactions involving transport of goods and transshipment of the same Two undertakings appeared embodied and/or provided for in the Bill of Lading. the court a quo found that there was actual delivery to the consignee through its duly authorized agent. Agent not guilty of negligence. as erstwhile carrier. Under said article. or to the person who has a right to receive them. Germany to Manila. 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. cannot be held responsible for the failure of the principal to accomplish the object of the agency Even as agent of the consignee. It is true that the transshipment of the goods. 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. there was. The subject goods were still awaiting transshipment to their port of destination. In all matters not regulated by said Code. in effect. was not fully Transportation Law. The first is FOR THE TRANSPORT OF GOODS from Bremen. The second. from possession in its own name as carrier. 12. and were stored in the warehouse of a third party when last seen and/or heard of. as it contemplates a situation where the goods had already reached their place of destination and are stored in the warehouse of the carrier. by the carrier to the consignee. until the consignee has been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or otherwise dispose of them. destruction or deterioration of goods transported from a foreign country to the Philippines is governed primarily by the New Civil Code. its personality changes from that of carrier to that of agent of the consignee. which was the object of the agency. Such being the case. provides that “The extraordinary liability of the common carrier continues to be operative even during the time the goods are stored in a warehouse of the carrier at the place of destination. with appellant acting as agent of the consignee. Article 1738 NCC. THE TRANSSHIPMENT OF THE SAME GOODS from Manila to Davao.

950. and delivering the same into the custody of AMCYL. Hongkong as notify party. [48] Macam vs. Nordeutscher Lloyd had commenced said performance. deceit or fraud committed by Nordeutscher Lloyd or by its representative in the Philippines. Article 1892 NCC Article 1892 of the Civil Code provides that “The agent may appoint a substitute if the principal has not prohibited him from doing so.Haystacks (Berne Guerrero) performed. and is liable for the damages which.” 15.273.00 covered by Bill of Lading HKG 99012 and exported through Letter of Credit HK 1031/30 issued by National Bank of Pakistan. Carrier not liable for loss of goods In discharging the goods from the ship at the port of Manila. Discharge of goods in Manila and delivery of the same to the bonded warehouse in full accord to stipulations in bill of lading. 3. Neither is there any showing of notorious incompetence or insolvency on the part of AMCYL which acted as appellant’s substitute in storing the goods awaiting transshipment. cannot be held responsible for the failure of the principal to accomplish the object of the agency. Article 1909 NCC Article 1909 of the Civil Code provides that “The agent is responsible not only for fraud. but he shall be responsible for the acts of the substitute: (1) When he was not given the power to appoint one. Bellosillo (J): 3 concur Facts: On 4 April 1989. An agent who carries out the orders and instructions of the principal without being guilty of negligence. owned and operated by China Ocean Shipping Co. shipped on board the vessel Nen Jiang. the bonded warehouse. (2) When he was given such power but without designating the person and the person appointed was notoriously incompetent or insolvent. the principal may suffer. deceit or fraud.” The shipment was bound for Hongkong with Pakistan Bank as consignee and Great Prospect Company (GPC) of Kowloon. However. The records fail to reveal proof of negligence.” 16. according to whether the agency was or was not for a compensation.46 covered by Bill of Lading HKG 99013 and exported through Letter of Credit HK 1032/30 also issued by Pakistan Bank.” 17. he should prefer his own. The Bills of Lading contained the following pertinent provision: “One of the Bills of Lading must be surrendered duly endorsed in exchange for the goods or delivery order..500 boxes of watermelons valued at US$5.” 18. 14. 2004 ( 122 ) . CA (GR 125524. doing business under the name and style Ben-Mac Enterprises. Article 1884 NCC Article 1884 of the Civil Code provides that “The agent is bound by his acceptance to carry out the agency. agency and contracts.611 boxes of fresh mangoes with a value of US$14. Article 1889 NCC Article 1889 of the Civil Code provides that “The agent shall be liable for damages if. 25 August 1999) Second Division. but also for negligence which shall be judged with more or less rigor by the courts. through his non-performance. they incur no liability for the loss of the goods in question. Hongkong and 1. Inc. The delivery of the goods to AMCYL was part of the carriers’ duty to transship the goods from Manila to their port of destination — Davao. the carriers were acting in full accord with the contractual stipulations contained in Bill of Lading 18. On Transportation Law. through local agent Wallem Philippines Shipping. The actions of the carrier and of its representative in the Philippines being in full faith with the lawful stipulations of Bill of Lading 18 and in conformity with the provisions of the New Civil Code on common carriers. Benito Macam. the completion of which was aborted by circumstances beyond its control. there being a conflict between his interests and those of the principal.

Hongkong. when immediate delivery is of the essence. then demanded payment from Wallem in writing but to no avail. Allegation of complaint does not deal with misdelivery of cargoes The submission of Macam that “the fact that the shipment was not delivered to the consignee as stated in the Bill of Lading or to a party designated or named by the consignee constitutes a misdelivery thereof” is a deviation from his cause of action before the trial court. (3) the costs.” 4. the petition for review. On 25 September 1991. and.42 from China Ocean Shipping and/or Wallem before the RTC of Manila. Subsequently. The Supreme Court denied the petition. Since SolidBank already pre-paid Macam the value of the shipment.42 plus legal interest from 6 April 1989 until full payment. it demanded payment from respondent Wallem through 5 letters but was refused. states “We are writing you on behalf of our client.000. The counterclaims were dismissed for lack of merit. per letter of credit requirement. Hence. as well as its resolution of 5 July 1996 denying reconsideration. not to Pakistan Bank. the appellate court set aside the decision of the trial court and dismissed the complaint together with the counterclaims.00 as attorney’s fees.” 2. 2004 ( 123 ) . Macam sought collection of the value of the shipment of US$20. It is clear from the allegation in his complaint that it does not deal with misdelivery of the cargoes but of delivery to GPC without the required bills of lading and bank guarantee. Explanation for the delivery without presentation of bills of lading and bank guarantee The shipment was delivered to GPC without presentation of the bills of lading and bank guarantee per request of Macam himself because the shipment consisted of perishable goods. refused to pay Macam through SolidBank. GPC failed to pay Pakistan Bank such that the latter. for the shipper to request or instruct the carrier to deliver the goods to the buyer upon arrival at the port of destination without requiring presentation of the bill of lading as that usually takes time. when Macam wrote Wallem demanding payment of the value of the cargoes. on 13 March 1996. which paid Macam in advance the total value of the shipment of US$20. misdelivery of the cargoes did not come into the picture. Thus.223. jointly and severally. Ben-Mac Enterprises who informed us that Bills of Lading No. (2) P10. “(6) The goods arrived in Hongkong and were released by the defendant Wallem directly to the buyer/notify party. Content of telex of 5 April 1989 The telex dated 5 April 1989 conveying Macam’s request read “AS PER SHPR’S REQUEST KINDLY ARRANGE DELIVERY OF A/M SHIPT TO RESPECTIVE CNEES WITHOUT PRESENTATION OF OB/L 2 and bank guarantee since for prepaid ship ofrt charges already fully paid our end. The Court of Appeals appreciated the evidence in a different manner.223.46 or its equivalent of P546.033. The letter. and without the required bill of lading having been surrendered. Macam was thus allegedly constrained to return the amount involved to SolidBank. copies of the bills of lading and commercial invoices were submitted to Macam’s depository bank. the National Bank of Pakistan. based on delivery of the shipment to GPC without presentation of the bills of lading and bank guarantee. On 14 May 1993. 99012 and 99013 with a total value of Transportation Law. i. Great Prospect Company and not to the consignee.46. 1. still in possession of the original bills of lading. without the required bills of lading and bank guarantee for the release of the shipment issued by the consignee of the goods.Haystacks (Berne Guerrero) 6 April 1989.e. On 5 July 1996 reconsideration was denied. the trial court ordered China Ocean Shipping and Wallem to pay. the shipment was delivered by Wallem directly to GPC. Consolidated Banking Corporation (SolidBank). Upon arrival in Hongkong. It is a standard maritime practice. and affirmed the decision of respondent Court of Appeals of 13 March 1996.033. in part. Misdelivery never an issue when Macam wrote Wallem for the payment of the value of the cargoes Herein. (1) P546. 3.

Article 1736 NCC Article 1736 of the Civil Code provides that “The extraordinary responsibility of the common carriers lasts from the time the goods are unconditionally placed in the possession of. neither the consignee. Effect of telegraphic transfers as to bank guarantee The telex of 5 April 1989 instructed delivery of various shipments to the respective consignees without need of presenting the bill of lading and bank guarantee per the respective shipper’s request since “for prepaid shipt ofrt charges already fully paid. Prior conduct between Macam and GPC as to perishable good. by the carrier to the consignee. is the consignee referred in telex The instruction in the telex of 5 April 1989 was “to deliver the shipment to respective consignees.” In his several years of business relationship with GPC and Wallem. actually or constructively. Hongkong. Macam requested release of goods Against Macam’s claim of “not remembering” having made a request for delivery of subject cargoes to GPC without presentation of the bills of lading and bank guarantee as reflected in the telex of 5 April 1989 are damaging disclosures in his testimony. Conformably. The delivery of the cargoes to GPC as buyer/importer which. He declared that it was his practice to ask the shipping lines to immediately release shipment of perishable goods through telephone calls by himself or his “people. the right to receive them was proper. conformably with Article 1736 had. When mangoes and watermelons are in season. 7. taking into account that subject shipment consisted of perishable goods and SolidBank pre-paid the full amount of the value thereof.” Macam was named therein as shipper and GPC as consignee with respect to Bill of Lading HKG 99012 and HKG 99013. When contract of carriage ends. not Pakistan Bank.” He no longer required presentation of a bill of lading nor of a bank guarantee as a condition to releasing the goods in case he was already fully paid. other than the consignee. Macam dispenses with the bank guarantee because the goods are already fully paid.46 were released to Great Prospect. without prejudice to the provisions of article 1738. did not release or endorse the original bills of lading.” The originals of the 2 subject Bills of Lading are still in the possession of the Pakistani Bank. to implement the said telex instruction. bank guarantee is normally required by the shipping lines prior to releasing the goods. National Bank of Pakistan. In transactions covered by a letter of credit. We were further informed that the consignee of the goods. it is not hard to believe the claim of Wallem that Macam indeed requested the release of the goods to GPC without presentation of the bills of lading and bank guarantee.Haystacks (Berne Guerrero) US$20. The goods are released to GPC. National Bank of Pakistan.” 5. But for buyers using telegraphic transfers. the notify party or real importer/buyer of the goods and not the Pakistani Bank since the latter can very well present the original Bills Transportation Law. there was not a single instance when the bill of lading was first presented before the release of the cargoes. 10. It has been the practice of Macam to request the shipping lines to immediately release perishable cargoes such as watermelons and fresh mangoes through telephone calls by himself or his “people. Great Prospect Company. nor the importer. 2004 ( 124 ) . However.” 6. Delivery to party other than actual consignee 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. 9. paid our client for the goods. Hongkong. Bill of Lading not presented Macam has been transacting with GPC as buyer/importer for around 2 or 3 years already. in the export invoices GPC was clearly named as buyer/importer. Pakistan Bank was indicated in the bills of lading as consignee whereas GPC was the notify party. his shipment to GPC using the facilities of Wallem is twice or thrice a week. Hongkong without the necessary bank guarantee. Thus. As a result thereof. and received by the carrier for transportation until the same are delivered. Herein. or to the person who has a right to receive them. the delivery of the shipment must be to GPC. Hongkong. 8. On account of perishable goods as cargoes and prepayment by bank. GPC.223.

and somehow they were switched. were booked with United Airlines from Chicago to California.A. and they see that the remains are taken to the proper air freight terminal.S. it will no longer be proper to require a bank guarantee as a substitute for the Bill of Lading. Macam failed to substantiate his claim that he returned to SolidBank the full amount of the value of the cargoes. (Continental Mortuary Air Services) at the airport (Chicago) which made the necessary arrangements such as flights.M.A.S. [49] Saludo vs. Philippine Vice Consul in Chicago. Illinois. and she and her brother had to change reservations from UA to the TWA flight after she confirmed by phone that her mother’s remains would be on that TWA flight. Upon arrival at San Francisco at about 5:00 p. and from Manila to Cebu on board PAL Flight 149 of 29 October 1976. Ani Bantug. Maria Salvacion Saludo and Saturnino Saludo.. To construe otherwise will render meaningless the telex instruction. CA (GR 95536. transfers. SolidBank must have realized the absence of privity of contract between itself and Wallem. Illinois. which in a matter of 10 minutes informed him that the remains were on a place to Mexico City.m. booked the shipment with PAL thru the carrier’s agent Air Care International. they furnish the air pouch which the casket is enclosed in. She then called Pomierski that her mother’s remains were not at the West Coast terminal. Maria Salvacion Saludo. That is why Macam conveniently took the cudgels for the bank. they took the TWA flight upon assurance of her cousin. 2004 ( 125 ) . The funeral home had the remains embalmed and secured a permit for the disposition of dead human body on 25 October 1976. Bienvenido M. So. Regalado (J): 4 concur Facts: After the death of Crispina Galdo Saludo.. Saludo. he relayed this information to Miss Saludo in California.A. 23 March 1992) Second Division.S.M. Pomierski and Son Funeral Home of Chicago. as the shipper and Mario (Maria) Saludo as the consignee. and Saturnino G.A. and she was told there was no body on that flight. sealed the shipping case containing a hermetically sealed casket that is airtight and waterproof wherein was contained the remains of Crispina Galdo Saludo.H. Besides. In the meantime. Saludo. Llaneta. later C. After all. This upset her. On the same date. and Pomierski immediately called C. she went to the TWA counter there to inquire about her mother’s remains.A. But no confirmation from her cousin reached her that her mother was on the West Coast. They went to the airport and watched from the look-out area. at 3:00 p. that he would look into the matter and inform her about it on the plane or have it radioed to her. the cargoes consist of perishable fresh fruits and immediate delivery thereof to the buyer/importer is essentially a factor to reckon with.S. Leopoldo G. 26 October 1976. with Pomierski F. She then went to the funeral director of Pomierski Funeral Home who had her mother’s remains and she told the director that they were booked with United Airlines.. C. and from San Francisco to Manila on board PAL Flight 107 of the same date. Likewise. GPC is listed as one among the several consignees in the telex and the instruction in the telex was to arrange delivery of A/M shipment (not any party) to respective consignees without presentation of OB/L and bank guarantee.m. She was told they did not know anything about it. Reluctantly. Return of money to bank mere accommodation of SolidBank by Macam Herein.M. But the director told her that the remains were booked with TWA flight to California.M. she went to the TWA counter again. on 26 October 1976 at the Pomierski & Son Funeral Home. made the necessary preparations and arrangements for the shipment of the remains from Chicago to the Philippines. is a national service used by undertakers throughout the nation (U.S. PAL Airway Bill 079-01180454 Ordinary was issued wherein the requested routing was from Chicago to San Francisco on board TWA Flight 131 of 27 October 1976. She saw no body being brought. 11.). C. in Chicago.M. etc.Haystacks (Berne Guerrero) of Lading in its possession. that there were two bodies at the terminal. called and told him they were Transportation Law.S. and with PAL from California to Manila. if it were the Pakistani Bank to whom the cargoes were to be strictly delivered. mother of Aniceto G.A. on 23 October 1976. SolidBank initially demanded payment from respondents through 5 letters. thru a travel agent. It is not far-fetched to entertain the notion that he merely accommodated SolidBank in order to recover the cost of the shipped cargoes from Wallem.. Saludo Jr. Pomierski brought the remains to C.

surmises or conjectures. This shipment was transferred to or received by PAL at 7:45 p.00. The Court of Appeals affirmed the decision of the lower court in toto. 2. exemplary damages. This casket bearing the remains of Crispina Saludo. is one in which there is a doubt or difference as to the truth or falsehood of the alleged facts. Southern Leyte.00. the petition for review on certiorari. and in a subsequent resolution. in which case it is a question of law. Distinction between question of law and question of fact. it has been held. This being so.000. Test to determine A question of law is one which involves a doubt or controversy on what the law is on a certain state of facts. Padagas for shipment to the Philippines. went beyond the issues of the case and the same are contrary to the admissions of both appellant and appellee. Factual findings of the Court of Appeals binding upon the Supreme Court. in making its findings. or where the findings of fact of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on record. moral damages of P1. otherwise it will be a question of fact. would justify a different conclusion. admits of established exceptions. praying for the award of actual damages of P50. the shipment or remains of Crispina Saludo arrived in San Francisco from Mexico on board American Airlines. was resealed by Crispin F. which was mistakenly sent to Mexico and was opened (there). The rule. the counsel of the Saludos informed Trans World Airlines (TWA) of the misshipment and eventual delay in the delivery of the cargo containing the remains of the late Crispina Saludo. Exceptions Only questions of law may be raised in a petition filed in the Supreme Court to review on certiorari the decision of the Court of Appeals. The Supreme Court affirmed the appealed decision. and. Branch III. the factual findings of the Court of Appeals are final and conclusive and cannot be reviewed by the Supreme Court. (e) when the factual findings are conflicting. is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence. a day after its expected arrival on 29 October 1976. and of the discourtesy of its employees to Maria Salvacion Saludo and Saturnino Saludo. attorney’s fees and costs of suit. Hence. or where the facts set forth by the petitioner are not disputed by the respondent.m. (g) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties and which. In a letter dated 15 December 1976. Issues warrant second look at facts Since it is the soundness of the inferences or conclusions that may be drawn from the factual issues which are being assayed. (f) when the Court of Appeals. denied the Saludos’ motion for reconsideration for lack of merit. The trial court absolved the two airline companies of liability. absurd or impossible. 1.000. One test. however. 3. A discussion seriatim of said issues will further Transportation Law. In a separate letter on 10 June 1977 addressed to Philippine Airlines (PAL). (c) when the inference made is manifestly mistaken. The shipment was immediately loaded on PAL flight for Manila that same evening and arrived in Manila on 30 October 1976. A damage suit was filed by the Saludos before the then Court of First Instance. and (h) where the findings of fact of the Court of Appeals are contrary to those of the trial court. (b) when the finding is grounded entirely on speculations. if properly considered.000. the Court finds that the issues raised in the present petition indeed warrant a second look if this litigation is to come to a reasonable denouement. 28 October 1976.Haystacks (Berne Guerrero) sending the remains back to California via Texas. to wit: (a) where there is grave abuse of discretion. 2004 ( 126 ) . The following day.00 as and by way of nominal damages is granted in favor of the Saludos to be paid by TWA.000. the Saludos stated that they were holding PAL liable for said delay in delivery and would commence judicial action should no favorable explanation be given. or are mere conclusions without citation of specific evidence. Both TWA and PAL denied liability. with the modification that an award or P40. a question of fact. (d) when the judgment of the Court of Appeals was based on a misapprehension of facts. contrarily.

A. (Continental Mortuary Air Services) at the airport (Chicago) which made the necessary arrangements such as flights. on the terms specified in such instrument. is evidence that the carrier has received the goods described therein for shipment.M. is not conclusive. As between the consignor and a receiving carrier. The two-fold character of a bill of lading is all too familiar: it is a receipt as to the quantity and description of the goods shipped and a contract to transport the goods to the consignee or other person therein designated. A bill of lading. it is a general rule as to the parties to a contract of carriage of goods in connection with which a bill of lading is issued reciting that goods have been received for transportation. a bill of lading may contain constituent elements of estoppel and thus become something more than a contract between the shipper and the carrier. 2004 ( 127 ) . transfers.A. is a national service used by undertakers throughout the nation (U. Likewise to be settled is whether or not the conclusions of the Court of Appeals subject of the review indeed find evidentiary and legal support. Designation of bill of lading immaterial The designation is immaterial. However. sealed the shipping case containing a hermetically sealed casket that is airtight and waterproof wherein was contained the remains of Crispina Galdo Saludo. when properly executed and delivered to a shipper. Except as modified by statute. when no goods have been delivered for shipment no recitals in the bill can estop the carrier from showing the true facts.). evidence of delivery to the carrier. However.S. delivery of the goods and issuance of the bill are regarded in commercial practice as simultaneous acts. on 26 October 1976 at the Pomierski & Son Funeral Home. 4. is competent and prima facie. at 3:00 p. 8. delivery of the goods to the carrier normally precedes the issuance of the bill. Pomierski brought the remains to C. but not conclusive. Bill of lading vis-à-vis estoppel An airway bill estops the carrier from denying receipt of goods of the quantity and quality described in the bill. Llaneta.m. recitals in a bill of lading as to the goods shipped raise only a rebuttable presumption that such goods were delivered for shipment. On the same date. a receipt is not essential to a complete delivery of goods to the carrier for transportation but. Such instrument may be called a shipping receipt. PAL Explanation overcoming presumption that remains were delivered and received by TWA and Herein. C. Between the consignor of goods and a receiving carrier. However. that the recital being in essence a receipt alone. whether by sea or land.Haystacks (Berne Guerrero) reveal that the sequence of the events involved is in effect disputed. the fact must outweigh the recital. Inverse order not prohibited by law Since a bill of lading acknowledges receipt of goods to be transported. they furnish the air pouch which the casket is Transportation Law. 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.S. for that matter. when issued. Illinois. that is. as between the shipper and the carrier.M. there is nothing to prevent an inverse order of events. Philippine Vice Consul in Chicago. Under the Tariff and Customs Code. or. the execution of the bill. etc. except as may be prohibited by law. varied or contradicted by parol or other evidence. 5. When bill of lading issued. forwarder’s receipt and receipt for transportation. but may be explained.A. Nature of bill of lading A bill of lading is a written acknowledgment of the receipt of the goods and an agreement to transport and deliver them at a specified place to a person named or on his order. that the former should precede the latter. 6. fall within the definition. Freight tickets for bus companies as well as receipts for cargo transported by all forms of transportation. 9.S. of lading even prior to actual possession and control by the carrier of the cargo to be transported. a bill of lading includes airway bills of lading. 7. to some extent. Bienvenido M. Receipt a prima facie evidence of delivery to carrier Ordinarily.

even prohibited. since the casket was hermetically sealed by the Philippine Vice-Consul in Chicago and in an air pouch of C. and subsequent events caused thereby.M. the body intended to be shipped as agreed upon was really placed in the possession and control of PAL on 28 October 1976 and it was from that date that TWA and PAL became responsible for the agreed cargo under their undertakings in PAL Airway Bill 079-01180454. and from Manila to Cebu on board PAL Flight 149 of 29 October 1976.A. for the switching of caskets prior thereto which was not caused by them. 13. and from San Francisco to Manila on board PAL Flight 107 of the same date. custody and control of the carrier for the purpose of their immediate transportation and the carrier has accepted them. 12. had no way of determining its actual contents. only when such fact of delivery has been unequivocally established can the liability for loss. And. Article 1736 NCC.H. Air Care International and/or TWA. but merely as a confirmation of the booking thus made for the San Francisco-Manila flight scheduled on 27 October 1976. Neither could Air Care International and/or TWA open the casket for further verification. but even prohibited.m.. C. When delivery made 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. unless the shipper or owner exercises the right of stoppage in transitu. which was supposed to contain the remains of Crispina Saludo. Herein. 11. PAL’s explanation On 26 October 1976 the cargo containing the casketed remains of Crispina Saludo was booked for PAL Flight PR-107 leaving San Francisco for Manila on 27 October 1976. with Pomierski F.S. for such duty to commence there must in fact have been delivery of the cargo subject of the contract of carriage. and they see that the remains are taken to the proper air freight terminal. to the effect that Air Care International and/or TWA had to rely on the information furnished by the shipper regarding the cargo’s content. PAL and TWA not liable for switching of caskets prior to their receipt of agreed cargo While the extraordinary diligence statutorily required to be observed by the carrier instantaneously commences upon delivery of the goods thereto. at the Chicago airport terminal for shipment. 2004 ( 128 ) . Actually.M. and not to TWA Transportation Law. TWA without authority. not as evidence of receipt of delivery of the Cargo on 26 October 1976. since they were not only without authority to do so. as duly evidenced by the Interline Freight Transfer Manifest of the American Airline Freight System and signed for by Virgilio Rosales at 7:45 p. attach and the presumption of fault of the carrier under Article 1735 be invoked. 14. absent the excepting causes under Article 1734. to verify contents of casket When the cargo was received from C.M. PAL Airway Bill 079-01180454 was issued.. booked the shipment with PAL thru the carrier’s agent Air Care International.A.Haystacks (Berne Guerrero) enclosed in. PAL Airway Bill 079. there is delivery to the carrier when the goods are ready for and have been placed in the exclusive possession. Period where extraordinary responsibility observed by common carrier. on said date.A. TWA and PAL cannot be held liable.S. 10. destruction or deterioration of goods in the custody of the carrier. This responsibility remains in full force and effect even when they are temporarily unloaded or stored in transit. as the shipper and Mario (Maria) Saludo as the consignee. Where such a delivery has thus been accepted by the carrier.S. it was not until 28 October 1976 that PAL received physical delivery of the body at San Francisco. 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. Pomierski & Son delivered casket to CMAS. Consequently.01180454 Ordinary was issued wherein the requested routing was from Chicago to San Francisco on board TWA Flight 131 of 27 October 1976. the liability of the common carrier commences eo instanti.

that what was inside the casket was not the body of Crispina Saludo so much so that it had to be withdrawn by C. Right of carrier to know contents when it has reasonable ground to suspect goods are dangerous or of illegal character It is the right of the carrier to require good faith on the part of those persons who deliver goods to be carried. CMAS classified as forwarder. However. the carrier has the right to accept shipper’s marks as to the contents of the package offered for transportation and is not bound to inquire particularly about them in order to take advantage of a false classification and where a shipper expressly represents the contents of a package to be of a designated character.M. too. TWA or any airline for that matter would not have opened such sealed casket just for the purpose of ascertaining whose body was inside and to make sure that the remains inside were those of the particular person indicated to be by C. and further noting at this juncture that a carrier has no obligation to inquire into the correctness or sufficiency of such information. that the Pomierski & Son Funeral Home delivered the casket containing the remains of Crispina Saludo. and it is the failure of the carrier to act accordingly in the face of such proof that constitutes the basis of the common carrier’s liability. it turned out later. as a condition of receiving and transporting such goods.M. TWA carried to San Francisco and transferred to defendant PAL a shipment covered by or under PAL Airway Bill 079-ORD-01180454. in the absence of showing of fraud or deceit on the part of the shipper. Only.S. is an agent of the shipper and not of the carrier While the actual participation of CMAS has been sufficiently and correctly established. but to C. where a common carrier has reasonable ground to suspect that the offered goods are of a dangerous or illegal character.And so as a matter of fact. to be subjected to unusual search. The foregoing points at C. it is not the duty of the carrier to ask for a repetition of the statement nor disbelieve it and open the box and see for itself. TWA would have to rely on the representations of C. TWA had to accept whatever information was being furnished by the shipper or by the one presenting the casket for shipment. or even refusal to accept carriage of the same. It bears repeating that CMAS was hired to handle all the necessary shipping arrangements for the transportation of the human remains of Crispina Saludo to Manila. The consequent duty to conduct an inspection thereof arises in the event that there should be reason to doubt the veracity of such representations.S. It was immediately loaded by PAL on its flight for Manila. other than the routinary inspection procedure customarily undertaken.A. In the absence of more definite information.A. and enter into contracts with it. The body of Crispina Saludo had been shipped to Mexico.S.M.Haystacks (Berne Guerrero) It was not to TWA. 2004 ( 129 ) . the carrier has the right to know the character of such goods and to insist on an inspection.A. from PAL.A. with the concomitant right to rely thereon.S. and inasmuch as the freight may depend on the value of the article to be carried. Right of carrier to require good faith on part of persons delivering goods. Ordinarily. 15. and its failure to do so cannot defeat the shipper’s right to recovery of the full value of the package if lost. to hold that it acted as agent for TWA and PAL would be both an inaccurate appraisal and an unwarranted categorization of the legal position it held in the entire transaction.S.M. Transportation Law. The casket was hermetically sealed and also sealed by the Philippine Vice Consul in Chicago. the carrier ordinarily has the right to inquire as to its value. Common carrier entitled to fair representation of nature and value of goods to be carried. 17. there must exist proof that would justify cause for apprehension that the baggage is dangerous as to warrant exhaustive inspection. while the casket was already with PAL. The casket containing the remains of Crispina Saludo was transshipped from Mexico and arrived in San Francisco the following day on board American Airlines.A. if reasonable and practical under the circumstances. 16. Therefore. Right of carrier to conduct an inspection A common carrier is entitled to fair representation of the nature and value of the goods to be carried. the airway bill for the shipment of the casketed remains of Crispina Saludo. and started a chain reaction of the misshipment of the body of Crispina Saludo and a one-day delay in the delivery thereof to its destination.M. it is the duty of the carrier to make inquiry as to the general nature of the articles shipped and of their value before it consents to carry them. as the one responsible for the switching or mix-up of the two bodies at the Chicago Airport terminal. TWA would have no knowledge therefore that the remains of Crispina Saludo were not the ones inside the casket that was being presented to it for shipment.

is regarded as an agent of the shipper and not of the carrier. Terms clear. much less definitively rule on. or deviate from the route or routes of shipment. CMAS may accordingly be classified as a forwarder which. The various stipulations of a contract shall be interpreted together and such a construction is to be adopted as will give effect to all provisions thereof. 18. notwithstanding that the same may be stated on the face hereof. it was acting well within its rights. regarding the statement of TWA and PAL laying the blame on CMAS for the incident. clearly allude to CMAS as the party at fault.” Hence. Thereafter. With its functions. Neither was the Court prepared to delve into. CMAS is actual culprit The facts of the case would point to CMAS as the culprit. Possible liability of CMAS best deferred to another time and addressed to another forum The Saludos’ grief over the death of their mother was aggravated by the unnecessary inconvenience and anxiety that attended their efforts to bring her body home for a decent burial. Air Care International. it merely contracts for the transportation of goods by carriers. CMAS booked the shipment with PAL through the carrier’s agent. and Carrier is hereby authorized to select. no interpretation needed The terms are clear enough as to preclude the necessity to probe beyond the apparent intendment of the contractual provisions. 2004 ( 130 ) . the Court is barred by the inequity of allowing recovery of the damages prayed for by them at the expense of TWA and PAL whose fault or negligence in the very acts imputed to them has not been convincingly and legally demonstrated. that they do not justify an attempt to read into any alleged intention of the parties. or is at the very least indicative of the fact that the Saludos entertained serious doubts as to whether TWA and PAL were responsible for the unfortunate turn of events. As such. 22. by accepted commercial practice. Interpretation of contracts The hornbook rule on interpretation of contracts consecrates the primacy of the intention of the parties. The shipper guarantees payment of all charges and advances. A contract cannot be construed by parts. it was to CMAS that the Pomierski & Son Funeral Home. in view of the condition on the back of the airway bill which provides that “It is agreed that no time is fixed for the completion of carriage hereunder and that Carrier may without notice substitute alternate carriers or aircraft. as shipper. But. Carrier assumes no obligation to carry the goods by any specified aircraft or over any particular route or routes or to make connection at any point according to any particular schedule. There is no ambiguity in the terms of the airway bill to warrant the application of the rules on interpretation of contracts and documents. brought the remains of Saludo for shipment. but its clauses should be interpreted in relation to one another. The Transportation Law. Carrier did not undertake to carry cargo aboard any specified aircraft The carrier did not undertake to carry the cargo aboard any specified aircraft. the possible liability of CMAS as the evaluation and adjudication of the same is not what is presently at issue and is best deferred to another time and addressed to another forum. Court cannot grant damages at expense of TWA and PAL. the terms are to be understood literally just as they appear on the face of the contract. 21. with Maria Saludo as consignee. When the terms of the agreement are clear and explicit. This is tantamount to an admission by the Saludos that they consider TWA and PAL without fault. when TWA shipped the body on an earlier flight and on a different aircraft. Equally telling of the more likely possibility of CMAS’ liability is the Saludos’ letter to and demanding an explanation from CMAS. as much as the Court would like to give them consolation for their undeserved distress. the same having the force of law between them.Haystacks (Berne Guerrero) Hence. 19. 20. and has no interest in the freight but receives compensation from the shipper as his agent. TWA can use substitute aircraft even without notice and without the assumption of any obligation whatsoever to carry the goods on any specified aircraft is clearly sanctioned by the contract of carriage as specifically provided for under the conditions thereof.

fully reconciling and giving effect to the manifest intention of the parties to the agreement. 836). a carrier is not an insurer against delay in transportation of goods. or any particular route or schedule) may be stated on the face hereof. routes and dates of departures and arrivals on the face of the airway bill does not constitute a special contract which modifies the printed conditions at the back thereof. Interpretative rule in Rules of Court applies only if there is inconsistency between written and printed words The interpretative rule in the Rules of Court that written words control printed words in documents may be considered only when there is inconsistency between the written and printed words of the contract. then the law will excuse him. The typewritten provisions of the contract are to be read and understood subject to and in view of the printed conditions. Said carrier being hereby authorized to deviate from the route of the shipment without any liability therefore. it is bound to fulfill its contract and is liable for any delay. 27. but where the party by his own contract creates a duty or charge upon himself. the law implies a contract that they shall be delivered at destination within a reasonable time. Specification of flights does not constitute a special contract To countenance a postulate that the specification of the flights and dates of departures and arrivals constitute a special contract (that would prevail over the printed stipulations at the back of the airway bill) would unduly burden the common carrier for that would have the effect of unilaterally transforming every Transportation Law. he is bound to make it good notwithstanding any accident or delay by inevitable necessity because he might have provided against it by contract. PAL. 2004 ( 131 ) . but in the ruling intention of the parties as gathered from all the language they have used and from their contemporaneous and subsequent acts. 26. neither do particular words or phrases necessarily determine the character of a contract. Statement on the face of the airway bill The statement on the face of the airway bill properly and completely reads “Carrier certifies goods described below were received for carriage subject to the Conditions on the reverse hereof the goods then being in apparent good order and condition except as noted hereon. and has no remedy over.” Herein. the contract has provided for such a situation by explicitly stating that the condition remains effective “notwithstanding that the same (fixed time for completion of carriage. The legal effect of the contract is not to be determined alone by any particular provision disconnected from all others. PAL. the typewritten specifications of the flight. 90 Phil. 24.” the Supreme Court ruled that common carriers are not obligated by law to carry and to deliver merchandise. In any event. and persons are not vested with the right to prompt delivery. unless such common carriers previously assume the obligation. Said rights and obligations are created by a specific contract entered into by the parties (Mendoza vs. in the absence of any agreement as to the time of delivery. But where a carrier has made an express contract to transport and deliver property within a specified time. Certain stipulations cannot be segregated and then made to control. As previously stated.” 25. When a common carrier undertakes to convey goods. Delayed delivery of air cargo In a similar case of delayed delivery of air cargo under a very similar stipulation contained in the airway bill which reads: “The carrier does not obligate itself to carry the goods by any specified aircraft or on a specified time. Whether or not there has been such an undertaking on the part of the carrier is to be determined from the circumstances surrounding the case and by application of the ordinary rules for the interpretation of contracts. and the party is disabled from performing it without any default in himself. This result logically follows from the well-settled rule that where the law creates a duty or charge. Mendoza vs. 23.Haystacks (Berne Guerrero) whole contract must be interpreted or read together in order to arrive at its true meaning. Carrier not an insurer against delay in transportation of goods in absence of a special contract The oft-repeated rule regarding a carrier’s liability for delay is that in the absence of a special contract. no matter from what cause it may have arisen. specified aircraft. there was no ambiguity in the contract subject of this case that would call for the application of said rule.

Contracts of adhesion not entirely prohibited The case of Ong Yiu vs. he is estopped from thereafter denying that he assented to such terms. duly signified their presumed assent to all terms of the contract through their acceptance of the airway bill and are consequently bound thereby. trip or voyage. only when the weaker party is imposed upon in dealing with the dominant bargaining party and is reduced to the alternative of taking it or leaving it.Haystacks (Berne Guerrero) single bill of lading or trip ticket into a special contract by the simple expedient of filling it up with the particulars of the flight. Herein. it must appear that the clause containing this exemption from liability plainly formed a part of the contract contained in the bill of lading. Ordinary prudence on the part of any person entering or contemplating to enter into a contract would prompt even a cursory examination of any such conditions. where a shipper accepts a receipt which states that its conditions are to be found on the back. It cannot be gainsaid that the Saludos were not without several choices as to carriers in Chicago with its numerous airways and airlines servicing the same. and in the absence of fraud or mistake. In order that any presumption of assent to a stipulation in a bill of lading limiting the liability of a carrier may arise. terms and/or stipulations. it does not mean. and thereby imposing upon the carrier duties and/or obligations which it may not have been ready or willing to assume had it been timely advised thereof. mechanical failure. generally lie within the discretion of the carrier in the absence of specific routing instructions or Transportation Law. Changes should be justified Although Condition 5 of the airway bill is binding upon the parties to and fully operative in the present transaction. or by contingencies or emergencies in aviation such as weather turbulence. flights and schedules to the prejudice of their customers. if he adheres. Thus. instructs that contracts of adhesion are not entirely prohibited. such receipt comes within the general rule. A stipulation printed on the back of a receipt or bill of lading or on papers attached to such receipt will be quite as effective as if printed on its face. Court of Appeals. requirements of national security and the like. far from being the weaker party in the situation. 29. This condition only serves to insulate the carrier from liability in those instances when changes in routes. et al. the Saludos. flights and schedules are clearly justified by the peculiar circumstances of a particular case. 2004 ( 132 ) . The one who adheres to the contract is in reality free to reject it entirely. or variations therein. Ong Yiu vs. Condition serves as insulation to liability when flight routes and schedules change. that the carriers can at all times whimsically seek refuge from liability in the exculpatory sanctuary of Condition 5 or arbitrarily vary routes. When contract of adhesion void and unenforceable A contract of adhesion may be struck down as void and unenforceable. customs and usages. 30. for being subversive of public policy. for there were sufficient indications on the face of said bill that would alert them to the presence of such additional condition to put them on their guard. Acceptance of bill of lading without dissent raises presumption that all terms brought to knowledge of shipper and agreed to by him 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. he gives his consent. if it is shown that the consignor knew of its terms. completely deprived of the opportunity to bargain on equal footing. flight or voyage. This rule applies with particular force where a shipper accepts a bill of lading with full knowledge of its contents. And even as it is conceded that specific routing and other navigational arrangements for a trip. 28. or by general transportation practices. under such circumstances makes it a binding contract. Ordinary prudence required of person entering in contract The fact that the challenged condition 5 was printed at the back of the airway bill militate against its binding effect on the Saludos as parties to the contract. 32. and acceptance. 31. CA. and the shipper is held to have accepted and to be bound by the conditions there to be found.

TWA knew urgency of shipment and actually carried the remains on earlier flight Herein. Transportation Law. which it could do under the terms of the airway bill. negligence or malice of PAL and TWA. arrogant or indifferent as would assume the proportions of malice or bad faith and lay the basis for an award of the damages claimed. courtesy and consideration. the delay in the delivery of the remains of Crispina Saludo. Common carrier has implicit duty to carry property within reasonable time and guard against delay. TWA took it upon itself to carry the remains of Crispina Saludo on an earlier flight. exacerbated by the tension and anxiety wrought by the impasse and confusion over the failure to ascertain over an appreciable period of time what happened to her remains. it is plainly incumbent upon the carrier to exercise its rights with due deference to the rights. the carrier shall be liable for damages immediately and proximately resulting from such neglect of duty. Herein.Haystacks (Berne Guerrero) directions by the shipper. No showing that personnel treated the Saludos in humiliating or arrogant manner. 33. TWA knew of the urgency of the shipment by reason of this notation on the lower portion of the airway bill: “All documents have been certified. and the inability of the TWA counter personnel to inform the Saludos of the whereabouts of the remains. Contract of carriage different from other contractual relations. they have a right to be treated with kindness. 34. The initial answer of the TWA personnel at the counter that they did not know anything about the remains. the use of abusive or insulting language calculated to humiliate and shame passenger or bad faith by or on the part of the employees of the carrier that gives the passenger an action for damages against the carrier. and generates a relation attended with public duty. Even their alleged indifference is not clearly established. Passengers are human beings with human feelings and emotions. undeniable and regrettable as it was. What constitutes rude or discourteous conduct There was no showing of any humiliating or arrogant manner with which the personnel of both TWA and PAL treated the Saludos. their answer that they have not heard anything about the remains. cannot be said to be total or complete indifference to the latter. and later. malfeasance or neglect. 37. particularly so in the face of the Saludos’ grief over the death of their mother. Although not in bad faith. Please return bag first available flight to SFO. actuations of TWA’s employees leave must to be desired The manner in which TWA’s employees dealt with the Saludos was not grossly humiliating. Human remains of Cristina (sic) Saludo. interests and convenience of its customers. passengers and the general public. It must however. which is the primary reason for their enfranchisement and recognition in our law. respect. and to guard against delay. Liability of carrier for unreasonable delay A common carrier undertaking to transport property has the implicit duty to carry and deliver it within a reasonable time. 35. absent any particular stipulation regarding time of delivery. they should not be treated as mere numbers or statistics for revenue. be pointed out that the lamentable actuations of TWA’s employees leave much to be desired. common carriers such as airline companies are in the business of rendering public service. At any rate. After all. 2004 ( 133 ) . Airline companies admonished to require personnel to be more accommodating towards customers and general public. cannot be attributed to the fault. 36. In case of any unreasonable delay. The operation of a common carrier is a business affected with public interest and must be directed to serve the comfort and convenience of passengers. A contract to transport passengers is quite different in kind and degree from any other contractual relation. it is any rude or discourteous conduct. and is not a mere contract for transportation but also treatment with courtesy and consideration Airline companies are hereby sternly admonished that it is their duty not only to cursorily instruct but to strictly require their personnel to be more accommodating towards customers.” Accordingly. Because the passengers in a contract of carriage do not contract merely for transportation. and none of the above is obtaining in the present case. to make sure that there would be enough time for loading said remains on the transfer flight on board PAL.

at least. It can be said to be more of a lethargic reaction produced and engrained in some people by the mechanically routine nature of their work and a racial or societal culture which stultifies what would have been their accustomed human response to a human need under a former and different ambience. 39. however. faith Censurable conduct of TWA employees do not approximate dimensions of fraud. malice or bad faith. which could have easily facilitated said inquiry and which are used as a matter of course by airline companies in their daily operations. They are recoverable where some injury has been done but the amount of which the evidence fails to show. malice or bad faith.Haystacks (Berne Guerrero) 38. containing personal and household effects. Articles 2221 and 2222 NCC The facts show that the Saludos’ right to be treated with due courtesy in accordance with the degree of diligence required by law to be exercised by every common carrier was violated by TWA and this entitles them. 42. 2004 ( 134 ) . the Court find an award of P40. However. When moral and exemplary damages. It was from PAL that they received confirmation that their mother’s remains would be on the same flight to Manila with them. vs. malice or good The censurable conduct of TWA’s employees cannot. 29 December 1960) Second Division. The ship Transportation Law. their apathetic stance while not legally reprehensible is morally deplorable. CA (GR L-15654. [50] Delgado Bros. fraud or bad faith. The airline’s counter personnel were totally helpless about the situation. They were. Articles 2221 and 2222 of the Civil Code make it clear that nominal damages are not intended for indemnification of loss suffered but for the vindication or recognition of a right violated or invaded.00 as nominal damages in favor of the Salufos to be a reasonable amount under the circumstances of the present case. Maria Saludo testified that it was to PAL that they repaired after failing to receive proper attention from TWA. Bautista Angelo (J): 6 concur Facts: On 17 February 1956. No attribution of discourtesy or indifference against PAL No attribution of discourtesy or indifference has been made against PAL by the Saludos and. the Saludos were not to be regaled with extra special attention. Kleeper shipped on board the S. in fact. In the exercise of the Court’s discretion. and not the cold insensitivity to their predicament. President Cleveland at Yokohama. the assessment of damages being left to the discretion of the court according to the circumstances of the case. Japan one lift van under bill of lading 82. said damages cannot be awarded. or attorney’s fees. With all the modern communications equipment readily available to them. be said to have approximated the dimensions of fraud. Apathy not legally reprehensible but is morally deplorable Herein. in the absence of strong and positive evidence of fraud. 40. however. Common Sense could and should have dictated that they exert a little extra effort in making a more extensive inquiry. there be an award of exemplary damages nor of attorney’s fees as an item of damages in the absence of proof that defendant acted with malice. Richard A. rather than just shrug off the problem with a callous and uncaring remark that they had no knowledge about it. S. 41. Award of nominal damages warranted. by themselves or through their superiors. entitled to the understanding and humane consideration called for by and commensurate with the extraordinary diligence required of common carriers. Neither can. awarded Moral damages may be awarded for willful or fraudulent breach of contract or when such breach is attended by malice or bad faith. to nominal damages from TWA alone.000.

namely: one wherein the shipping company assumes full responsibility for the use of the crane. value of the goods damaged. liable in any way. plus P600. Inc. Delgado Brothers. with legal interest from the filing of the complaint. CLEVELAND Reg.729. Kleeper brought the action before the CFI Manila to recover the sum of P6. In the latter case.000. assumed responsibility for the negligence of the crane operator who was employed by Delgado Brothers. When exemption from liability arising from negligence may be granted In order that exemption from liability arising from negligence may be granted. however. Inc. co-defendant Delgado Brothers. and the other where said company agreed not to hold the Delgado Brothers.50 arising out of the breakage.50 as damages. Inc.. on 22 February 1955. vs. on 5 November 1957. La Compania Transatlantica not in point The case of the Manila Railroad Co. Ltd. We hereby assume full responsibility and liability for damages to cargoes. American President Lines assumed responsibility The contract entered into between the American President Lines and Delgado Bros. Manila Railroad vs. A survey was made and the result was that Kleeper suffered damages totalling P6.00 as sentimental value of the damaged goods and attorney’s fees. The trial court.” and that for that reason the latter should be blamed for the consequence of the negligent act of its operator. which is a clear case of assumption of responsibility on the part of the carrier contrary to the conclusion reached by the Court of Appeals. interposed the present petition for review.) to pay Kleeper the sum of P6. 2 of the S/S PRES.000. Transportation Law. Clause determinative of the responsibility for the use of the crane The clause determinative of the responsibility for the use of the crane contains two parts. without pronouncement as to costs. rendered decision ordering the shipping company (American President Lines Ltd. relative to the gantry crane owned by Delgado Bros. We hereby agree to pay the corresponding charges for above requested services. Inc.50. the contract “must be so clear as to leave no room for the operation of the ordinary rules of liability consecrated by experience and sanctioned by the express provisions of law. Hence. The Supreme Court modified the decision appealed from in the sense that Delgado Brothers should not be made liable for the damage caused to the goods in question.00 as attorney’s fees. The court ordered that. ship or otherwise arising from use of said crane and we will not hold the Delgado Brothers. 2. Both Delgado Bros. denting and smashing of the goods. 1. Here the contrary appears. Inc.” 4. from 1300 hrs. it cannot do so under the second part when it expressly agreed to exempt petitioner from liability in any way it may arise. reads: “Please furnish us ONE gantry to be used on hatch No. La Compañia Trasatlantica. Inc. and American President Lines appealed to the Court of Appeals which affirmed in toto the decision of the trial court. 38 Phil.” The Court cannot agree with the finding that the phraseology employed in Exhibit 1 would not “induce a conclusion that the American President Lines. is not in point. 3. et al. and the sum of P1.729. it fell on the pier and its contents were spilled and scattered. should pay the shipping company the same amounts by way of reimbursement. plus the sum of P2. once the judgment is satisfied. 2004 ( 135 ) .729. the evidence adduced is not clear as to the exemption of responsibility..00 as their sentimental value.. because in the Court’s opinion the phraseology thus employed conveys precisely that conclusion. 875.Haystacks (Berne Guerrero) arrived in the port of Manila on 22 February 1956 and while the lift van was being unloaded by the gantry crane operated by Delgado Brothers. the doctrine therein laid down is not controlling. Contents of Exhibit 1 RE Gantry crane. While it may be admitted that under the first part the carrier may shift responsibility to petitioner when the damage caused arises from the negligence of the crane operator because exemption from responsibility for negligence must be stated in explicit terms. liable or responsible in any way thereof. to FINISH hrs.

Japan shipped a cargo consisting of 5 packages of supplies and materials for “1200 W x 2500 LMM Apron Feeder and 200 W x 5850 LMM Apron Feeder. Therefore. The shipper cannot elude its provisions simply because they prejudice him and take advantage of those that are beneficial. Shipper or consignee who takes bill of lading becomes bound by all stipulation contained therein Clause 17. These circumstances take this case out of our ruling in the Mirasol case (invoked by the Court of Appeals) and place it within the doctrine in the case of Mendoza vs. printed. a letter stating that HSBC holds title to the goods and has possession of the full set of original bills of lading. Eastern Shipping received from Hongkong and Shanghai Bank (HSBC).. On 14 January 1981. Under Article 1766. A few days later. Gutierrez Jr. COGSA merely suppletory to the provisions of the Code Article 1753 (New Civil Code) provides that the law of the country to which the goods are to be transported shall govern the liability of the common carrier in case of loss. Eastern Shipping wrote a reply to HSBC. see [6] [52] Eastern Shipping Lines vs. 836. If destination is Philippines. Inc. 1 on leave Facts: On 24 February 1980.. 17 October 1990) Third Division. said section is merely suppletory to the provisions of the Civil Code. and 1738). stating therein that it regrets Transportation Law. consignee and owner of the goods agree to be bound by all its stipulations.e. On 23 December 1980 CMI wrote a letter to HSBC admitting that they received the shipment in question due to a guarantee executed by them. 6. Metro Manila. This means the law of the Philippines. or stamped on the front or back hereof. [51] Eastern Shipping Lines vs. In said guaranty.’ i. 1737. and that it is unable to locate the cargo and that it appeared that Eastern Shipping has released it to CMI. CA.00 per package unless the value of the goods had been declared by the shipper and inserted in the bill of lading. although Section 4(5) of the Carriage of Goods by Sea Act states that the carrier shall not be liable in an amount exceeding $500. provisions that govern said rights and obligations (Articles 1736. The cargo was loaded on board the S/S Eastern Adventure destined for Manila. (J): 3 concur. and so it may be said that the same is binding upon him as if it has been actually signed by him or by any other person in his behalf. destruction or deterioration.Haystacks (Berne Guerrero) 5. Philippines. with “Address Arrival Notice to Consolidated Mines Inc. on the basis of an Undertaking for Delivery of Cargo but without the surrender of the original bill of lading presented by Consolidated Mines (CMI). printed in red ink that appears on the very face of the bill of lading. and requested HSBC that legal action be held off for at least 30 days. 2004 ( 136 ) . the fact that the shipper shipped his goods on board the ship of the shipping company and paid the corresponding freight thereon shows that he impliedly accepted the bill of lading which was issued in connection with the shipment in question. any local customs or privileges to the contrary notwithstanding. reads: “IN ACCEPTING THIS BILL OF LADING the shipper. This is more so where it is both the shipper and the consignee of the goods in question. promising to settle its account with HSBC from the funds it was expecting from Benguet Corporation.” The cargo arrived in Manila on 4 March 1980. Secondly. CA (GR 80936. and conditions whether written. HSBC wrote another demand letter through counsel dated 29 October 1980 in contemplation of a legal action against Eastern Shipping should it not make good HSBC’s claim. Makati. actions and expenses” About 5 ½ months later. Eastern Shipping released the shipment in question to CMI.” covered by a bill of lading. Law of country of destination prevails.” The clause provides that a shipper or consignee who accepts the bill of lading becomes bound by all stipulations contained therein whether on the front or back thereof. exceptions. CMI undertook to indemnify Eastern Shipping “harmless from all demands. Considering that there was no reply from Eastern Shipping. or specifically on 19 August 1980. 90 Phil. the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws. The vessel is operated by Eastern Shipping Lines. claiming liabilities. 6799 Ayala Avenue. ‘In all matters not regulated by this Code. The bill of lading was consigned to “Shipper’s Order”. the Nanyo Corporation of Kobe. or the new Civil Code. Clause 17 of the bill of lading. Philippine Air Lines.

the carrier is not ordinarily expected to deliver mining equipment to an unnamed or unknown party lurking for several months. The Supreme Court granted the petition. Hence. With respect to the Third Party Complaint.00 as and for attorney’s fees and to pay the costs. dismissed the complaint before the trial court for lack of merit but without prejudice to HSBC pursuing its claims against CMI in the proper proceedings. 1. P20. in effect makes CMI for all practical intents and purposes the party named and ordered to receive the goods. without more. PHILIPPINES. shows on its face that the Shipment is consigned “TO SHIPPER’S ORDER” with “ADDRESS ARRIVAL NOTICE TO CONSOLIDATED MINES INC. set aside the decision and order of the Court of Appeals. the court on 15 January 1985 rendered judgment in favor HSBC and against Eastern Shipping. Eastern Shipping requested that HSBC advise the former if the consignee be unable to comply with its requirement after 30 days. During trial.521. cannot be expected to look beyond what is contained on the face of the bill of lading and guess which of the many banks in Metro Manila or some other unrevealed corporation could possibly be the consignee. Eastern Shipping filed a third party complaint against CMI seeking reimbursement from the latter of whatever pecuniary obligations Eastern Shipping may be liable to HSBC.Haystacks (Berne Guerrero) releasing the cargo without the consent of HSBC’s client.” Nowhere did the Bill of Lading refer to HSBC as the consignee or the one to be notified. On 30 June 1987. as consignee At the outset. the Court rendered judgment in favor of Eastern Shipping and against the CMI ordering the latter to pay all the liabilities of the former in favor of HSBC consisting of the value of the goods covered by the Bill of Lading in the sum of $168.000. Eastern Shipping appealed to the Court of Appeals. CMI having failed to fulfill its promise. HSBC filed a complaint before the then CFI of Rizal against Eastern Shipping praying for actual and compensatory damages in the amount of $168. 2.16 representing the value of the goods covered by the Bill of Lading. Its motion for reconsideration having been denied. In the absence of contrary instructions or at least knowledge of other facts. but the same was denied on 24 November 1987. as well as moral damages. but that it was constrained to release the same in view of the consignee’s strong representation and guarantee that they will settle their obligation with the bank. not being privy to any transaction between HSBC and CMI. To consider otherwise would not be sound business practice as Eastern Shipping would be forced to wait for the real owner of the goods to show up. 6799 AYALA AVE. On the basis of the evidence presented by HSBC and Eastern Shipping. Eastern Shipping filed a motion for reconsideration.000.521.16 or its equivalent in Philippine Currency representing the value of the goods covered by the Bill of Lading plus interest thereon from the filing of the complaint. On 15 August 1981. MAKATI. The foregoing information. until fully paid. 2004 ( 137 ) .16 or its equivalent in Philippine Currency plus interest from the filing of the third party complaint until fully paid. The shipment consisted of machinery materials and supplies for a mining company named in the bill of lading. ordering the latter to pay the sum of $168. Eastern Shipping not expected to look beyond face of bil of lading Eastern Shipping. Bill of lading refer to CMI. the petition for review. not HSBC. the Court of Appeals rendered the decision affirming the appealed decision in toto.000 attorney’s fees plus expenses of litigation and judicial costs. the Bill of Lading which was issued by the carrier but contained articles furnished by the Shipper. exemplary damage in the amount deemed just by the court and P50. METRO MANILA. perhaps in vain.521. as CMI failed to present its evidence. attorney’s fees of P20. CMI filed a Motion to Stay Action in view of the pendency of involuntary insolvency proceedings commenced against it in the meantime by its creditors which included HSBC.00 and to pay the costs. Transportation Law. This motion was denied by the trial court.

(3) HSBC has established by its own documentary evidence. Macondray vs. condition. Similarly. it was held that the arrival of shipment is deemed admitted by an allegation of delivery to the consignee. The rule cannot always be absolute. And in Phoenix Assurance Co. due to its lack of knowledge as to who was the real consignee in view of CMI’s strong representations and letter of undertaking wherein it stated that the bill of lading would be presented later. it was held that a bill of lading is ordinarily merely a convenient commercial instrument designed to protect the importer or consignee.” 8. Article 353 of Code of Commerce Assuming that CMI may not be considered consignee. (11 SCRA 400 [1964]). Admissibility of evidence Section 3. identification marks. Nature of Bill of lading. Manila Port Service. a bill of lading recites the place and date of shipment. Rules of Court. This is precisely the situation covered by the last paragraph of Article 353 of the Code of Commerce.. While the goods in question were released on 4 March 1980 the records show that HSBC received the original bill of lading. Hence. equity favors Eastern Shipping which proved that it was in good faith while both CMI and HSBC cannot claim the same. Japan by the Foreign Service of the Republic of the Philippines. “We are unable to locate the cargo and it would appear that it has been released by you to Consolidated Mines. Section 3. and certified that advance copies of Commercial Invoice Packing List and Bill of Lading were airmailed directly to Buyer. it was held that as a receipt. CMI is the buyer-owner of the shipment. Inc. Rule 128. Acting Commissioner of Customs (62 SCRA 427 [1975]). Acting Commissioner of Customs. Co. v. weight. 9. the consignee cannot return upon receiving the merchandise the bill of lading subscribed by the carrier. v. in view of the admissions of HSBC. despite Transportation Law. exceptional circumstances allow a deviation from the general rule regarding the surrender of the bill of lading. dimensions. the Consular Invoice dated 25 February 1980. Rules of Court. “If in case of loss or for any other reason whatsoever. And to make things worse. Judicial admissions Section 2. of the Rules of Court provide that “Admissions made by the parties in the pleadings.” 6. by HSBC’s own documentary evidence. Rule 129. Ltd. United States Lines (22 SCRA 674 [1968]). State Bonding and Insurance vs. Manila Port Service In State Bonding and Ins. Rule 128. Other evidences (1) HSBC expressly admitted in its complaint that “pursuant to the Bill of lading the shipment was issued ‘To Shipper’s Order.Haystacks (Berne Guerrero) 3. issued in Tokyo. Rule 129.’” It never alleged therein that it was the consignee of the shipment in question.e. that the consignee of the shipment in question is CMI. i. Section 2. CMI owner of goods in question. (2) the Buyer referred to in the Certificate issued by the shipper Nanyo Corporation should perforce refer to CMI. describes the goods as to quantity. HSBC. v. Eastern Shipping in good faith Under the special circumstances of the present case. Inc. more particularly. he shall give said carrier a receipt of the goods delivered this receipt producing the same effects as the return of the bill of lading. or in the course of the trial or other proceedings do not require proof and cannot be contradicted unless previously shown to have been made through palpable mistakes. This circumstance goes against the claims of HSBC. Eastern Shipping cannot be faulted for releasing the goods to CMI under the circumstances. of the Rules of Court provide that “Evidence is admissible when it is relevant to the issue and is not excluded by these rules. US Lines In Macondray and Company Inc. only on April 1980 or long after the goods had been released. as per testimony of its witness Ederlina Crisostomo. quality and value. as that it certified that the Original Consular Invoice had been airmailed directly to Buyer. 4.” This proves that it had fore-knowledge of the prior release to CMI. 5. 2004 ( 138 ) . Thus HSBC in its original demand letter stated. Phoenix Assurance vs.” 7.

there was a named owner to be notified. the weather was threatening. actually or constructively. 10. Eastern Shipping did not commit any fault sufficient to render it liable to HSBC. belonging to Yangco Steamship. as if the transaction were his own. 25 July 1916) Second Division. of the value of P11. to the consignee.80 piculs of sugar. and received by the carrier for transportation until the same are delivered.229. Article 1883 NCC “If an agent acts in his own name. On 8 August 1913. and that there was such a sea on as to make it dangerous for the cascos. It could not possibly be left around lying idle when on the face of the bill of lading. together with others. akin to an agent of HSBC. The reason why this was done was that. by the carrier to the consignee.041. 2004 ( 139 ) . to tow from Guagua to Manila two cascos loaded with 2. it allowed the latter to be designated as the consignee in the Consular Invoice. On the other hand.90. 12. as the party to be notified. With such vast powers. 11. CMI secured the release of the goods through misrepresentation before Eastern Shipping without settling its account with HSBC and thereafter did not bother to present evidence before the trial court. except when the contract involves things belonging to the principal. Article 1736 NCC. Per Curiam: 3 concur. heavily loaded as they were. [53] Limpangco Sons vs. neither have such persons against the principal. leaving Eastern Shipping holding an empty bag as it were. Under the exceptional circumstances and applying especially strong considerations of equity. initiated. In such case the agent is the one directly bound in favor of the person with whom he has contracted. or to the person who has a right to receive them. Only later developments led to the present case. the launch Maturing was in the Malabon River Transportation Law. When the launches.” Herein. to continue the voyage to Manila. together with their tows. The provisions of this article shall be understood to be without prejudice to the actions between the principal and agent. Article uses conjunction “or” Article 1736 of the Civil Code of the Philippines which provides that “the extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of.Haystacks (Berne Guerrero) CMI’s admission that it received the goods. On that date the cascos left Guagua towed by the launches Tahimic and Matulin. Yangco Steamship (GR 10283. The launch Tahimic towed the cascos into the Malabon River and the launch Matulin continued the trip to Manila. property of Limpanggo Sons. Limpangco Sons employed Yangco Steamship Co. sued only Eastern Shipping while at the same time claiming for the value of the goods in the involuntary insolvency proceedings of CMI which the Bank itself. at that time. without prejudice to the provisions of Article 1738. that is.” 13. On the contrary. 1 concur in result. 1 dissent Facts: On 3 August 1913. the patron of the launch Matulin. and even if it acted on its own. HSBC more negligent party as against Eastern Shipping It becomes more evident that HSBC is the more negligent party as against Eastern Shipping when aside from having allowed CMI to be designed in the bills of lading. the original of which was directly furnished to CMI by and as certified to by the shipper Nanyo Corporation. Bad faith by both HSBC and CMI For almost 6 months from the arrival of the goods HSBC did not do anything to claim the cargo. arrived off the Malabon River. HSBC wittingly or unwittingly overlooked the fact that the same article uses the conjunction “or” in reference to whom the goods may be delivered. or to the person who has a right to receive them. These circumstances also prove bad faith on the part of CMI. CMI acted within its authority. the principal has no right of action against the persons with whom the agent has contracted. whether of his own motion or whether at the instance of the patrones of the cascos decided to leave the cascos in the Malabon River. it was HSBC and CMI who were obviously in bad faith in dealing with Eastern Shipping.

and that reasonable care is measured by the dangers and hazards to which the tow is or may be exposed. and. sound and reasonable appliances and instrumentalities for the service to be performed. 1. but by watching her when in a dangerous locality. and if the locality in which the tow finds itself at any given time is more than ordinarily dangerous. and this applies not only in the choice of route. they were driven ashore or on the shoals and their cargoes lost.Haystacks (Berne Guerrero) and the patron talked to the men in charge of the two cascos. greater care must necessarily be used when venturing upon an ocean voyage than with a vessel fitted for deep water. It neglected to furnish suitable appliances and instrumentalities. The patron of the Matulin testified that he was unable to render assistance to the cascos by reason of the shallow water in which they were at the time they were caught by the winds and waves and washed ashore. it was negligence for him to ask the cascos to move out into the open sea under such circumstances. scope A vessel which undertakes a towage service is liable for reasonable care of the tow. The fact of time of time and season and of the probability that in coming out of the river they would be met with wind and wave Transportation Law. to see that his directions are obeyed. It is negligence to leave two heavily loaded cascos in Manila Bay at the mercy of weather likely to exist in the month of August for a distance of 1. thus propelled. he would await them of the mouth of the Malabon River. something like 1. It was agreed between the patron of the Matulin and the patrones of the cascos that the latter should move out of the river by means of their tikines or bamboo poles and. such as the cascos are. made no effort to assist them and. they claim they called to the Matulin. which it is the duty of the master of the tug to know and to guard against not only by giving proper instructions for the management of the tow. duration. the patron of the Matulin arrived with his launch off the mouth of the Malabon River and anchored outside of the shallows. outside the bar. by reason of the high seas and strong winds. 2. The patron of the Matulin. The bamboo poles were unavailing. Also the captain of the Matulin failed to give proper instructions to the tow. but in the handing of the tow. If it was negligence not to provide himself with appliances by which the cascos could be protected while passing from the mouth of the river to the launch. as well as the giving of proper instructions as to the management of the tow. Vessel undertaking towage service liable for reasonable care of the tow. Its responsibility includes not only the proper and safe navigation of the tug on the journey. which were at that time tied up at Tansa. 2004 ( 140 ) . proceed to the place where the launch Matulin was to be waiting for them. 3. The duty of the tug to a tow is a continuous one from the time service commences until it is completed. the crews poled their cascos out of the river following the channel. if the weather was then favorable. On the following day.500 meters with no other motive power than bamboo poles. to select the one having the smoothest water and affording shelter in stormy weather. for help. Extraordinary circumstances Although the law requires the use of only ordinary diligence and care. the law required the exercise of more than ordinary care under the circumstances existing at the time the cascos were lost. When they passed the shallow water they were met with high seas and strong winds. The actual dispositive portion of the judgment is not found in the facts> The Supreme Court reversed the judgment of the trial court. the tug is held to a proportionately higher degree of care and skill. <The trial court appeared to have rendered judgment in favor of Yangco Steamship. An action for negligence was filed as a result of the loss of cargo while two cascos were towed from Guagua to Manila. and that. he would tow them to Manila. which was in plain sight. finding themselves in danger of being washed ashore and destroyed. Yangco negligent Yangco Steamship directly or through the captain failed in every duty laid upon it by the law. It is well recognized that in towing a boat built only for the shallow water of an inland stream. for the tug itself was unsuitable for the purpose in hand. they allege. In accordance with the agreement with the patron of the Matulin and under his instructions. and told them that on the following day. at daybreak.500 meters from the month of the river. but to furnish safe. Degree of diligence and care required. Measure.

in their helpless condition. were dispatched by messenger. and. Macondray called Codina by telephone at about 4. Macondray & Co. It was not an act of God by which the cascos were lost. Japan. God Qualification to warrant exemption from liability when proximate or immediate cause is Act of While the captain of the Matulin would not have been responsible for an act of God by which the cascos were lost. the cargo could be discharged from the ship.” The mate’s receipt.Haystacks (Berne Guerrero) and wave and. which constituted authority for the ship’s officers to receive the cargo aboard. Street (J): 7 concur Facts: In September 1916. yet. Letters by Martini. (GR 13972. and the tug should be held to a proportionate higher degree of care and skill. also [137] and [. 28 July 1919) En Banc.. with no express pronouncement will be made as to the costs of either instance. and the negotiable copies were. a request was made for the delivery of the bills of lading on that day To effectuate this.” written with pencil. it was his duty to foresee what the weather was likely to be. and to take such precautions as were necessary to protect his tow. arranged with Macondray & Co. told him that Macondray could not accept the cargo for transportation otherwise than on deck and that if Martini were dissatisfied. Ltd. The mate’s receipt did not come to Martini’s hand until Monday night. Martini applied to Macondray for necessary space on the steamship Eastern. The goods were embarked at Manila on the steamship Eastern and were carried to Kobe on the deck of that ship. The Supreme Court reversed the judgment appealed from and absolved Macondray from the complaint. but as Martini was desirous of obtaining the bills of lading on the Saturday morning preceding in order that he might negotiate them at the bank. Martini. 2004 ( 141 ) . if the tug unnecessary exposed the two such accident by any culpable act or omission of its own. An action was instituted by Martini to recover the amount of the damage thereby occasioned. received by the plaintiff two days later also bore the notation “on deck at shipper’s risk. and evidently by the officer who took the cargo on board and signed the receipt.” In conformity with the purpose of this document the bills of lading were issued. made the situation of the cascos one of more than ordinary danger. G. on 16 September 1916. and upon receiving it. for the shipment of 219 cases or packages of chemical products from Manila. vs. In the Court of First Instance judgment was rendered in favor of Martini for the sum of P34. Macondray appealed. with interest from 24 March 1917. negotiated at the bank by the plaintiff for 90% of the invoice value of the goods. the latter being an employee of the house whose duty it was to attend to all shipments of merchandise and who in fact had entire control of all matters relating to the shipping of the cargo. would in all probability. Martini was required to enter into the written obligation. as agents of the Eastern and Australian Steamship Company. if so met. Martini Ltd. although the immediate or proximate cause of the loss in any given instance may have been what is termed an act of God. conspicuously stenciled. 4.after 207] G. To be exempt from liability because of an act of God the tug must be free from any previous negligence or misconduct by which that loss or damage may have been occasioned. [54]. calling itself a “letter of guarantee. warning Macondray that it would be held liable for loss or damage if the goods were stowed on deck. Codina thereto. Transportation Law. Martini says that upon seeing the stamped “on deck at shipper’s risks”.30 p. he at once called the attention of S. Upon arrival at the port of destination it was found that the chemicals comprised in the shipment had suffered damage from the effects of both fresh and salt water. Philippine Islands. For. The bills of lading contained on their face. be driven on the shoals. and received a shipping order. referring to the communication just received. it is not excused.56. From this judgment.997. On 15 September 1916 (Friday). to Kobe. Inc. it was the direct result of the failure of the captain of the Matulin to meet the responsibilities which the occasion placed on him. upon the same day.m. and costs of the proceeding. the words “on deck at shipper’s risks.

the proof relative to the practicability of discharge is inconclusive. Another reason apparently was that Martini discerned. and the securing of an order of discharge from the steamship company. If Martini had promptly informed Macondray of their resolve to have the cargo discharged. 2004 ( 142 ) . or thought he discerned the possibility of shifting the risk so as to make it fall upon the ship’s company. however. 4. Cordina not deceived into signing document. and to hand you said mate’s receipt as soon as it reaches us and to abide by all clauses and notations on the same. as for instance. Shipper ordinarily produce mate’s receipt to agents of ship’s company Ordinarily the shipper is supposed to produce the mate’s receipt to the agents of the ship’s company. the guaranty was so drawn as to permit stowage either on or under deck at the ship’s option. the shipper desires to procure the bill of lading before he obtains the mate’s receipt. we hereby guarantee to hold you free from any responsibility by your doing so. “ 3. was that the bills had been discounted and to stop the shipment would have entailed the necessity of refunding the money which the bank had advanced. Herein. Contents of the “Letter of Guarantee” The “Letter of Guarantee” dated 16 September 1916. Damage was caused by water The damage was caused by water. the securing of a permit from the customs authorities. Martini did nothing to discharge cargo In order to get the cargo off certain formalities were necessary which could not be accomplished. In view of the fact that Martini did nothing whatever looking towards the discharge of the cargo. is of the tenor “In consideration of your signing us clean B/L for the undermentioned cargo per above steamer to be shipped on or under deck at ship’s option. Paragraph 19 of the several bills of lading issued for transportation of the cargo Paragraph 19 of the several bills of lading issued for transportation of the cargo reads “(19) Goods signed for on this bill of lading as carried on deck are entirely at shipper’s risk. and for any expense should the whole or part of the cargo be shut out. or otherwise. for Kobe without production of the mate’s receipt. which contained no such provision. among other things. 6. and the steamer is not liable for any loss or damage from any cause whatever. such as to require stowage on deck. the return of the mate’s receipt (which had not yet come to Martini’s hands). 7. it is customary for him to enter into a written obligation. and the attention of Codina must have been drawn to this provision because Macondray refused to issue the bills of lading upon a guaranty signed by Codina upon another form. The messenger between the two Transportation Law. When. 2. not even so much as to notify Macondray that the cargo must come off. if carried at all. Needless to say the Court attached no weight to the statement of Codina that he was unable to get Macondray by telephone in order to communicate directions for the discharge of the cargo. binding himself. whether carried on deck or under hatches. either falling in the form of rain or splashing aboard by the action of wind and waves. there would have been some ground for Martini’s contention that its consent had not been given for the goods to be carried on deck.Haystacks (Berne Guerrero) 1. to abide by the terms of the mate’s receipt. Inferred reasons why Martini allowed cargo to be carried away It is inferable that one reason why Martini allowed the cargo to be carried away without being discharged. By reason of the fact that the cargo had to be carried on deck at all events.” 5. and the latter had nevertheless permitted the ship to sail without discharging it. who thereupon issue the bill of lading to the shipper. Guaranty permit stowage either on or under deck at ship’s option There was no space in the hold to take the cargo and it was unnecessary to consider whether the chemicals to be shipped were of an explosive or inflammable character. with the inconveniences incident thereto.

Massachusetts. the master stowed the goods on deck. he does it at his own risk. No complaint was made until after the bills of lading had been negotiated at the bank. None of the cargo in the hold was lost. upon what is called a clean bill of lading. as well as the lives of the crew. Martini duly notified as to manner in which cargo was shipped. that when the inevitable accident is preceded by a fault of the debtor or person bound without which it would not have happened. Nevertheless. 9. It was thus evident that although the cargo in question was lost by peril of the sea. Maine. Cas. The Paragon. but Martini failed to give the necessary instructions. exceptions The general law is subject to an exception. it would not have been lost except for the fact that it was being carried on deck. Codina. Martini must thus be held to have assented to the shipment of the cargo on deck and that they are bound by the bills of lading in the form in which they were issued. to Portland.Haystacks (Berne Guerrero) establishments who was sent for the bills of lading accordingly had to make a second trip and go back for a letter of guaranty signed upon the desired form. Casus fortuitous nemo praestat. The exception is made by the law. he called Codina to account. the ship’s company would have been liable for all damage which resulted from the carriage on deck. upon the common principle that when a sacrifice is made for the benefit of all. 10708). 10. When the manager of Martini first had his attention drawn to the fact that the cargo was being carried on deck. if attentive to the interests of his house. and falls within the general principle that no one is responsible for fortuitous events and accidents of major force. Even then there was time to stop the shipment. 2004 ( 143 ) . both the master and the vessel are exempted from responsibility within the common exemption in bills of lading. losses by the dangers of the seas are excepted from the risks which the master takes upon himself. it became necessary to jettison them. Van Horn vs. The Paragon If a clean bill of lading had been issued and Martini had not consented for the cargo to go on deck. and the latter found it to his interest to feign surprise and pretend that he had been deceived by Macondray. that the loss shall be shared by all. must have known from the tenor of the guaranty to which his signature is affixed that Macondray had reserved the right to carry it on deck. 18 Fed. In the case of The Paragon (1 Ware. thereby manifesting acquiescence in the accomplished fact. The Paragon. Taylor. It was proved that the shipper had not given his consent for carriage on deck. 326. If they are damaged or lost in consequence of their being thus exposed. it appeared that cargo was shipped from Boston. he takes the risk upon himself of these peculiar perils. Clean bill of lading and stowage of cargo on deck without consent. Martini was duly affected with notice as to the manner in which the cargo was shipped. Thus. and there is no doubt that by the general maritime law he is bound to secure the cargo safely under deck. general average The goods. they nevertheless consented for it to go on deck. No. Loss by fortuitous event. and when the bills of lading were delivered to Martini they plainly showed that the cargo would be so carried. one in the common form without any memorandum in the margin or on its face showing that the goods are to be carried on deck. When shipper had no notice of cargo being carried on deck Transportation Law. and the goods having been thrown overboard from necessity. the master is responsible for the safe and proper stowage of the cargo. If the master carries goods on deck without the consent of the shipper. and a storm having arisen. he cannot protect himself from responsibility by showing that they were damaged or lost by the dangers of the seas. Loss by fortuitous event. 11. and for the safety of the vessel and cargo. It was held that the ship was liable. having been lost by the dangers of the seas. decided in 1836 in one of the district courts of the United States. When the shipper consents to his goods being carried on deck. that it presents a case for a general average or contribution. In every contract of affreightment. 12. whether the exception is expressed in the contract or not. then he becomes responsible for it. 8. that is. failed to give necessary instructions manifesting acquiescence Although Martini would have greatly preferred for the cargo to be carried under the hatches.

Haystacks (Berne Guerrero) Van Horn vs...” Transportation Law. Here the evidence shows that all reasonable care was taken of the tobacco during its transportation. without proof of negligence causing the damage. where he has consented or contributed to the act which occasioned his loss. Said the court: “It is said that the plaintiff’s goods were improperly stowed on deck. and they afford very high evidence of the general and appropriate usages. was a case where goods stowed on deck with the consent of the shipper were jettisoned during a storm at sea. for the most part on the top. 23 Fed. Minturn (17 How [U. the vessel. Indeed. Lawrence vs. There is not one of them which gives a recourse against the master. The foreign authorities are indeed express. and cargo under deck. it is obvious that no remedy against the shipowner or master for a wrongful loading of the goods on deck can exist. Oliver (4 Bing. and evidently as a consequence of rains.” 14. although an article easily injured. that the deck load only was thrown overboard by the collision. Upon arrival at its destination it was found damaged by water. with his usual precision. Goods loaded on deck with consent of merchant. that the manner of stowing and covering it was known to and assented to by the shipper. It was held that the ship was not liable. without fault of the carrier.. So the courts of this country and England. But. 558). No. as not having a claim on the master or owner of the ship in case of jettison. on the point. C. Tindal. leads to the same conclusion.. Risk of damage to shipper when contract is to carry upon deck In the case of The Thomas P. At the same time a quantity of malt stowed below deck on the same voyage was uninjured. or the owners. covered with tarpaulins. and the voyage was performed with usual care.. decided in the English Court of Common Pleas in 1837. 15 L ed. with his consent. it appeared that tobacco was received upon a canal boat. there can be no recovery. with the understanding that it was to be carried on deck. 100. with the consent of the shipper. 2004 ( 144 ) . the risk of any damage resulting from the place of carriage rests upon the shipper.. and without disaster. the cargo in the hold not being injured. that tobacco must of necessity be injured by being carried on deck. 58). 46 Am. The Thomas P.. said: “Where the loading on deck has taken place with the consent of the merchant. He was a passenger on board the steamer.’” 15. Thorn (8 Ben. And the general rule of the English law. from rain. Taylor (2 La. In discussing the question whether upon a contract to carry on deck. though the collision occurred several days after the steamer commenced her voyage. was a case where goods stowed on deck were lost in a collision. in this particular. is expressed by Chancellor Kent. there is evidence of a statement by the libelant. the court said: “It is manifest that the injury to the tobacco arose simply from the fact that it was carried on deck. received no damage. to which merchandise transported on deck must necessarily be in some degree exposed. 240: ‘Nor is the carrier in that case (Jettison of deck load) responsible to the owner. C. Goods stowed on deck with consent of shipper jettisoned during storm entitled to general average Lawrence vs. or a general custom binding him. decided in the District Court in the State of New York. under a contract to carry upon deck. 13927). The court found that the ship carrying these goods was not at fault. Cas. The goods were thus laden with the knowledge and implied approbation of the plaintiff. N. In discussing whether this cargo was entitled to general average.]. in 3 Com. and the inference is warranted that the injury arose. The received law. the Supreme Court of the United States said: “The maritime codes and writers have recognized the distinction between cargo placed on deck. and does not appear to have made any objection to the goods being thus carried. and. The malt.J.S. and then he would be chargeable with the loss. that no one can maintain an action for a wrong.” 13. on that point. and the writers on this subject. the vessel was liable for the wetting of the tobacco. Oliver. 132). of merchants and shipowners. unless the goods were stowed on deck without the consent of the owner. Dec. 587. Thorn. Gould vs. if the property lost had been placed on deck with the consent of its owner. Ann. Merchant has no remedy against shipper or master In Gould vs. 3.. and that the shipper had notice of the fact that the cargo was being carried on deck. Any loss arising from damaged thus occasioned is to be borne by the shipper.. have treated the owner of goods on deck. Minturn. carried below.

the dangers of the seas excepted. Burden of proof It is incumbent on Martini. So. the Supreme Court distinguishes with great precision between the situation where the burden of proof is upon the shipowner to prove that the loss resulted from an excepted peril and that where the burden of proof is upon the owner of the cargo to prove that the loss was caused by negligence on the part of the persons employed in the conveyance of the goods. In such case it could hardly be denied that the ship’s company should be held liable for such damage as might have been avoided by the use of such precaution. even though paragraph 19 of the bills of lading had not been made a term of the contract. 13 L. to the same extent as if the cargo had been deliberately thrown over without justification. When shipper consents to have goods carried on deck. but no such evidence is found in the record. if it had been improperly placed or secured.. [U. if his cause of action is founded on negligence of this character. had negligently and without good reason failed to exercise reasonable care to protect it by covering it with tarpaulins.S. 18. It is to be attributed exclusively to the dampness of the atmosphere of the vessel. or approaching still more to imaginable conditions. and momentarily ignoring paragraph 19 of these bills of lading.’ and they are found to be damaged the onus probandi is upon the owners of the vessel. it was competent for the libelants to show that the shipowner and master might have prevented it by proper skill and diligence in the discharge of their duties. under the authorities. 2004 ( 145 ) . or known to shipmasters. to show that the injury was occasioned by one of the excepted causes. Onus probandi In Clark vs. 21. instead of in the ship’s hold. The loss must therefore fall on the owner. notwithstanding the stowage of these goods on deck. ed. Clark vs. 20. When shipowner may be held liable Upon general principle. But. Transportation Law. 985). by the exercise of reasonable skill and attention on the part of the persons employed in the conveyance of the goods. supposed that the persons charged with the duty of transporting the cargo. yet still the owners of the vessel are responsible if the injury might have been avoided. being cognizant of the probability of damage by water. Clark vs. to avoid the damage in question. Barnwell. the ship would be liable. if it had been shown that.]. and had been swept overboard as a proximate result of such lack of care. For caught that appears every precaution was taken that is usual or customary. Barnwell (12 How. to show the negligence. 17. the owner might still be held. Barnwell. 19. Ship’s company may be liable for damage that may be avoided by use of precaution Supposed that a custom had been proved among mariners to protect deck cargo from the elements by putting a tarpaulin over it. The first two syllabi in Clark vs. But the onus probandi then becomes shifted upon the shipper. by the exercise of proper skill and diligence in the discharge of the duties incumbent on the ship. Damage due to dampness not the fault of master or owners Notwithstanding the proof was clear that the damage was occasioned by the effect of the humidity and dampness of the vessel. which is one of the dangers of navigation. ‘promising to deliver them in good order. In the present case it is indisputable that the goods were injured during the voyage and solely as a consequence of their being on deck. he takes risks of damage or loss Where the shipper consents to have his goods carried on deck he takes the risks of any damage or loss sustained as a consequence of their being so carried. For instance. And this would be true. although the injury may have been occasioned by one of the excepted causes. the damage could have been prevented. Barnwell read as follows: “Where goods are shipped and the usual bill of lading given. without negligence or fault on the part of the master or owners. the ship’s owner might be held liable for any damage directly resulting from a negligent failure to exercise the care properly incident to the carriage of the merchandise on deck.Haystacks (Berne Guerrero) 16. to allege and prove that the damage suffered was due to failure of the persons in charge of the cargo to use the diligence properly incident to carriage under these conditions. 272.

Compania Transatlantica and Atlantic. bound for Aklan. dismissing the case due to lack of sufficient evidence.900. A complaint was originally filed on 21 October 1968 and amended on 24 October 1968 by the heirs of Delos Santos and others as pauper litigants against the Compania Maritima. Diego brought with him P200 in cash and some belongings. notwithstanding the exemption contained in paragraph 19.m. But however that may be damages certainly cannot be recovered on the ground of negligence.) of said day bound for New Washington. with the intention of living in Aklan permanently. Forthwith.00 as Transportation Law. Mauricio de los Santos accompanied his common-law wife. The Supreme Court reversed the appealed decision. The trial court. On the other hand. Aklan. as to spouses Diego Salim and Teresa Pamatian. in the absence of any allegation or proof of negligence. 136 survived the accident. Abella (7 years old). to attribute negligence to the ship’s employees in the matter of protecting the goods from rains and storms. Other drowned victims include spouses Teresa Pamatian and Diego Salim. the ship is not to be held liable. at about 5:00 a. Josie. the damage was caused by rain and sea water — the risk of which is inherently incident to carriage on deck — Macondray cannot be held liable. As to Ruben Reyes. at about 6:00 p. Macondray not liable Herein.Haystacks (Berne Guerrero) 22.000. Medialdea (J): 4 concur Facts: On 2 November 1967. Rep. of 4 November 1967 causing the death of many of its passengers. where negligence is neither alleged nor proved. It appears that said vessel met typhoon ‘Welming’ on the Sibuyan Sea. on 27 March 1974. while Ruben was able to swim to an island and with others. but appeared to have purchased one in the vessel. M/V ‘Mindoro’ sailed from pier 8 North Harbor. Eliandora was able to board a balsa. it may be collected that the carrier would be held liable in such case. CA (GR 51165. and the heirs of the Delos Santos(es).00. namely: Romeo. (38 Phil. The appellate court affirmed the decision on appeal. Reyes.00 as indemnity for death to the heirs of each of the victims. also [150] Heirs of de los Santos vs. and children. even from a carrier. Gulf & Pacific Co.000. [55]. (2) P10. and Teresa Pamatian brought an appeal to the Court of Appeals. and also Felix Reyes Jakusalam. Diego boarded the vessel even if he did not have yet a ticket. including Amparo delos Santos and her children. Maria Lemia (5 years old) and Melany (5 months old). Aklan. Amparo delos Santos. 21 June 1990) First Division. Paragraph 19 of bills of lading would not protect ship from liability for consequences of negligent acts By the terms of paragraph 19 of the bills of lading. 2004 ( 146 ) . Damage caused by rain and sea water. to pier 8. Amparo was not included in the manifest as she boarded the boat without ticket. This provision would not have protected the ship from liability for the consequences of negligent acts.000. with many passengers aboard (about 200). Manila. Manila. while Teresa brought some cash and personal belongings worth P250. Hernani (10 years old).m. (should have sailed at 2:00 p. It is not permissible for the court. no other fault or delinquency on the part of anybody being alleged. From the discussion in Manila Railroad Co.m. he brought with him personal belongings and cash in the amount of P2. North Harbor. for any loss or damage from any cause whatever. Diego Salim. for damages due to the death of several passengers as a result of the sinking of the M/V ‘Mindoro’. 875). rescued later on and brought to the hospital. 23. to board the M/V ‘Mindoro’. Amparo delos Santos and the aforesaid children brought all their belongings. The complaint clearly indicates that the damage done was due to the mere fact of carriage on deck.. including Ruben Reyes and Eliadora Crisostomo de Justo. if negligence had been alleged and proved. and rendered judgment sentencing Compania Maritima to pay the following: (1) P30. adjudged the case in favor of Compania Maritima. including household utensils valued at P1. in the case of goods signed for as carried on deck. vs. owned by Compania Maritima.

Utmost diligence of very cautious persons in carrying passengers.00 as actual damages divided among the petitioners as follows: heirs of Amparo Delos Santos and her deceased children. P2. 3. During the periods of November 1-5. 6.000. In cases where the shipowner is likewise to be blamed. if any (Yangco v. New Civil Code). Modern technology belie contention that Maritima did not have information as to typhoon Welming Modern technology belie Maritima’s contention that it did not have any information about typhoon ‘Welming’ until after the boat was already at sea. ibid). Such a situation will be covered by the provisions of the New Civil Code on Common Carriers.00. et al. (instead of the scheduled 2:00 p. P400.. Inc. but he may exempt himself therefrom by abandoning the vessel with all her equipment’s and the freight it may have earned during the voyage.. it is highly improbable that the Weather Bureau had not yet issued any Transportation Law. 32. Article 587 of the Code of Commerce Article 587 of the Code of Commerce provides that “The ship agent shall also be civilly liable for indemnities in favor of third persons which may arise from the conduct of the captain in the care of the goods which he loaded on the vessel. and Ruben Reyes. 73 Phil. Whenever death or injury to a passenger occurs. Laserna. with a due regard for all the circumstances (Article 1755. heirs of Diego Salem.Haystacks (Berne Guerrero) moral damages to the heirs of each of the victims. This rule is found necessary to offset against the innumerable hazards and perils of a sea voyage and to encourage shipbuilding and marine commerce. Reason Notwithstanding the passage of the New Civil Code. Presumption of fault Owing to the nature of their business and for reasons of public policy. 330. Liability of shipowner or agent confined to which he is entitled as to right to abandon Under Article 587 of the Code of Commerce. P450. Laserna. 38).m. his liability is confined to that which he is entitled as of right to abandon — “the vessel with all her equipment’s and the freight it may have earned during the voyage” (Yangco v. Article 587 of the Code of Commerce still a good law. Considering the the late departure of the ship at 6:00 p. ibid). v. common carriers are tasked to observe extraordinary diligence in the vigilance over the goods and for the safety of its passengers (Article 1733. they are bound to carry the passengers safely as far as human care and foresight can provide. common carriers are presumed to have been at fault or to have acted negligently unless they prove that they observed extraordinary diligence as prescribed by Articles 1733 and 1755 (Article 1756.955. (4) P10. Further. et al. 1967. Abdulhanan.m. 1. Article 587 of the Code of Commerce is still good law. a shipowner or agent has the right of abandonment. (3) P6. the Bureau issued a total of 17 warnings or advisories of typhoon ‘Welming’ to shipping companies. 332). Article 587 speaks only of situations where the fault or negligence is committed solely by the captain. using the utmost diligence of very cautious persons. or to the insurance thereon. and (5) the costs.” 2. 5. and by necessary implication.00.. New Civil Code). Application of the limited liability doctrine The limited liability doctrine applies not only to the goods but also in all cases like death or injury to passengers wherein the shipowner or agent may properly be held liable for the negligent or illicit acts of the captain (Yangco v.00. 2004 ( 147 ) . New Civil Code).00 as attorney’s fees. heirs of Teresa Pamatian.000.805. The reason lies in the peculiar nature of maritime law is which is “exclusively real and hypothecary that operates to limit such liability to the value of the vessel. departure) on 2 November 1967.00. Laserna. P2. Article 587 does not apply (see Manila Steamship Co. Extraordinary diligence in vigilance over goods and safety of passengers required of common carriers. The Weather Bureau is now equipped with modern apparatus which enables it to detect any incoming atmospheric disturbances. 4. 100 Phil.

Maritima duly informed. steel bars. For in his radiogram sent to Maritima’s office in Manila as early as 8:07 a. Ship’s captain aware of typhoon. Maritima could not account for the delay because it neither checked from the captain the reasons behind the delay nor sent its representative to inquire into the cause of such delay. delayed for 4 hours. on 3 November 1967 when the Weather report was transmitted to him from the Weather Bureau at which time he plotted its position. Maritima submitted no convincing evidence to show this omission. Maritima’s negligence proximate cause of sinking of M/V Mindoro Maritima’s lack of extraordinary diligence coupled with the negligence of the captain were the proximate causes of the sinking of M/V Mindoro. Maritima shares equally in his negligence. of 2 November 1967. 2004 ( 148 ) . and 6.Haystacks (Berne Guerrero) typhoon bulletin at any time during the day to the shipping companies. While M/V Mindoro was already cleared by the Bureau of Customs and the Coast Guard for departure at 2:00 p. 3 Toyota cars. Life saving equipment and navigational instruments were installed. Maritima could have directed the ship’s captain to immediately depart in view of the fact that as of 11:07 a. the vessel could have reached its destination and thereby have avoided the effects of the storm.m.’ an important device such as the radar could have enabled the ship to pass through the river and to safety. ahead of M/V Mindoro and took the same route as the latter but it arrived safely. Hence. however. he stated in the concluding portion “still observing weather condition. the typhoon had already attained surface winds of about 240 kilometers per hour. Storms and typhoons not strange occurrences Storms and typhoons are not strange occurrences. however. M/V Mangaren.m. M/V Mindoro was dry-docked for about a month. Verily. 7.’ there were about 17 typhoons that hit the country. Aklan due to darkness and the Floripon Lighthouse at the entrance of the Aklan River was not functioning or could not be seen at all.m.m. Necessity of installation of a radar Maritima presents evidence of the seaworthy condition of the ship prior to its departure to prove that it exercised extraordinary diligence in this case. Consequently.000 beer cases) and passengers (about 241 more than the authorized 193 passengers) were loaded during the 4 hour interval. the vessel was left at the mercy of ‘Welming’ in the open sea because although it was already in the vicinity of the Aklan river. 11. could not present evidence that it specifically installed a radar which could have allowed the vessel to navigate safely for shelter during a storm. a closer supervision could have prevented the overloading of the ship. 8. In 1967 alone before ‘Welming. 9. “ If the captain knew of the typhoon beforehand. of 3 November 1967. It was due to this interim that iindeed there is a great probability that unmanifested cargo (such as dump truck. With the impending threat of ‘Welming. which cost so much damage to lives and properties. Maritima displayed lack of foresight and minimum concern for the safety of its passengers taking into account the surrounding circumstances of the case. sailed for New Washington. Maritima shares equally in ship captain’s negligence While the captain was negligent for overloading the ship. Maritima. Seaworthiness. it is inconceivable for Maritima to be totally in the dark of ‘Welming. 10. the latest of which was typhoon Uring which occurred on October 20-25. it was unable to enter the mouth of Aklan River to get into New Washington.’ In allowing the ship to depart late from Manila despite the typhoon advisories. It cannot be true that he was apprised of the typhoon only at about 11:00 a. Maritima is liable for the deaths and injury of the victims. This conclusion was buttressed by evidence that another ship. Maritima displayed lack of foresight and minimum concern for safety of passengers Herein. the ship’s departure was. Transportation Law.” thereby implicitly suggesting that he had known even before departure of the unusual weather condition. if it were not for this delay. Aklan on 2 November 1967. Necessary repairs were made on the ship.” Perchance. an inter island vessel.

With respect to Reyes. Consequently.000. v. and (3) Diego Salem. For such losses and incidental expenses at the trial of the case.00. 16. Maritima should pay the civil indemnity of P30. Jabellana Transportation Law. 712). Inc. 112 SCRA 629).00 for expenses at the trial. the heirs of Amparo delos Santos and her deceased children incurred transportation and incidental expenses in connection with the trial in the amount of P500. even if death does not result (Rex Taxicab Co. The prevailing jurisprudence has increased the amount of P3. For mental anguish suffered due to the deaths of their relatives. Moral damages not due.00 to P30. Del Castillo v. 1982.00.00 and personal belongings worth P100. that the case has been pending for almost 23 years and that since all the evidence had already been presented by both parties and received by the trial court. Maritima should also pay to the heirs the sum of P10.50 a day or in a total sum of P855. 15. at the time of death. In view thereof. Actual damages In addition. the Supreme Court resolved to decide the corresponding damages due to petitioners (see Samal v. 160 SCRA 70). Likewise.000. Jaymalin.000. 17. 14.00 as a reasonable compensation for the legal services rendered.00 each as moral damages. Inc. Laguna Tayabas Co.000. Trial court generally fix amount of damages.00 and personal belongings valued at P100. Attorney’s fees As regards the claim for attorney’s fees. 2004 ( 149 ) . L-35697-99.. Exemplary damages not due Anent the claim for exemplary damages.00 (De Lima v. the amount of damages for the death of a passenger caused by the breach of contract by a common carrier is at least P3. Reyes was unable to work for 3 months due to shock and he was earning P9. The Court finds the sum of P10. the Supreme Court would remand the case to the trial court for the reception of evidence. 13. son of victim Diego Salem and nephew of victim Teresa Pamatian spent about P100.00 while Dominador Salem.00 to the heirs of each of the victims.00.000.00 and personal belongings worth P200. Mere carelessness of the carrier does not per se constitute or justify an inference of malice or bad faith on its part (Rex Taxicab Co. Bautista. 99 Phil. April 15.Haystacks (Berne Guerrero) 12.900. v. March 17.00. [56] International Department Store vs. Further. 230.00. Exception to rule that moral damages not recoverable in action based on breach of contract Reyes’ claim for moral damages cannot be granted inasmuch as the same is not recoverable in damage action based on the breach of contract of transportation under Articles 2219 and 2220 of the New Civil Code except (1) where the mishap resulted in the death of a passenger and (2) where it is proved that the carrier was guilty of fraud or bad faith.00 and personal belongings valued at P500. he had in his possession cash in the sum of P2. Considering however.. cash in the sum of P200. 1988. Bautista. The exceptions do not apply in the present case since Reyes survived the incident and no evidence was presented to show that Maritima was guilty of bad faith.00 for court expenses. L-28256.000. Maritima should pay the amounts to the petitioners as actual damages. cash in the sum of P250. the evidence shows that at the time of the disaster. Amount of damages for the death of passenger caused by breach of contract of carriage Under Article 1764 in relation to Article 2206 of the New Civil Code. the Court is not inclined to grant the same in the absence of gross or reckless negligence in this case.000. 109 Phil.000. the records reveal that the petitioners engaged the services of a lawyer and agreed to pay the sum of P3. due to the disaster.00.00 each on a contingent basis. supra). (2) Teresa Pamatian. He also spent about P100. (1) Amparo delos Santos had with her cash in the sum of P1. Exceptions Ordinarily.. Court of Appeals.

Concepcion negotiated anew with Concepcion. which underdeclaration was intended to defraud Compañia Maritima of the payment of the freight charges and which likewise led the Chief Officer of the vessel to use the heel block of hatch 2 in unloading the payloader. He was issued Bill of Lading 113 on the same date upon delivery of the equipment at the Manila North Harbor.77 with respect to said shipment.225.5 tons and not 2.Haystacks (Berne Guerrero) [57] Compania Maritima vs. Compania Maritima shipped the payloader to Manila where it was weighed at the San Miguel Corporation. Concepcion filed an action for damages against Compania Maritima with the then CFI of Manila (Branch VII. the petition for review on certiorari. P20. thru Concepcion. The Reo trucks and water tanks were safely unloaded within a few hours after arrival. wrote Compania Maritima to demand a replacement of the payloader which it was considering as a complete loss because of the extent of damage.00 a day.00 representing the losses suffered by him due to the diversion of funds to enable him to buy a new payloader. To replace the damaged payloader.00 as exemplary damages. Unable to elicit response. Meanwhile. P34.00 representing the cost of the damaged payloader. Having shipped some of his equipment through Compania Maritima and having settled the balance of P2.5 tons. on 3 December 1964.00 as attorney’s fees.00 representing the difference between the cost of the damaged payloader and that of the new payloader. Misamis Oriental. and ordering Compania Maritima to pay unto Concepcion the sum in damages of P24.00 from Bormaheco. but while the payloader was about 2 meters above the pier in the course of unloading.000.000. Don Santiago Bldg. contending that had Concepcion declared the actual weight of the payloader. thru its collector. had a contract with the Civil Aeronautics Administration (CAA) sometime in 1964 for the construction of the airport in Cagayan de Oro City.652. Pacifico Fernandez. Being a Manila-based contractor. Transportation Law. Manila. Civil Case 61551). The payloader was damaged and was thereafter taken to Compania Maritima’s compound in Cagayan de Oro City.628. P11. After trial.000.. Concepcion appealed to the Court of Appeals which. and declared the payloader abandoned to Compania Maritima. Concepcion had to ship his construction equipment to Cagayan de Oro City. Inc. damage to their ship as well as to his payloader could have been prevented. the swivel pin of the heel block of the port block of Hatch 2 gave way. Consolidated Construction in the meantime bought a new one at P45. on 28 August 1964 for the shipment to Cagayan de Oro City of 1 unit payloader. On 7 September 1964. causing the payloader to fall.000. CA (GR L-31379. a civil engineer doing business under the name and style of Consolidated Construction with office address at Room 412. Concepcion. Finding that the payloader weighed 7.000. P10. the then CFI dismissed on 24 April 1968 the complaint with costs against Concepcion.00 allegedly suffered for the period of 97 days that he was not able to employ a payloader in the construction job at the rate of P450. Consolidated Construction likewise notified Compania Maritima of its claim for damages. P5.000. Compania Maritima denied the claim for damages of Consolidated Construction in its letter dated 7 October 1964. Hence. with costs against the latter. reversing the trial court.07 with legal interest from the date the decision shall have become final. 29 August 1988) Third Division. the demand was repeated in a letter dated 2 October 1964. stating that the proximate cause of the fall of the payloader was Concepcion’s act or omission in having misrepresented the weight of the payloader as 2. on 5 December 1965 rendered a decision. seeking to recover damages in the amount of P41. These equipment were loaded aboard the MV Cebu in its Voyage 316. Fernan (J): 4 concur Facts: Vicente E. 4 units 6x6 Reo trucks and 2 pieces of water tanks. which left Manila on 30 August 1964 and arrived at Cagayan de Oro City in the afternoon of 1 September 964. From the adverse decision against him. On 6 July 1965.5 tons as declared in the Bill of Lading. Consolidated Construction. Taft Avenue. and cost of the suit. 2004 ( 150 ) .

Article 1734 (3) NCC Paragraph 3 of Article 1734 of the Civil Code provides that “Common carriers are responsible for the loss. ordered that the decision is immediately executory. it is incumbent upon the common carrier to prove that the loss. and in view of the length of time this case has been pending. are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them according to all the circumstances of each case. 1735 and 1745. Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734. the responsibility to observe extraordinary diligence commences and lasts from the time the goods are unconditionally placed in the possession of. the common carrier must be held responsible. Compania Maritima negligent due to its laxity and carelessness in method to ascertain weight of heavy cargoes Herein. there was laxity and carelessness among Compania Maritima’s crew in their methods of ascertaining the weight of heavy cargoes offered for shipment before loading and unloading them. from the nature of their business and for reason of public policy. affirmed the decision of the Court of Appeals in all respects with costs against Compania Maritima. Rationale for the requirement of extraordinary diligence. so that if no explanation is given as to how the loss. makes out prima facie case against the common carrier. actually or constructively. Article 1733 of the Civil Code provides that “Common carriers. 6. Negligence presumed The general rule under Articles 1735 and 1752 of the Civil Code is that common carriers are presumed to have been at fault or to have acted negligently in case the goods transported by them are lost. Nos. or deterioration of the goods. The responsibility of observing extraordinary diligence in the vigilance over the goods is further expressed in Article 1734 of the same Code. by the carrier to the consignee. and of their arrival at the place of destination in bad order. deterioration or destruction of the goods occurred.” 2. deterioration or destruction was due to accident or some other circumstances inconsistent with its liability. destruction.Haystacks (Berne Guerrero) The Supreme Court denied the petition. or destruction of the goods entrusted to it for safe carriage and delivery. General rule under Articles 1735 and 1752 NCC. 6 and 7…” 5. 5. unless the same is due to any of the following causes only: xxx “(3) Act or omission of the shipper or owner of the goods. 2004 ( 151 ) . To overcome the presumption of liability for the loss. or to the person who has the right to receive them without prejudice to the provisions of Article 1738. Precaution required of common carrier to avoid damage or destruction to goods The extraordinary diligence in the vigilance over the goods tendered for shipment requires the common carrier to know and to follow the required precaution for avoiding damage to. It requires common carriers to render service with the greatest skill and foresight and “to use all reasonable means to ascertain the nature and characteristic of goods tendered for shipment. 1. Burden of proof incumbent on common carrier Corollary is the rule that mere proof of delivery of the goods in good order to a common carrier. and received by the carrier for transportation until the same are delivered. 4. including such methods as their nature requires. destruction or deterioration of the goods under Article 1735. The weight submitted by shipper Concepcion as an addendum to the original enumeration of equipment to be shipped was entered into the bill of lading by Compania Maritima. Otherwise stated. and to exercise due care in the handling and stowage. which is impressed with a special public duty. Transportation Law. the common carriers must prove that they observed extraordinary diligence as required in Article 1733 of the Civil Code. destroyed or had deteriorated.” Under Article 1736 of the Civil Code. as is customary among careful persons. Article 1733 NCC Extraordinary diligence is required of common carriers in the vigilance over the goods transported by them by virtue of the nature of their business. 3.

Chief Officer of the MV Cebu. common carriers can protect themselves against mistakes in the bill of lading as to weight by exercising diligence before issuing the same.Haystacks (Berne Guerrero) thru Pacifico Fernandez. Contributory negligence of shipper mitigates liability of common carrier While Concepcion’s act of furnishing Compania Maritima with an inaccurate weight of the payloader cannot successfully be used as an excuse by the latter to avoid liability to the damage thus caused. 7.000. as the same could have been avoided had the latter utilized the “jumbo” lifting apparatus which has a capacity of lifting 20 to 25 tons of heavy cargoes. a company collector. Assignment of errors by appellee only to maintain judgment on other grounds. Mr. Mariano Gupana. valued at P34.5 tons. which however. 9. It is a fact known to the Chief Officer of MV Cebu that the payloader was loaded aboard the MV Cebu at the Manila North Harbor on 28 August 1964 by means of a terminal crane. Appeal required to modify or reverse judgment Transportation Law. Besides. shall be equitably reduced. Felix Pisang chose not to use it. the proximate cause thereof being the negligence of the common carrier. Misdeclaration as to weight not an excuse for common carrier to avoid liability Herein.318. Article 1741.5 and 2. or destruction of. which mitigates the liability for damages of the latter. It used a 5-ton capacity lifting apparatus to lift and unload a visibly heavy cargo like a payloader. confirmed that the company never checked the information entered in the bill of lading. the same would be deducted from the P27. said act constitutes a contributory circumstance to the damage caused on the payloader.40 remained unpaid. Acknowledging that there was a “jumbo” in the MV Cebu which has the capacity of lifting 20 to 25 ton cargoes. Felix Pisang. thereby reducing the recoverable amount at 80% or 4/5 of P34. since the ordinary boom has a capacity of 5 tons while the payloader was only 2.” 10. Award of recoverable amount of damages reduced The conclusion of the Court of Appeals – reducing the recoverable amount of damages by 20% or 1/5 of the value of the payloader. a final recoverable amount of damages of P24.63 representing the freight charges for the undeclared weight of 5 tons (difference between 7. Chief Officer of MV Cebu. Even if Compania Maritima chose not to take the necessary precaution to avoid damage by checking the correct weight of the payloader. without seeing the equipment to be shipped.652. Worse.97 due to Concepcion. destruction or deterioration of the goods. 11.00 plus an additional deduction of P228. took the bill of lading on its face value and presumed the same to be correct by merely “seeing’ it.00. he did not bother to use the “jumbo” anymore. extraordinary care and diligence compel the use of the “jumbo” lifting apparatus as the most prudent course for Compania Maritima.00 – was equitable. the payloader entrusted to it for safe carriage and delivery to Cagayan de Oro City. the weight of the payloader as entered in the bill of lading was assumed to be correct by Mr. 12.200.00 or the sum of P27.5 tons) leaving. because according to him. Contributory negligence Article 1741 of the Code provides that “If the shipper or owner merely contributed to the loss. the latter shall be liable in damages. therefore. Compania Maritima failed to take the necessary and adequate precautions for avoiding damage to. Felix Pisang. Compania Maritima negligent in using 5-ton capacity lifting apparatus to unload payloader Herein. Mr.000. Considering that the freight charges for the entire cargoes shipped by Concepcion amounting to P2. 2004 ( 152 ) . assistant traffic manager of Maritima Compania.000. Mr. 8. The weights stated in a bill of lading are prima facie evidence of the amount received and the fact that the weighing was done by another will not relieve the common carrier where it accepted such weight and entered it on the bill of lading. Concepcion’s act of furnishing Compania Maritima with an inaccurate weight of the payloader cannot be used by the latter as an excuse to avoid liability for the damage caused.

HE Heacock caused to be delivered on board the steamship Bolton Castle. Neither the master of said vessel nor Macondray.Haystacks (Berne Guerrero) It is well-settled that an appellee. 4 cases of merchandise one of which contained 12 8-day Edmond clocks. see [41] [59] HE Heacock vs. with legal interest thereon from 20 November 1919. Three kinds of stipulations often found in a bill of lading Three kinds of stipulations have often been made in a bill of lading. and paid freight on said clocks from New York to Manila in advance. who is not an appellant. may assign errors in his brief where his purpose is to maintain the judgment on other grounds. 2004 ( 153 ) . properly boxed and marked for transportation to Manila. 3 October 1921) Second Division. delivered to HE Heacock the 12 8-day Edmond clocks. this being the invoice value of the clocks in question plus the freight and insurance thereon. consigned to Macondray & Co.” 2. The first is one exempting the carrier from any and all liability for loss or damage occasioned by its own negligence. or damage to. the date of the complaint. The second is one providing for an unqualified limitation of such liability to an agreed valuation. or. From that judgment both parties appealed to the Supreme Court. since Concepcion did not appeal from the judgment insofar as it limited the award of damages due him. CA. together with costs. According to an almost uniform weight of authority. Transportation Law. the carrier shall not be liable for more than the net invoice price plus freight and insurance less all charges saved. the proportionate freight ton value of the aforesaid 12 8-day Edmond clocks. The lower court rendered judgment in favor of HE Heacock against Macondray for the sum of P226. although demand was made upon them for their delivery.36. Macondray tendered to HE Heacock P76. then in the harbor of New York. but the third is valid and enforceable. xxx (9) Also. [58] Ganzon vs. the first and second kinds of stipulations are invalid as being contrary to public policy. but he may not do so if his purpose is to have the judgment modified or reversed. unless the value be expressly stated herein and ad valorem freight paid thereon. cargo being made. Macondray (GR 16598. for. The Supreme Court affirmed the judgment appealed from. which tender HE Heacock rejected. 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. and any loss or damage for which the carrier may be liable shall be adjusted pro rata on the said basis. in payment of HE Heacock’s claim. and the freight ton value thereof was $1. in such case. as its agent. he must appeal. the following clauses: (1) It is mutually agreed that the value of the goods receipted for above does not exceed $500 per freight ton. among others. 1. Herein. the reduction of 20% or 1/5 of the value of the payloader stands.02. On 9 October 1919. Contents of the Bill of Lading The bill of lading issued and delivered to HE Heacock by the master of the said steamship Bolton Castle contained. The invoice value of the said 12 8-day Edmond clocks in the city of New York was P22 and the market value of the same in the City of Manila at the time when they should have been delivered to HE Heacock was P420. Johnson (J): 4 concur Facts: On 5 June 1919. Inc. and no ad valorem freight was paid thereon. without any finding as to costs. in proportion for any part of a ton. No greater value than $500 per freight ton was declared by HE Heacock on the clocks. that in the event of claims for short delivery of. The case containing the 12 8-day Edmond clocks measured 3 cubic feet. as agent and representative of said vessel in said port.480. HE Heacock commenced in the CFi of Manila an action to recover the sum of P420 together with interest thereon. The said steamship arrived in the port of Manila on or about the 10 September 1919.

. Hart vs. 1884.” Said clauses of the bill of lading are. Piper (246 U. and Galt vs. even by the carrier’s negligence. unless the shipper is given a choice of rates. Limited Liability of a Carrier. 354. morals or public order. based on valuation. 5 Sup. Burke. 112 U. 469. This proposition is supported by a uniform lien of decisions of the Supreme Court of the United States rendered both prior and subsequent to the passage of the Harter Act. therefore. Irreconcilable conflict between Clauses 1 and 9 with regard to the measure of Macondray’s liability Whereas clause 1 contains only an implied undertaking to settle in case of loss on the basis of not exceeding $500 per freight ton. based upon an agreed value. 124.Haystacks (Berne Guerrero) 3. Co. 8. the court said: “In many cases. 331). Authorities supporting invalidity of absolute exemption from liability and unqualified limitation to an agreed valuation The Harter Act (Act of Congress of 13 February 1893). Co. by a valuation agreement with a shipper. decided in 1884). Co. Rep. 439. vs. 1918 E. and names his valuation. Rep. Union Pacific Railway Co. Louisville Ry. Co. limit its liability in case of the loss by negligence of an interstate shipment to less than the real value thereof. ed. he cannot thereafter recover more than the value which he thus places upon his property As a matter of legal distinction.. 48 Am.. having accepted the benefit of the lower rate. the contract will be upheld as proper and lawful mode of recurring a due proportion between the amount for which the carrier may be responsible and the freight he receives.. (decided Nov. 320). Pennsylvania RR Co.. decided in 1918). (112 U. agreeing on a valuation of the property carried. is valid and enforceable. signed by the shipper. 4. 28. Pennsylvania R. valid and binding upon the parties thereto. Clauses 1 and 9 falls within third kind of stipulation.. 2004 ( 154 ) . 742) support the proposition that the first and second stipulations in a bill of lading are invalid which either exempt the carrier from liability for loss or damage occasioned by its negligences or provide for an unqualified limitation of such liability to an agreed valuation. — but the rule and the effect of it are clearly established. 28 L. from the case of Hart vs. 331. Ct. S. with the rate of freight based on the condition that the carrier assumes liability only to the extent of the agreed valuation. vs. clause 9 contains an express undertaking to settle on the basis of the net Transportation Law.” 6.. vs. and it is not conformable to plain principle of justice that a shipper may understate value in order to reduce the rate and then recover a larger value in case of loss. Rep. Burke (decided Feb. Pennsylvania R. to the case of the Union Pacific Ry. 820. — that. R. Pennsylvania R. Co. Ct. vs.. 7. 38 Sup. in common honesty the shipper may not repudiate the conditions on which it was obtained. 717.” 5. not contrary to public policy A carrier may not. 318). S. if the shipper makes such a choice. Wynn (88 Tenn. 1920-1921. understandingly and freely. Adams Express Co. it has been declared to be the settled Federal law that if a common carrier gives to a shipper the choice of two rates. to wit: That a clause in a bill of lading limiting the liability of the carrier to a certain amount unless the shipper declares a higher value and pays a higher rate of freight. R. Article 1255 NCC A reading of clauses 1 and 9 of the bill of lading clearly shows that the present case falls within the third stipulation. the lower of them conditioned upon his agreeing to a stipulated valuation of his property in case of loss. vs.. Co. 24. R. 62 L. Burke In the case of Union Pacific Railway Co. p. Advance Opinions. it was held that “where a contract of carriage. A limitation of liability based upon an agreed value to obtain a lower rate does not conflict with any sound principle of public policy. In the case of Hart vs. terms and conditions they may deem advisable.. is fairly made with a railroad company. from the decision in Hart vs. to Boston & M. Ann. and protecting himself against extravagant and fanciful valuations. Article 1255 of the Civil Code provides that “the contracting parties may establish any agreements. (4 McAr.. ed. even in case of loss or damage by the negligence of the carrier. S. provided they are not contrary to law. 151. Clauses 1 and 9 are not contrary to public order. estoppel is made the basis of this ruling. 1921. Cas. R.

the sum of P809. plus costs. The shipment was insured by the shipper against loss and/or damage with the St.) It is a well-known principle of construction that ambiguity or uncertainty in an agreement must be construed most strongly against the party causing it. the consignee filed its claim with the insurer. 2004 ( 155 ) . 294. jointly and severally.00. but this was denied by the lower court on 5 May 1965. 25 March 1976) Second Division. with the freight prepaid.00. Inc. Consequently. U. Barber Steamship Lines.” (6 R. C. St. A contract. with legal interest thereon from the filing of the complaint until fully paid.46.I. 18 Am. the arrastre contractor for the Port of Manila. as shipper. Manila Port Service and/or Manila Railroad Company for the recovery of said amount of $1. instituted with the CFI of Manila an action against Macondray & Co. Wilhelm Wilhelmsen.A. On 12 April 1965.Haystacks (Berne Guerrero) invoice price plus freight and insurance less all charges saved. the SS “Tai Ping” arrived at the Port of Manila and discharged its shipment into the custody of Manila Port Service. and Wilhelm Wilhelmsen to pay to the insurance company. Paul Fire & Marine Insurance. “A written contract should.90... Manila.. New York. paid to the consignee the insured value of the lost and damaged goods. Thomas. or its equivalent in pesos at the rate of P3. agent of Wilhelm Wilhelmsen issued Bill of Lading 34. “Any loss or damage for which the carrier may be liable shall be adjusted pro rata on the said basis. in case of doubt in any matter of construction. Winthrop Products. Inc.. in case of doubt. the costs to be borne by all the defendants. St.00. Transportation Law. Paul Fire & Marine Insurance vs. L. Antonio (J): 4 concur.” (Alabama. and the insurance company.) [60] St. of New York. and favorably to the consignor. St. in the name of Winthrop Products. “In construing a bill of lading given by the carrier for the safe transportation and delivery of goods shipped by a consignor. be interpreted against the party who has drawn the contract. 1 designated to sit in second division Facts: On 29 June 1960. shipped aboard the SS “Tai Ping”. After due trial. 1 on leave.134.. in case of doubt. with arrival notice in Manila to consignee Winthrop-Stearns. 855. which were consigned to Winthrop-Steams.134. L. Inc. contending that it should recover the amount of $1. the insurance company. including other expenses in connection therewith. filed a motion for reconsideration. on the basis of such claim. owned and operated by Wilhelm Wilhelmsen. etc.. R. Paul Fire & Marine Insurance Co. jointly and severally... Manila. Barber Steamship Lines.109. with legal interest thereon from the filing of the complaint until fully paid. Inc..” clause 9 expressly provides. The said shipment was discharged complete and in good order with the exception of 1 drum and several cartons which were in bad order condition. the consignee filed the corresponding claim in the amount of P1. the sum of P300. for every US$1. Philippines. 119..F. in the total amount of $1. be interpreted against the party who drew the contract The bill of lading should be interpreted against the carrier. value of the damaged drum and cartons of medicine with the carrier. R. Hence. the lower court. on 10 March 1965 rendered judgment ordering Macondray & Co.67. However. Macondray (GR L-27795.46. On 7 August 1960.S.46. 89 Ala.67 representing the C. Because consignee failed to receive the whole shipment and as several cartons of medicine were received in bad order condition. It is difficult to reconcile them without doing violence to the language used and reading exceptions and conditions into the undertaking contained in clause 9 that are not there. 854. C. vs.. (6 R. and Manila Railroad Company and Manila Port Service to pay to the insurance company. instead of P2. both refused to pay such claim. It seems that there is an irreconcilable conflict between the two clauses with regard to the measure of Macondray’s liability. Philippines. Inc. which drew said contract. the appeal.) These rules are applicable to contracts contained in bills of lading.134. On 5 August 1961. the insurer. Barber Steamship Lines... Rep. as subrogee of the rights of the shipper and/or consignee. Paul Fire & Marine Insurance Company under its insurance Special Policy OC-173766 dated 23 June 1960. 9. Inc. and the Manila Port Service. Co. 218 cartons and drums of drugs and medicine. Inc. the contract will be construed most strongly against the carrier.

provided they are not contrary to law. Faul Fire Insurance. Shipper and consignee bound by stipulations It is not pretended that the conditions are unreasonable or were not freely and fairly agreed upon. 2. The right of action against another person. The shipper and consignee are. and (b) has been fairly and freely agreed upon. is subject to like limitations or restrictions. plus freight and insurance if paid. therefore.109. Liability limited to CIF value of the goods Herein.” (Paragraph 17) 4. stamped or printed. Limited Liability clause sanctioned by freedom of parties to stipulate. is subrogated merely to the rights of the assured. The stipulation in the bill of lading limiting the common carrier’s liability to the value of the goods appearing in the bill. Transportation Law. terms. the liabilities of Macondray. none passes to the insurer. whether written. 5. and if the assured’s right of action is limited or restricted by lawful contract between him and the person sought to be made responsible for the loss. clauses.F. morals. is limited or restricted by the provisions in the bill of lading. St. its agents. as fully as if they were all signed by such shipper. consignee or holder. Requisites for validity This limitation of the carrier’s liability is sanctioned by the freedom of the contracting parties to establish such stipulations. it follows that if the assured has no such right of action. unless the shipper or owner declares a greater value. in case of loss or damage to the goods. A stipulation fixing or limiting the sum that may be recovered from the carrier on the loss or deterioration of the goods is valid.67. owner and consignee of the goods. on the basis of the C. or conditions as they may deem convenient.I. being only that which the assured has. The Supreme Court affirmed the appealed decision.Haystacks (Berne Guerrero) The Court of Appeals certified the case to the Supreme Court on the ground that the appeal involves purely questions of law. owner. with costs against the insurance company. as insurer. the equitable interest in which passes to the insurer. Upon payment for a total loss of goods insured. The limitation of liability and other provisions herein shall inure not only to the benefit of the carrier. 2004 ( 156 ) . 3. exceptions and conditions. with respect to the lost or damaged shipments are expressly limited to the C. Limited Liability of Carrier The purpose of the bill of lading is to provide for the rights and liabilities of the parties in reference to the contract to carry. a suit by the insurer. but also to the benefit of any independent contractor performing services including stevedoring in connection with the goods covered hereunder. As subrogee. bound by such stipulations since it is expressly stated in the bill of lading that in “accepting this Bill of Lading. 1. good customs and public policy. their value in the calculation and adjustment of claims for which the Carrier may be liable shall for the purpose of avoiding uncertainties and difficulties in fixing value be deemed to be the invoice value. the shipper. The insurer after paying the claim of the insured for damages under the insurance is subrogated merely to the rights of the insured and therefore can necessarily recover only that to what was recoverable by the insured. the insurance is only subrogated to such rights of action as the assured has against 3rd persons who caused or are responsible for the loss. servants and employees. irrespective of whether any other value is greater or less. provided it is (a) reasonable and just under the circumstances. and the holder of the Bill of Lading agree to be bound by all its stipulations. which reads: “Whenever the value of the goods is less than $500 per package or other freight unit. in the right of the assured.I. it can recover only the amount that is recoverable by the latter. Right of subrogation Herein. Since the right of the assured.” It is obviously for this reason that the consignee filed its claim against the Macondray. etc. etc. is valid and binding. a suit by the insurer as subrogee necessarily is subject to like limitations and restrictions. after paying the claim of the insured for damages under the insurance. value of the goods as per contract of sea carriage embodied in the bill of lading.F. Purpose of the bill of lading. value of the lost or damaged goods in the aggregate amount of P1.

ordered South Sea Surety to pay VHIS the sum P2. Raised in the trial court. The present decision concerns itself to the petition for review filed by VHIS. on 15 October 1991. On 30 January 1984. (VHIS) entered into an agreement with the Seven Brothers whereby the latter undertook to load on board its vessel M/V Seven Ambassador the former’s lauan round logs numbering 940 at the port of Maconacon. On 24 January 1984. VHIS insured the logs against loss and/or damage with South Sea Surety and Insurance Co. Herein. VHIS gave the check in payment of the premium on the insurance policy to Mr.Haystacks (Berne Guerrero) 6.000. South Sea Surety and VHIS filed separate petitions for review before the Supreme Court.625.00 on said date. the Regional Trial Court of Valenzuela.000. Manila value of the goods which were lost or damaged. Inc. the reasonable attorney’s fees in the amount equivalent to 5% of the amount of the claim and the costs of the suit. [61] Valenzuela Hardwood and Industrial vs. There the Court found no reason to reverse the factual findings of the trial court and the Court of Appeals that Chua was indeed an authorized agent of South Sea when he received Valenzuela’s premium payment for the marine cargo insurance policy which was thus binding on the insurer. respectively.33 (shortlanded) or P456. On 20 January 1984. Valenzuela Hardwood and Industrial Supply.00 which was the rate existing at that time..00 representing the value of lost logs plus legal interest from the date of demand on 24 April 1984 until full payment thereof. Both Seven Brothers and South Sea Surety appealed. Obligation of carrier commenced on date it failed to deliver shipment in good condition The contention of the insurance company – that because of extraordinary inflation.14 and P653. VHIS demanded from South Sea Surety the payment of the proceeds of the policy but the latter denied liability under the policy. The Court of Appeals.000. Victorio Chua.00 representing the value of the policy of the lost logs with legal interest thereon from the date of demand on 2 February 1984 until the amount is fully paid or in the alternative. The peso equivalent was based by the consignee on the exchange rate of P2. Inc.37 (for the pilferage) and $324. it should be reimbursed for its dollar payments at the rate of exchange on the date of the judgment and not on the date of the loss or damage – is untenable. a check for P5. the C. The Court also ordered VHIS to pay Seven Brothers the sum of P230. for P2.53.00 and the latter issued its Marine Cargo Insurance Policy 84/24229 for P2.000. 30 June 1997) Third Division.000. Panganiban (J): 4 concur Facts: On 16 January 1984. In the meantime. Instead.I.000.000. after due hearing and trial. The trial court committed no error in adopting the aforesaid rate of exchange. Seven Brothers to pay VHIS the amount of P2. VHIS likewise filed a formal claim with Seven Brothers for the value of the lost logs but the latter denied the claim. Isabela for shipment to Manila.00 to cover payment of the premium and documentary stamps due on the policy was tendered due to the insurer but was not accepted.015 to $1. according to the claim of the consignee dated 26 September 1960 is $226. Transportation Law. The obligation of the carrier to pay for the damage commenced on the date it failed to deliver the shipment in good condition to the consignee. the South Sea Surety cancelled the insurance policy it issued as of the date of the inception for non-payment of the premium due in accordance with Section 77 of the Insurance Code. In a Resolution dated 2 June 1995. the Supreme Court denied the petition of South Sea Surety. and dismissed the counterclaim of South Sea Surety.F. CA (GR 102316. affirmed the judgment except as to the liability of Seven Brothers to VHIS. Metro Manila (Branch 171).000.00 representing the balance of the stipulated freight charges. On 2 February 1984.000. 2004 ( 157 ) . the said vessel M/V Seven Ambassador sank on 25 January 1984 resulting in the loss of VHIS’ insured logs.

good customs. (4) That the common carrier shall exercise a degree of diligence less than that of a good father of a family. vehicle. 5. Status of Seven Brothers as a private carrier undisputed. American Steamship Agencies. ship. public order. In a contract of private carriage. their contract of private carriage is not even a contract of adhesion. 4. Thus. This Court reversed the trial court Transportation Law. is dispensed with or diminished. 2. or public policy. (3) That the common carrier need not observe any diligence in the custody of the goods. Article 1306 NCC In a contract of private carriage. or of robbers who do not act with grave or irresistible threat. morals. (7) That the common carrier is not responsible for the loss. 2004 ( 158 ) . Home Insurance vs. Where the reason for the rule ceases. the public policy embodied therein is not contravened by stipulations in a charter party that lessen or remove the protection given by law in contacts involving common carriers. Hence. (5) That the common carrier shall not be responsible for the acts or omissions of his or its employees. exempting the shipowner from liability for loss of or damage to the cargo caused even by the negligence of the ship captain. Article 1745 NCC Article 1745 of the Civil Code provides that “any of the following or similar stipulations shall be considered unreasonable. short-landing. the trial court held the shipowner liable for damages resulting from the partial loss of the cargo.” 3. Unlike in a contract involving a common carrier.” The validity of this stipulation is the lis mota of the present case. the trial court similarly nullified a stipulation identical to that involved in the present case for being contrary to public policy based on Article 1744 of the Civil Code and Article 587 of the Code of Commerce. Inc. and affirmed the assailed decision. such stipulation is valid because it is freely entered into by the parties and the same is not contrary to law. destruction. Pursuant to Article 1306 of the Civil Code. the parties may freely stipulate their duties and obligations which perforce would be binding on them. destruction. the rule itself does not apply In Home Insurance Co. Validity of Stipulation is Lis Mota The charter party between VHIS and Seven Brothers stipulated that the “owners shall not be responsible for loss. American Steamship Agencies. Article 1745 and other Civil Code provisions on common carriers may not be applied unless expressly stipulated by the parties in their charter party.” 3.Haystacks (Berne Guerrero) The Supreme Court denied the petition for its utter failure to show any reversible error on the part of the appellate court. airplane or other equipment used in the contract of carriage. Common carriers provision may not be applied unless expressly stipulated in charter party It is undisputed that Seven Brothers had acted as a private carrier in transporting VHIS’ lauan logs. the parties may validly stipulate that responsibility for the cargo rests solely on the charterer. Consequently. or deterioration of goods on account of the defective condition of the car. breakages and any kind of damages to the cargo. violence or force. 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. or deterioration of the goods. unjust and contrary to public policy: (1) That the goods are transported at the risk of the owner or shipper.. private carriage does not involve the general public. (2) That the common carrier will not be liable for any loss. 1. split. (6) That the common carrier’s liability for acts committed by thieves. Proximate cause of sinking of M/V Seven Ambassadors The proximate cause of the sinking of M/V Seven Ambassadors resulting in the loss of its cargo was the “snapping of the iron chains and the subsequent rolling of the logs to the portside due to the negligence of the captain in stowing and securing the logs on board the vessel and not due to fortuitous event. Indeed. Consequently. or of a man of ordinary prudence in the vigilance over the movables transported. Parties may stipulate responsibility rests solely on charterer. vs.

determine the price or consideration of the charter. 7. Nature of contract of transportation between public and common carriers. enter into a free and voluntary agreement. in exchange for convenience and economy. morals. a stipulation exempting the owner from liability for the negligence of its agent is not against public policy. as held in Home Insurance. a charterer. the parties in a contract of private carriage can stipulate the carrier’s obligations and liabilities over the shipment which. were waived when it entered into the charter party. for whose acts the owner would ordinarily be liable except for said paragraph. Application of American rule reasonable. public policy. Herein. Under American jurisprudence.“ The Court finds such doctrine reasonable. being patently and undoubtedly patrimonial. 10. VHIS’s Transportation Law. becomes a private carrier. Compared to the general public. public order. a common carrier undertaking to carry a special cargo or chartered to a special person only. he takes a normal business risk. it cannot submit its own stipulations for the approval of the common carrier. unless the waiver is contrary to law. no choice. the law on common carriers extends its protective mantle against one-sided stipulations inserted in tickets. As a private carrier.Haystacks (Berne Guerrero) and laid down the well-settled observation and doctrine that “the provisions of our Civil Code on common carriers were taken from Anglo-American law. Thus. Private charterer not similarly situated as public The general public enters into a contract of transportation with common carriers without a hand or a voice in the preparation thereof. even if the public wants to. as in this case of a ship totally chartered for the use of a single party. or prejudicial to a person with a right recognized by law. “The Civil Code provisions on common carriers should not be applied where the carrier is not acting as such but as a private carrier. 2004 ( 159 ) . even from the neglect or fault of the captain or crew or some other person employed by the owner on board. invoices or other documents over which the riding public has no understanding or. It can. 8.” Undoubtedly. the ruling in said case remains a binding judicial precedent based on the doctrine of stare decisis and Article 8 of the Civil Code which provides that “judicial decisions applying or interpreting the laws or the Constitution shall form part of the legal system of the Philippines.” As a general rule. patrimonial rights may be waived as opposed to rights to personality and family rights which may not be made the subject of waiver.” 9. and in fact it usually does. The riding public merely adheres to the contract. and is deemed valid. Charter party waives right under Articles 586 and 587. may opt to set aside the protection of the law on common carriers. Rights may be waived. Home Insurance is applicable to the present case.” 6. Article 6 NCC Article 6 of the Civil Code provides that “rights may be waived. Home Insurance case applicable in present case The case of Home Insurance specifically dealt with “the liability of the shipowner for acts or negligence of its captain and crew” and a charter party stipulation which “exempts the owner of the vessel from any loss or damage or delay arising from any other source. Consequently. a charterer in a contract of private carriage is not similarly situated. Thus. which confer on the shipper the right to recover damages from the shipowner and ship agent for the acts or conduct of the captain. In practice. 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 the strict public policy governing common carriers is applied. as the Court there categorically held that said rule was “reasonable” and proceeded to apply it in the resolution of that case. VHIS miserably failed to show such circumstances or arguments which would necessitate a departure from a well-settled rule. worse. Code of Commerce Whatever rights petitioner may have under Articles 586 and 587 of the Code of Commerce. Ruling in Home Insurance binding based on doctrine of stare decisis and Article 8 NCC The naked assertion of that the American rule enunciated in Home Insurance is not the rule in the Philippines deserves scant consideration. in turn. or good customs. When the charterer decides to exercise this option. Such policy has no force where the public at large is not involved.

” 13. Compania Transatlantica not applicable. shall apply. Common carriers The cases of Shewaram and Ysmael both involve a common carrier. Steamship “Pompey” and Limpangco Sons vs. vs. The public policy considerations behind the rigorous treatment of common carriers are absent in the case of private carriers. it was “bound by its undertaking”. Article 362 of the Code of Commerce provides the standard of ordinary diligence for the carriage of goods by a carrier. Hence. Furthermore. negligence. The provisions cited by VHIS are. NT Hashim vs. Hashim and Co. 11. 14. the exemption was intended to cover accidents due to hidden defects in the apparatus or other unforseeable occurrences” not caused by its “personal negligence. Article 1170 NCC Article 1170. Lopez Costelo. 15. Rocha. Standard of ordinary diligence in private carriage. consequently. thereby exempting Seven Brothers from any responsibility for loss or damage thereto. Cadwallader Gibson Lumber Co. Cadwallader Gibson. vs. Ohta Development Co. of New York vs. T . be modified in a contract or private carriage as VHIS and Seven Brothers had done in their charter party.” This promise was thus construed to make sense together with the stipulation against liability for damages. This. Walter A. Herein. of the time and of the place. Shewaram vs. Seven Brothers is not an obligor in respect of the cargo. thus. the defendant therein made a “promise to use due care in the lifting operations” and.Haystacks (Berne Guerrero) right conferred under said articles may be waived. are liable for damages. and Ysmael vs. Article 362 of the Code of Commerce The factual milieu of the present case does not justify the application of the second paragraph of Article 1173 of the Civil Code which prescribes the standard of diligence to be observed in the event the law or the contract is silent. Seven Brothers made no such promise.. If the law does not state the diligence which is to be observed in he performance. and those who in any manner contravene the tenor thereof. inapplicable to the present case. The agreement of the parties to exempt the shipowner from responsibility for any damage to the cargo and place responsibility over the same to VHIS is the lone stipulation considered. 2004 ( 160 ) . In Herein. Yangco Steamship Co. the stringent laws applicable to common carriers are not applied to private carriers. or delay. Yangco not applicable. Smith vs. VHIS did by acceding to the contractual stipulation that it is solely responsible for any damage to the cargo. Articles 1170 and 1173 not applicable in present case Articles 1170 and 1173 are applicable only to the obligor or the one with an obligation to perform. they necessarily justify the application of such policy considerations and concomitantly stricter rules. The standard of diligence under this statutory provision may. This shifting of responsibility is not void. therefore. 16. Steamship. Limpangco Sons vs. Standard Oil of New York vs. that which is expected of a good father of a family shall be required. the provisions of articles 1171 and 2201. however. Smith & Co. Promise The case of Manila Railroad is inapplicable because the action for damages there does not involve a contract for transportation. Gabino Barreto not applicable. When negligence shows bad faith. Ohta vs. Lopez Castelo. Article 1173 NCC Article 1173 of the Civil Code provides that “The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons. of the Civil Code provides that “Those who in the performance of their obligations are guilty of fraud. Rocha and Co. 17. besides. Herein. VHIS points to Standard Oil Co. N. PAL. in support of its contention that the Transportation Law. for this obligation to bear the loss was shifted to VHIS by virtue of the charter party. Factual milieu Herein. Manila Railroad vs.” 12. vs..

000. Tandog and Tiro per advice. the petition for prohibition with preliminary injunction. Teves (GR L-37750. M/S “Sweet Hope” bound for Tagbilaran City via the port of Cebu. Sweet Line moved to dismiss the complaint on the ground of improper venue. the issue whether VHIS has a cause of action against Seven Brother as the Court affirmed the liability of South Sea Surety for the loss suffered by VHIS. but to no avail. by itself. and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of. loss Effect of the South Sea Resolution.00 before the CFI of Misamis Oriental. the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. 40 These however are not on all fours with the present case because they do not involve a similar factual milieu or an identical stipulation in the charter party expressly exempting the shipowner from responsibility for any damage to the cargo. 2004 ( 161 ) . is moot and academic. Tandog and Tiro were to board Sweet Line’s vessel.. they were forced to agree “to hide at the cargo section to avoid inspection of the officers of the Philippine Coastguard. Because the said vessel was already filed to capacity. the parties submitted their respective memoranda in support of their respective contentions. during the trip. with costs against Sweet Line.” [62] Sweet Line vs.Haystacks (Berne Guerrero) shipowner be held liable for damages. went to the branch office for proper relocation to M/S “Sweet Town”. Thereafter. and lifted and set aside the restraining order issued on 20 November 1973.” and that the tickets they bought at Cagayan de Oro City for Tagbilaran were not honored and they were constrained to pay for other tickets.” Tandog and Tiro alleged that they were. bought tickets 0011736 and 011737 for Voyage 90 on 31 December 1971 at the branch office of Sweet Line. 1 reserves vote Facts: Atty. at Cagayan de Oro City. necessarily preclude VHIS from proceeding against Seven Brother. An aggrieved party may still recover the deficiency from the person causing the loss in the event the amount paid by the insurance company does not fully cover the loss. Tandog and Tiro sued Sweet Line for damages and for breach of contract of carriage in the alleged sum of P110. the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. The Supreme Court dismissed the petition for prohibition. Leovigildo Tandog and Rogelio Tiro. Upon learning that the vessel was not proceeding to Bohol. Transportation Law. a contractor by professions. a shipping company transporting inter-island passengers and cargoes. The motion was denied by the trial court. Aggrieved party may recover deficient from person causing As the validity of the questioned charter party stipulation was upheld and as VHIS may not recover from Seven Brother.” “exposed to the scorching heat of the sun and the dust coming from the ship’s cargo of corn grits. 18. It suffices to state that the Resolution of the Court dated 2 June 1995 affirming the liability of South Sea does not. Santos (J): 3 concur. Sweet Line moved to reconsider the order of denial. The Supreme Court. Inc. In view thereof. 19. Hence. If the amount paid by the insurance company does not fully cover the injury or loss. On 18 January 1974. since many passengers were bound for Surigao. the Court gave due course to the petition and required Tandog and Tiro to answer. 19 May 1978) Second Division. in its resolution of 20 November 1973. restrained Judge Teves from proceeding further with the case and required Tandog and Tiro to comment. Article 2207 NCC Article 2207 of the Civil Code provides that “If the plaintiff’s property has been insured.

the Court finds and holds that Condition 14 printed at the back of the passage tickets should be held as void and unenforceable for the reasons that (1) under circumstances Transportation Law. All the essential elements of a valid contract. contracts of sale of lots on the installment plan fall into this category.” 7. these are commonly known as “contracts of adhesion. (2) cause or consideration which is the fare paid by the passenger as stated in the ticket.. the courts must be vigilant for his protection. and. Vargas The Court held that “the courts cannot ignore that nowadays. is ignorance. property or other relations.’ labelled since Raymond Saleilles ‘contracts by adherence’ (contracts d’ adhesion) in contrast to those entered into by parties bargaining on an equal footing. indigence. cartels and concentration of capital. Inc.Haystacks (Berne Guerrero) 1. and prevent their becoming traps for the unwary. usually a corporation. Qua Chee Gan v. there are certain contracts almost all the provisions of which have been drafted only by one party. manage to impose upon parties dealing with them cunningly prepared ‘agreements that the weaker party may not change one whit. v. Valid contract of carriage exists. Such contracts (of which policies of insurance and international bill of lading are prime examples) obviously call for greater strictness and vigilance on the part of the courts of justice with a view to protecting the weaker party from abuses and imposition. are the best evidence thereof. monopolies. upon which the latter based their complaint. Ticket best evidence of contract There was a valid contract of carriage entered into by Sweet Line and Tandog and Tiro and that the passage tickets. Ticket issued has all elements of a written contract. reads “It is hereby agreed and understood that any and all actions arising out of the conditions and provisions of this ticket. Condition 14 void Considered in the light of the foregoing norms and in the context of circumstances prevailing in the inter-island shipping industry in the country. i. “While generally. because the only participation of the party is the signing of his signature or his ‘adhesion’ thereto.. (3) object.” 4. For.” the validly and/or enforceability of which will have to be determined by the peculiar circumstances obtaining in each case and the nature of the conditions or terms sought to be enforced. as to venue Condition 14 printed at the back of the tickets. Law Union and Rock Insurance Co. tender age and other handicap. 3. Protection of disadvantaged expressly enjoined by the Civil Code To the same effect and import. Validity determined by peculiar circumstances obtaining in each case With respect to the 14 conditions printed at the back of the passage tickets. bills of lading. which is the transportation of the passenger from the place of departure to the place of destination which are stated in the ticket. shall be filed in the competent courts in the City of Cebu. consent. 2004 ( 162 ) . his participation in the ‘agreement’ being reduced to the alternative ‘to take it or leave it. cause or consideration and object. Condition printed at back of ticket. It is a matter of common knowledge that whenever a passenger boards a ship for transportation from one place to another he is issued a ticket by the shipper which has all the elements of a written contract. et al. Namely: (1) the consent of the contracting parties manifested by the fact that the passenger boards the ship and the shipper consents or accepts him in the ship for transportation. Madrigal Shipping Co.. Such contracts are called contracts of adhesion. in recognition of the peculiar character of contracts of this kind. mental weakness. stipulations in a contract come about after deliberate drafting by the parties thereto. the protection of the disadvantaged is expressly enjoined by the New Civil Code “in all contractual.” 5. irrespective of where it is issued. Peralta de Guerrero. Contracts of adhesion. when one of the parties is at a disadvantage on account of his moral dependence. Insurance contracts. endowed with overwhelming economic power.e.” 6. are present.” 2. Guidelines in determination of validity and/or enforceability of contracts of adhesion. and Fieldman Insurance v.

for conditions that may be printed thereon. engaged in inter-island shipping. Shipping companies (franchise holders of CPC) possess virtual monopoly over business of transporting passengers Shipping companies are franchise holders of certificates of public convenience and. it is not just and fair to bind passengers to the terms of the conditions printed at the back of the passage tickets. the piers are congested with passengers and their cargo waiting to be transported. Unlike fine prints in insurance contract.Haystacks (Berne Guerrero) obtaining in the inter-island shipping industry. and/or at the risk of their safety — their immediate concern. and who have little or no choice but to avail of Sweet Line’s vessels. that there is a dearth of and acute shortage in inter-island vessels plying between the country’s several islands. 13. Passengers not expected to examine tickets received from congested counters Under the circumstances. being to be able to board vessels with the hope of reaching their destinations. This being so. 2004 ( 163 ) . and (2) Condition 14 subverts the public policy on transfer of venue of proceedings of this nature. it is hardly just and proper to expect the passengers to examine their tickets received from crowded/congested counters. especially if there are a number of such conditions in fine print. when passengers literally scramble to secure whatever accommodations may be availed of. 8. leaving passengers with no choice but to buy their tickets and avail of their vessels and facilities. under Condition 14. shipping companies. for the moment. since the insured is afforded the opportunity to examine and consider the same. of which the COurt can take judicial notice. Section 3. even through circuitous routes. Condition 14 subversive of public policy on transfers of venue of actions. since their alleged adhesion is presumed only from the fact that they purchased the passage tickets. 11. This was precisely the experience of private respondents when they were relocated to M/S “Sweet Town” from M/S “Sweet Hope” and then allegedly “exposed to the scorching heat of the sun and the dust coming from the ship’s cargo of corn grits. Thus. The conditions are even worse at peak and/or the rainy seasons. 12. judicial notice may be taken of the fact that the bulk of those who board these inter-island vessels come from the low-income groups and are less literate. State of inter-island shipping of public knowledge. more often than not during rush hours. 10. Rule 4. Judicial notice that bulk of passengers from low-income groups Finally. since the same will prejudice rights and interests of innumerable passengers in different parts of the country who. will have to file suits against Sweet Line only in the City of Cebu. much less charge them with having consented to the conditioner so printed.” because even the latter vessel was filled to capacity. unlike the small print provisions of insurance contracts — the common example of contracts of adherence — which are entered into by the insured in full awareness of said conditions. Rules of Court Transportation Law. and the facilities they offer leave much to be desired. therefore. Court take judicial notice It is a matter of public knowledge. possess a virtual monopoly over the business of transporting passengers between the ports covered by their franchise. passengers do not have the same chance to examine conditions Condition 14 was prepared solely at the instance of Sweet Line. have a virtual monopoly of the business of transporting passengers and may thus dictate their terms of passage. For. the passengers had no say in its preparation. on which Condition 14 is printed in fine letters. The schedules are — as often as not if not more so — delayed or altered. 9. passengers of inter-island vessels do not have the same chance. even under ordinary circumstances. Neither did the latter have the opportunity to take the same into account prior to the purchase of their tickets.

14. De Castro (J): 4 concur.921.Haystacks (Berne Guerrero) Condition 14 is subversive of public policy on transfers of venue of actions.50. Inc. the petition for review on certiorari. For. thus placing Sweet Line at a decided advantage over said persons. Australia. Great American Insurance (GR L-37604. Condition 14 subversive of the public good or interest Public policy is “that principle of the law which holds that no subject or citizen can lawfully do that which has a tendency to be injurious to the public or against the public good. but having failed to make delivery. who may have perfectly legitimate claims against it. instead of enhance.921. Considering the expense and trouble a passenger residing outside of Cebu City would incur to prosecute a claim in the City of Cebu. and entered another one finding Eastern & Australian Steamship and Zuellig liable to Great American Insurance Co. under Bill of Lading 31. Sweet Line has branches or offices in the respective ports of call of its vessels and can afford to litigate in any of these places. therefore. Great American Insurance Co. will be subversive of the public good or interest. likewise. as contrary to public policy — to make the courts accessible to all who may have need of their services. 23 October 1981) First Division. be declared void and unenforceable. 1. of the Rules of Court. 1 concur in result Facts: On 10 December 1971. thru its agent F. As subrogee. was compelled to pay the consignee P35. The Supreme Court reversed the decision of the court. 2004 ( 164 ) . Co.” Under this principle “freedom of contract or private dealing is restricted by law for the good of the public.. Civil Case 88985) found Eastern & Australian Steamship and Zuellig liable to Great American Insurance Co. failed to make good the claim. The CFI of Manila. The philosophy underlying the provisions on transfer of venue of actions is the convenience of Sweet Line as well as his witnesses and to promote the ends of justice. Zuellig. in the amount of 100 Sterling or its peso equivalent of P1. Upon the other hand. the ends of justice.00. much less prejudice. shipped from Sydney. 1 case of impellers for warman pump on board the SS “Chitral. The first part of the provision of Section 4 (5) of the Carriage of Goods by Sea Act Transportation Law.E. Section 3.” a vessel owned and operated in the Philippines by Eastern & Australian Steamship Co. The said condition should. The condition will thus defeat. actions of passenger claimants outside of Cebu City.544.” Herein. Ltd.217. since it will frustrate in meritorious cases. Philippines in favor of consignee Benguet Consolidated. for P35.. with legal interest thereon from 20 November 1972. although venue may be changed or transferred from one province to another by agreement of the parties in writing pursuant to Rule 4. Without pronouncement as to costs. Ltd. the insurance company filed a complaint dated 20 November 1972 against Eastern & Australian Steamship and FE Zuellig for recovery of the said amount with legal interest and attorney’s fees. on 25 July 1973 (Branch XIII. Hence. a claim was presented against them for the value of the shipment. if enforced. the filing of the suit in the CFI of Misamis Oriental will not cause inconvience to. and to further pay an amount equivalent to 25% thereof by way of damages as and for attorney’s fees. he would most probably decide not to file the action at all. such an agreement will not be held valid where it practically negates the action of the claimants. for delivery to Manila. Section 4 (5) of COGSA and Clause 17 of the Bill of Lading not inconsistent There is no inconsistency between Section 4 (5) of the Carriage of Goods by Sea Act and Clause 17 of the Bill of Lading.81. Hence. the Jackson and Spring (Sydney) Pty. Inc. [63] Eastern and Australian Steamship vs. As a consequence of the loss of the shipment.81 against all risks. Demand was made on Eastern & Australian Steamship and FE Zuellig for the delivery of said shipment. Sweet Line.40. On 22 December 1971 the SS “Chitral” arrived in Manila but failed to discharge the shipment or any part thereof. The shipment was insured with Great American Insurance. Eastern & Australian Steamship and ZE Zuellig. Condition 14. in the amount of $500. or its peso equivalent of P3.

” Also in Phoenix Assurance Company vs. Clause 17 of the Bill of Lading shall prevail.00 refers to a situation where there is an agreement other than that set forth in the Bill of Lading providing for a maximum higher than $500. for it would render ineffective the very intent of the law setting the sum of $500. Inc. unless the shipper or owner declares a greater value. Said provision does not prescribe the minimum and hence. Clause 17 of the questioned Bill of Lading also provides the maximum for which the carrier is liable.” 4. Right of carrier to limit liability recognized also in the United States The right of the carrier to limit its liability has been recognized not only in Philippine jurisdiction but also in American jurisprudence. Under a stipulation such as this. Narvasa (J): 4 concur Transportation Law. the court held that the Court “has held as valid and binding a similar provision in a bill of lading limiting the carrier’s liability to a specific amount unless the shipper expressly declares a higher valuation and pays the corresponding rate thereon. in the absence of a higher valuation of the goods as indicated in the Bill of Lading. IAC (GR 75118. Article 1749 NCC Article 1749 of the New Civil Code expressly allows the limitation of the carrier’s liability. provided that the value of the goods have been declared in the Bill of Lading. it is the duty of the shipper to disclose. Both the Carriage of Goods by Sea Act and Clause 17 of the Bill of Lading allow the payment beyond the respective maximum limit imposed therein. the law does not disallow an agreement for liability at a lesser amount. where the shipper is silent as to the value of his goods. even if the loss or damage results from the carrier’s negligence. per package. 2004 ( 165 ) . 31 August 1987) First Division. is binding. also [67] Sea-land Service vs. Prince Line. It prescribes that the carrier may only be held liable for an amount not more than 100 Sterling which is below the maximum limit required in the Carriage of Goods by Sea Act. the carrier’s liability for loss or damage thereto is limited to that amount.. it was held that “a stipulation in a contract of carriage that the carrier will not be liable beyond a specified amount unless the shipper declares the goods to have a greater value is generally deemed to be valid and will operate to limit the carrier’s liability. vs. it is apparent that there had been no agreement between the parties. Macondray & Co. the carrier’s liability for loss or damage thereto is limited to the amount specified in the contract of carriage and where the shipper states the value of his goods. Inc.. By providing that $500. It provides that “a stipulation that the common carrier’s liability is limited to the value of the goods appearing in the bill of lading.00 per package.00. 3. 2. Clause 17 cannot be read in the light of second paragraph of Section 4 (5) of COGSA as such would render ineffective the very intent of the law The second paragraph of Section 4 (5) of the Carriage of Goods by Sea Act prescribing the maximum amount shall not be less than $500. it could be any amount which is below $500. Herein. Pursuant to such provision. rather than the carrier’s to demand the true value of the goods and silence on the part of the shipper will be sufficient to limit recovery in case of loss to the amount stated in the contract of carriage. and hence.Haystacks (Berne Guerrero) limits the maximum amount that may be recovered by the shipper in the absence of an agreement as to the nature and value of goods shipped. Limitation of carrier’s liability valid In the case of Northern Motors.00 as the maximum liability of the vessel/carrier. the validity of a stipulation limiting the carrier’s liability was reiterated. 5.00 is the maximum liability. In one case. Clause 17 of the Bill of Lading should not be read in the light of second paragraph of Section 4 (5) of the Carriage of Goods by Sea Act.” [64].

Branch X. goods being transported under said bill. The shipment arrived in Manila on 12 February 1981. Cue rejected the offer and thereafter brought suit for damages against Sea-Land in the then Court of First Instance of Cebu. after the shipment had been transferred. Said Court. asserting that said amount represented its maximum liability for the loss of the shipment under the package limitation clause in the covering bill of lading. a foreign shipping and forwarding company licensed to do business in the Philippines. Manila. received from Seaborne Trading Company in Oakland.48.00 as there was no question of the fact that the lost shipment consisted of 8 cartons or packages. no value was indicated in the bill of lading. he thereby made himself a party to the contract of transportation. Transportation Law. 1.00. (2) Sea-Land is liable in the aggregate amount of US$4.00 as litigation expenses. and there discharged in Container 310996 into the custody of the arrastre contractor and the customs and port authorities. Sea-Land appealed to the Intermediate Appellate Court.814. it was stolen by pilferers and has never been recovered.000. The right of the shipper to countermand the shipment terminates when the consignee or legitimate holder of the bill of lading appears with such bill of lading before the carrier and makes himself a party to the contract. Sometime between February 13 and 16. or damage to. Sea-Land thereupon filed the present petition for review.00.00 per package is valid and binding on Paulino Cue. the equivalent in Philippine currency of US$4. the consignee. 1981. rendered judgment in favor of Cue. made formal claim upon Sea-Land for the value of the lost shipment allegedly amounting to P179. after trial. The shipment was loaded on board the MS Patriot. Paulino Cue. for discharge at the Port of Cebu.643. The Supreme Court reversed and set aside the Decision of the Intermediate Appellate Court complained of.00 to $1. the business name used by Paulino Cue in the wholesale and retail trade which he operated out of an establishment located on Borromeo and Plaridel Streets. Sea-Land offered to settle for US$4. 2. California a shipment consigned to Sen Hiap Hing. sentencing Sea-Land to pay him P186. (3) Sea-Land was discharged of that obligation by paying Cue the sum of P32. a consignee in a bill of lading has the right to recover from the carrier or shipper for loss of.000. Cebu City.600.00 at the conversion rate of P8.00. Sea-Land Service. even if the LVN Pictures Inc. That Court however affirmed the decision of the Trial Court in toto. Costs against Cue. When consignee becomes party to contract Therein.” Based on volume measurements Sea-land charged the shipper the total amount of US$209. a vessel owned and operated by Sea-Land.000. Consignee in bill of lading has right to recover from carrier although document drawn by consignor and carrier In principle.048.00 for attorney’s fees and P2. 2004 ( 166 ) . Inc. made Mendoza as consignee. and acting independently of Mendoza for the time being. The shipper not having declared the value of the shipment. nevertheless when he. awaiting trans-shipment to Cebu. P55. as consignor of its own initiative. PAL. Mendoza appeared at the Phil Air Port armed with the copy of the Air Way Bill demanding the delivery of the shipment to him..28 for freightage and other charges. Prior to that time he is a stranger to the contract.000. a stranger to the contract if that is possible.Haystacks (Berne Guerrero) Facts: On 8 January 1981. although that document may have been — as in practice it oftentimes is — drawn up only by the consignor and the carrier without the intervention of the consignee. The bill described the shipment only as “8 CTNS on 2 SKIDS-FILES.00 representing the Philippine currency value of the lost cargo. along with other cargoes to Container 40158 near Warehouse 3 at Pier 3 in South Harbor. holding that (1) the stipulation in the questioned bill of lading limiting Sea-Land’s liability for loss of or damage to the shipment covered by said bill to US$500. On 10 March 1981. Mendoza vs.00. P25.000.00 for unrealized profit with 1% monthly interest from the filing of the complaint until fully paid.000. or its then Philippine peso equivalent of P30.

second paragraph NCC Article 1257. per customary freight unit. if any. Public Act No. In the event of any loss. and persons are not vested with the right to prompt delivery. xxx” 7. 6. Section 4 (5) of COGSA Section 4(5) of Commonwealth Act 65. and the carrier’s liability. if required and in such case if the actual value of the goods per package or per customary freight unit shall exceed such declared value. but shall not be conclusive on the carrier. approved on 22 October 1936.” 8. or in case of goods not shipped in packages. 2004 ( 167 ) . shall be prima facie evidence. That such maximum shall not be less than the figure above named. Mendoza vs. and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided. first paragraph. Common carriers not obligated to make prompt delivery. By agreement between the carrier. damage or delay to or in connection with goods exceeding in actual value $500 per package. PAL. the bill states that “If a value higher than $500 shall have been declared in writing by the shipper upon delivery to the carrier and inserted in this bill of lading and extra freight paid. PAL. unless the nature and a higher value shall be declared by the shipper in writing before shipment and inserted in this Bill of Lading. Liability of common carrier governed by laws of country of destination Since the liability of a common carrier for loss of or damage to goods transported by it under a contract of carriage is governed by the laws of the country of destination and the goods in question were shipped from the United States to the Philippines. Mendoza vs. per customary freight unit. suppletorily. the liability of Sea-Land to the consignee is governed primarily by the Civil Code. as the case may be. by the Code of Commerce and special laws. if any. One of these suppletory special laws is the Carriage of Goods by Sea Act. or the equivalent of that sum in other currency. in part. It says: “(22) VALUATION. the value shall nevertheless be deemed to be declared value and the carrier’s liability. of the old Civil Code (now Article 1311. if embodied in the bill of lading. This declaration.S. he may demand its fulfillment provided he has given notice of his acceptance to the person bound before the stipulation has been revoked. Clause 22. Clause 22. lawful money of the United States. paragraph 2. 521 which was made applicable to all contracts for the carriage of goods by sea to and from Philippine ports in foreign trade by Commonwealth Act 65. U. in all matters not determined thereby. master. unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. first paragraph of the long-form bill of lading Clause 22. now Article 1311.” Transportation Law. unless such common carriers previously assume the obligation. shall not exceed the declared value and any partial loss or damage shall be adjusted pro rata on the basis of such declared value. In no event shall the carrier be liable for more than the amount of damage actually sustained. Said rights and obligations are created by a specific contract entered into by the parties. shall be determined on the basis of a value of $500 per package or customary freight unit. unless such obligation is assumed Common carriers are not obligated by law to carry and to deliver merchandise. second paragraph) reads “Should the contract contain any stipulation in favor of a third person. of the long-form bill of lading customarily issued by Sea-Land to its shipping clients is a virtual copy of the first paragraph of the foregoing provision. and as ordained by the said Code. 4. or agent of the carrier. the value of the goods shall be deemed to be $500 per package or per customary freight unit. or in case of goods not shipped in packages.Haystacks (Berne Guerrero) 3.” 5. Article 1357 paragraph 2 of old Civil Code. reads “(5) Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States. second paragraph of the long-form bill of lading And in its second paragraph.

Said section merely gives more flesh and greater specificity to the rather general terms of Article 1719 (without doing any violence to the plain intent thereof) and of Article 1750. the right of a party to recover for loss of a shipment consigned to him under a bill of lading drawn up only by and between the shipper and the carrier. Transportation Law. if it is reasonable and just under the circumstances. And since the shipper here has not been heard to complaint of having been “rushed. is binding. Nothing in Civil Code which prohibits agreements as to limitation of carrier’s liability Article 1766 of the Civil Code expressly subjects the rights and obligations of common carriers to the provisions of the Code of Commerce and of special laws in matters not regulated by said (Civil) Code. 10. NCC Nothing in Section 4 (5) of COGSA is repugnant or inconsistent with Articles 1749 and 1750 Nothing contained in section 4(5) of the Carriage of Goods by Sea Act is repugnant to or inconsistent with any of the provisions of the Civil Code. and has been fairly and freely agreed upon. 14.” imposed upon or deceived in any significant way into agreeing to ship the cargo under a bill of lading carrying such a stipulation — in fact. the validity and binding effect of the liability limitation clause in the bill of lading are nevertheless fully sustainable on the basis alone of the Civil Code provisions. Determination of just and reasonable character of stipulation as to liability limitation clause But over and above that consideration. freely and fairly sought and given. PAL. That said stipulation is just and reasonable is arguable from the fact that it echoes Article 1750 itself in providing a limit to liability only if a greater value is not declared for the shipment in the bill of lading. it is also quite clear that said Code in fact has agreements of such character in contemplation in providing. destruction. 13. 15. Limited liability clause valid even without Section 4 (5) of COGSA Even if section 4(5) of the Carriage of Goods by Sea Act did not exist. To hold otherwise would amount to questioning the justice and fairness of that law itself. Right of consignee springs from either relation of agency with consignor. As pointed out in Mendoza vs. to give effect to just agreements limiting carriers’ liability for loss or damage which are freely and fairly entered into. or his status as a stranger in whose favor some stipulation is made in said contract. springs from either a relation of agency that may exist between him and the shipper or consignor. in its Articles 1749 and 1750. Article 1749 NCC Article 1749 of the Civil Code provides that “A stipulation that the common carrier’s liability is limited to the value of the goods appearing in the bill of lading.” 12. unless the shipper or owner declares a greater value. There is nothing in the Civil Code which absolutely prohibits agreements between shipper and carrier limiting the latter’s liability for loss of or damage to cargo shipped under contracts of carriage.Haystacks (Berne Guerrero) 9. the just and reasonable character of such stipulation is implicit in it giving the shipper or owner the option of avoiding accrual of liability limitation by the simple and surely far from onerous expedient of declaring the nature and value of the shipment in the bill of lading. or status as a stranger in whose favor some stipulation is made in said contract Herein. or deterioration of the goods is valid. Article 1750 NCC Article 1750 of the Civil Code provides that “A contract fixing the sum that may be recovered by the owner or shipper for the loss.” 11. it does not appear that said party has been heard from at all insofar as this dispute is concerned — there is simply no ground for assuming that its agreement thereto was not as the law would require. 2004 ( 168 ) . Cue had no direct part or intervention in the execution of the contract of carriage between the shipper and the carrier as set forth in the bill of lading in question.

22. Agreed limited liability of carrier valid and enforceable There can be no doubt or equivocation about the validity and enforceability of freely-agreed-upon stipulations in a contract of carriage or bill of lading limiting the liability of the carrier to an agreed valuation unless the shipper declares a higher value and inserts it into said contract or bill. Agreements as to transshipment (deviation) recognized by law Clause 13 of the bill of lading obviates the necessity to offer any other justification for off loading the shipment in question in Manila for transshipment to Cebu City. Aboitiz and Company. 18. the port of destination stipulated in the bill of lading. Free agreement not vitiated by fine printed provisions In neither capacity can he assert personally. 16. The carrier or master may delay such transshipping or forwarding for any reason. the delivery of the goods or cargo shipped. Clause 13 of Bill of Lading Clause 13 of the bill of lading which expressly authorizes transshipment of the goods at any point in the voyage in these terms: “13. THROUGH CARGO AND TRANSSHIPMENT. The carrier or master. the Court takes note of Sea-Land’s explanation that it only directly serves the Port of Manila from abroad in the usual course of voyage of its carriers. to all intents and purposes accepted said bill. 4(5) of the Act] are as much a part of a bill of lading as though actually placed therein by agreement of the parties. 21. COGSA applicable up to final port of destination The Carriage of Goods by Sea Act is applicable up to the final port of destination and that the fact that transshipment was made on an interisland vessel did not remove the contract of carriage of goods from the operation of said Act. moreover.Haystacks (Berne Guerrero) and who becomes a party thereto when he demands fulfillment of that stipulation. Parenthetically. Cue bound by stipulations in bill of lading Cue. i. but in fact recognized. may at port of discharge or any other place whatsoever transship or forward the goods or any part thereof by any means at the risk and expense of the goods and at any time. such arrangements not being prohibited. 17. rests upon an almost uniform weight of authority. in the exercise of its or his discretion and although transshipment or forwarding of the goods may not have been contemplated or provided for herein. the alleged circumstance that fair and free agreement to such provision was vitiated by its being in such fine print as to be hardly readable. hence its maintenance of arrangements with a local forwarder.” it nonetheless ruled that the consignee was bound thereby on the strength of authority holding that such provisions on liability limitation are as much a part of a bill of lading as though physically in it and as though placed therein by agreement of the parties. it may be observed that in one comparatively recent case where the Court found that a similar package limitation clause was “(printed in the smallest type on the back of the bill of lading. whether before or after loading on the ship named herein and by any route. for delivery of its imported cargo to the agreed final point of destination within the Philippines. he becomes bound by all stipulations contained therein whether on the front or the Transportation Law. Provisions of COGSA on package limitation a part of bill of lading although placed actually therein by the parties The provisions of the Carriage of Goods by Sea Act on package limitation [sec. Nonetheless. by law. whether within or outside the scope of the voyage or beyond the port of discharge or destination of the goods and without notice to the shipper or consignee. 20. This proposition.” 19. Having done so. in bar to any provision of the bill of lading. 2004 ( 169 ) . by making claim for loss on the basis of the bill of lading. including but not limited to awaiting a vessel or other means of transportation whether by the carrier or others.e.

00.00 as the peso value of the lost shipment is clearly based on a conversion rate of P8. and so it may be said that the same is finding upon him as if it had been actually signed by him or by any other person in his behalf. [65] Aboitiz Shipping vs. freightage.80 and US$94. and insured with the General Accident Fire and Life Assurance Corporation.885. A motion for reconsideration of said decision filed by Aboitiz was denied in a resolution dated 15 August 1989. Sea-Land’s dollar obligation should be convertible at the rate of P8 to $1 Herein. ordering Aboitiz to pay GAFLAC actual damages in the sum of P1.048.256. it is just and fair that Sea-Land’s dollar obligation be convertible at the same rate.00 to US$1.190.00.00 for said shipment. Said sum is all that is justly due Cue. until full payment thereof. Inc. the limit of said carrier’s liability for loss of the shipment under the bill of lading. 23. with costs against Aboitiz.55 or P753. The total value. it filed an action for damages against Aboitiz in the Regional Trial Court of Manila alleging that the loss was due to the fault and negligence of Aboitiz and the master and crew of its vessel in that they did not observe the extraordinary diligence required by law as regards common carriers. attorney’s fees in the amount of 20% of the total claim and to pay the costs. Hence. The decision of the Regional Trial Court awarding Cue P186.611. the petition for review. Cue having claimed a dollar value of $23. Secondly.85 or P319. 1. by being made to pay at the current conversion rate of the dollar to the peso.20 plus legal interest from the date of the filing of the complaint on 28 October 1981. The Supreme Court dismissed the petition. Both shipments were consigned to the Philippine Apparel.190. customs duties.000. 6 August 1990) First Division. the vessel M/V “P. All circumstances considered. Aboitiz appealed to the Court of Appeals wherein in due course a decision was rendered on 9 March 1989 affirming in toto the appealed decision. Not satisfied therewith..524. On 31 October 1980 on its way to Manila the vessel sunk and it was declared lost with all its cargoes. 10 bulk and 95 cartons of goods for apparel covered by Bill of Landing 505-M. The vessel is owned and operated by Aboitiz Shipping Corporation. He cannot elude its provisions simply because they prejudice him and take advantage of those that are beneficial. interests and actions of the consignee against Aboitiz. Aboitiz” took on board in Hongkong for shipment to Manila some cargo consisting of 1 20-footer container holding 271 rolls of goods foe apparel covered by Bill of Lading 515-M and 1 40-footer container holding 447 rolls. including invoice value. taxes and similar imports amount to US$39.086.885 for the first shipment while that of the second shipment amounts to US$94. 2004 ( 170 ) . it does not appear just or equitable that Sea-Land. CA (GR 89757.40 for the lost cargo. the fact that he shipped his goods on board the ship of Sea-Land and paid the corresponding freight thereon shows that he impliedly accepted the bill of lading which was issued in connection with the shipment in question. Finding of administrative bodies not always binding upon the court Transportation Law. After the issues were joined and the trial on the merits a decision was rendered by the trial court on 29 June 1985.Haystacks (Berne Guerrero) back thereof.072. should. As GAFLAC was subrogated to all the rights. Sea-Land had offered to settle his claim for US$4. (GAFLAC). Cue admits that as early as on 22 April 1981. bear for its own account all of the increase in said rate since the time of the offer of settlement. Ltd.55. with costs against Aboitiz. 1980. Gancayco (J): 4 concur Facts: On October 28. GAFLAC paid the consignee the amounts US$39. which offered that amount in good faith as early as 6 years ago.

is bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by it according to all the circumstances of each case. when the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. the law presumes that it was due to the carrier’s fault or negligence. Puno.” Herein. Aboitiz failed to prove that the loss of the subject cargo was not due to its fault or negligence. 88 SCRA 284). Weather condition prevailing under wind force of 10 to 15 knots usual and foreseeable The wind force when the ill-fated ship foundered was 10 to 15 knots. 4 and described as ‘moderate breeze. Trial court not informed of parallel administrative investigation being conducted by BMI. and if loss occurs.00 per package/container/customary freight. The said decision appears to have been rendered over 3 years after the case was brought to court. Aboitiz” was the subject of an administrative investigation conducted by the Board of Marine Inquiry (BMI) whereby in a decision dated 26 December 1984.” 3. Presumption of negligence. GAFLAC cannot be bound by findings and conclusions of BMI The present case was brought to court on 28 October 1981. Civil Code. that is necessary to protect the interest of the shipper which is at the mercy of the carrier (Article 17O6. it is but fair that it exercise extraordinary diligence in protecting them from loss or damage. While the goods are in the possession of the carrier. Said administrative investigation was conducted unilaterally.. Nocum vs. Even in Vasquez vs. 5.Haystacks (Berne Guerrero) The sinking of the vessel M/V “P. Landigan vs. This is especially so in the present case where GAFLAC was not a party in the BMI proceedings and which proceeding was not adversary in character. 2004 ( 171 ) . which is admittedly an accurate reference for measuring wind velocity. administrative findings of facts are not disturbed by the courts when supported by substantial evidence unless it is tainted with unfairness or arbitrariness that would amount to abuse of discretion or lack of jurisdiction. becoming longer. Anuran vs.’ The weather condition prevailing under said wind force is usual and foreseeable. from the nature of its business and for reasons of public policy. The trial court was never informed of a parallel administrative investigation that was being conducted by the BMI in any of the pleadings of Aboitiz. It was only on 22 March 1985 when Aboitiz revealed to the trial court the decision of the BMI dated 26 December 1984. the common carrier. Pangasinan Transportation Company. the wind force of 10 to 15 knots is classified as scale No. The trial court did not err in not giving weight to the finding of the BMI that the vessel sank due to a fortuitous event as findings of administrative bodies are not always binding on courts. Court of Appeals. Exception While it is true that in the bill of lading there is such stipulation that the liability of the carrier is US$500. burden of proof In accordance with Article 1732 of the Civil Code. that is. Thus. It cannot thereby be bound by said findings and conclusions of the BMI. the Court ruled that it nevertheless disagree with the conclusion of the BMI exonerating the captain from any negligence “since it obviously had not taken into account the legal responsibility of a common carrier towards the security of the passengers involved. there is an exception. The vessel M/V “Aboitiz” and its cargo were not lost due to fortuitous event or force majeure. Limited liability clause. 6. Transportation Law. According to the Beau fort Scale (Exhibit “I”). Laguna Tayabas Bus Co. Common carrier bound to observe extraordinary diligence (Article 1732 NCC). 2. GAFLAC was not notified or given an opportunity to participate therein. it is the basis of the liability of the carrier as the actual value of the loss. 17 SCRA 224. the description of the nature and the value of the goods shipped are declared and reflected in the bills of lading. General rule as to administrative findings of facts As a general rule. it was found that the sinking of the vessel may be attributed to force majeure on account of a typhoon.’ small waves. fairly frequent white horses. Herein. 4. 30 SCRA 69.

. Inc. unless the nature and value of such goods have been inserted in the bill of lading. Noscitur a sociis It is absurd to interpret “container. Aboitiz Shipping Corporation. which may be taken as their value. “Container” construed.Haystacks (Berne Guerrero) 7. Herein. 126127 (1976) Herein. or in case of goods not shipped in packages.” 8. Paul Fire & Marine Insurance Co.. Gabino Barreto & Co. (CA GR CV 04121. vs.Gabino Barreto. Macondray Co. 11. the goods shipped on the M/V “P. 23 March1987). 2004 ( 172 ) . 9.’ That ruling applies to the present case. Aboitiz” were insured for P278. 51 Phil. Such “container” must be given the same meaning and classification as a “package” and “customary freight unit. The remedy is available to petitioner under Section 3 Rule 39 of the Rules of Court but to place insolvency as a condition to issuance of a writ of execution pending appeal would render it illusory and ineffectual. functionally a part of the ship. and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided.. in which the carrier caused them to be contained. Rule 39. limiting the common carrier’s liability to the value of the goods appearing in the bill of lading. supra) Here to limit the liability of Aboitiz Shipping to $500.00 would obviously put it in its power to have taken the whole cargo. a carrier cannot limit its liability for injury or loss of goods shipped where such injury or loss was caused by its own negligence. of the Rules of Court would not be achieved or execution pending appeal would not be achieved if insolvency would still be awaited. 10. Issuance of execution pending appeal. In no event shall the carrier be liable for more than the amount of damage actually sustained.50. must be reasonable and just under the circumstances and must have been fairly and freely agreed upon. if embodied in the bill of lading.530.00 unless the true value had been declared and the corresponding freight paid was ‘void as against public policy. unless the shipper or owner declares a greater value. Section 4 (5) COGSA Section 4(5) of the Carriage of Goods by Sea Act provides that “(5) Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package of lawful money of the United States. vs. (Juan Ysmael & Co.500. Filing of supersedeas bond to stay execution The purpose of Section 2. to refer to the container which is the modern substitute for the hold of the vessel. but shall not be conclusive on the carrier. shall be prima facie evidence. per customary freight unit. Allied Guarantee Insurance Co. 70 SCRA 122. This declaration. 1749). (St. is valid. however. v. vs. To limit the liability of the carrier to $500.00 would nullify the policy of the law imposing on common carriers the duty to observe extraordinary diligence in the carriage of goods.” By the rule of noscitur a sociis. (Civil Code. Aboitiz is facing many law suits arising from said sinking of its vessel involving cargo loss of no less than P50 million. The package/container contemplated by the law to limit the liability of the carrier should be sensibly related to the unit in which the shipper packed the goods and described them. in some cases of which Transportation Law. Neither the carrier nor the ship shall be responsible in any event for loss or damage to or in connection with the transportation of the goods if the nature or value thereof has been knowingly and fraudulently mis-stated by the shipper in the bill of lading. Such stipulation. master or agent of the carrier. Limitation of liability inapplicable when loss caused by own negligence In Juan Ysmael & Co. Gabino Barreto & Co.00 per package of silk when the value of such package was P2. By agreement between the carrier. the word ‘container’ must be given the same meaning as ‘package’ and ‘customary freight unit’ and therefore cannot possibly refer to modern containers which are used for shipment of goods in bulk. 90 (1927). or the equivalent of that sum in other currency. By the weight of modern authority.00 each. Ysmael vs .” as provided in the bill of lading to be valued at US$500. a stipulation. Art. not a large metal object. Limited liability clause must be reasonable and freely agreed upon Generally speaking. it was held that a stipulation limiting the carrier’s liability to $500. that such maximum shall not be less than the figure above named.

Therein. 1749) Such stipulation. limiting the common carrier’s liability to the value of the goods appearing in the bill of lading. Martinez (J): 4 concur Facts: Hernandez Trading Co. G. The Court found therein no cogent reason to deviate from the factual findings of the appellate court and rule that the doctrine of primary administrative jurisdiction is not applicable in said case.Haystacks (Berne Guerrero) judgment had been rendered against Aboitiz. (Maruman Trading). Gabino Barretto & Co. Doctrine of primary administrative jurisdiction not applicable In a similar case for damages arising from the same incident entitled Aboitiz Shipping Corporation vs. 2004 ( 173 ) . Aboitiz vs. Inc. No. Aboitiz vs. 13 and MARCO C/No.50. 13 November1989) final and executory The motion for reconsideration for the Court’s Resolution in GR 88159 filed by Aboitiz was denied with finality in a resolution dated January 8. when the value of such package was P2. a foreign corporation based in Inazawa. 13 November1989). however. MARCO C/No.00 per package of silk. Japan. Said resolution of the case had become final and executory. This generalization certainly cannot prevail over the detailed explanation of the trial court in the case as basis for its contrary conclusion. Therein. was void as against public policy. since both of their claims are secured by their corresponding bonds. 51 Phil. unless the shipper or owner declares a greater value is valid. 88159. The crates were shipped from Nagoya. Paul Fire & Marine Insurance Co. CA (GR 88159. In Juan Ysmael & Co. leaving Aboitiz alone to face and answer the suits. Macondray & Co. vs. CA (GR 88159. Limitation of liability would render inefficacious the extraordinary diligence required by law of common carriers Generally speaking any stipulation. v.. and (3) it will put to equitable operation Sec. 13. 90 [1927].536. 14. Japan Transportation Law. and considering that its insurer is now bankrupt. To limit the liability of the carrier to $500. 14.00 would obviously put in its power to have taken the whole cargo.00. Aichi. CA (GR 122494. 126-127 [1976]. from its supplier. Aboitiz vs. That ruling applies to said case.500. the appellate court stated that the decision of the Board was based simply on its finding that the Philippine Coast Guard had certified the vessel to be seaworthy and that it sank because it was exposed later to an oncoming typhoon plotted within the radius where the vessel was positioned. 12. the decision and resolution of the appellate court shows that the same took into consideration not only the findings of the lower court but also the findings of the BMI. 13 November1989). entry of judgment having been made and the records remanded for execution on 22 March 1990. Art. Therein this Court held in part that the cause of sinking of the vessel was due to its unseaworthiness and the failure of its crew and the master to exercise extraordinary diligence. Thus. Inc. v. 70 SCRA 122. which may render any judgment for GAFLAC ineffectual. the goods shipped on the M/V ‘P. (2) it will not defeat or render phyrric a just resolution of the case whichever party prevails in the end or in the main case on appeal.. that the appeal is interposed manifestly for delay and the willingness of GAFLAC to put up a bond certainly are cogent bases for the issuance of an order of execution pending appeal. 1990. Maruman Trading Company.. 8 October 1998) Second Division. it was held that a stipulation limiting the carrier’s liability to P300. must be reasonable and just under the circumstances and must have been fairly and freely agreed upon. which may be taken as their value. 3 Rule 39 of the Revised Rules of Court. (Civil Code. CA (GR 88159. (St. 12. the Court in a resolution dated 13 November 1989 dismissed the petition for lack of merit. Said case is the law of the case applicable to the present petition. Honorable Court of Appeals and Allied Guaranteed Insurance Company. imported three crates of bus spare parts marked as MARCO C/No. Ltd. unless the true value had been declared and the corresponding freight paid. [66] Everett Steamship Corp. (1) it will cast no doubt on the solvency of the defendant.R. The statutory undertaking of posting a supersedeas bond will achieve a three-pronged direction of justice. Aboitiz’ were insured for P278.

it was discovered that the crate marked MARCO C/No. unless the shipper or owner declares a greater value. particularly Articles 1749 and 1750 of the Civil Code. On appeal. Inc.00 Yen. Everett Steamship offered to pay Y100. both parties manifested that they have no testimonial evidence to offer and agreed instead to file their respective memoranda.000.” Transportation Law. . 1. the just and reasonable character of such stipulation is implicit in it giving the shipper or owner the option of avoiding accrual of liability limitation by the simple and surely far from onerous expedient of declaring the nature and value of the shipment in the bill of lading . dated 14 November 1991. IAC. if it is reasonable and just under the circumstances.00. The said crates were covered by Bill of Lading NGO53MN. On 16 July 1993. is sanctioned by law. (c) 10% of the total amount as an award for and as contingent attorney’s fees.” 3. and on 14 June 1995. To hold otherwise would amount to questioning the justness and fairness of the law itself. This was confirmed and admitted by Everett Steamship in its letter of 13 January 1992 addressed to Hernandez Trading. the validity and binding effect of the liability limitation clause in the bill of lading here are nevertheless fully sustainable on the basis alone of the cited Civil Code Provisions. Limited liability clause sanctioned by law A stipulation in the bill of lading limiting the common carrier’s liability for loss or destruction of a cargo to a certain sum.500. and has been freely and fairly agreed upon. Article 1749 NCC Article 1749 of the Civil Code provides that “A stipulation that the common carrier’s liability is limited to the value of the goods appearing in the bill of lading. Thus. Article 1750 NCC Article 1750 of the Civil Code provides that “A contract fixing the sum that may be recovered by the owner or shipper for the loss. is binding.00 or its peso equivalent representing the actual value of the lost cargo and the material and packaging cost. However. ordering Everett Steamship to pay: (a) Y1. and this the private respondent does not pretend to do. Limited liability clause upheld by Court. 2004 ( 174 ) .000. At the pre-trial conference. and (d) to pay the cost of the suit. the amount shown in an Invoice MTM-941.00. or deterioration of the goods is valid. The Supreme Court reversed and set aside the decision of the Court of Appeals. Sea Land vs. the Court ruled that “It seems clear that even if said section 4 (5) of the Carriage of Goods by Sea Act did not exist. destruction.” a vessel owned by Everett Steamship Corporation’s principal.” 4. Upon arrival at the port of Manila. Everett Steamship filed a petition for review. That said stipulation is just and reasonable is arguable from the fact that it echoes Article 1750 itself in providing a limit to liability only if a greater value is not declared for the shipment in the bill of lading. which thereafter made a formal claim upon petitioner for the value of the lost cargo amounting to Y 1. the trial court rendered judgment in favor of Hernandez Trading. IAC Such limited-liability clause has also been consistently upheld by this Court in a number of cases. the maximum amount stipulated under Clause 18 of the covering bill of lading which limits the liability of Everett Steamship. 2. in Sea Land Service.552. the Court of Appeals deleted the award of attorney’s fees but affirmed the trial court’s findings with the additional observation that Hernandez Trading can not be bound by the terms and conditions of the bill of lading because it was not privy to the contract of carriage. against Everett Shipping before the RTC of Caloocan City (Branch 126). unless the shipper or owner declares a greater value.500. Hernandez Trading rejected the offer and thereafter instituted a suit for collection (Civil Case C-15532). vs. (b) Y20.552.Haystacks (Berne Guerrero) to Manila on board “ADELFAEVERETTE. 14 was missing. But over and above that consideration. Everett Orient Lines. .

the Court held that “Ong Yiu vs. While it may be true that the plane ticket was not signed. as the plane ticket in the case at bar. it is required that the stipulation limiting the common carrier’s liability for loss must be “reasonable and just under the circumstances.” 9. Maruman Trading. It is what is known as a contract of ”adhesion. among others. The carrier shall not be liable for any loss of or any damage to or in any connection with.” 7.. and in no event shall the carrier be liable for any loss of possible profits or any consequential loss. he is nevertheless bound by the provisions thereof. Inc. it had itself to blame for not complying with the stipulations.000. vs. Consent by adhering In Philippine American General Insurance Co. Inc. . . 2004 ( 175 ) . Such provisions have been held to be a part of the contract of carriage. Court of Appeals. are contracts not entirely prohibited. if paid. and valid and binding upon the passenger regardless of the latter’s lack of knowledge or assent to the regulation. Court of Appeals.. The one who adheres to the contract is in reality free to reject it entirely. CA As further explained in Ong Yiu vs. are contracts not entirely prohibited. 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. Ong Yiu vs. Contents of bill of lading (clause 18) The bill of lading specifically provides.. shipper. The stringent requirement Transportation Law. .Haystacks (Berne Guerrero) 5. Greater vigilance required of courts when dealing with contracts of adhesion. however. PAL vs.” such as the bill of lading. and has been freely and fairly agreed upon. Sweet Lines. Considering that the shipper did not declare a higher valuation. had the option to declare a higher valuation if the value of its cargo was higher than the limited liability of the carrier. instructs us that ‘contracts of adhesion wherein one party imposes a readymade form of contract on the other . . the carrier made it clear that its liability would only be up to Y100. . goods in an amount exceeding One Hundred Thousand Yen in Japanese Currency (Y100. Contract of adhesion. CA As ruled in PAL. if he adheres he gives his consent. . Contracts of adhesion. . . Court of Appeals. he gives his consent. Contracts of adhesion not invalid per se.00) or its equivalent in any other currency per package or customary freight unit (whichever is least) unless the value of the goods higher than this amount is declared in writing by the shipper before receipt of the goods by the carrier and inserted in the Bill of Lading and extra freight is paid as required. et al. 8. “(18) All claims for which the carrier may be liable shall be adjusted and settled on the basis of the shipper’s net invoice cost plus freight and insurance premiums. Not even an allegation of ignorance of a party excuses non-compliance with the contractual stipulations since the responsibility for ensuring full comprehension of the provisions of a contract of carriage devolves not on the carrier but on the owner.000.” 6. . 11. The one who adheres to the contract is in reality free to reject it entirely. Stipulations are reasonable and just The stipulations are reasonable and just. However. Article 24 NCC Greater vigilance. vs. In the bill of lading. Conditions for the validity of limited liability clause Pursuant to the provisions of law. if he adheres. is required of the courts when dealing with contracts of adhesion in that the said contracts must be carefully scrutinized “in order to shield the unwary (or weaker party) from deceptive schemes contained in ready-made covenants.” in regards which it has been said that contracts of adhesion wherein one party imposes a ready-made form of contract on the other.” 10. or consignee as the case may be. Inc. stipulations in contracts of adhesion are valid and binding. the “jurisprudence on the matter reveals the consistent holding of the court that contracts of adhesion are not invalid per se and that it has on numerous occasions upheld the binding effect thereof.00.. the shipper.

15. or his status as stranger in whose favor some stipulation is made in said contract. . .” it nonetheless ruled that the consignee was bound thereby on the strength of authority holding that such provisions on liability limitation are as much a part of a bill of lading as though physically in it and as though placed therein by agreement of the parties. although that document may have been — as in practice it oftentimes is-drawn up only by the consignor and the carrier without the intervention of the consignee. the alleged circumstance that fair and free agreement to such provision was vitiated by its being in such fine print as to be hardly readable. the former accepted the provisions of the contract and thereby made itself a party thereto. it may be observed that in one comparatively recent case (Phoenix Assurance Company vs. Sea Land vs. the consignee can still be bound by the contract. indigence. Hernandez Trading is bound by the whole stipulations in the bill of lading and must respect the same. or damage to goods being transported under said bill. ignorance. Bill of lading proves carrier unaware of contents. . IAC In Sea-Land Service. Consignee may be bound by contract of carriage although not a signatory thereto (Agency). To defeat the carrier’s limited liability. the right of a party to recover for loss of a shipment consigned to him under a bill of lading drawn up only by and between the shipper and the carrier. Inc. the Court held that even if the consignee was not a signatory to the contract of carriage between the shipper and the carrier. in principle. when one of the parties is at a disadvantage on account of his moral dependence. Phoenix Assurance Co. Hernandez Trading cannot now reject or disregard the carrier’s limited liability stipulation in the bill of lading. Consignee may be bound by contract of carriage although not a signatory thereto and even if stipulations in fine print. Shipper extensively engaged in trading business. 14. tender age or other handicap. The shipper could not have known. it was not even impleaded in the case. 64 SCRA 15) where the Court found that a similar package limitation clause was “printed in the smallest type on the back of the bill of lading. mental weakness. 13. the courts must be vigilant for his protection. Maruman Trading has not been heard to complain that it has been deceived or rushed into agreeing to ship the cargo in Everett Steamship’s vessel.. quantity and value of “the shipment which consisted of three pre-packed crates described in Bill of Lading NGO-53MN (Cases Spare Parts). IAC. . Moreover. Parenthetically. . Thus. Clause 18 of the bill of lading requires that the shipper should have declared in writing a higher valuation of its goods before receipt thereof Transportation Law. cannot be said to be ignorant of transactions as to shipment The shipper. there is no question of the right. property or other relations. has been extensively engaged in the trading business. . In other words. Macondray In neither capacity can he assert personally.Haystacks (Berne Guerrero) which the courts are enjoined to observe is in recognition of Article 24 of the Civil Code which mandates that “in all contractual. Macondray & Co.. or should know the stipulations in the bill of lading and there it should have declared a higher valuation of the goods shipped. To begin with. Maruman Trading. springs from either a relation of agency that may exist between him and the shipper or consignor. vs. Act of consignee that effected acceptance of provisions of contract of carriage When Hernandez Trading formally claimed reimbursement for the missing goods from Everett Steamship and subsequently filed a case against the latter based on the very same bill of lading. quantity and value of crates The bill of lading confirms the fact that Everett Steamship that it does not know of the contents. 2004 ( 176 ) . In fact.” 12. in bar to any provision of the bill of lading. vs. Inc. It can not be said to be ignorant of the business transactions it entered into involving the shipment of its goods to its customers. and who becomes a party thereto when he demands fulfillment of that stipulation. 16. such as the delivery of the goods or cargo shipped. or at least has come to court to enforce it. of a consignee in a bill of lading to recover from the carrier or shipper for loss of.

Haystacks (Berne Guerrero) by the carrier and insert the said declaration in the bill of lading. is bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by it according to the circumstances of each case. he was informed by Mr.G.00 as actual damages. and moreover. The suitcase was mistagged by PAL’s personnel in Zamboanga City. From the decision of the CFI of Zamboanga City. Shewaram instituted an action to recover damages suffered by him due to the alleged failure of PAL to observe extraordinary diligence in the vigilance and carriage of his luggage. P150. When Shewaram’s suitcase arrived in Manila. These requirements in the bill of lading were never complied with by the shipper. it was found to have reached Iligan and the station agent of the PAL in Iligan caused the same to be sent to Manila for delivery to Mr. IAC. with legal interest from 6 May 1960. alleging that all his clothes were white and the National transistor 7 and a Rollflex camera were not found inside the suitcase. 1. the rest having been claimed and released to the other passengers of said flight. Extraordinary diligence required of common carrier PAL is a common carrier. a paying passenger with ticket 4-30976. PAL appealed to the CFI of Zamboanga City. Tomas Blanco.00 as attorney’s fees.N. it contained a pistol which he did not have nor placed inside his suitcase (the suitcase belonged to a certain Del Rosario). eliminating the award of exemplary damages.00 as exemplary damages. offering its services to the public to carry and transport passengers and cargoes from and to different points in the Philippines. as I. on PAL’s aircraft flight 976/910 from Zamboanga City bound for Manila. 7 July 1966) En Banc. The commercial Invoice MTM-941 does not in itself sufficiently and convincingly show that Everett Steamship has knowledge of the value of the cargo as contended by Hernandez Trading. He made a claim with PAL’s personnel in Manila airport and another suitcase similar to his own which was the only baggage left for that flight. Jr. (for Iligan) with claim check B-3883. After hearing the CFI of Zamboanga City modified the judgment of the inferior court by ordering PAL to pay Shewaram only the sum of P373. After inquiries made by PAL’s personnel in Manila from different airports where the suitcase in question must have been sent. [67] Sea-Land Service vs. PAL appeals to the Supreme Court on a question of law. also [234] Shewaram vs. P100. The Supreme Court affirmed the decision appealed from. PAL (GR L-20099.00 as actual damages.. on 23 November 1959. On said date. his suitcase did not arrive with his flight because it was sent to Iligan. was given to Shewaram for him to take delivery but he did not and refused to take delivery of the same on the ground that it was not his. Parmanand Shewaram was. Zaldivar (J): 8 concur Facts: Philippine Airlines (PAL) is a common carrier engaged in air line transportation in the Philippines. and the sum of P150. Herein. Before the municipal court of Zamboanga City. After trial the municipal court of Zamboanga City rendered judgment ordering PAL to pay Shewaram P373. see [64] [-]. instead of MNL (for Manila). Shewaram made demand for these 2 items or for the value thereof but the same was not complied with by PAL. hence. As such common carrier PAL. with costs against PAL. the acting station agent of the Manila airport of the arrival of his suitcase but of course minus his Transistor Radio 7 and the Rollflex camera. Shewaram and which suitcase belonging to Shewaram arrived in Manila airport on 24 November 1959. from the nature of its business and for reasons of public policy. 2004 ( 177 ) . When Shewaram arrived in Manila on the same date. and the costs of the action. with the extra freight paid. The Transportation Law.00 as attorney’s fees. the liability of the carrier under the limited liability clause stands. he checked in 3 pieces of baggages — a suitcase and two 2 other pieces.

bound by the conditions of carriage found at the back of the ticket stub issued to him when he made the flight on PAL’s plane. Inasmuch as passengers do not sign the ticket. embodying the conditions as printed at the back of the ticket stub that was issued by PAL to Shewaram. 2. destruction. destruction or deterioration of the goods it has undertaken to transport. 3. 90.” In accordance with Article 1750 of the New Civil Code.00). and has been fairly and freely agreed upon. unless the same is due to any of the following causes only: (1) Flood. Transportation Law.00 (The transistor radio costs P197. whether international or Civil. or other natural disaster or calamity. Barretto. for loss or damage to checked baggage or for delay in the delivery thereof is limited to its value and. or deterioration of the goods. It can not be said that Shewaram had actually entered into a contract with PAL. of the Civil Code provides that “In all cases other than those mentioned in Nos. Article 1735 NCC Article 1735. it is clear that PAL should be held liable for the payment of said loss. (3) Act or omission of the shipper or owner of the goods. common carriers are presumed to have been at fault or to have acted negligently. 2. destruction. and can not be. was due to the negligence of the employees of PAL. destroyed or deteriorated. Article 1750 NCC Article 1750 of the New Civil Code provides that “A contract fixing the sum that may be recovered by the owner or shipper for the loss. that the contract must be “reasonable and just under the circumstances and has been fairly and freely agreed upon. 1. the pecuniary liability of a common carrier may. 51 Phil. vs. the value shall be conclusively deemed not to exceed P100. unless the passenger declares in advance a higher valuation and pay an additional charge therefor.” 7. or deterioration of the goods is valid. by contract. the requirements of said article have not been met. earthquake. Condition of carriage printed at the back of plane ticket stub The conditions of carriage printed at the back of the plane ticket stub.00 and the camera costs P176. (4) The character of the goods or defects in the packing or in the containers.” 6.” 3.” 4. 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 Shewaram was aware of those conditions such that he had “fairly and freely agreed” to those conditions.Haystacks (Berne Guerrero) suitcase of Shewaram was tampered. provides as follows: “The liability. Shewaram is not. if the goods are lost. and the transistor radio and the camera contained therein were lost. 4. and (5) Order or act of competent public authority. As the loss of the transistor radio and the camera of Shewaram. and 5 of the preceding article. much less did Shewaram sign his ticket when he made the flight on 23 November 1959. the Court had laid down the rule that the carrier can not limit its liability for injury to or loss of goods shipped where such injury or loss was caused by its own negligence. Requirements of Article 1750 must be complied with before common carrier may claim limitation of liability The requirements provided in Article 1750 of the New Civil Code must be complied with before a common carrier can claim a limitation of its pecuniary liability in case of loss. It is required. storm. if it is reasonable and just under the circumstances. Article 1734 NCC Article 1734 of the Civil Code provides that “Common carriers are responsible for the loss. however. if any. Herein. 2004 ( 178 ) . unless they prove that they observed extraordinary diligence as required in Article 1733. Carrier cannot limit liability for injury caused by its own negligence In the case of Ysmael and Co. which was filed with the Civil Aeronautics Board. One of those conditions. be limited to a fixed amount.00 for each ticket. costing P373. 5. which conditions are embodied in Domestic Tariff Regulations 2. (2) Act of the public enemy in war.

6. and it has bean specifically decided in many cases that no contract limitation will relieve the carrier from responsibility for the negligence. 7 (What Limitations of Liability Permissible) provides that “a. Corpus Juris. a blue “maleta” for which he was issued Claim Check 2106-R. According to Ong Yiu.m. Butuan City. volume 10. Paragraph 196. — In the absence of statute. at about 1:00 p. the latter denies. 154. Corpus Juris. and to relieve the shipper from all liability for loss or damage arising from negligence in performing its contract is to ignore the contract itself. in turn. rests on considerations of public policy.bb. PAL Manila wired PAL Cebu advising that the luggage had been overcarried to Manila aboard Flight 156 and that it would be forwarded to Cebu on Flight 345 of the same day. Melencio-Herrera (J): 5 concur Facts: On 26 August 1967. set for hearing on August 28-31. Paragraph 195. Cebu. of the same day. The undertaking is to carry the goods. unless such exemption is just and reasonable.. 29 June 1979) First Division. which. 154. bound for Butuan City. (PAL).m. CA (GR L-40597. Maximo Gomez. (Reasonableness of Limitation) provides that “The validity of stipulations limiting the carrier’s liability is to be determined by their reasonableness and their conformity to the sound public policy. the shipper must send his freight by the common carrier. Cebu. p. Negligence of servants Paragraph 197. however. he is therefore entirely at the mercy of the carrier unless protected by the higher power of the law against being forced into contracts limiting the carrier’s liability. Instructions Transportation Law.” 9. in accordance with which the obligations of the carrier to the public are settled... it was only after reacting indignantly to the loss that the matter was attended to by the porter clerk. and unless the contract is freely and fairly made. It must have been transmitted to Manila immediately.6.bb (Considerations on which Rule Based) provides that “The rule. Considerations on which Rule Based Paragraph 196. and arrived at Bancasi airport. This is the common law doctrine and it makes no difference that there is no statutory prohibition against contracts of this character.m. it is said. which message was. for at 3:59 p.’” [68]. — The rule prohibiting limitation of liability for negligence is often stated as a prohibition of any contract relieving the carrier from loss or damage caused by its own negligence or misfeasance. volume 10. The plane left Mactan Airport.” 10. at past 2:00 p. Reasonableness of Limitation Paragraph 194. or not at all.m. relayed in full to the Mactan Airport teletype operator at 3:45 p. or that of its servants. 154. PAL Butuan. What Limitations of Liability Permissible. 2004 ( 179 ) . p. that whatever limitations against its common-law liability are permissible to a carrier. Inc. Paragraph 194.7(a). Branch II. he checked in one piece of luggage. p. As a passenger. Corpus Juris. volume 10. where such injury or loss is caused by its own negligence. unskillfulness. Upon arrival. He was scheduled to attend the trial of Civil Case 1005 and Special Proceedings 1125 in the Court of First Instance.Haystacks (Berne Guerrero) 8.m. Cebu inquiring about the missing luggage. Such contracts are wanting in the element of voluntary assent. Augusto B. on board Flight 463-R. 154. p. volume 10. Paragraph 197. No contractual limitation is reasonable which is subversive of public policy. it is settled by the weight of authority in the United States. At about 3:00 p. It cannot lawfully stipulate for exemption from liability..cc. Application and Extent of Rule. The shipper and the common carrier are not on equal terms. 1967.cc (Application and Extent of Rule) provides that “(aa) Negligence of Servants. Negligence Paragraph 195. also [85] Ong Yiu vs.” 11. Corpus Juris. or carelessness of its employees. Negligence — (1) Rule in America — (a) In Absence of Organic or Statutory Provisions Regulating Subject — aa. it cannot limit its liability for injury to or loss of goods shipped. Ong Yiu claimed his luggage but it could not be found. The natural effect of a limitation of liability against negligence is to induce want of care on the part of the carrier in the performance of its duty. Ong Yiu was a fare paying passenger of Philippine Air Lines. sent a message to PAL. from Mactan. Majority Rule.

but the latter had already left. and affirmed the judgment sought to be reviewed in toto. 1005 and Sp. which was granted by the Court. with the information that the lock was open. Ong Yiu called attention to his telegram. 2004 ( 180 ) . At 10:00 p. After calling the attention of Maximo Gomez. the Court of Appeals. the Supreme Court gave due course to the Petition. otherwise.000. and it opened. for the morning flight which arrived at 10:00 a. who also used to drive for Ong Yiu. but ordered PAL to pay Ong Yiu the sum of P100. Messrs. Navarsi and Agustin had promised to conduct to pinpoint responsibility for the unauthorized opening of the “maleta”. however. demanded that his luggage be produced intact. The Supreme Court denied the petition for lack of merit. who sealed it and forwarded the same to PAL Cebu. This telegram was received by the Cebu PAL supervisor but the latter felt no need to wire Ong Yiu that his luggage had already been forwarded on the assumption that by the time the message reached Butuan City.. Ong Yiu found that a folder containing certain exhibits. Ong Yiu sent a tracer letter to PAL Cebu inquiring about the results of the investigation which Messrs. filed on 2 May 1975. 27 August 1967. otherwise. attorney’s fees of P5.00. reversed the judgment of the trial Court granting Ong Yiu moral and exemplary damages. Bad faith defined Transportation Law. On 16 July 1975. without costs.000.. As Maximo Gomez knew Dagorro to be the same driver used by Ong Yiu whenever the latter was in Butuan City. A certain Emilio Dagorro. Gomez took the luggage and placed it on the counter.00 for actual and moral damages within 5 days from receipt of the letter. Jose Yap and Atty. de Leon. Dagorro then delivered the “maleta” to Ong Yiu.00. the contents were listed and receipted for by Ong Yiu. all of PAL Cebu.m. Ong Yiu went to the Bancasi Airport to inquire about his luggage.000. de Leon. paged Ong Yiu. pressed it. the baggage liability assumed by it under the condition of carriage printed at the back of the ticket. this message was not received by PAL Butuan as all the personnel had already left since there were no more incoming flights that afternoon. Procs. 1126 were missing.m. he would hold PAL liable for damages. he would be left with no alternative but to file suit. On 31 August 1967. Dagorro returned it to the porter clerk. and which carried the missing luggage. Hence. went to Ong Yiu’s office to deliver the “maleta”. He did not wait. In a letter dated 29 August 1967 addressed to PAL. On 5 September 1967. volunteered to take the luggage to Ong Yiu. Dagorro examined the lock.00. Ong Yiu asked for postponement of the hearing of Civil Case 1005 due to loss of his documents. Upon inspection. In the presence of Mr. the luggage would have arrived. After due trial. However. In the meantime. Ong Yiu returned to Cebu City on 28 August 1967. The porter clerk. No. the “maleta” was opened. Ong Yiu was worried about the missing luggage because it contained vital documents needed for trial the next day. and Agustin. aside from two gift items for his parents-in-law.00. Manuel Maranga. exemplary damages of P30. Early in the morning of the next day. Civil Case R-10188). the lower Court found PAL to have acted in bad faith and with malice and declared petitioner entitled to moral damages in the gum of P80.000. worry. Ong Yiu refused to accept the luggage. PAL Cebu sent a message to PAL Butuan that the luggage would be forwarded on Flight 963 the following day. of the same afternoon. a driver of a “colorum” car. and costs. which PAL traversed. but did not touch them. At 5:00 p. the Petition for Review by Certiorari. and that he be compensated in the sum of P250. 1. and stating that PAL’s gross negligence had caused him undue inconvenience. finding that PAL was guilty only of simple negligence. Gomez took a look at its contents.m. On 13 September 1967. Both parties appealed to the Court of Appeals. 27 August 1967. Maximo Gomez. transcripts and private documents in Civil Case No. Ong Yiu filed a Complaint against PAL for damages for breach of contract of transportation with the CFI of Cebu (Branch V. Meanwhile. Navarsi. Maximo Gomez. Cebu.Haystacks (Berne Guerrero) were also given that the luggage be immediately forwarded to Butuan City on the first available flight. anxiety and extreme embarrassment. On 22 August 1974. Ong Yiu wired PAL Cebu demanding the delivery of his baggage before noon the next day.

such damages are justly due. nor exemplary damages In the absence of a wrongful act or omission or of fraud or bad faith.W. Ong Yu is neither entitled to exemplary damages. . social humiliation. mental anguish.Haystacks (Berne Guerrero) Bad faith means a breach of a known duty through some motive of interest or ill will.” 4. besmirched reputation. Condition of carriage printed at back of plane ticket The pertinent Condition of Carriage printed at the back of the plane ticket reads “8. The one who adheres to the contract is in reality free to reject it entirely. which has not been proven in the present case.” 7. he would have been able to retrieve his luggage sooner. 172. Failure of PAL Cebu to reply to Ong Yiu’s rush telegram does not indicate bad faith The failure of PAL Cebu to reply to Ong Yiu’s rush telegram is not indicative of bad faith. 103 Ohio App.” Transportation Law. BAGGAGE LIABILITY . Inc. Ong Yiu not entitled to moral damages. in regards which it has been said that contracts of adhesion wherein one party imposes a ready made form of contract on the other.00 for each ticket unless a passenger declares a higher valuation in excess of P100. 3. 2. as provided for in Article 2232 of the Civil Code. fright. reckless. but not in excess. Article 2220 NCC Article 2220 of the Civil Code provides that “Willful injury to property may be a legal ground for awarding moral damages if the court should find that. Ong Yiu is not entitled to moral damages. It was the duty of PAL to look for Ong Yiu’s luggage which had been miscarried. American Airlines And as held in Randolph v. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith. PAL had not acted in bad faith. of a total valuation of P1. 2d 878. There was no bad faith in the assumption made by said supervisor that the plane carrying the bag would arrive at Butuan earlier than a reply telegram. At that time the luggage was already to be forwarded to Butuan City. or malevolent manner. . exemplary damages can be granted if the defendant acted in a wanton. moral shock. he is nevertheless bound by the provisions thereof. Rosenchein vs. Had Ong Yiu waited or caused someone to wait at the Bancasi airport for the arrival of the morning flight. 6. moral damages may be recovered if they are the proximate result of the defendant’s wrongful act of omission. Though incapable of pecuniary computation. wounded feelings.” 5. Limitation of liability to agreed valuation not contrary to law. In contracts. The telegram was dispatched by petitioner at around 10:00 p. 2004 ( 181 ) . are contracts not entirely prohibited. 8. Randolph vs. he gives his consent. and PAL exerted due diligence in complying with such duty. and similar injury. if he adheres. as the plane ticket in the present case. Trans World Airlines. 144 N. serious anxiety. American Airlines.E.00. under the circumstances. oppressive. and valid and binding upon the passenger regardless of the latter’s lack of knowledge or assent to the regulation”. 2d 483. of 26 August 1967. The PAL supervisor at Mactan Airport was notified of it only in the morning of the following day. The total liability of the Carrier for lost or damaged baggage of the passenger is LIMITED TO P100.00 and additional charges are paid pursuant to Carrier’s tariffs.. Contract of adhesion While it may be true that Ong Yiu had not signed the plane ticket. fraudulent. “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. It is what is known as a contract of “adhesion”. “Such provisions have been held to be a part of the contract of carriage.m. 349 S. however.000. Article 2217 NCC Article 2217 of the Civil Code provides that “Moral damages include physical suffering.

After appropriate proceedings and trial.00 Pesos for moral and actual damages and 20% of the total amount imposed against BA for attorney’s fees and costs of the action.” Back in the Philippines. After patiently waiting for his luggage for one week. that Ong Yiu had failed to declare a higher value for his baggage. 1730H. Ong Yiu’s widow filed a Motion for Substitution claiming that Ong Yiu died on 6 January 1974 and that she only came to know of the adverse Decision on 23 October 1974 when Ong Yiu’s law partner informed her that he received copy of the Decision on 28 August 1974. Manila [MNL]. Considering. had already become final and executory since no appeal had been interposed therefrom within the reglementary period. India.” It is likewise to be noted that there is nothing in the evidence to show the actual value of the goods allegedly lost by Ong Yiu. Ong Yiu not having declared a greater value. Prior to his departure. In anticipation of his visit. P50. when Mahtani arrived in Bombay he discovered that his luggage was missing and that upon inquiry from the BA representatives.000. in turn. Gumar before the trial court (Civil Case CEB-9076).” She then filed a Motion for Reconsideration over the opposition of PAL which alleged that the Court of Appeals Decision. Moreover. 16 April. and are easily readable. being a lawyer and businessman. no serious prejudice has been caused PAL. Gumar to prepare his travel plans. 2004 ( 182 ) . Under the circumstances. PR 311 Y. considering the demise of Ong Yiu himself. and he. and not having called the attention of PAL on its true value and paid the tariff therefor. the trial court rendered its decision in favor of Mahtani. US$400. 10.00 per baggage. Transportation Law. 29 January 1998) Third Division. The Court dismissed BA’s third party complaint against PAL. Besides. he was told that the same might have been diverted to London. Technicality yields to the interests of substantial justice On 24 October 1974 or two months after the promulgation of the Decision of the appellate Court. the same would be transferred to the BA flight bound for Bombay. Status OK. confident that upon reaching Hongkong. Mahtani filed his complaint for damages and attorney’s fees against BA and Mr. 23 April. Besides. CA (GR 121824. 1 concur in result Facts: On 16 April 1989. 0840H.000. Status OK.00. Mahtani checked in at the PAL counter in Manila his two pieces of luggage containing his clothings and personal effects. therefore. passengers are advised not to place valuable items inside their baggage but “to avail of our V-cargo service. Bombay [BOM]. Status OK. Attached to her Motion was an Affidavit of Ong Yiu’s law partner reciting facts constitutive of excusable negligence. Hongkong [HKG] BA 20M. promulgated on 22 August 1974.Haystacks (Berne Guerrero) 9. specifically on 11 June 1990. he obtained the services of a certain Mr. They are printed in reasonably and fairly big letters. Ong Yiu had been a frequent passenger of PAL from Cebu to Butuan City and back. it is best that technicality yields to the interests of substantial justice. he cannot be permitted a recovery in excess of P100. who acted as his own counsel. in accordance with the stipulation written on the back of the ticket is limited to P100. BA finally advised him to file a claim by accomplishing the “Property Irregularity Report. The validity of the stipulation is not questioned by Ong Yiu. and upon arrival in Hongkong he had to take a connecting flight to Bombay on board BA.” Since BA had no direct flights from Manila to Bombay. Romero (J): 3 concur.Unfortunately. purchased a ticket from British Airways (BA) where the following itinerary was indicated (Manila [MNL]. 16 April. must be fully aware of these conditions. Mahtani had to take a flight to Hongkong via Philippine Airlines (PAL). in the last analysis. Hongkong [HKG]. on 4 March 1993. PR 310Y.00 representing the value of the contents of Mahtani’s luggage. The appellate Court noting that all pleadings had been signed by Ong Yiu himself allowed the widow “to take such steps as she or counsel may deem necessary. GOP Mahtani decided to visit his relatives in Bombay.00 for the value of the two (2) suit cases. [69] British Airways vs. The latter. No declaration of greater value nor payment of tariff for value of luggage The liability of PAL for the loss. BA 19M. ordering BA to pay Mahtani the sum of P7. 2100H.

Further. BA appealed to the Court of Appeals. such right is a mere privilege which can be waived. 5. Culpability of airline for lost damages. namely: a contract to deliver a cargo or merchandise to its destination and a contract to transport passengers to their destination. No costs. Declaration of higher value needed to recover greater amount. such tariff being binding on the passenger regardless of the passenger’s lack of knowledge thereof or assent thereto. it is vital that the claimant satisfactorily prove during the trial the existence of the factual basis of the damages and its causal connection to defendant’s acts. In determining the amount of compensatory damages in this kind of cases. which however. however. at the time the package was handed over to the carrier. on 7 September 1995. However. the objection must be made at the earliest opportunity. the Court has assessed the airlines’ culpability in the form of damages for breach of contract involving misplaced luggage. reinstating the third-party complaint filed by British Airways dated 9 November 1990 against Philippine Airlines.Haystacks (Berne Guerrero) Dissatisfied. Hence. Necessarily. Objection must be made at earliest opportunity It is a well-settled doctrine that where the proponent offers evidence deemed by counsel of the adverse party to be inadmissible for any reason. the latter has the right to object. Carrier not liable for loss of baggage in amount in excess of limits specified in tariff American jurisprudence provides that an air carrier is not liable for the loss of baggage in an amount in excess of the limits specified in the tariff which was filed with the proper authorities. This doctrine is recognized in this jurisdiction.” 4. the inescapable conclusion is that BA had waived the defense of limited liability when it allowed Mahtani to testify as to the actual damages he incurred due to the misplacement of his luggage. unless he proves that the sum is greater than the actual value to the consignor at delivery. Right to object actually a mere privilege that can be waived. Claimant must prove existence of factual basis for damages As in a number of cases. 3. affirmed the trial court’s findings in toto. Benefits of limited liability subject to waiver The Court. Nature of airline’s contract of carriage The nature of an airline’s contract of carriage partakes of two types. In that case the carrier will be liable to pay a sum not exceeding the declared sum. it is imbued with public interest. the appeal by certiorary. 2004 ( 183 ) . lest Transportation Law. Article 22 (1) of the Warsaw Convention In a contract of air carriage a declaration by the passenger of a higher value is needed to recover a greater amount. 2. the liability of the carrier shall be limited to a sum of 250 francs per kilogram. a special declaration of the value at delivery and has paid a supplementary sum if the case so requires. given the foregoing postulates. hence. the law governing common carriers imposes an exacting standard. benefits of limited liability are subject to waiver such as when the air carrier failed to raise timely objections during the trial when questions and answers regarding the actual claims and damages sustained by the passenger were asked. unless the consignor has made. has ruled against blind reliance on adhesion contracts where the facts and circumstances justify that they should be disregarded. without any objection. The Supreme Court modified the decision of the Court of Appeals. 6. with costs against BA. Herein. Article 22(2) of the Warsaw Convention provides that “In the transportation of checked baggage and goods. A business intended to serve the travelling public primarily. No blind reliance on adhesion contracts. Neglect or malfeasance by the carrier’s employees could predictably furnish bases for an action for damages. 1.

Proper time to object. and that if not so made it will be understood to have been waived. 12. 10. In fact. a finding not reviewable by the Supreme Court. the Court of Appeals erred when it opined that BA. its agent or sub-contractor. Factual findings of trial court entitled to great respect Needless to say. factual findings of the trial court. being the principal. by the defendant. the contractual relationship between BA and PAL is one of agency. 8. 11. and liable for damages which principal may suffer It is a 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. is one of agency Both BA and PAL are members of the International Air Transport Association (IATA). in respect of the plaintiff’s claim. may be brought into the case with leave of court. or from the answer thereto. since the actual value of the luggage involved appreciation of evidence. Abrenica vs.”) It is undisputed that PAL. Firestone Tire Rubber vs.Haystacks (Berne Guerrero) silence when there is opportunity to speak may operate as a waiver of objections. indemnity. Herein. Nature of third party complaint. subrogation or any other relief. a task within the competence of the Court of Appeals. to litigate his separate cause of action in respect of plaintiff’s claim against a thirdparty in the original and principal case with the object of avoiding circuitry of action and unnecessary proliferation of law suits and of disposing expeditiously in one litigation the entire subject matter arising from one particular set of facts. carriage to be performed hereunder by several successive carriers is regarded as a single operation. are entitled to great respect. The third-party complaint is actually independent of and separate and distinct from the plaintiff’s complaint. BA has precisely failed in this regard. or may be inferred. its ruling regarding the amount is assuredly a question of fact. Tempengko The third-party complaint is a procedural device whereby a ‘third party’ who is neither a party nor privy to the act or deed complained of by the plaintiff. Were it not for this provision of the Rules of Court. the former being the principal. had no cause of action against PAL. that court ruled that “it has been repeatedly laid down as a rule of evidence that a protest or objection against the admission of any evidence must be made at the proper time. its counsel failed not only to interpose a timely objection but even conducted his own cross-examination as well.” Herein. Transportation Law. since it was the one which issued the confirmed ticket. the fourth paragraph of the “Conditions of Contracts” of the ticket 32 issued by BA to Mahtani confirms that the contract was one of continuous air transportation from Manila to Bombay (“4. 2004 ( 184 ) . it would have to be filed independently and separately from the original complaint by the defendant against the third-party. and the latter the agent. as affirmed by the Court of Appeals. Hence. herein. to compound matters for BA. Gonda. Therefore. in transporting Mahtani from Manila to Hongkong acted as the agent of BA. the inadmissibility of evidence is. thus. the latter merely endorsing the Manila to Hongkong leg of the former’s journey to PAL. 9. Herein. as its subcontractor or agent. from the question addressed to the witness. both members of the IATA. PAL a subcontractor or agent of BA The contract of air transportation was exclusively between Mahtani and BA. The proper time to make a protest or objection is when. who acts as third-party plaintiff to enforce against such third-party defendant a right for contribution. But the Rules permit defendant to bring in a third-party defendant or so to speak. wherein member airlines are regarded as agents of each other in the issuance of the tickets and other matters pertaining to their relationship. Gonda In the early case of Abrenica v. Contractual relationship between BA and PAL. Agent responsible for any negligence in performance of its function. or from the presentation of proof. 7.

is without legal basis. acknowledging one of the Transportation Law. also [43] [71] PAL vs. Court of Appeals. the Court recognized that a carrier (PAL). 1 took no part Facts: At about 5:30 a. Co proceeded to the baggage retrieval area to claim his 9 pieces of checked-in luggage with the corresponding claim checks in his possession. U. However. Willy Guevarra filled up a printed form known as a Property Irregularity Report. who was then in charge of the PAL claim counter at the airport. Co then immediately notified PAL through its employee.01.A. Soon after embarking. denied any liability. fair and equitable to allow BA to sue PAL for indemnification.00 to US $600. however.243. this is not to say that PAL is relieved from any liability due to any of its negligent acts. CA (GR 92501. v. in addition to the presents entrusted to them by their friends which Co testified to be worth about US $500. In China Air Lines. It is but logical.Haystacks (Berne Guerrero) 13. CA The pronouncement that BA is the principal is consistent with the ruling in Lufthansa German Airlines v. arrived at the Manila International Airport aboard the airline’s PAL Flight 107 from San Francisco. while not exactly in point. from there on. Ltd. the case. but despite diligent search. Mahtani can sue BA alone. not PAL. its obligation as a principal in the contract of carriage ceased. Mahtani can only sue BA alone. Co’s lost luggage was a Samsonite suitcase measuring about 62 inches in length. accompanied by his wife and son. 15. such proceeding is in accord with the doctrine against multiplicity of cases which would entail receiving the same or similar evidence for both cases and enforcing separate judgments therefor.00 and containing various personal effects purchased by Co and his wife during their stay in the United States and similar other items sent by their friends abroad to be given as presents to relatives in the Philippines. illustrates the principle which governs the particular situation. regardless of those instances when actual carriage was to be performed by various carriers. The issuance of confirmed Lufthansa ticket in favor of Antiporda covering his entire five-leg trip aboard successive carriers concretely attest to this. if it is proven that the latter’s negligence was the proximate cause of Mahtani’s unfortunate experience. PAL however not relieved from liability Since the present petition was based on breach of contract of carriage. In that case. IAC. Court of Appeals. is also liable for its own negligent acts or omission in the performance of its duties. contending that its responsibility towards its passenger is limited to the occurrence of a mishap on its own line.S. instead of totally absolving PAL from any liability. After all. Lufthansa issued a confirmed ticket to Tirso Antiporda covering five-leg trip aboard different airlines. acting as an agent of another carrier. 2004 ( 185 ) . Lufthansa is clearly the principal in the contract of carriage with Antiporda and remains to be so. on 17 April 1985. with claim check number 729113. 6 March 1992) First Division. and not PAL. [70].m. Isidro Co. Air Kenya. Proceedings in third party complaint in accord with doctrine against multiplicity of suits To deny BA the procedural remedy of filing a third-party complaint against PAL for the purpose of ultimately determining who was primarily at fault as between them. it merely acted as a ticketing agent for Air Kenya: In rejecting Lufthansa’s argument. In that case. Unfortunately. Grino-Aquino (J): 2 concur. he failed to locate the 9th luggage. It must be borne in mind that the purpose of a third-party complaint is precisely to avoid delay and circuity of action and to enable the controversy to be disposed of in one suit. however.” 14. Willy Guevarra. since the latter was not a party to the contract. the court ruled that “In the very nature of their contract.Eastern Shipping vs. Co’s invoices evidencing their purchases show their missing personal effects to be worth US $1. one of the airlines which was to carry Antiporda to a specific destination “bumped” him off. worth about US $200. Consequently.00. California. when Antiporda transferred to Air Kenya. BA is principal. An action for damages was filed against Lufthansa which. Pronouncement consistent with Lufthansa vs. Co found eight of his luggage.

are factual issues which we may not pass upon in the absence of special circumstances requiring a review of the evidence. On 17 April 1985. Despite the letter. to the PAL officer after accomplishing the Property Irregularity Report. i. all in addition to the costs or the suit. (3) P10. Warsaw Convention. and rendered judgment on 3 June 1986. 18. IAC (192 SCRA 9. The petitioner therein did not declare a higher value for his luggage. Co filed a complaint against PAL for damages. the Court of Appeals affirmed in toto the trial court’s award. Hence. much less did he pay an additional transportation charge. it could not be possible for the passenger to produce the same in court. Samar Mining vs. The Regional Trial Court of Pasay City found PAL liable. Co. In all matters not regulated by said Code. and on 19 July 1989. unrelentingly called at PAL’s office in order to pursue his complaint about his missing luggage but to no avail. Inc. People.02 by way of actual damages. sentencing PAL to pay Co the amounts of (1) P42. the rights and obligations of common carriers shall be governed by the Code of Commerce and by Transportation Law. Although the passenger should produce his claim tag if he had not surrendered it because there was no baggage received. IAC not applicable In Alitalia vs. 178. destruction or deterioration of goods transported from a foreign country to the Philippines is governed primarily by the New Civil Code. or other special injury sustained by the passengers. it would appear that the passenger surrendered all the 9 claim checks corresponding to the 9 luggages. Rule 45. Inc. 2004 ( 186 ) . 3. The Supreme Court denied the petition for review for lack of merit. It is now for the carrier to produce the veracity of their Baggage Retrieval Report by corroborating evidence other than testimonies of their employees. 1.Haystacks (Berne Guerrero) Co’s luggages to be missing. Rules of Court).) Whether or not the lost luggage was ever retrieved by the passenger. (Hodges vs. Law of destination. on several occasions.00 as attorney’s fees..” The court also dismissed PAL’s counterclaim for lack of merit.000. which raise purely factual issues. Purely factual issues not reviewable by the court Assignments of error. Nordeutscher Lloyd In Samar Mining Company. PAL never found Co’s missing luggage or paid its corresponding value. on 15 April 1985. and signed it after asking Co himself to sign the same document. Nordeutscher Lloyd (132 SCRA 529). and thus. vs. Such document is within the control of PAL and necessarily requires other corroborative evidence. Rebecca Santos replied to the demand letter acknowledging ‘that to date we have been unable to locate your client’s baggage despite our careful search” and requesting Co’s counsel to “please extend to him our sincere apologies for the inconvenience he was caused by this unfortunate incident”. On appeal.00 by way of exemplary damages. Probative value of PAL’s retrieval report The probative value of PAL’s retrieval report was passed upon by the Regional Trial Court of Pasay City. IAC. Alitalia vs. the Warsaw Convention limiting the carrier’s liability was applied because of a simple loss of baggage without any improper conduct on the part of the officials or employees of the airline. and whether or not the actual and exemplary damages awarded by the court to him are reasonable. the Court ruled that “the liability of the common carrier for the loss. the petition for review. 164 SCRA 268). Thus. 2. 4.766. Willy Guevarra asked Co to surrender to him the nine claim checks corresponding to the nine luggages. its manager for Central Baggage Services. 68 Phil. however. (2) P20. The Court reviews only questions of law which must be distinctly set forth in the petition. vs. On 3 May 1985. including the one that was missing. 2. Co through his lawyer wrote a demand letter to PA: through Rebecca V. with costs against PAL. In accordance with his procedure in cases of this nature. Santos. are not reviewable by the Supreme Court (Sec. citing Pan American World Airways.000.e. including the one that was missing. whose finding was affirmed by the Court of Appeals.

Florencio O.” Herein.’ a suspect in the killing of Judge Valdez. even refusal. Philippine law governs the liability of the carrier for the loss of the passenger’s luggage. 4 and 5 of the preceding article if the goods are lost. A check by Villarin with the passenger’s ticket in the possession of flight Stewardess Annie Bontigao. 14 September 1990) First Division. Inc. In the cases of Imperial Insurance. seated at the front seat near the door leading to the cockpit of the plane. 9.. Royal Oil Products.’ one of his aliases known to Villarin. Villarin also came to know from the stewardess that ‘Zaldy had three companions on board the plane. the Court justified the grant of exemplary damages and attorney’s fees for the petitioner’s failure. 120 SCRA 396. proving that the carrier’s negligence was the proximate cause of the loss of his baggage. Co. 3. unless they prove that they observed extraordinary diligence as required in article 1733. to pay the private respondent’s valid claim. 1. and Gunther Loeffler were among the passengers of PAL’s Fokker ‘Friendship’ PIC-536 plane in its flight of 6 November 1968 which left Mactan City at about 7:30 in the evening with Manila for its destination. PAL acted in bad faith in faking a retrieval receipt to bail itself out of having to pay Co’s claim.” 6. [-]. Article 1753 NCC Article 1753 provides that “The law of the country to which the goods are to be transported shall govern the liability of the common carrier for their loss. from the nature of their business and for reasons of public policy. CA. Santos [72] Quisumbing vs. 2. Narvasa (J): 4 concur Facts: Norberto Quisumbing. Simon. No error in disregarding limits of liability under Warsaw Convention Herein. Villarin then scribbled a note addressed to the pilot of the plane requesting the latter to contact NBI duty agents in Manila for the said agents to ask the Director of the NBI to send about 6 NBI agents to meet the plane because the Transportation Law.” 8. 189 and Bert Osmeña and Associates vs. After the plane had taken off. but more importantly. 2004 ( 187 ) . Inc. destruction or deterioration. who was seated at the last seat right row revealed that ‘Zaldy’ had used the name ‘Cardente. 5.Haystacks (Berne Guerrero) Special Laws. CA (GR 50076. Villarin. Sr. 326. not only the presumption. Award of exemplary damages and attorney’s fees justified The award of exemplary damages and attorney’s fees to Co was justified. a Senior NBI Agent who was also a passenger of the said plane. vs. Likewise. common carriers are presumed to have been at fault or to have acted negligently. 102 Phil. noticed a certain ‘Zaldy. Furthermore. The appellate cout therefore did not err in disregarding the limits of liability under the Warsaw Convention. according to all the circumstances of each case. vs. Surety and Ins. destroyed or deteriorated. 7. Co’s evidence. Article 1733 NCC Article 1733 provides that “Common carriers. are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them. the appellant was awarded attorney’s fees because of appellee’s failure to satisfy the former’s just and valid demandable claim which forced the appellant to litigate. PAL failed to overcome. Article 1735 NCC Article 1735 provides that “In all cases other than those mentioned in Nos. also [133] Robles vs. in the case of Phil. since the passenger’s destination was the Philippines. 122 Phil.

Quisumbing and Loeffler appealed to the Court of Appeals. The said note was handed by Villarin to the stewardess who in turn gave the same in the pilot. Sr. The objective of modern-day hijackers is to display the irresistible force amounting to force majeure only when it is most effective and that is when the jetliner is winging its way at Himalayan altitudes and ill-advised heroics by either crew or passengers would send the multi-million peso airplane and the priceless lives of all its occupants into certain death and destruction. ‘Zaldy’ and one of his companions walked to the rear and stood behind them. but PAL refused averring that it is not liable to them in law or in fact.700. 2004 ( 188 ) . the compilation of hijacker behavioral profiles.00. Capt. Demands were thereafter made on PAL by Quisumbing and Loeffler “to indemnify them on their loss. told the pilot of the danger of commission of violent acts on board the plane by the notorious ‘Zaldy and his three companions. ‘Zaldy’ announced to the passengers and the pilots in the cockpit that it was hold-up and ordered the pilot not to send any SOS.. Security measures may minimize hijackings but may prove ineffective against truly determined hijackers The mandatory use of the most sophisticated electronic detection devices and magnetometers. Norberto Quisumbing. The Supreme Court denied the petition.00 out of which recoveries were made amounting to P4. to recover the value of the property lost by them to the robbers as well as moral and exemplary damages. ‘Zaldy’ and his companion likewise went back to their respective seats in front. sensing danger. Quisumbing and Loeffler brought suit against PAL in the CFi of Rizal. World experience shows that if a group of armed hijackers want to take over a plane in flight. the pilot of the plane. with costs against Quisumbing and Loeffler. Modern display of irresistible force by hijackers The hijackers do not board an airplane through a blatant display of firepower and violent fury. The Court affirmed the trial court’s judgment. Villarin. suffered shock. After receiving the note. the CFI rendered judgment dismissing Quisumbing’s and Loeffler’s complaint with costs against them. although there is an occasional use of innocent hostages who will be coldly murdered unless a plane is given to the hijackers’ complete disposal. the imposition of severe penalties. was divested of jewelries and cash in the total amount of P18. hand-grenades. While the pilot and Villarin were talking. Bonnevie then stood up and went back to the cockpit.’ Soon thereafter an exchange of gunshots ensued between Villarin and ‘Zaldy’ and the latter’s companions. Gunther Loeffler was divested of a wrist watch. Sr. the development of screening procedures. dynamite. 1. Zaldy and his three companions succeeded in escaping.550. stood up and went back to his original seat across the aisle on the second to the last seat near the window. and affirmed the appealed Decision of the Court of Appeals. The hold-uppers divested the passengers of their belongings. Specifically. and the weight of outraged world opinion may have minimized hijackings but all these have proved ineffective against truly determined hijackers. Quisumbing. they can elude the Transportation Law. As a result of the incident.” Quisumbing and Loeffler have come up to the Supreme Court praying that the judgments of the trial Court and the Court of Appeals be reversed and another rendered in their favor. and explosives are introduced into the airplane surreptitiously and with the utmost cunning and stealth. Luis Bonnevie. ‘Zaldy’ and his companions returned to their seats. Insisting that the evidence demonstrates negligence on the part of the PAL crew “occurring before and exposing them to hijacking. which was about 15 minutes after take off. however. 2. attorney’s fees and expenses of litigation.Haystacks (Berne Guerrero) suspect in the killing of Judge Valdez was on board. Upon landing at the Manila International Airport. Jr. because a gun had been pointed at him by one of the hold-uppers. came out of the cockpit and sat beside Villarin at the rear portion of the plane and explained that he could not send the message because it would be heard by all ground aircraft stations. the assignment of sky marshals. but after a few minutes they moved back to the rear throwing ugly looks at Villarin who.00. Firearms. Capt. cash and a wallet in the total amount of P1.650. After trial.

Rapadas alleged that PanAm discriminated or singled him out in ordering that his luggage be checked in. Rapadas (GR 60673. not in truth negligent acts “sufficient to overcome the force majeure nature of the armed robbery. Acts of airline and crew. While standing in line to board the flight at the Guam airport. 3. it had failed to comply with applicable regulations or universally accepted and observed procedures to preclude hijacking. Since Rapadas felt ill on his arrival. the acts of the airline and its crew cannot be faulted as negligence. Herein. he called up Mr. the use of force to overcome hijackers. more specifically. he acceded to checking it in. Rapadas received a letter from PanAm’s counsel dated 2 August 1975 offering to settle the claim for the sum of $160. but without declaring its contents or the value of its contents. This does not suggest. For several times. He stepped out of the line only to go back again at the end of it to try if he can get through without having to register his attache case. Jose K. Rapadas claimed and was given all his checked-in baggages except the attache case.’s (PanAm) Flight 841 with the route from Guam to Manila. he sent his son.Haystacks (Berne Guerrero) latest combined government and airline industry measures. Rapadas held Passenger Ticket and Baggage Claim Check 026394830084-5 for Pan American World Airways Inc. “the highjacking-robbery was force majeure” The evidence does fail to prove any want of diligence on the part of PAL. Upon arriving in Manila on the same date. As our own experience in Zamboanga City illustrates. Cooperation with the hijackers until they released their hostages at the runway end near the South Superhighway was dictated by the circumstances. the head of the Baggage Section of PAN AM. while complying with requirements of government agencies. or that. Jorge Rapadas to request for the search of the missing luggage.00 representing PanAm’s alleged limit of liability for loss or damage to a passenger’s personal property under the contract of carriage between Rapadas and PANAM. On 30 January 1975. The lives of the rest of the passengers and crew were more important than their properties. 2004 ( 189 ) . that the Philippine Airlines should not do everything humanly possible to protect passengers from hijackers’ acts. and that the particular acts singled out by Quisumbing and Loeffler as supposedly demonstrative of negligence were. Rapadas protested pointing to the fact that other co-passengers were permitted to handcarry bulkier baggages. PanAm required the Rapadas to put the request in writing. The hijackers had already shown their willingness to kill one passenger was in fact killed and another survived gunshot wounds. Rapadas was ordered by PanAm’s handcarry control agent to check-in his Samsonite attache case. (J): 4 concur Facts: On 16 January 1975. He was given a Baggage Claim Tag P-749-713. He also sent letters demanding and reminding the petitioner of his claim. 19 May 1992) Third Division. 16 January 1975. Gutierrez Jr. results in the death and injury of innocent passengers and crew members. He Transportation Law. Rapadas filed the instant action for damages on 1 October 1975. its failure to take certain steps that a passenger in hindsight believes should have been taken is not the negligence or misconduct which mingles with force majeure as an active and cooperative cause. Rapadas filled in a Baggage Claim Blank Form. Under the facts. Refusing to accept this kind of settlement. Thereafter. 4.” [73] PanAm World Airways vs. in the light of the circumstances of the case. PanAm exerted efforts to locate the luggage through the Pan American World Airways-Manila International Airport (PAN AM-MIA) Baggage Service. However. the same man in charge of handcarry control did not fail to notice him and ordered him again to register his baggage. Rapadas personally followed up his claim. Panuelos. He then gave his attache case to his brother who happened to be around and who checked it in for him. however. cannot be faulted as negligence Where the airline has faithfully complied with the requirements of government agencies and adhered to the established procedures and precautions of the airline industry at any particular time. For fear that he would miss the plane if he insisted and argued on personally taking the valise with him.

specifically provides that it is applicable to international carriage which it defines in Article 1.000. The Notice states 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 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 lower court had no other basis for determining whether or not there was actually a stipulation on the specific amounts PanAm had expressed itself to be liable for loss of baggage. He placed the value of the lost attache case and its contents at US$42.” 2. whether or not there be a breach in the carriage or a transshipment. Hence. The Supreme Court granted the petition. par. are situated either within the territories of two High Contracting Parties or within the territory of a single High Contracting Party if there is an agreed stopping place within the territory of another State.000 per passenger). and costs of the suit. 2004 ( 190 ) . according to the agreement between the parties. However. Although the trial court rejected the evidence of the PanAm of a stipulation particularly specifying what amounts it had bound itself to pay for loss of luggage. Warsaw Convention. On appeal.000.” (The latter notice refers to limited liability for death or personal injury to passengers with proven damages not exceeding US $75. 2 as follows.403. It discredited insufficient evidence to show discriminatory acts or bad faith on the part of PanAm.228. nominal damages in the amount of P20.000. even if that State is not a High Contracting Party.90. Carriage between two points within the territory of a Transportation Law.00 or its equivalent in Philippine Currency at the time of actual payment. See also notice headed “Advice to International Passengers on Limitation of Liability. The lower court ruled in favor of complainant Rapadas after finding no stipulation giving notice to the baggage liability limitation. inability to enjoy the fruits of his retirement and vacation pay earned from working in Tonga Construction Company (he retired in August 1974) and inability to return to Tonga to comply with then existing contracts. the place of departure and the place of destination. Furthermore. paragraph 2 The Warsaw Convention. damage or destruction to a passenger’s luggage. and reversed and set aside the decision of the Court of Appeals. who facilitated the issuance of the tickets on credit). the Notice and paragraph 2 of the “Conditions of Contract” should be sufficient notice showing the applicability of the Warsaw limitations. and the costs of the suit. the loss resulted in his failure to pay certain monetary obligations.00. The court rejected the claim of PanAm that its liability under the terms of the passenger ticket is only up to $160. The Court ordered PanAm to pay Rapadas damages in the amount of US$400.00 in attorney’s fees. The trial court ordered PanAm to pay Rapadas by way of actual damages the equivalent peso value of the amount of $5. The trial court also dismissed PanAm’s counterclaim. the petition for review.Haystacks (Berne Guerrero) also alleged that PanAm neglected its duty in the handling and safekeeping of his attache case from the point of embarkation in Guam to his destination in Manila. Faupula (of the Union Steam Ship Company of New Zealand. there was such a Notice appearing on page two (2) of the airline ticket stating that the Warsaw Convention governs in case of death or injury to a passenger or of loss. as amended. Ltd. P10. it scrutinized all the claims of Rapadas. the expression ‘international carriage’ means any carriage in which.90 and 100 paengs (Tongan money). failure to remit money sent through him to relatives. apart from the evidence offered by the airline. Notice of limited liability in airline ticket Herein.00 and attorney’s fees of P5. Thus. Article 1. paragraph 2 of the “Conditions of Contracts” also appearing on page 2 of the ticket states that “(2) Carriage hereunder is subject to the rules and limitations relating to liability established by the Warsaw Convention unless such carriage is not ‘international carriage’ as defined by that Convention. 1.00. Tonga.. the original of the Passenger Ticket and Baggage Check 026-394830084-5 itself was not presented as evidence as it was among those returned to Mr. the Court of Appeals affirmed the trial court decision. 3. “(2) For the purposes of this Convention. Paragraph 2 of Conditions of Contract sufficient notice of applicability of Warsaw limitations Herein. According to him.

it should become a common. Inc. Article 22 (2) of Convention Nowhere in the Warsaw Convention. paragraph 1(c) of the Warsaw Convention The Convention governs the availment of the liability limitations where the baggage check is combined with or incorporated in the passenger ticket which complies with the provisions of Article 3. American Airlines. Herein. 172. Ong Yiu vs. are contracts not entirely prohibited. as the plane ticket in the case at bar. Blind reliance not encouraged While contracts of adhesion are not entirely prohibited. 103 Ohio App. 2d 483. or which has not effectively denounced the Convention [Article 40A (1)])” 4. the baggage check is combined with the passenger ticket in one document of carriage. 83 SCRA 361. If the passenger fails to adduce evidence to overcome the stipulations. 144 N. v. safe and practical custom among air carriers to indicate beforehand the precise sums equivalent to those fixed by Article 22 (2) of the Convention. Contracts of adhesion. (Article 4. 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 amended. is such a detailed notice of baggage liability limitations required. par. Rapadas manifested a disregard of airline rules on allowable handcarried baggages. neither is a blind reliance on them encouraged. 1(c).E. Alleged lack of enough time to make declaration of higher value and payment of charges not a defense 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 Transportation Law.. 349 S. if he adheres. he cannot avoid the application of the liability limitations. IAC As held in the case of Ong Yiu v. was expected to be vigilant insofar as his luggage is concerned. No detailed notice of baggage liability required. Trans World Airlines. 2004 ( 191 ) . par.Haystacks (Berne Guerrero) single High Contracting Party without an agreed stopping place within the territory of another State is not international carriage for the purposes of this Convention. 2d 878. The passenger ticket complies with Article 3. Nevertheless. In attempting to avoid registering the luggage by going back to the line. The passenger. Rapadas 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 the face of facts and circumstances showing they should be ignored because of their basically one sided nature. 5. CA. 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.’” 7. Contracts of adhesion not prohibited. 2) Herein. 9. Passenger ticket complies with Article 3. and reiterated in Pan American World Airways v. Inc.” (“High Contracting Party” refers to a state which has ratified or adhered to the Convention. par. 368-369 [1978]) 8. Intermediate Appellate Court (164 SCRA 268 [1988]) that “It (plane ticket) is what is known as a contract of ‘adhesion’. ‘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. Rosenchein v. the Court does not hesitate to rule out blind adherence to their terms. And as held in Randolph v. Teves. Passenger expected to be vigilant insofar as his luggage is concerned The provisions in the plane ticket sufficient to govern the limitations of liabilities of the airline for loss of luggage. Court of Appeals. (See Sweet Lines. upon contracting with the airline and receiving the plane ticket.” 6. if the passenger’s journey involves an ultimate destination or stop in a country other than the country of departure. 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.W. he gives his consent. 1(c) which provides: “(1) In respect of the carriage of passengers a ticket shall be delivered containing: xxx (c) a notice to the effect that. and PanAm vs. The one who adheres to the contract is in reality free to reject it entirely. supra.

Transportation Law. Reason behind limited liability clauses By no means is it suggested that passengers are always bound to the stipulated amounts printed on a ticket.90 and 100 paengs. found in a contract of adhesion.000. Pan Am offered to pay $160. 12. there is no factual basis for the grant of P20. Rapadas was not allowed to handcarry the lost attache case. in addition. the Court is constrained to rule that it has to enforce the contract as it is the only reasonable basis to arrive at a just award. the whole or part of the court costs and other expenses of litigation incurred by the plaintiff. as amended does not precluded an award of attorney’s fees. 15. $400. he could have had enough time to disclose the true worth of the articles in it and to pay the extra charges or remove them from the checked-in-luggage.000. If Mr. The court had doubts as to the total claim.00 damages. Article 22 (4) of the Warsaw Convention. 10. however.00. Damages not supported by factual basis Since the trial court ruled out discriminatory acts or bad faith on the part of Pan Am or other reasons warranting damages. 2004 ( 192 ) .750. That provision states that the limits of liability prescribed in the instrument “shall not prevent the court from awarding. discrimination.403. The fair liability under PanAm’s own printed terms is $400.00. the Court will not hesitate to disregard the fine print in a contract of adhesion. 14. of establishing with a clear preponderance of evidence the contents of a lost valise or suitcase. Warsaw convention does not preclude award of attorney’s fees It is just and equitable for Rapadas to recover expenses for litigation in the amount of P5. Carrier not liable for discrimination or mistreatment Passengers are also allowed one handcarried bag each provided it conforms to certain prescribed dimensions. the Court treats the lost bag as partaking of involuntarily and hurriedly checked-in luggage and continuing its earlier status as unchecked luggage. The evidence on any arbitrary behavior of a Pan Am employee or inexcusable negligence on the part of the carrier is not clear from the petition.00 per passenger is allowed for unchecked luggage. The Court notes. Teves. an airplane will not depart meantime that its own employee is asking a passenger to comply with a safety regulation. Trial Court’s finding on the amount lost is more of a probability than a proved conclusion The conclusion of the trial court does not arise from the facts.00 in cash could have been placed inside. that an amount of $400. Unless the contents are declared.00 per kilogram. it will always be the word of a passenger against that of the airline. It may be noted that out of a claim for US$42. it can only mean that he was carrying more than the allowable weight for all his luggages or more than the allowable number of handcarried items or more than the prescribed dimensions for the bag or valise. Lost luggage considered as unchecked luggage. That the attache case was originally handcarried does not beg the conclusion that the amount of $4. Absent such proof.Haystacks (Berne Guerrero) exclude the application of limited liability. the Court cannot hold the carrier liable because of arbitrariness. 11. Had he not wavered in his decision to register his luggage. v. 13.00 considering the resort to the Court of Appeals and the Supreme Court. No proof of arbitrary behavior. Moreover. supra) Otherwise. At $20. or printed elsewhere but referred to in handouts or forms.90 as the amount lost.” The Court. (See Sweet Lines Inc. if not impossibility.00 as a higher value was not declared in advance and additional charges were not paid. If the loss of life or property is caused by the gross negligence or arbitrary acts of the airline or the contents of the lost luggage are proved by satisfactory evidence other than the self-serving declarations of one party. in accordance with its own law.228. raise the award to P10.000. the trial court found for only US$5. The Court simply recognize that the reasons behind stipulations on liability limitations arise from the difficulty. or mistreatment. Since the checking-in was against the will of Rapadas.00 instead of $160 The lost luggage was declared as weighing around 18 pounds or approximately 8 kilograms. however.

2004 ( 193 ) .00. (5) Service Voucher 199351. informed them that she was able to obtain the refund for her own hotel expenses. Pantejo informed Oscar Jereza. Regalado (J): 2 concur. the appeal by certiorari. where Pantejo was billeted. Pantejo was forced to seek and accept the generosity of a co-passenger. (3) It is likewise not denied that said Gonzales and Pantejo came to know about the reimbursements only because another passenger. Circumstance taken into consideration for lower court to declare bad faith existed In declaring that bad faith existed. Pantejo requested instead that he be billeted in a hotel at the PAL’s expense because he did not have cash with him at that time. that he was going to sue the airline for discriminating against him.000. Pantejo. the evidence shows that Sky View Hotel. At this point. Hence. an engineer named Andoni Dumlao. Rocha. P15. 1. 2. then City Fiscal of Surigao City. had plenty of rooms available. However. the trial court rendered judgment. a copassenger of Pantejo. the appellate court took into consideration the following factual circumstances: (1) Contrary to PAL’s claim that cash assistance was given instead because of non-availability of rooms in hotels where PAL had existing tie-ups.000. the next day.00 and. Contract to transport passenger different for any other contractual relation A contract to transport passengers is quite different in kind and degree from any other contractual relation. Leovigildo A. the latter declined. due to the ordeal and anguish he had undergone. an Auditor of the Philippine National Bank. To accommodate the needs of its stranded passengers. boarded a PAL plane in Manila and disembarked in Cebu City where he was supposed to take his connecting flight to Surigao City. Mrs. due to typhoon Osang. were reimbursed by PAL. ordering PAL to pay Pantejo P300.00 to Pantejo only after he had confronted the airline’s manager about the discrimination committed against him. Gloria Rocha.00 as moral damages. presented by PAL to prove that it gave cash assistance to its passengers. and this is because of the relation which an air carrier sustains with the public. was based merely on the list of passengers already given cash assistance and was purportedly prepared at Transportation Law. and 6% interest from the time of the filing of the complaint until said amounts shall have been fully paid. subject to the modification regarding the computation of the 6% legal rate of interest on the monetary awards granted therein to Pantejo.00 as attorney’s fees. CA (GR 120262. PAL’s Manager for Departure Services at Mactan Airport and who was in charge of cancelled flights. The contract of air carriage. was a refund for his plane ticket. 17 July 1997) Second Division. Pantejo filed a suit for damages against PAL with the RTC of Surigao City (Branch 30). (2) It is not true that the P300. the connecting flight to Surigao City was cancelled. and 29 December 1994. therefore. 1 took no part.00 paid to Ernesto Gonzales. one Superintendent Ernesto Gonzales and a certain Mrs. It invites people to avail of the comforts and advantages it offers. P100. PAL initially gave out cash assistance of P 100. for their expected stay of 2 days in Cebu. but with the exclusion of the award of attorney’s fees and litigation expenses.000. which the latter realized was an actionable wrong. 1 on leave Facts: On 23 October 1988.00 as exemplary damages. On 18 March 1991. and he shared a room with the latter at Sky View Hotel with the promise to pay his share of the expenses upon reaching Surigao. the truth being that it was a reimbursement for hotel and meal expenses. On appeal. (4) PAL offered to pay P300. Pantejo came to know that the hotel expenses of his co-passengers. P150. generates a relation attended with a public duty.Haystacks (Berne Guerrero) [74] PAL vs. Thus. but PAL refused. Neglect or malfeasance of the carrier’s employees naturally could give ground for an action for damages.00 for actual damages. It was only then that Jereza offered to pay Pantejo P300.00 which. the appellate court affirmed the decision of the court a quo. P200. The Supreme Court affirmed the challenged judgment of Court of Appeals. plus costs of suit. Its business is mainly with the travelling public. On 25 October 1988 when the flight for Surigao was resumed.

what makes PAL liable for damages in the present case and under the facts obtaining herein is its blatant refusal to accord the so-called amenities equally to all its stranded passengers who were bound for Surigao City. it miserably and significantly failed to explain why the other passengers were given reimbursements while Pantejo was not. and the Court find none. admitted that the PAL has an existing arrangement with hotel to accommodate stranded passengers. Factual findings of lower courts binding upon the Supreme Court Both the trial court and the Court of Appeals found that PAL acted in bad faith in refusing to provide hotel accommodations for Pantejo or to reimburse him for hotel expenses incurred despite and in contrast to the fact that other passengers were so favored. but never a right that may be demanded by its passengers. (3) Ernesto Gonzales. Had both known that they would be reimbursed by the airline. Passengers not duly informed. This was never denied by PAL. 1988. 5. 3. the Court views as impressed with dubiety PAL’s present attempt to represent such emergency assistance as being merely ex gratia and not ex debito. such arrangement would not have been necessary. to extend to its hapless passengers cash assistance or to provide them accommodations in hotels with which it has existing tie-ups. offered to answer for Pantejo’s hotel bill and the latter promised to pay him when they arrive in Surigao. Teresita Azarcon and Nerie Bol. 6. Transportation Law. Andoni Dumlao. Standard company policy as to cash assistance and hotel accommodations. No compelling or justifying reason was advanced for such discriminatory and prejudicial conduct. final and conclusive upon the Supreme Court absent any reason.Therefore. they were billeted at Rajah Hotel for two nights and three days at the expense of PAL. This explains why his copassenger. testified that sometime in November. Testimony relating to said fact It has been sufficiently established that it is PAL’s standard company policy. hence Pantejo could not have possibly refused the same. and that the hotel bills of Ernesto Gonzales were reimbursed obviously pursuant to that policy. He was not only refused accommodations. this was only so because he came to know about it by accident through Mrs. These factual findings. of 23 October 1988. but he was not even informed that he may later on be reimbursed for his hotel expenses. which is the country’s flag carrier at that. 2004 ( 194 ) . Pantejo’s copassenger on that fateful flight. Oscar Jereza. (2) Two witnesses presented by Pantejo. or even in Cebu Plaza. are binding. Inferior quality of service and professionalism While PAL insists that the passengers were duly informed that they would be reimbursed for their hotel expenses. except through word of mouth to a handful of passengers. This was 2 hours before Pantejo came to know of the cancellation of his flight to Surigao. (1) PAL’s Mactan Airport Manager for departure services. testified that based on his previous experience hotel accommodations were extended by PAL to its stranded passengers either in Magellan or Rajah Hotels. This is absurd because when Pantejo came to know that his flight had been cancelled.M. why this settled evidential rule should not apply. Although Gonzales was subsequently given a refund. 4. Rocha. whenever a flight has been cancelled. the refund of hotel expenses was surreptitiously and discriminatorily made by PAL since the same was not made known to everyone.Haystacks (Berne Guerrero) around 10:00 A. This is a sad commentary on the quality of service and professionalism of an airline company. Assuming hotel accommodations or cash assistance merely privilege. no reason for discriminatory and prejudicial conduct Assuming arguendo that the hotel accommodations or cash assistance given in case a flight is cancelled is in the nature of an amenity and is merely a privilege that may be extended at its own discretion. when their flight from Cebu to Surigao was cancelled. Thus. he immediately proceeded to PAL’s office and requested for hotel accommodations. and that the airline passengers have no vested right to the amenities in case a flight is cancelled due to force majeure. PAL could only offer the strained and flimsy pretext that possibly the passengers were not listening when the announcement was made. which are supported by substantial evidence.

Alitalia Airways vs. et al. moral and exemplary damages granted in the judgment of the lower court. However. an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. Interest computed from date of rendition of judgment and not from filing of complaint. are just and equitable. not constituting a loan or forbearance of money. a past Master of the Mount Diwata Lodge of Free Masons of the Philippines. Discriminatory act makes PAL liable for moral damages. Refusal of Pantejo of offered amount justified Herein. Inc. shame and anguish. member of the Philippine National Red Cross. Surigao Chapter. is breached. he would not even have known about it were it not for a co-passenger who verbally told him that she was reimbursed by the airline for hotel and meal expenses. Court of Appeals. Eastern Shipping Lines vs. His refusal to accept the P300. It may even be said that the amounts. 9. et al. however. be proportional to the suffering inflicted. be enforced through appropriate sanctions. vs. and that he is a member of the Philippine Jaycee Senate.. shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. it will be noted that the Courts of Appeals affirmed point by point the factual findings of the lower court upon which the award of damages had been based. It was even oblivious to the fact that Pantejo was exposed to humiliation and embarrassment especially because of his government position and social prominence. diversion. It remains uncontroverted that at the time of the incident. perforce. which altogether necessarily subjected him to ridicule. CA The discriminatory act of PAL against Pantejo ineludibly makes the former liable for moral damages under Article 21 in relation to Article 2219 (10) of the Civil Code. Travelling public should be afforded protection and duties of common carriers enforced Under the peculiar circumstances of the case. Purpose of moral damages Moral damages are emphatically not intended to enrich a plaintiff at the expense of the defendant. 2004 ( 195 ) . particularly as to their convenience. No interest. that “when an obligation. Governor of the Kiwanis Club of Surigao. past Lt. Surigao del Norte Chapter. and past Chairman of the Boy Scout of the Philippines. 10. CA The interest of 6% imposed by the court should be computed from the date of rendition of judgment and not from the filing of the complaint. Pantejo had every right to make such refusal since it evidently could not meet his needs and that was all that PAL claimed it could offer. except for attorney’s fees and costs of suit. 11. substantial damages do not translate into excessive damages. 8. It is high time that the travelling public is afforded protection and that the duties of common carriers. or amusements that will serve to alleviate the moral suffering he has undergone due to the defendant’s culpable action and must. Pantejo was then the City Prosecutor of Surigao City. long detailed in our previous laws and jurisprudence and thereafter collated and specially catalogued in our Civil Code in 1950. The rule has been laid down in Eastern Shipping Lines. They are awarded only to allow the former to obtain means. for the reasons meticulously analyzed and thoroughly explained in its decision. Worse. Herein. moral and exemplary damages just and equitable. PAL acted in bad faith Herein. Accordingly. the awards for actual. where the demand is established with Transportation Law. such inattention to and lack of care by the airline for the interest of its passengers who are entitled to its utmost consideration. As held in Alitalia Airways vs.Haystacks (Berne Guerrero) 7.00 proffered as an afterthought when he threatened suit was justified by his resentment when he belatedly found out that his co-passengers were reimbursed for hotel expenses and he was not. PAL acted in bad faith in disregarding its duties as a common carrier to its passengers and in discriminating against Pantejo. amount to bad faith which entitles the passenger to the award of moral damages. 12. the time and the circumstances under which those amounts were offered could not solve the moral wounds inflicted by PAL on Pantejo but even approximated insult added to injury. CA. Awards for actual.

It caused the instant death of Santiago and Escala. After hearing. the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). and injury to several others.” This is because at the time of the filling of the complaint. the bus passengers saw a cargo truck.00 moral damages. 1169. hence. Arturo Escala. Puno (J): 4 concur Facts: On 31 July 1980. Allan was a minor.000. Leticia Garcia. Julio Recontique. Santiago stepped on the brake. The Supreme Court affirmed the Decision of the Court of Appeals (CA-GR CV-31246) with the modification reducing the actual damages for hospitalization and medical fees to P5. Leticia suffered a fracture in her pelvis and right leg. without costs. After 3 days. Burden of Proof Transportation Law. and her 5-year old son.000.Haystacks (Berne Guerrero) reasonable certainty. but it was too late. At the time of the complaint. and only after the presentation of proof thereon. Allan Garcia. (3) P2.00 attorney’s fee.74. Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made. On appeal. Santiago’s passengers urged him to slow down but he paid them no heed. the Court of Appeals modified the trial court’s Decision by absolving A & J Trading from liability and by reducing the award of attorney’s fees to P10. Santiago even carried animated conversations with his co-employees while driving. A & J Trading and Recontique to pay jointly and severally the Garcia spouses (1) P25. be on the amount finally adjudged. and his helper. as the shoulder of the road was too narrow to accommodate the whole truck. the bus passengers shouted “Babangga tayo!”. the suit initiated by his parents in his favor. CA (GR 116110. the amount of the damages to which Pantejo may be entitled remains unliquidated and not known. Diligence required. liable for having failed to deliver Garcia and her son to their point of destination safely in violation of Garcia’s and Baliwag Transit’s contractual relation. respectively. A & J Trading and Julio Recontique for damages in the RTC of Bulacan. Leticia sued as an injured passenger of Baliwag and as mother of Allan. Inc.000. until it is definitely ascertained. The truck driver.. the petition for certiorari.00. A kerosene lamp appeared at the edge of the road obviously to serve as a warning device. on the other hand. assessed and determined by the court. She underwent an operation for partial hip prosthesis.000.000. Spouses Antonio and Leticia Garcia sued Baliwag Transit. Hence.00 hospitalization and medication fee. (2) P450. 1. Presumption of negligence. At about 7:30 p. in any case. were then replacing a flat tire. broke a leg. the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. Its left rear portion jutted to the outer lane. His bus rammed into the stalled cargo truck. The trial court ordered Baliwag. They rushed her to the provincial hospital in Cabanatuan City where she was given emergency treatment. and likewise found A & J and Julio Recontique liable for failure to provide its cargo truck with an early warning device in violation of the Motor Vehicle Law.000.017. He was also given emergency treatment at the provincial hospital. parked at the shoulder of the national highway. Leticia and Allan Garcia were among the injured passengers.00 and loss of earnings to P300. Inc. (4) P50.00 loss of earnings in eight (8) years. They took the seat behind the driver. [75] Baliwag Transit vs. 2004 ( 196 ) . Nueva Ecija. The actual base for the computation of legal interest shall. she was transferred to the National Orthopedic Hospital where she was confined for more than a month. Gapan. and (5) P30..m.00 for the hospitalization of their son Allan Garcia. 15 May 1996) Second Division. Duty of a common carrier. Allan. When the danger of collision became imminent. Bus driver Santiago was driving at an inordinately fast speed and failed to notice the truck and the kerosene lamp at the edge of the road. in Malimba.000. the trial court found Baliwag Transit. owned by A & J Trading. boarded Baliwag Transit Bus 2036 bound for Cabanatuan City driven by Jaime Santiago.

However. Unless the presumption is rebutted. The law clearly allows the use not only of an early warning device of the triangular reflectorized plates variety but also parking lights or flares visible 100 meters away. Nueva Ecija who investigated the incident. Leticia also revealed that the driver was smelling of liquor. 5. using the utmost diligence of a very cautious person. although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers. 2004 ( 197 ) . Demetrio dela Cruz. Col. therefore. the evidence shows that Recontique and Ecala placed a kerosene lamp or torch at the edge of the road. the bus driver was conversing with a co-employee. NCC Article 1759 of the Civil Code provides that “Common carriers are liable for the death of or injuries to passengers through the negligence or willfull acts of the former’s employees. Driver was reckless The records are bereft of any proof to show that Baliwag exercised extraordinary diligence. A common carrier is bound to carry its passengers safely as far as human care and foresight can provide. Col. Felix Cruz testified that immediately before the collision. Leticia and Allan Garcia to their destination safe and sound. dela Cruz and Romano testified that they did not see any early warning device at the scene of the accident. On the contrary. but their plea was ignored. the evidence demonstrates its driver’s recklessness. the court need not even make an express finding of fault or negligence on the part of the common carrier. All these prove the bus driver’s wanton disregard for the physical safety of his passengers. Furthermore. Section 34 (g) of the Land Transportation and Traffic Code Section 34 (g) of the Land Transportation and Traffic Code provides “Lights and reflector when parked or disabled. and Francisco Romano. Baliwag did not exercise extraordinary diligence. it is presumed that the common carrier was at fault or was negligent when a passenger dies or is injured. Another passenger. which makes Baliwag as a common carrier liable for damages under Article 1759 of the Civil Code. Recontique. No vehicle not provided with any of the requirements mentioned in this subsection shall be registered. They were referring to the triangular reflectorized plates in red and yellow issued by the Land Transportation Office. No negligence. Baliwag breached its contract of carriage when it failed to deliver its passengers. for the alleged non use of an early warning device (as testified to by Col. the bus conductor). This liability of the common carriers do not cease upon proof that they exercised all the diligence of a good father of a family in the selection or supervision of their employees. Testimony of injured passengers and disinterested witnesses against testimony of bus conductor Transportation Law. Baliwag cannot evade its liability by insisting that the accident was caused solely by the negligence of A & J Trading and Julio Recontique. may be imputed to A & J Trading and its driver. She could smell him as she was seated right behind the driver. Leticia Garcia testified that the bus was running at a very high speed despite the drizzle and the darkness of the highway. Indeed. is placed in such manner as to endanger passing traffic. dela Cruz himself admitted that a kerosene lamp is an acceptable substitute for the reflectorized plates. Article 1759. Use of kerosene lamp a substantial compliance of law as to early warning device Herein. with due regard for all the circumstances.” 4. This substantially complies with Section 34 (g) of the Land Transportation and Traffic Code. This statutory presumption may only be overcome by evidence that the carrier exercised extraordinary diligence as prescribed in Articles 1733 and 1755 of the Civil Code. the station commander of Gapan. “ 4. The passengers pleaded for its driver to slow down.Haystacks (Berne Guerrero) As a common carrier. painted or attached at its front and back which shall likewise be visible at night at least one hundred meters away. 3. 2. near the rear portion of the truck to serve as an early warning device. every motor vehicle shall be provided at all times with built-in reflectors or other similar warning devices either pasted. In a contract of carriage. — Appropriate parking lights or flares visible one hundred meters away shall be displayed at the corner of the vehicle whenever such vehicle is parked on highways or in places that are not well-lighted or. The records do not bear out Baliwag’s contention.

He further admitted that there exists a probability that the lights of the truck may have been smashed by the bus at the time of the accident considering the location of the truck where its rear portion was connected with the front portion of the bus.00 per month.00. Allan was also Transportation Law. Leticia and Allan experienced physical suffering. This being so. Again. her lone testimony cannot justify the award of P25.74.000. Award of P25. The court cannot rely on uncorroborated testimony whose truth is suspect. acted fraudulently or in bad faith. Award for amount representing lost earnings reasonable The award of P300. Thus. the award of moral damages to Antonio and Leticia Garcia was not in their capacity as parents of Allan. witness including the bus conductor himself admitted that the passengers shouted. it would be improbable and perhaps impossible on the part of the truck helper without the torch nor the kerosene to remove the flat tires of the truck.017. To prove actual damages. 8. Leticia underwent an operation to replace her broken hip bone with a metal plate. 2004 ( 198 ) . being the conductor of Baliwag Transit Inc. 10. but must depend upon competent proof that damages have been actually suffered. through its agent. herein. Testimony of investigating officer of little probative value Although that the investigating officer testified that he found no early warning device at the time of his investigation. 6. more so the passengers to notice the truck to be bumped by the bus considering the darkness of the place at the time of the accident. Investigator’s testimony therefore did not confirm nor deny the existence of such warning device. Her injuries forced her to stop working. the Court reduced the actual damages for medical and hospitalization expenses to P5. earning P5.017. Leticia was engaged in embroidery. that they are going to bump before the collision which consequently caused the bus driver to apply the brake 3 to 4 meters away from the truck. is not supported by the evidence on record. To be sure.000. making his testimony of little probative value.000 as hospitalization and medical fees not supported by evidence. the affirmative testimonies given by the two injured passengers must be upheld and less credence must be given to the testimony of the bus conductor who solely testified that no such early warning device exists. mental anguish and serious anxiety by reason of the accident. the best evidence available to the injured party must be presented.74. without the kerosene nor the torch in front of the truck. there were already many people surrounding the place. Thus.Haystacks (Berne Guerrero) The testimonies of injured passengers who may well be considered as disinterested witness appear to be natural and more probable than the testimony given by Francisco Romano who is undoubtedly interested in the outcome of the case. as hospitalization and medical fees. Award of moral damages in accord with law The award of moral damages is in accord with law. moral damages are recoverable if the carrier. Contrary to the contention of Baliwag. the Court found it proper that Baliwag should compensate her lost income for 5 years. The evidence shows the gross negligence of the driver of Baliwag bus which amounted to bad faith.00.000. 7. Considering the nature and extent of her injuries and the length of time it would take her to recover. The Garcias presented receipts but their total amounted only to P5. Reduced to P5.74 The award of P25. Without doubt. She was confined at the National Orthopedic Hospital for 45 days. Moreover. Leticia was given moral damages as an injured party. The young Allan was also confined in the hospital for his foot injury.017.000. In a breach of contract of carriage. the Court gives less credence to such testimony insofar as he himself admitted on cross examination that he did not notice the presence of any kerosene lamp at the back of the truck because when he arrived at the scene of the accident.00 representing Leticia’s lost earnings is reasonable. 9. Before the accident. Testimony supporting parked truck noticed in drizzly and dark night due to kerosene lamp The situation then prevailing at the time of the accident was admittedly drizzly and all dark. it would be improbable for the driver. Leticia testified as to the extra amount spent for her medical needs but without more reliable evidence. among the testimonies offered by the witnesses who were present at the scene of the accident.

the M/V “Don Juan” sank and hundreds of its passengers perished. Inc. Negros Navigation. the captain of the “Don Juan” without. PNOC and PNOC Shipping withdrew their appeal citing a compromise agreement reached by them with Negros Navigation. (Negros Navigation) left Manila bound for Bacolod with 750 passengers listed in its manifest. On 29 December 1980. CA (GR 88052. 2004 ( 199 ) . too. The complaint for damages was instituted by the Garcia spouses on 15 December 1982.00 is just and reasonable. ordering (a) Negros Navigation and Capt. whose bodies were never found despite intensive search by their children. Among the ill-fated passengers were the spouses Perfecto Mecenas and Sofia Mecenas. Violeta (Acervo). following the unjustified refusal of Baliwag to settle their claim. the “Tacloban City” and the “Don Juan” collided at the Talbas Strait near Maestra de Ocampo Island in the vicinity of the island of Mindoro. (b) each of Negros Navigation PNOC/PNOC Shipping to pay Ciocon the sum of P100. the award in his favor has to be given to his father who represented him in the suit.00 for the death of Manuel Ciocon. Negros Occidental. At about 1:00 p.000. to pay Ciocon jointly and severally.00 for the death of their parents. plus costs of the suit.. the Court of Appeals rendered a decision dated 26 January 1989.000. On 17 July 1986. PNOC and PNOC Shipping for the death of her husband Manuel Ciocon. the appellate court and to the Supreme Court. Orlando. was filed in the same court by Lilia Ciocon claiming damages against Negros Navigation. Numerous pleadings were filed before the trial court. When the collision occurred. also of Philippine registry. and a complete set of officers and crew members.m.” Manuel Ciocon’s body.68 tons. [76] Mecenas vs. The Decision was promulgated by the trial court only on 29 January 1991 or about 9 years later.241. As a result of this collision. 11. to pay the Mecenas the sum of P15. the M/T “Tacloban City.m. Later. Santisteban are held Transportation Law. the sum of P15. 14 December 1989) Third Division.” a barge-type oil tanker of Philippine registry. Branch 82. Mecenas.00 as well as moral and exemplary damages in such amount as the Court may deem reasonable to award to them.m. against Negros Navigation and Capt. and headed towards Bataan. the Mecenas filed a complaint in the then Court of First Instance of Quezon City (Civil Case Q-31525). Perfecto A. The 2 cases were consolidated and heard jointly by the Regional Trial Court of Quezon City. Jose. owned by the Philippine National Oil Company (PNOC) and operated by the PNOC Shipping and Transport Corporation (PNOC Shipping).000.31 tons gross weight. Santisteban. Another complaint (Civil Case Q-33932). Romeo. owned and operated by the Negros Navigation Co. Luzviminda. At about 10:30 p.Haystacks (Berne Guerrero) granted moral damages as an injured party but because of his minority. Roger Santisteban.000. another of the luckless passengers of the “Don Juan.00 as and for attorney’s fees.000. left Amlan. with a gross tonnage of 1. Given the complexity of the case and the amount of damages involved. the M/V “Don Juan.000. and Ofelia (Javier). The children prayed for actual damages of not less than P100. In time. Lilia. impleading either PNOC or PNOC Shipping. the Court of Appeals granted the motion by a resolution dated 5 September 1988. of 2. Award of attorney’s fees justified The award of attorney’s fees is justified. wherein Negros Navigation and Capt. the sum of P400. PNOC and PNOC Shipping appealed the trial court’s decision to the Court of Appeals. plus costs of the suit. however. the trial court rendered a decision.391.00 as and for attorney’s fees. the sea was calm. the award of attorney’s fee for P10. having unloaded its cargo of petroleum products. after trial. affirming the decision of the lower court with modification with respect to Civil Case 31525. subject to the reservation made by Lilia Ciocon that she could not be bound by the compromise agreement and would enforce the award granted her by the trial court. of 22 April 1980. Santisteban jointly and severally liable to pay the Mecenas. Mecenas and Sofia P.” an inter-island vessel. Feliciano (J): 4 concur Facts: At 6:20 a. of that same day. Capt. was never found. the weather fair and visibility good..

000. Article 2232 NCC Article 2332 of the Civil Code provides that “In contracts and quasi-contracts.00. They executed maneuvers inadequate. Ciocon suit based on both contract (Negros Navigation) and quasi-delict (PNOC and PNOC Shipping) The suit (Civil Case Q-33932) filed by the widow Lilia Ciocon was correctly treated by the trial and appellate courts as based on contract (vis-a-vis Negros Navigation) and as well on quasi-delict (vis-a-vis PNOC and PNOC Shipping). which liability may include liability for moral damages. 1.00 as attorney’s fees. they will meet head on.000. the Minister of National Defense reversed himself and held that both vessels had been at fault. the carrier under our civil law is liable for the death of passengers arising from the negligence or wilful act of the carrier’s employees although such employees may have acted beyond the scope of their authority or even in violation of the instructions of the carrier.000.000. and too late.00 for actual damages. to avoid collision.000. reversed and set aside the Decision of the Court of Appeals insofar as it reduced the amount of damages awarded to the Mecenas to P100. and shall constitute a lien upon the judgment awarded. in a decision dated 2 March 1981. and (e) P15.000.C. restored the award granted by the trial court and augmented as follows: (a) P126.000. The trial court found that “M/V Don Juan and Tacloban City became aware of each other’s presence in the area by visual contact at a distance of something like 6 miles from each other. Both vessels at fault The then Commandant of the Philippine Coast Guard. Transportation Law. The Court also ordered the Mecenas to pay the additional filing fees properly due and payable in view of the award made. 3. 2004 ( 200 ) . not quasi-delict Both the trial court and the Court of Appeals considered the action (Civil Case Q-31525) brought by the sons and daughters of the deceased Mecenas spouses against Negros Navigation as based on quasi-delict. Commodore B. (d) P307. they will collide.Haystacks (Berne Guerrero) jointly and severally liable to pay the Mecenas the amount of P100.000. On Motion for Reconsideration. (b) P60. The trial court. The Mecenas filed a petition for review in light of the reduction of the amount of damages awarded. however. Santisteban. reckless. They were fully aware that if they continued on their course. 2.000.” Initially. which fees shall be computed by the Clerk of Court of the trial court. however. Ochoco. the contract of carriage between the Mecenas spouses as regular passengers who paid for their boat tickets and Negros Navigation. 4. There can be no excuse for them not to realize that. Tacloban City continued its course to the left. is more appropriately regarded as grounded on contract.00 as moral damages. after a review of the evidence submitted during the trial.00 as actual and compensatory damages and P15. Mecenas suit based on breach of contract of carriage. The Court of Appeals.” They are thus equally negligent and are liable for damages. The Supreme Court granted the Petition for Review on Certiorari.00 as exemplary damages making a total of P800.” 5. (c) P307. held that the “Tacloban City” was “primarily and solely [sic] at fault and responsible for the collision.00 as attorney’s fees and the cost of the suit. The action. Liability of common carrier in action based upon breach of contract of carriage In an action based upon a breach of the contract of carriage.00 as compensatory damages for wrongful death. the Minister of National Defense upheld the decision of Commodore Ochoco. with such maneuvers. Don Juan steered to the right. oppressive or malevolent manner. fraudulent. the surviving children while not themselves passengers are in effect suing the carrier in representation of their deceased parents. with costs against Negros Navigation and Capt. for its part. arrived at the same conclusion that the Minister of National Defense had reached that both the “Tacloban City” and the “Don Juan” were at fault in the collision.00. the court may award exemplary damages if the defendant acted in a wanton.

after the collision.” 6. was playing mahjong before and up to the time of collision.” The record does not show that was the first or only time that Capt. The record also indicates that Auxiliary Chief Mate Antonio Labordo displayed laxity in maintaining order among the passengers after the collision. or 140 persons more than the maximum number that Transportation Law. Capt. Santisteban to supervise his officers and crew in the process of abandoning the ship and his failure to avail of measures to prevent the too rapid sinking of his vessel after collision. Captain failed to maintain seaworthiness of “Don Juan” Capt.m. The Certificate of Inspection. Thus. Santisteban of the imminent danger of collision and of the actual collision itself . Santisteban not only of the “imminent danger of collision” but even of “the actual collision itself. did not cause the collision by themselves.” The record shows that the “Don Juan” sank within 10 to 15 minutes after initial contact with the “Tacloban City. issued by the Philippine Coast Guard Commander at Iloilo City. with a due regard for all the circumstances.” This head-count of the passengers “did not include the 126 crew members.Haystacks (Berne Guerrero) reached the same conclusion. Santisteban and his officers and crew before the collision and immediately after contact of the 2vessels. 8. must be deemed grossly negligent. “to institute appropriate measures to delay the sinking of M/V Don Juan. no such thing as “offduty” hours for the master of a vessel at sea that is a common carrier upon whom the law imposes the duty of extraordinary diligence. he admitted that he failed or did not call or inform Capt. both realistically speaking and in contemplation of law. i. moreover. no question that the “Don Juan” was at least as negligent as the M/T “Tacloban City” in the events leading up to the collision and the sinking of the “Don Juan. “the duty to carry the passengers safely as far as human care and foresight can provide.” The report of the Philippine Coast Guard stated that the “Don Juan” had been “officially cleared with 878 passengers onboard when she sailed from the port of Manila on 22 April 1980 at about 1:00 p. states “Passengers allowed: 810. There is. or in failing to discover and correct such behaviour.” While the failure of Capt. The officer-on-watch in the “Don Juan” admitted that he had failed to inform Capt. therefore. he failed to assist his master to prevent the fast sinking of the ship. children below 3 years old and 2 half-paying passengers” which had been counted as one adult passenger. the Don Juan’s home port. Senior 3rd Mate Rogelio Devera. “Don Juan” carrying more passengers than what it is certified to carry The “Don Juan” was carrying more passengers than she had been certified as allowed to carry. Santisteban had entertained himself during a voyage by playing mahjong with his officers and passengers. using the utmost diligence of very cautious persons. such failures doubtless contributed materially to the consequent loss of life and. dated 27 August 1979. there is. Santisteban in respect of his vessel and his officers and men prior to actual contact between the 2 vessels. Also. No such thing as “off-duty” hours for master of a vessel Whether or not Capt. Captain and crew playing mahjong The report of the Philippine Coast Guard Commandant set out that there had been fault or negligence on the part of Capt. the total number of persons on board the “Don Juan” on that ill-starred night of 22 April 1980 was 1. Santisteban was “off-duty” or “on-duty” at or around the time of actual collision is quite immaterial. As regards the officer on watch.” This appears to us to be a euphemism for failure to maintain the seaworthiness or the water-tight integrity of the “Don Juan. he failed to institute appropriate measures to delay the sinking of MS Don Juan and to supervise properly the execution of his order of abandonship. 7. Santisteban was also faulted in the Philippine Coast Guard decision for failing after the collision.e. were indicative of the kind and level of diligence exercised by Capt. The decision of Commodore Ochoco said “MS Don Juan’s Master. Rogelio Santisteban.004. Fact pointing to negligence reaching level of recklessness or gross negligence. Total Persons Allowed: 864. 2004 ( 201 ) . Moreover.” 9. Negros Navigation in permitting.” The behaviour of the captain of the “Don Juan” in this instance — playing mahjong “before and up to the time of collision” — constitutes behaviour that is simply unacceptable on the part of the master of a vessel to whose hands the lives and welfare of at least 750 passengers had been entrusted.

Manchester Development Corp. CA cannot be given retroactive effect Transportation Law. In any case. Rule 18 of the International Rules of the Road are not to be obeyed and construed without regard to all circumstances attendant It is true that the “Tacloban City” failed to follow Rule 18 of the International Rules of the Road which requires 2 power-driven vessels meeting end on or nearly end on each to alter her course to starboard (right) so that each vessel may pass on the port side (left) of the other. in other words.” Indeed. is not to be applied where it is apparent that her captain was guilty of negligence or of a want of seamanship in not perceiving the necessity for.” The “Don Juan’s” top speed was 17 knots. 12.Haystacks (Berne Guerrero) could be safely carried by the “Don Juan. the “Don Juan. are not to be obeyed and construed without regard to all the circumstances surrounding a particular encounter between 2 vessels.3 of a mile apart. a vessel discharges her duty to another by a faithful and literal observance of the Rules of Navigation. This rule.3. The “Don Juan’s” Certificate of Inspection showed that she carried life boat and life raft accommodations for only 864 persons. however.” upon turning hard to port shortly before the moment of collision. 2004 ( 202 ) . the maximum number of persons she was permitted to carry. she did not carry enough boats and life rafts for all the persons actually on board that tragic night of 22 April 1980. In other words. for the “Don Juan” could choose its own distance. (4) The “Don Juan’s” officer on-watch had sighted the “Tacloban City” on his radar screen while the latter was still 4 nautical miles away. 13. the “Don Juan” having sighted the “Tacloban City” when it was still a long way off was negligent in failing to take early preventive action and in allowing the 2 vessels to come to such close quarters as to render the collision inevitable when there was no necessity for passing so near to the “Tacloban City” as to create that hazard or inevitability. a departure from the rule and acting accordingly. (2) The “Don Juan” carried the full complement of officers and crew members specified for a passenger vessel of her class. knots. In addition. “route observance” of the International Rules of the Road will not relieve a vessel from responsibility if the collision could have been avoided by proper care and skill on her part or even by a departure from the rules. turned (for the second time) 15x to port side while the “Don Juan” veered hard to starboard. Route observance of International Rules of Road does not per se relieve vessel from responsibility In ordinary circumstances. (3) The “Don Juan” was equipped with radar which was functioning that night. 11. 10. signaled its intention to do so by giving 2 short blasts with its horn. “Don Juan” grossly negligent The grossness of the negligence of the “Don Juan” is underscored by the facts: (1) The “Don Juan” was more than twice as fast as the “Tacloban City. at least 128 passengers on board had not even been entered into the “Don Juan’s” manifest. in other words. This circumstance.” when the 2 vessels were only 0. could have easily avoided the collision with the “Tacloban City. however. 14. Visual confirmation of radar contact was established by the “Don Juan” while the “Tacloban City” was still 2.” per its own Certificate of Inspection.” had it taken seriously its duty of extraordinary diligence. that only 750 passengers had been listed in its manifest for its final voyage. while that of the “Tacloban City” was 6. while it may have made the collision immediately inevitable. or in so acting as to create such necessity for. be viewed in isolation from the rest of the factual circumstances obtaining before and up to the collision. Intention of “Tacloban City” signaled to “Don Juan” Herein. vs. The “Tacloban City. Rule 18 like all other International Rules of the Road. cannot. In the total set of circumstances which existed. and she cannot be held at fault for so doing even though a different course would have prevented the collision. The “Don Juan” gave no answering horn blast to signal its own intention and proceeded to turn hard to starboard. the “Don Juan” might well have avoided the collision even if it had exercised ordinary diligence merely.7 miles away. The “Tacloban City.

is dated 24 March 1988. Purpose of exemplary damages. making a total of P307. Transportation Law. Santisteban.000. (SIOL). The original award of the trial court of P400.000. v. Manchester was promulgated by the Court on 7 May 1987. Disaggregation of original award of damages The amount of damages — compensatory.00 as moral damages.00 x 2) — P 60.00. even though such decision was then under appeal and had not yet reached finality. Asuncion.Haystacks (Berne Guerrero) The Manchester doctrine. is quite modest. The bulk of our population is too poor to afford domestic air transportation. In any event.00 could well have been disaggregated by the trial court and the Court of Appeals in the following manner: (1) actual or compensatory damages proved in the course of trial consisting of actual expenses incurred by petitioners in their search for their parents’ bodies — 126.000. 16.00 for moral damages.000. an additional award in the amount of P200. would be quite reasonable.000. of special importance in an archipelagic state like the Philippines. Judicial notice of dreadful regularity of maritime disasters The Court will take judicial notice of the dreadful regularity with which grievous maritime disasters occur in our waters with massive loss of life. or a total of P400.00 as exemplary damages. from common carriers and in creating a presumption of negligence against them. making a total award of P307. the law seeks to compel them to control their employees. et al. Manchester should not be applied retroactively to the present case where a decision on the merits had already been rendered by the trial court.000. The decision of the trial court was itself promulgated on 17 July 1986. which embodied the doctrine in Manchester. and that such additional filing fee shall constitute a lien upon the judgment. Herein. which has been modified and clarified in subsequent decision by the Court in Sun Insurance Office.000. One of those instruments is the institution of exemplary damages. So it is that notwithstanding the frequent sinking of passenger vessels in our waters. 17. Circular 7 of the Supreme Court. 18.000 reasonable Considering that the legitimate children of the deceased spouses Mecenas. (SIOL). a standard which is in fact that of the highest possible degree of diligence. that is. crowds of people continue to travel by sea. is the safe and reliable carriage of people and goods by sea.000. are 7 in number and that they lost both father and mother in one fell blow of fate. the Court applies Manchester as clarified and amplified by Sun Insurance Office Ltd.000. considering the foregoing. Additional moral damages of P200. the complaint in the present case was filed on 29 December 1980. In requiring compliance with the standard of extraordinary diligence.00 as exemplary damages.00. moral and exemplary — were properly imposable upon Negros Navigation and Capt. to tame their reckless instincts and to force them to take adequate care of human beings and their property.000. the Court believes that an additional amount of P200. 15. herein. (4) exemplary damages — P107. (3) moral damages — P107. The Court is prepared to use the instruments given to it by the law for securing the ends of law and public policy. by holding that the Mecenas shall pay the additional filing fee that is properly payable given the award specified below. one of those ends. and considering the pain and anxiety they doubtless experienced while searching for their parents among the survivors and the corpses recovered from the sea or washed ashore. Upon the other hand.000.00. As to common carriers Exemplary damages are designed by our civil law to permit the courts to reshape behaviour that is socially deleterious in its consequence by creating negative incentives or deterrents against such behaviour. There is no indication at all that the Mecenas here sought simply to evade payment of the court’s filing fees or to mislead the court in the assessment of the filing fees. 2004 ( 203 ) . long before either Manchester or Circular 7 of 24 March 1988 emerged.00. before Manchester and Circular 7 were promulgated.00. Ltd. et al. cannot be applied in the present case so as to work a striking out of that portion of the trial court’s award which could be deemed notionally to constitute an award of moral and exemplary damages. again. (2) actual or compensatory damages in case of wrongful death (P30.

however. As a consequence of the brain injury sustained by plaintiff from the crash. or a total of P255.00. Bustamante due to his very slow reaction and poor judgment overshot the airfield and as a result. instead of giving Samson expert and proper medical treatment called for by the nature and severity of his injuries.000. 2 concur in result Facts: On 8 January 1951.000.000. Coronado. On attempting to land the plane at Daet airport. The Court underscore once more. notwithstanding the diligent efforts of the co-pilot to avert an accident. Jesus filed a complaint against PAL on 1 July 1954.000. Court may consider and resolve all issues to render substantial justice The Mecenas herein merely asked for the restoration of the P400.000.00.00 as attorney’s fees and P5. stating a cause of action not cognizable within the general jurisdiction of the court. with Captain Delfin Bustamante as commanding pilot of a C-47 plane belonging to Philippine Air Lines. praying for damages in the amount of P180. the firmly settled doctrine that the Court may consider and resolve all issues which must be decided in order to render substantial justice to the parties. 2004 ( 204 ) . Capt. PAL instead of submitting Samson to expert medical treatment. with costs against PAL. P20. discharged the latter from its employ on 21 December 1953 on grounds of physical disability.00 as moral damages. thereby causing Samson not only to lose his job but to become physically unfit to continue as aviator due to PAL’s negligence in not giving him the proper medical attention. Camarines Sur. PAL simply referred him to a company physician. Samson flew as co-pilot on a regular flight from Manila to Legaspi with stops at Daet. who limited the treatment to the exterior injuries without examining the severe brain concussion of Samson. After the reception of evidence.000.00 as expenses. PAL appealed the decision to the Court of Appeals. PALfiled a Motion to Dismiss on the ground that the complaint is essentially a Workmen’s Compensation claim.000. Thereafter.00 representing his unearned income. et al. including issues not explicitly raised by the party affected. as in Kapalaran Bus Line v.000. the trial court rendered on 15 January 1973 its decision ordering PAL to pay Samson P1988. citing Section 8.00 as expenses of litigation. Inc. and inspite of the latter’s repeated request for expert medical assistance.000. Jesus V. PAL had not given him any. CA (GR L-46558. Rule 51 of the Rules of Court. wounds and abrasions on the forehead with intense pain and suffering. The Motion to Dismiss was denied in the order of 14 April 1958. Transportation Law. both the demands of substantial justice and the imperious requirements of public policy compel the Court to the conclusion that the trial court’s implicit award of moral and exemplary damages was erroneously deleted and must be restored and augmented and brought more nearly to the level required by public policy and substantial justice.00 unearned income from the filing of the complaint.00l with costs against PAL.00 award of the trial court. he had been having periodic dizzy spells and had been suffering from general debility and nervousness.000. P20.00 for moral damages.Haystacks (Berne Guerrero) 19. The Supreme Court affirmed the judgment of the appellate court with slight modification in that the correct amount of compensatory damages is P204. In the present case. the airplane crashlanded beyond the runway.000. [77] PAL vs. Guerrero (J): 2 concur. the Court of Appeals rendered its decision affirming the judgment of the lower court but modified the award of damages by imposing legal rate of interest on the P198.. PAL called back Samson to active duty as co-pilot. Its motion for reconsideration of the above judgment having been denied.00 as unearned income or damages. Several days after the accident. On 18 April 1977. Camarines Norte and Pili.000. On 25 March 1958.000. PAL filed a petition for certiorari. a general medical practitioner. (PAL). P50. 31 July 1981) First Division.00 as attorney’s fees and P5. that the jolt caused the head of Samson to hit and break through the thick front windshield of the airplane causing him severe brain concussion. P50. or a total of P273.

a neurologist and psychiatrist with experience in two hospitals abroad. that there were other similar physical examinations conducted by the CAA on the person of Samson the report on which were not presented in evidence. Reyes. that while making a landing at the Daet airport on that date. (2) that on January 1951. or approximately from November 1953 up to the date of his discharge on 21 December 1953. (4) that plaintiff’s unfitness for flight duty was properly established after a thorough medical examination by competent medical experts. that from July 1950 to 21 December 1953. which we find outlandishly exaggerated. the following facts are not the subject of controversy: (1) First. headache and general debility of Samson was an after-effect of the crash-landing. her testimony and opinion may not be discussed. plaintiff had complained of “spells of dizziness. the eyes which are very near it. PAL would imply that Samson suffered only superficial wounds which were treated and not brain injury. plaintiff was employed with defendant company as a first officer or co-pilot and served in that capacity in defendant’s domestic services. Testimony of Samson’s doctors believed Herein. Obviously. Sandico. The Deputy Transportation Law. by the opinion of its company doctors. Marquez. Dr. The pilot was sick. 2004 ( 205 ) . PI-C 94 did meet an accident as stated above. Dr. It would. neurasthenic or psychogenic. Dr. and suggested a possibility that it was due to postraumatic syndrome.” “headaches” and “nervousness”. Dr. evidently due to the injuries suffered by Samson in hitting the forehead against the windshield of the plane during the accident. Testimony of PAL’s doctors discounted Herein. The fact First Pilot Bustamante has a long standing tumor of the Nasopharynx for which reason he was grounded since November 1947 is admitted in the letter of Dr. That Samson’s condition as psychosomatic rather than organic in nature is allegedly confirmed by the fact that on 6 separate occasions after the accident he passed the required CAA physical examination for airman’s certificate. The Court noticed. Ador Dionisio. Yambao and Dr. with the late Capt. found abnormality reflected by the electroencephalogram examination in the frontal area on both sides of Samson’s head. Dizzy spells. 2. however. that at that time. although her testimony is crystallized by the opinions of Dr. Morales. The Court hesitated to accept the opinion of PAL’s two physicians. PAL grossly negligent for allowing Capt. Tumor on the spot will affect the sinus. In short. found that blood was coming from Samson’s ears and nose. Dizzy spells. Bustamante to fly as first pilot (not co-pilot) notwithstanding that the latter has a tumor of the nasopharynx The imputation of gross negligence by the court to PAL for having allowed Capt. a surgeon. Bernardo and Dr. Chan. The request for waiver of physical standards is itself a positive proof that the physical condition of Capt. only those which suited PAL’s cause were hand-picked and offered in evidence. Delfin Bustamante in command as pilot. plaintiff did fly on defendant’s PI-C 94. He testified that Samson was suffering from cerebral concussion as a result of traumatic injury to the brain caused by his head hitting on the windshield of the plane during the crash-landing. Bernardo to the Medical Director of the CAA requesting waiver of physical standards. Bustamante is short of the standard set by the CAA. clearly established and cited in the decision of said court. The spot is very near the brain and the eyes. considering that Dr. 3. Reyes because he could not determine the cause of the dizzy spells and headache and the latter admitted that it is extremely hard to be certain of the cause of his dizzy spells. headache and general debility of Samson was an after-effect of the crash-landing. He admittedly had tumor of the nasopharynx (nose). Delfin Bustamante to fly on that fateful day of the accident as the same is duly supported by substantial evidence. plaintiff was actually physically unfit to discharge his duties as pilot. the breathing. by reason of which he was grounded from flight duty. Dr. (3) that at or about the time of the discharge from defendant company. Conrado Aramil. Jose O. 4. as first officer or co-pilot. Uncontroverted facts Herein. Dr. Bernardo admittedly referred to Dr. No one will certify the fitness to fly a plane of one suffering from the disease. The opinion of these two specialist renders unnecessary that of Samson’s wife who is a physician in her own right and because of her relation to Samson.Haystacks (Berne Guerrero) 1. attribute the dizzy spells and headache to organic or as phychosomatic.

water. In another instance. as defined in Art. PAL is guilty of gross negligence and therefore should be made liable for the resulting accident. offering their services to the public. by land. unless they prove that they observed extraordinary diligence as prescribed in Articles 1733 and 1755. while the extraordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756.” Transportation Law. One month prior to the crash-landing. or air. The law is clear in requiring a common carrier to exercise the highest degree of care in the discharge of its duty and business of carriage and transportation under Arts. 2004 ( 206 ) . 5. clear and substantial evidence. are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them. 1755 and 1756 of the New Civil Code. Bustamante to fly merely as a co-pilot and it is safe to conclude that the CAA approved the request thus allowing Bustamante to fly only as a co-pilot. Sycangco. Supreme Court not a trier of facts. Bustamante affecting skills in flying Capt. considering that a miscalculation would not only cause the death of the crew but also of the passengers. These more than prove what plaintiff had complained of. PAL requested the CAA to allow Capt.” 10. notwithstanding PAL’s wail that the judgment of the appellate court is based entirely on speculations. Medical condition of Capt. Common carrier required of highest degree of care in discharge of duty and business PAL is a common carrier engaged in the business of carrying or transporting passengers or goods or both. for compensation. Disregard thereof by defendant is condemnable. 6. 5. using the utmost diligence of very cautious persons. The fact that the complaint was not in writing does not detract anything from the seriousness thereof. the pilot would hit the Mayon Volcano had not plaintiff warned him. 8. according to all the circumstances of each case. Bustamante used to get treatments from Dr. The plane hit outside the airstrip. The Supreme Court is convinced that the lower court’s judgment is supported by strong. from the nature of their business and for reasons of public policy. common carriers are presumed to have been at fault or to have acted negligently. Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734. surmises and conjectures. 1733. Article 1755 NCC Article 1755 of the Civil Code provides that “A common carrier is bound to carry the passenger safely as far as human care and foresight can provide. He used to complain of pain in the face more particularly in the nose which caused him to have sleepless nights. Samson’s observation of the pilot was reported to the Chief Pilot who did nothing about it. and 7. The complaint against the slow reaction of the pilot at least proved the observation. Nos. and 1745. Captain Carbonel of PAL corroborated Samson of this matter.” 9. New Civil Code. Article 1733 NCC Article 1733 of the Civil Code provides that “Common carriers. plaintiff warned him that they were not in the vicinity of Daet but above the town of Ligao. Bernardo. PAL a common carrier. Although the request says that “it is believed that his continuing to fly as a co-pilot does not involve any hazard. For having allowed Bustamante to fly as a First Officer on 8 January 1951. 1732.Haystacks (Berne Guerrero) Administrator of the CAA granted the request relying on the representation and recommendation made by Dr. when the pilot was preparing to land in Daet.” flying as a First Officer entails a very different responsibility than flying as a mere co-pilot. Article 1756 NCC Article 1756 of the Civil Code provides that “In case of death of or injuries to passengers. 6. with a due regard for all the circumstances. 7. cannot enter into a calibration of the evidence It is not the task of the Supreme Court to discharge the functions of a trier of facts much less to enter into a calibration of the evidence.

the employer shall not be answerable. the latter and the employer shall be solidarily liable for compensation.00 (not P120.00 is proper and justified. Delfin Bustamante to fly the plane to Daet on 8 January 1951 whose slow reaction and poor judgment was the cause of the crash-landing of the plane which resulted in Samson hitting his head against the windshield and causing him injuries for which reason PAL terminated his services and employment as pilot after refusing to provide him with the necessary medical treatment of PAL’s periodic spells. Article 1711 NCC Article 1711 of the Civil Code provides that “Owners of enterprises and other employers are obliged to pay compensation for the death or injuries to their laborers. Court affirms award of damages under provision of Articles 1711 and 1712 NCC Having affirmed the gross negligence of PAL in allowing Capt. If a fellow-worker’s intentional or malicious act is the only cause of the death or injury. The act of PAL in unjustly refusing Samson’s demand for special medical service abroad for the reason that Samson’s deteriorating physical condition was not due to the accident violates the provisions of Article 19 of the Civil Code on human relations “to act with justice.” Under the facts found by the trial court and affirmed by the appellate court and under the law and jurisprudence cited and applied.00 a month totals P78. the airplane in the present case. When the employee’s lack of due care contributed to his death or injury. Grant of moral damages upheld.000.000 not P198. the Court must necessarily affirm likewise the award of damages or compensation under the provisions of Articles 1711 and 1712 of the New Civil Code.600 per annum x 10 years = P126.000.” 15. Duty to exercise utmost diligence for passengers and members of the crew The duty to exercise the utmost diligence on the part of common carriers is for the safety of passengers as well as for the members of the crew or the complement operating the carrier. lapse or neglect thereof will certainly result to the damage. If the mishap was due to the employee’s own notorious negligence.00 (1964 to 1968 compensation) makes a grand total of P204. 2004 ( 207 ) . and observe honesty and good faith.00 as bonuses and extra pay for extra flying time at the same rate of P300.000. even though the event may have been purely accidental or entirely due to a fortuitous cause. mechanics or other employees. or drunkenness. passengers and crew members alike.00 and another P18. The employer is also liable for compensation if the employee contracts any illness or disease caused by such employment or as the result of the nature of the employment.Haystacks (Berne Guerrero) 11. workmen. the employer shall not be liable for compensation.” 14. 16. Quasi-delict (Article 2219 [2] NCC) The Court approve the grant of moral damages in the sum of P50.000. nay injuries and even death to all aboard the plane.000. Adding P126. unless it should be shown that the latter did not exercise due diligence in the selection or supervision of the plaintiffs fellow-worker.00 a month for extra pay for extra flying time including bonus given in December every year is justified.000.00 (not P198.000. if the death or personal injury arose out of and in the course of the employment. or voluntary act. prejudice.00 as originally computed).00 as computed by the court a quo). The further grant of increase in the basic pay of the pilots to P12. the grant of moral damages in the amount of P50. The correct computation however should be P750 plus P300 x 12 months = P12.000.000 annually for 1964 to 1968 totalling P60. Article 1712 NCC Article 1712 of the Civil Code provides that “If the death or injury is due to the negligence of a fellow-worker.00 a month as basic salary and P300. headache and general debility produced from said injuries. 12. 13.000.000 The grant of compensatory damages to Samson made by the trial court and affirmed by the appellate court by computing his basic salary per annum at P750.000. the compensation shall be equitably reduced. The fact that Samson suffered physical injuries in the head when the plane Transportation Law. give everyone his due.00 inasmuch as there is bad faith on the part of PAL. And this must be so for any omission.00. Grant of compensatory damages should be P204.

Thereunder interest begins to accrue upon demand. such damages are justly due. PFIC. Vicente. Since there was no improvement in his left eye’s vision. interest due shall earn legal interest from the time it is judicially demanded.00 the same is likewise correct. and many others). PAL acted in bad faith in refusing Samson’s valid claim (Filipino Pipe Foundry Corporation vs. Records). Bustamante is undeniable. give everyone his due. The correct amount of compensatory damages upon which legal interest shall accrue from the filing of the complaint is P204. 2209 and 2212 of the Civil Code govern when interest shall be computed. Samson is entitled to attorney’s fees because he was forced to litigate in order to enforce his valid claim (Ganaban vs. 22 SCRA 33. 2004 ( 208 ) . 19.00 as herein computed and not P198.Haystacks (Berne Guerrero) crash-landed due to the negligence of Capt. boarded Alatco Transportation Co.000. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith. see [14] [80] Pilapil vs. as applied by appellate court is also well-taken. Alatco’s personnel lost no time in bringing Pilapil to the provincial hospital in Naga City where he was confined and treated. Bad faith (Article 19 NCC) The justification in the award of moral damages under Article 19 of the New Civil Code on Human Relations which requires that every person must. 22 December 1989) Second Division. CA (GR 52159. a paying passenger. Capulong. in the exercise of his rights and in the performance of his duties. De la Cruz.M. 340). Grant of moral damages upheld. Quezon City where he was treated by Dr. and Samson was dismissed and was forced to go to court to vindicate his right (Nadura vs. Camarines Sur.000. hurled a stone at the left side of the bus. upon reaching the vicinity of the cemetery of the Municipality of Baao. 107 Phil. Benguet Consolidated. New Civil Code which provides that willful injury to property may be a legal ground for awarding moral damages if the court should find that. De la Cruz vs. Central Bank.. a bystander along said national highway. an unidentified man. 18. 20. Considering that the sight of his left eye was impaired. [78] Belgian Chartering vs. and affirmed by the Supreme Court applying the provisions of Article 2220. Luna Hospital. Grant of moral damages upheld. 5 SCRA 879). 23 SCRA 1044).00. Inc. 30 SCRA 365.000. under the circumstances. Padilla (J): 3 concur. and observe honesty and good faith. Pilapil was taken to Dr. act with justice. see [36] [79] De Guzman vs. 153-154. Payment of legal interest from date judicial demand was made by Samson Articles 1169. Malabanan of Iriga City where he was treated for another week. which hit Pilapil above his left eye. A complaint is a judicial demand (Cabarroguis vs. although the obligation may be silent upon this point. Award of attorney’s fees correct With respect to the award of attorney’s fees in the sum of P20. Iriga City on 16 September 1971 at about 6:00 P. pp. on the way to Naga City. extrajudicial or judicial. Under Article 2212 of the Civil Code. While said bus 409 was in due course negotiating the distance between Iriga City and Naga City. Bayle. Samson is still entitled to moral damages in view of the finding of bad faith or malice by the appellate court. CA. 17. (2) New Civil Code is applicable.” (CA Resolution. Pilapil went to V. The negligence of the latter is clearly a quasi-delict and therefore Article 2219. justifying the recovery of moral damages. Bad faith or malice (Article 2220 NCC) Even from the standpoint of PAL that there is an employer-employee relationship between it and Samson arising from the contract of employment.’s bus bearing number 409 at San Nicolas. 1 took no part Facts: Jose Pilapil. Despite the treatment accorded Transportation Law.

the petition to review on certiorari. the same is rebuttable by proof that the common carrier had exercised extraordinary diligence as required by law in the performance of its contractual obligation. with due regard for all the circumstances.” Further.Haystacks (Berne Guerrero) to him by Dr. Article 1756 NCC Article 1756 of the Civil Code. however. a common carrier does not give its consent to become an insurer of any and all risks to passengers and goods. and ordering furthermore. and presumption of negligence. It merely undertakes to perform certain duties to the public as the law imposes. representing actual and material damages for causing a permanent scar on the face and injuring the eye-sight of Pilapil. From the judgment.00. The Supreme Court affirmed the judgment appealed from. What constitutes compliance with said duty is adjudged with due regard to all the circumstances. the transportation company to reimburse Pilapil the sum of P300. from introducing evidence to fasten the negligence on the former. Common carrier not an insurer of all risks to passenger and goods In consideration of the right granted to it by the public to engage in the business of transporting passengers and goods. Intention of the Code Inferring from the law. 1.000.00 for his medical expenses and attorney’s fees in the sum of P1. for the time being. NCC Diligence required of a common carrier. and holds itself liable for any breach thereof. On 19 October 1979. the law presumes said common carriers to be at fault or to have acted negligently. 3. Being a mere presumption. using the utmost diligence of very cautious persons. 2004 ( 209 ) . to Pilapil as moral and exemplary damages. Hence. common carriers are required to observe extraordinary diligence for the safety of the passenger transported by them. according to all the circumstances of each case. in a Special Division of Five. because the presumption stands in the place of evidence. 5. or that the injury suffered by the passenger was solely due to a fortuitous event. Thereupon. Branch I an action for recovery of damages sustained as a result of the stone-throwing incident. ordering further the transportation company to pay the sum of P5.000. merely relieves the latter. Article 1755 NCC Article 1755 of the Civil Code qualifies the duty of extraordinary care. it does not. the court a quo rendered judgment ordering the transportation company to pay Pilapil the sum of P10. the Court of Appeals. Neither the Transportation Law. however.00. While the law requires the highest degree of diligence from common carriers in the safe transport of their passengers and creates a presumption of negligence against them. in creating a presumption of fault or negligence on the part of the common carrier when its passenger is injured. 2. make the carrier an insurer of the absolute safety of its passengers. rendered judgment reversing and setting aside the judgment of the court a quo. Capulong. vigilance and precaution in the carriage of passengers by common carriers to only such as human care and foresight can provide. The requirement of extraordinary diligence imposed upon common carriers is restated in Article 1755: “A common carrier is bound to carry the passengers safely as far as human care and foresight can provide. and to pay the costs. 4. Alatco Transportation appealed to the Court of Appeals (CA-GR 57354-R). After trial.000. in case of death of or injuries to passengers. the intention of the Code Commission and Congress was to curb the recklessness of drivers and operators of common carriers in the conduct of their business. Pilapil instituted before the CFI of Camarines Sur. Pilapil lost partially his left eye’s vision and sustained a permanent scar above the left eye. Articles 1733 and 1755 Under Article 1733 of the Civil Code.00.

The negligence for which a common carrier is held responsible is the negligent omission by the carrier’s employees to prevent the tort from being committed when the same could have been foreseen and prevented by them. the presumption is rebutted and the carrier is not and ought not to be held liable. it is to be noted that when the violation of the contract is due to the wilful acts of strangers the degree of care essential to be exercised by the common carrier for the protection of its passenger is only that of a good father of a family. it would seem that this is not the standard by which its liability is to be determined when intervening acts of strangers directly cause the injury.e. 7. and therefore involving no issue of negligence in its duty to provide safe and suitable cars as well as competent employees. It gives in where contrary facts are established proving either that the carrier had exercised the degree of diligence required by law or the injury suffered by the passenger was due to a fortuitous event. could have prevented the injury complained of. Sad to say. mesh-work grills covering windows of the bus.Haystacks (Berne Guerrero) law nor the nature of the business of a transportation company makes it an insurer of the passenger’s safety. Where the carrier uses cars of the most approved type. where the injury sustained by Pilapil was in no way due to any defect in the means of transport or in the method of transporting or to the negligent or willful acts of Alatco’s employees. 8. under the same provision. The carrier is not charged with the duty of providing or maintaining vehicles as to absolutely prevent any and all injuries to passengers. Further. Presumption of fault or negligence merely a disputable presumption The presumption of fault or negligence against the carrier is only a disputable presumption. common carriers are bound to exercise extraordinary diligence in the safe transport of their passengers. in general use by others engaged in the same occupation. Pilapil contends that it is to the greater interest of the State if a carrier were made liable for such stone-throwing incidents rather than have the bus riding public lose confidence in the transportation system. Herein. Standard of extraordinary diligence does not determine liability when acts of strangers directly caused the injury While as a general rule.” 9. with the injury arising wholly from causes created by strangers over which the carrier had no control or even knowledge or could not have prevented. but that its liability for personal injuries sustained by its passenger rests upon its negligence. Rule of ordinary care and prudence is not exacting to require exercise of doubtful or unreasonable precautions Although the suggested precaution. 2004 ( 210 ) . Article 1763 NCC Article 1763 provides that “a common carrier is responsible for injuries suffered by a passenger on account of the wilful acts or negligence of other passengers or of strangers. its failure to exercise the degree of diligence that the law requires 6. while the contract of carriage exists. 11. if the common carrier’s employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission. Transportation Law. and exercises a high degree of care in maintaining them in suitable condition. Such a policy would be better left to the consideration of Congress which is empowered to enact laws to protect the public from the increasing risks and dangers of lawlessness in society. the rule of ordinary care and prudence is not so exacting as to require one charged with its exercise to take doubtful or unreasonable precautions to guard against unlawful acts of strangers. i. the carrier cannot be charged with negligence in this respect. Congress’ role Herein. Article 1763 explained A tort committed by a stranger which causes injury to a passenger does not accord the latter a cause of action against the carrier. the court is not in a position to so hold. 10.

00 and P500. (2) actual damages in the amount of P30. CA (GR 119756. including two Maranaos. Then the bus was set on fire. Fortune Express’ bus figured in an accident with a jeepney in Kauswagan. 18 March 1999) Second Division. 2004 ( 211 ) . and (7) costs of suits. Lanao del Norte while on its way to Iligan City. conducted an investigation of the accident. heard Atty. Then one of the companions of Mananggolo started pouring gasoline inside the bus. Godofredo Cabatuan.m. (5) attorney’s fees in the amount of P50. Yasser King. including Atty. as the other held the passengers at bay with a handgun. Caorong out of the burning bus and rush him to the Mercy Community Hospital in Iligan City. dated 28 December 1990. The Supreme Court affirmed the decision of the Court of Appeals with modification that Fortune Express is ordered to pay Paulie. Cabatuan. a volunteer field agent of the Constabulary Regional Security Unit (X). to stop the bus on the side of the highway. Paulie Caorong. ordered the driver.000.00. In its decision. and rendered another one ordering Fortune Express to pay the Caorongs (1) P3. stepped out of the bus and went behind the bushes in a field some distance from the highway. the Court of Appeals reversed the decision of the trial court. Mananggolo then shot Cabatuan on the arm. and Prince Alexander brought a suit for breach of contract of carriage in the Regional Trial Court of Iligan City (Branch VI). Upon the instruction of Sgt. Caorong. Caorong.00. (3) moral damages in the amount of P100. but he died while undergoing operation. Atty.000. saw that Atty. During this exchange between Atty. is a bus company in northern Mindanao. Rose Heinni.00 per appearance as attorney’s fees. and Prince Alexander Caorong (1) death indemnity in the amount of P50. (2) P50.90. The leader of the Maranaos.649. identified as one Bashier Mananggolo. Caorong was hit. Mananggolo then ordered the passengers to get off the bus. at its main office in Cagayan de Oro City. the widow of Atty. Mendoza (J): 3 concur. and on 29 July 1994. and the corresponding counterclaim. Hence. however.Haystacks (Berne Guerrero) [81] Fortune Express vs. He found that the owner of the jeepney was a Maranao residing in Delabayan.00. and costs against Fortune Express.00. At that time.121. adamant as they repeated their warning that they were going to burn the bus along with its driver. 1 abroad on official business Facts: Fortune Express Inc. Caorong pleading with the armed men to spare the driver as he was innocent of any wrong doing and was only trying to make a living. Caorong and the assailants. resulting in the death of several passengers of the jeepney. on 22 November 1989.000. Generalao rendered a report on his findings to Sgt. Crisanto Generalao. On appeal. Talib Caorong. (4) exemplary damages in the amount of P100. Bravo assured him that the necessary precautions to insure the safety of lives and property would be taken. however. the appeal by petition for review on certiorari. Lanao del Norte and that certain Maranaos were planning to take revenge on Fortune Express by burning some of its buses. Cabatuan climbed out of the left window of the bus and crawled to the canal on the opposite side of the highway.399. seized a bus of Fortune Express at Linamon. On 18 November 1989. Reynaldo Bastasa of the Philippine Constabulary Regional Headquarters at Cagayan de Oro. and their minor children Yasser King. operations manager of petitioner.000. one of the armed men was pouring gasoline on the head of the driver. which caused him to slump on the steering wheel. However.20 as death indemnity. Some of the passengers were able to pull Atty. Transportation Law. The passengers. 3 armed Maranaos who pretended to be passengers. Larry de la Cruz. He heard shots from inside the bus. Among the passengers of the bus was Atty. one of the passengers. At about 6:45 p.000.000. who had meantime regained consciousness. Lanao del Norte. without costs. The armed men were. (6) compensation for loss of earning capacity in the amount of P2.404. Caorong returned to the bus to retrieve something from the overhead rack. the trial court dismissed the complaint.00. Rose Heinni. Bastasa he went to see Diosdado Bravo.

2004 ( 212 ) . Fortune Express took no steps to safeguard the lives and properties of its passengers. Article 1755 NCC Article 1755 of the Civil Code provides that “a common carrier is bound to carry the passengers as far as human care and foresight can provide. Pilapil vs. Diosdado Bravo. 3. violence. Despite warning by the Philippine Constabulary at Cagayan de Oro that the Maranaos were planning to take revenge on Fortune Express by burning some of its buses and the assurance of petitioner’s operation manager. The seizure of the bus of Fortune Express was foreseeable and. preferably with non-intrusive gadgets such as metal detectors. with due regard for all the circumstances. the seizure of the bus by Mananggolo and his men was made possible. it was held that a common carrier is not liable for failing to install window grills on its buses to protect passengers from injuries caused by rocks hurled at the bus by lawless elements. Fortune Express did nothing to protect the safety of its passengers. (2) the event must be either unforeseeable or unavoidable. it was ruled that a common carrier is not responsible for goods lost as a result of a robbery which is attended by grave or irresistible threat. a common carrier can be held liable for failing to prevent a hijacking by frisking passengers and inspecting their baggages. Article 1763 NCC. Had Fortune Express and its employees been vigilant they would not have failed to see that the malefactors had a large quantity of gasoline with them. and (4) the obligor must be free of participation in. thus. 2. Fortune Express negligent. 5. Herein.Haystacks (Berne Guerrero) 1.” 6. and. Transportation Law. The event was foreseeable. 4. Common carrier liable for injuries suffered by passenger on account of willful acts of other passenger Article 1763 of the Civil Code provides that a common carrier is responsible for injuries suffered by a passenger on account of the wilful acts of other passengers. the second requisite mentioned above was not fulfilled. Court of Appeals. that the necessary precautions would be taken. the injury to the creditor. if the employees of the common carrier could have prevented the act through the exercise of the diligence of a good father of a family. Court of Appeals. Inc. Yobido vs. No precautions was undertaken Herein.. when unforeseen event considered a force majeure Article 1174 of the Civil Code defines a fortuitous event as an occurrence which could not be foreseen or which though foreseen. Court of Appeals. On the other hand. of which it was warned. (3) the occurrence must be such as to tender it impossible for the debtor to fulfill the obligation in a normal manner. such as tortious or criminal acts of third persons. simple precautionary measures to protect the safety of passengers. Article 1174 of the Civil Code (Fortuitous event defined). This ruling applies by analogy to the present case. despite the report of PC agent Generalao that the Maranaos were going to attack its buses. CA. Vasquez vs. using the utmost diligence of very cautious persons. it was held that the common carrier was liable for its failure to take the necessary precautions against an approaching typhoon. it is clear that because of the negligence of Fortune Express’ employees. was not a fortuitous event which would exempt Fortune Express from liability. or force. Common carrier liable for failure to take necessary precautions In Vasquez v. such as frisking passengers and inspecting their baggages. The absence of any of the requisites mentioned above would prevent the obligor from being excused from liability. in De Guzman v. Under the circumstances. it is necessary that: (1) the cause of the breach of the obligation must be independent of the human will. As the Court intimated in Gacal v. In Yobido v. the Court held that to be considered as force majeure. CA and De Guzman vs. Philippine Air Lines. or aggravation of. therefore. CA. resulting in the loss of the lives of several passengers. In Pilapil and De Guzman. Court of Appeals. Herein. CA do not apply In Pilapil v. is inevitable. the respondents therein were not negligent in failing to take special precautions against threats to the safety of passengers which could not be foreseen. before allowing them on board could have been employed without violating the passenger’s constitutional rights. It is clear that the cases of Pilapil and De Guzman do not apply to the present case.

Fortune Express liable for damages (Moral damages). Article 1764 in relation to Article 2206 NCC Article 1764 of the Civil Code. 9. What apparently angered them was his attempt to help the driver of the bus by pleading for his life. Caorong. 10.00. The intended targets of the violence were Fortune Express and its employees. provides for the payment of indemnity for the death of passengers caused by the breach of contract of carriage by a common carrier. 7. The Caorongs are entitled to this amount. Thus.” The trial court found that Paulie Caorong suffered pain from the death of her husband and worry on how to provide support for their minor children. 2004 ( 213 ) .000. Fortune Express likewise does not question said finding of the trial court. not its passengers.000.000. Yasser King.e. it is liable to the Caorongs in the said amount as actual damages. reckless. despite the report of PC agent Generalao that the Maranaos were planning to burn some of petitioner’s buses and the assurance of Fortune Express’ operations manager (Diosdado Bravo) that the necessary precautions would be taken. let alone recklessness Herein. Caorong did not act recklessly.” Herein. oppressive. legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased. Caorong. Article 2199 NCC Article 2199 of the Civil Code provides that “except as provided by law or by stipulation. Caorong to retrieve something from the bus. Deceased not guilty of contributory negligence. the Court deems it reasonable to award private respondents exemplary damages in the amount of P100. Despite warning that the Maranaos were planning to take revenge against Fortune Express by burning some of its buses. Fortune Express and its employees did nothing to protect the safety of passengers. let alone recklessness. Atty. the amount of the said indemnity for death has through the years been gradually increased in view of the declining value of the peso.” The trial court found that the Caorongs spent P30.000.00. Initially fixed in Article 2206 at P3. Mananggolo. Article 2208 NCC Transportation Law. the court may award exemplary damages if the defendant acted in a wanton. fraudulent. the Court hold that Fortune Express is liable to the Caorongs in the amount of P100.00 for the wake and burial of Atty. He was playing the role of the good Samaritan.Haystacks (Berne Guerrero) this factor of unforeseeability (the second requisite for an event to be considered force majeure) is lacking. in relation to Article 2206 thereof. Article 2232 NCC Article 2232 of the Civil Code provides that “in contracts and quasi-contracts. 11. Fortune Express acted in a wanton and reckless manner. Certainly. The assailant’s motive was to retaliate for the loss of life of two Maranaos as a result of the collision between Fortune Express’ bus and the jeepney in which the two Maranaos were riding. Fortune Express liable for damages (Actual damages). Article 2206 NCC Under Article 2206 of the Civil Code. nothing was really done by Fortune Express to protect the safety of passengers.00. the “spouse. It is presently fixed at P50. the leader of the group which had hijacked the bus. Under the circumstances. and contrary to the assurance made by its operations manager that the necessary precautions would be taken.00 as moral damages for the death of Atty. Since Fortune Express does not question said finding of the trial court. i. in accordance with recent decisions of the Court. Fortune Express liable for damages (Indemnity for death). 8. this act cannot be considered an act of negligence. Rose Heinni. 12. The armed men actually allowed Atty.000. Fortune Express liable for damages (Attorney’s fees). or malevolent manner. and Prince Alexander. Fortune Express liable for damages (Exemplary damages). ordered the passengers to get off the bus as they intended to burn it and its driver. one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved.

ensuring the safety of the many passengers still inside the bus.00 as attorney’s fees to be reasonable. it ordered Pantranco to pay to the spouses Marcelo Landingin and Racquel Bocasas in Civil Case D-1468 the amount of P6. Villamor (J): 8 concur.005. The Court thus absolved the defendants from any liability on account of negligence on their part and therefore dismissing the complaints in the two cases. Inc. the court a quo rendered its decision therein concluding that the accident was caused by a fortuitous event or an act of God brought about by some extra-ordinary circumstances independent of the will of the Pantranco or its employees.00 23 as a lawyer in the Department of Agrarian Reform at the time of his death. Pangasinan Transportation (GR L-28014-15. v. Formula for computing net earning capacity Life expectancy is equivalent to two thirds (2/3) multiplied by the difference of 80 and the age of the deceased. Allowing for necessary living expenses of 50% of his projected gross annual income. Article 1764 in relation to Article 2206 NCC Article 1764 of the Civil Code. was P148. Civil Cases D-1468 and D-1470 were filed by the spouses Landingin and spouses Garcia for damages suffered by them in connection with the death of their respective daughters. Leonila and Estrella were not thrown out of the bus. By agreement of the parties. but that they panicked and jumped out. Hence. some of the passengers jumped out of the bus. however. Leonila Landingin. On 17 October 1966. the Caorongs are entitled to attorney’s fees in that amount. a sudden snapping or breaking of metal below the floor of the bus was heard. is pending appeal in a higher court. [82] Landingin vs. 13. and the indemnity shall be paid to the heirs of the latter. Court of Appeals. 29 May 1970) En Banc. Leonila and Estrella. Upon reaching the uphill point at Camp 8.404. n the recent case of Sulpicio Lines. the Court held an award of P50.500.Haystacks (Berne Guerrero) Pursuant to Article 2208. daughter of Pedro Garcia and Eufracia Landingin. While the driver was steering the bus towards the mountainside. in relation to Article 2206 thereof. computed based on his monthly salary of P11. he advised the passengers not to jump. were among the passengers in the bus driven by Marcelo Oligan and owned and operated by Pantranco on an excursion trip from Dagupan City to Baguio City and back. and Marcelo Oligan and/or breach of contract of carriage. while others stepped down. His projected gross annual income. due to the alleged negligence of Pangasinan Transport Co. however. 2004 ( 214 ) .90.385. Fortune Express liable for damages (Compensation for loss of earning capacity).” 14. rolling back a few moments later. and Estrella Garcia. Said criminal case. 1 on leave Facts: In the morning of 20 April 1963. provides that in addition to the indemnity for death arising from the breach of contract of carriage by a common carrier. but to remain seated. he had a life expectancy of 28 2/3 more years.121. Herein. Caorong was 37 years old at the time of his death.00. and the amount of P3. However. In connection with the incident. Leonila and Estrella suffered serious injuries as a result of which Leonila and Estrella died at the hospital on the same day. Hence.00 to the spouses Pedro Garcia and Eufracia Landingin in Civil Case D-1470. Fortune Express is liable to the Caorongs in the said amount as compensation for loss of earning capacity. the “defendant shall be liable for the loss of the earning capacity of the deceased. the two cases were tried jointly.500. daughter of Marcelo Landigin and Racquel Bocasas.000. The driver maneuvered the bus safely to and against the side of the mountain where its rear end was made to rest. and the bus abruptly stopped. his total earning capacity amounts to P2.00. not in payment of liability because Transportation Law. Since Atty. the driver had been charged with and convicted of multiple homicide and multiple slight physical injuries on account of the death of Leonila and Estrella and of the injuries suffered by four others. attorney’s fees may be recovered when exemplary damages are awarded. that as a result.

75) 4. and that the said two passengers did not reach destination safely. et al. would naturally be taxed more heavily than it would be under ordinary circumstances. The Supreme Court modified the judgment appealed from. et al. The bus in which the deceased were riding was heavily laden with passengers. It does not appear. as required by Article 1755. 1. however. Civil Code. Transportation Law. and return. with costs against PANTRANCO. the Court held that an accident caused by defects in the automobile is not a caso fortuito. with a due regard for all the circumstances. circuitous and ascending roads. This presumption is only rebutted by proof on the carrier’s part that it observed the “extraordinary diligence” required in Article 1733 and the “utmost diligence of very cautious persons” required in Article 1755 (Article 1756). Conclusion of “act of God” conjectural and speculative The lower court’s conclusion that “the accident was caused by a fortuitous event or an act of God brought about by some extraordinary circumstances independent of the will of the Pantranco or its employees. the presumption is that the common carrier is at fault or that it acted negligently (Article 1756). Paras. vs.Haystacks (Berne Guerrero) of any negligence on the part of the defendants but as an expression of sympathy and goodwill. including its mechanical parts. 5. and was arrived at without due regard to all the circumstances. as damages for breach of contracts. and having in fact dismissed the complaints against them – would have been meritorious if not for the fact that PANTRANCO was guilty of breach of contract of carriage. using the utmost diligence of very cautious persons.. Carrier should give due regard for all circumstances in connection with inspection The lower court considered the presumption rebutted on the strength of Pantranco’s evidence that only the day before the incident. 2. with interest thereon at the legal rate from the date of the filing of the complaints. 104 Phil.” (Article 1755. The mere fact that the bus was inspected only recently and found to be in order would not exempt the carrier from liability unless it is shown that the particular circumstances under which the bus would travel were also considered. The rationale of the carrier’s liability is the fact that “the passenger has neither the choice nor control over the carrier in the selection and use of the equipment and appliances in use by the carrier. PANTRANCO guilty of breach of contract of carriage The argument – the court should not have ordered them to assume any pecuniary liability inasmuch as it has found them to be absolutely free from fault or negligence. 2004 ( 215 ) . and ordered PANTRANCO to pay the spouses Landingin and spouses Garcia the amounts stated in the judgment appealed from. including the one in which the two deceased girls were riding. which caused the malfunctioning of the motor. Pantranco appealed.) 3. which in turn resulted in panic among some of the passengers. 660). were hired to transport the excursionist passengers from Dagupan City to Baguio City. that the carrier gave due regard for all the circumstances in connection with the said inspection. Presumption of negligence when a passenger dies or is injured When a passenger dies or is injured. In Lasam vs. Smith (45 Phil. Duty of a common carrier As a common carrier.” (Necesito. Each of the two complaints averred that two buses. 6.” is in large measure conjectural and speculative. PANTRANCO was duty bound to carry its passengers “safely as far as human care and foresight can provide. Pantranco did not measure up to the degree of care and foresight required it under the circumstances The cross-joint of the bus in which the deceased were riding broke. Thus the entire bus. and it would be traversing mountainous. the cross-joint in question was duly inspected and found to be in order.

2 took no part Facts: In Civil Case 27906 of the CFI of Manila (Branch XVII). That the whole case was deemed terminated is also clearly inferable from the fact that on 20 August 1957. The former provided for the dismissal of “this case” — meaning all the claims. without pronouncement as to costs. the California Lines filed a third-party complaint against the owner of the other bus in the accident. cross-claims and third-party complaint involved in the case — and this was reiterated in the order of 2 February. On 10 April 1957. after unsuccessfully seeking a clarification of the original order of dismissal. for loss of business goodwill of the Ricalinda Bus in the sum of P10. which merely made the dismissal of the thirdparty complaint without prejudice. the lower court. granted the motion to dismiss the complaint. et. In spite of the opposition filed by the California Lines. for which reason the trial court dismissed the case on 11 December 1956. and remanded the case to the lower court for further proceedings in accordance with law. together with her husband. Regalado sought to recover from California Lines. counterclaims. but the same was denied by the court on the ground that said order was already sufficiently clear. The Supreme Court reversed and set aside the order of dismissal appealed from. which was granted by the lower court on 2 February 1956. 1. the California Lines. if at all. Transportation Law.000. and filed a counterclaim therein for moral damages in the sum of P10. a domestic corporation engaged in the business of operating passenger buses. 2004 ( 216 ) . interposed a cross-claim against its co-defendant. in order to hold them liable for any amount which Regalado may be entitled to collect upon her complaint.000. the California Lines commenced Civil Case 32298 against Amparo de los Santos. for exemplary or corrective damages in the sum of P5. as defendants and third-party plaintiff.00. 30 December 1961) First Division. Inc. de los Santos. with costs. Subsequently. Inc. upon finding that the Ricalinda Bus had no juridical personality because it was a mere trade name.000. Morta. In their answer filed on 2 May 1957. al. damages and attorney’s fees in the total sum of P28. defendants filed a motion to dismiss the complaint on the ground that there was another action pending between the same parties for the same cause. California Lines filed a motion to set his third-party complaint for trial. in its order of 17 July 1957. The damages were claimed to have been the result of physical injuries sustained by her while on board a passenger bus of the California Lines. but the court denied the motion. caused to California Lines’ bus were due to the recklessness and lack of prudence and precaution of its own driver. and that the parties and cause of action therein involved are the same as those in Civil Case 32298. Dizon (J): 7 concur.Haystacks (Berne Guerrero) [83] California Lines vs. said party took the present appeal. Inc.00 and for attorney’s fees in the sum of P5. and her driver.00. filed a motion for the amendment of the court’s order so as to make the dismissal without prejudice insofar as its third-party complaint was concerned. as amended by the other issued on 2 February 1956.000. Morta in the CFI of Manila (Branch 1) to recover damages suffered by it as a result of the collision. Civil case 27906 dismissed without prejudice Civil Case 27906 was definitely terminated in its entirety by the order of dismissal dated 11 December 1956.00. 5 days thereafter. upon the ground relied upon in support thereof.000. alleged that the damages. de los Santos (GR L-13254. Amparo de los Santos. alleging that the third-party complaint filed by the California Lines in Civil Case 27906 was still pending adjudication in Branch XVII of the CFI of Manila. On 14 January 1957. Ricalinda Bus. and/or the Ricalinda Bus. Victor de los Santos. Regalado and de los Santos entered into an amicable settlement. In its answer to the complaint the California Lines. Celedonio N. Upon denial of the motion for reconsideration filed by the California Lines on 22 August 1957.00. On 12 August 1957 California Lines filed a motion in Civil Case 27906 for the clarification of the order of dismissal dated 2 February 1957.. Victor de los Santos and Celedonio N. which collided with another belonging to Ricalinda Bus. Josephine W. After the hearing of Civil Case 27906 had started.

in their answer. her husband and their driver. 29 June 1976) Second Division.00 a day. Antonio (J): 2 concur. the said bus was laid up and was not and could not be operated by plaintiff in its regular and ordinary business from 29 August 1955 to 8 October 1955 when the needed repairs on the said bus were finished and completed. as owner of the Ricalinda Bus vehicle that collided with the one owned by the California Lines. [84] Estrada vs.” 3.00. and a Ford pick-up truck [TRU 420]). as a result of which plaintiff suffered damages. while admitting that Estrada’s wife was a passenger and that she died as a result of the accident.Haystacks (Berne Guerrero) 2. while said jeep was cruising along Claro M. bumped a Ford pick-up truck. and does not cover nor is it covered by the claim subject matter of Civil Case 32298. from 29 August 1955 to 8 October 1955.00. therefore. that the lower court erred in dismissing the latter case on the ground that there was already another action pending between the same parties upon the same or similar causes of action. recovery of the damages suffered by the California Lines. 1 designated to sit in the second division Facts: On 1 January 1975. It is obvious. she was brought to the San Pedro Hospital where she died. to pay to the latter whatever damages it may be sentenced to pay its passenger Josephine W. and it is obvious that said claim is entirely different from.435. heading towards the direction of the Jones Circle. of a Toyota pick-up truck [TRU 221]. alleged that the proximate and only cause of the accident was the negligence of third persons (the drivers. a cross-claim because it sought to obtain judgment ordering Amparo de los Santos principally. Claims by California Lines The pertinent allegations of California Lines’ complaint regarding damages are as follows: (VII) That as a result of the Ricalinda Bus hitting and striking plaintiff’s passenger bus mentioned in paragraph IV hereof.00 being the average daily net earning and profit in the operation of said passenger bus by plaintiff. the plaintiff is entitled to collect exemplary or corrective damages from defendants. Defendants. thus leaving nothing in this respect to the California Lines to recover from them. (IX) That as a result of the gross negligence of defendants in the maintenance. in view of the death of his wife while she was a passenger of the vehicle. the amount of the damage and value of the repairs being P1. the amount of damages being P35. more or less. as a consequence of the incident Estrada’s wife sustained a fractured left humerus (pulmonary) embolism and shock due to respiratory failure. Recto Avenue. Simeona Estrada. Endino. Regalado. These third-party defendants settled the claim of Regalado for damages.. Claim asserted is different from that in third party complaint Whether it was properly a cross-claim or a third-party complaint is of little moment in the decision of the appeal. (VIII) That because of the damage to said plaintiff’s passenger bus and because of the needed repairs. Gregorio Estrada’s wife. or a total of P1. Danilo Ang and Rodolfo D. 2004 ( 217 ) . On 14 February 1975.700. was a passenger of the AC Jeep (ZE501). Davao City the driver (Galaura) “without regard for the safety of Estrada’s wife who was among his passengers and without taking the necessary precaution” in accordance with the situation. Third party complaint actually a cross-claim The third-party complaint was. 1 on leave. Inc. namely. Gregorio Estrada filed a complaint for damages against Uy and Galaura for breach of their obligations as a common carrier. the latter bus was damaged and was brought to N. supervision and operation of said Ricalinda Bus. Mercado for repairs. owned and operated by Corazon Ramirez Uy and driven by Lucio Galaura. Consolacion (GR L-40948. When the California Lines discovered that the Ricalinda Bus was a mere trade name and had no juridical personality. in reality. more or less. The fact is that the claim asserted therein was for reimbursement of whatever damages the California Lines might be sentenced to pay its passenger. it obtained leave of court to file and actually filed a third-party complaint against Amparo de los Santos. Defendants likewise set up a counterclaim for damages by reason of Estrada’s Transportation Law.C. the said sum of P35. 4.

-Jeep was then travelling. the CFI of Davao (Civil Case 8739) decreed that defendants have judgment summarily against the Estrada for such amount as may be found due them for damages. marked as Annex ‘7’ of defendants’ answer. “A party against whom a claim.e.S. Uy and Galaura sought to prove that they were relieved of any liability to petitioner inasmuch as the accident which caused the death of petitioner’s wife “resulted from the negligence of third persons over whom defendants had no supervision or control. when the moving party is a defending party. C. depositions. Estrada filed a petition for certiorari with prohibition before the Supreme Court. A motion for reconsideration of the order was denied 9 June 1975 for lack of merit. including pleadings. counterclaim. 2004 ( 218 ) . Transportation Law. M. On 16 April 1975. Jeep. 1. defendants filed a motion for summary judgment against Estrada on the ground that there is no genuine issue as to any material fact in the case except as to the amount of damages defendants are seeking from Estrada by way of counterclaim. After hearing. This motion shall be served on the adverse party at least 10 days prior to the time specified in the hearing. By means of the annexes. where it also collided with the latter. Rule 34 of the Revised Rules Pursuant to Section 2. as a result of which collision. certain annexes to the answer were incorporated therein.” The defendant who believes that he is untitled to a judgment either on the pleadings or on the basis of extrinsic facts established by affidavits or depositions may move for summary judgment in his favor. and (d) The sworn statement of defendant driver (Lucio Galaura) of said A. (a) The sketch of the accident made by Traffic Investigator J. Rule 34..Haystacks (Berne Guerrero) institution of the clearly unfounded suit against them. Davao City. The motion shall be denied if any party shall show facts sufficient to require a trial of any issue of fact other than an issue as to the amount or extent of the damages. and Bonifacio St. The Supreme Court dismissed the petition for certiorari with prohibition. Formeloza of the Davao City Police Department. the latter pick-up collided with the jeep driven by Lucio Galaura that was coming from the opposite direction. On 20 May 1975. (b) Said investigator’s affidavit detailing his findings upon investigation stating that the pick-up with plate No. marked as Annex ‘3’ of the defendants answer. namely. T-RU-420 upon reaching the intersection of Recto and Bonifacio Streets collided with the pick-up with plate No. of the Revised Rules. Section 2. depositions or affidavits must show that his defenses or denials arc sufficient to defeat the claimant’s claim. Summary judgment. In other words. and affidavits must establish a genuine issue of fact in order to defeat a motion for summary judgment. T-RU-221. one of them was deviated from course to the lane where defendants’ A. and that upon impact. i. Recto Ave. serve opposing affidavits The opposing papers.” 2. without special pronouncement as to costs. his pleadings. the motion for summary judgment shall be granted if. Procedure The affidavit submitted by the party moving for summary judgment shall be by persons having personal knowledge of the facts.C. (c) The respective sworn statements of the drivers of the two pick-ups (Danilo Ang and Rodolfo Endino) taken by the Traffic Division of the Davao City Police Department after the accident. marked as Annexes ‘5’ and of the defendants’ answer wherein each driver respectively claimed that he exercised due care but attributed to the other negligence as the cause of the collision. at any time. The adverse party may also. or crossclaim is asserted or a declaratory relief is sought may. prior to said date. move with supporting affidavits for a summary judgment in his favor as to all or any part thereof. Annexes to answer in support of motion for summary judgment In support of the defendant’s motion for summary judgment. it shall recite all material facts and show that there is no defense to the cause of actions or that the cause of action has no merits. 3. the drivers of the two pick-up trucks which collided at the intersection of C. the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party. on the basis of all the papers and proofs submitted. likewise taken by the Traffic Division of the Davao City Police Department detailing what he did in order to prevent or minimize damages to his vehicle and his passengers.

Questions of facts not yet resolved Transportation Law. 6. Presumption of negligence. “The Court should not pass. The test. and (3) the obligor must be free of a concurrent or contributory fault or negligence.Haystacks (Berne Guerrero) 4. Purpose of submission of the affidavit. such motion is not directed to the pleadings and deals only with the question of whether there are triable issues of facts and where such issues exist summary judgment must be denied. 8. 10. Duty of carrier under the contract of carriage. which means that the carrier must show the “utmost diligence of very cautious persons as far as human care and foresight can provide”. What constitutes caso fortuito In order to constitute a case fortuito that would exempt a person from responsibility. and that the summary judgment procedure ‘should not be perverted to the trial of disputed questions of fact upon affidavits”. the carrier and the driver are presumed to be at fault. The very object is to separate what is formal or pretended in denial or averment from what is genuine and substantial. After plaintiff’s burden has been discharged. shown prima facie that the accident was due to a caso fortuito and that the driver was free of concurrent or contributory fault or negligence. the defense of the carrier that the proximate cause of the accident was a caso fortuito remains unrebuted. 5. Summary judgment should not be granted where is fairly appears that there is a triable issue to be tried. the burden of proof is upon the plaintiff to prove the cause of action and to show that the defense is interposed solely for the purpose of delay. defendant has the burden to show facts sufficient to entitle him to defend. of a motion for summary judgment is — whether the pleadings. but merely to determine whether there is a meritorious issue to be tried. on questions of credibility or weight of evidence. or that the accident was caused by a fortuitous event. it must be shown that the carrier had observed the required extraordinary diligence. therefore. Purpose This Summary Judgment or Accelerated Judgment is a device for weeding out sham claims or defenses at an early stage of the litigation. it was incumbent upon Estrada to rebut such proof. (2) the occurrence must render it impossible for the obligor to fulfill his obligation m a normal manner. that Uy and Galaura submitted affidavits to prove that the accident which resulted in the death of Estrada’s wife was due to the fault or negligence of the drivers of the two pickup trucks over whom the carrier had no supervision or control. thereby avoiding the expense and loss of time involved in a trial. Having failed to do so. Motion for summary judgment deals on whether there are triable issues of facts. it is necessary that (1) the event must be independent of the human will. therefore. the purpose of the judge is not to try the issue. so that only the latter may subject a suitor to the burden of a trial. is immediately attributable to the negligence of the carrier. Test In conducting the hearing. 7. Uy and Galaura assumed the express obligation to transport Estrada’s wife to her destination safely and to observe extra ordinary diligence with due regard for all the circumstances. Burden of proof In proceedings for summary judgment. 9. affidavits and exhibits in support of the motions are sufficient to overcome the opposing papers and to justify a finding as a matter of law that there is no defense to the action or the claim is clearly meritorious. Diligence required Under the contract of carriage. and that any injury suffered by her in the course thereof. 2004 ( 219 ) . Affidavit prima facie proof. Having. Proceedings for summary judgment. To overcome such presumption. Summary judgment. said proof was unrebutted It was precisely because of the legal presumption that once a passenger in the course of travel is injured or does not reach his destination safely. Where a motion is made for summary judgment.

It took Lara 6 days to do his work during which he contracted malaria fever and for that reason he evinced a desire to return immediately to Davao. against Valencia in the CFI of Davao for the death of one Demetrio Lara. see [68] [86] Lara vs. the present petition is. 13. But where.” In this jurisdiction. together with Lara. Valencia (GR L-9907. Estrada could move for the setting aside of the Order of 20 May 1975 by the presentation of opposing affidavits showing that. Lara. a mere interlocutory order directing that a hearing be conducted for the purpose of ascertaining the amount or the assessment of damages which may be adjudged in favor of the prevailing party.” 11. Valencia denied the charge of negligence and set up certain affirmative defenses and a counterclaim. in the absence of any findings of fact and conclusions of law In the absence of any findings of fact and conclusions of law. “Upon the rendering of the assessment. At that time. Bautista Angelo (J): 7 concur Facts: Demetrio Lara went to the lumber concession of Brigido R. but not a disposition of the merits. the order of the Judge cannot be considered a judgment. 30 June 1958) En Banc. [85] Ong Yiu vs. Certainly. however.” 12. all judgments determining the merits of cases should state clearly and distinctly the facts and the law on which it is based. al. An action for damages was brought by Lourdes J. therefore. the passengers would alight and transfer to a bus that regularly makes the trip to Davao but unfortunately there was none available at the time and so the same passengers. including Lara. premature. Present petition premature There being no judgment. 2004 ( 220 ) . Sr. It is a determination of the court of a preliminary point or directing some steps in the proceedings.Haystacks (Berne Guerrero) Whether a carrier used such reasonable precautions to avoid the accident as would ordinarily be used by careful. therefore. as herein. therefore. the Court shall direct the entry forthwith of the appropriate summary judgment. the Judge did not. act arbitrarily in declaring in his Order that “there is no genuine issue to any material fact and no controversial question of fact to be submitted to the trial court. again requested Valencia to drive them to Davao. prudent persons under like circumstances is a question essentially one of fact and. Cotabato upon instructions of his chief in order to classify the logs of defendant which were then ready to be exported and to be loaded on a ship anchored in the port of Parang. but in spite of such precaution the accident occurred. there is a genuine issue of fact on the carrier’s liability. there was no available bus that could take him back to Davao and so he requested Valencia if he could take him in his own pick-up. Order merely an interlocutory order This was. It was also their understanding that upon reaching barrio Samoay. CA. Estrada has not submitted opposing affidavits to controvert Uy’s and Galaura’s evidence that the driver of the passenger jeepney was free of contributory fault as he stopped the jeepney to avoid the accident. Valencia agreed and. ordinarily such issue must be decided at the trial. Valencia merely accommodated them and did not charge them any fee for the service. other than the issue as to the amount or extent of damages. It has been held that “a trial court in granting summary judgment should file findings of fact and conclusion of law or a memorandum opinion so as to disclose grounds upon which the trial court reached its determination. allegedly caused by the negligent act of Valencia. pursuant to Section 9 of Article X of the Constitution and the procedural rules. 96. Order of judge cannot be considered a judgment. The court after hearing rendered Transportation Law. et. Lara accidentally fell suffering fatal injuries. Valencia in Parang. other passengers tagged along. most of them were employees of the Government. Valencia again accommodated them and upon reaching Km.

Valencia as owner and driver of the pick-up owes to them merely the duty to exercise reasonable care so that they may be transported safely to their destination. and not unreasonably to expose him to danger and injury by increasing the hazard of travel. new Civil Code). speed not unreasonable The finding of the trial court that the pick-up was running at more than 40 kilometers per hour is not supported by evidence. Indeed the law provides that “A passenger must observe the diligence of a good father of a family to avoid injury to himself” (Article 1761. Unfortunate happening due to unforeseen accident There is every reason to believe that the unfortunate happening was only due to an unforeseen accident caused by the fact at the time the deceased was half asleep and must have fallen from the pick-up Transportation Law. without pronouncement as to costs. and if Valencia agreed to take the deceased in his own car. still we say that such speed is not unreasonable considering that they were travelling on a national road and the traffic then was not heavy. is only required to observe ordinary care.000 as exemplary damages. Finding as to speed not supported by evidence. it was only to accommodate him considering his feverish condition and his request that he be so accommodated. 1. al. Degree of diligence required of owner of vehicle The deceased. and is not in duty bound to exercise extraordinary diligence as required of a common carrier by Philippine law.Haystacks (Berne Guerrero) judgment ordering Valencia to pay Lara. as frequently stated by the courts. the carrier cannot be held liable. 3.000. Valencia had done what a reasonable prudent man would have done Valencia was not in duty bound to take the deceased in his own pick-up to Davao because from Parang to Cotabato there was a line of transportation that regularly makes trips for the public. This rule. The reason for this can only be attributed to his desire to be at the back so that he could sit on a bag and travel in a reclining position because such was more convenient for him due to his feverish condition. the same obligation of care is imposed upon the driver as in the case of one expressly invited to ride” Valencia.up left barrio Samoay and the time the accident occurred in relation to the distance covered by the pick-up. et. is that an owner of an automobile owes a guest the duty to exercise ordinary or reasonable care to avoid injuring him.000 as attorney’s fees. Thus. else. Since one riding in an automobile is no less a guest because he asked for the privilege of doing so. and (c) P1. 5. al.000 as moral damages. Lara. 2004 ( 221 ) . As accommodation passengers or invited guests. the following amount: (a) P10. which means that if the injury to the passenger has been proximately caused by his own negligence. All the circumstances thereof clearly indicate that Valencia had done what a reasonable prudent man would have done under the circumstances. were merely accommodation passengers who paid nothing for the service and so they can be considered as invited guests within the meaning of the law. “The rule is established by the weight of authority that the owner or operator of an automobile owes the duty to an invited guest to exercise reasonable care in its operation. therefore. 2. The Supreme Court reversed the decision appealed from. as well as his companions who rode in the pick-up of Valencia. And even if this is correct. This is a mere surmise made by the trial court considering the time the pick. 4. Injury to passenger has been proximately caused by own negligence The incident may be attributed to lack of care on the part of the deceased considering that the pick-up was open and he was then in crouching position. (b) P3. The passengers who rode in the pick-up of Valencia took their respective seats therein at their own choice and not upon indication of Valencia with the particularity that Valencia invited the deceased to sit with him in the front seat but which invitation the deceased declined. in addition to the costs of action. merely accommodation passaengers who paid nothing for service. Both parties appealed to the Supreme Court because the damages claimed in the complaint exceed the sum of P50. et.

1.00 as fees of the attorney contracted by the said heirs and P1. the CFI of Mountain Province (Second Judicial District. It is clear from the last part of the testimony of the witness. it was blocked by a pine tree. Prosecution’s evidence not legally sufficient to show accused was negligent in driving his jeep A careful examination of the evidence introduced by the prosecution shows no “legally sufficient” proof that the accused was negligent in driving his jeep. went to barrio Ambasing to visit a patient. [87] Bayasen vs. were thrown out of the jeep. she suffered a skull fracture which caused her death. Later. Hence. again asked if they could ride with him up to a certain place on the way to barrio Suyo which he intended to visit anyway. on 17 November 1965. the accident occurred not due to the negligence of Valencia but to circumstances beyond his control and so he should be exempt from liability. 7 Months and 10 Days of prision correccional. As to whether Bayasen was under the influence of liquor at the time of the accident. too. Dolores Balcita who was one of the passengers in the jeep. affirmed the decision of the trial court with the modifications that the indemnity was increased to P6. As to the condition of the jeep itself. About 8 feet below the road. From this decision. with costs de oficio.000. at Ambasing. The Supreme Court set aside the decision of the Court of Appeals sought to be reviewed. and from there to the place where the jeep fell off the road.00 as compensatory damages. The three. On the way. which. the same witness testified that she “did not notice anything wrong” with it from the time they drove from Sagada to Ambasing. she said that it was fair enough to drive on. After trial. to indemnify the heirs of the deceased Elena Awichen the amount of P3. Dr. All things considered. the girls. CA (GR L-25785. Bayasen again allowed them to ride. Dolores Balcita.00 for burial expenses of the deceased.000. the witness answered that she did not feel any bump or jolt. Elena Awichen and Dolores Balcita. at barrio Langtiw. rode with him in the jeep assigned for the use of the Rural Health Unit as they had requested for a ride to Ambasing. she testified that he was not..00. Two nurses from the Saint Theodore’s Hospital in Sagada. Criminal Case 1056) found Bayasen guilty of the charge and sentenced the latter to an indeterminate penalty of 4 Months and 1 Day of arresto mayor as minimum. the eyewitness of the accident presented by the prosecution. Transportation Law. the Rural Health Physician in Sagada. to 1 Year. the jeep went over a precipice. When asked whether the jeep hit anything before it fell into the precipice. and 17 Days of prision correccional.Haystacks (Berne Guerrero) when it ran into some stones causing it to jerk considering that the road was then bumpy. viz. Regarding the road. The star witness of the prosecution. who wanted to gather flowers. In the light of the testimony of Dolores Balcita. Elena was found lying in a creek further below. The motion for reconsideration of Bayasen was denied. and the weather was fair. and P1. there is absolutely no evidence on record to show that the accused was negligent in driving his jeep. Saturnino Bayasen was charged in December 1963 by the Provincial Fiscal of Mountain Province of the crime of Homicide Thru Reckless Imprudence. and that the maximum of the prison term was raised to 1 Year.000. Mountain Province. rough and full of stones. but that it was moist or wet. the award of attorney’s fees was set aside. and to pay the costs. and acquitted Bayasen of the crime charged in the information in Criminal Case 1056 of the CFI of Mountain Province. Among other injuries. the petition for review on certiorari. 2004 ( 222 ) . testified that Saturnino Bayasen was driving his jeep moderately just before the accident and categorically stated that she did not know what caused the jeep to fall into the precipice. Bayasen appealed to the Court of Appeals. Elena sitting herself between him and Dolores. 26 February 1981) First Division.886. Saturnino Bayasen. as maximum. that there was no conversation between the passengers in the jeep that could have distracted the attention of the accused while driving the jeep. 7 Months. Fernandez (J): 4 concur Facts: On the morning of 15 August 1963.

Cervantes used it. 2004 ( 223 ) .Haystacks (Berne Guerrero) 2. while driving from 8 to 10 kilometers per hour. Philippines Air Lines (PAL) issued to Nicholas Cervantes a round trip plane ticket for Manila-Honolulu-Los Angeles-Honolulu-Manila. and she “did not feel any movement from (her) side. he directed the jeep towards the side of the mountain. Such fact shows that Bayasen could not have been driving the jeep at a fast rate of speed. Herein. 2 March 1999) Third Division. he immediately booked his Los AngelesTransportation Law. 7. who found the jeep at second gear when he examined it not long after the incident. Positive testimony of better credibility than negative or equivocal testimony The testimony of a credible witness that he saw or heard at a particular time and place is more reliable than that of an equally credible witness who with the same opportunities. entitled to acquittal. He is. the jeep suddenly swerved to the right and went off. 1 abroad on official business Facts: On 27 March 1989. and that immediately after. Bayasen testified that before reaching the portion of the road where the jeep fell. along the side of the mountain. Mountain Province.e. he noticed that the rear wheel skidded. as to the relative weight to be given to the positive and consistent testimony of Bayasen and to the negative and equivocal answers of Dolores Balcita. then mayor of Sagada. Upon his arrival in Los Angeles on the same day. On 23 March 1990. 1 on leave. Dolores Balcita “did not see” what Elena Awichen suddenly did. Mountain Province. Purisima (J): 2 concur. They do not deny or preclude the truth of the positive testimony of the accused. the former is more worthy of credence. 4 days before the expiry date of subject ticket. 4.. CA (GR 125138. but not touching the mountain. the skidding being an unforeseen event. Jeep in second gear The statement of Dolores Balcita that the accused was driving at moderate speed and not “an unreasonable speed” is bolstered by the testimony of Pablo Lizardo. Herein. Accused’s reason for falling into the precipice Herein. the late Elena Awichen suddenly held the steering wheel and he felt that her foot stepped on his right foot which was pressed then on the accelerator. Hence. so that Bayasen had a valid excuse for his departure from his regular course. i. [88] Cervantes vs. 5. which ticket expressly provided an expiry of date of one year from issuance. Testimony of mayor of Sagada. Proximate cause of tragedy The proximate cause of the tragedy was the skidding of the rear wheels of the jeep and not the “unreasonable speed” of Bayasen because there is no evidence on record to prove or support the finding that Bayasen was driving at “an unreasonable speed”. testifies that he did not see or hear the same thing at the same time and place. Bayasen who skidded could not be regarded as negligent.” These answers of Dolores Balcita are all in the negative and equivocal. that while doing so. Skidding means partial or complete loss of control of the car under circumstances not necessarily implying negligence. his guilt of the crime charged has not been proven beyond reasonable doubt. The issuance of the said plane ticket was in compliance with a Compromise Agreement entered into between the contending parties in two previous suits (Civil Case 3392 and 3451 before the RTC in Surigao City). therefore. Skidding may happen without necessary implying negligence It is a well known physical fact that cars may skid on greasy or slippery roads without fault on account of the manner of handling the car. until 27 March 1990. Guilt not proven beyond reasonable doubt The negligence of Bayasen has not having been sufficiently established. It may occur without fault. 6. under the particular circumstances. that as a precautionary measure. 3.

which request was refused by Lufthansa on the ground that the said tickets had already expired. Furthermore. Tolentino requested that subject tickets be extended. unless the latter ratifies the same expressly or impliedly. for breach of contract of carriage before the RTC of Surigao del Norte in Surigao City (Branch 32. the principal cannot be held liable for the acts of the agent. Carrier may refuse transportation if the applicable fare has not been paid. Acts of agent beyond scope of authority does not bind principal Under Article 1898 of the New Civil Code. Plane ticket expired The plane ticket itself provides that it is not valid after 27 March 1990. Cervantes made arrangements with PAL for him to board the flight in San Francisco instead of boarding in Los Angeles. 2004 ( 224 ) . Cervantes knew this from the Transportation Law. If the said third person is aware of such limits of authority. but the said complaint was dismissed for lack of merit. Confirmation of flights by PAL’s agents did not extend lifetime of ticket. they changed their accommodations to economy class but the replacement tickets still contained the same restriction. The fare for carriage hereunder is subject to change prior to commencement of carriage. conditions of carriage. Civil Case 3807). On 2 April 1990. and affirmed in toto the decision of the Court of Appeals dated 25 July 1995. contracts are to be interpreted according to their literal meaning. and considering that he would be there on 2 April 1990. and is not entitled to recover damages from the agent. upholding the dismissal of the case. Cervantes interposed an appeal to the Court of Appeals. 2. Conclusion and findings of facts of lower courts should not be disturbed unless for cogent reasons As a rule. 1.” 3. It is axiomatic that when the terms are clear and leave no doubt as to the intention of the contracting parties. which will be valid until 10 April 1983. Absence of authority The confirmation by the PAL’s agents in Los Angeles and San Francisco of Cervantes’ flights did not extend the validity or lifetime of the ticket.Haystacks (Berne Guerrero) Manila return ticket with the PAL office. Cervantes filed a Complaint for Damages. Lufthansa vs. in carrier’s tariffs. the Tolentinos were issued first class tickets on 3 April 1982. Court of Appeals. as both had no authority to do so. Court of Appeals In Lufthansa vs. On 20 September 1993. The Supreme Court denied the petition. unless the latter undertook to secure the principal’s ratification. The PAL personnel concerned marked the following notation on his ticket: “TICKET NOT ACCEPTED DUE EXPIRATION OF VALIDITY. Upon learning that the same PAL plane would make a stop-over in San Francisco. he was not allowed to board.” Aggrieved. the Court held that the “ticket constitute the contract between the parties.” 4. when Cervantes checked in at the PAL counter in San Francisco. without pronouncement as to costs. It is also stipulated in paragraph 8 of the Conditions of Contract that “this ticket is good for carriage for one year from date of issue. On 7 May 1983. On 10 June 1982. or related regulations. The non-extension of their tickets prompted the Tolentinos to bring a complaint for breach of contract of carriage against the petitioner. except as otherwise provided in this ticket. and it was confirmed for the 2 April 1990 flight. On 22 May 1996. Cervantes came to the Suprame Court via the Petition for Review. the acts of an agent beyond the scope of his authority do not bind the principal. conclusions and findings of fact arrived at by the trial court are entitled to great weight on appeal and should not be disturbed unless for strong and cogent reasons. he is to blame. when the third person knows that the agent was acting beyond his power or authority. which came out with a Decision. 5. In ruling against the award of damages. Article 1898. on 25 July 1995.

The wrongful act must be accompanied by bad faith. Reyes JBL (J): 7 concur Transportation Law. The said agents acted without authority when they confirmed the flights of Cervantes. Despite this knowledge. judgment may be rendered validly as regards the said issue. fraudulent. No injury resulted on the part of Cervantes because he had a back-up ticket should PAL refuse to accommodate him with the use of subject ticket. and an award of damages would be allowed only if the guilty party acted in a wanton. there is no showing that PAL acted in such a manner. Herein.Haystacks (Berne Guerrero) very start when he called up the Legal Department of appellee in the Philippines before he left for the USA. he would have to file a written request for extension at the PAL’s office in the Philippines. as if they had been raised in the pleadings. 9. Section 2 of the Revised Rules of Court. The claim for exemplary damages cannot be upheld. Should there be a finding of bad faith. the omission was cured since the said issue was litigated upon. He had first hand knowledge that the ticket in question would expire on 27 March 1990 and that to secure an extension. as to issues not alleged in the pleadings. and the existence of bad faith is established. No exemplary damages due Exemplary damages are imposed by way of example or correction for the public good. notwithstanding PAL’s failure to raise the defense of lack of authority of the said PAL agents in its answer or in a motion to dismiss. No moral damages due In awarding moral damages for breach of contract of carriage. as shown by the testimony of Cervantes in the course of trial. There is implied consent to the evidence thus presented when the adverse party fails to object thereto. 18 November 1955) Second Division. with the express or implied consent of the adverse party. reckless or malevolent manner. Georgina M. Herein. Rule 10. 2004 ( 225 ) . (GR L-8034. [89] De Gillaco vs. What the employees of PAL did was one of simple negligence. However. the records show that the question of whether there was authority on the part of the PAL employees was only acted upon by the trial court when Nicholas Cervantes was presented as a witness and the depositions of the PAL employees. Herein. Since the PAL agents are not privy to the said Agreement and Cervantes knew that a written request to the legal counsel of PAL was necessary. Cervantes persisted to use the ticket in question. it should be on Cervantes. he cannot use what the PAL agents did to his advantage. Section 5 (Amendment to conform or authorize presentation of evidence) of the 1997 Rules of Civil Procedure provides that “when issues not raised by the pleadings are tried with express or implied consent of the parties. were presented. so much so that he bought a backup ticket to ensure his departure. Amendment to conform or authorize presentation of evidence Rule 10. 6. although the alleged lack of authority of the PAL employees was neither raised in the answer nor in the motion to dismiss.” 8. 1997 Rules of Civil Procedure. “when evidence is presented by one party. which shall be treated as if they have been raised in the pleadings. even after judgment. Manila Railroad Co. Section 5. Cervantes knew there was a strong possibility that he could not use the subject ticket. Reyes and Ruth Villanueva. Thus. failure of a party to put up defenses in their answer or in a motion to dismiss is a waiver thereof. the breach must be wanton and deliberately injurious or the one responsible acted fraudulently or with malice or bad faith. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time. Defense of lack of authority on the part of the PAL employees was not deemed waived Under Rule 9.” 7. but failure to amend does not affect the result of the trial of these issues.

the resulting breach of Manila Railroad’s contract of safe carriage with the late Tomas Gillaco was excused thereby.’ “ 2. Devesa was convicted of homicide by final judgment of the Court of Appeals.Haystacks (Berne Guerrero) Facts: On 1 April 1946. upon seeing him inside the train coach. As held in Lasam vs. Smith. Obligation to transport passenger safely to destination. Devesa shot Gillaco with the carbine furnished to him by the Manila Railroad Company for his use as such train guard. Liability of a carrier as an insurer not recognized in Philippine Jurisdiction. to require the railroadcompany that it should guard against all possible misunderstanding between each and every one of its employees and every passenger that might chance to ride in its conveyances at any time. the Civil Code of 1889 did not impose absolute liability (Lasam vs. Civil Code of 1889 The basis of a carrier’s liability was under the old Civil Code of 1889 (which was in force in 1946. husband of Cornelia A. La Union Line. of the same day. happened to be in said station waiting for the same train which would take him to Tutuban Station. which reads as follows: ‘No one shall be liable for events which could not be foreseen or which. strikes as demanding diligence beyond what human care and foresight can provide. 7:30 a. Degree of care and diligence of a common carrier A common carrier is held to a very high degree of care and diligence in the protection of its passengers. but. where he was going to report for duty.m. being both unforeseeable and inevitable under the given circumstances. But under the law of the case. and dismissed the complaint. Act of Devesa entirely unforeseen by railroad company The act of guard Devesa in shooting passenger Gillaco (because of a personal grudge nurtured against the latter since the Japanese occupation) was entirely unforseeable by the Manila Railroad Co. supra). with the exception of the cases in which the law expressly provides otherwise and those in which the obligation itself imposes such liability. until the train to which he was assigned reached La Union at 7:00 p. Tomas Gillaco. a train guard of the Manila Railroad Company assigned in the Manila-San Fernando. that by entering into that contract the carrier bound himself to carry the plaintiff safely and securely to their destination. When the train reached the Paco Railroad station. the widow and children of the late Tomas Gillaco shot by an employee of said company. The shooting in question was therefore “caso fortuito” within the definition of article 1105 of the old Civil Code. de Gillaco filed an action against the Manila Railroad Company with the CFI Laguna. and pursuant to established doctrine. were inevitable. and that it can be inferred from the previous jurisprudence of the Court. this responsibility extends only to those that the carrier could foresee or avoid through the exercise of the degree of care and diligence required of it. 1. when Gillaco was shot). Exception: unforeseen event A passenger is entitled to protection from personal violence by the carrier or its agents or employees. Tomas Gillaco died as a result of the would which he sustained from the shot fired by Devesa. The trial court sentenced the railroad company to pay P4. And because of this personal grudge. Lt. The railroad company appealed. and that having failed to do so he is liable in damages unless he shows that the failure to fulfill his obligation was due to causes mentioned in article 1105 of the Civil Code. 3. since the contract of transportation obligates the carrier to transport a passenger safely to his destination. Although American authorities hold Transportation Law. 2004 ( 226 ) . even if foreseen. 4.. Devesa had a long standing personal grudge against Tomas Gillaco.m.. de Gillaco. Smith. considering the vast and complex activities of modern rail transportation. nor could it reasonably foresee every personal rancor that might exist between each one of its many employees and any one of the thousands of eventual passengers riding in its trains. The Supreme Court reversed the judgment appealed from. Laguna to Manila. The latter had no means to ascertain or anticipate that the two would meet.000 damages to the de Gillacos.m. without costs. same dating back during the Japanese occupation. was a passenger in the early morning train of the Manila Railroad Company from Calamba. Devesa’s tour of duty on that day was from 9:00 a. Emilio Devesa. Cornelia A.

Simeon Valenzuela. Found guilty. and thereby makes himself liable for every assault committed by each servant. he was sentenced to suffer imprisonment and to indemnify the heirs of the deceased in the sum of P6. The proposition that the carrier clothes every employee engaged in the transportation business with the comprehensive duty of protecting every passenger with whom he may in any way come in contact.. in the very act. [90] Maranan vs. but the only reason in our opinion for a broader liability arises from the fact that the servant. on 18 October 1960. where the deceased was riding. As a result. Valenzuela was prosecuted for homicide in the CFI of Batangas. That reason does not exist where the employee who committed the assault was never in a position in which it became his duty to his employer to represent him in discharging any duty of the latter towards the passenger. is that the servant is clothed with the delegated authority. two hours after the commission of the crime. That principle is not the ordinary rule.m. was a passenger in a taxicab owned and operated by Pascual Perez when he was stabbed and killed by the driver. by which the employer is held responsible only for acts or omissions of the employee in the scope of his employment. Rationale why carrier is made responsible by misconduct of employees The only good reason for making the carrier responsible for the misconduct of the servant perpetrated in his own interest. 6. the guard Devesa had no duties to discharge in connection with the transportation of the deceased from Calamba to Manila. is regarded as not only not sustained by the authorities. his tour of duty was to start at 9:00 a. and charged with the duty by the carrier. in mistreating the passenger wholly for some private purpose of his own. Devesa was therefore under no obligation to safeguard the passengers of the Calamba-Manila train. and he was at Paco Station awaiting transportation to Tutuban. this speaks only of the principle which holds a carrier responsible for wrongs done to passengers by servants acting in their own interest. 5. the starting point of the train that he was engaged to guard. No breach of contract of transportation by employee of carrier When the crime took place. Appeal from said conviction was taken to the Court of Appeals. and the killing of Gillaco was not done in line of duty. respondent superior. violates the contractual obligation of the employer for the performance of which he has put the employee in his place. Bengzon JP (J): 7 concur Facts: Rogelio Corachea. The stipulation of facts is clear that when Devesa shot and killed Gillaco. 2004 ( 227 ) . or otherwise within the scope of his employment. a stranger also awaiting transportation. impelled by personal malice toward the passenger. Transportation Law. and not in that of his employer. Devesa’s assault cannot be deemed in law a breach of Gillaco’s contract of transportation by a servant or employee of the carrier. and not that of an employee assigned to discharge any of the duties that the Railroad had assumed by its contract with the deceased. Of course. and not in that of the employer. but as being unsound and oppressive both to the employer and the employee.000. 26 June 1967) En Banc. without regard to the inquiry whether or not the passenger has come within the sphere of duty of that servant as indicated by the employment. it being immaterial that the act should be one of private retribution on the part of the servant. Perez (GR L-2272. Devesa was assigned to guard the Manila-San Fernando (La Union) trains. to execute his undertaking with the passenger. the liability of a carrier as an insurer was not recognized in this jurisdiction. In fact. And it cannot be said that there is any such delegation to the employees at a station with reference to passengers embarking at another or traveling on the train.Haystacks (Berne Guerrero) carriers to be insurers of the safety of their passengers against willful assault and intentional ill-treatment on the part of their servants. The position of Devesa at the time was that of another would be passenger. Railroad company guard had no duties to discharge in connection with the transportation of the deceased.

Haystacks (Berne Guerrero)

On 6 December 1961, while appeal was pending in the Court of Appeals, Antonia Maranan, Rogelio’s mother, filed an action in the CFI of Batangas to recover damages from Perez and Valenzuela for the death of her son. Perez, et. al. asserted that the deceased was killed in self-defense, since he first assaulted the driver by stabbing him from behind. Perez claimed that the death was a caso fortuito for which the carrier was not liable. The court, after trial, found for Maranan and awarded her P3,000 as damages against Perez. The claim against Valenzuela was dismissed. From this ruling, both Maranan and Perez appealed to the Supreme Court, the former asking for more damages and the latter insisting on non-liability. Subsequently, the Court of Appeals affirmed the judgment of conviction earlier mentioned, during the pendency of the herein appeal, and on 19 May 1964, final judgment was entered therein. The Supreme Court affirmed the judgment appealed from with the modification of increasing the award of actual damages in Maranan’s favor to P6,000, plus P3,000 moral damages, with legal interest on both from the filing of the complaint on 6 December 1961 until the whole amount is paid; no costs. 1. Gilaco case not controlling; Killing made outside scope and course of duty of guilty employee In Gillaco vs. Manila Railroad Co., 97 Phil. 884, it was held that the carrier is under no absolute liability for assaults of its employees upon the passengers. The attendant facts and controlling law of that case and the present one are very different however. In the Gillaco case, the passenger was killed outside the scope and the course of duty of the guilty employee. Herein, the killing was perpetrated by the driver of the very cab transporting the passenger, in whose hands the carrier had entrusted the duty of executing the contract of carriage. In other words, unlike the Gillaco case, the killing of the passenger here took place in the course of duty of the guilty employee and when the employee was acting within the scope of his duties. 2. Gilaco case not controlling; Case decided under provisions of the Civil Code of 1889 Moreover, the Gillaco case was decided under the provisions of the Civil Code of 1889 which, unlike the present Civil Code, did not impose upon common carriers absolute liability for the safety of passengers against wilful assaults or negligent acts committed by their employees. The death of the passenger in the Gillaco case was truly a fortuitous event which exempted the carrier from liability. It is true that Art. 1105 of the old Civil Code on fortuitous events has been substantially reproduced in Article 1174 of the Civil Code of the Philippines but both articles clearly remove from their exempting effect the case where the law expressly provides for liability in spite of the occurrence of force majeure. And herein significantly lies the statutory difference between the old and present Civil Codes, in the backdrop of the factual situation of the present case, which further accounts for a different result in the Gillaco case. 3. New Civil Code expressly makes common carrier liable for intentional assaults committed by its employees upon its passengers Unlike the old Civil Code, the new Civil Code of the Philippines expressly makes the common carrier liable for intentional assaults committed by its employees upon its passengers, by the wording of Article 1759 which categorically states that “Common carriers are liable for the death of or injuries to passengers although the negligence or wilful acts of the former’s employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers.” 4. Source of provisions on Common Carriers; Basis of carrier’s liability for assaults The Civil Code provisions on the subject of Common Carriers are new and were taken from AngloAmerican Law. There, the basis of the carrier’s liability for assaults on passengers committed by its drivers rests either on (1) the doctrine of respondent superior or (2) the principle that it is the carrier’s implied duty to transport the passenger safely. 5. Doctrine of respondent superior
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Under the Doctrine of Respondent Superior, which is the minority view, the carrier is liable only when the act of the employee is within the scope of his authority and duty. It is not sufficient that the act be within the course of employment only. 6. Principle of Carrier’s implied duty to transport the passenger safely Under the principle that it is the carrier’s implied duty to transport the passenger safely, upheld by the majority and also by the later cases, it is enough that the assault happens within the course of the employee’s duty. It is no defense for the carrier that the act was done in excess of authority or in disobedience of the carrier’s orders. The carrier’s liability here is absolute in the sense that it practically secures the passengers from assaults committed by its own employees. 7. Article 1759 NCC follows the rule based on the view that it is carrier’s implied duty to transport the passenger safely; Reasons (see Texas Midland R.R. vs. Monroe, 110 Tex. 97, 216 S.W. 388, 389-390 and Haver vs. Central Railroad Co., 43 LRA 84, 85) As can be gleaned from Article 1759, the Civil Code of the Philippines evidently follows the rule based on the view that it is carrier’s implied duty to transport the passenger safely. At least three very cogent reasons underlie this rule: (1) the special undertaking of the carrier requires that it furnish its passenger that full measure of protection afforded by the exercise of the high degree of care prescribed by the law, inter alia from violence and insults at the hands of strangers and other passengers, but above all, from the acts of the carrier’s own servants charged with the passenger’s safety; (2) said liability of the carrier for the servant’s violation of duty to passengers, is the result of the former’s confiding in the servant’s hands the performance of his contract to safely transport the passenger, delegating therewith the duty of protecting the passenger with the utmost care prescribed by law; and (3) as between the carrier and the passenger, the former must bear the risk of wrongful acts or negligence of the carrier’s employees against passengers, since it, and not the passengers, has power to select and remove them. 8. Carrier’s strict obligation to select its drivers It is the carrier’s strict obligation to select its drivers and similar employees with due regard not only to their technical competence and physical ability, but also, no less important, to their total personality, including their patterns of behavior, moral fibers, and social attitude. 9. Action predicated on breach of contract of carriage where the cab driver was not a party thereto The dismissal of the claim against the driver was correct. Maranan’s action was predicated on breach of contract of carriage and the cab driver was not a party thereto. His civil liability is covered in the criminal case wherein he was convicted by final judgment. 10. Award of compensatory damages In connection with the award of damages, the lower court granted only P3,000, which is the minimum compensatory damages amount recoverable under Article 1764 in connection with Article 2206 of the Civil Code when a breach of contract results in the passenger’s death. As has been the policy followed by the Court, this minimal award should be increased to P6,000. 11. No award of actual damages As to other alleged actual damages, the lower court’s finding that Maranan’s evidence thereon was not convincing and should not be disturbed. 12. Award of moral damages Articles 2206 and 1764 award moral damages in addition to compensatory damages, to the parents of the passenger killed to compensate for the mental anguish they suffered. A claim therefor having been properly made, it becomes the court’s duty to award moral damages. Maranan demands P5,000 as moral
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damages; however, in the circumstances, the Court considers P3,000 moral damages, in addition to the P6,000 compensatory damages as sufficient. [91] Lasam vs. Smith (GR 19495, 2 February 1924) First Division, Ostrand (J): 5 concur Facts: On 27 February 1918, Frank Smith Jr. was of San Fernando, La Union, and engaged in the business of carrying passengers for hire from one point to another in the Province of La Union and the surrounding provinces. On the date mentioned, he undertook to convey Honrion Lasam and Joaquina Sanchez-Lasam from San Fernando to Currimao, Ilocos Norte, in a Ford automobile. On leaving San Fernando, the automobile was operated by a licensed chauffeur, but after having reached the town of San Juan, the chauffeur allowed his assistant, Remigio Bueno, to drive the car. Bueno held to driver’s license, but had some experience in driving, and with the exception of some slight engine trouble while passing through the town of Luna, the car functioned well until after the crossing of the Abra River in Tagudin, when defects developed in the steering gear so as to make accurate steering impossible, and after zigzagging for a distance of about half a kilometer, the car left the road and went down a steep embankment. In going over the bank of the road, the automobile was overturned and the spouses pinned down under it. Mr. Lasam escaped with a few contusions and a “dislocated” rib, but his wife, Joaquina Sanchez, received serious injuries, among which was a compound fracture of one of the bones in her left wrist. She also appears to have suffered a nervous breakdown from which she had not fully recovered at the time of the trial. The Spouses brought the action, one and a half year after the occurrence, to recover damages in the sum of P20,000 for physical injuries sustained by them in an automobile accident. The trial court rendered a judgment in their favor for the sum of P1,254.10, with legal interest from the date of the judgment. Both the spouses and Smith appealed, the former maintaining that the damages awarded are insufficient while the latter denies all liability for any damages whatever. The Supreme Court affirmed the judgment appealed from, without costs. 1. Articles 1101 to 1107 NCC, not Article 1903, applicable The cause of action rests on Smith’s breach of the contract of carriage and that, consequently, articles 1101-1107 of the Civil Code, and not article 1903, are applicable. Herein, the source of Smith’s legal liability is the contract of carriage; the by entering into that contract he bound himself to carry the spouses safely and securely to their destination; and that having failed to do so he is liable in damages unless he shows that the failure to fulfill his obligation was due to causes mentioned in article 1105 of the Civil Code 2. Cases distinguishing extra-contractual and contractual liabilities Upon the facts stated, the defendant’s liability, if any, is contractual, is well settled by previous decisions of the court, beginning with the case of Rakes vs. Atlantic, Gulf & Pacific Co. (7 Phil., 359), and the distinction between extra-contractual liability and contractual liability has been so ably and exhaustively discussed in various other cases, that nothing further need be said upon that subject. (See Cangco vs. Manila Railroad Co. 38 Phil., 768; Manila Railroad Co. Compania Trasatlantica and Atlantic, Gulf & Pacific Co., 38 Phil., 875; De Guia vs. Manila Electric Railroad & Light ) 3. Article 1105 NCC Article 1105 reads as “no one shall be liable for events which could not be foreseen or which, even if foreseen, were inevitable, with the exception of the cases in which the law expressly provides otherwise and those in which the obligation itself imposes such liability.”

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4. Caso fortuito, “events which cannot be foreseen and which having been foreseen, are inevitable”; Spanish construction The Spanish authorities regard the language employed as an effort to define the term caso fortuito and hold that the two expressions are synonymous. (Manresa, Comentarios al Co Civil Español, vol. 8, pp. 88 et seq.; Scaevola, Codigo Civil, vol. 19, pp. 526 et seq.) 5. Article 1105’s antecedent: Law II, Title 33, Partida 7 The antecedent to article 1105 is found in Law 11, Title 33, Partida 7, which defines caso fortuito as “ocasion que acaese por aventura deque non se puede ante ver. E son estos, derrivamientos de casas e fuego que se enciende so ora, e quebrantamiento de navio, fuerca de ladrones. . . . ( An event that takes place by accident and could not have been foreseen, Examples of this are destruction of houses, unexpected fire, shipwreck, violence of robbers. . . .)” 6. Caso fortuito defined; Escriche Escriche defines caso fortuito as “an unexpected event such as floods, torrents, shipwrecks, conflagrations, lightning, compulsion, insurrections, destruction of buildings by unforeseen accidents and other occurrences of a similar nature.” 7. Caso fortuito defined; Enciclopedia Juridica Espanola In discussing and analyzing the term caso fortuito the Enciclopedia Juridica Española says: “ In a legal sense and, consequently, also in relation to contracts, a caso fortuito presents the following essential characteristics: (1) The cause of the unforeseen and unexpected occurrence, or of the failure of the debtor to comply with his obligation, must be independent of the human will. (2) It must be impossible to foresee the event which constitutes the caso fortuito, or if it can be foreseen, it must be impossible to avoid. (3) The occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner. And (4) the obligor (debtor) must be free from any participation in the aggravation of the injury resulting to the creditor.” (5 Enciclopedia Juridica Española, 309.) 8. Extraordinary circumstance independent of obligor’s will an essential element of caso fortuito Authorities agree that some extraordinary circumstance independent of the will of the obligor, or of his employees, is an essential element of a caso fortuito. Herein, it is at once apparent that this elements is lacking. It is not suggested that the accident in question was due to an act of God or to adverse road conditions which could not have been foreseen. As far as the record shows, the accident was caused either by defects in the automobile or else through the negligence of its driver. That is not a caso fortuito. 9. Carrier of passenger not an absolute insurer against risks of travel; However, Alba vs. Sociedad Anonima de Tranvias does not apply Neither under the American nor Spanish law is a carrier of passengers an absolute insurer against the risks of travel from which the passenger may protect himself by exercising ordinary care and diligence. The case of Alba vs. Sociedad Anonima de Tranvias, Jurisprudencia Civil, vol. 102, p. 928 affords a good illustration of the application of this principle. In that case Alba, a passenger on a street car, was standing on the platform of the car while it was in motion. The car rounded a curve causing Alba to lose his balance and fall off the platform, sustaining sever injuries. In an action brought by him to recover damages, the supreme court of Spain held that inasmuch as the car at the time of the accident was travelling at a moderate rate of speed and there was no infraction of the regulations, and the plaintiff was exposed to no greater danger than that inherent in that particular mode of travel, the plaintiff could not recover, especially so since he should have been on his guard against a contingency as natural as that of losing his balance to a greater or less extent when the car rounded the curve. Herein, however, the passengers had no means of avoiding the danger or escaping the injury. 10. Discretion of the court to moderate liability according to circumstances
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Although the expenses incurred by the spouses as a result of the accident greatly exceeded the amount of the damages awarded, the courts have “ a discretionary power to moderate the liability according to the circumstances” especially in determining the extent of the liability for losses or damages resulting from negligence in the fulfillment of a contractual obligation. The Court does not think that the evidence is such as to justify in interfering with the discretion of the court below in this respect. Herein, by far the greater part of the damages claimed by the spouses resulted from the fracture of a bone in the left wrist of Joaquina Sanchez and from her objections to having a decaying splinter of the bone refusal to submit to such an operation, a series of infections ensued and which required constant and expensive medical treatment for several years. [92], also [186] Sweet Lines vs. CA (GR L-46340, 28 April 1983) First Division, Melencio-Herrera (J): 5 concur Facts: Micaela B. Quintos, Fr. Jose Bacatan SJ, Marciano Cabras and Andrea Veloso purchased first-class tickets from Sweet Lines Inc. at the latter’s office in Cebu City. They were to board Sweet Lines’ vessel, M/V Sweet Grace, bound for Catbalogan, Western Samar. Instead of departing at the scheduled hour of about midnight on 8 July 1972, the vessel set sail at 3:00 A.M. of 9 July 1972 only to be towed back to Cebu due to engine trouble, arriving there at about 4:00 P.M. on the same day. Repairs having been accomplished, the vessel lifted anchor again on 10 July 1972 at around 8:00 A.M. Instead of docking at Catbalogan, which was the first port of call, the vessel proceeded direct to Tacloban at around 9:00 P.M. of 10 July 1972. Quintos, et. al. had no recourse but to disembark and board a ferryboat to Catbalogan. Hence, a suit for damages for breach of contract of carriage was filed by Quintos, et. al., where the Trial Court (CFI Cebu, Branch VIII) ordered Sweet Lines to pay the former to pay (1) P75,000.00 as moral damages divided as follows: P30,000.00 for Mrs. Micaela B. Quintos, P25,000.00 for Jesuit Father Jose Bacatan; P10,000.00 for Mrs. Andrea Veloso and P10,000.00 for Mike Cabras; (2) P30,000.00 as exemplary or corrective damages; (3) Interest at the legal rate of 6% per annum on the moral and exemplary damages as set forth above from the date of this decision until said damages are fully paid; (4) P5,000.00 as attorney’s fees; and (5) The costs. The court also dismissed the counterclaim. The decision of the trial court was affirmed by the Appellate Court. Hence, the appeal. The Supreme Court modified the judgment appealed from to the effect that Sweet Lines was sentenced to indemnify Quintos, et. al. in the sum of P3,000.00 each, without interest, plus P1,250.00, each, by way of attorney’s fees and litigation expenses; with costs against Sweet Lines. 1. Article 614, Code of Commerce Article 614 of the Code of Commerce provides that “a captain who, having agreed to make a voyage, fails to fulfill his undertaking, without being prevented by fortuitous event or force majeure, shall indemnify all the losses which his failure may cause, without prejudice to criminal penalties which may be proper.” 2. Article 698, Code of Commerce Article 698 of the Code of Commerce provides that “in case of interruption of a voyage already begun, the passengers shall only be obliged to pay the fare in proportion to the distance covered, without right to recover damages if the interruption is due to fortuitous event or force majeure, but with a right to indemnity, if the interruption should have been caused by the captain exclusively. If the interruption should be caused by the disability of the vessel, and the passenger should agree to wait for her repairs, he may not be required to pay any increased fare of passage, but his living expenses during the delay shall be for his own account.”

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3.

Fortuitous event not present The crucial factor in Articles 614 and 698 is the existence of a fortuitous event or force majeure. Without it, the right to damages and indemnity exists against a captain who fails to fulfill his undertaking or where the interruption has been caused by the captain exclusively. Herein, there was no fortuitous event or force majeure which prevented the vessel from fulfilling its undertaking of taking private respondents to Catbalogan. In the first place, mechanical defects in the carrier are not considered a caso fortuito that exempts the carrier from responsibility. 4. Arguendo that engine failure is fortuitous event, there was no fortuitous event to bypass a port of call In the second place, even granting arguendo that the engine failure was a fortuitous event, it accounted only for the delay in departure. When the vessel finally left the port of Cebu on 10 July 1972, there was no longer any force majeure that justified by-passing a port of call. The vessel was completely repaired the following day after it was towed back to Cebu. In fact, after docking at Tacloban City, it left the next day for Manila to complete its voyage. 5. Reason why Catbalogan was bypassed The reason for by-passing the port of Catbalogan was to enable the vessel to catch up with its schedule for the next week. There were 50 passengers for Tacloban compared to 20 passengers for Catbalogan, so that the Catbalogan phase could be scrapped without too much loss for the company. 6. Conditions in the carrier’s ticket cannot prevail over Articles 614 and 698 The carrier cannot rely on the conditions in small bold print at the back of the ticket reading: “The passenger’s acceptance of this ticket shall be considered as an acceptance of the following conditions: (3) In case the vessel cannot continue or complete the trip for any cause whatsoever, the carrier reserves the right to bring the passenger to his/her destination at the expense of the carrier or to cancel the ticket and refund the passenger the value of his/her ticket; xxx (11) The sailing schedule of the vessel for which this ticket was issued is subject to change without previous notice.” Herein, the carrier did not comply with the same. It did not cancel the ticket nor did it refund the value of the tickets to its affected passengers. Besides, it was not the vessel’s sailing schedule that was involved. The passengers’ complaint is directed not at the delayed departure the next day but at the by-passing of Catbalogan, their destination. Furthermore, the conditions relied upon by the carrrier cannot prevail over Articles 614 and 698 of the Code of Commerce heretofore quoted. 7. Owner of vessel and shipagent civilly liable for acts of the captain The voyage to Catbalogan was “interrupted” by the captain upon instruction of management. The “interruption” was not due to fortuitous event or for majeure nor to disability of the vessel. Having been caused by the captain upon instruction of management, the passengers’ right to indemnity is evident. The owner of a vessel and the ship agent shall be civilly liable for the acts of the captain. 8. Bad faith defined Bad faith means a breach of a known duty through some motive or interest or illwill. Self-enrichment or fraternal interest, and not personal illwill, may have been the motive, but it is malice nevertheless. 9. Bad faith present; Findings of the lower courts as to facts conclusive upon the Supreme Court Both the Trial Court and the Appellate Court found that there was bad faith on the part of the carrier in that: (1) Defendants-appellants did not give notice to plaintiffs-appellees as to the change of schedule 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 announcement of assurance that the vessel would leave within a short period of time, and when plaintiffs-appellees wanted to leave the port and gave up the trip, defendantsappellants’ 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 from Tacloban City to Catbalogan.
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That finding of bad faith is binding on us, since it is not the function of the Court to analyze and review evidence on this point all over again. 10. Moral damages due; Award of the lower court excessive Under Article 2220 of the Civil Code, moral damages are justly due in breaches of contract where the defendant acted fraudulently or in bad faith. Herein, however, under the circumstances, the award of moral damages is excessive and accordingly should be reduced to P3,000.00, respectively, for each of the claimants. 11. Award of attorney’s fees justified The total award of attorney’s fees of P5,000.00 is in order considering that the case has reached the Supreme Court. 12. Award of exemplary damages at court’s discretion Insofar as exemplary damages are concerned, although there was bad faith, the Court was not inclined to grant them in addition to moral damages. Exemplary damages cannot be recovered as a matter of right; the Court decides whether or not they should be adjudicated. The objective to meet its schedule might have been called for, but the carrier should have taken the necessary steps for the protection of its passengers under its contract of carriage. 13. Article 2215 (2) NCC inapplicable Article 2215(2) of the Civil Code invoked by the carrier is in-applicable herein. The harm done to private respondents outweighs any benefits they may have derived from being transported to Tacloban instead of being taken to Catbalogan, their destination and the vessel’s first port of call, pursuant to its normal schedule. [94] Magboo vs. Bernardo (GR L-16790, 30 April 1963) En Banc, Makalintal (J): 8 concur, 1 took no part Facts: Urbano and Emilia Magboo are the parents of Cesar Magboo, a child of 8 years old, who lived with them and was under their custody until his death on 24 October 1956 when he was killed in a motor vehicle accident, the fatal vehicle being a passenger jeepney with Plate AC-1963 (56) owned by Delfin Bernardo. At the time of the accident, said passenger jeepney was driven by Conrado Roque. The contract between Roque and Bernardo was that Roque was to pay to Bernardo the sum of P8.00, which he paid to Bernardo, for privilege of driving the jeepney on 24 October 1956, it being their agreement that whatever earnings Roque could make out of the use of the jeepney in transporting passengers from one point to another in the City of Manila would belong entirely to Roque. As a consequence of the accident and as a result of the death of Cesar Magboo in said accident, Roque was prosecuted for homicide thru reckless imprudence before the CDI of Manila (Criminal Case 37736), and that upon arraignment Roque pleaded guilty to the information and was sentenced to 6 months of arresto mayor, with the accessory penalties of the law; to indemnify the heirs of the deceased in the sum of P3,000.00, with subsidiary imprisonment in case of insolvency, and to pay the costs. Pursuant to said judgment Roque served his sentence but he was not able to pay the indemnity because he was insolvent. An action was filed by the spouses Magboo against Bernardo is for enforcement of his subsidiary liability as employer in accordance with Article 103, Revised Penal Code. The trial court (CFI of Manila) ordered Bernardo to pay the spouses P3,000.00 and costs. Bernardo appealed to the Court of Appeals, which certified the case to the Supreme Court on the ground that only questions of law are involved. The Supreme Court affirmed the judgment appealed from, with costs against Bernardo.
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1. Boundary system; Employer-Employee relationship exists; NLU vs. Dinglasan as cited in Doce vs. WCC In National Labor Union vs. Dinglasan, 52 O.G. No. 4, 1933, it was held that the features which characterize the “boundary system” — namely, the fact that the driver does not receive a fixed wage but gets only the excess of the amount of fares collected by him over the amount he pays to the jeep-owner, and that the gasoline consumed by the jeep is for the account of the driver — are not sufficient to withdraw the relationship between them from that of the employer and employee. The ruling was subsequently cited and applied in Doce vs. Workmen’s Compensation Commission, L9417, 22 December 1958, which involved the liability of a bus owner for injury compensation to a conductor working under the “boundary system.” 2. Principle applied in negligence cases concerning right of third parties to recover damages for injuries sustained The same principle applies with greater reason in negligence cases concerning the right of third parties to recover damages for injuries sustained. In Montoya vs. Ignacio, L-5868, December 29, 1953, the owner and operator of a passenger jeepney leased it to another, but without the approval of the Public Service Commission. In a subsequent collision a passenger died. The Court ruled that since the lease was made without such approval, which was required by law, the owner continued to be the operator of the vehicle in legal contemplation and as such was responsible for the consequences incident to its operation. The same responsibility was held to attach in a case where the injured party was not a passenger but a third person, who sued on the theory of culpa aquiliana (Timbol vs. Osias, L-7547, April 30, 1955). There is no reason why a different rule should be applied in a subsidiary liability case under Article 103 of the Revised Penal Code. As in the existence of an employer-employee relationship between the owner of the vehicle and the driver. Indeed to exempt from liability the owner of a public vehicle who operates it under the “boundary 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 — reckless because the measure of their earnings depends largely upon the number of trips they make and, hence, the speed at which they drive; and irresponsible because most if not all of them are in no position to pay the damages they might cause. (See Erezo vs. Jepte, L-9605, September 30, 1957). 3. Bernardo did not aid Roque in criminal case, cannot escape subsidiary liability as provided by Article 103 RPC With respect to Bernardo’s contention that he was taken unaware by the spontaneous plea of guilt entered by Roque, and that he did not have a chance to prove the innocence of Roque, the Court holds that at this stage, it is already too late to try the criminal case all over again. His allegation that he relied on his belief that Roque would defend himself and they had sufficient proof to show that Roque was not guilty of the crime charged cannot be entertained. He should have taken it to himself to aid in the defense of Roque. Having failed to take this step and the accused having been declared guilty by final judgment of the crime of homicide thru reckless imprudence, there appears no more way for him to escape his subsidiary liability as provided for in Article 103 of the Revised Penal Code. [95] Isaac vs. AL Ammen Transportation (GR L-9671, 23 August 1957) En Banc, Bengzon (J): 9 concur Facts: A. L. Ammen Transportation Co., Inc. is a corporation engaged in the business of transporting passengers by land for compensation in the Bicol provinces and one of the lines it operates is the one connecting Legaspi City, Albay with Naga City, Camarines Sur. One of the buses which Ammen Transportation was operating is Bus 31. On 31 May 1951, Cesar L. Isaac boarded said bus as a passenger paying the required fare from Ligao, Albay bound for Pili, Camarines Sur, but before reaching his destination,
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the bus collided with a motor vehicle of the pick-up type coming from the opposite direction, as a result of which Isaac’s left arm was completely severed and the severed portion fell inside the bus. Isaac was rushed to a hospital in Iriga, Camarines Sur where he was given blood transfusion to save his life. After 4 days, he was transferred to another hospital in Tabaco, Albay, where he underwent treatment for 3 months. He was moved later to the Orthopedic Hospital where he was operated on and stayed there for another 2 months. For these services, he incurred expenses amounting to P623.40, excluding medical fees which were paid by Ammen Transporation. As an aftermath, Isaac brought an action against Ammen Transportation for damages alleging that the collision which resulted in the loss of his left arm was mainly due to the gross incompetence and recklessness of the driver of the bus operated by Ammen Transportation and that Ammen Transporation incurred in culpa contractual arising from its non-compliance with its obligation to transport Isaac safely to his destination. Ammen Transportation set up as special defense that the injury suffered by Isaac was due entirely to the fault or negligence of the driver of the pick-up car which collided with the bus driven by its driver and to the contributory negligence of Isaac himself. The court after trial found that the collision occurred due to the negligence of the driver of the pick-up car and not to that of the driver of the bus it appearing that the latter did everything he could to avoid the same but that notwithstanding his efforts, he was not able to avoid it. As a consequence, the court dismissed the complaint, with costs against Isaac. Isaac appealed. The Supreme Court affirmed the decision appealed from, with costs against Isaac. 1. Article 1733 NC