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 )

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

80 representing the value of the cargo lost on board the ill-fated vessel. Finally. and the costs. 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.20 from the P12. save only where such loss. NO COSTS. On 20 November 1991. by land. and thereupon ordered Arada to pay unto the SMC the amount of P176. New Civil Code). the natural disaster must have been the proximate and only cause of the loss. 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. the plaintiff should deduct the amount of P4. IAC. with interest thereon at the legal rate from date of the filing of the complaint on 25 March 1983. 4. the common carrier must exercise due diligence to prevent or minimize the loss before.20. but in caring for the goods transported by it. Common carriers defined Common carriers are persons. M/L Maya. Eric Arada. the petition for review on certiorari.824. 70876. 2. 187 SCRA 547) 3.Haystacks (Berne Guerrero) On 25 March 1983. In the case at bar. SMC appealed the decision to the Court of Appeals (CA-GR CV 20597). pp. destruction or damage arises from extreme circumstances such as a natural disaster or calamity. it affirmed the appealed decision.” (Orig. 1732 of the New Civil Code). Failure to ascertain the location and direction of typhoon shows negligence Vivencio Babao. 193-195). 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. (2) Under the second cause of action. Record. 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. the ship’s captain.997. (3) In the third cause of action. said court rendered a decision dated 18 July 1988. 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. This fact is best supported by the admission of petitioner’s son.(Benedicto v. the Supreme Court gave due course to the petition.849. 2004 ( 7 ) .849.R.000. July 19. who testified as the officer-in-charge for operations of South Negros Enterprises in Cebu City. 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.00.47 due the defendant. 1990. Mr. Records will show that Babao did not ascertain where the typhoon was headed by the use of his vessel’s barometer and radio. (4) Since the plaintiff has withheld the payment of P12. 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. for compensation offering their services to the public (Art. However. claim of plaintiff is hereby dismissed. firms or associations engaged in the business of carrying or transporting passengers or goods or both. and (5) Defendant’s counterclaim not having been substantiated by evidence. until fully paid.27 must be paid to the defendant. Hence. Fortuitous event A common carrier.47 and the balance of P8. After due hearing. is likewise dismissed. G. where (1) With respect to the first cause of action.997. 1. Neither did the captain of the vessel monitor and record the weather conditions everyday Transportation Law. during and after the occurrence of flood. In its decision promulgated on 8 April 1991. Thereafter.148. corporations. Duty of common carrier to exercise extraordinary diligence. defendant must pay plaintiff the sum of P2. 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. the defendant must pay plaintiff the sum of P2. No. water or air. the Court of Appeals reversed the decision of the lower court.

1756. as to the weather and sea conditions that prevailed in the vicinity of Catmon. 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. 6. 7. Aug. the law presumes that it was due to the carrier’s fault or negligence. it is but fair that it exercises extraordinary diligence in protecting them from loss or damage. Aboitiz Shipping Corporation v. such permit was issued at the risk and responsibility of the owner. 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). Ballan. 89757. 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.” 10. Cebu during the period March 25-27. Jr. Court of Appeals. Cebu As per official records of the Climatological Division of the Philippine Atmospheric. 1982 on conditions prevailing in the vicinity of Catmon. 8. 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. Had he done so while navigating for 31 hours. all of whom were unlicensed. Primitivo G. 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. 1990. and if loss occurs. 6. he could have anticipated the strong winds and big waves and taken shelter. 2004 ( 8 ) . Civil Code. also [101] Sabena Belgian World Airlines vs. While it is true that they were given special permit to man the vessel. G. No. Such is the function of the Court.R. 1982. 188 SCRA 387). not the Special Board of Marine Inquiry. 5. that is necessary to protect the interest of the shipper which is at the mercy of the carrier (Art. Geophysical and Astronomical Services Administration (PAG-ASA) issued by its Chief of Climatological Division. [4]. CA (GR 104685. Carrier’s fault or negligence presumed While the goods are in the possession of the carrier. 612 of the Code of Commerce. 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. 14 March 1996) Transportation Law. constitute lack of foresight and minimum vigilance over its cargoes taking into account the surrounding circumstances of the case. 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. PAG-ASA’s records as per March 25-27. 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. 9. clearly. the sea conditions on March 25. officers and crew of the ill-fated” vessel.Haystacks (Berne Guerrero) as required by Art.

lightning. affirmed in toto the trial court’s judgment. and of the place. common carrier are presumed to have been at fault or to have acted negligently. She was advised to accomplish and submitted and filed on the same day. common carriers are bound to observe extraordinary diligence in the vigilance over the goods transported by them. She followed up her claim on 14 September 1987 but the luggage remained to be missing.00 or its exchange value. Paula San Agustin (a) US$4. Extraordinary diligence required on carriers Art. namely: jewelries valued at $2. 3. the luggage was its content has not been found. 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.’ And Art. luggage itself $10. San Agustin demanded from the defendant the money value of the luggage and its contents amounting to $4. Sabena appealed the decision of the Regional Trial Court to the Court of Appeals. Transportation Law. 1733 of the [Civil] Code provides that from the very nature of their business and by reason of public policy. She was issued Tag 77143 on her valuables. the mere breach or non-fulfillment of the prestation gives rise to the presumption of fault on the part of the obligor. After trial.000.00 or its legal exchange in Philippine pesos. 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. and (e) (t)he cost of the suit.00. She stayed overnight in Brussels and her luggage was left on board Flight SN 284.265. in its decision of 27 February 1992. of the time. or deterioration of the goods is due to any of the following causes: (1) Flood.350. or a total of $4. accessories $75.265. Hence. she filed her formal complaint with the office of Ferge Massed.00. earthquake. 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.00. unless they prove that they had observed extraordinary diligence as required in Article 1733.00. 1. On 30 September 1987. 2.00 shoes/bag $150. 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.00 as moral damages. attorney’s fees. The appellate court. the airlines’s Local Manager. 1736.000. according to Art. 1735 establishes the presumption that if the goods are lost. The Supreme Court affirmed the appealed decision. At the time of the filling of the complaint.265. destroyed or deteriorate. (c) P10.500. destruction.00 as exemplary damages. On 15 September 1987. clothes $1. the petition for review.000. But unfortunately San Agustin was informed that the luggage was lost for the second time. Ma. 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. storm. When the source of an obligation is derived from a contract.Haystacks (Berne Guerrero) First Division: Vitug (J): 4 concur Facts: On 21 August 1987. (d) P10. Paula San Agustin was a passenger on board flight SN 284 of Sabena Belgian World Airlines originating from Casablanca to Brussels. 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. the trial court rendered judgment ordering Sabena Belgian World Airlines to pay Ma. with costs against Sabena Belgian World Airlines. on the Occasion of San Agustin’s following up her luggage claim. Exceptions to extraordinary diligence requirement The only exceptions to the foregoing extraordinary responsibility of the common carrier is when the loss. 2004 ( 9 ) . demanding immediate attention. This extraordinary responsibility. Fault or negligence. but the airline refused to settle the claim. “(b) P30. or other natural disaster or calamity. Belgium.

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

although unforeseen.00 for loss of his earning capacity. Winifredo Tupang died of cardio-respiratory failure due to massive cerebral hemorrhage due to traumatic injury. for repairs. including moral and exemplary damages. and (b) Generally. Instead. and the carrier’ or misconduct of its employees.000. [5] Philippine National Railways (PNR) vs.00 as exemplary damages. Camarines Sur. Philippines is country of destination. (Alitalia vs. Hence the petition for review. Escolin (J): 3 concur Facts: On 10 September 1972. 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. as a defense.. Camarines Sur. without costs. the PNR raised for the first time. 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.000.” Under the foregoing section. Winifredo Tupang. The motion was denied. Perfecto Abrazado.00 adjudicated as moral and exemplary damages.000. to exercise all powers of a corporation under the Corporation Law. or for some Particular or exceptional type of damage. upon passing Iyam Bridge at Lucena. bad faith. to the non-performance of the obligation. As shown by the autopsy report. Tupang was later buried in the public cemetery of Lucena City by the local police authorities. PNR may sue and be sued like any other corporation The PNR was created under A 4156.000.00 as moral damages. Police authorities of Lucena City were dispatched to the Iyam Bridge where they found the lifeless body of Winifredo Tupang. Due to some mechanical defect. Upon complaint filed by the deceased’s widow. held the PNR liable for damages for breach of contract of carriage and ordered it to pay Rosario Tupang the sum of P12. Rosario Tupang.000. taking some two hours before the train could resume its trip to Manila.00 as attorney’s fees.00 for the death of Winifredo Tupang. Quezon.00 and P5. It further increased the amount adjudicated by the trial court by ordering PNR to pay the Rosario Tupang an additional sum of P5. and the further sum of P10. Quezon. the characteristics and attributes of a corporation under the Transportation Law. The train did not stop despite the alarm raised by the other passengers that somebody fell from the train. and requested for verification of the information. respectively. the train conductor.000. the doctrine of state immunity from suit. recklessness or otherwise improper conduct on the part of any official or employee for which the carrier is responsible. 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. called the station agent at Candelaria. Unfortunately. and P2. or destruction. 2004 ( 11 ) . Moving for reconsideration of the above decision. incidental or conducive to the attainment of the purpose of the corporation.m. Under domestic law and jurisprudence (the Philippines being the country of destination). the then CFI Rizal. Winifredo Tupang fell off the train resulting in his death. and cost. plus P20. after trial. husband of Rosario Tupang. at about 9:00 p. 1. the PNR has all the powers. The Supreme Court modified the decision of the appellate court by eliminating therefrom the amounts of P10. as amended. 4 October 1985) Second Division. the train stopped at Sipocot. as a paying passenger bound for Manila. On appeal. PNR created under RA 4196.000. loss or damage to property or delay in its transport is not attributable to or attended by any wilful misconduct.Haystacks (Berne Guerrero) liability only in those cases where the cause of the death or injury to person. CA (GR L-55347. 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. IAC) 9. boarded Train 516 of the Philippine National Railways at Libmanan.

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

Court of Appeals. the arrastre operator and the broker-forwarder to pay Mercantile Insurance. the trial court rendered judgment (1) ordering the shipping company. or until the lapse of a reasonable time for their acceptance. Ganzon vs.032. so that it became subrogated to all the rights of action of said consignee against the shipping company. reckless. 1. On January 8 and 14. said to be in bad order. Mercantile Insurance was compelled to pay the consignee P19. the consignee suffered losses totaling P19. Claims were presented against them who failed and refused to pay the same. also [51] Eastern Shipping Lines vs. and received by. P3. crate box or container in no case to exceed P5. Presumption of carrier’s negligence in case of loss. After trial. 161 SCRA 646. [6]. and costs. 1982. 2.382. Kui Bai vs. 1 took no part Facts: On 4 December 1981. Civil Code. 12 July 1994) En Banc.00 each.000. 1736-1738. On 7 January 1982. damage of goods. CA (GR 97412.95 with the present legal interest of 12% per annum from October 1. The latter excepted to one drum. The Court of Appeal affirmed in toto the judgment of the court a quo. shall be imposed on such amount upon finality of this decision until the payment thereof. the date of filing of this complaints. Eastern Shipping Lines appealed to the Court of Appeals. which damage was unknown to Mercantile Insurance. Japan for delivery vessel “SS Eastern Comet” owned by Eastern Shipping Lines under Bill of Lading YMA-8. As a consequence of the losses sustained. whichever is lesser. Due to the losses/damage sustained by said drum.032. Inc. Upon arrival of the shipment in Manila on 12 December 1981.01 of the Management Contract). None of the exclusive exceptions can be applied Transportation Law.000. Inc.00 as attorney’s fees. oppressive or malevolent manner. Dissatisfied. The shipment was insured under Mercantile Insurance Company’s Marine Insurance Policy 81/01177 for P36. 2004 ( 13 ) . pursuant to Section 6. Inc. arrastre operator and broker-forwarder. due to the fault and negligence of the shipping company. Allied Brokerage made deliveries of the shipment to the consignees’ warehouse. Vitug (J): 13 concur. by the person entitled to receive them (Arts. and dismissing the counterclaims and crossclaim of defendant/cross-claimant Allied Brokerage Corporation. shall be to the extent of the actual invoice value of each package.38. in solidum. A 12% interest. Dollar Steamship Lines.032. shall not exceed US$500 per case or the CIF value of the loss.95 under the aforestated marine insurance policy. until fully paid (the liability of defendant Eastern Shipping. Exemplary damages may be allowed only in cases where the defendant acted in a wanton. etc. the carrier for transportation until delivered to. There being no evidence of fraud. 863).95. 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. 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. Allied Brokerage Corporation received the shipment from Metro Port Service. The Supreme Court partly granted the petition. The latter excepted to one drum which contained spillages. 2 fiber drums of riboflavin were shipped from Yokohama. the grant of exemplary damages should be discarded. dated 3 February 1988. the amount of P19. in lieu of 6%. while the rest of the contents was adulterated/fake. while the liability of defendant Metro Port Service. one drum opened and without seal. 52 Phil.Haystacks (Berne Guerrero) The award of exemplary damages must be set aside.466. of the court a quo. malice or bad faith on the part of PNR. 1982. it was discharged unto the custody of Metro Port Services. fraudulent.

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

quasi-contracts. The shipment was packed in 4. valued at US $. 1974 Transportation Law. shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. in any case.245 per kilogram or a total purchase price of US $24.763. in addition to exemplary damages and attorney’s fees..94 plus 12% interest per annum from July 1. i. 3. Furthermore. Out of the 4. is imposed. (ARRASTRE). Melencio-Herrera (J): 5 concur Facts: Sometime in April 1973. The provisions under Title XVIII on “Damages” of the Civil Code govern in determining the measure of reoverable damages.e. No interest.709.30. a loan or forbearance of money. not constituting a loan or forbearance of money. i. (2) E. Inc. b. 2. Union Sales Marketing Corporation (UNION) ordered from Union Carbide of Antwerp. When the obligation is breached. 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). Razon. (INSURER) for P212. In its Decision. Inc. as well as the accrual thereof. 1974 until full payment thereof. the Trial Court ordered (1) the Universal Shipping Lines.000 bags. (CARRIER) and consigned to UNION in Manila. In the absence of stipulation. now called Metro Port Service.540 kilograms of Low Density Polyethylene. and was loaded at Antwerp. the rate of interest. contracts.738. On 1 July 1974.709. 1. shall be 12% per annum from such finality until its satisfaction. the contravenor can be held liable for damages. and it consists in the payment of a sum of money. owned and operated by Universal Shipping Lines. is breached. whether the case falls under paragraph 1 or paragraph 2.e.e. however.11 in full settlement of the claim. more or less. Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made. Razon Inc. The shipment was covered by a Marine Risk Note issued by Charter Insurance Co. When the judgment of the court awarding a sum of money becomes final and executory. from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. regardless of its source. Belgium. the INSURER sued for damages with the then CFI Manila against the CARRIER and the ARRASTRE in the amount of P35. CA (GR L-57582.Haystacks (Berne Guerrero) a. Inc.000 bags of 25 net kilograms. where the demand is established with reasonable certainty. Inc. 2004 ( 15 ) . When an obligation.17 against all risks. Accordingly.050 bags were received by the consignee UNION in bad order condition. With regard particularly to an award of interest in the concept of actual and compensatory damages. this interim period being deemed to be by then an equivalent to a forbearance of credit. the rate of legal interest. The CARRIER arrived in Manila on 22 June 1973 and arrastre services were handled by E. the interest due should be that which may have been stipulated in writing. the rate of interest shall be 12% per annum to be computed from default.848 to a US Dollar. at the conversion rate of P6. as follows: 1. When a obligation. i. The actual base for the computation of legal interest shall. an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. [7] Metro Port Services vs. 24 August 1984) First Division. the amount of P12. and the INSURER became the subrogee of all of UNION’s rights to recover from the parties concerned. in good order condition on board the “S/S Dingalan Bay”. the interest due shall itself earn legal interest from the time it is judicially demanded. 99. the amount of P9.... be on the amount of finally adjudged.285.11. As a consequence of the damage and loss. to pay Charter Insurance Co. for each bag. delicts or quasidelicts 18 is breached. law. Belgium.417. above. to pay Charter Insurance Co. the INSURER paid UNION the sum of P35.94 plus 12% interest per annum from July 1. the interest shall begin to run from the time the claim is made judicially or extrajudicially (Article 1169.

Inc. [8].285...94 fixed by the Trial Court is thus in order. and insured by Home Insurance Company for $202. The liability of the ARRASTRE for P9. 2.00 as attorney’s fees. Razon to pay Charter Insurance. as this is the “evidence of the plaintiff” (INSURER). 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. and allows of exceptions. Reconsideration filed by the ARRASTRE was denied by the Appellate Court. in solidum.505. on 23 March 1981.033. When the cargo was delivered to consignee San Miguel Brewery.763.” and the INSURER did not appeal said award by the Trial Court in its desire to have the case terminated soonest. causing the latter to lay claims against Luzon Stevedoring Corporation. Razon to pay the costs. since the Trial Court computed the liability of the ARRASTRE at 351 bags. Peru.8209 kilograms per bag. ARRASTRE’s liability fixed to 351 bags. The Court has held in a number of cases that findings of fact by the Court of Appeals are. both dated 17 January 1963.94. arrived in Manila on 7 March 1963 and was discharged into the lighters of Luzon Stevedoring Company. (3) both Universal Shipping and E. 2004 ( 16 ) . owner Transportation Law. exceptions Ordinarily. now San Miguel Corporation. Accordingly. American Steamship Agencies (GR L-25599.Haystacks (Berne Guerrero) until full payment thereof. without costs. only questions of law may be raised. the Trial Court held the CARRIER liable only for the value of a total of 443 bags. 4 April 1968) En Banc. less than the actual weight of 25 kilograms net per bag due to some recovery of spoilage. On appeal by the CARRIER and ARRASTRE. it follows that the remaining 431 bags were damaged while in the ARRASTRE’s custody for which it should be held liable. The Supreme Court reversed and set aside the appealed judgment of Court of Appeals. and reinstated that of the CFI Manila. Since 619 bags were discharged from the CARRIER already in bad order condition. notwithstanding the ARRASTRE’s admission that “80 bags were not included in the bad order cargo certificate. signed by the CARRIER and ARRASTRE representatives. covered by clean bills of lading Numbers 1 and 2. there were shortages amounting to P12. conclusive on the Supreme Court when supported by the evidence on record. as reflected in the Survey of Bad Order Cargoes. in this appeal. or a total liability of P12. Branch XI. however. have the judgment modified.000. The rule is not absolute. 3. The condition of the 619 bags before the turnover to the ARRASTRE from the CARRIER was loss or spoilage of up to 50%.740 jute bags of Peruvian fish meal through SS Crowborough. also [174] Home Insurance Co. the then Court of Appeals. Only questions of law may be raised in a Petition for Review on Certiorari. 1. and (4) both Universal Shipping and E. in general. Appellate Court’s ruling disregards evidence of the CARRIER and ARRASTRE that 619 bags were discharged in bad order condition In absolving the CARRIER. at 16. as INSURER failed to appeal award However. Inc. absolved the CARRIER of any and all liability and held the ARRASTRE solely liable. consigned to San Miguel Brewery. The cargo. 21. in a Petition for Review on Certiorari. P2. the INSURER may not. vs. Home Insurance Company and the American Steamship Agencies. Bengzon JP (J): 7 concur Facts: “Consorcio Pesquero del Peru of South America” shipped freight pre-paid at Chimbate. 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. 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.85.

Source of provisions of Civil Code on common carriers The provisions of our Civil Code on common carriers were taken from Anglo-American law. the charterer had the option to go north or south or vice-versa. equipped and supplied or by the personal act or default of the owner or its manager. 1. Disagreeing with such judgment. 4. P14. And as stated recovery cannot be had thereunder.870. Section 2. absolved Luzon Stevedoring Corporation.71 — the insurance value of the loss. 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. Under American jurisprudence. and ordered American Steamship Agencies to pay Home Insurance Co. otherwise..870. the consignees under the bills of lading must likewise abide by the terms of the charter party. Subject to all terms. even from the neglect or fault of the captain or crew or some other person employed by the owner on board. Home Insurance Company paid the consignee P14. the CFI. In the case at bar. plus attorney’s fees. Said paragraph. after trial. 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. exempts the owner of the vessel from any loss or damage or delay arising from any other source. and absolved the American Steamship Agencies from liability to Home Insurance Co. not a contract. the liability of the shipowner for acts or negligence of its captain and crew. As such. filed against them on 6 March 1964 before the CFI Manila a complaint for recovery of P14.71 with legal interest plus P1. conditions and exceptions of charter party dated London. On 17 November 1965. 13.000 attorneys fees. as bills of lading expressly referred to the same. for whose acts the owner would ordinarily be liable except for said paragraph – is valid. the charter party contract is one of affreightment over the whole vessel rather than a demise.870. a common carrier undertaking to carry a special cargo or chartered to a special person only. as in the case of a ship totally chartered for the use of a single party. 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. Accordingly. Having been refused reimbursement by both the Luzon Stevedoring Corporation and American Steamship Agencies. would remain in the absence of stipulation. Thus. if any. 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. Furthermore. Such policy has no force where the public at large is not involved. The consignee may not claim ignorance of said charter party because the bills of lading expressly referred to the same. Instance for recovery not present in case In a charter of the entire vessel. Because the others denied liability. as subrogee to the consignee. Home Insurance Company. As a private carrier. Dec. the bill of lading issued by the master to the charterer. and is deemed valid. The Supreme Court reversed the judgment appealed from. as full settlement of the claim.Haystacks (Berne Guerrero) and operator of SS Crowborough. Accordingly. 1962. a stipulation exempting the owner from liability for the negligence of its agent is not against public policy. however. as shipper. stowing and discharging at its risk and expense. for loss or damage to the Transportation Law. Contents of the bill lading in the present case The bills of lading. 2004 ( 17 ) . the vessel was chartered to its full and complete capacity. the bills of lading prevail over all the agreements. becomes a private carrier. On the face of the bills are stamped “Freight prepaid as per charter party. without costs. loading.” 2. having found the latter to have merely delivered what it received from the carrier in the same condition and quality.71 with legal interest. for the contract is the charter party. American Steamship Agencies appealed directly to the Supreme Court. 3. Consignee cannot claim ignorance of charter party.

MASCO reported that it found wetting and rusting of the packages of hot rolled sheets and metal covers of the tinplates. Vlasons Shipping. on 12 August 1974. viz: “xxx (2) Cargo: Full cargo of steel products of not less than 2.000. FIOST basis. does not transport cargo or shipment for the general public.Haystacks (Berne Guerrero) cargo. the NSC’s shipment of 1. 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. On 31 August 1974. The cargo was discharged and unloaded by stevedores hired by the Charterer.” On 6 September 1974. acknowledged receipt of the cargo on board and signed the corresponding bill of lading.00/metric ton. The ship is a private carrier. both while it was still on board the vessel and later at the NDC warehouse in Pureza St. that container/metal casings of the skids were rusting all over. The shipment was placed in the 3 hatches of the ship.677 skids of tinplates and 92 packages of hot rolled sheets or a total of 1. Manila. 1974. 7 and 8. Manila where the cargo was taken and stored.19 metric tons for carriage to Manila. entered into a contract of affreightment or contract of voyage charter hire with National Steel Corporation (NSC) on 17 July 1974. The following day. 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. 1974/Aug. (Weather Working Day of 24 consecutive hours. shows that wetting was caused by contact with sea water. CA (GR 112350) Third Division. when the vessel’s 3 hatches containing the shipment were opened by NSC’s agents. xxx (4) Freight/Payment: P30. xxx (9) Cargo Insurance: Charterer’s and/or Shipper’s must insure the cargoes. on the basis of Report 1770. acting as agent of the vessel. unless the same is due to personal acts or negligence of said owner or its manager.000. BLPP 0233 on 8 August 1974. NSC called for a survey of the shipment by the Manila Adjusters and Surveyors Company (MASCO). xxx” On August 6. as such. (VSA). 2004 ( 18 ) . In a letter to the NSC dated 17 March 1975. Sundays and Holidays Included). . In this case.481. 1974. as distinguished from its other agents or employees. (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. (7) Demurrage/Dispatch: P8. that tarpaulin hatch covers were noted torn at various extents. (5) Laydays/Cancelling: July 26. Inc. the MIT Testing Laboratories issued Report 1770 which in part. the MV ‘VLASONS I’ loaded at NSC’s pier at Iligan City. Manila. [9] Lastimosa vs. North Harbor. under the following terms and conditions. The vessel arrived with the cargo at Pier 12. see [2] [11] National Steel vs. NSC filed with VSI its claim for Transportation Law. the MV ‘VLASONS I’ to make 1 voyage to load steel products at Iligan City and discharge them at North Harbor. 12 December 1997) Vlasons Shipping vs. To determine the nature and extent of the wetting and rusting. whereby NSC hired VSI’s vessel. . 10% more or less at Master’s option. no such personal act or negligence has been proved. Mesa. Payment upon presentation of Bill of Lading within fifteen (15) days. CA. states.500 MT. in accordance with the Contract of Voyage Charter Hire. CA (GR 112287.00 per day.769 packages with a total weight of about 2. nearly all the skids of tinplates and hot rolled sheets were allegedly found to be wet and rusty. 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. (6) Loading/Discharging Rate: 750 tons per WWDSHINC. against the shipowners. Sta. “The analysis of bad order samples of packing materials . Chief Mate Gonzalo Sabando. MASCO made a report of its ocular inspection conducted on the cargo.00/P4.. Doliente [10] FPIC vs. 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.

. for all who opt to avail themselves of its transportation service for a fee. 2004 ( 19 ) . any other cause arising without the actual fault or privity of Owners or without the fault of the agents or servants of owners. Paragraph 5 of the NANYOZAI Charter Party The terms ‘F.000.” 2.00. and ordering NSC to pay VSI on the counterclaim for the sum of P75. 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. which means that the handling. equipped and supplied and to make the holds and all other parts of the vessel in which cargo is carried.’ 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’. Common carriers defined (Article 1732).O.18. NSC filed its complaint against VSI on 21 April 1976 (Civil Case 23317) before the CFI of Rizal. and on 12 August 1993. The term “FIOST”. and to secure that the vessel is properly manned. NSC and VSI filed their respective petitions for review before the Supreme Court. The Supreme Court denied the consolidated petitions. carriage and preservation. fit and safe for its reception. Paragraph 12 of the NANYOZAI Charter Party Paragraph 12 of said NANYOZAI Charter Party also provides that “owners shall not be responsible for split. provided it has space. stow and discharge the cargo free of risk and expenses to owners. On appeal. Undaunted. by land. NSC and VSI filed separate motions for reconsideration.000. 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.00 to P44. and affirmed the questioned Decision of the Court of Appeals with the modification that the demurrage awarded to VSI is deleted. . . or air. chafing and/or any damage unless caused by the negligence or default of the master and crew. before and at the beginning of the voyage. the appellate court denied both motions. Transportation Law. the Court of Appeals modified the decision of the trial court by reducing the demurrage from P88. . 1. . 1976 until the same shall have been fully paid.I. latent defects not discoverable by due diligence. for compensation. perils. quality or vice of the cargo. and cost of suit.145.” It has been held that the true test of a common carrier is the carriage of passengers or goods.00 as unpaid freight and P88. In a Resolution dated 20 October 1993. . the Court ordered on 14 February 1994 the consolidation of the petitions.00 and deleting the award of attorneys fees and expenses of litigation. exercise due diligence to make the vessel seaworthy and properly manned. fit and safe for its reception. . attorney’s fees and expenses of litigation in the sum of P100. offering their services to the public. wastage in bulk or weight or any other loss or damage arising from inherent defect. . carriage and preservation. firms or associations engaged in the business of carrying or transporting passengers or goods or both. Under Paragraph 5 of the NANYOZAI Charter Party.000. insufficiency of packing. . .” 4.000. it states.00 as demurrage with interest at the legal rate on both amounts from April 7. The trial court rendered judgment in favor of VSI and against NSC dismissing the complaint with costs against NSC. . . water. “Charterers to load. corporations. NSC formally demanded payment of said claim but VSI refused and failed to pay. On motion of VSI. Then on 3 October 1974.S.000.” 3.T.. Paragraph 10 of the NANYOZAI Charter Party Under paragraph 10 of the NANYOZAI Charter Party. dangers and accidents of the sea or other navigable waters. Test of common carrier Article 1732 of the Civil Code defines a common carrier as “persons. it is provided that “owners shall.Haystacks (Berne Guerrero) damages suffered due to the downgrading of the damaged tinplates in the amount of P941. No pronouncement as to costs.

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. vs. Extent of VSI’s Responsibility and Liability Over NSC’s Cargo From the parties’ Contract of Voyage Charter Hire. private carriage does not involve the general public.Haystacks (Berne Guerrero) 5. Rights and obligations of VSI and NSC are determined by stipulations in charter party Herein. The burden of proof of these accidents is on the carrier. VSI did not offer its services to the general public.” Consequently. 7. a party other than the shipowner. “Generally. 2004 ( 20 ) .” 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. however. Charter party A carrier which does not qualify under the test of a common carrier is deemed a private carrier. the damage and impairment suffered by the goods during the transportation. although not the only form of private carriage. private carriage is undertaken by special agreement and the carrier does not hold himself out to carry goods for the general public. Hence. carriage and preservation. Valenzuela Hardwood vs. Unlike in a contract involving a common carrier. are determined primarily by stipulations in their contract of private carriage or charter party. The most typical. Inc. Consequently. Therefore. Article 362 of the Code of Commerce Article 362 of the Code of Commerce provides that “The carrier. including their respective liability for damage to the cargo. 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. VSI “shall not be responsible for losses except on proven willful negligence of the officers of the vessel. dated 17 July 1974.. VSI a private carrier. the parties may freely stipulate their duties and obligations which perforce would be binding on them. carrying and safekeeping the cargo. 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.” 11. is the charter party. force majeure.” and to “make the holds and all other parts of the vessel in which cargo was carried.” 9. chafing and/or any damage unless caused by the negligence or default of the master or crew. the Court ruled that “in a contract of private carriage. Court of Appeals and Seven Brothers Shipping Corporation. 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. due to fortuitous event. 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. CA In Valenzuela Hardwood and Industrial Supply. Ineluctably. 10. 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. fit and safe for its reception. or the nature and inherent defect of the things. equipped and supplied. Burden of Proof (parties’ agreement) Herein. a maritime contract by which the charterer. shall be for the account and risk of the shipper. It carried passengers or goods only for those it chose under a “special contract of charter party. the burden of proof was placed on NSC by the parties’ agreement.” The MV Vlasons I “was not a common but a private carrier. if the contrary has not been expressly stipulated. 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. Private Carrier.” 6.” 8.” The NANYOZAI Charter Party. Contract of private carriage.

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

subject to the laws on prescription. the new tarpaulin did not give way and the ship’s hatches and cargo holds remained waterproof. therefore. Dumlao. 20. the new canvass covering still hold on. despite encountering rough weather twice. 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. NSC has cause of action against stevedoring company. Stevedores of NSC negligent in unloading cargo form ship. In passing. NSC failed to discharge its burden to show negligence on the part of the officers and the crew of MV Vlasons I. This series of actions constitutes a reasonable response in accord with common sense and ordinary human experience. 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. it may be noted that the NSC may seek indemnification. pointing out that he wrote his letter to NSC only 7 days later. 7 days lapsed because he first called the attention of the stevedores. NSC attempts to discredit the testimony of Vicente Angliongto. 21. 2004 ( 22 ) . Clearly. or loss of. because he was not responsible for the stevedores or the unloading operations. 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. where it was stated that every time the strong winds and big waves caused the first layer of the canvass covering to give way. however. Admissibility of certificates proving seaworthiness. 18. an officer of VSI. 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 . In fact. by questioning his failure to complain immediately about the stevedores’ negligence on the first day of unloading. 22. or damage to. about the negligent and defective procedure adopted in unloading the cargo. This was further demonstrated by the fact that. from the stevedoring company at fault in the discharge operations. as owner and real party in interest. 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. This tent-like covering. the vessel is not liable for loss of. Herein. the cargo caused by the negligence of the stevedores. Antonio C. only in addition to the new one used primarily to make the ship’s hatches watertight. the ship used the old tarpaulin. Due diligence exercised by officers and crew of 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. 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. The foregoing are clear from the marine protest of the master of the MV Vlasons I. 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. 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. Exhibits 3-9 and 12 inadmissible Transportation Law. and it is liable for injury to. 19. then the NSC’s representative. and the deposition of the ship’s boatswain. was clearly inadequate for keeping rain and seawater away from the hatches of the ship.Haystacks (Berne Guerrero) 17. NSC’s failure to insure the cargo will not affect its right. 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. Jose Pascua. to file an action against VSI for damages caused by the latter’s willful negligence.

therefore. was drydocked and PCG Inspectors were sent on board for inspection. If laytime is expressed in “running days. meets all requirements. Exhibits 3. as such.” Exhibit 11 is an original certificate of the Philippine Coast Guard in Cebu issued by Lieutenant Junior Grade Noli C. 9. and holidays are not excepted. 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. and qualified as WWDSHINC. Exhibits 5. in present case Herein. but their admission under the best evidence rule have not been demonstrated. and (5) Certificate of Approval for Conversion issued by the Bureau of Customs. The running of laytime was thus made subject to the weather. 27. the contract of voyage charter hire provided for a four-day laytime. Exhibits 3 and 4 are certificates issued by private parties. Attorney’s fees not justified While VSI was compelled to litigate to protect its rights. 4. (3) International Load Line Certificate from the Philippine Coast Guard. but they have not been proven by one who saw the writing executed.” (sic) NSC’s Claim. NSC may not be held liable for demurrage as the four-day laytime allowed it did not lapse. is obviously misleading and erroneous. 2004 ( 23 ) . 7. The vessel was a private carrier and. for they have not been properly offered as evidence. and 12 are photocopies. it did not have the obligation of a common carrier to show that it was seaworthy. are prima facie evidence of the facts therein stated.” this means days when the ship would be run continuously. Consequently. is in seaworthy condition. (2) Certificate of Inspection from the Philippine Coast Guard. Laytime for four days. 8. and would cease to run in the event unfavorable weather interfered with the unloading of cargo. After completion of drydocking and duly inspected by PCG Inspectors. Assailing genuineness of certificate of seaworthiness not sufficient proof of unseaworthiness NSC has the burden of proving that MV Vlasons I was not seaworthy. or by a person in the performance of a duty specially enjoined by law. 8. 26. or by evidence of the genuineness of the handwriting of the maker. How laytime runs Laytime runs according to the particular clause of the charter party.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. 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. Exhibit 11 is admissible under a well-settled exception to the hearsay rule per Section 44 of Rule 130 of the Rules of Court. the vessel ‘VLASONS I’. Assailing the genuineness of the certificate of seaworthiness is not sufficient proof that the vessel was not seaworthy. having been tolled by unfavorable weather condition in view of the WWDSHINC qualification agreed upon by the parties. 25. A qualification of “weather permitting” excepts only those days when bad weather reasonably prevents the work contemplated. 23. 28. 40 It is given to compensate the shipowner for the nonuse of the vessel. fitted and equipped for trading as a cargo vessel was cleared by the Philippine Coast Guard and sailed for Cebu Port on July 10. 24. 6. 9 and 12 are inadmissible. a cargo vessel. Clearly. 1974. Exhibit 11 admissible as exception to hearsay rule Herein. 6. Flores to the effect that “the vessel ‘VLASONS I’. it also qualified laytime as WWDSHINC or weather working days Sundays and holidays included. (4) Coastwise License from the Board of Transportation. 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. 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. 5. which provides that “(e)ntries in official records made in the performance of a duty by a public officer of the Philippines. or by a subscribing witness. 7. Indeed.

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

having been heard. and let same be published in the Gazette for general information. 1888. p. plying between this port and the other ports of the archipelago or China. and to furnish the postal authorities with due notice of their sailing hours. 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. p. 1868. 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. of giving four days’ notice before the day they are to sail. so as to give opportune notice to the administracion de correos. and file. pp. shall give notice to the captain of the port’s before midday. m. 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.) 3. its captain shall only be required to give. 528. (4) The report of the captain of the port’s office must be at that administracion general before 2 o’clock. let this decree be communicated to the comandancia general de marina. to their great prejudice. is reduced to two. 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. (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. relative to the duty imposed upon shipowners or consignees of steamers whether national or foreign. the administracion general de aduanas. 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. Considering that the actual application of such provisions might affect in a remarkable way the commercial interests in the very exceptional case spoken of. the fortunate increase of steamers and consequently the frequent repetition of voyages made by them. (2) The shipowners or consignees of steamers. from the very instant of determining the sailing of the ship. 1888. and vice versa. is evident. (6) The centro de correos shall send the notices to the Gazette and other newspapers. 1868. and the ship may sail in the afternoon of the day next following. 516. all vessels engaged in the coasting trade were required to carry the mails. capitania del puerto de Manila and Cavite and the administracion general de correos. 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. Diccionario de la Administracion de Filipinas. This general government ordains as follows: (1) The period of four days prescribed by section 7 of the superior decree of December 18. 1. Diccionario de la Administracion de Filipinas.Haystacks (Berne Guerrero) sailings of ships.. Decree of 13 January 1876 A later decree dated 13 January 1876. whether national or foreign.) 4. This superior civil government ordains: That when a ship falls within the precise exceptional case raised by the within resolution. plying between this port and the other ports of the Archipelago or China and vice versa. may have requested the visita de salida and in the event of there being none a report shall be sent stating that fact. 1.” (Berriz. M. 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. 2004 ( 25 ) . and shall post them besides on a bulletin board at the door of the postoffice. For the purposes that may be proper. There is no allegation in the Transportation Law. comandancia general de carabineros and the administracion general de correos. under the laws and regulations in force at the time of the change of sovereignty. (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. 529. immediate notice to the postoffice stating the day and hour in which the sailing must be made. and therefore. 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. Report to the government of H. Indeed it is a matter of common knowledge that.” (Berriz. where the ship just anchored should have to set sail again before the period of four days referred to. noon. The capitamia del puerto. vol. every day.

134 U. and limitation is not the equivalent of confiscation. v. Of course such regulations must not have the effect of depriving an owner of this property without due process of law.) Transportation Law. 418. that is. Minnesota. 113. Minnesota. (Chicago etc. vs. 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. judicial interference should never occur unless the case presents. As business is of public employment. 5. S. 173 U. vs. and have duties to perform in which the public is interested. 169 U. R. 6. 467.. But aside from such constitutional limitations. Illinois. 2004 ( 26 ) ..s. 466. 134 U.. 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. Minneapolis Eastern R. Yangco Steamship Co. 13(). S. Co. 31 Phil.. Munn vs. vs. therefore.. nor of limiting or prescribing irrevocably vested rights or privileges lawfully acquired under a charter or franchise. and is subject to public regulation. 6 How.man. 143 U. Well. 524. Power to regulate not power to destroy. Their business is. 344. 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. 1. and that as to them. Business of common carriers affected with public interest Common carriers exercise a sort of public office. Smyth vs. limitation not confiscation The power to regulate is not a power to destroy. 94 U. and this notwithstanding the fact that the enforcement of such regulations may tend to restrict their liberty. 8.) 9. 382. S.. Rep. affected with a public interest. Merchants’ Bank. or without due process of law. Co. 592. Co. 7. vs.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.. 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. state may impose reasonable regulations The nature of the business in which they are engaged as a public employment. 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. clearly and beyond all doubt.) 10. (New Jersey Steam Nav. Co. 339.) “ (Fisher vs. 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.. S. 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. 614. Henderson Bridge Co. nor of confiscating or appropriating private property without just compensation.. Ames. S. the determination of the nature and extent of the regulations which should be precribed rests in the hands of the legislator. Henderson City. (Chicago etc. Under pretense of regulating fares and freights the state can not require a railroad corporation to carry persons or property without reward. R. S. Nor can it do that which in law amounts to a taking of private property for public use without just compensation.

bells and other warning signals maintained at points of danger. without due process of law. Coast and geodetic surveys are conducted to keep them informed as to the dangers hidden beneath the treacherous sea. charts and general information as to conditions affecting travel by water are kept up to date. 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. appropriations are made for the support of a Weather Bureau. ‘equality’ in taxation means Transportation Law. 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. No one is compelled to comply with these regulations unless he voluntarily enters upon the business which they affect. In a word. Can it be fairly contended that a regulation is unreasonable which requires vessels licensed to engage in the interisland trade. Licensed pilots are provided to insure safe entry into the dangerous ports and harbors throughout the Islands. as one of the conditions upon which they were permitted to engage in the quasi-public employment of carriers in the interisland trade. and of changes of sailing hours.Haystacks (Berne Guerrero) 11. and to engage in a business. and buoys. 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. Uniformity of taxes (assuming) If regulations of this kind be regarded as in the nature of a tax upon the vessels affected thereby. but it is limited to geographical uniformity. to hold themselves in readiness to carry the public mails when duly tendered for transportation. of that which he voluntarily agrees to surrender. of his own free will and accord. and he cannot be heard to complain that he is deprived of his property without due process of law when he elects. made in the interests of the public. 241: “In practice. to secure a license as a common carrier in Philippine waters. and furnished all vessels having need for them. one of the conditions of which is that he will comply with such regulations. 2004 ( 27 ) . wharfs and docks constructed. Distinction between “equality” and “uniformity” The distinction between “equality” and “uniformity” in taxation is thus stated in Black on Constitutional Law. therefore. Const. (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. claim that he is unlawfully deprived. The only limitation upon the authority conferred is uniformity in laying the tax. 12. Under the law in force in these Islands at the time of the change of sovereignty. citing Miller. 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. 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. To this end lighthouses have been erected. 14. 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. and if he does enter such business he cannot.. and uniformity does not require the equal application of the tax to all persons or corporations who may come within its operation. 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. in whose behalf the public funds are so lavishly expended. page 392. Largely for the purpose of conveying timely warnings of threatening weather to those that go down into the sea in ships. 15. which the state has a right to impose when it grants licenses to the vessels affected thereby.

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

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

carts. nineteen hundred and four. but each renewal shall be operative for only one year. but the Insular Collector of Customs may at any time suspend or revoke any license upon satisfactory proof of misconduct. incapacity. the supervising inspector of hulls and boilers. not inconsistent withlaw. as amended by Section 1 of Act 1602 Section 1 of Act 780. one person holding an unexpired license as master in the Philippine coastwise trade. and one other competent person. 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. as follows: “The Insular Collector shall. and if satisfied that his capacity. make and promulgate general rules and regulations. Section 73 of Act 355 Section 73 of Act 355 provides as follows: “In the coasting trade. provides.” 28. mate. and assistant inspector of hulls. and under the direct supervision of collectors of customs at the subports of entry within their respective collection districts. who shall issue a license authorizing such applicant to act as master. Section 2 of Act 780 Section 2 of Act 780 is as follows: “Whenever any person applies for license as master. and immigration. Section 1 of Act 780.” 32. vessels.” 30. habits of life. 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. as the case may be. Certificates of protection shall hereafter be signed by the collector of customs at ports where issued and countersigned by the Insular Collector. 2004 ( 30 ) . patron.Haystacks (Berne Guerrero) Section 19 of Act 355 provides. the admeasurement. and enforce such orders and regulations respecting the same as have been heretofore or shall hereafter be prescribed by the proper authority. 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. applicable. 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. to consist of the Insular Collector of Customs. as amended by section 1 of Act 1602. the Insular Collector shall observe. experience. or inattention to duty on the part of the licensee. documenting. and such other evidence as it may deem proper or desirable. 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. patron. railways. promulgate.” 31. in part. or otherwise” 27. from time to time. it shall so certify to the Insular Collector of Customs. intemperate habits. 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. xxx (7) Prescribing the method of loading and unloading merchandise and the transportation thereof by bonded carriers. in part.” 29. or engineer. 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. as follows: “A board is hereby created. in his sound judgment. 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 evidence he presents in support of his application. 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. 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. enrollment and licensing of vessels built or owned in the Philippine Archipelago and in the making and recording of all documents relating thereto. mate. bonded lighters. navigation.

From that sentence. for which execution may issue when this judgment becomes final. during the last four years. intemperate habits. established at the port of Currimao. collected from the provincial government of Ilocos Norte 10 centavos for each of the 5.16. 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. for which sum a judgment is ordered to be entered against them. Ilocos Norte. The Supreme Court affirmed the judgment of the lower court. July. 6 centavos for each sack of rice loaded or unloaded by said association. 34.44. and vice versa. have regularly collected. acting as representatives of the Union Obrera. With costs. tried. such a body of reasonable regulations. Upon that complaint Quinajon and Quitoriano were duly arraigned. as that office formerly existed and as provided in the Spanish laws. Duties of captain of the port devolved upon Insular Collector of Customs and his subordinates The duties of the captain of the port. or inattention to duty on the part of the licensee and also to revoke any such renewal license.986 sacks of rice which they unloaded from the steamers during the months of June. and of licensed officers aboard such vessels.” 33. with reference to the transportation of mail. Insular collector clothed with necessary authority to prepare. 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. incapacity. when granted. [13] US vs. 1 dissents Facts: Pascual Quinajon and Eugenio Quitoriano. Johnson (J): 4 concur. pursuant to the provisions of section 1 of Act No. and sentenced by the Honorable Dionisio Chanco. so far as those decrees and similar regulations continued in force at that time. The Court ordered Quinajon and Quitoriano to the Province of Ilocos Norte the sum P239. and engaged by means of virayes as common carriers of passengers and in loading and unloading freight from steamers anchoring at said port. 30 July 1915) En Banc. but the Board is authorized to refuse any application for renewal upon satisfactory evidence of misconduct. 2004 ( 31 ) . On 17 November 1912. touching the conduct of coastwise vessels and their officers with reference to the transportation of mails. 625. in case the same is not paid. devolved upon the Collector of Customs at the date of the promulgation of Circular 627. to test his physical soundness. promulgation and enforcement. if deemed necessary by the Board. or any of them. The circular is. for the same reasons. a price which differed from the usual charge of 6 centavos made to other shippers of said commodity. Quinajon and Quitoriano were charged with a violation of the provisions of Act 98. the Insular Collector was clothed with the necessary authority at the date of the circular for its preparation. the prosecuting attorney of the Province of Ilocos Norte presented a complaint. and to return to the provincial government of the Province of Ilocos Norte the sum of P359.Haystacks (Berne Guerrero) examination. when correctly construed. and September. representing the same association. judge. to pay a fine of $100 (P200) and costs. now devolve upon the Insular Collector of Customs and his subordinates as he may direct. Transportation Law. Quinajon and Quitoriano. as property belonging to the said government. 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. found guilty of the crime charged. promulgate. to the shore or to the warehouses. with modification. Quinajon and Quitoriano appealed to the Supreme Court. Quinajon (GR 8686. A complaint was presented in the court of the justice of the peace on 11 November 1912.

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

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

that the actual cost of handling and shipping would be different and would. It is when the price charged is for the purpose of favoring persons by localities or particular kinds of merchandise. A common carrier may discriminate between shippers when the amount of goods shipped by one actually costs less to handle and Transportation Law. Actual cost depend upon and settled upon proof. 13. The difference in the charge made by the common carrier cannot be made for the purpose of favoring any person or locality. 14. while B delivers exactly the same number of bunches of bananas. (6) It is not believed that the law prohibits common carriers from making special rates for the handling and transporting of merchandise. Shipments not rendered unlike because shipment composed of different classes of merchandise. it is not sufficient always to say that merchandise is alike. A delivers his bananas to the carrier in separate bundles or bunches. therefore. 2004 ( 34 ) .Haystacks (Berne Guerrero) handle and transport. A man who ships freight by the car-load. simply because it is of a like kind or quantity. so far as the cost of transportation is concerned. 12. The quantity. For example. The difference in the charge to different merchants or shippers must be based upon the actual cost of handling and transporting. or locality. A and B are each shippers of bananas between the same points. without a wrapper or any kind of protection. in such a case. under certain conditions. but they are neatly packed in a few boxes or baskets. If the services are alike and contemporaneous. Difference in charge of handing may depend on actual cost. actual cost may depend upon quantity. Examples A difference in the charge for handling and transporting may only be made when the difference is based upon actual cost. It does not require much argument to convince men conversant with the shipping of merchandise. Absolute equality. or shipper. simply because A is also a shipper of hemp. A is a shipper of rice and hemp and B is a shipper of rice alone. providing they are made applicable to all. to a better rate than the man who ships a single article or package of the same class or kind of merchandise. For example. Merchandise may be alike in kind or quantity but not as to cost of transportation. 15. 16. This rule.” although contemporaneous. (5) The law does not require common carriers to perform different services for the same price. and yet not be alike. under certain circumstances and conditions. and quality may be exactly the same. under the law. discrimination in the price charged is prohibited. The difference in charge must not be made to favor one merchant. by reason of the actual cost of handling and shipping. It is not believed that the carrier is permitted. however. For example. may be entitled. or shipper. 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. to the disadvantage of another merchant. 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. that the law intervenes and prohibits. unless the actual cost is the same. (7) It is not believed that the law requires absolute equality in all cases. 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. As another example. Circumstances and conditions may make it injurious to the carrier. he is certainly entitled to a better rate. and adopted in other trades and pursuits. perhaps. may give some shippers an advantage over others. and to manage their important interests upon the same principles which are regarded as sound. 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. The law prohibits favoritism and discrimination It is favoritism and discrimination which the law prohibits. does not prohibit the making of general schedules. when the same are made for the purpose of increasing their business. not be “alike. or locality. kind. less than a car-load. The actual cost may depend upon quantity. Both A and B prepare their rice for shipment in exactly the same form of package. Example For the purposes of the law.

Quinajon and Quitoriano discriminated against the province Herein.Haystacks (Berne Guerrero) transport.60 and P359. 19. in determining the rate or amount of his compensation. shall be entitled to sue for and recover all damages so incurred.44. The difference in the charge must be the difference in the cost. Section 5 of Act 98 Section 5 of Act 98 provides that any person or corporation. or the sum of P239. the difference between P598. Cendaña would bring such material to Manila for resale. For that service. From the evidence it would seem that there was a clear discrimination made against the province. Upon gathering sufficient quantities of such scrap material. who may be damaged by reason of the doing by a common carrier of any matters and things prohibited. 17. Quinajon and Quitoriano required to return overpayment of P239. its nature. the expense of carriage at different periods of time. and it is but just to the carrier that he be permitted to take these circumstances into consideration. and when the consideration given to the individual is for the interest of the common carrier alone. while he does not carry all of the goods of another. such as the quantity carried. 20. The law of equality is in force only where the services performed in the different cases are substantially the same. Numerous circumstances may intervene. whereby advantage may accrue to individuals. 18. which bear upon the cost and expense of transportation. under the same conditions. They had a right to collect 6 centavos. and the like. or P239.16. CA (GR L-47822. 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. and unreasonable discrimination. He utilized 2 six-wheeler trucks which he owned for hauling the material to Manila.986 sacks. Cendaña would load his vehicles with cargo which various merchants wanted delivered to differing establishments in Pangasinan. and unreasonable discrimination which the law forbids. undue.60. or the sum of P359. Many considerations may properly enter into the agreement for the carriage or shipment rate. Circumstances may intervene in determining rate of compensation It is only unjust. A question of fact is raised in each case for the courts to decide. Quinajon and Quitoriano collected from the province more than they had a right to collect. a junk dealer. for which they charged the sum of P598. Law prohibits unjust. On the return trip to Pangasinan.44 Quinajon and Quitoriano had a right to charge the provincial government 6 centavos for each sack of rice unloaded. Feliciano (J): 4 concur Facts: Ernesto Cendaña. and the circumstances and conditions are similar. Cendaña charged freight rates which were commonly Transportation Law. undue. 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. but he cannot discriminate upon the ground simply that he carries all of the goods of one shipper. and when the common carrier gives all shippers exactly the same rate. 2004 ( 35 ) . They unloaded for the province 5. etc. 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.16. 21.44. 22 December 1988) Third Division. [14] also [39] De Guzman vs. was engaged in buying up used bottles and scrap metal in Pangasinan. Discrimination is the thing which is specifically prohibited and punished under the law. They should be required to return to the province the excess which they collected.

Accordingly. a merchant and authorized dealer of General Milk Company (Philippines).e.00 as attorney’s fees. On 10 December 1975.” i. and one who offers services or solicits business only from a narrow segment of the general population. corporations. Cendaña denied that he was a common carrier and argued that he could not be held responsible for the value of the lost goods. or air for compensation. 2004 ( 36 ) . Rizal. being a common carrier. Public Service. as amended) which at least partially supplements the law on common carriers set forth in the Civil Code.150. Pedro de Guzman. In his Answer. by land. Section 13. the general community or population. Article 1732 NCC The Civil Code defines “common carriers” in the following terms (Article 1732): “Common carriers are persons.00. The other 600 boxes never reached de Guzman. Cendaña loaded in Makati the merchandise on to his trucks: 150 cartons were loaded on a truck driven by Cendaña himself.000. de Guzman commenced action against Cendaña in the CFI of Pangasinan. its driver. 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. Common carriers defined. Sometime in November 1970. on 1 December 1970. his helper and the cargo. 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. and one who does such carrying only as an ancillary activity (in local idiom. in finding that he had habitually offered trucking services to the public.” under the Public Service Act (Commonwealth Act 1416. should be held liable for the value of the undelivered goods. 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..150. the claimed value of the lost merchandise.000. and in ordering him to pay damages and attorney’s fees. paragraph (b) of the Public Service Act Transportation Law. to de Guzman’s establishment in Urdaneta on or before 4 December 1970. Tarlac. such loss having been due to force majeure. Article 1733 deliberately refrained from making such distinctions. and affirmed the Decision of the Court of Appeals dated 3 August 1977. De Guzman came to the Supreme Court by way of a Petition for Review. 1. Neither does Article 1732 distinguish between a carrier offering its services to the “general public.Haystacks (Berne Guerrero) lower than regular commercial rates. Cendaña ‘s driver and employee. 3. De Guzman argued that Cendaña. contracted with Cendaña for the hauling of 750 cartons of Liberty filled milk from a warehouse of General Milk in Makati. The Supreme Court denied the Petition for Review on Certiorari. while 600 cartons were placed on board the other truck which was driven by Manuel Estrada. in Urdaneta. 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. 4.00) as well as for P4. in not exempting him from liability on the ground of force majeure. as “a sideline”). by armed men who took with them the truck. On 6 January 1971. firms or associations engaged in the business of carrying or transporting passengers or goods or both. Inc. 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. and having failed to exercise the extraordinary diligence required of him by the law.00 as damages and P2. demanding payment of P22. offering their services to the public. plus damages and attorney’s fees. Cendaña urged that the trial court had erred in considering him a common carrier. water. On appeal before the Court of Appeals. episodic or unscheduled basis. Pangasinan. without pronouncement as to costs.” 2. Only 150 boxes of Liberty filled milk were delivered to de Guzman. since the truck which carried these boxes was hijacked somewhere along the MacArthur Highway in Paniqui.

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

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

Philippines. PPI sent a claim letter dated 18 December 1974 to Soriamont Steamship Agencies (SSA). Japan. A private marine and cargo surveyor. PPI’s warehouse was made of corrugated galvanized iron (GI) sheets. Upon arrival of the vessel at her port of call on 3 July 1974. using metal scoops attached to the ship. covered with 3 layers of tarpaulin. The survey report submitted by CSCI to the consignee (PPI) dated 19 July 1974 revealed a shortage in the cargo of 106. Addenda 1. for P245. 14th and 18th).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. 3 and 4 to the charter-party were also subsequently entered into on the 18th. (PPI). what they received was just a request for shortlanded certificate and not a formal claim. to Poro Point. the steel hatches were closed with heavy iron lids. [15]. its load of Urea was covered with tarpaulin before it was transported to the consignee’s warehouse located some 50 meters from the wharf. La Union. The hatches remained open throughout the duration of the discharge. 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. Riders to the aforesaid charter-party starting from paragraph 16 to 40 were attached to the pre-printed agreement. Inc. and are not held liable for acts or events which cannot be foreseen or are inevitable. from 5 July to 18 July 1974 (except July 12th. 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. 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.726 M/T and that a portion of the Urea fertilizer approximating 18 M/T was contaminated with dirt. Tarpaulins and GI sheets were placed in-between and alongside the trucks to contain spillages of the fertilizer. according to them. then tied with steel bonds. The hatches remained closed and tightly sealed throughout the entire voyage. Bellosillo (J): 2 concur. USA. raining occasionally while the discharge was in progress. KKKK. by taking draft readings of the vessel prior to and after discharge. 15 September 1993) First Division. On 17 May 1974. 20th. (CSCI). also [171] Planters Products vs. 2004 ( 39 ) . as evidenced by Bill of Lading KP-1 signed by the master of the vessel and issued on the date of departure. rust and dirt. Cargo Superintendents Company Inc. 1 took no part Facts: Planters Products. in Tokyo. CA (GR 101503. with an opening at the front where the dump trucks entered and unloaded the fertilizer on the warehouse floor. 21st and 27th of May 1974.7069 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. PPI unloaded the cargo from the holds into its steel-bodied dump trucks which were parked alongside the berth. was hired by PPI to determine the “outturn” of the cargo shipped. 9. respectively.839 M/T and about 23 M/T were rendered unfit for commerce. Midway to the warehouse. provided that they shall have complied with the rigorous standard of extraordinary diligence. Alaska. having been polluted with sand. San Fernando. the steel pontoon hatches were opened with the use of the vessel’s boom.969. and that this “request” was denied by them because they “had nothing to do with the discharge of the shipment. certain portions of the route to the warehouse were sandy and the weather was variable. pursuant to the terms and conditions of the charter-party (which provided for an FIOS clause). 1 on leave.329.Haystacks (Berne Guerrero) Even common carriers are not made absolute insurers against all risks of travel and of transport of goods. USA. the resident agent of the carrier. Consequently. 2. 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. It took 11 days for PPI to unload the cargo. purchased from Mitsubishi International Corporation of New York. After the Urea fertilizer was loaded in bulk by stevedores hired by and under the supervision of the shipper. or prior to its voyage.” Transportation Law. Before loading the fertilizer aboard the vessel. The port area was windy. Each time a dump truck was filled up. SSA explained that they were not able to respond to the consignee’s claim for payment because.

affirmed the assailed decision of the Court of Appeals. PPI filed an action for damages with the Court of First Instance of Manila. or voyage charter. etc. and the burden of proving otherwise rests on them. 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. Common carriers presumed negligent in case of loss. Kinds of contract of affreightment Contract of affreightment may either be time charter. on a particular voyage. Distinction between common or public carrier. Extraordinary diligence required of common carriers (Article 1733). of Manila. 6. no Transportation Law. Common or public carrier defined. 2. wherein the vessel is leased to the charterer for a fixed period of time. PPI appealed by way of petition for review. now RTC. 2004 ( 40 ) . 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. 1. Ordinary diligence required of private carriers Article 1733 of the New Civil Code mandates that common carriers. Charter party defined A “charter-party” is defined as a contract by which an entire ship. of goods. 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. In both cases. by reason of the nature of their business. the shipowner to supply the ship’s stores. to carry goods for others. On the contrary. although involving the carriage of goods for a fee. 3. and consequently. The definition extends to carriers either by land. who are his servants. and. not a part of the general business or occupation. with costs against PPI. dismissed Civil Case 98623 of the then CFI. either for a determinate period of time or for a single or consecutive voyage. is let by the owner to another person for a specified time or use. should observe extraordinary diligence in the vigilance over the goods they carry. the person or corporation offering such service is a private carrier. 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. 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. 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. in consideration of the payment of freight. 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. wherein the ship is leased for a single voyage. 5. 7. 4. Scope of definition The term “common or public carrier” is defined in Article 1732 of the Civil Code. which reversed the trial court. (b) charter by demise or bareboat charter. including the master and the crew. however. such that if the undertaking is a single transaction. or some principal part thereof. On appeal. In the case of private carriers. the charter-party provides for the hire of the vessel only. destruction or deterioration of the goods. the exercise of ordinary diligence in the carriage of goods will suffice. pay for the wages of the master and the crew.Haystacks (Berne Guerrero) On 18 July 1975. common carriers are presumed to have been at fault or to have acted negligently. The Supreme Court dismissed the petition. No presumption in private carriers In case of loss.

at least insofar as the particular voyage covering the charter-party is concerned. Carrier has sufficiently overcome. notwithstanding the charter of the whole or portion of a vessel by one or more persons. does not find application in Philippine jurisdiction. the manning of the decks. chosen and hired by the shipowner. its officers and compliment were under the employ of the shipowner and therefore continued to be under its direct supervision and control. in the ordinary course of business. Kyosei Kisen Kabushiki Kaisha a common carrier. and the same difficulty in discovering the truth as to what has taken place arises . or some other circumstances inconsistent with its liability. When charter party converts common carrier to private carrier It is only when the charter includes both the vessel and its crew. 11. American Steamship misplaced The carrier’s heavy reliance on the case of Home Insurance Co. When PPI chartered the vessel M/V “Sun Plum”. 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. the learned barrister-at-law “As a matter of principle. 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. a public carrier shall remain as such. v. 10. so that he takes over the charge and control of her. operates as a common carrier. Thereafter. 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. as in the case of a time-charter or voyage-charter. Observations of Raoul Colinvaux. Reliance on case of Home Insurance vs. the same grounds for imposing a strict responsibility exist. actual or constructive. Considering that the steering 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. Thus. 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. the charterer is a stranger to the crew and to the ship. The master and the crew are in each case his servants. by clear and convincing proof. the prima facie presumption of negligence Transportation Law. remained as so in charter party Kyosei Kisen Kabushiki Kaisha. Indubitably. . 8. Where the ship herself is let to a charterer. 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. the case is different. of the carrier. 14. as in a bareboat or demise that a common carrier becomes private. the shipowner is not then a carrier. the rules governing common carriers. 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. 12. 2004 ( 41 ) . a shipowner in a time or voyage charter retains possession and control of the ship. more particularly. although her holds may.” 13. and not the effects of a special charter on common carriers. the ship captain. transporting goods indiscriminately for all persons. 9. be the property of the charterer. damage or deterioration of the cargo was due to fortuitous event. whether he is employed by one or many. the burden of proof shifts to respondent to prove that he has exercised extraordinary diligence required by law or that the loss. . 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. the same opportunities for fraud or collussion occur. But where her services only are let. American rule as to shipper carrying special cargo not applicable in the Philippines.Haystacks (Berne Guerrero) such presumption applies to private carriers. provided the charter is limited to the ship only. for the moment.

and that proof of these accidents is incumbent upon the carrier. as against him. 15. free from all risk and expense to the carrier. meaning. 16. 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. that the loading. and in the presence of a representative of the shipowner. (2) The dissipation of quantities of fertilizer. either fresh or saline. destruction or deterioration of goods Article 1734 of the New Civil Code provides that common carriers are not responsible for the loss. and a cargo surveyor representing CSCI. Moreover. 17. 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. some of its particles Transportation Law.. provided that the temperature inside the hull does not exceed 80 degrees centigrade. or the inherent defect of the goods. or when it comes in contact with water. Verily. up to and until the vessel reached its destination and its hull was re-examined by the consignee. the steel pontoon hatches were closed and sealed with iron lids. then covered with 3 layers of serviceable tarpaulins which were tied with steel bonds. losses due to spillage during such operation amounting to one percent (1%) against the bill of lading is deemed “normal” or “tolerable. (2) It was also shown during the trial that the hull of the vessel was in good condition. destruction or deterioration of the goods if caused by the character of the goods or defects in the packaging or in the containers. not when the same is done by the consignee or stevedores under the employ of the latter. representatives of the consignee boarded. force majeure. When M/V “Sun Plum” docked at its berthing place. the wind tends to blow away some of the materials during the unloading process.” The primary cause of these spillages is the clamped shell which does not seal very tightly. 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. testified that before the fertilizer was loaded. 2004 ( 42 ) . shall be liable for the loss and damage resulting from the preceding causes if it is proved. Expected risks of bulk shipping (1) In unloading fertilizer in bulk with the use of a clamped shell.I. a shipowner is liable for damage to the cargo resulting from improper stowage only when the stowing is done by stevedores employed by him. nonetheless. The carrier. After completing the loading of the cargo in bulk in the ship’s holds. but prior to unloading. stowing. dried and fumigated. the 4 hatches of the vessel were cleaned. shall be for the account and risk of the shipper. foreclosing the possibility of spillage of the cargo into the sea or seepage of water inside the hull of the vessel. that they arose through his negligence or by reason of his having failed to take the precautions which usage has established among careful persons. Japan. nitrogen and ammonia do not normally evaporate even on a long voyage. or its deterioration in value.O. 15. the foreman. The stevedores unloaded the cargo under the watchful eyes of the shipmates who were overseeing the whole operation on rotation basis. The Code of Commerce also provides that all losses and deteriorations which the goods may suffer during the transportation by reason of fortuitous event. during storage.S. trimming and discharge of the cargo was to be done by the charterer. Characteristics of urea Urea is a chemical compound consisting mostly of ammonia and carbon monoxide compounds which are used as fertilizer. is caused either by an extremely high temperature in its place of storage. When Urea is drenched in water. Urea also contains 46% nitrogen and is highly soluble in water. 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.Haystacks (Berne Guerrero) (1) The master of the carrying vessel. Period which carrier was to observe degree of diligence. Captain Lee Tae Bo. Also. However. When common carriers not liable for loss. opened the hatches and inspected the condition of the hull of the vessel. the stevedores. and therefore under his control and supervision.

making the M/V “Sun Plum” in all respects seaworthy to carry the cargo she was chartered for. 19. If there was loss or contamination of the cargo. (J): 4 concur Facts: Rodolfo A. 18. 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. After trial. Manila to the warehouse of Purefoods Corporation in Calamba. The trial court granted the writ of preliminary attachment on 17 February 1987. Cipriano demanded reimbursement from Bascos but the latter refused to pay. (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. Hull of vessel in good condition. [16] Bascos vs. subcontracted with Estrellita Bascos to transport and to deliver 400 sacks of soya bean meal worth P156. Variable weather condition a risk of loss or damage which owner or shipper of goods has to face Herein. 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. Eventually. As a consequence of that failure. Bulk shipment of highly soluble goods like fertilizer carries with it the risk of loss or damage. CA (GR 101089. the petition for review on certiorari.00 as and for attorney’s fees. To carry out its obligation. Campos Jr.000. 2004 ( 43 ) . The court further denied the “Urgent Motion To Dissolve/Lift preliminary Attachment” dated 10 March 1987 filed by Bascos for being moot and academic.” 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. more so. with a variable weather condition prevalent during its unloading. The Supreme Court dismissed the petition and affirmed the decision of the Court of Appeals. But the salvaged portion which is in liquid form still remains potent and usable although no longer saleable in its original market value. (2) the amount of P5. the trial court rendered a decision. ordering Bascos to pay Cipriano (1) the amount of P156. CIPTRADE. Laguna at the rate of P50. 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. it was in the month of July when the vessel arrived port and unloaded her cargo. and (3) the costs of the suit. Laguna.404. Del Pan.00 per metric ton. 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. This is a risk the shipper or the owner of the goods has to face. whereby the former bound itself to haul the latter’s 2. Hence. Bascos failed to deliver the said cargo. Bascos appealed to the Court of Appeals (CA-GR CV 25216) but the appellate court affirmed the trial court’s judgment.Haystacks (Berne Guerrero) dissolve.00 for actual damages with legal interest of 12% per cent per annum to be counted from 4 December 1986 until fully paid. This may be gleaned from the testimony of the marine and cargo surveyor of CSCI who supervised the unloading. Cipriano representing Cipriano Trading Enterprise (CIPTRADE) entered into a hauling contract with Jibfair Shipping Agency Corp. Cipriano paid Jibfair Shipping Agency the amount of the lost goods in accordance with the contract.000 m/tons of soya bean meal from Magallanes Drive.00 from the Manila Port Area to Calamba. It rained from time to time at the harbor area while the cargo was being discharged according to the supply officer of PPI. Cipriano filed a complaint for a sum of money and damages with writ of preliminary attachment for breach of a contract of carriage. Transportation Law.404. through Rodolfo Cipriano. 7 April 1993) Second Division.

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

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

Contract of transportation by air may be regarded as commercial. Obvious reason why transport by air not included in Code of Commerce A contract of transportation by air may be regarded as commercial. After trial. To recoup his losses. 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.Haystacks (Berne Guerrero) shown in the Cita Theater on the 17th and 18th of September. and Mendoza. this can of film was not unloaded at Pili Air Port and it was brought back to Manila. PAL issued its Air Way Bill 317133. corresponding to the eve and day of the fiesta itself. 1. 2004 ( 46 ) . PAL a debtor in good faith Although PAL was not obligated to load the film on any specified plane or on any particular day. air transportation is clearly similar or analogous to land and water transportation.000. and its unexplained failure to comply with this duty constituted negligence. 1107 of the Civil Code which provides that losses and damages for which a debtor in good faith is liable are those foreseen. the film was finally located the following day. the lower court found that because of his failure to exhibit the film “Himala ng Birhen” during the town fiesta. Camarines Sur. Mendoza suffered damages or rather failed to earn profits in the amount of P3. In pursuance of the agreement between the LVN Pictures Inc. After investigation and search in the Manila office. In the United States where air transportation has reached its highest development. besides. For reasons not explained by PAL. This can of films was loaded on PAL flight 113. for the reason that neither the shipper LVN Pictures Inc. 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. When Aircraft Operator is common carrier Transportation Law.00. then it assumed the obligation to unload it at its point of destination and deliver it to the consignee. an airline company engaged in the transportation business is regarded as a common carrier. or which might have been foreseen. The obvious reason for its non-inclusion in the Code of Commerce was that at the time of its promulgation. and then shipped to the Pili Air Port on September 20th. 39 PHIL 587) 3. dismissed the complaint. with no pronouncement as to costs.m. The reason is that at least in the present case the transportation company (PAL) is a common carrier. of the same day. 1948. For this shipment. went to the Air Port and inquired from PAL’s station master there about the can of film. but which would appear to be the fault of its employees or agents. transportation by air on a commercial basis was not yet known. The Court however found that fraud was not involved and that PAL was a debtor in good faith. and which are a necessary consequence of the failure to perform it. (See Similar case of Daywalt vs. the plane arriving at the Air Port at Pili a little after 4:00 p. the former on September 17th. 4. 2. at the time of constituting the obligation. a can containing the film “Himala ng Birhen” consigned to the Cita Theater. September 18th. September 17th. once said can of film was loaded and shipped on one of its planes making the trip to Camarines. 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. Mendoza who had completed all arrangements for the exhibition of the film beginning in the evening of September 17th. The Supreme Court affirmed the decision appealed from. to exploit the presence of the big crowd that came to attend the town fiesta. Corporacion de PP Agustinos Recoletos. 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. but finding the PAL not liable for said damages. 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. Mendoza brought this action against the PAL. A debtor in good faith is liable only for foreseen losses and damages Applying the provisions of Art. Mendoza may not recover the damages sought.

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

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

Herein. PhilGen then filed an action against Coastwise Lighterage before the RTC of Manila. using the latter’s dumb barges. including waste of efforts on preparations and expenses incurred in advertisements. but the possession. Inc. CA (GR 114167. Inc. Hence. 12 July 1995) Third Division. or else enter into a special contract or make a suitable arrangement with the common carrier for the prompt delivery of the films. The RTC (Branch 35) awarded the amount prayed for by PhilGen. [18]. for their security. Francisco R. which is likewise owned by Coastwise. the charterer will generally be regarded as the owner for the voyage or service stipulated. struck an unknown sunken object. Pag-asa Sales only leased three of Coastwise Lighterage’s vessels.000. Coastwise Lighterage. Thereafter. “Coastwise 9”. the award was affirmed on 17 December 1993.00 as attorney’s fees and costs. 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. entered into a contract to transport molasses from the province of Negros to Manila with Coastwise Lighterage Corp. This prompted the consignee. i. to reject the shipment of molasses as a total loss. remains in the absence of the stipulation When the charter party contract is one of affreightment over the whole vessels.000. Philippine General Insurance Company (PhilGen) and against the carrier. exhibitors. (J): 4 concur Facts: Pag-asa Sales Inc. The contract thus entered into with the consignee was one of affreightment. Pag-asa Sales.. would remain in the absence of stipulation. Demise or bareboat charter of the vessel.00 plus interest thereon at the legal rate computed from 29 March 1989. The Supreme Court denied the petition. As a consequence. In turn. also [177] Coastwise Lighterage Corp.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 barges were towed in tandem by the tugboat MT Marica. one of the barges. the molasses at the cargo tanks were contaminated and rendered unfit for the use it was intended. 2004 ( 49 ) . 1. The forward buoyancy compartment was damaged. vs. Coastwise Lighterage denied the claim and it was PhilGen which. as common carrier. seeking to recover the amount of P700.Haystacks (Berne Guerrero) In situations where failure to exhibit films on a certain day would spell substantial damages or considerable loss of profits. while approaching Pier 18.000. paid the consignee. 2. filed a formal claim with the insurer of its lost cargo. Pag-asa Sales the amount of P700. command mid navigation of the vessels remained with Coastwise Lighterage. which is presumed to have violated the contract of carriage. The charterer mans the vessel with his own people and becomes Transportation Law. and affirmed the appealed decision.00 representing the value of the damaged cargo of molasses. in order to carry cargo from one point to another. Liability of shipowner in contract of affreightment over vessels. Pag-asa Sales. Puromines vs. Upon reaching Manila Bay. rather than a demise. the principal amount of P700. the petition for review. the liability of the shipowner for acts or negligence of its captain and crew. the date the complaint was filed until fully paid and another sum of P100. On Coastwise Lighterage’s appeal to the Court of Appeals. CA Under the demise or bareboat charter of the vessel. and water gushed in through a hole “2 inches wide and 22 inches long”. 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.e.000. 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. Although a charter party may transform a common carrier into a private one.

and being free from fault. 3. having failed to overcome the presumption of negligence with the loss and destruction of goods it transported. . loading and unloading of the cargo . remains liable as carrier and must answer for any breach of duty as to the care. As a common carrier. remained unrebutted in the present case. as established by marine and navigation laws. the patron of the vessel “Coastwise 9” admitted that he was not licensed. which subsidiarily governs common carriers (which are primarily governed by the provisions of the Civil Code) provides that “captains. 5. once the goods it is sports are lost. Clearly. by placing a person whose navigational skills are questionable. Coastwise Lighterage’s embarking on a voyage with an unlicensed patron violates Article 609 of the Code of Commerce. This presumption. but also the utmost familiarity with the usual and safe routes taken by seasoned and legally authorized ones. 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. lacks not just the skill to do so. which is overcome only by proof of the exercise of extraordinary diligence. For one. command and navigation of the ship. It may also logically. subject to liability to others for damages caused by negligence. An owner who retains possession of the ship though the hold is the property of the charterer. 7.” 8. at the helm of the vessel which eventually met the fateful accident. Principle of subrogation explained Transportation Law. ordinances or regulations. Jesus R. have legal capacity to contract in accordance with this code. Puromines vs. 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. It follows then that the presumption of negligence that attaches to common carriers. 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. and prove the skill capacity and qualifications necessary to command and direct the vessel. applies to Coastwise Lighterage. Article 609 of the Code of Commerce Article 609 of the Code of Commerce. the carrier was culpably remiss in the observance of its duties.” 4. and must not be disqualified according to the same for the discharge of the duties of the position. . destroyed or deteriorated. masters. It cannot safely claim to have exercised extraordinary diligence. follow that a person without license to navigate. 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. 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. the charterer or freighter merely having use of the space in the vessel in return for his payment or the charter hire. To create a demise. Coastwise Lighterage is liable for breach of the contract of carriage. or patrons of vessels must be Filipinos.Haystacks (Berne Guerrero) the owner pro hac vice. Constantino. Carrier remised in observance of duties. Article 2207 NCC Article 2207 of the Civil Code provides that “If the plaintiff’s property has been insured. Contract of affreightment. 2004 ( 50 ) . the owner of a vessel must completely and exclusively relinquish possession.” 6. 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. 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. by proof of its exercise of extraordinary diligence.

Bulacan. The latter in turn informed Greenhills Wood’ resident manager in its Maddela sawmill of what had happened. If the insured property is destroyed or damaged through the fault or negligence of a party other than the assured. then the insurer.316 board feet. Cruz instructed Licuden to give the original copies of the 2 invoices to the consignee upon arrival in Valenzuela. Coastwise Lighterage. 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.822. Inc. Inc.” On 25 June 1980. it was not the carrier which paid the value thereof to Pag-asa Sales but the latter’s insurer. Bautista.. “they were constrained to look for other suppliers..374 board feet of sawn lumber. a business enterprise engaged in hauling freight. Dominador Cruz. Firesman’s Fund Insurance Company v.095. a lumber manufacturing firm with business address at Dagupan City.000. Blue Star’s administrative and personnel manager.690 board feet of sawn lumber with invoice value of P16. with main office in B. This cargo truck was registered in the name of Ma. Luisa Benedicto. IAC (GR 70876. Bulacan 100.00 aboard the cargo truck. In her answer. Coastwise Lighterage was liable for breach of the contract of carriage it entered into with the Pag-asa Sales. Greenhills Wood filed Criminal Case 668 against driver Licuden for estafa. while the other set out the amount of P5.” Herein. the consignee of the cargo of molasses totally damaged while being transported by Coastwise Lighterage. supervised the loading of 7. Manuel R. Homes. Feliciano (J): 3 concur..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. Jamilla & Company.918.80 representing the value of 5. However. Quirino. contracted Virgilio Licuden.20 as the value of 2. Sometime in May 1980. Upon payment by insurer PhilGen of the amount of P700. 19 July 1990) Third Division.F. [19] Benedicto vs. 2004 ( 51 ) . informing him that the sawn lumber on board the subject cargo truck had not yet arrived in Valenzuela. PhilGen. the Manager of Blue Star called up by long distance telephone Greenhills Wood’ president. Cruz in the presence and with the consent of driver Licuden. the former was. 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. 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. On 15 May 1980. and Pan Malayan Insurance Corporation v. Parañaque. Greenhills Wood’s resident manager in Maddela. Greenhills Wood bound itself to sell and deliver to Blue Star Mahogany. claim. subrogated into all the rights which Pag-asa Sales may have had against the carrier. a company with business operations in Valenzuela. wherein the Court explained that “Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. The right of subrogation is not dependent upon. 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. after confirming the above with Blue Star and after trying vainly to persuade it to continue with their contract. Bulacan and to retain the duplicate copies in order that he could afterwards claim the freightage from Greenhills Wood’s Manila office.000 board feet of sawn lumber with the understanding that an initial delivery would be made on 15 May 1980. Bulacan. Bulacan. operates a sawmill in Maddela. Henry Lee Chuy. Before the cargo truck left Maddela for Valenzuela. In a letter dated 18 May 1980. nor does it grow out of. any private of contract or upon written assignment of. 1 took no part Facts: Greenhills Wood Industries Co. On 16 May 1980. To effect its first delivery. It accrues simply upon payment of the insurance claim by the insurer. Benedicto denied liability alleging that she was a Transportation Law. The first invoice was for the amount of P11.00 to Pag-asa Sales. the driver of a cargo truck bearing Plate 225 GA TH to transport its sawn lumber to the consignee Blue Star in Valenzuela. the proprietor of Macoven Trucking. Court of Appeals. Inc. for the damage sustained by the loss of the cargo which the carrier was transporting. Cruz issued to Licuden Charge Invoices 3259 and 3260 both of which were initialed by the latter at the bottom left corner. Insurance Company of North America.

Registered owner liable for consequences flowing from the operation of the carrier. Public Service Law as basis Herein. 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.000. 3. and affirmed the Decision of the former IAC dated 30 January 1985. with legal rate of interest from the filing of the complaint. In this regard. Retention of registered ownership erroneous Herein. in brief. she averred that Tee had been operating the said truck in Central Luzon from that date (28 February 1980) onwards. to pay attorney’s fees in the amount of P2. 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.000. the subject truck having been earlier sold by her to Benjamin Tee. To permit the ostensible or registered owner to prove who the actual owner is. Benedicto retained registered ownership of the freight truck for her own benefit and convenience. In either case. assuming the truth of her story.00 out of the total agreed price of P68. On 20 June 1983. may have been unwilling to absorb the expenses of registering a chattel mortgage over the truck. and holding that Licuden was her employee. or she. is burdened by the law with the duty of exercising extraordinary diligence not only in ensuring the safety of Transportation Law. Benedicto has the legal security device of chattel mortgage. upon appeal by Benedicto.000. thru its President and General Manager. Registered owner not allowed to prove actual owner Herein. exceptions A common carrier. On 30 January 1985. the amount of P16.e. the public has the right to assume that the registered owner is the actual or lawful owner thereof. The prevailing doctrine on common carriers makes the registered owner liable for consequences flowing from the operations of the carrier. It would be very difficult and often impossible as a practical matter. the trial court ordered Benedicto to pay the Greenhills Wood. to secure the payment of the balance of the selling price of the truck. 2. would be to set at naught the purpose or public policy which infuses that doctrine. or her buyer. without success. therefore. the Intermediate Appellate Court affirmed the decision of the trial court in toto. Benedicto has been holding herself out to the public as engaged in the business of hauling or transporting goods for hire or compensation. 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. Presumption of fault or negligence.016 cost of the sawn lumber loaded on the cargo truck. Licuden was Tee’s employee and not hers. She may have been unaware of the legal security device of chattel mortgage. and to pay the costs of the suit. 4. both from the nature of its business and for insistent reasons of public policy. This doctrine rests upon the principle that in dealing with vehicles registered under the Public Service Law.00. 1. The Supreme Court denied the Petition for Review for lack of merit. based on the finding that petitioner Benedicto was still the registered owner of the subject truck. Benedicto is. 2004 ( 52 ) . Benedicto moved for reconsideration. a common carrier. Extraordinary diligence required of common carriers. considerations both of public policy and of equity require that she bear the consequences flowing from registered ownership of the subject vehicle. Hence. Greenhills Wood is not required to go beyond the vehicle’s certificate of registration to ascertain the owner of the carrier. Conclusive presumption. with costs against Benedicto. even though the specific vehicle involved may already have been transferred to another person. i. although the specific vehicle has been transferred to another person.Haystacks (Berne Guerrero) complete stranger to the contract of carriage.00 However. and that. on 28 February 1980 as evidenced by a deed of sale. the petition for review. the letter allegedly written by Benjamin Tee admitting that Licuden was his driver. The registered owner is not allowed to deny liability by proving the identity of the alleged transferee.

The presumption may be overcome only by proof of extraordinary diligence on the part of the carrier. Driver Licuden has implied authority to contract carriage of goods Herein. the Transportation Law. since the freight was at least determinable if not fixed by the tariff schedules in Benedicto’s main business office. Benedicto’s liability to Greenhills Wood fixed. 2004 ( 53 ) . Driver Licuden. 6. however. or from an act or omission of the shipper himself or from the character of the goods or their packaging or container. Herein. Nale. for whose acts Benedicto must respond. 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. the sawn lumber was loaded on board the freight truck. Driver Licuden was entrusted with possession and control of the freight truck by the registered owner (and by the alleged secret owner. [20] Teja Marketing vs. In other words. 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. The loss or destruction or deterioration of goods turned over to the common carrier for conveyance to a designated destination. 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. save only where such loss. 5.00 with a promise that he would pay plaintiff the balance within 60 days. did not prevent the contract of carriage from arising.00 as shown by Invoice 144. Nale bought from Teja Marketing (and/or Angel Jaucian) a motorcycle with complete accessories and a sidecar in the total consideration of P8. Out of the total purchase price Nale gave a downpayment of P1. Benedicto’s liability to Greenhills Wood was thus fixed and complete. 7. Paras (J): 5 concur. 1 took no part Facts: On 9 May 1975. that is. earlier. A contract of carriage of goods was shown. 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. Common carrier cannot be permitted to escape responsibility by proving prior sale of vehicle. in the first week of May 1980. raises instantly a presumption of fault or negligence on the part of the carrier. Bulacan was also proven. Reason Clearly. to sustain Benedicto’s contention. to require the shipper to go behind a certificate of registration of a public utility vehicle. destruction or damage arises from extreme circumstances such as a natural disaster or calamity or act of the public enemy in time of war. Pedro N. under the circumstances. failed to comply with his promise and so upon his own request. 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. It appears that.Haystacks (Berne Guerrero) passengers but also in caring for goods transported by it. 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.000.700. IAC (GR L-65510. Contract of carriage perfected. 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. No one came forward to question that contract or the authority of Licuden to represent the owner of the carrier truck. for that matter). 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. 9 March 1987) Second Division. would be utterly subversive of the purpose of the law and doctrine. 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. loss or non-delivery of the lumber at Blue Star’s premises in Valenzuela.

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 P8. 1.731.00 for the more than 2 times that the motorcycle figured in accidents aside from the loss of the daily income of P15. Hence. Teja Marketing made demands for the payment of the motorcycle but just the same Nale failed to comply. the sum of P546. a 2% service charge.” and accordingly. the appellate court set aside the decision under review on the basis of doctrine of “pari delicto. 2. Kabit system. is contrary to public policy Transportation Law. dismissing the counterclaim. The agreement was that Teja Marketing undertake the yearly registration of the motorcycle with the Land Transportation Commission (LTC).00 would be for the mortgage fee and the P82. the decision was affirmed in toto. as well as the counterclaim of Nale.700.700. and ordered Nale to pay Teja Marketing the sum of P1.21 for attorney’s fees and P100. and P546. On appeal to the Court of First Instance of Camarines Sur. 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. the sum of P200. 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.21 representing attorney’s fees. without costs. the petition for review was filed by Teja Marketing and/or Angel Jaucian.21 as attorney’s fees.00 for the registration fee of the motorcycle. The Supreme Court dismissed the petition for lack of merit. The City Court rendered judgment in favor of Teja Marketing. 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. although not penalized as a criminal offense. Nale gave Teja Marketing P90. Further. the total account of Nale was already P2. Teja Marketing.00. Teja Marketing also claimed that as of 20 February 1978.00 still payable to Teja Marketing.000. In this particular transaction a chattel mortgage was constituted as a security for the payment of the balance of the purchase price. includes not only the balance of P1. The “kabit system” has been identified as one of the root causes of the prevalence of graft and corruption in the government transportation offices. Abuse of this privilege by the grantees thereof cannot be countenanced. A certificate of public convenience is a special privilege conferred by the government. however.00 but an additional 12% interest per annum on the said balance from 26 January 1976 to 27 February 1978.00 as boundary fee beginning October 1976 when the motorcycle was impounded by the LTC for not being registered. 2004 ( 54 ) . Nale suffered damages when he failed to claim any insurance indemnity which would amount to no less than P15. Nale filed a petition for review with the Intermediate Appellate Court. On his part. 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. Nature of the kabit system Herein.00 as expenses of litigation. dismissed the complaint of Teja Marketing. On 18 July 1983.700.05 as shown in a statement of account. and affirmed the assailed decision of the Intermediate Appellate Court (now the Court of Appeals). 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. without pronouncements as to costs. and the costs. Nale did not dispute the sale and the outstanding balance of P1. Pursuant to the agreement and on 22 February 1976.00 for expenses of litigation. 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. but contends that because of this failure of Teja Marketing to comply with his obligation to register the motorcycle.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. the parties operated under an arrangement.

3. neither may recover that he has given by virtue of the contract. and affirmed the decision under review.” 4. 2004 ( 55 ) . neither can seek relief from the courts. Efforts exerted towards re-evaluation of the adverse judgment were futile..500. Sr. the petition for review on certiorari. The Supreme Court dismissed the petition.00.00 which the latter is adjudged to pay to Ocampo. It provides that “If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense. The trial court of Bulacan (Branch 6. The mere lapse of time cannot give efficacy to contracts that are null and void.740. Jr. Hence. On 13 October 1988. Neither Lino Castro nor the driver was connected with BA Finance Corp. and (d) Inocencio Turla. et.00. A suit for damages was filed by Carlos Ocampo.. without special pronouncement as to costs. al.48. et. and each must bear the consequences of his acts. with Justices De Pano. the performance of the other’s undertaking. Article 1412 of the Civil Code denies them such aid. IAC. 129 SCRA 81.00. resulting in triple homicide with multiple physical injuries with damage to property.) [21] BA Finance vs.. Transportation Law.Haystacks (Berne Guerrero) Although not outrightly penalized as a criminal offense. 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.’s Isuzu ten-wheeler truck then driven by an employee of Lino Castro. (4) dismissing all the counterclaims of Villar and BA Finance and Stronghold. CA (GR 98275. the following rules shall be observed: (1) When the fault is on the part of both contracting parties. and (5) ordering Rock to reimburse BA Finance the total amount of P622. (c) Nicolas Cruz P154. BA Finance and Rogelio Villar y Amare jointly and severally to pay (a) Carlos Ocampo P121.. (2) dismissing the case against Lino Castro. (b) Moises Ocampo P298. inasmuch as the truck was registered in the name of the latter. Article 1412 NCC It is a fundamental principle that the court will not aid either party to enforce an illegal contract. or demand. void and inexistent under Article 1409 of the Civil Code. The Court of Appeals affirmed the appealed disposition in toto through Justice Rasul.. (3) dismissing the third-party complaint against Stronghold. Upon this premise it would be error to accord the parties relief from their predicament. the injured in the accident against driver Villar and BA Finance. as the truck was leased by BA Finance to Rock Component Philippines Onc.000. and Imperial concurring. therefore. the trial court rendered a decision (1) ordering Rock Component Philippines Inc.” (Lita Enterprises vs. 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.890. 13 November 1992) Third Division. on practically the same grounds arrived at by the court a quo.al. A criminal suit was filed against Villar.00. Having entered into an illegal contract.650. an accident occurred involving BA Finance Corp. 5. Melo (J): 4 concur Facts: On 6 March 1983. the kabit system is invariably recognized as being contrary to public policy and. Rogelio Villar y Amera. 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. but will leave both where it finds them.

in the interest of the determination of persons responsible for damages or injuries caused on public highways. 4. No vehicle used in public highway unless properly registered The Revised Motor vehicles Law (Act 3992. It is to forestall these circumstances. because the administrative proceeding of registration does not bear any essential relation to the contract of sale between the parties (Chinchilla vs. There is a presumption that the owner of the guilty vehicle as he is the registered owner in the Motor Vehicles Office. as amended). The principle upon which this doctrine is based is that in dealing with vehicles registered under the Public Service Law. 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. even if not used for a public service. 888). 2004 ( 56 ) . 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. Registration required. conspicuously displayed. It has been stated that the system of licensing and the requirement that each machine must carry a registration number. Act 3992. (Section 5[c]. as amended). assigned or conveyed the vehicle. that the motor vehicle registration is primarily ordained. 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. Main of motor vehicle registration The main aim of motor vehicle registration is to identify the owner so that if any accident happens. as amended) provides that no vehicle may be used or operated upon any public highway unless the same is properly registered. so inconvenient or prejudicial to the public. 2. 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. regulating the speed and operation of machines upon the highways. is one of the precautions taken to reduce the danger of injury to pedestrians and other travellers from the careless management of automobiles. 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. 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. 39 Phil. 6. Rafael and Verdaguer. as in land registration cases. however. but to permit the use and operation of the vehicle upon any public highway (section 5 [a]. Doctrine does not imply that registered owner cannot recover By the doctrine. and to furnish a means of ascertaining the identity of persons violating the laws and ordinances. or that any damage or injury is caused by the vehicle on the public highways. Registered owner of vehicle primarily responsible to public and third persons Under the same principle the registered owner of any vehicle. 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. Transportation Law. Act 3992. the public has the right to assume or presume that the registered owner is the actual owner thereof. even though the same had been transferred to a third person. responsibility therefor can be fixed on a definite individual. the registered owner. Registered owner of CPC liable to public for injuries or damages suffered by passengers or third persons. 3. or with very scant means of identification. 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.Haystacks (Berne Guerrero) 1. 5. Revised Motor Vehicles Law.

A registered owner who has already sold or transferred a vehicle has the recourse to a third-party complaint. in that the jeep and the truck were driven in reckless fashion without the consent or knowledge of the respective owners. 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. as it will thwart the purpose of the statute. The inconvenience of the suit is no justification for relieving him of liability. 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. In the Duquillo case. but actually is not. the registered owner should not be allowed to prove the contrary to the prejudice of the person injured. and the displayed number becomes a ‘snare and delusion. Court cannot entertain registrant’s defense to avoid liability. so that he may thereby be relieved of the responsibility to the injured person. 31 October 1969) First Division. 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. 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. 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. 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. The purpose of the statute is thwarted. 1 reserves vote Facts: Herminio L. Barredo (J): 7 concur. Court of Appeals and in Duquillo vs. 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. CA. Cases of Duavit vs. Laguna. in case of accident. said inconvenience is the price he pays for failure to comply with the registration that the law demands and requires. [22] Vargas vs. to prove that a third person or another has become the owner.’ if an individual or corporation should be allowed to pace a “middleman” between them and the public. 8. Bayot is legally unpalatable for the purpose of the present discourse. in the same action brought against him to recover for the damage or injury done. 9.’s Bus 120. 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. contained in a box. The vehicles adverted to in the two cases shared a common thread. Transportation Law. was injured as a consequence of the explosion of firecrackers. Nocum. Bayot not applicable The rulings in Duavit vs. Laguna Tayabas Bus Co. 1 concur in result. Municipality of Bay. that is. (GR L-23733. CA and Duquillo vs. loaded in said bus and declared to its conductor as containing clothes and miscellaneous items by a co-passenger. and escape liability by the manner in which they recompense their servants. Langkay [23] Nocum vs. 2004 ( 57 ) . If the policy of the law is to be enforced and carried out. In the case of Duavit vs. which was then making a trip within the barrio of Dita. a passenger in Laguna Tayabas Bus Co.Haystacks (Berne Guerrero) 7. against the vendee or transferee of the vehicle. Whatever purpose there may be in these statutes.

In other words. 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. Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734. 2004 ( 58 ) . The Supreme Court reversed the appealed judgment of the trial court. 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. fairness demands that in measuring a common carrier’s duty towards its passengers.Haystacks (Berne Guerrero) Nocum filed a case against Laguna Tayabas Bus for damages. while the extraordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756. using the utmost diligence of very cautious persons. 6. 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. using the utmost diligence of very cautious persons. according to all the circumstances of each case. constitutional boundaries are already in danger of being transgressed.351.00 as attorney’s fees. Article 1756 NCC Article 1756 of the Civil Code provides that “In case of death of or injuries to passengers. 3. 6. 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. with a due regard for all the circumstances. after the passenger had already declared that the box contained mere clothes and Transportation Law. Article 1733 NCC Article 1733 of the Civil Code provides that “Common carriers.” 5. Refusal by the passenger to have the package opened was no excuse because.” Even it that may be true. 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. as stated by Dispatcher Cornista. without costs.” 4. employees should call the police if there were packages containing articles against company regulations. from the nature of their business and for reasons of public policy. with due regard for all the circumstances. unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755. and dismissed the case. inquiry was made with the passenger carrying the same as to what was in it. are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them. “if proper and rigid inspection were observed by the defendant. 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. the law does not require as much. Laguna Tayabas appealed. The CFI of Batangas (Civil Case 834) sentenced Laguna Tayabas to pay Nocum the sum of P1. the contents of the box could have been discovered and the accident avoided. Right to privacy Not to be lightly considered be the right to privacy to which each passenger is entitled. and 7. 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. He cannot be subjected to any unusual search. 1. Calling a policeman to his aid in compelling the passenger to submit to more rigid inspection. 2. It is to be presumed that a passenger will not take with him anything dangerous to the lives and limbs of his co-passengers. but beyond this. not to speak of his own. Nos. with legal interest from the filing of the complaint plus costs. as in the case at bar. when he protests the innocuousness of his baggage and nothing appears to indicate the contrary.” “In fact.” According to the judge of the lower court. since its “opening was folded and tied with abaca. and 1745. common carriers are presumed to have been at fault or to have acted negligently. Article 1733 NCC not too exacting. Article 1733 is not as unbending. 5. 1735.

A. 652. Clark vs. above all. and doubtless knew that he had the sack on the seat with him. 703.R. Vincent. 9. and it was not shown that appellant’s employees knew that the jug contained alcohol. in which case the plaintiff was injured by alcohol which had been carried upon the train by another passenger. In the opinion. It ignited and exploded. R. considering how easily the duty to inspect can be made an excuse for mischief and abuse. L. though the conductor had collected his fare. the assistance of the police authorities may be solicited. Wood v. Co. [Quinn v. W. could not have justified invasion of a constitutionally protected domain. 29 Ky. 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. R. In that case Clarke was a passenger on the defendant’s train. 590. Rep. but to conduct the needed investigation consistent with the rules of propriety and. Co. 898. 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. R. 32 S. 9 Tex. and injury is done. W. Louisville “The opinion quotes with approval from the case of Gulf. R. vs. Rep. 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. 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. 96 S. It is in this sense that the service manual issued by Laguna Tayabas Bus Co. R. 742. App. that otherwise the railroad is not responsible. 8. v. W.W. Another passenger took a quantity of gasoline into the same coach in which Clarke was riding. what must be importantly considered is not so much the infringement of the fundamental sacred rights of the particular passenger involved. 652. in assuming the liability of a railroad to its passengers for injury done by another passenger. Principle controlling servants of the carrier. In fact. Co. S. but the constant threat any contrary ruling would pose on the right of privacy of all passengers of all common carriers. & S. 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. 49 S. Louisville & N. Renfro. (20 Ky L. that then the company is responsible. 231. Gulf vs. 7. v. It cannot be successfully denied that Harris had the right as a passenger to carry baggage on the train. 142 Ky. Louisville & N. Withal. Co. 266] Transportation Law. Civ. in the absence of some intimation or circumstance indicating that the sack contained something dangerous to other passengers. 1120). F. Louisville & N. by reason of which he was severely injured. it was not the duty of appellant’s conductor or any other employee to open the sack and examine its contents. 33 L. Shields as cited in Clark vs. not necessarily to force the passenger to open his baggage. 349. W. 101 Ky. to its conductors must be understood. 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.) 133. 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. The trial court peremptorily instructed the jury to find for the defendant. 10. 42 S. the constitutional rights of the passenger. 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. We think it is equally clear that. Co. 135 S. Louisville & N. R. (N. 839. 29 S. Principle controlling servants of the carrier. in the interest of the common safety of all. 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. and that he had a right to carry it in a sack if he chose to do so. affirming the judgment. Co. and if he neglects this reasonable duty. Shields. it is said: ‘It may be stated briefly. W. C. 98 Ky. 2004 ( 59 ) .Haystacks (Berne Guerrero) other miscellanies. 1049.

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

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

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

) The principle upon which this doctrine is based is that in dealing with vehicles registered under the Public Service Law. The Supreme Court affirmed the judgment appealed from. Rafael and Verdaguer. R. 108.Haystacks (Berne Guerrero) that the vehicle belonged to the Port Brokerage. regulating the speed and operation of machines upon the highways (2 R. (Montoya vs. Purpose of motor vehicle registration One of the principal purposes of motor vehicles legislation is identification of the vehicle and of the operator. and to furnish a means of ascertaining the identity of persons violating the laws and ordinances. C. Cresencia. Vda. 3992. It has been stated that the system of licensing and the requirement that each machine must carry a registration number. as in land registration cases.. 39 Phil. 3992. held that Jepte is liable because he cannot be permitted to repudiate his own declaration. de Medina vs. 1176). It. 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. even though the same had been transferred to a third person. Nature of motor vehicle registration Registration is required not to make said registration the operative act by which ownership in vehicles is transferred. L. The trial court held that as Jepte represented himself to be the owner of the truck and the Motor Vehicles Office. 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. the Government and all persons affected by the representation had the right to rely on his declaration of ownership and registration. System of licensing. 52 Off. the public has the right to assume or presume that the registered owner is the actual owner thereof. 506. 3. 888). Transportation Law. 4606. Act No. 2. 1. 1 G. Roque vs.. 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.. the appeal. conspicuously displayed. Duties of motor vehicle dealers The Revised Motor Vehicles Law (Act No. Ignacio. 5.. L-8561. 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. [10]. Hence. in case of accident. Act No. as amended. 94 Phil. 3992. but to permit the use and operation of the vehicle upon any public highway (section 5 [a]. as amended). No. Motor Vehicles Registration. as amended) provides that no vehicle may be used or operated upon any public highway unless the same is properly registered.) 4. 99 Phil. therefore. Rationale of the law. (Section 5 [c]. 50 Off. Malibay Transit Inc. registered the vehicles in his name. relying on his representation. because the administrative proceeding of registration does not bear any essential relation to the contract of sale between the parties (Chinchilla vs. 182. assigned or conveyed the vehicle. 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. 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. Registered owner of CPC liable to public for injuries and damages suffered by passengers or third person caused by his vehicle’s operation. with costs against Jepte. Gaz. of which he was the broker at the time of the accident. 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.. 1955. Gaz. is one of the precautions taken to reduce the danger of injury to pedestrians and other travellers from the careless management of automobiles. 2004 ( 63 ) . November 18. even if not used for a public service. 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.

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

000 for the death of the spouses. and as such operator. Marcos’ appeal was later dismissed. Zamtranco was in fact the operator. and that in contemplation of law. 1. To start with. the appeal via a petition for certiorari. At that time. (1) P12. P4. the companies both admitted separately that they are the owners of the bus involved in the incident in question and that Valeriano Marcos. Finding that (1) the Zamtranco and the Zambraco were under one management at the time of the accident.000 as moral damages. with no costs in this instance. Zamtranco was in fact the operator There is abundant evidence that although the Zambraco appears to be the registered owner. with costs against Zamtranco and Zambraco. Zambraco and Marcos appealed.000 for the death of the spouses Ramon and Josefina Dagamanuel. and (2) annulling the deed of sale executed by Marcos. hence as to him the judgment is already final and executory. 3. and (3) the sale made by Marcos of his property was done with intent to defraud his creditors. the transferor of such certificate continues to be the operator of the service as long as the transfer is not yet approved. (2) the accident was due to the negligence of the driver who was under their employ. attorney’s fees in the sum of P5. and costs. to wit.000 as attorney’s fees. 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. there is the testimony of Filoteo de los Reyes. to the effect that for the trip to and from Bunguiao where the benefit dance was held. instituted an action against Zamboanga Transportation Co. without the approval of the transfer by the Public Service Commission required by the Public Service Act. (Zamtanco) and the Zamboanga Rapids Co. was registered in the name of Zambraco in the year 1955.000. with the modification that as to damages. exemplary damages in the sum of P20.520 for the loss of earnings of both spouses.Haystacks (Berne Guerrero) Jose Mario Dagamanuel. Zamtranco filed a third-party complaint against the driver Marcos.000 and costs. which figured in the accident that caused the death of the spouses Ramon Dagamanuel and Josefina Punzalan. 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. 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. to pay the plaintiff P16.. through his maternal grandmother as guardian ad-litem. (3) P5. principal teacher of Josefina. and that he paid the fare to the driver of Zamtranco.000 as exemplary damages. the trial court rendered judgment (1) sentencing the three. Transportation Law. Pascuala Julian de Punzalan. the only child of the deceased spouses. Zamtranco. The Supreme Court affirmed the judgment of the Court of Appeals. Sale and merger of Zambraco with Zamtranco subject of application with PSC. Dagamanuel asks for actual or compensatory damages in the sum of P40. Inc. The latter moved for reconsideration. was in their employ.000. either by documentary or testimonial evidence. Inc. 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. Hence.000. Zambraco appears to be the registered owner. 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. P2. 2. and (4) P5. 2004 ( 65 ) . The Zambraco also filed a third-party complaint against the driver. Zamtranco and Zambraco are sentenced to pay jointly and severally no more than the amounts of damages adjudged by the trial court.. jointly and severally. but the same was denied. moral damages in the sum of P40. (2) P11. The appellate court affirmed the judgment of the trial court with modification as to the award of damages. (Zambraco) for breach of contract of carriage. This testimony was never contradicted by the companies. the driver of said bus at the time of said incident. that he saw in Bunguiao the bus sent by Zamtranco. he contracted with Zamtranco at Tetuan.000 as exemplary damages. Zambraco remains registered with Zambraco TPU Bus 1327.

then Acting Registrar of the Motor Vehicle Office in Zamboanga. as to the item of moral damages. it alone should be adjudged liable. 28483-R. 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. the Zambraco. April 29. the ill-fated bus was again registered in the name of the Zambraco in the year 1956.G. as Dagamanuel herein was when his parents died. according to the testimony given at the trial by Leonardo Galvez. (Coleongco vs. Lira. vs. but he may not do so if his purpose is to have the judgment modified or reversed. CA-G.. Octavio. claiming that as registered owner. ‘It is well-settled rule that whenever an appeal is taken in a civil case. 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. Thus viewed. But the fact stands out in bold relief that although still the registered owner at the time of the accident. must be commensurate with the mental anguish suffered by the heir. 5. should be adjudged jointly and severally liable with the driver (see Dizon vs. et al. 4059-4061.R. cannot yet feel the mental anguish resulting from their death. 1965). 19295-R. [27] Santos vs. 2004 ( 66 ) . 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. There.R. the Zamtranco. etc. Sept. 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.. is also liable with it. like compensatory or actual. 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. 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. may assign errors in his brief where his purpose is to maintain the judgment on other grounds. March 8.) 8. 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. CA-G. if any. 21809-R. L-13328-29 and L-13358. the registered owner. Redado vs. the amounts awarded by the trial court cannot be considered excessive. as held by the Court in the past. Bautista. 7. 1964). 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. in such a case. he must appeal. 1961). 51 O. it had already sold the vehicle to Zamtranco and the latter was actually operating it. (Mercado. Herein. 30. who is not appellant. 19. for. et al. No. We would not inquire into the motive of the Zambraco why instead of sharing whatever liability it has with the Zamtranco. 29. as to warrant such excessive award of P5. (Dy. The Court of Appeals properly interpreted the P16. Pages. et al. except perhaps.00 moral damages. vs. 8. Castanares vs. 4. CA-G. admits whatever liability it has and vigorously objects to any finding that the actual operator. Noeth. March 31.000. Bering vs. An appellee.000 awarded by the trial court as including not only damages for the deceased couple but also the other items of recoverable damages. Pending such approval.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. et al. Sept. Nov. What degree of mental torture could have been possibly endured by a boy of such tender age? The measure of moral damages. 1961. whereas in the present case.R. it prefers to shoulder it alone. Previous rulings inapplicable. Sibog (GR L-26815. No. Kuison. Claparols. L-16654. L-18616. 1961. 6. 1962. Nos. 26 May 1981) Transportation Law.

while Adolfo L.Haystacks (Berne Guerrero) First Division. The Court further ordered Sibug to pay the Philippine Surety. registered in the name of Vidad. Branch X issued a Restraining Order enjoining the Sheriff from conducting the public auction sale of the motor vehicle levied upon. 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. but he had no certificate of public convenience for the operation of the vehicle as a public passenger jeep. The complaint was later amended to include the Philippine Surety as a party defendant although its bond had not become effective. Vidad was a duly authorized passenger jeepney operator. to include the Philippine Surety as jointly and severally liable with Sibug. 1 designated to sit in first division. Abraham Sibug was bumped by a passenger jeepney operated by Vidad and driven by Severo Gragas.00. On 5 December 1963. of the same CFI of Manila). On 11 May 1964. Santos moved for immediate execution. No public sale was conducted on 8 May 1964. 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. a Court of concurrent or coordinate jurisdiction. P3. Sibug appealed. This was subsequently amended on 5 December 1965. upon motion for reconsideration filed by Santos. the same sums it is ordered to pay under the decision. On 13 November 1965. On 26 April 1963.00 as attorney’s fees. to pay Sibug the sums of P506. 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 P15.00 as moral damages.” Without waiting for the resolution of his Motion for Reconsideration. After the third-party complaint was filed. Vidad. then presided by Hon. P500.000. On 18 November 1965. and the Sheriff (Civil Case 56842 of Branch X. the Court of Appeals Transportation Law. 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. and P500. On 22 April 1964. Santos became what is known in ordinary parlance as a kabit operator. before the scheduled sale of 8 May 1964. provided that the liability of the Philippine Surety shall in no case exceed P6. On 10 April 1964. Santos then transferred his jeep to the name of Vidad so that it could be operated under the latter’s certificate of public convenience. On 14 October 1965. In other words. 2004 ( 67 ) . Branch X affirmed Santos’ ownership of the jeepney in question based on the evidence adduced. a judgment was rendered by the trial court sentencing Vidad and Gragas. and costs. Arsenio Solidum).500. On 11 April 1964. Sibug sought relief from the Appellate Court in a Petition for Certiorari with Preliminary Injunction. Meanwhile.20 as actual damages. 1 concur in result. 1 on leave Facts: Vicente U. the Sheriff of Manila levied on a motor vehicle (PUJ-343-64). As a result thereof. Sibug opposed it on the ground that Branch X had no jurisdiction over the Branch XVII case. Santos was the owner of a passenger jeep. Sibug submitted to the Sheriff a bond issued by the Philippine Surety Insurance Company. Santos presented a third-party claim with the Sheriff alleging actual ownership of the motor vehicle levied upon. to save the Sheriff from liability if he were to proceed with the sale and if Santos’ third-party claim should be ultimately upheld.00 a day from 10 April 1964 until the vehicle is returned to him. and that Branch X had no power to interfere by injunction with the judgment of Branch XVII. For the protection of Santos. Santos instituted an action for Damages and Injunction with a prayer for Preliminary Mandatory Injunction against Sibug. Sibug filed a complaint for damages against Vidad and Gragas with the Court of First Instance of Manila (Branch XVII. jointly and severally.00 as attorney’s fees as well as the costs. Vidad executed a re-transfer document to the former.” From the judgment in the Branch X case. and scheduled the public auction sale thereof on 8 May 1964. Melencio-Herrera (J): 3 concur. and decreed that the Sibug.

69 SCRA 93. 1. a power which devolves upon the proper appellate court. Bell & Co. When such bond is not filed.. If he decides to proceed. Osmena As said in Uy Piaoco vs. Hon..Haystacks (Berne Guerrero) enjoined the enforcement of the Branch X Decision and the Order of execution issued by said Branch. Rule 39. Inc. 308. If bond not filed. 5. exceptions. Madrigal & Co. vs. 21 Phil.. the writ of injunction. discretion comes in. On 28 September 1966. 88 Phil. Madrigal The discretional power and personal liability have been further elucidated in Planas and Verdon vs. 2. with the public auction. 565). Alzua. Consulta No.. Arabay vs.” 4. in order to prevent one court from nullifying the judgment or process of another court of the same rank or category. Restraining order wrongfully issued by Branch X Under the provisions of Section 17. Provincial Sheriff. 307. When sheriff proceeds It appears from the above that if the attaching creditor should furnish an adequate bond. where no third-party claimant is involved. 94. 102). the sheriff. Ramos.. 15 of Rule 39). succinctly held that “generally. The Supreme Court dismissed the petition for review on certiorari filed by Santos. he will incur personal liability in favor of the successful third-party claimant. 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. is not an interference with the writ of execution issued by another court because the writ of execution was improperly implemented by the sheriff. the Sheriff has to proceed with the public auction. in Arabay. et al. Serafin Salvador. vs. or to desist from proceeding. the rule. He is not authorized to levy upon the property of the third-party claimant (Polaris Marketing Corporation vs. 1976. 48 Phil. acting beyond the bounds of his authority. “the powers of the Sheriff involve both discretional power and personal liability. the sheriff may proceed with the levy even without the indemnity bond. 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. 419. Powers of the sheriff. January 22. Attaching creditor should furnish bond. with costs against Santos. Plan. xxx When the sheriff.. Manila Herald Publishing Co. Uy Piaoco vs. Under the writ. then the Sheriff shall decide whether to proceed.. Salvador The Court. 8 Phil. 94 Phil. Inc. 341 de los abogados de Smith. et al. 9 Phil.. 97.. 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. Section 15 thereof provides for the procedure to be followed where the property levied on execution is claimed by a third person. 91 Phil. Discretional power and personal liability of the sheriff. vs. but in such case he will answer for any damages with his own personal funds (Waite vs. 299. Peterson. Osmeña. he could attach the property of the judgment debtor. seizes a stranger’s property. or he can desist from conducting the public sale unless the attaching creditor files a bond securing him against the third-party claim. But the decision to proceed or not with the public sale lies with him.” 3. “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.” Transportation Law. Johnson. 2004 ( 68 ) . the petition for review on certiorari filed by Santos on 14 December 1966. Hence. is applied in cases. upon receiving it. et al. 368). 754. where it was held. unless he is given by the judgment creditor an indemnity bond against the claim (Mangaoang vs. The Sheriff has the right to continue with the public sale on his own responsibility. which is issued to stop the auction sale of that property. is not bound to proceed with the levy of the property. Of course. Planas vs. L-40666. the action taken by the Sheriff cannot be restrained by another Court or by another Branch of the same Court. If the third-party claim is sufficient. No court can interfere by injunction judgment of concurrent or coordinate jurisdiction.

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

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

with back wages for a period of 6 months corresponding to the position. The MV ‘Pioneer Cebu’ encountered typhoon ‘Klaring’ and struck a reef on the southern part of Malapascua Island. Gempis and those persons he abused (F/Os A. Said passengers were unheard from since then. located somewhere north of the island of Cebu and subsequently sunk. Thus. Filipinas Pioneer Lines Inc. Ranches to drink on 27 February 1980. the two pilots were ordered to stand erect and were hit on the stomach by Gempis. 1. 13 September 1985) First Division. Barcebal and J. and the extinction of its liability by the actual total loss of the vessel. within 30 minutes. and approved PAL’s application for clearance to terminate Gempis from employment.100.m. 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. 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.m. defended on the plea of force majeure. Cleto Bagaipo and Agustina Virtudes are the parents of Filipinas Bagaipo. ordering Filipinas Pioneer to pay (a) Pedro Vasquez and Soledad Ortega the sums of P15. 2004 ( 71 ) . otherwise so many lives will be in danger if he is drunk. The Supreme Court set aside the decision of the NLRC dated 29 November 1982. extraordinary measures and diligence should be exercised by it for the safety of its passengers and their belongings.00 for moral damages. [29] Vasquez vs. The foremost consideration called for by their position as pilots is the safety of the passengers. it had on board the spouses Alfonso Vasquez and Filipinas Bagaipo and a 4-year old boy. 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. (b) Transportation Law. Due to the loss of their children. 2.000. they sued for damages before the CFI of Manila (Civil Case 67139). The National Labor Relations Commission affirmed the decision of the Labor Arbiter on 29 November 1982. and P10. among her passengers. 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. 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. 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. Needless to state. Mario Marlon Vasquez. at 10:30 p. 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. 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.m. Ranches) are pilots.Haystacks (Berne Guerrero) “serious misconduct (abuse of authority)” for forcing First Officers A. 6 bottles of beer each. the trial Court awarded damages. P2. CA (GR L-42926. 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. and as late as 12:00 p.00 for the loss of earning capacity of the deceased Alfonso Vasquez. at the coffee shop of the Triton Hotel at Cebu. Gempis is a risk and liability rather than an asset to PAL. Barcebal and J. a pilot must be sober all the time for he may be called upon to fly a plane even before his regular scheduled hours. Romeo Vasquez and Maximina Cainay are the parents Mario Marlon Vasquez.000.00 for support. Unable to consume the bottles of beer within the time limit set by Gempis. Pedro Vasquez and Soledad Ortega are the parents of Alfonso Vasquez. After proper proceedings.

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

Dangwa’s and Lardizabal’s motion for reconsideration was denied by the Court of Appeals in its resolution dated 4 October 1990. On 29 July 1988. 5. Factual findings of the Court of Appeals generally final. Samuel Cudiamat and Ligaya Cudiamat (heirs of Pedrito Cudiamat. Contention on limited liability rule as per Yangco vs.000. Pedrito Cudiamat. it was because it had considered the question of negligence as “moot and academic. 73 Phil. 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.” the captain having “lived up to the true tradition of the profession. it was held that the liability of a shipowner is limited to the value of the vessel or to the insurance thereon. in a decision (CA-GR CV 19504) promulgated on 14 August 1990. 330 [1941]. 7 October 1991) Second Division. Inocencia Cudiamat. Laserna. (3) the sum of P288. They failed to overcome that presumption of fault or negligence that arises in cases of death or injuries to passengers. The Supreme Court affirmed the challenged judgment and resolution of the Court of Appeals. The Cudiamats appealed to the Court of Appeals which. and ordered Dangwa and Lardizabal to pay the Cudiamats (1) the sum of P30. and (4) the costs of the suit. Norma Cudiamat. Marrieta Cudiamat. Theodore M. 1. On 13 May 1985. Lardizabal was driving a passenger bus belonging to Dangwa Transportation Co. Nonetheless.000. which investigated the disaster. Hence. Sapid. (2) the sum of P20. in utter bad faith and without regard to the welfare of the victim. were hereby ordered to pay the heirs of Pedrito Cudiamat the sum of P10. Mankayan. the petition. with modifications. Regalado (J): 4 concur Facts: On 25 March 1985 at Marivic. first brought his other passengers and cargo to their respective destinations before bringing said victim to the Lepanto Hospital where he expired. instead of bringing Pedrito immediately to the nearest hospital. in equity.” While the Court is bound by the Board’s factual findings. set aside the decision of the lower court.Haystacks (Berne Guerrero) unnecessarily exposed the vessel and passengers to the tragic mishap. its insurance answers for the damages that a shipowner or agent may be held liable for by reason of the death of its passengers. in a reckless and imprudent manner and without due regard to traffic rules and regulations and safety to persons and property.00 as actual and compensatory damages. CA (GR 95582. [30] also [104] Dangwa Transportation vs.000. 4. the said driver. Dante Cudiamat.00 by way of moral damages. Construction of “moot and academic” ruling of the Board of Marine Inquiry. Emilia Cudiamat Bandoy. without costs. Court disagrees with Board’s conclusion While the Board of Marine Inquiry. the trial court rendered a decision. pronouncing that Pedrito Cudiamat was negligent.00 by way of indemnity for death of the victim Pedrito Cudiamat.00 which approximates the amount Lardizabal and Dangwa Transportation initially offered said heirs for the amicable settlement of the case. it ran over its passenger. Benguet. Despite the total loss of the vessel therefore.000. which negligence was the proximate cause of his death. 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. Exceptions Transportation Law. However. Lardizabal and Dangwa Transportation. exonerated the captain from any negligence. 2004 ( 73 ) . Fernando Cudiamat. suffice it to state that even in said case. 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.

Findings of the trial court Pedrito Cudiamat was negligent in trying to board a moving vehicle. one of which is when the findings of the appellate court are contrary to those of the trial court. it is safe to assume that when the deceased Cudiamat attempted to board the bus. it becomes the duty of the driver and the conductor. However. 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. to do no act that would have the effect of increasing the peril to a passenger while he was attempting to board the same. Its findings are supported by the testimony of Dangwa Transportation’s own witnesses. 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. Here lies the defendant’s lack of diligence. once it stops. the premature acceleration of the bus was a breach of such duty. 3. 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. 2004 ( 74 ) . Deceased not guilty of negligence The Supreme Court finds no reason to disturb the holding of the Court of Appeals. This should be so. Moreover. It did offer a certain monetary consideration to the victim’s heirs. 5. 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. When bus not in motion. also considering that initially. the common carrier had made overtures to amicably settle the case. Martin Anglog. without having given the driver or the conductor any indication that he wishes to board the bus. especially with one of his hands holding an umbrella. Transportation Law. it cannot be said that the deceased was guilty of negligence. this is subject to settled exceptions. 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. hence the finding of the Court of Appeals that the bus was at full stop when the victim boarded the same is correct. is in effect making a continuous offer to bus riders. the trial court and the Court of Appeals have discordant positions as to who between Dangwa Transportation and the victim is guilty of negligence. Hence. and. A public utility bus. In this connection. 4. in which case a reexamination of the facts and evidence may be undertaken. 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. 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. Virginia Abalos. every time the bus stops. New Civil Code).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. Herein. as shown by the physical evidence on where he was thereafter found in relation to the bus when it stopped. the vehicle’s door was open instead of being closed. This. Findings of the appellate court supported by witnesses’ testimony. Herein. Under such circumstances. 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. equity demands that there must be something given to the heirs of the victim to assuage their feelings. and its the bus conductor. 2. Under such circumstances. 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. 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. Dangwa Transportation can also be found wanting of the necessary diligence. Perforce.

from the nature of their business and for reasons of public policy. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide. are bound to observe extraordinary diligence for the safety of the passengers transported by them. The evidence shows that after the accident the bus could have forthwith turned at Bunk 56 and thence to the hospital. not gross earnings. or as a matter of law. This is an exception to the general rule that negligence must be proved. Transportation Law. Diligence required of common carriers Common carriers. including common carriers by railroad train. Hence. and any injury that might be suffered by the passenger is right away attributable to the fault or negligence of the carrier. the total of the earnings less expenses necessary in the creation of such earnings or income and minus living and other incidental expenses. 12. despite the serious condition of the victim. 7. It defies understanding and can even be stigmatized as callous indifference. 8. 11. or motorbus. is already considered a passenger and is entitled to all the rights and protection pertaining to such a contractual relation. 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. 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. streetcar. Exception in ontract of carriage In an action based on a contract of carriage. using the utmost diligence of very cautious persons. 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.Haystacks (Berne Guerrero) 6. but its driver instead opted to first proceed to Bunk 70 to allow a passenger to alight and to deliver a refrigerator. that is. 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. for one to attempt to board a train or streetcar which is moving slowly. 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. In other words. with a due regard for all the circumstances. By the contract of carriage. 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. 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. Even assuming bus moving. but rather the loss of that portion of the earnings which the beneficiary would have received. 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. deceased still not negligent Even assuming that the bus was moving. Duty of common carriers of passengers It is the duty of common carriers of passengers. An ordinarily prudent person would have made the attempt to board the moving conveyance under the same or similar circumstances. to stop their conveyances a reasonable length of time in order to afford passengers an opportunity to board and enter. are to be considered. 2004 ( 75 ) . by stepping and standing on the platform of the bus. It is not negligence per se. only net earnings. When contractual obligation of common carrier starts The victim herein. 10. 9. according to all the circumstances of each case. Negligence must be proved. the act of the victim in boarding the same cannot be considered negligent under the circumstances.

was reversed. 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.00 a month or P6. MT Maysun. 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. American Home Assurance paid Caltex the sum of P5. De Leon Jr. by the Court of Appeals on 16 June 1996. Due to its failure to collect from Delsan Transport despite prior demand. Under the contract. with costs against Delsan Transport. MT Maysun set sail from Batangas for Zamboanga City. not an automatic admission of vessel’s seaworthiness Transportation Law.Haystacks (Berne Guerrero) 13. In adjudicating the actual or compensatory damages. the appellate court found that the deceased was 48 years old.635. Inc. The decision of the trial court. American Home Assurance demanded of Delsan Transport the same amount it paid to Caltex. 2. in contrast to Delsan Transport’s allegation that the waves were 20 feet high. Using the gross annual income as the basis.000.00.000. Actual award of damages to be given The deductible living and other expense of the deceased may fairly and reasonably be fixed at P500. Subsequently. However. and affirmed the Decision dated 17 June 1996 of the Court of Appeals. American Home Assurance filed a complaint with the RTC Makati City. The trial court found that the vessel. [31] Delsan Transport Lines vs.7 to two (2) meters in height only in the vicinity of the Panay Gulf where the subject vessel sank. 2004 ( 76 ) .00 a year. which gave credence to the weather report by the Philippine Atmospheric. PAGASA Weather report for 15 August 1986 The weather report issued by the Philippine Atmospheric. Branch 137. 2. On 14 August 1986. the death indemnity is hereby increased to P50. CA (GR 127897.314 kiloliters of industrial fuel oil of Caltex to be delivered to the Caltex Oil Terminal in Zamboanga City.00. After the trial and upon analyzing the evidence adduced. Payment of insured value of lost cargo operates as waiver to enforce term of implied warranty against Caltex. The Supreme Court denied the instant petition. and multiplying the same by 12 years. Unfortunately. the wind speed remained at 10 to 20 knots per hour while the waves measured from . 1986. said award must be rectified and reduced to P216. on appeal. it accordingly awarded P288. Exercising its right of subrogation under Article 2207 of the New Civil Code. 15 November 2001) Second Division. in good health with a remaining productive life expectancy of 12 years. for collection of a sum of money. petitioner took on board its vessel. (J): 4 concur Facts: Caltex Philippines entered into a contract of affreightment with Delsan Transport Lines. however. 1. in accordance with prevailing jurisprudence.00 a year. Hence. 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.000.277. and then earning P24. 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. Applying the rule on computation based on the net earnings. The shipment was insured with American Home Assurance Corporation. thus exempting the common carrier from liability for the loss of its cargo.096. Geophysical and Astronomical Services Administration (PAGASA).000. the trial court rendered a decision on 29 November 1990 dismissing the complaint against Delsan Transport without pronouncement as to cost. MT Maysun. The subsequent motion for reconsideration of Delsan Transport was denied by the appellate court on 21 January 1997. the petition for review on certiorari.57 representing the insured value of the lost cargo.

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

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

was insured by Prudential Guarantee & Assurance. received on board its M/V “Cherokee” (a) 705 bales of lawanit hardwood. (CJ): 4 concur Facts: On 19 November 1984. agreed with the trial court and affirmed its decision in toto. for there is no doubt that the cargo of industrial fuel oil belonging to Caltex was lost while on board Delsan Transport’s vessel. were insured for the same amount with the Manila Insurance Co. PGAI.” Further. American Steamship. Loadstar being the party insured. CA (GR 131621. averred that MIC had no cause of action against it. The bills of lading failed to show any special arrangement. Branch 16. There was no charter party. Davide Jr. Such policy has no force where the public at large is not involved. 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. v. On 20 November 1984. American Steamship Agencies. [32] Loadstar Shipping vs.Haystacks (Berne Guerrero) consignee. CA. The records do not disclose that the M/V “Cherokee” undertook to carry a special cargo or was chartered to a special person only. ignored the same. (PGAI) for P4 million. the bare fact Transportation Law. and the latter executed a subrogation receipt therefor.067. the vessel.000 to the insured in full settlement of its claim. Hence. The Supreme Court denied the petition and affirmed the challenged decision of the Court of Appeals. (b) 27 boxes and crates of tilewood assemblies and others. amounting to P6. but only a general provision to the effect that the M/V “Cherokee” was a “general cargo carrier. the trial court (RTC of Manila. said amount to be deducted from MIC’s claim from Loadstar. PGAI was later dropped as a party defendant after it paid the insurance proceeds to Loadstar. the presentation of the insurance policy is not applicable. Inc. ordering Loadstar to pay MIC the amount of P6. CA not applicable. in turn. As the insurer. 1.178. Civil Case 85-29110) rendered judgment in favor of MIC. Herein. Court of Appeals and National Steel Corp. Loadstar’s motion for reconsideration was denied on 19 November 1997. In its answer. On 4 October 1991. 2004 ( 79 ) . as in the case of a ship totally chartered for the use of a single party. which sank while in transit in the vicinity of Panay Gulf and Cuyo East Pass in the early morning of 16 August 1986. however on 30 January 1997. on its way to Manila from the port of Nasipit. with costs against Loadstar. Inc. v.” The vessel. Court of Appeals. with legal interest from the filing of the complaint until fully paid. (MIC) against various risks including “total loss by total loss of the vessel. 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. P8. MIC filed a complaint against Loadstar and PGAI. along with its cargo. Valenzuela Hardwood vs. alleging that the sinking of the vessel was due to the fault and negligence of Loadstar and its employees. v.178. On 4 February 1985. Inc.. 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.000 as attorney’s fees. 28 September 1999) First Division. Loadstar elevated the matter to the Court of Appeals. MIC paid P6. Loadstar Shipping Co. sank off Limasawa Island. Home Insurance vs. Agusan del Norte. Inc. No charter party in present case In the 1968 case of Home Insurance Co. upheld the Home Insurance doctrine. on the other hand. MT Maysun. As a result of the total loss of its shipment.067. the petition for review on certiorari. The goods. and (c) 49 bundles of mouldings R & W (3) Apitong Bolidenized for shipment. and the costs of the suit. the consignee made a claim with Loadstar which. and National Steel vs. which. It also prayed that PGAI be ordered to pay the insurance proceeds from the loss of the vessel directly to MIC. These cases are not applicable in the present case as the factual settings are different. however.075. The cases of Valenzuela Hardwood and Industrial Supply. In any event.

water. 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. 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. To exempt the carrier from the liabilities of a common carrier because he has not secured the necessary certificate of public convenience. that would be to reward private respondent precisely for failing to comply with applicable statutory requirements. and one who offers services or solicits business only from a narrow segment of the general population. Herein. 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 vs.” 3. Issuance of CPC not a prerequisite for a common carrier. 2004 ( 80 ) . by land. Present stipulations void as contrary to public policy Transportation Law. 5. or air for compensation. “For a vessel to be seaworthy. Article 1733 deliberately refrained from making such distinctions.Haystacks (Berne Guerrero) that the vessel was carrying a particular type of cargo for one shipper. 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.. which appears to be purely coincidental. especially where it was shown that the vessel was also carrying passengers. Since it was remiss in the performance of its duties. 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. would be offensive to sound public policy. is not reason enough to convert the vessel from a common to a private carrier. That liability arises the moment a person or firm acts as a common carrier.” 6. it did not sink because of any storm that may be deemed as force majeure. corporations. 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. In any event. as “a sideline”’.e.” i. CA Article 1732 makes no distinction between one whose principal business activity is the carrying of persons or goods or both. The vessel was not even sufficiently manned at the time. the general community or population. 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. Neither does Article 1732 distinguish between a carrier offering its services to the “general public. 2. episodic or unscheduled basis. it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. 4. Loadstar cannot hide behind the “limited liability” doctrine to escape responsibility for the loss of the vessel and its cargo. Article 1732 NCC construed. offering their services to the public. Article 1732 NCC Article 1732 of the Civil Code defines “common carriers” as “Common carriers are persons. firms or associations engaged in the business of carrying or transporting passengers or goods or both. Stipulations in St. CA A certificate of public convenience is not a requisite for the incurring of liability under the Civil Code provisions governing common carriers. De Guzman vs. 7. Common Carriers defined. 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. Paul Fire and National Union Fire Insurance cases different from present one. and one who does such carrying only as an ancillary activity (in local idiom. inasmuch as the wind condition in the area where it sank was determined to be moderate.

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

who being then a minor was assisted by her parents. on the bases of the evidence presented was. Furthermore. an appeal was filed by her with appellate court. (c) the sum of P15. dated 31 October 1991. thus prompting MMTC to file the present petition.00 by way of medical expenses. and paying at the same time the corresponding docket fee. 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 moral damages. she was confined for 24 days. 1. against all of therein named defendants following their refusal to pay the expenses incurred by the former as a result of the collision. As joint tortfeasors. was received by MMTC on 18 November 1991 and it seasonably filed a motion for the reconsideration thereof on 28 November 1991. or up to 23 April 1992. (d) the sum of P2. et al. absolved from liability for the accident. Second Special Cases Division of the Intermediate Appellate Court. Therefore. Rule 45 of the Rules of Court. Said defendants denied all the material allegations in the complaint and pointed an accusing finger at each other as being the party at fault. The reorganized trial court. Said motion for reconsideration was denied by the court in its resolution dated 17 February 1992. as well as Lamayo. MMTC.” In other words.00 by way of exemplary damages. MMTC filed a motion on 19 March 1992 for an extension of 30 days to file the present petition. 2. 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. the period of 15 days begins to run all over again from notice of the denial resolution. however. and (g) costs of suit. it had 30 days from 24 March 1992 within which to file its petition. if a motion for reconsideration is filed.000. in the event a motion for reconsideration is filed and denied. with the extended period to be counted from the expiration of the reglementary period. The Hon. i. The Supreme Court affirmed the impugned decision of the Court of Appeals.000. Anticipating. and as a consequence.00 by way of attorney’s fees.000. Thereat. which in turn was received by MMTC on 9 March 1992. which has long since been clarified in Lacsamana vs. 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. Reglementary period in a petition for review on certiorari.000. 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. Otherwise put.00 by way of loss of earnings. with proof of service of copies thereof to the court and the adverse parties. The Court granted said motion. 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.e. both drivers (Calebag and Leonardo). Rule 45 of the Rules of Court.. were held solidarily liable for damages sustained by Custodio. that it may not be able to file said petition before the lapse of the reglementary period therefor. 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. 2004 ( 82 ) . in its decision of 1 August 1989.000.00 by way of expenses of litigation. (a) the sum of P10. however. a motion for Transportation Law. Consequently. Rule 45 of the Rules of Court The decision of the Court of Appeals. it had. Filing of petition timely. 15 days therefrom or up to 24 March 1992 within which to file a petition for review on certiorari. (f) the sum of P6.672. After consideration of the appropriate pleadings on appeal and finding the appeal meritorious. (b) the sum of P5.Haystacks (Berne Guerrero) brought to the Medical City Hospital where she regained consciousness only after 1 week. Section 1. and the eventual filing of said petition on 14 April 1992 was well within the period granted by the Court. 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. A complaint for damages was filed by Custodio. she was unable to work for 3 ½ months. Section 1. (e) the sum of P5. pursuant to Section 1.

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

nor interest. caused damage to another.” 12. which forms the foundation of such responsibility. Ex-Meralco Employees Transportation Co. which might obviate the apparent biased nature of the testimony. 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. 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. in relation to Article 2180. 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. MMTC short of required evidentiary quantum. 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. Diligentissimi patris familias applicable when there is an employer-employee relationship. 10. notwithstanding the calls therefor by both the trial court and the opposing counsel. 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. but also for those of persons for whom one is responsible. even though the former are not engaged in any business or industry. et al. as all the elements thereof are present. argues strongly against its pretensions. It is clear. 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. therefore. Negligence is imputed to them by law. 9. unless they prove the contrary. of the Civil Code provisions on quasi-delicts. Elements of quasi-delicts The present case isy within the coverage of Articles 2176 and 2177. 8.. vs. (2) fault or negligence of the defendant or some other person for whose act he must respond. 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. set amidst an almost identical factual setting. Therein. 2004 ( 84 ) . although it is not necessary that the employer be engaged in business or industry. Case covered by Articles 2176 and 2177. object or documentary. Thus.. nor even the necessity of having somebody else answer for the damages caused by the persons devoid of personality. that it is not representation.Haystacks (Berne Guerrero) as it was unable to buttress the same with any other evidence. of the Civil Code. 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.” 11. to wit: (1) damages suffered by the plaintiff. Central Taxicab vs. xxx Employers shall be liable for damages caused by their employees and household helpers acting within the scope of their assigned tasks. in relation to Article 2180. derived from their failure to exercise due care and vigilance over the acts of subordinates to prevent them from causing damage. 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. 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.

may find it necessary to interpose the defense of due diligence in the selection and supervision of employees. 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. the plaintiff must show. the drivers and owners of the said vehicles shall be primarily. To this. and thereafter. On the matter of selection of employees.” 15. the employer is likewise responsible for damages. the employer under Article 2180 is liable for torts committed by his employees within the scope of their assigned tasks. the basis of the liability being the relationship of pater familias or on the employer’s own negligence. that the employee was acting within the scope of his assigned task when the tort complained of was committed. 14. Gutierrez As early as the case of Gutierrez vs. as employer. it is not enough to emptily invoke the existence of said company guidelines and policies on hiring and supervision. the case is undoubtedly based on a quasi-delict under Article 2180. It is only then that the defendant. his experience and record of service. the Court has consistently held that where the injury is due to the concurrent negligence of the drivers of the colliding vehicles. Gutierrez vs. it is necessary first to establish the employment relationship. When the employee causes damage due to his own negligence while performing his own duties.Haystacks (Berne Guerrero) industry. directly and solidarily liable for damages and it is immaterial that one action is based on quasi-delict and the other on culpa contractual. 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. Admonition as to selection of employees. These steps the vehicle owner failed to observe. he should not have been satisfied with the mere possession of a professional driver’s license. The mere allegation of the Transportation Law. rebuttable only by proof of observance of the diligence of a good father of a family. he should have carefully examined the applicant for employment as to his qualifications. But. as the solidarity of the obligation is justified by the very nature thereof. the Court adds that actual implementation and monitoring of consistent compliance with said rules should be the constant concern of the employer. Drivers and vehicle owners directly and solidarily liable. as appears to be the fashion of the times. 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. failed to exercise all due diligence required of a good father of a family in the choice or selection of driver. For failure to rebut such legal presumption of negligence in the selection and supervision of employees. 12. since the non-observance thereof actually becomes the basis of their vicarious liability under Article 2180. 2004 ( 85 ) . 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. 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. 16. Cambo vs. 13. 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. Once this is done. there arises the juris tantum presumption that the employer is negligent. the case of Cambo vs. he has therefore. As the negligence of the employee gives rise to the presumption of negligence on the part of the employer. to hold the employer liable. Gutierrez. acting through dependable supervisors who should regularly report on their supervisory functions. 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.

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

From the above judgment. Manicad. plus the sum of P10. Herein. Laguna.000. 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. 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.000.000. The KBL bus appeared to have been travelling at a fast rate of speed because.00. The Supreme Court denied the Petition for Review on Certiorari for lack of merit and affirmed the Decision of the Court of Appeals. The general rules on right-of-way may be invoked only if both vehicles approach the intersection at almost the same time. Kapalaran appealed to the Court of Appeals assailing the trial court’s findings on the issue of fault and the award of damages.000.000. 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. Manicad and the other vehicles behind Atty.00 in the concept of exemplary damages to serve as a deterrent to others who. On 14 September 1982. 3.00 as attorney’s fees and litigation expenses. the petition for Review. like the plaintiff. and the sum of P15.00 representing the expenses said defendant will incur for his second operation to remove the intramedulary nail from his femur. Branch 27. 2004 ( 87 ) . may be minded to induce accident victims to perjure themselves in a sworn statement. Cruz.000. on 28 June 1988. 2. Sta. Grajera and Shinyo and ordering Kapalaran (a) to pay Angel Coronado the sum of P40.00 to Dionisio Shinyo shall similarly be restored.00 as attorney’s fees and litigation expenses. it did not stop.00 as compensation for the totally wrecked jeepney. A third-party complaint and/or a complaint for intervention was also filed in the same case against Kapalaran by jeepney passenger Dionisio Shinyo. 1. and (b) to Dionisio Shinyo the sum of P35.00 to P25. Coronado and Grajera answered with their own claims (counter-claims) for damages. Manicad and overtook both vehicles at the intersection. the trial court rendered a judgment in favor of Coronado. apparently believing that the best defense was offense. filed a complaint for damage to property and physical injuries through reckless imprudence against Angel Coronado and Lope Grajera in the Regional Trial Court. 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. 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.000. plus the sum of P5.Haystacks (Berne Guerrero) A Laguna Transit bus had just entered the town of Pila ahead of Atty. causing the accident.00 representing the expenses incurred by said intervenor for his treatment including his car-hire. except (1) that the award of exemplary damages to Dionisio Shinyo shall be restored and increased from P10. the additional sum of P50. On the contrary. A motion for reconsideration by Kapalaran having been denied by the appellate court on 13 October 1988. Kapalaran. presumed negligent Transportation Law. Costs against Kapalaran.000. Hence. it travelled for another 50 meters and stopped only when it hit an electric post. 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. Bus driver actually violating traffic rules and regulations. therefore.000. after the collision. The KBL bus ignored the stopped vehicles of Atty.00 to serve as moral damages for the pain and suffering inflicted on said defendant. after trial.000. The Court of Appeals. On 15 October 1986. Another general rule is that the vehicle coming from the right has the right-of-way over the vehicle coming from the left. amply supported by the evidence of record. and (2) that the grant of attorney’s fees and litigation expenses in the sum of P15.

nor at a speed greater than will permit him to bring the vehicle to a stop within the assured clear distance ahead. a legal presumption arose that the bus driver was negligent. Section 41 (c) of RA 4136. or unless permitted to do so by a watchman or a peace officer. unless such intersection or crossing is controlled by traffic signal. among others. 8. that the left lane of the road within the intersection and beyond was clear. 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). and so caught the jeepney within the intersection. at any railway grade crossing. unless such left side is clearly visible. Thus. 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. Jeepney driver has right to assume further vehicles would stop The jeepney driver. a presumption Kapalaran was unable to overthrow. seeing the cars closest to the intersection on the opposite side of the highway come to a stop to give way to him. 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. and is free of oncoming traffic for a sufficient distance ahead to permit such overtaking or passing to be made in safety. another vehicle which is making or about to make a left turn. 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.” 6. 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. 9. 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. 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.” 5. The bus driver. having due regard for the traffic. as amended. the width of the highway. Driver’s gross negligence raises presumption that Kapalaran guilty of negligence in selection and supervision of employees. or at any intersection of highways. and or any other condition then and there existing. Section 35(a) of RA 4136. chose to swerve to the left lane and overtake such preceding vehicles. proceeding in the same direction. upon the right. who was driving at a speed too high to be safe and proper at or near an intersection on the highway. RA 4136. Immediately before the collision. and no person shall drive any motor vehicle upon a highway at such a speed as to endanger the life. 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. 7. 2004 ( 88 ) . Right of recourse Transportation Law. when it overtook the 2 cars ahead which had stopped at the intersection. the bus driver was actually violating the following traffic rules and regulations. Section 41 (a) of RA 4136. Nothing in this section shall be construed to prohibit a driver overtaking or passing. 4. not greater nor less than is reasonable and proper. in the Land Transportation and Traffic Code. entered the intersection and directly smashed into the jeepney within the intersection.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. Kapalaran’s bus was still relatively far away from the intersection when the jeepney entered the same. limb and property of any person. 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. which was precisely the lane or side on which the jeepney had a right to be.

Where the employer is held liable for damages.” Herein.” In requiring the highest possible degree of diligence from common carriers and creating a presumption of negligence against them. with due regard for all the circumstances. the very size and power of which seem often to inflame the minds of their drivers.” nor are Coronado.” and is not limited to cases where the employee “cannot pay his liability. the grievous injuries sustained by him in the violent collision. 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. it is not conditioned upon prior recourse against the negligent employee and a prior showing of the insolvency of such employee. 2004 ( 89 ) . compelled first to proceed against the bus driver. 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. may and should be considered and decided by the Supreme Court even if those issues had not been explicitly raised by the party affected. Contrary to Kapalaran’s pretense. et. Award of moral damages in order. 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. and should not only be restored but augmented. it has of course a right of recourse against its own negligent employee. 15. of course. its liability for the acts and negligence of its bus driver is not “merely subsidiary. 12. the passengers and owners of cargo carried by a common carrier. al. If Kapalaran was interested in maintaining its right of recourse against or reimbursement from its own driver. 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. it is not only the demands of substantial justice but also the compelling considerations of public policy noted above. the award of exemplary damages by the trial court was quite proper. it is also quite modest considering Dionisio Shinyo’s death during the pendency of this petition. For if common carriers carefully observed the statutory standard of extraordinary diligence in respect of their own passengers. a death hastened by. if not directly due to. Shinyo’s death The award of moral damages against Kapalaran is not only entirely in order. 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.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. 11. Beneficiaries of standard of extraordinary diligence While the immediate beneficiaries of the standard of extraordinary diligence are. 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. although granted for the wrong reason. The liability of the employer under Article 2180 of the Civil Code is direct and immediate. 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. 10. Exemplary damages. 14. the law compels them to curb the recklessness of their drivers. 13. they are not the only persons that the law seeks to benefit. using the utmost diligence of very cautious persons. 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. which impel us to the conclusion that the trial court’s award of exemplary damages Transportation Law.

Chapter 3. and (4) Cost of suit. Laws applicable Undoubtedly. Arroyo noticed that some repair work were being undertaken on the engine of the vessel. were allowed to disembark. 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. a public attorney. The vessel departed at around 11:00 p. Davide Jr.000. Arroyo. After half an hour of stillness. The Supreme Court denied the petition. Article 1755. bought a ticket Trans-Asia Shipping Lines Inc.00 as exemplary damages. Trans-Asia was bound to observe extraordinary diligence in ensuring the safety of Arroyo. Thereafter. After an hour of slow voyage. subject to the modification as to the award for attorney’s fees which is set aside. with only 1 engine running. The laws of primary application then are the provisions on common carriers under Section 4. That meant that Trans-Asia was. Unsatisfied.00 as moral damages. On account of the failure of Trans-Asia to transport him to the place of destination on 12 November 1991. The Court dismissed the complaint as it did not appear that Arroyo was left in the Port of Cebu because of the fault. the vessel proceeded to Cagayan de Oro City. 4 March 1996) Third Division. Article 1733 NCC.00 as attorney’s fees. there was. bound to carry Arroyo safely as far as human care and foresight could provide. Herein. Trans-Asia failed to discharge this obligation. Arroyo. with due regard for all the circumstances. likewise a vessel of Trans-Asia. a contract of common carriage. for the voyage of M/V Asia Thailand vessel to Cagayan de Oro City from Cebu City on 12 November 1991. using the utmost diligence of very cautious persons. Trans-Asia instituted the petition for review on certiorari. Arroyo appealed to the Court of Appeals (CA-GR CV 39901). Arroyo filed before the trial court a complaint for damages against Trans-Asia. [35] Trans-Asia Shipping Lines vs.. and 1173 of the Civil Code as applicable law — not Article 2180 of the same Code. boarded the M/V Asia Japan for its voyage to Cagayan de Oro City. the Court of Appeals reversed the trial court’s decision by applying Article 1755 in relation to Articles 2201. (2) P10. 1172. 1. Book IV of the Civil Code. with Articles 1170.m of the said day. the next day. 2004 ( 90 ) . At around 5:30p. CA (GR 118126. and affirmed the challenged decision of the Court of Appeals. the Code of Commerce and special laws. (3) P5. 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. 2. together with the other passengers who requested to be brought back to Cebu City. 2217. (J): 4 concur Facts: Atty.m. At Cebu City. Renato Arroyo. the vessel stopped near Kawit Island and dropped its anchor thereat. accordingly. the trial court rendered its decision and ruled that the action was only for breach of contract. and 2232 of the Civil Code and. Transportation Law. Utmost diligence of very cautious persons Under Article 1733 of the Civil Code.000. malice or wanton attitude of Trans-Asia’s employees. while for all other matters not regulated thereby. between Trans-Asia and Arroyo.000. a corporation engaged in inter-island shipping. awarded (1) P20. with costs against Trans-Asia.Haystacks (Berne Guerrero) was erroneously deleted and must be restored and brought more nearly to the level which public policy and substantial justice require. The captain acceded [sic] to their request and thus the vessel headed back to Cebu City. At that instance. pursuant to Article 1755 of the said Code. In its decision of 23 November 1994. Extraordinary diligence. After due trial. negligence. Arroyo boarded the M/V Asia Thailand vessel. 2208. Title VIII.

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

without right to recover for losses and damages if the interruption is due to fortuitous event or force majeure. however. Arroyo not entitled to actual or compensatory damages The cause of the delay or interruption was Trans-Asia’s failure to observe extraordinary diligence. 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. the passengers shall be obliged to pay the fare in proportion to the distance covered. He. with full awareness that it was exposed to perils of the sea. but he did not. 2004 ( 92 ) . Article 698 of the Code of Commerce must be read with Articles 2199. 11. 10. This. Trans-Asia should not expect its passengers to act in the manner it desired. 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. Any further delay then in Arroyo’s arrival at the port of destination was caused by his decision to disembark. Article 698 must then be read together with Articles 2199. the vessel had to return to its port of origin and allow them to disembark. it means that Trans-Asia is liable for any pecuniary loss or loss of profits which Arroyo may have suffered by reason thereof. 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. It was. 13. anxious. which Arroyo failed to do. as correctly pointed out by the petitioner. and 2208 in relation to Article 21 of the Civil Code. But actual or compensatory damages must be proved. assumes that he stayed on the vessel and was with it when it thereafter resumed its voyage. Even so. As he and some passengers resolved not to complete the voyage. Trans-Asia’s assertion shows lack of genuine concern for safety of passengers. 2201. However. For Arroyo. it deliberately disregarded its solemn duty to exercise extraordinary diligence and obviously acted with bad faith and in a wanton and reckless manner. but with a right to indemnity if the interruption should have been caused by the captain exclusively. 2200. 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. Article 698 of the Code of Commerce applies suppletorily to Article 1766 NCC. The passengers were not stoics. If the interruption should be caused by the disability of the vessel and a passenger should agree to await the repairs. Arroyo then took Trans-Asia’s other vessel the following day. perhaps. Trans-Asia is liable for moral and exemplary damages Trans-Asia is liable for moral and exemplary damages. becoming alarmed.Haystacks (Berne Guerrero) the voyage was subsequently interrupted when the vessel had to stop near Kawit Island after the only functioning engine conked out. Article 698 of the Code of Commerce specifically provides for such a situation. he would have reached his destination at noon of 13 November 1991. Rights and duties of parties arising out of delay As to the rights and duties of the parties strictly arising out of such delay. only providential than the sea happened to be calm. the Civil Code is silent. It reads “In case a voyage already begun should be interrupted. using the ticket he had purchased for the previous day’s voyage. In allowing its unseaworthy M/V Asia Thailand to leave the port of origin and undertake the contracted voyage. Had he remained on the first vessel. therefore.” This article applies suppletorily pursuant to Article 1766 of the Civil Code. but his living expenses during the stay shall be for his own account. thus been able to report to his office in the afternoon. There is no convincing evidence that he did not receive his salary for 13 November 1991 nor that his absence was not excused. In so reading. 14. he may not be required to pay any increased price of passage. 2201. and 2208 in relation to Article 21 NCC. Article 2208 NCC Transportation Law. 12. would have lost only the salary for half of a day. 2200.

Hence. plus interest at the legal rate from the time of filing of the complaint on 25 July 1991.086. Period as to when observance of extraordinary responsibility lasts Well-settled is the rule that common carriers. 1 on leave Facts: On 13 June 1990. reversed and set aside the decision of the trial court. within the subsequent days. Finding the 4 coils in their damaged state to be unfit for the intended purpose.50. (PFIC) paid the consignee P506. legal and equitable justification” needed as basis for an award of attorney’s fees. (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. (JDTSI) refused to submit to the consignee’s claim. to merit such an award. BOCSNV and JDTSI’s motion for reconsideration was denied. discharged the subject cargo. 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. On appeal. Philippine First Insurance Co. [36].027. not as moral damages nor judicial costs. 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. Hence. attorney’s fees amounting to 20% of the claim.” 15. from the nature of their business and for reasons of public policy.32 as actual damages. M/V Anangel Sky arrived at the port of Manila and. Belgian Overseas Chartering and Shipping NV (BOCSNV) and Jardine Davies Transport Services Inc. the award of attorney’s fees must be deleted. dismissing the complaint. 1. and modified the assailed Decision. Philippine First Insurance Co. are bound to observe extraordinary diligence and vigilance with respect to the safety of the goods and the passengers they transport. (GR 143133. Extraordinary diligence required of common carriers. and was subrogated to the latter’s rights and causes of action against BOCSNV and JDTSI. and on 15 July 1998.Haystacks (Berne Guerrero) Article 2208 of the Civil Code provides that “ In the absence of stipulation. and ordered BOCSNV and JDTSI jointly and severally pay PFIC P451.000 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. In sum. CMC Trading A. Inc. and costs of suit. other than judicial costs cannot be recovered except: (1) When exemplary damages are awarded. The Court reduced BOCSNV and JDTSI’s liability is reduced to US$2. to the consignee as insured. On 28 July 1990. Inc. it is settled that the amount thereof must be proven. common carriers are required to render service with the Transportation Law. PFCI instituted a complaint for recovery of the amount paid by them. for lack of factual and legal basis. the petition for review. Thus. 4 coils were found to be in bad order (BO Tally sheet 154974). No pronouncement as to costs. Attorney’s fees are recoverable only in the concept of actual damages. Award of attorney’s fees not justified Under Article 2208 of the Civil Code. Panganiban (J): 2 concur. The Regional Trial Court of Makati City (Branch 134) rendered judgment.G. 5 June 2002) Third Division. Consequently. and 12% thereafter until fully paid. also [78] and [189] Belgian Overseas Chartering and Shipping vs. attorney’ s fees and expenses of litigation. representing the value of the damaged cargo. 2004 ( 93 ) . Despite receipt of a formal demand. Moreover. as well as the defendants’ counterclaim. The Supreme Court partially granted the Petition. Germany 242 coils of various Prime Cold Rolled Steel sheets for transportation to Manila consigned to the Philippine Steel Trading Corporation. shipped on board the M/V ‘Anangel Sky’ at Hamburg. until fully paid. the consignee Philippine Steel Trading Corporation declared the same as total loss.

Normally. stated that 4 coils were in bad order and condition. who notably failed to explain why. they have the burden of proving that they observed such diligence. Herein. Germany. 6. 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. Rationale why extraordinary diligence required This strict requirement is justified by the fact that. are presumed to have been at fault or negligent if the goods they transported deteriorated or got lost or destroyed. storm. Equipped with the proper knowledge of the nature of steel sheets in coils and of the proper way of Transportation Law. (2) prior to the unloading of the cargo. (2) an act of the public enemy in war. (4) the Certificate of Analysis stated that. and to exercise due care in the handling and stowage. Having been in the service for several years. actually or constructively. (3) an act or omission of the shipper or owner of the goods. and the contents thereof exposed and rusty.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. or (5) an order or act of competent public authority. If the cause of destruction. lightning. 3. however. This is a closed list. the riding public enters into a contract of transportation with common carriers. loss or deterioration is other than the enumerated circumstances. it merely adheres to the agreement prepared by them. or other natural disaster or calamity. 4. (1) as stated in the Bill of Lading. Common carrier presumed to have been at fault or negligent. including such methods as their nature requires. That is. then the carrier is liable therefor. unless they prove that they exercised extraordinary diligence in transporting the goods. it cannot submit its own stipulations for their approval. 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. 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. as a general rule. based on the sample submitted and tested. 2004 ( 94 ) . (3) Bad Order Tally Sheet 154979 issued by JDTSI. 5. (4) the character of the goods or defects in the packing or the container. a request for a bad order survey is made in case there is an apparent or a presumed loss or damage. In order to avoid responsibility for any loss or damage. List exclusive The presumption of fault or negligence will not arise if the loss is due to any of the following causes: (1) flood. an Inspection Report prepared and signed by representatives of both parties showed the steel bands broken. Burden of proof Owing to this high degree of diligence required of them. 2. When presumption of fault or negligence will not arise. If no adequate explanation is given as to how the deterioration. without a hand or a voice in the preparation of such contract. 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. Even if it wants to. 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. the loss or the destruction of the goods happened. the steel sheets found in bad order were wet with fresh water. whether international or civil. there is no showing that BOCSNV and JDTSI exercised due diligence to forestall or lessen the loss. the transporter shall be held responsible. (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. common carriers. earthquake. BOCSNV and JDTSI received the subject shipment in good order and condition in Hamburg. the metal envelopes rust-stained and heavily buckled. Hence. to the consignee or to the person who has a right to receive them.

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

17. and Cresencio Yobido. The incident resulted in the death of 28-year-old Tito Tumboy. the number of units. the left front tire of the bus exploded. the Court held that a bill of lading was separate from the Other Letter of Credit arrangements. The bus fell into a ravine around 3 feet from the road and struck a tree. and physical injuries to other passengers. 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. Maria. IAC. On 21 November 1988. [37] Yobido vs. a Yobido Liner bus bound for Davao City. as stipulated in the bill of lading. considering the ruling in Eastern Shipping Lines and the fact that the Bill of Lading clearly disclosed the contents of the containers. 14. spouses Tito and Leny Tumboy and their minor children named Ardee and Jasmin. the Court explained the meaning of package. Surigao del Sur. its driver. They also filed a third-party complaint against Philippine Phoenix Surety Transportation Law. 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. the owner of the bus. 16. as well as the nature of the steel sheets. Inc.e. That notation was made only for the convenience of the shipper and the bank processing the Letter of Credit. Thus. Agusan del Sur. BOCSNV and JDTSI’s liability should be computed based on US$500 per package. When the Yobidos filed their answer to the complaint.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. boarded at Mangagoy. 17 October 1997) Third Division. must be treated independently of the contract of sale between the seller and the buyer. they raised the affirmative defense of caso fortuito. damages and attorney’s fees was filed by Leny and her children against Alberta Yobido. v. Court of Appeals. In Eastern Shipping Lines. “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. CA. the 4 damaged coils should be considered as the shipping unit subject to the US$500 limitation. a complaint for breach of contract of carriage. 15. i. Intermediate Appellate Court. Bill of lading separate from other letter of credit arrangements In Keng Hua Paper Products v. the contract of carriage. Along Picop Road in Km. Therein. 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. As the bank cannot be expected to look beyond the documents presented to it by the seller pursuant to the letter of credit. 2004 ( 96 ) . 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. Eastern Shipping Line vs. 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.” Herein. 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. Keng Hua Paper Products vs. Sta. before the RTC of Davao City. CA (GR 113003. Romero (J): 4 concur Facts: On 26 April 1988.

and P7.00. is not an unavoidable event. it is the burden of the defendants to prove that the cause of the blow-out was a fortuitous event.00 for the death of Tito Tumboy. the petition for review on certiorari.000. Dissatisfied.000. 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. in addition to the monetary awards therein. when a passenger boards a common carrier. 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. there may have been adverse conditions on the road that were unforeseeable and/or inevitable. the lower court dismissed the third party complaint. the parties agreed to a stipulation of facts. using the utmost diligence of very cautious persons. It is not incumbent upon the plaintiff to prove that the cause of the blow-out is not caso fortuito. he takes the risks incidental to the mode of travel he has taken. 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. The Yobidos filed a motion for reconsideration of said decision which was denied on 4 November 1993 by the Court of Appeals. On the other hand. The fact that the cause of the blow-out was not known does not relieve the carrier of liability. there is evidence that the bus was moving fast. the Tumboys appealed to the Court of Appeals. Paras. Article 1755 NCC. if due to a factory defect. The cause of the blow-out. be liable for the award of exemplary damages in the amount of P20. Ruling of the Court of Appeals. This third-party defendant filed an answer with compulsory counterclaim.Haystacks (Berne Guerrero) and Insurance. However. the Court found no reason to overturn the findings and conclusions of the Court of Appeals. 2. 2004 ( 97 ) . Carrier not an insurer of safety of its passengers. 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. No amicable settlement having been arrived at by the parties. 1. P30. improper mounting. However. On 23 August 1993. with costs against the Yobidos. 3. As enunciated in Necesito vs. however. Inc. 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. Proving that the tire that exploded is a new Goodyear tire is not sufficient to discharge defendants’ burden. Upon a finding that the third party defendant was not liable under the insurance contract. while traveling. trial on the merits ensued. At the pre-trial conference. This general principle is subject to exceptions such as that the lower court and the Court of Appeals arrived at diverse factual findings. the law presumes that the common carrier is negligent. Herein. excessive tire pressure. the Court of Appeals rendered the Decision reversing that of the lower court. which could make the blow-out a caso fortuito. relieve the carrier from liability. On 29 August 1991. 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.000. and the road was wet and rough.00 in moral damages. ordering the Yobidos to pay the Tumboys the sum of P50. The Supreme Court affirmed the Decision of the Court of Appeals subject to the modification that the Yobidos shall. 4. but he was not presented as witness. when a passenger is injured or dies. Explosion of the tire not in itself a fortuitous event The explosion of the tire is not in itself a fortuitous event.00 for funeral and burial expenses. when passenger injured or dies. upon such re-examination. After all. common carrier presumed negligent As a rule. Moreover. Factual findings may not be reviewed on appeal by the Supreme Court. the lower court rendered a decision dismissing the action for lack of merit. with a due regard for all the circumstances.000.” Transportation Law. Hence.

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

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

DISC had paid as insurer the total amount of P364. in all cases other than those mentioned is Article 1734 thereof. the Supreme Court ordered the consolidation of the above cases. and it is immaterial that the collision actually occurred in foreign waters.977. Kaisa Ltd.Haystacks (Berne Guerrero) cotton were lost and/or destroyed. On 17 November 1978. the rights and obligations of common carrier shall be governed by the Code of Commerce and by special laws (Article 1766. 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. On 12 November 1969. the Development Insurance and Surety Corporation (DISC) as insurer.000. 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. until fully paid and attorney’s fees of P10. Extraordinary diligence required of common carriers. Thus. Accordingly. Hence. the appeals by certiorari. The Supreme Court denied the subject petitions for lack of merit. Actual collision occurring in foreign waters immaterial Herein. Manila. is merely suppletory to the provisions of the Civil Code. it has been established that the goods in question are transported from San Francisco. of which 535 bales as damaged were landed and sold on the authority of the General Average Surveyor for Y6. 2. Civil Code).915. Law of country of destination governs liability of common carrier As held in Eastern Shipping Lines Inc. Civil Code). paid to the Riverside Mills Corporation as holder of the negotiable bills of lading duly endorsed. Under the above ruling. and affirmed the assailed decision of the Appellate Court. unless it proves that it has observed the extraordinary diligence required by law.86 plus attorney’s fees of P10.938. Negligence presumed Under Article 1733 of the Civil Code. in said decision. for the said lost or damaged cargoes. Likewise. Manila.86 plus the legal rate of interest to be computed from the filing of the complaint on 22 April 1965.86 to the consignees or their successors-in-interest. after DISC and MCP presented their respective evidence. On 22 April 1965. Also considered totally lost were the aforesaid shipment of Kyokuto. the common carrier shall be presumed to have been at fault or to have acted negligently.915. under Article 1735 of the same Code. the Court of Appeals promulgated its decision affirming in toto the decision of the trial court. The damaged and lost cargoes was worth P344. 1. acting for Guilcon.045. 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. the trial court rendered a decision ordering MCP and NDC to pay jointly and solidarily to DISC the sum of P364. such as Ise Bay. MCP interposed its appeal on 20 December 1969. The total loss was P19. On 25 July 1979.00 against NDC and MCP.00 which DISC as insurer paid to Guilcon as holder of the duly endorsed bill of lading. DISC filed before the then Court of First Instance of Manila an action for the recovery of the sum of P364.500 and 15 bales were not landed and deemed lost. it is evident that the laws of the Philippines will apply.86 which amount. 2004 ( 100 ) . Thus.. destruction or deterioration” (Article 1753.00. Transportation Law. the liability of the carrier is governed primarily by the Civil Code and in all matters not regulated by said Code. v.000. Hence. Japan. 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. California and Tokyo. the Carriage of Goods by Sea Act. Boekui. a special law. consigned to the order of Manila Banking Corporation. the trial court granted MCP’s cross-claim against NDC.915. the rule was specifically laid down that for cargoes transported from Japan to the Philippines. 3.

or as limiting its application. 751 [1909]). no less than MCP itself issued a certification attesting to this fact. Aside from the fact that the Carriage of Goods by Sea Act (Commonwealth Act 65) does not specifically provide for the subject of collision. Agency broad enough to include shipagent in maritime law The Memorandum Agreement of 13 September 1962 shows that NDC appointed MCP as Agent. 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.86 to said consignees for the loss or damage of the insured cargo. Urrutia & Co. which deal exclusively with collision of vessels. said Act in no uncertain terms. MCP cannot escape liability. however. Riverside Mills Corporation and Guilcon. but more importantly does not repeal nor limit its application. DISC a subrogee.Haystacks (Berne Guerrero) 4. MCP an agent. it is evident that DISC has a cause of action to recover (what it has paid) from MCP. 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. 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. restricts its application “to all contracts for the carriage of goods by sea to and from Philippine ports in foreign trade. 7. 10. Application of Article 826 to 839 of the Code of Commerce proper The collision. Code of Commerce applies both to domestic and foreign trade.915. 6. 281 [1906]). it is obvious that said law not only recognizes the existence of the Code of Commerce. Articles 826 and 827 of the Code of Commerce. a term broad enough to include the concept of Ship-agent in Maritime Law. which provides that if the collision is imputable to both vessels. 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. Garcia Vergara. that in case of collision. Book Three of the Code of Commerce. Consequently. 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. DISC paid the total amount of P364. the shipowner or carrier. under the circumstances.” Under Section 1 thereof.” By such incorporation. each one shall suffer its own damages and both shall be solidarily responsible for the losses and damages suffered by their cargoes. as it is undisputed that the insurer. shows that the actual consignees of the said goods are the aforementioned companies.. 9. MCP was even conferred all the powers of the owner of the vessel. Accordingly. Collision does not fall under matters regulated by Civil Code. falls among matters not specifically regulated by the Civil Code. 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. 5. has a right of action against MCP Herein. particularly Articles 826 to 839. 2004 ( 101 ) . both the owner and the agent are civilly responsible for the acts of the captain (Yueng Sheng Transportation Law. In fact. v. so that no reversible error can be found in the lower court’s application to the present case of Articles 826 to 839. the owner of the vessel at fault. Primary liability of shipowner on occasion of collision due to fault of captain Under the provisions of the Code of Commerce. 96 Phil. 8. is not exempt from liability for damages arising from collision due to the fault or negligence of the captain. But more in point to the instant case is Article 827 of the same Code. shall indemnify the losses and damages incurred after an expert appraisal. including the power to contract in the name of the NDC. 12 Phil.

Sarmiento (J): 3 concur Facts: On 28 November 1956. On 1 December 1956. Hence. 276 [1908]). the agent. its equipment. 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. The rest was brought to the compound of NASSCO. had the cargoes in question been saved. and the cargoes not being jettisoned to save some of the cargoes and the vessel. Mayor Jose Advincula of Mariveles. common carriers. Transportation Law. 12. Bataan. Bataan.Haystacks (Berne Guerrero) Exchange and Trading Co. and the freight (Behn. captain of the lighter. When about half of the scrap iron was already loaded.e. Urrutia & Co. in the language of the court in Juan Ysmael & Co. 11 Phil. 42 Phil. is not expressly provided in Article 826 of the Code of Commerce. would necessitate the trans-shipment of cargo. 423 [1923]). i. for treatment. Ganzon sent his lighter “Batman” to Mariveles where it docked in 3 feet of water. 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. The latter resisted the shakedown and after a heated argument between them. resulting in consequent delay of their arrival. 256. Besides. to his rights against the owner of the ship. 11.” Negligence of the captains of the colliding vessel being the cause of the collision. Action not prescribed. 30 Mary 1988) Second Division. the loading of the scrap iron was resumed. 1964. v. the trial court and the Court of Appeals acted correctly in not applying the law on averages (Articles 806 to 818. Gelacio Tumambing delivered the scrap iron to Filomeno Niza. Mauro B. 90 [1927]) “cannot limit its liability for injury to a less of goods where such injury or loss was caused by its own negligence. 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. 45 Phil. Value of goods declared in bills of lading. for losses and damages occasioned to such cargo. however. because of the collision. [41]. Barretto et al. Code of Commerce). ordered captain Filomeno Niza and his crew to dump the scrap iron where the lighter was docked. the cargo which was supposed to arrive in Manila on 18 April 1964 arrived only on June 12. the Court held that both the owner and agent (Naviero) should be declared jointly and severally liable. (51 Phil. Gelacio Tumambing contracted the services of Mauro B. is liable to the shippers and owners of the cargo transported by it. Inc. Standard Oil Co. Bataan. 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.. to the extent of the value of the vessel. Section 3 (6) The bills of lading issued allow trans-shipment of the cargo. Lopez Castelo. After sometime. Mayor Jose Advincula drew his gun and fired at Gelacio Tumambing. 13. Rementeria y Cia v. 262 [1921]). v. without prejudice. 18. Consequently. sub-paragraph (6) of COGSA. the complaint was filed on 22 April 1965. Meyer Y Co. supra citing Article 586 of the Code of Commerce. of New York v. for loading which was actually begun on the same date by the crew of the lighter under the captain’s supervision. But on 4 December 1956.000. The gunshot was not fatal but Tumambing had to be taken to a hospital in Balanga. that while it is true that the liability of the naviero in the sense of charterer or agent. 13 and 15.. Ganzon to haul 305 tons of scrap iron from Mariveles. arrived and demanded P5. also [58] Ganzon vs. CA (GR L-48757. accompanied by 3 policemen. Acting Mayor Basilio Rub. 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. McMicking et al. 2004 ( 102 ) . Later on Acting Mayor Rub issued a receipt stating that the Municipality of Mariveles had taken custody of the scrap iron. Moreover. v. even though he may not be the owner of the vessel. Lim.” Pursuant to this agreement. to the port of Manila on board the lighter LCT “Batman. they could have arrived in Manila on the said dates.00 from Gelacio Tumambing. In fact. Accordingly.. 20 and July 10.

storm. namely: (1) Flood. the scraps are placed in the possession of the common carrier.000. with costs against Ganzon. the appellate court reversed and set aside the decision appealed from.00 as attorney’s fees. Order by competent authority must be valid. Contract of carriage perfected. it must be shown that Acting Mayor Basilio Rub had the power to issue the disputed order. Loss not due to any cause enumerated in Article 1734 of the Civil Code Herein. actual or constructive. (4) The character of the goods or defects in the packing or in the containers. and affirmed the assailed decision of the Court of Appeals. On appeal. By reason of this presumption. As it was. Hence. albeit still unloaded. Duties of the carrier By the act of delivery. the scraps were unconditionally placed in the possession and control of the common carrier. Ganzon is presumed to have been at fault or to have acted negligently. 2004 ( 103 ) . 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. the decision being immediately executory. and (5) Order or act of competent public authority. (3) Act or omission of the shipper or owner of the goods. or that it was issued under legal process of authority. Pursuant to Article 1736. 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. Indeed. The order of the acting mayor did not constitute valid authority for Ganzon and his representatives to carry out. according to all the circumstances of the case. 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. lightning.000. and upon their receipt by the carrier for transportation. Burden of proof to prove otherwise Herein. the sum of P5. 4.895. the contract of carriage was deemed perfected. Neither has it been shown that the cargo of scrap iron belonged to the Municipality of Mariveles. 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. or that it was lawful. or to the person who has a right to receive them. The appellee failed to establish this. The trial court rendered a decision absolving Ganzon from liability. whether international or civil. earthquake.00. by the carrier to the consignee. the petition for review on certiorari. and the amount of P2. Consequently. 1. 5. 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. no authority or power of the acting mayor to issue such an order was given in evidence.000. or other natural disaster or calamity.Haystacks (Berne Guerrero) Tumambing instituted in the CFI of Manila an action against Ganzon for damages based on culpa contractual. 3. the carrier’s extraordinary responsibility for the loss.00 as actual damages. (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. there was hardly any attempt on the part of Ganzon to prove that he exercised such extraordinary diligence. 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.00 as exemplary damages. The Supreme Court denied the petition. destruction. By delivery. with costs against Ganzon. 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. and entered a new one ordering Ganzon to pay Tumambing the sum of P5. or that the loss was due to an unforeseen event or to force majeure. 2. Still. or determination of the goods commenced. however. Negligence presumed. such extraordinary responsibility would cease only upon the delivery.

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

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

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

Japan. the then Court of Appeals on 10 September 1984.540 for the 7 cases of spare parts. the vessel caught fire and sank. for US$46. plus P5. plus attorney’s fees of P5. and Dowa. the facts alleged in a party’s pleading are deemed admissions of that party and binding upon it.00 and costs. which they have done.361.00 as attorney’s fees and costs. as subrogees of the insured. the Trial Court rendered judgment in favor of Nisshin and Dowa in the amounts of US$46.361.00.. with legal interest. Eastern Shipping filed a petition for review on certiorari. resulting in the total loss of ship and cargo. 2004 ( 107 ) . [GR 69044] On 11 May 1978. the Resolution of the Second Division of 25 September 1985 was set aside and the Petition was given due course. with legal interest. on 14 August 1984. and the costs. for US$11. Ltd..039 for the 28 packages of calorized lance pipes.385. during the same period. Eastern Shipping sought reconsideration of the Resolution denying the Petition for Review and moved for its consolidation with GR 69044. 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). Both sets of goods were insured against marine risk for their stated value with Development Insurance and Surety Corporation. Civil Case 116151). The Supreme Court modified the judgment in GR 69044.385.000. Civil Case 116087)..039. and the parties were required to submit their respective Memoranda. Upon Eastern Shipping’s Motion for Reconsideration. in 2 containers. hence.000. the petition for review on certiorari by Eastern Shipping.583. and that when the loss of fire is established. the same vessel took on board 128 cartons of garment fabrics and accessories. on the other hand. plus P35. affirmed the decision of the trial court. Nisshin. the Trial Court rendered judgment in favor of Development Insurance in the amounts of P256. and 7 cases of spare parts valued at P92. Admission of Eastern Shipping as operator of vessel As a general rule. consigned to Central Textile Mills.000.00 consigned to Philippine Blooming Mills Co. and GR 71478 on 25 September 1985 by the Second Division.00 because of $500 per package limitation of liability under the COGSA. The Court. Development Insurance. Enroute for Kobe. in favor of a party to Transportation Law. which was then pending resolution with the First Division. 1.75. respectively. On appeal by Eastern Shipping. [GR 71478] On 16 June 1978. it is not liable under the law. 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 P71.00 and US$11. in that Eastern Shipping shall pay the Development Insurance the amount of P256. in GR 71478.75.. to Manila. consigned to Mariveles Apparel Corporation. The 128 cartons were insured for their stated value by Nisshin Fire & Marine Insurance Co. In GR 71478. On 15 September 1980. with interest at the legal rate from the date of the filing of the Complaint on 13 June 1978. in GR 71478. Inc. GR 69044 on 16 January 1985 by the First Division. Eastern Shipping took an appeal to the then Court of Appeals which. 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.000 as attorney’s fees. affirmed with modification the Trial Court’s judgment by decreasing the amount recoverable by Dowa to US$1. however. GR 69044 was given due course on 25 March 1985. affirmed the judgment. imputing unseaworthiness of the ship and non-observance of extraordinary diligence by Eastern Shipping. having been subrogated unto the rights of the two insured companies.00. Eastern Shipping denied liability mainly on the ground that the loss was due to an extraordinary fortuitous event. and two cases of surveying instruments consigned to Aman Enterprises and General Merchandise. and the 2 cases by Dowa Fire & Marine Insurance Co. On the other hand.039. Both Petitions were initially denied for lack of merit. The same was granted. 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.00. On 31 August 1979. respectively.583. Hence.00 and P92.Haystacks (Berne Guerrero) packages valued at P256. 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. the burden of proving negligence of the vessel is shifted to the cargo shipper.

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

Eastern Shipping’s liability should not exceed US$500 per package In GR 69044. there is no stipulation in the respective Bills of Lading limiting the carrier’s liability for the loss or destruction of the goods.” 11. and the amount affirmed to be paid by the Court. 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. (1) the actual total loss for the 5. Code Civil Code does not limit liability of common carrier. unless the shipper or owner declares a greater value. or Transportation Law. Consequently. is binding. 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. would be P286. which was exactly the amount of the insurance coverage by Development Insurance. 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. Actual liability of Eastern Shipping in GR 69044 In GR 69044. Nor is there a declaration of a higher value of the goods. “A stipulation that the common carrier’s liability is limited to the value of the goods appearing in the bill of lading. That such maximum shall not be less than the figure above named.039. or its peso equivalent.44 to US$1. 12. which is suppletory to the provisions of the Civil Code. The goods were shipped in 28 packages. at the current exchange rate of P20.” 13. unless caused by the actual fault or privity of the carrier. This declaration if embodied in the bill of lading shall be prima facie evidence. 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. Hence. Multiplying 28 packages by $500 would result in a product of $14. or the equivalent of that sum in other currency. xxx (b) Fire. 2004 ( 109 ) . Section 4 (2) of COGSA. per customary freight unit. no regular inspection was made as to their condition during the voyage.” 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.160. or in case of goods not shipped in packages. xxx” 10. at the time of payment of the value of the goods lost. the COGSA.000 which. but all be conclusive on the carrier. Section 4(5) of COGSA Section 4(5) of the COGSA. xxx” Herein. master or agent of the carrier. Eastern Shipping’s liability should not exceed US$500 per package. 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. and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided.” and that “after the cargoes were stored in the hatches. but in no case “more than the amount of damage actually sustained. Article 1749 NCC Article 1749 of the New Civil Code also allows the limitations of liability in this wise. the complete defense afforded by the COGSA when loss results from fire is unavailing to Eastern Shipping. By agreement between the carrier. there was “actual fault” of the carrier shown by “lack of diligence” in that “when the smoke was noticed. 9. the fire was already big. Thus. In no event shall the carrier be liable for more than the amount of damage actually sustained. unless the nature and value of such goods have been declared by the shipper before shipment and inserted in bill of lading.000 pieces of calorized lance pipes was P256. that the fire must have started 24 hours before the same was noticed.Haystacks (Berne Guerrero) 8.

the amount awarded to Dowa which was already reduced to $1. 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. supra. They simply serve to divide the ship’s overall cargo stowage space into smaller. 414 F. 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.44) would yield P71. 15. 1304(5)]. 4(5). These containers are likened to detachable stowage compartments of the ship. obvious wisdom in the Ninth Circuit’s conclusion in Hartford that technological advancements. District Court for the Southern District of New York rendered judgment for the plaintiffs. American Export Lines In Mitsui & Co.’ 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. more serviceable loci.583. 636 F 2d 807 (1981). Second Division. do not warrant a distortion or artificial construction of the statutory term ‘package.” Consequently. and not P92. in this regard. 46 U.44 to US$1 (US$3. 14. the interest in securing international uniformity would suggest that they should not be so treated.039 should be upheld. 16. which had been shipped in vessel-supplied containers. which is likewise the insured value of the cargo and which amount was affirmed to be paid by the Court. The United States Court of Appeals. vs. which amount is less than the maximum limitation of the carrier’s liability. however great might be the temptation to ‘modernize’ or reconstitute it by artful judicial gloss. each of those units and not the container constitutes the ‘package’ referred to in liability limitation provision of Carriage of Goods by Sea Act. (2) With respect to the 7 cases of spare parts. There is. If COGSA’s package limitation scheme suffers from internal illness. that treating a container as a package is inconsistent with the congressional purpose of establishing a reasonable minimum level of liability [Judge Beeks wrote. and the defendant appealed.000 by the Appellate Court following the statutory $500 liability per package.S. Inc. whether or not forseeable by the COGSA promulgators. 17. [Carriage of Goods by Sea Act.. the Appellate Court also limited Eastern Shipping’s liability to $500 per package and affirmed the award of $46. at 907].S. that is $46. American Export Lines. the amount of P256.S. 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. Congress alone must undertake the surgery. The U. 46 U.583 to Nisshin. Actual liability of Eastern Shipping in GR 71478 In GR 71478. It multiplied 128 cartons (considered as COGSA packages) by $500 to arrive at the figure of $64. 1304(5)].Haystacks (Berne Guerrero) “more than the amount of damage actually sustained. After quoting the statement in Leather’s Best.000.500 x P20. Ltd. 2004 ( 110 ) . in so far as the 2 cases of surveying instruments are concerned. Courts to construe and apply statute as enacted. However. [Carriage of Goods by Sea Act. Supp. 451 F 2d at 815. 4(5). 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. which is the amount that should be paid by Eastern Shipping for those spare parts.361. 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.75.C. their actual value was P92.A.C. Mitsui vs. Shippers’ Transportation Law.75. and explained that “since this amount is more than the insured value of the goods.540 only. the Trial Court was correct in awarding said amount only for the 128 cartons.A. multiplying 7 cases by $500 per package at the present prevailing rate of P20. is in order. In respect of the shipment of 128 cartons of garment fabrics in 2 containers and insured with Nisshin.361. The 128 cartons and not the 2 containers should be considered as the shipping unit. they do not suddenly lose that character upon being showed in a carrier’s container.

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. M/V Eurygenes followed the Mitsui test. 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. 1979).C.M. which is drawn up by the carrier. “Two (2) Containers” appearing as the first entry would have sufficed and if there is any ambiguity in the Bill of Lading. S. like the Bill of Lading. 2004 ( 111 ) . No Denial of Opportunity to Present Deposition of Its Witnesses (in GR 69044 only). Since after 6 November 1978. Yeramex Internation vs. Va. Obscure words or stipulations in contract construed against party who caused obscurity. when its answer was prepared and filed in Court. 1977 A. or if the parties indicated. just two days before the hearing set for August 27th. What due process abhors Herein. Why did it take until 25 August 1979. an agreement to treat the container as the package. only proves the lack of merit of Eastern Shipping’s motion for postponement. for which reason it deserves no sympathy from the Court in that regard. served upon Development Insurance on August 25th. Eastern Shipping was given full opportunity to present its evidence but it failed to do so. 21. Smithgreyhound vs. as well as the nature of the goods. the cartons and not the containers are the packages. Judge Kellam held that when rolls of polyester goods are packed into cardboard cartons which are then placed in containers. Eurygenes followed the Mitsui test and treated the cartons.). It cannot mean that the shipper had furnished the containers for if so. Mitsui and Eurygenes cases applied Considering that the Bill of Lading clearly disclosed the contents of the containers. Its belated notice to take deposition on written interrogatories of its witnesses in Japan. when the pre-trial conference was conducted for the last time. Tando. in clear and unambiguous language. to 27 August 1979. However. 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. 18. and applying the ruling in the Mitsui and Eurygenes cases it is clear that the 128 cartons. 595 F 2d 943 (4 Cir. not to mention the time from 27 June 1978. 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. 1807 (E. Only Eastern Shipping itself is to Transportation Law. the use of the estimate “Say: Two (2) Containers Only” in the Bill of Lading. Eastern Shipping has told the Court since 16 February 1979. to prepare its written interrogatories. Eastern Shipping had more than 9 months to prepare its evidence.S. or more than 6 months. M/V Eurygenes (US) The case of Smithgreyhound v. not the container. 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. another district with many maritime cases followed Judge Beeks’ reasoning in Matsushita and similarly rejected the functional economics test.” 20. 22. 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. “Say: Two (2) Containers Only” construed. Bill of lading disclosed contents of containers.D. not the 2 containers should be considered as the shipping unit subject to the $500 limitation of liability. the Carrier shall be at liberty to pack and carry them in any type of container[s]”). until 26 September 1978. the number of cartons or units. rev’d on other grounds. as the COGSA packages. 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. The number of cartons was disclosed to the carrier in the bill of lading. that it was going to take the deposition of its witnesses in Japan. 19. means that the goods could probably fit in 2 containers only.

23. and Transportation Law. consigned to Kui Pai. and in its fourth special defense alleges that at Hongkong on 12 April 1927. from which Kui Pai appealed. Dollar Steamship pleads 11 separate defenses.734. As a result of the trial upon such issues. 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. When liability of a carrier begins The liability of the carrier shall begin from the moment he receives the merchandise. and that the weight of the 3 packages was 996 pounds only. specifically refer to the identical two cases now claimed by Kui Pai. they were measured by the Official Measure’s Office at Hongkong. and refused and refuses to accept delivery of the other 2. vs. Code of Commerce. for which it issued the corresponding bill of lading. that it has repeatedly demanded the delivery of the merchandise. Dollar Steamship made a general and specific denial. Liability (responsibility) of a carrier The carrier shall be obliged to deliver the goods transported in the same condition in which. Thus. Dollar Steamship failed and neglected to deliver 2 cases of the goods. Dollar Steamship tendered to Kui Pai “the six identical cases shipped by Mee Hing Chan and covered by the Bill of Lading. that through such loss and failure to deliver. It cannot complain now that it was denied due process when the Trial Court rendered its Decision on the basis of the evidence adduced. which is the net invoice value of the goods. which certified that the 3 packages contained 68 cubic feet. The award of P5. Kui Pai has been damaged in the sum of P11. and that the measurements of the two cases of piece goods described in the certificate.1927. 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. and costs. that Dollar Steamshop received and accepted said merchandise. the two packages or cases lost or missing were never landed in Manila from the President Taft.00 in GR 71478 was affirmed. it is believed that the amount of P5.) 2. plus freight and profit.00 would be more reasonable in GR 69044. [44] Kui Pai & Co. in the City of Manila. and as a first special defense alleges that about 14 April 1927. that as shown by the records of the Manila Terminal Company of Manila. without any detriment or impairment. 2004 ( 112 ) . For answer. wares and merchandise in good order and condition.000. (a limited mercantile partnership) alleged that about 12 April 1927. Award of Attorney’s Fees Courts being vested with discretion in fixing the amount of attorney’s fees. 355.15. Johns (J): 7 concur Facts: Kui Pai & Co. Eastern Shipping was afforded ample time to present its side of the case. that Kui Pai has paid all freight charges to Dollar Steamship. and agreed to deliver it Kui Pai in Manila. 1. What due process abhors is absolute lack of opportunity to be heard. goods. Dollar Steamship Line (GR 30019. they were at the time of their receipt. and that it has never been delivered. Kui Pai prays for a corresponding judgment. 3/6 by 3/5 by 2/3. The Supreme Court affirmed the judgment of the lower court. the lower court rendered judgment for Dollar Steamship. when the cases were brought aboard the President Taft.Haystacks (Berne Guerrero) blame for its failure to adduce evidence in support of its defenses. in person or through a person entrusted thereto in the place indicated for their reception. (Art. 2 March 1929) En Banc.000. according to the bill of lading.” but that Kui Pai accepted and took delivery of only 4. for which demand has been made and payment refused. with interest from April 14. with costs.

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

washing. Adding to this last amount the sum of P8. Macleod promptly notified the carrier’s main office in Manila and its branch in Davao advising it of its liability.75 piculs of the reconditioned hemp out of the original cargo of 1. the value of the reconditioned hemp was reduced to P84.197. 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. The Supreme Court affirmed the decision appealed from.S. Bowline Knot belonging to Compañia Maritima on which the hemp was to be loaded. 30 October 1964) En Banc.421.421.162 bales loaded on the carrier’s LCT 1025. Davao. Macleod and Company contracted by telephone the services of petitioner to ship the hemp in question from the former’s private pier at Sasa. and other fees for washing. which oral contract was later confirmed by a formal and written booking issued by the shipper’s branch office. which had a total of P116.. also [118] Compania Maritima vs. Hence. in virtue of which the carrier sent two of its lighters to Transportation Law.947. Massachusetts. These two lighters were manned each by a patron and an assistant patron. for the shipment of 2. cleaning and redrying in the amount of P19. Contract of carriage exists Herein.Haystacks (Berne Guerrero) of that same hold.162 bales weighing 2.00. the carrier’s trucks and lighters hauled from Odell to Macleod at Sasa a total of 2. The patron of both barges issued the corresponding carrier’s receipts and that issued by the patron of Barge 1025. or at the early hours of October 30. which is the only amount supported by receipts. 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. Davao City. the sum of P64. After trial. or a loss in value of P31. were insured with the Insurance Company of North America against all losses and damages.610. 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. All abaca shipments of Macleod. Bautista Angelo (J): 10 concur Facts: Sometime in October.645 bales of hemp from the former’s Sasa private pier at Davao City to Manila and for their subsequent transshipment to Boston.021. During the period from November 115.30 representing Macleod’s expenses in checking. it must follow that.887. 1952. in the very nature of things. to Manila. Macleod filed a claim for the loss it suffered as above stated with said insurance company. Hence. to be subsequently transshipped to Boston. with costs against Compania Maritima. Thereafter.02.28.00. 1. the total loss adds up to P60. During the night of 29 October 1952. This judgment was affirmed by the Court of Appeals on 14 December 1960. and redrying. and the costs.A. a shipping corporation. 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. On 30 October 1952. including the 1.S. of North America (GR L-18965. and after the same had been processed. for cleaning.863. 2004 ( 114 ) . USA on board the S. LCT 1025 sank resulting in the damage or loss of 1.324 piculs. After reclassification.S. Macleod and Company of the Philippines contracted by telephone the services of the Compañia Maritima. the petition for review. Insurance Co.162 bales of hemp loaded therein. reconditioning.835. which was noted down in a document which. aside from being a receipt of the amount paid.018.02. U. Davao City. Having failed to recover from the carrier the sum of P60. the insurance company instituted the action on 28 October 1953. grading.55 was paid. and that the short change artist must have appeared on the scene in Hongkong. the court a quo rendered judgment ordering the carrier to pay the insurance company the sum of P60. rebaling. [45]. 1952. with legal interest thereon from the date of the filing of the complaint until fully paid. The damaged hemp was brought to Odell Plantation in Madaum.421.72. In due time. Massachusetts. Steel Navigator.

Vol.Haystacks (Berne Guerrero) undertake the service. The liability and responsibility of the carrier under a contract for the carriage of goods commence on their actual delivery to. 2004 ( 115 ) . is a good delivery and binds the vessel receiving the freight. 12-13) has written that “As to issuance of a bill of lading. similarly.” 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. Knot Contract of affreightment commenced even if the hemp was not actually loaded on S. or as a condition imposed in the contract by the agreement of Transportation Law. although Article. II. 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. 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. and the carrier to the full payment of its freight upon completion of the voyage. Revised Edition. In fact. then it can be said with certainty that the relation of shipper and carrier has been established. Martin (Philippine Commercial Laws. although it may become obligatory by reason of the regulations of railroad companies. 5. pp. 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. 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. and if actually no goods are received there can be no 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. where there is a contract to carry goods from one port to another.’ The bill of lading is not essential to the contract. and lighters are sent by the vessel to bring the goods to it. the lighters are for the time its substitutes. but once that step was taken and the hemp delivered to the carrier’s employees. In other words. 2. the rights and obligations of the parties attached thereby subjecting them to the principles and usages of the maritime law. the carrier or an authorized agent and delivery to a lighter in charge of a vessel for shipment on the vessel. so that the bill of lading is applicable to the goods as soon as they are placed on the lighters. 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 receipt signed by the patron of the lighter that carried the hemp stated that he was receiving the cargo “in behalf of S. said bill of lading is not indispensable. Bill of lading not indispensable to creation of contract of carriage.’ still. the liability commencing at the time of delivery to the lighter and. there is a complete contract of carriage the consummation of which has already begun: the shipper delivering the cargo to the carrier. and the latter taking possession thereof by placing it on a lighter manned by its authorized employees. ‘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 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. 3. The lighters were merely employed as the first step of the voyage. for that preparatory steps is but a part and parcel of said contract of carriage.S. under which Macleod became entitled to the privilege secured to him by law for its safe transportation and delivery. Bowline Knot in good order and condition.S. “ 6. or receipt by. there should be no limitations as to form. for the delivery of the hemp to the carrier’s lighter is in line with the contract. where it is the custom to deliver in that way.

but one between the shipper and the carrier. May 6. 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. 288 The liability of the carrier as common carrier begins with the actual delivery of the goods for transportation. 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. What constitutes a storm According to Beaufort’s wind scale. 9. it is but fair that it be given the right to recover from the party responsible for the loss. 2004 ( 116 ) . 314-315. 1895). Visayan Stevedore Transportation Co. Robles vs. and not merely with the formal execution of a receipt or bill of lading. 13 C. actual delivery and acceptance are sufficient to bind the carrier.” (barge therefore was not seaworthy). At any rate. no valid reason is seen why such action cannot be asserted or availed of by the insurance company as a subrogee of the shipper. vs. Decision. Even where it is provided by statute that liability commences with the issuance of the bill of lading. a storm has wind velocities of from 64 to 75 miles per hour. Mishap due to lack of adequate precaution or measures. And since the shipper has a direct cause of action against the carrier on account of the damage of the cargo.Haystacks (Berne Guerrero) the parties themselves.. (Del Viso p. not due to force majeure The mishap that caused the damage or loss was due. 11. 8. Bill of lading not indispensable to creation of contract of carriage. the correctness of the accounts cannot be disputed for the same is supported by the original Transportation Law. therefore. Ltd. In other words. cannot be classified as storm. but gives right to both the carrier and the shipper to mutually demand of each other the delivery of said bill.. but to lack of adequate precaution or measures taken by the carrier to prevent the loss. del Pan & Co. 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. The instant case. or other natural disaster or calamity. 2268). winds of 11 miles per hour. (Sp.G. p.S. Insurance company subrogated to right of shipper.. J. The bill of lading is juridically a documentary proof of the stipulations and conditions agreed upon by both parties. 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.6 miles per hour then prevailing in Davao on 29 October 1952. the correctness of the account representing the loss was not so material as would necessitate the presentation of the books in question. Inc. 10. Herein. 44 O. flood. on the night of the nautical accident there was no storm. 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.). The report of marine surveyors (R. Since the Cargo that was damaged was insured with the insurance company and the latter paid the amount represented by the loss.” 7. not to force majeure. the Code does not demand.) attributes the sinking of LCT 1025 to the non-watertight conditions of various buoyancy compartments. Hence. was due to a fortuitous event. as necessary requisite in the contract of transportation.. even if the books of accounts were not produced. is not one between the insured and the insurer. if any. the delivery of the bill of lading to the shipper. Santos. Ct. because the insurance company merely stepped into the shoes of the shipper. Sup. the issuance of a bill of lading is not necessary to complete delivery and acceptance. although stronger than the average 4. under the carrier’s theory.J.

provided that the indications of the damage or average giving rise to the claim cannot be ascertained from the exterior of said packages. the appeal by the Government. to be reimbursed for the loss of the cement.02 made in favor of respondent. was in good order and condition. or after the transportation charges have been paid.after 158] Government vs. 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. or from the day on which it should have been delivered according to the conditions of its transportation. 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. when damages which do not appear on the exterior of the packages received are in question. After the periods mentioned have elapsed. the Government placed aboard Inchausti’s steamer Venus 500 barrels of cement consigned to the district engineer of the Province of Albay. which was filed on 18 February 1911. {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. On arrival of the steamer at the port of Tabaco. when placed aboard the steamer in Manila Bay.” 2. through its agents. the Court finds the same of no importance. 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. The trial court sustained Inchausti’s demurrer. the period of the prescription to be counted from the day of the delivery of the cargo at the place of its destination. 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. and it is alleged that this loss was due to the careless handling on the part of Inchausti’s agents. 2004 ( 117 ) . Hence. Inchausti. in which case said claim would only be admitted on the receipt of the packages.Haystacks (Berne Guerrero) documents on which the entries in said books were based which were presented by the shipper as part of its evidence. The cement. 14 February 1913) First Division. 12. 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.421. with costs against the Government. the proper protests or reservations should not have been made. 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.” 3. 1. 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. no claim whatsoever shall be admitted against the carrier with regard to the condition in which the goods transported were delivered. Trent (J): 4 concur Facts: On 3 June 1909. Inchausti (GR 6957. to be shipped to Tabaco. Section 67. Albay. [46] also [. These documents alone sufficiently establish the award of P60. Insurance company has juridical personality to file suit With regard to the question concerning the personality of the insurance company to maintain the action.

and may properly be said to have been repealed by said section 43. They create conditions precedent to the accruing of the right of action against carriers for damages caused to merchandise. or other committee appointed under the provisions of this Act: Provided. This Act.” 4. 8. a district auditor. (9 Cyc. he must allege and prove the fulfillment of the condition or a legal excuse for its nonfulfillment. and cases cited. 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. complaint. 2004 ( 118 ) . and this fact was noted upon the bill of lading. and when a notation is made upon the bill of lading or receipt of such evidence. including the section in question. Transportation Law. Liability of carrier due to “opening” of package or “tampering” of goods before the passage of Act 1792 Before the passage of Act 1792. 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.Haystacks (Berne Guerrero) receipt therefor without notation thereon of a shortage in or damage to the public property covered by such bill of lading. Changes made by Section 67. 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. 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 burden rested upon the carrier to show that. 699. History of Section 67. 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. 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. Act 1792 Section 67 first appeared as section 23 of Act 215 under the heading of “Transportation of Property.” the title of that Act being “An Act establishing and regulating accountability for public property in the Philippine Archipelago. And if he omits such allegation his declaration. If right action depends upon a condition precedent. he must allege and prove fulfillment or excuse for nonfulfillment If the plaintiff’s right of action depends upon a condition precedent. 5. went through a series of amendments until the section was finally inserted in its present form in the Accounting Act as section 67. 6. evidence of the “opening” of a package or “tampering” with the goods delivered to him for transportation made the carrier liable for the loss. 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. 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. Such actions must be brought within the periods therein set forth after the right of action accrues.” 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. and have not been repealed by section 43. although the package may have been broken at the time of delivery. the burden of proof that the shortage or damage occurred after the shipment left the carrier’s possession is upon the carrier.) 7.. 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. or petition will be bad on demurrer. 8. the contents were intact. 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. provided the required notice was given in time.

et.F. also [185] Samar Mining Co. Barnes & Co. vs. to pay the amount of P1. Nordeutscher Lloyd and CF Sharp & Co. against the former. Inc. the equivalent of $424. and dismissed Samar Mining’s complaint. Sharp & Co. a vessel owned by 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. 7). that the shipper can bring an action against the carrier at any time within the 10 years allowed by section 43 of Act 190. Inc. nor received by. 1 took no part Facts: An importation was made by Samar Mining Co. Samar Mining filed a formal claim for P1. of 1 crate Optima welded wedge wire sieves through the M/S Schwabenstein. Warner. without costs.93 plus attorney’s fees and costs. the consignee at the port of destination — Davao. (1 Phil. Nordeutscher Lloyd (GR L-28673. The court finds no reason for changing the doctrine announced in that case. ordering Nordeutscher Lloyd. When the letters of complaint sent to Nordeutscher Lloyd failed to elicit the desired response. may recoup whatever they may pay Samar Mining by enforcing the judgment against third party defendant AMCYL which had earlier been declared in default. Cuevas (J): 4 concur. 23 October 1984) Second Division.93.691. C. al.00 at the prevailing rate of exchange at that time. Nordeutscher Lloyd and CF Sharp & Co. although receipted for as being in good condition. [47]. as declared in the case of Cordoba vs. Rep. Being a contract. The Supreme Court reversed the appealed decision.. al. the Court stated that Nordeutscher Lloyd. brought in AMCYL as third party defendant. 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. Upon arrival of the vessel at the port of Manila. appealed from said decision. 1. but neither paid. Article 366 of the Code of Commerce applicable to maritime transporation Article 366 of the Code of Commerce is applicable to maritime transportation. and more importantly. 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.Haystacks (Berne Guerrero) 9. as a contract to transport and deliver the same as stipulated therein. which shipment is covered by Bill of Lading 18 duly issued to consignee Samar Mining. Samar Mining filed a suit to enforce payment. et. 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. Burden of proof when there is annotation of receipt of goods in bad condition. 2004 ( 119 ) . 11. within which to sue on an obligation arising from a contract in writing and recover upon proof that the goods. 10. 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. (represented in the Philippines by its agent. it is the law Transportation Law. However.). The goods were however never delivered to. the importation was unloaded and delivered in good order and condition to the bonded warehouse of AMCYL. The trial court rendered judgment in favor of Samar Mining. 1 concur in result..691.

” 5. 2004 ( 120 ) . Ltd. vs. United States Lines. 2. 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. delay or failure to act of anyone to whom the goods are entrusted or delivered for storage. public order and public policy. neglect. good customs. 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. M/S SCHWABENSTEIN. This carrier. Applicable law. 7. forward the whole or any part of the goods before or after loading at the original port of shipment. 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. Davao. . without notice. the goods in question in both cases were destined for Davao. to wit “The carrier shall not be liable in any capacity whatsoever for any delay. the goods were to be transshipped by the carrier to the port of destination or “port of discharge of goods”. and in Section 11 of the same Bill. Phoenix Assurance Co. As if to underline their awesome likeness. . “if goods are to be transshipped at port of discharge. thus. vs. handling or any service incidental thereto” 6. as to the stipulations contained in the bill of lading concerned. Transship defined The word “transship” means “to transfer for further transportation from one ship or conveyance to another. 22 SCRA 674 (1968). the carrier undertook to transport the goods in its vessel. Law of country of destination Transportation Law. 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. . 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. Said case matches the present controversy not only as to the material facts but more importantly. . only up to the “port of discharge from ship” — Manila. while the freight had been prepaid up to the port of destination or the “port of discharge of goods”. 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. 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”. Germany. in accordance with their respective bills of lading.Haystacks (Berne Guerrero) between the parties thereto. but were discharged from ship in Manila.’” 3. the carrier or master may. Thereafter. transshipped or forwarded”. paragraph 3 of Bill of Lading 18. 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. 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. show destination under the column for `description of contents. 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. morals. .

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

611 boxes of fresh mangoes with a value of US$14. but he shall be responsible for the acts of the substitute: (1) When he was not given the power to appoint one. The records fail to reveal proof of negligence. Article 1909 NCC Article 1909 of the Civil Code provides that “The agent is responsible not only for fraud. 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. and delivering the same into the custody of AMCYL. Nordeutscher Lloyd had commenced said performance. Hongkong and 1. 2004 ( 122 ) . through local agent Wallem Philippines Shipping. and is liable for the damages which. Hongkong as notify party. cannot be held responsible for the failure of the principal to accomplish the object of the agency. the bonded warehouse. Article 1884 NCC Article 1884 of the Civil Code provides that “The agent is bound by his acceptance to carry out the agency. Bellosillo (J): 3 concur Facts: On 4 April 1989. On Transportation Law. according to whether the agency was or was not for a compensation.273. 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.Haystacks (Berne Guerrero) performed. [48] Macam vs.00 covered by Bill of Lading HKG 99012 and exported through Letter of Credit HK 1031/30 issued by National Bank of Pakistan. 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.” 18. 3. 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. deceit or fraud committed by Nordeutscher Lloyd or by its representative in the Philippines. the carriers were acting in full accord with the contractual stipulations contained in Bill of Lading 18. there being a conflict between his interests and those of the principal. he should prefer his own. However. Article 1889 NCC Article 1889 of the Civil Code provides that “The agent shall be liable for damages if. 14. Inc.” The shipment was bound for Hongkong with Pakistan Bank as consignee and Great Prospect Company (GPC) of Kowloon.500 boxes of watermelons valued at US$5. 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. through his non-performance. shipped on board the vessel Nen Jiang. An agent who carries out the orders and instructions of the principal without being guilty of negligence. the principal may suffer. 25 August 1999) Second Division. deceit or fraud.. doing business under the name and style Ben-Mac Enterprises.” 15.950. CA (GR 125524. they incur no liability for the loss of the goods in question.” 16. Benito Macam. but also for negligence which shall be judged with more or less rigor by the courts. (2) When he was given such power but without designating the person and the person appointed was notoriously incompetent or insolvent. agency and contracts. 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. the completion of which was aborted by circumstances beyond its control.” 17.46 covered by Bill of Lading HKG 99013 and exported through Letter of Credit HK 1032/30 also issued by Pakistan Bank. owned and operated by China Ocean Shipping Co.

1. Macam was thus allegedly constrained to return the amount involved to SolidBank. per letter of credit requirement. Upon arrival in Hongkong. the National Bank of Pakistan. the shipment was delivered by Wallem directly to GPC.46 or its equivalent of P546. not to Pakistan Bank.42 plus legal interest from 6 April 1989 until full payment. On 5 July 1996 reconsideration was denied. when immediate delivery is of the essence. Great Prospect Company and not to the consignee. Misdelivery never an issue when Macam wrote Wallem for the payment of the value of the cargoes Herein. and affirmed the decision of respondent Court of Appeals of 13 March 1996. as well as its resolution of 5 July 1996 denying reconsideration. 99012 and 99013 with a total value of Transportation Law.223. jointly and severally. 2004 ( 123 ) . without the required bills of lading and bank guarantee for the release of the shipment issued by the consignee of the goods. and without the required bill of lading having been surrendered. copies of the bills of lading and commercial invoices were submitted to Macam’s depository bank. Macam sought collection of the value of the shipment of US$20.033. Ben-Mac Enterprises who informed us that Bills of Lading No. On 25 September 1991.00 as attorney’s fees. On 14 May 1993. the appellate court set aside the decision of the trial court and dismissed the complaint together with the counterclaims. Hence. (3) the costs. 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. It is a standard maritime practice.42 from China Ocean Shipping and/or Wallem before the RTC of Manila.Haystacks (Berne Guerrero) 6 April 1989. in part. The Court of Appeals appreciated the evidence in a different manner.” 2. and. The Supreme Court denied the petition. on 13 March 1996. based on delivery of the shipment to GPC without presentation of the 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. i. misdelivery of the cargoes did not come into the picture. (1) P546. which paid Macam in advance the total value of the shipment of US$20. Consolidated Banking Corporation (SolidBank). the trial court ordered China Ocean Shipping and Wallem to pay. still in possession of the original bills of lading. (2) P10.” 4. Thus. GPC failed to pay Pakistan Bank such that the latter. The letter. 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. then demanded payment from Wallem in writing but to no avail. the petition for review.000.033. states “We are writing you on behalf of our client. “(6) The goods arrived in Hongkong and were released by the defendant Wallem directly to the buyer/notify party. Hongkong. it demanded payment from respondent Wallem through 5 letters but was refused. 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. 3.46.223.e. when Macam wrote Wallem demanding payment of the value of the cargoes. 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. refused to pay Macam through SolidBank. Subsequently. Since SolidBank already pre-paid Macam the value of the shipment. The counterclaims were dismissed for lack of merit.

In transactions covered by a letter of credit. 8. Pakistan Bank was indicated in the bills of lading as consignee whereas GPC was the notify party. to implement the said telex instruction. without prejudice to the provisions of article 1738. taking into account that subject shipment consisted of perishable goods and SolidBank pre-paid the full amount of the value thereof. Hongkong. But for buyers using telegraphic transfers. the right to receive them was proper. On account of perishable goods as cargoes and prepayment by bank. there was not a single instance when the bill of lading was first presented before the release of the cargoes. 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. Hongkong. not Pakistan Bank. and received by the carrier for transportation until the same are delivered. 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.” 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. or to the person who has a right to receive them. We were further informed that the consignee of the goods. Macam dispenses with the bank guarantee because the goods are already fully paid. neither the consignee.” Macam was named therein as shipper and GPC as consignee with respect to Bill of Lading HKG 99012 and HKG 99013. When mangoes and watermelons are in season. bank guarantee is normally required by the shipping lines prior to releasing the goods.Haystacks (Berne Guerrero) US$20. in the export invoices GPC was clearly named as buyer/importer. by the carrier to the consignee.” 5. other than the consignee. Hongkong without the necessary bank guarantee. 7. Thus. did not release or endorse the original bills of lading. 10.223. 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.” 6. Great Prospect Company. Herein. National Bank of Pakistan. conformably with Article 1736 had. The delivery of the cargoes to GPC as buyer/importer which. 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.” The originals of the 2 subject Bills of Lading are still in the possession of the Pakistani Bank. 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. nor the importer. Hongkong. 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.46 were released to Great Prospect. 9. However. When contract of carriage ends. As a result thereof. 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. 2004 ( 124 ) . actually or constructively. National Bank of Pakistan. Conformably. Bill of Lading not presented Macam has been transacting with GPC as buyer/importer for around 2 or 3 years already. Prior conduct between Macam and GPC as to perishable good. the delivery of the shipment must be to GPC. GPC. 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. is the consignee referred in telex The instruction in the telex of 5 April 1989 was “to deliver the shipment to respective consignees. The goods are released to GPC. paid our client for the goods. his shipment to GPC using the facilities of Wallem is twice or thrice a week.” In his several years of business relationship with GPC and Wallem.

26 October 1976. mother of Aniceto G.M. Illinois.M. She was told they did not know anything about it. 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. C. that there were two bodies at the terminal. Maria Salvacion Saludo and Saturnino Saludo. [49] Saludo vs. Saludo. Upon arrival at San Francisco at about 5:00 p. In the meantime. (Continental Mortuary Air Services) at the airport (Chicago) which made the necessary arrangements such as flights. Saludo Jr. 11. made the necessary preparations and arrangements for the shipment of the remains from Chicago to the Philippines. as the shipper and Mario (Maria) Saludo as the consignee. she went to the TWA counter again. Pomierski and Son Funeral Home of Chicago. Besides. After all. on 26 October 1976 at the Pomierski & Son Funeral Home.S.S.m.M. and with PAL from California to Manila.). called and told him they were Transportation Law. That is why Macam conveniently took the cudgels for the bank. Reluctantly. and they see that the remains are taken to the proper air freight terminal.S. they furnish the air pouch which the casket is enclosed in. the cargoes consist of perishable fresh fruits and immediate delivery thereof to the buyer/importer is essentially a factor to reckon with. SolidBank initially demanded payment from respondents through 5 letters. They went to the airport and watched from the look-out area. in Chicago. Saludo. So. But no confirmation from her cousin reached her that her mother was on the West Coast. Philippine Vice Consul in Chicago. 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. and she was told there was no body on that flight. Maria Salvacion Saludo. SolidBank must have realized the absence of privity of contract between itself and Wallem. Regalado (J): 4 concur Facts: After the death of Crispina Galdo Saludo. and from Manila to Cebu on board PAL Flight 149 of 29 October 1976. and from San Francisco to Manila on board PAL Flight 107 of the same date. sealed the shipping case containing a hermetically sealed casket that is airtight and waterproof wherein was contained the remains of Crispina Galdo Saludo.A. She then called Pomierski that her mother’s remains were not at the West Coast terminal..S. Illinois. at 3:00 p. is a national service used by undertakers throughout the nation (U. booked the shipment with PAL thru the carrier’s agent Air Care International. 23 March 1992) Second Division. She saw no body being brought. later C. and Pomierski immediately called C. C. Llaneta. Macam failed to substantiate his claim that he returned to SolidBank the full amount of the value of the cargoes.m.A. Bienvenido M. 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.A.Haystacks (Berne Guerrero) of Lading in its possession.A. she went to the TWA counter there to inquire about her mother’s remains. they took the TWA flight upon assurance of her cousin. 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. and somehow they were switched. The funeral home had the remains embalmed and secured a permit for the disposition of dead human body on 25 October 1976. if it were the Pakistani Bank to whom the cargoes were to be strictly delivered. on 23 October 1976.. Pomierski brought the remains to C. But the director told her that the remains were booked with TWA flight to California. were booked with United Airlines from Chicago to California. Ani Bantug..M. etc..M.A.H. and Saturnino G. To construe otherwise will render meaningless the telex instruction. 2004 ( 125 ) . This upset her. transfers. Return of money to bank mere accommodation of SolidBank by Macam Herein. 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. he relayed this information to Miss Saludo in California. On the same date. it will no longer be proper to require a bank guarantee as a substitute for the Bill of Lading.S.S. with Pomierski F. CA (GR 95536. Likewise. which in a matter of 10 minutes informed him that the remains were on a place to Mexico City. Leopoldo G.A. that he would look into the matter and inform her about it on the plane or have it radioed to her. thru a travel agent.

Hence. Factual findings of the Court of Appeals binding upon the Supreme Court.m. a question of fact. was resealed by Crispin F. and of the discourtesy of its employees to Maria Salvacion Saludo and Saturnino Saludo. The trial court absolved the two airline companies of liability. 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. it has been held.000. went beyond the issues of the case and the same are contrary to the admissions of both appellant and appellee. (c) when the inference made is manifestly mistaken. Distinction between question of law and question of fact. however. or are mere conclusions without citation of specific evidence. A discussion seriatim of said issues will further Transportation Law. surmises or conjectures. Southern Leyte. (d) when the judgment of the Court of Appeals was based on a misapprehension of facts. 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.000. The Supreme Court affirmed the appealed decision. The following day.000. 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. otherwise it will be a question of fact. The Court of Appeals affirmed the decision of the lower court in toto. admits of established exceptions. with the modification that an award or P40.Haystacks (Berne Guerrero) sending the remains back to California via Texas. absurd or impossible. attorney’s fees and costs of suit. The rule. praying for the award of actual damages of P50. in making its findings. 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. One test. would justify a different conclusion. 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. denied the Saludos’ motion for reconsideration for lack of merit. This casket bearing the remains of Crispina Saludo. 2. is one in which there is a doubt or difference as to the truth or falsehood of the alleged facts. the petition for review on certiorari. 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. moral damages of P1. which was mistakenly sent to Mexico and was opened (there). in which case it is a question of law.00 as and by way of nominal damages is granted in favor of the Saludos to be paid by TWA.000. (b) when the finding is grounded entirely on speculations. A damage suit was filed by the Saludos before the then Court of First Instance. and. 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. the factual findings of the Court of Appeals are final and conclusive and cannot be reviewed by the Supreme Court. or where the facts set forth by the petitioner are not disputed by the respondent. the shipment or remains of Crispina Saludo arrived in San Francisco from Mexico on board American Airlines. 3.00. This being so. In a separate letter on 10 June 1977 addressed to Philippine Airlines (PAL). exemplary damages.00. 28 October 1976. and (h) where the findings of fact of the Court of Appeals are contrary to those of the trial court. This shipment was transferred to or received by PAL at 7:45 p. 1. The shipment was immediately loaded on PAL flight for Manila that same evening and arrived in Manila on 30 October 1976. Both TWA and PAL denied liability. (e) when the factual findings are conflicting. to wit: (a) where there is grave abuse of discretion. if properly considered. and in a subsequent resolution. Padagas for shipment to the Philippines. In a letter dated 15 December 1976. Branch III. 2004 ( 126 ) . contrarily. (g) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties and which. 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. (f) when the Court of Appeals.

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

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

Therefore.S. In the absence of more definite information.M. Transportation Law. is an agent of the shipper and not of the carrier While the actual participation of CMAS has been sufficiently and correctly established. that the Pomierski & Son Funeral Home delivered the casket containing the remains of Crispina Saludo. with the concomitant right to rely thereon.A. if reasonable and practical under the circumstances.And so as a matter of fact.S. the airway bill for the shipment of the casketed remains of Crispina Saludo. The foregoing points at C.Haystacks (Berne Guerrero) It was not to TWA. that what was inside the casket was not the body of Crispina Saludo so much so that it had to be withdrawn by C. However. TWA had to accept whatever information was being furnished by the shipper or by the one presenting the casket for shipment.M. 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. in the absence of showing of fraud or deceit on the part of the shipper. The body of Crispina Saludo had been shipped to Mexico. other than the routinary inspection procedure customarily undertaken. 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. The casket containing the remains of Crispina Saludo was transshipped from Mexico and arrived in San Francisco the following day on board American Airlines. 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. and inasmuch as the freight may depend on the value of the article to be carried. 17. TWA would have to rely on the representations of C. 16. the carrier ordinarily has the right to inquire as to its value. and enter into contracts with it.S. while the casket was already with PAL. CMAS classified as forwarder. there must exist proof that would justify cause for apprehension that the baggage is dangerous as to warrant exhaustive inspection. Right of carrier to require good faith on part of persons delivering goods.A. Ordinarily. 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. Only.M. to be subjected to unusual search. as the one responsible for the switching or mix-up of the two bodies at the Chicago Airport terminal. 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 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. The consequent duty to conduct an inspection thereof arises in the event that there should be reason to doubt the veracity of such representations. The casket was hermetically sealed and also sealed by the Philippine Vice Consul in Chicago. 2004 ( 129 ) . 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.A. but to C.M. the carrier has the right to know the character of such goods and to insist on an inspection. Common carrier entitled to fair representation of nature and value of goods to be carried. from PAL. 15. 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.A. 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. 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. it turned out later. 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.A.M. and further noting at this juncture that a carrier has no obligation to inquire into the correctness or sufficiency of such information. It was immediately loaded by PAL on its flight for Manila.S.S. TWA carried to San Francisco and transferred to defendant PAL a shipment covered by or under PAL Airway Bill 079-ORD-01180454. too. as a condition of receiving and transporting such goods. where a common carrier has reasonable ground to suspect that the offered goods are of a dangerous or illegal character. or even refusal to accept carriage of the same.

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. When the terms of the agreement are clear and explicit. There is no ambiguity in the terms of the airway bill to warrant the application of the rules on interpretation of contracts and documents. the same having the force of law between them. but its clauses should be interpreted in relation to one another. Equally telling of the more likely possibility of CMAS’ liability is the Saludos’ letter to and demanding an explanation from CMAS.” Hence. when TWA shipped the body on an earlier flight and on a different aircraft. with Maria Saludo as consignee. 2004 ( 130 ) . clearly allude to CMAS as the party at fault. CMAS booked the shipment with PAL through the carrier’s agent. 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. no interpretation needed The terms are clear enough as to preclude the necessity to probe beyond the apparent intendment of the contractual provisions. 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. This is tantamount to an admission by the Saludos that they consider TWA and PAL without fault. 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. the terms are to be understood literally just as they appear on the face of the contract. notwithstanding that the same may be stated on the face hereof. 19.Haystacks (Berne Guerrero) Hence. Interpretation of contracts The hornbook rule on interpretation of contracts consecrates the primacy of the intention of the parties. Carrier did not undertake to carry cargo aboard any specified aircraft The carrier did not undertake to carry the cargo aboard any specified aircraft. and Carrier is hereby authorized to select. regarding the statement of TWA and PAL laying the blame on CMAS for the incident. or deviate from the route or routes of shipment. Court cannot grant damages at expense of TWA and PAL. 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. is regarded as an agent of the shipper and not of the carrier. brought the remains of Saludo for shipment. CMAS is actual culprit The facts of the case would point to CMAS as the culprit. Terms clear. by accepted commercial practice. Thereafter. Air Care International. it was to CMAS that the Pomierski & Son Funeral Home. But. As such. With its functions. 22. and has no interest in the freight but receives compensation from the shipper as his agent. 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. it was acting well within its rights. 21. as much as the Court would like to give them consolation for their undeserved distress. as shipper. 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. 20. much less definitively rule on. A contract cannot be construed by parts. The shipper guarantees payment of all charges and advances. 18. that they do not justify an attempt to read into any alleged intention of the parties. it merely contracts for the transportation of goods by carriers. Neither was the Court prepared to delve into. CMAS may accordingly be classified as a forwarder which. 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. The Transportation Law.

836). PAL. 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.” 25. In any event. 27. This result logically follows from the well-settled rule that where the law creates a duty or charge. 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. 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. Said rights and obligations are created by a specific contract entered into by the parties (Mendoza vs. But where a carrier has made an express contract to transport and deliver property within a specified time. 23. and persons are not vested with the right to prompt delivery. When a common carrier undertakes to convey goods. there was no ambiguity in the contract subject of this case that would call for the application of said rule. 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. Certain stipulations cannot be segregated and then made to control.” the Supreme Court ruled that common carriers are not obligated by law to carry and to deliver merchandise. 90 Phil. 2004 ( 131 ) . Mendoza vs. fully reconciling and giving effect to the manifest intention of the parties to the agreement. 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. 26. 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.Haystacks (Berne Guerrero) whole contract must be interpreted or read together in order to arrive at its true meaning. he is bound to make it good notwithstanding any accident or delay by inevitable necessity because he might have provided against it by contract. 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. but in the ruling intention of the parties as gathered from all the language they have used and from their contemporaneous and subsequent acts. it is bound to fulfill its contract and is liable for any delay. and the party is disabled from performing it without any default in himself. a carrier is not an insurer against delay in transportation of goods. 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. Said carrier being hereby authorized to deviate from the route of the shipment without any liability therefore. PAL. The legal effect of the contract is not to be determined alone by any particular provision disconnected from all others. specified aircraft. neither do particular words or phrases necessarily determine the character of a contract. in the absence of any agreement as to the time of delivery. but where the party by his own contract creates a duty or charge upon himself. no matter from what cause it may have arisen. 24. The typewritten provisions of the contract are to be read and understood subject to and in view of the printed conditions. As previously stated. and has no remedy over. then the law will excuse him. unless such common carriers previously assume the obligation.” Herein. the law implies a contract that they shall be delivered at destination within a reasonable time. or any particular route or schedule) may be stated on the face hereof. the typewritten specifications of the flight.

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. Herein. 28. CA. customs and usages. where a shipper accepts a receipt which states that its conditions are to be found on the back. and acceptance. 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. it must appear that the clause containing this exemption from liability plainly formed a part of the contract contained in the bill of lading. far from being the weaker party in the situation. The one who adheres to the contract is in reality free to reject it entirely. if he adheres. if it is shown that the consignor knew of its terms. for being subversive of public policy. 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. or by contingencies or emergencies in aviation such as weather turbulence. terms and/or stipulations. 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 variations therein. he gives his consent. that the carriers can at all times whimsically seek refuge from liability in the exculpatory sanctuary of Condition 5 or arbitrarily vary routes. instructs that contracts of adhesion are not entirely prohibited. 29. or by general transportation practices. 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. and in the absence of fraud or mistake. And even as it is conceded that specific routing and other navigational arrangements for a trip. 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. under such circumstances makes it a binding contract. 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. flight or voyage. Contracts of adhesion not entirely prohibited The case of Ong Yiu vs. requirements of national security and the like. Court of Appeals. This condition only serves to insulate the carrier from liability in those instances when changes in routes. it does not mean. and the shipper is held to have accepted and to be bound by the conditions there to be found. completely deprived of the opportunity to bargain on equal footing. Ong Yiu vs. This rule applies with particular force where a shipper accepts a bill of lading with full knowledge of its contents. 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. trip or voyage. such receipt comes within the general rule. Thus. 30. 2004 ( 132 ) .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. et al. 32. Condition serves as insulation to liability when flight routes and schedules change. duly signified their presumed assent to all terms of the contract through their acceptance of the airway bill and are consequently bound thereby. he is estopped from thereafter denying that he assented to such terms. flights and schedules to the prejudice of their customers. 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. When contract of adhesion void and unenforceable A contract of adhesion may be struck down as void and unenforceable. 31. mechanical failure. generally lie within the discretion of the carrier in the absence of specific routing instructions or Transportation Law. the Saludos. flights and schedules are clearly justified by the peculiar circumstances of a particular case. In order that any presumption of assent to a stipulation in a bill of lading limiting the liability of a carrier may arise.

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

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. Richard A. to nominal damages from TWA alone. Maria Saludo testified that it was to PAL that they repaired after failing to receive proper attention from TWA. in the absence of strong and positive evidence of fraud. 40. Common Sense could and should have dictated that they exert a little extra effort in making a more extensive inquiry.000. Neither can. President Cleveland at Yokohama. malice or good The censurable conduct of TWA’s employees cannot. said damages cannot be awarded.00 as nominal damages in favor of the Salufos to be a reasonable amount under the circumstances of the present case. 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. be said to have approximated the dimensions of fraud. Apathy not legally reprehensible but is morally deplorable Herein. fraud or bad faith.Haystacks (Berne Guerrero) 38. awarded Moral damages may be awarded for willful or fraudulent breach of contract or when such breach is attended by malice or bad faith. Japan one lift van under bill of lading 82. vs. Bautista Angelo (J): 6 concur Facts: On 17 February 1956. entitled to the understanding and humane consideration called for by and commensurate with the extraordinary diligence required of common carriers. 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. No attribution of discourtesy or indifference against PAL No attribution of discourtesy or indifference has been made against PAL by the Saludos and. and not the cold insensitivity to their predicament. They are recoverable where some injury has been done but the amount of which the evidence fails to show. in fact. malice or bad faith. 29 December 1960) Second Division. Kleeper shipped on board the S. In the exercise of the Court’s discretion. malice or bad faith. 2004 ( 134 ) . 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. The airline’s counter personnel were totally helpless about the situation. It was from PAL that they received confirmation that their mother’s remains would be on the same flight to Manila with them. containing personal and household effects. which could have easily facilitated said inquiry and which are used as a matter of course by airline companies in their daily operations. rather than just shrug off the problem with a callous and uncaring remark that they had no knowledge about it. 39. Award of nominal damages warranted. S. With all the modern communications equipment readily available to them. however. They were. the Court find an award of P40. the assessment of damages being left to the discretion of the court according to the circumstances of the case. at least. 42. CA (GR L-15654. The ship Transportation Law. 41. however. by themselves or through their superiors. or attorney’s fees. [50] Delgado Bros. However. their apathetic stance while not legally reprehensible is morally deplorable. faith Censurable conduct of TWA employees do not approximate dimensions of fraud. When moral and exemplary damages. the Saludos were not to be regaled with extra special attention.

assumed responsibility for the negligence of the crane operator who was employed by Delgado Brothers.00 as attorney’s fees. When exemption from liability arising from negligence may be granted In order that exemption from liability arising from negligence may be granted. ship or otherwise arising from use of said crane and we will not hold the Delgado Brothers. 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. 875. Contents of Exhibit 1 RE Gantry crane. La Compania Transatlantica not in point The case of the Manila Railroad Co. 38 Phil. with legal interest from the filing of the complaint. Inc. Both Delgado Bros. American President Lines assumed responsibility The contract entered into between the American President Lines and Delgado Bros.000. co-defendant Delgado Brothers. Inc. to FINISH hrs. namely: one wherein the shipping company assumes full responsibility for the use of the crane.. denting and smashing of the goods. 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. Hence.” and that for that reason the latter should be blamed for the consequence of the negligent act of its operator. Here the contrary appears. liable or responsible in any way thereof. is not in point. the evidence adduced is not clear as to the exemption of responsibility.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. In the latter case. vs. 3. 1.729. and the sum of P1. A survey was made and the result was that Kleeper suffered damages totalling P6. it fell on the pier and its contents were spilled and scattered. and the other where said company agreed not to hold the Delgado Brothers. Inc. relative to the gantry crane owned by Delgado Bros.” 4.50. rendered decision ordering the shipping company (American President Lines Ltd. plus P600.729. Kleeper brought the action before the CFI Manila to recover the sum of P6. and American President Lines appealed to the Court of Appeals which affirmed in toto the decision of the trial court. from 1300 hrs.) to pay Kleeper the sum of P6. it cannot do so under the second part when it expressly agreed to exempt petitioner from liability in any way it may arise.50 arising out of the breakage. 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. value of the goods damaged. Inc. 2. Delgado Brothers.000..” The Court cannot agree with the finding that the phraseology employed in Exhibit 1 would not “induce a conclusion that the American President Lines. the doctrine therein laid down is not controlling. interposed the present petition for review. CLEVELAND Reg. 2 of the S/S PRES. once the judgment is satisfied. Ltd. liable in any way. The court ordered that. La Compañia Trasatlantica.00 as their sentimental value. on 5 November 1957. on 22 February 1955..00 as sentimental value of the damaged goods and attorney’s fees. We hereby agree to pay the corresponding charges for above requested services. Inc. Manila Railroad vs. The trial court. 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. Inc. should pay the shipping company the same amounts by way of reimbursement. et al. 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.50 as damages. Transportation Law. We hereby assume full responsibility and liability for damages to cargoes. plus the sum of P2. because in the Court’s opinion the phraseology thus employed conveys precisely that conclusion.729. however. 2004 ( 135 ) . reads: “Please furnish us ONE gantry to be used on hatch No. without pronouncement as to costs.

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. 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. If destination is Philippines. 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. Philippines. exceptions. Therefore. Law of country of destination prevails. The cargo was loaded on board the S/S Eastern Adventure destined for Manila. Eastern Shipping received from Hongkong and Shanghai Bank (HSBC). CMI undertook to indemnify Eastern Shipping “harmless from all demands. and conditions whether written. said section is merely suppletory to the provisions of the Civil Code. a letter stating that HSBC holds title to the goods and has possession of the full set of original bills of lading. reads: “IN ACCEPTING THIS BILL OF LADING the shipper.e. and requested HSBC that legal action be held off for at least 30 days. The bill of lading was consigned to “Shipper’s Order”. printed. Eastern Shipping released the shipment in question to CMI. claiming liabilities. Metro Manila. printed in red ink that appears on the very face of the bill of lading. Makati. or specifically on 19 August 1980. or stamped on the front or back hereof. On 14 January 1981. ‘In all matters not regulated by this Code. 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. Under Article 1766. CA. 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. This means the law of the Philippines. 1737. Clause 17 of the bill of lading.” 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. destruction or deterioration. and 1738). 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.” covered by a bill of lading. the rights and obligations of common carriers shall be governed by the Code of Commerce and by special laws. 836. with “Address Arrival Notice to Consolidated Mines Inc. or the new Civil Code.’ i.Haystacks (Berne Guerrero) 5. actions and expenses” About 5 ½ months later. 90 Phil. Considering that there was no reply from Eastern Shipping.00 per package unless the value of the goods had been declared by the shipper and inserted in the bill of lading.. 6799 Ayala Avenue. (J): 3 concur. promising to settle its account with HSBC from the funds it was expecting from Benguet Corporation. 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. any local customs or privileges to the contrary notwithstanding. stating therein that it regrets Transportation Law. 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. The shipper cannot elude its provisions simply because they prejudice him and take advantage of those that are beneficial. The vessel is operated by Eastern Shipping Lines. provisions that govern said rights and obligations (Articles 1736. [51] Eastern Shipping Lines vs. see [6] [52] Eastern Shipping Lines vs. 17 October 1990) Third Division. CA (GR 80936. Philippine Air Lines. Shipper or consignee who takes bill of lading becomes bound by all stipulation contained therein Clause 17. consignee and owner of the goods agree to be bound by all its stipulations. A few days later. Inc. 2004 ( 136 ) . 1 on leave Facts: On 24 February 1980. Gutierrez Jr. 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).” The cargo arrived in Manila on 4 March 1980. Secondly. the Nanyo Corporation of Kobe. 6. In said guaranty. and that it is unable to locate the cargo and that it appeared that Eastern Shipping has released it to CMI. This is more so where it is both the shipper and the consignee of the goods in question..

CMI having failed to fulfill its promise. In the absence of contrary instructions or at least knowledge of other facts. The shipment consisted of machinery materials and supplies for a mining company named in the bill of lading. as CMI failed to present its evidence.000 attorney’s fees plus expenses of litigation and judicial costs.000. During trial. 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. MAKATI. the Court of Appeals rendered the decision affirming the appealed decision in toto. Eastern Shipping requested that HSBC advise the former if the consignee be unable to comply with its requirement after 30 days. not being privy to any transaction between HSBC and CMI. perhaps in vain. until fully paid.16 representing the value of the goods covered by the Bill of Lading.521. 2. the petition for review. Transportation Law. 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. The Supreme Court granted the petition. Eastern Shipping not expected to look beyond face of bil of lading Eastern Shipping. as well as moral damages. shows on its face that the Shipment is consigned “TO SHIPPER’S ORDER” with “ADDRESS ARRIVAL NOTICE TO CONSOLIDATED MINES INC. the Bill of Lading which was issued by the carrier but contained articles furnished by the Shipper. P20.521. 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. not HSBC.521. On 15 August 1981.00 and to pay the costs. On 30 June 1987. The foregoing information. Eastern Shipping appealed to the Court of Appeals. 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. ordering the latter to pay the sum of $168. set aside the decision and order of the Court of Appeals. as consignee At the outset. 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.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. 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. 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. 6799 AYALA AVE.000. With respect to the Third Party Complaint.Haystacks (Berne Guerrero) releasing the cargo without the consent of HSBC’s client.16 or its equivalent in Philippine Currency plus interest from the filing of the third party complaint until fully paid. Hence. in effect makes CMI for all practical intents and purposes the party named and ordered to receive the goods. HSBC filed a complaint before the then CFI of Rizal against Eastern Shipping praying for actual and compensatory damages in the amount of $168. the court on 15 January 1985 rendered judgment in favor HSBC and against Eastern Shipping. Eastern Shipping filed a motion for reconsideration. Its motion for reconsideration having been denied. but the same was denied on 24 November 1987. exemplary damage in the amount deemed just by the court and P50. attorney’s fees of P20.00 as and for attorney’s fees and to pay the costs. METRO MANILA.” Nowhere did the Bill of Lading refer to HSBC as the consignee or the one to be notified. On the basis of the evidence presented by HSBC and Eastern Shipping. 2004 ( 137 ) . without more. 1. Bill of lading refer to CMI. This motion was denied by the trial court. PHILIPPINES. the carrier is not ordinarily expected to deliver mining equipment to an unnamed or unknown party lurking for several months.

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

041. Eastern Shipping did not commit any fault sufficient to render it liable to HSBC. the patron of the launch Matulin. heavily loaded as they were. or to the person who has a right to receive them. as the party to be notified. to continue the voyage to Manila. the weather was threatening. Only later developments led to the present case. 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. and that there was such a sea on as to make it dangerous for the cascos. to the consignee. 1 dissent Facts: On 3 August 1913. The launch Tahimic towed the cascos into the Malabon River and the launch Matulin continued the trip to Manila. Article 1736 NCC. 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. arrived off the Malabon River. On that date the cascos left Guagua towed by the launches Tahimic and Matulin. to tow from Guagua to Manila two cascos loaded with 2. actually or constructively. In such case the agent is the one directly bound in favor of the person with whom he has contracted. without prejudice to the provisions of Article 1738. akin to an agent of HSBC. belonging to Yangco Steamship. it was HSBC and CMI who were obviously in bad faith in dealing with Eastern Shipping. 2004 ( 139 ) . initiated. When the launches. or to the person who has a right to receive them. 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. These circumstances also prove bad faith on the part of CMI. the launch Maturing was in the Malabon River Transportation Law. The reason why this was done was that.90. property of Limpanggo Sons. the principal has no right of action against the persons with whom the agent has contracted. 11.80 piculs of sugar.” Herein. On 8 August 1913. the original of which was directly furnished to CMI by and as certified to by the shipper Nanyo Corporation. 10. Per Curiam: 3 concur. 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.” 13. Article 1883 NCC “If an agent acts in his own name.Haystacks (Berne Guerrero) CMI’s admission that it received the goods. The provisions of this article shall be understood to be without prejudice to the actions between the principal and agent. On the contrary. leaving Eastern Shipping holding an empty bag as it were. Yangco Steamship (GR 10283. HSBC wittingly or unwittingly overlooked the fact that the same article uses the conjunction “or” in reference to whom the goods may be delivered. and received by the carrier for transportation until the same are delivered. by the carrier to the consignee. 25 July 1916) Second Division. and even if it acted on its own. With such vast powers. neither have such persons against the principal. together with others. except when the contract involves things belonging to the principal. CMI acted within its authority. it allowed the latter to be designated as the consignee in the Consular Invoice. that is. Limpangco Sons employed Yangco Steamship Co. at that time. of the value of P11. 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. 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. It could not possibly be left around lying idle when on the face of the bill of lading. Under the exceptional circumstances and applying especially strong considerations of equity. On the other hand. 12. together with their tows. 1 concur in result. there was a named owner to be notified. as if the transaction were his own.229. [53] Limpangco Sons vs.

and that. Vessel undertaking towage service liable for reasonable care of the tow. for the tug itself was unsuitable for the purpose in hand. 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. Yangco negligent Yangco Steamship directly or through the captain failed in every duty laid upon it by the law. which were at that time tied up at Tansa. Measure. 2004 ( 140 ) . greater care must necessarily be used when venturing upon an ocean voyage than with a vessel fitted for deep water. made no effort to assist them and. to select the one having the smoothest water and affording shelter in stormy weather. and that reasonable care is measured by the dangers and hazards to which the tow is or may be exposed. 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. finding themselves in danger of being washed ashore and destroyed. 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. and if the locality in which the tow finds itself at any given time is more than ordinarily dangerous. An action for negligence was filed as a result of the loss of cargo while two cascos were towed from Guagua to Manila. Extraordinary circumstances Although the law requires the use of only ordinary diligence and care. 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. outside the bar. they claim they called to the Matulin. 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. Degree of diligence and care required. and told them that on the following day. at daybreak. which was in plain sight. It neglected to furnish suitable appliances and instrumentalities. The bamboo poles were unavailing. to see that his directions are obeyed. but by watching her when in a dangerous locality. by reason of the high seas and strong winds. they allege.Haystacks (Berne Guerrero) and the patron talked to the men in charge of the two cascos. he would await them of the mouth of the Malabon River. 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. for help. <The trial court appeared to have rendered judgment in favor of Yangco Steamship. but in the handing of the tow. such as the cascos are. and this applies not only in the choice of route.500 meters from the month of the river. something like 1. the patron of the Matulin arrived with his launch off the mouth of the Malabon River and anchored outside of the shallows. and. they were driven ashore or on the shoals and their cargoes lost. The patron of the Matulin. Its responsibility includes not only the proper and safe navigation of the tug on the journey. sound and reasonable appliances and instrumentalities for the service to be performed. the crews poled their cascos out of the river following the channel. the law required the exercise of more than ordinary care under the circumstances existing at the time the cascos were lost. It is well recognized that in towing a boat built only for the shallow water of an inland stream. The duty of the tug to a tow is a continuous one from the time service commences until it is completed. proceed to the place where the launch Matulin was to be waiting for them. 3. he would tow them to Manila. On the following day. 1.500 meters with no other motive power than bamboo poles. Also the captain of the Matulin failed to give proper instructions to the tow. it was negligence for him to ask the cascos to move out into the open sea under such circumstances. In accordance with the agreement with the patron of the Matulin and under his instructions. When they passed the shallow water they were met with high seas and strong winds. as well as the giving of proper instructions as to the management of the tow. but to furnish safe. if the weather was then favorable. duration. thus propelled. scope A vessel which undertakes a towage service is liable for reasonable care of the tow. the tug is held to a proportionately higher degree of care and skill. 2. The actual dispositive portion of the judgment is not found in the facts> The Supreme Court reversed the judgment of the trial court.

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

and the securing of an order of discharge from the steamship company. 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. When. binding himself. among other things. either falling in the form of rain or splashing aboard by the action of wind and waves. it is customary for him to enter into a written obligation. and for any expense should the whole or part of the cargo be shut out. as for instance.Haystacks (Berne Guerrero) 1. or otherwise. 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. By reason of the fact that the cargo had to be carried on deck at all events. 4. Another reason apparently was that Martini discerned. the shipper desires to procure the bill of lading before he obtains the mate’s receipt. not even so much as to notify Macondray that the cargo must come off.” 5. 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. the guaranty was so drawn as to permit stowage either on or under deck at the ship’s option. Cordina not deceived into signing document. 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. 7. 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. with the inconveniences incident thereto. 6. Martini did nothing to discharge cargo In order to get the cargo off certain formalities were necessary which could not be accomplished. 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. such as to require stowage on deck. The messenger between the two Transportation Law. the return of the mate’s receipt (which had not yet come to Martini’s hands). Contents of the “Letter of Guarantee” The “Letter of Guarantee” dated 16 September 1916. and the steamer is not liable for any loss or damage from any cause whatever. who thereupon issue the bill of lading to the shipper. Damage was caused by water The damage was caused by water. we hereby guarantee to hold you free from any responsibility by your doing so. to abide by the terms of the mate’s receipt. whether carried on deck or under hatches. which contained no such provision. 2004 ( 142 ) . If Martini had promptly informed Macondray of their resolve to have the cargo discharged. 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. 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. 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. if carried at all. and the latter had nevertheless permitted the ship to sail without discharging it. Herein. “ 3. the proof relative to the practicability of discharge is inconclusive. for Kobe without production of the mate’s receipt. the securing of a permit from the customs authorities. 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. 2. or thought he discerned the possibility of shifting the risk so as to make it fall upon the ship’s company. however. In view of the fact that Martini did nothing whatever looking towards the discharge of the cargo.

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

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

without negligence or fault on the part of the master or owners. The first two syllabi in Clark vs. but no such evidence is found in the record. the owner might still be held.. 20. Burden of proof It is incumbent on Martini. So. The loss must therefore fall on the owner. even though paragraph 19 of the bills of lading had not been made a term of the contract. Clark vs. 985).]. by the exercise of proper skill and diligence in the discharge of the duties incumbent on the ship. if his cause of action is founded on negligence of this character. 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. under the authorities. For instance. When shipowner may be held liable Upon general principle. which is one of the dangers of navigation. 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. 17. And this would be true. Barnwell read as follows: “Where goods are shipped and the usual bill of lading given. 19. yet still the owners of the vessel are responsible if the injury might have been avoided. the ship would be liable. 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. to show the negligence. 272. supposed that the persons charged with the duty of transporting the cargo. Barnwell. the dangers of the seas excepted. by the exercise of reasonable skill and attention on the part of the persons employed in the conveyance of the goods. if it had been improperly placed or secured. the damage could have been prevented. to the same extent as if the cargo had been deliberately thrown over without justification. or known to shipmasters. had negligently and without good reason failed to exercise reasonable care to protect it by covering it with tarpaulins. and had been swept overboard as a proximate result of such lack of care.S. [U. 21. if it had been shown that. notwithstanding the stowage of these goods on deck. being cognizant of the probability of damage by water. or approaching still more to imaginable conditions. Barnwell. Barnwell (12 How. 13 L. When shipper consents to have goods carried on deck. 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. For caught that appears every precaution was taken that is usual or customary. But the onus probandi then becomes shifted upon the shipper. 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. ed. But. 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. 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. 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. to show that the injury was occasioned by one of the excepted causes.Haystacks (Berne Guerrero) 16. 18. although the injury may have been occasioned by one of the excepted causes. Transportation Law. ‘promising to deliver them in good order. 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. Clark vs. It is to be attributed exclusively to the dampness of the atmosphere of the vessel. 2004 ( 145 ) . Onus probandi In Clark vs. to avoid the damage in question. 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. instead of in the ship’s hold.

000. Damage caused by rain and sea water. Diego Salim. no other fault or delinquency on the part of anybody being alleged. with the intention of living in Aklan permanently. Diego boarded the vessel even if he did not have yet a ticket. Forthwith. Hernani (10 years old). with many passengers aboard (about 200). Macondray not liable Herein. This provision would not have protected the ship from liability for the consequences of negligent acts. Maria Lemia (5 years old) and Melany (5 months old). while Ruben was able to swim to an island and with others. even from a carrier. and Teresa Pamatian brought an appeal to the Court of Appeals. if negligence had been alleged and proved. Abella (7 years old). for damages due to the death of several passengers as a result of the sinking of the M/V ‘Mindoro’. and the heirs of the Delos Santos(es). Other drowned victims include spouses Teresa Pamatian and Diego Salim.Haystacks (Berne Guerrero) 22. Compania Transatlantica and Atlantic. Josie. Reyes.00 as indemnity for death to the heirs of each of the victims. 23.00 as Transportation Law. 2004 ( 146 ) . On the other hand. Aklan. for any loss or damage from any cause whatever. Manila. in the case of goods signed for as carried on deck. rescued later on and brought to the hospital. But however that may be damages certainly cannot be recovered on the ground of negligence. The complaint clearly indicates that the damage done was due to the mere fact of carriage on deck. including household utensils valued at P1.. The Supreme Court reversed the appealed decision. CA (GR 51165.000. notwithstanding the exemption contained in paragraph 19. at about 6:00 p. to pier 8. of 4 November 1967 causing the death of many of its passengers. As to Ruben Reyes. It appears that said vessel met typhoon ‘Welming’ on the Sibuyan Sea. 136 survived the accident. at about 5:00 a. Rep. 21 June 1990) First Division. the ship is not to be held liable. (2) P10. 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. 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. Medialdea (J): 4 concur Facts: On 2 November 1967. (38 Phil. Manila. Eliandora was able to board a balsa. also [150] Heirs of de los Santos vs. The appellate court affirmed the decision on appeal. Amparo was not included in the manifest as she boarded the boat without ticket. including Ruben Reyes and Eliadora Crisostomo de Justo. to attribute negligence to the ship’s employees in the matter of protecting the goods from rains and storms. North Harbor. vs. and children. Amparo delos Santos. (should have sailed at 2:00 p. Amparo delos Santos and the aforesaid children brought all their belongings. Gulf & Pacific Co. while Teresa brought some cash and personal belongings worth P250. Aklan. and rendered judgment sentencing Compania Maritima to pay the following: (1) P30. as to spouses Diego Salim and Teresa Pamatian. 875). on 27 March 1974.000. bound for Aklan. namely: Romeo. to board the M/V ‘Mindoro’. Diego brought with him P200 in cash and some belongings. in the absence of any allegation or proof of negligence. Mauricio de los Santos accompanied his common-law wife. adjudged the case in favor of Compania Maritima. The trial court. [55].00. M/V ‘Mindoro’ sailed from pier 8 North Harbor. where negligence is neither alleged nor proved. and also Felix Reyes Jakusalam. owned by Compania Maritima. From the discussion in Manila Railroad Co. but appeared to have purchased one in the vessel.m.m.) of said day bound for New Washington. he brought with him personal belongings and cash in the amount of P2. It is not permissible for the court.m. dismissing the case due to lack of sufficient evidence.900. including Amparo delos Santos and her children. 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. it may be collected that the carrier would be held liable in such case.

Liability of shipowner or agent confined to which he is entitled as to right to abandon Under Article 587 of the Code of Commerce. New Civil Code). Inc. During the periods of November 1-5.m. 73 Phil.00. and by necessary implication.00 as attorney’s fees. Article 587 of the Code of Commerce is still good law. heirs of Diego Salem. Such a situation will be covered by the provisions of the New Civil Code on Common Carriers. P2. or to the insurance thereon. Article 587 does not apply (see Manila Steamship Co. 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. 3. it is highly improbable that the Weather Bureau had not yet issued any Transportation Law. a shipowner or agent has the right of abandonment. The Weather Bureau is now equipped with modern apparatus which enables it to detect any incoming atmospheric disturbances. Laserna.. common carriers are tasked to observe extraordinary diligence in the vigilance over the goods and for the safety of its passengers (Article 1733. 100 Phil. Whenever death or injury to a passenger occurs. Extraordinary diligence in vigilance over goods and safety of passengers required of common carriers. Reason Notwithstanding the passage of the New Civil Code. Laserna. New Civil Code).805. 2004 ( 147 ) . heirs of Teresa Pamatian. 332). using the utmost diligence of very cautious persons. 6. Article 587 speaks only of situations where the fault or negligence is committed solely by the captain. 32.m. departure) on 2 November 1967.Haystacks (Berne Guerrero) moral damages to the heirs of each of the victims. 5. 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 (5) the costs. et al.000..00. 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. ibid). 1967. 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. Further. This rule is found necessary to offset against the innumerable hazards and perils of a sea voyage and to encourage shipbuilding and marine commerce. Utmost diligence of very cautious persons in carrying passengers. (4) P10.00. P450. Article 587 of the Code of Commerce still a good law. and Ruben Reyes. Laserna. Abdulhanan.00 as actual damages divided among the petitioners as follows: heirs of Amparo Delos Santos and her deceased children. 38). (instead of the scheduled 2:00 p. Presumption of fault Owing to the nature of their business and for reasons of public policy.. ibid). 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. with a due regard for all the circumstances (Article 1755. et al. (3) P6. In cases where the shipowner is likewise to be blamed. the Bureau issued a total of 17 warnings or advisories of typhoon ‘Welming’ to shipping companies. v. 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.000. if any (Yangco v. New Civil Code).” 2. 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. P400. Considering the the late departure of the ship at 6:00 p. 330. 1. 4.955. P2. they are bound to carry the passengers safely as far as human care and foresight can provide.00.

the ship’s departure was. the latest of which was typhoon Uring which occurred on October 20-25.Haystacks (Berne Guerrero) typhoon bulletin at any time during the day to the shipping companies. delayed for 4 hours. ahead of M/V Mindoro and took the same route as the latter but it arrived safely. Maritima displayed lack of foresight and minimum concern for safety of passengers Herein. it was unable to enter the mouth of Aklan River to get into New Washington.’ an important device such as the radar could have enabled the ship to pass through the river and to safety. the vessel could have reached its destination and thereby have avoided the effects of the storm. Life saving equipment and navigational instruments were installed. In 1967 alone before ‘Welming. This conclusion was buttressed by evidence that another ship. 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. however. 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. 3 Toyota cars.m. the typhoon had already attained surface winds of about 240 kilometers per hour. While M/V Mindoro was already cleared by the Bureau of Customs and the Coast Guard for departure at 2:00 p. a closer supervision could have prevented the overloading of the ship. Storms and typhoons not strange occurrences Storms and typhoons are not strange occurrences. With the impending threat of ‘Welming. 10. on 3 November 1967 when the Weather report was transmitted to him from the Weather Bureau at which time he plotted its position. “ If the captain knew of the typhoon beforehand. steel bars. of 3 November 1967. Maritima displayed lack of foresight and minimum concern for the safety of its passengers taking into account the surrounding circumstances of the case. It cannot be true that he was apprised of the typhoon only at about 11:00 a. Necessary repairs were made on the ship. Transportation Law. which cost so much damage to lives and properties.” Perchance. Ship’s captain aware of typhoon.’ there were about 17 typhoons that hit the country.m. Consequently. however. Maritima shares equally in his negligence. could not present evidence that it specifically installed a radar which could have allowed the vessel to navigate safely for shelter during a storm. an inter island vessel. M/V Mangaren. Maritima is liable for the deaths and injury of the victims. 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. it is inconceivable for Maritima to be totally in the dark of ‘Welming. 2004 ( 148 ) . Maritima could have directed the ship’s captain to immediately depart in view of the fact that as of 11:07 a. Maritima shares equally in ship captain’s negligence While the captain was negligent for overloading the ship. he stated in the concluding portion “still observing weather condition. Aklan on 2 November 1967. For in his radiogram sent to Maritima’s office in Manila as early as 8:07 a. of 2 November 1967. 9. sailed for New Washington.” thereby implicitly suggesting that he had known even before departure of the unusual weather condition.000 beer cases) and passengers (about 241 more than the authorized 193 passengers) were loaded during the 4 hour interval. It was due to this interim that iindeed there is a great probability that unmanifested cargo (such as dump truck. and 6. 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. 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. if it were not for this delay.m. Maritima duly informed.m.’ In allowing the ship to depart late from Manila despite the typhoon advisories. Maritima. 11. M/V Mindoro was dry-docked for about a month. Verily. 8. Hence. 7. Seaworthiness.

(2) Teresa Pamatian. supra).000. even if death does not result (Rex Taxicab Co. 160 SCRA 70).00. 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. 109 Phil.000. cash in the sum of P250. Further.00 and personal belongings valued at P500. Bautista. In view thereof. L-28256. Del Castillo v. cash in the sum of P200. the records reveal that the petitioners engaged the services of a lawyer and agreed to pay the sum of P3. 112 SCRA 629).. Jabellana Transportation Law.00 to P30.000.000. For mental anguish suffered due to the deaths of their relatives. Exemplary damages not due Anent the claim for exemplary damages. Likewise. Laguna Tayabas Co.00 for expenses at the trial. 230.00. the evidence shows that at the time of the disaster.00 while Dominador Salem. due to the disaster. Exceptions Ordinarily. Inc. Reyes was unable to work for 3 months due to shock and he was earning P9.00. the amount of damages for the death of a passenger caused by the breach of contract by a common carrier is at least P3.00.00 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.900..00 and personal belongings worth P200. Moral damages not due. For such losses and incidental expenses at the trial of the case. son of victim Diego Salem and nephew of victim Teresa Pamatian spent about P100. 712). the Court is not inclined to grant the same in the absence of gross or reckless negligence in this case. 14. the Supreme Court would remand the case to the trial court for the reception of evidence. [56] International Department Store vs.00 to the heirs of each of the victims. Maritima should pay the amounts to the petitioners as actual damages. 16.000. April 15. 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.000.00 and personal belongings valued at P100.00 each on a contingent basis. Consequently. 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. 15.00. Considering however. he had in his possession cash in the sum of P2. The prevailing jurisprudence has increased the amount of P3. He also spent about P100. v. at the time of death. 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. 1988. (1) Amparo delos Santos had with her cash in the sum of P1. Trial court generally fix amount of damages. March 17.00 (De Lima v. Maritima should pay the civil indemnity of P30. Court of Appeals. 1982. 99 Phil. and (3) Diego Salem.00 each as moral damages. Actual damages In addition. Attorney’s fees As regards the claim for attorney’s fees.000. Bautista. 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. the Supreme Court resolved to decide the corresponding damages due to petitioners (see Samal v.00 as a reasonable compensation for the legal services rendered. L-35697-99. 2004 ( 149 ) .000. 17.00. 13. With respect to Reyes..50 a day or in a total sum of P855. Inc. Jaymalin.Haystacks (Berne Guerrero) 12.00 for court expenses. Maritima should also pay to the heirs the sum of P10. v. The Court finds the sum of P10.

00 representing the difference between the cost of the damaged payloader and that of the new payloader.Haystacks (Berne Guerrero) [57] Compania Maritima vs. The payloader was damaged and was thereafter taken to Compania Maritima’s compound in Cagayan de Oro City. 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. and cost of the suit. Pacifico Fernandez.00 as exemplary damages. P20. Unable to elicit response.5 tons. Fernan (J): 4 concur Facts: Vicente E. These equipment were loaded aboard the MV Cebu in its Voyage 316. P34. He was issued Bill of Lading 113 on the same date upon delivery of the equipment at the Manila North Harbor. had a contract with the Civil Aeronautics Administration (CAA) sometime in 1964 for the construction of the airport in Cagayan de Oro City. the petition for review on certiorari. thru its collector.00 from Bormaheco. After trial. To replace the damaged payloader.07 with legal interest from the date the decision shall have become final. with costs against the latter. Inc.000.000. which left Manila on 30 August 1964 and arrived at Cagayan de Oro City in the afternoon of 1 September 964.5 tons and not 2. Concepcion appealed to the Court of Appeals which. Having shipped some of his equipment through Compania Maritima and having settled the balance of P2. and ordering Compania Maritima to pay unto Concepcion the sum in damages of P24. Consolidated Construction likewise notified Compania Maritima of its claim for damages. On 7 September 1964.00 a day.000.00 representing the losses suffered by him due to the diversion of funds to enable him to buy a new payloader. Finding that the payloader weighed 7. Manila. 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. Concepcion filed an action for damages against Compania Maritima with the then CFI of Manila (Branch VII. 4 units 6x6 Reo trucks and 2 pieces of water tanks.. on 5 December 1965 rendered a decision.628. but while the payloader was about 2 meters above the pier in the course of unloading. on 28 August 1964 for the shipment to Cagayan de Oro City of 1 unit payloader.00 representing the cost of the damaged payloader. Concepcion had to ship his construction equipment to Cagayan de Oro City. a civil engineer doing business under the name and style of Consolidated Construction with office address at Room 412. the swivel pin of the heel block of the port block of Hatch 2 gave way.00 as attorney’s fees.000. Concepcion.000. Misamis Oriental.000. Transportation Law. Civil Case 61551).652. Being a Manila-based contractor. P5.5 tons as declared in the Bill of Lading. the demand was repeated in a letter dated 2 October 1964. reversing the trial court. causing the payloader to fall. 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. From the adverse decision against him. contending that had Concepcion declared the actual weight of the payloader. Consolidated Construction in the meantime bought a new one at P45. On 6 July 1965. P10. 2004 ( 150 ) .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. Compania Maritima shipped the payloader to Manila where it was weighed at the San Miguel Corporation. Don Santiago Bldg. damage to their ship as well as to his payloader could have been prevented. Consolidated Construction.77 with respect to said shipment. Compania Maritima denied the claim for damages of Consolidated Construction in its letter dated 7 October 1964. P11.225. Meanwhile. on 3 December 1964. the then CFI dismissed on 24 April 1968 the complaint with costs against Concepcion. Concepcion negotiated anew with Concepcion. and declared the payloader abandoned to Compania Maritima. Hence. CA (GR L-31379. seeking to recover damages in the amount of P41. Taft Avenue. 29 August 1988) Third Division.

or to the person who has the right to receive them without prejudice to the provisions of Article 1738. makes out prima facie case against the common carrier. 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. the common carrier must be held responsible. 6 and 7…” 5. 5. The responsibility of observing extraordinary diligence in the vigilance over the goods is further expressed in Article 1734 of the same Code. and of their arrival at the place of destination in bad order. the common carriers must prove that they observed extraordinary diligence as required in Article 1733 of the Civil Code. Nos. Compania Maritima negligent due to its laxity and carelessness in method to ascertain weight of heavy cargoes Herein. Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734.” 2. Article 1734 (3) NCC Paragraph 3 of Article 1734 of the Civil Code provides that “Common carriers are responsible for the loss. 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. 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. or deterioration of the goods. and to exercise due care in the handling and stowage.” Under Article 1736 of the Civil Code. as is customary among careful persons. actually or constructively. 2004 ( 151 ) . Article 1733 of the Civil Code provides that “Common carriers. 6. affirmed the decision of the Court of Appeals in all respects with costs against Compania Maritima. Otherwise stated. To overcome the presumption of liability for the loss. 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. it is incumbent upon the common carrier to prove that the loss. 1. or destruction of the goods entrusted to it for safe carriage and delivery. 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. so that if no explanation is given as to how the loss. which is impressed with a special public duty. Transportation Law. 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. 4. 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. destruction. by the carrier to the consignee. 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. from the nature of their business and for reason of public policy. and in view of the length of time this case has been pending. 1735 and 1745. General rule under Articles 1735 and 1752 NCC. destruction or deterioration of the goods under Article 1735. 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. and received by the carrier for transportation until the same are delivered. 3. deterioration or destruction was due to accident or some other circumstances inconsistent with its liability. the responsibility to observe extraordinary diligence commences and lasts from the time the goods are unconditionally placed in the possession of. Rationale for the requirement of extraordinary diligence. deterioration or destruction of the goods occurred. including such methods as their nature requires.Haystacks (Berne Guerrero) The Supreme Court denied the petition. ordered that the decision is immediately executory. destroyed or had deteriorated.

shall be equitably reduced. the latter shall be liable in damages. 11. confirmed that the company never checked the information entered in the bill of lading. 2004 ( 152 ) . Compania Maritima negligent in using 5-ton capacity lifting apparatus to unload payloader Herein. 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. Assignment of errors by appellee only to maintain judgment on other grounds.652. Even if Compania Maritima chose not to take the necessary precaution to avoid damage by checking the correct weight of the payloader. Felix Pisang. valued at P34.5 and 2. took the bill of lading on its face value and presumed the same to be correct by merely “seeing’ it. extraordinary care and diligence compel the use of the “jumbo” lifting apparatus as the most prudent course for Compania Maritima. the payloader entrusted to it for safe carriage and delivery to Cagayan de Oro City. Felix Pisang chose not to use it. 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.000.63 representing the freight charges for the undeclared weight of 5 tons (difference between 7.97 due to Concepcion. 12. Appeal required to modify or reverse judgment Transportation Law. Mr. said act constitutes a contributory circumstance to the damage caused on the payloader. thereby reducing the recoverable amount at 80% or 4/5 of P34. 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.00 plus an additional deduction of P228. which mitigates the liability for damages of the latter.000. 7.318. the same would be deducted from the P27. Contributory negligence Article 1741 of the Code provides that “If the shipper or owner merely contributed to the loss. 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. assistant traffic manager of Maritima Compania. It used a 5-ton capacity lifting apparatus to lift and unload a visibly heavy cargo like a payloader.00 or the sum of P27. Felix Pisang. the weight of the payloader as entered in the bill of lading was assumed to be correct by Mr. destruction or deterioration of the goods. a final recoverable amount of damages of P24. Compania Maritima failed to take the necessary and adequate precautions for avoiding damage to. Worse.200. without seeing the equipment to be shipped. Considering that the freight charges for the entire cargoes shipped by Concepcion amounting to P2. Chief Officer of MV Cebu.000. Mr. 9. 8. which however.5 tons. a company collector. 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. Acknowledging that there was a “jumbo” in the MV Cebu which has the capacity of lifting 20 to 25 ton cargoes. Article 1741. Besides.5 tons) leaving.40 remained unpaid. therefore. 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. he did not bother to use the “jumbo” anymore.00 – was equitable.” 10. Chief Officer of the MV Cebu. since the ordinary boom has a capacity of 5 tons while the payloader was only 2. or destruction of. 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. 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. because according to him. Mariano Gupana.00. Mr.

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

. S. even by the carrier’s negligence. Piper (246 U. 124. Clauses 1 and 9 are not contrary to public order. 820. S. — but the rule and the effect of it are clearly established. valid and binding upon the parties thereto. Pennsylvania RR Co. 2004 ( 154 ) . to the case of the Union Pacific Ry. understandingly and freely. 331). 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. 112 U. and protecting himself against extravagant and fanciful valuations. 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). and Galt vs. Union Pacific Railway Co. 1884. Cas. 151. vs. 28 L. based on valuation.. decided in 1884).. Ct. S. he cannot thereafter recover more than the value which he thus places upon his property As a matter of legal distinction. 48 Am. and names his valuation. 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. Clauses 1 and 9 falls within third kind of stipulation. agreeing on a valuation of the property carried. 1918 E. 1921. 8... Burke (decided Feb. Burke In the case of Union Pacific Railway Co. 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. ed. therefore. Limited Liability of a Carrier. 4. unless the shipper is given a choice of rates. 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. Hart vs.” Said clauses of the bill of lading are. signed by the shipper.. 439. limit its liability in case of the loss by negligence of an interstate shipment to less than the real value thereof. 1920-1921. p. Rep.. having accepted the benefit of the lower rate. the lower of them conditioned upon his agreeing to a stipulated valuation of his property in case of loss. Advance Opinions. terms and conditions they may deem advisable. In the case of Hart vs. decided in 1918). based upon an agreed value. is fairly made with a railroad company. Ann. even in case of loss or damage by the negligence of the carrier. Article 1255 of the Civil Code provides that “the contracting parties may establish any agreements. Co. 318). 717. vs. 28. if the shipper makes such a choice. Pennsylvania R. Wynn (88 Tenn. — that. Co. 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. is valid and enforceable. Pennsylvania R. in common honesty the shipper may not repudiate the conditions on which it was obtained. with the rate of freight based on the condition that the carrier assumes liability only to the extent of the agreed valuation. Louisville Ry. (decided Nov. vs. it has been declared to be the settled Federal law that if a common carrier gives to a shipper the choice of two rates. Co. the court said: “In many cases. Rep. 331. Co. Co. R. R. ed. to Boston & M. 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. Co. 469. Pennsylvania R. from the decision in Hart vs. (112 U. Rep. 38 Sup. estoppel is made the basis of this ruling. vs. 62 L... not contrary to public policy A carrier may not. 320). it was held that “where a contract of carriage. Adams Express Co. provided they are not contrary to law.” 6. 354. morals or public order. 7. vs. by a valuation agreement with a shipper. (4 McAr.Haystacks (Berne Guerrero) 3. R. 24. Burke. clause 9 contains an express undertaking to settle on the basis of the net Transportation Law.. Ct.” 5.. R. 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. 5 Sup. A limitation of liability based upon an agreed value to obtain a lower rate does not conflict with any sound principle of public policy. from the case of Hart vs.

On 12 April 1965. both refused to pay such claim. 855. Paul Fire & Marine Insurance Company under its insurance Special Policy OC-173766 dated 23 June 1960. the consignee filed its claim with the insurer.134. Transportation Law. On 5 August 1961. or its equivalent in pesos at the rate of P3. the lower court. It seems that there is an irreconcilable conflict between the two clauses with regard to the measure of Macondray’s liability. Barber Steamship Lines. However. and favorably to the consignor.00. 294. the contract will be construed most strongly against the carrier. Manila. in case of doubt. the insurance company. plus costs. L. paid to the consignee the insured value of the lost and damaged goods. Inc. on the basis of such claim. the arrastre contractor for the Port of Manila. but this was denied by the lower court on 5 May 1965. the sum of P300. for every US$1. with legal interest thereon from the filing of the complaint until fully paid. Winthrop Products. “In construing a bill of lading given by the carrier for the safe transportation and delivery of goods shipped by a consignor. Antonio (J): 4 concur.90. the costs to be borne by all the defendants. which were consigned to Winthrop-Steams. the SS “Tai Ping” arrived at the Port of Manila and discharged its shipment into the custody of Manila Port Service. St. Paul Fire & Marine Insurance vs.) These rules are applicable to contracts contained in bills of lading. R. including other expenses in connection therewith. be interpreted against the party who has drawn the contract. and the insurance company. in the total amount of $1. value of the damaged drum and cartons of medicine with the carrier. Paul Fire & Marine Insurance Co. “A written contract should. which drew said contract...) [60] St. 89 Ala.) 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. On 7 August 1960. Thomas.109. After due trial. 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.00. Inc.46. Inc. with arrival notice in Manila to consignee Winthrop-Stearns. filed a motion for reconsideration.. as subrogee of the rights of the shipper and/or consignee. Inc.. jointly and severally. Manila.46. with legal interest thereon from the filing of the complaint until fully paid. in case of doubt.134. the sum of P809. C. and Manila Railroad Company and Manila Port Service to pay to the insurance company.. 218 cartons and drums of drugs and medicine.46.S. etc. Paul Fire & Marine Insurance. and the Manila Port Service. shipped aboard the SS “Tai Ping”. and Wilhelm Wilhelmsen to pay to the insurance company.” (Alabama. 119. as shipper. of New York. agent of Wilhelm Wilhelmsen issued Bill of Lading 34. Because consignee failed to receive the whole shipment and as several cartons of medicine were received in bad order condition. 2004 ( 155 ) . the appeal. Manila Port Service and/or Manila Railroad Company for the recovery of said amount of $1. 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. contending that it should recover the amount of $1. 1 on leave.00. St. instead of P2.. Macondray (GR L-27795. jointly and severally.67 representing the C. with the freight prepaid.. St.. be interpreted against the party who drew the contract The bill of lading should be interpreted against the carrier.I. Inc.. Wilhelm Wilhelmsen. Philippines.134. Co.. Philippines. 25 March 1976) Second Division.F.” clause 9 expressly provides. Consequently.. in case of doubt in any matter of construction. 1 designated to sit in second division Facts: On 29 June 1960. in the name of Winthrop Products. Inc.. (6 R. 9. L. R. New York.” (6 R. Barber Steamship Lines. C. the insurer. owned and operated by Wilhelm Wilhelmsen. The shipment was insured by the shipper against loss and/or damage with the St.Haystacks (Berne Guerrero) invoice price plus freight and insurance less all charges saved. U. A contract. Barber Steamship Lines.. instituted with the CFI of Manila an action against Macondray & Co. “Any loss or damage for which the carrier may be liable shall be adjusted pro rata on the said basis. vs.A. Inc. 854. 18 Am. on 10 March 1965 rendered judgment ordering Macondray & Co. Hence. the consignee filed the corresponding claim in the amount of P1. Rep.67.

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

30 June 1997) Third Division. 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.37 (for the pilferage) and $324.625. Seven Brothers to pay VHIS the amount of P2.53. South Sea Surety and VHIS filed separate petitions for review before the Supreme Court. affirmed the judgment except as to the liability of Seven Brothers to VHIS.000.00 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. Inc. after due hearing and trial.000.00 representing the balance of the stipulated freight charges.000. VHIS gave the check in payment of the premium on the insurance policy to Mr. Valenzuela Hardwood and Industrial Supply. VHIS likewise filed a formal claim with Seven Brothers for the value of the lost logs but the latter denied the claim.015 to $1.Haystacks (Berne Guerrero) 6. Instead. the Regional Trial Court of Valenzuela. On 20 January 1984. The Court of Appeals. respectively. 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. Manila value of the goods which were lost or damaged. VHIS demanded from South Sea Surety the payment of the proceeds of the policy but the latter denied liability under the policy. Herein. The trial court committed no error in adopting the aforesaid rate of exchange. Isabela for shipment to Manila.F. CA (GR 102316. Raised in the trial court. The Court also ordered VHIS to pay Seven Brothers the sum of P230. [61] Valenzuela Hardwood and Industrial vs.000.00 representing the value of lost logs plus legal interest from the date of demand on 24 April 1984 until full payment thereof.14 and P653. On 2 February 1984. VHIS insured the logs against loss and/or damage with South Sea Surety and Insurance Co.33 (shortlanded) or P456. Panganiban (J): 4 concur Facts: On 16 January 1984.000..000.00 on said date.I.00 to cover payment of the premium and documentary stamps due on the policy was tendered due to the insurer but was not accepted. The peso equivalent was based by the consignee on the exchange rate of P2. 2004 ( 157 ) . for P2. (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. 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. 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.000. Victorio Chua. 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. on 15 October 1991. Metro Manila (Branch 171). Inc. the reasonable attorney’s fees in the amount equivalent to 5% of the amount of the claim and the costs of the suit. the said vessel M/V Seven Ambassador sank on 25 January 1984 resulting in the loss of VHIS’ insured logs. and dismissed the counterclaim of South Sea Surety. ordered South Sea Surety to pay VHIS the sum P2. Transportation Law. Both Seven Brothers and South Sea Surety appealed. the C. the Supreme Court denied the petition of South Sea Surety. On 30 January 1984.000.00 which was the rate existing at that time.00 and the latter issued its Marine Cargo Insurance Policy 84/24229 for P2. a check for P5. In the meantime. On 24 January 1984. The present decision concerns itself to the petition for review filed by VHIS. In a Resolution dated 2 June 1995. according to the claim of the consignee dated 26 September 1960 is $226.000.

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. 1.” 3. 4. American Steamship Agencies.” 3. Parties may stipulate responsibility rests solely on charterer. Consequently. the trial court held the shipowner liable for damages resulting from the partial loss of the cargo. 2004 ( 158 ) . (3) That the common carrier need not observe any diligence in the custody of the goods. destruction. Status of Seven Brothers as a private carrier undisputed. or public policy. In a contract of private carriage. American Steamship Agencies. good customs. (2) That the common carrier will not be liable for any loss. 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. Inc. morals. the parties may freely stipulate their duties and obligations which perforce would be binding on them. Validity of Stipulation is Lis Mota The charter party between VHIS and Seven Brothers stipulated that the “owners shall not be responsible for loss. public order.. Where the reason for the rule ceases. or of robbers who do not act with grave or irresistible threat. split. short-landing.” The validity of this stipulation is the lis mota of the present case. This Court reversed the trial court Transportation Law. (6) That the common carrier’s liability for acts committed by thieves. (4) That the common carrier shall exercise a degree of diligence less than that of a good father of a family. Consequently. 2. vs. Hence. 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. such stipulation is valid because it is freely entered into by the parties and the same is not contrary to law. airplane or other equipment used in the contract of carriage. the rule itself does not apply In Home Insurance Co. destruction. Pursuant to Article 1306 of the Civil Code. their contract of private carriage is not even a contract of adhesion. (7) That the common carrier is not responsible for the loss. (5) That the common carrier shall not be responsible for the acts or omissions of his or its employees. the parties may validly stipulate that responsibility for the cargo rests solely on the charterer. or deterioration of goods on account of the defective condition of the car. 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. vehicle. or deterioration of the goods.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. Article 1745 NCC Article 1745 of the Civil Code provides that “any of the following or similar stipulations shall be considered unreasonable. 5. exempting the shipowner from liability for loss of or damage to the cargo caused even by the negligence of the ship captain. and affirmed the assailed decision. Unlike in a contract involving a common carrier. 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. Thus. unjust and contrary to public policy: (1) That the goods are transported at the risk of the owner or shipper. violence or force. Article 1306 NCC In a contract of private carriage. Indeed. private carriage does not involve the general public. or of a man of ordinary prudence in the vigilance over the movables transported. ship. breakages and any kind of damages to the cargo. is dispensed with or diminished. Article 1745 and other Civil Code provisions on common carriers may not be applied unless expressly stipulated by the parties in their charter party. Home Insurance vs.

Under American jurisprudence. a stipulation exempting the owner from liability for the negligence of its agent is not against public policy. patrimonial rights may be waived as opposed to rights to personality and family rights which may not be made the subject of waiver. he takes a normal business risk. Such policy has no force where the public at large is not involved. 10.” Undoubtedly. and in fact it usually does. being patently and undoubtedly patrimonial. worse. In practice. as the Court there categorically held that said rule was “reasonable” and proceeded to apply it in the resolution of that case. “The Civil Code provisions on common carriers should not be applied where the carrier is not acting as such but as a private carrier. Home Insurance is applicable to the present case. which confer on the shipper the right to recover damages from the shipowner and ship agent for the acts or conduct of the captain. The riding public merely adheres to the contract. VHIS miserably failed to show such circumstances or arguments which would necessitate a departure from a well-settled rule. Code of Commerce Whatever rights petitioner may have under Articles 586 and 587 of the Code of Commerce. Thus. 2004 ( 159 ) . 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. morals. and is deemed valid. 7. no choice. as held in Home Insurance. unless the waiver is contrary to law. VHIS’s Transportation Law. Charter party waives right under Articles 586 and 587. It can.” 9.” 6. even from the neglect or fault of the captain or crew or some other person employed by the owner on board. public policy. Compared to the general public.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. for whose acts the owner would ordinarily be liable except for said paragraph. 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. Herein. in exchange for convenience and economy. 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. When the charterer decides to exercise this option. or prejudicial to a person with a right recognized by law. in turn. the parties in a contract of private carriage can stipulate the carrier’s obligations and liabilities over the shipment which. the law on common carriers extends its protective mantle against one-sided stipulations inserted in tickets. Consequently. it cannot submit its own stipulations for the approval of the common carrier. enter into a free and voluntary agreement. a charterer. determine the price or consideration of the charter. Nature of contract of transportation between public and common carriers.“ The Court finds such doctrine reasonable. even if the public wants to. Article 6 NCC Article 6 of the Civil Code provides that “rights may be waived. a common carrier undertaking to carry a special cargo or chartered to a special person only. 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. 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. Application of American rule reasonable. 8. invoices or other documents over which the riding public has no understanding or. public order. may opt to set aside the protection of the law on common carriers.” As a general rule. As a private carrier. a charterer in a contract of private carriage is not similarly situated. becomes a private carrier. Rights may be waived. Thus. as in this case of a ship totally chartered for the use of a single party. were waived when it entered into the charter party. or good customs.

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

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

Contracts of adhesion. v. bills of lading. 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. the protection of the disadvantaged is expressly enjoined by the New Civil Code “in all contractual. contracts of sale of lots on the installment plan fall into this category. his participation in the ‘agreement’ being reduced to the alternative ‘to take it or leave it. reads “It is hereby agreed and understood that any and all actions arising out of the conditions and provisions of this ticket. as to venue Condition 14 printed at the back of the tickets.” 2. there are certain contracts almost all the provisions of which have been drafted only by one party. the courts must be vigilant for his protection. shall be filed in the competent courts in the City of Cebu. manage to impose upon parties dealing with them cunningly prepared ‘agreements that the weaker party may not change one whit.’ labelled since Raymond Saleilles ‘contracts by adherence’ (contracts d’ adhesion) in contrast to those entered into by parties bargaining on an equal footing.e. Valid contract of carriage exists. tender age and other handicap. 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. mental weakness. et al. property or other relations. 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. and prevent their becoming traps for the unwary. (2) cause or consideration which is the fare paid by the passenger as stated in the ticket. consent. usually a corporation.. (3) object. Validity determined by peculiar circumstances obtaining in each case With respect to the 14 conditions printed at the back of the passage tickets.” 7. endowed with overwhelming economic power. 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.” 5. For. Ticket issued has all elements of a written contract. stipulations in a contract come about after deliberate drafting by the parties thereto. cartels and concentration of capital. when one of the parties is at a disadvantage on account of his moral dependence. Madrigal Shipping Co. Vargas The Court held that “the courts cannot ignore that nowadays. Guidelines in determination of validity and/or enforceability of contracts of adhesion. in recognition of the peculiar character of contracts of this kind. “While generally.. irrespective of where it is issued.” 4. cause or consideration and object. Insurance contracts. 2004 ( 162 ) . 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. upon which the latter based their complaint. Qua Chee Gan v. 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. indigence. Condition printed at back of ticket. which is the transportation of the passenger from the place of departure to the place of destination which are stated in the ticket. because the only participation of the party is the signing of his signature or his ‘adhesion’ thereto. Such contracts are called contracts of adhesion.Haystacks (Berne Guerrero) 1. 3. is ignorance. and. All the essential elements of a valid contract. Peralta de Guerrero. i. these are commonly known as “contracts of adhesion. monopolies. Protection of disadvantaged expressly enjoined by the Civil Code To the same effect and import.” 6. Law Union and Rock Insurance Co. are present.” 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.. Inc. are the best evidence thereof. and Fieldman Insurance v.

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

50. for delivery to Manila. Sweet Line. 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. Considering the expense and trouble a passenger residing outside of Cebu City would incur to prosecute a claim in the City of Cebu. in the amount of 100 Sterling or its peso equivalent of P1. Great American Insurance (GR L-37604. such an agreement will not be held valid where it practically negates the action of the claimants. The CFI of Manila. Inc. on 25 July 1973 (Branch XIII. for P35. Zuellig. Without pronouncement as to costs. since it will frustrate in meritorious cases.921. Great American Insurance Co. actions of passenger claimants outside of Cebu City. The condition will thus defeat. thru its agent F. but having failed to make delivery. Section 3.921.. the petition for review on certiorari. Ltd. 14. if enforced.Haystacks (Berne Guerrero) Condition 14 is subversive of public policy on transfers of venue of actions. and to further pay an amount equivalent to 25% thereof by way of damages as and for attorney’s fees. Demand was made on Eastern & Australian Steamship and FE Zuellig for the delivery of said shipment. Inc. 1. and entered another one finding Eastern & Australian Steamship and Zuellig liable to Great American Insurance Co. For. with legal interest thereon from 20 November 1972. The first part of the provision of Section 4 (5) of the Carriage of Goods by Sea Act Transportation Law. be declared void and unenforceable. who may have perfectly legitimate claims against it. 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. The shipment was insured with Great American Insurance. Upon the other hand. Hence..544. 2004 ( 164 ) .81 against all risks. was compelled to pay the consignee P35.” Herein. As a consequence of the loss of the shipment.217. [63] Eastern and Australian Steamship vs. Australia. under Bill of Lading 31. instead of enhance. 1 case of impellers for warman pump on board the SS “Chitral.40. although venue may be changed or transferred from one province to another by agreement of the parties in writing pursuant to Rule 4. shipped from Sydney. Co. On 22 December 1971 the SS “Chitral” arrived in Manila but failed to discharge the shipment or any part thereof. Ltd. Philippines in favor of consignee Benguet Consolidated. the filing of the suit in the CFI of Misamis Oriental will not cause inconvience to. he would most probably decide not to file the action at all.00. failed to make good the claim. The Supreme Court reversed the decision of the court. will be subversive of the public good or interest. 1 concur in result Facts: On 10 December 1971. De Castro (J): 4 concur. 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. Civil Case 88985) found Eastern & Australian Steamship and Zuellig liable to Great American Insurance Co. Condition 14. in the amount of $500. 23 October 1981) First Division. therefore.E. The said condition should.81. thus placing Sweet Line at a decided advantage over said persons. 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. or its peso equivalent of P3. Eastern & Australian Steamship and ZE Zuellig.” Under this principle “freedom of contract or private dealing is restricted by law for the good of the public.” a vessel owned and operated in the Philippines by Eastern & Australian Steamship Co. the ends of justice. likewise. much less prejudice. a claim was presented against them for the value of the shipment. of the Rules of Court. the Jackson and Spring (Sydney) Pty. as contrary to public policy — to make the courts accessible to all who may have need of their services. 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. As subrogee. Hence.

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. unless the shipper or owner declares a greater value. 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.00 as the maximum liability of the vessel/carrier. 2. 5. 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. 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. 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. Inc.” [64].00 per package. and hence. Limitation of carrier’s liability valid In the case of Northern Motors. 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.00.00 is the maximum liability.” Also in Phoenix Assurance Company vs. 2004 ( 165 ) . is binding. Clause 17 of the Bill of Lading shall prevail. also [67] Sea-land Service vs.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. Under a stipulation such as this. in the absence of a higher valuation of the goods as indicated in the Bill of Lading. vs. Macondray & Co. even if the loss or damage results from the carrier’s negligence. 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. Prince Line. 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.” 4. 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. per package. 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. provided that the value of the goods have been declared in the Bill of Lading. 3. Pursuant to such provision. Inc. 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.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. 31 August 1987) First Division. the validity of a stipulation limiting the carrier’s liability was reiterated. Clause 17 of the questioned Bill of Lading also provides the maximum for which the carrier is liable.. it is apparent that there had been no agreement between the parties. it is the duty of the shipper to disclose. Article 1749 NCC Article 1749 of the New Civil Code expressly allows the limitation of the carrier’s liability. the carrier’s liability for loss or damage thereto is limited to that amount. Said provision does not prescribe the minimum and hence. In one case. IAC (GR 75118. for it would render ineffective the very intent of the law setting the sum of $500.. By providing that $500. Narvasa (J): 4 concur Transportation Law. Herein.

Branch X. The shipment was loaded on board the MS Patriot. it was stolen by pilferers and has never been recovered. 1.000.00. after the shipment had been transferred.643. 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.00 at the conversion rate of P8.00 for unrealized profit with 1% monthly interest from the filing of the complaint until fully paid. or its then Philippine peso equivalent of P30. (3) Sea-Land was discharged of that obligation by paying Cue the sum of P32. 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. 1981. Inc.600. and acting independently of Mendoza for the time being. and there discharged in Container 310996 into the custody of the arrastre contractor and the customs and port authorities. received from Seaborne Trading Company in Oakland. Mendoza vs. When consignee becomes party to contract Therein. 2. The shipment arrived in Manila on 12 February 1981.00 for attorney’s fees and P2.000. On 10 March 1981. he thereby made himself a party to the contract of transportation.00 representing the Philippine currency value of the lost cargo. for discharge at the Port of Cebu. Sea-Land appealed to the Intermediate Appellate Court. awaiting trans-shipment to Cebu.00. a vessel owned and operated by Sea-Land. made formal claim upon Sea-Land for the value of the lost shipment allegedly amounting to P179. 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. a foreign shipping and forwarding company licensed to do business in the Philippines. California a shipment consigned to Sen Hiap Hing. a consignee in a bill of lading has the right to recover from the carrier or shipper for loss of. no value was indicated in the bill of lading. even if the LVN Pictures Inc.00 per package is valid and binding on Paulino Cue.00 to $1. sentencing Sea-Land to pay him P186. Consignee in bill of lading has right to recover from carrier although document drawn by consignor and carrier In principle. nevertheless when he. The Supreme Court reversed and set aside the Decision of the Intermediate Appellate Court complained of.048. Transportation Law. Cebu City. 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. Sometime between February 13 and 16.00. Sea-Land Service.000.. as consignor of its own initiative.000.000.00.” Based on volume measurements Sea-land charged the shipper the total amount of US$209. Manila.00 as there was no question of the fact that the lost shipment consisted of 8 cartons or packages. rendered judgment in favor of Cue. goods being transported under said bill.814. (2) Sea-Land is liable in the aggregate amount of US$4. the consignee. P55. That Court however affirmed the decision of the Trial Court in toto. Said Court. Sea-Land thereupon filed the present petition for review. after trial. or damage to. along with other cargoes to Container 40158 near Warehouse 3 at Pier 3 in South Harbor. made Mendoza as consignee.48. the equivalent in Philippine currency of US$4.00 as litigation expenses.28 for freightage and other charges. P25. Prior to that time he is a stranger to the contract. Cue rejected the offer and thereafter brought suit for damages against Sea-Land in the then Court of First Instance of Cebu. a stranger to the contract if that is possible. The shipper not having declared the value of the shipment. The bill described the shipment only as “8 CTNS on 2 SKIDS-FILES. Costs against Cue.Haystacks (Berne Guerrero) Facts: On 8 January 1981. 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. Sea-Land offered to settle for US$4. Paulino Cue. 2004 ( 166 ) . 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.000.

That such maximum shall not be less than the figure above named. Common carriers not obligated to make prompt delivery. now Article 1311. shall be prima facie evidence.” 8. Section 4 (5) of COGSA Section 4(5) of Commonwealth Act 65. if any. per customary freight unit. unless the nature and a higher value shall be declared by the shipper in writing before shipment and inserted in this Bill of Lading. second paragraph of the long-form bill of lading And in its second paragraph. unless such common carriers previously assume the obligation. damage or delay to or in connection with goods exceeding in actual value $500 per package. Public Act No. U. per customary freight unit.S. 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. the liability of Sea-Land to the consignee is governed primarily by the Civil Code. second paragraph) reads “Should the contract contain any stipulation in favor of a third person. first paragraph. It says: “(22) VALUATION. and as ordained by the said Code. This declaration. or in case of goods not shipped in packages. he may demand its fulfillment provided he has given notice of his acceptance to the person bound before the stipulation has been revoked. in part.” 5. unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. Mendoza vs. 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. Article 1357 paragraph 2 of old Civil Code. in all matters not determined thereby. 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. shall not exceed the declared value and any partial loss or damage shall be adjusted pro rata on the basis of such declared value. unless such obligation is assumed Common carriers are not obligated by law to carry and to deliver merchandise. 6. One of these suppletory special laws is the Carriage of Goods by Sea Act. but shall not be conclusive on the carrier. of the old Civil Code (now Article 1311. as the case may be. second paragraph NCC Article 1257. suppletorily. and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided. 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. Clause 22. and the carrier’s liability. or agent of the carrier. 2004 ( 167 ) . if any. Said rights and obligations are created by a specific contract entered into by the parties. the value of the goods shall be deemed to be $500 per package or per customary freight unit. 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. or the equivalent of that sum in other currency. Mendoza vs. approved on 22 October 1936. first paragraph of the long-form bill of lading Clause 22. Clause 22. by the Code of Commerce and special laws. xxx” 7. shall be determined on the basis of a value of $500 per package or customary freight unit.” Transportation Law. In no event shall the carrier be liable for more than the amount of damage actually sustained. and persons are not vested with the right to prompt delivery. PAL. 4. master. 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. the value shall nevertheless be deemed to be declared value and the carrier’s liability. By agreement between the carrier.Haystacks (Berne Guerrero) 3. In the event of any loss. if embodied in the bill of lading. lawful money of the United States. or in case of goods not shipped in packages. paragraph 2.

As pointed out in Mendoza vs.” 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. 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. 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. or deterioration of the goods is valid. destruction. is binding. if it is reasonable and just under the circumstances. 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. to give effect to just agreements limiting carriers’ liability for loss or damage which are freely and fairly entered into.” 12. PAL. Determination of just and reasonable character of stipulation as to liability limitation clause But over and above that consideration. springs from either a relation of agency that may exist between him and the shipper or consignor. To hold otherwise would amount to questioning the justice and fairness of that law itself. 13. 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. 14. 2004 ( 168 ) . 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. 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. Right of consignee springs from either relation of agency with consignor. in its Articles 1749 and 1750. or status as a stranger in whose favor some stipulation is made in said contract Herein. 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. Transportation Law. 15. 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. unless the shipper or owner declares a greater value. 10. and has been fairly and freely agreed upon. 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. 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. freely and fairly sought and given. 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. it is also quite clear that said Code in fact has agreements of such character in contemplation in providing.Haystacks (Berne Guerrero) 9.” 11. And since the shipper here has not been heard to complaint of having been “rushed. 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 his status as a stranger in whose favor some stipulation is made in said contract.

17. 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. The carrier or master may delay such transshipping or forwarding for any reason. but in fact recognized. 2004 ( 169 ) . The carrier or master. 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. by law. rests upon an almost uniform weight of authority. to all intents and purposes accepted said bill. i. in bar to any provision of the bill of lading. 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. he becomes bound by all stipulations contained therein whether on the front or the Transportation Law. 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. including but not limited to awaiting a vessel or other means of transportation whether by the carrier or others. 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. the port of destination stipulated in the bill of lading. 18. by making claim for loss on the basis of the bill of lading. This proposition. hence its maintenance of arrangements with a local forwarder. 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. Aboitiz and Company. whether before or after loading on the ship named herein and by any route.Haystacks (Berne Guerrero) and who becomes a party thereto when he demands fulfillment of that stipulation. Cue bound by stipulations in bill of lading Cue. 21. Parenthetically. Free agreement not vitiated by fine printed provisions In neither capacity can he assert personally. 16. 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. 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. the delivery of the goods or cargo shipped.” 19. 22. for delivery of its imported cargo to the agreed final point of destination within the Philippines.e.” 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. 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. 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. 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. Having done so. 20. such arrangements not being prohibited. 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. moreover. THROUGH CARGO AND TRANSSHIPMENT. Nonetheless.

2004 ( 170 ) .00.00 for said shipment. Hence. The vessel is owned and operated by Aboitiz Shipping Corporation. A motion for reconsideration of said decision filed by Aboitiz was denied in a resolution dated 15 August 1989. 1.55.190. All circumstances considered. the vessel M/V “P. it does not appear just or equitable that Sea-Land. 1980. As GAFLAC was subrogated to all the rights. Finding of administrative bodies not always binding upon the court Transportation Law.20 plus legal interest from the date of the filing of the complaint on 28 October 1981. Said sum is all that is justly due Cue. CA (GR 89757.Haystacks (Berne Guerrero) back thereof. Secondly. GAFLAC paid the consignee the amounts US$39. interests and actions of the consignee against Aboitiz.000. it is just and fair that Sea-Land’s dollar obligation be convertible at the same rate.885 for the first shipment while that of the second shipment amounts to US$94. 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. 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. ordering Aboitiz to pay GAFLAC actual damages in the sum of P1. 23. taxes and similar imports amount to US$39.524. including invoice value.00 as the peso value of the lost shipment is clearly based on a conversion rate of P8. Not satisfied therewith. After the issues were joined and the trial on the merits a decision was rendered by the trial court on 29 June 1985. 6 August 1990) First Division. Gancayco (J): 4 concur Facts: On October 28. 10 bulk and 95 cartons of goods for apparel covered by Bill of Landing 505-M.190.256. until full payment thereof. and insured with the General Accident Fire and Life Assurance Corporation.80 and US$94. On 31 October 1980 on its way to Manila the vessel sunk and it was declared lost with all its cargoes.611. The total value. the petition for review. Both shipments were consigned to the Philippine Apparel. (GAFLAC). 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.048.00. Sea-Land’s dollar obligation should be convertible at the rate of P8 to $1 Herein.85 or P319. [65] Aboitiz Shipping vs.072. Cue having claimed a dollar value of $23.00 to US$1. 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.55 or P753. Inc. attorney’s fees in the amount of 20% of the total claim and to pay the costs. should. by being made to pay at the current conversion rate of the dollar to the peso. with costs against Aboitiz. which offered that amount in good faith as early as 6 years ago. the limit of said carrier’s liability for loss of the shipment under the bill of lading.086.885. 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. Ltd. with costs against Aboitiz. He cannot elude its provisions simply because they prejudice him and take advantage of those that are beneficial. customs duties. Cue admits that as early as on 22 April 1981. The Supreme Court dismissed the petition. bear for its own account all of the increase in said rate since the time of the offer of settlement. Sea-Land had offered to settle his claim for US$4. freightage. The decision of the Regional Trial Court awarding Cue P186..40 for the lost cargo.

that is. Anuran vs. it was found that the sinking of the vessel may be attributed to force majeure on account of a typhoon. The vessel M/V “Aboitiz” and its cargo were not lost due to fortuitous event or force majeure. Said administrative investigation was conducted unilaterally. Herein. Pangasinan Transportation Company. 5. 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. While the goods are in the possession of the carrier. GAFLAC cannot be bound by findings and conclusions of BMI The present case was brought to court on 28 October 1981. Civil Code. 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. Presumption of negligence. there is an exception. 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. Aboitiz” was the subject of an administrative investigation conducted by the Board of Marine Inquiry (BMI) whereby in a decision dated 26 December 1984. 30 SCRA 69. it is but fair that it exercise extraordinary diligence in protecting them from loss or damage. becoming longer. Laguna Tayabas Bus Co. Exception While it is true that in the bill of lading there is such stipulation that the liability of the carrier is US$500. fairly frequent white horses. General rule as to administrative findings of facts As a general rule. 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. the description of the nature and the value of the goods shipped are declared and reflected in the bills of lading. It cannot thereby be bound by said findings and conclusions of the BMI. the wind force of 10 to 15 knots is classified as scale No. Common carrier bound to observe extraordinary diligence (Article 1732 NCC). 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.” Herein.” 3. Aboitiz failed to prove that the loss of the subject cargo was not due to its fault or negligence.00 per package/container/customary freight. 6. Court of Appeals. According to the Beau fort Scale (Exhibit “I”). GAFLAC was not notified or given an opportunity to participate therein.’ small waves. Nocum vs. 88 SCRA 284).Haystacks (Berne Guerrero) The sinking of the vessel M/V “P. Transportation Law.’ The weather condition prevailing under said wind force is usual and foreseeable. Limited liability clause. Even in Vasquez vs. Landigan vs. 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.. which is admittedly an accurate reference for measuring wind velocity. the common carrier. it is the basis of the liability of the carrier as the actual value of the loss. 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 ) . that is necessary to protect the interest of the shipper which is at the mercy of the carrier (Article 17O6. Trial court not informed of parallel administrative investigation being conducted by BMI. the law presumes that it was due to the carrier’s fault or negligence. Thus. 4 and described as ‘moderate breeze. burden of proof In accordance with Article 1732 of the Civil Code. Puno. 4. 2. It was only on 22 March 1985 when Aboitiz revealed to the trial court the decision of the BMI dated 26 December 1984. and if loss occurs. 17 SCRA 224. when the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. from the nature of its business and for reasons of public policy. The said decision appears to have been rendered over 3 years after the case was brought to court.

Paul Fire & Marine Insurance Co.’ That ruling applies to the present case.00 each. Aboitiz Shipping Corporation. in which the carrier caused them to be contained. By the weight of modern authority. however. and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided. 10. Such “container” must be given the same meaning and classification as a “package” and “customary freight unit. 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.” By the rule of noscitur a sociis. of the Rules of Court would not be achieved or execution pending appeal would not be achieved if insolvency would still be awaited. Herein. Macondray Co. vs.. or in case of goods not shipped in packages. 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. 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. (Juan Ysmael & Co. 70 SCRA 122.Gabino Barreto.00 unless the true value had been declared and the corresponding freight paid was ‘void as against public policy. that such maximum shall not be less than the figure above named. which may be taken as their value. Issuance of execution pending appeal. unless the shipper or owner declares a greater value. Filing of supersedeas bond to stay execution The purpose of Section 2. Such stipulation. 1749).” 8. to refer to the container which is the modern substitute for the hold of the vessel. Limited liability clause must be reasonable and freely agreed upon Generally speaking. To limit the liability of the carrier to $500.500. if embodied in the bill of lading. it was held that a stipulation limiting the carrier’s liability to $500. Aboitiz” were insured for P278. not a large metal object. Ysmael vs . functionally a part of the ship. 126127 (1976) Herein. “Container” construed. This declaration. 23 March1987).530. (St. unless the nature and value of such goods have been inserted in the bill of lading. 11. a stipulation. the goods shipped on the M/V “P. Allied Guarantee Insurance Co. Art. In no event shall the carrier be liable for more than the amount of damage actually sustained. or the equivalent of that sum in other currency. (Civil Code. Noscitur a sociis It is absurd to interpret “container. 9. in some cases of which Transportation Law.50. 2004 ( 172 ) . supra) Here to limit the liability of Aboitiz Shipping to $500.00 per package of silk when the value of such package was P2.Haystacks (Berne Guerrero) 7. 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. but shall not be conclusive on the carrier. Limitation of liability inapplicable when loss caused by own negligence In Juan Ysmael & Co. vs. 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. v. By agreement between the carrier. 90 (1927). limiting the common carrier’s liability to the value of the goods appearing in the bill of lading. shall be prima facie evidence. 51 Phil. Gabino Barreto & Co. a carrier cannot limit its liability for injury or loss of goods shipped where such injury or loss was caused by its own negligence. (CA GR CV 04121. master or agent of the carrier. must be reasonable and just under the circumstances and must have been fairly and freely agreed upon. per customary freight unit.00 would obviously put it in its power to have taken the whole cargo. Inc. Gabino Barreto & Co.00 would nullify the policy of the law imposing on common carriers the duty to observe extraordinary diligence in the carriage of goods.. Rule 39. vs. Aboitiz is facing many law suits arising from said sinking of its vessel involving cargo loss of no less than P50 million..” as provided in the bill of lading to be valued at US$500. is valid.

Martinez (J): 4 concur Facts: Hernandez Trading Co. 13. (1) it will cast no doubt on the solvency of the defendant.R. 1990. 13 November1989). unless the shipper or owner declares a greater value is valid. 13 and MARCO C/No. however. from its supplier. 12. Said resolution of the case had become final and executory.00 per package of silk. 14. the Court in a resolution dated 13 November 1989 dismissed the petition for lack of merit. entry of judgment having been made and the records remanded for execution on 22 March 1990. and (3) it will put to equitable operation Sec. must be reasonable and just under the circumstances and must have been fairly and freely agreed upon.536.. Japan Transportation Law. Gabino Barretto & Co. 13 November1989). Doctrine of primary administrative jurisdiction not applicable In a similar case for damages arising from the same incident entitled Aboitiz Shipping Corporation vs. 3 Rule 39 of the Revised Rules of Court. it was held that a stipulation limiting the carrier’s liability to P300. Honorable Court of Appeals and Allied Guaranteed Insurance Company. The statutory undertaking of posting a supersedeas bond will achieve a three-pronged direction of justice. Said case is the law of the case applicable to the present petition.Haystacks (Berne Guerrero) judgment had been rendered against Aboitiz. Macondray & Co. Japan. limiting the common carrier’s liability to the value of the goods appearing in the bill of lading. 8 October 1998) Second Division. Limitation of liability would render inefficacious the extraordinary diligence required by law of common carriers Generally speaking any stipulation. imported three crates of bus spare parts marked as MARCO C/No.00 would obviously put in its power to have taken the whole cargo. Aichi. CA (GR 88159. 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. 126-127 [1976]. Therein. (St.50. 14. 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. was void as against public policy. CA (GR 88159. CA (GR 122494. Maruman Trading Company. which may render any judgment for GAFLAC ineffectual. 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. That ruling applies to said case. 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. Ltd. 90 [1927]. Inc. 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. since both of their claims are secured by their corresponding bonds. Aboitiz’ were insured for P278. This generalization certainly cannot prevail over the detailed explanation of the trial court in the case as basis for its contrary conclusion. 2004 ( 173 ) . [66] Everett Steamship Corp. unless the true value had been declared and the corresponding freight paid. v. (Civil Code.. MARCO C/No. v. a foreign corporation based in Inazawa. Aboitiz vs. leaving Aboitiz alone to face and answer the suits. the goods shipped on the M/V ‘P. Paul Fire & Marine Insurance Co.500. which may be taken as their value. when the value of such package was P2. CA (GR 88159. Therein. Aboitiz vs. In Juan Ysmael & Co. 51 Phil. 88159. 1749) Such stipulation. To limit the liability of the carrier to $500. G. No. 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. vs. Thus. and considering that its insurer is now bankrupt. Art. The crates were shipped from Nagoya. (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. (Maruman Trading). 12. Inc. Aboitiz vs. 70 SCRA 122.00..

552. is binding. 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.552.” a vessel owned by Everett Steamship Corporation’s principal. Upon arrival at the port of Manila. Inc. Hernandez Trading rejected the offer and thereafter instituted a suit for collection (Civil Case C-15532). destruction. Everett Orient Lines. ordering Everett Steamship to pay: (a) Y1. against Everett Shipping before the RTC of Caloocan City (Branch 126). However. . The Supreme Court reversed and set aside the decision of the Court of Appeals. is sanctioned by law. 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. IAC. both parties manifested that they have no testimonial evidence to offer and agreed instead to file their respective memoranda. 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. dated 14 November 1991.00 Yen.00 or its peso equivalent representing the actual value of the lost cargo and the material and packaging cost. 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. if it is reasonable and just under the circumstances. 2004 ( 174 ) .500. But over and above that consideration. At the pre-trial conference. the trial court rendered judgment in favor of Hernandez Trading. 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. the maximum amount stipulated under Clause 18 of the covering bill of lading which limits the liability of Everett Steamship. and has been freely and fairly agreed upon. particularly Articles 1749 and 1750 of the Civil Code. and (d) to pay the cost of the suit. On 16 July 1993. and this the private respondent does not pretend to do. 1. unless the shipper or owner declares a greater value. This was confirmed and admitted by Everett Steamship in its letter of 13 January 1992 addressed to Hernandez Trading.00.000.00. 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. 2. To hold otherwise would amount to questioning the justness and fairness of the law itself. On appeal. Limited liability clause upheld by Court. 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 . it was discovered that the crate marked MARCO C/No. (b) Y20. which thereafter made a formal claim upon petitioner for the value of the lost cargo amounting to Y 1. 14 was missing. the amount shown in an Invoice MTM-941. unless the shipper or owner declares a greater value.” 4. 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. IAC Such limited-liability clause has also been consistently upheld by this Court in a number of cases. Sea Land vs. The said crates were covered by Bill of Lading NGO53MN. .Haystacks (Berne Guerrero) to Manila on board “ADELFAEVERETTE. or deterioration of the goods is valid. (c) 10% of the total amount as an award for and as contingent attorney’s fees.” 3. Everett Steamship filed a petition for review.” Transportation Law. and on 14 June 1995. Thus. vs.000.500. in Sea Land Service. Everett Steamship offered to pay Y100.

Contracts of adhesion. The carrier shall not be liable for any loss of or any damage to or in any connection with. however. .” 7. Inc. . While it may be true that the plane ticket was not signed. are contracts not entirely prohibited. 8. Such provisions have been held to be a part of the contract of carriage. . vs. Contents of bill of lading (clause 18) The bill of lading specifically provides. PAL vs. Contracts of adhesion not invalid per se. Sweet Lines. 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. Considering that the shipper did not declare a higher valuation. Consent by adhering In Philippine American General Insurance Co. Greater vigilance required of courts when dealing with contracts of adhesion.” in regards which it has been said that contracts of adhesion wherein one party imposes a ready-made form of contract on the other. It is what is known as a contract of ”adhesion. Inc. Conditions for the validity of limited liability clause Pursuant to the provisions of law. vs. . et al. . Contract of adhesion. . Ong Yiu vs. 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. if paid. goods in an amount exceeding One Hundred Thousand Yen in Japanese Currency (Y100. it is required that the stipulation limiting the common carrier’s liability for loss must be “reasonable and just under the circumstances. The one who adheres to the contract is in reality free to reject it entirely.. the shipper.” 10. Article 24 NCC Greater vigilance. he is nevertheless bound by the provisions thereof.. Court of Appeals.” 6. In the bill of lading. are contracts not entirely prohibited.Haystacks (Berne Guerrero) 5. and valid and binding upon the passenger regardless of the latter’s lack of knowledge or assent to the regulation. “(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. Stipulations are reasonable and just The stipulations are reasonable and just. 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. CA As further explained in Ong Yiu vs. if he adheres he gives his consent. as the plane ticket in the case at bar. among others. the Court held that “Ong Yiu vs.000. it had itself to blame for not complying with the stipulations. the carrier made it clear that its liability would only be up to Y100. and in no event shall the carrier be liable for any loss of possible profits or any consequential loss. 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.. he gives his consent. had the option to declare a higher valuation if the value of its cargo was higher than the limited liability of the carrier. 11. shipper. Maruman Trading.” such as the bill of lading. CA As ruled in PAL. stipulations in contracts of adhesion are valid and binding.. The one who adheres to the contract is in reality free to reject it entirely. The stringent requirement Transportation Law. if he adheres.000. and has been freely and fairly agreed upon. instructs us that ‘contracts of adhesion wherein one party imposes a readymade form of contract on the other . However.00.” 9. .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. . 2004 ( 175 ) . . or consignee as the case may be. Court of Appeals. Inc. Court of Appeals.

cannot be said to be ignorant of transactions as to shipment The shipper. In fact. or damage to goods being transported under said bill. Moreover. 16. . 2004 ( 176 ) . has been extensively engaged in the trading business. vs. . . 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. property or other relations. . 14.” 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. in bar to any provision of the bill of lading. 15. Bill of lading proves carrier unaware of contents. quantity and value of “the shipment which consisted of three pre-packed crates described in Bill of Lading NGO-53MN (Cases Spare Parts). 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. or at least has come to court to enforce it. Maruman Trading. Inc. Consignee may be bound by contract of carriage although not a signatory thereto (Agency). Inc. . the former accepted the provisions of the contract and thereby made itself a party thereto. springs from either a relation of agency that may exist between him and the shipper or consignor. in principle.. 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. In other words. vs. the Court held that even if the consignee was not a signatory to the contract of carriage between the shipper and the carrier. such as the delivery of the goods or cargo shipped. Macondray In neither capacity can he assert personally. Thus. 13. 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. Sea Land vs. quantity and value of crates The bill of lading confirms the fact that Everett Steamship that it does not know of the contents. tender age or other handicap. IAC. and who becomes a party thereto when he demands fulfillment of that stipulation. To defeat the carrier’s limited liability. 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. mental weakness.” 12.. there is no question of the right. the consignee can still be bound by the contract. To begin with. It can not be said to be ignorant of the business transactions it entered into involving the shipment of its goods to its customers. Phoenix Assurance Co. the courts must be vigilant for his protection. Hernandez Trading cannot now reject or disregard the carrier’s limited liability stipulation in the bill of lading. when one of the parties is at a disadvantage on account of his moral dependence. it may be observed that in one comparatively recent case (Phoenix Assurance Company vs. IAC In Sea-Land Service. Macondray & Co. ignorance. Consignee may be bound by contract of carriage although not a signatory thereto and even if stipulations in fine print. The shipper could not have known. Hernandez Trading is bound by the whole stipulations in the bill of lading and must respect the same.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. 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. or his status as stranger in whose favor some stipulation is made in said contract. 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. . Parenthetically. or should know the stipulations in the bill of lading and there it should have declared a higher valuation of the goods shipped. Shipper extensively engaged in trading business. indigence. it was not even impleaded in the case. of a consignee in a bill of lading to recover from the carrier or shipper for loss of.

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. These requirements in the bill of lading were never complied with by the shipper. 2004 ( 177 ) . Herein. IAC. Shewaram and which suitcase belonging to Shewaram arrived in Manila airport on 24 November 1959. alleging that all his clothes were white and the National transistor 7 and a Rollflex camera were not found inside the suitcase. on PAL’s aircraft flight 976/910 from Zamboanga City bound for Manila. a paying passenger with ticket 4-30976.. from the nature of its business and for reasons of public policy. P150. When Shewaram arrived in Manila on the same date.N. PAL appeals to the Supreme Court on a question of law. hence. PAL (GR L-20099. he was informed by Mr. 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. [67] Sea-Land Service vs. also [234] Shewaram vs. From the decision of the CFI of Zamboanga City. On said date. The suitcase was mistagged by PAL’s personnel in 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. P100. the liability of the carrier under the limited liability clause stands. 7 July 1966) En Banc. After trial the municipal court of Zamboanga City rendered judgment ordering PAL to pay Shewaram P373. and the costs of the action. offering its services to the public to carry and transport passengers and cargoes from and to different points in the Philippines. Before the municipal court of Zamboanga City. As such common carrier PAL. with costs against PAL. 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. The Transportation Law. Zaldivar (J): 8 concur Facts: Philippine Airlines (PAL) is a common carrier engaged in air line transportation in the Philippines. on 23 November 1959. 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. see [64] [-]. (for Iligan) with claim check B-3883. PAL appealed to the CFI of Zamboanga City. with the extra freight paid. with legal interest from 6 May 1960. 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.00 as actual damages. After inquiries made by PAL’s personnel in Manila from different airports where the suitcase in question must have been sent.G. 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. 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. The Supreme Court affirmed the decision appealed from. Shewaram made demand for these 2 items or for the value thereof but the same was not complied with by PAL. Parmanand Shewaram was.00 as attorney’s fees. his suitcase did not arrive with his flight because it was sent to Iligan. instead of MNL (for Manila). as I.00 as attorney’s fees.00 as actual damages. and moreover. the rest having been claimed and released to the other passengers of said flight. Jr. Tomas Blanco. 1. Extraordinary diligence required of common carrier PAL is a common carrier. it contained a pistol which he did not have nor placed inside his suitcase (the suitcase belonged to a certain Del Rosario). When Shewaram’s suitcase arrived in Manila.00 as exemplary damages. he checked in 3 pieces of baggages — a suitcase and two 2 other pieces. eliminating the award of exemplary damages. and the sum of P150.Haystacks (Berne Guerrero) by the carrier and insert the said declaration in the bill of lading.

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

Inc. or that of its servants.m. Negligence Paragraph 195. at past 2:00 p. on board Flight 463-R. 2004 ( 179 ) .. 154. it was only after reacting indignantly to the loss that the matter was attended to by the porter clerk. Corpus Juris. The undertaking is to carry the goods. 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. He was scheduled to attend the trial of Civil Case 1005 and Special Proceedings 1125 in the Court of First Instance.” 10. Application and Extent of Rule.m. PAL Butuan. p. or not at all. Ong Yiu claimed his luggage but it could not be found.. relayed in full to the Mactan Airport teletype operator at 3:45 p. Negligence — (1) Rule in America — (a) In Absence of Organic or Statutory Provisions Regulating Subject — aa..m. Corpus Juris. Negligence of servants Paragraph 197. Maximo Gomez. and arrived at Bancasi airport. Paragraph 197. also [85] Ong Yiu vs.6.Haystacks (Berne Guerrero) 8. unless such exemption is just and reasonable. At about 3:00 p.” 9. volume 10. p. bound for Butuan City. Considerations on which Rule Based Paragraph 196. Reasonableness of Limitation Paragraph 194. Cebu inquiring about the missing luggage. or carelessness of its employees. 1967. which. which message was. it is said. 154. CA (GR L-40597. No contractual limitation is reasonable which is subversive of public policy. — 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. Melencio-Herrera (J): 5 concur Facts: On 26 August 1967. Augusto B. 154.6.cc (Application and Extent of Rule) provides that “(aa) Negligence of Servants.bb. in accordance with which the obligations of the carrier to the public are settled. sent a message to PAL. Instructions Transportation Law. it cannot limit its liability for injury to or loss of goods shipped. p. As a passenger. unskillfulness.” 11. Corpus Juris. What Limitations of Liability Permissible. Such contracts are wanting in the element of voluntary assent. however. Paragraph 194. 29 June 1979) First Division. where such injury or loss is caused by its own negligence. — In the absence of statute.bb (Considerations on which Rule Based) provides that “The rule.7(a). the latter denies. that whatever limitations against its common-law liability are permissible to a carrier. 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. The plane left Mactan Airport. it is settled by the weight of authority in the United States. Cebu. and it has bean specifically decided in many cases that no contract limitation will relieve the carrier from responsibility for the negligence. This is the common law doctrine and it makes no difference that there is no statutory prohibition against contracts of this character. 7 (What Limitations of Liability Permissible) provides that “a. Butuan City. at about 1:00 p. of the same day. Ong Yiu was a fare paying passenger of Philippine Air Lines. 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. a blue “maleta” for which he was issued Claim Check 2106-R. It must have been transmitted to Manila immediately. Branch II. Paragraph 196. Upon arrival. the shipper must send his freight by the common carrier. volume 10.’” [68]. (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. from Mactan. Majority Rule. volume 10. The shipper and the common carrier are not on equal terms. Paragraph 195. According to Ong Yiu. in turn. 154. It cannot lawfully stipulate for exemption from liability. for at 3:59 p.cc. and unless the contract is freely and fairly made. (PAL). Corpus Juris. p. rests on considerations of public policy.. Cebu. volume 10. set for hearing on August 28-31. 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.m.m. he checked in one piece of luggage.

who sealed it and forwarded the same to PAL Cebu. On 16 July 1975. Maximo Gomez. No. reversed the judgment of the trial Court granting Ong Yiu moral and exemplary damages.00 for actual and moral damages within 5 days from receipt of the letter.00.000. attorney’s fees of P5.m. Hence. worry. 1126 were missing. 27 August 1967. and Agustin. He did not wait. de Leon. and affirmed the judgment sought to be reviewed in toto. the contents were listed and receipted for by Ong Yiu. Ong Yiu filed a Complaint against PAL for damages for breach of contract of transportation with the CFI of Cebu (Branch V. Ong Yiu found that a folder containing certain exhibits.. At 5:00 p. but did not touch them. 1. who also used to drive for Ong Yiu. finding that PAL was guilty only of simple negligence. PAL Cebu sent a message to PAL Butuan that the luggage would be forwarded on Flight 963 the following day.000. Both parties appealed to the Court of Appeals. 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. Early in the morning of the next day. volunteered to take the luggage to Ong Yiu. 1005 and Sp. the luggage would have arrived. exemplary damages of P30. The Supreme Court denied the petition for lack of merit. On 13 September 1967. On 22 August 1974. 27 August 1967. Ong Yiu was worried about the missing luggage because it contained vital documents needed for trial the next day. he would hold PAL liable for damages.m. de Leon. and which carried the missing luggage. Messrs. Meanwhile. however. but ordered PAL to pay Ong Yiu the sum of P100. a driver of a “colorum” car. demanded that his luggage be produced intact.Haystacks (Berne Guerrero) were also given that the luggage be immediately forwarded to Butuan City on the first available flight. the baggage liability assumed by it under the condition of carriage printed at the back of the ticket. After calling the attention of Maximo Gomez. and costs.. for the morning flight which arrived at 10:00 a. went to Ong Yiu’s office to deliver the “maleta”. with the information that the lock was open. Ong Yiu called attention to his telegram. In a letter dated 29 August 1967 addressed to PAL.000. After due trial. 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. the Court of Appeals. without costs. Bad faith defined Transportation Law. transcripts and private documents in Civil Case No. Navarsi. As Maximo Gomez knew Dagorro to be the same driver used by Ong Yiu whenever the latter was in Butuan City. this message was not received by PAL Butuan as all the personnel had already left since there were no more incoming flights that afternoon. On 5 September 1967. In the meantime. Procs. However. Gomez took the luggage and placed it on the counter. the Petition for Review by Certiorari. On 31 August 1967. which PAL traversed. Manuel Maranga. but the latter had already left. Gomez took a look at its contents. 2004 ( 180 ) . otherwise. filed on 2 May 1975. otherwise. Ong Yiu returned to Cebu City on 28 August 1967. A certain Emilio Dagorro. Dagorro returned it to the porter clerk.m. Civil Case R-10188). he would be left with no alternative but to file suit. Ong Yiu wired PAL Cebu demanding the delivery of his baggage before noon the next day.00. the Supreme Court gave due course to the Petition. Upon inspection. aside from two gift items for his parents-in-law. Ong Yiu sent a tracer letter to PAL Cebu inquiring about the results of the investigation which Messrs. the “maleta” was opened. and stating that PAL’s gross negligence had caused him undue inconvenience. anxiety and extreme embarrassment. Dagorro examined the lock. Ong Yiu asked for postponement of the hearing of Civil Case 1005 due to loss of his documents. and that he be compensated in the sum of P250. At 10:00 p. Maximo Gomez. all of PAL Cebu. which was granted by the Court. Navarsi and Agustin had promised to conduct to pinpoint responsibility for the unauthorized opening of the “maleta”.00. Ong Yiu refused to accept the luggage. paged Ong Yiu.00. The porter clerk. and it opened. Dagorro then delivered the “maleta” to Ong Yiu. Ong Yiu went to the Bancasi Airport to inquire about his luggage. of the same afternoon. Jose Yap and Atty. pressed it. Cebu. In the presence of Mr.

2d 483. wounded feelings. and PAL exerted due diligence in complying with such duty. Ong Yu is neither entitled to exemplary damages. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith. The one who adheres to the contract is in reality free to reject it entirely. Trans World Airlines. Contract of adhesion While it may be true that Ong Yiu had not signed the plane ticket. however.Haystacks (Berne Guerrero) Bad faith means a breach of a known duty through some motive of interest or ill will. and valid and binding upon the passenger regardless of the latter’s lack of knowledge or assent to the regulation”. 144 N. fright. mental anguish.00 and additional charges are paid pursuant to Carrier’s tariffs. 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. reckless.000. under the circumstances. Had Ong Yiu waited or caused someone to wait at the Bancasi airport for the arrival of the morning flight. 103 Ohio App. in regards which it has been said that contracts of adhesion wherein one party imposes a ready made form of contract on the other. Condition of carriage printed at back of plane ticket The pertinent Condition of Carriage printed at the back of the plane ticket reads “8. nor exemplary damages In the absence of a wrongful act or omission or of fraud or bad faith. and similar injury. Ong Yiu not entitled to moral damages. 2. of 26 August 1967. 6.m. exemplary damages can be granted if the defendant acted in a wanton. The telegram was dispatched by petitioner at around 10:00 p. At that time the luggage was already to be forwarded to Butuan City. as the plane ticket in the present case. social humiliation. moral shock.00. It is what is known as a contract of “adhesion”. 2d 878.W. 3.. “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. he is nevertheless bound by the provisions thereof. American Airlines. which has not been proven in the present case. he gives his consent. 2004 ( 181 ) . or malevolent manner.00 for each ticket unless a passenger declares a higher valuation in excess of P100. serious anxiety. PAL had not acted in bad faith. if he adheres. are contracts not entirely prohibited. The PAL supervisor at Mactan Airport was notified of it only in the morning of the following day. 8. The total liability of the Carrier for lost or damaged baggage of the passenger is LIMITED TO P100.” 4. besmirched reputation. . Article 2217 NCC Article 2217 of the Civil Code provides that “Moral damages include physical suffering.” 5. such damages are justly due. Randolph vs.E. In contracts. moral damages may be recovered if they are the proximate result of the defendant’s wrongful act of omission. Rosenchein vs. Inc. Though incapable of pecuniary computation.” 7. Limitation of liability to agreed valuation not contrary to law. fraudulent. . 349 S. Ong Yiu is not entitled to moral damages. but not in excess. BAGGAGE LIABILITY . of a total valuation of P1.” Transportation Law. “Such provisions have been held to be a part of the contract of carriage. It was the duty of PAL to look for Ong Yiu’s luggage which had been miscarried. oppressive. he would have been able to retrieve his luggage sooner. 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. 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. American Airlines And as held in Randolph v. 172. as provided for in Article 2232 of the Civil Code.

Status OK. in turn.00 for the value of the two (2) suit cases. They are printed in reasonably and fairly big letters. and he. Romero (J): 3 concur. 1 concur in result Facts: On 16 April 1989. Considering. must be fully aware of these conditions. Ong Yiu not having declared a greater value. Mahtani checked in at the PAL counter in Manila his two pieces of luggage containing his clothings and personal effects. P50. Gumar to prepare his travel plans. ordering BA to pay Mahtani the sum of P7. promulgated on 22 August 1974. specifically on 11 June 1990. and upon arrival in Hongkong he had to take a connecting flight to Bombay on board BA. confident that upon reaching Hongkong. The Court dismissed BA’s third party complaint against PAL. Besides. had already become final and executory since no appeal had been interposed therefrom within the reglementary period. and not having called the attention of PAL on its true value and paid the tariff therefor. he obtained the services of a certain Mr. CA (GR 121824. the trial court rendered its decision in favor of Mahtani.00 representing the value of the contents of Mahtani’s luggage. Moreover. Mahtani filed his complaint for damages and attorney’s fees against BA and Mr. 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. no serious prejudice has been caused PAL. Manila [MNL]. Attached to her Motion was an Affidavit of Ong Yiu’s law partner reciting facts constitutive of excusable negligence. Status OK.” Back in the Philippines.Unfortunately.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. BA 19M. PR 311 Y. PR 310Y. he cannot be permitted a recovery in excess of P100. Transportation Law. 16 April. it is best that technicality yields to the interests of substantial justice. India. In anticipation of his visit. 16 April. 23 April. After appropriate proceedings and trial.Haystacks (Berne Guerrero) 9. Gumar before the trial court (Civil Case CEB-9076).000. passengers are advised not to place valuable items inside their baggage but “to avail of our V-cargo service. being a lawyer and businessman. 1730H. Prior to his departure. on 4 March 1993.000. 0840H. 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. The latter. Status OK.” She then filed a Motion for Reconsideration over the opposition of PAL which alleged that the Court of Appeals Decision. After patiently waiting for his luggage for one week. Besides. No declaration of greater value nor payment of tariff for value of luggage The liability of PAL for the loss. considering the demise of Ong Yiu himself. [69] British Airways vs. therefore. 2004 ( 182 ) .00. Ong Yiu had been a frequent passenger of PAL from Cebu to Butuan City and back. in the last analysis. who acted as his own counsel. 29 January 1998) Third Division. Hongkong [HKG]. Mahtani had to take a flight to Hongkong via Philippine Airlines (PAL). BA finally advised him to file a claim by accomplishing the “Property Irregularity Report. 10. Under the circumstances. that Ong Yiu had failed to declare a higher value for his baggage. US$400. The validity of the stipulation is not questioned by Ong Yiu. the same would be transferred to the BA flight bound for Bombay. Hongkong [HKG] BA 20M.” 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.00 per baggage. Bombay [BOM]. 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. in accordance with the stipulation written on the back of the ticket is limited to P100. 2100H.” Since BA had no direct flights from Manila to Bombay. purchased a ticket from British Airways (BA) where the following itinerary was indicated (Manila [MNL]. he was told that the same might have been diverted to London. GOP Mahtani decided to visit his relatives in Bombay. when Mahtani arrived in Bombay he discovered that his luggage was missing and that upon inquiry from the BA representatives. and are easily readable.

the latter has the right to object. Further. such tariff being binding on the passenger regardless of the passenger’s lack of knowledge thereof or assent thereto. however. 5. In determining the amount of compensatory damages in this kind of cases. No blind reliance on adhesion contracts. Declaration of higher value needed to recover greater amount. such right is a mere privilege which can be waived. Article 22(2) of the Warsaw Convention provides that “In the transportation of checked baggage and goods. This doctrine is recognized in this jurisdiction. 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. the appeal by certiorary. Hence. 2004 ( 183 ) . lest Transportation Law. a special declaration of the value at delivery and has paid a supplementary sum if the case so requires. 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. affirmed the trial court’s findings in toto. BA appealed to the Court of Appeals. Neglect or malfeasance by the carrier’s employees could predictably furnish bases for an action for damages. it is imbued with public interest. without any objection. The Supreme Court modified the decision of the Court of Appeals. 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. hence. Herein. Benefits of limited liability subject to waiver The Court. with costs against BA. 6. 1. the objection must be made at the earliest opportunity. 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. unless he proves that the sum is greater than the actual value to the consignor at delivery. namely: a contract to deliver a cargo or merchandise to its destination and a contract to transport passengers to their destination. at the time the package was handed over to the carrier. 3. the Court has assessed the airlines’ culpability in the form of damages for breach of contract involving misplaced luggage. However. 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. reinstating the third-party complaint filed by British Airways dated 9 November 1990 against Philippine Airlines. which however. Claimant must prove existence of factual basis for damages As in a number of cases.” 4. 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. has ruled against blind reliance on adhesion contracts where the facts and circumstances justify that they should be disregarded. 2. Necessarily. the liability of the carrier shall be limited to a sum of 250 francs per kilogram. A business intended to serve the travelling public primarily. on 7 September 1995. given the foregoing postulates. the law governing common carriers imposes an exacting standard. Right to object actually a mere privilege that can be waived. unless the consignor has made. No costs. Culpability of airline for lost damages. 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.Haystacks (Berne Guerrero) Dissatisfied.

Nature of third party complaint. thus. 12. 10. 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. and the latter the agent. Therefore. The third-party complaint is actually independent of and separate and distinct from the plaintiff’s complaint. is one of agency Both BA and PAL are members of the International Air Transport Association (IATA). The proper time to make a protest or objection is when. the Court of Appeals erred when it opined that BA. its agent or sub-contractor. 7. Were it not for this provision of the Rules of Court. carriage to be performed hereunder by several successive carriers is regarded as a single operation. factual findings of the trial court. in respect of the plaintiff’s claim. and that if not so made it will be understood to have been waived. 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. Gonda In the early case of Abrenica v. Agent responsible for any negligence in performance of its function. Proper time to object. 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. are entitled to great respect. 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. BA has precisely failed in this regard. or may be inferred. In fact. may be brought into the case with leave of court. Transportation Law. from the question addressed to the witness. 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. indemnity.Haystacks (Berne Guerrero) silence when there is opportunity to speak may operate as a waiver of objections. its counsel failed not only to interpose a timely objection but even conducted his own cross-examination as well.” Herein. the contractual relationship between BA and PAL is one of agency. Herein. by the defendant. Gonda. Abrenica vs. a finding not reviewable by the Supreme Court. Firestone Tire Rubber vs. subrogation or any other relief. 9. Factual findings of trial court entitled to great respect Needless to say. to compound matters for BA. herein. had no cause of action against PAL. its ruling regarding the amount is assuredly a question of fact. Hence. since it was the one which issued the confirmed ticket. 8.”) It is undisputed that PAL. Contractual relationship between BA and PAL. Herein. the latter merely endorsing the Manila to Hongkong leg of the former’s journey to PAL. it would have to be filed independently and separately from the original complaint by the defendant against the third-party. 11. wherein member airlines are regarded as agents of each other in the issuance of the tickets and other matters pertaining to their relationship. or from the presentation of proof. in transporting Mahtani from Manila to Hongkong acted as the agent of BA. both members of the IATA. or from the answer thereto. being the principal. a task within the competence of the Court of Appeals. the former being the principal. as affirmed by the Court of Appeals. 2004 ( 184 ) . as its subcontractor or agent. the inadmissibility of evidence is. PAL a subcontractor or agent of BA The contract of air transportation was exclusively between Mahtani and BA. 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. since the actual value of the luggage involved appreciation of evidence.

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

Nordeutscher Lloyd In Samar Mining Company. and whether or not the actual and exemplary damages awarded by the court to him are reasonable. Co filed a complaint against PAL for damages. and thus. Purely factual issues not reviewable by the court Assignments of error. 18. (Hodges vs. Rule 45. and rendered judgment on 3 June 1986. 164 SCRA 268). however. including the one that was missing. The Court reviews only questions of law which must be distinctly set forth in the petition.000. (3) P10. In all matters not regulated by said Code.00 as attorney’s fees.e. (2) P20. Nordeutscher Lloyd (132 SCRA 529).” The court also dismissed PAL’s counterclaim for lack of merit. much less did he pay an additional transportation charge. or other special injury sustained by the passengers. sentencing PAL to pay Co the amounts of (1) P42. On 17 April 1985.00 by way of exemplary damages. 68 Phil. 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”. citing Pan American World Airways. Co. Samar Mining vs. vs. Despite the letter. the Court ruled that “the liability of the common carrier for the loss. Inc. unrelentingly called at PAL’s office in order to pursue his complaint about his missing luggage but to no avail. 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. whose finding was affirmed by the Court of Appeals. IAC not applicable In Alitalia vs. the petition for review. People. It is now for the carrier to produce the veracity of their Baggage Retrieval Report by corroborating evidence other than testimonies of their employees. 2.) Whether or not the lost luggage was ever retrieved by the passenger. Although the passenger should produce his claim tag if he had not surrendered it because there was no baggage received. with costs against PAL. it would appear that the passenger surrendered all the 9 claim checks corresponding to the 9 luggages. are factual issues which we may not pass upon in the absence of special circumstances requiring a review of the evidence. all in addition to the costs or the suit.Haystacks (Berne Guerrero) Co’s luggages to be missing. Willy Guevarra asked Co to surrender to him the nine claim checks corresponding to the nine luggages. Law of destination.000. are not reviewable by the Supreme Court (Sec. its manager for Central Baggage Services. 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. On appeal. and signed it after asking Co himself to sign the same document.. IAC (192 SCRA 9. The Supreme Court denied the petition for review for lack of merit. and on 19 July 1989. IAC. Such document is within the control of PAL and necessarily requires other corroborative evidence. In accordance with his procedure in cases of this nature. 4. 1.766. The petitioner therein did not declare a higher value for his luggage. 2004 ( 186 ) . it could not be possible for the passenger to produce the same in court. Warsaw Convention. The Regional Trial Court of Pasay City found PAL liable. which raise purely factual issues. the Court of Appeals affirmed in toto the trial court’s award. 3. on 15 April 1985. on several occasions. 178. i. destruction or deterioration of goods transported from a foreign country to the Philippines is governed primarily by the New Civil Code. Co through his lawyer wrote a demand letter to PA: through Rebecca V. PAL never found Co’s missing luggage or paid its corresponding value. the rights and obligations of common carriers shall be governed by the Code of Commerce and by Transportation Law. Santos. to the PAL officer after accomplishing the Property Irregularity Report. Hence. including the one that was missing. vs. On 3 May 1985. 2. Thus. Alitalia vs. Inc.02 by way of actual damages. Rules of Court).

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

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

it had failed to comply with applicable regulations or universally accepted and observed procedures to preclude hijacking. 4. The hijackers had already shown their willingness to kill one passenger was in fact killed and another survived gunshot wounds. the same man in charge of handcarry control did not fail to notice him and ordered him again to register his baggage. the head of the Baggage Section of PAN AM. Jorge Rapadas to request for the search of the missing luggage. As our own experience in Zamboanga City illustrates. Acts of airline and crew. 19 May 1992) Third Division. Rapadas personally followed up his claim. in the light of the circumstances of the case. Rapadas received a letter from PanAm’s counsel dated 2 August 1975 offering to settle the claim for the sum of $160. however. “the highjacking-robbery was force majeure” The evidence does fail to prove any want of diligence on the part of PAL. Rapadas filled in a Baggage Claim Blank Form. more specifically. 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. Rapadas claimed and was given all his checked-in baggages except the attache case. not in truth negligent acts “sufficient to overcome the force majeure nature of the armed robbery. Cooperation with the hijackers until they released their hostages at the runway end near the South Superhighway was dictated by the circumstances. He Transportation Law. Rapadas held Passenger Ticket and Baggage Claim Check 026394830084-5 for Pan American World Airways Inc. He also sent letters demanding and reminding the petitioner of his claim. 16 January 1975.00 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. Refusing to accept this kind of settlement. but without declaring its contents or the value of its contents. or that. he sent his son. 2004 ( 189 ) . Herein. the acts of the airline and its crew cannot be faulted as negligence. and that the particular acts singled out by Quisumbing and Loeffler as supposedly demonstrative of negligence were.Haystacks (Berne Guerrero) latest combined government and airline industry measures. Gutierrez Jr. Under the facts. The lives of the rest of the passengers and crew were more important than their properties. Rapadas filed the instant action for damages on 1 October 1975. (J): 4 concur Facts: On 16 January 1975. 3. He was given a Baggage Claim Tag P-749-713. while complying with requirements of government agencies. For fear that he would miss the plane if he insisted and argued on personally taking the valise with him. For several times. he called up Mr. Upon arriving in Manila on the same date. PanAm required the Rapadas to put the request in writing. Thereafter. While standing in line to board the flight at the Guam airport. Jose K. PanAm exerted efforts to locate the luggage through the Pan American World Airways-Manila International Airport (PAN AM-MIA) Baggage Service. Rapadas protested pointing to the fact that other co-passengers were permitted to handcarry bulkier baggages. Rapadas was ordered by PanAm’s handcarry control agent to check-in his Samsonite attache case. He then gave his attache case to his brother who happened to be around and who checked it in for him. the use of force to overcome hijackers. Rapadas alleged that PanAm discriminated or singled him out in ordering that his luggage be checked in. that the Philippine Airlines should not do everything humanly possible to protect passengers from hijackers’ acts. results in the death and injury of innocent passengers and crew members. This does not suggest. On 30 January 1975. he acceded to checking it in. 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. However.’s (PanAm) Flight 841 with the route from Guam to Manila.” [73] PanAm World Airways vs. Panuelos. Since Rapadas felt ill on his arrival. Rapadas (GR 60673. 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.

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.00.228. and costs of the suit. 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. 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.00 and attorney’s fees of P5. Ltd. the petition for review. Paragraph 2 of Conditions of Contract sufficient notice of applicability of Warsaw limitations Herein. 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. Tonga. the Notice and paragraph 2 of the “Conditions of Contract” should be sufficient notice showing the applicability of the Warsaw limitations. whether or not there be a breach in the carriage or a transshipment. According to him. Warsaw Convention. 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.000. even if that State is not a High Contracting Party. 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. and reversed and set aside the decision of the Court of Appeals. The trial court also dismissed PanAm’s counterclaim. Thus. P10.. Carriage between two points within the territory of a Transportation Law. and the costs of the suit. 2004 ( 190 ) .00. Hence. Notice of limited liability in airline ticket Herein. the place of departure and the place of destination. as amended. Furthermore. who facilitated the issuance of the tickets on credit). See also notice headed “Advice to International Passengers on Limitation of Liability. 1. it scrutinized all the claims of Rapadas. He placed the value of the lost attache case and its contents at US$42.000 per passenger). The court rejected the claim of PanAm that its liability under the terms of the passenger ticket is only up to $160.90 and 100 paengs (Tongan money). It discredited insufficient evidence to show discriminatory acts or bad faith on the part of PanAm. However. The trial court ordered PanAm to pay Rapadas by way of actual damages the equivalent peso value of the amount of $5.00 in attorney’s fees. the loss resulted in his failure to pay certain monetary obligations. according to the agreement between the parties.” (The latter notice refers to limited liability for death or personal injury to passengers with proven damages not exceeding US $75. 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. “(2) For the purposes of this Convention.90.000. The lower court ruled in favor of complainant Rapadas after finding no stipulation giving notice to the baggage liability limitation. the expression ‘international carriage’ means any carriage in which. paragraph 2 The Warsaw Convention. 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. failure to remit money sent through him to relatives. nominal damages in the amount of P20. Faupula (of the Union Steam Ship Company of New Zealand. On appeal.00 or its equivalent in Philippine Currency at the time of actual payment. specifically provides that it is applicable to international carriage which it defines in Article 1. The Supreme Court granted the petition. Article 1.403. the Court of Appeals affirmed the trial court decision. 2 as follows.” 2. apart from the evidence offered by the airline.000. damage or destruction to a passenger’s luggage. 3. 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 Court ordered PanAm to pay Rapadas damages in the amount of US$400. 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.. The passenger ticket complies with Article 3. he cannot avoid the application of the liability limitations. (See Sweet Lines. 5. par. was expected to be vigilant insofar as his luggage is concerned. CA. 1(c). 172. 2d 483. 349 S. The passenger. Ong Yiu vs. Inc. In the face of facts and circumstances showing they should be ignored because of their basically one sided nature. 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. 2004 ( 191 ) . Rapadas manifested a disregard of airline rules on allowable handcarried baggages. supra.” 6. American Airlines. Herein.W. Court of Appeals. v. IAC As held in the case of Ong Yiu v. Blind reliance not encouraged While contracts of adhesion are not entirely prohibited. Nevertheless. safe and practical custom among air carriers to indicate beforehand the precise sums equivalent to those fixed by Article 22 (2) of the Convention. 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. par. Trans World Airlines. And as held in Randolph v. as the plane ticket in the case at bar. is such a detailed notice of baggage liability limitations required. he gives his consent. in regards which it has been said that contracts of adhesion wherein one party imposes a ready made form of contract on the other. No detailed notice of baggage liability required. Passenger ticket complies with Article 3. Intermediate Appellate Court (164 SCRA 268 [1988]) that “It (plane ticket) is what is known as a contract of ‘adhesion’. are contracts not entirely prohibited. 144 N. the baggage check is combined with the passenger ticket in one document of carriage. Inc. If the passenger fails to adduce evidence to overcome the stipulations. 2d 878. 103 Ohio App. or which has not effectively denounced the Convention [Article 40A (1)])” 4. 2) Herein. 368-369 [1978]) 8. it should become a common. and PanAm vs. Teves. as amended. The one who adheres to the contract is in reality free to reject it entirely. par. 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. 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. 83 SCRA 361. 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. upon contracting with the airline and receiving the plane ticket. In attempting to avoid registering the luggage by going back to the line. Contracts of adhesion not prohibited. Contracts of adhesion. and reiterated in Pan American World Airways v. ‘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. 9. 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. Rosenchein v. (Article 4. if the passenger’s journey involves an ultimate destination or stop in a country other than the country of departure.E. 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.’” 7. Article 22 (2) of Convention Nowhere in the Warsaw Convention. if he adheres.” (“High Contracting Party” refers to a state which has ratified or adhered to the Convention. the Court does not hesitate to rule out blind adherence to their terms. neither is a blind reliance on them encouraged.

however. if not impossibility.00 considering the resort to the Court of Appeals and the Supreme Court. Lost luggage considered as unchecked luggage. 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. 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.90 and 100 paengs. the Court treats the lost bag as partaking of involuntarily and hurriedly checked-in luggage and continuing its earlier status as unchecked luggage. the whole or part of the court costs and other expenses of litigation incurred by the plaintiff. Reason behind limited liability clauses By no means is it suggested that passengers are always bound to the stipulated amounts printed on a ticket. That the attache case was originally handcarried does not beg the conclusion that the amount of $4. however. The court had doubts as to the total claim. Rapadas was not allowed to handcarry the lost attache case.00 as a higher value was not declared in advance and additional charges were not paid. Transportation Law. The Court notes. supra) Otherwise.90 as the amount lost. No proof of arbitrary behavior.000.Haystacks (Berne Guerrero) exclude the application of limited liability. If Mr. Pan Am offered to pay $160. 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. raise the award to P10. 2004 ( 192 ) . an airplane will not depart meantime that its own employee is asking a passenger to comply with a safety regulation. of establishing with a clear preponderance of evidence the contents of a lost valise or suitcase. Carrier not liable for discrimination or mistreatment Passengers are also allowed one handcarried bag each provided it conforms to certain prescribed dimensions. 13. 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. it will always be the word of a passenger against that of the airline. the Court will not hesitate to disregard the fine print in a contract of adhesion.000. 10.” The Court. Since the checking-in was against the will of Rapadas. the trial court found for only US$5. 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. The Court simply recognize that the reasons behind stipulations on liability limitations arise from the difficulty. found in a contract of adhesion. the Court cannot hold the carrier liable because of arbitrariness. $400. 12. That provision states that the limits of liability prescribed in the instrument “shall not prevent the court from awarding. or printed elsewhere but referred to in handouts or forms.00. that an amount of $400. 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.403. Teves. Unless the contents are declared.00.00 per passenger is allowed for unchecked luggage. Moreover. Article 22 (4) of the Warsaw Convention.750. v. discrimination. Absent such proof.000. 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. or mistreatment. 14. as amended does not precluded an award of attorney’s fees. 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. At $20.00 damages. in accordance with its own law.228. 15. (See Sweet Lines Inc.00 per kilogram. in addition. 11. there is no factual basis for the grant of P20.00 in cash could have been placed inside. The fair liability under PanAm’s own printed terms is $400.00 instead of $160 The lost luggage was declared as weighing around 18 pounds or approximately 8 kilograms. It may be noted that out of a claim for US$42. Had he not wavered in his decision to register his luggage.

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

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

. Travelling public should be afforded protection and duties of common carriers enforced Under the peculiar circumstances of the case. which altogether necessarily subjected him to ridicule. PAL acted in bad faith in disregarding its duties as a common carrier to its passengers and in discriminating against Pantejo. 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. 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. is breached. Governor of the Kiwanis Club of Surigao. PAL acted in bad faith Herein. It remains uncontroverted that at the time of the incident. an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum.Haystacks (Berne Guerrero) 7. et al. They are awarded only to allow the former to obtain means. 9. Alitalia Airways vs. CA. Surigao del Norte Chapter. Eastern Shipping Lines vs. perforce. 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. where the demand is established with Transportation Law. not constituting a loan or forbearance of money. It is high time that the travelling public is afforded protection and that the duties of common carriers. however. Herein. Purpose of moral damages Moral damages are emphatically not intended to enrich a plaintiff at the expense of the defendant. vs. except for attorney’s fees and costs of suit. Worse. and that he is a member of the Philippine Jaycee Senate.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. Pantejo was then the City Prosecutor of Surigao City. Interest computed from date of rendition of judgment and not from filing of complaint. Surigao Chapter. 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. 10. moral and exemplary damages just and equitable. No interest. Refusal of Pantejo of offered amount justified Herein. The rule has been laid down in Eastern Shipping Lines. 11. the awards for actual. amount to bad faith which entitles the passenger to the award of moral damages. a past Master of the Mount Diwata Lodge of Free Masons of the Philippines. However. 8. for the reasons meticulously analyzed and thoroughly explained in its decision. shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. member of the Philippine National Red Cross. Court of Appeals. Awards for actual. such inattention to and lack of care by the airline for the interest of its passengers who are entitled to its utmost consideration. et al. It was even oblivious to the fact that Pantejo was exposed to humiliation and embarrassment especially because of his government position and social prominence. particularly as to their convenience. 2004 ( 195 ) . shame and anguish. diversion. past Lt. 12. moral and exemplary damages granted in the judgment of the lower court. As held in Alitalia Airways vs. His refusal to accept the P300. Discriminatory act makes PAL liable for moral damages. or amusements that will serve to alleviate the moral suffering he has undergone due to the defendant’s culpable action and must. substantial damages do not translate into excessive damages. It may even be said that the amounts. and past Chairman of the Boy Scout of the Philippines. that “when an obligation. Inc. be proportional to the suffering inflicted. 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. are just and equitable. long detailed in our previous laws and jurisprudence and thereafter collated and specially catalogued in our Civil Code in 1950. Accordingly. be enforced through appropriate sanctions. 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.

be on the amount finally adjudged.” This is because at the time of the filling of the complaint. Nueva Ecija.00 attorney’s fee. A & J Trading and Julio Recontique for damages in the RTC of Bulacan. Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made. hence. Burden of Proof Transportation Law. without costs. They rushed her to the provincial hospital in Cabanatuan City where she was given emergency treatment. but it was too late.74.. the trial court found Baliwag Transit.. Leticia sued as an injured passenger of Baliwag and as mother of Allan. Diligence required. owned by A & J Trading. 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. A & J Trading and Recontique to pay jointly and severally the Garcia spouses (1) P25. Inc. 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. parked at the shoulder of the national highway. the suit initiated by his parents in his favor. respectively.00 moral damages. the amount of the damages to which Pantejo may be entitled remains unliquidated and not known.m. Allan Garcia. 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. 1169. Julio Recontique.000. The truck driver. 15 May 1996) Second Division. and (5) P30. she was transferred to the National Orthopedic Hospital where she was confined for more than a month. At the time of the complaint. were then replacing a flat tire. and only after the presentation of proof thereon. Allan.00. in Malimba. On appeal.000. 1.000.00 hospitalization and medication fee. Santiago even carried animated conversations with his co-employees while driving. 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). Spouses Antonio and Leticia Garcia sued Baliwag Transit. A kerosene lamp appeared at the edge of the road obviously to serve as a warning device. Leticia Garcia. The trial court ordered Baliwag. Santiago’s passengers urged him to slow down but he paid them no heed. assessed and determined by the court. He was also given emergency treatment at the provincial hospital.Haystacks (Berne Guerrero) reasonable certainty. the bus passengers shouted “Babangga tayo!”. and his helper. (3) P2. Duty of a common carrier.000. as the shoulder of the road was too narrow to accommodate the whole truck.00 and loss of earnings to P300. (4) P50. Allan was a minor.017. His bus rammed into the stalled cargo truck. Hence. 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. the petition for certiorari. Leticia suffered a fracture in her pelvis and right leg. 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. Arturo Escala. Inc. (2) P450. They took the seat behind the driver.000.00 for the hospitalization of their son Allan Garcia. boarded Baliwag Transit Bus 2036 bound for Cabanatuan City driven by Jaime Santiago. in any case.00 loss of earnings in eight (8) years. It caused the instant death of Santiago and Escala. When the danger of collision became imminent. At about 7:30 p. and injury to several others. She underwent an operation for partial hip prosthesis. until it is definitely ascertained. the bus passengers saw a cargo truck. Its left rear portion jutted to the outer lane. The actual base for the computation of legal interest shall. Presumption of negligence.000. CA (GR 116110. and her 5-year old son. broke a leg. Gapan. Leticia and Allan Garcia were among the injured passengers. After 3 days. Puno (J): 4 concur Facts: On 31 July 1980. the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art.000. 2004 ( 196 ) . After hearing. Santiago stepped on the brake. on the other hand. [75] Baliwag Transit vs.

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

Leticia was given moral damages as an injured party. making his testimony of little probative value. Leticia was engaged in embroidery.017. Leticia and Allan experienced physical suffering. through its agent.74.00.000. She was confined at the National Orthopedic Hospital for 45 days. 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. 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. 10. it would be improbable for the driver. Leticia underwent an operation to replace her broken hip bone with a metal plate. Without doubt. Again.00 representing Leticia’s lost earnings is reasonable.000 as hospitalization and medical fees not supported by evidence.000. herein. Considering the nature and extent of her injuries and the length of time it would take her to recover. To be sure. 8. Moreover. The Garcias presented receipts but their total amounted only to P5. 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. 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. Thus. is not supported by the evidence on record. 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. 6. 9. 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. The evidence shows the gross negligence of the driver of Baliwag bus which amounted to bad faith. the Court reduced the actual damages for medical and hospitalization expenses to P5.74. being the conductor of Baliwag Transit Inc. 7. moral damages are recoverable if the carrier. as hospitalization and medical fees. but must depend upon competent proof that damages have been actually suffered.00 per month. the award of moral damages to Antonio and Leticia Garcia was not in their capacity as parents of Allan. Investigator’s testimony therefore did not confirm nor deny the existence of such warning device. In a breach of contract of carriage. earning P5. Reduced to P5. 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.000.00. the Court found it proper that Baliwag should compensate her lost income for 5 years. Leticia testified as to the extra amount spent for her medical needs but without more reliable evidence. The court cannot rely on uncorroborated testimony whose truth is suspect.017.74 The award of P25. The young Allan was also confined in the hospital for his foot injury. To prove actual damages. Award for amount representing lost earnings reasonable The award of P300. mental anguish and serious anxiety by reason of the accident. without the kerosene nor the torch in front of the truck. 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. This being so. Award of moral damages in accord with law The award of moral damages is in accord with law. Contrary to the contention of Baliwag. Award of P25. Her injuries forced her to stop working. there were already many people surrounding the place. among the testimonies offered by the witnesses who were present at the scene of the accident.000. Allan was also Transportation Law. 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. acted fraudulently or in bad faith. witness including the bus conductor himself admitted that the passengers shouted. Before the accident.017. 2004 ( 198 ) . her lone testimony cannot justify the award of P25. the best evidence available to the injured party must be presented.

impleading either PNOC or PNOC Shipping. Later. PNOC and PNOC Shipping for the death of her husband Manuel Ciocon. ordering (a) Negros Navigation and Capt.” a barge-type oil tanker of Philippine registry.00 for the death of their parents. the M/V “Don Juan. Negros Occidental. The children prayed for actual damages of not less than P100. (Negros Navigation) left Manila bound for Bacolod with 750 passengers listed in its manifest. with a gross tonnage of 1. wherein Negros Navigation and Capt. the sea was calm. Given the complexity of the case and the amount of damages involved. Roger Santisteban. left Amlan. the weather fair and visibility good. another of the luckless passengers of the “Don Juan. Award of attorney’s fees justified The award of attorney’s fees is justified. was filed in the same court by Lilia Ciocon claiming damages against Negros Navigation.. (b) each of Negros Navigation PNOC/PNOC Shipping to pay Ciocon the sum of P100. Santisteban are held Transportation Law. Violeta (Acervo). owned and operated by the Negros Navigation Co.” an inter-island vessel.Haystacks (Berne Guerrero) granted moral damages as an injured party but because of his minority. PNOC and PNOC Shipping withdrew their appeal citing a compromise agreement reached by them with Negros Navigation. The 2 cases were consolidated and heard jointly by the Regional Trial Court of Quezon City. Another complaint (Civil Case Q-33932). against Negros Navigation and Capt. whose bodies were never found despite intensive search by their children. As a result of this collision. the award of attorney’s fee for P10. 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. Jose. 11. also of Philippine registry. and Ofelia (Javier).000. CA (GR 88052. owned by the Philippine National Oil Company (PNOC) and operated by the PNOC Shipping and Transport Corporation (PNOC Shipping). Lilia. [76] Mecenas vs. the sum of P15.000. 14 December 1989) Third Division. of 22 April 1980. of 2. plus costs of the suit. At about 1:00 p. too. When the collision occurred. however. the M/V “Don Juan” sank and hundreds of its passengers perished. Santisteban jointly and severally liable to pay the Mecenas. In time.. of that same day. 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.00 as well as moral and exemplary damages in such amount as the Court may deem reasonable to award to them. The complaint for damages was instituted by the Garcia spouses on 15 December 1982. Orlando. plus costs of the suit.241. Negros Navigation.m.000.31 tons gross weight.m.000. after trial. and headed towards Bataan.391. Numerous pleadings were filed before the trial court.” Manuel Ciocon’s body.00 as and for attorney’s fees. On 17 July 1986. PNOC and PNOC Shipping appealed the trial court’s decision to the Court of Appeals. Mecenas. the award in his favor has to be given to his father who represented him in the suit. affirming the decision of the lower court with modification with respect to Civil Case 31525. The Decision was promulgated by the trial court only on 29 January 1991 or about 9 years later.000. to pay the Mecenas the sum of P15. Perfecto A.00 is just and reasonable. the trial court rendered a decision. 2004 ( 199 ) . Romeo. to pay Ciocon jointly and severally. the captain of the “Don Juan” without. the Court of Appeals rendered a decision dated 26 January 1989.000. the appellate court and to the Supreme Court. having unloaded its cargo of petroleum products. Inc. and a complete set of officers and crew members. Branch 82. On 29 December 1980. the Court of Appeals granted the motion by a resolution dated 5 September 1988.00 for the death of Manuel Ciocon. Luzviminda. Santisteban. Feliciano (J): 4 concur Facts: At 6:20 a. Capt. the sum of P400. Mecenas and Sofia P.00 as and for attorney’s fees. Among the ill-fated passengers were the spouses Perfecto Mecenas and Sofia Mecenas. following the unjustified refusal of Baliwag to settle their claim. was never found.m.68 tons. At about 10:30 p. the Mecenas filed a complaint in the then Court of First Instance of Quezon City (Civil Case Q-31525). the M/T “Tacloban City.

Don Juan steered to the right. The Court also ordered the Mecenas to pay the additional filing fees properly due and payable in view of the award made.00 for actual damages. There can be no excuse for them not to realize that. for its part.000. 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.00 as compensatory damages for wrongful death. (b) P60. 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).00. They executed maneuvers inadequate. The trial court. and too late. with such maneuvers.Haystacks (Berne Guerrero) jointly and severally liable to pay the Mecenas the amount of P100. the surviving children while not themselves passengers are in effect suing the carrier in representation of their deceased parents.00 as actual and compensatory damages and P15. The Supreme Court granted the Petition for Review on Certiorari.000.000.000. Commodore B. the contract of carriage between the Mecenas spouses as regular passengers who paid for their boat tickets and Negros Navigation. with costs against Negros Navigation and Capt. 1. 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. in a decision dated 2 March 1981. 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.00. is more appropriately regarded as grounded on contract.” Initially. which fees shall be computed by the Clerk of Court of the trial court.” They are thus equally negligent and are liable for damages.00 as attorney’s fees and the cost of the suit. (c) P307. 2. the court may award exemplary damages if the defendant acted in a wanton.000. 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. held that the “Tacloban City” was “primarily and solely [sic] at fault and responsible for the collision. The Mecenas filed a petition for review in light of the reduction of the amount of damages awarded. On Motion for Reconsideration.00 as exemplary damages making a total of P800. they will collide. 2004 ( 200 ) . to avoid collision. however. Article 2232 NCC Article 2332 of the Civil Code provides that “In contracts and quasi-contracts.000. The Court of Appeals.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. reversed and set aside the Decision of the Court of Appeals insofar as it reduced the amount of damages awarded to the Mecenas to P100.000. which liability may include liability for moral damages. and shall constitute a lien upon the judgment awarded. (d) P307. Transportation Law. 4. They were fully aware that if they continued on their course. oppressive or malevolent manner. after a review of the evidence submitted during the trial. they will meet head on.C. the Minister of National Defense reversed himself and held that both vessels had been at fault.000. restored the award granted by the trial court and augmented as follows: (a) P126.00 as moral damages. The action. Tacloban City continued its course to the left.” 5. reckless. 3. Mecenas suit based on breach of contract of carriage. fraudulent. however. and (e) P15. the Minister of National Defense upheld the decision of Commodore Ochoco. Both vessels at fault The then Commandant of the Philippine Coast Guard. Santisteban.00 as attorney’s fees. Ochoco.

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

Intention of “Tacloban City” signaled to “Don Juan” Herein. 10.” upon turning hard to port shortly before the moment of collision. cannot. or in so acting as to create such necessity for. In other words.” when the 2 vessels were only 0. “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. This circumstance. the “Don Juan. The “Tacloban City.” had it taken seriously its duty of extraordinary diligence. in other words. for the “Don Juan” could choose its own distance. Manchester Development Corp. 12.Haystacks (Berne Guerrero) could be safely carried by the “Don Juan. Visual confirmation of radar contact was established by the “Don Juan” while the “Tacloban City” was still 2. This rule. 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. In any case.” The “Don Juan’s” top speed was 17 knots. (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. she did not carry enough boats and life rafts for all the persons actually on board that tragic night of 22 April 1980. 14. in other words. The “Tacloban City. the “Don Juan” might well have avoided the collision even if it had exercised ordinary diligence merely. 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. turned (for the second time) 15x to port side while the “Don Juan” veered hard to starboard. Rule 18 like all other International Rules of the Road. a vessel discharges her duty to another by a faithful and literal observance of the Rules of Navigation.3 of a mile apart. vs. are not to be obeyed and construed without regard to all the circumstances surrounding a particular encounter between 2 vessels. and she cannot be held at fault for so doing even though a different course would have prevented the collision.” Indeed.” per its own Certificate of Inspection. a departure from the rule and acting accordingly. 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. knots. The “Don Juan” gave no answering horn blast to signal its own intention and proceeded to turn hard to starboard. however. 13. the maximum number of persons she was permitted to carry. (3) The “Don Juan” was equipped with radar which was functioning that night. that only 750 passengers had been listed in its manifest for its final voyage. signaled its intention to do so by giving 2 short blasts with its horn. 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.3. however. while that of the “Tacloban City” was 6. while it may have made the collision immediately inevitable. The “Don Juan’s” Certificate of Inspection showed that she carried life boat and life raft accommodations for only 864 persons. 11.7 miles away. 2004 ( 202 ) . CA cannot be given retroactive effect Transportation Law. at least 128 passengers on board had not even been entered into the “Don Juan’s” manifest. Route observance of International Rules of Road does not per se relieve vessel from responsibility In ordinary circumstances. In the total set of circumstances which existed. (2) The “Don Juan” carried the full complement of officers and crew members specified for a passenger vessel of her class. be viewed in isolation from the rest of the factual circumstances obtaining before and up to the collision. could have easily avoided the collision with the “Tacloban City.

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. or a total of P400. (3) moral damages — P107. Santisteban.000. Transportation Law. to tame their reckless instincts and to force them to take adequate care of human beings and their property. 18.00. The Court is prepared to use the instruments given to it by the law for securing the ends of law and public policy.000. Manchester should not be applied retroactively to the present case where a decision on the merits had already been rendered by the trial court. which has been modified and clarified in subsequent decision by the Court in Sun Insurance Office. Additional moral damages of P200.000. is the safe and reliable carriage of people and goods by sea. 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. is quite modest. Disaggregation of original award of damages The amount of damages — compensatory. One of those instruments is the institution of exemplary damages.000. the Court applies Manchester as clarified and amplified by Sun Insurance Office Ltd.00 as exemplary damages. Asuncion. of special importance in an archipelagic state like the Philippines. the complaint in the present case was filed on 29 December 1980. that is. Purpose of exemplary damages.00. Upon the other hand. herein. which embodied the doctrine in Manchester. So it is that notwithstanding the frequent sinking of passenger vessels in our waters.000. and that such additional filing fee shall constitute a lien upon the judgment. are 7 in number and that they lost both father and mother in one fell blow of fate. making a total award of P307. is dated 24 March 1988.00 x 2) — P 60. (SIOL). an additional award in the amount of P200. the law seeks to compel them to control their employees. moral and exemplary — were properly imposable upon Negros Navigation and Capt. long before either Manchester or Circular 7 of 24 March 1988 emerged. The original award of the trial court of P400.000. Circular 7 of the Supreme Court.00. 17. Herein. the Court believes that an additional amount of P200.000. would be quite reasonable. by holding that the Mecenas shall pay the additional filing fee that is properly payable given the award specified below.00 as exemplary damages. from common carriers and in creating a presumption of negligence against them.000 reasonable Considering that the legitimate children of the deceased spouses Mecenas. considering the foregoing.000. one of those ends. making a total of P307. The decision of the trial court was itself promulgated on 17 July 1986. (SIOL). (2) actual or compensatory damages in case of wrongful death (P30.00 as moral damages. even though such decision was then under appeal and had not yet reached finality. Manchester was promulgated by the Court on 7 May 1987. 16. et al. before Manchester and Circular 7 were promulgated. v. 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. In any event. 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.Haystacks (Berne Guerrero) The Manchester doctrine. Ltd.00 for moral damages. crowds of people continue to travel by sea. The bulk of our population is too poor to afford domestic air transportation. et al.00.00 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. 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.000. 15. 2004 ( 203 ) .000. (4) exemplary damages — P107. a standard which is in fact that of the highest possible degree of diligence.000. again.00. In requiring compliance with the standard of extraordinary diligence.

Several days after the accident.00.00l with costs against PAL. On 18 April 1977. PAL called back Samson to active duty as co-pilot.000.00 for moral damages. PAL filed a petition for certiorari. praying for damages in the amount of P180. CA (GR L-46558. Its motion for reconsideration of the above judgment having been denied. Thereafter.000.00 as moral damages. as in Kapalaran Bus Line v.000. instead of giving Samson expert and proper medical treatment called for by the nature and severity of his injuries.000. including issues not explicitly raised by the party affected.00 as expenses. PAL instead of submitting Samson to expert medical treatment. On attempting to land the plane at Daet airport..00 as attorney’s fees and P5.00 unearned income from the filing of the complaint.000. Samson flew as co-pilot on a regular flight from Manila to Legaspi with stops at Daet. P50. In the present case.00 as attorney’s fees and P5. The Court underscore once more.000. 2 concur in result Facts: On 8 January 1951. stating a cause of action not cognizable within the general jurisdiction of the court. 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.Haystacks (Berne Guerrero) 19.000. citing Section 8.000. Rule 51 of the Rules of Court. The Motion to Dismiss was denied in the order of 14 April 1958. Guerrero (J): 2 concur. he had been having periodic dizzy spells and had been suffering from general debility and nervousness.00 as expenses of litigation. or a total of P255. Inc. wounds and abrasions on the forehead with intense pain and suffering. Jesus filed a complaint against PAL on 1 July 1954. On 25 March 1958. 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. After the reception of evidence. 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. and inspite of the latter’s repeated request for expert medical assistance. (PAL). the airplane crashlanded beyond the runway. the trial court rendered on 15 January 1973 its decision ordering PAL to pay Samson P1988. discharged the latter from its employ on 21 December 1953 on grounds of physical disability. [77] PAL vs. however. PAL simply referred him to a company physician. Camarines Sur. Transportation Law. 31 July 1981) First Division.00. The Supreme Court affirmed the judgment of the appellate court with slight modification in that the correct amount of compensatory damages is P204. with costs against PAL. with Captain Delfin Bustamante as commanding pilot of a C-47 plane belonging to Philippine Air Lines.00 representing his unearned income. PALfiled a Motion to Dismiss on the ground that the complaint is essentially a Workmen’s Compensation claim. Capt. PAL appealed the decision to the Court of Appeals. who limited the treatment to the exterior injuries without examining the severe brain concussion of Samson. 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. et al.000. Camarines Norte and Pili.000.00 as unearned income or damages. Court may consider and resolve all issues to render substantial justice The Mecenas herein merely asked for the restoration of the P400. 2004 ( 204 ) . P50.00 award of the trial court. Jesus V. As a consequence of the brain injury sustained by plaintiff from the crash. Coronado. P20.000. or a total of P273. P20.000.000. PAL had not given him any. 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. Bustamante due to his very slow reaction and poor judgment overshot the airfield and as a result. a general medical practitioner. notwithstanding the diligent efforts of the co-pilot to avert an accident.

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

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

headache and general debility produced from said injuries.00 inasmuch as there is bad faith on the part of PAL. 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.000. 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.00 and another P18.000. When the employee’s lack of due care contributed to his death or injury.00 (1964 to 1968 compensation) makes a grand total of P204. Quasi-delict (Article 2219 [2] NCC) The Court approve the grant of moral damages in the sum of P50.00. prejudice. the compensation shall be equitably reduced.000.00 (not P120. The correct computation however should be P750 plus P300 x 12 months = P12. nay injuries and even death to all aboard the plane. 13.00 (not P198.” 15.00 as originally computed). lapse or neglect thereof will certainly result to the damage.00 a month for extra pay for extra flying time including bonus given in December every year is justified. 2004 ( 207 ) .000.” Under the facts found by the trial court and affirmed by the appellate court and under the law and jurisprudence cited and applied. 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.000. the employer shall not be answerable.00 is proper and justified.000. the latter and the employer shall be solidarily liable for compensation. passengers and crew members alike.00 as computed by the court a quo). And this must be so for any omission.000.Haystacks (Berne Guerrero) 11. or drunkenness. workmen.600 per annum x 10 years = P126. The further grant of increase in the basic pay of the pilots to P12.00 as bonuses and extra pay for extra flying time at the same rate of P300.00 a month as basic salary and P300. If a fellow-worker’s intentional or malicious act is the only cause of the death or injury. The fact that Samson suffered physical injuries in the head when the plane Transportation Law. If the mishap was due to the employee’s own notorious negligence.000. 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. Grant of compensatory damages should be P204. 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. or voluntary act. the airplane in the present case.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. unless it should be shown that the latter did not exercise due diligence in the selection or supervision of the plaintiffs fellow-worker. give everyone his due. the grant of moral damages in the amount of P50.000. 12.” 14. 16. if the death or personal injury arose out of and in the course of the employment.000. 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. and observe honesty and good faith. the employer shall not be liable for compensation.000 not P198. Court affirms award of damages under provision of Articles 1711 and 1712 NCC Having affirmed the gross negligence of PAL in allowing Capt. even though the event may have been purely accidental or entirely due to a fortuitous cause. Adding P126. mechanics or other employees.00 a month totals P78.000 annually for 1964 to 1968 totalling P60. Grant of moral damages upheld. 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.

[78] Belgian Chartering vs.Haystacks (Berne Guerrero) crash-landed due to the negligence of Capt. pp.000. Malabanan of Iriga City where he was treated for another week. Bustamante is undeniable.00 the same is likewise correct. Pilapil went to V. Quezon City where he was treated by Dr. see [36] [79] De Guzman vs. Grant of moral damages upheld. boarded Alatco Transportation Co. Luna Hospital.000. De la Cruz.’s bus bearing number 409 at San Nicolas. CA (GR 52159. CA. 20. extrajudicial or judicial. 2004 ( 208 ) . 340). hurled a stone at the left side of the bus. Award of attorney’s fees correct With respect to the award of attorney’s fees in the sum of P20. 5 SCRA 879). Inc. (2) New Civil Code is applicable. interest due shall earn legal interest from the time it is judicially demanded. a paying passenger. act with justice. 2209 and 2212 of the Civil Code govern when interest shall be computed.00 as herein computed and not P198. which hit Pilapil above his left eye. under the circumstances. Grant of moral damages upheld. Under Article 2212 of the Civil Code.00. Iriga City on 16 September 1971 at about 6:00 P. and observe honesty and good faith. on the way to Naga City. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith. 23 SCRA 1044). 107 Phil. Central Bank. PAL acted in bad faith in refusing Samson’s valid claim (Filipino Pipe Foundry Corporation vs. 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. in the exercise of his rights and in the performance of his duties. 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. Bayle. Thereunder interest begins to accrue upon demand. While said bus 409 was in due course negotiating the distance between Iriga City and Naga City. upon reaching the vicinity of the cemetery of the Municipality of Baao. Vicente. PFIC. Pilapil was taken to Dr. Considering that the sight of his left eye was impaired. and many others). Records). such damages are justly due.. justifying the recovery of moral damages. as applied by appellate court is also well-taken. 18.M. Capulong. The negligence of the latter is clearly a quasi-delict and therefore Article 2219. give everyone his due. although the obligation may be silent upon this point. a bystander along said national highway. Padilla (J): 3 concur. Alatco’s personnel lost no time in bringing Pilapil to the provincial hospital in Naga City where he was confined and treated. Samson is entitled to attorney’s fees because he was forced to litigate in order to enforce his valid claim (Ganaban vs. The correct amount of compensatory damages upon which legal interest shall accrue from the filing of the complaint is P204. Camarines Sur. Since there was no improvement in his left eye’s vision. Benguet Consolidated. 1 took no part Facts: Jose Pilapil. 17. 22 SCRA 33. 19. 30 SCRA 365. and Samson was dismissed and was forced to go to court to vindicate his right (Nadura vs. 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. Payment of legal interest from date judicial demand was made by Samson Articles 1169. De la Cruz vs. 22 December 1989) Second Division. and affirmed by the Supreme Court applying the provisions of Article 2220. 153-154. see [14] [80] Pilapil vs. Samson is still entitled to moral damages in view of the finding of bad faith or malice by the appellate court. A complaint is a judicial demand (Cabarroguis vs. an unidentified man. Despite the treatment accorded Transportation Law.000.” (CA Resolution.

because the presumption stands in the place of evidence. Thereupon. it does not.000. 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. with due regard for all the circumstances. 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. rendered judgment reversing and setting aside the judgment of the court a quo. the transportation company to reimburse Pilapil the sum of P300. and to pay the costs. and presumption of negligence. using the utmost diligence of very cautious persons. 5. from introducing evidence to fasten the negligence on the former. the petition to review on certiorari. 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. 4. From the judgment.000. 3. 1. Capulong. in a Special Division of Five. 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. Pilapil instituted before the CFI of Camarines Sur. make the carrier an insurer of the absolute safety of its passengers.00. NCC Diligence required of a common carrier. according to all the circumstances of each case. What constitutes compliance with said duty is adjudged with due regard to all the circumstances. a common carrier does not give its consent to become an insurer of any and all risks to passengers and goods. Branch I an action for recovery of damages sustained as a result of the stone-throwing incident. 2. vigilance and precaution in the carriage of passengers by common carriers to only such as human care and foresight can provide. Being a mere presumption. After trial.00. common carriers are required to observe extraordinary diligence for the safety of the passenger transported by them.” Further. the law presumes said common carriers to be at fault or to have acted negligently. 2004 ( 209 ) . representing actual and material damages for causing a permanent scar on the face and injuring the eye-sight of Pilapil. ordering further the transportation company to pay the sum of P5. Articles 1733 and 1755 Under Article 1733 of the Civil Code. and holds itself liable for any breach thereof. to Pilapil as moral and exemplary damages. for the time being. It merely undertakes to perform certain duties to the public as the law imposes. Article 1755 NCC Article 1755 of the Civil Code qualifies the duty of extraordinary care. merely relieves the latter. however. or that the injury suffered by the passenger was solely due to a fortuitous event. in creating a presumption of fault or negligence on the part of the common carrier when its passenger is injured. however. in case of death of or injuries to passengers. and ordering furthermore. Article 1756 NCC Article 1756 of the Civil Code. the Court of Appeals. Intention of the Code Inferring from the law.00.Haystacks (Berne Guerrero) to him by Dr. The Supreme Court affirmed the judgment appealed from. the court a quo rendered judgment ordering the transportation company to pay Pilapil the sum of P10. 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. On 19 October 1979.000. Hence. Neither the Transportation Law. Pilapil lost partially his left eye’s vision and sustained a permanent scar above the left eye.00 for his medical expenses and attorney’s fees in the sum of P1. Alatco Transportation appealed to the Court of Appeals (CA-GR 57354-R).

but that its liability for personal injuries sustained by its passenger rests upon its negligence. in general use by others engaged in the same occupation. and exercises a high degree of care in maintaining them in suitable condition. Herein. the presumption is rebutted and the carrier is not and ought not to be held liable. could have prevented the injury complained of. Further. 10. under the same provision. Transportation Law. 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. 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. 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. mesh-work grills covering windows of the bus. the court is not in a position to so hold. i. The carrier is not charged with the duty of providing or maintaining vehicles as to absolutely prevent any and all injuries to passengers. Sad to say. common carriers are bound to exercise extraordinary diligence in the safe transport of their passengers. 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. 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. 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 carrier cannot be charged with negligence in this respect. Congress’ role Herein. 8. 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. its failure to exercise the degree of diligence that the law requires 6. 7.” 9. 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. and therefore involving no issue of negligence in its duty to provide safe and suitable cars as well as competent employees. 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. 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.e. 2004 ( 210 ) . Standard of extraordinary diligence does not determine liability when acts of strangers directly caused the injury While as a general rule. 11. Rule of ordinary care and prudence is not exacting to require exercise of doubtful or unreasonable precautions Although the suggested precaution. 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. Presumption of fault or negligence merely a disputable presumption The presumption of fault or negligence against the carrier is only a disputable presumption. while the contract of carriage exists. 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. Where the carrier uses cars of the most approved type.Haystacks (Berne Guerrero) law nor the nature of the business of a transportation company makes it an insurer of the passenger’s safety.

Rose Heinni. During this exchange between Atty. a volunteer field agent of the Constabulary Regional Security Unit (X). conducted an investigation of the accident.00 per appearance as attorney’s fees. Mananggolo then ordered the passengers to get off the bus.20 as death indemnity. Then the bus was set on fire. Caorong. (6) compensation for loss of earning capacity in the amount of P2. and Prince Alexander Caorong (1) death indemnity in the amount of P50.00. On 18 November 1989.000.m. however. the Court of Appeals reversed the decision of the trial court. Mananggolo then shot Cabatuan on the arm.90. however.Haystacks (Berne Guerrero) [81] Fortune Express vs. seized a bus of Fortune Express at Linamon. and the corresponding counterclaim. Caorong returned to the bus to retrieve something from the overhead rack. 3 armed Maranaos who pretended to be passengers. the appeal by petition for review on certiorari. dated 28 December 1990. 18 March 1999) Second Division. Cabatuan climbed out of the left window of the bus and crawled to the canal on the opposite side of the highway. to stop the bus on the side of the highway. Generalao rendered a report on his findings to Sgt. Hence. Lanao del Norte. heard Atty. Some of the passengers were able to pull Atty. At that time. on 22 November 1989. Godofredo Cabatuan. without costs. (3) moral damages in the amount of P100. The passengers. identified as one Bashier Mananggolo. CA (GR 119756. Bravo assured him that the necessary precautions to insure the safety of lives and property would be taken. Mendoza (J): 3 concur. The leader of the Maranaos. Lanao del Norte while on its way to Iligan City. However. 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. 2004 ( 211 ) .00. the trial court dismissed the complaint.000. and (7) costs of suits. Rose Heinni. Talib Caorong. and rendered another one ordering Fortune Express to pay the Caorongs (1) P3. Cabatuan.649. but he died while undergoing operation.000. Crisanto Generalao. Reynaldo Bastasa of the Philippine Constabulary Regional Headquarters at Cagayan de Oro. At about 6:45 p. He heard shots from inside the bus. which caused him to slump on the steering wheel. stepped out of the bus and went behind the bushes in a field some distance from the highway. who had meantime regained consciousness.000. including Atty. Yasser King. adamant as they repeated their warning that they were going to burn the bus along with its driver. Upon the instruction of Sgt.399. He found that the owner of the jeepney was a Maranao residing in Delabayan. is a bus company in northern Mindanao. Transportation Law. including two Maranaos.121. (2) actual damages in the amount of P30. (2) P50. On appeal. The Supreme Court affirmed the decision of the Court of Appeals with modification that Fortune Express is ordered to pay Paulie. resulting in the death of several passengers of the jeepney. Then one of the companions of Mananggolo started pouring gasoline inside the bus.000. ordered the driver. one of the passengers. In its decision. The armed men were. operations manager of petitioner. Caorong was hit. 1 abroad on official business Facts: Fortune Express Inc. Bastasa he went to see Diosdado Bravo.00 and P500. saw that Atty. the widow of Atty.00. and on 29 July 1994. as the other held the passengers at bay with a handgun. Among the passengers of the bus was Atty. Caorong. (5) attorney’s fees in the amount of P50.000. one of the armed men was pouring gasoline on the head of the driver. Lanao del Norte and that certain Maranaos were planning to take revenge on Fortune Express by burning some of its buses.404.00. (4) exemplary damages in the amount of P100. and their minor children Yasser King. Larry de la Cruz. Caorong and the assailants. Caorong out of the burning bus and rush him to the Mercy Community Hospital in Iligan City. at its main office in Cagayan de Oro City. Atty. Fortune Express’ bus figured in an accident with a jeepney in Kauswagan. Paulie Caorong.00. and costs against Fortune Express. and Prince Alexander brought a suit for breach of contract of carriage in the Regional Trial Court of Iligan City (Branch VI).

Yobido vs. (2) the event must be either unforeseeable or unavoidable. of which it was warned. 4. 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.. thus. Herein. it is clear that because of the negligence of Fortune Express’ employees. and (4) the obligor must be free of participation in. the injury to the creditor. In Pilapil and De Guzman. in De Guzman v. 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.” 6. the Court held that to be considered as force majeure. before allowing them on board could have been employed without violating the passenger’s constitutional rights. No precautions was undertaken Herein. As the Court intimated in Gacal v. Herein. the respondents therein were not negligent in failing to take special precautions against threats to the safety of passengers which could not be foreseen. preferably with non-intrusive gadgets such as metal detectors. using the utmost diligence of very cautious persons. simple precautionary measures to protect the safety of passengers. Under the circumstances. Court of Appeals. 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. Transportation Law. Fortune Express did nothing to protect the safety of its passengers. Philippine Air Lines. This ruling applies by analogy to the present case. was not a fortuitous event which would exempt Fortune Express from liability. despite the report of PC agent Generalao that the Maranaos were going to attack its buses. (3) the occurrence must be such as to tender it impossible for the debtor to fulfill the obligation in a normal manner. it is necessary that: (1) the cause of the breach of the obligation must be independent of the human will. CA and De Guzman vs. Fortune Express took no steps to safeguard the lives and properties of its passengers. Court of Appeals. Court of Appeals. or force. Diosdado Bravo. On the other hand. 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. 2004 ( 212 ) . such as tortious or criminal acts of third persons. therefore. Vasquez vs. and. 2. In Yobido v. Pilapil vs. The absence of any of the requisites mentioned above would prevent the obligor from being excused from liability. Common carrier liable for failure to take necessary precautions In Vasquez v. The event was foreseeable. Inc. The seizure of the bus of Fortune Express was foreseeable and. it was held that the common carrier was liable for its failure to take the necessary precautions against an approaching typhoon. the seizure of the bus by Mananggolo and his men was made possible. with due regard for all the circumstances. CA do not apply In Pilapil v. 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. 3. violence. resulting in the loss of the lives of several passengers. 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. 5. the second requisite mentioned above was not fulfilled. Article 1174 of the Civil Code (Fortuitous event defined). that the necessary precautions would be taken. Court of Appeals. Article 1763 NCC. Fortune Express negligent. CA. It is clear that the cases of Pilapil and De Guzman do not apply to the present case. a common carrier can be held liable for failing to prevent a hijacking by frisking passengers and inspecting their baggages. CA. 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. is inevitable.Haystacks (Berne Guerrero) 1. such as frisking passengers and inspecting their baggages. 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. or aggravation of.

He was playing the role of the good Samaritan. Certainly. Fortune Express likewise does not question said finding of the trial court. What apparently angered them was his attempt to help the driver of the bus by pleading for his life. The Caorongs are entitled to this amount. in relation to Article 2206 thereof. let alone recklessness Herein. Fortune Express acted in a wanton and reckless manner. Since Fortune Express does not question said finding of the trial court.” Herein. oppressive.000. 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. 11. Article 1764 in relation to Article 2206 NCC Article 1764 of the Civil Code. Article 2199 NCC Article 2199 of the Civil Code provides that “except as provided by law or by stipulation. i. the “spouse. Initially fixed in Article 2206 at P3. Fortune Express liable for damages (Exemplary damages). Caorong did not act recklessly.000.000. and Prince Alexander. Caorong. the amount of the said indemnity for death has through the years been gradually increased in view of the declining value of the peso. Fortune Express liable for damages (Actual damages). Fortune Express and its employees did nothing to protect the safety of passengers. 2004 ( 213 ) . Article 2232 NCC Article 2232 of the Civil Code provides that “in contracts and quasi-contracts.00. Under the circumstances. reckless. 7. It is presently fixed at P50. and contrary to the assurance made by its operations manager that the necessary precautions would be taken. the leader of the group which had hijacked the bus. not its passengers. Rose Heinni. it is liable to the Caorongs in the said amount as actual damages. legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased.00 as moral damages for the death of Atty. the Court deems it reasonable to award private respondents exemplary damages in the amount of P100. Thus. 9. ordered the passengers to get off the bus as they intended to burn it and its driver. Caorong. the Court hold that Fortune Express is liable to the Caorongs in the amount of P100. 8. this act cannot be considered an act of negligence. fraudulent. one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved.” 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.Haystacks (Berne Guerrero) this factor of unforeseeability (the second requisite for an event to be considered force majeure) is lacking. The armed men actually allowed Atty.00 for the wake and burial of Atty. 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. in accordance with recent decisions of the Court. Caorong to retrieve something from the bus. Deceased not guilty of contributory negligence.00.00. Atty. 12. nothing was really done by Fortune Express to protect the safety of passengers. or malevolent manner. Fortune Express liable for damages (Moral damages).” The trial court found that the Caorongs spent P30.000. the court may award exemplary damages if the defendant acted in a wanton. 10.000. Article 2208 NCC Transportation Law. Fortune Express liable for damages (Indemnity for death). let alone recklessness. Yasser King. Fortune Express liable for damages (Attorney’s fees). The intended targets of the violence were Fortune Express and its employees. Article 2206 NCC Under Article 2206 of the Civil Code. Mananggolo.e. provides for the payment of indemnity for the death of passengers caused by the breach of contract of carriage by a common carrier. Despite warning that the Maranaos were planning to take revenge against Fortune Express by burning some of its buses.

Allowing for necessary living expenses of 50% of his projected gross annual income.Haystacks (Berne Guerrero) Pursuant to Article 2208. the Caorongs are entitled to attorney’s fees in that amount. the two cases were tried jointly. not in payment of liability because Transportation Law. but to remain seated.005.121. some of the passengers jumped out of the bus. Leonila and Estrella suffered serious injuries as a result of which Leonila and Estrella died at the hospital on the same day. 2004 ( 214 ) . On 17 October 1966. Leonila and Estrella. The driver maneuvered the bus safely to and against the side of the mountain where its rear end was made to rest. however. provides that in addition to the indemnity for death arising from the breach of contract of carriage by a common carrier. but that they panicked and jumped out. and Marcelo Oligan and/or breach of contract of carriage.500. Caorong was 37 years old at the time of his death. his total earning capacity amounts to P2. he had a life expectancy of 28 2/3 more years. and the bus abruptly stopped. ensuring the safety of the many passengers still inside the bus. Fortune Express liable for damages (Compensation for loss of earning capacity).90. rolling back a few moments later. that as a result. and the amount of P3. While the driver was steering the bus towards the mountainside. 1 on leave Facts: In the morning of 20 April 1963.385. and Estrella Garcia. 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. the “defendant shall be liable for the loss of the earning capacity of the deceased.” 14. daughter of Marcelo Landigin and Racquel Bocasas.404. 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.00 to the spouses Pedro Garcia and Eufracia Landingin in Civil Case D-1470. Leonila and Estrella were not thrown out of the bus. was P148. he advised the passengers not to jump. v. the Court held an award of P50. in relation to Article 2206 thereof. Herein. 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. computed based on his monthly salary of P11. Said criminal case. daughter of Pedro Garcia and Eufracia Landingin. However. Since Atty. Hence. 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.000.00 as attorney’s fees to be reasonable. Upon reaching the uphill point at Camp 8. n the recent case of Sulpicio Lines. Fortune Express is liable to the Caorongs in the said amount as compensation for loss of earning capacity.500. and the indemnity shall be paid to the heirs of the latter. it ordered Pantranco to pay to the spouses Marcelo Landingin and Racquel Bocasas in Civil Case D-1468 the amount of P6. Hence. due to the alleged negligence of Pangasinan Transport Co.00. Leonila Landingin. Court of Appeals. His projected gross annual income. [82] Landingin vs. 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.00. 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. 13. a sudden snapping or breaking of metal below the floor of the bus was heard.00 23 as a lawyer in the Department of Agrarian Reform at the time of his death. By agreement of the parties. Villamor (J): 8 concur. Inc. is pending appeal in a higher court. Article 1764 in relation to Article 2206 NCC Article 1764 of the Civil Code. In connection with the incident. attorney’s fees may be recovered when exemplary damages are awarded. however. while others stepped down. 29 May 1970) En Banc. Pangasinan Transportation (GR L-28014-15.

Transportation Law. The Supreme Court modified the judgment appealed from. 6. 660). Each of the two complaints averred that two buses. including the one in which the two deceased girls were riding. 2. 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. PANTRANCO was duty bound to carry its passengers “safely as far as human care and foresight can provide. were hired to transport the excursionist passengers from Dagupan City to Baguio City. which in turn resulted in panic among some of the passengers. et al. 104 Phil. vs. 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. and that the said two passengers did not reach destination safely. however. as damages for breach of contracts. circuitous and ascending roads. Pantranco appealed. Civil Code. as required by Article 1755. It does not appear.Haystacks (Berne Guerrero) of any negligence on the part of the defendants but as an expression of sympathy and goodwill. and it would be traversing mountainous.. et al. Presumption of negligence when a passenger dies or is injured When a passenger dies or is injured. Smith (45 Phil.” (Article 1755. Paras.” is in large measure conjectural and speculative. 2004 ( 215 ) .) 3. the presumption is that the common carrier is at fault or that it acted negligently (Article 1756). 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.” (Necesito. 75) 4. that the carrier gave due regard for all the circumstances in connection with the said inspection. and was arrived at without due regard to all the circumstances. with a due regard for all the circumstances. which caused the malfunctioning of the motor. In Lasam vs. and return. Thus the entire bus. The bus in which the deceased were riding was heavily laden with passengers. 5. 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. would naturally be taxed more heavily than it would be under ordinary circumstances. 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). 1. 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. 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. using the utmost diligence of very cautious persons. with costs against PANTRANCO. and ordered PANTRANCO to pay the spouses Landingin and spouses Garcia the amounts stated in the judgment appealed from. including its mechanical parts. the Court held that an accident caused by defects in the automobile is not a caso fortuito. Duty of a common carrier As a common carrier. with interest thereon at the legal rate from the date of the filing of the complaints. the cross-joint in question was duly inspected and found to be in order. 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.

as defendants and third-party plaintiff. On 10 April 1957. Inc. Dizon (J): 7 concur. said party took the present appeal. for exemplary or corrective damages in the sum of P5. The Supreme Court reversed and set aside the order of dismissal appealed from.Haystacks (Berne Guerrero) [83] California Lines vs. Josephine W. 5 days thereafter. Civil case 27906 dismissed without prejudice Civil Case 27906 was definitely terminated in its entirety by the order of dismissal dated 11 December 1956. Victor de los Santos and Celedonio N. In spite of the opposition filed by the California Lines. which was granted by the lower court on 2 February 1956. for loss of business goodwill of the Ricalinda Bus in the sum of P10. After the hearing of Civil Case 27906 had started. Morta.00 and for attorney’s fees in the sum of P5. Amparo de los Santos. the California Lines filed a third-party complaint against the owner of the other bus in the accident. 2 took no part Facts: In Civil Case 27906 of the CFI of Manila (Branch XVII). 2004 ( 216 ) . the California Lines commenced Civil Case 32298 against Amparo de los Santos. That the whole case was deemed terminated is also clearly inferable from the fact that on 20 August 1957. caused to California Lines’ bus were due to the recklessness and lack of prudence and precaution of its own driver. upon finding that the Ricalinda Bus had no juridical personality because it was a mere trade name. the lower court. 30 December 1961) First Division.00. granted the motion to dismiss the complaint. which merely made the dismissal of the thirdparty complaint without prejudice. the California Lines. in order to hold them liable for any amount which Regalado may be entitled to collect upon her complaint. and filed a counterclaim therein for moral damages in the sum of P10. with costs. but the court denied the motion. 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. alleged that the damages. Ricalinda Bus. 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. Subsequently. and remanded the case to the lower court for further proceedings in accordance with law. upon the ground relied upon in support thereof. In its answer to the complaint the California Lines.000. as amended by the other issued on 2 February 1956. and that the parties and cause of action therein involved are the same as those in Civil Case 32298. Upon denial of the motion for reconsideration filed by the California Lines on 22 August 1957.00. Transportation Law. if at all. Victor de los Santos. without pronouncement as to costs.000. together with her husband. counterclaims. 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. Celedonio N.00. but the same was denied by the court on the ground that said order was already sufficiently clear. Regalado sought to recover from California Lines. de los Santos. The former provided for the dismissal of “this case” — meaning all the claims..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. which collided with another belonging to Ricalinda Bus. Morta in the CFI of Manila (Branch 1) to recover damages suffered by it as a result of the collision.000.000. al. interposed a cross-claim against its co-defendant. 1. In their answer filed on 2 May 1957. Inc. and her driver. Inc. Regalado and de los Santos entered into an amicable settlement.000. after unsuccessfully seeking a clarification of the original order of dismissal. On 14 January 1957. for which reason the trial court dismissed the case on 11 December 1956. et. and/or the Ricalinda Bus. 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. a domestic corporation engaged in the business of operating passenger buses. damages and attorney’s fees in the total sum of P28. California Lines filed a motion to set his third-party complaint for trial. cross-claims and third-party complaint involved in the case — and this was reiterated in the order of 2 February. de los Santos (GR L-13254. in its order of 17 July 1957.

Inc. as a consequence of the incident Estrada’s wife sustained a fractured left humerus (pulmonary) embolism and shock due to respiratory failure. Endino. 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. owned and operated by Corazon Ramirez Uy and driven by Lucio Galaura. When the California Lines discovered that the Ricalinda Bus was a mere trade name and had no juridical personality. 4. alleged that the proximate and only cause of the accident was the negligence of third persons (the drivers. in reality. from 29 August 1955 to 8 October 1955.00 a day. These third-party defendants settled the claim of Regalado for damages. as owner of the Ricalinda Bus vehicle that collided with the one owned by the California Lines. and it is obvious that said claim is entirely different from. and a Ford pick-up truck [TRU 420]). 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.435. namely. the amount of the damage and value of the repairs being P1. therefore. Consolacion (GR L-40948. It is obvious. the said sum of P35. Defendants. 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.00. in view of the death of his wife while she was a passenger of the vehicle. or a total of P1. in their answer. Simeona Estrada. she was brought to the San Pedro Hospital where she died. more or less. recovery of the damages suffered by the California Lines. 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. Gregorio Estrada filed a complaint for damages against Uy and Galaura for breach of their obligations as a common carrier.700. Defendants likewise set up a counterclaim for damages by reason of Estrada’s Transportation Law.Haystacks (Berne Guerrero) 2. 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.C. Antonio (J): 2 concur. 29 June 1976) Second Division. and does not cover nor is it covered by the claim subject matter of Civil Case 32298. (IX) That as a result of the gross negligence of defendants in the maintenance.00 being the average daily net earning and profit in the operation of said passenger bus by plaintiff. 1 on leave. Mercado for repairs. the latter bus was damaged and was brought to N. heading towards the direction of the Jones Circle. Recto Avenue. 1 designated to sit in the second division Facts: On 1 January 1975. [84] Estrada vs. while said jeep was cruising along Claro M. supervision and operation of said Ricalinda Bus. was a passenger of the AC Jeep (ZE501). a cross-claim because it sought to obtain judgment ordering Amparo de los Santos principally. thus leaving nothing in this respect to the California Lines to recover from them. it obtained leave of court to file and actually filed a third-party complaint against Amparo de los Santos. her husband and their driver. Gregorio Estrada’s wife. On 14 February 1975.00. bumped a Ford pick-up truck. the plaintiff is entitled to collect exemplary or corrective damages from defendants. Danilo Ang and Rodolfo D.” 3. of a Toyota pick-up truck [TRU 221]. to pay to the latter whatever damages it may be sentenced to pay its passenger Josephine W. The fact is that the claim asserted therein was for reimbursement of whatever damages the California Lines might be sentenced to pay its passenger. (VIII) That because of the damage to said plaintiff’s passenger bus and because of the needed repairs. the amount of damages being P35. Third party complaint actually a cross-claim The third-party complaint was. more or less. 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.. Regalado. 2004 ( 217 ) .

i. Transportation Law. certain annexes to the answer were incorporated therein. marked as Annex ‘3’ of the defendants answer. depositions. including pleadings.S.” 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. After hearing. Rule 34. 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. 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. 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. Jeep. the latter pick-up collided with the jeep driven by Lucio Galaura that was coming from the opposite direction. The Supreme Court dismissed the petition for certiorari with prohibition. and (d) The sworn statement of defendant driver (Lucio Galaura) of said A.. 1. T-RU-221. Section 2. 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. 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. marked as Annex ‘7’ of defendants’ answer. prior to said date. as a result of which collision. of the Revised Rules. the drivers of the two pick-up trucks which collided at the intersection of C. Recto Ave. serve opposing affidavits The opposing papers. Davao City. move with supporting affidavits for a summary judgment in his favor as to all or any part thereof. (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. A motion for reconsideration of the order was denied 9 June 1975 for lack of merit. (b) Said investigator’s affidavit detailing his findings upon investigation stating that the pick-up with plate No. Annexes to answer in support of motion for summary judgment In support of the defendant’s motion for summary judgment. On 20 May 1975. and that upon impact. the motion for summary judgment shall be granted if. Estrada filed a petition for certiorari with prohibition before the Supreme Court. In other words.” 2. without special pronouncement as to costs. where it also collided with the latter. on the basis of all the papers and proofs submitted. 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.e. (a) The sketch of the accident made by Traffic Investigator J. and Bonifacio St. This motion shall be served on the adverse party at least 10 days prior to the time specified in the hearing. On 16 April 1975. and affidavits must establish a genuine issue of fact in order to defeat a motion for summary judgment. The adverse party may also. depositions or affidavits must show that his defenses or denials arc sufficient to defeat the claimant’s claim. T-RU-420 upon reaching the intersection of Recto and Bonifacio Streets collided with the pick-up with plate No. at any time. Procedure The affidavit submitted by the party moving for summary judgment shall be by persons having personal knowledge of the facts. 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. counterclaim. 2004 ( 218 ) . 3. when the moving party is a defending party. “A party against whom a claim. namely. Formeloza of the Davao City Police Department. or crossclaim is asserted or a declaratory relief is sought may. C. his pleadings. By means of the annexes.Haystacks (Berne Guerrero) institution of the clearly unfounded suit against them. M.C. Summary judgment. one of them was deviated from course to the lane where defendants’ A.-Jeep was then travelling. Rule 34 of the Revised Rules Pursuant to Section 2. 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.

Test In conducting the hearing. Diligence required Under the contract of carriage. defendant has the burden to show facts sufficient to entitle him to defend. 7. Duty of carrier under the contract of carriage. or that the accident was caused by a fortuitous event. 9. Summary judgment. the carrier and the driver are presumed to be at fault. Motion for summary judgment deals on whether there are triable issues of facts. “The Court should not pass. 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. therefore. 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. Affidavit prima facie proof. the defense of the carrier that the proximate cause of the accident was a caso fortuito remains unrebuted. Burden of proof In proceedings for summary judgment. 2004 ( 219 ) . Having. The very object is to separate what is formal or pretended in denial or averment from what is genuine and substantial. Proceedings for summary judgment. 6. After plaintiff’s burden has been discharged. 10. Purpose This Summary Judgment or Accelerated Judgment is a device for weeding out sham claims or defenses at an early stage of the litigation.Haystacks (Berne Guerrero) 4. 5. and that any injury suffered by her in the course thereof. so that only the latter may subject a suitor to the burden of a trial. but merely to determine whether there is a meritorious issue to be tried. What constitutes caso fortuito In order to constitute a case fortuito that would exempt a person from responsibility. 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. 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. The test. Presumption of negligence. and that the summary judgment procedure ‘should not be perverted to the trial of disputed questions of fact upon affidavits”. it is necessary that (1) the event must be independent of the human will. it must be shown that the carrier had observed the required extraordinary diligence. Summary judgment should not be granted where is fairly appears that there is a triable issue to be tried. and (3) the obligor must be free of a concurrent or contributory fault or negligence. on questions of credibility or weight of evidence. is immediately attributable to the negligence of the carrier. Having failed to do so. (2) the occurrence must render it impossible for the obligor to fulfill his obligation m a normal manner. thereby avoiding the expense and loss of time involved in a trial. Purpose of submission of the affidavit. which means that the carrier must show the “utmost diligence of very cautious persons as far as human care and foresight can provide”. 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. of a motion for summary judgment is — whether the pleadings. 8. the purpose of the judge is not to try the issue. To overcome such presumption. it was incumbent upon Estrada to rebut such proof. 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. therefore. Questions of facts not yet resolved Transportation Law. Where a motion is made for summary judgment. 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.

13. 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. see [68] [86] Lara vs. Valencia agreed and. therefore. pursuant to Section 9 of Article X of the Constitution and the procedural rules. however. [85] Ong Yiu vs. Estrada could move for the setting aside of the Order of 20 May 1975 by the presentation of opposing affidavits showing that. other than the issue as to the amount or extent of damages. the Judge did not. most of them were employees of the Government. in the absence of any findings of fact and conclusions of law In the absence of any findings of fact and conclusions of law. together with Lara. premature.Haystacks (Berne Guerrero) Whether a carrier used such reasonable precautions to avoid the accident as would ordinarily be used by careful. but in spite of such precaution the accident occurred. Order merely an interlocutory order This was. Certainly. It was also their understanding that upon reaching barrio Samoay. the present petition is. 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. et.” In this jurisdiction. Valencia again accommodated them and upon reaching Km. again requested Valencia to drive them to Davao. Bautista Angelo (J): 7 concur Facts: Demetrio Lara went to the lumber concession of Brigido R. Valencia (GR L-9907. Lara accidentally fell suffering fatal injuries. The court after hearing rendered Transportation Law. the order of the Judge cannot be considered a judgment. al. 96. other passengers tagged along. 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. CA. prudent persons under like circumstances is a question essentially one of fact and. 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. the Court shall direct the entry forthwith of the appropriate summary judgment. as herein. But where. “Upon the rendering of the assessment.” 11. Valencia in Parang. against Valencia in the CFI of Davao for the death of one Demetrio Lara. Present petition premature There being no judgment. Lara. An action for damages was brought by Lourdes J. At that time. all judgments determining the merits of cases should state clearly and distinctly the facts and the law on which it is based. Sr. there is a genuine issue of fact on the carrier’s liability. Valencia denied the charge of negligence and set up certain affirmative defenses and a counterclaim. including Lara. 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. 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. 2004 ( 220 ) . 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. 30 June 1958) En Banc. but not a disposition of the merits. Order of judge cannot be considered a judgment.” 12. therefore. ordinarily such issue must be decided at the trial. It is a determination of the court of a preliminary point or directing some steps in the proceedings. therefore. 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. allegedly caused by the negligent act of Valencia. Valencia merely accommodated them and did not charge them any fee for the service.

the carrier cannot be held liable. Since one riding in an automobile is no less a guest because he asked for the privilege of doing so. et. the same obligation of care is imposed upon the driver as in the case of one expressly invited to ride” Valencia. it was only to accommodate him considering his feverish condition and his request that he be so accommodated. merely accommodation passaengers who paid nothing for service. 3. “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. 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. therefore. Thus.Haystacks (Berne Guerrero) judgment ordering Valencia to pay Lara. and (c) P1. 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. is only required to observe ordinary care. (b) P3. 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. as frequently stated by the courts. in addition to the costs of action.000 as moral damages. new Civil Code). 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.000 as attorney’s fees. 4.000. without pronouncement as to costs. As accommodation passengers or invited guests. All the circumstances thereof clearly indicate that Valencia had done what a reasonable prudent man would have done under the circumstances. And even if this is correct. 2004 ( 221 ) . 1. 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. et. and if Valencia agreed to take the deceased in his own car. 2. which means that if the injury to the passenger has been proximately caused by his own negligence. 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. else. 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. Finding as to speed not supported by evidence. and not unreasonably to expose him to danger and injury by increasing the hazard of travel. 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. Degree of diligence required of owner of vehicle The deceased. the following amount: (a) P10. The Supreme Court reversed the decision appealed from. and is not in duty bound to exercise extraordinary diligence as required of a common carrier by Philippine law. al. al. as well as his companions who rode in the pick-up of Valencia. This rule.up left barrio Samoay and the time the accident occurred in relation to the distance covered by the pick-up. 5. 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. is that an owner of an automobile owes a guest the duty to exercise ordinary or reasonable care to avoid injuring him. This is a mere surmise made by the trial court considering the time the pick. 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. Lara. Both parties appealed to the Supreme Court because the damages claimed in the complaint exceed the sum of P50.000 as exemplary damages.

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

4 days before the expiry date of subject ticket. Purisima (J): 2 concur. 4. testifies that he did not see or hear the same thing at the same time and place. 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. the jeep suddenly swerved to the right and went off. the skidding being an unforeseen event.” These answers of Dolores Balcita are all in the negative and equivocal. Bayasen testified that before reaching the portion of the road where the jeep fell. and that immediately after.. 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. entitled to acquittal. but not touching the mountain.Haystacks (Berne Guerrero) 2. until 27 March 1990. Guilt not proven beyond reasonable doubt The negligence of Bayasen has not having been sufficiently established. Philippines Air Lines (PAL) issued to Nicholas Cervantes a round trip plane ticket for Manila-Honolulu-Los Angeles-Honolulu-Manila. He is. so that Bayasen had a valid excuse for his departure from his regular course. CA (GR 125138. therefore. Hence. his guilt of the crime charged has not been proven beyond reasonable doubt. along the side of the mountain. 1 abroad on official business Facts: On 27 March 1989. They do not deny or preclude the truth of the positive testimony of the accused. while driving from 8 to 10 kilometers per hour. and she “did not feel any movement from (her) side.e. that while doing so. the former is more worthy of credence. he directed the jeep towards the side of the mountain. Herein. Such fact shows that Bayasen could not have been driving the jeep at a fast rate of speed. that as a precautionary measure. under the particular circumstances. 7. Cervantes used it. 2 March 1999) Third Division. On 23 March 1990. 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). 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. 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”. 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. then mayor of Sagada. 1 on leave. 2004 ( 223 ) . Bayasen who skidded could not be regarded as negligent. Herein. i. Testimony of mayor of Sagada. 5. Dolores Balcita “did not see” what Elena Awichen suddenly did. It may occur without fault. who found the jeep at second gear when he examined it not long after the incident. which ticket expressly provided an expiry of date of one year from issuance. Mountain Province. he immediately booked his Los AngelesTransportation Law. 3. Mountain Province. 6. 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. he noticed that the rear wheel skidded. Accused’s reason for falling into the precipice Herein. Upon his arrival in Los Angeles on the same day. [88] Cervantes vs. Skidding means partial or complete loss of control of the car under circumstances not necessarily implying negligence.

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

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

. The Supreme Court reversed the judgment appealed from. 4. Exception: unforeseen event A passenger is entitled to protection from personal violence by the carrier or its agents or employees. de Gillaco filed an action against the Manila Railroad Company with the CFI Laguna. happened to be in said station waiting for the same train which would take him to Tutuban Station. where he was going to report for duty. Lt. Devesa had a long standing personal grudge against Tomas Gillaco. same dating back during the Japanese occupation.000 damages to the de Gillacos. husband of Cornelia A. Smith. Tomas Gillaco. which reads as follows: ‘No one shall be liable for events which could not be foreseen or which. Devesa shot Gillaco with the carbine furnished to him by the Manila Railroad Company for his use as such train guard.m. As held in Lasam vs. Obligation to transport passenger safely to destination. without costs. Tomas Gillaco died as a result of the would which he sustained from the shot fired by Devesa. Devesa’s tour of duty on that day was from 9:00 a.’ “ 2. 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. 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. 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. Cornelia A. were inevitable. Liability of a carrier as an insurer not recognized in Philippine Jurisdiction. And because of this personal grudge. de Gillaco. 1. a train guard of the Manila Railroad Company assigned in the Manila-San Fernando. supra). Emilio Devesa. and that it can be inferred from the previous jurisprudence of the Court. since the contract of transportation obligates the carrier to transport a passenger safely to his destination. until the train to which he was assigned reached La Union at 7:00 p. 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. Although American authorities hold Transportation Law. being both unforeseeable and inevitable under the given circumstances.. upon seeing him inside the train coach. Devesa was convicted of homicide by final judgment of the Court of Appeals.m. and pursuant to established doctrine.Haystacks (Berne Guerrero) Facts: On 1 April 1946. the Civil Code of 1889 did not impose absolute liability (Lasam vs. when Gillaco was shot). The trial court sentenced the railroad company to pay P4. and dismissed the complaint. The railroad company appealed. but. The latter had no means to ascertain or anticipate that the two would meet. Smith. 7:30 a. 2004 ( 226 ) . When the train reached the Paco Railroad station. 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. the resulting breach of Manila Railroad’s contract of safe carriage with the late Tomas Gillaco was excused thereby. considering the vast and complex activities of modern rail transportation. Laguna to Manila.m. of the same day. with the exception of the cases in which the law expressly provides otherwise and those in which the obligation itself imposes such liability. that by entering into that contract the carrier bound himself to carry the plaintiff safely and securely to their destination. 3. But under the law of the case. strikes as demanding diligence beyond what human care and foresight can provide. 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. La Union Line. even if foreseen. 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. was a passenger in the early morning train of the Manila Railroad Company from Calamba. 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.

or otherwise within the scope of his employment. in the very act. a stranger also awaiting transportation. respondent superior. Simeon Valenzuela. two hours after the commission of the crime. 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. but the only reason in our opinion for a broader liability arises from the fact that the servant. and the killing of Gillaco was not done in line of duty. Devesa was assigned to guard the Manila-San Fernando (La Union) trains. That principle is not the ordinary rule. his tour of duty was to start at 9:00 a. to execute his undertaking with the passenger. 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. violates the contractual obligation of the employer for the performance of which he has put the employee in his place. he was sentenced to suffer imprisonment and to indemnify the heirs of the deceased in the sum of P6.. No breach of contract of transportation by employee of carrier When the crime took place. Railroad company guard had no duties to discharge in connection with the transportation of the deceased. on 18 October 1960. 5. was a passenger in a taxicab owned and operated by Pascual Perez when he was stabbed and killed by the driver. The position of Devesa at the time was that of another would be passenger. and he was at Paco Station awaiting transportation to Tutuban. 26 June 1967) En Banc. In fact. and not in that of his employer.000. the starting point of the train that he was engaged to guard. is that the servant is clothed with the delegated authority. the guard Devesa had no duties to discharge in connection with the transportation of the deceased from Calamba to Manila. Appeal from said conviction was taken to the Court of Appeals. and thereby makes himself liable for every assault committed by each servant. impelled by personal malice toward the passenger. the liability of a carrier as an insurer was not recognized in this jurisdiction. in mistreating the passenger wholly for some private purpose of his own. Bengzon JP (J): 7 concur Facts: Rogelio Corachea.m. and not in that of the employer.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. Valenzuela was prosecuted for homicide in the CFI of Batangas. and charged with the duty by the carrier. The stipulation of facts is clear that when Devesa shot and killed Gillaco. Of course. Transportation Law. 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. As a result. where the deceased was riding. Perez (GR L-2272. 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. it being immaterial that the act should be one of private retribution on the part of the servant. by which the employer is held responsible only for acts or omissions of the employee in the scope of his employment. Devesa was therefore under no obligation to safeguard the passengers of the Calamba-Manila train. [90] Maranan vs. Devesa’s assault cannot be deemed in law a breach of Gillaco’s contract of transportation by a servant or employee of the carrier. Found guilty. 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. is regarded as not only not sustained by the authorities. and not that of an employee assigned to discharge any of the duties that the Railroad had assumed by its contract with the deceased. 6. this speaks only of the principle which holds a carrier responsible for wrongs done to passengers by servants acting in their own interest. but as being unsound and oppressive both to the employer and the employee. 2004 ( 227 ) .

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 NCC Article 1733 of the Civil Code provides that “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 t