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Loadstar Shipping vs.

CA (GR 131621, 28 September 1999)
Facts:
On 19 November 1984, Loadstar Shipping Co. Inc. received on board its M/V “Cherokee” (a) 705
bales of lawanit hardwood; (b) 27 boxes and crates of tilewood assemblies and others; and (c) 49
bundles of mouldings R & W (3) Apitong Bolidenized for shipment. The goods, amounting to
P6,067,178, were insured for the same amount with the Manila Insurance Co. (MIC) against various
risks including “total loss by total loss of the vessel.” The vessel, in turn, was insured by Prudential
Guarantee & Assurance, Inc. (PGAI) for P4 million.
On 20 November 1984, on its way to Manila from the port of Nasipit, Agusan del Norte, the vessel,
along with its cargo, sank off Limasawa Island. As a result of the total loss of its shipment, the
consignee made a claim with Loadstar which, however, ignored the same. As the insurer, MIC paid
P6,075,000 to the insured in full settlement of its claim, and the latter executed a subrogation receipt
therefor.
On 4 February 1985, MIC filed a complaint against Loadstar and PGAI, alleging that the sinking of
the vessel was due to the fault and negligence of Loadstar and its employees. It also prayed that
PGAI be ordered to pay the insurance proceeds from the loss of the vessel directly to MIC, said
amount to be deducted from MIC’s claim from Loadstar. In its answer, 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. PGAI, on the other hand, averred that MIC had no cause of action against it, Loadstar
being the party insured. In any event, PGAI was later dropped as a party defendant after it paid the
insurance proceeds to Loadstar. On 4 October 1991, the trial court (RTC of Manila, Branch 16, Civil
Case 85-29110) rendered judgment in favor of MIC, ordering Loadstar to pay MIC the amount of
P6,067,178, with legal interest from the filing of the complaint until fully paid, P8,000 as attorney’s
fees, and the costs of the suit. Loadstar elevated the matter to the Court of Appeals, which, however
on 30 January 1997, agreed with the trial court and affirmed its decision in toto. Loadstar’s motion for
reconsideration was denied on 19 November 1997. Hence, the petition for review on certiorari.
Issues:
(1)

Is

the

M/V

Cherokee

a

common

carrier?

Yes.

(2) Did LOADSTAR observe due and/or ordinary diligence? No.
Held: The Supreme Court denied the petition and affirmed the challenged decision of the Court of
Appeals;

with

costs

against

Loadstar.

(1) LOADSTAR argues that the vessel was a private carrier because it was not issued a certificate of
public convenience, it did not have a regular trip or schedule nor a fixed route, and there was only
one

shipper,

one

consignee

for

a

special

cargo.

LOADSTAR relied on the 1968 case of Home Insurance Co. v. American Steamship Agencies, Inc.,

1

The records do not disclose that the M/V Cherokee. on the date in question. the weather was fine until the next day when the vessel sank due to strong waves. Under the facts and circumstances obtaining in this case. (See De Guzman v. In any event. who certified that the ship was fit to undertake a voyage. The doctrine of limited liability does not apply where there was negligence on the part of the vessel owner or agent. 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.. Before the fateful voyage on 19 November 1984. but only a general provision to the effect that the M/V Cherokee was a general cargo carrier. SC: We find that the M/V Cherokee was not seaworthy when it embarked on its voyage on 19 November 1984. 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. There was no charter party. inasmuch as the wind condition in the area where it sank was determined to be moderate. there could be no other conclusion except that LOADSTAR exercised the diligence of a good father of a family in ensuring the vessels seaworthiness. The vessel was not even sufficiently manned at the time. episodic or unscheduled. as in the case of a ship totally chartered SC: It is not necessary that the carrier be issued a certificate of public convenience. LOADSTAR further claims that it was not responsible for the loss of the cargo. it did not sink because of any storm that may be deemed as force majeure. on 19 November 1984.where this 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. Court of Appeals. occasional. With all these precautions. which appears to be purely coincidental. The bills of lading failed to show any special arrangement. it was shown that the vessel was also carrying passengers. the vessel was allegedly dry docked at Keppel Philippines Shipyard and was duly inspected by the maritime safety engineers of the Philippine Coast Guard. such loss being due to force majeure. Such policy has no force where the public at large is not involved. Since it was remiss in the 2 . LOADSTAR fits the definition of a common carrier under Article 1732 of the Civil Code. Agusan del Norte. it must be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. as in this case. 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. Neither do we agree with LOADSTARs argument that the limited liability theory should be applied in this case.) (2) LOADSTAR also maintains that the vessel was seaworthy. the bare fact that the vessel was carrying a particular type of cargo for one shipper. and this public character is not altered by the fact that the carriage of the goods in question was periodic. It points out that when the vessel left Nasipit. licensed and unquestionably competent. especially where. Its crew at the time was experienced. is not reason enough to convert the vessel from a common to a private carrier. undertook to carry a special cargo or was chartered to a special person only. For a vessel to be seaworthy. Further. The cases invoked by LOADSTAR are not applicable in the case at bar for simple reason that the factual settings are different.

the general community or population. It appears to the Court that private respondent is properly characterized as a common carrier even though he merely "backhauled" goods for other merchants from Manila to Pangasinan. Sometime in November 1970. The trial court ruled against the respondent. and one who offers services or solicits business only from a narrow segment of the general population. and even though private respondent's principal occupation was not the carriage of goods for others. He buys scrap materials and brings those that he gathered to Manila for resale using 2 six-wheeler trucks. On the return trip to Pangasinan. respondent loaded the cargo. that fee frequently fell below 3 . Petitioner commenced an action claiming the value of the lost merchandise. respondent would load his vehicle with cargo which various merchants wanted delivered. Only 150 boxes were delivered to petitioner because the truck carrying the boxes was hijacked along the way. There is no dispute that private respondent charged his customers a fee for hauling their goods. petitioner Pedro de Guzman contracted with respondent for the delivery of 750 cartons of Liberty Milk. and one who does such carrying only as an ancillary activity.e. charging fee lower than the commercial rates. Petitioner argues that respondent. 1970. and so he could not be held liable for force majeure." i. On December 1. PEDRO DE GUZMAN VS CA AND ERNESTO CENDANA Facts: Respondent Ernesto Cendana was a junk dealer. 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. being a common carrier. LOADSTAR cannot hide behind the limited liability doctrine to escape responsibility for the loss of the vessel and its cargo. but such was reversed by the Court of Appeals. is bound to exercise extraordinary diligence. Neither does Article 1732 distinguish between a carrier offering its services to the "general public. episodic or unscheduled basis. Issues: (1) Whether or not private respondent is a common carrier (2) Whether private respondent is liable for the loss of the goods Held: (1) Article 1732 makes no distinction between one whose principal business activity is the carrying of persons or goods or both. which it failed to do.. although such backhauling was done on a periodic or occasional rather than regular or scheduled manner. Private respondent denied that he was a common carrier.performance of its duties.

Private respondent as common carrier is presumed to have been at fault or to have acted negligently." we hold that 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.commercial freight rates is not relevant here. 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. d. Flood. provided that they shall have complied with the rigorous standard of extraordinary diligence. Hidalgo Street. c. or other natural disaster or calamity. was in charge of car 74 running from east to west on R. and e. Act or omission of the shipper or owner of the goods. Order or act of competent public authority. Del Prado vs. as Meralco’s motorman. It is necessary to recall that even common carriers are not made absolute insurers against all risks of travel and of transport of goods. however. whether international or civil. Meralco (GR 29462. The character of the goods or defects in the packing or in the containers.does not fall within any of the five (5) categories of exempting causes listed in Article 1734. (2) Article 1734 establishes the general rule that common carriers are responsible for the loss. one Teodorico Florenciano. "unless the same is due to any of the following causes only: a. may be overthrown by proof of extraordinary diligence on the part of private respondent. 7 March 1929) 52 PHIL 900 Facts: The Manila Electric Company. A certificate of public convenience is not a requisite for the incurring of liability under the Civil Code provisions governing common carriers. This presumption. is engaged in operating street cars in the City of Manila for the conveyance of passengers. storm." The hijacking of the carrier's truck . and are not held liable for acts or events which cannot be foreseen or are inevitable. Act of the public enemy in war. the scene of the 4 . and on the morning of 18 November 1925. lightning. b. destruction or deterioration of the goods which they carry. violence or force. earthquake.

upon approaching the car.000.accident being at a point near the intersection of said street and Mendoza Street. his approach being made from the left. An action was instituted in the CFI of Manila by Ignacio del Prado to recover damages in the amount of P50. Del Prado. when Ignacio del Prado ran across the street to catch the car. the front perpendicular handpost. Meralco appealed. at the same time placing his left foot upon the platform. with his left hand. raised his hand as an indication to the motorman of his desire to board the car.000 for personal injuries alleged to have been caused by the negligence of Meralco in the operation of one of its street cars in the City of Manila. The Supreme Court affirmed the appealed judgment with the modification that the sum to be recovered reduced to P2. The car was of the kind having entrance and exit at either end. as damages. However. and even before his raised right foot had reached the platform. del Prado seized. The next day the member had to be amputated in the hospital. and his right foot was caught and crushed by the moving car. and the movement of del Prado was so timed that he arrived at the front entrance of the car at the moment when the car was passing. without stopping. After the car had stopped at its appointed place for taking on and letting off passengers. before del Prado’s position had become secure. and his hand was jerked loose from the handpost. The car had proceeded only a short distance. Upon this. with the result that the car gave a slight lurch forward. the motorman applied the power. This sudden impulse to the car caused del Prado’s foot to slip. just east of the intersection. however. it resumed its course at a moderate speed under the guidance of the motorman. He therefore fell to the ground. with costs against Meralco.500. 5 . with costs of suit. Upon hearing the cause the trial court awarded to del Prado the sum of P10. in response to which the motorman eased up a little.

and 1104 of the Civil Code. supplies an instance of the violation of the duty with respect to a passenger who was getting off of a train. Furthermore. In that case. 3. the plaintiff stepped off of a moving train. The premature acceleration of the car was a breach of this duty. 1103. The employees of the company had carelessly left watermelons on the platform at the place where the plaintiff alighted. and at a time when it was too dark for him to see clearly where he was putting his feet. No obligation on the part of a street railway company to stop cars at points other than appointed for stoppage There is no obligation on the part of a street railway company to stop its cars to let on intending passengers at other points than those appointed for stoppage. 768). the duty that the carrier of passengers owes to its patrons extends to persons boarding the cars as well as to those alighting therefrom. 4. 2. Duty of the motorman of the car Although the motorman of the car was not bound to stop to let the passenger on. while it was slowing down in a station. and a failure on the part of the carrier to use due care in carrying its passengers safely is a breach of duty (culpa contractual) under articles 1101. Duty of the carrier The relation between a carrier of passengers for hire and its patrons is of a contractual nature. Manila Railroad. to go to the proper places for boarding the cars. It would be impossible to operate a system of street cars if a company engaged in this business were required to stop any and everywhere to take on people who are too indolent.. (38 Phil. with the result that his feet slipped and he fell under the car.1. Cangco vs. Manila Railroad Co. Nature of relation between a carrier of passengers for hire and its patrons. where his right arm was badly injured. This court held that the railroad company was liable for breach of 6 . it was his duty to do no act that would have the effect of increasing the passenger’s peril while he was attempting to board the car. Culpa Contractual The case of Cangco vs. or who imagine themselves to be in too great a hurry.

the court is given a discretion to mitigate liability according to the circumstances of the case (art 1103). 5. No such general 7 . under the last paragraph of article 1903 of the Civil Code. may exculpate himself.positive duty (culpa contractual). Relevance of distinction between negligence arising under Article 1902 and 1101 as to mitigation of liability Another practical difference between liability for negligence arising under article 1902 of the Civil Code and liability arising from negligence in the performance of a positive duty. not involving a breach of positive obligation. Training of motorman irrelevant in breach of obligation under Article 1101 of the Civil Code Herein. in dealing with the latter form of negligence. This proof is irrelevant in view of the fact that the liability involved was derived from a breach of obligation under article 1101 of the Civil Code and related provisions. 7. for the reason that where liability arises from a mere tort (culpa aquiliana). and the plaintiff was awarded damages in the amount of P2. 6. whereas this defense is not available if the liability of the master arises from a breach of contractual duty (culpa contractual). under article 1101 and related provisions of the Civil Code. an employer. the company pleaded as a special defense that it had used all the diligence of a good father of a family to prevent the damage suffered by del Prado. is that.500 for the loss of his arm. and to establish this contention the company introduced testimony showing that due care had been used in training and instructing the motorman in charge of this car in his art. In the opinion in that case the distinction is clearly drawn between a liability for negligence arising from breach of contractual duty and that arising under articles 1902 and 1903 of the Civil Code (culpa aquiliana). by proving that he had exercised due diligence to prevent the damage. Relevance of distinction between Culpa Contractual and Culpa Aquiliana as to defenses available The distinction between the two sorts of negligence is important in this jurisdiction. or master.

The direct and proximate cause of the injury was the act of Meralco’s motorman in putting on the power prematurely. he is able to use an artificial member without great inconvenience and his earning capacity has 8 . 9.. 359). 10. by the exercise of reasonable care and prudence. A person boarding a moving car must be taken to assume the risk of injury from boarding the car under the conditions open to his view. the negligence of del Prado was contributory to the accident and must be considered as a mitigating circumstance. it is treated as a mitigating circumstance under article 1103 of the Civil Code. will increase his peril by accelerating the speed of the car before he is planted safely on the platform. Gulf and Pacific Co. Herein. Award of damage With respect to the effect of this injury upon del Prado’s earning power. Contributory negligence a mitigating circumstance under Article 1103 Civil Code As to the contributory negligence of del Prado. 8. 11. having the situation in view. though possibly the same end is reached by courts in dealing with the latter form of liability because of the latitude of the considerations pertinent to cases arising under this article. if not identical with that which is sometimes referred to as the doctrine of “the last clear chance. Again. Rule analogous to the doctrine of “the last clear chance” The rule applicable seems to be analogous to. but he cannot fairly be held to assume the risk that the motorman. although he lost his foot.discretion is given by the Code in dealing with liability arising under article 1902. Proximate cause of the accident Del Prado’s negligence in attempting to board the moving car was not the proximate cause of the injury.” In accordance with this doctrine. the contributory negligence of the party injured will not defeat the action if it be shown that the defendant might. and the negligence of the company must be considered the proximate cause of the injury. Atlantic. the situation is one where the negligent act of the company’s servant succeeded the negligent act of the passenger. as in Rakes vs. have avoided the consequences of the negligence of the injured party. (7 Phil.

Cavite. a fierce fire started.. on September 13. 768). Atlantic. while the bus was running within the jurisdiction of Imus. Issye: Whether or not the respondent is liable. named Bataclan. 165). operated by its owner defendant Mariano Medina under a certificate of public convenience. (7 Phil. L-10126. burning and all but consuming the bus. and in view of all the circumstances connected with the case. Manila Railroad Co. Gulf and Pacific Co. Saludo Villanueva vs Mariano Medina Gr no. and that the lighted torch brought by one of the men who answered the call for help set it on fire. After half an hour. 359). 1952. including the four passengers trapped inside it. could not get out of the overturned bus. These men presumably approach the overturned bus. and Borromeo vs. and almost immediately. gasoline began to leak and escape from the gasoline tank on the side of the chassis. 22 Oct 1957 Facts: Shortly after midnight. Some of the passengers managed to leave the bus the best way they could. It would appear that as the bus overturned. Held: YES. At about 2:00 o'clock that same morning. the petitioners sought for the recovery of compensatory. 30 of the Medina Transportation. (38 Phil. driven by its regular chauffeur. bus no. evidently fueled with petroleum. 9 . the Court is of the opinion that del Prado will be adequately compensated by an award of P2. left the town of Amadeo. came about ten men. Lara and the Visayan and the woman behind them named Natalia Villanueva. (44 Phil. moral and exemplary damages and attorney’s fees against the respondent. Manila Electric Railroad and Light Co. Cavite..probably not been reduced by more than 30%.500. others had to be helped or pulled out. one of them carrying a lighted torch made of bamboo with a wick on one end. spreading over and permeating the body of the bus and the ground under and around it. Conrado Saylon. one of the front tires burst and the vehicle began to zig-zag until it fell into a canal or ditch on the right side of the road and turned turtle. Hence. and more particularly Rakes vs. In view of the precedents found in the Court’s decisions with respect to the damages that ought to be awarded for the loss of a limb.. on its way to Pasay City. Cangco vs. while the three passengers seated beside the driver.

in natural and continuous sequence. made not only by the passengers. for transport and delivery to the plaintiff in the City of Manila.630 and the other P700. with the circumstances present. the rescuers had to carry a light with them. It is as follows: 'that cause. either immediately or by setting other events in motion. on board the defendant’s steamship President Garfield. USA. and that because it was dark (about 2:30 in the morning). pages 695-696 of American jurisprudence. The plaintiff alleged that he never entered into any contract with the defendant limiting defendant’s liability as a common carrier. but most probably. unbroken by any efficient intervening cause. the final event in the chain immediately effecting the injury as a natural and probable result of the cause which first acted. produces the injury.R. by the driver and the conductor themselves. and without which the result would not have occurred. that the coming of the men with a lighted torch was in response to the call for help. under such circumstances that the person responsible for the first event should. this for the reason that when the vehicle turned not only on its side but completely on its back. giving its reason that the steamship President Garfield at all the times alleged was in all respects seaworthy and properly manned. and coming as they did from a rural area where lanterns and flashlights were not available. No. resulting in the total loss of one case and a partial loss of the other. L-29721 March 27. The proximate cause in the case at bar was the overturning of the bus. all freight charges paid.' And more comprehensively. 1927. 10 . all constituting a natural and continuous chain of events. the leaking of the gasoline from the tank was not unnatural or unexpected. G. The defendant refused and neglected to pay. 1929 FACTS: Plaintiff alleges that he is the owner and consignee of two cases of books. 'the proximate legal cause is that acting first and producing the injury. for which he filed his claims.A satisfactory definition of proximate cause is found in Volume 38. in bad order and damaged condition. The two cases arrived in Manila on September 1. each having a close causal connection with its immediate predecessor. AMANDO MIRASOL vs. as an ordinary prudent and intelligent person. The loss in one case is P1. The burning of the bus can also in part be attributed to the negligence of the carrier. THE ROBERT DOLLAR CO. equipped and supplied. shipped in good order and condition at New York. have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom. through is driver and its conductor because none of them have cautioned or taken steps. to warn the rescuers not to bring the lighted torch too near the bus. which. cited by plaintiffs-appellants in their brief.

" and that the bill of lading exempts defendant from liability for that cause. The defendant having admitted that the boxes were damaged while in transit and in its possession. it then devolves upon the ship owner to both allege and prove that the goods were damaged by the reason of some fact which legally exempts him from liability. To require the plaintiff to prove as to when and how the damage was caused would force him to call and rely upon the employees of the defendant's ship." Defendant also alleged that the damage. to wit: Acts of God. That damage by "sea water" is a shipper's risk. if any. As to how the boxes were damaged. “but that such damage. perils of the sea or other waters. the shipper would be left without any redress. and the ship owner delivers them to the shipper in bad order and condition. officers." and that plaintiff's damage. and when goods are delivered on board ship in good order and condition. and that defendant is not liable. if any. or damage to. It also alleged that in the in the bill of lading issued by the defendant to plaintiff. nor by reason of the vessel being unseaworthy or improperly manned.and fit for the voyage. tackle or appurtenances. It also alleged that the damage to the plaintiff’s merchandise. was caused by "sea water. crew. the boxes were under the control and supervision of the defendant and beyond the control of the plaintiff. The trial court rendered judgment for the plaintiff for P2. when or where. from which both parties appealed. resulted from faults or errors in navigation or in the management of said vessel”.080 with legal interest. its master. otherwise. was a matter peculiarly and exclusively within the knowledge of the defendant and in the very nature of things could not be in the knowledge of the plaintiff. if any. was caused by "Acts of God" or "perils of the sea. RULING: The defendant having received the two boxes in good condition. it was agreed in writing that defendant should not be "held liable for any loss of. the burden of proof then shifted and it devolved upon the defendant to both allege and prove that the damage was caused by reason of some fact which exempted it from liability. From the time of their delivery to the defendant in New York until they are delivered to the plaintiff in Manila. any of said merchandise resulting from any of the following causes. Shippers who are forced to ship goods on an ocean liner or any other ship have some legal rights. was not caused through the negligence of the vessel. which in legal effect would be to say that he could not recover any damage for any reason. agent. 11 . ISSUE: Whether the defendant is liable. if any. no matter what may have caused the damage. its legal duty was to deliver them to the plaintiff in the same condition in which it received them.

Ganzon to haul 305 tons of scrap iron from Mariveles. The fact that the cases were damaged by "sea water. arrived and demanded P5. Gelacio Tumambing contracted the services of Mauro B.The evidence for the defendant shows that the damage was largely caused by "sea water." from which it contends that it is exempt under the provisions of its bill of lading and the provisions of the article 361 of the Code of Commerce. foundering.000.00 from Gelacio Tumambing. 30 Mary 1988) Second Division. The rest was brought to the compound of NASSCO. The words "perils of the sea." Ganzon vs. Ganzon sent his lighter “Batman” to Mariveles where it docked in 3 feet of water." and "where the peril is the proximate cause of the loss. Gelacio Tumambing delivered the scrap iron to Filomeno Niza. Sarmiento (J) Facts: On 28 November 1956. On 1 December 1956. the ship owner is excused. to the port of Manila on board the lighter LCT “Batman. Mauro B. Later on Acting Mayor 12 . rocks. icebergs and other obstacles are within the expression. After sometime. When about half of the scrap iron was already loaded. Mayor Jose Advincula of Mariveles." standing alone and within itself. CA (GR L-48757. shoals. accompanied by 3 policemen. Bataan. for treatment. stranding. for loading which was actually begun on the same date by the crew of the lighter under the captain’s supervision. captain of the lighter. The latter resisted the shakedown and after a heated argument between them. it is said: "Tempest. ordered captain Filomeno Niza and his crew to dump the scrap iron where the lighter was docked." as stated in defendant's brief apply to "all kinds of marine casualties." "Something fortuitous and out of the ordinary course is involved in both words ‘peril’ and 'accident'. Bataan. the loading of the scrap iron was resumed." and among other things. The gunshot was not fatal but Tumambing had to be taken to a hospital in Balanga. But on 4 December 1956. is not evidence that they were damaged by force majeure or for a cause beyond the defendant's control. Bataan. such as shipwreck. Acting Mayor Basilio Rub. Mayor Jose Advincula drew his gun and fired at Gelacio Tumambing.” Pursuant to this agreement.

the sum of P5. and entered a new one ordering Ganzon to pay Tumambing the sum of P5.00 as actual damages. destruction. 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. Pursuant to Article 1736. albeit still unloaded. Contract of carriage perfected. lightning. the petition for review on certiorari. the carrier’s extraordinary responsibility for the loss. whether international or civil. On appeal. or determination of the goods commenced.000. and upon their receipt by the carrier for transportation. Tumambing instituted in the CFI of Manila an action against Ganzon for damages based on culpa contractual. with costs against Ganzon.000. (3) Act or 13 . and the amount of P2. Consequently.895. and affirmed the assailed decision of the Court of Appeals. 2. Duties of the carrier By the act of delivery. storm.00 as attorney’s fees. earthquake. or to the person who has a right to receive them. with costs against Ganzon. 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. or other natural disaster or calamity. the appellate court reversed and set aside the decision appealed from. The Supreme Court denied the petition. (2) Act of the public enemy in war. Hence. by the carrier to the consignee. the scraps were unconditionally placed in the possession and control of the common carrier. 1. By delivery.Rub issued a receipt stating that the Municipality of Mariveles had taken custody of the scrap iron. the decision being immediately executory.00 as exemplary damages. namely: (1) Flood. Loss not due to any cause enumerated in Article 1734 of the Civil Code Herein. actual or constructive. however. the contract of carriage was deemed perfected. the scraps are placed in the possession of the common carrier. such extraordinary responsibility would cease only upon the delivery. The trial court rendered a decision absolving Ganzon from liability.

according to all the circumstances of the case. The appellee failed to establish this. 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. The order of the acting mayor did not constitute valid authority for Ganzon and his representatives to carry out. 3. 14 .omission of the shipper or owner of the goods. it must be shown that Acting Mayor Basilio Rub had the power to issue the disputed order. 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. Ganzon is presumed to have been at fault or to have acted negligently. Still. As it was. Order by competent authority must be valid. Negligence presumed.00. By reason of this presumption. no authority or power of the acting mayor to issue such an order was given in evidence. there was hardly any attempt on the part of Ganzon to prove that he exercised such extraordinary diligence. or that the loss was due to an unforeseen event or to force majeure. 4. 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. 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.000. Indeed. (4) The character of the goods or defects in the packing or in the containers. Burden of proof to prove otherwise Herein. and (5) Order or act of competent public authority. or that it was issued under legal process of authority. 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. or that it was lawful.

For Article 1735 of the Civil Code. means that the shipper will suffer the losses and deterioration arising from the causes enumerated in Article 1734. the scraps could then be delivered in accordance with the contract of carriage. the same is deemed to have been modified by Article 1733 of the Civil Code. conversely stated. Ganzon was not duty bound to obey the illegal order to dump into the sea the scrap iron. No incompatibility between Civil Code provisions on common carriers and Articles 361 and 362 of the Code of Commerce. The scraps could have been properly unloaded at the shore or at the NASSCO compound. and which Ganzon invokes in the petition. the burden of proving that damages were caused by the fault or negligence of the carrier rests upon him. Ynchausti & Co. However. Findings on actual and exemplary damages not disturbed 15 . The intervention of the municipal officials was not of a character that would render impossible the fulfillment by the carrier of its obligation The intervention of the municipal officials was not of a character that would render impossible the fulfillment by the carrier of its obligation. Moreover. there is absence of sufficient proof that the issuance of the same order was attended with such force or intimidation as to completely overpower the will of the petitioner’s employees. and in these instances. 7. so that after the dispute with the local officials concerned was settled.5. insofar as Article 362 appears to require of the carrier only ordinary diligence. The mere difficulty in the fulfillment of the obligation is not considered force majeure. Herein. 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. Be that as it may. 6. 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.

was over 3 years. alleges that upon arrival of the S. for the conversion of which. 3. if the goods are tendered before a suit is brought. a demand and a refusal to deliver is sometimes essential to show a conversion. these were not sufficiently controverted by Ganzon. although he thereby makes himself liable for the damages incurred by reason of the delay. Facts: 1. is liable for a conversion of the property. and delivery thereof had been tendered and rejected. The delay which ensued between the date when the merchandise should have been delivered and the date when it was finally tendered was close to 2 years and 4 months. Therefore. the carrier. THE ADMIRAL LINE GR 22134 OCT 17. Defendant Admiral Line argues that the merchandise had been delayed. mere delay in the delivery of goods by a common carrier. but is only a breach of the contract of carriage. had been found. Satsuma at the port of Manila. the same will not be disturbed by the Supreme Court. in the absence of any legal exemption and after demand has been made and delivery refused. S. is not a conversion thereof. the consignee cannot refuse to receive 16 . A tender of the property. Issue:Whether or not defendant is guilty of conversion? Held: Yes. no matter how long continued. As a general rule. Plaintiff Mariano Uy Chaco Sons & Co. the consignee cannot refuse to accept the goods from him and recover their value but is compelled to receive them. However. defendant is liable. to be effectual. 1924 Doctrine: Where property in the hands of a common carrier is not delivered within a reasonable time after it has reached its destination. It appears that the interval which elapsed between the date when the merchandise should have been delivered and the presentation of the complaint was approximately 11 months. MARIANO VS. Besides. must have been made within the time in which the defendant was entitled to deliver it and the plaintiff bound to receive it. Even after demand. there were short-delivered one case of varnish and paint remover and fifty bales of oakum. where a carrier fails to deliver goods within a reasonable time.Finding the award of actual and exemplary damages to be proper. The time which passed between the date when the merchandise should have been delivered and the date when the defense of tender was set up. 2.

under such circumstances. he failed to locate the 9th luggage. if they are safely kept. but despite diligent search. A delay of more than 2 years in making delivery was conclusively unreasonable. the tender made was not until long after the lapse of this period. arrived at the Manila International Airport aboard the airline’s PAL Flight 107 from San Francisco. of more than 2 years counted from the date when the complaint was filed. or for the value of the goods. to be effectual.S. and in fact. in addition to the presents entrusted to them by their friends which Co testified to be worth about US $500.A. PAL vs.m. may elect to waive all the title to the property and sue for conversion. CA (GR 92501. The consignee. defendant was in effect guilty of conversion and must accordingly respond for the value of the property at the time of conversion. is liable for a conversion of the property. California. must have been made within the time in which the defendant was entitled to deliver it and the plaintiff bound to receive it. Co’s invoices evidencing their purchases show their missing personal effects to be worth US $1.00. his sole remedy being an action for damages resulting from the delay.00 to US $600. the owner cannot charge him with a conversion. 6 March 1992) Facts: At about 5:30 a. is no bar to plaintiff’s right to recover. A tender of the property. in the absence of any legal exemption and after demand has been made and delivery refused.243. Co then immediately notified PAL through 17 . unless they have been demanded of the carrier and their delivery refused.01. Though the carrier may delay ever so long.the goods and sue for conversion. Soon after embarking. Co found eight of his luggage. could not do so until a long time thereafter. not being accepted. U. was likewise unreasonable. Isidro Co. with claim check number 729113. on 17 April 1985. and after he has done so. Defendant was unable to turn the goods over to plaintiff at any time before the complaint was presented. accompanied by his wife and son. the carrier. Co’s lost luggage was a Samsonite suitcase measuring about 62 inches in length. From the foregoing. and. Co proceeded to the baggage retrieval area to claim his 9 pieces of checkedin luggage with the corresponding claim checks in his possession. a subsequent tender by the carrier will not be available for it as a defense. Where property in the hands of a common carrier is not delivered within a reasonable time after it has reached its destination.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. worth about US $200. In this case. A delay in pressing a defense predicated on tender.

Rules of Court). Willy Guevarra filled up a printed form known as a Property Irregularity Report. who was then in charge of the PAL claim counter at the airport. Despite the letter. 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. to the PAL officer after accomplishing the Property Irregularity Report. are not reviewable by the Supreme Court (Sec. Thus. its manager for Central Baggage Services. In accordance with his procedure in cases of this nature. 2. Although the passenger should produce his claim tag if he had not surrendered it because there was no baggage received. sentencing PAL to pay Co the amounts of (1) P42. 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”. which raise purely factual issues. it would appear that the passenger surrendered all the 9 claim checks corresponding to the 9 luggages. The Court reviews only questions of law which must be distinctly set forth in the petition. On 17 April 1985. Co. PAL never found Co’s missing luggage or paid its corresponding value. Such document is within the control of PAL and necessarily requires other corroborative evidence. however. Co filed a complaint against PAL for damages. it could not be possible for the passenger to produce the same in court. all in addition to the costs or the suit. Willy Guevarra asked Co to surrender to him the nine claim checks corresponding to the nine luggages. and rendered judgment on 3 June 1986. and signed it after asking Co himself to sign the same document.its employee. Willy Guevarra.” The court also dismissed PAL’s counterclaim for lack of merit.00 as attorney’s fees.02 by way of actual damages. including the one that was missing. Rule 45. The Supreme Court denied the petition for review for lack of merit. Santos. the Court of Appeals affirmed in toto the trial court’s award.766. with costs against PAL. People. acknowledging one of the Transportation Law. (2) P20.e. and thus. On appeal.000. unrelentingly called at PAL’s office in order to pursue his complaint about his missing luggage but to no avail. including the one that was missing. i. on 15 April 1985. Co through his lawyer wrote a demand letter to PA: through Rebecca V. (Hodges vs. (3) P10. Purely factual issues not reviewable by the court Assignments of error.. On 3 May 1985. 2004 ( 185 ) Haystacks (Berne Guerrero) Co’s luggages to be missing. whose finding was affirmed by the Court of Appeals. Issue: WON PAL is liable WON PAL can avail the limited liability rule Ruling: The Regional Trial Court of Pasay City found PAL liable. It is now for the carrier to produce the veracity of their Baggage Retrieval Report by corroborating evidence other than testimonies of their employees. on several occasions. 2. 1.000. 18 . and on 19 July 1989.00 by way of exemplary damages.

destruction or deterioration. Warsaw Convention. IAC. 7. Article 1735 NCC Article 1735 provides that “In all cases other than those mentioned in Nos. 19 . IAC (192 SCRA 9. but more importantly. Law of destination. the rights and obligations of common carriers shall be governed by the Code of Commerce and by Transportation Law. proving that the carrier’s negligence was the proximate cause of the loss of his baggage. Nordeutscher Lloyd (132 SCRA 529). or other special injury sustained by the passengers. Article 1733 NCC Article 1733 provides that “Common carriers. 178. unless they prove that they observed extraordinary diligence as required in article 1733. according to all the circumstances of each case. not only the presumption.) Whether or not the lost luggage was ever retrieved by the passenger. 1. 2004 ( 186 ) Haystacks (Berne Guerrero) Special Laws. 3. Samar Mining vs. are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them. much less did he pay an additional transportation charge. common carriers are presumed to have been at fault or to have acted negligently. citing Pan American World Airways. PAL acted in bad faith in faking a retrieval receipt to bail itself out of having to pay Co’s claim.” Herein. Furthermore. Alitalia vs. Nordeutscher Lloyd In Samar Mining Company. vs. Philippine law governs the liability of the carrier for the loss of the passenger’s luggage. PAL failed to overcome. vs.” 8. 164 SCRA 268). and whether or not the actual and exemplary damages awarded by the court to him are reasonable. IAC not applicable In Alitalia vs. from the nature of their business and for reasons of public policy. 2. The appellate cout therefore did not err in disregarding the limits of liability under the Warsaw Convention. the Court ruled that “the liability of the common carrier for the loss. 18. The petitioner therein did not declare a higher value for his luggage. Inc. destroyed or deteriorated.68 Phil. 4. 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.” 6. 4 and 5 of the preceding article if the goods are lost. since the passenger’s destination was the Philippines. 5. 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. Co’s evidence. In all matters not regulated by said Code. 3. destruction or deterioration of goods transported from a foreign country to the Philippines is governed primarily by the New Civil Code. No error in disregarding limits of liability under Warsaw Convention Herein. are factual issues which we may not pass upon in the absence of special circumstances requiring a review of the evidence. Inc.