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G.R. No. 167363

meikimouse
December 15, 2010

SEALOADER SHIPPING CORPORATION, Petitioner,


vs.
GRAND
CEMENT
MANUFACTURING
CORPORATION, JOYCE LAUNCH & TUG CO., INC.,
ROMULO DIANTAN & JOHNNY PONCE, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 177466

TAIHEIYO CEMENT PHILIPPINES, INC. (Formerly Grand


Cement Manufacturing Corporation), Petitioner,
vs.
SEALOADER SHIPPING CORPORATION, JOYCE LAUNCH &
TUG CO., INC., ROMULO DIANTAN & JOHNNY PONCE,
Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

For consideration of the Court are two Petitions for


Review on Certiorari1 under Rule 45 of the Rules of Court,
both seeking to challenge the Amended Decision2 dated
March 3, 2005 of the Court of Appeals in CA-G.R. CV No.
65083. The Amended Decision reduced by 50% the award
of actual damages that was previously granted in the
Decision3 dated April 19, 1999 of the Regional Trial Court
(RTC) of Cebu City, Branch 58, in Civil Case No. CEB16602 and affirmed by the Court of Appeals in its earlier
Decision4 dated November 12, 2004.

The antecedents of the case are presented hereunder:

Sealoader Shipping Corporation (Sealoader) is a domestic


corporation engaged in the business of shipping and
hauling cargo from one point to another using sea-going
inter-island barges.5 Grand Cement Manufacturing
Corporation (now Taiheiyo Cement Philippines, Inc.), on
the other hand, is a domestic corporation engaged in the
business of manufacturing and selling cement through its
authorized distributors and, for which purposes, it
maintains its own private wharf in San Fernando, Cebu,
Philippines.6

On March 24, 1993, Sealoader executed a Time Charter


Party Agreement7 with Joyce Launch and Tug Co., Inc.
(Joyce Launch), a domestic corporation, which owned and
operated the motor tugboat M/T Viper. By virtue of the
agreement, Sealoader chartered the M/T Viper in order to
tow the formers unpropelled barges for a minimum
period of fifteen days from the date of acceptance,
renewable on a fifteen-day basis upon mutual agreement
of the parties.8

Subsequently, Sealoader entered into a contract with


Grand Cement for the loading of cement clinkers and the
delivery thereof to Manila. On March 31, 1994,
Sealoaders barge, the D/B Toploader, arrived at the
wharf of Grand Cement tugged by the M/T Viper. The D/B
Toploader, however, was not immediately loaded with its
intended cargo as the employees of Grand Cement were
still loading another vessel, the Cargo Lift Tres.

On April 4, 1994, Typhoon Bising struck the Visayas area,


with maximum recorded winds of 120 kilometers per
hour. Public storm signal number 3 was raised over the
province of Cebu. The D/B Toploader was, at that time,
still docked at the wharf of Grand Cement. In the
afternoon of said date, as the winds blew stronger and
the waves grew higher, the M/T Viper tried to tow the D/B
Toploader away from the wharf. The efforts of the tugboat
were foiled, however, as the towing line connecting the
two vessels snapped. This occurred as the mooring lines
securing the D/B Toploader to the wharf were not cast off.
The following day, the employees of Grand Cement
discovered the D/B Toploader situated on top of the
wharf, apparently having rammed the same and causing
significant damage thereto.

On October 3, 1994, Grand Cement filed a Complaint for


Damages9 against Sealoader; Romulo Diantan, the
Captain of the M/T Viper; and Johnny Ponce, the Barge
Patron of the D/B Toploader. The complaint was docketed
as Civil Case No. CEB-16602 before the RTC of Cebu City,
Branch 58. Grand Cement claimed, among others, that
when the D/B Toploader arrived at its wharf on March 31,
1994, the same was not properly secured. Likewise, the
storm warnings for Typhoon Bising were allegedly
circulated to the public as early as 6:00 a.m. of April 4,
1994 through radio and print media. Grand Cement
stated that after it received the weather updates for that
day, it immediately advised Romulo Diantan and Johnny
Ponce to move their respective vessels away from the
wharf to a safer berthing area. Both men allegedly
refused to do so, with Romulo Diantan even abandoning
the D/B Toploader in the critical hours in the afternoon.
Because of the strong winds of Typhoon Bising, the D/B
Toploader was forced to smash against the wharf of

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Grand Cement. On April 7, 1994, Grand Cement sent a


letter10 addressed to Johnny Ponce, demanding the
payment of the cost of the damage to the wharf in the
amount of P2,423,318.58. As Grand Cement still failed to
receive a reply, it sought the assistance of the Coast
Guard Investigation Service Detachment in Cebu. The
said office scheduled consecutive hearings, but Sealoader
allegedly did not appear. Hence, Grand Cement filed the
complaint, praying that the defendants named therein be
ordered to pay jointly and severally the amount of
P2,423,318.58 as actual damages, plus P1,000,000.00 as
compensatory damages, P200,000.00 as attorneys fees,
and P100,000.00 as litigation expenses and other costs.

On November 25, 1994, Sealoader filed a motion to


dismiss11 the complaint. Sealoader insisted that Joyce
Launch should have been sued in its stead, as the latter
was the owner and operator of the M/T Viper. Having
complete physical control of the M/T Viper, as well as the
towing, docking, mooring and berthing of the D/B
Toploader, Sealoader maintained that Joyce Launch
should be held liable for the negligent acts of the latters
employees who were manning the M/T Viper.

Before the RTC could hear the above motion, Grand


Cement filed on December 14, 1994, an Amended
Complaint,12 impleading Joyce Launch as one of the
party defendants. The RTC admitted the Amended
Complaint and ordered that summons be issued to Joyce
Launch.13

On January 2, 1995, Sealoader instituted a Cross-claim14


against Joyce Launch and Romulo Diantan. Sealoader
reiterated that the M/T Viper was under the complete
command, control, supervision and management of Joyce
Launch through Romulo Diantan and the crew, all of
whom were employed by Joyce Launch. Sealoader posited
that Joyce Launch had the sole duty and responsibility to
secure the M/T Viper and the D/B Toploader in order to
avert any damage to the properties of third parties. Thus,
Sealoader pleaded that, should it be adjudged liable to
pay the damages sought by Grand Cement, Joyce Launch
should likewise be ordered to reimburse Sealoader any
and all amounts that the latter is ordered to pay.

On January 4, 1995, Sealoader filed its Answer15 to the


amended complaint, maintaining that it only had the right
to use the M/T Viper for the purposes for which the
tugboat was chartered and nothing more. Sealoader
pointed out that Grand Cement did not initiate the
loading of the D/B Toploader notwithstanding the fact that
the said barge had been docked at the latters wharf long
before Typhoon Bising came on April 4, 1994. As the
typhoon was a force majeure, the damage it brought
upon the wharf of Grand Cement was allegedly beyond

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the control of Sealoader. The Clearing Officer of
Sealoader, Emar Acosta, also appeared before the Coast
Guard Investigation Service Detachment in Cebu to
testify on the circumstances that occurred when Typhoon
Bising struck. Sealoader also instituted a counterclaim
against Grand Cement and sought the payment of
exemplary damages, attorneys fees and expenses of
litigation.

On March 14, 1995, Joyce Launch posted its Answer16 to


the cross-claim of Sealoader, asserting that the damage
sustained by the wharf of Grand Cement was not due to
the gross negligence of the M/T Viper crew but due to the
force majeure that was Typhoon Bising. Joyce Launch also
claimed that the wharf was not equipped with rubber
fenders and finger jutes, such that the same could easily
be damaged by strong waves and winds even without
any vessel berthed thereat. When the typhoon struck, the
employees of Grand Cement allegedly abandoned the
wharf, thus, leaving the crew of the M/T Viper helpless in
preventing the D/B Toploader from ramming the wharf.
Joyce Launch likewise faulted Grand Cements employees
for not warning the crew of the M/T Viper early on to seek
refuge from the typhoon.

In its Answer17 to the amended complaint, Joyce Launch


reprised its argument that the resultant damage to the
wharf of Grand Cement was brought about by a fortuitous
event, of which it was belatedly warned. Joyce Launch
insisted that, if only the loading of the D/B Toploader
proceeded as scheduled, the M/T Viper could have tugged
the barge away from the wharf before the typhoon struck.
Joyce Launch prayed for the dismissal of the complaint
and the cross-claim against it, as well as the payment of
attorneys fees and litigation expenses, by way of
counterclaim against Grand Cement.

The trial of the case ensued thereafter.

On May 14, 1997, Grand Cement presented ex parte its


first witness, Rolando Buhisan, in order to establish the
factual allegations in the complaint and to prove the
damages sought therein.18 Buhisan stated that, in 1994,
he became the head of the civil engineering department
of Grand Cement. The primary duty of the said office was
to estimate expenses, as well as to investigate or inspect
the implemented projects under the said department.19
Buhisan related that on April 5, 1994, he was instructed
to investigate the damage caused by the D/B Toploader
on the wharf of Grand Cement.20 After inspecting the
damage on the top and bottom sides of the pier, Buhisan
immediately made an estimate of the total cost of repairs
and sent it to the Senior Vice President of Grand
Cement.21 On April 17, 1994, Grand Cement sent a letter
to Johnny Ponce, the Barge Patron of the D/B Toploader,

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demanding that he pay the estimated cost of damage.22


The demand, however, was not paid.23 Buhisan said that
the estimated total cost was about P2,640,000.00, more
or less.24

The next witness also put forward ex parte by Grand


Cement, on May 16, 1997, was Wennie C. Saniel. As the
Corporate Affairs Manager of Grand Cement, Saniel
testified that he was responsible for keeping the company
documents and was likewise in charge of the internal and
external functions of the company, the claims for
damages, and the keeping of the policies required for
minor claims.25 Saniel pertinently stated that, on April 4,
1994, he gave instructions for the pullout of the D/B
Toploader from the wharf in view of the incoming
typhoon.26 As the instructions were ignored, Grand
Cement resultantly suffered damages estimated to be
around P2.4 million.27 The cost of repairs made on the
wharf was P2,362,358.20.28

Subsequently, in an Order29 dated November 12, 1997,


the RTC granted the manifestation of Grand Cement to
drop Romulo Diantan as a party defendant. The latter
was, at that time, already working abroad and cannot be
served with summons and a copy of the complaint.

On February 26, 1998, the RTC granted30 the motion of


Sealoader to take the testimonies of its witnesses by
depositions upon written interrogatories.

Thus, on March 16, 1998, the deposition31 of Marita S.


Santos was taken by Sealoader in order to prove that the
damage to the wharf of Grand Cement was caused by
force majeure, as well as the negligent acts and
omissions of Grand Cement and Joyce Launch. Santos
declared that she was the General Manager of Sealoader.
She related that Sealoader and Joyce Launch entered into
a Time Charter Party Agreement on March 24, 1993.32 In
accordance with the contract, Joyce Launch would
provide a tugboat, the M/T Viper, to tow the barge of
Sealoader. On March 31, 1994, Sealoaders barge, the
D/B Toploader, was towed by the M/T Viper to the wharf of
Grand Cement in San Fernando, Cebu. Upon arrival,
Sealoaders Clearing Officer, Emar Acosta, notified Grand
Cement that the D/B Toploader was ready to load. The
crew of the barge then waited as Grand Cement had
three days from notice to load cargo into the barge.
Despite waiting for several days, Santos averred that
Grand Cement did not load the barge. Santos explained
that there are demurrage charges if Grand Cement failed
to complete the loading within three days from the
commencement thereof. In the afternoon of April 4, 1994,
the crew of the D/B Toploader received notice that
Typhoon Bising was expected to batter the Cebu
province. The crew then looked for Romulo Diantan, the

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captain of the M/T Viper, to direct him to tow the barge to
a safer place.33 At around 3:00 p.m., the crew of the
barge found Diantan trying to maneuver the M/T Viper to
tow the D/B Toploader away from the wharf. The M/T
Viper failed to tow the barge since the mooring lines were
not cast off and the arrastre responsible for the same
were not at the wharf. The towing line connecting the M/T
Viper to the D/B Toploader then snapped with the force of
the strong winds and the weight of the vessels. The crew
of the M/T Viper tried to connect another towing line to
the D/B Toploader but they failed to do so because of the
big waves. The M/T Viper drifted away to the Bohol area,
while the D/B Toploader ran aground.34

Santos contended that Sealoader was not liable for the


damage given that the wharf was still under construction
at that time and Grand Cement was completely
responsible for the pulling out of the vessels docked
therein.35 Also, had Grand Cement loaded the D/B
Toploader with cargo before April 4, 1994, the accident
could have been averted. Santos further stressed that,
since the D/B Toploader had no engine, the M/T Viper was
responsible for towing the barge to safety. Finally, Santos
asserted that Typhoon Bising was an act of God; hence,
the parties had to suffer their respective losses.36

In reply to the written cross-interrogatories submitted by


the counsel of Grand Cement, Santos stated that, after
Sealoader chartered the M/T Viper, they communicated
with the tugboat by means of SSB radio and sometimes
through messages with other vessels. The SSB radio of
Sealoader was allegedly operational on the months of
March and April 1994. Santos declared that Sealoader
gets weather forecasts twice a day, every 12 hours, from
the Japan Meteorological Company.37 Santos admitted
that Sealoader received the weather bulletin issued by
PAGASA regarding Typhoon Bising at 5:00 a.m. of April 3,
1994. Sealoader, however, was not able to relay the
information to the M/T Viper as radio reception was poor.
Sealoader tried to communicate through the operator of
another vessel, the Tugboat BJay, but the reception was
likewise weak. Consequently, the succeeding weather
forecasts were also not conveyed to the M/T Viper.38

The deposition of Emar A. Acosta was also taken by


Sealoader on March 16, 1998 to negate the alleged
liability of Sealoader to Grand Cement. Acosta stated that
he was the Clearing Officer of Sealoader from 1992 to
1997. On March 31, 1994, he was on board the M/T Viper,
which tugged the D/B Toploader to the wharf of Grand
Cement. Upon their arrival on said date, Acosta informed
Grand Cement, through the latters representative Jaime
Nobleza, that the D/B Toploader was ready to be
loaded.39 Nobleza supposedly told Acosta to wait as
another vessel was being loaded at that time. Thereafter,
on April 4, 1994, Typhoon Bising struck. At around 3:00

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p.m. of said date, Romulo Diantan tried to steer the M/T


Viper in an effort to pull the D/B Toploader away from the
wharf, as the waves grew stronger. The lines between the
vessels snapped as the D/B Toploader was still moored to
the wharf. The arrastre were supposed to cast off the
mooring lines but there was nobody on the wharf during
the typhoon.40 Acosta explained that the M/T Viper did
not tow the D/B Toploader before the typhoon intensified
because there were no instructions from Nobleza to pull
out from the wharf. Acosta pointed out that the
employees of Grand Cement were still loading another
vessel at around 1:00 p.m. on April 4, 1994.41 Lastly,
Acosta presented the Sworn Statement42 he executed
before the Coast Guard on July 26, 1994 to affirm the
truth of his statements in connection with the incident in
question.

Acosta also answered written cross-interrogatories


submitted by the counsel of Grand Cement on July 9,
1998. Upon being asked if he had the authority to direct
where and when the D/B Toploader and the M/T Viper will
go, Acosta answered in the affirmative. He likewise
acknowledged that he was authorized to order the
withdrawal of the vessels from any wharf at any given
time, through the captain of the M/T Viper. Acosta added
that he first came to know of the typhoon when Romulo
Diantan told him so, while the latter was maneuvering
the M/T Viper away from the wharf. Acosta claimed that it
was not his duty to receive weather forecasts and the
same was gathered by the crew of the M/T Viper.43
Acosta also said that the D/B Toploader was equipped
with a handheld radio, while the M/T Viper had a SSB
radio. Acosta further stated that he did not order the
withdrawal of the D/B Toploader away from the wharf
because they were waiting for Grand Cement to load their
barge and he had no knowledge of the typhoon until it
struck the wharf.44

On November 4, 1998, Grand Cement called on Jaime


Nobleza to the witness stand in order to rebut the
testimonies of Santos and Acosta. Nobleza testified that
he was the Ward Coordinator of Grand Cement from
1993-1995, whose duties were to monitor the loading
operations at the Grand Cement pier, to oversee the
general situation therein, and to receive and disseminate
information to the vessels and his superior.45 Nobleza
contradicted the statement of Acosta that there was no
instruction to pull the D/B Toploader away from the wharf.
Nobleza said that Acosta was aware of the typhoon as
early as April 3, 1994. When Nobleza learned that
typhoon signal number 1 was raised in the Central
Visayas region, he discussed the same with Acosta and
advised him of the possible towing of the D/B Toploader
to a safer place. Acosta allegedly told Nobleza that the
typhoon was still far. At about 9:00 a.m. on April 4, 1994,
Nobleza boarded the D/B Toploader and advised Acosta to
remove the barge from the wharf since the weather was
already deteriorating. Acosta did not heed the

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instructions and instead told Nobleza that the anchor of
the vessel and the cable wire attached thereto were
strong enough to withstand the typhoon.46 The last time
that Nobleza directed Acosta to pull out the barge from
the wharf was at 2:00 p.m. on April 4, 1994. About 15
minutes thereafter, the operations of the wharf were
suspended. Contrary to the claim of Acosta, Nobleza
averred that during the typhoon, he was at the wharf
along with a roving guard and four other people from the
arrastre.47

Nobleza further testified that he did not receive any


request for the casting off of the mooring lines, which
connected the D/B Toploader to the wharf. Nobleza said
that it was also not proper to simply cast off the mooring
lines without the proper coordination with the crew of the
barge because the vessel might no longer be
maneuvered and would drift out to sea.48 Anent the
alleged failure of Grand Cement to load cargo on the D/B
Toploader on time, Nobleza countered that Santos was
aware of this since the latter was told that the barge will
be loaded only after the loading of the Cargo Lift Tres was
completed.49

On cross-examination, Nobleza articulated that Grand


Cement took days to load just one vessel because the
sea was not cooperative and they had to stop loading at
times. At around 9:00 a.m. on April 4, 1994, despite
telling Acosta to pull out the D/B Toploader from the
wharf, Nobleza admitted that they did not suspend the
loading of the Cargo Lift Tres. He explained that the
vessel was grounded in the shallow waters and it was
already loaded with clinkers.50 Nobleza testified that he
remained at the vicinity of the wharf at around 4:00 p.m.
on April 4, 1994.51

Finally, on December 9, 1998, Sealoader presented Renee


Cayang as a surrebuttal witness to prove that Nobleza
was not at the wharf when Typhoon Bising struck. Cayang
stated that he was the Assistant Barge Patron of the D/B
Toploader at the time of the incident on question. On April
4, 1994, he was on board the D/B Toploader.52 Cayang
testified that he did not see Nobleza either on board the
D/B Toploader, before the typhoon struck, or at the wharf
at the time of the typhoon. Cayang also asserted that
there was nobody at the wharf at that time.53

At his cross-examination, Cayang said that, during the


entire afternoon of April 4, 1994, he stayed inside the
compartment of the D/B Toploader where the officers
were usually stationed.54 Cayang revealed that they
were waiting for the master of the barge to arrive. When
asked if there was a radio on board the barge, Cayang
replied in the negative. He also disclosed that nobody
notified them of the typhoon and they only came to know

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about the same when their vessel was hit.55 Cayang


stated that Nobleza stayed in the guardhouse of Grand
Cement on April 4, 1994 and the latter did not go to the
wharf.56 Cayang alleged that, on their end, there was no
advice to pull out the D/B Toploader and that was why
they were waiting for somebody to cast off the mooring
lines. On re-direct examination, however, Cayang said
that there were stevedores present at that time who were
in a position to cast off the mooring lines.57

On April 19, 1999, the RTC rendered a decision on Civil


Case No. 161602, declaring that:

From the evidence adduced, the Court is of the view that


the defendants are guilty of negligence, which caused
damage to the [Grand Cements] wharf. The defendants
negligence can be shown from their acts or omissions,
thus: they did not take any precautionary measure as
demanded or required of them in complete disregard of
the public storm signal or warning; the master or captain
or the responsible crew member of the vessel was not in
the vessel, hence, nobody could make any move or
action for the safety of the vessel at such time of
emergency or catastrophe; and the vessel was not
equipped with a radio or any navigational communication
facility, which is a mandatory requirement for all
navigational vessels.

On the second issue: Re: Damages. As the defendants


are guilty of negligence, [Grand Cement] is entitled to
recover damages from them. Even the failure of the
defendants to equip their vessel with the communication
facility, such as radio, such failure is undisputedly a
negligence. x x x Had defendants been mindful enough to
equip their vessel with a radio, a responsible crew
member of the vessel would have been informed through
the radio of the incoming typhoon and the notice from
the [Grand Cement] about the said typhoon would have
been of no concern to the defendant and/or the
responsible crew members of the vessel. The safety of
the vessel and the avoidance of injury or damage to
another should be the primary concern of the defendants
and/or the crew members themselves.

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"Art. 2180. The obligation imposed by Article 2176 is


demandable not only for ones own acts or omissions, but
also for those persons for whom one is responsible.

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Employers shall be liable for the damages caused by their


employees and household helpers acting within the scope
of their assigned tasks, even though the former are not
engaged in any business or industry." (Civil Code)

The Court finds sufficient and competent evidence to


award [Grand Cement] actual or compensatory damages
in the amount of P2,362,358.20 x x x. Likewise, as [Grand
Cement] has engaged the services of counsel because of
defendants act or omission and has incurred expenses to
protect its interest (Art. 2208, par. (2), Civil Code), [Grand
Cement] should recover the sum of P50,000.00 as
attorneys fees and another sum of P10,000.00 as
litigation expenses. The defendants are held liable to pay
all these damages, and their liability is solidary (Art.
2194, Civil Code).

As to the counterclaim, considering the findings of Court,


which are adverse to the defendants, the counterclaim
has become without basis, hence, should be dismissed.

WHEREFORE, premises considered, judgment is hereby


rendered in favor of [Grand Cement] and against the
defendants by ordering the defendants Sealoader
Shipping Corporation, Joyce Launch and Tug Company,
Inc. and Johnny Ponce to pay jointly and severally to the
[Grand Cement] the sum of Pesos Two Millions Three
Hundred Sixty Two Thousand Three Hundred Fifty Eight
and 20/ centavos (P2,362,358.20) as actual or
compensatory damages, the sum of Fifty Thousand Pesos
(P50,000.00) as attorneys fees, the sum of Ten Thousand
Pesos (P10,000.00) as litigation expenses, and the costs
of the suit.

xxxx
The counterclaim is hereby dismissed.58
The damage to [Grand Cements] private wharf was
caused by the negligence of both defendants Sealoader
and Joyce Launch as well as their employees, who are the
complements of the barge Toploader and the tugboat M/T
Viper. Said defendants are also responsible for the
negligence of their employees, as the law says:

Sealoader appealed the above ruling with the Court of


Appeals, which appeal was docketed as CA-G.R. CV No.
65083. On the other hand, Joyce Launch and Johnny
Ponce no longer questioned the trial courts decision.

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Before the appellate court, Sealoader argued that the RTC


erred in: (1) finding that the damage to the wharf of
Grand Cement was caused by the negligence of
Sealoader; (2) holding Sealoader liable for damages
despite the fact that it was Grand Cement that had the
last clear chance to avert the damage; (3) not holding
that Grand Cement was negligent for not loading the
vessel on time; and (4) giving credence to the
afterthought testimony of Grand Cements rebuttal
witness.59

In its Decision dated November 12, 2004, the Court of


Appeals found no merit in the appeal of Sealoader,
adjudging thus:

On the first and second assignment of error, Sealoader


attributes the cause of the damage to the negligence of
Grand Cement for not casting off the mooring lines of the
barge at the height of the typhoon despite their having
the last clear chance to avert any damage. We find this
contention untenable.

xxxx

Indeed, the people at the wharf could not just cast off the
mooring lines absent any instructions from the crew of
the vessels to do so, considering that the barge was a
dumb boat, i.e., without a propeller. In view of this,
Sealoader can not fault the people at the wharf for not
acting. Although Sealoader presented a Mr. Renee
Cayang, Assistant Patron of D/B "Toploader", to rebut Mr.
Noblezas testimony, the same did not reveal that any
command for the release of the mooring lines was made.
Mr. Cayangs testimony revealed that they had no radio
on board x x x and that there were stevedores present at
that time x x x.

Second, good seamanship dictates that, in cases of


departure under extraordinary circumstances, as in the
case at bench, the tugboats crew has the obligation to
cut off their mooring lines. The records reveal that the
crew did try to cut off the mooring lines but were
unsuccessful due to the big waves. Consequently, the
towing lines between M/T "Viper" and D/B "Toploader"
snapped. x x x.

Going to the third assignment of error, Sealoader


contends that Grand Cement was negligent for not
loading the vessel on time. Yet again, we find this to be
untenable. x x x. With the knowledge that a storm was
approaching, prudence would have dictated them to tug

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the barge to shelter and safety at the earliest possible
time. Instead, they waited until the last minute to take
action which was already too late. Their experience would
have prompted them to take precautionary measures
considering that the weather and the sea are capricious.
Whether Grand Cement was late in loading the barge or
not is of no moment. It was the judgment of the vessels
captain and patron that was crucial.

As to the last assignment of error regarding the rebuttal


witness of Grand Cement, we find no reversible error
committed by the court a quo in giving credence to the
testimony of the said witness. The defendant-appellant
and defendants-appellees were given chance to crossexamine the witness. Moreover, no documentary or
testimonial evidence was given to rebut the crucial
testimony that no command from the vessel was given to
the people at the wharf to release the mooring lines.

WHEREFORE, in view of all the foregoing premises,


judgment is hereby rendered by us DISMISSING the
appeal filed in this case. The decision dated April 19,
1999 rendered by the Regional Trial Court, Branch 58 in
Cebu City in Civil Case No. CEB-16602 is hereby
AFFIRMED.60

On December 9, 2004, Sealoader filed a Motion for


Reconsideration61 of the above decision, arguing that the
obligation to pay the damages sustained by Grand
Cement did not require solidarity given that Joyce Launch
was solely liable therefor. Sealoader insisted that the D/B
Toploader would not have rammed the wharf if the M/T
Viper had towed the barge to safety on the morning of
April 4, 1994. Sealoader also asserted that the delay in
the loading of the D/B Toploader partly contributed to the
resulting damage to the wharf.

On March 3, 2005, the Court of Appeals issued an


Amended Decision in CA-G.R. CV No. 65083, finding the
above stated motion of Sealoader partly meritorious.
While upholding its earlier finding that Sealoader was
negligent, the appellate court determined that:

Like Sealoader, Grand Cement did not take any


precaution to avoid the damages wrought by the storm.
Grand Cement waited until the last possible moment
before informing Sealoader and Joyce about the
impending storm. In fact, it continued loading on another
vessel (Cargo Lift 3) until 2:15 p.m. of April 4, 1994
(transcript of the testimony of Jaime Nobleza, pp. 10-11)
or roughly just before the storm hit. It is no wonder that
Sealoader did not immediately move away from the pier
since the owner of the pier, Grand Cement, was

TRANSPO

continuing to load another vessel despite the fast


approaching storm. As for the conduct of Grand Cement
when the storm hit, we find the testimony of Sealoaders
witness that there were no employees of Grand Cement
manning the pier to be more convincing. In totality, we
find that Grand Cement also did not exercise due
diligence in this case and that its conduct contributed to
the damages that it suffered.

Article 2179 of the New Civil Code states that where the
plaintiffs negligence was only contributory, the
immediate and proximate cause of the injury being the
defendants lack of due care, the plaintiff may recover
damages, the courts shall mitigate the damages to be
awarded. Contributory negligence is conduct on the part
of the plaintiff which falls below the standard to which he
should conform for his own protection and which is legally
contributing cause, cooperating with the negligence of
the defendant in bringing about the plaintiffs harm. x x x

Due to its contributory negligence, Grand Cement must


carry part of the brunt of the damages. This Court finds it
equitable that Grand Cement should bear FIFTY PER CENT
(50%) or half of the actual damages. The other
pronouncements of the court regarding attorneys fees,
litigation expenses and cost of suit shall, however, not be
disturbed.

meikimouse
In G.R. No. 167363, Sealoader raised the following issues
in its Memorandum, to wit:

WHILE THE HONORABLE COURT OF APPEALS WAS


CORRECT IN RULING THAT GRAND CEMENT WAS GUILTY
OF NEGLIGENCE, IT COMMITTED REVERSIBLE ERROR IN
NOT HOLDING THAT GRAND CEMENT WAS BARRED FROM
RECOVERING DAMAGES UNDER THE DOCTRINE OF LAST
CLEAR CHANCE.

II

THE COURT OF APPEALS AND THE TRIAL COURT


DEPARTED FROM THE USUAL COURSE OF JUDICIAL
PROCEEDINGS IN REFUSING TO DETERMINE THE
ULTIMATE RIGHTS AND OBLIGATIONS OF PETITIONER
[SEALOADER] AND RESPONDENT JOYCE LAUNCH AS
AGAINST EACH OTHER AND AS AGAINST GRAND
CEMENT.66

In G.R. No. 177466, Grand Cement set forth the following


assignment of errors for our consideration:
WHEREFORE, in view of the foregoing premises, judgment
is hereby rendered by us PARTIALLY MODIFYING our
earlier judgment by reducing the award for actual
damages by FIFTY PER CENT (50%) or HALF.62

Grand Cement filed a Motion for Reconsideration63 of the


Amended Decision but the Court of Appeals denied the
same in a Resolution64 dated February 20, 2007.

Desirous of having the Amended Decision overturned,


Sealoader and Grand Cement each filed their separate
Petitions for Review on Certiorari before this Court, which
petitions were docketed as G.R. No. 167363 and G.R. No.
177466, respectively. In a Resolution65 dated August 6,
2008, the Court ordered the consolidation of the two
petitions, as the same involved identical parties, identical
sets of facts, and both petitions assailed the Amended
Decision dated March 3, 2005 of the Court of Appeals in
CA-G.R. CV No. 65083.

WHETHER OR NOT JOYCE LAUNCH SHOULD HAVE BEEN


IMPLEADED AS ONE OF THE RESPONDENTS HEREIN
PURSUANT TO SECTIONS 3 AND 4, RULE 45 OF THE 1997
RULES OF CIVIL PROCEDURE AND SUPREME COURT
CIRCULAR NO. 19-91.

II

WHETHER OR NOT THE COURT OF APPEALS ERRED IN


CREATING A PREVIOUSLY NON-EXISTENT LEGAL DUTY BY
SHIPPERS OF GOODS OR OWNERS OF PIERS TO WARN
DOCKED VESSELS OF APPROACHING TYPHOONS AND IN
MAKING THE SAME AS ONE OF ITS BASES IN FINDING
[GRAND
CEMENT]
GUILTY
OF
CONTRIBUTORY
NEGLIGENCE.

Issues
III

TRANSPO
WHETHER OR NOT THE COURT OF APPEALS ERRED IN
CREATING A PREVIOUSLY NON-EXISTENT LEGAL DUTY ON
AN OWNER OF A PIER TO STATION EMPLOYEES AT SUCH
PIER WHEN A TYPHOON HITS AND IN MAKING THE SAME
AS ONE OF ITS BASES IN FINDING [GRAND CEMENT]
GUILTY OF CONTRIBUTORY NEGLIGENCE.

IV

WHETHER OR NOT THE COURT OF APPEALS ERRED IN


REFUSING TO TAKE COGNIZANCE OF THE ISSUES RAISED
IN [GRAND CEMENTS] MOTION FOR RECONSIDERATION,
ON THE GROUND THAT ALL THE ISSUES HAD ALREADY
BEEN DISCUSSED, WHEN NEITHER ITS ORIGINAL
DECISION OR THE AMENDED DECISION HAD RULED ON
THE
POINTS
RAISED
IN
SAID
MOTION
FOR
RECONSIDERATION.67

Ultimately, the question that needs to be resolved by this


Court is who, among the parties in this case, should be
liable for the damage sustained by the wharf of Grand
Cement.

Sealoader assails the Amended Decision of the Court of


Appeals insofar as it was found guilty of committing
negligent acts that partly caused damage to the wharf of
Grand Cement. Instead, Sealoader directly lays the blame
on Grand Cement and Joyce Launch.

meikimouse
guilty of contributory negligence, and thus, likewise
questions the reduction by 50% of the award of actual
damages to be paid by Sealoader.

Ruling

Sealoader contends that Grand Cement had the last clear


chance to prevent the damage to the latters wharf. Had
Grand Cement cast off the mooring lines attached to the
D/B Toploader early on, the barge could have been towed
away from the wharf and the damage thereto could have
been avoided. As Grand Cement failed to act accordingly,
Sealoader argues that the former was barred from
recovering damages.

Grand Cement counters that the determination as to who


among the parties had the last clear chance to avoid an
impending harm or accident calls for a re-examination of
the evidence adduced by the parties. As this Court is not
a trier of facts, Grand Cement posits that Sealoaders
petition may already be dismissed. Furthermore, Grand
Cement asserts that the doctrine of last clear chance
cannot aid Sealoader since the doctrine presumes that
Sealoaders negligence had ceased and the alleged
negligence of Grand Cement came at a later time. Thus,
an appreciable time must have intervened, which
effectively severed the negligence of Sealoader.
Contrarily, Grand Cement maintains that the negligence
of Sealoader did not cease, while its own negligence was
not proven.

The Court had occasion to reiterate the well-established


doctrine of last clear chance in Philippine National
Railways v. Brunty68 as follows:
Sealoader argues that the negligence imputed on its part
was not established, thus, it is absolved from any liability.
On the contrary, the negligent acts allegedly committed
by Grand Cement should bar its recovery of damages in
view of the doctrine of last clear chance. Sealoader
reiterates that the damage to the wharf was ultimately
caused by the failure of Grand Cement to cast off the
mooring lines attached to the D/B Toploader at the height
of the typhoon. The second sentence of Article 2179 of
the Civil Code on contributory negligence was supposedly
inapplicable in the instant case, considering that
Sealoader was not negligent at all. Sealoader again
insists that the D/B Toploader was entirely dependent on
the M/T Viper for movement. Thus, the failure of the M/T
Viper to tow the D/B Toploader to safety should not be
charged to the latter.

On the other hand, Grand Cement disputes the Court of


Appeals finding in the Amended Decision that it was

The doctrine of last clear chance states that where both


parties are negligent but the negligent act of one is
appreciably later than that of the other, or where it is
impossible to determine whose fault or negligence
caused the loss, the one who had the last clear
opportunity to avoid the loss but failed to do so, is
chargeable with the loss. Stated differently, the
antecedent negligence of plaintiff does not preclude him
from recovering damages caused by the supervening
negligence of defendant, who had the last fair chance to
prevent the impending harm by the exercise of due
diligence.69 (Emphasis ours.)

Upon the other hand, in Layugan v. Intermediate


Appellate Court,70 the Court defined negligence as "the
omission to do something which a reasonable man,

TRANSPO

guided by those considerations which ordinarily regulate


the conduct of human affairs, would do, or the doing of
something which a prudent and reasonable man would
not do, or as Judge Cooley defines it, (T)he failure to
observe for the protection of the interests of another
person, that degree of care, precaution, and vigilance
which the circumstances justly demand, whereby such
other person suffers injury."

Verily, the matter of negligence of either or both parties


to a case is a question of fact since a determination of
the same "would entail going into factual matters on
which the finding of negligence was based."71 Generally,
questions of fact should not be raised in a petition for
review.72 Section 1, Rule 4573 of the Rules of Court
explicitly states that a petition filed thereunder shall raise
only questions of law, which must be distinctly set forth.

Jurisprudence has provided for exceptions74 to this rule,


however, one of which is when the findings of fact of the
Court of Appeals are contrary to those of the trial court.
As will be further elaborated upon, this exception is
present in the instant case as the RTC and the Court of
Appeals issued contrary findings of fact as to the
negligence of Grand Cement. Thus, an examination of the
evidence adduced by the parties is warranted under the
circumstances.

After a thorough review of the records of this case, the


Court finds that Sealoader was indeed guilty of
negligence in the conduct of its affairs during the incident
in question.

One of the bases cited by the RTC for its finding that
Sealoader was negligent was the lack of a radio or any
navigational communication facility aboard the D/B
Toploader. To recall, Emar Acosta stated in his deposition
dated July 9, 1998 that Sealoader was equipped with a
handheld radio while the M/T Viper had on board an SSB
radio. Marita Santos, on the other hand, explained that
Sealoader communicated and transmitted weather
forecasts to the M/T Viper through the latters SSB radio.
Before Typhoon Bising hit the province of Cebu on April 4,
1994, Santos stated that Sealoader tried to relay the
weather bulletins pertaining to the storm directly with the
M/T Viper but the radio signal was always poor. The
foregoing statements were put to doubt, however, when
Sealoaders own witness, Renee Cayang, stated on crossexamination that there was no radio on board the D/B
Toploader. The Court, therefore, agrees with the
conclusion of Grand Cement that there was either no
radio on board the D/B Toploader, the radio was not fully
functional, or the head office of Sealoader was negligent
in failing to attempt to contact the D/B Toploader through

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radio. Either way, this negligence cannot be ascribed to
anyone else but Sealoader.

Correlated to the above finding is the manifest laxity of


the crew of the D/B Toploader in monitoring the weather.
Despite the apparent difficulty in receiving weather
bulletins from the head office of Sealoader, the evidence
on record suggests that the crew of the D/B Toploader
failed to keep a watchful eye on the prevailing weather
conditions. Cayang, then the Assistant Barge Patron of
the D/B Toploader, admitted that on the afternoon of April
4, 1994, he only stayed inside the officers station in the
barge, waiting for the barge patron to arrive. He testified
that nobody notified the crew of the barge of the
impending typhoon and the latter knew about the
typhoon only when it hit their vessel.

In like manner, Acosta stated in his deposition dated July


9, 1998 that it was not his duty to receive weather
forecasts and the said information was gathered only
from the crew of the M/T Viper. He was also not aware if
Sealoader had records of weather forecasts and how
many of such were received. Acosta likewise gave
conflicting statements as to how and when he came to
know of the typhoon. In his answer to the written crossinterrogatories dated July 9, 1998, Acosta said that he
found out about the incoming typhoon when Romulo
Diantan told him while the latter was already
maneuvering the M/T Viper away from the wharf on April
4, 1994. However, in the Sworn Statement he executed
before the Coast Guard Investigation Service Detachment
on July 26, 1994, Acosta declared as follow:

32. Q While on board did you hear any news about the
approaching typhoon BISING?
A Yes about 1100H I heard a news about the typhoon.
33. Q How were you able to hear about this news of the
typhoon approaching?
A I contacted another tugboat M/T BEEJAY and I heard
that the typhoon was still far.
34. Q Did you inquire from them if San Fernando, Cebu
is the path of the incoming typhoon?
A Yes I tried asking them but they said the place is safe
for the incoming typhoon.
35. Q Did you inform your captain about this typhoon?
A Yes I informed him but he says the typhoon is far.
36. Q What was the weather condition during that time
1100H?

TRANSPO
A The weather is fine the sea was calm, but it was
cloudy.
xxxx
38. Q -- What did ROMULO DIANTAN do with xxx after
1100H of that day?
A He stood by at the tugboat.
39. Q Until what time?
A Until the time when the wind was becoming strong.
40. Q What time was this about the wind becoming
strong?
A 1300H of that day I say 1500H not 1300H. [T]hat is
3:00 P.M.
41. Q What did the captain do at about x x x 1500H?
A He stood by the main engine for maneuvering.
42. Q What was the decision of the captain during that
time?
A To pull out the BARGE TOPLOADER from the beaching
area of Grand Cement Pier in order to shelter at Sangat,
San Fernando.75 (Emphases ours.)

Unmistakably, the crew of the D/B Toploader and the M/T


Viper were caught unawares and unprepared when
Typhoon Bising struck their vicinity. According to the
Sworn Statement of Acosta, which was taken barely three
months after the typhoon, he was already informed of the
approaching typhoon. Regrettably, Acosta merely relied
on the assurances of the M/T Beejay crew and the opinion
of Romulo Diantan that the typhoon was nowhere near
their area. As it turned out, such reliance was utterly
misplaced. Within a few hours, the weather quickly
deteriorated as huge winds and strong waves began to
batter the vessels. At the height of the typhoon, the M/T
Viper tried in vain to tow the D/B Toploader away from the
wharf. Since the barge was still moored to the wharf, the
line connecting the same to the M/T Viper snapped and
the latter vessel drifted to the Bohol area. The violent
waves then caused the D/B Toploader to ram against the
wharf, thereby causing damage thereto.

Sealoader cannot pass to Grand Cement the


responsibility of casting off the mooring lines connecting
the D/B Toploader to the wharf. The Court agrees with the
ruling of the Court of Appeals in the Decision dated
November 12, 2004 that the people at the wharf could
not just cast off the mooring lines without any
instructions from the crew of the D/B Toploader and the
M/T Viper. As the D/B Toploader was without an engine,

meikimouse
casting off the mooring lines prematurely might send the
barge adrift or even run the risk of the barge hitting the
wharf sure enough. Thus, Sealoader should have taken
the initiative to cast off the mooring lines early on or, at
the very least, requested the crew at the wharf to
undertake the same. In failing to do so, Sealoader was
manifestly negligent.

On the issue of the negligence of Grand Cement, the


Court of Appeals initially affirmed the ruling of the RTC
that the damage to the wharf of Grand Cement was
caused by the negligent acts of Sealoader, Joyce Launch
and Johnny Ponce. Upon motion of Sealoader, however,
the Court of Appeals rendered an Amended Decision,
finding that Grand Cement was guilty of contributory
negligence. The award of actual damages to Grand
Cement was, thus, reduced by 50%.

Article 2179 of the Civil Code defines the concept of


contributory negligence as follows:

Art. 2179. When the plaintiffs own negligence was the


immediate and proximate cause of his injury, he cannot
recover damages. But if his negligence was only
contributory, the immediate and proximate cause of the
injury being the defendants lack of due care, the plaintiff
may recover damages, but the courts shall mitigate the
damages to be awarded.

Contributory negligence is conduct on the part of the


injured party, contributing as a legal cause to the harm
he has suffered, which falls below the standard to which
he is required to conform for his own protection.76

We find that, contrary to the judgment of the Court of


Appeals in the Amended Decision dated March 3, 2005,
Grand Cement was not guilty of negligent acts, which
contributed to the damage that was incurred on its
wharf.1avvphi1

To recall, the Court of Appeals subsequently found that


Grand Cement likewise did not exercise due diligence
since it belatedly informed Sealoader of the approaching
typhoon and, thereafter, still continued to load another
vessel. The Court of Appeals further gave more credence
to the claim of Sealoader that there were no employees
of Grand Cement manning the pier when the typhoon
struck.

TRANSPO

The Court holds that Sealoader had the responsibility to


inform itself of the prevailing weather conditions in the
areas where its vessel was set to sail. Sealoader cannot
merely rely on other vessels for weather updates and
warnings on approaching storms, as what apparently
happened in this case. Common sense and reason
dictates this. To do so would be to gamble with the safety
of its own vessel, putting the lives of its crew under the
mercy of the sea, as well as running the risk of causing
damage to the property of third parties for which it would
necessarily be liable.

Be that as it may, the records of the instant case reveal


that Grand Cement timely informed the D/B Toploader of
the impending typhoon. Jaime Nobleza testified that he
warned Acosta of the typhoon as early as April 3, 1994
and even advised the latter to move the D/B Toploader to
a safer place. On April 4, 1994, Nobleza twice directed
Acosta to remove the barge away from the wharf. The
first order was given at about 9:00 a.m., while the second
was around 2:00 p.m.

In contrast, Acosta again gave contradictory statements


regarding the advise of Grand Cement to remove the D/B
Toploader away from the wharf. In the deposition of
Acosta dated March 16, 1998, he stated that the M/T
Viper did not tow the D/B Toploader away from the wharf
before the typhoon intensified because there was no
instruction from Nobleza to pull out. However, in his
Sworn Statement before the Coast Guard, Acosta
declared thus:

meikimouse
waters at that time and already loaded with cement
clinkers.

As regards the presence of employees at the wharf


during the typhoon, Acosta stated in his deposition dated
March 16, 1998 that there was nobody on the wharf to
cast off the mooring lines at that time. Nobleza refuted
this statement, however, responding that he was present
at the wharf during the typhoon, together with a roving
guard and four other people from the arrastre. Notably,
Sealoaders
own
witness,
Renee
Cayang,
also
contradicted the statement of Acosta, testifying that
there were actually stevedores present at the wharf who
were in a position to cast off the mooring lines.

In light of the foregoing, the Court finds that the evidence


proffered by Sealoader to prove the negligence of Grand
Cement was marred by contradictions and are, thus,
weak at best. We therefore conclude that the contributory
negligence of Grand Cement was not established in this
case. Thus, the ruling of the Court of Appeals in the
Amended Decision, which reduced the actual damages to
be recovered by Grand Cement, is hereby revoked.
Accordingly, the doctrine of last clear chance does not
apply to the instant case.

WHEREFORE, the Court hereby rules that:

(1) The Petition for Review in G.R. No. 167363 is DENIED;


43. Q According to the representative of Grand Cement
you were notified as early as the morning of April 4, 1994
to pull out your vessel but allegedly you did not do so.
What can you say on this?

A They informed us at about 2:40 P.M. telling me that if


ever the typhoon will become stronger we must pull out
the barge. I told MR. NOBLEZA about this that we will do
so.77

Furthermore, the Court cannot subscribe to the ruling of


the Court of Appeals in the Amended Decision that Grand
Cement was likewise negligent inasmuch as it continued
to load the Cargo Lift Tres despite the fast approaching
typhoon. Such fact alone does not prove that Grand
Cement was oblivious of the typhoon. As testified upon
by Nobleza, Sealoader was very much aware of this as he
told Marita Santos that the D/B Toploader would only be
loaded with its cargo after the loading of the Cargo Lift
Tres. The latter vessel was also grounded in shallow

(2) The Petition for Review in G.R. No. 177466 is


GRANTED;

(3) The Amended Decision dated March 3, 2005 of the


Court of Appeals in CA-G.R. CV No. 65083 is REVERSED
and SET ASIDE; and

(4) The Decision dated November 12, 2004 of the Court


of Appeals in CA-G.R. CV No. 65083 is REINSTATED.

No costs.

SO ORDERED.

TRANSPO

G.R. No. 161833. July 8, 2005


PHILIPPINE CHARTER INSURANCE CORPORATION,
Petitioners,
vs. UNKNOWN OWNER OF THE VESSEL M/V
"NATIONAL
HONOR,"
NATIONAL
SHIPPING
CORPORATION
OF
THE
PHILIPPINES
and
INTERNATIONAL
CONTAINER
SERVICES,
INC.,
Respondents.

DECISION

CALLEJO, SR., J.:

This is a petition for review under Rule 45 of the 1997


Revised Rules of Civil Procedure assailing the Decision1
dated January 19, 2004 of the Court of Appeals (CA) in
CA-G.R. CV No. 57357 which affirmed the Decision dated
February 17, 1997 of the Regional Trial Court (RTC) of
Manila, Branch 37, in Civil Case No. 95-73338.

The Antecedent

On November 5, 1995, J. Trading Co. Ltd. of Seoul, Korea,


loaded a shipment of four units of parts and accessories
in the port of Pusan, Korea, on board the vessel M/V
"National Honor," represented in the Philippines by its
agent, National Shipping Corporation of the Philippines
(NSCP). The shipment was for delivery to Manila,
Philippines. Freight forwarder, Samhwa Inter-Trans Co.,
Ltd., issued Bill of Lading No. SH94103062 in the name of
the shipper consigned to the order of Metropolitan Bank
and Trust Company with arrival notice in Manila to
ultimate consignee Blue Mono International Company,
Incorporated (BMICI), Binondo, Manila.

NSCP, for its part, issued Bill of Lading No.


NSGPBSML5125653 in the name of the freight forwarder,
as shipper, consigned to the order of Stamm International
Inc., Makati, Philippines. It is provided therein that:

12. This Bill of Lading shall be prima facie evidence of the


receipt of the Carrier in apparent good order and
condition except as, otherwise, noted of the total number
of Containers or other packages or units enumerated
overleaf. Proof to the contrary shall be admissible when
this Bill of Lading has been transferred to a third party
acting in good faith. No representation is made by the
Carrier as to the weight, contents, measure, quantity,

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quality, description, condition, marks, numbers, or value
of the Goods and the Carrier shall be under no
responsibility whatsoever in respect of such description
or particulars.

13. The shipper, whether principal or agent, represents


and warrants that the goods are properly described,
marked, secured, and packed and may be handled in
ordinary course without damage to the goods, ship, or
property or persons and guarantees the correctness of
the particulars, weight or each piece or package and
description of the goods and agrees to ascertain and to
disclose in writing on shipment, any condition, nature,
quality, ingredient or characteristic that may cause
damage, injury or detriment to the goods, other property,
the ship or to persons, and for the failure to do so the
shipper agrees to be liable for and fully indemnify the
carrier and hold it harmless in respect of any injury or
death of any person and loss or damage to cargo or
property. The carrier shall be responsible as to the
correctness of any such mark, descriptions or
representations.4

The shipment was contained in two wooden crates,


namely, Crate No. 1 and Crate No. 2, complete and in
good order condition, covered by Commercial Invoice No.
YJ-73564 DTD5 and a Packing List.6 There were no
markings on the outer portion of the crates except the
name of the consignee.7 Crate No. 1 measured 24 cubic
meters and weighed 3,620 kgs. It contained the following
articles: one (1) unit Lathe Machine complete with parts
and accessories; one (1) unit Surface Grinder complete
with parts and accessories; and one (1) unit Milling
Machine complete with parts and accessories. On the
flooring of the wooden crates were three wooden battens
placed side by side to support the weight of the cargo.
Crate No. 2, on the other hand, measured 10 cubic
meters and weighed 2,060 kgs. The Lathe Machine was
stuffed in the crate. The shipment had a total invoice
value of US$90,000.00 C&F Manila.8 It was insured for
P2,547,270.00 with the Philippine Charter Insurance
Corporation (PCIC) thru its general agent, Family
Insurance and Investment Corporation,9 under Marine
Risk Note No. 68043 dated October 24, 1994.10

The M/V "National Honor" arrived at the Manila


International Container Terminal (MICT) on November 14,
1995. The International Container Terminal Services,
Incorporated (ICTSI) was furnished with a copy of the
crate cargo list and bill of lading, and it knew the
contents of the crate.11 The following day, the vessel
started discharging its cargoes using its winch crane. The
crane was operated by Olegario Balsa, a winchman from
the ICTSI,12 the exclusive arrastre operator of MICT.

TRANSPO

Denasto Dauz, Jr., the checker-inspector of the NSCP,


along with the crew and the surveyor of the ICTSI,
conducted an inspection of the cargo.13 They inspected
the hatches, checked the cargo and found it in apparent
good condition.14 Claudio Cansino, the stevedore of the
ICTSI, placed two sling cables on each end of Crate No.
1.15 No sling cable was fastened on the mid-portion of
the crate. In Dauzs experience, this was a normal
procedure.16 As the crate was being hoisted from the
vessels hatch, the mid-portion of the wooden flooring
suddenly snapped in the air, about five feet high from the
vessels twin deck, sending all its contents crashing down
hard,17 resulting in extensive damage to the shipment.

BMICIs customs broker, JRM Incorporated, took delivery


of the cargo in such damaged condition.18 Upon receipt
of the damaged shipment, BMICI found that the same
could no longer be used for the intended purpose. The
Mariners Adjustment Corporation hired by PCIC
conducted a survey and declared that the packing of the
shipment was considered insufficient. It ruled out the
possibility of taxes due to insufficiency of packing. It
opined that three to four pieces of cable or wire rope
slings, held in all equal setting, never by-passing the
center of the crate, should have been used, considering
that the crate contained heavy machinery.19

BMICI subsequently filed separate claims against the


NSCP,20 the ICTSI,21 and its insurer, the PCIC,22 for
US$61,500.00. When the other companies denied
liability, PCIC paid the claim and was issued a
Subrogation Receipt23 for P1,740,634.50.

On March 22, 1995, PCIC, as subrogee, filed with the RTC


of Manila, Branch 35, a Complaint for Damages24 against
the "Unknown owner of the vessel M/V National Honor,"
NSCP and ICTSI, as defendants.

PCIC alleged that the loss was due to the fault and
negligence of the defendants. It prayed, among others

WHEREFORE, it is respectfully prayed of this Honorable


Court that judgment be rendered ordering defendants to
pay plaintiff, jointly or in the alternative, the following:

1. Actual damages in the amount of P1,740,634.50 plus


legal interest at the time of the filing of this complaint
until fully paid;

2. Attorneys fees in the amount of P100,000.00;

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3. Cost of suit.25

ICTSI, for its part, filed its Answer with Counterclaim and
Cross-claim against its co-defendant NSCP, claiming that
the loss/damage of the shipment was caused exclusively
by the defective material of the wooden battens of the
shipment, insufficient packing or acts of the shipper.

At the trial, Anthony Abarquez, the safety inspector of


ICTSI, testified that the wooden battens placed on the
wooden flooring of the crate was of good material but
was not strong enough to support the weight of the
machines inside the crate. He averred that most
stevedores did not know how to read and write; hence, he
placed the sling cables only on those portions of the crate
where the arrow signs were placed, as in the case of
fragile cargo. He said that unless otherwise indicated by
arrow signs, the ICTSI used only two cable slings on each
side of the crate and would not place a sling cable in the
mid-section.26 He declared that the crate fell from the
cranes because the wooden batten in the mid-portion
was broken as it was being lifted.27 He concluded that
the loss/damage was caused by the failure of the shipper
or its packer to place wooden battens of strong materials
under the flooring of the crate, and to place a sign in its
mid-term section where the sling cables would be placed.

The ICTSI adduced in evidence the report of the R.J. Del


Pan & Co., Inc. that the damage to the cargo could be
attributed to insufficient packing and unbalanced weight
distribution of the cargo inside the crate as evidenced by
the types and shapes of items found.28

The trial court rendered judgment for PCIC and ordered


the complaint dismissed, thus:

WHEREFORE, the complaint of the plaintiff, and the


respective counterclaims of the two defendants are
dismissed, with costs against the plaintiff.

SO ORDERED.29

According to the trial court, the loss of the shipment


contained in Crate No. 1 was due to the internal defect
and weakness of the materials used in the fabrication of
the crates. The middle wooden batten had a hole
(bukong-bukong).
The
trial
court
rejected
the
certification30 of the shipper, stating that the shipment

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was properly packed and secured, as mere hearsay and


devoid of any evidentiary weight, the affiant not having
testified.

Not satisfied, PCIC appealed31 to the CA which rendered


judgment on January 19, 2004 affirming in toto the
appealed decision, with this fallo

WHEREFORE, the decision of the Regional Trial Court of


Manila, Branch 35, dated February 17, 1997, is
AFFIRMED.

SO ORDERED.32

The appellate court held, inter alia, that it was bound by


the finding of facts of the RTC, especially so where the
evidence in support thereof is more than substantial. It
ratiocinated that the loss of the shipment was due to an
excepted cause "[t]he character of the goods or defects
in the packing or in the containers" and the failure of the
shipper to indicate signs to notify the stevedores that
extra care should be employed in handling the
shipment.33 It blamed the shipper for its failure to use
materials of stronger quality to support the heavy
machines and to indicate an arrow in the middle portion
of the cargo where additional slings should be
attached.34 The CA concluded that common carriers are
not absolute insurers against all risks in the transport of
the goods.35

Hence, this petition by the PCIC, where it alleges that:

I.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF


LAW IN NOT HOLDING THAT RESPONDENT COMMON
CARRIER IS LIABLE FOR THE DAMAGE SUSTAINED BY THE
SHIPMENT IN THE POSSESSION OF THE ARRASTRE
OPERATOR.

II.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF


LAW IN NOT APPLYING THE STATUTORY PRESUMPTION OF
FAULT AND NEGLIGENCE IN THE CASE AT BAR.

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III.

THE COURT OF APPEALS GROSSLY MISCOMPREHENDED


THE FACTS IN FINDING THAT THE DAMAGE SUSTAINED BY
THE [SHIPMENT] WAS DUE TO ITS DEFECTIVE PACKING
AND NOT TO THE FAULT AND NEGLIGENCE OF THE
RESPONDENTS.36

The petitioner asserts that the mere proof of receipt of


the shipment by the common carrier (to the carrier) in
good order, and their arrival at the place of destination in
bad order makes out a prima facie case against it; in such
case, it is liable for the loss or damage to the cargo
absent satisfactory explanation given by the carrier as to
the exercise of extraordinary diligence. The petitioner
avers that the shipment was sufficiently packed in
wooden boxes, as shown by the fact that it was accepted
on board the vessel and arrived in Manila safely. It
emphasizes that the respondents did not contest the
contents of the bill of lading, and that the respondents
knew that the manner and condition of the packing of the
cargo was normal and barren of defects. It maintains that
it behooved the respondent ICTSI to place three to four
cables or wire slings in equal settings, including the
center portion of the crate to prevent damage to the
cargo:

[A] simple look at the manifesto of the cargo and the


bill of lading would have alerted respondents of the
nature of the cargo consisting of thick and heavy
machinery. Extra-care should have been made and
extended in the discharge of the subject shipment. Had
the respondent only bothered to check the list of its
contents, they would have been nervous enough to place
additional slings and cables to support those massive
machines, which were composed almost entirely of thick
steel, clearly intended for heavy industries. As indicated
in the list, the boxes contained one lat[h]e machine, one
milling machine and one grinding machine-all coming
with complete parts and accessories. Yet, not one among
the respondents were cautious enough. Here lies the
utter failure of the respondents to observed extraordinary
diligence in the handling of the cargo in their custody and
possession, which the Court of Appeals should have
readily observed in its appreciation of the pertinent
facts.37

The petitioner posits that the loss/damage was caused by


the mishandling of the shipment by therein respondent
ICTSI, the arrastre operator, and not by its negligence.

The petitioner insists that the respondents did not


observe extraordinary diligence in the care of the goods.

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It argues that in the performance of its obligations, the


respondent ICTSI should observe the same degree of
diligence as that required of a common carrier under the
New Civil Code of the Philippines. Citing Eastern Shipping
Lines, Inc. v. Court of Appeals,38 it posits that
respondents are liable in solidum to it, inasmuch as both
are charged with the obligation to deliver the goods in
good condition to its consignee, BMICI.

Respondent NSCP counters that if ever respondent ICTSI


is adjudged liable, it is not solidarily liable with it. It
further avers that the "carrier cannot discharge directly to
the consignee because cargo discharging is the monopoly
of the arrastre." Liability, therefore, falls solely upon the
shoulder of respondent ICTSI, inasmuch as the
discharging of cargoes from the vessel was its exclusive
responsibility. Besides, the petitioner is raising questions
of facts, improper in a petition for review on certiorari.39

Respondent ICTSI avers that the issues raised are factual,


hence, improper under Rule 45 of the Rules of Court. It
claims that it is merely a depository and not a common
carrier; hence, it is not obliged to exercise extraordinary
diligence. It reiterates that the loss/damage was caused
by the failure of the shipper or his packer to place a sign
on the sides and middle portion of the crate that extra
care should be employed in handling the shipment, and
that the middle wooden batten on the flooring of the
crate had a hole. The respondent asserts that the
testimony of Anthony Abarquez, who conducted his
investigation at the site of the incident, should prevail
over that of Rolando Balatbat. As an alternative, it argues
that if ever adjudged liable, its liability is limited only to
P3,500.00 as expressed in the liability clause of Gate Pass
CFS-BR-GP No. 319773.

The petition has no merit.

The well-entrenched rule in our jurisdiction is that only


questions of law may be entertained by this Court in a
petition for review on certiorari. This rule, however, is not
ironclad and admits certain exceptions, such as when (1)
the conclusion is grounded on speculations, surmises or
conjectures; (2) the inference is manifestly mistaken,
absurd or impossible; (3) there is grave abuse of
discretion; (4) the judgment is based on a
misapprehension of facts; (5) the findings of fact are
conflicting; (6) there is no citation of specific evidence on
which the factual findings are based; (7) the findings of
absence of facts are contradicted by the presence of
evidence on record; (8) the findings of the Court of
Appeals are contrary to those of the trial court; (9) the
Court of Appeals manifestly overlooked certain relevant
and undisputed facts that, if properly considered, would
justify a different conclusion; (10) the findings of the

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Court of Appeals are beyond the issues of the case; and
(11) such findings are contrary to the admissions of both
parties.40

We have reviewed the records and find no justification to


warrant the application of any exception to the general
rule.

We agree with the contention of the petitioner that


common carriers, from the nature of their business and
for reasons of public policy, are mandated 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.41 The
Court has defined extraordinary diligence in the vigilance
over the goods as follows:

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, or destruction of the goods entrusted to it for
sale, carriage and delivery. 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 to
exercise due care in the handling and stowage, including
such methods as their nature requires."42

The common carriers duty to observe the requisite


diligence in the shipment of goods lasts from the time the
articles are surrendered to or unconditionally placed in
the possession of, and received by, the carrier for
transportation until delivered to, or until the lapse of a
reasonable time for their acceptance, by the person
entitled to receive them.43 When the goods shipped are
either lost or arrive in damaged condition, a presumption
arises against the carrier of its failure to observe that
diligence, and there need not be an express finding of
negligence to hold it liable.44 To overcome the
presumption of negligence in the case of loss, destruction
or deterioration of the goods, the common carrier must
prove that it exercised extraordinary diligence.45

However, under Article 1734 of the New Civil Code, the


presumption of negligence does not apply to any of the
following causes:

1. Flood, storm, earthquake, lightning or other natural


disaster or calamity;

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2. Act of the public enemy in war, whether international


or civil;

3. Act or omission of the shipper or owner of the goods;

4. The character of the goods or defects in the packing or


in the containers;

5. Order or act of competent public authority.

It bears stressing that the enumeration in Article 1734 of


the New Civil Code which exempts the common carrier
for the loss or damage to the cargo is a closed list.46 To
exculpate itself from liability for the loss/damage to the
cargo under any of the causes, the common carrier is
burdened to prove any of the aforecited causes claimed
by it by a preponderance of evidence. If the carrier
succeeds, the burden of evidence is shifted to the shipper
to prove that the carrier is negligent.47

"Defect" is the want or absence of something necessary


for completeness or perfection; a lack or absence of
something essential to completeness; a deficiency in
something essential to the proper use for the purpose for
which a thing is to be used.48 On the other hand, inferior
means of poor quality, mediocre, or second rate.49 A
thing may be of inferior quality but not necessarily
defective. In other words, "defectiveness" is not
synonymous with "inferiority."

In the present case, the trial court declared that based on


the record, the loss of the shipment was caused by the
negligence of the petitioner as the shipper:

The same may be said with respect to defendant ICTSI.


The breakage and collapse of Crate No. 1 and the total
destruction of its contents were not imputable to any
fault or negligence on the part of said defendant in
handling the unloading of the cargoes from the carrying
vessel, but was due solely to the inherent defect and
weakness of the materials used in the fabrication of said
crate.

The crate should have three solid and strong wooden


batten placed side by side underneath or on the flooring
of the crate to support the weight of its contents.
However, in the case of the crate in dispute, although
there were three wooden battens placed side by side on

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its flooring, the middle wooden batten, which carried
substantial volume of the weight of the crates contents,
had a knot hole or "bukong-bukong," which considerably
affected, reduced and weakened its strength. Because of
the enormous weight of the machineries inside this crate,
the middle wooden batten gave way and collapsed. As
the combined strength of the other two wooden battens
were not sufficient to hold and carry the load, they too
simultaneously with the middle wooden battens gave way
and collapsed (TSN, Sept. 26, 1996, pp. 20-24).

Crate No. 1 was provided by the shipper of the


machineries in Seoul, Korea. There is nothing in the
record which would indicate that defendant ICTSI had any
role in the choice of the materials used in fabricating this
crate. Said defendant, therefore, cannot be held as blame
worthy for the loss of the machineries contained in Crate
No. 1.50

The CA affirmed the ruling of the RTC, thus:

The case at bar falls under one of the exceptions


mentioned in Article 1734 of the Civil Code, particularly
number (4) thereof, i.e., the character of the goods or
defects in the packing or in the containers. The trial court
found that the breakage of the crate was not due to the
fault or negligence of ICTSI, but to the inherent defect
and weakness of the materials used in the fabrication of
the said crate.

Upon examination of the records, We find no compelling


reason to depart from the factual findings of the trial
court.

It appears that the wooden batten used as support for the


flooring was not made of good materials, which caused
the middle portion thereof to give way when it was lifted.
The shipper also failed to indicate signs to notify the
stevedores that extra care should be employed in
handling the shipment.

Claudio Cansino, a stevedore of ICTSI, testified before the


court their duties and responsibilities:

"Q: With regard to crates, what do you do with the


crates?
A: Everyday with the crates, there is an arrow drawn
where the sling is placed, Maam.

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Q: When the crates have arrows drawn and where you


placed the slings, what do you do with these crates?

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weight and respect on appeal, and, in fact, accorded
finality when supported by substantial evidence.51

A: A sling is placed on it, Maam.


Q: After you placed the slings, what do you do with the
crates?

We agree with the trial and appellate courts.

A: After I have placed a sling properly, I ask the crane


(sic) to haul it, Maam.

The petitioner failed to adduce any evidence to counter


that of respondent ICTSI. The petitioner failed to rebut the
testimony of Dauz, that the crates were sealed and that
the contents thereof could not be seen from the
outside.52 While it is true that the crate contained
machineries and spare parts, it cannot thereby be
concluded that the respondents knew or should have
known that the middle wooden batten had a hole, or that
it was not strong enough to bear the weight of the
shipment.

Q: Now, what, if any, were written or were marked on the


crate?
A: The thing that was marked on the cargo is an arrow
just like of a chain, Maam.
Q: And where did you see or what parts of the crate did
you see those arrows?
A: At the corner of the crate, Maam.
Q: How many arrows did you see?
A: Four (4) on both sides, Maam.

Q: What did you do with the arrows?


A: When I saw the arrows, thats where I placed the
slings, Maam.

There is no showing in the Bill of Lading that the


shipment was in good order or condition when the carrier
received the cargo, or that the three wooden battens
under the flooring of the cargo were not defective or
insufficient or inadequate. On the other hand, under Bill
of Lading No. NSGPBSML512565 issued by the
respondent NSCP and accepted by the petitioner, the
latter represented and warranted that the goods were
properly packed, and disclosed in writing the "condition,
nature, quality or characteristic that may cause damage,
injury or detriment to the goods." Absent any signs on
the shipment requiring the placement of a sling cable in
the mid-portion of the crate, the respondent ICTSI was
not obliged to do so.

Q: Now, did you find any other marks on the crate?


A: Nothing more, Maam.
Q: Now, Mr. Witness, if there are no arrows, would you
place slings on the parts where there are no arrows?
A: You can not place slings if there are no arrows, Maam."

Appellants allegation that since the cargo arrived safely


from the port of [P]usan, Korea without defect, the fault
should be attributed to the arrastre operator who
mishandled the cargo, is without merit. The cargo fell
while it was being carried only at about five (5) feet high
above the ground. It would not have so easily collapsed
had the cargo been properly packed. The shipper should
have used materials of stronger quality to support the
heavy machines. Not only did the shipper fail to properly
pack the cargo, it also failed to indicate an arrow in the
middle portion of the cargo where additional slings should
be attached. At any rate, the issue of negligence is
factual in nature and in this regard, it is settled that
factual findings of the lower courts are entitled to great

The statement in the Bill of Lading, that the shipment was


in apparent good condition, is sufficient to sustain a
finding of absence of defects in the merchandise. Case
law has it that such statement will create a prima facie
presumption only as to the external condition and not to
that not open to inspection.53

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED


for lack of merit.

SO ORDERED.

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G.R. No. 143133

June 5, 2002

BELGIAN OVERSEAS CHARTERING AND SHIPPING


N.V. and JARDINE DAVIES TRANSPORT SERVICES,
INC., petitioners,
vs. PHILIPPINE
respondents.

FIRST

INSURANCE

CO.,

INC.,

The CA reversed the Decision of the Regional Trial Court


(RTC) of Makati City (Branch 134), which had disposed as
follows:

"WHEREFORE, in view of the foregoing, judgment is


hereby rendered, dismissing the complaint, as well as
defendant's counterclaim."5

PANGANIBAN, J.:
The Facts
Proof of the delivery of goods in good order to a common
carrier and of their arrival in bad order at their
destination constitutes prima facie fault or negligence on
the part of the carrier. If no adequate explanation is given
as to how the loss, the destruction or the deterioration of
the goods happened, the carrier shall be held liable
therefor.

Statement of the Case

Before us is a Petition for Review under Rule 45 of the


Rules of Court, assailing the July 15, 1998 Decision1 and
the May 2, 2000 Resolution2 of the Court of Appeals3
(CA) in CA-GR CV No. 53571. The decretal portion of the
Decision reads as follows:

"WHEREFORE, in the light of the foregoing disquisition,


the decision appealed from is hereby REVERSED and SET
ASIDE. Defendants-appellees are ORDERED to jointly and
severally pay plaintiffs-appellants the following:

'1) FOUR Hundred Fifty One Thousand Twenty-Seven


Pesos and 32/100 (P451,027.32) as actual damages,
representing the value of the damaged cargo, plus
interest at the legal rate from the time of filing of the
complaint on July 25, 1991, until fully paid;

'2) Attorney's fees amounting to 20% of the claim; and

'3) Costs of suit.'"4

The assailed Resolution denied petitioner's Motion for


Reconsideration.

The factual antecedents of the case are summarized by


the Court of Appeals in this wise:

"On June 13, 1990, CMC Trading A.G. shipped on board


the M/V 'Anangel Sky' at Hamburg, Germany 242 coils of
various Prime Cold Rolled Steel sheets for transportation
to Manila consigned to the Philippine Steel Trading
Corporation. On July 28, 1990, M/V Anangel Sky arrived at
the port of Manila and, within the subsequent days,
discharged the subject cargo. Four (4) coils were found to
be in bad order B.O. Tally sheet No. 154974. Finding the
four (4) coils in their damaged state to be unfit for the
intended purpose, the consignee Philippine Steel Trading
Corporation declared the same as total loss.1wphi1.nt

"Despite receipt of a formal demand, defendantsappellees refused to submit to the consignee's claim.
Consequently, plaintiff-appellant paid the consignee five
hundred six thousand eighty six & 50/100 pesos
(P506,086.50), and was subrogated to the latter's rights
and causes of action against defendants-appellees.
Subsequently, plaintiff-appellant instituted this complaint
for recovery of the amount paid by them, to the
consignee as insured.

"Impugning the propriety of the suit against them,


defendants-appellees imputed that the damage and/or
loss was due to pre-shipment damage, to the inherent
nature, vice or defect of the goods, or to perils, danger
and accidents of the sea, or to insufficiency of packing
thereof, or to the act or omission of the shipper of the
goods or their representatives. In addition thereto,
defendants-appellees argued that their liability, if there
be any, should not exceed the limitations of liability
provided for in the bill of lading and other pertinent laws.
Finally, defendants-appellees averred that, in any event,
they exercised due diligence and foresight required by
law to prevent any damage/loss to said shipment."6

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Ruling of the Trial Court

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testimony is purely hearsay is sufficient to pave the way
for the applicability of Article 1735 of the Civil Code;

The RTC dismissed the Complaint because respondent


had failed to prove its claims with the quantum of proof
required by law.7

II

It likewise debunked petitioners' counterclaim, because


respondent's suit was not manifestly frivolous or primarily
intended to harass them.8

Ruling of the Court of Appeals

In reversing the trial court, the CA ruled that petitioners


were liable for the loss or the damage of the goods
shipped, because they had failed to overcome the
presumption of negligence imposed on common carriers.

The CA further held as inadequately proven petitioners'


claim that the loss or the deterioration of the goods was
due to pre-shipment damage.9 It likewise opined that the
notation "metal envelopes rust stained and slightly
dented" placed on the Bill of Lading had not been the
proximate cause of the damage to the four (4) coils.10

As to the extent of petitioners' liability, the CA held that


the package limitation under COGSA was not applicable,
because the words "L/C No. 90/02447" indicated that a
higher valuation of the cargo had been declared by the
shipper. The CA, however, affirmed the award of
attorney's fees.

Hence, this Petition.11

Issues

In their Memorandum, petitioners raise the following


issues for the Court's consideration:

"Whether or not the consignee/plaintiff filed the required


notice of loss within the time required by law;
III

"Whether or not a notation in the bill of lading at the time


of loading is sufficient to show pre-shipment damage and
to exempt herein defendants from liability;

IV

"Whether or not the "PACKAGE LIMITATION" of liability


under Section 4 (5) of COGSA is applicable to the case at
bar."12

In sum, the issues boil down to three:

1. Whether petitioners have overcome the presumption of


negligence of a common carrier

2. Whether the notice of loss was timely filed

3. Whether the package limitation of liability is applicable

This Court's Ruling

The Petition is partly meritorious.

First Issue:
I
Proof of Negligence
"Whether or not plaintiff by presenting only one witness
who has never seen the subject shipment and whose

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Petitioners contend that the presumption of fault imposed


on common carriers should not be applied on the basis of
the lone testimony offered by private respondent. The
contention is untenable.

Well-settled is the rule that common carriers, from the


nature of their business and for reasons of public policy,
are bound to observe extraordinary diligence and
vigilance with respect to the safety of the goods and the
passengers they transport.13 Thus, common carriers are
required to render service with the greatest skill and
foresight and "to use all reason[a]ble means to ascertain
the nature and characteristics of the goods tendered for
shipment, and to exercise due care in the handling and
stowage, including such methods as their nature
requires."14 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, actually or constructively,
to the consignee or to the person who has a right to
receive them.15

This strict requirement is justified by the fact that,


without a hand or a voice in the preparation of such
contract, the riding public enters into a contract of
transportation with common carriers.16 Even if it wants
to, it cannot submit its own stipulations for their
approval.17 Hence, it merely adheres to the agreement
prepared by them.

Owing to this high degree of diligence required of them,


common carriers, as a general rule, are presumed to
have been at fault or negligent if the goods they
transported deteriorated or got lost or destroyed.18 That
is, unless they prove that they exercised extraordinary
diligence in transporting the goods.19 In order to avoid
responsibility for any loss or damage, therefore, they
have the burden of proving that they observed such
diligence.20

However, the presumption of fault or negligence will not


arise21 if the loss is due to any of the following causes:
(1) flood, storm, earthquake, lightning, or other natural
disaster or calamity; (2) an act of the public enemy in
war, whether international or civil; (3) an act or omission
of the shipper or owner of the goods; (4) the character of
the goods or defects in the packing or the container; or
(5) an order or act of competent public authority.22 This
is a closed list. If the cause of destruction, loss or
deterioration
is
other
than
the
enumerated
circumstances, then the carrier is liable therefor.23

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Corollary to the foregoing, mere proof of delivery of the
goods in good order to a common carrier and of their
arrival in bad order at their destination constitutes a
prima facie case of fault or negligence against the carrier.
If no adequate explanation is given as to how the
deterioration, the loss or the destruction of the goods
happened, the transporter shall be held responsible.24

That petitioners failed to rebut the prima facie


presumption of negligence is revealed in the case at bar
by a review of the records and more so by the evidence
adduced by respondent.25

First, as stated in the Bill of Lading, petitioners received


the subject shipment in good order and condition in
Hamburg, Germany.26

Second, prior to the unloading of the cargo, an Inspection


Report27 prepared and signed by representatives of both
parties showed the steel bands broken, the metal
envelopes rust-stained and heavily buckled, and the
contents thereof exposed and rusty.

Third, Bad Order Tally Sheet No. 15497928 issued by


Jardine Davies Transport Services, Inc., stated that the
four coils were in bad order and condition. Normally, a
request for a bad order survey is made in case there is an
apparent or a presumed loss or damage.29

Fourth, the Certificate of Analysis30 stated that, based on


the sample submitted and tested, the steel sheets found
in bad order were wet with fresh water.

Fifth, petitioners -- in a letter31 addressed to the


Philippine Steel Coating Corporation and dated October
12, 1990 -- admitted that they were aware of the
condition of the four coils found in bad order and
condition.

These facts were confirmed by Ruperto Esmerio, head


checker of BM Santos Checkers Agency. Pertinent portions
of his testimony are reproduce hereunder:

"Q.
Mr. Esmerio, you mentioned that you are a Head
Checker. Will you inform the Honorable Court with what
company you are connected?
A.

BM Santos Checkers Agency, sir.

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Q.
How is BM Santos checkers Agency related or
connected with defendant Jardine Davies Transport
Services?
A.

It is the company who contracts the checkers, sir.

Q.
You mentioned that you are a Head Checker, will
you inform this Honorable Court your duties and
responsibilities?
A.
I am the representative of BM Santos on board the
vessel, sir, to supervise the discharge of cargoes.
xxx

xxx

xxx

Q.
On or about August 1, 1990, were you still
connected or employed with BM Santos as a Head
Checker?
A.

Yes, sir.

Q.
And, on or about that date, do you recall having
attended the discharging and inspection of cold steel
sheets in coil on board the MV/AN ANGEL SKY?
A.
Yes, sir, I was there.
xxx

xxx

xxx

Q.
Based on your inspection since you were also
present at that time, will you inform this Honorable Court
the condition or the appearance of the bad order cargoes
that were unloaded from the MV/ANANGEL SKY?
ATTY. MACAMAY:
Objection, Your Honor, I think the document itself reflects
the condition of the cold steel sheets and the best
evidence is the document itself, Your Honor that shows
the condition of the steel sheets.
COURT:

True, the words "metal envelopes rust stained and slightly


dented" were noted on the Bill of Lading; however, there
is no showing that petitioners exercised due diligence to
forestall or lessen the loss.36 Having been in the service
for several years, 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.37 Equipped with the proper
knowledge of the nature of steel sheets in coils and of the
proper way of transporting them, the master of the vessel
and his crew should have undertaken precautionary
measures to avoid possible deterioration of the cargo. But
none of these measures was taken.38 Having failed to
discharge the burden of proving that they have exercised
the extraordinary diligence required by law, petitioners
cannot escape liability for the damage to the four coils.39

In their attempt to escape liability, petitioners further


contend that they are exempted from liability under
Article 1734(4) of the Civil Code. They cite the notation
"metal envelopes rust stained and slightly dented"
printed on the Bill of Lading as evidence that the
character of the goods or defect in the packing or the
containers was the proximate cause of the damage. We
are not convinced.

From the evidence on record, it cannot be reasonably


concluded that the damage to the four coils was due to
the condition noted on the Bill of Lading.40 The
aforecited exception refers to cases when goods are lost
or damaged while in transit as a result of the natural
decay of perishable goods or the fermentation or
evaporation of substances liable therefor, the necessary
and natural wear of goods in transport, defects in
packages in which they are shipped, or the natural
propensities of animals.41 None of these is present in the
instant case.

Let the witness answer.


A.
The scrap of the cargoes is broken already and the
rope is loosen and the cargoes are dent on the sides."32

All these conclusively prove the fact of shipment in good


order and condition and the consequent damage to the
four coils while in the possession of petitioner,33 who
notably failed to explain why.34

Further, even if the fact of improper packing was known


to the carrier or its crew or was apparent upon ordinary
observation, it is not relieved of liability for loss or injury
resulting therefrom, once it accepts the goods
notwithstanding such condition.42 Thus, petitioners have
not successfully proven the application of any of the
aforecited exceptions in the present case.43

Second Issue:
Further, petitioners failed to prove that they observed the
extraordinary diligence and precaution which the law
requires a common carrier to know and to follow to avoid
damage to or destruction of the goods entrusted to it for
safe carriage and delivery.35

Notice of Loss

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Petitioners claim that pursuant to Section 3, paragraph 6


of the Carriage of Goods by Sea Act44 (COGSA),
respondent should have filed its Notice of Loss within
three days from delivery. They assert that the cargo was
discharged on July 31, 1990, but that respondent filed its
Notice of Claim only on September 18, 1990.45

We are not persuaded. First, the above-cited provision of


COGSA provides that the notice of claim need not be
given if the state of the goods, at the time of their
receipt, has been the subject of a joint inspection or
survey. As stated earlier, prior to unloading the cargo, an
Inspection Report46 as to the condition of the goods was
prepared and signed by representatives of both
parties.47

Second, as stated in the same provision, a failure to file a


notice of claim within three days will not bar recovery if it
is nonetheless filed within one year.48 This one-year
prescriptive period also applies to the shipper, the
consignee, the insurer of the goods or any legal holder of
the bill of lading.49

In Loadstar Shipping Co., Inc, v. Court of Appeals,50 we


ruled that a claim is not barred by prescription as long as
the one-year period has not lapsed. Thus, in the words of
the ponente, Chief Justice Hilario G. Davide Jr.:
"Inasmuch as the neither the Civil Code nor the Code of
Commerce states a specific prescriptive period on the
matter, the Carriage of Goods by Sea Act (COGSA)--which
provides for a one-year period of limitation on claims for
loss of, or damage to, cargoes sustained during transit-may be applied suppletorily to the case at bar."

In the present case, the cargo was discharged on July 31,


1990, while the Complaint51 was filed by respondent on
July 25, 1991, within the one-year prescriptive period.

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On the other hand, respondent argues that Section 4(5)
of COGSA is inapplicable, because the value of the
subject shipment was declared by petitioners beforehand,
as evidenced by the reference to and the insertion of the
Letter of Credit or "L/C No. 90/02447" in the said Bill of
Lading.54

A bill of lading serves two functions. First, it is a receipt


for the goods shipped.53 Second, it is a contract by which
three parties -- namely, the shipper, the carrier, and the
consignee -- undertake specific responsibilities and
assume stipulated obligations.56 In a nutshell, the
acceptance of the bill of lading by the shipper and the
consignee, with full knowledge of its contents, gives rise
to the presumption that it constituted a perfected and
binding contract.57

Further, 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 value58 -- is sanctioned by law.59
There are, however, two conditions to be satisfied: (1) the
contract is reasonable and just under the circumstances,
and (2) it has been fairly and freely agreed upon by the
parties.60 The rationale for this rule is to bind the
shippers by their agreement to the value (maximum
valuation) of their goods.61

It is to be noted, however, that the Civil Code does not


limit the liability of the common carrier to a fixed amount
per package.62 In all matters not regulated by the Civil
Code, the right and the obligations of common carriers
shall be governed by the Code of Commerce and special
laws.63 Thus, the COGSA, which is suppletory to the
provisions of the Civil Code, 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.64 The provisions on
limited liability are as much a part of the bill of lading as
though physically in it and as though placed there by
agreement of the parties.65

Third Issue:

Package Limitation

Assuming arguendo they are liable for respondent's


claims, petitioners contend that their liability should be
limited to US$500 per package as provided in the Bill of
Lading and by Section 4(5)52 of COGSA.53

In the case before us, there was no stipulation in the Bill


of Lading66 limiting the carrier's liability. Neither did the
shipper declare a higher valuation of the goods to be
shipped. This fact notwithstanding, the insertion of the
words "L/C No. 90/02447 cannot be the basis for
petitioners' liability.

First, 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

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bill.67 That notation was made only for the convenience


of the shipper and the bank processing the Letter of
Credit.68

Second, in Keng Hua Paper Products v. Court of


Appeals,69 we held that a bill of lading was separate from
the Other Letter of Credit arrangements. We ruled thus:

"(T)he contract of carriage, as stipulated in the bill of


lading in the present case, must be treated independently
of the contract of sale between the seller and the buyer,
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. As the bank cannot be expected to look
beyond the documents presented to it by the seller
pursuant to the letter of credit, 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--vis
the commercial invoice and the letter of credit. Thus, the
discrepancy between the amount of goods indicated in
the invoice and the amount in the bill of lading cannot
negate petitioner's obligation to private respondent
arising from the contract of transportation."70

In the light of the foregoing, petitioners' liability should be


computed based on US$500 per package and not on the
per metric ton price declared in the Letter of Credit.71 In
Eastern Shipping Lines, Inc. v. Intermediate Appellate
Court,72 we explained the meaning of packages:

"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, 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."

Considering, therefore, the ruling in Eastern Shipping


Lines and the fact that the Bill of Lading clearly disclosed
the contents of the containers, the number of units, as
well as the nature of the steel sheets, the four damaged
coils should be considered as the shipping unit subject to
the US$500 limitation.1wphi1.nt

WHEREFORE, the Petition is partly granted and the


assailed Decision MODIFIED. Petitioners' liability is
reduced to US$2,000 plus interest at the legal rate of six
percent from the time of the filing of the Complaint on

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July 25, 1991 until the finality of this Decision, and 12
percent thereafter until fully paid. No pronouncement as
to costs.

SO ORDERED.

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G.R. No. 127897

November 15, 2001

DELSAN TRANSPORT LINES, INC., petitioner,


vs. THE HON. COURT OF APPEALS and AMERICAN
HOME ASSURANCE CORPORATION, respondents.

DE LEON, JR., J.:

Before us is a petition for review on certiorari of the


Decision1 of the Court of Appeals in CA-G.R. CV No.
39836 promulgated on June 17, 1996, reversing the
decision of the Regional Trial Court of Makati City, Branch
137, ordering petitioner to pay private respondent the
sum of Five Million Ninety-Six Thousand Six Hundred
Thirty-Five
Pesos
and
Fifty-Seven
Centavos
(P5,096,635.57) and costs and the Resolution2 dated
January 21, 1997 which denied the subsequent motion for
reconsideration.

The facts show that Caltex Philippines (Caltex for brevity)


entered into a contract of affreightment with the
petitioner, Delsan Transport Lines, Inc., for a period of one
year whereby the said common carrier agreed to
transport Caltexs industrial fuel oil from the BatangasBataan Refinery to different parts of the country. Under
the contract, petitioner took on board its vessel, MT
Maysun 2,277.314 kiloliters of industrial fuel oil of Caltex
to be delivered to the Caltex Oil Terminal in Zamboanga
City. The shipment was insured with the private
respondent, American Home Assurance Corporation.

On August 14, 1986, MT Maysum set sail from Batangas


for Zamboanga City. Unfortunately, the vessel sank in the
early morning of August 16, 1986 near Panay Gulf in the
Visayas taking with it the entire cargo of fuel oil.

Subsequently, private respondent paid Caltex the sum of


Five Million Ninety-Six Thousand Six Hundred Thirty-Five
Pesos
and
Fifty-Seven
Centavos
(P5,096,635.67)
representing the insured value of the lost cargo.
Exercising its right of subrogation under Article 2207 of
the New Civil Code, the private respondent demanded of
the
petitioner
the
same
amount
it
paid
to
Caltex.1wphi1.nt

Due to its failure to collect from the petitioner despite


prior demand, private respondent filed a complaint with
the Regional Trial Court of Makati City, Branch 137, for
collection of a sum of money. After the trial and upon
analyzing the evidence adduced, the trial court rendered
a decision on November 29, 1990 dismissing the

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complaint
against
herein
petitioner
without
pronouncement as to cost. The trial court found that the
vessel, MT Maysum, was seaworthy to undertake the
voyage as determined by the Philippine Coast Guard per
Survey Certificate Report No. M5-016-MH upon inspection
during its annual dry-docking and that the incident was
caused by unexpected inclement weather condition or
force majeure, thus exempting the common carrier
(herein petitioner) from liability for the loss of its cargo.3

The decision of the trial court, however, was reversed, on


appeal, by the Court of Appeals. The appellate court gave
credence to the weather report issued by the Philippine
Atmospheric, Geophysical and Astronomical Services
Administration (PAGASA for brevity) which showed that
from 2:00 oclock to 8:oo oclock in the morning on
August 16, 1986, the wind speed remained at 10 to 20
knots per hour while the waves measured from .7 to two
(2) meters in height only in the vicinity of the Panay Gulf
where the subject vessel sank, in contrast to herein
petitioners allegation that the waves were twenty (20)
feet high. In the absence of any explanation as to what
may have caused the sinking of the vessel coupled with
the finding that the same was improperly manned, the
appellate court ruled that the petitioner is liable on its
obligation as common carrier4 to herein private
respondent insurance company as subrogee of Caltex.
The subsequent motion for reconsideration of herein
petitioner was denied by the appellate court.

Petitioner raised the following assignments of error in


support of the instant petition,5 to wit:

THE COURT OF APPEALS ERRED IN REVERSING THE


DECISION OF THE REGIONAL TRIAL COURT.

II

THE COURT OF APPEALS ERRED AND WAS NOT JUSTIFIED


IN REBUTTING THE LEGAL PRESUMPTION THAT THE
VESSEL MT "MAYSUN" WAS SEAWORTHY.

III

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THE COURT OF APPEALS ERRED IN NOT APPLYING THE


DOCTRINE OF THE SUPREME COURT IN THE CASE OF
HOME INSURANCE CORPORATION V. COURT OF APPEALS.

Petitioner Delsan Transport Lines, Inc. invokes the


provision of Section 113 of the Insurance Code of the
Philippines, which states that in every marine insurance
upon a ship or freight, or freightage, or upon any thin
which is the subject of marine insurance there is an
implied warranty by the shipper that the ship is
seaworthy. Consequently, the insurer will not be liable to
the assured for any loss under the policy in case the
vessel would later on be found as not seaworthy at the
inception of the insurance. It theorized that when private
respondent paid Caltex the value of its lost cargo, the act
of the private respondent is equivalent to a tacit
recognition that the ill-fated vessel was seaworthy;
otherwise, private respondent was not legally liable to
Caltex due to the latters breach of implied warranty
under the marine insurance policy that the vessel was
seaworthy.

The petitioner also alleges that the Court of Appeals erred


in ruling that MT Maysun was not seaworthy on the
ground that the marine officer who served as the chief
mate of the vessel, Francisco Berina, was allegedly not
qualified. Under Section 116 of the Insurance Code of the
Philippines, the implied warranty of seaworthiness of the
vessel, which the private respondent admitted as having
been fulfilled by its payment of the insurance proceeds to
Caltex of its lost cargo, extends to the vessels
complement. Besides, petitioner avers that although
Berina had merely a 2nd officers license, he was
qualified to act as the vessels chief officer under Chapter
IV(403), Category III(a)(3)(ii)(aa) of the Philippine
Merchant Marine Rules and Regulations. In fact, all the
crew and officers of MT Maysun were exonerated in the
administrative investigation conducted by the Board of
Marine Inquiry after the subject accident.6

In any event, petitioner further avers that private


respondent failed, for unknown reason, to present in
evidence during the trial of the instant case the subject
marine cargo insurance policy it entered into with Caltex.
By virtue of the doctrine laid down in the case of Home
Insurance Corporation vs. CA,7 the failure of the private
respondent to present the insurance policy in evidence is
allegedly fatal to its claim inasmuch as there is no way to
determine the rights of the parties thereto.

Hence, the legal issues posed before the Court are:


I - Whether or not the payment made by the private
respondent to Caltex for the insured value of the lost
cargo amounted to an admission that the vessel was

meikimouse
seaworthy, thus precluding any action for recovery
against the petitioner.

II - Whether or not the non-presentation of the marine


insurance policy bars the complaint for recovery of sum
of money for lack of cause of action.

We rule in the negative on both issues.


The payment made by the private respondent for the
insured value of the lost cargo operates as waiver of its
(private respondent) right to enforce the term of the
implied warranty against Caltex under the marine
insurance policy. However, the same cannot be validly
interpreted as an automatic admission of the vessels
seaworthiness by the private respondent as to foreclose
recourse against the petitioner for any liability under its
contractual obligation as a common carrier. The fact of
payment grants the private respondent 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.8 Article
2207 of the New civil Code provides that:

Art. 2207. If the plaintiffs property has been insured, 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, the insurance company shall be
subrogated to the rights of the insured against the
wrongdoer or the person who has violated the contract. 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.

The right of subrogation has its roots in equity. 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.9 It is not dependent upon, nor
does it grow out of, any privity of contract or upon written
assignment of claim. It accrues simply upon payment by
the insurance company of the insurance claim.10
Consequently, the payment made by the private
respondent (insurer) to Caltex (assured) operates as an
equitable assignment to the former of all the remedies
which the latter may have against the petitioner.

From the nature of their business and for reasons of


public policy, common carriers are bound to observe
extraordinary diligence in the vigilance over the goods
and for the safety of passengers transported by them,
according to all the circumstance of each case.11 In the

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event of loss, destruction or deterioration of the insured


goods, common carriers shall be responsible unless the
same is brought about, among others, by flood, storm,
earthquake, lightning or other natural disaster or
calamity.12 In all other cases, if the goods are lost,
destroyed or deteriorated, common carriers are
presumed to have been at fault or to have acted
negligently, unless they prove that they observed
extraordinary diligence.13

In order to escape liability for the loss of its cargo of


industrial fuel oil belonging to Caltex, petitioner attributes
the sinking of MT Maysun to fortuitous even or force
majeure. From the testimonies of Jaime Jarabe and
Francisco Berina, captain and chief mate, respectively of
the ill-fated vessel, it appears that a sudden and
unexpected change of weather condition occurred in the
early morning of August 16, 1986; that at around 3:15
oclock in the morning a squall ("unos") carrying strong
winds with an approximate velocity of 30 knots per hour
and big waves averaging eighteen (18) to twenty (20)
feet high, repeatedly buffeted MT Maysun causing it to
tilt, take in water and eventually sink with its cargo.14
This tale of strong winds and big waves by the said
officers of the petitioner however, was effectively
rebutted and belied by the weather report15 from the
Philippine Atmospheric, Geophysical and Astronomical
Services Administration (PAGASA), the independent
government agency charged with monitoring weather
and sea conditions, showing that from 2:00 oclock to
8:00 oclock in the morning on August 16, 1986, the wind
speed remained at ten (10) to twenty (20) knots per hour
while the height of the waves ranged from .7 to two (2)
meters in the vicinity of Cuyo East Pass and Panay Gulf
where the subject vessel sank. Thus, as the appellate
court correctly ruled, petitioners vessel, MT Maysun,
sank with its entire cargo for the reason that it was not
seaworthy. There was no squall or bad weather or
extremely poor sea condition in the vicinity when the said
vessel sank.

The appellate court also correctly opined that the


petitioners witnesses, Jaime Jarabe and Francisco Berina,
ship captain and chief mate, respectively, of the said
vessel, could not be expected to testify against the
interest of their employer, the herein petitioner common
carrier.

Neither may petitioner escape liability by presenting in


evidence certificates16 that tend to show that at the time
of dry-docking and inspection by the Philippine Coast
Guard, the vessel MT Maysun, was fit for voyage. These
pieces of evidence do not necessarily take into account
the actual condition of the vessel at the time of the
commencement of the voyage. As correctly observed by
the Court of appeals:

meikimouse

At the time of dry-docking and inspection, the ship may


have appeared fit. The certificates issued, however, do
not negate the presumption of unseaworthiness triggered
by an unexplained sinking. Of certificates issued in this
regard, authorities are likewise clear as to their probative
value, (thus):

Seaworthiness relates to a vessels actual condition.


Neither the granting of classification or the issuance of
certificates established seaworthiness. (2-A Benedict on
Admiralty, 7-3, Sec. 62).

And also:
Authorities are clear that diligence in securing certificates
of seaworthiness does not satisfy the vessel owners
obligation. Also securing the approval of the shipper of
the cargo, or his surveyor, of the condition of the vessel
or her stowage does not establish due diligence if the
vessel was in fact unseaworthy, for the cargo owner has
no obligation in relation to seaworthiness. (Ibid.)17

Additionally, the exoneration of MT Maysuns officers and


crew by the Board of Marine Inquiry merely concerns their
respective administrative liabilities. It does not in any
way operate to absolve the petitioner common carrier
from its civil liabilities. 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 determination of which properly belongs
to the courts.18 In the case at bar, petitioner 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 carrier19
occasioned by the unexplained sinking of its vessel, MT
Maysun, while in transit.

Anent the second issue, it is our view and so hold that 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
subrogation receipt, by itself, is sufficient to establish not
only the relationship of herein private respondent as
insurer and Caltex, as the assured shipper of the lost
cargo of industrial fuel oil, but also the amount paid to
settle the insurance claim. The right of subrogation
accrues simply upon payment by the insurance company
of the insurance claim.20

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meikimouse

The presentation of the insurance policy was necessary in


the case of Home Insurance Corporation v. CA21 (a case
cited by petitioner) because the shipment therein
(hydraulic engines) passed through several stages with
different parties involved in each stage. First, from the
shipper to the port of departure; second, from the port of
departure to the M/S Oriental Statesman; third, from the
M/S Oriental Statesman to the M/S Pacific Conveyor;
fourth, from the M/S Pacific Conveyor to the port or
arrival; fifth, from the port of arrival to the arrastre
operator; sixth, from the arrastre operator to the hauler,
Mabuhay Brokerage Co., Inc. (private respondent
therein); and lastly, from the hauler to the consignee. We
emphasized in that case that in the absence of proof of
stipulations to the contrary, 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.
Ordinarily, it cannot be held responsible for the handling
of the cargo before it actually received it. The insurance
contract, which was not presented in evidence in that
case would have indicated the scope of the insurers
liability, if any, since no evidence was adduced indicating
at what stage in the handling process the damage to the
cargo was sustained.

Hence, our ruling on the presentation of the insurance


policy in the said case of Home Insurance Corporation is
not applicable to the case at bar. In contrast, there is no
doubt that the cargo of industrial fuel oil belonging to
Caltex, in the case at bar, was lost while on board
petitioners vessel, MT Maysun, which sank while in
transit in the vicinity of Panay Gulf and Cuyo East Pass in
the early morning of August 16, 1986.
WHEREFORE, the instant petition is DENIED. The Decision
dated June 17, 1996 of the Court of Appeals in CA-G.R. CV
No. 39836 is AFFIRMED. Costs against the petitioner.SO
ORDERED.
G.R. No. 149038

April 9, 2003

PHILIPPINE
AMERICAN
COMPANY, petitioner,

GENERAL

INSURANCE

vs. PKS SHIPPING COMPANY, respondent.

VITUG, J.:

The petition before the Court seeks a review of the


decision of the Court of Appeals in C.A. G.R. CV No.
56470, promulgated on 25 June 2001, which has affirmed
in toto the judgment of the Regional Trial Court (RTC),
Branch 65, of Makati, dismissing the complaint for
damages filed by petitioner insurance corporation against
respondent shipping company.

Davao Union Marketing Corporation (DUMC) contracted


the services of respondent PKS Shipping Company (PKS
Shipping) for the shipment to Tacloban City of seventyfive thousand (75,000) bags of cement worth Three
Million Three Hundred Seventy-Five Thousand Pesos
(P3,375,000.00). DUMC insured the goods for its full value
with petitioner Philippine American General Insurance
Company (Philamgen). The goods were loaded aboard the
dumb barge Limar I belonging to PKS Shipping. On the
evening of 22 December 1988, about nine oclock, while
Limar I was being towed by respondents tugboat, MT Iron
Eagle, the barge sank a couple of miles off the coast of
Dumagasa Point, in Zamboanga del Sur, bringing down
with it the entire cargo of 75,000 bags of cement.

DUMC filed a formal claim with Philamgen for the full


amount of the insurance. Philamgen promptly made
payment; it then sought reimbursement from PKS
Shipping of the sum paid to DUMC but the shipping
company refused to pay, prompting Philamgen to file suit
against PKS Shipping with the Makati RTC.

The RTC dismissed the complaint after finding that the


total loss of the cargo could have been caused either by a
fortuitous event, in which case the ship owner was not
liable, or through the negligence of the captain and crew
of the vessel and that, under Article 587 of the Code of
Commerce adopting the "Limited Liability Rule," the ship
owner could free itself of liability by abandoning, as it
apparently so did, the vessel with all her equipment and
earned freightage.

Philamgen interposed an appeal to the Court of Appeals


which affirmed in toto the decision of the trial court. The
appellate court ruled that evidence to establish that PKS
Shipping was a common carrier at the time it undertook
to transport the bags of cement was wanting because the
peculiar method of the shipping companys carrying
goods for others was not generally held out as a business
but as a casual occupation. It then concluded that PKS
Shipping, not being a common carrier, was not expected
to observe the stringent extraordinary diligence required
of common carriers in the care of goods. The appellate
court, moreover, found that the loss of the goods was
sufficiently established as having been due to fortuitous
event, negating any liability on the part of PKS Shipping
to the shipper.

In the instant appeal, Philamgen contends that the


appellate court has committed a patent error in ruling
that PKS Shipping is not a common carrier and that it is
not liable for the loss of the subject cargo. The fact that
respondent has a limited clientele, petitioner argues,

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does not militate against respondents being a common


carrier and that the only way by which such carrier can
be held exempt for the loss of the cargo would be if the
loss were caused by natural disaster or calamity.
Petitioner avers that typhoon "APIANG" has not entered
the Philippine area of responsibility and that, even if it
did, respondent would not be exempt from liability
because its employees, particularly the tugmaster, have
failed to exercise due diligence to prevent or minimize
the loss.

PKS Shipping, in its comment, urges that the petition


should be denied because what Philamgen seeks is not a
review on points or errors of law but a review of the
undisputed factual findings of the RTC and the appellate
court. In any event, PKS Shipping points out, the findings
and conclusions of both courts find support from the
evidence and applicable jurisprudence.

The determination of possible liability on the part of PKS


Shipping boils down to the question of whether it is a
private carrier or a common carrier and, in either case, to
the other question of whether or not it has observed the
proper diligence (ordinary, if a private carrier, or
extraordinary, if a common carrier) required of it given
the circumstances.

The findings of fact made by the Court of Appeals,


particularly when such findings are consistent with those
of the trial court, may not at liberty be reviewed by this
Court in a petition for review under Rule 45 of the Rules
of Court.1 The conclusions derived from those factual
findings, however, are not necessarily just matters of fact
as when they are so linked to, or inextricably intertwined
with, a requisite appreciation of the applicable law. In
such instances, the conclusions made could well be
raised as being appropriate issues in a petition for review
before this Court. Thus, an issue whether a carrier is
private or common on the basis of the facts found by a
trial court or the appellate court can be a valid and
reviewable question of law.

The Civil Code defines "common carriers" in the following


terms:

"Article
1732.
Common
carriers
are
persons,
corporations, firms or associations engaged in the
business of carrying or transporting passengers or goods
or both, by land, water, or air for compensation, offering
their services to the public."

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Complementary to the codal definition is Section 13,
paragraph (b), of the Public Service Act; it defines "public
service" to be

"x x x 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, 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, 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
communication systems, wire or wireless broadcasting
stations and other similar public services. x x x.
(Underscoring supplied)."

The prevailing doctrine on the question is that enunciated


in the leading case of De Guzman vs. Court of Appeals.2
Applying Article 1732 of the Code, in conjunction with
Section 13(b) of the Public Service Act, this Court has
held:

"The above article makes no distinction between one


whose principal business activity is the carrying of
persons or goods or both, and one who does such
carrying only as an ancillary activity (in local idiom, as `a
sideline). Article 1732 also carefully avoids making any
distinction between a person or enterprise offering
transportation service on a regular or scheduled basis
and one offering such service on an occasional, episodic
or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the
`general public, i.e., the general community or
population, and one who offers services or solicits
business only from a narrow segment of the general
population. We think that Article 1732 deliberately
refrained from making such distinctions.

"So understood, 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 No. 1416, as amended) which at
least partially supplements the law on common carriers
set forth in the Civil Code."

TRANSPO

Much of the distinction between a "common or public


carrier" and a "private or special carrier" lies in the
character of the business, such that if the undertaking is
an isolated transaction, not a part of the business or
occupation, and the carrier does not hold itself out to
carry the goods for the general public or to a limited
clientele, although involving the carriage of goods for a
fee,3 the person or corporation providing such service
could very well be just a private carrier. A typical case is
that of a charter party which includes both the vessel and
its crew, such as in a bareboat or demise, where the
charterer obtains the use and service of all or some part
of a ship for a period of time or a voyage or voyages4 and
gets the control of the vessel and its crew.5 Contrary to
the conclusion made by the appellate court, its factual
findings indicate that PKS Shipping has engaged itself in
the business of carrying goods for others, although for a
limited clientele, undertaking to carry such goods for a
fee. The regularity of its activities in this area indicates
more than just a casual activity on its part.6 Neither can
the concept of a common carrier change merely because
individual contracts are executed or entered into with
patrons of the carrier. Such restrictive interpretation
would make it easy for a common carrier to escape
liability by the simple expedient of entering into those
distinct agreements with clients.

Addressing now the issue of whether or not PKS Shipping


has exercised the proper diligence demanded of common
carriers, Article 1733 of the Civil Code requires common
carriers to observe extraordinary diligence in the
vigilance over the goods they carry. In case of loss,
destruction or deterioration of goods, common carriers
are presumed to have been at fault or to have acted
negligently, and the burden of proving otherwise rests on
them.7 The provisions of Article 1733, notwithstanding,
common carriers are exempt from liability for loss,
destruction, or deterioration of the goods due to any of
the following causes:

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(5) Order or act of competent public authority.8

The appellate court ruled, gathered from the testimonies


and sworn marine protests of the respective vessel
masters of Limar I and MT Iron Eagle, that there was no
way by which the barges or the tugboats crew could
have prevented the sinking of Limar I. The vessel was
suddenly tossed by waves of extraordinary height of six
(6) to eight (8) feet and buffeted by strong winds of 1.5
knots resulting in the entry of water into the barges
hatches. The official Certificate of Inspection of the barge
issued by the Philippine Coastguard and the Coastwise
Load Line Certificate would attest to the seaworthiness of
Limar I and should strengthen the factual findings of the
appellate court.

Findings of fact of the Court of Appeals generally


conclude this Court; none of the recognized exceptions
from the rule - (1) when the factual findings of the Court
of Appeals and the trial court are contradictory; (2) when
the conclusion is a finding grounded entirely on
speculation, surmises, or conjectures; (3) when the
inference made by the Court of Appeals from its findings
of fact is manifestly mistaken, absurd, or impossible; (4)
when there is a grave abuse of discretion in the
appreciation of facts; (5) when the appellate court, in
making its findings, went beyond the issues of the case
and such findings are contrary to the admissions of both
appellant and appellee; (6) when the judgment of the
Court of Appeals is premised on a misapprehension of
facts; (7) when the Court of Appeals failed to notice
certain relevant facts which, if properly considered, would
justify a different conclusion; (8) when the findings of fact
are themselves conflicting; (9) when the findings of fact
are conclusions without citation of the specific evidence
on which they are based; and (10) when the findings of
fact of the Court of Appeals are premised on the absence
of evidence but such findings are contradicted by the
evidence on record would appear to be clearly extant in
this instance.

(1) Flood, storm, earthquake, lightning, or other natural


disaster or calamity;

(2) Act of the public enemy in war, whether international


or civil;

All given then, the appellate court did not err in its
judgment absolving PKS Shipping from liability for the
loss of the DUMC cargo.

WHEREFORE, the petition is DENIED. No costs.


(3) Act or omission of the shipper or owner of the goods;
SO ORDERED.
(4) The character of the goods or defects in the packing
or in the containers; and

TRANSPO

G.R. No. 146018


EDGAR
COKALIONG
Petitioner,

meikimouse
June 25, 2003
SHIPPING

LINES,

"No cost."8
INC.,
The Facts

vs. UCPB GENERAL INSURANCE COMPANY, INC.,


Respondent.
The facts of the case are summarized by the appellate
court in this wise:
DECISION

PANGANIBAN, J.:

The liability of a common carrier for the loss of goods


may, by stipulation in the bill of lading, be limited to the
value declared by the shipper. On the other hand, the
liability of the insurer is determined by the actual value
covered by the insurance policy and the insurance
premiums paid therefor, and not necessarily by the value
declared in the bill of lading.

The Case

Before the Court is a Petition for Review1 under Rule 45


of the Rules of Court, seeking to set aside the August 31,
2000 Decision2 and the November 17, 2000 Resolution3
of the Court of Appeals4 (CA) in CA-GR SP No. 62751. The
dispositive part of the Decision reads:

"IN THE LIGHT OF THE FOREGOING, the appeal is


GRANTED. The Decision appealed from is REVERSED.
[Petitioner] is hereby condemned to pay to [respondent]
the total amount of P148,500.00, with interest thereon, at
the rate of 6% per annum, from date of this Decision of
the Court. [Respondents] claim for attorneys fees [is]
DISMISSED. [Petitioners] counterclaims are DISMISSED."5

"Sometime on December 11, 1991, Nestor Angelia


delivered to the Edgar Cokaliong Shipping Lines, Inc.
(now Cokaliong Shipping Lines), [petitioner] for brevity,
cargo consisting of one (1) carton of Christmas dcor and
two (2) sacks of plastic toys, to be transported on board
the M/V Tandag on its Voyage No. T-189 scheduled to
depart from Cebu City, on December 12, 1991, for
Tandag, Surigao del Sur. [Petitioner] issued Bill of Lading
No. 58, freight prepaid, covering the cargo. Nestor
Angelia was both the shipper and consignee of the cargo
valued, on the face thereof, in the amount of P6,500.00.
Zosimo Mercado likewise delivered cargo to [petitioner],
consisting of two (2) cartons of plastic toys and Christmas
decor, one (1) roll of floor mat and one (1) bundle of
various or assorted goods for transportation thereof from
Cebu City to Tandag, Surigao del Sur, on board the said
vessel, and said voyage. [Petitioner] issued Bill of Lading
No. 59 covering the cargo which, on the face thereof, was
valued in the amount of P14,000.00. Under the Bill of
Lading, Zosimo Mercado was both the shipper and
consignee of the cargo.

"On December 12, 1991, Feliciana Legaspi insured the


cargo, covered by Bill of Lading No. 59, with the UCPB
General Insurance Co., Inc., [respondent] for brevity, for
the amount of P100,000.00 against all risks under Open
Policy No. 002/9 1/254 for which she was issued, by
[respondent], Marine Risk Note No. 18409 on said date.
She also insured the cargo covered by Bill of Lading No.
58, with [respondent], for the amount of P50,000.00,
under Open Policy No. 002/9 1/254 on the basis of which
[respondent] issued Marine Risk Note No. 18410 on said
date.

The assailed Resolution denied petitioners Motion for


Reconsideration.

On the other hand, the disposition of the Regional Trial


Courts6 Decision,7 which was later reversed by the CA,
states:

"WHEREFORE, premises considered, the case is hereby


DISMISSED for lack of merit.

"When the vessel left port, it had thirty-four (34)


passengers and assorted cargo on board, including the
goods of Legaspi. After the vessel had passed by the
Mandaue-Mactan Bridge, fire ensued in the engine room,
and, despite earnest efforts of the officers and crew of
the vessel, the fire engulfed and destroyed the entire
vessel resulting in the loss of the vessel and the cargoes
therein. The Captain filed the required Marine Protest.

TRANSPO

"Shortly thereafter, Feliciana Legaspi filed a claim, with


[respondent], for the value of the cargo insured under
Marine Risk Note No. 18409 and covered by Bill of Lading
No. 59. She submitted, in support of her claim, a Receipt,
dated December 11, 1991, purportedly signed by Zosimo
Mercado, and Order Slips purportedly signed by him for
the goods he received from Feliciana Legaspi valued in
the amount of P110,056.00. [Respondent] approved the
claim of Feliciana Legaspi and drew and issued UCPB
Check No. 612939, dated March 9, 1992, in the net
amount of P99,000.00, in settlement of her claim after
which she executed a Subrogation Receipt/Deed, for said
amount, in favor of [respondent]. She also filed a claim
for the value of the cargo covered by Bill of Lading No.
58. She submitted to [respondent] a Receipt, dated
December 11, 1991 and Order Slips, purportedly signed
by Nestor Angelia for the goods he received from
Feliciana Legaspi valued at P60,338.00. [Respondent]
approved her claim and remitted to Feliciana Legaspi the
net amount of P49,500.00, after which she signed a
Subrogation Receipt/Deed, dated March 9, 1992, in favor
of [respondent].

"On July 14, 1992, [respondent], as subrogee of Feliciana


Legaspi, filed a complaint anchored on torts against
[petitioner], with the Regional Trial Court of Makati City,
for the collection of the total principal amount of
P148,500.00, which it paid to Feliciana Legaspi for the
loss of the cargo, praying that judgment be rendered in
its favor and against the [petitioner] as follows:

WHEREFORE, it is respectfully prayed of this Honorable


Court that after due hearing, judgment be rendered
ordering [petitioner] to pay [respondent] the following.

1. Actual damages in the amount of P148,500.00 plus


interest thereon at the legal rate from the time of filing of
this complaint until fully paid;

2. Attorneys fees in the amount of P10,000.00; and

3. Cost of suit.

[Respondent] further prays for such other reliefs and


remedies as this Honorable Court may deem just and
equitable under the premises.

"[Respondent] alleged, inter alia, in its complaint, that the


cargo subject of its complaint was delivered to, and
received by, [petitioner] for transportation to Tandag,

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Surigao del Sur under Bill of Ladings, Annexes A and
B of the complaint; that the loss of the cargo was due to
the negligence of the [petitioner]; and that Feliciana
Legaspi had executed Subrogation Receipts/Deeds in
favor of [respondent] after paying to her the value of the
cargo on account of the Marine Risk Notes it issued in her
favor covering the cargo.

"In its Answer to the complaint, [petitioner] alleged that:


(a) [petitioner] was cleared by the Board of Marine
Inquiry of any negligence in the burning of the vessel; (b)
the complaint stated no cause of action against
[petitioner]; and (c) the shippers/consignee had already
been paid the value of the goods as stated in the Bill of
Lading and, hence, [petitioner] cannot be held liable for
the loss of the cargo beyond the value thereof declared in
the Bill of Lading.

"After [respondent] rested its case, [petitioner] prayed for


and was allowed, by the Court a quo, to take the
depositions of Chester Cokaliong, the Vice-President and
Chief Operating Officer of [petitioner], and a resident of
Cebu City, and of Noel Tanyu, an officer of the Equitable
Banking Corporation, in Cebu City, and a resident of Cebu
City, to be given before the Presiding Judge of Branch 106
of the Regional Trial Court of Cebu City. Chester Cokaliong
and Noel Tanyu did testify, by way of deposition, before
the Court and declared inter alia, that: [petitioner] is a
family corporation like the Chester Marketing, Inc.; Nestor
Angelia had been doing business with [petitioner] and
Chester Marketing, Inc., for years, and incurred an
account with Chester Marketing, Inc. for his purchases
from said corporation; [petitioner] did issue Bills of Lading
Nos. 58 and 59 for the cargo described therein with
Zosimo
Mercado
and
Nestor
Angelia
as
shippers/consignees, respectively; the engine room of the
M/V Tandag caught fire after it passed the
Mandaue/Mactan Bridge resulting in the total loss of the
vessel and its cargo; an investigation was conducted by
the Board of Marine Inquiry of the Philippine Coast Guard
which rendered a Report, dated February 13, 1992
absolving [petitioner] of any responsibility on account of
the fire, which Report of the Board was approved by the
District Commander of the Philippine Coast Guard; a few
days after the sinking of the vessel, a representative of
the Legaspi Marketing filed claims for the values of the
goods under Bills of Lading Nos. 58 and 59 in behalf of
the shippers/consignees, Nestor Angelia and Zosimo
Mercado; [petitioner] was able to ascertain, from the
shippers/consignees and the representative of the
Legaspi Marketing that the cargo covered by Bill of
Lading No. 59 was owned by Legaspi Marketing and
consigned to Zosimo Mercado while that covered by Bill
of Lading No. 58 was purchased by Nestor Angelia from
the Legaspi Marketing; that [petitioner] approved the
claim of Legaspi Marketing for the value of the cargo
under Bill of Lading No. 59 and remitted to Legaspi
Marketing the said amount under Equitable Banking

TRANSPO

Corporation Check No. 20230486 dated August 12, 1992,


in the amount of P14,000.00 for which the representative
of the Legaspi Marketing signed Voucher No. 4379, dated
August 12, 1992, for the said amount of P14,000.00 in full
payment of claims under Bill of Lading No. 59; that
[petitioner] approved the claim of Nestor Angelia in the
amount of P6,500.00 but that since the latter owed
Chester Marketing, Inc., for some purchases, [petitioner]
merely set off the amount due to Nestor Angelia under
Bill of Lading No. 58 against his account with Chester
Marketing, Inc.; [petitioner] lost/[misplaced] the original
of the check after it was received by Legaspi Marketing,
hence, the production of the microfilm copy by Noel
Tanyu of the Equitable Banking Corporation; [petitioner]
never knew, before settling with Legaspi Marketing and
Nestor Angelia that the cargo under both Bills of Lading
were insured with [respondent], or that Feliciana Legaspi
filed claims for the value of the cargo with [respondent]
and that the latter approved the claims of Feliciana
Legaspi and paid the total amount of P148,500.00 to her;
[petitioner] came to know, for the first time, of the
payments by [respondent] of the claims of Feliciana
Legaspi when it was served with the summons and
complaint, on October 8, 1992; after settling his claim,
Nestor Angelia x x x executed the Release and Quitclaim,
dated July 2, 1993, and Affidavit, dated July 2, 1993 in
favor of [respondent]; hence, [petitioner] was absolved of
any liability for the loss of the cargo covered by Bills of
Lading Nos. 58 and 59; and even if it was, its liability
should not exceed the value of the cargo as stated in the
Bills of Lading.

"[Petitioner] did not anymore present any other witnesses


on its evidence-in-chief. x x x"9 (Citations omitted)

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Finally, it ruled that respondent "is not bound by the
valuation of the cargo under the Bills of Lading, x x x nor
is the value of the cargo under said Bills of Lading
conclusive on the [respondent]. This is so because, in the
first place, the goods were insured with the [respondent]
for the total amount of P150,000.00, which amount may
be considered as the face value of the goods."11

Hence this Petition.12


Issues
Petitioner raises for our consideration the following
alleged errors of the CA:

"I
"The Honorable Court of Appeals erred, granting
arguendo that petitioner is liable, in holding that
petitioners liability should be based on the actual
insured value of the goods and not from actual valuation
declared by the shipper/consignee in the bill of lading.
"II
"The Court of Appeals erred in not affirming the findings
of the Philippine Coast Guard, as sustained by the trial
court a quo, holding that the cause of loss of the
aforesaid cargoes under Bill of Lading Nos. 58 and 59 was
due to force majeure and due diligence was [exercised]
by petitioner prior to, during and immediately after the
fire on [petitioners] vessel.

"III
Ruling of the Court of Appeals

The CA held that petitioner had failed "to prove that the
fire which consumed the vessel and its cargo was caused
by something other than its negligence in the upkeep,
maintenance and operation of the vessel."10

Petitioner had paid P14,000 to Legaspi Marketing for the


cargo covered by Bill of Lading No. 59. The CA, however,
held that the payment did not extinguish petitioners
obligation to respondent, because there was no evidence
that
Feliciana
Legaspi
(the
insured)
was
the
owner/proprietor of Legaspi Marketing. The CA also
pointed out the impropriety of treating the claim under
Bill of Lading No. 58 -- covering cargo valued therein at
P6,500 -- as a setoff against Nestor Angelias account
with Chester Enterprises, Inc.

"The Court of Appeals erred in not holding that


respondent UCPB General Insurance has no cause of
action against the petitioner."13

In sum, the issues are: (1) Is petitioner liable for the loss
of the goods? (2) If it is liable, what is the extent of its
liability?

This Courts Ruling

The Petition is partly meritorious.

First Issue:
Liability for Loss

TRANSPO
Petitioner argues that the cause of the loss of the goods,
subject of this case, was force majeure. It adds that its
exercise of due diligence was adequately proven by the
findings of the Philippine Coast Guard.

We are not convinced. The uncontroverted findings of the


Philippine Coast Guard show that the M/V Tandag sank
due to a fire, which resulted from a crack in the auxiliary
engine fuel oil service tank. Fuel spurted out of the crack
and dripped to the heating exhaust manifold, causing the
ship to burst into flames. The crack was located on the
side of the fuel oil tank, which had a mere two-inch gap
from the engine room walling, thus precluding constant
inspection and care by the crew.

Having originated from an unchecked crack in the fuel oil


service tank, the fire could not have been caused by force
majeure. Broadly speaking, force majeure generally
applies to a natural accident, such as that caused by a
lightning, an earthquake, a tempest or a public enemy.14
Hence, fire is not considered a natural disaster or
calamity. In Eastern Shipping Lines, Inc. v. Intermediate
Appellate Court,15 we explained:
"x x x. This must be so as it arises almost invariably from
some act of man or by human means. It does not fall
within the category of an act of God unless caused by
lighting or by other natural disaster or calamity. It may
even be caused by the actual fault or privity of the
carrier.

"Article 1680 of the Civil Code, which considers fire as an


extraordinary fortuitous event refers to leases or 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, considering that the law adopts a protective policy
towards agriculture.

"As the peril of fire is not comprehended within the


exceptions in Article 1734, supra, Article 1735 of the Civil
Code provides that in all cases other than those
mentioned in Article 1734, the common carrier shall be
presumed to have been at fault or to have acted
negligently, unless it proves that it has observed the
extraordinary diligence required by law."

Where loss of cargo results from the failure of the officers


of a vessel to inspect their ship frequently so as to
discover the existence of cracked parts, that loss cannot
be attributed to force majeure, but to the negligence of
those officials.16

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The law provides that a common carrier is presumed to


have been negligent if it fails to prove that it exercised
extraordinary vigilance over the goods it transported.
Ensuring the seaworthiness of the vessel is the first step
in exercising the required vigilance. Petitioner did not
present sufficient evidence showing what measures or
acts it had undertaken to ensure the seaworthiness of the
vessel. It failed to show when the last inspection and care
of the auxiliary engine fuel oil service tank was made,
what the normal practice was for its maintenance, or
some other evidence to establish that it had exercised
extraordinary diligence. It merely stated that constant
inspection and care were not possible, and that the last
time the vessel was dry-docked was in November 1990.
Necessarily, in accordance with Article 173517 of the Civil
Code, we hold petitioner responsible for the loss of the
goods covered by Bills of Lading Nos. 58 and 59.

Second Issue:
Extent of Liability

Respondent contends that petitioners liability should be


based on the actual insured value of the goods, subject of
this case. On the other hand, petitioner claims that its
liability should be limited to the value declared by the
shipper/consignee in the Bill of Lading.
The records18 show that the Bills of Lading covering the
lost goods contain the stipulation that in case of claim for
loss or for damage to the shipped merchandise or
property, "[t]he liability of the common carrier x x x shall
not exceed the value of the goods as appearing in the bill
of lading."19 The attempt by respondent to make light of
this stipulation is unconvincing. As it had the consignees
copies of the Bills of Lading,20 it could have easily
produced those copies, instead of relying on mere
allegations and suppositions. However, it presented mere
photocopies thereof to disprove petitioners evidence
showing the existence of the above stipulation.

A stipulation that limits liability is valid21 as long as it is


not against public policy. In Everett Steamship
Corporation v. Court of Appeals,22 the Court stated:

"A stipulation in the bill of lading limiting the common


carriers liability for loss or destruction of a cargo to a
certain sum, unless the shipper or owner declares a
greater value, is sanctioned by law, particularly Articles
1749 and 1750 of the Civil Code which provides:

TRANSPO

Art. 1749. A stipulation that the common carriers


liability is limited to the value of the goods appearing in
the bill of lading, unless the shipper or owner declares a
greater value, is binding.
Art. 1750. A contract fixing the sum that may be
recovered by the owner or shipper for the loss,
destruction, or deterioration of the goods is valid, if it is
reasonable and just under the circumstances, and has
been freely and fairly agreed upon.

"Such limited-liability clause has also been consistently


upheld by this Court in a number of cases. Thus, in SeaLand Service, Inc. vs. Intermediate Appellate Court, we
ruled:

It seems clear that even if said section 4 (5) of the


Carriage of Goods by Sea Act did not exist, 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. That
said stipulation is just and reasonable is arguable from
the fact that it echoes Art. 1750 itself in providing a limit
to liability only if a greater value is not declared for the
shipment in the bill of lading. To hold otherwise would
amount to questioning the justness and fairness of the
law itself, and this the private respondent does not
pretend to do. But over and above that consideration, 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.

"Pursuant to the afore-quoted provisions of law, it is


required that the stipulation limiting the common
carriers liability for loss must be reasonable and just
under the circumstances, and has been freely and fairly
agreed upon.
"The bill of lading subject of the present controversy
specifically provides, among others:

18. All claims for which the carrier may be liable shall be
adjusted and settled on the basis of the shippers net
invoice cost plus freight and insurance premiums, if paid,
and in no event shall the carrier be liable for any loss of
possible profits or any consequential loss.

The carrier shall not be liable for any loss of or any


damage to or in any connection with, goods in an amount
exceeding One Hundred Thousand Yen in Japanese
Currency (100,000.00) or its equivalent in any other

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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.

"The above stipulations are, to our mind, reasonable and


just.1avvphi1 In the bill of lading, the carrier made it
clear that its liability would only be up to One Hundred
Thousand (Y100,000.00) Yen. However, the shipper,
Maruman Trading, had the option to declare a higher
valuation if the value of its cargo was higher than the
limited liability of the carrier. Considering that the shipper
did not declare a higher valuation, it had itself to blame
for not complying with the stipulations." (Italics supplied)

In the present case, the stipulation limiting petitioners


liability is not contrary to public policy. In fact, its just and
reasonable character is evident. The shippers/consignees
may recover the full value of the goods by the simple
expedient of declaring the true value of the shipment in
the Bill of Lading. Other than the payment of a higher
freight, there was nothing to stop them from placing the
actual value of the goods therein. In fact, they committed
fraud against the common carrier by deliberately
undervaluing the goods in their Bill of Lading, thus
depriving the carrier of its proper and just transport fare.

Concededly, the purpose of the limiting stipulation in the


Bill of Lading is to protect the common carrier. Such
stipulation obliges the shipper/consignee to notify the
common carrier of the amount that the latter may be
liable for in case of loss of the goods. The common carrier
can then take appropriate measures -- getting insurance,
if needed, to cover or protect itself. This precaution on
the part of the carrier is reasonable and prudent. Hence,
a shipper/consignee that undervalues the real worth of
the goods it seeks to transport does not only violate a
valid contractual stipulation, but commits a fraudulent
act when it seeks to make the common carrier liable for
more than the amount it declared in the bill of lading.

Indeed, Zosimo Mercado and Nestor Angelia misled


petitioner by undervaluing the goods in their respective
Bills of Lading. Hence, petitioner was exposed to a risk
that was deliberately hidden from it, and from which it
could not protect itself.

It is well to point out that, for assuming a higher risk (the


alleged actual value of the goods) the insurance company
was paid the correct higher premium by Feliciana
Legaspi; while petitioner was paid a fee lower than what
it was entitled to for transporting the goods that had

TRANSPO

been deliberately undervalued by the shippers in the Bill


of Lading. Between the two of them, the insurer should
bear the loss in excess of the value declared in the Bills of
Lading. This is the just and equitable solution.

In Aboitiz Shipping Corporation v. Court of Appeals,23 the


description of the nature and the value of the goods
shipped were declared and reflected in the bill of lading,
like in the present case. The Court therein considered this
declaration as the basis of the carriers liability and
ordered payment based on such amount. Following this
ruling, petitioner should not be held liable for more than
what was declared by the shippers/consignees as the
value of the goods in the bills of lading.

We find no cogent reason to disturb the CAs finding that


Feliciana Legaspi was the owner of the goods covered by
Bills of Lading Nos. 58 and 59. Undoubtedly, the goods
were merely consigned to Nestor Angelia and Zosimo
Mercado, respectively; thus, Feliciana Legaspi or her
subrogee (respondent) was entitled to the goods or, in
case of loss, to compensation therefor. There is no
evidence showing that petitioner paid her for the loss of
those goods. It does not even claim to have paid her.

On the other hand, Legaspi Marketing filed with petitioner


a claim for the lost goods under Bill of Lading No. 59, for
which the latter subsequently paid P14,000. But nothing
in the records convincingly shows that the former was the
owner of the goods. Respondent was, however, able to
prove that it was Feliciana Legaspi who owned those
goods, and who was thus entitled to payment for their
loss. Hence, the claim for the goods under Bill of Lading
No. 59 cannot be deemed to have been extinguished,
because payment was made to a person who was not
entitled thereto.

With regard to the claim for the goods that were covered
by Bill of Lading No. 58 and valued at P6,500, the parties
have not convinced us to disturb the findings of the CA
that compensation could not validly take place. Thus, we
uphold the appellate courts ruling on this point.
WHEREFORE, the Petition is hereby PARTIALLY GRANTED.
The assailed Decision is MODIFIED in the sense that
petitioner is ORDERED to pay respondent the sums of
P14,000 and P6,500, which represent the value of the
goods stated in Bills of Lading Nos. 59 and 58,
respectively. No costs. SO ORDERED.

meikimouse

TRANSPO

G.R. No. L-45637

meikimouse
May 31, 1985

ROBERTO JUNTILLA, petitioner,


vs. CLEMENTE FONTANAR, FERNANDO BANZON and
BERFOL CAMORO, respondents.

Valentin A. Zozobrado for petitioner.

Ruperto N. Alfarara for respondents.

GUTIERREZ, JR., J.:

This is a petition for review, on questions of law, of the


decision of the Court of First Instance of Cebu which
reversed the decision of the City Court of Cebu and
exonerated the respondents from any liability arising
from a vehicular accident.

The background facts which led to the filing of a


complaint for breach of contract and damages against
the respondents are summarized by the Court of First
Instance of Cebu as follows:

The facts established after trial show that the plaintiff


was a passenger of the public utility jeepney bearing
plate No. PUJ-71-7 on the course of the trip from Danao
City to Cebu City. The jeepney was driven by defendant
Berfol Camoro. It was registered under the franchise of
defendant Clemente Fontanar but was actually owned by
defendant Fernando Banzon. When the jeepney reached
Mandaue City, the right rear tire exploded causing the
vehicle to turn turtle. In the process, the plaintiff who was
sitting at the front seat was thrown out of the vehicle.
Upon landing on the ground, the plaintiff momentarily
lost consciousness. When he came to his senses, he
found that he had a lacerated wound on his right palm.
Aside from this, he suffered injuries on his left arm, right
thigh and on his back. (Exh. "D"). Because of his shock
and injuries, he went back to Danao City but on the way,
he discovered that his "Omega" wrist watch was lost.
Upon his arrival in Danao City, he immediately entered
the Danao City Hospital to attend to his injuries, and also
requested his father-in-law to proceed immediately to the
place of the accident and look for the watch. In spite of
the efforts of his father-in-law, the wrist watch, which he
bought for P 852.70 (Exh. "B") could no longer be found.

xxx

xxx

xxx

Petitioner Roberto Juntilla filed Civil Case No. R-17378 for


breach of contract with damages before the City Court of
Cebu City, Branch I against Clemente Fontanar, Fernando
Banzon and Berfol Camoro.

The respondents filed their answer, alleging inter alia that


the accident that caused losses to the petitioner was
beyond the control of the respondents taking into
account that the tire that exploded was newly bought and
was only slightly used at the time it blew up.

After trial, Judge Romulo R. Senining of the Civil Court of


Cebu rendered judgment in favor of the petitioner and
against the respondents. The dispositive portion of the
decision reads:

WHEREFORE, judgment is hereby rendered in favor of the


plaintiff and against the defendants and the latter are
hereby ordered, jointly and severally, to pay the plaintiff
the sum of P750.00 as reimbursement for the lost Omega
wrist watch, the sum of P246.64 as unrealized salary of
the plaintiff from his employer, the further sum of
P100.00 for the doctor's fees and medicine, an additional
sum of P300.00 for attorney's fees and the costs.

The respondents appealed to the Court of First Instance


of Cebu, Branch XIV.

Judge Leonardo B. Canares reversed the judgment of the


City Court of Cebu upon a finding that the accident in
question was due to a fortuitous event. The dispositive
portion of the decision reads:

WHEREFORE, judgment is hereby rendered exonerating


the defendants from any liability to the plaintiff without
pronouncement as to costs.

A motion for reconsideration was denied by the Court of


First Instance.

The petitioner raises the following alleged errors


committed by the Court of First Instance of Cebu on
appeal

TRANSPO

a.
The Honorable Court below committed grave
abuse of discretion in failing to take cognizance of the
fact that defendants and/or their employee failed to
exercise "utmost and/or extraordinary diligence" required
of common carriers contemplated under Art. 1755 of the
Civil Code of the Philippines.

b.
The Honorable Court below committed grave
abuse of discretion by deciding the case contrary to the
doctrine laid down by the Honorable Supreme Court in
the case of Necesito et al. v. Paras, et al.

We find the petition impressed with merit.

The City Court and the Court of First Instance of Cebu


found that the right rear tire of the passenger jeepney in
which the petitioner was riding blew up causing the
vehicle to fall on its side. The petitioner questions the
conclusion of the respondent court drawn from this
finding of fact.

The Court of First Instance of Cebu erred when it absolved


the carrier from any liability upon a finding that the tire
blow out is a fortuitous event. The Court of First Instance
of Cebu ruled that:

After reviewing the records of the case, this Court finds


that the accident in question was due to a fortuitous
event. A tire blow-out, such as what happened in the case
at bar, is an inevitable accident that exempts the carrier
from liability, there being absence of a showing that there
was misconduct or negligence on the part of the operator
in the operation and maintenance of the vehicle involved.
The fact that the right rear tire exploded, despite being
brand new, constitutes a clear case of caso fortuito which
can be a proper basis for exonerating the defendants
from liability. ...

The Court of First Instance relied on the ruling of the


Court of Appeals in Rodriguez v. Red Line Transportation
Co., CA G.R. No. 8136, December 29, 1954, where the
Court of Appeals ruled that:

A tire blow-out does not constitute negligence unless the


tire was already old and should not have been used at all.
Indeed, this would be a clear case of fortuitous event.

meikimouse
The foregoing conclusions of the Court of First Instance of
Cebu are based on a misapprehension of overall facts
from which a conclusion should be drawn. The reliance of
the Court of First Instance on the Rodriguez case is not in
order. In La Mallorca and Pampanga Bus Co. v. De Jesus,
et al. (17 SCRA 23), we held that:

Petitioner maintains that a tire blow-out is a fortuitous


event and gives rise to no liability for negligence, citing
the rulings of the Court of Appeals in Rodriguez v. Red
Line Transportation Co., CA G.R. No. 8136, December 29,
1954, and People v. Palapad, CA-G.R. No. 18480, June 27,
1958. These rulings, however, not only are not binding on
this Court but were based on considerations quite
different from those that obtain in the case at bar. The
appellate court there made no findings of any specific
acts of negligence on the part of the defendants and
confined itself to the question of whether or not a tire
blow-out, by itself alone and without a showing as to the
causative factors, would generate liability. ...

In the case at bar, there are specific acts of negligence on


the part of the respondents. The records show that the
passenger jeepney turned turtle and jumped into a ditch
immediately after its right rear tire exploded. The
evidence shows that the passenger jeepney was running
at a very fast speed before the accident. We agree with
the observation of the petitioner that a public utility jeep
running at a regular and safe speed will not jump into a
ditch when its right rear tire blows up. There is also
evidence to show that the passenger jeepney was
overloaded at the time of the accident. The petitioner
stated that there were three (3) passengers in the front
seat and fourteen (14) passengers in the rear.

While it may be true that the tire that blew-up was still
good because the grooves of the tire were still visible,
this fact alone does not make the explosion of the tire a
fortuitous event. No evidence was presented to show that
the accident was due to adverse road conditions or that
precautions were taken by the jeepney driver to
compensate for any conditions liable to cause accidents.
The sudden blowing-up, therefore, could have been
caused by too much air pressure injected into the tire
coupled by the fact that the jeepney was overloaded and
speeding at the time of the accident.

In Lasam v. Smith (45 Phil. 657), we laid down the


following essential characteristics of caso fortuito:

xxx

xxx

xxx

TRANSPO

... 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 Encyclopedia Juridica Espanola, 309.)

In the case at bar, the cause of the unforeseen and


unexpected occurrence was not independent of the
human will. The accident was caused either through the
negligence of the driver or because of mechanical defects
in the tire. Common carriers should teach their drivers
not to overload their vehicles, not to exceed safe and
legal speed limits, and to know the correct measures to
take when a tire blows up thus insuring the safety of
passengers at all times. Relative to the contingency of
mechanical defects, we held in Necesito, et al. v. Paras, et
al. (104 Phil. 75), that:

... The preponderance of authority is in favor of the


doctrine that a passenger is entitled to recover damages
from a carrier for an injury resulting from a defect in an
appliance purchased from a manufacturer, whenever it
appears that the defect would have been discovered by
the carrier if it had exercised the degree of care which
under the circumstances was incumbent upon it, with
regard to inspection and application of the necessary
tests. For the purposes of this doctrine, the manufacturer
is considered as being in law the agent or servant of the
carrier, as far as regards the work of constructing the
appliance. According to this theory, the good repute of
the manufacturer will not relieve the carrier from liability'
(10 Am. Jur. 205, s, 1324; see also Pennsylvania R. Co. v.
Roy, 102 U.S. 451; 20 L. Ed. 141; Southern R. Co. v.
Hussey, 74 ALR 1172; 42 Fed. 2d 70; and Ed Note, 29 ALR
788.: Ann. Cas. 1916E 929).

meikimouse
It is sufficient to reiterate that the source of a common
carrier's legal liability is the contract of carriage, and by
entering into the said contract, it binds itself to carry the
passengers safely as far as human care and foresight can
provide, using the utmost diligence of a very cautious
person, with a due regard for all the circumstances. The
records show that this obligation was not met by the
respondents.

The respondents likewise argue that the petitioner cannot


recover any amount for failure to prove such damages
during the trial. The respondents submit that if the
petitioner was really injured, why was he treated in
Danao City and not in Mandaue City where the accident
took place. The respondents argue that the doctor who
issued the medical certificate was not presented during
the trial, and hence not cross-examined. The respondents
also claim that the petitioner was not wearing any wrist
watch during the accident.

It should be noted that the City Court of Cebu found that


the petitioner had a lacerated wound on his right palm
aside from injuries on his left arm, right thigh and on his
back, and that on his way back to Danao City, he
discovered that his "Omega" wrist watch was lost. These
are findings of facts of the City Court of Cebu which we
find no reason to disturb. More so when we consider the
fact that the Court of First Instance of Cebu impliedly
concurred in these matters when it confined itself to the
question of whether or not the tire blow out was a
fortuitous event.

WHEREFORE, the decision of the Court of First Instance of


Cebu, Branch IV appealed from is hereby REVERSED and
SET ASIDE, and the decision of the City Court of Cebu,
Branch I is REINSTATED, with the modification that the
damages shall earn interest at 12% per annum and the
attorney's fees are increased to SIX HUNDRED PESOS
(P600.00). Damages shall earn interests from January 27,
1975.

SO ORDERED.
The rationale of the carrier's liability is the fact that the
passenger has neither choice nor control over the carrier
in the selection and use of the equipment and appliances
in use by the carrier. Having no privity whatever with the
manufacturer or vendor of the defective equipment, the
passenger has no remedy against him, while the carrier
usually has. It is but logical, therefore, that the carrier,
while not an insurer of the safety of his passengers,
should nevertheless be held to answer for the flaws of his
equipment if such flaws were at all discoverable. ...

TRANSPO

G.R. No. 150751

September 20, 2004

CENTRAL SHIPPING COMPANY, INC., petitioner,


vs. INSURANCE COMPANY OF NORTH AMERICA,
respondent.

DECISION

meikimouse
The factual antecedents, summarized by the trial court
and adopted by the appellate court, are as follows:

"On July 25, 1990 at Puerto Princesa, Palawan, the


[petitioner] received on board its vessel, the M/V Central
Bohol, 376 pieces [of] Philippine Apitong Round Logs and
undertook to transport said shipment to Manila for
delivery to Alaska Lumber Co., Inc.

PANGANIBAN, J.:

A common carrier is presumed to be at fault or negligent.


It shall be liable for the loss, destruction or deterioration
of its cargo, unless it can prove that the sole and
proximate cause of such event is one of the causes
enumerated in Article 1734 of the Civil Code, or that it
exercised extraordinary diligence to prevent or minimize
the loss. In the present case, the weather condition
encountered by petitioners vessel was not a "storm" or a
natural disaster comprehended in the law. Given the
known weather condition prevailing during the voyage,
the manner of stowage employed by the carrier was
insufficient to secure the cargo from the rolling action of
the sea. The carrier took a calculated risk in improperly
securing the cargo. Having lost that risk, it cannot now
disclaim any liability for the loss.

The Case

Before the Court is a Petition for Review1 under Rule 45


of the Rules of Court, seeking to reverse and set aside the
March 23, 2001 Decision2 of the Court of Appeals (CA) in
CA-GR CV No. 48915. The assailed Decision disposed as
follows:

"WHEREFORE, the decision of the Regional Trial Court of


Makati City, Branch 148 dated August 4, 1994 is hereby
MODIFIED in so far as the award of attorneys fees is
DELETED. The decision is AFFIRMED in all other
respects."3

The CA denied petitioners Motion for Reconsideration in


its November 7, 2001 Resolution.4

The Facts

"The cargo was insured for P3,000,000.00 against total


loss under [respondents] Marine Cargo Policy No. MCPB00170.

"On July 25, 1990, upon completion of loading of the


cargo, the vessel left Palawan and commenced the
voyage to Manila.

"At about 0125 hours on July 26, 1990, while enroute to


Manila, the vessel listed about 10 degrees starboardside,
due to the shifting of logs in the hold.

"At about 0128 hours, after the listing of the vessel had
increased to 15 degrees, the ship captain ordered his
men to abandon ship and at about 0130 hours of the
same day the vessel completely sank. Due to the sinking
of the vessel, the cargo was totally lost.

"[Respondent] alleged that the total loss of the shipment


was caused by the fault and negligence of the [petitioner]
and its captain and as direct consequence thereof the
consignee suffered damage in the sum of P3,000,000.00.

"The consignee, Alaska Lumber Co. Inc., presented a


claim for the value of the shipment to the [petitioner] but
the latter failed and refused to settle the claim, hence
[respondent], being the insurer, paid said claim and now
seeks to be subrogated to all the rights and actions of the
consignee as against the [petitioner].

"[Petitioner], while admitting the sinking of the vessel,


interposed the defense that the vessel was fully manned,
fully equipped and in all respects seaworthy; that all the
logs were properly loaded and secured; that the vessels
master exercised due diligence to prevent or minimize
the loss before, during and after the occurrence of the
storm.

TRANSPO
"It raised as its main defense that the proximate and only
cause of the sinking of its vessel and the loss of its cargo
was a natural disaster, a tropical storm which neither
[petitioner] nor the captain of its vessel could have
foreseen."5

The RTC was unconvinced that the sinking of M/V Central


Bohol had been caused by the weather or any other caso
fortuito. It noted that monsoons, which were common
occurrences during the months of July to December,
could have been foreseen and provided for by an oceangoing vessel. Applying the rule of presumptive fault or
negligence against the carrier, the trial court held
petitioner liable for the loss of the cargo. Thus, the RTC
deducted the salvage value of the logs in the amount of
P200,000 from the principal claim of respondent and
found that the latter was entitled to be subrogated to the
rights of the insured. The court a quo disposed as follows:

"WHEREFORE, premises considered, judgment is hereby


rendered in favor of the [respondent] and against the
[petitioner] ordering the latter to pay the following:

1) the amount of P2,800,000.00 with legal interest


thereof from the filing of this complaint up to and until
the same is fully paid;

2) P80,000.00 as and for attorneys fees;

3) Plus costs of suit."6

Ruling of the Court of Appeals

The CA affirmed the trial courts finding that the


southwestern monsoon encountered by the vessel was
not unforeseeable. Given the season of rains and
monsoons, the ship captain and his crew should have
anticipated the perils of the sea. The appellate court
further held that the weather disturbance was not the
sole and proximate cause of the sinking of the vessel,
which was also due to the concurrent shifting of the logs
in the hold that could have resulted only from improper
stowage. Thus, the carrier was held responsible for the
consequent loss of or damage to the cargo, because its
own negligence had contributed thereto.

meikimouse
The CA found no merit in petitioners assertion of the
vessels seaworthiness. It held that the Certificates of
Inspection and Drydocking were not conclusive proofs
thereof. In order to consider a vessel to be seaworthy, it
must be fit to meet the perils of the sea.

Found untenable was petitioners insistence that the trial


court should have given greater weight to the factual
findings of the Board of Marine Inquiry (BMI) in the
investigation of the Marine Protest filed by the ship
captain, Enriquito Cahatol. The CA further observed that
what petitioner had presented to the court a quo were
mere excerpts of the testimony of Captain Cahatol given
during the course of the proceedings before the BMI, not
the actual findings and conclusions of the agency. Citing
Arada v. CA,7 it said that findings of the BMI were limited
to the administrative liability of the owner/operator,
officers and crew of the vessel. However, the
determination of
whether
the
carrier
observed
extraordinary diligence in protecting the cargo it was
transporting was a function of the courts, not of the BMI.

The CA concluded that the doctrine of limited liability was


not applicable, in view of petitioners negligence -particularly its improper stowage of the logs.

Hence, this Petition.8

Issues

In its Memorandum, petitioner submits the following


issues for our consideration:

"(i) Whether or not the weather disturbance which caused


the sinking of the vessel M/V Central Bohol was a
fortuitous event.

"(ii) Whether or not the investigation report prepared by


Claimsmen Adjustment Corporation is hearsay evidence
under Section 36, Rule 130 of the Rules of Court.

"(iii) Whether or not the finding of the Court of Appeals


that the logs in the hold shifted and such shifting could
only be due to improper stowage has a valid and factual
basis.

TRANSPO

"(iv) Whether or not M/V Central Bohol is seaworthy.

"(v) Whether or not the Court of Appeals erred in not


giving credence to the factual finding of the Board of
Marine Inquiry (BMI), an independent government agency
tasked to conduct inquiries on maritime accidents.

"(vi) Whether or not the Doctrine of Limited Liability is


applicable to the case at bar."9

The issues boil down to two: (1) whether the carrier is


liable for the loss of the cargo; and (2) whether the
doctrine of limited liability is applicable. These issues
involve a determination of factual questions of whether
the loss of the cargo was due to the occurrence of a
natural disaster; and if so, whether its sole and proximate
cause was such natural disaster or whether petitioner
was partly to blame for failing to exercise due diligence in
the prevention of that loss.

The Courts Ruling

The Petition is devoid of merit.

First Issue:

Liability for Lost Cargo

From the nature of their business and for reasons of


public policy, common carriers are bound to observe
extraordinary diligence over the goods they transport,
according to all the circumstances of each case.10 In the
event of loss, destruction or deterioration of the insured
goods, common carriers are responsible; that is, unless
they can prove that such loss, destruction or
deterioration was brought about -- among others -- by
"flood, storm, earthquake, lightning or other natural
disaster or calamity."11 In all other cases not specified
under Article 1734 of the Civil Code, common carriers are
presumed to have been at fault or to have acted
negligently, unless they prove that they observed
extraordinary diligence.12

In the present case, petitioner disclaims responsibility for


the loss of the cargo by claiming the occurrence of a
"storm" under Article 1734(1). It attributes the sinking of

meikimouse
its vessel solely to the weather condition between 10:00
p.m. on July 25, 1990 and 1:25 a.m. on July 26, 1990.

At the outset, it must be stressed that only questions of


law13 may be raised in a petition for review on certiorari
under Rule 45 of the Rules of Court. Questions of fact are
not proper subjects in this mode of appeal,14 for "[t]he
Supreme Court is not a trier of facts."15 Factual findings
of the CA may be reviewed on appeal16 only under
exceptional circumstances such as, among others, when
the inference is manifestly mistaken,17 the judgment is
based on a misapprehension of facts,18 or the CA
manifestly overlooked certain relevant and undisputed
facts that, if properly considered, would justify a different
conclusion.19

In the present case, petitioner has not given the Court


sufficient cogent reasons to disturb the conclusion of the
CA that the weather encountered by the vessel was not a
"storm" as contemplated by Article 1734(1). Established
is the fact that between 10:00 p.m. on July 25, 1990 and
1:25 a.m. on July 26, 1990, M/V Central Bohol
encountered a southwestern monsoon in the course of its
voyage.

The Note of Marine Protest,20 which the captain of the


vessel issued under oath, stated that he and his crew
encountered a southwestern monsoon about 2200 hours
on July 25, 1990, and another monsoon about 2400 hours
on July 26, 1990. Even petitioner admitted in its Answer
that the sinking of M/V Central Bohol had been caused by
the strong southwest monsoon.21 Having made such
factual representation, it cannot now be allowed to
retreat and claim that the southwestern monsoon was a
"storm."

The pieces of evidence with respect to the weather


conditions encountered by the vessel showed that there
was a southwestern monsoon at the time. Normally
expected on sea voyages, however, were such monsoons,
during which strong winds were not unusual. Rosa S.
Barba, weather specialist of the Philippine Atmospheric
Geophysical and Astronomical Services Administration
(PAGASA), testified that a thunderstorm might occur in
the midst of a southwest monsoon. According to her, one
did occur between 8:00 p.m. on July 25, 1990, and 2 a.m.
on July 26, 1990, as recorded by the PAGASA Weather
Bureau.22

Nonetheless, to our mind it would not be sufficient to


categorize the weather condition at the time as a "storm"
within the absolutory causes enumerated in the law.

TRANSPO

Significantly, no typhoon was observed within the


Philippine area of responsibility during that period.23

According to PAGASA, a storm has a wind force of 48 to


55 knots,24 equivalent to 55 to 63 miles per hour or 10 to
11 in the Beaufort Scale. The second mate of the vessel
stated that the wind was blowing around force 7 to 8 on
the Beaufort Scale.25 Consequently, the strong winds
accompanying the southwestern monsoon could not be
classified as a "storm." Such winds are the ordinary
vicissitudes of a sea voyage.26

Even if the weather encountered by the ship is to be


deemed a natural disaster under Article 1739 of the Civil
Code, petitioner failed to show that such natural disaster
or calamity was the proximate and only cause of the loss.
Human agency must be entirely excluded from the cause
of injury or loss. In other words, the damaging effects
blamed on the event or phenomenon must not have been
caused, contributed to, or worsened by the presence of
human participation.27 The defense of fortuitous event or
natural disaster cannot be successfully made when the
injury could have been avoided by human precaution.28

Hence, if a common carrier fails to exercise due diligence


-- or that ordinary care that the circumstances of the
particular case demand -- to prevent or minimize the loss
before, during and after the occurrence of the natural
disaster, the carrier shall be deemed to have been
negligent. The loss or injury is not, in a legal sense, due
to a natural disaster under Article 1734(1).29

We also find no reason to disturb the CAs finding that the


loss of the vessel was caused not only by the
southwestern monsoon, but also by the shifting of the
logs in the hold. Such shifting could been due only to
improper stowage. The assailed Decision stated:

"Notably, in Master Cahatols account, the vessel


encountered the first southwestern monsoon at about
1[0]:00 in the evening. The monsoon was coupled with
heavy rains and rough seas yet the vessel withstood the
onslaught. The second monsoon attack occurred at about
12:00 midnight. During this occasion, the master felt
that the logs in the hold shifted, prompting him to order
second mate Percival Dayanan to look at the bodega.
Complying with the captains order, 2nd mate Percival
Dayanan found that there was seawater in the bodega.
2nd mate Dayanans account was:

meikimouse
14.T Kung inyo pong natatandaan ang mga pangyayari,
maari mo bang isalaysay ang naganap na paglubog sa
barkong M/V Central Bohol?

S Opo, noong ika-26 ng Julio 1990 humigit kumulang


alas 1:20 ng umaga (dst) habang kami ay nagnanabegar
patungong Maynila sa tapat ng Cadlao Island at Cauayan
Island sakop ng El Nido, Palawan, inutusan ako ni Captain
Enriquito Cahatol na tingnan ko ang bodega; nang ako ay
nasa bodega, nakita ko ang loob nang bodega na
maraming tubig at naririnig ko ang malakas na agos ng
tubig-dagat na pumapasok sa loob ng bodega ng barko;
agad bumalik ako kay Captain Enriquito Cahatol at sinabi
ko ang malakas na pagpasok ng tubig-dagat sa loob nang
bodega ng barko na ito ay naka-tagilid humigit kumulang
sa 020 degrees, nag-order si Captain Cahatol na standby
engine at tinawag ang lahat ng mga officials at mga crew
nang maipon kaming lahat ang barko ay naka-tagilid at
ito ay tuloy-tuloy ang pagtatagilid na ang ilan sa mga
officials ay naka-hawak na sa barandilla ng barko at dinagtagal sumigaw nang ABANDO[N] SHIP si Captain
Cahatol at kami ay nagkanya-kanya nang talunan at
languyan sa dagat na malakas ang alon at nang ako ay
lumingon sa barko ito ay di ko na nakita.

"Additionally, [petitioners] own witnesses, boatswain


Eduardo Vias Castro and oiler Frederick Perena, are one
in saying that the vessel encountered two weather
disturbances, one at around 10 oclock to 11 oclock in
the evening and the other at around 12 oclock midnight.
Both disturbances were coupled with waves and heavy
rains, yet, the vessel endured the first and not the
second. Why? The reason is plain. The vessel felt the
strain during the second onslaught because the logs in
the bodega shifted and there were already seawater that
seeped inside."30

The above conclusion is supported by the fact that the


vessel proceeded through the first southwestern
monsoon without any mishap, and that it began to list
only during the second monsoon immediately after the
logs had shifted and seawater had entered the hold. In
the hold, the sloshing of tons of water back and forth had
created pressures that eventually caused the ship to sink.
Had the logs not shifted, the ship could have survived
and reached at least the port of El Nido. In fact, there was
another motor launch that had been buffeted by the
same weather condition within the same area, yet it was
able to arrive safely at El Nido.31

In its Answer, petitioner categorically admitted the


allegation of respondent in paragraph 5 of the latters
Complaint "[t]hat at about 0125 hours on 26 July 1990,
while enroute to Manila, the M/V Central Bohol listed
about 10 degrees starboardside, due to the shifting of

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logs in the hold." Further, petitioner averred that "[t]he


vessel,
while
navigating
through
this
second
southwestern monsoon, was under extreme stress. At
about 0125 hours, 26 July 1990, a thud was heard in the
cargo hold and the logs therein were felt to have shifted.
The vessel thereafter immediately listed by ten (10)
degrees starboardside."32

Yet, petitioner now claims that the CAs conclusion was


grounded on mere speculations and conjectures. It
alleges that it was impossible for the logs to have shifted,
because they had fitted exactly in the hold from the port
to the starboard side.

After carefully studying the records, we are inclined to


believe that the logs did indeed shift, and that they had
been improperly loaded.

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the lower hold. Thus, the finding of the surveyor that the
logs were still intact clearly pertained only to those
lashed on deck.

The evidence indicated that strong southwest monsoons


were common occurrences during the month of July. Thus,
the officers and crew of M/V Central Bohol should have
reasonably anticipated heavy rains, strong winds and
rough seas. They should then have taken extra
precaution in stowing the logs in the hold, in consonance
with their duty of observing extraordinary diligence in
safeguarding the goods. But the carrier took a calculated
risk in improperly securing the cargo. Having lost that
risk, it cannot now escape responsibility for the loss.

Second Issue:

Doctrine of Limited Liability


According to the boatswains testimony, the logs were
piled properly, and the entire shipment was lashed to the
vessel by cable wire.33 The ship captain testified that out
of the 376 pieces of round logs, around 360 had been
loaded in the lower hold of the vessel and 16 on deck.
The logs stored in the lower hold were not secured by
cable wire, because they fitted exactly from floor to
ceiling. However, while they were placed side by side,
there were unavoidable clearances between them owing
to their round shape. Those loaded on deck were lashed
together several times across by cable wire, which had a
diameter of 60 millimeters, and were secured from
starboard to port.34

It is obvious, as a matter of common sense, that the


manner of stowage in the lower hold was not sufficient to
secure the logs in the event the ship should roll in heavy
weather. Notably, they were of different lengths ranging
from 3.7 to 12.7 meters.35 Being clearly prone to
shifting, the round logs should not have been stowed with
nothing to hold them securely in place. Each pile of logs
should have been lashed together by cable wire, and the
wire fastened to the side of the hold. Considering the
strong force of the wind and the roll of the waves, the
loose arrangement of the logs did not rule out the
possibility of their shifting. By force of gravity, those on
top of the pile would naturally roll towards the bottom of
the ship.

The adjusters Report, which was heavily relied upon by


petitioner to strengthen its claim that the logs had not
shifted, stated that "the logs were still properly lashed by
steel chains on deck." Parenthetically, this statement
referred only to those loaded on deck and did not
mention anything about the condition of those placed in

The doctrine of limited liability under Article 587 of the


Code of Commerce36 is not applicable to the present
case. This rule does not apply to situations in which the
loss or the injury is due to the concurrent negligence of
the shipowner and the captain.37 It has already been
established that the sinking of M/V Central Bohol had
been caused by the fault or negligence of the ship
captain and the crew, as shown by the improper stowage
of the cargo of logs. "Closer supervision on the part of the
shipowner
could
have
prevented
this
fatal
miscalculation."38 As such, the shipowner was equally
negligent. It cannot escape liability by virtue of the
limited liability rule.

WHEREFORE, the Petition is DENIED, and the assailed


Decision and Resolution AFFIRMED. Costs against
petitioner.

SO ORDERED.

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G.R. No. 101089. April 7, 1993.


ESTRELLITA M. BASCOS, petitioners,
vs. COURT OF APPEALS and RODOLFO A. CIPRIANO,
respondents.

Modesto S. Bascos for petitioner.


Pelaez, Adriano & Gregorio for private respondent.

SYLLABUS

1.
CIVIL LAW; COMMON CARRIERS; DEFINED; TEST
TO DETERMINE COMMON CARRIER. Article 1732 of the
Civil Code defines a common carrier as "(a) person,
corporation or 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." 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." . . . The holding of the Court in De Guzman
vs. Court of Appeals is instructive. In referring to Article
1732 of the Civil Code, it held thus: "The above article
makes no distinction between one whose principal
business activity is the carrying of persons or goods or
both, and one who does such carrying only as an ancillary
activity (in local idiom, as a "sideline"). Article 1732 also
carefully avoids making any distinction between a person
or enterprise offering transportation service on a regular
or scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis. Neither does
Article 1732 distinguished 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 1732
deliberately refrained from making such distinctions."

2.
ID.; ID.; DILIGENCE REQUIRED IN VIGILANCE OVER
GOODS
TRANSPORTED;
WHEN
PRESUMPTION
OF
NEGLIGENCE ARISES; HOW PRESUMPTION OVERCAME;
WHEN PRESUMPTION MADE ABSOLUTE. Common
carriers are obliged to observe extraordinary diligence in
the vigilance over the goods transported by them.
Accordingly, they are presumed to have been at fault or
to have acted negligently if the goods are lost, destroyed
or deteriorated. There are very few instances when the
presumption of negligence does not attach and these
instances are enumerated in Article 1734. In those cases
where the presumption is applied, the common carrier
must prove that it exercised extraordinary diligence in

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order to overcome the presumption . . . The presumption
of negligence was raised against petitioner. It was
petitioner's burden to overcome it. Thus, contrary to her
assertion, private respondent need not introduce any
evidence to prove her negligence. Her own failure to
adduce sufficient proof of extraordinary diligence made
the presumption conclusive against her.
3.
ID.; ID.; HIJACKING OF GOODS; CARRIER
PRESUMED NEGLIGENT; HOW CARRIER ABSOLVED FROM
LIABILITY. In De Guzman vs. Court of Appeals, the Court
held that hijacking, not being included in the provisions of
Article 1734, must be dealt with under the provisions of
Article 1735 and thus, the common carrier is presumed to
have been at fault or negligent. To exculpate the carrier
from liability arising from hijacking, he must prove that
the robbers or the hijackers acted with grave or
irresistible threat, violence, or force. This is in accordance
with Article 1745 of the Civil Code which provides: "Art.
1745. Any of the following or similar stipulations shall be
considered unreasonable, unjust and contrary to public
policy . . . (6) That the common carrier's liability for acts
committed by thieves, or of robbers who do not act with
grave or irresistible threat, violences or force, is
dispensed with or diminished"; In the same case, the
Supreme Court also held that: "Under Article 1745 (6)
above, a common carrier is held responsible and will
not be allowed to divest or to diminish such responsibility
even for acts of strangers like thieves or robbers,
except where such thieves or robbers in fact acted "with
grave of irresistible threat, violence of force," We believe
and so hold that the limits of the duty of extraordinary
diligence in the vigilance over the goods carried are
reached where the goods are lost as a result of a robbery
which is attended by "grave or irresistible threat, violence
or force."

4.
REMEDIAL LAW; EVIDENCE; JUDICIAL ADMISSIONS
CONCLUSIVE. In this case, petitioner herself has made
the admission that she was in the trucking business,
offering her trucks to those with cargo to move. Judicial
admissions are conclusive and no evidence is required to
prove the same.

5.
ID.; ID.; BURDEN OF PROOF RESTS WITH PARTY
WHO ALLEGES A FACT. Petitioner presented no other
proof of the existence of the contract of lease. He who
alleges a fact has the burden of proving it.

6.
ID.; ID.; AFFIDAVITS NOT CONSIDERED BEST
EVIDENCE IF AFFIANTS AVAILABLE AS WITNESSES.
While the affidavit of Juanito Morden, the truck helper in
the hijacked truck, was presented as evidence in court,
he himself was a witness as could be gleaned from the
contents of the petition. Affidavits are not considered the
best evidence if the affiants are available as witnesses.

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7.
CIVIL LAW; OBLIGATIONS AND CONTRACTS;
CONTRACT IS WHAT LAW DEFINES IT TO BE. Granting
that the said evidence were not self-serving, the same
were not sufficient to prove that the contract was one of
lease. 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.

DECISION

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Cipriano demanded reimbursement from petitioner but
the latter refused to pay. Eventually, Cipriano filed a
complaint for a sum of money and damages with writ of
preliminary attachment 4 for breach of a contract of
carriage. The prayer for a Writ of Preliminary Attachment
was supported by an affidavit 5 which contained the
following allegations:

"4.
That this action is one of those specifically
mentioned in Sec. 1, Rule 57 the Rules of Court, whereby
a writ of preliminary attachment may lawfully issue,
namely:

CAMPOS, JR., J p:

This is a petition for review on certiorari of the decision **


of the Court of Appeals in "RODOLFO A. CIPRIANO, doing
business
under
the
name
CIPRIANO
TRADING
ENTERPRISES plaintiff-appellee, vs. ESTRELLITA M.
BASCOS, doing business under the name of BASCOS
TRUCKING, defendant-appellant," C.A.-G.R. CV No. 25216,
the dispositive portion of which is quoted hereunder:

"PREMISES considered, We find no reversible error in the


decision appealed from, which is hereby affirmed in toto.
Costs against appellant." 1

The facts, as gathered by this Court, are as follows:

Rodolfo A. Cipriano representing Cipriano Trading


Enterprise (CIPTRADE for short) entered into a hauling
contract 2 with Jibfair Shipping Agency Corporation
whereby the former bound itself to haul the latter's 2,000
m/tons of soya bean meal from Magallanes Drive, Del
Pan, Manila to the warehouse of Purefoods Corporation in
Calamba, Laguna. To carry out its obligation, CIPTRADE,
through Rodolfo Cipriano, subcontracted with Estrellita
Bascos (petitioner) to transport and to deliver 400 sacks
of soya bean meal worth P156,404.00 from the Manila
Port Area to Calamba, Laguna at the rate of P50.00 per
metric ton. Petitioner failed to deliver the said cargo. As a
consequence of that failure, Cipriano paid Jibfair Shipping
Agency the amount of the lost goods in accordance with
the contract which stated that:

"1.
CIPTRADE shall be held liable and answerable for
any loss in bags due to theft, hijacking and non-delivery
or damages to the cargo during transport at market
value, . . ." 3

"(e)
in an action against a party who has removed or
disposed of his property, or is about to do so, with intent
to defraud his creditors;"
5.
That there is no sufficient security for the claim
sought to be enforced by the present action;

6.
That the amount due to the plaintiff in the aboveentitled case is above all legal counterclaims;"

The trial court granted the writ of preliminary attachment


on February 17, 1987.

In her answer, petitioner interposed the following


defenses: that there was no contract of carriage since
CIPTRADE leased her cargo truck to load the cargo from
Manila Port Area to Laguna; that CIPTRADE was liable to
petitioner in the amount of P11,000.00 for loading the
cargo; that the truck carrying the cargo was hijacked
along Canonigo St., Paco, Manila on the night of October
21, 1988; that the hijacking was immediately reported to
CIPTRADE and that petitioner and the police exerted all
efforts to locate the hijacked properties; that after
preliminary investigation, an information for robbery and
carnapping were filed against Jose Opriano, et al.; and
that hijacking, being a force majeure, exculpated
petitioner from any liability to CIPTRADE.

After trial, the trial court rendered a decision *** the


dispositive portion of which reads as follows:

"WHEREFORE, judgment is hereby rendered in favor of


plaintiff and against defendant ordering the latter to pay
the former:

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1.
The amount of ONE HUNDRED FIFTY-SIX
THOUSAND FOUR HUNDRED FOUR PESOS (P156,404.00)
as an (sic) for actual damages with legal interest of 12%
per cent per annum to be counted from December 4,
1986 until fully paid;

2.
The amount of FIVE THOUSAND
(P5,000.00) as and for attorney's fees; and

3.

PESOS

The costs of the suit.

The "Urgent Motion To Dissolve/Lift preliminary


Attachment" dated March 10, 1987 filed by defendant is
DENIED for being moot and academic.

SO ORDERED." 6
Petitioner appealed to the Court of Appeals but
respondent Court affirmed the trial court's judgment.

Consequently, petitioner filed this petition where she


makes the following assignment of errors; to wit:

"I.
THE RESPONDENT COURT ERRED IN HOLDING
THAT THE CONTRACTUAL RELATIONSHIP BETWEEN
PETITIONER AND PRIVATE RESPONDENT WAS CARRIAGE
OF GOODS AND NOT LEASE OF CARGO TRUCK.

II.
GRANTING, EX GRATIA ARGUMENTI, THAT THE
FINDING OF THE RESPONDENT COURT THAT THE
CONTRACTUAL RELATIONSHIP BETWEEN PETITIONER AND
PRIVATE RESPONDENT WAS CARRIAGE OF GOODS IS
CORRECT, NEVERTHELESS, IT ERRED IN FINDING
PETITIONER LIABLE THEREUNDER BECAUSE THE LOSS OF
THE CARGO WAS DUE TO FORCE MAJEURE, NAMELY,
HIJACKING.

III.
THE RESPONDENT COURT ERRED IN AFFIRMING
THE FINDING OF THE TRIAL COURT THAT PETITIONER'S
MOTION TO DISSOLVE/LIFT THE WRIT OF PRELIMINARY
ATTACHMENT HAS BEEN RENDERED MOOT AND
ACADEMIC BY THE DECISION OF THE MERITS OF THE
CASE." 7

The petition presents the following issues for resolution:


(1) was petitioner a common carrier?; and (2) was the
hijacking referred to a force majeure?

The Court of Appeals, in holding that petitioner was a


common carrier, found that she admitted in her answer
that she did business under the name A.M. Bascos
Trucking and that said admission dispensed with the
presentation by private respondent, Rodolfo Cipriano, of
proofs that petitioner was a common carrier. The
respondent Court also adopted in toto the trial court's
decision that petitioner was a common carrier, Moreover,
both courts appreciated the following pieces of evidence
as indicators that petitioner was a common carrier: the
fact that the truck driver of petitioner, Maximo Sanglay,
received the cargo consisting of 400 bags of soya bean
meal as evidenced by a cargo receipt signed by Maximo
Sanglay; the fact that the truck helper, Juanito Morden,
was also an employee of petitioner; and the fact that
control of the cargo was placed in petitioner's care.

In disputing the conclusion of the trial and appellate


courts that petitioner was a common carrier, she alleged
in this petition that the contract between her and Rodolfo
A. Cipriano, representing CIPTRADE, was lease of the
truck. She cited as evidence certain affidavits which
referred to the contract as "lease". These affidavits were
made by Jesus Bascos 8 and by petitioner herself. 9 She
further averred that Jesus Bascos confirmed in his
testimony his statement that the contract was a lease
contract. 10 She also stated that: she was not catering to
the general public. Thus, in her answer to the amended
complaint, she said that she does business under the
same style of A.M. Bascos Trucking, offering her trucks for
lease to those who have cargo to move, not to the
general public but to a few customers only in view of the
fact that it is only a small business. 11

We agree with the respondent Court in its finding that


petitioner is a common carrier.

Article 1732 of the Civil Code defines a common carrier


as "(a) person, corporation or 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." 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." 12 In this case, petitioner herself
has made the admission that she was in the trucking
business, offering her trucks to those with cargo to move.
Judicial admissions are conclusive and no evidence is
required to prove the same. 13

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But petitioner argues that there was only a contract of


lease because they offer their services only to a select
group of people and because the private respondents,
plaintiffs in the lower court, did not object to the
presentation of affidavits by petitioner where the
transaction was referred to as a lease contract.

Regarding the first contention, the holding of the Court in


De Guzman vs. Court of Appeals 14 is instructive. In
referring to Article 1732 of the Civil Code, it held thus:

"The above article makes no distinction between one


whose principal business activity is the carrying of
persons or goods or both, and one who does such
carrying only as an ancillary activity (in local idiom, as a
"sideline"). Article 1732 also carefully avoids making any
distinction between a person or enterprise offering
transportation service on a regular or scheduled basis
and one offering such service on an occasional, episodic
or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the
"general public," i.e., the general community or
population, and one who offers services or solicits
business only from a narrow segment of the general
population. We think that Article 1732 deliberately
refrained from making such distinctions."

Regarding the affidavits presented by petitioner to the


court, both the trial and appellate courts have dismissed
them as self-serving and petitioner contests the
conclusion. We are bound by the appellate court's factual
conclusions. Yet, granting that the said evidence were not
self-serving, the same were not sufficient to prove that
the contract was one of lease. 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. 15 Furthermore,
petitioner presented no other proof of the existence of
the contract of lease. He who alleges a fact has the
burden of proving it. 16

Likewise, We affirm the holding of the respondent court


that the loss of the goods was not due to force majeure.

Common carriers are obliged to observe extraordinary


diligence in the vigilance over the goods transported by
them. 17 Accordingly, they are presumed to have been at
fault or to have acted negligently if the goods are lost,
destroyed or deteriorated. 18 There are very few
instances when the presumption of negligence does not
attach and these instances are enumerated in Article
1734. 19 In those cases where the presumption is
applied, the common carrier must prove that it exercised

extraordinary
presumption.

diligence

in

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order to overcome

the

In this case, petitioner alleged that hijacking constituted


force majeure which exculpated her from liability for the
loss of the cargo. In De Guzman vs. Court of Appeals, 20
the Court held that hijacking, not being included in the
provisions of Article 1734, must be dealt with under the
provisions of Article 1735 and thus, the common carrier is
presumed to have been at fault or negligent. To exculpate
the carrier from liability arising from hijacking, he must
prove that the robbers or the hijackers acted with grave
or irresistible threat, violence, or force. This is in
accordance with Article 1745 of the Civil Code which
provides:

"Art. 1745.
Any of the following or similar stipulations
shall be considered unreasonable, unjust and contrary to
public policy;

xxx xxx xxx

(6)
That the common carrier's liability for acts
committed by thieves, or of robbers who do not act with
grave or irresistible threat, violences or force, is
dispensed with or diminished;"

In the same case, 21 the Supreme Court also held that:

"Under Article 1745 (6) above, a common carrier is held


responsible and will not be allowed to divest or to
diminish such responsibility even for acts of strangers
like thieves or robbers except where such thieves or
robbers in fact acted with grave or irresistible threat,
violence or force. We believe and so hold that the limits
of the duty of extraordinary diligence in the vigilance
over the goods carried are reached where the goods are
lost as a result of a robbery which is attended by "grave
or irresistible threat, violence or force."

To establish grave and irresistible force, petitioner


presented her accusatory affidavit, 22 Jesus Bascos'
affidavit, 23 and Juanito Morden's 24 "Salaysay".
However, both the trial court and the Court of Appeals
have concluded that these affidavits were not enough to
overcome the presumption. Petitioner's affidavit about
the hijacking was based on what had been told her by
Juanito Morden. It was not a first-hand account. While it
had been admitted in court for lack of objection on the
part of private respondent, the respondent Court had

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discretion in assigning weight to such evidence. We are


bound by the conclusion of the appellate court. In a
petition for review on certiorari, We are not to determine
the probative value of evidence but to resolve questions
of law. Secondly, the affidavit of Jesus Bascos did not
dwell on how the hijacking took place. Thirdly, while the
affidavit of Juanito Morden, the truck helper in the
hijacked truck, was presented as evidence in court, he
himself was a witness as could be gleaned from the
contents of the petition. Affidavits are not considered the
best evidence if the affiants are available as witnesses.
25 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.

The presumption of negligence was raised against


petitioner. It was petitioner's burden to overcome it. Thus,
contrary to her assertion, private respondent need not
introduce any evidence to prove her negligence. Her own
failure to adduce sufficient proof of extraordinary
diligence made the presumption conclusive against her.

Having affirmed the findings of the respondent Court on


the substantial issues involved, We find no reason to
disturb the conclusion that the motion to lift/dissolve the
writ of preliminary attachment has been rendered moot
and academic by the decision on the merits.

In the light of the foregoing analysis, it is Our opinion that


the petitioner's claim cannot be sustained. The petition is
DISMISSED and the decision of the Court of Appeals is
hereby AFFIRMED.

SO ORDERED.

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G.R. No. 52159

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December 22, 1989

JOSE PILAPIL, petitioner,


vs. HON. COURT OF APPEALS and ALATCO
TRANSPORTATION COMPANY, INC., respondents.

Thereupon, petitioner instituted before the Court of First


Instance of Camarines Sur, Branch I an action for
recovery of damages sustained as a result of the stonethrowing incident. After trial, the court a quo rendered
judgment with the following dispositive part:

Martin Badong, Jr. for petitioner.


Eufronio K. Maristela for private respondent.

PADILLA, J.:

This is a petition to review on certiorari the decision*


rendered by the Court of Appeals dated 19 October 1979
in CA-G.R. No. 57354-R entitled "Jose Pilapil, plaintiffappellee versus Alatco Transportation Co., Inc.,
defendant-appellant," which reversed and set aside the
judgment of the Court of First Instance of Camarines Sur
in Civil Case No. 7230 ordering respondent transportation
company to pay to petitioner damages in the total sum of
sixteen thousand three hundred pesos (P 16,300.00).

Wherefore, judgment is hereby entered:

1.
Ordering defendant transportation company to
pay plaintiff Jose Pilapil the sum of P 10,000.00, Philippine
Currency, representing actual and material damages for
causing a permanent scar on the face and injuring the
eye-sight of the plaintiff;

2.
Ordering
further
defendant
transportation
company to pay the sum of P 5,000.00, Philippine
Currency, to the plaintiff as moral and exemplary
damages;

3.
Ordering furthermore, defendant transportation
company to reimburse plaintiff the sum of P 300.00 for
his medical expenses and attorney's fees in the sum of P
1,000.00, Philippine Currency; and

The record discloses the following facts:


4.
Petitioner-plaintiff Jose Pilapil, a paying passenger,
boarded respondent-defendant's bus bearing No. 409 at
San Nicolas, Iriga City on 16 September 1971 at about
6:00 P.M. While said bus No. 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, Camarines Sur, on the way to Naga
City, an unidentified man, a bystander along said national
highway, hurled a stone at the left side of the bus, which
hit petitioner above his left eye. Private respondent's
personnel lost no time in bringing the petitioner to the
provincial hospital in Naga City where he was confined
and treated.

To pay the costs.

SO ORDERED 1

From the judgment, private respondent appealed to the


Court of Appeals where the appeal was docketed as CAG.R. No. 57354R. On 19 October 1979, the Court of
Appeals, in a Special Division of Five, rendered judgment
reversing and setting aside the judgment of the court a
quo.

Hence the present petition.


Considering that the sight of his left eye was impaired,
petitioner was taken to Dr. Malabanan of Iriga City where
he was treated for another week. Since there was no
improvement in his left eye's vision, petitioner went to V.
Luna Hospital, Quezon City where he was treated by Dr.
Capulong. Despite the treatment accorded to him by Dr.
Capulong, petitioner lost partially his left eye's vision and
sustained a permanent scar above the left eye.

In seeking a reversal of the decision of the Court of


Appeals, petitioner contends that said court has decided
the issue not in accord with law. Specifically, petitioner
argues that the nature of the business of a transportation
company requires the assumption of certain risks, and
the stoning of the bus by a stranger resulting in injury to
petitioner-passenger is one such risk from which the
common carrier may not exempt itself from liability.

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We do not agree.

In consideration of the right granted to it by the public to


engage in the business of transporting passengers and
goods, a common carrier does not give its consent to
become an insurer of any and all risks to passengers and
goods. It merely undertakes to perform certain duties to
the public as the law imposes, and holds itself liable for
any breach thereof.

Under Article 1733 of the Civil Code, common carriers are


required to observe extraordinary diligence for the safety
of the passenger transported by them, according to all
the circumstances of each case. 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, using the utmost diligence of very
cautious persons, with due regard for all the
circumstances." Further, in case of death of or injuries to
passengers, the law presumes said common carriers to
be at fault or to have acted negligently. 2

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, it does not, however, make the carrier an
insurer of the absolute safety of its passengers. 3

Article 1755 of the Civil Code qualifies the duty of


extraordinary care, vigilance and precaution in the
carriage of passengers by common carriers to only such
as human care and foresight can provide. what
constitutes compliance with said duty is adjudged with
due regard to all the circumstances.

Article 1756 of the Civil Code, in creating a presumption


of fault or negligence on the part of the common carrier
when its passenger is injured, merely relieves the latter,
for the time being, from introducing evidence to fasten
the negligence on the former, because the presumption
stands in the place of evidence. Being a mere
presumption, however, 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, or that the injury suffered by the
passenger was solely due to a fortuitous event. 4

In fine, we can only infer from the law the intention of the
Code Commission and Congress to curb the recklessness

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of drivers and operators of common carriers in the
conduct of their business.

Thus, it is clear that neither the law nor the nature of the
business of a transportation company makes it an insurer
of the passenger's safety, but that its liability for personal
injuries sustained by its passenger rests upon its
negligence, its failure to exercise the degree of diligence
that the law requires. 5
Petitioner contends that respondent common carrier
failed to rebut the presumption of negligence against it
by proof on its part that it exercised extraordinary
diligence for the safety of its passengers.

We do not agree.

First, as stated earlier, the presumption of fault or


negligence against the carrier is only a disputable
presumption. 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.
Where, as in the instant case, the injury sustained by the
petitioner 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 private respondent's
employees, and therefore involving no issue of
negligence in its duty to provide safe and suitable cars as
well as competent employees, 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, the presumption is rebutted and the
carrier is not and ought not to be held liable. To rule
otherwise would make the common carrier the insurer of
the absolute safety of its passengers which is not the
intention of the lawmakers.

Second, while as a general rule, common carriers are


bound to exercise extraordinary diligence in the safe
transport of their passengers, it would seem that this is
not the standard by which its liability is to be determined
when intervening acts of strangers is to be determined
directly cause the injury, while the contract of carriage
Article 1763 governs:

Article 1763.
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, 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.

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Clearly under the above provision, a tort committed by a
stranger which causes injury to a passenger does not
accord the latter a cause of action against the carrier. The
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. Further, under the same provision, it is to be
noted that when the violation of the contract is due to the
willful acts of strangers, as in the instant case, 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.

Petitioner has charged respondent carrier of negligence


on the ground that the injury complained of could have
been prevented by the common carrier if something like
mesh-work grills had covered the windows of its bus.

We do not agree.

Although the suggested precaution could have prevented


the injury complained of, 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.
The carrier is not charged with the duty of providing or
maintaining vehicles as to absolutely prevent any and all
injuries to passengers. Where the carrier uses cars of the
most approved type, in general use by others engaged in
the same occupation, and exercises a high degree of care
in maintaining them in suitable condition, the carrier
cannot be charged with negligence in this respect. 6

Finally, petitioner 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.

Sad to say, we are not in a position to so hold; 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.

WHEREFORE, the judgment appealed from is hereby


AFFIRMED.

meikimouse
SO ORDERED.

TRANSPO

G.R. No. 119756

March 18, 1999

FORTUNE EXPRESS, INC., petitioner,


vs. COURT OF APPEALS, PAULIE U.CAORONG, and
minor childrenYASSER KING CAORONG, ROSE
HEINNI and PRINCE ALEXANDER, all surnamed
CAORONG, and represented by their mother PAULIE
U. CAORONG, respondents.

MENDOZA, J.:

This is an appeal by petition for review on certiorari of the


decision, dated July 29, 1994, of the Court of Appeals,
which reversed the decision of the Regional Trial Court,
Branch VI, Iligan City. The aforesaid decision of the trial
court dismissed the complaint of public respondents
against petitioner for damages for breach of contract of
carriage filed on the ground that petitioner had not
exercised the required degree of diligence in the
operation of one of its buses. Atty. Talib Caorong, whose
heirs are private respondents herein, was a passenger of
the bus and was killed in the ambush involving said bus.

The facts of the instant case are as follows:

Petitioner is a bus company in northern Mindanao. Private


respondent Paulie Caorong is the widow of Atty. Caorong,
while private respondents Yasser King, Rose Heinni, and
Prince Alexander are their minor children.

On November 18, 1989, a bus of petitioner figured in an


accident with a jeepney in Kauswagan, Lanao del Norte,
resulting in the death of several passengers of the
jeepney, including two Maranaos. Crisanto Generalao, a
volunteer field agent of the Constabulary Regional
Security Unit No. X, conducted an investigation of the
accident. He found that the owner of the jeepney was a
Maranao residing in Delabayan, Lanao del Norte and that
certain Maranaos were planning to take revenge on the
petitioner by burning some of its buses. Generalao
rendered a report on his findings to Sgt. Reynaldo
Bastasa of the Philippine Constabulary Regional
Headquarters at Cagayan de Oro. Upon the instruction of
Sgt. Bastasa, he went to see Diosdado Bravo, operations
manager of petitioner, its main office in Cagayan de Oro
City. Bravo assured him that the necessary precautions to
insure the safety of lives and property would be taken. 1

meikimouse
At about 6:45 P.M. on November 22, 1989, three armed
Maranaos who pretended to be passengers, seized a bus
of petitioner at Linamon, Lanao del Norte while on its way
to Iligan City. Among the passengers of the bus was Atty.
Caorong. The leader of the Maranaos, identified as one
Bashier Mananggolo, ordered the driver, Godofredo
Cabatuan, to stop the bus on the side of the highway.
Mananggolo then shot Cabatuan on the arm, which
caused him to slump on the steering wheel. The one of
the companions of Mananggolo started pouring gasoline
inside the bus, as the other held the passenger at bay
with a handgun. Mananggolo then ordered the passenger
to get off the bus. The passengers, including Atty.
Caorong, stepped out of the bus and went behind the
bushes in a field some distance from the highway. 2

However, Atty. Caorong returned to the bus to retrieve


something from the overhead rack. at that time, one of
the armed men was pouring gasoline on the head of the
driver. Cabatuan, who had meantime regained
consciousness, heard Atty. 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. The
armed men were, however, adamant as they repeated
the warning that they were going to burn the bus along
with its driver. During this exchange between Atty.
Caorong and the assailants, Cabatuan climbed out of the
left window of the bus and crawled to the canal on the
opposite side of the highway. He heard shots from inside
the bus. Larry de la Cruz, one of the passengers, saw that
Atty. Caorong was hit. Then the bus was set on fire. Some
of the passengers were able to pull Atty. Caorong out of
the burning bus and rush him to the Mercy Community
Hospital in Iligan City, but he died while undergoing
operation. 3

The private respondents brought this suit for breach of


contract of carriage in the Regional Trial Court, Branch VI,
Iligan City. In its decision, dated December 28, 1990, the
trial court dismissed the complaint, holding as follows:

The fact that defendant, through Operations Manager


Diosdado Bravo, was informed of the "rumors" that the
Moslems intended to take revenge by burning five buses
of defendant is established since the latter also utilized
Crisanto Generalao as a witness. Yet despite this
information, the plaintiffs charge, defendant did not take
proper precautions. . . . Consequently, plaintiffs now fault
the defendant for ignoring the report. Their position is
that the defendant should have provided its buses with
security guards. Does the law require common carriers to
install security guards in its buses for the protection and
safety of its passengers? Is the failure to post guards on
omission of the duty to "exercise the diligence of a good
father of the family" which could have prevented the
killing of Atty. Caorong? To our mind, the diligence

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demanded by law does not include the posting of security


guard in buses. It is an obligation that properly belongs to
the State. Besides, will the presence of one or two
security guards suffice to deter a determined assault of
the lawless and thus prevent the injury complained of?
Maybe so, but again, perhaps not. In other words, the
presence of a security guard is not a guarantee that the
killing of Atty. Caorong would have been definitely
avoided.

xxx

xxx

xxx

Accordingly, the failure of defendant to accord faith and


credit to the report of Mr. Generalao and the fact that it
did not provide security to its buses cannot, in the light of
the circumstances, be characterized as negligence.

Finally, the evidence clearly shows that the assalants did


not have the least intention of the harming any of the
passengers. They ordered all the passengers to alight and
set fire on the bus only after all the passengers were out
of danger. The death of Atty. Caorong was an unexpected
and unforseen occurrense over which defendant had no
control. Atty. Caorong performed an act of charity and
heroism in coming to the succor of the driver even in the
face of danger. He deserves the undying gratitude of the
driver whose life he saved. No one should blame him for
an act of extraordinary charity and altruism which cost
his life. But neither should any blame be laid on the
doorstep of defendant. His death was solely due to the
willfull acts of the lawless which defendant could neither
prevent nor to stop.

WHEREFORE, in view of the foregoing, the complaint is


hereby dismissed. For lack of merit, the counter-claim is
likewise dismissed. No costs. 4

On appeal, however, the Court of Appeals reversed. It


held:

In the case at bench, how did defendant-appellee react to


the tip or information that certain Maranao hotheads
were planning to burn five of its buses out of revenge for
the deaths of two Maranaos in an earlier collision
involving appellee's bus? Except for the remarks of
appellee's operations manager that "we will have our
action . . . . and I'll be the one to settle it personally,"
nothing concrete whatsoever was taken by appellee or its
employees to prevent the execution of the threat.
Defendant-appellee never adopted even a single safety
measure for the protection of its paying passengers. Were

meikimouse
there available safeguards? Of course, there were: one
was frisking passengers particularly those en route to the
area where the threats were likely to be carried out such
as where the earlier accident occurred or the place of
influence of the victims or their locality. If frisking was
resorted to, even temporarily, . . . . appellee might be
legally excused from liabilty. Frisking of passengers
picked up along the route could have been implemented
by the bus conductor; for those boarding at the bus
terminal, frisking could have been conducted by him and
perhaps by additional personnel of defendant-appellee.
On hindsight, the handguns and especially the gallon of
gasoline used by the felons all of which were brought
inside the bus would have been discovered, thus
preventing the burning of the bus and the fatal shooting
of the victim.

Appellee's argument that there is no law requiring it to


provide guards on its buses and that the safety of citizens
is the duty of the government, is not well taken. To be
sure, appellee is not expected to assign security guards
on all its buses; if at all, it has the duty to post guards
only on its buses plying predominantly Maranaos areas.
As discussed in the next preceding paragraph, least
appellee could have done in response to the report was
to adopt a system of verification such as the frisking of
passengers boarding at its buses. Nothing, and no repeat,
nothing at all, was done by defendant-appellee to protect
its innocent passengers from the danger arising from the
"Maranao threats." It must be observed that frisking is
not a novelty as a safety measure in our society. Sensitive
places in fact, nearly all important places have
applied this method of security enhancement. Gadgets
and devices are avilable in the market for this purpose. It
would not have weighed much against the budget of the
bus company if such items were made available to its
personnel to cope up with situations such as the
"Maranaos threats."

In view of the constitutional right to personal privacy, our


pronouncement in this decision should not be construed
as an advocacy of mandatory frisking in all public
conveyances. What we are saying is that given the
circumstances obtaining in the case at bench that: (a)
two Maranaos died because of a vehicular collision
involving one of appellee's vehicles; (b) appellee received
a written report from a member of the Regional Security
Unit, Constabulary Security Group, that the tribal/ethnic
group of the two deceased were planning to burn five
buses of appellee out of revenge; and (c) appelle did
nothing absolutely nothing for the safety of its
passengers travelling in the area of influence of the
victims, appellee has failed to exercise the degree of
dilegence required of common carriers. Hence, appellee
must be adjudge liable.

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xxx

xxx

xxx

WHEREFORE the decision appealed from is hereby


REVERSED and another rendered ordering defendantappellee to pay plaintiffs-appellants the following:

1)

meikimouse
Art. 1763 of the Civil Code provides that a common
carrier is responsible for injuries suffered by a passenger
on account of wilfull acts of other passengers, 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. In the present case, it is clear that
because of the negligence of petitioner's employees, the
seizure of the bus by Mananggolo and his men was made
possible.

P3,399,649.20 as death indemnity;

2)
P50,000.00 and P500.00 per appearance as
attorney's fee and

Costs against defendant-appellee. 5

Hence, this appeal. Petitioner contends:

(A)
THAT PUBLIC RESPONDENT ERRED IN REVERSING
THE DECISION OF THE REGIONAL TRIAL COURT DATED
DECEMBER 28, 1990 DISMISSING THE COMPLAINT AS
WELL AS THE COUNTERCLAIM, AND FINDING FOR PRIVATE
RESPONDENTS BY ORDERING PETITIONER TO PAY THE
GARGANTUAN SUM OF P3,449,649.20 PLUS P500.00 PER
APPEARANCE AS ATTORNEY'S FEES, AS WELL AS DENYING
PETITIONERS MOTION FRO RECONSIDERATION AND THE
SUPPLEMENT TO SAID MOTION, WHILE HOLDING, AMONG
OTHERS, THAT THE PETITIONER BREACHED THE
CONTRACT OF THE CARRIAGE BY ITS FAILURE TO
EXCERCISE THE REQUIRED DEGREE OF DILIGENCE;

(B)
THAT THE ACTS OF THE MARANAO OUTLAWS
WERE SO GRAVE, IRRESISTABLE, VIOLENT, AND
FORCEFULL, AS TO BE REGARDED AS CASO FORTUITO;
AND

Despite warning by the Philippine Constabulary at


Cagayan de Oro that the Maranaos were planning to take
revenge on the petitioner by burning some of its buses
and the assurance of petitioner's operation manager,
Diosdado Bravo, that the necessary precautions would be
taken, petitioner did nothing to protect the safety of its
passengers.

Had petitioner and its employees been vigilant they


would not have failed to see that the malefactors had a
large quantity of gasoline with them. Under the
circumstances, simple precautionary measures to protect
the safety of passengers, such as frisking passengers and
inspecting their baggages, preferably with non-intrusive
gadgets such as metal detectors, before allowing them
on board could have been employed without violating the
passenger's constitutional rights. As this Court amended
in Gacal v. Philippine Air Lines, Inc., 6 a common carrier
can be held liable for failing to prevent a hijacking by
frisking passengers and inspecting their baggages.

From the foregoing, it is evident that petitioner's


employees failed to prevent the attack on one of
petitioner's buses because they did not exercise the
diligence of a good father of a family. Hence, petitioner
should be held liable for the death of Atty. Caorong.

Second. Seizure of Petitioner's Bus not a Case of Force


Majeure
(C)
THAT PUBLIC RESPONDENT COURT OF APPEALS
SERIOUSLY ERRED IN HOLDING THAT PETITIONER COULD
HAVE
PROVIDED
ADEQUATE
SECURITY
IN
PREDOMINANTLY MUSLIM AREAS AS PART OF ITS DUTY TO
OBSERVE EXTRA-ORDINARY DILIGENCE AS A COMMON
CARRIER.

The instant has no merit.

First. Petitioner's Breach of the Contract of Carriage.

The petitioner contends that the seizure of its bus by the


armed assailants was a fortuitous event for which it could
not be held liable.

Art. 1174 of the Civil Code defines a fortuitous event as


an occurence which could not be foreseen, is inevitable.
In Yobido v. Court of Appeals, 7 we held that to
considered as force majeure, it is necessary that (1) the
cause of the breach of the obligation must be
independent of the human will; (2) the event must be
either unforeseeable or unavoidable; (3) the occurence

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must be render it impossible for the debtor to fulfill the


obligation in a normal manner; and (4) the obligor must
be free of participation in, or aggravation of, the injury to
the creditor. The absence of any of the requisites
mentioned above would prevent the obligor from being
excused from liability.

Thus, in Vasquez v. Court of Appeals, 8 it was held that


the common carrier was liable for its failure to take the
necessary precautions against an approaching typhoon,
of which it was warned, resulting in the loss of the lives of
several passengers. The event was forseeable, and, thus,
the second requisite mentioned above was not fulfilled.
This ruling applies by analogy to the present case.
Despite the report of PC agent Generalao that the
Maranaos were going to attack its buses, petitioner took
no steps to safeguard the lives and properties of its
passengers. The seizure of the bus of the petitioner was
foreseeable and, therefore, was not a fortuitous event
which would exempt petitioner from liabilty.

Petitioner invokes the ruling in Pilapil v. Court of Appeals,


9 and De Guzman v. Court of Appeals, 10 in support of its
contention that the seizure of its bus by the assailants
constitutes force majeure. In Pilapil v. Court of Appeals,
11 it was held that a common carrier is not liable for
failing to install window grills on its buses to protect the
passengers from injuries cause by rocks hurled at the bus
by lawless elements. On the other hand, in De Guzman v.
Court of Appeals, 12 it was ruled that a common carriers
is not responsible for goods lost as a result of a robbery
which is attended by grave or irresistable threat,
violence, or force.

It is clear that the cases of Pilapil and De Guzman do not


apply to the prensent case. Art. 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, using the utmost diligence of very cautious
persons, with due regard for all the circumstances." Thus,
we held in Pilapil and De Guzman that the respondents
therein were not negligent in failing to take special
precautions against threats to the safety of passengers
which could not be foreseen, such as tortious or criminal
acts of third persons. In the present case, this factor of
unforeseeability (the second requisite for an event to be
considered force majeure) is lacking. As already stated,
despite the report of PC agent Generalao that the
Maranaos were planning to burn some of petitioner's
buses and the assurance of petitioner's operation
manager
(Diosdado
Bravo)
that
the
necessary
precautions would be taken, nothing was really done by
petitioner to protect the safety of passengers.

Third. Deceased not Guilty of Contributory Negligence

meikimouse

The petitioner contends that Atty. Caorong was guilty of


contributory negligence in returning to the bus to retrieve
something. But Atty. Caorong did not act recklessly. It
should be pointed out that the intended targets of the
violence were petitioners and its employees, not its
passengers. The assailant's motive was to retaliate for
the loss of life of two Maranaos as a result of the collision
between petitioner's bus and the jeepney in which the
two Maranaos were riding. Mananggolo, the leader of the
group which had hijacked the bus, ordered the
passengers to get off the bus as they intended to burn it
and its driver. The armed men actually allowed Atty.
Caorong to retrieve something from the bus. What
apparently angered them was his attempt to help the
driver of the bus by pleading for his life. He was playing
the role of the good Samaritan. Certainly, this act cannot
considered an act of negligence, let alone recklessness.

Fourth. Petitioner Liable to Private Respaondents for


Damages

We now consider the question of damages that the heirs


of Atty. Caorong, private respondents herein, are entitled
to recover from the petitioner.

Indemnity for Death.


Art. 1764 of the Civil Code, in
relation to Art. 2206 thereof, provides for the payment of
indemnity for the death of passengers caused by the
breach of contract of carriage by a common carrier.
Initially fixed in Art. 2206 at P3,000.00, the amount of the
said indemnity for death has through the years been
gradually increased in view of the declining value of the
peso. It is presently fixed at P50,000.00. 13 Private
respondents are entitled to this amount.

Actual Damages.
Art. 2199 provides that "except
as provided by law or by stipulation, one is entitled to an
adequate compensation only for such pecuniary loss
suffered by him as has duly proved." The trial court found
that the private respondents spent P30,000.00 for the
wake and burial of Atty. Caorong. 14 Since petitioner does
not question this finding of the trial court, it is liable to
private respondent in the said amount as actual
damages.
Moral Damages.
Under Art. 2206, the "spouse,
legitimate and illegitimate descendants and ascendants
of the deceased may demand moral damages for mental
anguish by reason of the death of the deceased." The
trial court found that private respondent Paulie Caorong
suffered pain from the death of her husband and worry on
how to provide support for their minor children, private
respondents Yasser King, Rose Heinni, and Prince

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Alexander. 15 The petitioner likewise does not question


this finding of the trial court. Thus, in accordance with
recent decisions of this Court, 16 we hold that the
petitioner is liable to the private respondents in the
amount of P100,000.00 as moral damages for the death
of Atty. Caorong.

Exemplary Damages. Art. 2232 provides that "in


contracts and quasi-contracts, the court may award
exemplary damages if the defendant acted in a wanton,
fraudulent, reckless, oppressive, or malevolent reckless
manner." In the present case, the petitioner acted in a
wanton and reckless manner. Despite warning that the
Maranaos were planning to take revenge against the
petitioner by burning some of its buses, and contary to
the assurance made by its operations manager that the
necessary precautions would be take, the petitioner and
its employees did nothing to protect the safety of
passengers. Under the circumtances, we deem it
reasonable to award private respondents exemplary
damages in the amount of P100,000.00. 17

Attorney's Fees.
Pursuant to Art. 2208, attorney's
fees may be recovered when, as in the instant case,
exemplary damages are awarded. In the recent case of
Sulpicio Lines, Inc. v. Court of Appeals, 18 we held an
award of P50,000.00 as attorney's fees to be reasonable.
Hence, the private respondents are entitled to attorney's
fees in that amount.

Compensation for Loss of Earning Capacity.


Art. 1764
of the Civil Code, in relation to Art. 2206 thereof, provides
that in addition to the indemnity for death arising from
the breach of contrtact of carriage by a common carrier,
the "defendant shall be liable for the loss of the earning
capacity of the deceased, and the indemnity shall be paid
to the heirs of the latter." The formula established in
decided cases for computing net earning capacity is as
follows: 19

Gross

meikimouse
Life expectancy is equivalent to two thirds (2/3)
multiplied by the difference of eighty (80) and the age of
the deceased. 20 Since Atty. Caorong was 37 years old at
that time of his death, 21 he had a life expectancy of 28
2/3 more years. 22 His projected gross annual income,
computed based on his monthly salary of P11,385.00. 23
as a lawyer in the Department of Agrarian Reform at the
time of his death, was P148,005.00. 24 Allowing for
necessary living expenses of fifty percent (50%) 25 of his
projected gross annual income, his total earning capacity
amounts to P2,121,404.90. 26 Hence, the petitioner is
liable to the private respondents in the said amount as a
compensation for loss of earning capacity.

WHEREFORE, the decision, dated July 29, 1994, of the


Court of Appeals is hereby AFFIRMED with the
MODIFICATION that petitioner Fortune Express, Inc. is
ordered to pay the following amounts to private
respondents Paulie, Yasser King, Rose Heinni, and Prince
Alexander Caorong:

1.
death indemnity in the amount of fifty thousand
pesos (P50,000.00);

2.
actual damages in the amount of thirty thousand
pesos (P30,000.00);

3.
moral damages in the amount of one hundred
thousand pesos (P100,000.00);

4.
exemplary damages in the amount
hundred thousand pesos (P100,000.00);

of

one

5.
attorney's fees in the amount of fifty thousand
pesos (P50,000.00);

Necessary

Net Earning = Life

Capacity

Expectancy

Annual

Living

Income Expenses

6.
compensation for loss of earning capacity in the
amount of two million one hundred twenty-one thousand
four hundred four pesos and ninety centavos
(P2,121,404.90); and

7.

cost of suits.

SO ORDERED.