TATAD V. GARCIA, JR. (G.R. NO.

114222)

FACTS:
In 1989, the government planned to build a railway transit line along EDSA. No bidding was made but
certain corporations were invited to prequalify. The only corporation to qualify was the EDSA LRT
Consortium which was obviously formed for this particular undertaking. An agreement was then made
between the government, through the Department of Transportation and Communication (DOTC), and
EDSA LRT Consortium. The agreement was based on the Build-Operate-Transfer scheme provided
for by law (RA 6957, amended by RA 7718). Under the agreement, EDSA LRT Consortium shall build
the facilities, i.e., railways, and shall supply the train cabs. Every phase that is completed shall be
turned over to the DOTC and the latter shall pay rent for the same for 25 years. By the end of 25 years,
it was projected that the government shall have fully paid EDSA LRT Consortium. Thereafter, EDSA
LRT Consortium shall sell the facilities to the government for $1.00.
However, Senators Francisco Tatad, John Osmeña, and Rodolfo Biazon opposed the implementation
of said agreement as they averred that EDSA LRT Consortium is a foreign corporation as it was
organized under Hongkong laws; that as such, it cannot own a public utility such as the EDSA railway
transit because this falls under the nationalized areas of activities. The petition was filed against Jesus
Garcia, Jr. in his capacity as DOTC Secretary.

ISSUE:
Whether or not the EDSA LRT III, a public utility, can be owned by a foreign corporation.

HELD: YES.
The Constitution, in no uncertain terms, requires a franchise for the operation of a public utility.
However, it does not require a franchise before one can own the facilities needed to operate a
public utility so long as it does not operate them to serve the public.
In law, there is a clear distinction between the “operation” of a public utility and the ownership of
the facilities and equipment used to serve the public. Ownership is defined as a relation in law by
virtue of which a thing pertaining to one person is completely subjected to his will in everything
not prohibited by law or the concurrence with the rights of another. The exercise of the rights
encompassed in ownership is limited by law so that a property cannot be operated and used to
serve the public as a public utility unless the operator has a franchise. The operation of a rail system
as a public utility includes the transportation of passengers from one point to another point, their
loading and unloading at designated places and the movement of the trains at pre-scheduled times.
In sum, private respondent will not run the light rail vehicles and collect fees from the riding public.
It will have no dealings with the public and the public will have no right to demand any services
from it. Even the mere formation of a public utility corporation does not ipso facto characterize
the corporation as one operating a public utility. The moment for determining the requisite Filipino
nationality is when the entity applies for a franchise, certificate or any other form of authorization
for that purpose.
 Under the deed of chattel mortgage, B.A. Finance Corporation was constituted attorney-in-fact with
full power and authority to file, follow-up, prosecute, compromise or settle insurance claims; to sign
execute and deliver the corresponding papers, receipts and documents to the Insurance Company as
may be necessary to prove the claim, and to collect from the latter the proceeds of insurance to the
extent of its interests, in the event that the mortgaged car suffers any loss or damage.

JARDIN V. NLRC (G.R. NO. 119268)

FACTS:
Petitioners were drivers of private respondent’s taxicabs under the boundary system whose
earnings were regularly deducted washing fee for the taxi units. Petitioners decided to form a labor
union to protect their rights and interests on the belief that the deductions made were illegal. Upon
learning, respondent refused to let petitioners drive their taxicabs when they reported for work.
Aggrieved, petitioners filed a complaint for illegal dismissal with the Labor Arbiter but the latter
dismissed said complaint. On appeal, the NLRC tribunal declared that petitioners are employees
of private respondent. On reconsideration however, the decision was reversed by the NLRC
tribunal and held that no employer-employee relationship between the parties exists.

ISSUE:
Whether or not petitioner taxi drivers are employees of respondent company.

HELD: YES.
In a number of cases decided by this Court, we ruled that the relationship between jeepney
owners/operators on one hand and jeepney drivers on the other under the boundary system is that
of employer-employee and not of lessor-lessee. In the case of jeepney owners/operators and
jeepney drivers, the former exercise supervision and control over the latter. The management of
the business is in the owner’s hands. The owner as holder of the certificate of public convenience
must see to it that the driver follows the route prescribed by the franchising authority and the rules
promulgated as regards its operation. Now, the fact that the drivers do not receive fixed wages but
get only that in excess of the so-called “boundary” they pay to the owner/operator is not sufficient
to withdraw the relationship between them from that of employer and employee. We have applied
by analogy the doctrine to the relationships between bus owner/operator and bus conductor, auto-
calesa owner/operator and driver, and recently between taxi owners/operators and taxi drivers.
Hence, petitioners are undoubtedly employees of private respondent because as taxi drivers they
perform activities which are usually necessary or desirable in the usual business or trade of their
employer.
Jose Cangco vs Manila Railroad Co.

FACTS:
On January 20, 1915, Cangco was riding the train of Manila Railroad Co (MRC). He was an
employee of the latter and he was given a pass so that he could ride the train for free. When
he was nearing his destination at about 7pm, he arose from his seat even though the train
was not at full stop. When he was about to alight from the train (which was still slightly moving)
he accidentally stepped on a sack of watermelons which he failed to notice due to the fact
that it was dim. This caused him to lose his balance at the door and he fell and his arm was
crushed by the train and he suffered other serious injuries. He was dragged a few meters
more as the train slowed down.
It was established that the employees of MRC were negligent in piling the sacks of
watermelons. MRC raised as a defense the fact that Cangco was also negligent as he failed
to exercise diligence in alighting from the train as he did not wait for it to stop.
ISSUE:
Whether or not Manila Railroad Co is liable for damages.
HELD:
Yes. Alighting from a moving train while it is slowing down is a common practice and a lot of
people are doing so every day without suffering injury. Cangco has the vigour and agility of
young manhood, and it was by no means so risky for him to get off while the train was yet
moving as the same act would have been in an aged or feeble person. He was also ignorant
of the fact that sacks of watermelons were there as there were no appropriate warnings and
the place was dimly lit.
The Court also elucidated on the distinction between the liability of employers under Article
2180 and their liability for breach of contract [of carriage]:
MAERSK LINE vs. CAG.R. No. 94761, May 17, 1993FACTS:

FACTS: Petitioner Maersk Line is engaged in the transportation of goods by sea, doing business
in the Philippines through its general agent, Compania de Tabacos de Filipinas, while private
respondent Efren Castillo is the proprietor of Ethegal Laboratories, a firm engaged in the
manufacture of pharmaceutical products.

On Nov. 12, 1976, Castillo ordered from Eli Lilly, Inc. of Puerto Rico 600,000 empty gelatine
capsules for the manufacture of his pharmaceutical products. The capsules were placed in 6 drums
of 100,000 capsules each valued at US$1,668.71. Shipper Eli Lilly, Inc. advised Castillo through
a Memorandum of Shipment that the
Products were already shipped on board MV “Anders Maerskline” for shipment to the Philippines
via Oakland, California. In said Memorandum, shipper Eli Lilly, Inc. specified the date of arrival
to be April 3, 1977.However, for unknown reasons, said cargoes of capsules were mis-shipped and
diverted to Richmond, Virginia, USA and then transported back to Oakland, California, USA and
with the goods finally arriving in the Philippines on June 10, 1977 or after two (2) months from
the date specified in the memorandum. Consignee Castillo refused to take delivery of the goods
on account of its failure to arrive on time, and filed an action for rescission of contract with
damages against Maersk Line and Eli Lilly alleging gross negligence and undue delay. Denying
that it committed breach of contract, petitioner alleged in its answer that the subject shipment was
transported in accordance with the provisions of the NCC covering bill of lading and that its
liability under the law on transportation of good attaches only in case of loss, destruction or
deterioration of the goods as provided for in Article 1734 of Civil Code
.
For its part, Eli Lilly in its cross claim argued that the delay was due solely to the negligence of
Maersk Line. The Trial Court dismissed the complaint against Eli Lilly and the latter withdrew
cross claim but TC still held Maersk liable and CA affirmed with modifications.

ISSUES:
1.

W/N a cause of action exists against Maersk Line given that there was a dismissal of the complaint
against EliLilly? Yes, but not under the cross claim rather becauseMaersk was an original party.2.

W/N Castillo is entitled to damages resulting from delay in the delivery of the shipment?

Yes.

RULING:
While it is true that common carriers are not obligated bylaw to carry and to deliver merchandise,
and persons are not vested with the right to prompt delivery, unless such common
carriers previously assume the obligation to deliver at a given date or time,delivery of shipment
or cargo should at least be made within a reasonable time. While there was no special contract
entered into by the parties indicating the date of arrival of the subject shipment, petitioner
nevertheless, was very well aware of the specific date when the goods were expected to arrive as
indicated in the bill of lading itself. In this regard, there arises no need to execute another contract
for the purpose as it would be a mere superfluity. In the case before us, we find that a delay in the
delivery of the goods spanning a period of two months and seven days falls was beyond the realm
of reasonableness. This Court held Maersk Line liable for delay in the delivery of goods. An
examination of the subject bill of lading that the subject shipment was estimated to arrive in Manila
on April 3, 1977. While there was no special contract entered into by the parties indicating the date
of arrival, petitioner nevertheless, was very well aware of the specific date when the goods
expected to arrives as indicated in the bill lading. There was delay in the delivery of the goods,
spanning a period of 2 months and 7 days falls way beyond the realm of reasonableness.
Petitioner never even bothered to explain the cause for delay of more than 2 months in the delivery
of the goods.
Therefore, Maersk Line is liable for breach of contract carriage amounting to bad faith.
Ganzon V. CA (1988)
FACTS: Gelacio > Ganzon (via Capt. Niza) > Lighter “Batman” (common carrier) (loaded half)
 November 28, 1956: Gelacio Tumambing (Gelacio) contracted the services of of Mauro B.
Ganzon to haul 305 tons of scrap iron from Mariveles, Bataan, to the port of Manila on board
the light LCT “Batman”
 December 1, 1956: Gelacio delivered the scrap iron to Filomeno Niza, captain of the lighter,
for loading which was actually begun on the same date by the crew of the lighter under the
captain’s supervisor.
 When about half of the scrap iron was already loaded, Mayor Jose Advincula of Mariveles,
Bataan arrived and demanded P5000 from Gelacio
 Upon resisting, the Mayor fired at Gelacio so he had to be taken to the hospital
 Loading of the scrap iron was resumed
 December 4, 1956: Acting Mayor Basilio Rub (Rub), accompanied by 3 policemen, ordered
captain Filomeno Niza and his crew to dump the scrap iron where the lighter was docked
 Later on Rub had taken custody of the scrap iron
 RTC: in favor of Gelacio and against Ganzon
ISSUE: W/N Ganzon should be held liable under the contract of carriage

HELD: YES. Petition is DENIED.

 Ganzon thru his employees, actually received the scraps is freely admitted.
 Pursuant to Art. 1736, such extraordinary responsibility would cease only upon the delivery,
actual or constructive, by the carrier to the consignee, or to the person who has a right to receive
them.
 The fact that part of the shipment had not been loaded on board the lighter did not impair the
said contract of transportation as the goods remained in the custody and control of the carrier,
albeit still unloaded.
 failed to show that the loss of the scraps was due to any of the following causes enumerated in
Article 1734 of the Civil Code, namely:

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

(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.
Hence, the petitioner is presumed to have been at fault or to have acted negligently.
 By reason of this presumption, the court is not even required to make an express finding of
fault or negligence before it could hold the petitioner answerable for the breach of the contract
of carriage.
 exempted from any liability had he been able to prove that he observed extraordinary diligence
in the vigilance over the goods in his custody, according to all the circumstances of the case,
or that the loss was due to an unforeseen event or to force majeure. As it was, there was hardly
any attempt on the part of the petitioner to prove that he exercised such extraordinary diligence.
 We cannot sustain the theory of caso fortuito - "order or act of competent public authority"(Art.
1174 of the Civil Code)
 no authority or power of the acting mayor to issue such an order was given in evidence. Neither
has it been shown that the cargo of scrap iron belonged to the Municipality of Mariveles.
 Ganzon was not duty bound to obey the illegal order to dump into the sea the scrap iron.
 Moreover, there is absence of sufficient proof that the issuance of the same order was attended
with such force or intimidation as to completely overpower the will of the petitioner's
employees. The mere difficulty in the fulfilment of the obligation is not considered force
majeure.

Compania Maritima vs Court of Appeals and Vicente Concepcion

(162 SCRA 685)
FACTS: Vicente Concepcion is doing business under the name of Consolidated Construction.
Being a Manila based contractor, Concepcion had to ship his construction equipment to Cagayan
de Oro. On August 28, 1964, Concepcion shipped 1 unit pay loader, 4 units of 6x6 Roe trucks, and
2 pieces of water tanks. The aforementioned equipment was loaded aboard the MV Cebu, which
left Manila on August 30, 1964 and arrived at Cagayan de Oro on September 1, 1964. The Reo
trucks and water tanks were safely unloaded however the pay loader suffered damage while being
unloaded. The damaged pay loader was taken to the petitioner’s compound in Cagayan de Oro.
Consolidated Construction thru Vicente Concepcion wrote Compania Maritima to demand a
replacement of the broken pay loader and also asked for damages. Unable to get a response,
Concepcion sent another demand letter. Petitioner meanwhile, sent the damaged payloader to
Manila, it was weighed at San Miguel Corporation, where it was found that the payloader actually
weighed 7.5 tons and not 2.5 tons as declared in its bill of lading. Due to this, petitioner denied the
claim for damages of Consolidated Construction. Consolidated then filed an action for damages
against petitioner with the Court of First Instance of Manila. The Court of First Instance dismissed
the complaint stating that the proximate cause of the fall of the payloader which caused its damage
was the act or omission of Vicente Concepcion for misrepresenting the weight of the payloader as
2.5 tons instead of its true weight of 7.5 tons. On appeal, the Court of Appeals, reversed the
decision of the Court of First Instance and ordered the plaintiff to pay Concepcion damages. Hence
this petition.

ISSUE: Whether or not the act of respondent Concepcion of misdeclaring the true weight of the
payloader the proximate and only cause of the damage of the payloader?

HELD: No, Compania Maritima is liable for the damage to the payloader. The General rule under
Articles 1735 and 1752 of the Civil Code is that common carriers are presumed to be at fault or to
have acted negligently in case the goods transported by them are lost, destroyed, or had
deteriorated. To overcome the presumption of liability for the loss destruction or deterioration
common carriers must prove that they have exercised extraordinary diligence as required by
Article 1733 of the Civil Code.
Extraordinary Diligence in the vigilance over the goods tendered for shipment requires the
common carrier to know and follow the required precaution fro avoiding damage or destruction of
the goods entrusted to it for safe 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 characteristics of goods tendered for shipment and to exercise due care in the handling and
stowage including such methods as their nature requires.

The Supreme Court further held that the weight in a bill of lading are prima facie evidence of the
amount received and the fact that the weighing was done by another will not relieve the common
carrier where it accepted such weight and entered it in on the bill of lading. The common carrier
can protect themselves against mistakes in the bill of lading as to weight by exercising
extraordinary diligence before issuing such.

LU DO & LU YM CORPORATION vs I. V. BINAMIRAG.R. No. L-

9840 April 22, 1957
FACTS:
Delta Photo Supply Company of New York shipped on board the M/S “FERNSIDE” at New
York, U.S.A., 6 cases of films and/or photographic supplies consigned to the order of I. V.
Binamira. A Bill of Lading was issued where the carrier and the consignee have stipulated to
limit the responsibility of the carrier for the loss or damage that may be caused to the goods
before they are actually delivered. The films were discharged at the port of Cebu by the
stevedoring company hired by petitioner as agent of the carrier. The cargo was received by the
Visayan Cebu Terminal Company, Inc., the arrastre operator appointed by the Bureau of
Customs. During the discharge, the cargo was inspected by both the stevedoring company and
the arrastre operator, and the films were found to be in good condition. But after it was delivered
to respondent after 3 days, the same was examined by a surveyor and found out that some films
and supplies were missing.

ISSUE:
WON the carrier is responsible for the loss though the films were lost after the shipment was
discharged from the ship and placed in the possession and custody of the customs arrastre.

HELD: NO.
It is true that, as a rule, a common carrier is responsible for the loss, destruction or deterioration
of the goods it assumes to carry from one place to another unless the same is due to any to any of
the causes mentioned in Article 1734 on the new Civil Code. But this shall only apply when the
loss, destruction or deterioration takes place while the goods are in the possession of the carrier,
and not after it has lost control of them.
The parties may agree to limit the liability of the carrier considering that the goods have still to
go through the inspection of the customs authorities before they are actually turned over to the
consignee. This is a situation where we may say that the carrier losses control of the goods
because of a custom regulation and it is unfair that it be made responsible for what may happen
during the interregnum. And this is precisely what was done by the parties herein. In the bill of
lading that was issued covering the shipment in question, both the carrier and the consignee have
stipulated to limit the responsibility of the carrier for the loss or damage that may be caused to
the goods before they are actually delivered.

SARKIES TOURS PHILIPPINES, INC. vs. C.A., DR. ELINO G. FORTADES,

MARISOL A. FORTADES and FATIMAMINERVA A. FORTADESG.R. No.
108897 October 2, 1997
FACTS:
On August 31, 1984, Fatima boarded petitioner's De Luxe Bus No. 5 in Manila on her way
to Legazpi City. Her brother Raul helped her load three pieces of luggage containing all of her
optometry review books, materials and equipment, trial lenses, trial contact lenses, passport and
visa, as well as her mother Marisol's U.S. immigration (green) card, among other important
documents and personal belongings. Her belongings were kept in the baggage compartment of the
bus, but during a stopover at Daet, it was discovered that only one bag remained in the open
compartment. The others, including Fatima's things, were missing and might have dropped along
the way. Some of the passengers suggested retracing the route of the bus to try to recover the
lost items, but the driver ignored them and proceeded to Legazpi City. Fatima immediately
reported the loss to her mother who, in turn, went to petitioner's office in Legazpi City and later
at its head office in Manila. Petitioner, however, merely offered her P1,000.00 for each piece of
luggage lost, which she turned down. After returning to Bicol, disappointed but not defeated,
mother and daughter asked assistance from the radio stations and even from Philtranco bus drivers’
who plied the same route on August 31st. The effort paid off when one of Fatima's bags was
recovered. Marisol further reported the incident to the National Bureau of Investigation's field
office in Legazpi City and to the local police. On September 20, 1984, respondents, through
counsel, formally demanded satisfaction of their complaint from petitioner. In a letter dated
October 1, 1984, the latter apologized for the delay and said that "(a) team has been sent out to
Bicol for the purpose of recovering or at least getting the full detail"of the incident. After more
than nine months of fruitless waiting, respondents decided to file the case below to recover the
value of the remaining lost items, as well as moral and exemplary damages, attorney's fees and
expenses of litigation. They claimed that the loss was due to petitioner's failure to observe
extraordinary diligence in the care of Fatima's luggage and that petitioner dealt with them in bad
faith from the start. Petitioner, on the other hand, disowned any liability for the loss on the ground
that Fatima allegedly did not declare any excess baggage upon boarding its bus. Trial Court ruled
in favour of the private respondents, and the appellate court affirmed the trial court's judgment, but
deleted the award of moral and exemplary damages. Petitioner’s then filed for a motion for review
before the CA, but CA denied said petition. Hence the petition.

ISSUE:
WON a common carrier may be responsible for the loss of the passenger’s baggage’s
RULING: Under the Civil Code, "common carriers, from the nature of their business and
for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the
goods . . . transported by them," and this liability "lasts from the time the goods are unconditionally
placed in the possession of, and received by the carrier for transportation until the same are
delivered, actually or constructively, by the carrier to . . . the person who has a right to receive
them, "unless the loss is due to any of the excepted causes under Article 1734 thereof.
The cause of the loss in the case at bar was petitioner's negligence in not ensuring that the doors
of the baggage compartment of its bus were securely fastened. As a result of this lack of care,
almost all of the luggage was lost, to the prejudice of the paying passengers. As the Court of
Appeals correctly observed: Where the common carrier accepted its passenger's baggage for
transportation and even had it placed in the vehicle by its own employee, its failure to collect the
freight charge is the common carrier's own lookout. It is responsible for the consequent loss of the
baggage. In the instant case, defendant appellant's employee even helped Fatima Minerva Fortades
and her brother load the luggage’s/baggage’s in the bus' baggage compartment, without asking that
they be weighed, declared, receipted or paid for (TSN, August 4, 1986, pp. 29, 34, 54, 57, 70;
December 23, 1987, p. 35). Neither was this required of the other passengers (TSN, August 4,1986,
p. 104; February 5, 1988; p. 13).WHEREFORE, the assailed decision of the Court of Appeals
dated January 13, 1993, and its resolution dated February 19, 1993, are hereby AFFIRMED with
the MODIFICATION that petitioner is ordered to pay respondents an additional P20,000.00 as
moral damages and P5,000.00 as exemplary damages. Costs against petitioner.SO ORDERED

Alitalia v. Intermediate Appellate Court (192 SCRA 9 )

Facts: Dr. Felipa Pablo, a professor from UP was invited to attend a meeting by the United Nations
in Ispra, Italy. She was to read a paper regarding foreign substances in food and the agriculture
environment which she had specialized knowledge of. She booked a flight to Italy
with Alitalia airlines, petitioner herein. She had arrived in Milan the day before the meeting
however her luggage did not arrive with her. The airline informed her that her luggage was delayed
because it was placed in one of the succeeding flights to Italy. She never got her luggage.

When she got back to Manila she demanded that Alitalia compensate her for the damages that she
suffered. Petitioner herein offered free airline tickets in order to compensate for the alleged
damages, however she rejected this offer and instead filed a case. Subsequently it was found out
that the luggages of Dr. Pablo were not placed in the succeeding flights. She received her luggage
11 months after and after she had already instituted a case against Alitalia.

The lower court rendered a decision in favor of Dr. Pablo and ordered plaintiff to pay damages.
On appeal, the Court of Appeals affirmed the decision and even increased the amount of damages
to be awarded to Dr. Pablo. Hence this petition for certiorari.

Issue: Whether or not Alitalia is liable for damages incurred by Dr. Pablo.
Held: The Court held that Alitalia is liable to pay Dr. Pablo for nominal damages. The Warsaw
Convention provides that an air carrier is made liable for damages when: (1) the death, wounding
or other bodily injury of a passenger if the accident causing it took place on board the aircraft or
in the course of its operations of embarking or disembarking; (2) the destruction or loss of, or
damage to, any registered luggage or goods, if the occurrence causing it took place during the
carriage by air"; and (3) delay in the transportation by air of passengers, luggage or goods.
However, the claim for damages may be brought subject to limitations provided in the said
convention.

In this case, Dr. Pablo did not suffer any other injury other than not being able to read her paper in
Italy. This was due to the fact that Alitalia misplaced her luggage. There was no bad faith or malice
on the part of Alitalia in the said delay in the arrival of her luggage. Dr. Pablo received all her
things which were returned to her in good condition although 11 months late. Therefore she shall
receive nominal damages for the special injury caused.

Transportation Case Digest: Everett Streamship Corp. V. CA (1998)

FACTS:

 Hernandez Trading Co., Inc. (Hernandez) imported 3 crates of bus spare parts
(MARCO C/No. 12, MARCO C/No. 13 and MARCO C/No. 14), from Maruman Trading
Company, Ltd. (Maruman), a foreign corporation based in Japan.
 The crates (covered by Bill of Lading No. NGO53MN) were shipped on board
“ADELFAEVERETTE,” a vessel owned by Everett Orient Lines
 Upon arrival at the port of Manila, it was discovered that the crate marked MARCO C/No. 14
was missing
 Hernandez made a formal claim for Y1,552,500.00, as shown in an Invoice No. MTM-941,
dated November 14, 1991
 Everett Streamship Corp. offered to pay only Y100,000.00 the maximum amount stipulated
under Clause 18 of the covering bill of lading
 Hernandez rejected the offer and thereafter instituted a suit for collection
 Trial Court: in favor of Hernandez
 CA: Affirmed but deleted the award of attorney’s fees

ISSUE:
1. W/N the limited liability clause in the Bill of Lading is valid
2. W/N Hernandez as consignee, who is not a signatory to the bill of lading is bound by the
stipulations thereof
HELD:

1. YES.
 A stipulation in the bill of lading limiting the common carrier’s 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 provide:

ART. 1749. A stipulation that the common carrier’s 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.
 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.
 The trial court’s ratiocination that private respondent could not have “fairly and freely” agreed
to the limited liability clause in the bill of lading because the said conditions were printed in
small letters does not make the bill of lading invalid.
 contracts of adhesion are valid and binding
 Greater vigilance, however, is required of the courts when dealing with contracts of adhesion
in that the said contracts must be carefully scrutinized “in order to shield the unwary (or weaker
party) from deceptive schemes contained in ready-made covenant
 Article 24 of the Civil Code which mandates that “(i)n all contractual, property or other
relations, when one of the parties is at a disadvantage on account of his moral dependence,
ignorance, indigence, mental weakness, tender age or other handicap, the courts must be
vigilant for his protection
 Maruman Trading, we assume, has been extensively engaged in the trading business. It can
not be said to be ignorant of the business transactions it entered into involving the shipment of
its goods to its customers. The shipper could not have known, or should know the stipulations
in the bill of lading and there it should have declared a higher valuation of the goods
shipped. Moreover, Maruman Trading has not been heard to complain that it has been
deceived or rushed into agreeing to ship the cargo in petitioner’s vessel. In fact, it was not
even impleaded in this case.
2. YES.
 the right of a party in the same situation as Hernandez, to recover for loss of a shipment
consigned to him under a bill of lading drawn up only by and between the shipper and the
carrier, springs from either a relation of agency that may exist between him and the shipper or
consignor, or his status as stranger in whose favor some stipulation is made in said contract,
and who becomes a party thereto when he demands fulfillment of that stipulation, in this case
the delivery of the goods or cargo shipped
 When Hernandez formally claimed reimbursement for the missing goods from Everett and
subsequently filed a case against the it based on the very same bill of lading, it accepted the
 provisions of the contract and thereby made itself a party thereto, or at least has come to court
to enforce it.[
 The commercial Invoice No. MTM-941 does not in itself sufficiently and convincingly show
that Everett has knowledge of the value of the cargo as contended by Hernandez

MACAM vs. COURT OF APPEALS GR No. 125524; August 25, 1999

FACTS: Benito Macam, doing business under name Ben-Mac Enterprises, shipped on board
vessel Nen-Jiang, owned and operated by respondent China Ocean Shipping Co. through local
agent Wallem Philippines Shipping Inc., 3,500 boxes of watermelon covered by Bill of Lading No.
HKG 99012, and 1,611 boxes of fresh mangoes covered by Bill of Lading No. HKG 99013. The
shipment was bound for Hongkong with PAKISTAN BANK as consignee and Great Prospect
Company of Rowloon (GPC) as notify party.

Upon arrival in Hongkong, shipment was delivered by respondent WALLEM directly to GPC, not
to PAKISTAN BANK and without the required bill of lading having been surrendered.
Subsequently, GPC failed to pay PAKISTAN BANK, such that the latter, still in possession of
original bill of lading, refused to pay petitioner thru SOLIDBANK. Since SOLIDBANK already
pre-paid the value of shipment, it demanded payment from respondent WALLEM but was refused.
MACAM constrained to return the amount paid by SOLIDBANK and demanded payment from
WALLEM but to no avail.

WALLEM submitted in evidence a telex dated 5 April 1989 as basis for delivering the cargoes to
GPC without the bills of lading and bankguarantee. The telex instructed delivery of various
shipments to the respective consignees without need of presenting the bill of lading and
bank guarantee per the respective shipper’s request since “for prepaid shipt ofrt charges already
fully paid.” MACAM, however, argued that, assuming there was such an instruction, the consignee
referred to was PAKISTAN BANK and not GPC.

The RTC ruled for MACAM and ordered value of shipment. CA reversed RTC’s decision.
ISSUE: Are the respondents liable to the petitioner for releasing the goods to GPC without the
bills of lading or bank guarantee?

HELD: It is a standard maritime practice when immediate delivery is of the essence, for shipper
to request or instruct the carrier to deliver the goods to the buyer upon arrival at the port of
destination without requiring presentation of bill of lading as that usually takes time. Thus, taking
into account that subject shipment consisted of perishable goods and SOLIDBANK pre-paid the
full amount of value thereof, it is not hard to believe the claim of respondent WALLEM that
petitioner indeed requested the release of the goods to GPC without presentation of the bills of
lading and bank guarantee.

To implement the said telex instruction, the delivery of the shipment must be to GPC, the notify
party or real importer/buyer of the goods and not the PAKISTANI BANK since the latter can very
well present the original Bills of Lading in its possession. Likewise, if it were the PAKISTANI
BANK to whom the cargoes were to be strictly delivered, it will no longer be proper to require a
bank guarantee as a substitute for the Bill of Lading. To construe otherwise will render
meaningless the telex instruction. After all, the cargoes consist of perishable fresh
fruits and immediate delivery thereof the buyer/importer is essentially a factor to reckon with.

We emphasize that the extraordinary responsibility of the common carriers lasts until actual
or constructive delivery of the cargoes to the consignee or to the person who has a right to receive
them. PAKISTAN BANK was indicated in the bills of lading as consignee whereas GPC was the
notify party. However, in the export invoices GPC was clearly named as buyer/importer. Petitioner
also referred to GPC as such in his demand letter to respondent WALLEM and in his complaint
before the trial court. This premise draws us to conclude that the delivery of the cargoes to GPC
as buyer/importer which, conformably with Art. 1736 had, other than the consignee, the right to
receive them was proper
Art. 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.
Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound
to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers
transported by them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in Articles 1734, 1735,
and 1745, Nos. 5, 6, and 7, while the extraordinary diligence for the safety of the passengers is further set
forth in Articles 1755 and 1756.

SUBSECTION 2. - Vigilance Over Goods

Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of the goods, unless
the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act of 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.
Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, 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 as required in Article
1733.
Art. 1736. The extraordinary responsibility of the common carrier lasts from the time the goods are
unconditionally placed in the possession of, and received by the carrier for transportation until the same
are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right
to receive them, without prejudice to the provisions of Article 1738.
Art. 1737. The common carrier's duty to observe extraordinary diligence over the goods remains in full
force and effect even when they are temporarily unloaded or stored in transit, unless the shipper or owner
has made use of the right of stoppage in transitu.
Art. 1738. The extraordinary liability of the common carrier continues to be operative even during the
time the goods are stored in a warehouse of the carrier at the place of destination, until the consignee has
been advised of the arrival of the goods and has had reasonable opportunity thereafter to remove them or
otherwise dispose of them.
Art. 1739. In order that the common carrier may be exempted from responsibility, the natural disaster
must have been the proximate and only cause of the loss. However, the common carrier must exercise due
diligence to prevent or minimize loss before, during and after the occurrence of flood, storm or other
natural disaster in order that the common carrier may be exempted from liability for the loss, destruction,
or deterioration of the goods. The same duty is incumbent upon the common carrier in case of an act of
the public enemy referred to in Article 1734, No. 2.
Art. 1740. If the common carrier negligently incurs in delay in transporting the goods, a natural disaster
shall not free such carrier from responsibility.
Art. 1741. If the shipper or owner merely contributed to the loss, destruction or deterioration of the
goods, the proximate cause thereof being the negligence of the common carrier, the latter shall be liable in
damages, which however, shall be equitably reduced.
Art. 1742. Even if the loss, destruction, or deterioration of the goods should be caused by the character of
the goods, or the faulty nature of the packing or of the containers, the common carrier must exercise due
diligence to forestall or lessen the loss.
Art. 1743. If through the order of public authority the goods are seized or destroyed, the common carrier
is not responsible, provided said public authority had power to issue the order.
Art. 1744. A stipulation between the common carrier and the shipper or owner limiting the liability of the
former for the loss, destruction, or deterioration of the goods to a degree less than extraordinary diligence
shall be valid, provided it be:
(1) In writing, signed by the shipper or owner;
(2) Supported by a valuable consideration other than the service rendered by the common carrier; and
(3) Reasonable, just and not contrary to public policy.
Art. 1745. Any of the following or similar stipulations shall be considered unreasonable, unjust and
contrary to public policy:
(1) That the goods are transported at the risk of the owner or shipper;
(2) That the common carrier will not be liable for any loss, destruction, or deterioration of the goods;
(3) That the common carrier need not observe any diligence in the custody of the goods;
(4) That the common carrier shall exercise a degree of diligence less than that of a good father of a
family, or of a man of ordinary prudence in the vigilance over the movables transported;
(5) That the common carrier shall not be responsible for the acts or omission of his or its employees;
(6) That the common carrier's liability for acts committed by thieves, or of robbers who do not act with
grave or irresistible threat, violence or force, is dispensed with or diminished;
(7) That the common carrier is not responsible for the loss, destruction, or deterioration of goods on
account of the defective condition of the car, vehicle, ship, airplane or other equipment used in the
contract of carriage.
Art. 1746. An agreement limiting the common carrier's liability may be annulled by the shipper or owner
if the common carrier refused to carry the goods unless the former agreed to such stipulation.
Art. 1747. If the common carrier, without just cause, delays the transportation of the goods or changes the
stipulated or usual route, the contract limiting the common carrier's liability cannot be availed of in case
of the loss, destruction, or deterioration of the goods.
Art. 1748. An agreement limiting the common carrier's liability for delay on account of strikes or riots is
valid.
Art. 1749. A stipulation that the common carrier's 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 fairly and freely agreed upon.
Art. 1751. The fact that the common carrier has no competitor along the line or route, or a part thereof, to
which the contract refers shall be taken into consideration on the question of whether or not a stipulation
limiting the common carrier's liability is reasonable, just and in consonance with public policy.
Art. 1752. Even when there is an agreement limiting the liability of the common carrier in the vigilance
over the goods, the common carrier is disputably presumed to have been negligent in case of their loss,
destruction or deterioration.
Art. 1753. The law of the country to which the goods are to be transported shall govern the liability of the
common carrier for their loss, destruction or deterioration.
Art. 1754. The provisions of Articles 1733 to 1753 shall apply to the passenger's baggage which is not in
his personal custody or in that of his employee. As to other baggage, the rules in Articles 1998 and 2000
to 2003 concerning the responsibility of hotel-keepers shall be applicable.