G.R. No.
114167 July 12, 1995 The RTC awarded the amount prayed for by
COASTWISE LIGHTERAGE
CORPORATION, petitioner,
vs.
COURT OF APPEALS and the PHILIPPINE
GENERAL INSURANCE COMPANY, respondents.
RESOLUTION
FRANCISCO, R., J.:
This is a petition for review of a Decision
rendered by the Court of Appeals, dated
December 17, 1993, affirming Branch 35 of the
Regional Trial Court, Manila in holding that
herein petitioner is liable to pay herein private
respondent the amount of P700,000.00, plus
legal interest thereon, another sum of
P100,000.00 as attorney's fees and the cost of
the suit.
The factual background of this case is as follows:
Pag-asa Sales, Inc. entered into a contract to
transport molasses from the province of Negros
to Manila with Coastwise Lighterage Corporation
(Coastwise for brevity), using the latter's dumb
barges. The barges were towed in tandem by the
tugboat MT Marica, which is likewise owned by
Coastwise.
Upon reaching Manila Bay, while approaching
Pier 18, one of the barges, "Coastwise 9", struck
an unknown sunken object. The forward
buoyancy compartment was damaged, and water
gushed in through a hole "two inches wide and
twenty-two inches long"1 As a consequence, the
molasses at the cargo tanks were contaminated
and rendered unfit for the use it was intended.
This prompted the consignee, Pag-asa Sales, Inc.
to reject the shipment of molasses as a total loss.
Thereafter, Pag-asa Sales, Inc. filed a formal
claim with the insurer of its lost cargo, herein
private respondent, Philippine General Insurance
Company (PhilGen, for short) and against the
carrier, herein petitioner, Coastwise Lighterage.
Coastwise Lighterage denied the claim and it was
PhilGen which paid the consignee, Pag-asa Sales,
Inc., the amount of P700,000.00, representing
the value of the damaged cargo of molasses.
In turn, PhilGen then filed an action against
Coastwise Lighterage before the Regional Trial
Court of Manila, seeking to recover the amount of
P700,000.00 which it paid to Pag-asa Sales, Inc.
for the latter's lost cargo. PhilGen now claims to
be subrogated to all the contractual rights and
claims which the consignee may have against the
carrier, which is presumed to have violated the
contract of carriage.
PhilGen. On Coastwise Lighterage's appeal to the
Court of Appeals, the award was affirmed.
Hence, this petition.
There are two main issues to be resolved herein.
First, whether or not petitioner Coastwise
Lighterage was transformed into a private carrier,
by virtue of the contract of affreightment which it
entered into with the consignee, Pag-asa Sales,
Inc. Corollarily, if it were in fact transformed into
a private carrier, did it exercise the ordinary
diligence to which a private carrier is in turn
bound? Second, whether or not the insurer was
subrogated into the rights of the consignee
against the carrier, upon payment by the insurer
of the value of the consignee's goods lost while on
board one of the carrier's vessels.
On the first issue, petitioner contends that the
RTC and the Court of Appeals erred in finding
that it was a common carrier. It stresses the fact
that it contracted with Pag-asa Sales, Inc. to
transport the shipment of molasses from Negros
Oriental to Manila and refers to this contract as a
"charter agreement". It then proceeds to cite the
case of Home Insurance Company vs. American
Steamship Agencies, Inc.2 wherein this Court
held: ". . . a common carrier undertaking to carry
a special cargo or chartered to a special person
only becomes a private carrier."
Petitioner's reliance on the aforementioned case
is misplaced. In its entirety, the conclusions of
the court are as follows:
Accordingly, the charter party
contract is one of affreightment
over the whole vessel, rather than
a demise. As such, the liability of
the shipowner for acts or
negligence of its captain and crew,
would remain in the absence of
stipulation.3
The distinction between the two kinds of charter
parties (i.e. bareboat or demise and contract of
affreightment) is more clearly set out in the case
of Puromines, Inc. vs. Court of Appeals,4 wherein
we ruled:
Under the demise or bareboat
charter of the vessel, the charterer
will generally be regarded as the
owner for the voyage or service
stipulated. The charterer mans the
vessel with his own people and
becomes the owner pro hac vice,
subject to liability to others for
damages caused by negligence. To
create a demise, the owner of a
vessel must completely and
exclusively relinquish possession,
 command and navigation thereof
to the charterer, anything short of
such a complete transfer is a
contract of affreightment (time or
voyage charter party) or not a
charter party at all.
On the other hand a contract of
affreightment is one in which the
owner of the vessel leases part or
all of its space to haul goods for
others. It is a contract for special
service to be rendered by the
owner of the vessel and under
such contract the general owner
retains the possession, command
and navigation of the ship, the
charterer or freighter merely
having use of the space in the
vessel in return for his payment of
the charter hire. . . . .
. . . . An owner who retains
possession of the ship though the
hold is the property of the
charterer, remains liable as carrier
and must answer for any breach of
duty as to the care, loading and
unloading of the cargo. . . .
Although a charter party may transform a
common carrier into a private one, the same
however is not true in a contract of affreightment
on account of the aforementioned distinctions
between the two.
Petitioner admits that the contract it entered into
with the consignee was one of affreightment. 5 We
agree. Pag-asa Sales, Inc. only leased three of
petitioner's vessels, in order to carry cargo from
one point to another, but the possession,
command and navigation of the vessels remained
with petitioner Coastwise Lighterage.
Pursuant therefore to the ruling in the
aforecited Puromines case, Coastwise Lighterage,
by the contract of affreightment, was not
converted into a private carrier, but remained a
common carrier and was still liable as such.
The law and jurisprudence on common carriers
both hold that the mere proof of delivery of goods
in good order to a carrier and the subsequent
arrival of the same goods at the place of
destination in bad order makes for a  prima
facie  case against the carrier.
It follows then that the presumption of negligence
that attaches to common carriers, once the goods
it transports are lost, destroyed or deteriorated,
applies to the petitioner. This presumption,
which is overcome only by proof of the exercise of
extraordinary diligence, remained unrebutted in
this case.
The records show that the damage to the barge
which carried the cargo of molasses was caused
by its hitting an unknown sunken object as it
was heading for Pier 18. The object turned out to
be a submerged derelict vessel. Petitioner
contends that this navigational hazard was the
efficient cause of the accident. Further it asserts
that the fact that the Philippine Coastguard "has
not exerted any effort to prepare a chart to
indicate the location of sunken derelicts within
Manila North Harbor to avoid navigational
accidents"6 effectively contributed to the
happening of this mishap. Thus, being unaware
of the hidden danger that lies in its path, it
became impossible for the petitioner to avoid the
same. Nothing could have prevented the event,
making it beyond the pale of even the exercise of
extraordinary diligence.
However, petitioner's assertion is belied by the
evidence on record where it appeared that far
from having rendered service with the greatest
skill and utmost foresight, and being free from
fault, the carrier was culpably remiss in the
observance of its duties.
Jesus R. Constantino, the patron of the vessel
"Coastwise 9" admitted that he was not licensed.
The Code of Commerce, which subsidiarily
governs common carriers (which are primarily
governed by the provisions of the Civil Code)
provides:
Art. 609. — Captains, masters, or
patrons of vessels must be
Filipinos, have legal capacity to
contract in accordance with this
code, and prove the skill capacity
and qualifications necessary to
command and direct the vessel, as
established by marine and
navigation laws, ordinances or
regulations, and must not be
disqualified according to the same
for the discharge of the duties of
the position. . . .
Clearly, petitioner Coastwise Lighterage's
embarking on a voyage with an unlicensed
patron violates this rule. It cannot safely claim to
have exercised extraordinary diligence, by placing
a person whose navigational skills are
questionable, at the helm of the vessel which
eventually met the fateful accident. It may also
logically, follow that a person without license to
navigate, lacks not just the skill to do so, but
also the utmost familiarity with the usual and
safe routes taken by seasoned and legally
authorized ones. Had the patron been licensed,
he could be presumed to have both the skill and
the knowledge that would have prevented the
vessel's hitting the sunken derelict ship that lay
on their way to Pier 18.
As a common carrier, petitioner is liable for
breach of the contract of carriage, having failed to
overcome the presumption of negligence with the
loss and destruction of goods it transported, by
proof of its exercise of extraordinary diligence.
On the issue of subrogation, which petitioner
contends as inapplicable in this case, we once
more rule against the petitioner. We have already
found petitioner liable for breach of the contract
of carriage it entered into with Pag-asa Sales, Inc.
However, for the damage sustained by the loss of
the cargo which petitioner-carrier was
transporting, it was not the carrier which paid
the value thereof to Pag-asa Sales, Inc. but the
latter's insurer, herein private respondent
PhilGen.
Article 2207 of the Civil Code is explicit on this
point:
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 violated the
contract. . . .
This legal provision containing the equitable
principle of subrogation has been applied in a
long line of cases including Compania Maritima v.
Insurance Company of North America;7 Fireman's
Fund Insurance Company v. Jamilla & Company,
Inc.,8 and Pan Malayan Insurance Corporation v.
Court of Appeals,9 wherein this Court explained:
Article 2207 of the Civil Code is
founded on the well-settled
principle of subrogation. If the
insured property is destroyed or
damaged through the fault or
negligence of a party other than
the assured, then the insurer,
upon payment to the assured will
be subrogated to the rights of the
assured to recover from the
wrongdoer to the extent that the
insurer has been obligated to
pay. Payment by the insurer to the
assured operated as an equitable
assignment to the former of all
remedies which the latter may
have against the third party whose
negligence or wrongful act caused
the loss. The right of subrogation
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 of the insurance claim by
the insurer.
Undoubtedly, upon payment by respondent
insurer PhilGen of the amount of P700,000.00 to
Pag-asa Sales, Inc., the consignee of the cargo of
molasses totally damaged while being
transported by petitioner Coastwise Lighterage,
the former was subrogated into all the rights
which Pag-asa Sales, Inc. may have had against
the carrier, herein petitioner Coastwise
Lighterage.
WHEREFORE, premises considered, this petition
is DENIED and the appealed decision affirming
the order of Branch 35 of the Regional Trial
Court of Manila for petitioner Coastwise
Lighterage to pay respondent Philippine General
Insurance Company the "principal amount of
P700,000.00 plus interest thereon at the legal
rate computed from March 29, 1989, the date the
complaint was filed until fully paid and another
sum of P100,000.00 as attorney's fees and
costs"10 is likewise hereby AFFIRMED
SO ORDERED.
G.R. No. 150403             January 25, 2007
CEBU SALVAGE CORPORATION, Petitioner,
vs.
PHILIPPINE HOME ASSURANCE
CORPORATION, Respondent.
DECISION
CORONA, J.:
May a carrier be held liable for the loss of cargo
resulting from the sinking of a ship it does not
own?
This is the issue presented for the Court’s
resolution in this petition for review on
certiorari1 assailing the March 16, 2001
decision2 and September 17, 2001 resolution3 of
the Court of Appeals (CA) in CA-G.R. CV No.
40473 which in turn affirmed the December 27,
1989 decision4 of the Regional Trial Court (RTC),
Branch 145, Makati, Metro Manila.5
The pertinent facts follow.
On November 12, 1984, petitioner Cebu Salvage
Corporation (as carrier) and Maria Cristina
Chemicals Industries, Inc. [MCCII] (as charterer)
entered into a voyage charter6 wherein petitioner
was to load 800 to 1,100 metric tons of silica
quartz on board the M/T Espiritu Santo 7 at
Ayungon, Negros Occidental for transport to and
discharge at Tagoloan, Misamis Oriental to
consignee Ferrochrome Phils., Inc.8
Pursuant to the contract, on December 23, 1984,
petitioner received and loaded 1,100 metric tons
of silica quartz on board the M/T Espiritu Santo
which left Ayungon for Tagoloan the next
day.9 The shipment never reached its destination,
however, because the M/T Espiritu Santo sank in
the afternoon of December 24, 1984 off the beach
of Opol, Misamis Oriental, resulting in the total
loss of the cargo.10
MCCII filed a claim for the loss of the shipment
with its insurer, respondent Philippine Home
Assurance Corporation.11 Respondent paid the
claim in the amount of P211,500 and was
subrogated to the rights of MCCII.12 Thereafter, it
filed a case in the RTC 13 against petitioner for
reimbursement of the amount it paid MCCII.
After trial, the RTC rendered judgment in favor of
respondent. It ordered petitioner to pay
respondent P211,500 plus legal interest,
attorney’s fees equivalent to 25% of the award
and costs of suit.
On appeal, the CA affirmed the decision of the
RTC. Hence, this petition.
Petitioner and MCCII entered into a "voyage
charter," also known as a contract of
affreightment wherein the ship was leased for a
single voyage for the conveyance of goods, in
consideration of the payment of freight. 14 Under a
voyage charter, the shipowner retains the
possession, command and navigation of the ship,
the charterer or freighter merely having use of
the space in the vessel in return for his payment
of freight.15 An owner who retains possession of
the ship remains liable as carrier and must
answer for loss or non-delivery of the goods
received for transportation.16
Petitioner argues that the CA erred when it
affirmed the RTC finding that the voyage charter
it entered into with MCCII was a contract of
carriage.17 It insists that the agreement was
merely a contract of hire wherein MCCII hired the
vessel from its owner, ALS Timber Enterprises
(ALS).18 Not being the owner of the M/T Espiritu
Santo, petitioner did not have control and
supervision over the vessel, its master and
crew.19 Thus, it could not be held liable for the
loss of the shipment caused by the sinking of a
ship it did not own.
We disagree.
Based on the agreement signed by the parties
and the testimony of petitioner’s operations
manager, it is clear that it was a contract of
carriage petitioner signed with MCCII. It actively
negotiated and solicited MCCII’s account, offered
its services to ship the silica quartz and proposed
to utilize the M/T Espiritu Santo in lieu of the
M/T Seebees or the M/T Shirley (as previously
agreed upon in the voyage charter) since these
vessels had broken down.20
There is no dispute that petitioner was a common
carrier. At the time of the loss of the cargo, it was
engaged in the business of carrying and
transporting goods by water, for compensation,
and offered its services to the public.21
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 the
circumstances of each case.22 In the event of loss
of the goods, common carriers are responsible,
unless they can prove that this was brought
about by the causes specified in Article 1734 of
the Civil Code.23 In all other cases, common
carriers are presumed to be at fault or to have
acted negligently, unless they prove that they
observed extraordinary diligence.24
Petitioner was the one which contracted with
MCCII for the transport of the cargo. It had
control over what vessel it would use. All
throughout its dealings with MCCII, it
represented itself as a common carrier. The fact
that it did not own the vessel it decided to use to
consummate the contract of carriage did not
negate its character and duties as a common
carrier. The MCCII (respondent’s subrogor) could
not be reasonably expected to inquire about the
ownership of the vessels which petitioner carrier
offered to utilize. As a practical matter, it is very
difficult and often impossible for the general
public to enforce its rights of action under a
contract of carriage if it should be required to
know who the actual owner of the vessel is. 25 In
fact, in this case, the voyage charter itself
denominated petitioner as the "owner/operator"
of the vessel.26
Petitioner next contends that if there was a
contract of carriage, then it was between MCCII
and ALS as evidenced by the bill of lading ALS
issued.27
Again, we disagree.
The bill of lading was merely a receipt issued by
ALS to evidence the fact that the goods had been
received for transportation. It was not signed by
MCCII, as in fact it was simply signed by the
supercargo of ALS.28 This is consistent with the
fact that MCCII did not contract directly with
ALS. While it is true that a bill of lading may
serve as the contract of carriage between the
parties,29 it cannot prevail over the express
provision of the voyage charter that MCCII and
petitioner executed:
[I]n cases where a Bill of Lading has been issued
by a carrier covering goods shipped aboard a
vessel under a charter party, and the charterer is
also the holder of the bill of lading, "the bill of
lading operates as the receipt for the goods, and
as document of title passing the property of the
goods, but not as varying the contract between
the charterer and the shipowner." The Bill of
Lading becomes, therefore, only a receipt and not
the contract of carriage in a charter of the entire
vessel, for the contract is the Charter Party, and
is the law between the parties who are bound by
its terms and condition provided that these are
not contrary to law, morals, good customs, public
order and public policy. 30
Finally, petitioner asserts that MCCII should be
held liable for its own loss since the voyage
charter stipulated that cargo insurance was for
the charterer’s account.31 This deserves scant
consideration. This simply meant that the
charterer would take care of having the goods
insured. It could not exculpate the carrier from
liability for the breach of its contract of carriage.
The law, in fact, prohibits it and condemns it as
unjust and contrary to public policy.32
To summarize, a contract of carriage of goods
was shown to exist; the cargo was loaded on
board the vessel; loss or non-delivery of the cargo
was proven; and petitioner failed to prove that it
exercised extraordinary diligence to prevent such
loss or that it was due to some casualty or force
majeure. The voyage charter here being a
contract of affreightment, the carrier was
answerable for the loss of the goods received for
transportation.33
The idea proposed by petitioner is not only
preposterous, it is also dangerous. It says that a
carrier that enters into a contract of carriage is
not liable to the charterer or shipper if it does not
own the vessel it chooses to use. MCCII never
dealt with ALS and yet petitioner insists that
MCCII should sue ALS for reimbursement for its
loss. Certainly, to permit a common carrier to
escape its responsibility for the goods it agreed to
transport (by the expedient of alleging non-
ownership of the vessel it employed) would
radically derogate from the carrier's duty of
extraordinary diligence. It would also open the
door to collusion between the carrier and the
supposed owner and to the possible shifting of
liability from the carrier to one without any
financial capability to answer for the resulting
damages.34
WHEREFORE, the petition is hereby DENIED.
Costs against petitioner.
SO ORDERED.
G.R. No. 84458 November 6, 1989
ABOITIZ SHIPPING CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS, ELEVENTH
DIVISION, LUCILA C. VIANA, SPS. ANTONIO
VIANA and GORGONIA VIANA, and PIONEER
STEVEDORING CORPORATION, respondents.
Herenio E. Martinez for petitioner.
M.R. Villaluz Law Office for private respondent.
REGALADO, J.:
In this appeal by certiorari, petitioner Aboitiz
Shipping Corporation seeks a review of the
decision 1 of respondent Court of Appeals, dated
July 29, 1988, the decretal portion of which
reads:
WHEREFORE, the judgment
appealed from as modified by the
order of October 27, 1982, is
hereby affirmed with the
modification that appellant Aboitiz
Shipping is hereby ordered to pay
plaintiff-appellees the amount of
P30,000.00 for the death of
Anacleto Viana; actual damages of
P9,800.00; P150,000.00 for
unearned income; P7,200.00 as
support for deceased's parents;
P20,000.00 as moral damages;
P10,000.00 as attorney's fees; and
to pay the costs.
The undisputed facts of the case, as found by the
court a quo and adopted by respondent court, are
as follows: .
The evidence disclosed that on
May 11, 1975, Anacleto Viana
boarded the vessel M/V Antonia,
owned by defendant, at the port at
San Jose, Occidental Mindoro,
bound for Manila, having
purchased a ticket (No. 117392) in
the sum of P23.10 (Exh. 'B'). On
May 12, 1975, said vessel arrived
at Pier 4, North Harbor, Manila,
and the passengers therein
disembarked, a gangplank having
been provided connecting the side
of the vessel to the pier. Instead of
using said gangplank Anacleto
Viana disembarked on the third
deck which was on the level with
the pier. After said vessel had
landed, the Pioneer Stevedoring
Corporation took over the
exclusive control of the cargoes
loaded on said vessel pursuant to
the Memorandum of Agreement
dated July 26, 1975 (Exh. '2')
between the third party defendant
Pioneer Stevedoring Corporation
and defendant Aboitiz Shipping
Corporation.
The crane owned by the third
party defendant and operated by
its crane operator Alejo Figueroa
was placed alongside the vessel
and one (1) hour after the
passengers of said vessel had
disembarked, it started operation
by unloading the cargoes from
said vessel. While the crane was
being operated, Anacleto Viana
who had already disembarked
from said vessel obviously
remembering that some of his
cargoes were still loaded in the
vessel, went back to the vessel,
and it was while he was pointing
to the crew of the said vessel to
the place where his cargoes were
loaded that the crane hit him,
pinning him between the side of
the vessel and the crane. He was
thereafter brought to the hospital
where he later expired three (3)
days thereafter, on May 15, 1975,
the cause of his death according to
the Death Certificate (Exh. "C")
being "hypostatic pneumonia
secondary to traumatic fracture of
the pubic bone lacerating the
urinary bladder" (See also Exh.
"B"). For his hospitalization,
medical, burial and other
miscellaneous expenses,
Anacleto's wife, herein plaintiff,
spent a total of P9,800.00
(Exhibits "E", "E-1", to "E-5").
Anacleto Viana who was only forty
(40) years old when he met said
fateful accident (Exh. 'E') was in
good health. His average annual
income as a farmer or a farm
supervisor was 400 cavans of
palay annually. His parents,
herein plaintiffs Antonio and
Gorgonia Viana, prior to his death
had been recipient of twenty (20)
cavans of palay as support or
P120.00 monthly. Because of
Anacleto's death, plaintiffs
suffered mental anguish and
extreme worry or moral damages.
For the filing of the instant case,
they had to hire a lawyer for an
agreed fee of ten thousand
(P10,000.00) pesos. 2
Private respondents Vianas filed a complaint 3 for
damages against petitioner corporation (Aboitiz,
for brevity) for breach of contract of carriage.
In its answer. 4 Aboitiz denied responsibility
contending that at the time of the accident, the
vessel was completely under the control of
respondent Pioneer Stevedoring Corporation
(Pioneer, for short) as the exclusive stevedoring
contractor of Aboitiz, which handled the
unloading of cargoes from the vessel of Aboitiz. It
is also averred that since the crane operator was
not an employee of Aboitiz, the latter cannot be
held liable under the fellow-servant rule.
Thereafter, Aboitiz, as third-party plaintiff, filed a
third-party complaint 5 against Pioneer imputing
liability thereto for Anacleto Viana's death as
having been allegedly caused by the negligence of
the crane operator who was an employee of
Pioneer under its exclusive control and
supervision.
Pioneer, in its answer to the third-party
complaint, 6 raised the defenses that Aboitiz had
no cause of action against Pioneer considering
that Aboitiz is being sued by the Vianas for
breach of contract of carriage to which Pioneer is
not a party; that Pioneer had observed the
diligence of a good father of a family both in the
selection and supervision of its employees as well
as in the prevention of damage or injury to
anyone including the victim Anacleto Viana; that
Anacleto Viana's gross negligence was the direct
and proximate cause of his death; and that the
filing of the third-party complaint was premature
by reason of the pendency of the criminal case for
homicide through reckless imprudence filed
against the crane operator, Alejo Figueroa.
In a decision rendered on April 17, 1980 by the
trial court, 7 Aboitiz was ordered to pay the
Vianas for damages incurred, and Pioneer was
ordered to reimburse Aboitiz for whatever
amount the latter paid the Vianas. The
dispositive portion of said decision provides:
WHEREFORE, judgment is hereby
rendered in favor of the plantiffs:
(1) ordering defendant Aboitiz
Shipping Corporation to pay to
plaintiffs the sum of P12,000.00
for the death of Anacleto Viana
P9,800.00 as actual damages;
P533,200.00 value of the 10,664
cavans of palay computed at
P50.00 per cavan; P10,000.00 as
attorney's fees; F 5,000.00, value
of the 100 cavans of palay as
support for five (5) years for
deceased (sic) parents, herein
plaintiffs Antonio and Gorgonia
Viana computed at P50.00 per
 cavan; P7,200.00 as support for
deceased's parents computed at
P120.00 a month for five years
pursuant to Art. 2206, Par. 2, of
the Civil Code; P20,000.00 as
moral damages, and costs; and
(2) ordering the third party
defendant Pioneer Stevedoring
Corporation to reimburse
defendant and third party plaintiff
Aboitiz Shipping Corporation the
said amounts that it is ordered to
pay to herein plaintiffs.
Both Aboitiz and Pioneer filed separate motions
for reconsideration wherein they similarly raised
the trial court's failure to declare that Anacleto
Viana acted with gross negligence despite the
overwhelming evidence presented in support
thereof. In addition, Aboitiz alleged, in opposition
to Pioneer's motion, that under the memorandum
of agreement the liability of Pioneer as contractor
is automatic for any damages or losses
whatsoever occasioned by and arising from the
operation of its arrastre and stevedoring service.
In an order dated October 27, 1982, 8 the trial
court absolved Pioneer from liability for failure of
the Vianas and Aboitiz to preponderantly
establish a case of negligence against the crane
operator which the court a quo ruled is never
presumed, aside from the fact that the
memorandum of agreement supposedly refers
only to Pioneer's liability in case of loss or
damage to goods handled by it but not in the
case of personal injuries, and, finally that Aboitiz
cannot properly invoke the fellow-servant rule
simply because its liability stems from a breach
of contract of carriage. The dispositive portion of
said order reads:
WHEREFORE, judgment is hereby
modified insofar as third party
defendant Pioneer Stevedoring
Corporation is concerned rendered
in favor of the plaintiffs-,:
(1) Ordering defendant Aboitiz
Shipping Corporation to pay the
plaintiffs the sum of P12,000.00
for the death of Anacleto Viana;
P9,000.00 (sic) as actual damages;
P533,200.00 value of the 10,664
cavans of palay computed at
P50.00 per cavan; P10,000.00 as
attorney's fees; P5,000.00 value of
the 100 cavans of palay as support
for five (5) years for deceased's
parents, herein plaintiffs Antonio
and Gorgonia Viana,computed at
P50.00 per cavan; P7,200.00 as
support for deceased's parents
computed at P120.00 a month for
five years pursuant to Art. 2206,
Par. 2, of the Civil Code;
P20,000.00 as moral damages,
and costs; and
(2) Absolving third-party defendant
Pioneer Stevedoring Corporation
for (sic) any liability for the death
of Anacleto Viana the passenger of
M/V Antonia owned by defendant
third party plaintiff Aboitiz
Shipping Corporation it appearing
that the negligence of its crane
operator has not been established
therein.
Not satisfied with the modified judgment of the
trial court, Aboitiz appealed the same to
respondent Court of Appeals which affirmed the
findings of of the trial court except as to the
amount of damages awarded to the Vianas.
Hence, this petition wherein petitioner Aboitiz
postulates that respondent court erred:
(A) In holding that the doctrine
laid down by this honorable Court
in La Mallorca vs. Court of
Appeals, et al. (17 SCRA 739, July
27, 1966) is applicable to the case
in the face of the undisputable fact
that the factual situation under
the La Mallorca case is radically
different from the facts obtaining
in this case;
(B) In holding petitioner liable for
damages in the face of the finding
of the court a quo and confirmed
by the Honorable respondent court
of Appeals that the deceased,
Anacleto Viana was guilty of
contributory negligence, which, We
respectfully submit contributory
negligence was the proximate
cause of his death; specifically the
honorable respondent Court of
Appeals failed to apply Art. 1762
of the New Civil Code;
(C) In the alternative assuming the
holding of the Honorable
respondent Court of Appears that
petitioner may be legally
condemned to pay damages to the
private respondents we
respectfully submit that it
committed a reversible error when
it dismissed petitioner's third
party complaint against private
respondent Pioneer Stevedoring
Corporation instead of compelling
the latter to reimburse the
petitioner for whatever damages it
 may be compelled to pay to the
private respondents Vianas. 9
At threshold, it is to be observed that both the
trial court and respondent Court of Appeals
found the victim Anacleto Viana guilty of
contributory negligence, but holding that it was
the negligence of Aboitiz in prematurely turning
over the vessel to the arrastre operator for the
unloading of cargoes which was the direct,
immediate and proximate cause of the victim's
death.
I. Petitioner contends that since one (1) hour had
already elapsed from the time Anacleto Viana
disembarked from the vessel and that he was
given more than ample opportunity to unload his
cargoes prior to the operation of the crane, his
presence on the vessel was no longer reasonable
e and he consequently ceased to be a passenger.
Corollarily, it insists that the doctrine in La
Mallorca vs. Court of Appeals, et al. 10 is not
applicable to the case at bar.
The rule is that the relation of carrier and
passenger continues until the passenger has
been landed at the port of destination and has
left the vessel owner's dock or premises. 11 Once
created, the relationship will not ordinarily
terminate until the passenger has, after reaching
his destination, safely alighted from the carrier's
conveyance or had a reasonable opportunity to
leave the carrier's premises. All persons who
remain on the premises a reasonable time after
leaving the conveyance are to be deemed
passengers, and what is a reasonable time or a
reasonable delay within this rule is to be
determined from all the circumstances, and
includes a reasonable time to see after his
baggage and prepare for his departure. 12 The
carrier-passenger relationship is not terminated
merely by the fact that the person transported
has been carried to his destination if, for
example, such person remains in the carrier's
premises to claim his baggage.13
It was in accordance with this rationale that the
doctrine in the aforesaid case of La Mallorca was
enunciated, to wit:
It has been recognized as a rule
that the relation of carrier and
passenger does not cease at the
moment the passenger alights
from the carrier's vehicle at a place
selected by the carrier at the point
of destination, but continues until
the passenger has had a depend on the attending circumstances of the
reasonable time or a reasonable
opportunity to leave the carrier's
premises. And, what is a and so forth, and therefore precludes a
reasonable time or a reasonable
delay within this rule is to be
determined from all the
circumstances. Thus, a person
who, after alighting from a train,
walks along the station platform is
considered still a passenger. So
also, where a passenger has
alighted at his destination and is
proceeding by the usual way to
leave the company's premises, but
before actually doing so is halted
by the report that his brother, a
fellow passenger, has been shot,
and he in good faith and without
intent of engaging in the difficulty,
returns to relieve his brother, he is
deemed reasonably and
necessarily delayed and thus
continues to be a passenger
entitled as such to the protection
of the railroad company and its
agents.
In the present case, the father
returned to the bus to get one of
his baggages which was not
unloaded when they alighted from
the bus. Racquel, the child that
she was, must have followed the
father. However, although the
father was still on the running
board of the bus waiting for the
conductor to hand him the bag
or bayong, the bus started to run,
so that even he (the father) had to
jump down from the moving
vehicle. It was at this instance that
the child, who must be near the
bus, was run over and killed. In
the circumstances, it cannot be
claimed that the carrier's agent
had exercised the 'utmost
diligence' of a 'very cautious
person' required by Article 1755 of
the Civil Code to be observed by a
common carrier in the discharge of
its obligation to transport safely its
passengers. ... The presence of
said passengers near the bus was
not unreasonable and they are,
therefore, to be considered still as
passengers of the carrier, entitled
to the protection under their
contract of carriage. 14
It is apparent from the foregoing that what
prompted the Court to rule as it did in said case
is the fact of the passenger's reasonable presence
within the carrier's premises. That
reasonableness of time should be made to
case, such as the kind of common carrier, the
nature of its business, the customs of the place,
consideration of the time element per se without
taking into account such other factors. It is thus
of no moment whether in the cited case of La
Mallorca there was no appreciable interregnum
for the passenger therein to leave the carrier's
premises whereas in the case at bar, an interval
of one (1) hour had elapsed before the victim met
the accident. The primary factor to be considered
is the existence of a reasonable cause as will
justify the presence of the victim on or near the
petitioner's vessel. We believe there exists such a
justifiable cause.
It is of common knowledge that, by the very
nature of petitioner's business as a shipper, the
passengers of vessels are allotted a longer period
of time to disembark from the ship than other
common carriers such as a passenger bus. With
respect to the bulk of cargoes and the number of
passengers it can load, such vessels are capable
of accommodating a bigger volume of both as
compared to the capacity of a regular commuter
bus. Consequently, a ship passenger will need at
least an hour as is the usual practice, to
disembark from the vessel and claim his baggage
whereas a bus passenger can easily get off the
bus and retrieve his luggage in a very short
period of time. Verily, petitioner cannot
categorically claim, through the bare expedient of
comparing the period of time entailed in getting
the passenger's cargoes, that the ruling in La
Mallorca is inapplicable to the case at bar. On the
contrary, if we are to apply the doctrine
enunciated therein to the instant petition, we
cannot in reason doubt that the victim Anacleto
Viana was still a passenger at the time of the
incident. When the accident occurred, the victim
was in the act of unloading his cargoes, which he
had every right to do, from petitioner's vessel. As
earlier stated, a carrier is duty bound not only to
bring its passengers safely to their destination
but also to afford them a reasonable time to
claim their baggage.
It is not definitely shown that one (1) hour prior
to the incident, the victim had already
disembarked from the vessel. Petitioner failed to
prove this. What is clear to us is that at the time
the victim was taking his cargoes, the vessel had
already docked an hour earlier. In consonance
with common shipping procedure as to the
minimum time of one (1) hour allowed for the
passengers to disembark, it may be presumed
that the victim had just gotten off the vessel
when he went to retrieve his baggage. Yet, even if
he had already disembarked an hour earlier, his
presence in petitioner's premises was not without
cause. The victim had to claim his baggage which
was possible only one (1) hour after the vessel
arrived since it was admittedly standard
procedure in the case of petitioner's vessels that
the unloading operations shall start only after
that time. Consequently, under the foregoing
circumstances, the victim Anacleto Viana is still
deemed a passenger of said carrier at the time of
his tragic death.
II. Under the law, common carriers are, from the
nature of their business and for reasons of public
policy, 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. 15 More
particularly, 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 a due regard for all
the circumstances. 16 Thus, where a passenger
dies or is injured, the common carrier is
presumed to have been at fault or to have acted
negligently. 17 This gives rise to an action for
breach of contract of carriage where all that is
required of plaintiff is to prove the existence of
the contract of carriage and its non-performance
by the carrier, that is, the failure of the carrier to
carry the passenger safely to his
destination, 18 which, in the instant case,
necessarily includes its failure to safeguard its
passenger with extraordinary diligence while
such relation subsists.
The presumption is, therefore, established by law
that in case of a passenger's death or injury the
operator of the vessel was at fault or negligent,
having failed to exercise extraordinary diligence,
and it is incumbent upon it to rebut the same.
This is in consonance with the avowed policy of
the State to afford full protection to the
passengers of common carriers which can be
carried out only by imposing a stringent
statutory obligation upon the latter.
Concomitantly, this Court has likewise adopted a
rigid posture in the application of the law by
exacting the highest degree of care and diligence
from common carriers, bearing utmost in mind
the welfare of the passengers who often become
hapless victims of indifferent and profit-oriented
carriers. We cannot in reason deny that
petitioner failed to rebut the presumption against
it. Under the facts obtaining in the present case,
it cannot be gainsaid that petitioner had
inadequately complied with the required degree
of diligence to prevent the accident from
happening.
As found by the Court of Appeals, the evidence
does not show that there was a cordon of drums
around the perimeter of the crane, as claimed by
petitioner. It also adverted to the fact that the
alleged presence of visible warning signs in the
vicinity was disputable and not indubitably
established. Thus, we are not inclined to accept
petitioner's explanation that the victim and other
passengers were sufficiently warned that merely
venturing into the area in question was fraught
with serious peril. Definitely, even assuming the
existence of the supposed cordon of drums
loosely placed around the unloading area and the
guard's admonitions against entry therein, these
were at most insufficient precautions which pale
into insignificance if considered vis-a-vis the
gravity of the danger to which the deceased was
exposed. There is no showing that petitioner was
extraordinarily diligent in requiring or seeing to it
that said precautionary measures were strictly
and actually enforced to subserve their purpose
of preventing entry into the forbidden area. By no
stretch of liberal evaluation can such perfunctory
acts approximate the "utmost diligence of very
cautious persons" to be exercised "as far as
human care and foresight can provide" which is
required by law of common carriers with respect
to their passengers.
While the victim was admittedly contributorily
negligent, still petitioner's aforesaid failure to
exercise extraordinary diligence was the
proximate and direct cause of, because it could
definitely have prevented, the former's death.
Moreover, in paragraph 5.6 of its petition, at
bar, 19 petitioner has expressly conceded the
factual finding of respondent Court of Appeals
that petitioner did not present sufficient evidence
in support of its submission that the deceased
Anacleto Viana was guilty of gross negligence.
Petitioner cannot now be heard to claim
otherwise.
No excepting circumstance being present, we are
likewise bound by respondent court's declaration
that there was no negligence on the part of
Pioneer Stevedoring Corporation, a confirmation
of the trial court's finding to that effect, hence
our conformity to Pioneer's being absolved of any
liability.
As correctly observed by both courts, Aboitiz
joined Pioneer in proving the alleged gross
negligence of the victim, hence its present
contention that the death of the passenger was
due to the negligence of the crane operator
cannot be sustained both on grounds, of estoppel
and for lack of evidence on its present theory.
Even in its answer filed in the court below it
readily alleged that Pioneer had taken the
necessary safeguards insofar as its unloading
operations were concerned, a fact which appears
to have been accepted by the plaintiff therein by
not impleading Pioneer as a defendant, and
likewise inceptively by Aboitiz by filing its third-
party complaint only after ten (10) months from
the institution of the suit against it.
Parenthetically, Pioneer is not within the ambit of
the rule on extraordinary diligence required of,
and the corresponding presumption of negligence
foisted on, common carriers like Aboitiz. This, of
course, does not detract from what we have said
that no negligence can be imputed to Pioneer
but, that on the contrary, the failure of Aboitiz to
exercise extraordinary diligence for the safety of
its passenger is the rationale for our finding on
its liability.
WHEREFORE, the petition is DENIED and the
judgment appealed from is hereby AFFIRMED in
toto.
SO ORDERED.
G.R. No. 80256 October 2, 1992
BANKERS & MANUFACTURERS ASSURANCE
CORP., petitioner,
vs.
COURT OS APPEALS, F. E. ZUELLIG & CO.,
INC. and E. RAZON, INC., respondents.
MELO, J.:
After the Court of Appeals in CA-G.R. CV No.
08226 (July 8, 1987, Kapunan, Puno (P),
Marigomen, JJ.) affirmed the dismissal by
Branch XVI of the Regional Trial Court of Manila
of petitioner's complaint for recovery of the
amount it had paid its insured concerning the
loss of a portion of a shipment, petitioner has
interposed the instant petition for review
on certiorari.
Petitioner presents the following bare operative
facts: 108 cases of copper tubings were imported
by Ali Trading Company. The tubings were
insured by petitioner and arrived in Manila on
board and vessel S/S "Oriental Ambassador" on
November 4, 1978, and turned over the private
respondent E. Razon, the Manila arrastre
operator upon discharge at the waterfront. The
carrying vessel is represented in the Philippines
by its agent, the other private respondent, F. E.
Zuellig and Co., Inc., Upon inspection by the
importer, the shipment was allegedly found to
have sustained loses by way of theft and pilferage
for which petitioner, as insurer, compensated the
importer in the amount of P31,014.00.
Petitioner, in subrogation of the importer-
consignee and on the basis of what it asserts had
been already established — that a portion of that
shipment was lost through theft and pilferage —
forthwith concludes that the burden of proof of
proving a case of non-liability shifted to private
respondents, one of whom, the carrier, being
obligated to exercise extraordinary diligence in
the transport and care of the shipment. The
implication of petitioner's statement is that
private respondents have not shown why they are
not liable. The premises of the argument of
petitioner may be well-taken but the conclusions
are not borne out or supported by the record.
It must be underscored that the shipment
involved in the case at bar was "containerized".
The goods under this arrangement are stuffed,
packed, and loaded by the shipper at a place of
his choice, usually his own warehouse, in the
absence of the carrier. The container is sealed by
the shipper and thereafter picked up by the
carrier. Consequently, the recital of the bill of
lading for goods thus transported ordinarily
would declare "Said to Contain", "Shipper's Load
and Count", "Full Container Load", and the
amount or quantity of goods in the container in a
particular package is only prima facie evidence
of the amount or quantity which may be
overthrown by parol evidence.
A shipment under this arrangement is not
inspected or inventoried by the carrier whose
duty is only to transport and deliver the
containers in the same condition as when the
carrier received and accepted the containers for
transport. In the case at bar, the copper tubings
were placed in three containers. Upon arrival in
Manila on November 4, 1978, the shipment was
discharged in apparent good order and condition
and from the pier's docking apron, the containers
were shifted to the container yard of Pier 3 for
safekeeping. Three weeks later, one of the
container vans, said to contain 19 cases of the
cargo, was "stripped" in the presence of
petitioner's surveyors, and three cases were
found to be in bad order. The 19 cases of the van
stripped were then kept inside Warehouse No. 3
of Pier 3 pending delivery. It should be stressed
at this point, that the three cases found in bad
order are not the cases for which the claim below
was presented, for although the three cases
appeared to be in bad order, the contents
remained good and intact.
The two other container vans were not moved
from the container yard and they
were not stripped. On December 8, 1978, the
cargo was released to the care of the consignee's
authorized customs broker, the RGS Customs
Brokerage. The broker, accepting the shipment
without exception as to bad order, caused the
delivery of the vans to the consignee's warehouse
in Makati. It was at that place, when the contents
of the two containers were removed and
inspected, that petitioner's surveyors reported,
that checked against the packing list, the
shipment in Container No. OOLU2552969 was
short of seven cases (see p. 18, Rollo).
Under the prevailing circumstances, it is
therefore, not surprising why the Court of
Appeals in sustaining the trial court, simply
quoted the latter, thus:
It must be also considered that the
subject container was not stripped
of its content at the pier zone. The
two unstripped containers
(together with the 19 cases
removed from the stripped third
container) were delivered to, and
received by, the customs broker
for the consignee without any
exception or notation of bad order
of shortlanding (Exhs. 1, 2 and 3
Vessel). If there was any suspicion
or indication of irregularity or theft
or pilferage, plaintiff or consignee's
representatives should have noted
the same on the gate passes or
insisted that some form of protest
form part of the documents
concerning the shipment. Yet, no
such step was taken. The
shipment appears to have been
delivered to the customs broker in
good order and condition and
complete save for the three cases
noted as being apparently in bad
order.
Consider further that the stripping
of the subject container was done
at the consignee's warehouse
where, according to plaintiff's
surveyor, the loss of the seven
cases was discovered. The
evidence is not settled as whether
the defendants' representative
were notified of, and were present
at, the unsealing and opening of
the container in the bodega. Nor is
the evidence clear how much time
elapsed between the release of the
shipment from the pier and the
stripping of the containers at
consignee bodega. All these fail to
discount the possibility that the
loss in question could have taken
place after the container had left
the pier. (pp. 20-21, Rollo)
Verily, if any of the vans found in bad condition,
or if any inspection of the goods was to be done
in order to determine the condition thereof, the
same should have been done at the pierside, the
pier warehouse, or at any time and place while
the vans were under the care and custody of the
carrier or of the arrastre operator. Unfortunately
for petitioner, even as one of the three vans was
inspected and stripped, the two other vans and
the contents of the owner previously stripped
were accepted without exception as to any
supposed bad order or condition by petitioner's
own broker. To all appearances, therefore, the
shipment was accepted by petitioner in good
order.
It logically follows that the case at bar presents
no occasion for the necessity of discussing the
diligence required of a carrier or of the theory
of prima facie liability of the carrier, for from all
indications, the shipment did not suffer loss or
damage while it was under the care of the carrier,
or of the arrastre operator, it must be added.
WHEREFORE, the petition is hereby DISMISSED
and the decision of the Court of Appeals
AFFIRMED, with costs against petitioner.
SO ORDERED.