G.R. No.

150403             January 25, 2007

CEBU SALVAGE CORPORATION, Petitioner,

vs.
PHILIPPINE HOME ASSURANCE CORPORATION, Respondent

FACTS:
Petitioner Cebu Salvage Corporation and Mariaa Christina Chemicals Industries, Inc.
(MCCII) entered into a voyage charter wherein petitioner was to load 800 to 1,100 metric tons of
silica quartz on board the M/T Espiritu Santo7 at Ayungon, Negros Occidental for transport to
and discharge at Tagoloan, Misamis Oriental to consignee Ferrochrome Phils., Inc.
However, the shipment never reached the destination for M/T Espiritu Santo had sank at he
beach of Opol, Misamis Oriental which results to the total loss of the cargo.
MCCII filed a claim for the loss of the shipment with its insurer, respondent Philippine Home
Assurance Corporation. They were able to get paid and Philippine Home Assurance
Corporation subrogated the rights of MCII. They then filed for reimbursement against Cebu
Salvage Corporation.
RTC then ruled in favor of Philippine Assurance Corporation.
The petitioner appeled to CA. But CA affirmed the decision of the RTC.

ISSUE:
Whether or not a carrier be held liable for the loss of cargo resulting from the sinking of a ship it
does not own

RULING:
The court ruled that Cebu Salvage Corporation is liable for the loss of cargo because it is clear
that there was a contract of carriage between them and MCII wherein they are considered as
the common carrier. At the time of the lost of the cargo, Cebu Salvage Corporation was
engaged in the business of carrying and transporting goods by water, for compensation, and
offered its services to the public. For this reason, they are bound to observe extraordinary
diligence over the goods they transport according to the circumstances of each case. 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. 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.
G.R. No. 127897      November 15, 2001

DELSAN TRANSPORT LINES, INC., petitioner,

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

DE LEON, JR., J.:

FACTS:

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

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

Caltex were able to get paid by American Home Assurance Corporation for the loss of
the cargo. American Home Assurance Corporation subrogated Caltex and demanded same
amount to the petitioner.

Due to failure to collect, Respondent filed a complaint with the RTC for collection of
money. However, RTC dismissed the complaint.

Upon appeal, the CA reversed the decision and found rthe petitioner liable on its
obligation as common carrier to herein private respondent insurance company as subrogee of
Caltex. The motion for reconsideration of herein petitioner was then denied.

ISSUE:

Whether or not the payment made by the private respondent to Caltex for the
insured value of the lost cargo amounted to an admission that the vessel was seaworthy,
thus precluding any action for recovery against the petitioner.

RULING:

The court ruled that the payment is not an automatic admission that the vessel was
seaworthy as to foreclose recourse against the petitioner for any liability under its contractual
obligation as a common carrier. The payment made by the private respondent for the insured
value of the lost cargo operates as waiver of its (private respondent) right to enforce the term of
the implied warranty against Caltex under the marine insurance policy. The fact of payment
grants the private respondent subrogatory right which enables it to exercise legal remedies that
would otherwise be available to Caltex as owner of the lost cargo against the petitioner common
carrier.8 Article 2207 of the New civil Code provides that:

Art. 2207. If the plaintiff’s property has been insured, and he has received indemnity
from the insurance company for the injury or loss arising out of the wrong or breach of
contract complained of, the insurance company shall be subrogated to the rights of the
insured against the wrongdoer or the person who has violated the contract. If the amount
paid by the insurance company does not fully cover the injury or loss, the aggrieved
party shall be entitled to recover the deficiency from the person causing the loss or
injury.
G.R. No. 94149 May 5, 1992

AMERICAN HOME ASSURANCE, COMPANY, petitioner,

vs.
THE COURT OF APPEALS and NATIONAL MARINE CORPORATION and/or NATIONAL
MARINE CORPORATION (Manila), respondents.

FACT:

American Home Assurance Co. and the respondent National Marine Corporation are
foreign corporations licensed to do business in the Philippines, the former through its branch.
The American Home Assurance Company (Philippines), Inc. and the latter through its branch
The National Marine Corporation (Manila).

Cheng Hwa Pulp Corporation shipped 5,000 bales (1,000 ADMT) of bleached kraft pulp
from Haulien, Taiwan on board "SS Kaunlaran", which is owned and operated by herein
respondent National Marine Corporation. It was consigned to Mayleen Paper, Inc. of Manila and
was insured with American Home Assurnce Co.

The shipment arrived in Manila and was discharged into the custody of the Marina Port
Services, Inc., for eventual delivery to the consignee-assured. However it was found that 122
bales had either been damaged or lost.

Mayleen Paper, Inc. then duly demanded indemnification from respondent. However, it
was not heeded. Because of this, Mayleen Paper, Inc. sought recovery from the American
Home Assurance paid Mayleen Paper, Inc. The latter paid Mayleen and subrogated the rights
and interests on Mayleen Paper Inc.

The petitioner, as subrogee, brought suit against respondents for the recovery of the
amount paid to Mayleen Paper, Inc.

National Marine Corporation filed a motion to dismiss the case filed by the American
Home Assurance Company. The Regional Trial Court sustained private respondent's
contention.

The petitioner then filed a motion for reconsideration of the order of dismissal but same
was denied. They then filed a petition before the CA but it was dismissed.

ISSUE:

Whether or not National Marine Corporation is liable as common carrier

RULING:

The court ruled that National Marine Corporation is liable and hereby ordered to
reimburse the subrogee, petitioner American Home Assurance Company that amount paid to
Mayleen Paper, Inc. The court further discussed held further that under Article 1733 of 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 and for the safety of
passengers transported by them according to all circumstances of each case. Thus, under
Article 1735 of the same Code, in all cases other than those mentioned in Article 1734 thereof,
the common carrier shall be presumed to have been at fault or to have acted negligently, unless
it proves that it has observed the extraordinary diligence required by law. But more importantly,
the Court ruled that common carriers cannot limit their liability for injury or loss of goods where
such injury or loss was caused by its own negligence. Otherwise stated, the law on averages
under the Code of Commerce cannot be applied in determining liability where there is
negligence.

Under the foregoing principle and in line with the Civil Code's mandatory requirement of
extraordinary diligence on common carriers in the car care of goods placed in their stead, it is
but reasonable to conclude that the issue of negligence must first be addressed before the
proper provisions of the Code of Commerce on the extent of liability may be applied.
G.R. No. 125948 December 29, 1998

FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner,

vs.
COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN, BATANGAS CITY and
ADORACION C. ARELLANO, in her official capacity as City Treasurer of Batangas,
respondents.

FACTS:

First Philippine Industrial Corporation is a grantee of a pipeline concession under

Republic Act No. 387, as amended, to contract, install and operate oil pipelines. The original
pipeline concession was granted in 19671 and renewed by the Energy Regulatory Board in
1992.

They applied for a Mayor’s permit. However, before receiving such they were required
by the City Treasurer to pay a local Tax. They were able topay for the first quarter.

The petitioner then filed a letter-protest addressed to the City Treasurer. However, it was
denied.

Petititoner then filed with the RTC a complaint for tax refund with prayer for writ of
preliminary injunction against respondents City of Batangas and Adoracion Arellano in her
capacity as City Treasurer. The court dismissed the complaint.

Petitioner assailed the decision before the SC via petition for review but it was referred
to CA for consideration and adjudication. CA affirmed the decision of the trial court. They filed a
motion for reconsideration but it was denied.

Hence, they filed before the SC.

ISSUE:

Whether or not First Philippine Industrial Corporation is a common carrier

RULING:

The court ruled that the petitioner is a common carrier where it is engaged in the
business of transporting or carrying goods, i.e. petroleum products, for hire as a public
employment. It undertakes to carry for all persons indifferently, that is, to all persons who
choose to employ its services, and transports the goods by land and for compensation. The fact
that petitioner has a limited clientele does not exclude it from the definition of a common carrier.
 The court further discussed that a "common carrier" may be defined, broadly, as one
who holds himself out to the public as engaged in the business of transporting persons or
property from place to place, for compensation, offering his services to the public generally.

Art. 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firm or
association engaged in the business of carrying or transporting passengers or goods or both, by
land, water, or air, for compensation, offering their services to the public."

The test for determining whether a party is a common carrier of goods is:

1. He must be engaged in the business of carrying goods for others as a public

employment, and must hold himself out as ready to engage in the transportation of goods
for person generally as a business and not as a casual occupation;

2. He must undertake to carry goods of the kind to which his business is confined;

3. He must undertake to carry by the method by which his business is conducted and over
his established roads; and

4. The transportation must be for hire.

The petition was granted by the court.

G.R. No. L-47822 December 22, 1988

PEDRO DE GUZMAN, petitioner,

vs.
COURT OF APPEALS and ERNESTO CENDANA, respondents.

Vicente D. Millora for petitioner.

Jacinto Callanta for private respondent.

FACTS:
Respondent Ernesto Cendana, a junk dealer, was engaged in buying up used bottles
and scrap metal in Pangasinan. Upon gathering sufficient quantities of such scrap material,
respondent would bring such material to Manila for resale. He utilized two (2) six-wheeler trucks
which he owned for hauling the material to Manila. On the return trip to Pangasinan, respondent
would load his vehicles with cargo which various merchants wanted delivered to differing
establishments in Pangasinan. For that service, respondent charged freight rates which were
commonly lower than regular commercial rates.
Later, Pedro de Guzman a merchant and authorized dealer of General Milk Company
(Philippines), Inc. in Urdaneta, Pangasinan, contracted with respondent for the hauling of 750
cartons of Liberty filled milk from a warehouse of General Milk in Makati, Rizal, to petitioner's
establishment in Urdaneta. The 150 cartons were loaded to a truck driven by Ernesto and the
600 cartons were loaded to another truck driven by Manuel Estrada.

Only 150 boxes of Liberty filled milk were delivered to petitioner becaus ethe other truck,
carrying the 600 boxes were hijacked.

De Guzman filed an action against the respondent daemanding payment for the lost
boxesa plus damages and attorney’s fees. He alleged that the respondent failed to exercise the
extraordinary diligence required of him by the law as a common carrier.

The respondent denied that he was a common carrier.

The trial court held Ernesto Cendana liable as a common carrier and demanded him to
pay the petitioner,

Ernesto then appealed with CA. CA reversed the decision of the trial court.

De Guzman filed a Petition for review before the Supreme Court. Hence, this petition.
ISSUE:

Whether or not private respondent Ernesto Cendana may be properly characterized as a

common carrier

RULING:

The court ruled that Ernesto Cedana, herein respondent, is a common carrier even
though he merely "back-hauled" goods for other merchants from Manila to Pangasinan,
although such back-hauling was done on a periodic or occasional rather than regular or
scheduled manner, and even though private respondent's principal occupation was not the
carriage of goods for others. There is no dispute that private respondent charged his customers
a fee for hauling their goods; that fee frequently fell below commercial freight rates is not
relevant here.

It is immaterial that the respondent has no certificate of public convenience because

such is not a requisite for the incurring of liability under the Civil Code provisions governing
common carriers. That liability arises the moment a person or firm acts as a common carrier,
without regard to whether or not such carrier has also complied with the requirements of the
applicable regulatory statute and implementing regulations and has been granted a certificate of
public convenience or other franchise.

The court further discussed that by nature of their business and for reasons of public
policy" are held to a very high degree of care and diligence ("extraordinary diligence") in the
carriage of goods as well as of passengers. The specific import of extraordinary diligence in the
care of goods transported by a common carrier is, according to Article 1733, "further expressed
in Articles 1734,1735 and 1745, numbers 5, 6 and 7" of the Civil Code.
G.R. No. 101503 September 15, 1993

PLANTERS PRODUCTS, INC., petitioner,

vs.
COURT OF APPEALS, SORIAMONT STEAMSHIP AGENCIES AND KYOSEI KISEN
KABUSHIKI KAISHA, respondents.

FACTS:

Planters Products, Inc. (PPI), purchased from Mitsubishi International Corporation

(MITSUBISHI) of New York, U.S.A., 9,329.7069 metric tons (M/T) of Urea 46% fertilizer which
the latter shipped in bulk on 16 June 1974 aboard the cargo vessel M/V "Sun Plum" owned by
private respondent Kyosei Kisen Kabushiki Kaisha (KKKK) from Kenai, Alaska, U.S.A., to Poro
Point, San Fernando, La Union, Philippines.

Prior to the voyage, Mitsubishi and KKKK entered into a time charter-party on the vessel
M/V "Sun Plum" pursuant to the Uniform General Charter.

Before loading the fertilizer aboard the vessel, four (4) of her holds were all presumably
inspected by the charterer's representative and found fit to take a load of urea in bulk pursuant
to par.

After the Urea fertilizer was loaded in bulk by stevedores hired by and under the
supervision of the shipper, the steel hatches were closed with heavy iron lids, covered with
three (3) layers of tarpaulin, then tied with steel bonds. The hatches remained closed and tightly
sealed throughout the entire voyage.

Upon arrival, the unloaded the cargo and the hatches remained open throughout the
duration of the discharge.

Whenever a dumptruck was filled up, it was covered with a tarpaulin. It is individually
weighed to ascertain the net weigh of the cargo. The port area was windy, certain portions of
the route to the warehouse were sandy and the weather was variable, raining occasionally while
the discharge was in progress. They unloaded it to the petitioner’s warehouse.

It took them 11 days to unload the cargo. Through private marine and cargo surveyor, Cargo
Superintendents Company Inc. (CSCI), they found out that the cargo has a shortage that a
portion of the Urea fertilizer approximating 18 M/T was contaminated with dirt. The same results
were contained in a Certificate of Shortage/Damaged Cargo. It was rendered unfit for
commerce, having been polluted with sand, rust and dirt.

PPI sent a claim letter to Soriamont Steamship Agencies (SSA), the resident agent of
the carrier, KKKK, for the cost of the alleged shortage in the shipped and the diminution in value
of that portion said to have been contaminated with dirt. 

Respondent SSA explained that they were not able to respond to the consignee's claim
for payment because, according to them, what they received was just a request for shortlanded
certificate and not a formal claim, and that this "request" was denied by them because they "had
nothing to do with the discharge of the shipment." Due to this, PPI filed an action for damages.
The court a quo however sustained the claim of the plaintiff against the defendant carrier for the
value of the goods lost or damaged.

On appeal, respondent Court of Appeals reversed the lower court and absolved the
carrier from liability for the value of the cargo that was lost or damaged.

ISSUE:

Whether a common carrier becomes a private carrier by reason of a charter-party

RULING:

The court ruled that the common carrier remains as a common carrier notwithstanding
the charter of the whole or portion of a vessel by one or more persons, provided the charter is
limited to the ship only, as in the case of a time-charter or voyage-charter. It is only when the
charter includes both the vessel and its crew, as in a bareboat or demise that a common carrier
becomes private, at least insofar as the particular voyage covering the charter-party is
concerned. Indubitably, a shipowner in a time or voyage charter retains possession and control
of the ship, although her holds may, for the moment, be the property of the charterer.

The court differentiates the two: common carrier and charter-party. A "charter-party" is defined
as a contract by which an entire ship, or some principal part thereof, is let by the owner to
another person for a specified time or use; a contract of affreightment by which the owner of a
ship or other vessel lets the whole or a part of her to a merchant or other person for the
conveyance of goods, on a particular voyage, in consideration of the payment of freight; Charter
parties are of two types: (a) contract of affreightment which involves the use of shipping space
on vessels leased by the owner in part or as a whole, to carry goods for others; and, (b) charter
by demise or bareboat charter, by the terms of which the whole vessel is let to the charterer with
a transfer to him of its entire command and possession and consequent control over its
navigation, including the master and the crew, who are his servants. Contract of affreightment
may either be time charter, wherein the vessel is leased to the charterer for a fixed period of
time, or voyage charter, wherein the ship is leased for a single voyage. In both cases, the
charter-party provides for the hire of vessel only, either for a determinate period of time or for a
single or consecutive voyage, the shipowner to supply the ship's stores, pay for the wages of
the master and the crew, and defray the expenses for the maintenance of the ship. Upon the
other hand, the term "common or public carrier" is defined in Art. 1732 of the Civil Code. The
definition extends to carriers either by land, air or water which hold themselves out as ready to
engage in carrying goods or transporting passengers or both for compensation as a public
employment and not as a casual occupation. The distinction between a "common or public
carrier" and a "private or special carrier" lies in the character of the business, such that if the
undertaking is a single transaction, not a part of the general business or occupation, although
involving the carriage of goods for a fee, the person or corporation offering such service is a
private carrier.
G.R. No. L-49407 August 19, 1988

NATIONAL DEVELOPMENT COMPANY, petitioner-appellant,

vs.
THE COURT OF APPEALS and DEVELOPMENT INSURANCE & SURETY
CORPORATION, respondents-appellees.

No. L-49469 August 19, 1988

MARITIME COMPANY OF THE PHILIPPINES, petitioner-appellant,

vs.
THE COURT OF APPEALS and DEVELOPMENT INSURANCE & SURETY
CORPORATION, respondents- appellees.

FACTS:

A memorandum of agreement was entered into between defendants NDC and MCP.
NDC as the first preferred mortgagee of three ocean going vessels including one with the name
'Dona Nati' appointed defendant MCP as its agent to manage and operate said vessel for and in
its behalf and account. the E. Philipp Corporation of New York loaded on board the vessel
"Dona Nati" at San Francisco, California, a total of 1,200 bales of American raw cotton
consigned to the order of Manila Banking Corporation, Manila and the People's Bank and Trust
Company acting for and in behalf of the Pan Asiatic Commercial Company, Inc., who represents
Riverside Mills Corporation loaded on the same vessel at Tokyo, Japan, were the cargo of
Kyokuto Boekui, Kaisa, Ltd., consigned to the order of Manila Banking Corporation consisting of
200 cartons of sodium lauryl sulfate and 10 cases of aluminum foil. En route to Manila the
vessel Dofia Nati figured in a collision at 6:04 a.m. at Ise Bay, Japan with a Japanese vessel
'SS Yasushima Maru' as a result of which 550 bales of aforesaid cargo of American raw cotton
were lost and/or destroyed, of which 535 bales as damaged were landed and sold on the
authority of the General Average Surveyor for Yen 6,045,-500 and 15 bales were not landed
and deemed lost. The damaged and lost cargoes was worth P344,977.86 which amount, the
plaintiff as insurer, paid to the Riverside Mills Corporation as holder of the negotiable bills of
lading duly endorsed. Also considered totally lost were the aforesaid shipment of Kyokuto,
Boekui Kaisa Ltd., consigned to the order of Manila Banking Corporation, Manila, acting for
Guilcon, Manila. the plaintiff had paid as insurer the total amount of P364,915.86 to the
consignees or their successors-in-interest, for the said lost or damaged cargoes.

As subrogee, plaintiff filed this complaint to recover said amount from the defendants-
NDC and MCP as owner and ship agent respectively, of the said 'Dofia Nati' vessel.

The Development Insurance and Surety Corporation filed before the then Court of First
Instance of Manila an action for the recovery of the sum of P364,915.86 plus attorney's fees of
P10,000.00 against NDC and MCP.

MCP filed a motion to dismiss. Trial court deferred the resolution of the motion to dismiss
till after the trial on the merits. MCP filed its answer with counterclaim and cross-claim against
NDC.

NDC, as well, filed their answer. However, it was stricken off the record.
 NDC filed a motion to set aside the order, but the trial court denied it.

After DISC and MCP presented their respective evidence, the trial court rendered a
decision ordering the defendants MCP and NDC to pay jointly and solidarity to DISC.

The trial court granted MCP's crossclaim against NDC.

MCP interposed its appeal, while NDC filed its appeal on February 17, 1970 after its
motion to set aside the decision was denied by the trial court.

NDC and MCP appealed. These cases were then consolidated in the Supreme Court.Tis
consolidated cases wre given due course.

ISSUE:

Whether or not the law of the country to which the goods are to be transported governs
the liability of the common carrier in case of their loss, destruction or deterioration

RULING:

The court ruled that the Philippine laws will apply, and it is immaterial that the collision
actually occurred in foreign waters, such as Ise Bay, Japan. And NDC's interpretation that the
Code of Commerce should apply only to domestic trade and not to foreign trade shall not be
credited.

The court further discussed Under Article 1733 of 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 and for the safety of the passengers transported by
them according to all circumstances of each case. Accordingly, under Article 1735 of the same
Code, in all other than those mentioned is Article 1734 thereof, the common carrier shall be
presumed to have been at fault or to have acted negligently, unless it proves that it has
observed the extraordinary diligence required by law.

It appears, however, that collision falls among matters not specifically regulated by the Civil
Code, so that no reversible error can be found in respondent courses application to the case at
bar of Articles 826 to 839, Book Three of the Code of Commerce, which deal exclusively with
collision of vessels.

More specifically, Article 826 of the Code of Commerce provides that where collision is
imputable to the personnel of a vessel, the owner of the vessel at fault, shall indemnify the
losses and damages incurred after an expert appraisal. But more in point to the instant case is
Article 827 of the same Code, which provides that if the collision is imputable to both vessels,
each one shall suffer its own damages and both shall be solidarily responsible for the losses
and damages suffered by their cargoes.

Significantly, under the provisions of the Code of Commerce, particularly Articles 826 to
839, the shipowner or carrier, is not exempt from liability for damages arising from collision due
to the fault or negligence of the captain. Primary liability is imposed on the shipowner or carrier
in recognition of the universally accepted doctrine that the shipmaster or captain is merely the
representative of the owner who has the actual or constructive control over the conduct of the
voyage.
G.R. No. 114167 July 12, 1995

COASTWISE LIGHTERAGE CORPORATION, petitioner,

vs.
COURT OF APPEALS and the PHILIPPINE GENERAL INSURANCE
COMPANY, respondents.

FACTS:

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.” As a result, 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.

Pag-asa Sales, Inc. then filed a formal claim with the insurer of its lost cargo. Coastwise
Lighterage denied the claim and PhilGen paid Pag-asa Sales, Inc. for the damage cargo of
Molasses.

As subrogee, PhilGen then filed an action against Coastwise Lighterage before the Regional
Trial Court of Manila, seeking to recover the amount they paid to Pag-asa, Inc. for the latter’s
lost cargo.

RTC ruled in favour of PhilGen. On Coastwise Lighterage's appeal to the Court of Appeals, the
award was affirmed.

Hence, this petition.

ISSUE:

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.

RULING:

The court ruled that 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. 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.

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.
G.R. No. 140349               June 29, 2005

SULPICIO LINES, INC., petitioner,

vs.
FIRST LEPANTO-TAISHO INSURANCE CORPORATION, respondent.

FACTS:

Taiyo Yuden Philippines, Inc. (owner of the goods) and Delbros, Inc. (shipper) entered
into a contract with Delbros, Inc. to transport a shipment of goods consisting of three (3) wooden
crates containing one hundred thirty-six (136) cartons of inductors and LC compound on board
the V Singapore V20 from Cebu City to Singapore in favor of the consignee, Taiyo Yuden
Singapore Pte, Ltd.

For the carriage of said shipment from Cebu City to Manila, Delbros, Inc. engaged the
services of the vessel M/V Philippine Princess, owned and operated by petitioner Sulpicio Lines,
Inc. (carrier). The vessel arrived at the North Harbor, Manila, on 24 February 1992.

During the unloading of the shipment, one crate containing forty-two (42) cartons
dropped from the cargo hatch to the pier apron. As a result, it is no longer usable and were
rejected as a total loss.

Taiyo Yuden Philippines, Inc. filed a claim with herein petitioner-carrier for the recovery
of the value of the rejected cargo which was refused by the latter. They then sought payment
from respondent First Lepanto-Taisho Insurance Corporation (insurer) under a marine insurance
policy issued to the former. Respondent-insurer paid the claim less thirty-five percent (35%)
salvage value or P194, 220.31.

As subrogee, respondent filed claims for reimbursement from Delbros, Inc. and
petitioner-carrier Sulpicio Lines, Inc. which were subsequently denied. Respondent-insurer filed
a suit for damages against Delbros, Inc. and herein petitioner-carrier. Petitioner-carrier filed its
Answer with Counterclaim.

Petitioner-carrier filed its Answer to Delbros, Inc.’s cross-claim asserting that it observed
extraordinary diligence in the handling, storage and general care of the shipment and that
subsequent inspection of the shipment by the Manila Adjusters and Surveyors Company
showed that the contents of the third crate that had fallen were found to be in apparent sound
condition, except that "2 cello bags each of 50 pieces ferri inductors No. LC FL 112270K-60 (c)
were unaccounted for and missing as per packaging list."

Trial court dismissed the complaint for damages as well as the counterclaim.

A Motion for Reconsideration was then filed by herein respondent-insurer and subsequently
denied by the trial court. Thus, respondent-insurer instituted an appeal with the Court of
Appeals, which reversed the dismissal of the complaint by the lower court.
Herein petitioner-carrier filed its Motion for Reconsideration of the decision of the Court of
Appeals which was subsequently denied.

ISSUE:

Whether or not petitioner-carrier is liable for the damages

RULING:

The court upholds the ruling of the appellate court that herein petitioner-carrier is liable
to pay the amount paid by respondent-insurer for the damages sustained by the owner of the
goods.

The court further discussed that the falling of the crate during the unloading is evidence
of petitioner-carrier’s negligence in handling the cargo. As a common carrier, it is expected to
observe extraordinary diligence in the handling of goods placed in its possession for
transport. The standard of extraordinary diligence imposed upon common carriers is
considerably more demanding than the standard of ordinary diligence, i.e., the diligence of a
good paterfamilias established in respect of the ordinary relations between members of society.
A common carrier is bound to transport its cargo and its passengers safely "as far as human
care and foresight can provide, using the utmost diligence of a very cautious person, with due
regard to all circumstances." The extraordinary diligence in the vigilance over the goods
tendered for shipment requires the common carrier to know and to follow the required
precaution for avoiding the damage to, 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 characteristic of goods
tendered for shipment, and to exercise due care in the handling and stowage, including such
methods as their nature requires."

Here, the petitioner-carrier is to have been negligent in the handling of the damaged
cargo in accordance with Articles 1735 and 1752 of the Civil Code. To overcome the
presumption of liability for loss, destruction or deterioration of goods under Article 1735, the
common carrier must prove that they observed extraordinary diligence as required in Article
1733 of the Civil Code.
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.

FACTS:

Anacleto Viana boarded the vessel M/V Antonia, owned by defendant, at the port at San
Jose, Occidental Mindoro, bound for Manila. 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 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.

Private respondents Vianas filed a complaint for damages against petitioner corporation

(Aboitiz, for brevity) for breach of contract of carriage. However, Aboitiz denied responsibility
and 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.

Aboitiz, as third-party plaintiff, filed a third-party complaint 5 against Pioneer.

Pioneer raised defences that Aboitiz has no cause of action and they had observed the
diligence of a good father 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.

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. Both
Aboitiz and Pioneer filed separate motions for reconsideration.

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.
 Aboitiz appealed the decision with the Court of Appeals. CA affirmed the decision of the
trial court except as to the amount of damages awarded to Vianas.

Hence, this petition.

ISSUE:

Whether or not petitioner liable for damages

RULING:

The court affirmed the decision of the Court of Appeals in holding the petitioner liable
because of its failure to exercise extraordinary diligence for the safety of its passenger is the
rationale for our finding on its liability.

The court further explained 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. 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. 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. Thus, where a passenger
dies or is injured, the common carrier is presumed to have been at fault or to have acted
negligently. 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, which, in the instant case, necessarily includes its failure to safeguard its passenger
with extraordinary diligence while such relation subsists.
G.R. No. 125524           August 25, 1999

BENITO MACAM doing business under the name and style BEN-MAC
ENTERPRISES, petitioner,
vs.
COURT OF APPEALS, CHINA OCEAN SHIPPING CO., and/or WALLEM PHILIPPINES
SHIPPING, INC., respondents.

BELLOSILLO, J.:

FACTS:

Petitioner Benito Macam, doing business under the name and style Ben-Mac
Enterprises, shipped on board the vessel Nen Jiang, owned and operated by respondent China
Ocean Shipping Co., through local agent respondent Wallem Philippines Shipping, Inc.
(hereinafter WALLEM), 3,500 boxes of watermelons and 1,611 boxes of fresh mangoes. The
Bills of Lading contained the following pertinent provision: "One of the Bills of Lading must be
surrendered duly endorsed in exchange for the goods or delivery order.1 The shipment was
bound for Hongkong with PAKISTAN BANK as consignee and Great Prospect Company of
Kowloon, Hongkong (hereinafter GPC) as notify party.

Letter of credit requirement, copies of the bills of lading and commercial invoices were
submitted to petitioner's depository bank, Consolidated Banking Corporation, which paid
petitioner in advance the total value of the shipment.

Upon arrival in Hongkong, the shipment was delivered by respondent WALLEM directly
to GPC, not to PAKISTAN BANK, and without the required bill of lading having been
surrendered. GPC failed to pay PAKISTAN BANK such that the latter, still in possession of the
original bills of lading, refused to pay petitioner through SOLIDBANK. Since SOLIDBANK
already pre-paid petitioner the value of the shipment, it demanded payment from respondent
WALLEM through five (5) letters but was refused. Petitioner was thus allegedly constrained to
return the amount involved to SOLIDBANK, then demanded payment from respondent
WALLEM in writing but to no avail.

Petitioner sought collection of the value of the shipment from respondents before the
Regional Trial Court of Manila, based on delivery of the shipment to GPC without presentation
of the bills of lading and bank guarantee.

The trial court ordered respondents to pay, jointly and severally. Counterclaims were
dismissed for lack of merit.5 The trial court opined that respondents breached the provision in
the bill of lading requiring that "one of the Bills of Lading must be surrendered duly endorsed in
exchange for the goods or delivery order," when they released the shipment to GPC without
presentation of the bills of lading and the bank guarantee that should have been issued by
PAKISTAN BANK in lieu of the bills of lading.

Respondent Court of Appeals appreciated the evidence in a different manner.

ISSUE:
 Whether or not WALLEM Philippines is liable for releasing the goods to GPC without the
bills of lading or bank guarantee

RULING:

The court found that thepetitioner failed to establish the liability of the respondents over
the cargoes an found no reversible error was committed by respondent court in ruling against
him. Hence, it denied the petition and affirmed the decision of the CA.

The court discussed that it was stated in the telex "to deliver the shipment to respective
consignees." Here, the respondent court court analyzed the telex in its entirety and correctly
arrived at the conclusion that the consignee referred to was not PAKISTAN BANK but GPC.

The court emphasized 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.
G.R. No. L-25599             April 4, 1968

HOME INSURANCE COMPANY, plaintiff-appellee,

vs.
AMERICAN STEAMSHIP AGENCIES, INC. and LUZON STEVEDORING
CORPORATION, defendants,
AMERICAN STEAMSHIP AGENCIES, INC., defendant-appellant.

FACTS:

"Consorcio Pesquero del Peru of South America" shipped freight pre-paid at Chimbate,
Peru, 21,740 jute bags of Peruvian fish meal through SS Crowborough, covered by clean bills of
lading. The cargo, consigned to San Miguel Brewery, Inc., now San Miguel Corporation, and
insured by Home Insurance Company for $202,505, arrived in Manila and was discharged into
the lighters of Luzon Stevedoring Company. When the cargo was delivered to consignee San
Miguel Brewery Inc., there were shortages amounting to P12,033.85, causing the latter to lay
claims against Luzon Stevedoring Corporation, Home Insurance Company and the American
Steamship Agencies, owner and operator of SS Crowborough.

Due to the denial of others, Home Insurance paid the consignee the value of the loss, as
full settlement of the claim. Having been refused reimbursement by both the Luzon Stevedoring
Corporation and American Steamship Agencies, Home Insurance Company, as subrogee to the
consignee, filed a case against them.

Luzon Stevedoring Corporation filed its answers alleging that it delivered with due
diligence the goods in the same quantity and quality that it had received the same from the
carrier.

American Steamship Agencies denied liability by alleging that under the provisions of the
Charter party referred to in the bills of lading, the charterer, not the shipowner, was responsible
for any loss or damage of the cargo. Furthermore, it claimed to have exercised due diligence in
stowing the goods and that as a mere forwarding agent, it was not responsible for losses or
damages to the cargo.

The Court of First Instance, after trial, absolved Luzon Stevedoring Corporation, having
found the latter to have merely delivered what it received from the carrier in the same condition
and quality, and ordered American Steamship Agencies to pay plaintiff.

American Steamship Agencies appealed directly to the Supreme Court.

ISSUE:

Whether or not the stipulation in the charter party of the owner's non-liability valid so as
to absolve the American Steamship Agencies from liability for loss

RULING:
 The court reversed the decision of the court. According to its ruling, the Civil Code
provisions on common carriers should not be applied where the carrier is not acting as such but
as a private carrier. The stipulation in the charter party absolving the owner from liability for loss
due to the negligence of its agent would be void only if the strict public policy governing
common carriers is applied. Such policy has no force where the public at large is not involved,
as in the case of a ship totally chartered for the use of a single party.
G.R. No. 94761 May 17, 1993

MAERSK LINE, petitioner,
vs.
COURT OF APPEALS AND EFREN V. CASTILLO, doing business under the name and
style of Ethegal Laboratories, respondents.

FACTS:

Maersk Line is engaged in the transportation of goods by sea, doing business in the
Philippines through its general agent Compania General de Tabacos de Filipinas. On the other
hand, espondent Efren Castillo, on the other hand, is the proprietor of Ethegal Laboratories, a
firm engaged in the manutacture of pharmaceutical products.

Private respondent ordered from Eli Lilly. Inc. of Puerto Rico through its (Eli Lilly, Inc.'s) agent in
the Philippines, Elanco Products, 600,000 empty gelatin capsules for the manufacture of his
pharmaceutical products. The capsules were placed in six (6) drums of 100,000 capsules each.

Shipper Eli Lilly, Inc. of Puerto Rico advised private respondent as consignee that the
order have been shipped on board MV "Anders Maerskline" under Voyage No. 7703 for
shipment to the Philippines via Oakland, California. However, it was mishipped to Richmond,
Virginia, USA and then transported back Oakland, Califorilia.After 2 months, the goods finally
arrived in the Philippines. As a consequence, private respondent as consignee refused to take
delivery of the goods on account of its failure to arrive on time.

Respondent filed an action against petitioner alleging gross negligence and undue delay
in the delivery of the goods. Denying that it committed breach of contract, petitioner alleged in
its that answer that the subject shipment was transported in accordance with the provisions of
the 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.

Defendant Eli Lilly filed its answer with compulsory and cross-claim. In its cross-claim, it
alleged that the delay in the arrival of the the subject merchandise was due solely to the gross
negligence of petitioner Maersk Line.

Respondent moved for the dismissal of the complaint against Eli Lilly, Inc.

The trial court dismissed the complaint against Eli Lilly, Inc.

Between respondent and petitioner, the trial court ruled in favour of Castillo.

On appeal, CA affirmed the decision of the trial court.

Hence, this petition.

ISSUE:

Whether or not respondent Castillo is entitled to damages resulting from delay in the
delivery of the shipment in the absence in the bill of lading of a stipulation on the period of
delivery.

RULING:

The court held that we hold that exemplary damages may be awarded to the private
respondent. In contracts, exemplary damages may be awarded if the defendant acted in a
wanton, fraudulent, reckless, oppresive or malevolent manner. There was gross negligence on
the part of the petitioner in mishiping the subject goods destined for Manila but was inexplicably
shipped to Richmond, Virginia, U.S.A. Gross carelessness or negligence contitutes wanton
misconduct, hence, exemplary damages may be awarded to the aggrieved party.

The court further discussed that petitioner never even bothered to explain the course for
the delay, i.e. more than two (2) months, in the delivery of subject shipment. Under the
circumstances of the case, we hold that petitioner is liable for breach of contract of carriage
through gross negligence amounting to bad faith. Thus, the award of moral damages if therefore
proper in this case.
G.R. No. 145044             June 12, 2008

PHILIPPINE CHARTER INSURANCE CORPORATION, petitioner,

vs.
NEPTUNE ORIENT LINES/OVERSEAS AGENCY SERVICES, INC., respondent.

FACTS:

L.T. Garments Manufacturing Corp. Ltd. shipped from Hong Kong three sets of warp
yarn on returnable beams aboard respondent Neptune Orient Lines' vessel, M/V Baltimar Orion,
for transport and delivery to Fukuyama Manufacturing Corporation (Fukuyama) of No. 7 Jasmin
Street, AUV Subdivision, Metro Manila. Fukuyama insured the shipment against all risks with
petitioner Philippine Charter Insurance Corporation (PCIC) under Marine Cargo Policy No.
RN55581.

During the course of the voyage, the container with the cargoes fell overboard and was
lost.

Fukuyama wrote a letter to respondent Overseas Agency Services, Inc. (Overseas

Agency), the agent of Neptune Orient Lines in Manila, and claimed for the value of the lost
cargoes. However, Overseas Agency ignored the claim.

Hence, Fukuyama sought payment from its insurer,PCIC. PCIC paid Fukuyama.

As subrogee, PCIC demanded from respondents reimbursement of the entire amount it

paid to Fukuyama, but respondents refused payment.

Due to this, PCIC filed a complaint for damages against respondents with the Regional
Trial Court (RTC) of Manila.

In answer, respondents denied the claim and contended that the occurrence was a
fortuitous event which exempted them from any liability.

RTC held the respondents liable.

Respondents filed a Motion for Reconsideration but it was denied.

Respondents appealed the RTC Decision to the CA. However, CA affirmed the decision
of the RTC.

Respondents moved for reconsideration and CA found the argument meritorious.

ISSUE:

Whether or not the court of appeals erred in awarding respondents damages

RULING:
 The court ruled that CA did not erred in holding respondents liable for damages to
petitioner subject to the US$500 per package limited- liability provision in the bill of lading.

It further discussed that since the subject cargoes were lost while being transported by
respondent common carrier from Hong Kong to the Philippines, Philippine law applies pursuant
to the Civil Code which provides:

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. 1766. In all matters not regulated by this Code, the rights and obligations of common
carriers shall be governed by the Code of Commerce and by special laws.

The rights and obligations of respondent common carrier are thus governed by the provisions of
the Civil Code, and the COGSA, which is a special law, applies suppletorily.

The pertinent provisions of the Civil Code applicable to this case are as follows:

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.
G.R. No. 88092               April 25, 1990

CITADEL LINES, INC., petitioner,

vs.
COURT OF APPEALS* and MANILA WINE MERCHANTS, INC., respondents.

FACTS:

Citadel Lines, Inc. (hereafter referred to as the CARRIER) is the general agent of the
vessel "Cardigan Bay/Strait Enterprise," while respondent Manila Wine Merchants, Inc.
(hereafter, the CONSIGNEE) is the importer of the subject shipment of Dunhill cigarettes from
England.

On or about March 17, 1979, the vessel "Cardigan Bay/Strait Enterprise" loaded on
board at Southampton, England, for carriage to Manila, 180 Filbrite cartons of mixed British
manufactured cigarettes called "Dunhill International Filter" and "Dunhill International Menthol."
The shipment arrived at the Port of Manila Pier 13, on April 18, 1979 in container van No. BENU
204850-9. The said container was received by E. Razon, Inc. (later known as Metro Port
Service, Inc. and referred to herein as the ARRASTRE).

However, the container van, which contained two shipments was stripped. One shipment
was delivered and the other shipment consisting of the imported British manufactured cigarettes
was palletized. Due to lack of space at the Special Cargo Coral, the aforesaid cigarettes were
placed in two containers with two pallets in container No. BENU 204850-9, the original
container, and four pallets in container No. BENU 201009-9, with both containers duly
padlocked and sealed by the representative of the CARRIER.

The next morning, the CARRIER'S headchecker discovered that container van No.
BENU 201009-9 had a different padlock and the seal was tampered with and it was found out
that it was found that 90 cases of imported British manufactured cigarettes were missing. Later
in the investigation, it was revealed that the cargo in question was not formally turned over to it
by the CARRIER but was kept inside container van No. BENU 201009-9 which was padlocked
and sealed by the representatives of the CARRIER without any participation of the ARRASTRE.

Upon learning of the incident, Consignee filed a formal claim with the Carrier demanding
payment of the value of the missing cargoes. Carrier admitted the loss but alleged that the same
occurred at Pier 13, an area absolutely under the control of the ARRASTRE. In view thereof, the
CONSIGNEE filed a formal claim, dated June 4, 1979, with the ARRASTRE, demanding
payment of the value of the goods but said claim was denied.

The lower court absolved Arrastre since it was not formally turned over to them.

CA affirmed the decision.

ISSUE:

Whether the loss occurred while the cargo in question was in the custody of E. Razon,
Inc. or of Citadel Lines, Inc

RULING:

The court ruled that the cargo was still in possession of the carrier, there having been no
formal turnover of the cargo to the ARRASTRE. It further held that the subject shipment was lost
while it was still in the custody of herein petitioner CARRIER, and considering further that it
failed to prove that the loss was occasioned by an excepted cause, the inescapable conclusion
is that the CARRIER was negligent and should be held liable therefor.

Further, 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. 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 extra ordinary
diligence as required in Article 1733 of the Civil Code. The duty of the consignee is to prove
merely that the goods were lost. Thereafter, the burden is shifted to the carrier to prove that it
has exercised the extraordinary diligence required by law. And, its extraordinary responsibility
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 the right to receive them.
G.R. No. L-36481-2 October 23, 1982

AMPARO C. SERVANDO, CLARA UY BICO, plaintiffs-appellees,

vs.
PHILIPPINE STEAM NAVIGATION CO., defendant-appellant

FACTS:

Clara Uy Bico and Amparo Servando loaded on board the appellant's vessel, FS-176, for
carriage from Manila to Pulupandan, Negros Occidental. Upon arrival of the vessel at
Pulupandan, in the morning of November 18, 1963, the cargoes were discharged, complete and
in good order, unto the warehouse of the Bureau of Customs. At about 2:00 in the afternoon of
the same day, said warehouse was razed by a fire of unknown origin, destroying appellees'
cargoes. Before the fire, however, appellee Uy Bico was able to take delivery of 907 cavans of
rice. Appellees' claims for the value of said goods were rejected by the appellant.

The lower court ordered the defendant to pay the petitioners.

The court a quo held that the delivery of the shipment in question to the warehouse of
the Bureau of Customs is not the delivery contemplated by Article 1736; and since the burning
of the warehouse occurred before actual or constructive delivery of the goods to the appellees,
the loss is chargeable against the appellant.

In the bill of lading binding between the two parties, they agreed to limit the responsibility
of the carrier for the loss or damage that may be caused to the shipment by inserting therein the
following stipulation:

Clause 14. Carrier shall not be responsible for loss or damage to shipments
billed 'owner's risk' unless such loss or damage is due to negligence of carrier.
Nor shall carrier be responsible for loss or damage caused by force majeure,
dangers or accidents of the sea or other waters; war; public enemies; . . . fire . ...

This was considered valid.

ISSUE:

Whether or not Philippine Steam Navigation liable for damages for the loss of the
appellees' cargoes as a result of a fire

RULING:

The court ruled that the appellant is plainly not responsible.

The court further discussed that there is nothing in the record to show that appellant
carrier ,incurred in delay in the performance of its obligation. It appears that appellant had not
only notified appellees of the arrival of their shipment, but had demanded that the same be
withdrawn. In fact, pursuant to such demand, appellee Uy Bico had taken delivery of 907
cavans of rice before the burning of the warehouse.
 Nor can the appellant or its employees be charged with negligence. The storage of the
goods in the Customs warehouse pending withdrawal thereof by the appellees was undoubtedly
made with their knowledge and consent. Since the warehouse belonged to and was maintained
by the government, it would be unfair to impute negligence to the appellant, the latter having no
control whatsoever over the same.
G.R. No. L-31379 August 29, 1988

COMPAÑIA MARITIMA, petitioner,
vs.
COURT OF APPEALS and VICENTE CONCEPCION, respondents

FACTS:

Vicente E. Concepcion, a civil engineer doing business under the name and style of
Consolidated Construction with office address at Room 412, Don Santiago Bldg., Taft Avenue,
Manila, had a contract with the Civil Aeronautics Administration (CAA) for the construction of the
airport in Cagayan De Oro City, Misamis Oriental.

Being a Manila — based contractor, Vicente E. Concepcion had to ship his construction
equipment to Cagayan de Oro City.

He contracted with the petitioner for the shipment of his equipment. Concepcion
negotiated anew with petitioner, thru its collector, Pacifico Fernandez, for the shipment to
Cagayan de Oro City of one (1) unit payloader, four (4) units 6x6 Reo trucks and two (2) pieces
of water tanks.

These equipment were loaded aboard the MV Cebu in its Voyage No. 316, which left
Manila on August 30, 1964 and arrived at Cagayan de Oro City in the afternoon of September 1,
1964. The Reo trucks and water tanks were safely unloaded within a few hours after arrival, but
while the payloader was about two (2) meters above the pier in the course of unloading, the
swivel pin of the heel block of the port block of Hatch No. 2 gave way, causing the payloader to
fall. 3 The payloader was damaged and was thereafter taken to petitioner's compound in
Cagayan de Oro City.

Concepcion then demanded Compania Maritima a replacement of the payloader which it

was considering as a complete loss because of the extent of damage. Consolidated
Construction likewise notified petitioner of its claim for damages. Unable to elicit response, the
demand was repeated.

Meanwhile, petitioner shipped the payloader to Manila where it was found to have 7.5
tons as weight and not 2.5 tons. Petitioner denied the claim for damages of Consolidated
Construction in its letter dated October 7, 1964, contending that had Vicente E. Concepcion
declared the actual weight of the payloader, damage to their ship as well as to his payloader
could have been prevented. 

To replace the damaged payloader, Consolidated Construction in the meantime bought

a new one at P45,000.00 from Bormaheco Inc.

Concepcion filed an action for damages against petitioner with the then Court of First
Instance of Manila. But it was dismissed.

Concepcion appealed to the Court of Appeals and reversed the decision.

ISSUE:
 Whether or not the act of private respondent Vicente E. Concepcion in furnishing
petitioner Compañia Maritima with an inaccurate weight of 2.5 tons instead of the payloader's
actual weight of 7.5 tons was the proximate and only cause of the damage

RULING:

The court held that respondent's act of furnishing petitioner with an inaccurate weight of
the payloader upon being asked by petitioner's collector, cannot be used by said petitioner as
an excuse to avoid liability for the damage caused, as the same could have been avoided had
petitioner utilized the "jumbo" lifting apparatus which has a capacity of lifting 20 to 25 tons of
heavy cargoes. . It is a fact known to the Chief Officer of MV Cebu that the payloader was
loaded aboard the MV Cebu at the Manila North Harbor on August 28, 1964 by means of a
terminal crane. 21 Even if petitioner chose not to take the necessary precaution to avoid damage
by checking the correct weight of the payloader, extraordinary care and diligence compel the
use of the "jumbo" lifting apparatus as the most prudent course for petitioner.

While the act of private respondent in furnishing petitioner with an inaccurate weight of the
payloader cannot successfully be used as an excuse by petitioner to avoid liability to the
damage thus caused, said act constitutes a contributory circumstance to the damage caused on
the payloader, which mitigates the liability for damages of petitioner in accordance with Article
1741 of the Civil Code, to wit:

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.

We find equitable the conclusion of the Court of Appeals reducing the recoverable amount of
damages by 20% or 1/5 of the value of the payloader, which at the time the instant case arose,
was valued at P34,000. 00, thereby reducing the recoverable amount at 80% or 4/5 of
P34,000.00 or the sum of P27,200.00. Considering that the freight charges for the entire
cargoes shipped by private respondent amounting to P2,318.40 remained unpaid.. the same
would be deducted from the P27,000.00 plus an additional deduction of P228.63 representing
the freight charges for the undeclared weight of 5 tons (difference between 7.5 and 2.5 tons)
leaving, therefore, a final recoverable amount of damages of P24,652.97 due to private
respondent Concepcion.

Notwithstanding the favorable judgment in his favor, private respondent assailed the Court of
Appeals' decision insofar as it limited the damages due him to only P24,652.97 and the cost of
the suit. Invoking the provisions on damages under the Civil Code, more particularly Articles
2200 and 2208, private respondent further seeks additional damages allegedly because the
construction project was delayed and that in spite of his demands, petitioner failed to take any
steps to settle his valid, just and demandable claim for damages.
G.R. No. 135645      March 8, 2002

THE PHILIPPINE AMERICAN GENERAL INSURANCE CO., INC., petitioner,

vs.
MGG MARINE SERVICES, INC. and DOROTEO GAERLAN, respondents

FACTS:

San Miguel Corporation insured several beer bottle cases with petitioner Philippine American
General Insurance Company. The cargo were loaded on board the M/V Peatheray Patrick-G to
be transported from Mandaue City to Bislig, Surigao del Sur. The vessel left the port of
Mandaue City for Bislig, Surigao del Sur after having been cleared by the Coast Guard. The
weather was calm when the vessel started its voyage. However, it sunk off at Cawit Point,
Cortes, Surigao del Sur. As a consequence thereof, the cargo belonging to San Miguel
Corporation was lost.

San Miguel Corporation claimed the amount of its loss from petitioner.

In the report of Mr. Eduardo Sayo, the shifting of ballast water from starboard to portside
affected the stability of the M/V Peatheray Patrick-G.

Thereafter, petitioner paid San Miguel of the full amount based on the contract.

Petitioner, as subrogee of San Miguel Corporation, filed with the Regional Trial Court (RTC) of
Makati City a case for collection against private respondents to recover the amount it paid to
San Miguel Corporation for the loss of the latter's cargo.

RTC ruled that respondents shall be solidarily liable for the loss of San Miguel Corporation's
cargo and ordering them to pay petitioner the full amount of the lost cargo plus legal interest,
attorney's fees and costs of suit.

They appealed before the CA. CA assiled the decision and reversed the ruling of the RTC.

Petitioner thus filed the present petition.

ISSUE:

Whether the loss of the cargo was due to the occurrence of a natural disaster and held
the respondents liable

RULING:

The court held that the presence of strong winds and enormous waves at Cortes,
Surigao del Sur on March 3, 1987 was shown to be the proximate and only cause of the sinking
of the M/V Peatheray Patrick-G and the loss of the cargo belonging to San Miguel Corporation,
private respondents cannot be held liable for the said loss.
G.R. No. 119197 May 16, 1997

TABACALERA INSURANCE CO., PRUDENTIAL GUARANTEE & ASSURANCE, INC., and

NEW ZEALAND INSURANCE CO., LTD., petitioners,

vs.

NORTH FRONT SHIPPING SERVICES, INC., and COURT OF APPEALS, respondents.

FACTS:

The Republic Flour Mills Corporation in Manila consigned with North Front Shipping
Services, Inc and was insured by the petitioner. 20,234 sacks of corn grains valued at
P3,500,640.00 were then shipped on board North Front 777, a vessel owned by North Front
Shipping Services, Inc. The vessel was inspected prior to actual loading by representatives of
the shipper and was found fit to carry the merchandise. The cargo was covered with tarpaulins
and wooden boards. The hatches were sealed and could only be opened by representatives of
Republic Flour Mills Corporation.

The vessel left Cagayan de Oro City on 2 August 1990 and arrived Manila on 16 August
1990. Republic Flour Mills Corporation was advised of its arrival but it did not immediately
commence the unloading operations. There were days when unloading had to be stopped due
to variable weather conditions and sometimes for no apparent reason at all. There were days
when unloading had to be stopped due to variable weather conditions and sometimes for no
apparent reason at all. When the cargo was eventually unloaded there was a shortage of
26.333 metric tons. The remaining merchandise was already moldy, rancid and deteriorating.
The unloading operations were completed on 5 September 1990 or twenty (20) days after the
arrival of the barge at the wharf of Republic Flour Mills Corporation in Pasig City.

After finding out the reason for damages, Republic Flour Mills Corporation rejected the
entire cargo and formally demanded from North Front Shipping Services, Inc., payment for the
damages suffered by it. The demands however were unheeded. The insurance companies were
perforce obliged to pay Republic Flour Mills Corporation.

As subrogee, petitioner lodged a complaint for damages against North Front Shipping
Services, Inc., claiming that the loss was exclusively attributable to the fault and negligence of
the carrier.

The trial court dismissed the complaint and ruled that the contract entered into between
North Front Shipping Services, Inc., and Republic Flour Mills Corporation was a charter-party
agreement.

Court of Appeals ruled that as a common carrier required to observe a higher degree of
diligence North Front 777 satisfactorily complied with all the requirements hence was issued
a Permit to Sail after proper inspection. Consequently, the complaint was dismissed and the
motion for reconsideration rejected.
ISSUE:

Whether or not North Front Shipping Services, Inc. is liable for the damages obtained by
Republic Flour Mills Corporation.

RULING:

The court held North Front Shipping Services, Inc liable and ordered them to to pay
petitioners Tabacalera Insurance Co., Prudential Guarantee & Assurance, Inc., and New
Zealand Insurance Co. Ltd., P1,313,660.00 which is 60% of the amount paid by the insurance
companies to Republic Flour Mills Corporation, plus interest at the rate of 12% per annum from
the time this judgment becomes final until full payment.

Also, for its contributory negligence, Republic Flour Mills Corporation should share at
least 40% of the loss.
G.R. No. 148496, March 19, 2002

Virgines Calvo doing business under the name and style Transorient Container Terminal
Services, Inc.

vs.

UCPB General Insurance Co., Inc. (formerly Allied Guarantee Ins. Co., Inc.)

FACTS:

Petitioner enetered into a contract ith San Miguel Corporation (SMC) for the transfer of
114 reels of semi-chemical fluting paper and 124 reels of kraft liner board from the Port Area in
Manila to SMC’s warehouse in Ermita, Manila. The shipment was insured with respondents.
Upon delivery, they found out that the some of the goods were damaged.

SMC collected payment from respondent UCPB under its insurance contract for the
aforementioned amount. In turn, respondent, as subrogee of SMC, brought suit against
petitioner in the Regional Trial Court, Branch 148, Makati City, which. RTC rendered judgment
finding petitioner liable to respondent for the damage to the shipment.

The decision was affirmed by the Court of Appeals on appeal.

ISSUE:

Whether or not the petitioner liable for the damage of the goods

RULING:

The court ruled that the petitioner is liable for the damages of goods because she failed
to prove that she exercised extraordinary diligence in the carriage of goods, the presumption of
negligence as provided under Art. 1735 applies.

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

ESTRELLITA M. BASCOS, petitioners,

vs.
COURT OF APPEALS and RODOLFO A. CIPRIANO, respondents.

Modesto S. Bascos for petitioner.

Pelaez, Adriano & Gregorio for private respondent.

FACTS:
 CIPTRADE, through the respondent, entered a hauling contract with Jibfair Shipping
Agency Corporation whereby the former bound itself to haul the latter's 2,000 m/tons of soya
bean meal from Magallanes Drive, Del Pan, Manila to the warehouse of Purefoods Corporation
in Calamba, Laguna.

To be able to accomplish the obligation, CIPTRADE, through Rodolfo, the petitioner to

transport and to deliver 400 sacks of soya bean meal worth P156,404.00 from the Manila Port
Area to Calamba, Laguna at the rate of P50.00 per metric ton. Petitioner failed to deliver the
said cargo. As a consequence of that failure, Cipriano paid Jibfair Shipping Agency the amount
of the lost goods in accordance with the contract.

The trial court granted the writ of preliminary attachment.

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

The trial court, ruled in favour of the plaintiff and against the defendant.

The "Urgent Motion To Dissolve/Lift preliminary Attachment" dated March 10, 1987 filed
by defendant is DENIED for being moot and academic.

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

ISSUES:

Whether or not the petitioner was a common carrier; and whether or not the hijacking
can be referred to a force majeure

RULING:

The court ruled that the petitioner is a common carrier in accordance with Article 1732 of
the Civil Code which defines a common carrier as "(a) person, corporation or firm, or association
engaged in the business of carrying or transporting passengers or goods or both, by land, water
or air, for compensation, offering their services to the public." The test to determine a common
carrier is "whether the given undertaking is a part of the business engaged in by the carrier
which he has held out to the general public as his occupation rather than the quantity or extent
of the business transacted."In this case, petitioner herself has made the admission that she was
in the trucking business, offering her trucks to those with cargo to move. Judicial admissions are
conclusive and no evidence is required to prove the same.

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

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

xxx xxx xxx

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

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

"Under Article 1745 (6) above, a common carrier is held responsible — and will not be allowed
to divest or to diminish such responsibility — even for acts of strangers like thieves or robbers
except where such thieves or robbers in fact acted with grave or irresistible threat, violence or
force. We believe and so hold that the limits of the duty of extraordinary diligence in the
vigilance over the goods carried are reached where the goods are lost as a result of a robbery
which is attended by "grave or irresistible threat, violence or force."
G.R. No. 131621 September 28, 1999

LOADSTAR SHIPPING CO., INC., petitioner,

vs.
COURT OF APPEALS and THE MANILA INSURANCE CO., INC., respondents

FACTS:

LOADSTAR received on board its M/V "Cherokee" (hereafter, the vessel) the following
goods for shipment: a) 705 bales of lawanit hardwood; b) 27 boxes and crates of tilewood
assemblies and the others ;and c) 49 bundles of mouldings R & W (3) Apitong Bolidenized.

The goods, amounting to P6,067,178, were insured for the same amount with MIC
against various risks including "TOTAL LOSS BY TOTAL OF THE LOSS THE VESSEL." The
vessel, in turn, was insured by Prudential Guarantee & Assurance, Inc. (hereafter PGAI) for P4
million.On its way to Manila from the port of Nasipit, Agusan del Norte, the vessel, along with its
cargo, sank off Limasawa Island. As a result of the total loss of its shipment, the consignee
made a claim with LOADSTAR which, however, ignored the same. As the insurer, MIC paid
P6,075,000 to the insured in full settlement of its claim, and the latter executed a subrogation
receipt therefor.

MIC filed a complaint against LOADSTAR and PGAI, alleging that the sinking of the
vessel was due to the fault and negligence of LOADSTAR and its employees.

LOADSTAR denied the liability for the loss of the shipper's goods and claimed that
sinking of its vessel was due to force majeure.

The court a quo rendered judgment in favor of MIC, prompting LOADSTAR to elevate

the matter to the court of Appeals, which, however, agreed with the trial court and affirmed its
decision in toto.

ISSUE:

Whether or not Loadstar is liable for damages

RULING:

The court held loadstar liable. LOADSTAR was at fault or negligent in not maintaining a
seaworthy vessel and in having allowed its vessel to sail despite knowledge of an approaching
typhoon. In any event, it did not sink because of any storm that may be deemed as force
majeure, inasmuch as the wind condition in the performance of its duties, LOADSTAR cannot
hide behind the "limited liability" doctrine to escape responsibility for the loss of the vessel and
its cargo.