Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-9840             April 22, 1957
LU DO & LU YM CORPORATION, petitioner-defendant,
vs.
I. V. BINAMIRA, respondent-plaintiff.
Ross, Selph, Carrascoso and Janda for petitioner.
I. V. Binamira in his own behalf.
BAUTISTA ANGELO, J.:
On April 4, 1954, plaintiff filed an action in the Court of First Instance of Cebu against defendant to recover the sum of
P324.63 as value of certain missing shipment, P150 as actual and compensatory damages, and P600 as moral and
pecuniary damages. After trial, the court rendered judgment ordering defendant to pay plaintiff the sum of P216.84,
with legal interest. On appeal, the Court of Appeals affirmed the judgment, hence the present petition for review.
On August 10, 1951, the Delta Photo Supply Company of New York shipped on board the M/S "FERNSIDE" at New
York, U.S.A., six cases of films and/or photographic supplies consigned to the order of respondent I. V. Binamira. For
this shipment, Bill of Lading No. 29 was issued. The ship arrived at the port of Cebu on September 23, 1951 and
discharged her cargo on September 23, and 24, 1951, including the shipment in question, placing it in the possession
and custody of the arrastre operator of said port, the Visayan Cebu Terminal Company, Inc.
Petitioner, as agent of the carrier, hired the Cebu Stevedoring Company, Inc. to unload its cargo. During the discharge,
good order cargo was separated from the bad order cargo on board the ship, and a separate list of bad order cargo
was prepared by Pascual Villamor, checker of the stevedoring company. All the cargo unloaded was received at the
pier by the Visayan Cebu Terminal Company Inc, arrastre operator of the port. This terminal company had also its own
checker, Romeo Quijano, who also recorded and noted down the good cargo from the bad one. The shipment in
question, was not included in the report of bad order cargo of both checkers, indicating that it was discharged from the,
ship in good order and condition.
On September 26, 1951, three days after the goods were unloaded from the ship, respondent took delivery of his six
cases of photographic supplies from the arrastre operator. He discovered that the cases showed signs of pilferage
and, consequently, he hired marine surveyors, R. J. del Pan & Company, Inc., to examine them. The surveyors
examined the cases and made a physical count of their contents in the presence of representatives of petitioner,
respondent and the stevedoring company. The surveyors examined the cases and made a physical count of their
contents in the presence of representatives of petitioner, respondent and the stevedoring company. The finding of the
surveyors showed that some films and photographic supplies were missing valued at P324.63.
It appears from the evidence that the six cases of films and photographic supplies were discharged from the ship at the
port of Cebu by the stevedoring company hired by petitioner as agent of the carrier. All the unloaded cargo, including
the shipment in question, was received by the Visayan Cebu Terminal Company Inc., the arrastre operator appointed
by the Bureau of Customs. It also appears that during the discharge, the cargo was checked both by the stevedoring
company hired by petitioner as well as by the arrastre operator of the port, and the shipment in question, when
discharged from the ship, was found to be in good order and condition. But after it was delivered to respondent three
days later, the same was examined by a marine surveyor who found that some films and supplies were missing valued
at P324.63.
The question now to be considered is: Is the carrier responsible for the loss considering that the same occurred after
the shipment was discharged from the ship and placed in the possession and custody of the customs authorities?
The Court of Appeals found for the affirmative, making on this point the following comment:
In this jurisdiction, a common carrier has the legal duty to deliver goods to a consignee in the same condition in
which it received them. Except where the loss, destruction or deterioration of the merchandise was due to any
of the cases enumerated in Article 1734 of the new Civil Code, a carrier is presumed to have been at fault and
to have acted negligently, unless it could prove that it observed extraordinary diligence in the care and handling
of the goods (Article 1735, supra). Such presumption and the liability of the carrier attach until the goods are
delivered actually or constructively, to the consignee, or to the person who has a right to receive them (Article
1736, supra), and we believe delivery to the customs authorities is not the delivery contemplated by Article
1736, supra, in connection with second paragraph of Article 1498, supra, because, in such a case, the goods
are then still in the hands of the Government and their owner could not exercise dominion whatever over them
until the duties are paid. In the case at bar, the presumption against the carrier, represented appellant as its
agent, has not been successfully rebutted.
It is now contended that the Court of Appeals erred in its finding not only because it made wrong interpretation of the
law on the matter, but also because it ignored the provisions of the bill of lading covering the shipment wherein it was
stipulated that the responsibility of the carrier is limited only to losses that may occur while the cargo is still under its
custody and control.
We believe this contention is well taken. It is true that, as a rule, a common carrier is responsible for the loss,
destruction or deterioration of the goods it assumes to carry from one place to another unless the same is due to any
to any of the causes mentioned in Article 1734 on the new Civil Code, and that, if the goods are lost, destroyed or
deteriorated, for causes other that those mentioned, the common carrier is presumed to have been at fault or to have
acted negligently, unless it proves that it has observed extraordinary diligence in their care (Article 1735, Idem.), and
that this extraordinary liability lasts from the time the goods are placed in the possession of the carrier until they are
delivered to the consignee, or "to the person who has the right to receive them" (Article 1736,  Idem.), but these
provisions only apply when the loss, destruction or deterioration takes place while the goods are in the possession of
the carrier, and not after it has lost control of them. The reason is obvious. While the goods are in its possession, it is
but fair that it exercise extraordinary diligence in protecting them from damage, and if loss occurs, the law presumes
that it was due to its fault or negligence. This is necessary to protect the interest the interest of the owner who is at its
mercy. The situation changes after the goods are delivered to the consignee.
While we agree with the Court of Appeals that while delivery of the cargo to the consignee, or to the person who has a
right to receive them", contemplated in Article 1736, because in such case the goods are still in the hands of the
Government and the owner cannot exercise dominion over them, we believe however that the parties may agree to
limit the liability of the carrier considering that the goods have still to through the inspection of the customs authorities
before they are actually turned over to the consignee. This is a situation where we may say that the carrier losses
control of the goods because of a custom regulation and it is unfair that it be made responsible for what may happen
during the interregnum. And this is precisely what was done by the parties herein. In the bill of lading that was issued
covering the shipment in question, both the carrier and the consignee have stipulated to limit the responsibility of the
carrier for the loss or damage that may because to the goods before they are actually delivered by insert in therein the
following provisions:
1. . . . The Carrier shall not be liable in any capacity whatsoever for any delay, nondelivery or misdelivery, or
loss of or damage to the goods occurring while the goods are not in the actual custody of the Carrier. . . .
(Emphasis ours.)
(Paragraph 1, Exhibit "1")
2. . . . The responsibility of the Carrier in any capacity shall altogether cease and the goods shall be considered
to be delivered and at their own risk and expense in every respect when taken into the custody of customs or
other authorities. The Carrier shall not be required to give any notification of disposition of the goods. . . .
(Emphasis ours.)
(Paragraph 12, Exhibit "1")
3. Any provisions herein to the contrary notwithstanding, goods may be . . . by Carrier at ship's tackle . . . and
delivery beyond ship's tackle shall been tirely at the option of the Carrier and solely at the expense of the
shipper or consignee.
(Paragraph 22, Exhibit "1")
It therefore appears clear that the carrier does not assume liability for any loss or damage to the goods once they have
been "taken into the custody of customs or other authorities", or when they have been delivered at ship's tackle. These
stipulations are clear. They have been adopted precisely to mitigate the responsibility of the carrier considering the
present law on the matter, and we find nothing therein that is contrary to morals or public policy that may justify their
nullification. We are therefore persuaded to conclude that the carrier is not responsible for the loss in question, it
appearing that the same happened after the shipment had been delivered to the customs authorities.
Wherefore, the decision appealed from is reversed, without pronouncement as to costs.
Bengzon, Padilla, Montemayor, Reyes, A., Labrador, Concepcion, Reyes, J.B.L. Endencia and Felix, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
 
G.R. No. 131166 September 30, 1999
CALTEX (PHILIPPINES), INC., petitioner,
vs.
SULPICIO LINES, INC., GO SIOC SO, ENRIQUE S. GO, EUSEBIO S. GO, CARLOS S. GO, VICTORIANO S. GO,
DOMINADOR S. GO, RICARDO S. GO, EDWARD S. GO, ARTURO S. GO, EDGAR S. GO, EDMUND S. GO,
FRANCISCO SORIANO, VECTOR SHIPPING CORPORATION, TERESITA G. CAÑEZAL, AND SOTERA E.
CAÑEZAL, respondents.
 
PARDO, J.:
Is the charterer of a sea vessel liable for damages resulting from a collision between the chartered vessel and a
passenger ship?
When MT Vector left the port of Limay, Bataan, on December 19, 1987 carrying petroleum products of Caltex
(Philippines), Inc. (hereinafter Caltex) no one could have guessed that it would collide with MV Doña Paz, killing almost
all the passengers and crew members of both ships, and thus resulting in one of the country's worst maritime
disasters.
The petition before us seeks to reverse the Court of Appeals decision 1 holding petitioner jointly liable with the operator of
MT Vector for damages when the latter collided with Sulpicio Lines, Inc.'s passenger ship MV Doña Paz.
The facts are as follows:
On December 19, 1987, motor tanker MT Vector left Limay, Bataan, at about 8:00 p.m., enroute to Masbate, loaded
with 8,800 barrels of petroleum products shipped by petitioner Caltex. 2 MT Vector is a tramping motor tanker owned and
operated by Vector Shipping Corporation, engaged in the business of transporting fuel products such as gasoline, kerosene,
diesel and crude oil. During that particular voyage, the MT Vector carried on board gasoline and other oil products owned by
Caltex by virtue of a charter contract between them. 3

On December 20, 1987, at about 6:30 a.m., the passenger ship MV Doña Paz left the port of Tacloban headed for Manila
with a complement of 59 crew members including the master and his officers, and passengers totaling 1,493 as indicated in
the Coast Guard Clearance. 4 The MV Doña Paz is a passenger and cargo vessel owned and operated by Sulpicio Lines,
Inc. plying the route of Manila/ Tacloban/ Catbalogan/ Manila/ Catbalogan/ Tacloban/ Manila, making trips twice a week.
At about 10:30 p.m. of December 20, 1987, the two vessels collided in the open sea within the vicinity of Dumali Point
between Marinduque and Oriental Mindoro. All the crewmembers of MV Doña Paz died, while the two survivors from
MT Vector claimed that they were sleeping at the time of the incident. 1âwphi1.nêt

The MV Doña Paz carried an estimated 4,000 passengers; many indeed, were not in the passenger manifest. Only 24
survived the tragedy after having been rescued from the burning waters by vessels that responded to distress
calls. 5 Among those who perished were public school teacher Sebastian Cañezal (47 years old) and his daughter Corazon
Cañezal (11 years old), both unmanifested passengers but proved to be on board the vessel.
On March 22, 1988, the board of marine inquiry in BMI Case No. 659-87 after investigation found that the MT Vector,
its registered operator Francisco Soriano, and its owner and actual operator Vector Shipping Corporation, were at fault
and responsible for its collision with MV Doña Paz. 6
On February 13, 1989, Teresita Cañezal and Sotera E. Cañezal, Sebastian Cañezal's wife and mother respectively, filed with
the Regional Trial Court, Branch 8, Manila, a complaint for "Damages Arising from Breach of Contract of Carriage" against
Sulpicio Lines, Inc. (hereafter Sulpicio). Sulpicio, in turn, filed a third party complaint against Francisco Soriano, Vector
Shipping Corporation and Caltex (Philippines), Inc. Sulpicio alleged that Caltex chartered MT Vector with gross and evident
bad faith knowing fully well that MT Vector was improperly manned, ill-equipped, unseaworthy and a hazard to safe
navigation; as a result, it rammed against MV Doña Paz in the open sea setting MT Vector's highly flammable cargo ablaze.
On September 15, 1992, the trial court rendered decision dismissing, the third party complaint against petitioner. The
dispositive portion reads:
WHEREFORE, judgment is hereby rendered in favor of plaintiffs and against defendant-3rd party
plaintiff Sulpicio Lines, Inc., to wit:
1. For the death of Sebastian E. Cañezal and his 11-year old daughter Corazon G. Cañezal, including
loss of future earnings of said Sebastian, moral and exemplary damages, attorney's fees, in the total
amount of P 1,241,287.44 and finally;
2. The statutory costs of the proceedings.
Likewise, the 3rd party complaint is hereby DISMISSED for want of substantiation and with costs
against the 3rd party plaintiff.
IT IS SO ORDERED.
DONE IN MANILA, this 15th day of September 1992.
ARSENIO M. GONONG
Judge 7

On appeal to the Court of Appeals interposed by Sulpicio Lines, Inc., on April 15, 1997, the Court of Appeal modified the trial
court's ruling and included petitioner Caltex as one of the those liable for damages. Thus:
WHEREFORE, in view of all the foregoing, the judgment rendered by the Regional Trial Court is hereby
MODIFIED as follows:
WHEREFORE, defendant Sulpicio Lines, Inc., is ordered to pay the heirs of Sebastian E. Cañezal and
Corazon Cañezal:
 1. Compensatory damages for the death of Sebastian E. Cañezal and Corazon Cañezal the total
amount of ONE HUNDRED THOUSAND PESOS (P100,000);
2. Compensatory damages representing the unearned income of Sebastian E. Cañezal, in the total
amount of THREE HUNDRED SIX THOUSAND FOUR HUNDRED EIGHTY (P306,480.00) PESOS;
3. Moral damages in the amount of THREE HUNDRED THOUSAND PESOS (P300,000.00);
4. Attorney's fees in the concept of actual damages in the amount of FIFTY THOUSAND PESOS
(P50,000.00);
5. Costs of the suit.
Third party defendants Vector Shipping Co. and Caltex (Phils.), Inc. are held equally liable under the
third party complaint to reimburse/indemnify defendant Sulpicio Lines, Inc. of the above-mentioned
damages, attorney's fees and costs which the latter is adjudged to pay plaintiffs, the same to be shared
half by Vector Shipping Co. (being the vessel at fault for the collision) and the other half by Caltex
(Phils.), Inc. (being the charterer that negligently caused the shipping of combustible cargo aboard an
unseaworthy vessel).
SO ORDERED.
JORGE S. IMPERIAL
Associate Justice
WE CONCUR:
RAMON U. MABUTAS, JR. PORTIA ALIÑO HERMACHUELOS
Associate Justice Associate Justice. 8

Hence, this petition.

We find the petition meritorious.
First: The charterer has no liability for damages under Philippine Maritime laws.
The respective rights and duties of a shipper and the carrier depends not on whether the carrier is public or private, but
on whether the contract of carriage is a bill of lading or equivalent shipping documents on the one hand, or a charter
party or similar contract on the other. 9
Petitioner and Vector entered into a contract of affreightment, also known as a voyage charter. 10
A charter party is 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 is one by which the owner of a ship or other vessel lets the whole or 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. 11
A contract of affreightment may be either time charter, wherein the leased 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 the vessel only, either for a determinate period of time or for a single or consecutive voyage, the ship owner to supply
the ship's store, pay for the wages of the master of the crew, and defray the expenses for the maintenance of the ship. 12
Under a demise or bareboat charter on the other hand, the charterer mans the vessel with his own people and becomes, in
effect, the owner for the voyage or service stipulated, subject to liability for damages caused by negligence.
If the charter is a contract of affreightment, which leaves the general owner in possession of the ship as owner for the
voyage, the rights and the responsibilities of ownership rest on the owner. The charterer is free from liability to third
persons in respect of the ship. 13
Second: MT Vector is a common carrier
Charter parties fall into three main categories: (1) Demise or bareboat, (2) time charter, (3) voyage charter. Does a
charter party agreement turn the common carrier into a private one? We need to answer this question in order to shed
light on the responsibilities of the parties.
In this case, the charter party agreement did not convert the common carrier into a private carrier. The parties entered
into a voyage charter, which retains the character of the vessel as a common carrier.
In Planters Products, Inc. vs. Court of Appeals, 14 we said:
It is therefore imperative that a public carrier shall remain as such, notwithstanding the charter of the
whole portion of a vessel of one or more persons, provided the charter is limited to the ship only, as in
the case of a time-charter or the 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 ship-owner 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.
Later, we ruled in Coastwise Lighterage Corporation vs. Court of Appeals: 15
Although a charter party may transform a common carrier into a private one, the same however is not
true in a contract of affreightment . . .
A common carrier is a person or corporation whose regular business is to carry passengers or property for all persons
who may choose to employ and to remunerate him. 16 MT Vector fits the definition of a common carrier under Article 1732
of the Civil Code. In Guzman vs. Court of Appeals, 17 we ruled:
The Civil Code defines "common carriers" in the following terms:
Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the business
of carrying or transporting passengers for passengers or goods or both, by land, water, or air for
compensation, offering their services to the public.
The above article makes no distinction between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only as an ancillary activity (in local idiom,
as "a sideline"). Article 1732 also carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled basis and one offering such
services on an occasional, episodic or unscheduled basis. Neither does Article 1732 distinguish
between a carrier offering its services to the "general public," i.e., the general community or population,
 and one who offers services or solicits business only from a narrow segment of the general population.
We think that Article 1733 deliberately refrained from making such distinctions.
It appears to the Court that private respondent is properly characterized as a common carrier even
though he merely "back-hauled" goods for other merchants from Manila to Pangasinan, although such
backhauling was done on a periodic, occasional rather than regular or scheduled manner, and even
though 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 the fee frequently fell
below commercial freight rates is not relevant here.
Under the Carriage of Goods by Sea Act :
Sec. 3. (1) The carrier shall be bound before and at the beginning of the voyage to exercise due
diligence to —
(a) Make the ship seaworthy;
(b) Properly man, equip, and supply the ship;
x x x           x x x          x x x
Thus, the carriers are deemed to warrant impliedly the seaworthiness of the ship. For a vessel to be seaworthy, it must
be adequately equipped for the voyage and manned with a sufficient number of competent officers and crew. The
failure of a common carrier to maintain in seaworthy condition the vessel involved in its contract of carriage is a clear
breach of its duty prescribed in Article 1755 of the Civil Code. 18
The provisions owed their conception to the nature of the business of common carriers. This business is impressed with a
special public duty. The public must of necessity rely on the care and skill of common carriers in the vigilance over the goods
and safety of the passengers, especially because with the modern development of science and invention, transportation has
become more rapid, more complicated and somehow more hazardous. 19 For these reasons, a passenger or a shipper of
goods is under no obligation to conduct an inspection of the ship and its crew, the carrier being obliged by law to impliedly
warrant its seaworthiness.
This aside, we now rule on whether Caltex is liable for damages under the Civil Code.
Third: Is Caltex liable for damages under the Civil Code?
We rule that it is not.
Sulpicio argues that Caltex negligently shipped its highly combustible fuel cargo aboard an unseaworthy vessel such
as the MT Vector when Caltex:
1. Did not take steps to have M/T Vector's certificate of inspection and coastwise license renewed;
2. Proceeded to ship its cargo despite defects found by Mr. Carlos Tan of Bataan Refinery Corporation;
3. Witnessed M/T Vector submitting fake documents and certificates to the Philippine Coast Guard.
Sulpicio further argues that Caltex chose MT Vector transport its cargo despite these deficiencies.
1. The master of M/T Vector did not posses the required Chief Mate license to command and navigate the vessel;
2. The second mate, Ronaldo Tarife, had the license of a Minor Patron, authorized to navigate only in bays and rivers
when the subject collision occurred in the open sea;
3. The Chief Engineer, Filoteo Aguas, had no license to operate the engine of the vessel;
4. The vessel did not have a Third Mate, a radio operator and lookout; and
5. The vessel had a defective main engine. 20
As basis for the liability of Caltex, the Court of Appeals relied on Articles 20 and 2176 of the Civil Code, which provide:
Art. 20. — Every person who contrary to law, willfully or negligently causes damage to another, shall
indemnify the latter for the same.
Art. 2176. — Whoever by act or omission causes damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.
And what is negligence?
The Civil Code provides:
Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is
required by the nature of the obligation and corresponds with the circumstances of the persons, of the
time and of the place. When negligence shows bad faith, the provisions of Article 1171 and 2201
paragraph 2, shall apply.
If the law does not state the diligence which is to be observed in the performance, that which is
expected of a good father of a family shall be required.
In Southeastern College, Inc. vs. Court of Appeals, 21 we said that negligence, as commonly understood, is conduct which
naturally or reasonably creates undue risk or harm to others. It may be the failure to observe that degree of care, precaution,
and vigilance, which the circumstances justly demand, or the omission to do something which ordinarily regulate the conduct
of human affairs, would do.
The charterer of a vessel has no obligation before transporting its cargo to ensure that the vessel it chartered complied
with all legal requirements. The duty rests upon the common carrier simply for being engaged in "public service."  22 The
Civil Code demands diligence which is required by the nature of the obligation and that which corresponds with the
circumstances of the persons, the time and the place. Hence, considering the nature of the obligation between Caltex and
MT Vector, liability as found by the Court of Appeals is without basis.
1âwphi1.nêt

The relationship between the parties in this case is governed by special laws. Because of the implied warranty of
seaworthiness, 23 shippers of goods, when transacting with common carriers, are not expected to inquire into the vessel's
seaworthiness, genuineness of its licenses and compliance with all maritime laws. To demand more from shippers and hold
them liable in case of failure exhibits nothing but the futility of our maritime laws insofar as the protection of the public in
general is concerned. By the same token, we cannot expect passengers to inquire every time they board a common carrier,
whether the carrier possesses the necessary papers or that all the carrier's employees are qualified. Such a practice would
be an absurdity in a business where time is always of the essence. Considering the nature of transportation business,
passengers and shippers alike customarily presume that common carriers possess all the legal requisites in its operation.
Thus, the nature of the obligation of Caltex demands ordinary diligence like any other shipper in shipping his cargoes.
A cursory reading of the records convinces us that Caltex had reasons to believe that MT Vector could legally transport
cargo that time of the year.
Atty. Poblador: Mr. Witness, I direct your attention to this portion here containing the entries here under
"VESSEL'S DOCUMENTS
1. Certificate of Inspection No. 1290-85, issued December 21, 1986, and Expires
December 7, 1987", Mr. Witness, what steps did you take regarding the impending
expiry of the C.I. or the Certificate of Inspection No. 1290-85 during the hiring of MT
Vector?
Apolinario Ng: At the time when I extended the Contract, I did nothing because the
tanker has a valid C.I. which will expire on December 7, 1987 but on the last week of
November, I called the attention of Mr. Abalos to ensure that the C.I. be renewed and
Mr. Abalos, in turn, assured me they will renew the same.
Q: What happened after that?
A: On the first week of December, I again made a follow-up from Mr. Abalos, and said
they were going to send me a copy as soon as possible, sir.  24

x x x           x x x          x x x
Q: What did you do with the C.I.?
A: We did not insist on getting a copy of the C.I. from Mr. Abalos on the first place,
because of our long business relation, we trust Mr. Abalos and the fact that the vessel
was able to sail indicates that the documents are in order. . . . 25
On cross examination —
Atty. Sarenas: This being the case, and this being an admission by you, this Certificate
of Inspection has expired on December 7. Did it occur to you not to let the vessel sail on
that day because of the very approaching date of expiration?
Apolinar Ng: No sir, because as I said before, the operation Manager assured us that
they were able to secure a renewal of the Certificate of Inspection and that they will in
time submit us a copy. 26
Finally, on Mr. Ng's redirect examination:
Atty. Poblador: Mr. Witness, were you aware of the pending expiry of the Certificate of
Inspection in the coastwise license on December 7, 1987. What was your assurance for
the record that this document was renewed by the MT Vector?
Atty. Sarenas: . . .
Atty. Poblador: The certificate of Inspection?
A: As I said, firstly, we trusted Mr. Abalos as he is a long time business partner;
secondly, those three years; they were allowed to sail by the Coast Guard. That are
some that make me believe that they in fact were able to secure the necessary renewal.
Q: If the Coast Guard clears a vessel to sail, what would that mean?
Atty. Sarenas: Objection.
Court: He already answered that in the cross examination to the effect that if it was
allowed, referring to MV Vector, to sail, where it is loaded and that it was scheduled for
a destination by the Coast Guard, it means that it has Certificate of Inspection extended
as assured to this witness by Restituto Abalos. That in no case MV Vector will be
allowed to sail if the Certificate of inspection is, indeed, not to be extended. That was
his repeated explanation to the cross-examination. So, there is no need to clarify the
same in the re-direct examination.  27
Caltex and Vector Shipping Corporation had been doing business since 1985, or for about two years before the tragic
incident occurred in 1987. Past services rendered showed no reason for Caltex to observe a higher degree of diligence.
Clearly, as a mere voyage charterer, Caltex had the right to presume that the ship was seaworthy as even the
Philippine Coast Guard itself was convinced of its seaworthiness. All things considered, we find no legal basis to hold
petitioner liable for damages.
As Vector Shipping Corporation did not appeal from the Court of Appeals' decision, we limit our ruling to the liability of
Caltex alone. However, we maintain the Court of Appeals' ruling insofar as Vector is concerned.
WHEREFORE, the Court hereby GRANTS the petition and SETS ASIDE the decision of the Court of Appeals in CA-
G.R. CV No. 39626, promulgated on April 15, 1997, insofar as it held Caltex liable under the third party complaint to
reimburse/indemnify defendant Sulpicio Lines, Inc. the damages the latter is adjudged to pay plaintiffs-appellees. The
Court AFFIRMS the decision of the Court of Appeals insofar as it orders Sulpicio Lines, Inc. to pay the heirs of
Sebastian E. Cañezal and Corazon Cañezal damages as set forth therein. Third-party defendant-appellee Vector
Shipping Corporation and Francisco Soriano are held liable to reimburse/indemnify defendant Sulpicio Lines, Inc.
whatever damages, attorneys' fees and costs the latter is adjudged to pay plaintiffs-appellees in the case. 1âwphi1.nêt

No costs in this instance.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-9907             June 30, 1958
LOURDES J. LARA, ET AL., plaintiffs-appellants,
vs.
BRIGIDO R. VALENCIA, defendant-appellant.
Castillo, Cervantes, Occeña, Lozano, Montana, Cunanan, Sison and Castillo and Eligio G. Lagman for defendant-
appellant.
Donato C. Endriga and Emigdio Dakanay for plaintiffs-appellants.
BAUTISTA ANGELO, J.:
This is an action for damages brought by plaintiffs against defendant in the Court of First Instance of Davao for the
death of one Demetrio Lara, Sr. allegedly caused by the negligent act of defendant. Defendant denied the charge of
negligence and set up certain affirmative defenses and a counterclaim.
The court after hearing rendered judgment ordering defendant to pay the plaintiffs the following amount: (a) P10,000
as moral damages; (b) P3,000 as exemplary damages; and (c) P1,000 as attorney's fees, in addition to the costs of
action. Both parties appealed to this Court because the damages claimed in the complaint exceed the sum of P50,000.
In their appeal, plaintiffs claim that the court a quo erred in disregarding their claim of P41,400 as actual or
compensatory damages and in awarding as attorneys' fees only the sum of P1,000 instead of P3,000 as agreed upon
between plaintiffs and their counsel. Defendant, on the other hand, disputes the finding of the court a quo that the oath
of Demetrio Lara, Sr. was due to the negligence of defendant and the portion of the judgment which orders dependant
to pay to plaintiffs moral and exemplary damages as well as attorneys' fees, said defendant contending that the court
should have declared that the death of Lara was due to unavoidable accident.
The deceased was an inspector of the Bureau of Forestry stationed in Davao with an annual salary of P1,800. The
defendant is engaged in the business of exporting logs from his lumber concession in Cotabato. Lara went to said
concession upon instructions of his chief to classify the logs of defendant which were about to be loaded on a ship
anchored in the port of Parang. The work Lara of lasted for six days during which he contracted malaria fever. In the
morning of January 9, 1954, Lara who then in a hurry to return to Davao asked defendant if he could take him in his
pick-up as there was then no other means of transportation, to which defendant agreed, and in that same morning the
pick-up left Parang bound for Davao taking along six passengers, including Lara.
The pick-up has a front seat where the driver and two passengers can be accommodated and the back has a steel
flooring enclosed with a steel walling of 16 to 17 inches tall on the sides and with a 19 inches tall walling at the back.
Before leaving Parang, the sitting arrangement was as follows: defendant was at the wheel and seated with him in the
front seat were Mrs. Valencia and Nicanor Quinain; on the back of the pick-up were two improvised benches placed on
each side, and seated on the right bench were Ricardo Alojipan and Antonio Lagahit, and on the left one Bernardo and
Pastor Geronimo. A person by the name of Leoning was seated on a box located on the left side while in the middle
Lara sat on a bag. Before leaving Parang, defendant invited Lara to sit with him on the front seat but Lara declined. It
was their understanding that upon reaching barrio Samoay, Cotabato, the passengers were to alight and take a bus
bound for Davao, but when they arrived at that place, only Bernardo alighted and the other passengers requested
defendant to allow them to ride with him up to Davao because there was then no available bus that they could take in
going to that place. Defendant again accommodated the passengers.
When they continued their trip, the sitting arrangement of the passengers remained the same, Lara being seated on a
bag in the middle with his arms on a suitcase and his head cove red by a jacket. Upon reaching Km. 96, barrio
Catidtuan, Lara accidentally fell from the pick-up and as a result he suffered serious injuries. Valencia stopped the
pick-up to see what happened to Lara. He sought the help of the residents of that place and applied water to Lara but
to no avail. They brought Lara to the nearest place where they could find a doctor and not having found any they took
him to St. Joseph's Clinic of Kidapawan. But when Lara arrived he was already dead. From there they proceeded to
Davao City and immediately notified the local authorities. An investigation was made regarding the circumstances
surrounding the death of Lara but no criminal action was taken against defendant.
It should be noted that the deceased went to the lumber concession of defendant in Parang, Cotabato upon
instructions of his chief in order to classify the logs of defendant which were then ready to be exported and to be
loaded on a ship anchored in the port of Parang. It took Lara six days to do his work during which he contracted
malaria fever and for that reason he evinced a desire to return immediately to Davao. At that time, there was no
available bus that could take him back to Davao and so he requested the defendant if he could take him in his own
pick-up. Defendant agreed and, together with Lara, other passengers tagged along, most of them were employees of
the Government. Defendant merely accommodated them and did not charge them any fee for the service. It was also
their understanding that upon reaching barrio Samoay, the passengers would alight and transfer to a bus that regularly
makes the trip to Davao but unfortunately there was none available at the time and so the same passengers, including
Lara, again requested the defendant to drive them to Davao. Defendant again accommodated them and upon reaching
Km. 96, Lara accidentally fell suffering fatal injuries.
It therefore appears that the deceased, as well his companions who rode in the pick-up of defendant, were merely
accommodation passengers who paid nothing for the service and so they can be considered as invited guests within
the meaning of the law. As accommodation passengers or invited guests, defendant as owner and driver of the pick-up
owes to them merely the duty to exercise reasonable care so that they may be transported safely to their destination.
Thus, "The rule is established by the weight of authority that the owner or operator of an automobile owes the duty to
an invited guest to exercise reasonable care in its operation, and not unreasonably to expose him to danger and injury
by increasing the hazard of travel. This rule, as frequently stated by the courts, is that an owner of an automobile owes
a guest the duty to exercise ordinary or reasonable care to avoid injuring him. Since one riding in an automobile is no
less a guest because he asked for the privilege of doing so, the same obligation of care is imposed upon the driver as
in the case of one expressly invited to ride" (5 Am. Jur., 626-627). Defendant, therefore, is only required to observe
ordinary care, and is not in duty bound to exercise extraordinary diligence as required of a common carrier by our law
(Articles 1755 and 1756, new Civil Code).
The question that now arises is: Is there enough evidence to show that defendant failed to observe ordinary care or
diligence in transporting the deceased from Parang to Davao on the date in question?
The trial court answered the question in the affirmative but in so doing it took into account only the following facts:
No debe perderse de vista el hecho, que los negocios de exportacion de trozos del demandado tiene un
volumen de P1,200. Lara era empleado de la Oficina de Montes, asalariado por el gobierno, no pagado por el
demandado para classificar los trozos exportados; debido a los trabajos de classificacion que duro 6 dias, en
su ultimo dia Lara no durmio toda la noche, al dia siguiente, Lara fue atacado de malaria, tenia inflamada la
cara y cuerpo, sufria dolores de cabeza con erupciones en la cara y cuerpo; que en la manana, del dia 2 de
enero de 1954, fecha en que Lara salio de Davao para Parang, en aeroplano para clasificar los trozos del
demandado, el automobil de este condujo a aquel al aerodromo de Davao.
xxx     xxx     xxx
El viaje de Cotabato a Davao no es menos de 8 horas, su carretera esta en malas condiciones, desnivelada,
con piedras salientes y baches, que hacen del vehiculo no estable en su marcha. Lara estaba enfermo de
cierta gravedad, tenia el cuerpo y cara inflamados, atacado de malaria, con dolores de cabeza y con
erupciones en la cara y cuerpo.
A la vista de estos hechos, el demandado debia de saber que era sumamente peligroso llevar 5 pasajeros en
la parte trasera del pick-up; particularmente, para la salud de Lara; el permitirlo, el demandado no ha tomado
las precausiones, para evitar un posible accidente fatal. La negative de Lara de ocupar el asiento delantero del
pick-up no constituye a juicio del Juzgado una defensa, pues el demendado conociendo el estado delicado de
salud de Lara, no debio de haber permitido que aquel regrese a Davao en su pick-up; si querria prestar a
aquel un favor, debio de haver provisto a Lara de un automobil para su regrese a Davao, ya que el
demendado es un millionario; si no podia prestar a aquel este favor, debio de haver dejado a Lara en Samuay
para coger aquel un camion de pasajero de Cotabato a Davao.
Even if we admit as true the facts found by the trial court, still we find that the same are not sufficient to show that
defendant has failed to take the precaution necessary to conduct his passengers safely to their place of destination for
there is nothing there to indicate that defendant has acted with negligence or without taking the precaution that an
ordinary prudent man would have taken under similar circumstances. It should be noted that Lara went to the lumber
concession of defendant in answer to a call of duty which he was bound to perform because of the requirement of his
office and he contracted the malaria fever in the course of the performance of that duty. It should also be noted that
defendant was not in duty bound to take the deceased in his own pick-up to Davao because from Parang to Cotabato
there was a line of transportation that regularly makes trips for the public, and if defendant agreed to take the
deceased in his own car, it was only to accommodate him considering his feverish condition and his request that he be
so accommodated. It should also be noted that the passengers who rode in the pick-up of defendant took their
respective seats therein at their own choice and not upon indication of defendant with the particularity  that defendant
invited the deceased to sit with him in the front seat but which invitation the deceased declined . The reason for this can
only be attributed to his desire to be at the back so that he could sit on a bag and travel in a reclining position because
such was more convenient for him due to his feverish condition. All the circumstances therefore clearly indicate that
defendant had done what a reasonable prudent man would have done under the circumstances.
There is every reason to believe that the unfortunate happening was only due to an unforeseen accident accused by
the fact that at the time the deceased was half asleep and must have fallen from the pick-up when it ran into some
stones causing it to jerk considering that the road was then bumpy, rough and full of stones.
The finding of the trial court that the pick-up was running at more than 40 kilometers per hour is not supported by the
evidence. This is a mere surmise made by the trial court considering the time the pick-up left barrio Samoay and the
time the accident occured in relation to the distance covered by the pick-up. And even if this is correct, still we say that
such speed is not unreasonable considering that they were traveling on a national road and the traffic then was not
heavy. We may rather attribute the incident to lack of care on the part of the deceased considering that the pick-up was
open and he was then in a crouching position. Indeed, the law provides that "A passenger must observe the diligence
of a good father of a family to avoid injury to himself" (Article 1761, new Civil Code), which means that if the injury to
the passenger has been proximately caused by his own negligence, the carrier cannot be held liable.
All things considered, we are persuaded to conclude that the accident occurred not due to the negligence of defendant
but to circumstances beyond his control and so he should be exempt from liability.
Wherefore, the decision appealed from is reversed, without pronouncement as to costs.
 Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
 
G.R. No. 104685 March 14, 1996
SABENA BELGIAN WORLD AIRLINES, petitioner,
vs.
HON. COURT OF APPEALS and MA. PAULA SAN AGUSTIN, respondents.
 
VITUG, J.:p
The appeal before the Court involves the issue of an airline's liability for lost luggage. The petition for review assails the decision of the Court of Appeals, 1 dated 27
February 1992, affirming an award of damages made by the trial court in a complaint filed by private respondent against petitioner.
The factual background of the case, narrated by the trial court and reproduced at length by the appellate court, is
hereunder quoted:
On August 21, 1987, plaintiff was a passenger on board Flight SN 284 of defendant airline originating
from Casablanca to Brussels, Belgium on her way back to Manila. Plaintiff checked in her luggage
which contained her valuables, namely: jewelries valued at $2,350.00; clothes $1,500.00 shoes/bag
$150; accessories $75; luggage itself $10.00; or a total of $4,265.00, for which she was issued Tag No.
71423. She stayed overnight in Brussels and her luggage was left on board Flight SN 284.
Plaintiff arrived at Manila International Airport on September 2, 1987 and immediately submitted her
Tag No. 71423 to facilitate the release of her luggage but the luggage was missing. She was advised to
accomplish and submit a property Irregularity Report which she submitted and filed on the same day.
She followed up her claim on September 14, 1987 but the luggage remained to be missing.
On September 15, 1987, she filed her formal complaint with the office of Ferge Massed, defendant's
Local Manager, demanding immediate attention (Exh. "A").
On September 30, 1987, on the occasion of plaintiffs following up of her luggage claim, she was
furnished copies of defendant's telexes with an information that the Burssel's Office of defendant found
the luggage and that they have broken the locks for identification (Exhibit "B"). Plaintiff was assured by
the defendant that it has notified its Manila Office that the luggage will be shipped to Manila on October
27, 1987. But unfortunately plaintiff was informed that the luggage was lost for the second time
(Exhibits "C" and "C-1").
At the time of the filing of the complaint, the luggage with its content has not been found.
Plaintiff demanded from the defendant the money value of the luggage and its contents amounting to
$4,265.00 or its exchange value, but defendant refused to settle the claim.
Defendant asserts in its Answer and its evidence tend to show that while it admits that the plaintiff was
a passenger on board Flight No. SN 284 with a piece of checked in luggage bearing Tag No. 71423,
the loss of the luggage was due to plaintiff's sole if not contributory negligence; that she did not declare
the valuable items in her checked in luggage at the flight counter when she checked in for her flight
from Casablanca to Brussels so that either the representative of the defendant at the counter would
have advised her to secure an insurance on the alleged valuable items and required her to pay
additional charges, or would have refused acceptance of her baggage as required by the generally
accepted practices of international carriers; that Section 9(a), Article IX of General Conditions of
carriage requiring passengers to collect their checked baggage at the place of stop over, plaintiff
neglected to claim her baggage at the Brussels Airport; that plaintiff should have retrieved her
undeclared valuables from her baggage at the Brussels Airport since her flight from Brussels to Manila
will still have to visit for confirmation inasmuch as only her flight from Casablanca to Brussels was
confirmed; that defendant incorporated in all Sabena Plane Tickets, including Sabena Ticket No.
082422-72502241 issued to plaintiff in Manila on August 21, 1987, a warning that "Items of value
should be carried on your person" and that some carriers assume no liability for fragile, valuable or
perishable articles and that further information may be obtained from the carrier for guidance;' that
granting without conceding that defendant is liable, its liability is limited only to US $20.00 per kilo due
to plaintiffs failure to declare a higher value on the contents of her checked in luggage and pay
additional charges thereon. 2

The trial court rendered judgment ordering petitioner Sabena Belgian World Airlines to pay private respondent Ma.
Paula San Agustin —
(a) . . . US $4,265.00 or its legal exchange in Philippine pesos;
(b) . . . P30,000.00 as moral damages;
(c) . . . P10,000.00 as exemplary damages;
(d) . . . P10,000.00 as attorney's fees; and
(e) (t)he costs of the suit. 3

Sabena appealed the decision of the Regional Trial Court to the Court of Appeals. The appellate court, in its decision
of 27 February 1992, affirmed in toto the trial court's judgment.
Petitioner airline company, in contending that the alleged negligence of private respondent should be considered the
primary cause for the loss of her luggage, avers that, despite her awareness that the flight ticket had been confirmed
only for Casablanca and Brussels, and that her flight from Brussels to Manila had yet to be confirmed, she did not
retrieve the luggage upon arrival in Brussels. Petitioner insists that private respondent, being a seasoned international
traveler, must have likewise been familiar with the standard provisions contained in her flight ticket that items of value
are required to be hand-carried by the passenger and that the liability of the airline for loss, delay or damage to
baggage would be limited, in any event, to only US $20.00 per kilo unless a higher value is declared in advance and
corresponding additional charges are paid thereon. At the Casablanca International Airport, private respondent, in
checking in her luggage, evidently did not declare its contents or value. Petitioner cites Section 5(c), Article IX, of the
General Conditions of Carriage, signed at Warsaw, Poland, on 02 October 1929, as amended by the Hague Protocol
of 1955, generally observed by International carriers, stating, among other things, that:
Passengers shall not include in his checked baggage, and the carrier may refuse to carry as checked
baggage, fragile or perishable articles, money, jewelry, precious metals, negotiable papers, securities
or other valuable.
4

Fault or negligence consists in the omission of that diligence which is demanded by the nature of an obligation and
corresponds with the circumstances of the person, of the time, and of the place. When the source of an obligation is
derived from a contract, the mere breach or non-fulfillment of the prestation gives rise to the presumption of fault on the
part of the obligor. This rule is no different in the case of common carriers in the carriage of goods which, indeed, are
bound to observe not just the due diligence of a good father of a family but that of "extraordinary" care in the vigilance
over the goods. The appellate court has aptly observed:
. . . Art. 1733 of the [Civil] Code provides that from the very nature of their business and by reasons of
public policy, common carriers are bound to observe extraordinary diligence in the vigilance over the
goods transported by them. This extraordinary responsibility, according to Art. 1736, lasts from the time
the goods are unconditionally placed in the possession of and received by the carrier until they are
delivered actually or constructively to the consignee or person who has the right to receive them. Art.
1737 states that the common carrier's duty to observe extraordinary diligence in the vigilance over the
goods transported by them remains in full force and effect even when they are temporarily unloaded or
stored in transit. And Art. 1735 establishes the presumption that 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 had observed extraordinary diligence as required in Article 1733.
The only exceptions to the foregoing extraordinary responsibility of the common carrier is when the
loss, destruction, or deterioration of the goods is due to any of the following causes:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.
Not one of the above excepted causes obtains in this case. 5

The above rules remain basically unchanged even when the contract is breached by tort  although noncontradictory
6

principles on quasi-delict may then be assimilated as also forming part of the governing law. Petitioner is not thus
entirely off track when it has likewise raised in its defense the tort doctrine of proximate cause. Unfortunately for
petitioner, however, the doctrine cannot, in this particular instance, support its case. Proximate cause is that which, in
natural and continuous sequence, unbroken by any efficient intervening cause, produces injury and without which the
result would not have occurred. The exemplification by the Court in one case  is simple and explicit; viz:
7

(T)he proximate legal cause is that acting first and producing the injury, either immediately or by setting
other events in motion, all constituting a natural and continuous chain of events, each having a close
causal connection with its immediate predecessor, the final event in the chain immediately affecting the
injury as a natural and probable result of the cause which first acted, under such circumstances that the
person responsible for the first event should, as an ordinarily prudent and intelligent person, have
reasonable ground to expect at the moment of his act or default that an injury to some person might
probably result therefrom.
It remained undisputed that private respondent's luggage was lost while it was in the custody of petitioner. It was
supposed to arrive on the same flight that private respondent took in returning to Manila on 02 September 1987. When
she discovered that the luggage was missing, she promptly accomplished and filed a Property Irregularity Report. She
followed up her claim on 14 September 1987, and filed, on the following day, a formal letter-complaint with petitioner.
She felt relieved when, on 23 October 1987, she was advised that her luggage had finally been found, with its contents
intact when examined, and that she could expect it to arrive on 27 October 1987. She then waited anxiously only to be
told later that her luggage had been lost for the second time. Thus, the appellate court, given all the facts before it,
sustained the trial court in finding petitioner ultimately guilty of "gross negligence" in the handling of private
respondent's luggage. The "loss of said baggage not only once but twice, said the appellate court, "underscores the
wanton negligence and lack of care" on the part of the carrier.
The above findings, which certainly cannot be said to be without basis, foreclose whatever rights petitioner might have
had to the possible limitation of liabilities enjoyed by international air carriers under the Warsaw Convention
(Convention for the Unification of Certain Rules Relating to International Carriage by Air, as amended by the Hague
Protocol of 1955, the Montreal Agreement of 1966, the Guatemala Protocol of 1971 and the Montreal Protocols of
1975). In Alitalia vs. Intermediate Appellate Court,  now Chief Justice Andres R. Narvasa, speaking for the Court, has
8

explained it well; he said:

The Warsaw Convention however denies to the carrier availment of the provisions which exclude or
limit his liability, if the damage is caused by his wilful misconduct or by such default on his part as, in
accordance with the law of the court seized of the case, is considered to be equivalent to wilful
misconduct, or if the damage is (similarly) caused . . . by any agent of the carrier acting within the
scope of his employment. The Hague Protocol amended the Warsaw Convention by removing the
provision that if the airline took all necessary steps to avoid the damage, it could exculpate itself
completely, and declaring the stated limits of liability not applicable if it is proved that the damage
resulted from an act or omission of the carrier, its servants or agents, done with intent to cause damage
or recklessly and with knowledge that damage would probably result. The same deletion was effected
 by the Montreal Agreement of 1966, with the result that a passenger could recover unlimited damages
upon proof of wilful misconduct.
The Convention does not thus operate as an exclusive enumeration of the instances of an airline's
liability, or as an absolute limit of the extent of that liability. Such a proposition is not borne out by the
language of the Convention, as this Court has now, and at an earlier time, pointed out. Moreover, slight
reflection readily leads to the conclusion that it should be deemed a limit of liability only in those cases
where the cause of the death or injury to person, or destruction, loss or damage to property or delay in
its transport is not attributable to or attended by any wilful misconduct, bad faith, recklessness, or
otherwise improper conduct on the part of any official or employee for which the carrier is responsible,
and there is otherwise no special or extraordinary form of resulting injury. The Convention's provisions,
in short, do not regulate or exclude liability for other breaches of contract by the carrier or misconduct of
its officers and employees, or for some particular or exceptional type of damage. Otherwise, an air
carrier would be exempt from any liability for damages in the event of its absolute refusal, in bad faith,
to comply with a contract of carriage, which is absurd. Nor may it for a moment be supposed that if a
member of the aircraft complement should inflict some physical injury on a passenger, or maliciously
destroy or damage the latter's property, the Convention might successfully be pleaded as the sole
gauge to determine the carrier's liability to the passenger. Neither may the Convention be invoked to
justify the disregard of some extraordinary sort of damage resulting to a passenger and preclude
recovery therefor beyond the limits set by said Convention. It is in this sense that the Convention has
been applied, or ignored, depending on the peculiar facts presented by each case.
The Court thus sees no error in the preponderant application to the instant case by the appellate court, as well as by
the trial court, of the usual rules on the extent of recoverable damages beyond the Warsaw limitations. Under domestic
law and jurisprudence (the Philippines being the country of destination), the attendance of gross negligence (given the
equivalent of fraud or bad faith) holds the common carrier liable for all damages which can be reasonably attributed,
although unforeseen, to the non-performance of the obligation,  including moral and exemplary damages. 
9 10

WHEREFORE, the decision appealed from is AFFIRMED. Costs against petitioner.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-48757 May 30, 1988
MAURO GANZON, petitioner,
vs.
COURT OF APPEALS and GELACIO E. TUMAMBING, respondents.
Antonio B. Abinoja for petitioner.
Quijano, Arroyo & Padilla Law Office for respondents.

SARMIENTO, J.:
The private respondent instituted in the Court of First Instance of Manila 1 an action against the petitioner for damages based on culpa contractual. The antecedent
facts, as found by the respondent Court, 2 are undisputed:
On November 28, 1956, Gelacio Tumambing contracted the services of Mauro B. Ganzon to haul 305 tons of scrap
iron from Mariveles, Bataan, to the port of Manila on board the lighter LCT "Batman" (Exhibit 1, Stipulation of Facts,
Amended Record on Appeal, p. 38). Pursuant to that agreement, Mauro B. Ganzon sent his lighter "Batman" to
Mariveles where it docked in three feet of water (t.s.n., September 28, 1972, p. 31). On December 1, 1956, Gelacio
Tumambing delivered the scrap iron to defendant Filomeno Niza, captain of the lighter, for loading which was actually
begun on the same date by the crew of the lighter under the captain's supervision. When about half of the scrap iron
was already loaded (t.s.n., December 14, 1972, p. 20), Mayor Jose Advincula of Mariveles, Bataan, arrived and
demanded P5,000.00 from Gelacio Tumambing. The latter resisted the shakedown and after a heated argument
between them, Mayor Jose Advincula drew his gun and fired at Gelacio Tumambing (t.s.n., March 19, 1971, p. 9;
September 28, 1972, pp. 6-7). The gunshot was not fatal but Tumambing had to be taken to a hospital in Balanga,
<äre||anº•1àw> 

Bataan, for treatment (t.s.n., March 19, 1971, p. 13; September 28, 1972, p. 15).
After sometime, the loading of the scrap iron was resumed. But on December 4, 1956, Acting Mayor Basilio Rub,
accompanied by three policemen, ordered captain Filomeno Niza and his crew to dump the scrap iron (t.s.n., June 16,
1972, pp. 8-9) where the lighter was docked (t.s.n., September 28, 1972, p. 31). The rest was brought to the
compound of NASSCO (Record on Appeal, pp. 20-22). Later on Acting Mayor Rub issued a receipt stating that the
Municipality of Mariveles had taken custody of the scrap iron (Stipulation of Facts, Record on Appeal, p. 40; t.s.n.,
September 28, 1972, p. 10.)
On the basis of the above findings, the respondent Court rendered a decision, the dispositive portion of which states:
WHEREFORE, the decision appealed from is hereby reversed and set aside and a new one entered
ordering defendant-appellee Mauro Ganzon to pay plaintiff-appellant Gelacio E. Tumambimg the sum
of P5,895.00 as actual damages, the sum of P5,000.00 as exemplary damages, and the amount of
P2,000.00 as attorney's fees. Costs against defendant-appellee Ganzon.  3

In this petition for review on certiorari, the alleged errors in the decision of the Court of Appeals are:
I
THE COURT OF APPEALS FINDING THE HEREIN PETITIONER GUILTY OF BREACH OF THE CONTRACT OF
TRANSPORTATION AND IN IMPOSING A LIABILITY AGAINST HIM COMMENCING FROM THE TIME THE SCRAP
WAS PLACED IN HIS CUSTODY AND CONTROL HAVE NO BASIS IN FACT AND IN LAW.
II
THE APPELLATE COURT ERRED IN CONDEMNING THE PETITIONER FOR THE ACTS OF HIS EMPLOYEES IN
DUMPING THE SCRAP INTO THE SEA DESPITE THAT IT WAS ORDERED BY THE LOCAL GOVERNMENT
OFFICIAL WITHOUT HIS PARTICIPATION.
III
THE APPELLATE COURT FAILED TO CONSIDER THAT THE LOSS OF THE SCRAP WAS DUE TO A
FORTUITOUS EVENT AND THE PETITIONER IS THEREFORE NOT LIABLE FOR LOSSES AS A CONSEQUENCE
THEREOF.  4

The petitioner, in his first assignment of error, insists that the scrap iron had not been unconditionally placed under his
custody and control to make him liable. However, he completely agrees with the respondent Court's finding that on
December 1, 1956, the private respondent delivered the scraps to Captain Filomeno Niza for loading in the lighter
"Batman," That the petitioner, thru his employees, actually received the scraps is freely admitted. Significantly, there is
not the slightest allegation or showing of any condition, qualification, or restriction accompanying the delivery by the
private respondent-shipper of the scraps, or the receipt of the same by the petitioner. On the contrary, soon after the
scraps were delivered to, and received by the petitioner-common carrier, loading was commenced.
By the said act of delivery, the scraps were unconditionally placed in the possession and control of the common
carrier, and upon their receipt by the carrier for transportation, the contract of carriage was deemed perfected.
Consequently, the petitioner-carrier's extraordinary responsibility for the loss, destruction or deterioration of the goods
commenced. Pursuant to Art. 1736, such extraordinary responsibility would cease only upon the delivery, actual or
constructive, by the carrier to the consignee, or to the person who has a right to receive them.    The fact that part of the 5

shipment had not been loaded on board the lighter did not impair the said contract of transportation as the goods
remained in the custody and control of the carrier, albeit still unloaded.
The petitioner has failed to show that the loss of the scraps was due to any of the following causes enumerated in
Article 1734 of the Civil Code, namely:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.
Hence, the petitioner is presumed to have been at fault or to have acted negligently.   By reason of this presumption,
6

the court is not even required to make an express finding of fault or negligence before it could hold the petitioner
answerable for the breach of the contract of carriage. Still, the petitioner could have been exempted from any liability
had he been able to prove that he observed extraordinary diligence in the vigilance over the goods in his custody,
according to all the circumstances of the case, or that the loss was due to an unforeseen event or to  force majeure. As
it was, there was hardly any attempt on the part of the petitioner to prove that he exercised such extraordinary
diligence.
It is in the second and third assignments of error where the petitioner maintains that he is exempt from any liability
because the loss of the scraps was due mainly to the intervention of the municipal officials of Mariveles which
constitutes a caso fortuito as defined in Article 1174 of the Civil Code. 
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We cannot sustain the theory of caso fortuito. In the courts below, the petitioner's defense was that the loss of the
scraps was due to an "order or act of competent public authority," and this contention was correctly passed upon by
the Court of Appeals which ruled that:
... In the second place, before the appellee Ganzon could be absolved from responsibility on the
ground that he was ordered by competent public authority to unload the scrap iron, it must be shown
that Acting Mayor Basilio Rub had the power to issue the disputed order, or that it was lawful, or that it
was issued under legal process of authority. The appellee failed to establish this. Indeed, no authority
or power of the acting mayor to issue such an order was given in evidence. Neither has it been shown
that the cargo of scrap iron belonged to the Municipality of Mariveles. What we have in the record is the
stipulation of the parties that the cargo of scrap iron was accilmillated by the appellant through separate
purchases here and there from private individuals (Record on Appeal, pp. 38-39). The fact remains that
the order given by the acting mayor to dump the scrap iron into the sea was part of the pressure
applied by Mayor Jose Advincula to shakedown the appellant for P5,000.00. The order of the acting
mayor did not constitute valid authority for appellee Mauro Ganzon and his representatives to carry out.
Now the petitioner is changing his theory to caso fortuito. Such a change of theory on appeal we cannot, however,
allow. In any case, the intervention of the municipal officials was not In any case, of a character that would render
impossible the fulfillment by the carrier of its obligation. The petitioner was not duty bound to obey the illegal order to
dump into the sea the scrap iron. Moreover, there is absence of sufficient proof that the issuance of the same order
was attended with such force or intimidation as to completely overpower the will of the petitioner's employees. The
mere difficulty in the fullfilment of the obligation is not considered force majeure. We agree with the private respondent
that the scraps could have been properly unloaded at the shore or at the NASSCO compound, so that after the dispute
with the local officials concerned was settled, the scraps could then be delivered in accordance with the contract of
carriage.
There is no incompatibility between the Civil Code provisions on common carriers and Articles 361    and 362   of the
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Code of Commerce which were the basis for this Court's ruling in Government of the Philippine Islands vs. Ynchausti &
Co.10 and which the petitioner invokes in tills petition. For Art. 1735 of the Civil Code, conversely stated, means that
the shipper will suffer the losses and deterioration arising from the causes enumerated in Art. 1734; and in these
instances, the burden of proving that damages were caused by the fault or negligence of the carrier rests upon him.
However, the carrier must first establish that the loss or deterioration was occasioned by one of the excepted causes
or was due to an unforeseen event or to force majeure. Be that as it may, insofar as Art. 362 appears to require of the
carrier only ordinary diligence, the same is .deemed to have been modified by Art. 1733 of the Civil Code.
Finding the award of actual and exemplary damages to be proper, the same will not be disturbed by us. Besides, these
were not sufficiently controverted by the petitioner.
WHEREFORE, the petition is DENIED; the assailed decision of the Court of Appeals is hereby AFFIRMED. Costs
against the petitioner.
This decision is IMMEDIATELY EXECUTORY.